NOTICE OF PUBLIC HEARING CITY OF MILWAUKIE The Milwaukie City Council will hold a public meeting on June 5, 2018 at 6:00 p.m., at 10722 SE Main Street, Milwaukie, Oregon 97222. The purpose of this meeting is to declare the City’s election to receive state revenue sharing funds, levy and classify property taxes, and consider adoption of the Budget Committee’s approved budget for the 2019-2020 biennium. The BN 2019-2020 budget was prepared in accordance with the basis of accounting used in the preceding year and includes levying a property tax rate of $4.1367 per $1,000 of taxable assessed value for operations and $913,000 for general obligation bonds for FY 2018-2019, and for FY 2019-2020 includes the rate of $4.1367 per $1,000 of taxable assessed value for operations and $910,000 for general obligation bonds. Copies of the budget document are available online at and/or at Milwaukie City Hall between the hours of 8:00 a.m. and 5:00 p.m. Narrative Summary of the BN 2019-2020 Budget: To the Citizens of the City of Milwaukie, Six years ago, the city undertook the Moving Forward Milwaukie planning process. The goal was to elevate our downtown into a vibrant, stable community center, and to extend the benefits of a connected and thriving city throughout our neighborhoods. Today’s budget, which is balanced and financially prudent, reflects the work of the past six years, as well as the city’s commitment to achieving the dreams shared by our residents. Far more than just numbers, our budget is the toolbox that will make extraordinary things happen over the next two years. In November 2016, the city initiated our visioning process as an outcome of Moving Forward. Over the course of a year, Milwaukians attended Town Hall meetings to create a document defining who we want to be. At the end of 2017, Council adopted three goals based on those recommendations: Housing Affordability, Completion of Milwaukie Bay Park and Development of a Climate Action Plan, recently amended to include implementation of carbon reduction strategies. This budget also adopts a fourth goal, set by me and the Department Directors, to provide effective and efficient government. Finally, the budget completes the goals initiated, but not yet completed by previous Councils including: — A greatly improved Ledding Library — Implementation of the Safe Access For Everyone (SAFE) program — Completion of Kronberg Multi-Use Path, reconstruction of the Milwaukie Bay Park bridge and beach — Completion of the city’s updated Comprehensive Plan — Redevelopment of Milwaukie’s entire South Downtown (including a festival street for the Milwaukie Farmers Market) and a long-standing need of the city to develop additional space for staff. These, individually, are daring goals for Milwaukie, but what this budget funds is a community transformation. It will create a better Milwaukie that is more aligned with our community’s vision for who we hope to become. The City’s Goals Housing Affordability has become a national issue, heightened especially in this region, as we face dramatic growth pressures. By setting a goal to greatly influence this issue, Council has committed to supporting both the development of new Market Rate Units and significant increase in the number of units affordable to community members from varied backgrounds. This budget supports that goal in several ways. First, a position within Community Development is being restructured to focus on housing, with a secondary focus on economic development. In addition, a limited-duration planning position has been made permanent to support the ever-growing demands that accompany more housing applications. Second, you will find the budget line item associated with the Construction Excise Tax, approved earlier this year, that allows for investments into projects that increase the affordability of units. Finally, you will find land banking and real estate technical funding within the Community Development budget to allow the city to secure parcels, should they become available, for this goal. However, these funding moves do not accurately portray the scale of work underway to working towards this goal. Redevelopment in South Downtown will create a couple hundred additional housing units and are projected to finish during this biennium. Development of the Harrison and Main site could add another 100, including at least 20 affordable units. The Hillside Manor Master Planning process will lead to improved affordable units for those in residence, while supporting an increase in the number of obtainable units on the site. Each additional unit relieves the pressure currently driving rents and purchase prices higher. It’s the city’s intent to do all it can to keep Milwaukie the blue-collar town we are proud to be. Milwaukie Bay Park has been in development for decades. Council’s commitment is driving the park to be completed by October 31, 2020, at which time the city’s Corps of Engineers Permit expires. The park will be constructed largely based on responses shared during the past visioning process. However, a few questions remain and the community can expect an engagement process to solidify the plans. Those costs are being born primarily by our community partner North Clackamas Parks and Recreation District, but to show our support for this goal and to assure its timely completion, this budget proposes $250,000 in general fund contributions to achieve our goal. In July, the city is expected to adopt the Climate Action Plan (CAP), achieving one of Council’s three goals. For this reason, Council expanded the goal to direct more resources towards achieving climate-related items called out in the Vision Action Plan and the CAP. This work requires a dedicated staff person, as well as some smaller allocations for developing metrics and tracking the city’s carbon footprint-both of which are included in the budget. This goal also plans for the increased focus the city has placed on tree management and improving Milwaukie’s total tree canopy. To achieve this, the city has shifted existing resources to increase the number of staff maintaining Milwaukie’s natural areas and existing urban forest. This budget and work plan also express the city’s commitment to leading the way on energy efficiency and renewables. The city’s Ledding Library project is already blazing the path on building efficiency by using one sixth of the energy the current building consumes, and integrating the city’s first solar installation. Buildings being constructed in downtown will also include significant energy-efficiency measures to comply with a new bonus requirement that buildings achieve a green building standard to secure development of a fifth floor. While striving for these goals, the city remains dedicated to providing effective and efficient municipal services. This budget maintains operation funding levels for all departments, while providing increases agreed upon through bargaining and meeting our healthcare and PERS obligations. Last year, the administration, in consultation with Council, eliminated use of the photo radar van due to difficulties in staffing it, as well as philosophical shifts around its role. To reflect this change, the city has eliminated one FTE in the Police Department (van operator) and a .5 FTE in the Milwaukie Court. This budget also shifts Emergency Operations funding and responsibilities from the Milwaukie Police Department to the Finance Department, where there is a trained and dedicated EOC expert. This past year, Council expedited the SAFE program and approved an increase in the number of FTE required to fulfill those obligations. This budget accounts for these decisions in both the Engineering and Public Works Departments. These employees also require the city to construct new spaces for more employees, which has been planned for in the Facilities budget. The location of the new space is expected at either City Hall or the Pond House, with construction anticipated early in the first biennium. Overall City Budget For the biennium period beginning July 1, 2018, the budget totals $154 million and is balanced, as required by the statutory limits of Oregon budget law. Personnel services represent 24% of the total budgeted expenditures at $38 million, materials and services represent 18% of total expenditures at $27 million, debt service represents 4% of total expenditures at $7 million, and capital outlay makes up 28% of the total budgeted expenditures at $44 million. Transfers, contingency and ending fund balances comprise the remaining portion of the budget, totaling $38 million to balance the budget. Operating Expenses Continuing to Trend up Citywide, budgeted personnel services expenditures are up 19% over the prior biennium due to anticipated benefit cost increases, cost of living increases and additional hiring to provide staff capacity to complete Council goals and execute new approved programs like SAFE and the integrated CIP. The budgeted materials and services expenditures are up 17% over the prior biennium to restore previous service levels and to keep pace with inflation. Transfers to other funds is up 19% over the prior biennium budget to account for increased costs related to General Fund personnel services, materials and services and capital outlay. Reserve Fiscal Policies Our fiscal policies define the boundaries for many fiscal decisions and continue to guide our operating and financial procedures. These policies also include targeted reserve balances. Defining adequate reserves is critical because: — In times of fiscal duress, adequate reserve funds are necessary to continue to provide needed services to citizens without significant interruption or uncertainty. — The primary source of revenue to fund police and library services property taxes is not received until five months into the fiscal year. If adequate reserves are not maintained, the city must borrow, either internally or externally, until the receipt of funds. This increases costs due to required interest payments on the borrowing or loss of interest earnings when financed internally. — Bond rating agencies critically review a city’s reserves prior to providing a rating on a bond sale. A better rating may result in lower interest rates on city debt, which ultimately saves taxpayers money. There are two types of reserves: contingency reserves represent the portion of reserve funds that may be used during the budget period for unforeseen or unexpected items, as approved. Unappropriated Ending Fund Balance reserves are intended for use in future years, unless significant unforeseen issues arise that require action by management. The use of contingency reserves must be approved by the City Council through a supplemental budget process. We have not proposed any changes to the proposed policy reserve levels and have presented a budget the maintains compliance with the policy throughout the biennium. Personnel and Full-time Equivalent (FTE) Changes The city has two collective bargaining arrangements-the Milwaukie Police Employees Association (MPEA) and the Milwaukie Employees Association (AFSCME). Considering that personnel costs are approximately 24% of the city budget, funding in this area is integral to balancing the budget while continuing services at a level to meet community expectations. In 2011, we implemented processes to ensure that any vacant position within the city is closely scrutinized before a plan to fill the position commences. This process continues and has allowed us to preserve funds and make decisions to more efficiently deliver service within budget constraints. Debt Overview The citywide debt is projected to be approximately $38.5 million. This includes authorized but not issued debt of $21 million to fund SAFE, SSMP and other transportation CIP projects. The city’s credit rating is solid at the Aa2 level as that is the rating the city received on the $9.2 million of General Obligation bonds approved by voters and issued in 2016. Additionally, in February 2017 Moody’s Investors Service upgraded the city’s rating of the city’s Full Faith and Credit Obligations, Series 2014 from Aa3 rating to Aa2 rating. City Council has authorized the issuance of Oregon Full Faith and Credit Obligations, in one or more series, in an aggregate principal amount with a not to exceed amount of $21 million for the financing of capital construction and improvements related to streets, sidewalks and various other transportation projects. Oregon PERS Despite our widespread cost-cutting changes, the amount that Oregon’s state and local governments pay for pension costs continues to climb significantly and as such, are reflected in this budget. Much of the increase is the result of PERS continuing to pay for stock market losses on the investment of pension funds in 2001 and again in 2008. Even though PERS investments earned healthy returns in years other than 2001 and 2008, the system is weighed down by the losses in those years. PERS makes up these losses through rate increases that public agencies are responsible for throughout Oregon on the payroll of current employees. For this budget, we have balanced the budget inclusive of these PERS rate increases, estimated to increase an additional 5.67% of payroll, effective starting in July 2019. Five Year Financial Forecasting Long-term financial planning uses financial forecasts and analysis to identify future financial challenges and opportunities, and then identifies strategies to secure financial sustainability in light of such challenges and opportunities. It satisfies two requirements that can sometimes be difficult to reconcile. First, long-term forecasting provides strategies to achieve and maintain financial balance. Second, it identifies from a financial perspective, how the city will provide a consistent level of public services while addressing the unique issues of concern to our community. Please understand that the quickest path to financial balance is usually the curtailment of services – cuts which the public may not find acceptable or which may even endanger the communitys basic health, safety, and welfare. At the same time, providing public services to the full extent desired and deserved by the community may not be financially feasible. Hence, a good financial forecast requires balance and compromise between the public services provided by the government and the debt and tax burden supported by the community. Fund Structure Throughout the budget process our goal has been to organize the fund structure so that our budgets are simple, easily understood, supportable, and as transparent as possible to the citizens of Milwaukie. In this spirit, we continue with the simplest of Fund structures of 10 funds as follows: General Fund 1. General Fund – The General Fund is financed through general resources of the City including property taxes, franchise fees, fees and charges, intergovernmental revenues, and interfund transfers. Debt Service Fund 2. Debt Service Fund – The Debt Service Fund is financed through property taxes and intergovernmental revenues. Special Revenue Funds: 3. Building Inspections Fund – The Building Inspections Fund is financed through fees and charges for building related services. 4. Library Fund – The Library Fund is financed primarily through the County Library District Dedicated Levy, general property taxes, and library fines. 5. Transportation Fund – The Transportation Fund is primarily financed through state and local gas taxes, franchise fees, the City’s street maintenance fee, and intergovernmental grants. 6. Affordable Housing (CET) Fund – NEW! – The Affordable Housing Fund is primarily financed through a local Construction Excise Tax. Enterprise Funds 7. Water Fund – The Water Fund is primarily financed through user fees. 8. Wastewater Fund- The Wastewater Fund is primarily financed through user fees. 9. Stormwater Fund – The Stormwater Fund is primarily financed through user fees. Capital Project Funds: 10. Systems Development Charges Fund – The Stems Development Charges (SDC) Fund is primarily financed through SDC’s. We continuously commit ourselves to making our municipal budget as understandable as possible while pledging to be as transparent as possible. This fund structure provides the foundation for solid and transparent financial planning well into the future. Conclusion In closing, I want to thank all of the staff who had input into this document. In particular, I want to acknowledge the department directors for their considerable effort in aligning departmental needs to fund Council goals. To all of you, thank you. We will strive to maintain our services at high levels while working to stretch our resources. We are in position to do this as effectively as possible given our improved budget and financial forecasting process. Respectfully, /s/Ann Ober City Manager Publish May 30, 2018. CLK49959

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Publication: CLK OPC Legals 2

Section: Legals

Start Date: 2018/05/30

End Date: 2018/05/31

Owner: City of Milwaukie


County: Clackamas