That's what I'm average when I bring it to you. So I didn't bring it to you. I know. Is that in your mailbox? Yeah. Really? I'm the only one that got one. Oh, needs help. Yeah. I'm I'm lying right now. You like it when you're rewatching this move. It I back. Denying. Magazines keep you Welcome, everyone, to our June 23 Recall the name of the city council study session. We have two agenda items on today's agenda. First, we have a presentation on our twenty twenty four year end audit presentation and then
we will be looking at recommended twenty twenty six-twenty twenty seven budget preview and presentation of recommended capital improvement plan and outside agency funding. So with that, I will ask Mr. Jason Boynton to come forward and, mister Brian Anderson will introduce our auditor, and, we'll hear our audit presentation. Assists with the financial audit as well too. So thank you for, both of their assistance and leadership, for putting together the 2024 audit.
With that, we have Jason Boynton, as you've said, Toups from Smith Schafer, who has done our audit for us. And with that, I'll ask him to step up and present the audit. And it should be noted too, I think this is our fifty third year. We asked, we actually recently received our certificate of achievement award from the GFOA. So I think we're the longest standing city in Minnesota to receive that. But I'm sure Jason will mention that. Great. Thank you. Congratulations. Well, good afternoon, council president, council members, illustrator zones. Pleased to be with you today to go over the results of the audit of the 2024 financial statements.
So the financial statements just got issued. They're hot off the press. It's the book here. As I've done in the past, I put together, a PowerPoint presentation, a slide deck here of about 50 slides. Probably take me about a half an hour, maybe a little bit more, to kind of work through those. But let's keep it fairly informal. If you have questions as I'm going through, just speak up. I'm happy to address those. I think we'll also have time at the end, for questions, as well. So I'm going to, use the PowerPoint as a guide. I think if you can point it towards the city clerk, it will work. This way? Oh, there we go. Perfect.
Alright. So, we're here today to talk about the audit. So, Smith Schaffer performed the audit for the city's financial statements. What we do is we issue an opinion on the financial statements. That's our primary purpose. So we perform our accounting duties and based on the work, we issue an unmodified opinion. A lot of people refer to that as a clean opinion. It just means that we think that the financial statements are fairly stated in accordance with the generally accepted accounting principles. Just a reminder that, counsel, that this is a group audit, we call it. That means that we're not the only auditors involved in the financial statements of the city. You can see those extra bullets there,
the, electric and water utilities at RPU as well as the DMCC, which by accounting standards is required to be reported as a blended component unit. Those, financial statements are audited by other auditors and we rely on their opinion in issuing our overall, unmodified opinion on the city's financial statements. That first section, the fourth bullet, we do participate in the certificate of achievement for excellence in financial reporting program of the GFOA, which is the government finance as Brian mentioned, we did receive the 2023, award, award for the 2023 report, our fifty third year, that in a row that we've received that. We will submit the 'twenty four report,
to that process as well. And we certainly anticipate, that we will receive that award. That award goes to cities that go above and beyond the minimum reporting requirements, for governments. It provides more information in the financial statements for users, provides more transparency, about the results and what's going on at the city. So, that, length of time receiving that award shows the city's long term history of providing quality financial reporting. In addition to issuing an opinion on the financial statements, we're required to perform a special federal program audit we refer to as a single audit. And that's just procedures that we perform on federal dollars that we receive here at
the city to make sure that we're meeting all the compliance requirements associated with federal awards. So that work will be performed in July. We'll issue the report on that, prior to its due date in September. And lastly, I just wanted to thank, the audit committee. We were able to just wanted to thank, the audit committee. We were able to meet last week, spent a little bit more time on the audit side, reviewing the results as well as going over accounting standards, both current ones and future ones. And we reviewed the letter to those charged with governance and required communication to that group. So, again, thanks to those folks for their time and participating in that meeting. Just a quick summary of the audit.
So what we like to do at this point since we've just issued the financial statements is take a look back at the kind of the highlights of the financials, for 2024. So we've got, a slide deck here, as I mentioned, of about 50 slides to review. We're going to cover this is going to be we're covering kind of really at a high level and a 10,000 foot view of the financial information. But as I said, certainly as we go through, if you have questions, speak up as well as, if I mention a color of one of the charts and it doesn't match up, certainly let me know the screen versus the printed copy. Sometimes it's a little bit different,
so. We're going to cover, governmental funds. So we're going to cover the general fund, certain special revenue funds, not all of them. Some of them are relatively small. We'll talk about our CIP fund and then the debt service funds. Those are all considered governmental funds. And then, we will touch on proprietary funds, the enterprise funds which is our utilities, parking, electric, water, sewer, and then internal service funds which are internal vehicles that the city uses for these activities for equipment, revolving purchases as well as self insurance, employee benefits, and ITRF information technology. We're going to start out in the general fund.
So, the general fund, main operating fund for the city. All these charts that I'm going to go through in this section here are generally going to be pretty similar. The first bar in each year, so you got multiple years' worth of data. The first bar is going to be revenues, inflows, sources of funding. The second bar is going to be expenditures, outlays. And then the last bar will be the surplus or deficit if we add to our fund reserves or if we use fund reserves in any particular year. A couple of the charts will add a fund balance column as well or bar to the chart too, so I'll point that out. So if we start out in the general fund in 2024,
our total revenues for the year we brought in $120,000,000 that's up the previous year, by about $11,000,000 over the previous year. If you break that $120,000,000 down in that first bar, the purple represents property taxes. That's our primary revenue source in the general fund. We had about $69,000,000 in property tax collections compared to $63,000,000 So we're up about $6,000,000 That's a main driver of the increase in revenues. We did increase the levy by 9% and so a lot of that is a result of that. The blue represents all other revenues besides payment in lieu of tax which is the
yellow at the top. That last bullet there covers the in lieu of tax payment summary, which is just under $15,000,000 And then the other revenues are going to be just a, a mix of, license and permit revenue, fees for service, lodging tax, intergovernmental, LGA investment income, all of those things. So, the other revenues represent about $36,000,000 So that's the makeup, $69 property taxes, dollars 36 other than $15 payment in blue. Our expenses and transfers out totaled about $117,000,000 for the year. That leaves a surplus then of $3,100,000 which you can see in the first bullet there.
So that added to our general fund reserves. We had an excess of $3,100,000 increasing that fund balance. Mr. Boynton, can you hold for a minute, Council Member Palmer? On this page, I got a couple of questions for you. We have a surplus of $3,000,000 or $3,000,000 that goes into where? That goes into your general fund unassigned fund balance. Okay. And that increases our fund balance. So then I'm looking at the revenues are up by $10,000,000 and our expenses are up by $5,000,000 And under the revenues increasing,
the private tax revenue went up $6,000,000 So if we would have taken this about 3% of our tax levy, if we would have taken less tax levy, we would just about breakeven in that category. Am I thinking right on that? Yes. I mean, if you'd set the levy at, say, dollars 66,000,000, then we would have the fund balance wouldn't have changed at all. But from a 10% down to a seven percent increase last year, we would have saved that much money. I always figure it's about 2% per million. Yes. I mean, levy was well, for the general fund, it was $70,000,000
So the next question for you is in lieu of taxes, we have all those numbers that are there. From other organizations, from standards that you have, are these typical standards? Or is it high? Is it low? What is your thought? I would say that I have not done an analysis of that. Payment in lieu is used. We do a lot of smaller city audits and you don't see a lot of payment in lieu in those smaller cities. It's the larger cities that have large utilities. So I don't know if any city staff have any thought on, any comparisons there. Or we certainly could do that for you if that's something we could provide that
information. But Well, I mean, if you look at parking at 816, it would be nice to know is that a good number or is a percentage for a from an enterprise fund? Should it be higher? Should it be lower? Should we lower our fees? Should we increase our fees? I look at the stormwater at 6.85%. I mean, are we taxing people too much on stormwater? And should we kick that back to a lower amount or should we be I mean, those are our budget questions for me that those are areas that, you know, if we're at average then I would say we're okay. But if we need to look at those, I think those would be good to look at.
We also, I think looking at doing a gas natural gas, in lieu of taxes, which would be, another fund that we could we could tap. So I'm looking at something that we can do to to not have an increase in our property tax. Administer Deselmes, did you have something to add? Council president, of course, this is a look backwards, but also the question would be would all of the expenses happen the same way? We plan for the expenses that are anticipated, but sometimes, for example, the police department hasn't fully staffed since before I arrived,
in Rochester. So had the police department been fully staffed, you may not be looking at this number. You may be looking at a deficit if you don't account for what you anticipate happening during the year. So just point that out, and I would just kind of echo what mister Boynton said. Realistically, when you're looking at these in lieu, you would want those to be in line with the size and scope of the operation that the in lieu is coming from. And, so each is different, basically, because of the formulas for electric and water are very different than the formulas for parking stormwater and sewer.
But we, when we get into the budget discussion, are looking at all of those in lieu funds and trying to make more alignment going forward. But, typically, you would not want to not increase your property tax levy and utilize other funding sources that are really not intended to replace the levy. They're intended to operate within an accounting structure where you have special revenue funds. You have enterprise funds that are supposed to operate like a business. And that business is paying, if you will, for its impact to the levy for which it does not it isn't taxed.
The land that it sits on, the parking ramp sits on, is not contributing to the governmental accounting, system that we work under. But that would be why we look to balance our approach to how revenues come in because there there does need to be some relationship to why you are utilizing, like, what how you're applying your in lieu fees, especially to maintain our bond rating. My last question is, is the largest increase we have here is in general government, which, you know, that's $2,200,000 we gave public safety. We gave, quite a bit of a raise last year.
And so that kind of surprised me that general government went up that much. So just Yes. So we did look just quickly at that. The main drivers of a lot of the drivers of that increase was that we added the three eleven public information process that was added cost as well as wellness initiative. We got an additional revenue through a Blue Mer grant. And so that those expenditures associated with that ramp through general government. So all of those things combined contributed to that little larger increase on the general government side. Thank you. And on the in lieu of tax payments, again, the concept of them is that if you had a private utility running in town,
you would be bringing in tax revenues. But we don't have we run the government ourselves. And so we're just trying to, treat it like, you know, it was a private company that was doing that. So now as to the actual formula amounts and the amounts that we're using to generate those dollars, that would have to be as part of the budget process to take a look at that. Yeah. Thank you. So, back to that. So we had a surplus then of about $3,100,000 for the year that added to our fund reserves within the general funds on the next chart. What we're looking at here is your unassigned fund balance represented in the green section there.
The yellow is your total expenditures. So, typically, we look at a metric of fund balance to the size of the government. We're using expenditures as the metric to take a look at it. And, the city policy then is not less than five months of expenditures, which is 42%. And if you look historically, even though we saw increases every year in fund balance, we have been setting aside additional dollars. And even though we added $3,000,000 to general fund reserves this year, that still left our percentage at the same. So as the city grows, we're maintaining the same level on a percentage basis of our expenditures. That third bullet looks at a metric if you said,
well, instead of looking at 24 expenditures, what if it was 25 budget and we spent all those dollars? That would actually bring the percentage down to about 43%, which is still above our minimum policy. But, it was a little bit closer as Administrator Zelens had mentioned. You know, there's years where we don't spend all the money because we have open positions in police or fire or those types of things. One of the reasons we set that 42% fund balance policy, only one of the reasons but one of it is cash flow. So, our funding through property taxes as a significant portion of the general fund revenue budget only comes in in June and December.
And so, we have to fund all operations. So, this chart just takes a look at your cash balances each month in the general fund, cash and investments. And you can see we have to cover operating costs, each month. And so, that draws that balance down until those dollars come back in again in June and then again in December. Now that's one of the reasons. Obviously, there's other reasons that we set that 42% for bond ratings and for emergency reserves and those types of things within the general fund. Just one quick question to kind of follow-up on Council Member Palmer. Looking at the unassigned fund balance in 2025,
budget dollars, we could say that we are really optimizing for that percentage. I feel like the question was how do we optimize the tax levy, but we're looking at this metric as our optimization for how to think about our 2025 budget and do we have the right fund balance for those fluctuations. And so I see this as a way of answering is optimized, that's not taking more tax levy than necessary, but projecting forward what we'll need to cover in the year. Is that fair? That's fair. There. Yep. Alright. Moving on from the general fund. So we have special revenue funds that are listed here. As I mentioned,
I don't have, necessarily chart on every single one, but we're gonna hit the major ones. We're gonna start out in the library fund. So library in 2024 in the last set of columns there, revenue was about $10,000,000 that's made up of property tax levy in the light blue and then county, levy of 1,250,000.00 that we get. So library, predominantly tax funded. We get a small amount of user fees in the green there about $400,000 and just to point out to council with in the third bullet there, just a reminder that the money that we get from the county, for the library is assessed on properties outside of the city.
So city taxpayers are not paying both city and and county levy for the library. Expenditures this last year were about 9,800,000.0, so we had a surplus of about 170,000 in the library. That added to our fund balance. There is a fund balance column at the end there in the gray, that ended the year at 3,600,000.0 which is about 37% of the expenditures in 2024. Next chart is municipal rec. So this covers all of the areas in that first bullet there. So recreation center, golf, tennis, pools, plumber house, and so on. So this is an aggregate of all those activities together.
The funding sources there for the municipal rec, we brought in revenue of just under $16,000,000 About 10 of that is tax levy. About 5,500,000 is user fees. So certain activities we can charge for. Other things within park and rec, we don't and we fund those with property taxes. Our expenses and transfers out were about $15,500,000 so we had a surplus of $446,000 across all the activities. That increased the fund balance in that last bullet up to just over $3,000,000 or about 21% of our expenditures. A little historical context here, if you look back that fund balance column which is in the light,
green or gray, we were at about 3,600,000.0 in 2017. And, over the course of several years, we've used reserves for capital projects within municipal rec and brought that fund balance level down to about 1,800,000.0 in 2021. You can see there, which is about 14% of the expenditures in that year. But since then, we've been able to increase that those reserves, I think, intentionally to bring that back up, to a level at 21%. So we made up about seven percent, over the last three years within municipal rec. The next chart takes a look at rec center operations.
So this is part of municipal recs, We're drilling down into a couple of the departments within there, just to give you a flavor for what those activities are. So starting out with the rec center, funding sources again, the light blue is property taxes and the green are the user fees. So we brought in a little over $1,700,000 this year. Our expenditures actually came down a little bit at the rec center compared to the previous year, at 1,500,000.0. So, we had we call it a surplus, but basically it's property tax levy that we allocated toward rec center that wasn't needed this year, about $230,000 so and then when you compare that first bullet just says,
well, what are the actual costs that we aren't covering through the fees that we are able to charge at the facility? And so that was $435,000 which was better than the previous year which was $638,000 as user charges were up and expenses were down. If we look at Graham, it's, similar. User fees there in the green. But then there's two funding sources to cover the difference. It's the blue represents city property tax levy and then the yellow based on our agreement with the county for Grand Marina. But any deficit between what we can charge for using the facilities versus our operating cost is is shared,
fiftyfifty. So the county pays a portion of the shortfall, from operations there. And so then, you can see roughly that's about the same. If the city allocates levy, that's the property tax levy based on the budget. But if it doesn't work out to be exactly that amount, it just comes either adds to or comes out of our, fund reserves within the municipal rec system. Gulf. If if you look at Gulf, the last or for 2024, revenues were about $2,000,000 Again, there's a little bit of property tax levy which is, actually down from the previous year. We levied $267,000 roughly in 2023.
That was dropped to 80 but revenues continue to increase as we did raise rates in 'twenty three and 'twenty four. So we generated additional dollars from the users of the Gulf operations. But expenditures were up this year at a larger clip. So we actually ended up with a small deficit which means we didn't allocate enough property tax levy in this particular year to cover all the expenses. And last, in municipal rec is park and park forestry and parkway maintenance. So here, obviously, we the green is the user fees. We don't get a lot of user fees for using our park system. We get some about a half million dollars.
But it's primarily funded through property taxes. So we did increase the amount of property taxes levied, for parks up to 8,300,000.0. Our expenditures came in at 7,600,000.0. We're under budget, on the expenditure side and therefore, we our levy, we didn't need about 1,200,000.0 this year so that went into reserves within the municipal rec system. So actually, the overall rec system went up about a half a million dollars. Most of that came probably from our unused, budget within parks. So moving on from municipal rec. We're gonna take a look at the airport here. This first chart just takes a look at revenues that generated out at the airport.
So there's four categories there. The red represents commissions. The yellow is land and building rents. And then there's landing fees in the green. So, historically, obviously, the trend changed in 2020 with the pandemic is impacted there. So commission, revenues dropped as passenger traffic dropped. We've gotten revenues back to almost back to the level, but passenger traffic is not at the level we were in 2018 and 2019. But we've gotten the revenues back. We have $2,350,000 in commissions. Commissions generally come from parking lot, fees, car rentals, and then from the FBO.
The yellow was land and building rents for the terminal as well as other properties around the airport. The green is landing fees. We actually did see an increase, pretty significant increase this past year as we instituted a new general aviation landing fee. So that drove some more revenue to the airport. And then the blue is other income, which historically, prior to 2020, was around a half million dollars of other sources. That increased to about a million and a half the last several years and that's the result. That second to last bullet there talks about federal dollars that we got after the pandemic and the CARES Act. We've gotten a little over a million dollars each year to help support operations at
the airport. And I believe there's one more year left on that funding commitment. So So, mister Boynton, on that, with with the, end of the CARES, funds, will that other income drop by roughly $1,000,000 Okay. So that's the revenues overall for the airport. So the overall fund operations, so we include in addition to that, those are the revenues generated at the airport. We also have property tax levy that we do there for utilities and customs, as well as some other revenue like investment income on the reserves and so on.
So total, we brought in $7,750,000 including all of those items. Our expenditures were at 6,100,000.0. We had a surplus of 1,600,000.0, at the airport. So to your point, council president, if we did not have that $1,000,000 of CARES dollars, we would have had a surplus of about 600,000 in the fund for the year. That surplus then, on their fund balance, added to their fund balance, we have about $13,700,000 at the end of twenty twenty four compared to $12,100,000 And these are dollars, airport, transit, they're setting aside funds for capital. These are pretty capital intensive activities.
And even though in both case those cases, they're heavily funded through federal and state grants, there still is a local share or local match on these projects and that's what these dollars would be available for. Transit is our next chart. So revenues overall for transit were about $15,000,000 as I said, mainly through federal and state grant funding, so about 87% of the funding in 2024 came from federal and state grant dollars. We have about a million and a half in ridership fees, so that's about 10%. And then a little bit of other income makes the difference. Expenditures, roughly about $14,500,000
So we had a surplus this year for $568,000 in the transit fund. So that added to our fund balance. It went from $4,700,000 up to $5,300,000 and again, those are reserves for future capital. From a tax levy standpoint, no. For the last nine years, none of the tax levy has gone on to support the transit operations. It's all been funded through federal and state grants. We did have a small levy. You can see a little bit of blue in in that twenty fifteen year, that was the last time we had property tax levy going toward transit. And the last special revenue fund I've got is the Bioscience Center.
So this chart covers the operations for just Floors 4 Through 8, which are we call non TIF or tax increment financed. So we bring in rental, revenue there about $2,600,000 Our operating costs for operating that facility is a million and a half and then we transfer about 930,000 for debt service on the bonds that we used, to construct the bioscience center. Just an outlier there in 2021 that other, or transfer income from parking and that related to the sale of the dually space. So we've had a 1,400,000.0 that came in there. Next, we're gonna quickly go through our outstanding bonds from the governmental standpoint.
This does not include the utilities. The first one in chart '21 is EDA lease revenue bonds. So, the initial bonds were used to construct the bioscience center for those upper floors. We're paying those back with the rents over time. And then in 2020, we added the, bonds for the construction of the development services center in the North Precinct. And, so, combination, we owe still 24,000,000 on both of those bond issues in total, about 7,000,000 in Bioscience and about 17,000,000 in North Precinct and DSIC. We have also issued a tax increment bond for the TIF portion of the Bioscience
Center, that's this one. It had an ending balance of $385,000 at the end of the year and that will be paid off in 2025. In 2017, we issued a TIF bond for assistance in construction of Parking Ramp, Number 6. We owe about $16,600,000 At the end of 2024, we're paying that back with a combination of parking revenues or transfers from parking as well as tax increment revenues. In 2010, we issued the building taxable build America bonds to construct the public works ops center and the transit ops center. We did a refunding in 2020,
and we owe about $14,100,000 left on those bonds. We issued lodging tax revenue bonds in 2015 for construction, of the Civic Center expansion. Issued 43,000,000 in bonds. We owe about 30,000,000. We're paying that back with collections from the lodging tax. Sales tax revenue bonds were issued in our last sales tax authorization in 2015. Proceeds to be used for those items in the bullet there. Stadium is not the current stadium project we've been talking about. It had to do with the RCTC Stadium. We owe $10,000,000 at the end of twenty twenty four,
and I think those were paid off in 2025. And last in the bonds area, we've, two new issues we had the last two years were tax abatement bonds. The 23 bonds were issued for improvements, park and rec improvements to soldiers field pools over Lake Park. Those funds are gonna be repaid then with, a portion of that park and rec referendum, the additional 2,000,000 that we did. And then the, abatement bonds that we issued, 11,400,000.0 in 'twenty four was for HVAC improvements. So the geothermal that we did at City Hall Library, Civic Center, and Art Center. And those are gonna be repaid with property tax levy,
probably savings on the cost of the improvements as well. And then lastly, on the debt side, this isn't a bond per se, this is a net pension liabilities. So, accounting standards require that cities report their share of any underfunding on a plan that they participate in. So, city participates in PERA, the state plan. And so we have to record our pro rata share of what their actuaries determined as of June 3024. They were underfunded which was $55,000,000 so and they've done some assumption changes over the years which definitely has impacted the
actuarial valuation. You can see the liability has changed dramatically in some years as well as market performance that can have an impact on that. But that last bullet there talks about what their last study, they say they were funded at roughly about 90% for the general employee fund and the police and fire fund, which I think relative to other governments is considered to be a relatively healthy funding level. Alright. Switching gears to capital projects. So I just have one chart here on capital projects and this just shows the fund balance for the CIP fund. Now, the CIP fund is made up of a lot of different projects, and we aggregate them all for reporting purposes into one fund.
We ended the year with a fund balance of $311,000,000 These are funds that we have on hand, the end of 'twenty four that we haven't spent, obviously. The bullets there kind of list the major buckets that those are broken down into to give you a feel for where those dollars are planned to be used for. We did see an increase this last year from $253,000,000 to $311,000,000 The largest increase came in the, DMCC, the last bullet there, is that increased by about 30,000,000, a little over $30,000,000 So these are funds that we get from the state, that have not been spent yet for the DMCC initiative.
So that was the largest increase there. We did see increases in a couple of other areas, highways and streets, infrastructure sales tax. We actually saw a decrease in park and rec as we spent out the bond proceeds park and rec improvement projects that we, did in 2024. We'll move on to enterprise fund. We'll start out in parking. Parking revenues were about just a little under $9,000,000 this past year. Expenses were slightly more than that, so we had a small deficit of $58,000 in parking. If you compare that to the last two years, it looks like we're down but, you know, there's a couple of one time items.
I'd point out in 2022, that blue, the other income at the top, we got a $2,000,000 settlement on Ramp 6. So that's not really operating revenues. So if you factor that out, we'd probably have been closer to breakeven there. And we ran a little higher deficit in 2023 if it weren't for, we got a federal grant for the construction of the 70 Fifth Street Park And Ride. So we got about $2,000,000 there as well. So if you look back historically in parking, you know, we generated enough revenue to cover our operating costs and then we added debt service with the, RAV6 construction, which is the yellow represents transfers primarily for debt service.
Then the pandemic hit, you can see the revenues dropped in 2020. Came back a little bit in 'twenty one and 'twenty two. So obviously, the impact of remote work had an impact on our parking revenues there. Operating costs continue to increase, although our revenues are back to where they were pre pandemic levels. But we're essentially at a break even level, although I think we just completed a great study in 2024 to help assist the city in, kind of dealing with the new environment within parking going forward. Electric utility at RPU, revenues exceeded expenditures by about 35
aside resources, we'll look at that in a second for capital needs. Aside resources. We'll look at that in a second for capital needs. Just to point out as well that, they are servicing debt. They have about 140,000,000 in that last bullet there in outstanding bonds, associated with capital activity of the electric utility. Water utility, they also generated a surplus about $3,600,000 up from 2.9. They had a rate increase about 5.5 which drove most of that, increase there. And then, if we look at their reserves or cash reserves, the green represents unrestricted cash and investments.
The yellow is your, again, your expenses and transfers out for payment in lieu. So we they have about a 146,000,000 on hand at of the year. That's made up of 130,000,000 for electric, about 16,000,000 for water. That's about 80% of the expenditures. You can see they've made a concerted effort to build up those reserves. They were running at 30% back in the 2015 time frame. But looks like they're setting aside dollars as part of their power supply resource plan as a simple contract comes to a close in 02/1930. And I think they're projecting that they have significant capital needs moving forward,
primarily in the electric side. Sewer utility, their revenues through fees was about $35,000,000 Expenses were about just under 20,000,000. So we did generate a surplus within the sewer. Just point out that the last time we did a major construction, we incurred some debt. We've been paying that off over time. So our interest cost, our borrowing cost has come down pretty dramatically, which has lowered our expenses over the years. But now I think we are looking at additional capital investment there. I think there's a project right now ongoing that's about a $90,000,000 project and we're issuing we got a PFA note for about $72,000,000
towards that. And then obviously, some could come from reserves. If you look at their cash reserves, they ended the year at $57,500,000 but again, I think when you look at electric and sewer, these are all capital intensive activities and, they require a lot of dollars to fund their improvements. And that debt that PFA note that we did get, we we are just starting to draw on that. So we'd only drawn about $10,000,000 of that $72,000,000 as of the end of the year. Stormwater, we did not have a rate change there. So revenues are actually pretty similar year on year. Expenses were up.
We did generate a surplus a little bit lower than the previous year of about $2,400,000 within stormwater. And if you look at their reserves, they have about $32,000,000 in unrestricted cash and investments. It's actually the same as the previous year. So even though we had a surplus from an income statement perspective, we did spend, in 2024 a little over $4,000,000 in capital. So our cash balances stayed roughly the same. Last fund charts we're going to look at are internal service. The first one deals with equipment revolving. So again, we're using this to help stabilize and balance budgets within the general fund so you
don't have to budget for large equipment purchases in particular years. It spreads that cost out over time. So the departmental charges that go into the fund are in the yellow. That was about $4,100,000 this year. And our equipment that we purchased this year was roughly a little under $2,800,000 If you look at the last five years there, the department charges exceeded our equipment acquisitions in each year, adding to our fund reserves within compare that to the first five years, primarily the first three where we had outlaid a lot more equipment than than the
dollars that were coming in. So we drew our fund balance down, our our reserves, and we're trying to build that back up as well as we're also trying to deal with the cost of replacement, being significantly higher than what they were originally and based on the charges that we had done previously. So, an effort to build that as well, with the fees that we're charging to the departments. ITRF or information technology, we charged departments 3,200,000.0 and we spent about 2.3. So we did add, to our reserves there as well. And this is their unrestricted net position at the end of the year. So I mentioned that equipment revolving,
we had brought that fund balance down. In the, 2017 year, we were at $3,200,000 and we built it up to $11,200,000 at the end of twenty twenty four. ITRF, they had a $700,000 increase up to $8,200,000 Self insurance funds. So, Citi self insurers for their medical and dental benefits for their employees, with some stop loss coverage as well as, work comp and property loss. The chart here, you've got, just the orange and the yellow are basically operating income, net income in each year. The dark green colors are cash and investments reserves,
and then the blue represents net position. If you look at 2024, we had $36,000,000 in cash reserves, but our net position was about $13,000,000 Well, the difference there is that we recorded liabilities for OPEB which is other post employment benefits. So there's an estimate of what we have to pay out in the future compared to what we, brought back into today's dollars, as well as accrued claims for medical benefits. So that's the difference between the two. The OPEB, we've been bringing that on which is why you saw that, net position decrease. County standards had us bringing that. We didn't have it recorded, many years ago at all.
They said, well, bring it on slowly over years. So we're bringing that down. And then at '23, we actually had a change in the estimate we had for claims, which was a paper adjustment, but that contributed to a significant portion of that, deficit that we occurred in 2023. But we did have a surplus this year, which added to those fund reserves. Our cash reserves went from $33,000,000 up to $36,000,000,000 And just for reference, our total claims that we paid out of the fund were about just under $30,000,000 for the year. So we got a little over a year's worth of reserve, within the self insurance fund. And if you look at the departmental charges in the yellow there compared to the
benefit expense or the claims, again, that excess benefits also included a paper charge related to the adjustment in the claim, liability, accrued claim liability. But for 2024, we had a surplus of $3,600,000 between our charges and our benefits paid out. So that's kind of the funds that we're going to cover today. I've got a few more charts here, taking a look at governmental fund revenues and expenditures in total, and then we will wrap things up and take additional questions if we have them. So this first chart just takes a look at taxable market values.
It sets the stage for we're looking at the city, Russia is a growing community. We're growing in population. We're growing in housing and commercial. And so, this is just reflective of that. And just keep that in mind as we're looking through the trends in revenues and expenditures too. But we ended the year at 18,300,000,000 in taxable market value. Just for comparison, we were under $10,000,000,000 back in 2016. If we look at revenues then for governmental funds, we talked about property tax levy. So this includes levy that gets allocated to all the funds. So this is the aggregate of the total. So we are at about a $100,000,000
up about, with a 9% levy increase up from the $92,000,000 the year before. That money in that levy also includes the $2,000,000 Park and Rec referendum. Tax increment is the next category. It's only, about $10,000,000 but it is up the last few years as we've had more TIF, related development. Non property and sales tax, that's gonna be, dollars 36,000,000, about the same as the year before. Sales tax represents 24,000,000 of that. $12,000,000 we get through the lodging tax. LGA, local government aid, so this is aid from the state for operations. We actually we actually had an increase in 2024 compared to 'twenty three.
But historically, if you look back, we're not getting even at the level we were getting in 2020 or 2015, excuse me. And then in lieu of tax payments were 14,800,000.0. We talked about those when we were at the general fund. Other categories, we have charges for services. So these are the fees that we can charge at all the different departments. We brought in 17,000,000 in revenue there. There was a change in 2020. Well, two things, I guess. The pandemic had an impact in this area as well as, we changed how we are accounting for the civic center. We used to account for all the revenue and expenses of the civic center as the city operated it.
Now, we contract out with Experience Rochester. So the revenues dropped and then when we get to the expenses, you'll see those dropped as well. Federal, state, county, local, this is all other revenues that we get, not LGA. So this year, saw a sizable increase, but that was driven by the DMCC money we got from the state. As well as over the last several years, we've had the runway project going on at the airport. We had, we got some public safety aid in the previous year, DMCC activity. We got ARPA money, back in 'twenty one. So those are all aggregated in there. Investment income,
rates are have been higher for longer here, so we've been able to generate some return. This also includes fair market value adjustments for the securities that we are holding. But we generate about 13,000,000 each year in the last couple of years. And then other revenues of 17,600,000.0 is gonna be like license and permit revenue, rents from the bioscience center that we talked about, assessments and other, miscellaneous revenue. On the expenditure side, we spent, 20,000,000 in general government. Police was about 38,000,000, fire 22,000,000, other public safety, which is building safety, flood control, just about 7,000,000.
So if you add all those three categories together, we spent about $67,000,000 in the public safety area. Airport was 6,200,000.0 and transit, 14,000,000 in 2024. Park and rec, we spent about 15,000,000. Again, there's that drop in the expenditures I mentioned earlier with the changeover in how we're accounting for the civic center operations as well as the pandemic. I'm sure, had an impact in that particular year. Culture, which is primarily the library, has been a little over 11,000,000. Economic development and tourism, 10,000,000 for 2024. We did see an increase in 2017 that was related to DMCC and then in
'21 when we switched over the way we were accounting for the Civic Center. Public works, so 17,000,000 in just your general public works activities. And then community reinvestment allocated was just a little over a million dollars. The spike in 2020 was, CARES funding that we distributed out to the community. Chart 51. So we talked, I talked about how Russia's growing community. And so what we attempted to do with our tax levy here and to some extent LGA, although it's a relatively small amount, is to take a look at what that is relatively speaking, how compared to today to some adjusted numbers from the prior year for population growth
as well as inflation. So basically, if you took the 2024 tax levy collections as well as the LGA and divide it by the population, that would be the amount $800 in per person in property taxes. And then what we did is took all the previous years and we adjusted it for the CPI using the CPI for inflation. So if I look back historically, we saw an increase on adjusted basis from 2015 through 2020 for property taxes per capita. Really looking at a growing community, adding services, not getting you saw the LGA was flat,
actually coming down. So not getting additional state aid, so the property tax levy had to bear a lot of that increase. In '21, because of the pandemic, we we also left the levy, I think, the same. It was a 0%. So, actually, it reduced the amount of tax levy that you were taking in, which impacted all of the next budgets. And so you see that number drop in 2021 as population and primarily this was an inflationary time too as well, so adjusting for that. And in 2024, I think we're back to, you know, roughly about $800 property tax and $40 LGA per capita,
which is, on inflation adjusted basis, pretty similar to where we are at, even actually a little bit lower than we were in 2020. Last couple of charts. So accounting standards required us to go to full accrual for all activities. We do full accrual normally for the utilities, but for the fund levels, we use fund basis accounting. They required us to go to full accrual, which means depreciation, interest on the bonds, debt service, and so on. And so there's a schedule in the report here and it's relatively small and it's not important that you can necessarily read it all.
But the concept is is that you have expenses including depreciation in the first column. You have program revenues, so these are things that we can actually charge directly for those services in that area. So, park and rec, for example, can charge fees in certain areas for what the services are providing. As well as it includes operating grants and donations and capital grants for specific purposes that are solely for those activities. It comes to a net cost in like the third to last column for governmental and basically we fund those net costs with general revenues which is going to be property taxes, LGA, sales tax, and so on.
And my last chart then just takes a look at the last five years comparison. And I think what I take away here is if you look at departments like transit and airport where they get funding from other areas, federal and state, it's not actually a drawing upon those general revenues, property taxes, as I pointed out when we looked at those slides. Economic development is different because DMCC, we're getting, state money in there, but we're capitalizing those, costs as we incur those. But then you get to the last five areas, and these are areas that use, general revenues like property taxes,
with the most significant one being the public safety area. And that's funded primarily through property taxes, LGA, investment income, all those other general So, quick summary focused primarily on fund balances of general fund. So we ended the year at 48% of 24 expenditures, 43% of our budgeted 25 expenditures. Both numbers exceed our city policy, if not less than 42%. Libraries at 37%. Municipal rec, we've been able to increase that the last few years up to 21%. Airport and transit both have fund balances, $13,700,000 and $5,300,000 respectively. Those are available for capital and local match for capital purchases.
CIP air dollars that we have on hand for future capital, dollars $311,000,000. We looked at kind of the breakdown of where those dollars, significant majority of those are for the DMCC initiative. Parking, evaluating what's going on with parking, but we do have $18,000,000 in cash reserves within the parking. Electric and sewer, they're servicing their outstanding bonds and their operating costs and building up reserves. Electric is continue to build reserves in anticipation of the changeover in the contract. And then self insurance, we saw an increase up to $36,000,000
in cash reserves, a little over $2,800,000 increase. And same with the equipment revolving, increase from $10,400,000 up to 11.3 So so I gave you a lot of information in a short amount of time. I'm happy to take any questions. We covered a lot, going on at city at a high level. But Council member Wall. Thank you. As I, both reviewed beforehand and listened to you, it it seems to me, you could disabuse me in my notion that, Rochester is in a a really good position, well run, good fund balances.
Could you compare us, kinda get into Palmer's question? Could you how how do we rank, say, against, say, a Byron, much smaller, or a Minneapolis, much bigger, or a Duluth, more common to us, are are we in great shape? So my in working with the city for quite a few years, my impression this is just opinion. This is kinda going around what auditors typically do, but I'll give you my opinion is that, that we have a good group of people that are good at planning out what they need for resources. So we don't have surprises. We don't run into problems.
We regularly set aside resources. We do planning. We're budgeting out multiple years. And so, as I go through it outside of some environmental problem or not problems but environmental changes, say, with like parking and we're trying to evaluate, you know, how do we handle parking going forward. But, all the other funds seem be in solid shape. Thank you. Council Member Miller? Thank you for the presentation. I want to pick up on Council Member Palmer's question from earlier about the in lieu of tax, specifically looking at Slide 47. Legislative priority of ours to work with the state legislature.
I see the in lieu of tax slightly increased. Is that trend just suppressed? Or how might that be coupled or decoupled from what it's supposed to be was in lieu of paying property tax, which the levy has been increasing? That's a good question. I don't necessarily have the answer for that. I I the in lieu of tax, my understanding is it's formula driven, based on, president, council member, mister Boynton, you're correct in depending on the formula. So, there is even a regression, applied to the formula for electric and water. So they are very revenue driven, but it's net revenue and and there was used to be some caveats about when there except they don't have an increase if there's no rate adjustment.
So I think it's something that we need to be looking at, longer term. I don't think that, it's something that we should rely on. That was frowned upon in the financial and accounting community. But understand what are is the relationship of the, of the formula to the fund. Obviously, you saw a slide where the parking fund actually was negative. So if you're increasing that and we don't have the revenue to pay the payment in lieu of tax, like, that's a problem for the parking fund because then you're just sort of robbing Peter to pay Paul, and you end up needing to subsidize the parking fund with property tax.
So each is slightly different, whether you're talking about I I would argue you would wanna be distinct in how are they actually impacting what otherwise either might be generating property tax and how is the operation utilizing the other services that are paid for in large part by property tax, police, fire, etcetera. There was a recent response to, a facility owned by Rochester Public Utilities, that, you know, needed to have coverage just like anyone else would have coverage for whatever their large
investments are for police and fire to show up. And, so there's that side of it. The other thing that we are looking at, as we come to you with the budget is there's the payment in lieu of tax, but then there's also the services within the general fund and other fund, you know, primarily the general fund that we're providing, that otherwise, if this was a stand alone utility, would be overhead on their part. There's things like the finance department. That is not 100% true for the electric utility because they've built out a lot of their different systems,
but not HR. So it's really looking at, like, I don't know, decades of history in how we had been accounting for things, which is a reasonable way to account for them. And then going forward, understanding as organizational practices have changed across all industries to be less siloed and more of a matrix or sort of a shared services approach, even all of the IT world and software is software as a service now. It's like, you don't buy it and put it on your computer. You live in the cloud with a bunch of other people.
So we've had changes like that also. And so then how you actually adjust for that, recognizing all of these departments are trying to be planful and figure out what they need to be prepared for going forward, it takes time to bake that in. And it also is sort of an adaptive challenge where there's a lot of Feelings about how things have been done before. And when you move someone's cheese, their cheese moves. And I guess as a follow-up question, the other, slide I find very striking is 35, which is the electric water utilities, RPU. And there's the yellow portion,
operating expenses and transfers out or pilot. Can you talk about, like, what's driving that? Obviously, I know it's a very capital intensive operation. Good to see unrestricted cash investments going up. But it seems like that operating expenses at pilot is just trending very specifically. And I'm curious, is that a decrease in operating expenses? Is that a decrease relative to charge for service in the pilot? Or how should we understand that graph? Can I just clarify? So that top line is the total. Yep. So the expenses are actually increasing. They were So the expenses are increasing.
Yeah. The the yellow just it's it's like a layered graph. Can you clarify what page we're on? 35. 35. So the unrestricted cash as a percent is increasing? Correct. Okay. Yep. So we're at 80% at the end of the year compared to 30. But that was, from my understanding and, you know, probably talk with the RPU, they could speak better to it, but the building cash reserves, anticipation of a lot of capital needs coming out of the MCIPA contract. Yes. They have upwards of $1,200,000,000 of capital needs coming forward just on the electric side. Okay. Just trying to understand the graph. Thank you.
Yeah. It's that's not the they're not stacked on each other. They're kind of layered onto apologize for the confusion. No. It's okay. Thank you. A different question. So I see I think about, recent changes. So parking had a rate study. It's changed roughly breakeven as of the end of last year. And then Golf had a funding stability change where there was property tax increase and fees. But it looks like on the Golf side that the revenue increases are not keeping up with expenses. Is that an area that we would look at again?
I feel like, if I'm remembering correctly, there were some initial increases and then they stabilized at much lower rates. But it looks like perhaps expenditures are increasing particularly last year, much faster. Yeah. So they were over budget in expenditures for the year. So they spent more than they initially had planned, which is the budget was used to set the amount of property tax levy allocated there. Just a quick look at the expenses. There were changes in employees that impacted that, as well as they I think they implemented a new software,
product. Yeah. I think that maybe the simple answer is I don't think that we anticipate that to be an ongoing issue, but it's something that I know that mister Woodman monitors very closely. It is near and dear to his heart and the ability to understand whether the changes that we made are working. But I I think when you get the 2025 report when we're not we're only not even quite halfway there yet, but, you may see something different. There's also a lot of seasonality, and weather really has a lot of impacts for golf. So, hopefully, we keep getting crowds Yes. We are not generating revenue at the golf course this week.
Council member Palmer. If I read that right in golf, we'll send $83,000 of of, property tax. Wasn't that what we put in last year? That's what we allocated in $24,000 correct. Okay. Couple of questions and I'm going to go off kind of the bond question. Rule of thumb, bonding wise, my understanding is that the City of Rochester really doesn't bond for very much. There's a percentage that you could hit that we are way below that. Am I saying that correctly? Well, there's a legal debt margin, if that's what you're referring to, which is 2% of your market value and and but only certain bonds count toward
that, so it's really not an issue. Because if you have any revenue associated outside revenue besides property taxes associated with bond, you don't count it toward that. But a lot of cities have a lot more bonding than we do. On a percentage basis for sure. Yes. K. And you said the biobusiness center will be paid off this next year or this year? A portion of it. The TIF portion will be. The TIF portion. The non TIF portion is still scheduled. So then we'll start getting property tax payments on that full? Is that what you're trying to yeah. Depending when we do certify the TIF district. Those property taxes then will come to the city through their general revenues and through
their general property tax levy. Okay. And then if I remember correctly off your slides, the taxable market value went up 3.4%. So if you wanted to kinda stay the same, you could take your your budget and increase it by 3.4 and you kinda would stay at the same as a simple math? What that means? I would maybe answer that no because, you wouldn't be able to meet your labor agreements and so you would be, cutting services. So, I mean, you set your levy. It's spread across the taxable market value of the properties. Right. Yeah. So in theory, you that would be a good Yes.
Thank you. I have a question on the airport fund, operating revenues. So my understanding, we have one more year of CARES dollars coming in at, a million. My question is, how are we at the airport kind of looking to the future as far as filling that gap? Council president, if you look at that I don't remember what chart that was. But if you look back before CARES, we would be going back to the what we were bringing in in 2019, 2018, 2017, 2016.
But we are trying to also enhance all the revenue opportunities. So every time a contract comes up for renewal, we're looking at, you know, adjusting to current market value or, engaging in conversations about whether there's interest in locating at the airport, although, you're locating on city owned land that has a lot of federal regulations. If you're located at the airport, working to, the the this body, acted to provide, air, airport development fund to try to attract additional, leisure flights. We mostly are a business travel airport, but, trying to add direct routes for,
low cost leisure carriers. So every every day, we are looking at opportunities. There's really a three legged stool at the airport. We have cargo, which is critical. We have commercial, which is critical, and we have, general aviation, which is also critical. But the most critical of those is commercial because that's really tied to almost all of your federal funding and being able to do the amount of projects. We're really getting ahead of the game with the amount of infrastructure investment that's happened in the meat and potatoes of how an airport works over the last five years with the runway extension, which never ending runway extension that's,
that's happening, the approval, last week of the grant for the general aviation apron maintenance, which opens up a lot of different experience for the general aviation traveler and then continuing, to make sure that we keep a direct flight for cargo, and that expands beyond the airport. Because if you order anything online, although we still want you to shop local, there is a very quick turnaround time for people in Rochester because of all the other cargo that happens out of the airport. Thank you. Any other questions for mister Boynton?
Thank you very much. Very comprehensive. Yep. And we'll look forward to seeing you next year. Alright. Thank you very much. Thanks, everybody. We will now move on to, budget. And, miss Zounds, are you going to present from there or from the podium? There she goes. Myself and my assistant deputy administrator, Parrish. So you'll have two different voices. I did just wanna add one other thing. You each should have a, an audit that's in your the full audit. This was not even the full audit, even though it's very comprehensive. That book that, council president is holding up.
I would, like many things, I would start at the back first. There's a statistical section. I think it starts on page a 131, 161. One of those rings a bell to me. And that really shows you the ten year history of a lot of different things, for, the financial, readiness of the city and sort of the economic status. So, audit, I would recommend starting at the end before you look at actually what happened last year. I think it gives you a lot of perspective. So just a tip. So now we are gonna talk about the recommended 2026, '27, budget review. So budget review. So really talking about capital improvement plan and outside agency funding.
This is not your entire recommended budget. It's a continuation as we're still finalizing the budget book, which is much larger than the audit that you received, and is actually two books when, you count the operating and the capital. So it is light reading. Oh, I thought we were already on this slide. And this is the first appearance of your updated, community vision as well as the, foundational principles and strategic priorities. I promise you that it will get prettier, and, these are in, you know, no importance of order under the strategic priorities.
It's just to be able to fit this on a slide that no one can barely read. So, did just want you to know that we are taking these into account. We've started incorporating it into some of our conversations. So congratulations on adopting that, and, thank you for the work to move it forward. It is important for how we build the budget and, live in our budget throughout the year. And now I can't click despite pointing it at you. There we go. So, the focus for today, again, brief update on the 2627 recommended budget. So really going over, at a very high level, what you already talked about in April,
just as a reminder, the capital improvement plan, which, deputy administrator Parrish will talk to you about, and then, hopefully well, we may have healthy discussion on the outside agencies, but, we started that process much earlier this year, so wanted to be able to get some feedback from all of you as we finalize the recommended budgets. So be thinking about what questions you might have on the capital budget, things that you might wanna see, areas you wanna see us focus in more as we move, into, the more details of the budget once we've finalized all of the numbers and crossed our t's and dotted our i's, and then is there any of that preliminary feedback on the outside agencies?
So as a reminder, we are in June, and we have a long way to go. So thank you for for hearing me out, one more time about the budget, my favorite subject. So you've seen this slide before. I just wanted to remind folks that as we're navigating, we have this, you know I I think it was helpful to have I hope it was helpful to have what happened last year in front of you because we take into account all of those things. We look through, you know, what are the needs that are being brought forward. Some might say them see them as once, but when you really talk to the departments, there there is a rationale for every one of these requests that they have for,
changing, adding to, or adjusting services. This $4,200,000 number is the entire budget. So you saw general government. You saw library, parks, and the enterprise funds. This is across the entire budget, less Rochester public utilities. And it's not uncommon for there to you know, folks are really trying to plan ahead. And so much like when we go to the legislature, sometimes you have to ask more than once in order to, be able to accomplish your goals, and then applying those strategic priorities. That's how this process whittles down into what is the recommendation and then focusing in
a little bit more on, your priorities as to whether you think that's reasonable or not. I do want to, again, reiterate that we looked at it in that way by trying to make sure that we take into account how are how is your actual budget living? Like, how are you living within the budget that's allocated? Are there changes that you can make? That comes at the baseline level. So that's outside of the decision packages. There could have if someone comes up with an idea to change how they're providing in their baseline that could accommodate a decision package,
you know, there's two levers happening within the budget. Sometimes there's adjustments, sometimes we call them reductions that are happening, that could make room for something that's more important in today's day and age. And then, of course, we are always looking backward at our, former tax rates and unfortunately we never get, like, the actual number, until September, despite there being multiple stories in the newspaper about, what's happening within tax appeals, etcetera, and growth within the marketplace. So you can see, probably a different visual representation from what you saw in the audit conversation,
but we are trying to, much to Councilmember Palmer's point, stay within a certain amount of the net tax capacity. So when we talk about the estimated market value, that's part of what makes up this net tax capacity. And you can see, in those years where we were after the zero levy year, it's challenging to, stay below the prior historical average when we're trying to build back services on a levy that actually brought in fewer dollars that year. And so I think we're finally making it there.
So we're back in 2019 here, today, in the middle of 2025. And we are hopefully starting from this new baseline. Also, for perspective, and just for the media in the room and probably for the elected officials, this is just illustrative. This is an example of a tax bill, and I don't know where we can move the, text maybe to the very top. That's helpful. But if you think about the 2025 approved budget that we're living in right now, and the total amount of levy that's approved, across the budget, you are collecting $111,645,142
And that gets applied across all of the piece of the property tax pie. Commercial, apartment, multifamily, residential, strict single family residential, arm land, we have a little bit of that, etcetera. Then you apply the rates. You come up with that's this is how you're coming up with that prior chart that has the line bouncing around 50%, of the, estimated tax rate, which gets applied to each class of property. So this residential property, the median home home price in 2025 is $288,000 If they go up,
the average assessed value increase could be more, could be less, then their new assessed value is 304,000 change. They lose some of their homestead, credit. Right? So that's gonna start impacting how much they pay in taxes. And, now you have this new median home value and median home value, it has gone up to $2,849. So you could see the first thing that happens is when your market value changes and your homestead, calculation reduces, that's that's the first driver of what your property tax bill is going to be. It's not the actual amount that we're collecting.
They then apply that to our our, let's say, 49.84% in 2026 if there was a 6% increase in the levy amount, just the total dollars collected year over year. And that is what's gonna drive your property tax bill. So the same house, let's say that we were coming in at 12%. Again, just illustrative, just information. Because that same change happens in the median home value, the homestead, market value calculation, and then applying the rate of the 1%, they're still going up that same amount of median home value.
And then you see the difference between $4.14 $1,420 It's an $80 difference when you're talking about the amount of levy that this house is absorbing. So I just think for perspective, it doesn't go up like it's not 6% of your whole home value that you're paying. There's just a number of different calculations that need to happen that spread that property tax out outside of a strict percentage across any class of, property. Another thing to note that we know that there has been a shift. Grateful for the residential community,
not so grateful for the commercial property community, where commercial's estimated market values in their assessments went up fairly significantly, at least on average, across the community. And so that also absorbs any, initial property tax. Even if you didn't change at all from 2025 to 2026, the amount of tax you're collecting, which is what this shows, it's absorbing your tax levy across the system. So the first absorber will be growth in market value. Well, first is growth in construction value.
So the first absorption of any levy is gonna be this construction increased value. This is an estimate of 1.7% of the total market value growth is new construction that's never been paying paying property tax at that level. So I just think it's important to the percentage is important, but it's really driven by if you're funding the needs of the community, this is the amount of levy that would be necessary in order to do that. And then all the math happens and all of the, discrete math occurs. So just wanna put that out there. We do start our process early.
We try to think ahead and give time to make changes, but that also subjects us to assumptions that maybe are not what becomes reality by the end of the year. And I also wanted to touch on this very briefly, even though you probably don't want to touch on it. I just want to make it very clear. My recommended budget includes funding these things. But in all of the work that the departments did to say, how could I optimize my budget? What are things that I could do and think differently about expenses or revenue? These are things that, aside from all of the changes we made,
that is helping to really reduce that 11% projection to much, much less. These are things that still seem worthy of you talking about. I would not cut them myself because they do have implications, the types of implications that you're probably concerned about. But that's what it means if you're going to constrain your levy beyond the net like, what is essential to be able to continue to provide the level of service people are expecting or used to. There are trade offs. It's not just a balancing act. You're actually trading off what is important. And this important. And this is only $334,000 worth. Now we we made a lot of those trade offs during the baseline because we
didn't feel like there was gonna have major impacts to our ability to provide the level of service, that people have. You don't get to really do that every year, so I think we're in a resetting year. And so I just wanna make that clear as we go into finalizing, bringing forward the operating budget. Can I ask you a question on this? I'm confused on the lease space for adaptive rec. Where are we leasing space? We have the fire station. We have property at 125 Y. Where are we renting space? I couldn't give you the exact buildings because I don't have it at my fingertips, but there are other places where we have been paying to lease space to bring
that accessible rec forward. And I think the reason I mean, I this one was hard. I probably could have just said yes to it, but I think it's a valuable conversation to be had whether whether and where you would wanna have the accessible rec programming. We think we have spaces that accommodate it just within, the walls of the city and the parks, facilities. And so I think it's feasible to do, but there may be people who really like the existing locations where there's some lease space happening. Alright. Oh. We can also bring you more detail back at a future date. Well,
we have the fire station, the old fire station that they they were using or are using, I'm assuming. Correct. They're using that. They're using more spaces than they have than just the city spaces. We're using some private or I don't know if they're private or nonprofit private spaces. Okay. And and your first one on there is discontinue short term licensing software and inspections. Are you talking that we wouldn't be doing any of those inspections on the Airbnbs? Is that the the area? That's a policy question. Do you want to continue to do that? If you do, you really need to have the licensing and you need to pay the cost of
inspecting. Otherwise, if you're not doing those things, why would you license it? If you're not doing inspections, what is the purpose of licensing? Correctly, right now, all of this is in the budget. If we wanna reduce the budget, these are some ideas you have To get Yes. And the city council might have If you wanna reduce it further. And if you have other ideas, we would need to evaluate what the implications of those ideas are. Thank you. I don't know what those ideas might be. But, like, if you don't want the police to do something, we would need to understand the implications of that. Could you,
later on, let let us know what the adaptive rec is is contracting? And the other one that's that's the the disease trees on private property, can you get us the information on that? I mean, are we doing some? Are we doing all? Are we because I know we had a grant for some places, but So this is really, like, fully on your private property, disease trees that are threatening public property. So if it's threatening your neighbor if your neighbor's tree is threatening you, that's a civil matter. If your private property tree let's say you have an alley behind you and your
private property backyard tree is potentially going to fall across the alley and maybe some electric wires, we're worried about that. We we will plan to bring back a lot of information about all of these, including whether or not I mean, the the budget is constantly evolving. Mhmm. Maybe Sunday is not the day that you would wanna make adjustments if you're open to having that conversation. But this is related to other requests in the library budget and how they think they might be able to do that in a way that wouldn't drastically impact service, but would That's right. Reduce the impact of what the cost of some of the new ideas are.
So Can you hold a minute? I think council member Fredericks has a question regarding the library issue. Yep. Thanks for your presentation today, administrator Zelms. Just wanna go over this quick. In regards to Sunday hours at the library, I looked at the hours and compared all city city's libraries, and none offers many weekend hours as Rochester. Mankato, Saint Cloud, and Fargo are all closed on Sunday. Duluth is closed on Sunday, and during the summer is closed on Saturday as well. Sioux Falls and Cedar Rapids are open four hours on Sunday. La Crosse is open four hours on Saturday and Sunday.
The library provides valuable services to Rochester. According to the audit report we had earlier, the library spent nearly 10,000,000 in 2024. We need to be looking at relief for taxpayers, and if we can find some savings that would make sense, we should do it. So we we're planning to bring you all the detail back. I just mostly wanted to clarify. I'm not I'm not building a budget that does not include these things. I'm in building a budget that does include still funding these things, and I still think it's important for us to have the conversation, the policy level conversation about whether or not,
the budget these specific items, especially, are are if you're open to changes in how we're providing those services. So so when would we have that discussion if not today? You will have that discussion when the budget is complete, which you get the recommended budget for your August study session. Okay. We do have the budget booked on yet. We do have council member Miller, in the queue, and I also have a question. So council member Miller, go ahead. Yeah. Hopefully, just a quick question because I continue to get questions about the July 4, music. Mhmm. Is there an alternate city facility? I mean, can't build amphitheater. It doesn't require any setup.
Is I I'm just curious. What's driving the majority of this cost that could be saved? The majority of the cost so this isn't that we are not doing fireworks. Yep. This would be fire this would be all the all day long fest part. Yep. And so you could still do music. You would probably partner with a radio station, maybe have it would be, like, up leading up to briefly the fireworks while people are gathering. And then during the fireworks display, there would be some music, like, what you would see at a fireworks display related to the fireworks going off. So maybe it would be the community band plus a radio station doing the MC
or something. But this wouldn't be all of the all day long part of it that's really not I don't know how related it is to fireworks. It's the fest. It puts the fest in the fourth, I guess, versus the fourth of July fireworks. And my question is really I I I know we have great facilities at Cascade Lake. People have asked about fireworks over a lake, being able to have better viewing distances. I just wonder about, like, how much we could save and still provide a good experience for that festival around the July 4 by utilizing facilities that don't require setup and tear down like a
festival. If you were still don't think you would have the all day festival if you were having it at a different location because you you need to bring in porta potties. You have to have security. Like, these things are not, like there's a little bit that's entertainment cost in here. I mean, you have to pay someone to either entertainment unless you're changing it significantly. It's a day that is on a holiday. People are getting overtime holiday pay, which is double time. All of those things. So, I mean, you could look at having it at a different facility and changing it. I don't know that you would save anything, by moving it to a I mean,
you'd shift your costs around probably Okay. To how you were spending it. So the setup and tear down, temporary stage, all of that, and it's some of that, but it's difficult to produce what we're doing now with this dollar amount. Okay. So just to clarify, these budget optimization options, so with the aligning the fourth of July fireworks, with another event or just doing the fireworks, this option of saving roughly 20,000, that is for us to come back and say if we're looking to take a
few items out for the budget. So currently, what you're working with is the fourth fest, the entire blown out program? Yes. But it's still challenging to to do that effectively even at the level of budget that we have that we're recommending with the small team that put pulls that off. And sometimes we have rain. So those types of things. The daytime part is the part that's challenging to pull off. I have one more question since I I have the about the daytime? Oh, go ahead.
I I just looked it up. It looks like it's only, like, from 5PM to, 10:30PM, the fourth. Right. That's 5PM. The daytime part I mean, you have to set it all up. It's to actually pull that off, you set it up the day before, you get it ready, you're bringing everything, and then you open for wait far far before the fireworks, and you have to have entertainment. You need to have the porta potties. You need to have security, all of those things for all of it. And so that's what I mean. The non k. Fireworks specific things that I'm talking about.
For like, I mean, in the middle of the summer, it's 05:00 till roughly 09:30, 10:00 before the fireworks starts. So Because it's not dark yet. Is this a fireworks question? Go ahead. It is a future looking fireworks question. Does any of this consideration change once the transit West Transit Village is operational, you know, parking facility, transit facility, does that provide additional bathrooms in addition to the ones already at the park? I mean, does some of the setup become already built into the infrastructure there? To a degree, but you probably need to have porta pot potties and handwashing stations if there's any
food, even if people are bringing it themselves. I mean, I think the health department would tell us we need to have more than just that. I I guess just a comment. It it feels like there there are great facilities at Cascade Lake that, at least with Canfield Amphitheater, get used for a forward concert annually. Yes. We can absolutely look at that. It just it's unlikely to significantly reduce or alter your costs. Is yours fireworks related? Go ahead. Well, we used to do fireworks at Silver Lake. When we did North Broadway, we moved it to Soldier's Field. The reason we use Soldier's Field is there's parking all around.
Very little parking for people to come and watch the fireworks and just and then when they're over, it leave. So it's always been a headache for the police department after the fireworks leaves. So that's the reason Cascade Lake does work. Yes. We have a shelter. Why we built it? Nobody knows. But we have one at Cascade because, you know, know, I'm sure people from the Southwest wanted one, so we got one. But, you know, we it's at Soldier's Field, it you can park at a lot of different spots, watch the fireworks, and and and leave. So that's Isn't there a major ramp going in in the West Transit Village?
But that's far from Cascade. Is it? K. Council member Doreen. This is simply a process question. Why are we debating this right now? Because I put a slide in to tell you that this is included in my recommendations to fund this and for you to have this conversation when we have the total budget in front of you. Okay. So it would to me, it would seem like it would be more, more prudent for us to have that conversation when that total budget is in front of us. I will So I've just I will make sure you have that, and you are welcome to continue having this conversation as it is you are meeting. Thank you for that,
council member Doering. I am gonna ask one more fireworks related question since we are digging very deeply into it. So if we did go with just the fireworks, kinda dusk, we can have patriotic music. Correct? Correct. What you would most likely do, as happens at many, many fireworks show, is that you reach out to your BDA partners and ask whether they would be willing to host the event, play music, and perhaps you would utilize the community band again. There are all sorts of ways that you can do this, and the question really is about whether you think that we should spend time discussing
this to have a small savings in your budget or if you're comfortable with how it is, recognizing the staff is still gonna be evaluating how things change over time and perhaps suggesting that there would be different locations for thing as the this as the continue the continued growth of the community happens. Okay. With We're always looking at all of those things all the time. Council member Doreen pulling us out of the weeds on this. Is there any other questions on any other item on, these potential budget optimization projects?
Alright. Move. I am going to ask deputy administrator Parish to come up. Good afternoon. At the risk of pulling you back to that previous conversation, our friend Ben Bolt has said that the rental for the, adaptive rec program was for an activity center with Hiawatha Homes associated with the summer programming, and there's some limited contracted services that occur, with third party providers that would just be slightly reduced in scope, but it's primarily the Hiawatha Hiawatha Homes rental, for that. CIP, so this is always a a great opportunity for us to think about what our
capital investment looks like. We do it on a six year basis, but we really prioritize and focus on the two years. So you're appropriating within the '26 and '27, period here. From a process perspective, we're gonna give you a high level overview tonight. We'll get you a book, that specifically itemizes all of the projects, and potentially have you consider that, for approval in September when you set your preliminary levy. But, again, this walks sort of parallel and concurrent with the operating budget. So when we look at 26 to 31 overall, we have 210 projects that are included over 25 categories.
Many of those categories are essentially the same categories you saw in the audit. Wastewater, stormwater, you know, and so on. Overall, that represents 560, $400,000 of total investment. And as you'll note in the later years, those numbers do get smaller. So we tend to focus on the first few years, and then the residual years are more planning focused. I'd also wanna just emphasize for you that this will look different as we move along in the planning process. So a couple things this is not or does not reflect. It does not have any of RPU's information in here.
It has not the most current, and evolved version of the DMC recommendations that you normally see on a different time frame as you walk through that process with the DMCC corporation board. So you will see that later in September at the DMCC board and then into October, for city council approval. So just, just note that that those two things are not reflected, within this. And then specifically in '26, as we zero in on that particular year, you have a 127 projects, again, 24 categories,
and a 144,900,000 in total investment. I would say some of the projects included in here are transformative projects that you've talked about in terms of your evolved strategic priority, and some of these are really asset preservation. Just things that we do to invest and maintain the existing assets, that we have. A lot of times, my experience is the city council really wants to understand the levy investment into the CIP. We get a number of sources of revenue into this, and we'll go through some of those later. But as you talk about your $110,000,000
2025, levy, you know, about 9,000,000 of that is CIP. So what do we do? We're having that 2020 parks referendum. That's actually not included in 09/2003. So if you add the parks referendum, it will be 11.3, but that was a voter approved. We tend to hold that as a standalone item. For recollection, about $1,000,000 of that is allocated to debt. We accelerated about $14,000,000 worth of projects, that you're all familiar with, Soldier's Field, Silver Lake, MLK, some of those projects. And then the other $1,000,000 is appropriated year to year,
within the CIP. A couple of you know, two big items that we've talked to you about just in terms of we have big liabilities and limited resources for funding, streets and facilities. Those are the next two categories that we have here. We put a little over a million into, street rehab resurfacing, that should say preservation. That's a lot of your mill and overlay. That really does stabilize your streets. But, of course, we are, you know, evolving and having more significant reconstruction needs. A lot of different sources of funding go on the streets. Municipal state aid, we get allocated about 20% of our mileage,
with funding from the state. You obviously have local option sales tax that was recently approved in this space, and and other sources of funding. But this is a significant, investment in the CIP, but, again, not significant probably in the context of the liability or obligation. As you saw a couple weeks ago, facilities reinvestment fund, we are able to allocate about a million dollars, for, you know, our significant, facilities portfolio. You saw numbers previously, though, that had that, you know, need much, much higher. This is a different pivot, but 750,750,000,
dollars, so it, you know, drops off rather quickly, goes to Willow Creek. That's basically matching our state bonding, funds. So, you know, we don't always know if we're gonna be funded, estate bonding. But when we do, we have to, you know, finalize the local match within the CIP. This is a portion of that, in this particular year in '26. Annual Batuman Street reconstruction, again, more street reconstruction, happening there. So a smaller, you know, amount, but trying to start to build in that reconstruction space. And then annual ADA transition plan. This is the second part of an ADA transition investment,
that's been made and was sort of previously discussed by last year's, city council, just to accelerate some of our ADA work and, you know, get ahead ahead of that. Mister Parrish, could you hold, council member Palmer? I have two quick questions. Annual, street rig construction, do you know the dollar amount that sales tax pays for that? This is strictly the levy portion, supported, portion of that. So, definitely more than 700,000. Within the CIP that you will eventually see, you will see how those are allocated to specific projects. But I I could get you some more information as we move forward with that.
Because when we did the sales tax presentations, people were worried that we would just lower the dollar amount we would would use. It'd be nice to say this was the sales tax dollars. Yeah. I know the county does signs on their projects to say this was paid for by sales tax. The second quick question, the $750,000 for, Willow Creek, that comes out of property tax? Yeah, that is the local match for the property tax. Yes. I'm also aware of that. Thank you. That's the second installment we had previously allocated some in a prior year as well. Specific projects, and and, actually, if you look at these, these are just the portion of funding that's allocated within this specific year.
As you'll note, these are much larger projects. So the runway project with the airport is a $57,000,000 project. The liquids and solids upgrade, you know, we're, you know, budgeting 14,000,000 this year, but it's a $90,000,000 project. Rapid transit, 7,000,000, but it's a 170 or $75,000,000 project, and evolving as you'll, you know, start to hear more about. And then we have a couple of, you know, more traditional, transportation projects to to round out the top two. I'll go through those briefly. But, again, if you just look at this list, this top five list, you know, you're probably upwards of $350,000,000
worth of total projects, that we are investing in the community if you, you know, take them, not just this year, but in their total project cost. So, again, I'm not gonna go through these in-depth. I think some of these are well discussed. You've seen some of these on your bus tour. You've heard about them before. We're definitely doing the, you know, runway upgrades at the airport. This is 56,400,000.0. There's been much more work also out there. There are significant category two lighting upgrades and all kinds of other investments that have also been made there. So you're, I think, generally familiar with the airport.
We also have a project within the CIP that talks about the parking, and the resurfacing of the lot, and, hopefully, you know, that could potentially be a bonding project as well. But if not, at some point, we have to rescope that and move ahead with the parking lot work there. Again, you're all very familiar with the WRP, you know, liquids and bio biosolids upgrade. This really gets us ahead of our permit requirements, and, you know, helps us to most efficiently process the significant amount of wastewater that we, you know, generate year over year. Bus rapid transit. Again, you're all very familiar with the bus rapid transit project,
with an overall budget of 175,000,000. So a small portion of the CIP funding within the DMC twenty twenty six, for transit aid is allocated, within that. You can see sort of the evolution of the bidding, that's happening here, and the architectural packages are being evaluated. And, again, the, Center Street, project, you know, looking at moving along with that and the roundabout overall $6,700,000 requesting 5,700,000.0 of, CIP funding in '26. So that'll be bid in, in '26, and same with Eighteenth Avenue.
This one is just really pending the federal funding, element, which is traditionally allocated through ROCOG. So that feels pretty stable, but, you know, we will continue to monitor, you know, whether we're ultimately successful in getting that federal funding, to move forward with that $14,400,000 project. And I see Dylan is luckily here if you have any questions on any of those. So, overall, this is really just the sources of funds. So I think this is an interesting thing for the council to look at. You start to think about, like, where are we allocating money within this $144,000,000?
And you can see, you know, significant federal funding at 40,500,000.0. You have state DMC funds, you know, at about 15,000,000 or even 20,000,000 if you include the low the local quarter cent sales tax, for that. And then tax levy at 9.3 as we discussed. We do allocate a small or a portion of our local government aid, in the past. And instead of taking the slight increase, we generally, it's a declining enterprise for us, but we did have a slight bump last year. We did put that into capital, because we didn't really know or understand if that would be sustainable long term.
And I think that's a good move because, you know, that there's just a lot of, volatility in that space. And then retained earnings and project reserves, generally are are funds that have been previously allocated for projects in prior years that are now carrying forward. Or if it's an enterprise fund, it's in essence coming out of the enterprise fund fund balance. And then where are we spending the money again? I'm sorry. Council member Wall. Thank you, mister Parish. On the revenues, I think I remember asking this last year too. The totals go down precipitously in the future.
That's just because we haven't identified all those funds that will be available in 2030 and 2031. Yeah. That is correct. So if you look at, like, I'll use the federal funding as an example. We have 40,000,000 there, and it goes down, you know, quite a bit as the years go along. We may, as we, you know, go for state and federal funding, have a better sense of what those are, and then we will program those in the outer years. Absolutely. Other questions here? I I have a question on how a project lands on, on our list. I noticed, some of our priorities that we had at the legislature,
like the sewer infrastructure upgrades and, is not on their, Sixth Street Bridge. How how do, projects land on this six year CIP? Yeah. That's a council president Schubert, that's a great question. And so, some regards, some of those may have been appropriated in prior years. So, you know, Sixth Street Bridge, for example, you know, we had previously appropriated in that space realizing the federal funding, so it's just not being reflected here per se. But in the example of the e sombrero sewer,
the sombrero sewer work that we're asking for, funding for at the legislature, we have not included that in that because it would be the scope of that project would be highly dependent on whether we are able to leverage state or federal funding. So if we're lucky enough to advance that project, we would come back and have a conversation and say, you know, how are we able to fund this locally? It's a little bit of a different discussion because it is within the sewer fund. There is some ability to access retained earnings there within the sewer fund balance, but it would be a conversation with the council. So what you're saying,
it has to generally have to gain traction either from a state level, federal level, or maybe private sector funding before we start putting our our, putting it on our CIP. Is that I think that's absolutely correct. And the only thing we do when we adopt the resolution is we acknowledge that we will work toward producing the local match, you know, if and I think that's why it's important for you all to understand that when we're advocating for the projects or grants.
You know, we typically are making a commitment that if awarded, we would fund the local share of that. So Got it. Councilmember Palmer. And so over the weekend, I looked at the CIP budget and looked at it and it's 400 pages, which is fun reading. Project 6,685 is out of the stormwater and that's Twelfth Street and Third Avenue flood control. How does that fit into what we're doing with Broadway and and, Twelfth Street? Councilmember Palmer, that's a fantastic question that I do not have the answer to. I'll stop. Perhaps Dylan, or Anne Lefstein is here as well.
They could maybe answer that for you. Good afternoon, President, members of the Council. I can take the first shot at this, and, that's obviously a project that comes out of our stormwater team, which is the environmental services group that Aaron leads. But, really, that's a localized ongoing localized flooding area that has always been identified by the stormwater team as there's a need there. And so they've been planning for that project. So it's mainly, it's really unrelated to the work that we're doing with MnDOT at the intersection of Broadway and 14.
It's separate. It's just near that project. Okay. And then, project 2,577 is coming out of the parking. And that's for bicycle parking. That's $60,000 Do we have an idea of what we're doing there? So president or council, one, I always wanna reference. I think you're looking at last year's CIP and then, you know, of course, we're talking about the next iteration of that here. But that's a great base document, to have an awareness of. So if I recall that correctly, and I think others can, you know, certainly add in, I think there was just some desire to evaluate options within the ramp system or
downtown for bike bike facilities. And so it would be $60,000 to enhance bike facilities in the downtown. But Is that to physically do it or is that to study to do it? I thought that was for a project, but yeah. Thank you for the question. I I believe that was the cost for a project that was work and assessment done between, the active transportation coordinator and conversation with the parking and transit department where there might be opportunities to add parking in in ramps, bike racks, etcetera. So it was a study, so we don't really actually spend money on that?
It's not a study. It was an allocation to do an improvement. If we identified an, a parking ramp that could use a bike rack, we would have the dollars to put the bike rack in. So it wasn't a study. It was creating some funding to be able to do the installation. And lockers and things like that. Okay. And and my last one I I I'm I'm looking at is the flood control one, and it's, project four eight eight nine, which is removing sediment from Silver Lake Cascade and the reservoirs. That was number 11 on that page. Do you figure out where that's coming from?
Mr. Dombrowski, we're going to take that. Mr. Luxtine. Yes. I can take take that question. So that is an allocation. We always have to have funds set aside to be able to respond to a storm event, should there be a significant amount of sediment that is deposited. So we put that placeholder in so that when we come back to council, you know, to do a project, the funds are there and allocated and ready to go. And it gives us the flexibility to go to different locations based on a storm event. Because number 12, and this is the Silver Lake one, is, flood control money,
state funds of $11,000,000 and then $5,000,000 of bonding, for Silver Lake improvements at the lake. Is when is that coming to us Or what would I know we have a presentation coming, but you're talking finances of $5,000,000 for bonding. How does that work into this whole system? I don't remember all the details off the top of my head. Council member, I'll have to look into that one. I believe that was for the full project scope. Sorry. Go ahead. So I'm present. Because that would have been adopted, like, three years ago, that CIP that you're looking at, because we don't make any significant changes in the supplemental year.
I think that was when we were in front of the state legislature looking at a much larger Silver Lake plan that included some park improvements and other things. You might recall the 2023 legislative session, I believe, is when we were doing that, and then maybe it was 2022. So I think it's based on that attempt, which then has did not move forward, and now we have the, pending, DNR grant for the smaller, Silver Lake, dam only and dam and dredging project. So the project scope has changed significantly from the document that you're looking at. Thank you.
Carry on. And, just yeah. Moving on, this is these are the investment areas that match out. And and, again, I I won't go through those. We've kinda highlighted some of the core projects, but you can see some of the key key investment areas, that you have for consideration, then that's pretty much it. Unless there's questions on this slide, otherwise, we can transition it back to administrator zones to talk about outside agencies. Any other CIP related questions? Council member Dohring. Just when the CIP comes to us for final approval, what is actually included in that document?
I did not review the old CIP, yet to the level as my colleague, mister Palmer here or council member Palmer. I guess the request I'm gonna make is in that CIP, if you could put, what the bill to the city taxpayer is, what what other sources of funding are, and then total project cost. Is that what's contained in the CIP? Yes. And there should there yeah. It's a I don't know. Was it a thousand pages? It it's 400. Yeah. Yep. I mean, it was it's not insignificant. And we do a little profile of each project so you understand what you're investing
in. And then we, have a coding system that tells you every dollar and what it attaches to. Excellent. Thank you. Alright. Let's move on to outside agencies. And I guess this also provides an opportunity to say there's a reason you don't have all of the detailed budget information yet. It takes the work of a team of a very small but mighty team of Rachel Hodak and Josh Stewart and couple of other us giving them a little bit of trouble, making changes to our decisions in the midst of their pulling it together, to be able to line up all of those dollars and every line item. So thanks for all they do to do that.
And a tiny part of that is outside agencies. We did have an outside agency, oversight committee meeting earlier today, so some of you are just going to have the pleasure of seeing versions of this again. But, outside agencies, just to provide some context, we have service agreements, and the first one, one hundred and twenty five Live, we actually have a specific contractual, arrangement with 125. The rest of these, we have service agreements that state what, services will be provided, because there is public funding going to them to meet the public, purpose doctrine of the state of Minnesota.
So one twenty five live, obviously, probably some of you are members or have visited is in a city owned building but operated by a five zero one c. The history center, again, not it's not Olmsted County does not own it. It is a five zero one. And so these are things that we provide, resources to and they, serve a function that otherwise the city might be doing. But they're doing that, and carrying a lot of the cost. You could think of this similar to, the civic center. We used to operate the civic center. We've changed our agreement so there is someone else operating the civic center on our
behalf, but we have an agreement for how that will occur. Outside agencies, you can see here, you've seen this slide before and so you may not need to focus too much, but I just want to outline the far left column with numbers in it. This is the what was requested by each entity. So we go through, all of that. The recommendations column that has some green in it is what I'm what I have reflected in the recommended, budget that I'm working on. And the column to the far right is still doesn't match the column to the
far left. But if you wanted to further increase beyond what I'm recommending, I probably wouldn't still recommend that you increase it more than even that. But, you can see that what I'm recommending in the 2026 year is overall about a 5% adjustment. And just like the rest of all of the operating budgets of the city, we don't just go across and give everybody 5%. Like, we look at what the needs are for each operation. What are people proposing? Is that something that rises to the top relative to all the other services we provide? It's quite a process to actually pull together the total budget,
and it is a mini process to pull together this recommendation. So you can see so the first one, one twenty five live, that those recommendations are really directly driven by the way that our contract works with them. And so if you look at the note section, community building fund, we're not recommending that we increase that. It's been fairly successful program. We operate that as a city. It can you hold? Council member Miller Sorry. The question about that. With the success of it, can you talk about how long in each year that that fund is available traditionally? Like, how quickly does it run out a given year as I it's we've actually not
had it run out, but we've only been doing it for last year. So, it's fairly new. This was something that we created. There used to be a different title here in a different purpose. Council used to receive funding from the city, and the diversity council actually used to do some of the, mini grants a little bit different than what what we've been doing. And I just would say there is one slight thing different here on the right hand side of that. If there was a desire to invest more funding here, it is not recommended that it be for the large grants. The things that we've been seeing, it's a little they've been harder to justify,
and so we think there's actually more impact since the one that we think was fairly successful. But, like, as we've seen other things come in, it starts to, feel a little bit less like the purpose of the grant program overall is being met. And then, again, the history center, maybe I don't know if I should share this on this slide or the next slide, but the 2027 recommendation is about a 3% increase. You saw the audit. The amount going to outside agencies over time has typically not significantly changed every year. We did have adjustments during, the pandemic just like the rest of the budget,
but I try not to look at these as entitlements. These are, like, is supposed to be funding that but for being able to provide some some support, we might be absorbing the entire budget of the entity and operating an art center or operating a theater or not having those things happen in our community. So this is really context for you. It did not seem prudent to propose a 25% or a 21% increase. I if I did that across the entire budget, I don't think I would be standing here next year. So you can see here sort of some of the rationale for the recommendations.
We receive, input from each of the organizations, and they provide context for how they would utilize the funding. I will say, sometimes it's like, I need additional support in order to be what I am. And that's sometimes less compelling than, being able to say, for example, with historical funding, they did a very specific request. It's the cost of busing for an entire class of third or sixth graders to come to the history center and to hopefully get more membership and more visits outside of school hours as well. Council member Miller. I have a question about the RDA,
the pilot marketing campaign that's mentioned that could be added. Is there a way that we should that pilot go into effect, could measure the impact? Do we get enough detail from sales tax lodging tax that we could say, here's kind of our stable base, here's what we see from a marketing campaign, and how do we measure the outcome of that investment? Council member council president, council member, I it depends. We wouldn't be operating it, so we would you'd have to structure what your expectations were for that funding. I'm not recommending that you do that within the budget.
I'm certain I definitely wouldn't recommend that this would increase their baseline. So if it's one time funding, I would suggest there are other ways to do that outside of allocating new budget dollars to it. But it really depends on what the marketing campaign is. If it's market it's just, like, wide area marketing, like, people people don't know why they're showing up at your store unless it's, like, attached to something that they bring in. You could get some of the data, but it depends on what the very specific purpose of the marketing is and how it's actually conducted. Like, I guess my question is broader.
If we do anything, I mean, I I've seen certain cities are are studying pre and post sidewalk improvements in a in a commercial district, sales tax data before and after, and attributing change or an outcome to compare to the cost of investment. I I just I guess Some of the challenges we have in Minnesota is that we do not get very deep dive information from sales tax data. I had the pleasure of working in a state where we actually collected all the sales tax ourselves, and we had a lot of great data. But we I've struggled to ever get, like, really any anytime recent.
There's, like, a look back, but it's quite far back when you get actual industry data, and it's pretty high level in Minnesota. Okay. Thank you. That that was really my question, and perhaps there's an opportunity that we can work with the legislature to think about that because it is good data. It's really valuable data to try to understand where where what's shifting in your marketplace. We get again, we get high level data. For example, there's the city that I worked for that really saw great increases in activity in people investing in their homes, and we could see it directly in some of the data that was coming for,
what was happening at, like, the Home Depots and Lowe's of the world. So Council member Palmer. Kind of piggybacking what Mr. Miller's asking. We're doing something similar to that for the historic district, aren't we, at this time? This Are we doing a study to to It's similar but different. So we're doing, maybe Yeah. Could describe the historic district, men's More of a visioning project. Yeah. It's more of a or sorry. Actually, I would refer to community development director. I remember where that's okay. Sure where we ended up with that. That's okay. Yes.
There is a public realm plan that we're kind of identifying in the process of right now of getting some engagement, and that's gonna be more of what does that historic district look like and identify potential projects moving forward. Okay. And I'm gonna ask a follow-up with mister miss Doreen, question here. Do you want us to talk about this today, or are we waiting until September when you bring the budget to us? I'm happy for you to talk about this today. This is what I'm recom this is the specific numbers I'm gonna bring to you and recommend in your budget. Okay. Unless you told me something different. Second third question is community building fund.
To me, that's a confusing thing. It sounds like we're building something instead of events. Why did we come up with that name? Well, I I mean, I'm gonna guess. But the the intent is that the grants that are being provided are building community within, our our community. They're not all events that are funded. Some of them are some of them are events, but some of them, for example, was related to, a recent one was an agricultural, getting more locally sourced agricultural food products to different parks where people could access low,
no cost fresh foods and vegetables. I guess you could consider that an event, but it's to try to make sure that the community has small supports to be able to be more connected. I have a question on that. So so the community building fund thank you, mister Palmer, because I didn't realize that that was how is that different from the our neighbors grants, or are they the same or similar? They're different. So the community building fund, you can find that on our website.
I can send you the link. We also had a report that went to the city council. I don't recall if it was in 2025 or 2024, that showed, some of the results that we've been seeing based on the funding that's been provided. That might actually be on that section of the website. I can send that directly to you. These are go from $500 up to a cap of $5,000 and these are directly requested of the city and then go through a city vetting process to see if they align with the strategic priorities, etcetera, make sure that we think that it will impact the result, and then there's a reporting required for that.
The Our Neighbors grants are very specific, and they work with the neighborhood associations. So the intent of the community building fund is you may not have a re established group that would go forth and already be connected to go and try to get a grant for their neighborhood association. So they're diff they have different purposes. They're administered differently. And Okay. We have, council member Miller, then council member Wahl. And so my question is related, because there are different programs. Because the park board also sets out and granted this is outside of our budget, dollars 100,000 a year for projects,
community projects that could happen in the parks. Is there a way to better integrate at least communication to community members? So say something comes into the community building fund, we don't have funding or we could fund it, but it could also potentially apply to the parks. Is there a way to shift those and say we've evaluated it? Yes. I would say this gets to one of the very large goals that I have as the city administrator, which is try to connect an organization that by charter and well, maybe perception of charter and reality of some parts of charter,
suggests that all of this is separate when in fact anyone going to a park is expecting to have the similar experience, positive experience they have if they go to a library, if they go to a bus stop, if they go anywhere. And so there is a way for us to do that and it is continuing to pull together as an organization and continue our strategy of having more centralized or shared services in out external communication of what is available so that it's not just someone receives a park's press release, a city press release, so that all goes it's challenging because people have been used to doing the separate
way. And it is an adaptive challenge that is has to acknowledge the grief and loss that comes with not being able to put your own press release out. So, yes, there is. And it's part of a much broader, all the way across the organization, goal organizational goal, but, point well taken. Okay. Thank you. Council member Wahl? I support the, elimination of, funds for Southeastern or South Southern Minnesota initiative fund of $15,000 because our few dollars are just a drop in that huge bucket they have. Does that, will that play into any funding decisions that they make for Rochester in terms of
projects? I would suggest that it should not. I did meet with, one of their their newer, I can't remember the title, but, in they're in the space of, you know, donor relations, etcetera. And so I I share that we are looking at this. We'd had some reductions in the past. Past. But, again, I their mission and the mission of each of the programs with either past funding through four or that they are awarded from the state to achieve something doesn't really change. So I would think that with the integrity of how they've operated for the past decades that they would continue to,
look at that. And regardless of the amount of funding a city would provide or not provide, that they would be looking at to try to still achieve their goals and the impact of the funds that they are circulating. Yep. That seems reasonable. I would follow-up I would follow-up on that one. That was mister Penny's, I believe was the executive director, and I believe they were pushing hard for reading programs, and and I believe Rochester received a lot of that reading program. So I like that one. I'm gonna go back to my community, excuse me, community building fund. We had the, gospel music event that we did, which which was turned out to be good.
We just got a report how well it was done. I would like to see us increase that building fund a little bit more, and maybe maybe not do as much with, our neighbors. I I would like to see, clarification on when it comes to our neighbors. It's a 120. That's the entire budget, correct, for our neighbors? It is we are the vast majority of the it's not the entire budget. We're So I guess my We're, like, 95% of the I guess my my question would be how much of that how much in in, neighborhood grants do we do we provide?
And I guess I I I would be open to if it if it means bringing them together. But I I think neighborhood grants, those small 500, a thousand to up to I think they're $5,000. They really do improve the the neighborhoods, bring up the property values to those neighborhoods. So I wouldn't wanna see those go away. So if I could just provide some context about our neighbors. So our neighbors, if you can see on the right hand side of the slide, this would they had some challenges during the pandemic,
and they were not able to successfully close a grant, etcetera. So they had had been carrying a fund balance. That changed, for a variety of different reasons. And so they've been readdressing their strategic priorities and model. We had adjusted downward based on what they had been spending, their budget. This recommendation brings them back to approximately their 2020 funding level by 2027. But it also means they are a separate entity. So they, as their board, once you are providing these funds, needs to be managing the budget in accordance with what their budget is,
especially if the majority of it is city funding. So I would just also say if we were going to provide this type of neighborhood support to the organized neighborhood groups or encourage others to organize, it is highly unlikely you would have a full well, you would definitely not have a full time employee at that rate. Just even their salary would be more than that with benefits. So, I mean, it is a partnership that's been going on for quite some time. It operates very much at, like, an extension of the city of Rochester, but it is a separate board that's looking at how would they allocate.
And so if they're hiring additional staff, then that is a decision that they make that maybe means they can't do the grants. And so even if we provide additional funding, if they're making other choices about how how they need to operate or feel they need to operate in their organization, I mean, they just like every city department, they have to look at what is their priority. And if they don't have enough to do both and hire additional people, then, you know, are you growing beyond what your capacity is, or should you be looking at other funding sources? Those things of that nature.
Thank you. Council member Miller. And just to comment on our neighbors, I I do believe for their grant program, they discontinued it for the current year. So I don't believe there are any grants that are available now. Obviously, their board will continue to look at decisions with their additional funding in future years perhaps. But what what I was gonna ask for is for the community building fund. Is there a way that we could see just a summary report of impact to council member Palmer's point about the gospel music festival, understand how it's being used in the community, what, projects are being funded, which ones maybe aren't being funded,
either because of a I don't know. Just to get a sense of what that is supporting in the community or what people are putting forward, I think it would be really helpful to understand how an increase, could impact those areas. Yes. We can work to bring something forward, and I can send you what we already have available, which is probably not up to date through, like, current day. Council member Palmer. I have a quick question. Our neighbors, art center, civic theater, all are in city owned buildings. Do we give a value to that? Or if let's say the art center closed,
would we open an art center or would we We would have a discussion. Would we sell the building? I mean, what would we That's part of the challenge, right? So there's space that has been able to be, in large part, fundraised. Some other funding sources went to the building to be able to finish it. We now own it, and we have an operating agreement for that to be there. But you would yes. We would have decisions to make about much like another building that I hesitate to mention, the chateau, about making understanding is there a clear vision that you can get four votes on
that doesn't that also your your mayor agrees is, like, the right thing to do in a period of time, and and how much funding are you willing to put to operate it? Because the operations of these far exceeds the dollars that the city is providing, but for the our neighbors and, I mean, community building doesn't really have it's a part of operating cost of other employees that that But at Civic Theatre, we're replacing the roof. They don't pay for any of that. That's our building. We pay for the roof if they do things that are directly related to their operation, like they need to get new curtains or something like that.
They arguably would need to be paying for that if it's related to a theater operation. But some of those things, we also still share some cost because we need the building to be safe. We need the operation of that to be safe. And, we work together, but it is more challenge it's a challenge and an opportunity to have these partnerships in city owned facilities. But, yes, the asset is ours. And if we don't preserve it, whether there's an operator that is operating in the facility or not, you will still own that asset and need to determine what you would do with it. You think there could be complications over there depending on the funding sources that went
to funding it and how, how the state auditor will look at them in relationship to the state bonding that was used to some there was some state bonding, put into that. So there's requirements on how it operates, that I think our obligation goes for twenty five years. So there's some challenges. When you don't pay for things locally, you have strings. Thank you. Council member Dohring. Just a couple of quick questions that hopefully can provide a little clarity. When the Civic Theatre says this additional money would increase support programming and work in
hosting 25 nonprofits and community organizations. What does that actually mean? When we give, an additional $8,500 to the art center, would increase support would increase would support operations and increase programming. What does that actually mean? So what kind of increased programming is the art center going to put forward because of the additional funding? This is so that so there's a voluminous amount of documentation that I felt, like, was too much to provide. No. It's okay. But if this is the very basic summary on one page of if you look
at the art center, I would say that that was more related to their having trouble meeting, like, costs of salaries, etcetera, and continuing to do a lot of their summer programming, summer camps, etcetera. But it isn't necessarily a drastic amount of new programming for that amount, but it helps keep them at a level where if they're bringing in more dollars, they can actually be operating and then looking at what other opportunities they have to to add. Rochester Civic Theatre is unique because this had gone to zero in one year. Yep. And so, they're still not at the amount that they were at before,
but their operating model has completely changed, in their, recovery from the challenges that they had in 2017, 2018. So if you look at this, it's trying to get them to this point over a period of time. They, are also, I believe, looking at potentially increasing a little bit about the cost for for their space, but they wanna keep it still low enough that they can serve as many people as possible. And so this helps them be able to meet budget and growth and and survive and thrive and not peel back the access to other groups because otherwise,
they likely would need to do more of their own ticketed events in order to make up that revenue. So it's sort of trying to be able to support this model and not just the Civic Theatre, but the other users of that space. So if I understand what you're saying correctly, it's not for a abundance of new programming. It is to, compensate staff to maintain current levels of programming more often than not? Current levels of programming and specifically the other groups that are not Rochester Civic Theater
specific productions Yep. Utilizing the space, in a way that doesn't end up making their budget not work because the cost that they're associating with that is maybe not quite cost neutral to to to the actual amount of money that they could make if they were actually putting on a more of their own productions. So it's actually them sort of holding back on what else they might be able to do within Rochester specific theater specific productions, in order to keep making space for those other groups. Does that make sense? Yep. Can I ask one more question real quick since I have the floor?
It looks like we are overfunding one two five live based on their funding request for to 2027. Right? So I look at this chart, and I understand that their request for 2027 funding was a $114,610. We're gonna fund them, according to these numbers, at a $116,902. In 2027. That's Correct. That's an error on here. We just put what their contract said for 2026. So they're a little bit different than the rest of these. Well, they're all different from each other. So that probably should have said a $116,902
on the bar upper left corner. Okay. It's still allowing their contract. I was just gonna ask the justification of overfunding one organization and underfunding another organization, and you just answered that question for me. So I appreciate that. Apologies for that. Yeah. Council member Palmer. Yeah. Real quick. On Civic Theatre, they almost they they should have gone bankrupt. They didn't. But last year, they said that they had three hundred nights that they were using their building. If we gave them more money, then they could support more. And I believe that they wanted to get to 330 nights of using that facility. So that's that's one of the reasons I would I would really,
support that. Council member Paul council member Miller. Just a quick question. RDA asked for double their budget. Is there a proposal behind that as well? I mean, can we I mean, we talk about economic development funding. There was a DMC contracted a property analysis of the downtown in 2019 through Urban three. I'm just trying to get to, like, how do we understand the opportunity for development for other paybacks of this investment versus So there have been a lot of changes at RDA, and they have been adjusting how they're providing their summer events through more contractors and,
professional services and trying to maximize the revenue that they also receive off of those events so they can shift some of their budget to be more focused on marketing, which it hadn't been for quite a period of time. So, I'm just gonna say this, but when we met with, the director, I asked multiple times, is this supposed to be did you just accidentally put a 125,000 in for two years and, like, you put it on the first year? Or and no. But it was we have a new director that's looking, you know, maybe hasn't gone through this process before and was like,
oh, go big. And that's not really what outside agencies is for. I can totally appreciate that. But in reviewing it, it appears that it's sort of trying to do both then, add more to marketing and, like, restore to some degree some of what you're spending on your events. But that's a huge increase and a shift in an organization that maybe needs to also think about what other dollars are they bringing into the organization. So it was to add staffing was a big part of it. And then the other component was I think about $50,000 for this idea for marketing.
But again, they've been shifting their budget for marketing. I think some of that is a concern with what amount of construction is gonna happen. But typically, once we add, we don't ever take away. And so it's difficult for me to think about putting that in the budget. And then, again, this is a nonprofit organization that has decisions to make as they work through the budget year. I don't think there's a really great way of guaranteeing that four years from now, it's still getting used specifically for marketing. Sure. And that makes sense. I I guess the the biggest question I know we talked about this with sales tax. It's just hard to say,
is this a good investment? Is this not a good investment? What is the potential return? And we don't seem to have a great way to measure that. Well and, of course, each of these organizations is doing something really different and has a really different community value and, you know, value to the fabric of how how work and relationships help us move forward in a way where the city doesn't have to do all of it, which sometimes we're not the best people to do it. Sometimes we're the best people to support it in some way or influence it in some way. And so I'll give the example of one twenty five live. If you look at their overall budget,
which I don't have in front of me because my computer's up there, but it's not small, you might be having that entire budget be part of, what the city does if you wanted to continue to operate, a one twenty five, like, service for the community. And perhaps if the city operated it, people would say, and you shouldn't be charging me for it at the door. It shouldn't be a membership. Right? So, like, maybe the budget is double. So, I would say for all of these for all of these looking at it as what is the impact we're trying to have, say, with the community building fund, it's slightly different than the our neighbors local grants,
but similar concept. You can have a small amount of dollars, have a really big impact, and maybe it just plants the seed, and then the rest of those ideas go forward without additional city funding. History center, I don't know if you would operate a history center. I've never operated a history center, but I guess there's a first time for everything. Their budget is much larger than $47,500, to operate and maintain the facility. The Rochester Area Economic Development, Inc, I mean, there are plenty of cities that operate their own, economic development funds and do marketing, etcetera. But,
you know, we have an established partnership. A lot of, folks there, they have a much larger budget than this, in total. And so, you know, the list goes on. I was I have a question. All day. I do have a question on on the REDI. So could we see how much I know Reddy, it's Rochester area, so it it goes, broader than the city of Rochester city limits. Other municipalities, the county, how much do they put into REDI? Is it is it per capita similar to what we put into it?
I can ask for those detailed questions. They don't provide that amount of detail in their financial reports. But I know that so if it's listed on their website as a ready investor, they're providing something, but it's probably at scale. So we're the largest city in Olmstead County and the third largest in the state. So other cities are probably putting in vastly less than that as a as an investor. Yep. No. I do expect that. Council member Wahl? Compounding, council member Miller's, investment and what we get back, of course, it's not always, in in the way of money. Mhmm. You know,
it's quality of life, art center, music, but particularly, like, the RDA, that Thursday is downtown. I mean, if I were a visitor and was healthy enough to be outside and enjoying Thursday and saw this thing happen, I think I think Rochester's a really great place to be. Maybe we'll move here. I actually heard that from one person, and they did move. Right? Yeah. That's that's the hard part of it. It's honestly the hard part about the whole budget. Part of why I love it is that it's also painful. I suffer for the budget, which me, you know which I do love the budget,
but, I have a passion for it. And the Latin, you know, etymology of passion is to suffer. So but it it's it really kinda tells the story of, like, how complicated it is to provide all of these different services at a level that people expect on the day, the one day a year, or the ten days a year that they either have to use it or get to use it. So it's challenging to pull it all together because on that day that somebody needs it or wants it, they want it to be perfect. And that's, like, multiple different iterations of 125,000 people plus 3,000,000
visitors every single day getting it right. And the fact that we don't actually have that many complaints, like, we're getting it right, like, 99% of the time. Other questions? Outside agencies? Thank you. Thank you. I think look. There. We're at policy considerations again. So just something to think about. I know it maybe feels like you're getting sort of the slow drip of a budget, but it really takes a lot of time and effort to pull together all of the details that roll up, to the entire proposal. And because it becomes focused on so much, I would not wanna put an anticipated,
like, how much the levy might change year over year together until, like, we've come through it 10 more times to make sure that we're confident that if we brought this forward, that it would, you know, we wouldn't be coming back and asking for more afterward. So with that, we do have another item. It's your favorite study session schedule. So forthcoming, we have, oh, we started with today. The update, on the disposition of city real estate. So reminder, July is normal, and then things start getting weird in August. But we did make some changes, to the twenty eighth study session.
We think that we can fit that in a typical time frame, but that's four very different topics. So you might wanna plan to be here a little bit later, than you typically would. I don't think you need to be here till nine, but, like, seven maybe. We'll see. We want you to be able to have robust discussion as some of these things came up today. And then, we will be moving forward. The city clerk's office will send you updated calendar invites for, the changes that you made at your last meeting for the August, regular meetings and study session, meetings. And then we have another question slide just in case you didn't ask all your
questions. Any final questions? Council member, Miller. I guess, just still thinking about the outside agencies as we kind of, like, create benchmarks for our community and what they do. Obviously, the community is still growing, and I wonder where we might think about per capita investment on some of the ones that make sense that can should scale up as our community grows, particularly community building fund, maybe our neighbors. How do we grow those services to accommodate so that it's not just the established ones that are getting funding at some period of time, thinking of our neighbors, which hasn't really expanded beyond the city core that much. How do we support that service to,
you know, neighborhoods that are newer? And then I think the secondary question would be it's important to, like, take it all in context. Right? And maybe these break out differently. They've Mhmm. Adjusted and broken out differently in different parts of the budget as time has moved on. But it's helpful for me to look at them all in one place because they are similar. And I think the question also then becomes should we still be doing it in that model? Or should it be a different model? Should there maybe be our neighbors? Should it be a city department? I mean, there maybe should be something where it's, you know, you're pulling together a coordination where somebody's coordinating and they're pulling in parks or they're
pulling in public works or those kinds of things. And, that's a harder political conversation to have, typically for elected officials, and we'll leave it at that. Yep. Yeah. I totally appreciate that. Just wanna make sure that we scale the services, appropriately as our community grows and changes. Alright. Well, thank you. And, everybody have a wonderful week off next week, and we are adjourned. Recording stop.