The City of Rushford has spent more than a decade cracking away at infrastructure needs accelerated by 2007 flooding. Utilizing financial planning tools, in partnership with Mike Bubany, of David Drown & Associates, the city has been able to continue a steady pace forward while maintaining a self-imposed debt per capita threshold.
Bubany was on hand at the October 15 council meeting to present updated information for planned planned future projects, including debt service needs, debt levels, utility service charges, long range planning, and comparables with similar municipalities. Using financial modeling, the council got a clear outlook for tax and utility rates, as well as cost estimates impacts for households if projects are done. A 3% annual increase was included in projects for operational spending on the assumption that the tax base will also continue to grow at the same rate.
“We’re attempting to keep the tax rate as flat as we can. Monthly water usage indicates projected cash reserves you can see the water fund is now performing well. The sewer fund has made a nice recovery,” began Bubany. “Capital outlay fund has roughly $1 million in it and is steady.”
Remarkably, despite its size and amenities, the city also has one of the lowest tax rates in the county, 89% for 2019, third to just Whalan (39%) and Fountain (69%). “In a municipal comparison of Fillmore County cities, you’re one of the better ones,” noted Bubany. “You have a better tax rate than most. Your water bill is higher, but the sewer bill is spot on. You stack up kinda well, you know, but you have to take it all into account.”
“There’s so many variables, but this is a baseline. You’re doing fairly well, but have not added any projects,” continued Bubany. The city is already planning a Highway 30 Street Improvement Project for 2022. The estimated $2.175 million project is slated for a 10-year general obligation bond and plans are to pay for it using state funds, water and sewer fund, property assessment, and tax levy. “You have the financial wherewithal to get in and get out with these projects.”
Building a few generic no-name projects into the program, the council was easily able to see the impact on tax base, water, sewer, and households. Hypothetically, built in were a $1.5 million, 10-year project for 2025, two water and sewer projects each $1 million in size over a 20-year bond, and a larger project up to $2.5 million in size, over a 10-year span, for 2027. With some finagaling of where finances are pulled from, the city would be able to keep tax and utility rates relatively flat. “It may be nice to some day, maybe, get to a self-imposed $5,000 debt per capita threshold,” added Bubany. The city’s current threshold is $6,000.
“By improving infrastructure, we will begin to have less and less debt projects,” added Councilor Jim O’Donnell.
“At that point, you keep what you can and jam it into maintenance,” suggested Bubany. The city is already planning and budgeting for scheduled maintenance of recently updated infrastructure. “Of course, all of this could change in a heartbeat. There’s so many variables that all we can do is be reasonable in our projections.”
A few areas of caution for the city included possible usage of Capital Outlay Fund dollars for larger projects rather than scheduled smaller needs or other projects that crop up. “It’s wonderful when you have those unplanned/unforeseen projects. You have a nice cushion,” said Bubany. In addition, the city will likely be losing an estimated $10,000 in tax base as the Farmers Win Coop grain elevator site in Rushford is removed, having been sold already. “With over $1 million of tax base, it’s relatively small,” noted Bubany.
Bubany also noted trends within the water and sewer rates during long-term project planning. While the water rate remained fairly constant, the sewer rate bill projections will take a significant hit if rates are not increased within the next two years. It’s been more than five years since rates were increased and Bubany suggested the city build in a 2% increase every year, beginning in 2020, to keep the rate steady and help build reserves. “If not now, you will have to do a bigger catch up later,” he stated. “Sooner rather than later you want to institute a long-term increase in rates.”
“The whole scenario… that’s why when we plan these, we’re able to choose various projects of varying sizes to meet thresholds,” said O’Donnell praising the financial planning.
“From a financial standpoint, it really drives the projects,” added City Administrator Tony Chladek. “We’re really stress testing the finances.”
In other news, the city has opted to extend its contract with Darr Realty for the sale of properties in the Himlie Business Park. The city has partnered with the company since 2015 and the number of inquiries and/or sales of properties has steadily ticked up.
“It really helps out,” noted Councilor Terri Benson. “It’s a long-term relationship, but looking at it year to year and asking does this still work for us. It feels like its a strong relationship to build within the community.” The council unanimously approved the extension through December 31, 2020.
A recently held community meeting for residents affected by recently updated Federal Emergency Management Agency flood mapping had a productive outcome, according to Chladek. The majority of residents were able to secure flood insurance through their own agency or directly. It was noted that Engineer Derek Olinger, of Bolton & Menk, who led the meeting, conducted a good discussion and did well presenting. A second meeting for residents regarding the next step, filing a Letter of Map Amendment, will be held October 23.
The next regularly scheduled meeting is Monday, October 28, at 6:30 p.m., at city hall. The public is encouraged to attend.