City of Edmond, Budget & Financial Plan, FY 19-20

CITY OF ED MOND, OK L AHOMA BUDGET AND FINANCIAL PLAN FISCAL YEAR 2 0 1 9 – 2 0

19-20 Budget Message Honorable Mayor O’Neil and members of the City Council The proposed City of Edmond annual budget for fiscal year 2019-2020 and the Five-Year Financial Plan is presented for your consideration. The upcoming fiscal year starts on July 1 of this year and goes through June 30 of 2020, and the Plan includes the budget years 19-20 through 23-24.

As always, a major thank you goes to Finance Director Warren Porter and Assistant Director William Weaver for their extensive efforts and expertise in directing our organization in this labor-intensive process. We also want to recognize the efforts of our people from our various departments who have also been in preparing the budget.

We consistently continue to make progress in developing our organizational culture to reflect our longstanding internal mission of, Trustworthy Service through Continuous Improvement, which is defined by our eight core values of Customer Service, Integrity, Teamwork, Accountability, Professionalism, Communication, Innovation and Inclusion.

THE BIG PICTURE Total estimated costs for 2019-2020 are $339,438,769 (page 1). This amount is a 22 % increase from the current year, mainly resulting from more capital expenditures.

Our community continues to benefit from a consistently healthy economy. We are 10.29 % above last year in combined sales and use tax collections through the first eleven months of the fiscal year. This includes a 4.86% increase in sales tax collections, well above our conservative 2% budget growth projection. The combined total also includes a 38% increase in use tax revenues, although with very limited historical data (less than 2 years since the State agreement with Amazon) it will remain difficult to project this revenue source in the near future. It is important to remember that the only reason this revenue is categorized as use and not sales tax is that these companies do not have a physical presence (nexus) in Oklahoma.

Edmond’s total sales tax rate of 8.25% remains the lowest in the metro area. This percentage is broken down into a local tax mix of 3.75% plus the state tax of 4.5% paid by all cities. During this budget year Edmond has moved from third to first in our seven-city comparison group (Yukon, OKC, Moore, Midwest City, Norman and Tulsa) in sales tax growth for the year.

The police, fire and capital projects special purpose sales taxes approved by voters in 2000 remain essential sources of revenue. These taxes include an eight-cent for Police, a quarter-cent for Fire, and three-quarters of a cent for Capital Improvements. Please also remember that, in addition to these special sales taxes, the police and fire budgets receive two-thirds of General Fund revenue automatically.

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A great barometer of the City’s financial health can be found in the easy-to-understand and concise “Performeter” financial statement analysis that has been developed for many years by Crawford & Associates. This document notes …”Edmond’s financial health remains well above satisfactory”, and our overall reading improved slightly from 7.6 to 7.7 out of a possible 10. The Performeter is available for public review on the City’s web site (www.edmondok.com).

The price of oil always has a major impact on our local and state economy. Bob Masterson, our Fleet/Vehicle Maintenance/Solid Waste Supt., has estimated slight increases for both our fuels, including projected increases of 13-18 cents per gallon for unleaded and 30-35 cents per gallon for diesel. However, in such a rapidly-changing environment it is always difficult to prepare estimates.

CITY COUNCIL STRATEGIC PLAN Your formal plan is reviewed twice each year and updated annually.

GENERAL FUND REVENUES Sales and use tax collections are the lifeblood of this fund, even more so in Edmond since we have NO property tax (ad valorem). While no property tax is available for operations by state law, many cities of our size or larger levy a small property tax that can be used to fund capital projects. Oklahoma remains the only state in the US that funds cities in this manner.

As discussed in the January budget workshop, we are proposing conservative 2% annual increase for sales tax and 5% increase is use tax in the next budget year and all four outer years as well. Edmond’s history of increased sales tax revenue over the years identifies 2% growth as a comparatively nominal amount.

With this proposed increase the revenue per penny of sales tax collected in next year’s budget is estimated to be approximately $17.8M. Several years ago you adopted a formal policy for the General Fund that identifies a “preferred minimum” of 10% in unreserved funds (Reserve for Emergencies and Shortfalls). At the end of the current budget this percentage is estimated to be 7.58%, and the projection is 7.72% for next year’s budget (page 1). Please keep in mind however, that we always budget maximum expenditures (assumes all budgeted $$ will be spent) and lower-than-expected (conservative) revenues, so the identified cash balance identified should be artificially low.

A very nominal increase of less than one percent (.07) is projected for General Fund revenue next year over the current budget (page 9).

The Reserve for Council Special Projects will maintain a $100,000 balance in next year’s budget.

Investment income increased during the current year, and next year’s projection estimates a similar amount ($106,250).

The automatic two-thirds revenue transfers to fire and police operations are estimated for the 19-20 budget to be $17,888,768 to Fire and $21,943,555 to Police.

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GENERAL FUND: ASSISTANCE FOR OUTSIDE AGENCIES

Social Agencies and Community Enrichment These two categories include nineteen agencies for the coming budget year, an increase of one (Turning Point Ministries) from this year’s total (pages 22-23).

3.19% of current sales tax collections in the current budget year is the combined cap for both categories.

The Community Agency Review Commission (CARC) includes 6 citizens who spend a lot of time working with Todd Hildabrand from our office in reviewing all the applications and then determining appropriate funding recommendations. The complete list of funding recommendations from the CARC is included in next year’s proposed budget.

Guthrie/Edmond Regional Airport This partnership between the two communities is now in its fifteenth year, and the airport operation is funded through an equal sharing of both operating and capital expenses. For Edmond’s budget it has always been difficult to identify a realistic amount at the time of our process, since Guthrie’s fiscal year begins in October instead of July. Given this reality we have again included a $200,000 placeholder amount in all five years of the Plan.

Edmond Economic Development Fund This fund was established to provide economic development financial enhancements to both help grow existing businesses and also attract appropriate new businesses (page 43). All five years of the Plan include the continuation of annual $100,000 allocations from the Electric Fund.

Before the end of the current fiscal year staff will be proposing an agreement for a commercial development project that is projecting $30M in retail sales for the first 6 years of operation through the development of historic creamery building west of Festival Market for restaurant/entertainment activities (Rail Spur Project). Most of these funds will be used for the development of a public parking lot and alley improvements to compliment the development of not only this project, but also other new developments west of the railroad tracks as downtown Edmond expands in that direction.

PUBLIC SAFETY LIMITED TAX FUNDS When sales tax collections exceed budget projections both the Fire and Police Departments will realize additional revenue, and such a situation has occurred in most years since the Public Safety Sales taxes were approved by voters in 2000. Although the amount of this additional revenue is not be known until after September in the next fiscal year, for comparison purposes this year the Fire Department received $767,559 and the Police Department received $941,536.

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Fire Department The Fire Department budget reflects healthy balances for all five years of the Plan (pages 54-55).

In March, 12 recruit firefighters were hired to begin their training process in our internal Fire Academy.

This class includes three additional firefighter positions, the first new positions added in 14 years. The Academy training is a 22-week course, and the new firefighters will graduate in August.

The construction of new and relocated Fire Station # 2 to a location near the NW corner of 15th & Kelly is on schedule for a grand opening in August of this year. This station was relocated to help improve response times, and it will be the second one on the west side of the railroad tracks.

In the 19-20 budget the Department will receive a new 100ft. Aerial Platform and two new Engines, all of which will replace aging equipment. Several new software platforms have also been purchased to increase various efficiencies.

Police Department This budget has projected negative balances in the outer years of the Plan for the past several years, because of the increased cost of Personal Services (salaries and benefits). This situation is continuing in the proposed five-year Plan, again involving the outer three years. However, it is very important to remember that we have never proposed and will never propose a negative balance in ANY department for the annual budget. This situation with the outer years in recent budgets is a good example of one of the basic advantages of a true multi-year financial plan, as it allows us to identify and proactively address such issues.

Our internal Police Academy graduated 14 cadets in February, and these people are expected to complete their field training in May. It has been a real challenge to reach full authorized staffing over the past several years, but that goal has now been achieved. This is a positive anomaly for Edmond, as many police departments in the metro area and nationally continually struggle to attract and retain people.

Bids for the planned expansion of the Animal Services Shelter facility were opened in April, and staff is currently evaluating the information to prepare a formal recommendation.

ADMINISTRATIVE SUPPORT SERVICES FUND The operations of fifteen internal departments are paid for through this fund, as these provide support to the departments that directly services to our citizens (pages 125-126). “Cost allocations� or internally budgeted charges to these departments provide the funding. The determination of these cost allocations is a very interactive process between our outside consultant and the various departments.

Warren has also made an improvement to this process, which has initially resulted in budget authority increasing about 4.1%. The new process is based on the actual costs incurred in the current budget instead of future budgets as had been done in previous years. This has resulted in a more straightforward and easier to understand process for all of our people, and it is also less cumbersome. iv

Edmond Public Works Authority

Electric Fund Edmond Electric has been our City-owned and operated electric utility for over a hundred years, and it continues to provide competitive rates and outstanding service to Edmond residents (pages 91-92). The electric utility has provided significant support of general governmental operations for many years, and this has been a key factor in being able to keep taxes at lower levels than would otherwise occurred. In next year’s budget the total EE support to the General Fund will be $7,478,564, which includes $3,592,142 in ROW use fees and $3,888,421 as a direct transfer.

This fund also provides the main financial support for the Edmond Economic Development Authority, which in the 19-20 budget will be $618,178 (3% increase).

In February 2018 the City Council approved a contract with Red Clay Consulting to provide assistance in developing and issuing a request for proposals (RFP) for the implementation of Advance Metering Initiative (Smart Meter) system. Proposals were issued in October of last year. After reviewing the proposals, staff, in conjunction with Red Clay is developing scopes of work with two vendors to provide the Advanced Metering infrastructure. In addition, scopes of work for software interfaces to other City systems will be developed. It is anticipated this package will be brought to the City Council in July of this year for formal consideration.

Water Fund This fund provides for the operation of the City’s drinking water system, which includes over 500 miles of distribution lines, the Arcadia Lake Treatment Plant, and 52 water wells (pages 93-94). Next year’s budget will include the second of five years of phased-in increases of 4-8% annually. These increases include both base and volumetric charges.

An additional $350M (est.) in water and wastewater improvements will be accomplished over the next decade. These projects will address several critical needs, including the accommodation of future growth through additional treatment capacity at the Water Plant, the drilling of additional water wells, the upsizing of current distribution lines, and adding storage capacity for the system.

Rate increases will service this debt over a 30-yr. period, and the longer period will ensure that our future customers are also involved in paying for these long-term improvements. It is important to remember that other city utilities in our metro area and around the state are addressing similar issues, as these major utility upgrades are not unique to Edmond.

In the 19-20 budget we will begin to drill additional wells and begin several other projects necessary for the supply and delivery of potable water for our community. These projects will continue to help us accomplish the improvements identified in the 2013 Water and Wastewater Master Plan, while taking a more phased-in and long-term approach to the implementation of a new Water Treatment Plant. The initial bids for the new plant were rejected this spring because the cost was unaffordable within our current debt load. v

Some examples of these additional projects include the Danforth water line from the Blake Service Soccer Fields to UCO, which should be under construction in early 2020. The construction of the Danforth Water Tower at Danforth & Thomas is on schedule and will be online either late in 2019 or early in 2020.

This tower will be another key component of our comprehensive improvements and will also be a landmark for the area. We will also begin working towards the noted phased approach to constructing the new plant and intake structure at Arcadia Lake, to ensure these improvements are ready when the bulk of the plant construction begins in the next 4-5 years.

The water well rehabilitation program will continue at a minimum of five wells per year. We currently have 52 operable wells.

Our community will continue to be a participant in the Oklahoma City mandatory watering program initiated a few years ago. As part of our water purchase agreement with OKC, we are working toward adopting a formal Water Conservation Plan between the State, OKC, and the Tribes. An Outreach program with Oklahoma State University has also been initiated by our people and we will continue the efforts to host classes, conduct irrigation audits, and perform additional public education to make our residents continually aware of the need to conserve our water supply.

Next year’s budget will again an allocation $1,260,641 in ROW use fees to support general City services.

Wastewater Fund This fund provides for over 400 miles of collection lines, 9 lift stations, the operation of the Coffee Creek Water Resource Recovery Facility (WRRF), and other facilities included in our wastewater collection and treatment system (pages 97-98). As discussed in the Water Fund section above, the wastewater utility is also included in the phased-in rate increase program, with annual increases over the next five years of 411%.

In June of 2016 a $43.5M bond was issued to finance the first round of projects that included the Spring Creek lift station replacements, the Spring Creek force main, the Water Resources Admin/Lab facility, the LS-2 project replaces the 33rd and 40th St. lift stations, and an interceptor sewer project near 2nd and Santa Fe. The Administration facility and the Spring Creek lift stations are substantially complete, and all the other projects are under construction. It is anticipated that all projects associated with the 2016 bond issue will be completed by early 2020.

The largest project is the Coffee Creek Water Resource Recovery Facility (WRRF), and it required a $171M bond issue. This facility will increase plant capacity from to 9 to 12 million gallons per day (MGD) and will meet the nutrient removal requirements mandated by the State. The WRRF is about 40% complete and should be completed in early 2021.

This fund also supports general City services through an allocation of $799,217 in ROW use fees.

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Solid Waste Fund Over 31,100 residential customers and over 2,100 commercial customers receive collection and disposal services through this fund (pages 95-96). This enterprise fund is supported solely by user fees, and 10,000-14,000 residential carts are serviced each day.

The enhanced residential recycling program has now been in operation for six years, and it features single-stream recycling, full-size carts with lids and rollers, the acceptance of cardboard, and curbside pickup for every other week.

An operating transfer from this fund is again included to support general City services, and in the 19-20 budget this amount will be $369,069.

Drainage Fund This fund continues to operate with insufficient revenue, as the only source of funding remains a $3 monthly residential fee (pages 101-102). As a result projects are accomplished as sufficient funding is “pooled� for two or more years.

Both the Crossbow and Morningstar storm sewer projects are scheduled to be accomplished in the Faircloud subdivision in the 19-20 budget. Additional projects identified for next year include the rehabilitation of both the Willowood and 33rd St. channels, and the modification of the detention ponds in the Meadow Lake and Swan Lake subdivisions to improve functionality and make them easier to maintain.

The general maintenance of City-owned detention areas is now being accomplished, starting in the current budget year, by the Community Image/Forestry Dept. as part of our Green Infrastructures Initiatives. The visual appearance of these areas will be improved by these efforts, especially those that are adjacent to City streets. The limited revenue available in this fund has resulted in this maintenance expense being moved to the General Fund.

Arcadia Fund Recreational opportunities at Arcade Lake are provided for through this fund (pages 99-100), and the charges for services now produce over $1M per year in revenue. For several years this revenue was sufficient to cover operating expenses, but unfortunately in the next budget year we will need to once again make transfers from the Park Tax to subsidize this operation. Weather is always a major positive or negative factor in providing sufficient revenue from lake activities to cover operating costs. Because of this instability we are including a transfer from the Park Tax ($130,000) in all five years of the Plan to ensure a balanced budget for this fund. We will also be considering the feasibility of increasing our charges as they relate to other similar facilities in the region. Our staff continues to work with a variety of people to bring new activities to Arcadia Lake and grow attendance. If we receive substantial additional revenue from increased usage of the Lake, the subsidizing transfer needed to balance the budget will be reduced accordingly.

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Carl Reherman Park, the first new park opened since the lake was created, is now in its second full year of operation. This day-use park features great views of the lake and picnic sites for families to come out and enjoy the outdoors. Our people are also working with state wildlife officials to obtain matching grant funds for a boat ramp and fishing dock. This additional dock will be helpful in reducing heavy weekend and holiday boat traffic in our other parks.

Two significant trail enhancements are scheduled to open this spring. The Spring Creek Trail from I-35 to Spring Creek Park is being extended to the gate entrance to the park and will provide a parking area for trail users to enjoy the trail without having to enter the park. Also, another trail head for this trail is being constructed in the Integris Medical Office Building parking lot. Integris Hospital has been gracious to share this access point and parking with the public so that another access point is available to what we hope will be a growing trail network.

Golf Course Fund For several years the Kickingbird Golf Course has been operated as an enterprise fund, in the sense that revenues cover operating expenses while capital improvement needs have sometimes been subsidized by the Park Tax Fund. In the same manner as Arcadia Lake, weather always plays a critical role in course revenue, and for the past couple of years the weather has generally not been favorable for these activities during several months of the year. As a result it has become necessary to transfer Park Tax funds in the current year to subsidize the course operation. In the current budget this transfer will be $165,000 and for the 19-20 budget this amount will be $100,000. However, if the weather improves and the rounds of play increases, these amounts will be reduced accordingly.

As noted last year Edmond is certainly impacted by a golf industry that is experiencing significant decline around the country, and keeping a consistent level of rounds played is a challenge. The amount of time needed to play seems to be a growing concern nation-wide, and so the industry is encouraging players to consider playing nine holes or less.

A series of necessary capital projects are planned for the course that will help Kickingbird stay competitive and improve this significant public asset. Park Tax funding is identified in year two of the Plan for a much-need replacement of our maintenance facility. Assistance from the 2000 CIP Fund has been identified to provide water system improvements in the fourth year of the Plan. A new Clubhouse also remains a critical priority, and funding has been identified from the 2017 CIP Fund, with design budgeted in the third year of the Plan and construction scheduled for the fourth year.

It must be emphasized that replacing our very-aged clubhouse is critical for being able to remain competitive in the metro market. Our people are also working on improved golf training facilities as another means to attract players, using some of the land currently occupied by the Kickingbird Tennis Center.

Even with the identified challenges our people will continue to run the course in a professional businesslike manner. One annual expense that will be eliminated in 2024 is the $76,000 bond payment on course improvements that were accomplished many years ago.

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Park Tax Fund This fund is financed by the 1/8 cents sales tax for parks, and it has mainly been used for major capital improvements at the golf and the lake (pages 81-82).

This fund helps with smaller improvements throughout the Park system. Between $1-1.5M is available annually for capital improvements or major maintenance activities. The remaining $800,000 of this revenue goes for ongoing staffing and operating expenses in parks around Edmond. The reality of this budget is that most of the major projects are now financed from CIP funding, supported with resources from this tax. As an example major park projects are included in the CIP Fund section later in the narrative. These funds will also be leveraged as available for park or trail development.

Various consulting services are being utilized to prepare projects so they can then be accomplished through the CIP funds. These include renovations to Stephenson Park and trail extensions for better access to Spring Creek Trail and Creek Bend Trail (which runs along Spring Creek and connects with the existing Spring Creek trail and extends to Coltrane).

The current budget includes playground equipment replacement in the Tot Lot (for smaller children) in Hafer Park and a large playground replacement in Mitch Park is allocated in the next budget year.

Carl Reherman Park has been another focus of this tax over the past few years, and funds are identified for matching grant support of the fishing dock and other park improvements.

As previously noted in the Arcadia and Golf Course sections, subsidy funding is being allocated from this tax to support these other activities as they make adjustments in their operations to substantially reduce or eliminate the need for this support.

This tax will help support major CIP projects in the coming years such as the Stephenson Park renovation, furniture and fixtures for the Tennis Center, support for additional trail development and future developments at Edmond 66 Park on the east side of the community.

Staff will continue to work with the Park Board in exploring opportunities identified in the Park Master Plan as the driver of future major capital projects.

Ambulatory Services Fund EMSA (Emergency Medical Services Authority) has operated the regional ambulance service in our community for many years (pages 67-68), and this service has been nationally recognized for outstanding clinical care.

A monthly $3 charge on all residential utility bills has been the source of Edmond’s subsidy to EMSA, reflecting a common practice for most member cities to reduce pressure on the General Fund. This charge covers out-of-pocket expenses for the EMSACare ambulance program, and local residents are automatically enrolled but can opt-out annually during the month of October. A decision to opt-out carries substantial risk however, as such residents are then responsible for these significant expenses, and the cost of an ambulance run is now in the range of $1,500-$2,000.

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We are very pleased that this $3 charge has not been increased since it was started 10 years ago. We are projecting to continue keeping this charge the same through the first two years of the Plan. As we get closer to the third year we’ll be able to better determine an appropriate increase.

Appendix A identifies the request from EMSA for the 19-20 budget and the amount of $646,502 a 3% increase from the current year.

CAPITAL IMPROVEMENT FUNDS

CIP—General Fund Included in the General Government budget in the General Fund, this fund provides limited capital funding for specific, smaller needs (pages 69-70). A $200,000 allocation is again included in all five years of the Plan for ADA (Americans with Disabilities Act) improvements to continue our efforts in our 20Year ADA Transition Plan.

Repairs of City-owned buildings are also accomplished through this fund as appropriate, and next year’s budget includes about $1M as the City’s share of a joint project with the Metropolitan Library System for replacement of the heating and air conditioning system and other renovations at the Edmond Library. The regional library system is supporting the project with up to $650,000.

2000 Capital Improvements Fund This fund has provided the primary financing for capital improvements in Edmond for many years, through a 3/4 cent tax initially approved by the voters in 1996 and indefinitely extended in 2000 (pages 83-84). Over $110M in bonds have been issued through this fund over the past 19 years, with the total value of projects constructed being around $200M. This fund financed the public infrastructure that supported the development of the new ShowBiz movie/entertainment center at I-35 & Covell. This opening occurred last December and followed a successful year of operation of the new Hotel/Conference Center. The HCC was supported by infrastructure improvements in the area financed by this fund, and also specific support of the Conference Center development. Other commercial development has now been opened just south of these developments at the I-35 interchange, creating commercial opportunities for travelers along I-35 to purchase goods and services.

Another element of our economic investment in the I-35 & Covell interchange is the planned development of an Indoor Sports Complex on the northeast corner, as the City purchased land for the development and is leasing the property to a potential development group. This group is actively pursuing financing for a $24M indoor complex which would include basketball/volleyball courts and sports turf for soccer and football activities.

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Though it has taken much longer than any of the parties anticipated for the project to come together, the lease holder is current with their contract with the City and have recently restructured their ownership to put them in a better position to move forward with the project. We remain confident that the market exists in our area for this type of facility, and that it will complement the hotel/conference center and the movie/entertainment complex by providing outstanding support services for visitors coming to Edmond to use the Sports Complex.

We are seeing significant private interest in investing in new development in downtown Edmond. The two CIP funds have made and will continue to make significant investments as the City’s share of these public/private partnerships. Some examples include the completion of the downtown stormwater and Streetscape project which significantly improved our system to mitigate urban flooding, and also added 55 parking spaces in the northern end of downtown. The formal commitment to proceed with the Quiet Zone project along the railroad will create opportunities for multi-family and town home living in the core of the city. These investments and others noted in the 2017 CIP Fund have already resulted in multiple new restaurants under construction. Other downtown improvements include additional Streetscape parking around Stephenson Park and implementation of improvements in the Park to make it more of an urban area for the additional residents moving downtown.

Traffic movement and maintaining quality roads is still the major funding activity of the 2000 CIP. Last year’s budget resulted in an increase of the very popular Street Overlay and Reconstruction Program, with a planned allocation of $3.34M in next year’s budget. The outer four years of the Plan also include similar allocations adjusted for inflation. This funding was increased last year to begin addressing the repair/replacement of concrete streets and alleys in the community.

Even though wet weather has significantly delayed the Thomas realignment project, it will be completed very soon and will provide significant traffic flow improvement for the adjacent high school and elementary school. Because students will no longer have to cross a busy street from the parking lot it will drastically improve pedestrian safety. It will also provide a wide sidewalk for pedestrians and cyclists coming through this area.

Phase II of the Intelligent Traffic System (ITS) is now under construction and will provide new coordinated signals along these roadway corridors: Broadway (9th to Comfort Drive), Danforth (Blvd. to Sherry Lane), Santa Fe (Covell to Danforth) and Covell (Broadway to Marilyn Williams Drive). We are realizing the traffic flow improvements from Phase I along the 2nd St./Edmond Road corridor, and this will expand the improvements to other high-volume traffic streets. Phase III funding has been tentatively approved by ODOT which will address most of the remaining high traffic streets.

The improvement of Covell from Fairfax to Griffin is the next major street improvement, continuing improvements from Fairfax back to the I-35 interchange on Covell. Once this next phase is accomplished turn lanes and traffic signals on Covell at Coltrane will be constructed and the 4-way stop impediment will be removed.

Future street projects in the five-year Plan include intersection improvements at Danforth & Kelly, one of the top 3 “hot spots” identified in last fall’s Citizen Survey and a high accident intersection.

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Signal and ramp improvements at I-35 & Covell will also be accomplished to improve traffic flow during peak usage.

Another major trail project is moving forward with the support of two ODOT grants for building another section of the trail around Arcadia Lake, with 2.5 miles of 18’wide paved trail surface from Midwest Blvd. to Post Road along Route 66 adjacent to the lake. This project is moving quicker than anticipated, but connections will be provided to Central State Park, Edmond Park and the Park offices and overlook at the Lake. It will continue to Post and end near the entrance of 66 Park.

All three phases of improvements at the Museum have now been completed with the installation of a new HVAC system that is much more energy efficient. Phase I improvements involved moisture sealing the building and roof reconstruction/repair. The second phase included energy efficient lighting upgrades and electric system improvements.

Future budgets identify the expansion of facilities at Cross Timbers and golf course improvements.

To fund all these activities it is our recommendation to borrow funds. This debt would recognize that within the five-year Plan we are beginning to retire some of the past bond issues, with all current debt paid out by 2027. The proposed funding identifies up to $21.5M being issued over a two-year period, with this amount possibly coming from internal borrowings from other city funds to avoid the issuance cost associated with traditional bond issues. We also intend to continue to explore the concept of borrowing from the Hospital Trust. All of these considerations will of course be taken to the Finance Committee for their review and recommendation.

2012 Public Safety Center—Capital Improvements Fund This temporary fund was established to account for revenues and expenditures associated with the Public Safety Center (pages 85-86), and it was closed in the 17-18 budget. The remaining fund balance was split between the 2000 CIP and the 2017 CIP Fund.

2017 Capital Improvements Fund In 2016 voters approved a repurposing of the 2012 Public Safety Center sales tax for a ten-year period for capital projects that started in April of 2017. A Citizens Task Force identified many projects for consideration using these funds. The CIP Advisory Board was then expanded to include members of this task force, and this Board now reviews and makes recommendations for projects from both of these capital improvement funds. This fund is designed to address the project recommendations that came out of the task force discussions.

Current projects include the relocation of Fire Station # 2 from the current location on Broadway to near the northeast corner of Kelly & 15th on the west side of the railroad tracks to improve response times.

Completion is scheduled for late summer of this year.

The other major project under construction is the joint construction of a new Tennis Center with the Edmond Public Schools near the northwest corner of the same Kelly & 15th intersection.

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This complex will be one of the largest facilities in the region, with 6 indoor courts and 24 outdoor courts, with completion planned for the summer of 2020.

Two trail access improvement projects will be completed this spring. A new parking area and trail extension to the parking lot at Spring Creek Park will be accomplished on the Spring Creek Trail, and a trail head access point in cooperation with Integris Health is being constructed at their complex adjacent to I-35.

The expansion of the Animal Services Shelter facility at Cross Timbers is a $4M project that will have a contract before the end of the current fiscal year. This expansion will double the animal capacity and modernize workflow processes.

As noted in the 2000 CIP we are focusing a lot of attention on downtown redevelopment. One part of the City’s infrastructure improvement involves the lighting, and concept lighting has been developed for Broadway, Festival Marketplace and the railroad underpass. With a section of ITS now being added to downtown, the lighting and ITS work will now be combined into a single construction activity.

The Task Force also emphasized the need to take care of current Park assets, which will involve renovating many of the existing ball fields and sports complexes. The initial site for such improvements will be the Service-Blake Soccer Complex, which is currently in design planning.

The only project added to the project list that was not initially identified by the Task Force is the expansion of Gracelawn Cemetery, and this project was accelerated because we are running out of burial spaces.

Additional projects identified in the outer years of the Plan include intersection improvements at both 2nd & Bryant and 2nd & Boulevard, the two top “hot spots” identified in last fall’s Citizen Survey. A new Kickingbird Golf Course Clubhouse, a new Police Arcadia Lake Station and remodeling work at our older fire stations are also anticipated in the second five years of funding for this 10-yr. tax.

The CIP Advisory Board remains focused on the projects identified by the Task Force, along with the desire for future improvements to be responsive to citizen traffic priorities and projects that compliment other land development activities so that public infrastructure is in place in these areas. The Board also recognizes that priorities might need to be adjusted occasionally to take advantage of new opportunities as they arise.

CITYLINK Public Transportation Fund CITYLINK is our community’s public transportation service, which will celebrate its 10-year anniversary in the 19-20 budget. The service features four local routes, an express route to and from OKC, and an ondemand paratransit service available within three-quarters of a mile from the fixed routes within the city limits. Ridership has declined in recent years, both in our service and in systems throughout the area, although over 215,000 people used CITYLINK in 2018.

In 2018 100 ADA-compliant bus stops were installed throughout the community. In the current budget Tyler Outdoor Advertising was contracted to provide bus benches or shelters at the majority of these stops, providing a much-needed amenity to the users and also some revenue to the system. xiii

The outsourcing of fleet maintenance for our 13 vehicles to McDonald Transit in 2017 continues to be a significant improvement. As part of this arrangement the City is providing building space for McDonald in the repurposed PD vehicle storage facility on 3rd Street. This outsourcing has also reduced fuel consumption and “deadhead’ miles for the CITYLINK system. Our people also continue to work on implementing a more realistic depreciation schedule (more frequent replacement) for all CITYLINK vehicles.

Next year’s budget will include an expansion of service hours on local routes 1-3 to allow passengers coming back from Oklahoma City to have a connection when the last express bus arrives at Festival Marketplace.

Next year’s total CITYLINK budget is projected at $1,679,377 (2% increase), which includes a $700,000 allocation from the General Fund (7% increase). Please remember that the City’s total funding has been reduced significantly over the past few years, due in large part to a phased-in, five-year increase in grant funding through the Central Oklahoma Transportation and Parking Authority (COTPA). The 19-20 budget will be the final year for an increase.

Concerning regional transit, a trust agreement/indenture was formally approved in January of this year creating a Regional Transit Authority (RTA), with the goal of providing fixed guideway transit that will serve the communities of Edmond, Oklahoma City, Norman, Midwest City, Del City and Moore. All six cities involved in the Regional Task Force approved the agreement and directors have been selected to serve on the RTA.

Art in Public Places Fund The financing of public art in our community is provided for by this fund (pages 75-76). Our community now has 206 pieces with a purchase value of $4.4M. A public/private partnership is the main characteristic of this program, which includes a dollar-for-dollar match up to $300,000 for a single piece of art, with the private donations being received before the public funds are spent. The pieces are mainly located along local streets or within local parks. All five years of the Plan again include an annual $100,000 allocation, and an additional $3,000 annual allocation for unrestricted administrative expenses.

The 19-20 budget will be the fourth and final year of an additional $5,000 allocation requested by the Visual Arts Commission (VAC) to build a $20,000 reserve fund for art repair and replacement. This is a much better arrangement than paying for special insurance coverage at a cost of over $10,000 a year.

The Utility Bill Check-Off Program was eliminated as of November 1 of last year. This program had only 62 people out of approximately 30,000+ utility customers participating, and generated less than $3,000 per year. This type of special donation program required far more staff time than the money that was brought in. This is a great example of simple-sounding donation programs that in reality are timeconsuming and should be avoided.

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Hospital Trust Fund The proceeds from the City’s 1982 sale of the hospital facility now known as OU Medical Center Edmond and a portion of the accrued interest is included in this fund (pages 61-62). The principal amount can only be spent through a public vote, and in 2011 voters did approve a provision that the funds could be loaned to provide interim financing for City projects. The entire principal amount of $6.881M was repaid on time to this in March of last year.

As noted earlier, this fund will be considered as a possible source of funding for 2000 CIP projects in the next couple of budget years.

Real Property Fund This fund contains some of the interest from the Hospital Trust Fund and is used to purchase property for City use (pages 63-64). Next year’s projected fund balance is $117,598.

CDBG Fund This fund provides for the operation of the City’s Community Development Block Grant program (pages 53-54). With a population of over 50,000 Edmond is designated as an “entitlement” community, and this annual federal allocation is the only funding source. Only funds that are actually received are spent.

Usually the amount of the federal allocation is not known until after the budget is prepared, but this year we were recently notified that this allocation will be $444, 258 for next year’s budget, a 15% increase from the current year.

Convention and Visitors Bureau Fund The only revenue available for this fund (pages 65-66) is the 4% hotel/motel (lodging) tax. Last year you authorized a one-time allocation of $100,000 to help with the move of this operation to their new office at the Hotel/Conference Center and to jump-start the addition of a fourth staff position.

We are concerned with the negative balances identified in the outer three years of the Plan. Since it appears that revenue growth will be modest or flat, staff is considering appropriate spending adjustments to ensure a balanced budget and an adequate reserve fund balance.

Employee Pension Fund This self-funded program includes all City employees except uniformed fire and police personnel and the City Manager, and the projected contributions are identified in the individual fund budgets. The City’s annual contribution rate is determined by an actuary hired by the Employee Pension Board. This recommendation for the 19-20 budget is 9.82%, an increase from 9.49% in the current budget, and I support this recommendation. Since we never know how future economic conditions might affect the pension program, we have always used the annual rate for all five years of the Plan. xv

The employee contribution rate will again remain at 5.25% in next year’s budget, and this percentage has not changed for many years. However, since the City’s proposed contribution rate is projected to exceed the 9.5% “trigger provision” that was added several years ago, the Board will review the employee contribution rate in the coming year.

HUMAN RESOURCES HR Director Lisa Goodpasture’s comprehensive report is included in the personnel section at the end of the budget document.

I am recommending a 2% cost-of-living (COLA) increase for all non-union employees in the 19-20 budget.

This recommendation is based on current and short-term economic conditions. For comparison, these same employees received a 2% COLA in the current budget and a 1% conditional COLA in last year’s budget.

I also support the Personnel Review Committee’s recommendation to add a net 2 new full-time positions, not counting the temporary over hires, as identified on page 9 in Lisa’s report. For comparison, 20 net new positions were added in the current budget and 3 were added in last year’s budget. The Committee and I thoroughly review all recommendations to add new positions. An appropriately growing work force is a reality for a growing community that continues to have very high expectations for the quality and delivery of City services.

Employee Group Insurance Fund The City’s self-funded health insurance remains one of the major benefits for full-time and some parttime employees (pages 121-122).

Historically the City has provided the full cost of individual employee coverage, except that those employees who choose the enhanced individual plan now pay a nominal $80 per month amount. Since the plan year for the health insurance program runs with the calendar and not the fiscal year it includes halves of two budget years.

The changes to our plan are identified on pages 4-5 of Lisa’s report. We are concerned that the outer three years of the Plan identify negative balances for the second year in a row, resulting again from abnormally high total claims. We have discussed this situation with the Employee Health Insurance Committee and will continue to review possible plan adjustments and cost containments on a regular basis.

In August the Employee Health Clinic will celebrate its five-year anniversary, and pages 6-7 of Lisa’s report provide a summary of the clinic operation. The budget year for the Clinic is the same as our fiscal year. The Clinic remains a very popular major benefit with our employees, their dependents, and retirees covered by our plan.

As promised at the inception of the clinic, we are continuing our efforts to quantify the Clinic’s impact on the general wellness of our employees.

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Conclusion Our budget process continues to be a source of pride for openness, transparency, and professionalism.

The reality that the City of Edmond exists to provide services remains a focus of our internal culture. I am blessed to work with tremendously talented and dedicated women and men in our organization.

Respectfully submitted,

Larry Stevens City Manager

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