Fiscal Years 2020 and 2021 Budget Impact ProjectionsCopyrighted
April 22, 2020
City of Dubuque Work Session - Bottom # 4.
ITEM TITLE: Fiscal Years 2020 and 2021 Budget Impact Projections
SUMMARY: • Jennifer Larson, Director of Finance and Budget
• Marie Ware, Leisure Services Manager
• HR Cook, Five Flags Civic Center Manager/ASM
Global
SUGGESTED DISPOSITION:
ATTACHMENTS:
Description Type
Budget Office Memo REVISED re Coronavirus Staff Memo
Financial Impact
Leisure Services - Five Flags Civic Center Budgetary
Changes and Information
ASM Global - Five Flags Civic Center Costs Update
and FY21 Budget Impact
Staff Memo
Supporting Documentation
Masterpiece on the Mississippi
TO: Michael C. Van Milligen, City Manager
FROM: Jennifer Larson, Director of Finance and Budget
SUBJECT: Estimated Financial Impact of Coronavirus
DATE: April 22, 2020
Dubuque
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2007.2012.2013
2017*2019
The financial impact of COVID-19 is unknown and unprecedented. A record number of
workers have filed for unemployment benefits in Iowa, as businesses closed and consumers
remained at home. The unprecedented surge in unemployment insurance claims comes just
weeks after the novel coronavirus was first detected in Iowa. The losses show an instant, deep
drop that surpasses even the Great Recession for Iowans. In Iowa, more than 210,000 jobless
benefit claims have been filed in the past four weeks — a record level, including a peak of
67,334 claims for the week ending April 4, far exceeding the combined 64,600 jobs it lost from
May 2008 to January 2010, the height of the recession.
The City of Dubuque relies on property tax revenue which is less "elastic" in short-term, but
over time unemployment increases and the result is a decrease in the real estate market
demand. Foreclosures due to unemployment, inability to pay taxes and mortgages, may
increase and happen more quickly. Some fees are immediately impacted, such as transit and
parking fees, because demand is reduced. Cities that don't significantly rely on sales tax or
income tax and do not have a high percent of employment in high -risk industries will realize a
decline in revenues more slowly than cities that do rely on sales tax or income tax.
The City of Dubuque's operating budget is funded as follows:
All Funds O •eratin • Revenue Source
28.0%
Utilities
Property Tax
19.2%
Operating Receipts
10.5%
State Grants
8.2%
Federal Grants
6.5%
Tax Increment Financing (TIF)
6.2%
Miscellaneous
4.9%
Local Option Sales Tax
4.2%
Franchise Fees
3.8%
Dubuque Racing Association Rent
3.8%
Riverfront Leases
2.4%
Hotel/Motel Tax
1.7%
Private Funding
0.6%
Total
100.0%
General Fund O •eratin • Revenue Source
6.4%
Utilities
Property Tax
36.9%
Operating Receipts
20.1%
State Grants
2.7%
Federal Grants
1.9%
Tax Increment Financing (TIF)
0.7%
Miscellaneous
1.5%
Local Option Sales Tax
6.5%
Franchise Fees
7.5%
Dubuque Racing Association Rent
7.2%
Riverfront Leases
4.1%
Hotel/Motel Tax
3.3%
Private Funding
1.2%
Total
100.0%
The FY21 property tax rate is based on 1/1/19 valuations. The 1/1/20 valuations are already
complete for the FY22 budget. Most likely the soonest that we would see significant decline in
assessed valuations due to a drop in market prices/increase in foreclosures is 1/1/21 which
impacts the FY23 budget which begins 7/1/22.
Due to COVID-19, we know that revenues will not be at the current level, however it is not
possible to know the definitive revenue loss and how long the loss will continue. The City of
Dubuque has been awarded some Federal Assistance such as Federal Transportation
Administration CARES Act Section 5307 Funds for $3,641,599; Community Development
Block Grant Coronavirus Funds for $647,301. Provides supplemental funding for community
assistance and some percent of which can fund administrative overhead; Housing and Urban
Development Housing Choice Voucher administrative funds for $86,000; Federal Aviation
Administration CARES Act Airport grant for $1,159,773. The City Manager will work with the
Airport Director and Airport Commission on a spending plan; Police Federal Bureau of Justice
Coronavirus Emergency Supplemental Funding for $68,679; and Ambulance Public Health
and Social Services Emergency Fund for $44,663 restricted to prevent, prepare for, and
respond to coronavirus.
The following table shows the estimated general fund operating revenue loss related to
COVID-19 for Fiscal Year 2020 and Fiscal Year 2021.
General Fund Operating Revenue
Property Taxes (1% delinquent in FY21)
FY20 Estimated
Revenue Loss
$0
FY21 Estimated
Revenue Loss
$267,000
DRA Rent
$1,111,685
$1,209,933
Gaming Taxes
$135,069
$163,769
Hotel/Motel Tax
$404,587
$389,000
Local Option Sales Tax (50% Operating)
$0
$997,391
Five Flags Loss in Revenue/Increase in Subsidy
$201,049
$0
Electric Franchise Fees
$0
$125,000
Gas Franchise Fees
$0
$49,518
Investment Earnings
$0
$305,038
Police Court Fines
$142,000
$247,549
Camping/Pavilion Fees
$122,000
$122,000
Recreation Programs/Golf/Marina
$443,000
$300,000
Aviation Fuel Net Profit
$293,000
$400,000
Building Permits
$126,403
$315,700
Housing Inspections
$60,387
$100,000
Zoning Inspections
$41,041
$25,640
Business Licenses
$38,611
$48,900
Total General Fund Operating Revenue Loss
$3,118,832
$5,066,438
2
The following table shows the estimated capital revenue loss related to COVID-19 for Fiscal
Year 2020 and Fiscal Year 2021.
Capital Revenue
FY20 Estimated
Revenue Loss
FY21 Estimated
Revenue Loss
DRA Distribution 100% Capital
$0
$1,599,417
Local O • tion Sales Tax 50% Ca • ital
$0
$997,391
Total General Fund Capital Revenue Loss
$0
$2,596,808
The following table shows the estimated Road Use Tax revenue loss related to COVID-19 for
Fiscal Year 2020 and Fiscal Year 2021.
Road Use Tax
FY20 Estimated
Revenue Loss
FY21 Estimated
Revenue Loss
Road Use Tax
$538,527
$2,978,351
Total Road Use Tax Revenue Loss
$538,527
$2,978,351
The following table shows the estimated Airport restricted revenue loss related to COVID-19
for Fiscal Year 2020 and Fiscal Year 2021.
Airport Restricted Revenue
FY20 Estimated FY21 Estimated
Revenue Loss
Revenue Loss
Passen • er Facilit Char • e
$32,763
$49,500
Customer Facilit Char•e
$15,069
$18,000
Total Airport Restricted Revenue Loss
$47,832
$67,500
The following table shows the estimated enterprise fund operating revenue loss related to
COVID-19 for Fiscal Year 2020 and Fiscal Year 2021.
Fund
Parking
Revenue Type
Parking Meter
FY20 Estimated
Loss
$181,000
FY21 Estimated
Revenue Loss
$260,000
Parking
Parking Ticket Fines
$92,000
$110,000
Parking
Ramp monthly fees
$172,000
$569,006
Parking
Event Rental
$13,000
$4,536
Parking
Lot Monthly fees
$14,000
$43,000
Parking
Parking - Ramp Daily Fees
$71,000
$53,000
Parking
Total Parking Revenue Loss
$543,000
$1,039,542
Water
Water User Fees
$0
$50,000
Water
Shut -Off Fees
$2,250
$0
Water
Late Fees
$25,263
$0
Water
Total Water Revenue Loss
$27,513
$50,000
Sanitary Sewer
Sanitary Sewer User Fees
$0
$50,000
Sanitary Sewer
Shut -Off Fees
$ 2,250
$0
Sanitary Sewer
Late Fees
$31,578
$0
Sanitary Sewer
Total Sanitary Sewer Revenue Loss
$33,828
$50,000
Stormwater
Late Fees
$11,841
$0
Stormwater
Total Stormwater Revenue Loss
$11,841
$0
3
Fund
Refuse
Revenue Type
Late Fees
FY20 Estimated
Loss
$10,263
FY21 Estimated
Revenue Loss
$0
Refuse
Total Refuse Revenue Loss
$10,263
$0
Transit
Passenger Fares
$55,613
$56,000
Transit
Advertising Fees
$19,303
$0
Transit
Total Transit Revenue Loss
$74,916
$56,000
Total Enterprise Fund Revenue Loss
$701,361
$1,195,542
The following table summarizes the total estimated operating revenue loss for all funds related
to COVID-19 for Fiscal Year 2020 and Fiscal Year 2021.
Fund
General Fund Operating
FY20 Estimated
Revenue Loss
$3,118,832
FY21 Estimated
Revenue Loss
$5,066,438
General Fund Capital
$0
$2,596,808
Road Use Tax Fund
$538,527
$2,978,351
Airport Restricted Funds
$47,832
$67,500
Parking Fund
$543,000
$1,039,542
Water Fund
$27,513
$50,000
Sanitary Sewer Fund
$33,828
$50,000
Stormwater Fund
$11,841
$0
Refuse Fund
$10,263
$0
Transit Fund
$74,916
$56,000
Total COVID-19 Revenue Loss
$4,406,552
$11,904,639
Between Fiscal Year 2020 and Fiscal Year 2021, the City of Dubuque could lose an estimated
$16.3 million in revenue.
The City of Dubuque has also incurred costs related to COVID-19. The following table
summarizes the cost through April 16, 2020:
COVID-19 Cost
Payroll Related to COVID-19 Work
Amount
$216,250
COVID-19 Employee Leave
$144,877
Five Flags Additional Subsidy Payment
$120,000
Sanitization of City Hall and Historic Federal Building
$52,101
Janitorial Products/Translation/Other
$20,502
Total COVID-19 Cost Through 4/20/20
$553,730
4
The following is the course of action being taken to help mitigate the financial burden of
COVID-19:
1. Administratively initiate a hiring freeze on most positions vacant in Fiscal Year 2020.
Positions will be evaluated by the City Manager on a case -by -case basis as they
become vacant, with there being few exceptions to the freeze. This hiring freeze will be
reevaluated minimally quarterly (July 1, 2020, October 1, 2020, January 1, 2021, and
April 1, 2021). How far into Fiscal Year 2021 vacant positions are frozen will be
determined by the revenues. Should this appear to be more of a long-term issue, it will
need to be dealt with using a more long-term solution through the Fiscal Year 2022
budget process. When positions were previously frozen in Fiscal Year 2015, the budget
was removed related to the frozen positions. This is not the case for the vacant
positions being frozen in Fiscal Year 2021, the budget will remain intact for the frozen
positions.
The Fiscal Year 2020 savings by fund from vacant positions that is available to help offset the
financial impact of the COVID-19 is as follows:
Vacancy Savings by Fund
General Property Tax
FY 2020
$926,063
Road Use Tax
$76.614
CDBG
$28.553
Transit
$14,317
Sanitary Sewer
$131,372
Stormwater
$72,937
Water
$128,141
Internal Service
$28,674
Garage Service
$85,383
Total FY20 Vacancy Savings All Funds
$1,386,992
In total, there are 26.10 full-time equivalents or 30 vacant positions frozen. The frozen Fiscal
Year 2020 vacant positions summarized by department and by type are as follows:
Department
Building
FTE
1.00
Type
Full-time
FY21 Cost
$115,864
10/01/20
Savings
$29,281
Economic Dev
0.25
Seasonal
$7,912
$1,940
Engineering
2.00
Full-time
$138,494
$35,066
Fire
3.00
Full-time
$229,620
$51,692
Housing
1.00
Full-time
$96,580
$24,410
Library
1.00
Full-time
$66,462
$16,793
MFC
0.48
Part -Time
$20,985
$5,306
Parks
1.00
Full-time
$64,280
$16,240
Planning
0.38
Seasonal
$9,490
$2,400
Police
4.00
Full-time
$336,938
$81,474
Police
0.62
Part -Time
$9,603
$2,429
Public Works
6.00
Full-time
$368,762
$92,007
Recreation
1.00
Full-time
$70,004
$17,689
5
De • artment
Recreation
FTE
0.09
T • e
Seasonal
FY21 Cost
$2,573
10/01/20
Savin • s
$0
Transit
0.28
Part -Time
$16,408
$4,113
Water
2.00
Full-time
$142,005
$35,882
W&RRC
2.00
Full-time
$138,164
$34,744
Total
26.10
$1,834,143
$451,465
The detail of positions that are vacant in Fiscal Year 2020 that will be frozen by fund and by
department is as follows:
Department
Building
Services
Fund
General
FTE
1.00
Type
Full -Time
Position
Building Services
Manager
Vacant
Date
4/10/2020
FY21 Cost
$115,864
10/01/20
Savings
$29,281
Economic
Development
General
0.25
Seasonal
Intern
8/3/2019
$7,912
$1,940
Engineering
General
0.87
Full -Time
Traffic Engineer
1/1/2019
$67,881
$17,153
Engineering
General
0.90
Full -Time
Engineering Assist
II ROW Tech
5/1/2018
$53,724
$13,572
Fire
General
1.00
Full -Time
Fire Fighter (FY21)
10/5/2019
$76,540
$17,231
Fire
General
1.00
Full -Time
Fire Fighter (FY21)
4/1/2020
$76,540
$17,231
Fire
General
1.00
Full -Time
Fire Fighter (FY21)
4/1/2020
$76,540
$17,231
Housing
General
0.50
Full -Time
Assistant Director
11/1/2019
$48,287
$12,203
Library
General
1.00
Full -Time
User Support
Specialist
3/9/2020
$66,462
$16,793
MFC
General
0.48
Part -Time
Receptionist
4/1/2020
$20,985
$5,306
Parks
General
1.00
Full -Time
Maintenance
Worker
7/1/2019
$64,280
$16,240
Planning
General
0.38
Seasonal
Intern
1/24/2020
$9,490
$2,400
Police
General
1.00
Full -Time
Police Officer
7/1/2019
$84,234
$20,368
Police
General
1.00
Full -Time
Police Officer
7/1/2019
$84,234
$20,368
Police
General
1.00
Full -Time
Police Officer
7/1/2019
$84,234
$20,368
Police
General
1.00
Full -Time
Police Officer
7/1/2019
$84,234
$20,368
Police
General
0.62
Part -Time
Records Clerk
9/25/19
$9,603
$2,429
Public
Works
General
0.02
Full -Time
Equipment
Operator II
3/16/2020
$1,330
$337
Recreation
General
1.00
Full -Time
Facility Supervisor
7/1/2019
$70,004
$17,689
Recreation
General
0.09
Seasonal
Golf Course
Laborer
6/30/2019
$2,573
$-
General Fund Total
$1,104,953
$268,508
Public
Works
Road Use
Tax
1.00
Full -Time
Equipment
Operator II
2/4/2020
$67,767
$17,122
Public
Works
Road Use
Tax
0.16
Full -Time
Equipment
Operator II
3/16/2020
$10,635
$2,688
Public
Works
Road Use
Tax
1.00
Full -Time
Equipment
Operator I
3/23/2020
$60,031
$15,166
Public
Works
Road Use
Tax
1.00
Full -Time
Utility Worker
4/1/2020
$55,647
$14,058
6
De • artment
Public
Works
Fund
Road Use
Tax
FTE
1.00
T • e
Full -Time
Vacant
Position Date
Utility Worker 4/1/2020
FY21 Cost
$55,647
10/01/20
Savin • s
$14,058
Public
Works
Road Use
Tax
0.16
Full -Time
Sanitary Sewer 3/16/2020
Operator
$10,386
$2,625
Road Use Tax Fund Total
$260,113
$65,716
Housing
CDBG
0.25
Full -Time
Assistant Director 11/1/2019
$24,149
$6,103
CDBG Fund Total
$24,149
$6,103
Housing
Section 8
0.25
Full -Time
Assistant Director 11/1/2019
$ 24,145
$6,103
Section 8 Fund Total
$24,145
$6,103
Transit
Transit
0.28
Part -Time
Laborer 8/9/2019
$16,408
$4,113
Transit Fund Total
$16,408
$4,113
Public
Works
Sanitary
Sewer
0.72
Full -Time
Equipment 3/16/2020
Operator II
$47,855
$12,093
Public
Works
Sanitary
Sewer
0.72
Full -Time
Sanitary Sewer 3/16/2020
Operator
$45,183
$10,253
WRRC
Sanitary
Sewer
1.00
Full -Time
WRRC Operator 6/14/2019
$60,139
$15,027
WRRC
Sanitary
Sewer
1.00
Full -Time
Laboratory 1/10/2020
Supervisor
$78,025
$19,717
Sanitary Sewer Fund Total
$231,202
$57,089
Public
Works
Stormwater
0.12
Full -Time
Equipment 3/16/2020
Operator II
$7,789
$1,967
Public
Works
Stormwater
0.10
Full -Time
Sanitary Sewer 3/16/2020
Operator
$6,492
$1,641
Stormwater Fund Total
$14,281
$3,608
Water
Water
1.00
Full -Time
Water Distrib Main 3/9/2020
Worker
$59,694
$15,081
Water
Water
1.00
Full -Time
Water Treatment 1/1/2019
Plant Operator
$82,311
$20,801
Water Fund Total
$142,005
$35,882
Engineering
Internal
Service
0.13
Full -Time
Traffic Engineer 1/1/2019
$10,143
$2,563
Engineering
Internal
Service
0.10
Full -Time
Engineering Assist 5/1/2018
II ROW Tech
$6,746
$1,779
Internal Service Fund Total
$16,889
$4,341
Grand Total All Funds
$1,834,143
$451,465
2. Administratively initiate a hiring freeze on most new positions recommended in Fiscal
Year 2021. These positions will be funded in the Fiscal Year 2021 but frozen. This
hiring freeze will be reevaluated minimally quarterly (July 1, 2020, October 1, 2020,
January 1, 2021, and April 1, 2021). How far into Fiscal Year 2021 new positions are
frozen will be determined by the revenues. Should this appear to be more of a long-term
issue, it will need to be dealt with using a more Tong -term solution through the Fiscal
Year 2022 budget process.
7
The following Fiscal Year 2021 new positions are recommended to be frozen:
Department
Building Services
Fund
General
FTE
Type
Full -Time
Position
Custodian
FY21 Cost
$56,091
10/01/20
Savings
$14,171
Engineering
General
0.50
Full -Time
Camera systems technician
$33,278
$8,319
Fire
General
1.00
Full -Time
Firefighter
$86,417
$21,604
Library
General
1.00
Full -Time
Youth Services
$68,479
$17,120
Police
General
1.00
Full -Time
School Resource Officer
$44,761
$11,190
Public Works
General
1.00
Full -Time
Traffic Signal Tech II
$91,234
$22,809
General Fund Total
$380,260
$95,213
Engineering
Sanitary Sewer
0.05
Full -Time
Civil Engineer
$5,403.94
$1,350.99
Engineering
Stormwater
0.52
Full -Time
Civil Engineer
$16,992.12
$4,248.03
Engineering
Internal Service
0.43
Full -Time
Civil Engineer
$45,659.11
$11,414.78
Engineering
Internal Service
0.50
Full -Time
Camera Systems
Technician
$45,659.11
$11,414.78
Enterprise Funds Total
$113,714
$28,429
All Funds Total
$493,974
$123,642
3. All travel budgets (conferences, education and training, city business travel) for all
departments have been frozen unless the conferences or education are needed to
retain job certifications, required for accreditation, the registration has been already
paid, the employee is on the Board of Directors, or employee has agreed to make a
presentation. The Fiscal Year 2021 travel budgets are funded but frozen.
The following chart shows a summary of travel budgets frozen by fund in Fiscal Year 2020 and
Fiscal Year 2021:
Fund
General
Budget Frozen
Travel
FY 2020
$220,598*
FY 2021
$570,256*
Road Use Tax
Travel
$6,911
$22,138
CDBG
Travel
$0
$18,489
Section 8
Travel
$0
$19,950
Cable TV
Travel
$3,745
$8,580
Transit
Travel
$3,384
$15,183
Sanitary Sewer
Travel
$3,350
$11,492
Stormwater
Travel
$10,255
$13,360
Parking
Travel
$0
$5,400
Water
Travel
$3,945
$29,348
Refuse
Travel
$1,767
$6,934
Internal Service
Travel
$0
$390
Garage Service
Travel
$11,081
$22,346
Landfill
Travel
$3,578
$20,382
Total All Funds
Travel
$268,614
$746,248
8
*The frozen travel in Fiscal Year 2020 and 2021 does not include the Mayor and City Council
conferences and training.
4. Equipment replacements have been reviewed for Fiscal Year 2020 and Fiscal Year
2021. The Fiscal Year 2021 equipment replacement budgets are funded but some
equipment has been identified to be delayed if necessary.
The following chart shows a summary of equipment replacement delays in Fiscal Year 2020
and Fiscal Year 2021:
Fund
General
Budget Frozen
Equipment
FY 2020
$309,001
FY 2021
$509,865
Road Use Tax
Equipment
$16,702
$2,000
Sanitary Sewer
Equipment
$10,000
$0
Stormwater
Equipment
$186,361
$40,000
Parking
Equipment
$3,000
$0
Water
Equipment
$15,840
$540,000
Refuse
Equipment
$478,454
$0
Garage Service
Equipment
$0
$25,500
Landfill
Equipment
$12,000
$0
Total All Funds
Equipment
$1,031,358
$1,117,365
5. All capital projects have been frozen unless the project is already under contract, a
grant is associated with the project, the project is part of an agreement, or the project
addresses health and safety. The Fiscal Year 2021 capital project budgets are funded
but frozen.
The following chart shows a summary of capital project budgets identified by departments that
can be frozen by fund in Fiscal Year 2020 and Fiscal Year 2021:
Fund
General
Budget Frozen
Capital
FY 2020
$96,284
FY 2021
$0
DRA Distribution
Capital
$178,207
$250,000
Road Use Tax
Capital
$427,126
$0
Street Construction
Capital
$1,186,256
$226,350
Sales Tax Const 20%
Capital
$1,409,329
$248,505
General Construction
Capital
$273,643
$0
Airport Construction
Capital
$5,114,600
$41,000
Transit
Capital
$409,474
$100,000
Refuse
Capital
$56,199
$0
Sanitary Sewer
Capital
$1,012,211
$23,500
Stormwater
Capital
$81,206
$796,918
Parking
Capital
$172,286
$0
Water
Capital
$1,862,870
$1,477,410
Total All Funds
Capital
$12,279,691
$3,163,683
6. No wage increases for non -bargaining and bargaining unit employees in Fiscal Year
2021. The Fiscal Year 2021 budget recommendation included a 1.5% wage increase.
9
The following chart shows the savings by fund if there is no wage increase for both non -
bargaining and bargaining unit in Fiscal Year 2021:
Fund
General Property Tax Fund
FY21 Savings
No Wage
Increase
Bargaining +
Non -Bargaining
$508,184
Road Use Tax
$28,319
Community Development Block Grant
$6,628
Lead
$4,801
Section 8
$9,924
Cable TV
$5,489
Transit
$32,924
Sanitary
$23,249
Storm
$6,719
Parking
$8,275
Water
$28,446
Refuse
$20,389
Internal Service
$23,192
Garage
$12,415
Landfill
$11,982
Total FY21 No Wage Increase Savings
$730,934
7. To manage the difficult decisions that are going to need to be made multiple employee
work groups will be formed as follows:
a) CIP & Equipment Team (Additional decision criteria: Is project under contract?
Grant -funded?)
b) Operating Budget Team (Programs & Services)
c) Purchase of Services & Contracts Team (Additional decision criteria: equity
indicators -- even more important as we think about vulnerable populations)
d) Grants & Contracts team
e) Staffing & Vacant Position Review
All teams will be assigned to assist the budget department as needed with review of
FY21 projections. This will minimally be quarterly (July 1, 2020, October 1, 2020,
January 1, 2021, and April 1, 2021).
Recommendations would be generally based on community impact as follows:
a) Funding source availability
b) Priority values developed by leadership team (the 7 questions described above)
c) City Council goals & priorities
d) Does the item influence our ability to provide essential services?
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All teams will have to interact to determine influence on each other (ex. if we cut a
service, there will be staffing implications)
After the budget process is done and employees have more time available as they
manage through this crisis, departments will be directed to develop budget cuts that
assume operating at reduced funding levels so that the City will be prepared with
strategies to implement as the economy and revenues come back at some unknown
pace.
I am working with Wellmark Blue Cross Blue Shield for health care projections; however, there
is limited information available. We may start to see a reduction in weekly claims for a while
due to providers not seeing patients and postponement of elective procedures.
Once the COVID-19 tests and treatment start coming in we would expect to see an increase in
costs, but we are not sure if that will result in a net increase in costs or be a net decrease to
costs. There are still a lot of unknown variables currently, such as how bad is it going to get as
far as number of positive cases for covered members of the City's self -insured plan.
The City of Dubuque has a $17 million general fund reserve. The City's general fund reserve
policy is to have a reserve balance of a minimum of 20% of General fund revenues. The
General fund reserve balance exceeds the 20% minimum of $14.6 million by $2.4 million. This
$2.4 million is available to help offset revenue losses without impacting the minimum general
fund reserve policy.
JML
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Masterpiece on the Mississippi
Dubuque
bCetrl
AIMAIq City
11111!
2007.2012.2013
2017*2019
TO: Michael C. Van Milligen, City Manager
FROM: Marie L. Ware, Leisure Services Manager
SUBJECT: Five Flags Civic Center FY20 and FY21 Budgetary Changes and
Information
DATE: April 19, 2020
INTRODUCTION
The purpose of this memorandum is to share a summary of work completed with HR
Cook, General Manager of Five Flags Civic Center related to the FY 20 and FY 21
budgets.
BACKGROUND
The budget of Five Flags Civic Center is outlined and established based upon the
management agreement with ASM Global. As was shared earlier COVID-19 and the
closure of Five Flags Civic Center during the late winter/early spring disrupts the budget
and affects the budget's final fiscal year outcome. General Manager HR Cook on
March 21, 2020 shared a cash flow statement if the Center was closed until June 30,
2020. At that time, the final estimate was ($279,912) over the benchmark. As early as
March 10, 2020 HR began cutting expenses, shutting down services and contracts that
could be paused or cancelled and laying off part time staff and they have turned off and
turned down everything possible in the building. These cuts and cancellations dropped
the final estimate to ($ 210,000) on April 6, 2020.
DISCUSSION
HR and I have continued to have conversations about every other day to continue to
work on any other budget savings for FY 20 that could be possible. Attached you will
find a detailed memo from HR on the COVID-19 impact. He shares information related
to the building, personnel, events, as well as budget adjustments for FY 20 and FY 21.
I will summarize some of this information here. The final estimate has now moved to
($201,049) over the benchmark for FY 20. There is likely little movement in this number
to the end of the fiscal year from here forward. If the Center opens yet in FY 20 and the
events outlined in his memo do occur this might slightly lower the number. The number
of events is very limited that remain on the calendar through the end of June.
The Leisure Services Department presented the proposed FY 21 budget to the City
Council February 27, 2020. Per the management agreement a CPI increase was
estimated at 2°/0 CPI increase. The chart below shows the 2% increase as presented
and an example benchmark with a 0% CPI as that may be likely for the May CPI that is
used per the agreement. The agreement does not allow for a negative CPI only 0%.
HR Cook was asked to consider any cuts that could be provided to the City. He outlines
in his memo proposed cuts that would lower the benchmark by $35,000. These include
items similar to cuts being considered for the City organization. These cuts would lower
the starting benchmark for FY 21.
He also estimated if the building remained closed due to Governor's closures or event
cancellations and rescheduling for a three- and six-month closure in FY 21. One may
look at these numbers and say if we as a city determined we wished to keep the
building closed then this would be the savings. The answer is yes, but...
If the building is closed for three months and the Governor's closure is in effect, then all
events are cancelled per the order. This type of closure is outlined in the contracts with
all the entertainment acts and events as items that are covered in contracts. If however
the Governor's closure is lifted and the acts or events determine they wish to go on
versus reschedule or cancel on their own, then there is an obligation to have the
building open and ready for the event.
As you will see from the listing of events HR provided in his memo events for facilities
such as our Civic Center complex are booked far in advance. Any decision to close the
building without an order would have contractual ramifications that would need to be
explored, considered, and calculated.
BENCHMARK FY21
FY 21 Presented to Council
FY 21
included 2% CPI estimate
with 0% CPI
Full Year Operation
Benchmark
$955,701
$936,962
_presented
Saving travel
freeze, no salary
increase, freeze
($35,000)
ASM mgmt fee
($35,000)
$920,701
New benchmark
$901,962
Three (3) Month
Closure
$920,701
New benchmark
$901,962
($90,000)
Closure savings
($90,000)
$830,701
New benchmark
$811,962
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Six (6) Month Closure
$920,701
New benchmark
$901,962
($150,000)
Closure savings
($150,000)
$770,701
New benchmark
$751,962
Work will continue with HR to cost control and continue to investigate additional ways to
lower costs.
ACTION REQUESTED
This memorandum is shared for information only.
Attachment: HR Cook April 17, 2020 Memo
cc: HR Cook, General Manager Five Flags Civic Center
Jenny Larson, Budget and Finance Director
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` . 1
FIVE FLAGS
ACRA
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Memorandum
Date: April 17, 2020
To: Marie Ware, Leisure Services Manager
City of Dubuque
From: H.R. Cook, General Manager
Five Flags Center, ASM Global
Re: Five Flags Center COVID-19 Impact Update and FY21 Budget
Marie,
During this unprecedented time, the City of Dubuque will need to make some difficult decisions
in the next month. As we have discussed many times, Five Flags Center, though a city facility,
serves more citizens than just Dubuque but all of the Tri-States and Midwest, attracting visitors
and guests to Dubuque and helping generate over Five Million Dollars to the local economy. We
know that the future is unknown, but we are certain that the need and ability to congregate in
large groups will return. Five Flag's stands ready for that return but in the meantime, we are
making some major adjustments to our operations.
Current Status:
Venue:
The Five Flags Center is currently closed to the general public. All box office transactions are
being conducted online and through the phones. Any calls received are being forwarded to
current employees either at the office or forwarded to cell phones of those working from
home. Only essential building HVAC equipment is currently operating to maintain the safety
and integrity of the facility. All non-perishable foods have been inventoried stored or frozen for
future use. All food service equipment has been cleaned, inventoried and put in storage mode.
All non -essential services have been either postponed or cancelled. These include trash
services, all subscriptions and publications, LP deliveries, water service, armored car pick up,
Point of Sale software and marketing software that may be on a month to month subscription.
Any annual inspections such as fire suppression, hoist motor, fall protection system, Arc Flash
and others that may be re -scheduled have been postponed until after July 1.
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Personnel:
All Part -Time Employees have been laid -off. Five Flags Center employees 11 full time
employees. Currently five of eleven employees are on full furlough.
Events Manager
Food and Beverage Manager
Technical Manager
Theater Technical
Operations Manager
These positions are event driven and will be called back as needed when events resume in the
buildings. These events could include emergency needs for use of the Civic Center because of
the pandemic.
All remaining employees have been placed on part time furlough:
General Manager
Box Office Manager
Director of Facility Accounting
Operations Director
Marketing and PR Manager
Maintenance Manager
These positions have been currently deemed essential and will continue to work varied weeks
through April with re-evaluation and increased furlough until such a time when the events
return. We are still booking and marketing the arena and theater for dates for fall 2020 and
beyond, working with current clients that have events contracted in Five Flags Center in 2020
with ticket sales, event postponement and marketing. The operations division is maintaining
and repairing the 41 and 110-year-old facilities. All divisions are also ready to assist in any local,
state, or national relief effort related to the current crisis should they arise. Though on furlough
any salary savings will not be realized until the employee Personal Time Off (personal days and
vacation) is exhausted. The State of Iowa only had an option of utilizing unemployment in lieu
of earned Personal Time Off and not a mandate. All ASM employees on furlough are utilizing
their PTO at this time to make whole their paycheck while receiving unemployment.
Events:
We do not know when the State of Iowa will allow venues such as casinos, theaters, and arenas
to open. Immediately after the mandate to shut down was given on March 11, we were able to
postpone 26 events to the fall of 2020. Only three event planners elected to cancel their events.
This shows a commitment and confidence in Dubuque from the local and national agents,
promoters, and artists that Dubuque must remain on many of the national tour routes. All
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events in March, April and most of May have been postponed or cancelled. Currently only
Dubuque Community School commencements in late May are still scheduled. The Julien
Dubuque International Film Festival had been rescheduled from April to June 17-21, Studio 5-6-
7-8 dance has been rescheduled to June 25-28. Due to the summer closure of many colleges
and universities, we have approached wrestling sports camps and offered our venue should we
be able to host them. As you know sports camps fill hotels and could provide downtown
businesses with a little extra revenue. We are currently scheduled to host a wrestling camp
June 10-14 that may have up to 500 wrestlers.
Going forward, we have the following events that have been booked confirmed and contracted
with local and national promoters for 2020-21. These are either rescheduled or new events:
National Tours: Rescheduled (R) , New Event (N)
July:
9 Styx in Concert (N)
29 National Touring Concert (not announced yet) (N)
23 Harlem Globetrotters (R)
29-Aug 2 Dueling Dogs World Championships (R)
August:
5 Peppa Pig Family (R)
13 Home Free Concert (R)
15 National Touring Concert (not announced yet) (N)
17 Nitro Comedy Tour (R)
September:
18 National Comedy Tour (not announced yet) (N)
24 Insane Clown Posse (R)
25 National Touring Concert (not announced yet) (N)
29-30 National touring Family Show (not announced yet) (N)
October:
8 Colin Mocheri (R)
8 Cole Swindell in Concert (R)
9 Air Supply Concert (R)
10 Bone Thugs N Harmony Concert (R)
13 National Theater touring show (not announced yet) (N)
16 National Touring Concert (not announced yet) (N)
18 Regional Touring Concert (not announced yet) (N)
November:
12 Lee Brice in Concert (N)
10 National Touring Concert (not announced yet) (N)
18 National Touring Concert (not announced yet) (N)
3
19 National Touring Family Show (not announced yet) (N)
December:
23 Baby Shark Live Family Show (R)
January:
Monster Sports Spectacular 16 (N)
National Flat Track Racing 12-13 (N)
February:
National Touring Show (not announced yet) 11 (N)
Rodeo 19-20 (N)
NCAA Wrestling Division III Championships 26-27 (N)
National Theater Touring Show (not announced yet) 23 (N)
April:
National Touring Show (not announced yet) 14 (N)
National Dance Competition 16-18 (N)
May:
National Touring Show (not announced yet) 13 (N)
The following are locally promoted shows that have confirmed and contracted for 2020-21
Local and annual productions:
Julien Dubuque International Film Festival June 17-21
Studio 5-6-7-8 June 25-28
Dueling Dogs World Championship July 29-Aug 2
Dubuque Symphony 10/3-4, 10/31-Nov 1, 12/5-6, February 20-21, March 20-21,
Fly by Night Theater Sept 12-13, January 29-31, June 3-5, 11-12
Dock Dogs World Championships October 18-25
Quad Con Comicon October 31
Rumble by the River Wrestling Tournament November 6-8
Dubuque Music Men November 13-14
Key City Classic Wrestling Tournament December 12
Retro Rewind Car Show January 9
Iowa Winter Games January 22-24
RC Arena Nationals February 7
360 Gymnastics Competition March 6
Wellness Expo March 20
Dancing with the Stars April 3
Julien Dubuque International Film Festival April 21-25
Dubuque Community Schools Commencements May 28
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The fall and winter of 2020 is shaping up to be the busiest in the history of Five Flags Center.
This list does not include the 35 events that we have bids or offers in to host. In addition to
2020, 2021 will continue to be successful with additional local and national shows filling the
calendar now.
Budget Adjustment for FY20 and FY21:
ASM Global understands the rough road that the many cities will be facing. As you know, we at
Five Flags immediately took action to conserve cash and reduce costs in any possible way not
knowing when the venue would open again. As I stated above, most of our staff is currently
furloughed or laid -off employees on furlough have been using PTO to offset their missing hours
We will not see drastic cash savings until this leave is exhausted which should take place
starting in May and June. I have shared the latest cash flow calculation through June including
a list of expenses that must be paid and cannot be avoided. As you can see, we predict an
overall cash shortage of $201,049 by the end of June 2020. This is down from our initial
estimate of $279,912 provided March 20, 2020.
Going forward for FY21 we do not know when the venue will open and when the community
will feel comfortable attending events in larger groups. As with all ASM venues, we will work
with our clients to help mitigate expenses yet be prepared for the events for which we have
signed contracts. Until the events return, we will maintain a minimum staff that must manage
the operations, communicate with our clients, public and maintain the assets of the City of
Dubuque. We must be prepared to open either for the contracted events or for service to
assist in the fight against COVID-19. In addition to any cost savings from furloughs and non-
essential service elimination we have made the following adjustments to our budget for FY21:
All salaries have been frozen for FY21
Any non-event related hiring has been frozen
All non -corporate mandated travel has been frozen including education and training
A freeze for one-year, annual increase to ASM Management Fees
These have created a savings of $35,000.
In addition to mitigation from our locations such as Dubuque, ASM Global Corporate offices
have taken steps to reduce expenses to remain a viable international management company.
All senior staff have taken pay cuts, eliminated performance -based incentives and all company
travel. They remain committed to make sure that our locations and venues still have the tools
and resources needed to get through this crisis and come out a much stronger company.
As requested, we have prepared a worst -case scenario of a three, six- and 12-month closure.
Many would believe that if the building is closed that you save the entire subsidy of $955,701 in
FY21 proposed upcoming budget. This is not true. With all three scenarios there is a
5
"management of care" that must be maintained. Five Flags will still need routine maintenance
of the assets, inspections and service contracts that are required. There are $35,000 in service
contracts and inspections alone that must take place if the building were open or closed. Some
of these required services include:
Boiler License and Inspections
Bleacher Inspections (bi-annual. Due in 2020)
Fire Alarm suppression system and sprinkler monitoring, maintenance, and inspections
Generator License and inspections
Elevator inspection and maintenance
Grease trap license and inspections
Man lift inspections
Kitchen hood inspections
Booking calendar (required by ASM Global)
Pest control
Piano maintenance
Chain Hoist inspections
Fall protection system inspections
Health permit
liquor license
TM Engage
ASM Global recommends a minimum staff needed to maintain a temporary furloughed venue
would include:
General Manager
Director of Facility Accounting
Maintenance and Housekeeping Manager
Box Office
These positions would be a mix of full and part time employees.
Unlike a regular city facility that can close their doors, we develop and maintain relationships
with many promoters, agents and local organizations that have signed contracts for their
events. We must be very careful in any non -force majeure related closure. As you can see by
the list above, we have a full schedule of large events for the first six months of the budget
year. Should the mandated closure continue, events will naturally be postponed or cancelled
without penalty. Should the decision be made to close the facility and contracts with
promoters be cancelled without force majeure or forced mandate, ASM and the City of
Dubuque would be liable for any potential damages in lost revenues. Per our management
contract, the City of Dubuque will hold harmless and defend ASM in any claims not due to
negligence in ASM operations. Worse yet, any momentum that we have gained in attracting
6
national acts to Dubuque and Five Flags will be lost along with confidence in our market. It is
my opinion to allow the shows to progress naturally without a "mothball" approach. Subsidy
savings would occur naturally with the limited staff and resources on hand.
I have shared an expense statement that includes the three, and six-month expenses to
maintain the facilities. As you can see the city would save an estimated $90,000 over the
course of a three-month closure without any events if Governor's or other orders prohibited
opening or $150,000 over the course of a six-month closure without any events scheduled and
an order prohibiting opening. Should the decision be made to close the facility completely for a
year, the city would save an estimated $400,000 with no events booked but would lose any
future opportunity for bookings and lost revenues with event sales tax collection in addition to
taxes generated by the retail, hotels, restaurants, bars and service industries that benefit from
Five Flags Center's events which outweigh any savings from closure. In addition, contracted
events that are cancelled during this time without a mandated order related to Force Majeure'
may be subject to monetary compensation to the promoters.
Conclusion and Recommendations:
ASM Global is committed to the long-term success of Five Flags Center and the City of
Dubuque. City leaders made a decision 20 years ago to create a community of inclusion,
diversity, vibrancy and cutting -edge ideas to be progressive and grow our community. Five
Flags Center has become an important part of downtown and the generation of opportunities
for others. We must be ready to serve again when the time comes. In the meantime, we must
contribute to the savings plan of the City during this crisis. Unfortunately, ASM Global is not
eligible for any of the various state national or local small business loan funding opportunities
as we are an international company that employs over 50,000 employees worldwide.
In addition to the $35,000 cost savings mentioned above from reductions in labor, overhead,
salaries, travel, and education, I would like to make the following recommendation:
• Acceleration of naming rights contract of Five Flags Center which could generate an
estimated $50,000 in advertising revenue per year not accounted for in our current
budget. This revised proposal would not be tied to any new building or bond vote.
Please review my recommendations and reach out with any questions or concerns you may
have. I look forward to reviewing further this information with you.
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