1d. Approval of Additional Fund Closings and Transfers.CITY OF 1 ° 4
CHANHASSEN
690 COULTER DRIVE 0 P.O. BOX 147 • CHANHASSEN, MINNESOTA 55317
(612) 937 -1900 • FAX (612) 937 -5739
MEMORANDUM
TO:
FROM:
DATE:
SUBJ:
Mayor and City Council
Don Ashworth, City Manager
June 10, 1997
7� �
a
Update on Additional Year End Fund Closings and Transfers Report
This item was tabled from the May 27` agenda with questions regarding the large deficit that
exists in the Chanhassen Estates public improvement project. In researching 1993 records, the
bottom line is primarily the same as had been previously reported, but the rationale of how we
get to the bottom line was incorrect. It was previously reported that the project costs were
estimated at $900,000 +, but the amount bonded was $700,000 +. We also found that the total
amount bonded in that year hit the magical $10 million mark. All of the above statements are
true and the conclusion that we previously reached that the $200,000 in additional bonding,
whether paid for by today's dollars or debt levies, needed to occur. All of those facts and figures
come from the project records in the engineering department. In reviewing the bonding
documents, those records indicate that the amount to be paid from sewer and water expansion
was set at $)(not the $1 0 00_previously estimated by Charles) with the net proceeds
then being approximately $750,000. The approximate $135,000 differential between estimated
project costs and actual total costs can be accounted for by three factors, i.e:
• Bonding /Storm Water Costs ($ ): By the time the project had been awarded, the
Storm Water Management Plan had been received. That document indicated that a holding
pond should be built on the north side of Highway 5 with the downstream drainage going
through the Chanhassen Estates neighborhood. Individual drainage problems for property
owners in the Chanhassen Estates neighborhood prompted staff to recommend that the
contract be amended to include the pond and drainage items. The city council approved that
contract amendment and the funding was, again, to have occurred through the Storm Water
Management fund, although the actual expenses were being recorded within the Chanhassen
Estates project fund (same contractor, engineer, etc.); and
Mayor and City Council
June 10, 1997
Page 2
• Engineering Services: The original project included the entire Chanhassen Estates
neighborhood. The feasibility study, hearings, plans and specifications, and even bid
documents were for this much larger $2 million project. Virtually on the same date that the
city council was to have awarded the bids for the project, several of the neighbors from the
western half of Chanhassen Estates petitioned the city council asking that the project be cut in
half and that solely the easterly half be awarded. The two neighborhoods had become quite
polarized with the westerly half backing the position of not carrying out the improvements
and the easterly half strongly supporting them. Caught in this dilemma, the city council acted
to revise the project to the $920,000 level and to delete the improvements in the westerly
half. However, the engineering costs for preparing the feasibility study, plans and
specifications, and bidding were $120,000, and by eliminating the western half of the project,
a $60,000 bill was left on the table which reasonably could not be assessed or bonded for.
The dilemma we are faced with is exactly the same problem that exists with costs associated
with Nez Perce; and
• Interest Costs: The length of time from the start of this project until its final closing had
produced a deficit for the past 2 -3 years. Accordingly, approximately $30,000 of the total
deficit in this fund is attributable to negative interest earnings.
As stated at the beginning of this memorandum, the bottom line of actions that need to be taken
to eliminate the deficit associated with the Chanhassen Estates project is almost identical to that
previously recommended.
Approval of the attached (amended) transfers and fund closings is recommended.
[Note: At this point in time, the funds listed cannot be officially closed for audit year 1996.
However, I would rather have the management report show that the city has taken positive steps
in regards to the deficits in each of these funds rather than having that document potentially
criticize the city for not taking positive steps.]
gAmg6fundclosings 1
Fund Closings
648
Minnewashta Parkway to
415
Minnesota State Aid (MSA)
(456,208.05)
663
Highway 5 Corridor to
460
H.R.A.
(58,700.95)
665
Hwy 101 S. Re- alignment to
460
H.R.A.
(79,305.05)
666
92 -6 Nez Perce Extension to
458
City Hall Expansion
(109,811.22)
671
93 -10 Chanhassen Estates S/W & Strrr to
720
Stormwater Expansion
(40,692.56)
671 93 -10 Chanhassen Estates S/W & Strrrto 710 Sewer & Water Expansion (170,000.00)
671 93 -10 Chanhassen Estates S/W & Strrr to 458 City Hall Expansion (94,276.78)
Project Complete -funds received into MSA
to fund
Project Complete
Project Complete
Project Complete
Project Complete - Stormwater costs to be
funded by fund 720
Project Complete -Water main portion to be
funded by fund 710
Project Complete