08-816WITHDRAWN 8106/08
RESOLUTION
1 Resolurion Accepling a Financing and Spending Plan for License & Permit Fund 320
2
3 WHEREAS, A hment A presents a proposed financing and spending plan for operarion of License & Perxnit Fund 320 that
4 was prepazed by the epartaient of Safety and Inspections in cooperation with the Office of Financial Seroices;
5
6 WHEREAS, Attachmen B provides a narrative snu�ary of factors taken into consideration in prepazarion of the proposal;
7 now, therefore be it
8
9 RESOLVED that the City Co il accepts the Mayor's plan foi addtessing the revenue shortfall in the License and Permit fund
10 as outlined in attachments A and � and be it
11
12 FURTHER RESOLVED that the De ent
13 and spending reducrions accomplished Octo
14
15 FURTEIER RESOLVED that the 2009 bu t
16 ieserves; and be it
17
18 FINALLY RESOLVED that the status zeports
19 of Safery and Inspections budgets including the
20 Enforcement Fund.
of Safety and Inspecrions will provide a status report on actual revenues received
ber and December; and be it
will include a recommendation on the management of fund balance
ude updates on spending and financing associated with all Deparhnent
Fund, Charitable Gambling Enforcement Fund, and the Pcoperry Code
Council File # �g'�� �
Green Sheet # 3057557
Requested by Depa
a���
Adoprion Certified by Council Secretary
$y:
Apptoved by Mayor: Date
�
BY� �..�.�..a.rM.
Approved by the Office
By:
1
Approv Ciry Attox
i
By:
�
Services
l
Adopted by Council: Date
� Green Sheet Green Sheet Green Sheet Green Sheet Green Sheet Green Sheet �
� v0 '���G
SI "Dcp[�,(S
__. _'__ �
ConWCt Person &
Bob Kessler
266-9013
Must Be on Courn
Doa Type: RESOLUTION
�
_ ASSign
. by (Date): Number
For
— - Routing
Order
E-DOCUmentRequired: Y
Document Contact: Robert Humph
. .._ GonWCtPhone: 266-9'123 `
� Total # of Signature Pages _(Clip AII La
ActionRequested: � � ��
, Approval of a Resolution estab(ishing the
i
� Recommendations: Approve (A) or R
� Planning Commission
CIB Committee
Civil Service Commission
i
— �reen Sheet NO: 3057557
Denartment Sent er�son � InitiaflDate
0 DentofSafery&Inspections�' /.�7J��/__p �-�,�
�
1 DeOt, of Safety & Inspections Denart¢ient ➢irector
2 City Attorney _ _
3 Mawr's ORce Mayor/ASSistani _
4 Council
5 !Ci Clerk _ CitvClerk �_
for Signature)
for the Department of Safety and Inspections' revenue shortfall.
1. H this person/firm ever worked under a contract for this department?
, Yes No
I 2. Has this rson�rm ever been a city employee?
Yes No
I � 3. Does this pers /firm possess a skill not normally possessed by any
currentcilyempl e?
Yes No
��, Explain all yes answers separate sheet and attacfi to green sheet
i Initiating Problem, Issces, OppoAunity (Who, What, When, Where, Why):
'. A general nation-wide economic downtum has adversely effected the construction indus
', downtum has effected DSPs revenue and led to a shortfall of previous budget estimates for
�, Advantages If Approved: '
'�, DisadvantageslfApproved:
',-_—____—_—..._— —_______-___.__—__ _—_- _________—_
� Disadvantages If Not Approved:
Total Amount of
' TransacGU�:
�� Funding Source:
, Pinanciallnformation:
'� (Explain)
& Inspections 30-JUL-0B
CosURevenue Budgeted:
Activity Number:
As DSI`s revenue is based on fees, t6is
%
_ —I
July 30, 2008 72:08 PM Page 1
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4
DEPARTMENT OF SAFE'CY AND INSPECCIONS
Bob Kess[er, DirectPr
t� -�11.� -----
CIT`Y OF SAINT PAUL
Clv+stapker B. Colemon. Mayor
MEMO
To: Counci Preside:
Council mber
Council M vin
Councilmem r
Councilmembe
Councilmember
Councilmember
st Kathy Lantry
Dan Bostrom
Carter III
Pat Harris
Lee Helgen
ss Stark
Da e Thune
Fi° Bob Kessler i U��
Directar of Safety and
Date: July 16, 2008
Re: The Current Condition of the
COMMERCE BUILDING
8 Fourth Street E¢st, Suite 200
StPau(,Mmnesota 5�107-1024
Attachment B
and Permit Special Fund 320
TeleP���ne 65l-?66-9090
Facsmrde 6�1-266-912�
Web: mak'.stpaul.eoridsa
Fimd 320, the License and Permit Special F d, is the major source of funding for the
Department of Safety and Inspections, represe ing 60% of the Department's annual budget at
approximately $12.2 million in 2009. Fund 320 as a number of different revenue sources, some
of which are fairly constant and predictable such a: business licensing fees, building trades
licensing, and elevator inspections. On the other han , the fund also contains approximately 28
consiruction permit related revenue sources which reflect building activity and vary in relation to
the economy.
The variation of construction activity is difficult to predict from month to month and year to
year. The attached analysis of permit revenue trends since 1 7(Appendix A) shows a steady
growth of revenue except for a brief decline of approximately % after the events of September
11, 2001. Other than the 911 anomaly, revenues have exceeded udgeted amounts for at least
the past 14 years. (The report covers the last 10 years, detailed in rmation before 1997 is not
readily available)
DSI staff closeiy monitor license and permit revenues on a monthly ba is and we became very
concerned in May 2008 when the April report was down more than $27 000 after a slow winter,
which we initially attributed to the unusually cold weather this year. Un rtunately, both the
May and June reports continued the downward trend to confirm that permi activity was
reflecting the general slow down in the economy and that we were not going o collect sufficient
permit revenues to meet our budget for 2008. Therefore, in consultation with e Mayor's
Office, we have tal:en some initial steps to reduce expenditures, explore alterna �ve revenues, and
to report to the City Council that in all likelihood, financing for Fund 320 will be ' sufficient to
AA-ADA-EEO Employer
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report to the City Council that in all likelihood, financing for Fund 320 will be insufficient to
�et the City Council adopted spendm�ap�ropriaiions,_and.ThaL�nceanticipate_usixig-�ig-.te-- -- --
,�r� __ -- - ' - -
rxui:...,aa..;�..rt �,..,��„r„�o - —. __._ -- --
A wors� case scenario would be a shortage of as much as $2,000,000 or 15.5% of the total budget
in fund �
reductions
activity or in
While this is a large problem, we believe that it is manageable without significant
service through prudent plamiing and parsimonious use of existing revenues.
� t is important to note that there is no decline in the overall amount of permit
workload of the departrnent.
This seeming contr iction can be explained by looking at the type of permits we are seeing. For
example, the prolong slump in the construction of new housing over the last 18 months is
reflected in a lack of pe its for new housing construction. However, the total number of
permits for additions and emodels is up so that the total number of permits is remarkably the
same. Put another way, al ugh our revenues aze down in 2008 because we don't have a lot of
new construction, the amoun f work is roughly the same because of a growth in smaller repair
and remodel projects. The reas why we are not seeing a reduction in workload is due to the
fact that smaller proj ects aze gene ting less fee revenue wbile utilizing roughly the same amount
of inspection time.
Interestingly, the increase in small repa and remodeling jobs does appear to be the result of the
increased pressure Code Enforcement is acing on the repair of vacant buildings. ThaYs
definitely a positive aspect of the situation, d one that we need to recognize as a silver lining in
challenging economic times.
Since our revenue shortage is associated with the lum�
everyone is asking these days is what is going to ha e
desperately need to know what the revenue picture is �
of the year. We need to gather the best information we
construction industry in Saint Paul to better predict our
of 2009. We are in the process of talking to bankers, dc
identify what they have planned for 2008 and 2009.
1g economy, the burning question that
in the next few months? For DSI, we
ng to look like between now and the end
an on the current state of the
; enue for the remainder of 2008 and all
elo ers and construction companies to
In the meantime, we have implemented some extensive cost contr measures designed to reduce
2008 spending in every way that we can across the whole departme , not in just fund 320,
where the revenue shortage is located. The following are the main co ponents of our strategy:
• Initial readings show significant reductions in spending in salaries, fringes, and services
in the range of approximately $SSO,OOQ far the first six months of 2 Q8. We expect to
exceed these savings in the second half of 2008 for a total of approxi ately $1,100,000
in savings for the year.
A plumbing inspector position and customer service representative positio are expected
to become vacant in the coming month. We plan to keep both positions vac t for a
savings of $65,000. �
• Besides spending reductions we are fortunate to have several new revenue sources
including the increase in the Vacant Building Registration fee and the increase in the fee
2
J� � �
for Code Compliance Inspechons. We expect to generate approximately $3 � 5 00 in new
revenue for the remainde_r of 2008,_ _ --- ---
In a dition to the fee increases recently approved by the City Council, the State legislature
appro d a change in State law that allows the City to assess the cost of unpaid bills for vacant
building onitoring and fire certificate of occupancy fees. We expect this tool will substantially
improve o collection rate for both fee programs in 2008 and beyond.
Beyond the spe ding reductions and the new revenues we are proposing, as mentioned earlier in
this memorandum to rely on the use of additional fund balance to get us through 2008. Based
on our 2008 adopte budget, our fund balance at the end of 2008 was projected to be $2.15
million. At this point e believe that we need up to $500,000 in additional fund balance, leaving
a projected balance of $ 65 million at the end of the year. Although we would prefer not to
rely on fund balance to so e this problem, our existing reserve will help us address our revenue
challenge until permit reven es recover.
We are also working on a revise fund balance policy for fund 320 that takes into account the
fluctuations of the construction in stry so that we will be in a better position in the future to
address similar short term financing eeds when the economy slows down. We will be seeking
City Council approval of a the policy commendation.
Going forwazd we want the Mayor and C Council, and aA the residents of the City of Saint
Paul to know that we are monitoring our re nue collections on a daily basis and that we will
provide you with the current information toge er with our analysis of the situation on a monthly
basis. To that end we have attached a spreadshe t(Appendix B) which tracks the funds we have
received by month in 2008 and calculates the gap ' revenue on a monthly and yearly basis.
Please let us laiow if you haee any questions xegardin�this important matter.
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