Finance Advisory Committee

MINUTES JOINT CITY COUNCIL AND FINANCE ADVISORY COMMITTEE CITY OF DEKALB MAY 20, 2015 The Joint City Council and Finance Advisory Committee meeting of May 20, 2015, was called to order at 5:05 p.m. by Mayor Rey. ROLL CALL City Council members present were: Alderman David Jacobson (arrived at 5:06 p.m.), Alderman Bill Finucane (arrived at 6:40 p.m.), Alderman Michael Marquardt, Alderman Bob Snow, Alderman Kate Noreiko, Alderman David Baker, Alderman Monica O’Leary, and Mayor John Rey. Finance Advisory Committee members present were: Chair Mike Peddle, Connie Golden, Tom Teresinski, Mike Verbic, and Lynn Neeley. Others present: City Manager Anne Marie Gaura, Finance Director Cathy Haley, Fire Chief Eric Hicks, Police Chief Gene Lowery (arrived at 5:14 p.m.), Assistant City Manager Patty Hoppenstedt, City Engineer/Interim Public Works Director John Laskowski, Streets Superintendent Mark Espy, Community Development Director Ellen Divita, Utilities Superintendent Bryan Faivre, Economic Development Coordinator Jennifer Diedrich, Account Technician Carri Parker, and Deputy City Clerk Ruth Scott. Not Present: Finance Advisory Committee members Thomas Gearhart and Dave Conlin. CAPITAL BUDGET DISCUSSIONS – PROJECTS (STREETS) Interim Director Laskowski began his presentation with the current condition of the City streets. He stated that some are in great shape and others are in dire need of repair. His Power Point presentation covered all of the aspects of the street condition from condition to location and cost. He estimated that if the City were to maintain the streets in the next five years it would be $45 million. He added that if we do not do something and just keep things the way they are the conditions of the nice roads will deteriorate and become as bad as the ones described in his presentation. Alderman Baker asked Interim Director Laskowski why the City does not use concrete. Interim Director Laskowski responded that there are advantages to concrete, they do have a longer life span, you will need to determine the cost of concrete and construction over a 30 year period and compare it to asphalt. He included that this analysis solely looks at the asphalt streets. Alderman Snow questioned how the City streets compare nationally. Interim Director Laskowski stated that our average street rates at a 78 and added that if we can improve the streets by taking the necessary proactive steps to allocate funding we will be able to maintain the streets with less money than in the future. He added that once we get the roads that are in terrible condition repaired, we will be able to save on maintenance costs other than reconstruction. City Council approved minutes on July 6, 2015 / Finance Advisory Committee approved minutes on July 14, 2015  Joint City Council and Finance Advisory Committee Meeting May 20, 2015 Page 2 of 6 John continued with his slideshow presentation regarding capital budget projects for streets which included information regarding grants received over the past few years, etc. Superintendent Faivre left the meeting at 5:28 p.m. Alderman Baker asked Interim Director Laskowski if the City can reconstruct differently. Interim Director Laskowski responded with that they will look at each reconstruction differently, but they also have to consider the lifespan as well. He added that replacing a road in concrete he would recommend but the City would need to look at the cost effectiveness as well. Superintendent Faivre returned to the meeting at 5:33 p.m. Interim Director Laskowski asked Superintendent Espy to provide some background on the potholes and the procedures that he and his team have to go through. Superintendent Espy explained that potholes years ago used to be seasonal. He added that now Street Operations is getting calls daily from residents to fill potholes all year long. This causes problems if there are enough of them that Street Operations will need to stop on project to go fill potholes. He stated that Street Operations does not have the staff to continue filling potholes as needed to get caught up. He added that the price of the materials have increased. He mentioned that even if you fill a pothole, depending on the conditions it will migrate around it causing another hole. He suggested that if the City does not do something with the streets that he is very concerned about the condition of the streets in the next few years. Committee Member Verbic asked what it would take to plan a long term scenario. Interim Director Laskowski responded that he will need to run the projection again to get that type of view. Alderman Noreiko asked what level the street index becomes unsafe to residents. Interim Director Laskowski responded that it would be a street index of 59 and below. He mentioned that the City does not have any roads currently that are in that condition, but there are some that need a lot of attention. Committee Member Teresinski asked what the existing MFT fund is funding. Interim Director Laskowski responded that some of the MFT funds currently and in the future are reserved for those projects along with the NPO. So those funds can leverage federal funding. Committee Member Teresinski asked how far the NPO goes out. Interim Director Laskowski responded with five years for a TIF District. They can only fund up to five years. There are grants that we are in line for, in FY19 we will have the Peace Road widening project. Alderman Noreiko asked if the winters impact the road conditions. Superintendent Espy stated that it is the freeze and thaw that the roads go through that affect the condition. Superintendent Espy stated that the winter in previous years affected the roads significantly. He added that if the City has more winters like two years ago that the road conditions will deteriorate faster. Committee Chair Peddle asked if the City did not have garbage trucks driving on these roads would it change the payment viability or improve the payment index. Interim Director Laskowski stated that it would make a significant difference. Committee Chair Peddle suggested that the garbage fees are not including maintenance fees that are caused by these trucks and that is something the City needs to look at. City Council approved minutes on July 6, 2015 / Finance Advisory Committee approved minutes on July 14, 2015  Joint City Council and Finance Advisory Committee Meeting May 20, 2015 Page 3 of 6 City Manager Gaura left the meeting at 6:02 p.m. Alderman Baker asked why the gas tax is not supplementing this fund. He questioned where the $500,000 is that was in the budget years ago. Finance Director Haley stated that the tax is declining every year. For 2015, they are projecting $360,000, which is where the $350,000 is coming from in the budget. She added that there were some State grants as well as some MFT funds for maintenance. Interim Director Laskowski commented that there are MFT funds used for street maintenance but the staff has been budgeting funds for the future to leverage for funds in FY19 for the Peace Road widening. Alderman Baker asked for clarification on the 2 cents. He eluded its actually 3.5 cents. Finance Director Haley replied that the 1.5 cents is paying off the debt for the Public Safety building. City Manager Gaura returned to the meeting at 6:04 p.m. ALTERNATIVE REVENUE SOURCES Finance Director Haley reviewed the capital project requests and the sustainability of the general fund from the previous meeting. She commented that GFOA states that creating a new revenue source will be a sound financial practice. She then discussed the alternative revenue source memorandum. City Manager Gaura added that if the Council would recommend increasing the tax it would not be just residents of DeKalb. She clarified that it would be anyone shopping in the area. Alderman Baker asked about the restaurant-bar tax is not listed. Committee Chair Peddle stated that most likely DeKalb would fall in line the same way. He added that he has seen generally a 2% above sales tax consistency with other communities. Finance Director Haley stated she will add the listing of restaurant-bar tax. Committee Chair Peddle mentioned that some communities have added a fixed fee, for example, $1 per ticket, not necessarily a percentage. Alderman Baker stated that he would not like to support participative entertainment. He added that he has met with NIU and really did not get an answer with regard to taxing their events. Finance Director Haley stated that other communities did exempt certain events and organizations. She added that she would need to gather more detail. City Manager Gaura added that sales tax is being collected from NIU. She also pointed out that any tax or fee with regard to NIU will need to be further discussed with NIU considering the financial situation they are in. She also added that the staff would not recommend anything that would have an adverse effect on the university. Committee Chair Peddle recommended that the City really understands what the tax basis is relative to the Gas Utility Tax. He added that the tax is easy for a large user to avoid, and have to understand when you pay it and when you don’t. He believed that the tax is on the producer and not the delivery. He asked who is the entity is that is responsible for paying the tax and forwarding on that payment to the City. Finance Director Haley replied that there are two types of Gas Tax. She added that one does affect the producer and one affects the delivery. She mentioned that the City’s bill if 5 cents per Therm as the end user, but she will double check. City Council approved minutes on July 6, 2015 / Finance Advisory Committee approved minutes on July 14, 2015  Joint City Council and Finance Advisory Committee Meeting May 20, 2015 Page 4 of 6 Alderman Noreiko asked what tax increases have been more acceptable by residents. Committee Chair Peddle stated that from the comments he has received that when the public can see where their tax dollars are going, that tax seems to be more acceptable. He added that you will need to dedicate a revenue source to a tax for the residents to accept. City Manager Gaura added that there are not any additional revenue sources in the FY16 budget, as they are presenting a balanced budget. She mentioned that if the Council were to recommend an alternative revenue source that the City would see the benefit in FY17 and on. TIF Economic Development Coordinator Diedrich presented the TIF Plan Memorandum and the seven year phase out revenue spreadsheet in detail. Alderman Marquardt left the meeting at 6:30 p.m. City Manager Gaura added that the staff has met and listened to the community. The staff has met with local business owners, at Chamber meetings, with Downtown merchants and they all are stating that the life support the Egyptian Theatre brings to their businesses is positive. She added that these groups support the option to move the Egyptian Theatre to a 12 month venue is critical to the downtown. Alderman Marquardt returned to the meeting at 6:33 p.m. Alderman Jacobson asked if the apartments above the businesses downtown are not meeting current code restrictions, is the Structural Commercial program will help these business owners rehab there second floors to provide viable income sources to sustain their businesses on the first floors. Economic Development Coordinator Diedrich responded that she will need to look at that more further, but added that it is a great comment and something that will be kept into consideration. Alderman Baker added that building codes have changed over the decades, we have been told that if we have a great downtown residence it will be a thriving downtown. Community Development Director Divita commented that to use these funds is a policy decision that the Council will need to make on how to apply these funds where others may perceive as maintenance costs on a building. Committee Chair Peddle left the meeting at 6:35 p.m. Alderman Baker suggested that the parking study would show that we needed a parking garage. Economic Development Coordinator Diedrich agreed that doing the parking study will provide those suggestions and give us the final response to a parking garage. City Manager Gaura added that the library expansion will see a 25% increase in the number of people in the downtown area and converting the Egyptian Theatre to a 12 month venue will be included in the parking study. In addition, to providing a feasibility study to how the Egyptian Theatre will impact the City moving forward. She also included that the staff does have recommendations in the budget for the 50/50 budget for the Egyptian Theatre for operating fees. Committee Chair Peddle returned to the meeting at 6:38 p.m. City Council approved minutes on July 6, 2015 / Finance Advisory Committee approved minutes on July 14, 2015  Joint City Council and Finance Advisory Committee Meeting May 20, 2015 Page 5 of 6 Alderman Finucane arrived to the meeting at 6:40 p.m. City Manager Gaura recommends that $2 million would be allocated to the school districts. She added that the City is only as strong as the school district is. It will help with the neighborhoods to make them more viable. Mayor Rey reflected on the Joint Committee between the City and School District and asked City Manager Gaura to reflect on the atmosphere of the meeting. City Manager Gaura stated the relationship is amazing and that there is open communication and coordination between both parties. City Manager Gaura requested that the City and Committee provide feedback on the direction to take with regard to the phase out of the TIF districts. Alderman Noreiko questioned the parking study and its relationship with projected improvements to the Egyptian Theatre. She asked if it makes sense to do the study before moving the Theatre to a 12 month venue. Economic Development Coordinator Diedrich responded that the parking study is more than just focused on the Theatre, but on the entire Downtown area. Committee Chair Peddle stated that he was frustrated on the parking study. He stated that this is the same conversation they have had year after year. He added that if you want to get students downtown, you will need to move west of Annie Glidden Road. He stated that there are many buildings downtown that are not up to their full use. He added that he does agree with the Theatre going to a 12 month venue. He stated that a consulting firm looked at the maps and stated that the City does not have a parking problem. Alderman Baker stated that when he had his business downtown, he always had parking issues. He added that the parking study will provide the fact that there is not enough parking. He suggested that if you go to Naperville there is a parking lot on every corner. Committee Member Verbic suggested that we help mediate in businesses spaces that are not being used to their full potential, obtaining them and turning them over to benefit the City. Alderman Baker left the meeting at 7:20 p.m. Committee Member Teresinski added that he feels that the City needs to put a place holder in for $1 million for a street project. City Manager Gaura stated that the downtown is the heart of the community, the tenor of the phase out will never be where it was 20-30 years ago but it can be a viable downtown. She added in relation to the theatre, the air conditioning is a necessity and the building is a historical building and is a large part of the City’s history. This study will look at the best return on investment and how to move forward. Alderman Baker returned to the meeting at 7:22 p.m. Mayor Rey requested that the rest of the agenda (F-L) will be moved to the May 27 at 5:00 p.m. meeting. PUBLIC PARTICIPATION Ray Binkowski, owner of Fitworkz, stated that adding a 4% entertainment tax is a disincentive. He claimed that health fitness is not an entertainment and it is price sensitive. He added that people are already going a few miles more down the road for cheaper gas, shopping, etc. He commented that the short falls of cash flow because the City has too many draws on the system that are not City Council approved minutes on July 6, 2015 / Finance Advisory Committee approved minutes on July 14, 2015  Joint City Council and Finance Advisory Committee Meeting May 20, 2015 Page 6 of 6 paying back in. He questioned how non-profit organizations will be affected by this tax when they have fitness programs (i.e. DeKalb Park District, NIU, etc.). He added that with the events he has hosted at the Egyptian Theatre there is parking it’s just not in the right spot. Michael Haji-Sheik, resident, stated that until the City finds a way to bring money into the town we will never grow beyond where we are now. He added that the taxes are a disincentive. He claimed that he sees a dead end business town. He suggested that the City needs to bring in outside industry and businesses to help the City grow. City Manager Gaura replied to the public comments. She stated that Community Development Director Divita has been working with community organizations to set-up an incubator for industrial businesses, either through NIU or DCEDC. She added that on the agenda for the May 26 City Council meeting is Project Black Bear, which is a potential business that will locate to Park 88. Community Development Director Divita added that the Planning and Zoning meeting will be moved to another location in City Hall on May 27th. Committee Member Teresinski requested that Council to look at the five year on what is sustainable. He asked that once we get into recommendations that the City uses this as a tool when making decisions on short term goals with long term consequences. CONFIRM NEXT MEEETING DATE AND TIME Next meeting confirmed for Tuesday, May 27, 2015 at 5:00 p.m. ADJOURNMENT Mayor Rey requested a move to adjourn, moved by Alderman O’Leary and seconded by Committee Member Neeley. Meeting adjourned at 8:05 p.m. __________________________________________ RUTH A. SCOTT, Deputy City Clerk Minutes prepared by Account Technician Carri Parker City Council approved minutes on July 6, 2015 / Finance Advisory Committee approved minutes on July 14, 2015