Fin Strat & Strategic Plan 2004CITY OF
C HASSEN
77Q Markei
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Administration
Ph ;le: :~52 227~ 100
Fax: %2 227 1110
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Engineering
Bax 9522271i70
Phr~qe: r62 22T 11
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P~one: 952227 1120
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2310 09~ iter Botievard
Ph(~e 952 22~ 1400
Fax: 952 22Z 1401
Planning
Natural Resources
Phone: 952 227 1130
Fax: 952 22T 1110
Public Works
1591 Park
Phone: %222F ~300
Fax g52 22T 1310
Ph; e 95222Fl125
Fax 952 2271110
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MEMORANDUM
TO:
Todd Gerhardt, City Manager
FROM:
DATE:
Justin Miller, Assistant to the City Manager
February 12, 2004
RE:
Key Financial Strategies and Strategic Planning for 2004
Follow-up meeting
Attached to this memo are several documents:
1)
2)
3)
4)
Rankings of the issues identified by the City Council at the February 3,
2004 work session (staff recommends focusing on the issues that
averaged a priority of less than 2.00)
Updated listing of issues from 2003 with 2004 issues added
Revised Key Financial Strategies document for 2004
2004 KFS task sheets
Please be prepared to discuss these items at the City Council work session being
held at 5:30 on TuesdaT~ February !7th.
The City of Chanhassen · ~ ~r,;,'urq~i, ,;r~'u ;~r !',, .... ~'
, tn, .,,an akes q laiih,, ~q,:3 loc, is a: i'~l,r~ r/q, 1,',v',nt,x,,,x ?'r,v!r,g bu.siness,~s '¢,,,irldJh',1 trails and b(~m',ifJ! [,,u'~ ; ,,.~' [)a,( ~:,. I'u ,,,, ,¢ ~,: L ,~,
Furlong Laban Peterson Ayotte Lundquist Average
Public Safety
Create plan to deal with public safeo, issues as growth continues I 1 I I 1 1.00
Monitor impletnentation ofSheri~[~s Maximus study 1 2 2 I 2 1.60
More council interaction in crime prevention/neighborhood watch 2 2 4 I I 2.00
Public safety entity - establish and define 4 2 3 1 3 2.60
Economic Development
2005 MUSA issues - review land uses I I 1 I 2 1.20
Hwy 212/312 - update on design and land use, vision of corridor I I 3 1 1 1.40
Leverage City property as much as possible - Marketing of land 3 2 I 2 2 2.00
Should the City be in the land ownership business? 2 3 I 3 2.25
Develop town center into a more full-service/inviting central business district 3 3 2 2 2.50
Support the marketplace driven development of industrial land 3 3 2 2 3 2.60
Budget/Taxation
Create plan for TIF districts returning to tax rolls I 1 I I 1 1.00
Better council direction in budget process I I I 2 I 1.20
Review decisions based on costs/benefits 2 2 2 1 1 1.60
Incorporate strategic planning into budget process 2 2 1 2 I 1.60
Monitor state and county financial sitt~ations 2 2 2 2 2 2.00
Validate existing contracts in terms of cost and scope 4 2 2 1 2 2.20
Leverage current services 3 2 I 2 3 2.20
Evaluate Pavement Management Program 3 3 2 I 3 2.40
Evaluate outside consultant use, what can we do in-house 3 3 2 I 3 2.40
Parameters for incremental staff increases 2 3 I 3 3 2.40
Exploration of contract model for other services 3 3 3 2 2 2.60
City Organization
Communicate what City Council does/receive feedback I 2 2 I 2 1.60
Develop working relationship with outside agencies (state, county, etc.) 3 2 3 1 2 2.20
Public Works facility expansion 2 3 2 3 3 2.60
Community-Wide Issues
Water treatment discussion, implemet,tation I I I 1 l 1.00
Highway 101 gap project I 2 I 2 I 1.40
Finalize community center discussion, possible partnership 3 1 3 I 2 2.00
4thleticfield space 2 2 3 4 2 2.60
Monitor Highway 41 river crossing study 2 3 2 4 3 2.80
~eminary Fen 4 1 3 4 3 3.00
Monitor school district enrollment mtmbers 3 3 3 2 4 3.00
lOl South Turnback 2 3 3 3 2 3.25
Highway 5 ttpgrade (west of Highway 41) 2 3 2 3 3 3.25
Amphitheater/gathering place 4 3 3 4 4 3.60
Housing
Zoning issues related with higher densities 3 2 2 I 3 2.20
Analyze eosts imposed by City to developers 2 3 3 I 2 2.20
Serve as convener of private and non-profit sectors to develop housing strategies 2 3 2 3 4 2.80
Explore tax credits/other financial support programs that support this issue 3 3 3 2 4 3.00
2003 Strategic Planning Session
Issues Brainstorming
January '7, 2003
Updated after February 3, 2004 worksession
c,.;,.=m .....~' denotes completed tasks
2.
3.
4.
5.
6.
7.
$.
9.
10.
!!.
12.
14.
15.
16.
17.
18.
!9.
21.
22.
23.
24.
26.
27.
Public safety entity - establish and define
]~rc;~a ,-~1~ ~T~ 'l~l~ A [~'~m~
Validate existing contracts in terms of cost and scope
Exploration of contract model for other services
Finalize community center discussion, establish next steps
Water treatment discussion, establish next steps
c.;,., c,~,~ park
Communicate what City Council does/receive feedback
More council interaction in crime prevention
Amphitheater/gathering place
Better council direction in budget process
Incorporate strategic planning into budget process
2005 MUSA issues
Hwy 212/312 - update on design and land use, vision of coddor
Develop working relationship with outside agencies (state, county, etc.)
Review decisions based on costs/benefits
Leverage cu~ent services
Evaluate Pavement Management Program
Zoning issues related with higher densities
Parameters for incremental staff increases
Evaluate outside consultant use, what can we do in-house
' EHLERS
& ASSOCIATES lNg
KEY FINANCIAL STRATEGIES
OVERVIEW
Ehlers & Associates was engaged by the City of Chanhassen, Minnesota (the "City") to assist in
the preparation of the City's Key Financial Strategies. The need to create a comprehensive
financial management plan was identified by the City Mayor, Council, Manager and Staff due to
growing demands for financial resources. This strategic financial plan is the result of four
workshops with the Council and many hours of staff consultation. One of the workshops
(November 7, 2002) focused on identifying potential financial needs of the City. The results
from that session have been incorporated into this plan document.
OBJECTIVES FOR THE FINANCIAL PLANNING PROCESS
A financial plan is a necessary element of a City strategy to remain competitive in today's
demanding environment. Other objectives of the City's Key Financial Strategies are:
Establishing a common understanding among the elected officials and staff
of the City's needs and financial capacity.
Developing a comprehensive view of financial resources and options.
Identifying City issues and opportunities.
Creating a framework in which elected officials and staff can make
immediate and long-term investment decisions.
Developing a consensus among the elected officials and staff on key actions
the City will take to remain competitive.
Meeting the new standard presented in the Governmental Accounting
Standards Board Regulation 34 including its capital planning provisions.
Through this workshop process we have examined the current and future ability to meet
these objectives to answer the question "How do we get there?" The City's Key
Financial Strategies will provide a road map into the future and a framework for future
decision-making.
City of Clumhas.s'e~ - Key Fb,ancial Strategies
FINANCIAL ASSESSMENT - FINDINGS
The financial assessment conducted of the City was divided into seven areas:
1. Community goals/initiatives
2. Local tax base considerations
3. Financial Position
4. City owned infrastructure
5. Competitiveness
6. Credit position
7. Enterprise funds
As part of the financial assessment, a number of findings were presented within the
workshops. These findings are outlined in more detail within this report. A summary of
these findings is as follows:
1) COMMUNITY GOALS/INITIATIVES - Establishing a strategic profile
including community vision (purpose), goals (means to achieve the purpose), and
strategies (directed at accomplishing goals), which are essential to the efficient
and effective use of scarce City resources.
A) Important Initiatives -- City Officials have identified several initiatives as
part of this financial planning process. Key issues include:
· Maintaining city infrastructure. This includes:
o Pavement Management System
o Sewer and Water Infrastructure
o Park Pavement Maintenance
o Vehicle and Major Equipment Replacement
o Water System Improvements
o Public Facility Maintenance
· Enhance and protect city environment. This includes:
o Update SWMP (Storm Water Management Plan)
o Watershed Improvements
o NPDES Phase II compliance
o Lake Monitoring/Improvements
o 2007 Environmental Fund Solvency Issues
o Bluff Creek Improvements
· Managing growth. This includes:
o Future staffing issues
o 2005 MUSA
o City Trails
o Comprehensive Plan Update
o Establishing an Affordable Housing Land Trust
o Expansion of Public Works Facility
o Improving City Services
CiU q/'Clumltassen - Key Financial Strategies Page 2
o Quality Assurance for Law Enforcement/Public Safety
o City Archives and E-City Hall.
Explore support for new City facilities. This includes, without
limitation:
o CommunityCenter/Ice Arena
o City Commons Park
o Chanhassen School Campus
Implication: The City has identified a significant agenda for future needs.
Developing a mechanism to regularly prioritize needs, develop
implementation programs (including resource requirements) and evaluate
the City's capacity to implement the programs should be a high priority.
Financial strategies should also include direction regarding the nature of
activities to be undertaken for each issue including: · Assessing need for service or facility.
· Studying alternatives, methods and cost and funding sources for
implementation.
· Implementation.
B)
Facility Options -- City Officials are looking at options for public facilities
including a water treatment system, Public Works facility expansion, a
Community Center, and land purchase for a potential school.
Implication: Involving the public with this process will be key to
progressing this issue to the implementation phase. Careful consideration
should be given to the funding options and impacts (including operating
costs). While there are some issues impacting the timing of these decisions,
it is essential that public understanding and support be developed.
c)
Technology -- Ever growing demands for staff services and the need for
City departments to work together require ongoing investments in
computers and technology.
Implication: Further enhancements to the City's information technology
systems may require financial support from the City's General Fund. There will
be more and better technology products available to cities. Residents,
customers and employees will likely create pressure to invest in improved and
new technology. This will require the City to develop a disciplined approach to
reviewing the requests and needs for technology investments. That approach
should address cost and benefits (not limited to financial), productivity,
training, support and potential obsolescence.
CiO' O[ Ghalt/laS$¢tl -- K~y Financial Strategies Page 3
2) I,OCAI, TAXBASE CONSII)ERATIONS - Structure. quality and size of a
commtmity's tax base impact its ability to fund services and investments.
A) Development -- City land area is approximately 54% developed and has reached 65%
of projected population. How the community completes development will impact its
future.
Implication: The City will add additional residents and businesses to its population
and, in addition, will face new and additional requests for future services as
demographics and resident interests change as well as the need to address reinvestment
in existing facilities. Understanding the dual impact of new service requests of existing
residents and the impact of additional new residents will be a key to future planning.
B)
Market Value - City market value of $1.79 billion has been increasing an average
10% per year for the past 5 years. The City has a high per capita market value of
$88,000.
hnplication: The high per capita market value and strong commercial base provides
good opportunity for revenue diversification. The tax rate should be evaluated in terms
of what rate creates the outcomes that the City seeks for itself. The tax rate should be
set in conjunction with both the budget and the yearly costs identified in the capital
plan.
c)
Tax Increment Districts - Changes in State property tax law have adversely impacted
the City's ability to cover debt service related to development. A plan has been
prepared to cover potential shortfalls.
Implication: The City should continue to implement the plan prepared to work out debt
service issues. This plan should be carefully monitored for the next two years.
D)
Diverse tax base -- The City has a diverse tax base with 69% residential and 28%
commercial/industrial. The balance includes a variety of open space and institutional
uses.
Implication.- Tax base diversification is a positive trend for stability in City services
requirements and property tax production. Continued effort should be made to maintain
a ratio of residential to commercial/industrial base with a target range of 67% to 75%
residential and 25% to 33% commercial/industrial.
E) Economic Development Policy - The City has provided economic development
incentives in the form of tax increment financing.
lnaplicalion: Previously the City used economic development incentives to attract
targeted development. This strategy is clearly responsible for the level of tax base
diversification that exists today. To encourage continued balanced community growth
the City will consider appropriate strategies.
Ci0, c)f CIza~tltaxsett - Kev Fimmcial Strategies Page 4
3) FINANCIAL POSITION - Availability of funds to meet current and future needs, adequate
fund balances for cash flow purposes and to meet emergency needs requires planning and
discipline.
. A) Effective past financial management practices has left the City with a moderate
undesignated, unreserved fund balance within the General Fund, Water and Sewer
Fund and Storm Sewer Fund.
Implication: The City's General Fund Balance remains adequate. Changes in State tax
structure and potential capital projects costs indicate the need to continue to carefully
monitor the fund balance.
B)The City faces growing demand and cost to provide services with limited ability to
increase short-term tax base.
Implication: State levy limits will impact the City's ability to increase operating
expenses without an offsetting increase in non-property tax revenues.
C) The City has developed effective loss reduction strategies (accident review, safety
committee). Additional risk management efforts including review of risk retention
levels, deductibles, funding of loss reserves may be warranted.
Implication: Additional development of risk management policies will help reduce
exposure to financial risks.
4.) CITY INFRASTRUCTURE - Communities need to regularly invest and reinvest in their
infrastructure (roads, buildings, parks, etc.). Regular deferral of investment can lead to
fiscal stress and community disinvestments.
A) The City has maintained a street reconstruction program since 2002.
l~a-qglic~tion: Overall the streets are in acceptable condition, but continued annual
investment will be needed. Progress on maintenance should be carefully monitored.
B) The City is reviewing Public Works facility needs. It is intended that facility needs will
be addressed at the same time as water treatment facilities are addressed.
lmplic~titm: The City has not initiated a plan to review the need for reinvestment in this
facility.
Ci0, oJ'Cha~hax.s'c~ - Kev Fi~m~cial Strategies Page 5
$)
c)
Potential need for reinvestment in public facilities infrastructure needs may increase the
property tax above the normal inflationary increase. The City has major investments in
buildings, utility systems, streets, trails, lighting systems and related improvements.
Implication: Community involvement will be key to addressing need for major
investments. The City should undertake a public participation process to involve the
community in understanding and then selecting options. Preparing plans and schedules
for anticipated required maintenance and replacement will provide information need for
financial planning purposes.
D)
The City has extensive vehicle replacement requirements for Public Works and Fire
equipment. The City does not currently have a schedule of equipment replacement that
forecasts these needs for the expected life of the equipment.
Implication: Equipment replacement is often deferred as part of budget balancing
efforts. In the long term this may increase maintenance costs, increase downtime of
equipment and staff and lead to a funding problem in future years. Developing an
equipment replacement schedule and funding source will help remedy this problem and
provide a more accurate measure of services.
E) The City faces potential major expenditures in its Water Fund for infrastructure
improvements in order to meet required Federal water quality standards and
distribution system needs.
Implication: Enterprise funds are generally expected to support system needs. The City
should continue to identify future major enterprise expenditures within the next five to
ten years. This will permit the development of a utility rate plan to facilitate the required
improvements. Water rates are cun'ently subsidizing sewer operations.
COMPETITIVENESS - Communities compete for people to live, work and do business.
Understanding and responding to the elements of competition is an important role for the
City.
A) The City's overall City tax rate remains competitive with other comparable communities
in the metro area. (52nd out of 108 metro communities)
Implication: Given the competitive tax rate and the high level of services, the City
would be in position to increase tax rates when conditions permit. However, this
increase should come only upon completion of a comprehensive analysis of competing
demands and priorities with community involvement in setting and funding these
priorities.
B) The City offers a full complement of services to residents and businesses.
Implication: Services offered by the City appear to be consistent or superior to
surrounding communities.
CiU of Chauttassc. - Key Financial Strategies Page 6
C) Chanhassen appears to be well maintained with no typical signs of disinvestments or
deterioration.
Implication: Careful attention should be paid to monitoring the condition of public and
private property.
D) Chanhassen's open space and trail system appear to be equal or greater than many other
communities in the metropolitan area. A new state of art library is currently under
construction. The City does not have some amenities typical for comparable
communities including a community center and may face community interest in
developing this facility. There is not a funding source in place for maintenance of the
extensive trail system.
Implication: Planning and investments in these areas has provided a sound foundation
for creating a community with amenities that will attract and retain residents, visitors
and businesses. Careful attention should be paid to the operating costs of recreation and
cultural amenities. Community involvement in discussions regarding the cost to build
and maintain new facilities will be a key factor for future considerations.
6) CREDIT POSITION Maintaining a strong credit rating helps reduce the cost of borrowing
required to develop and maintain the community.
A)
The City is rated "A" by Standard & Poor's b, vestors Service. This is an above average
rating reflecting the City's strong property value growth and maintenance of a strong
financial position while making progress in mitigating the impact of a tax increment
district negatively impacted by tax rate changes.
Implication: This strong credit rating has helped the City successfully issue debt at very
competitive interest rates in the commercial marketplace.
B)The City's debt burden is high at $4,000+ per capita, but reflects community growth
needs and overlapping debt of other governmental units. These burden ratios have been
falling due to community growth and value increases. About 2/3 of this debt is supported
by tax increment, assessment and enterprise revenues. Eighty-three per cent (83%) of
the City's debt will be paid off in ten years.
Implication: The City has successfully implemented a plan to address tax increment
debt issues. Careful attention should be paid to "mapping" out future debt issues for the
next five to ten years. The aggressive debt repayment schedule will enable the City to
continue to invest as needed.
C) The City currently has a moderate undesignated fund balance.
Implicution' This strong fund reserve helps the City to maintain its current rating. The
City should be careful to maintain this strong fund balance.
C/O' q/~' Chattlta.~.¥et~ - Key Fi~rmcial Strategies Page 7
7)
ENTERPRISE- Operating enterprise funds as businesses is key to avoiding
transferring the burden of operations to general taxpayers. In addition some enterprise
operations can help reduce the cost of general government.
Al The City has improved cost recovery for water and sewer services but rates are still not
covering all operating costs. The City has not increased rates since 1998. The City is in
the process of completing a rate study related to the evaluation of a water treatment
investment. The study will likely recommend the establishment of minimum reserves for
operating and capital costs.
Implication: Fluctuations in water demand due to weather has provided challenges in
establishing water and sewer rates. However, rates should be established to assure
recovery of operating costs and adjusted annually.
City q/'Clut~has,s'e~ - Kc), Fb~attcial Strategic.~ Page 8
RECOMMENI) ATIONS
Based on the findings and analysis conducted in the workshops, Ehlers developed a list of
recommendations for the City -- their Key Financial Strategies -- listed in the seven categories below.
1.0 COMMUNITY GOALS/INITIATIVES
1.1
GOAL SETTING:
The Mayor and City Council should continue annual goal setting sessions, prior to
budget preparation. The goal setting session should prioritize needs. This
information should be used by staff to develop programs, service options and
resource requirements, for consideration within the budget process. The goals
should specifically address the major issue categories.
Financial strategies should be incorporated into the annual goal setting program.
1.2
FACILITY NEEDS:
The City should continue the deliberate and careful approach to addressing facility
needs for future growth, reinvestment and quality of life services and capital
investments. The Mayor and City Council should consider authorizing a study to
address future facility needs.
1.3
COMMUNICATION PLAN:
A communications plan should be developed in order to inform and seek community
feedback on important financial issues including future needs and financial
constraints. The plan should also forecast the process that will be used to seek
community participation for significant community investment decisions.
Conducting a community survey will help identify the types of services vital to
attract and retain residents. Consideration should be given to expanding the survey
to collect information regarding improving the City's competitive position,
economic development, quality of life, school funding inequity and possible
intergovernmental / tax sharing solutions.
Consideration should be given to continuing the use of the "Funding Public
Facilities Public Participation Process" model in City facilities planning.
1.4
TECHNOLOGY PLAN:
A technology plan has been prepared with projected needs for the next five-year
period. The plan should also include a basis for evaluating the requests for
technology investments that address cost and benefits (not limited to financial),
productivity, training, support and potcntial obsolcscence and funding sourcc.
1.5
IMPLEMENTATION PLAN:
Annual budgets should be prepared with budget options of at least 10% of total
budget expenditures. Budget presentations should be supported with a balance of
input and resources and outcome materials.
CiU of Chanhassen - Key Financial Strategiex Page 9
2.0
2.1
2.2
3.0
3.1
3.2
3.3
3.4
3.5
3.6
4.0
4.1
4.2
LOCAL TAX BASE
Growth planning should address continued attention to balancing commercial and residential
development. Special attention should be paid to assessing housing types to reflect life
cycle, financial ranges and life style choices.
The use of public subsidies to assist with encouraging the type of development needed to
maintain community competitiveness and balanced tax base should be continued. The
public assistance policy should be reviewed to assure flexibility to meet broad based
community needs.
FINANCIAL POSITION
FINANCIAL POLICIES:
The Mayor and City Council should consider a Fund Balance Policy for the Special Revenue
Funds, Debt Service Funds, Capital Project Funds, Enterprise Funds, and Internal Service
Funds.
City staff should prepare an alternative revenue source report for the City Council. These
options should be reviewed annually as part of the Key Financial Strategies update.
The City should adjust all user fees and utility rates on an annual basis to reflect changes in
the cost of services.
The City should review assessment practices to include pavement management cost recovery
through special assessments to benefiting property owners (i.e. increasing assessments to
property owners and including street maintenance such as crack sealing) and to address
increased cost of pavement management projects.
The City should establish a schedule for increasing developer fees that is determined
annually. The current method of tying fees to increases in construction cost index does not
accurately reflect the City's cost of services.
The City should use this report as part of its annual goal-setting framework.
CITY OWNED INFRASTRUCTURE / CAPITAL EQUIPMENT
CAPITAL EQUIPMENT:
The Manager and Finance Director should review the final list of items which were
recommended as part of the vehicle/equipment replacement program and develop a funding
program to provide a more level annual replacement contribution. The City could establish
an internally funded equipment rental program to level out annual replacement costs.
INFRASTRUCTURE:
The City staff should enact each annual capital improvement program based on review of the
multi-year capital improvement needs.
The City staff should coordinate development of the capital improvement budget with the
City q[ Cha.lzaxxe, - Kev Fimtm'ial Strategiex Page 10
development of the operating budget. Future operating costs associated with new capital
improvements will be projected and included in operating budget forecasts.
The City should prepare a non-annual recumng maintenance schedule for City facilities.
5.0 COMPETITIVENESS
5.1
PROPERTY TAXES:
The City's tax rate is currently significantly below the state limit. In managing property
taxes, the City will seek a balance between providing an appropriate level of service,
maintaining infrastructure, and affordability for residents. Having the lowest property taxes
is not always the final measure of this balance.
Given these limits and demands on property taxes, the City should review and implement a
revenue enhancement study for additional revenue options including utility franchise fees,
utility bill preparation fees and similar alternatives. The information should be prepared to
identify options prior to their need.
Continued long range financial planning creates the opportunity for managing property taxes
and providing the greatest stability in tax rates. Staff should annually prepare three-year
projections of tax levies. Community involvement in the long range planning process will
allow build support for the development of resources to achieve goals the public has
supported.
The City should continue to meet and confer with overlapping local government units
(county, schools, etc.) to discuss operating and capital funding issues that will impact
residents overall taxes.
5.2
BUDGET:
The current City practice is to target only an inflationary increase in the following year's
operating budget. In order to provide direction to staff, the Mayor and City Council should
review and select the appropriate items from the Budget Option Impact Worksheets that
would be included in next year's budget. This budget should then be constructed by
balancing resources with current and future needs.
The Financial Strategies should be reviewed and updated annually as part of the City's
budget process.
Annual budgets should include budget option analysis for 5% to 10% of total projected
expenditures.
Budget presentations and discussions should be supported with a balance of input/resources
and outcome options.
5.3
Risk Management
The City has initiated development of a risk management program. Additional effort to
reduce risk exposure including review of retentions levels, deductible levels, funding of
reserves for retained risks should be undertaken.
City (?f Chanhasse~ - Kev Fimmcial Strategies Page I I
6.0
6.1
6.2
6.3
6.4
CREI)IT POSITION
The approval of Key Financial Strategies by the Mayor and City Council will help
document the future City plan to Standard & Poor's Investors Service.
The City should endeavor to keep the total maturity length of general obligation
bonds below 20 years and at least 50% of the principal shall be retired within ten
years. In all cases, the maturity shall be shorter than the life of the related assets.
The City should work to minimize the amount of debt supported by property taxes
and will seek maximum use of special assessments, utility revenues and other non-
tax sources to support debt.
City staff, working with the City's independent financial advisor, shall monitor
outstanding debt and advise the City Council on ways to reduce the debt burden
through refinancing at lower interest rates and the early retirement of bonds.
7.0
7.1
ENTERPRISE FUNDS
Annually, the Manager and Finance Director should review and recommend
necessary adjustments to water and sewer rates sufficient to recover cost of
operations and provide for capital needs for consideration by the Mayor and City
Council.
7.2 City staff should annually review the cost of general fund services provided to
enterprise activities including insurance, financial and accounting services,
management, legal and related expenses. These costs should be evaluated by the
City Council for inclusion in the rates for enterprise services.
7.3 City staff should prepare a utility rate policy that addresses the need for fees to
recover operating costs and provide for operating cash, reserves, non-annual
recurring maintenance, and debt service.
7.4 City staff should identify the costs to meet mandated water quality standards and
the impact on water rates.
7.5 City staff should continue to monitor storm water management program (SWMP)
to ensure compliance with state and federal regulations.
CiU qf Chanhaxxcn - Key Financial Strategies Page 12
ACTION PLAN
This section describes the actions needed to implement the City's Key Financial Strategies. Actions
fall into two categories: Tasks for immediate action, and tasks that reflect on-going financial
management actions. The following is a recommendation on the tasks that require attention over the
next five-year period. Implementation of these Key Financial Strategies requires annual review and
updating the Plan and revision of the schedule prior to initiating the budget process. Careful attention
should be paid to developing realistic time frames and work plans.
Projected Start Projected
Activity Date Level/Status Completion Date
1.0 Commuaity Goals/Initiatives
1.1 Goal setting Bi-annual 1/I N/A
1.11 Further define funding options and plan for 2003 2/S 2004
Affordable Housing Land Trust 2004 2005
1.2 Facility needs study 2006 2/S 2007
1.21 City Commons Park 2003 4/I 2005
Completed
1.22 Identify funding options for school land 2003 3/A 2O0q
2008
1.23 Community Center / Ice Arena 2005 3/A 2007
1.3 Prepare financial strategies communication 2004 2005
plan
1.31 r~ .... ~ ...... , .......... ;,,,~ ~A~,,~,,b .... ,~o 24)1M- 2/$ or~r~q
Combined with 1.4
1.32 Conduct community survey to assess 2005 I/S 2006
community knowledge of and support for 2005
new initiatives, facilities services and fees.
1.4 Expand e-city hall services -phase 1 2009 1/I 2004
2004
1.41 Develop digitized document archives 2003 3/I Ongoing
1.5 Annual CIP Annual 1/I Annual
1.51 Identify options for replacing 2007 2004 1/S 2005
Environmental Fund
2.0 Local Tax Base
2.1 Prepare plan for 2005 MUSA expansion 2003 1/S 2004
including capital and operating needs to
accommodate growth.
2.12 Begin looki~g at 2010 a~d 2015 MUSA areas 2006 2/S 2008
2.13 Update Comprehensive Plan 2007 2/S 2005
2008 2009
City (¢' Chattha.s',~'c~t - Key Fi~ta~cial Strategies Page 13
Projected Start Projected
Activity Date Level/Status Completion Date
2.2 Update public subsidy policy 2003 4/A 299n.
Completed
2.3 Conduct an Economic Development Summit 2004 4/1 2004
3.0 Financial Position
3.1 Establish/Update Budget Control and 2004 2/S 2004
Financial Control Policy
3.11 Update fund balance policies 2004 2/S 2005
3.12 Update debt management plan 2005 I/S 2006
3.13 Establish/Update Investment Policy 2004 2/S 2004
3.2 Explore franchise fee in context of financing 2003 1/S 2004
needs
3.3 ~o,,,~,~;~,/Tr~,,,~ T To~ o~.~,,., .... Policy ~nn~,
............ v ........ ,>,~ 2/A -3004
Consolidated with 7.1 Annual
3.4 Review assessment practice to address Annual 1/S Annual
pavement management and consider
increasing assessed portions and interest rate.
3.41 Identify funding sources for Park Pavement 2004 I/S 2005
Maintenance
4.0 Infrastructure/Capital Equipment
4.2 Identify options for funding Pavement 2004 l/I 2005
Management System
4.21 Develop estimates for public facilities 2005 2/S 2006
maintenance
4.22 Prepare non-annual recurring maintenance 2004 I/S 2005
schedule
4.23 Prepare funding options for major equipment 2004 1/S 2004
sources
4.24 Construct trail additions Ongoing 1/I N/A
4.25 Expand Public Works Facility Coordinate with 2/A N/A
water treatment
project
5.0 Compettttv~ ness
5.1 Properly tax review Annual I/S 2995
Annual
5.11 Prepare three five year budget, CIP and debt Annual 2/S Annual
forecasts including revenue forecasts
5.12 Prepare alternate revenue analysis 2004 I/S 2005
5.13 Identify and fund future staffing requirement Annual I/S ^~";' 2994
to match growth Annual
City of Chanhavset; - Kev Fimmcial Strategies
Page 14
Projected Start Projected
Activity Date Level/Status Completion Date
5.2 identify a limited number (l-3) of selected Annual 2/S Annual
services for potential competitive pricing on
annual basis
5.21 Review budget option analysis as part of Annual 2/S Annual
budget process
5.22 Needx Assessment/quality assurance for law 2003 1/S 2004
enforcement/public safety
5.3 Establish/Update Risk Management Policy 2003 2/S 2004
2004
6.0 Credit
6.1 Accept Key Financial Strategies 2003 2/1 2002
Annual Annual
7.0 Enterprise
7.1 Adjust user fees on annual basis to reflect Annual 1/S Annual
changes in cost of services.
7.2 Review general fund cost for enterprise 2004 2/S 2004
services for rate consideration
7.3 Develop utility rate policy 2003 1/I 2004
7.4 Evaluate/initiate Water Treatment 2003 I/S 2004
Improvements
7.41 Identify funding source for sewer and water 2003 1/I 2004
infrastructure replacement
7.5 Update Storm Water Management Plan Underway 1/I Ongoing
1. Watershed improvement impacts
2. Bluff Creek improvements
3. Lake Monitoring/Improvement
7.51 NPDES Phase II Compliance Underway I/A 2007
PRIORITY DEFINITIONS:
LEVEL 1 Critical to continued operation of city baseline services at present levels. This includes
restoration of services identified as baseline.
LEVEL 2 Provides opportunity for increased efficiency in baseline level of services. This includes ability to
continue to serve existing level of services without staff increases.
LEVEL 3 Provides opportunity for expansion of services to meet existing demand as evidenced
by Council direction or staff analysis.
LEVEL 4 Provides opportunity to increase services that improve quality of life within City.
I Implementation
S Study Need
A Assess Need
6'ily of Chanhaxxcn - Kev Financial Strategiex Page 15
GOAL #2
Local Tax Base
STRATEGY//:2.1
Prepare Plan to Accommodate Growth in 2005 MUSA Area
Target Completion Date
2O04
DEFINE GOAL ACCOMPLISHMENT
Prepare plans to ensure timely and efficient development of the 2005 MUSA area
ACTION STEPS PRIMARY KEY TARGET COMMENTS
RESPONSIBLE INDIVIDUALS COMPLETION
DATE
1. Prepare Utility Feasibility Study PO PO, KA 7/04
2. Noise Attenuation Study PC BG 7/04
3. Coordinate Feasibility Study with PO PO, KA 10/04
County and MnDot
4. Meet with Developers in 2005
KA
PO,
KA
Ongoing
MUSA
5.
6.
7.
8.
9.
10.
GOAL #2
Local Tax Base
STRATEGY #2.12
Prepare for 2010 and 2015 MUSA Areas/Comp Plan Update
Target Completion Date
2007
DEFINE GOAL ACCOMPLISHMENT
Review and re-evaluate the city's comprehensive plan to ensue it is current with existing goals and policies.
ACTION STEPS PRIMARY KEY TARGET COMMENTS
RESPONSIBLE INDIVIDUALS COMPLETION
DATE
1. Prepare Budget KA KA 2006
2. Consultants for Engineering Issues KA KA/PO 2006
3. Prepare Update KA KA/BG 2007
4. Public Hearing PC KA/BG 2007
5. Adoption KA CC / KA 2007
6. Adoption by Met Council KA Met Council 2008
7.
8.
9.
10.
GOAL #6
Credit
STRATEGY #6.1
Accept Key Financial Strategies
Target Completion Date
2004
DEFINE GOAL ACCOMPLISHMENT
Adoption of the KFS/Strategic Planning document after council and staff input are incorporated.
ACTION STEPS PRIMARY KEY TARGET COMMENTS
RESPONSIBLE INDIVIDUALS COMPLETION
DATE
1. Review previous year's KFS action CC CC, TG, JM 1/12/04
plan
2. Review changes, incorporate with CC CC, TG, JM 2/17/04
strategic planning document
3. Monitoring CC CC, TG Throughout year
4.
5.
6.
7.
8.
9.
10.
GOAL #5
Competitiveness
STRATEGY #5.12
Prepare Alternate Revenue Analysis
Target Completion Date
2004
DEFINE GOAL ACCOMPLISHMENT
Prepare list of potential new revenue sources with probable amounts raised for City Council consideration during budget development.
ACTION STEPS PRIMARY KEY TARGET COMMENTS
RESPONSIBLE INDIVIDUALS COMPLETION
DATE
1. Survey of alternate revenue sources BD BD, CTF 6/04
2. Estimate of potential revenue raised BD BD, CTF 7/04
3. Presentation to City Council BD BD 8/04
4.
5.
6.
7.
8.
9.
10.
fGOAL #1
Community Goals and initiatives
STRATEGY #1.1
Annual Goal Setting Session
Target Completion Date
Annual
DEFINE GOAL ACCOMPLISHMENT
Establish goals and priorities to guide the annual work plans of the City Council and staff.
ACTION STEPS PRIMARY KEY TARGET COMMENTS
RESPONSIBLE INDIVIDUALS COMPLETION
DATE
1. Work session to establish 2004 goals CC CC, TG 1/12/04
2. Work session to review format CC CC, TG 2/3/04
3. Approve final format/goals CC CC, TG 2/17/04
4. Monitoring CC CC, TG Throughout year
5.
6.
7.
8.
9.
10.
GOAL #3
Financial Position
STRATEGY #3.1
Update Budget Control and Financial Control Policy
Target Completion Date
2004
DEFINE GOAL ACCOMPLISHMENT
Update financial policy as necessary or prudent and present it to the City Council for adoption.
ACTION STEPS PRIMARY KEY TARGET COMMENTS
RESPONSIBLE INDIVIDUALS COMPLETION
DATE
1. Review cun'ent policy BD BD, DW 4/04
2. Review changes with legal counsel BD BD, RK d/04
3. Present to City Council BD BD, CC 5/04
4.
5.
6.
7.
8.
9.
10.
GOAL #5
Competitiveness
STRATEGY #5.21
Review Budget Option Analysis as Part of Budget Process
Target Completion Date
2004
DEFINE GOAL ACCOMPLISHMENT
Each depm'tment should identify an alternate budget that would reflect a 10% decrease in expenditures either through spending cuts or
revenue enhancements.
ACTION STEPS PRIMARY KEY TARGET COMMENTS
RESPONSIBLE INDIVIDUALS COMPLETION
DATE
1. Departments submit preliminary BD TG, BD, KA, TH, 7/04
budgets PO, JM
2. Department heads identify 10% cuts BD TG, BD, KA, TH, 9/04
PO, JM
3. Alternate budgets are presented to BD TG, BD, KA, TH, 10/04
Council PO, JM
4.
5.
6.
8.
9.
GOAL #5
Competitiveness
ISTRATEGY #5.2
Identify Limited Number of Services for Potential Competitive
Pricing
Target Completion Date
2004
DEFINE GOAL ACCOMPLISHMENT
Each year Council and staff should identify 1-3 services currently provided by city staff to competitively bid out to determine
competitiveness.
ACTION STEPS PRIMARY KEY TARGET COMMENTS
RESPONSIBLE INDIVIDUALS COMPLETION
DATE
1. Council and staff identify services to CC, TG Dept. heads 4/04
bid out
2. Staff compiles RFPs for bidding TG Dept. heads 5/04
3. RFPs are advertised TG Dept. heads 6/04
4. Results are tabulated TG Dept. heads 7/04
5. Council and staff review results CC, TG Dept. heads 7/04
6.
7.
8.
9.
10.
GOAL #4
Infrastructure/Capital Equipment
STRATEGY #4.24
Construct Trail Additions
Target Completion Date
2004
DEFINE GOAL ACCOMPLISHMENT
Complete State Highway 41 pedestrian trail connector
ACTION STEPS PRIMARY KEY TARGET COMMENTS
RESPONSIBLE INDIVIDUALS COMPLETION
DATE
1. Prepare consultant RFP TH CC, TH, PO 2/04
2. Select consultant TH CC, TH, PO 3/04
3. Design plans and specifications TH CC, TH, PO 4/04
4. Award project TH CC, TH, PO 6/04
5. Final completion TH CC, TH, PO 9/04
6.
7.
8.
9.
10.
GOAL #1
Community Goals and Initiatives
STRATEGY #1.4
Expand E-City Hall Services
Target Completion Date
2004 - 2005
DEFINE GOAL ACCOMPLISHMENT
Provide an electronic interface for residents to carry out regular business with city departments and staff. Projects include but are not
limited to online registration and payment for recreational programs, basic building permits, and license renewals. This goal also
covers the selection of an internal customer relations module.
ACTION STEPS PRIMARY KEY TARGET COMMENTS
RESPONSIBLE INDIVIDUALS COMPLETION
DATE
1. Complete a needs/benefits assessment RR Dept Heads
for each city department in regards to
online service offerings
2. Survey cities to gather vendor RR Dept Heads Will use various city
recommendations associations for survey.
3. Select vendors and schedule product RR Dept Heads Some demos may be done
demonstrations with associated staff remotely.
4. Prepare bid proposal documents RR Dept. Heads Product pricing will
determine process.
5. Facilitate bid process - select vendor or
vendors
6. Install product or products
7. Train Staff Training may precede
installation in some products.
8. , Notify and provide online instruction for Combination of online web
! i public use based instructions and
i I newspaper articles. I
GOAL #1
Community Goals and Initiatives
STRATEGY #1.3
Prepare Financial Strategies Communication Plan
Target Completion Date
As needed
DEFINE GOAL ACCOMPLISHMENT
Develop a communications plan so that citizens are aware of and participate in large financial decisions of the City.
ACTION STEPS PRIMARY KEY TARGET COMMENTS
RESPONSIBLE INDIVIDUALS COMPLETION
DATE
1. Determine desired outcomes of TG, CC Dept. Heads As needed
public participation
2. Determine format (CAP, taskforce, TG, CC Dept. Heads As needed
etc.)
3. Receive applications, hold meetings TG, CC Dept. Heads As needed
4.
5.
6.
7.
8.
9.
10.
GOAL #5
Competitiveness
STRATEGY #5.11
Prepare Five Year Budget, CIP, Debt, and Revenue Forecasts
Target Completion Date
2004
DEFINE GOAL ACCOMPLISHMENT
Provide five year projections for operating and capital budgets, as well as revenues and debt service.
ACTION STEPS PRIMARY KEY TARGET COMMENTS
RESPONSIBLE INDIVIDUALS COMPLETION
DATE
1. Departments submit budgets to BD Dept. Heads 7/04
Finance
2. Finance produces five year estimates BD Dept. Heads 8/04
3. Projections presented to Council as BD BD, TG 9/04
part of budget process
4.
5.
6.
7.
8.
9.
10.
GOAL 4/3
Financial Position
STRATEGY #3.2
Explore franchise fee in context of financing needs
Target Completion Date
2004
DEFINE GOAL ACCOMPLISHMENT
Review options and impacts of establishing franchise fees on utilities.
ACTION STEPS PRIMARY KEY TARGET COMMENTS
RESPONSIBLE INDIVIDUALS COMPLETION
DATE
1. Collect data from other cities JM JM, PO 5/04
? Analyze impacts to City/residents JM JM, BD 5/04
_.
3' Share results with Council JM JM, TG, CC 6/04
4. Possibly incorporate into 2005 budget BD JM, TG, CC 8/04
5.
6.
7.
8.
9.
10.
I GOAL #5
Competitiveness
STRATEGY #5.13
Identify and Fund Future Staffing Requirements to Match Growth
Target Completion Date
2004
DEFINE GOAL ACCOMPLISHMENT
Analyze current staffing levels and determine where and when additional staff is needed.
ACTION STEPS PRIMARY KEY TARGET COMMENTS
RESPONSIBLE INDIVIDUALS COMPLETION
DATE
1. Departments submit annual budgets BD Dept. Heads 7/04
2. Finance and City Manager review BD, TG Dept. Heads 8/04
requests
3. Justification for new positions Dept. heads Dept. Heads 10/04
presented to Council during budget
presentations
4.
5.
6.
7.
8.
9.
10.
GOAL #4
Infrastructure/Capital Equipment
STRATEGY #4.22
Prepare non-annual recurring maintenance schedule
Target Completion Date
2004
DEFINE GOAL ACCOMPLISHMENT
Compile database of all City facilities to track and predict maintenance needs.
ACTION STEPS PRIMARY KEY TARGET COMMENTS
RESPONSIBLE INDIVIDUALS COMPLETION
DATE
1. Collect list of facilities from GASB JM JM, BD 3/04
34 data
2. Compile list of improvements on JM JM, DD 6/04
each building
3. Report to Council as part of 2005 JM JM, TG, BD 8/04
budget process
4.
5.
6.
7.
8.
9.
GOAL//7
Enterprise
STRATEGY//7.51
NPDES Phase II Compliance
DEFINE GOAL ACCOMPLISHMENT
Target Completion Date
2008
Ensure compliance with National Pollutant Discharge Elimination System (NPDES) Phase II Municipal Separate Storm Sewer System
(MS4) Permit and all subsequent modifications by implementing Storm Water Pollution Prevention Program (SWPPP) and preparing
and submitting annual reports in a timely fashion.
ACTION STEPS PRIMARY KEY TARGET COMMENTS
RESPONSIBLE INDIVIDUALS COMPLETION
DATE
1. Prepare and submit annual report LH LH 3/04
2. Continue administration of SWPPP LH LH/PO/MW 3/08 Ongoing (see SWPPP)
3. Conduct public meeting CC CC/LH 2/05
4. Prepare and submit annual report LH LH 3/05
5. Conduct public meeting CC CC/L,H 2/06
6. Prepare and submit annual report LH LH 3/06
7. Conduct public meeting CC CC/LH 2/07
8. Prepare and submit annual report LH LH 3/07
9. Conduct public meeting CC CC/LH 2/08
10. Prepare and submit annual report LH LH 3/08
GOAL #4
Infrastructure/Capital Equipment
STRATEGY #4.2
Identify Options for Funding Pavement Management Program.
Target Completion Date
2004
DEFINE GOAL ACCOMPLISHMENT
Review Pavement Management program and funding options to ensure long term preservation of pavement system network.
ACTION STEPS PRIMARY KEY TARGET COMMENTS
RESPONSIBLE INDIVIDUALS COMPLETION
DATE
1. Work session - review funding for
2004 street improvement projects and PO PO,MS,BD 2/04
future projects
2. Work session- review and refine
future street improvement projects PO PO 5/04
with funding options.
3. Monitor
4.
5.
6.
7.
8.
GOAL #1
Community Goals and Initiatives
STRATEGY #1.S1
Identify Options for Replacing 2007 Environmental Fund
Target Completion Date
2005
DEFINE GOAL ACCOMPLISHMENT
Identify legal funding options and present them to the City Council for review
ACTION STEPS PRIMARY KEY TARGET COMMENTS
RESPONSIBLE INDIVIDUALS COMPLETION
DATE
1. Determine if SWMP funds can be BD BD, KA, LH, RK, 4/04
used for environmental and forestry JS
purposes.
2. Determine funding methods used by LH JS 8/04
neighboring communities
3. Estimate amount of funds needed on BD BD, KA, JS 9/04
an annual basis if tax levy is used.
4. Present findings to City Council BD BD 10/04
5.
6.
7.
8.
9.
GOAL #7
Enterpri se
STRATEGY #?.2
Review General Fund Cost for Enterprise Service Rate
Consideration
Target Completion Date
2004
DEFINE GOAL ACCOMPLISHMENT
Establish transfers to General Fund from Special Revenue and Enterprise Funds for administrative and overhead costs.
ACTION STEPS PRIMARY KEY TARGET COMMENTS
RESPONSIBLE INDIVIDUALS COMPLETION
DATE
1. Determine appropriate cost drivers BD BD, KA, JM, PO 7/04
for each fund and how the general
fund is affected
2. Generate direct cost and overhead BD BD, KA, JM, PO, 8/04
allocation bases for each fund BE
3. Present options to City Council to BD BD 8/04
determine tax levy strategy in
preparing 2005 budget
4.
5.
6.
7.
GOAL #5
Competitiveness
STRATEGY #5.3
Update Risk Management Policy
Target Completion Date
2004
DEFINE GOAL ACCOMPLISHMENT
Update risk management policy to minimize exposure to accidents and high insurance premiums.
ACTION STEPS PRIMARY KEY TARGET COMMENTS
RESPONSIBLE INDIVIDUALS COMPLETION
DATE
1. Convene Safety Committee JM JM, CW 4/04
2. Review current practices JM JM, CW 5/04
3. Consult with St. Paul Companies JM JM, CW 5/04
4. Present revised policy to Council JM JM, TG 7/04
5.
6.
7.
8.
9.
10.
GOAL #3
Financial Position
ISTRATEGY #3.4
Review Assessment Practice to Address Pavement Management
Program
Target Completion Date
2004
DEFINE GOAL ACCOMPLISHMENT
Adopt an assessment policy/practice to be used on future street improvement projects.
ACTION STEPS PRIMARY KEY TARGET COMMENTS
RESPONSIBLE INDIVIDUALS COMPLETION
DATE
Work session - review assessments
for 2004 street improvement projects
1. and discuss current assessment PO PO, MS 2/9/04
policy. Also discuss if current policy
should be changed
2. Work session - review final
assessment alternatives for future
PO PO,MS, BD 3/04
street projects and modifications to
assessment policy.
3. Approve final assessment policy PO PO,MS 3/04
4. Monitoring
5.
6.
7.
8.
9.
GOAL #3
Financial Position
STRATEGY #3.11
Update Fund Balance Policies for All Funds
Target Completion Date
2004
DEFINE GOAL ACCOMPLISHMENT
Determine appropriate fund balance levels and incorporate them into the financial policies of the City.
ACTION STEPS PRIMARY KEY TARGET COMMENTS
RESPONSIBLE INDIVIDUALS COMPLETION
DATE
1. Review GFOA literature and BD BD, DW 3/04
guidance from the State Auditor's
office
2. Prepare language for fund balance BD BD, DW 4/04
policy
3. Review with Ehlers and Auditors BD BD, Tautges 5/04
Redpath, Ehlers
4. Present to City Council BD BD 5/04
5.
6.
7.
8.
9.
GOAL #3
Financial Position
STRATEGY #3.13
Update Investment Policy
Target Completion Date
2004
DEFINE GOAL ACCOMPLISHMENT
Review current investment policy and determine what changes, if any, need to be made and incorporate into financial policies of the
City.
ACTION STEPS PRIMARY KEY TARGET COMMENTS
RESPONSIBLE INDIVIDUALS COMPLETION
DATE
1. Review GFOA literature and BD BD, DW 3/04
guidance from the State Auditor's
office
2. Prepare language for investment BD BD, DW 4/04
policy
3. Review with Ehlers and Auditors BD BD, Tautges 5/04
Redpath, Ehlers
4. Present to City Council BD BD 5/04
5.
6.
7.
GOAL #7
Ente~T~rise
STRATEGY #7.5
Update Storm Water Management Plan
Target Completion Date
2005
DEFINE GOAL ACCOMPLISHMENT
A surface water management plan (SWMP) that accurately reflects the current state of storm water management in Chanhassen;
accommodates for future development; achieves compliance with applicable federal, state and local requirements; integrates other
local water management plans; and provides a stable source of financing for surface water management-related endeavors.
ACTION STEPS PRIMARY KEY TARGET COMMENTS
RESPONSIBLE INDIVIDUALS COMPLETION
DATE
1. Develop Request For Proposals LH LH 3/04
2. Approve RFP CC CC/LH 4/04
3. Evaluate RFPs LH LH/Eng./Plan. 5/04
4. Select consultant LH LH/Eng./Plan. 6/04
5. Award contract CC CC/LH 7/04
6. Preliminary data gathering LH LEI/Consultant 9/04
7. Final draft LH LH/Consultant 12/04
8. Adopt updated SWMP CC CC/LH 2/05
9.
il0.