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State of the City 2020

State of the City 2020

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Farmington City Administrator Greg Beavers recently presented his annual State of the City Address in a virtual format to members of the Farmington Regional Chamber of Commerce, in which he covered a number of topics that included the effects of COVID-19 on the local economy, Weber Road improvements, and the city government's strong financial status.

Local economy

Starting his address with an overview of Farmington’s economic health, Beavers said, “Our economy, obviously, is going through a couple of adjustments. One, is due to [COVID-19] and the business loss we had there. A lot of businesses seem to be realigning their business practices — internet sales, online sales. The way people merchandise things, everything’s kind of changing, so we’re going through a reset, but we do have today still a very active retail and merchant market in Farmington.

“We’ve got just short of 300 active business licenses in town. We did lose a few businesses this year, but we’re gaining some back. Notably, right now, Starbuck’s is under construction which will begin to redevelop that area. It’s very visible in town. Then we have a national tire retailer that’s going to [demolish] what is known by some as the old Ryan’s building, for other people as the China Buffet building. They’ll be redeveloping that area. We’ve had several discussions with other people wanting to bring new retail businesses into the market, which is very encouraging in this online environment.”

Construction

Beavers noted that Farmington has seen more residential homes constructed this year than usual, and commercial construction has remained strong as well.

“Normally we are at about 40 residential homes being constructed,” he said. “Even in the face of a lot of price pressure on building materials, we still constructed 49 — a little over $4 million in residential construction. We’ve also had nearly $30 million in commercial construction this year here in Farmington, which is an impressive number. That includes the school projects that it was working on and it also includes the long-term care facilities that are under construction and still not complete, so that construction continues.”

Unemployment

According to Beavers, that while the city is experiencing an unusually high unemployment rate, Farmington’s overall workforce actually saw a slight increase in 2020.

“The unemployment rate as of August numbers, which is the last information available for us, is still pretty high,” he said. “It’s eight-and-a-half percent. The number of people in the workforce in Farmington did increase by about 40-45 folks since January, which is bucking the national trend a little bit. The state of Missouri is reporting right now that, based on the latest numbers, we’ve had 70,000 people drop out of the labor market since that number was updated last month. And there tends to be an increasing trend of people just checking out of the labor market. It’s either [baby boomers] kind of moving through and hitting retirement or a number of retired people that are actually working part-time jobs that due to COVID or other things have just decided they’re not going to pursue those jobs.

“Taxable retail sales in Farmington — and that is just the taxable sales — was about $444 million last year. So, if you’re in retail business there’s still a lot of money out there to grab. A lot of sales aren’t taxable, but those are the taxable components. I still stay very confident about Farmington’s local economy. Manufacturing is a challenge. Some of our manufacturers have laid people off.”

SR Global layoffs

As an example, Beavers mentioned that one of the city’s major manufacturing companies, SR Global, is preparing to lay off 150 employees when the company idles its plating line in June.

“We’ve had some discussions about back-filling that plating process with other manufacturing from other business divisions that they have out there,” he said. “We have been talking with Missouri Economic Development and also Missouri Partnership about trying to help us get those jobs replaced. The problem in Missouri is that the incentives that are available through the state are pretty anemic. I think about the best they could offer that company to retain jobs is about $30,000 a year in employment tax credits for retention. So, the incentive programs they have aren’t very helpful.”

City improvements

Now that the city’s fiscal year has come to a close, Beavers listed several achievements that took place over the past year.

“We improved our ISO rating from a 4 to a 3 — which puts us in a very, very small group of fire departments and communities nationally,” he said. “And as your insurance renews on your businesses — not so much on your homes, it doesn’t seem to affect your home insurance so much — you should see a reduction in your insurance cost. Obviously, the factor that decreases is going to depend on the kind of facility that you have and the value of that.

“We also went through an engineering analysis and a re-rating of our east sewer treatment plant. A sewer is not something that anybody ever gets excited about unless it’s backing up in your basement, but it’s real important to us. That treatment plant was rated at two million gallons a day and we were bumping right up to that limit and exceeding that limit. We were able to go through and demonstrate to DNR that we can process a lot more than that effectively, so they agreed to re-rate that plant to 2.75 million gallons a day. The reason we’re excited about that is plant expansions cost about $10 a gallon a treatment. So, going through that engineering assessment — which we spent less than $30,000 on and nothing to DNR for this re-rating — it would have cost us about $7.5 million dollars for construction to get that same thing. So, we are very happy to have gotten that completed.”

SFC 911 merger

Beavers addressed a major change for the Farmington Police Department — the consolidation of its dispatching unit with St. Francois County’s 911 Central Dispatch.

“You all remember that they put the tax in place — the sales tax just a few years back — to provide services for the county, but we were continuing to provide our own dispatch,” he said. “We suffer a marginal loss of service by not having an organic service, but it also is about $300,000 a year in labor expense and other costs we were able to shed. So, we felt like it was a necessary step that we needed to take.”

As far as the city’s fire department, it acquired a new self-contained breathing apparatus (SCBA) with a regional grant award through FEMA’s 2017 Assistance to Firefighters Grant Program.

“It’s a big expense,” Beavers said. “It was almost $1.7 million for the truck. We won’t take delivery of it until May. That’s part of keeping our ISO standard where we need it to be, having the right operating equipment. The equipment we’re replacing is 22 years old, so it’s at a point where we can’t get parts for it.”

Cash reserves

Admitting that “cash balances are something we pay a lot of attention to,” Beavers went on to explain that the city of Farmington operates under “different operating funds” and “different operating departments” with each having the responsibility for keeping their own reserves.

“Citywide, we ended the year with just under $14 million in cash reserves, government-wide,” he said. “We hit our targets in all of our operating departments. Seventeen percent is effectively where we want to be. We’re working to grow that reserve in the general fund alone to 40% of operating expenses. This past year we established a strategic reserve that is pretty much equal to the sales tax we get off Walmart. Walmart is almost 18% of our sales tax revenue in town, so if something were to happen to that store — fire or something else that put them out of service for us — we would lose a tremendous amount of cash we need to operate. So, we’re working on growing the general fund reserves, but our cash reserves are very, very strong.

Debt retirement

“Going into 2021, our citywide total revenues are a little over $44 million. I say a little over — it’s almost a million over — it’s pretty close to $45 million. Our expenses are just short of $48 million, so we are spending down some cash reserves. Some of those reserves are programmed to be spent down because some of our debts are retiring. When we have a bond issue, we typically have to establish a debt service reserve fund that is held by the trust bank and then is applied to what is effectively a balloon payment when you pay off your note. So, we’ve got three bonds that are paying off this year.”

One of the bonds is a state revolving loan fund for the west sewer treatment plant.

“We’re paying off the rate on the nuclide equipment which was about a $6 million investment on our water system in 2011, and then we’re also paying off some UV disinfection equipment at the east plant,” Beavers said. “So, those debts will all go away. It frees up operating cash for us to do other improvements in those departments. Our projected ending government-wide balance will be $12,285,000, which is still within our target range.”

Weber Road

According to Beavers, major improvements are in the works for Weber Road.

“We’re going to try to correct that terrible intersection at the plaza where Panera Bread Co. and [Cheap Smokes Tobacco and Liquor] are,” he said. “There’s not a lot we can do, but we’ve gone through some engineering designs that we think will relieve that traffic congestion and confusion there. We’ll be announcing some meetings to get public input on which option is preferred — probably within the next couple or three weeks, so we can start the design on it.

“Our plan on Weber Road is to widen it to a three-lane from the plaza down to Maple Valley Drive, which is where Catfish Kettle is. We’ll curb and gutter it and put in stormwater systems. We’ll put a sidewalk on the south side. That will connect the crosswalk at Maple Valley Drive with the crosswalk that we just installed this past year at Walton Drive. Then we’re going to extend the sidewalk on out to Doris Drive, which is the first drive that goes into the mobile home park. A lot of the walkers we have along Weber Road are coming out of that mobile home park, so we need to provide them a safe pedestrian route."

Other projects

Beavers mentioned several other city projects now on the horizon.

“We have Maple Street sidewalk which we should award as soon as MoDOT approves the plans,” he said. “We have a grant to pay for 75% of the cost of that. It’s about a quarter-of-a-million-dollar project that will connect Maple Street from Maple Valley Drive — over near the former Tiger Car Wash — back over to Potosi Street near Gifford Lumber Co. It will provide a connecting route between the sidewalks we have downtown and the sidewalk we’ve been working on over at the commercial part of town. We have a detention basin we’re going to build on Potosi Street, and we’ll be taking ownership of the John Crouch Park.

“We’re working on the Pine Street development with the Koppeis Development Group to extend Pine Street. There’s a large lake out there that was part of the Presbyterian Children’s Home property. Part of our transaction on helping with the roads and things, they’re dedicating that property to the city and we’re going to develop a lake park on that side of town. That will actually be the largest lake that the city owns, so it will provide a lot of recreational opportunities for people, especially on that side of town.”

City employees

Beavers noted that the city employs 139 full-time workers, around 22 part-time workers, and as many as 80-90 part-time seasonal workers, many of whom are employed during the summer at the Farmington Water Park. There are plans to hire more.

“We are adding two additional employees this year in our park system for a couple of reasons,” he said. “We lost benefit of the prisoners this year. First due to heroin finding its way into the prisons, and then COVID. We think we’re going to get them back, but we also realize that we need to gradually ween ourselves away from our dependence on them. We were contracted for 22 prisoners at $7.50 a day per worker. That’s a lot of labor to have to replace and absorb in your budget, so we’re going to begin a slow process to try to ween ourselves off the dependence we have on those workers.

“We have also added one new police officer to our rolls at no cost to the city because we contracted with Mineral Area Task Force. They had one of our officers that is very good at working drugs. They wanted him. He wanted to remain a Farmington police officer, so we worked a deal with them where they’re basically contracting him from us. To be honest, it was a pretty easy negotiation because Chief Baker is the president of the board for the Mineral Area Task Force. He and I were able to come to terms on it pretty easily.”

Online sales tax

Beavers closed out his address with what he considers an important piece of legislation he hopes the Missouri Legislature will take under serious consideration during its next session.

“It’s called the Wayfair Legislation, which is the online sales tax collection,” he said. “There are only two states in the nation that do not impose state and local sales tax on all internet transactions, and that’s Missouri and Florida. Earlier I mentioned that the economy is changing. The way that commerce is transacted is changing nationally. As you make those kinds of changes, you just have to recognize that you’re going to have to restructure the way that you’re paying for government services. None of us like paying taxes, but we all like having nice streets to drive on and you have to be able to pay for those things.

“Our sales tax is 2 percent — the lowest in the region. We’ve had conversations about asking for a law enforcement sales tax to offset the fact that sales tax revenue does not grow as fast as our expenses. We don’t want to do that. My personal view on taxes is that everything ought to pay sales tax and sales tax ought to be as low as you can get it — have a broad base and a low rate. We hope the business community will support that. It’s tough to get any kind of tax things through the Missouri Legislature, so we don’t know how that will go.”

Kevin R. Jenkins is the managing editor of the Farmington Press and can be reached at 573-756-8927 or kjenkins@farmingtonpressonline.com

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