Finance Advisory Committee

Regular Meeting

DeKalb, IL · October 30, 2017

Minutes

MINUTES FINANCE ADVISORY COMMITTEE CITY OF DEKALB OCTOBER 30, 2017 1. CALL TO ORDER The Finance Advisory Committee meeting of October 30, 2017, was called to order at 5:01 p.m. by Chair Peddle. 2. ROLL CALL Committee members present were Tom Teresinski, Lynn Neeley, Steve Parker, Dave Conlin, Ron Partch and Chair Mike Peddle. Staff present: City Manager Anne Marie Gaura, Assistant City Manager Patty Hoppenstedt, Finance Director Molly Talkington, Assistant Finance Director Robert Miller, and Account Technician III Carri Parker. Staff present in audience: Deputy Fire Chief Jeff McMaster, Human Resources Director Cris Randall, Public Works Director Tim Holdeman (arrived at 5:30 p.m.), Fire Chief Eric Hicks (arrived at 5:35 p.m.), Police Chief Eugene Lowery (arrived at 5:42 p.m.) and Economic Development Director Jo Ellen Charlton (arrived at 5:55 p.m.). 3. PUBLIC PARTICIPATION No public participation 4. APPROVAL OF MINUTES 1. Minutes of the Finance Advisory Committee Meeting of October 17, 2017. MOTION Committee Member Teresinski moved to approve the minutes; seconded by Committee Member Neeley. VOTE Motion carried on a unanimous vote. Chair Peddle declared motion passed. 5. REVIEW FISCAL YEAR 2018 BUDGET RECOMMENDATIONS Finance Director Talkington presented the FY2018 budget. She stated that the budget is balance and is safety and development focused. She added that the budget meets the City’s polices where funding allows and added that the general fund reserve is 26.2% which is above the funding policy of 25%. She pointed out the history of the fund balance and explained the balances of each fund. She focused on the top ten The Finance Advisory Committee approved these minutes on November 2, 2017. Finance Advisory Committee Meeting October 30, 2017 Page 2 of 5 revenues and the top five expenditures. Finance Director Talkington explained that the majority of the spending is for public safety. She discussed the key priorities of the Police Department staffing plan. Finance Director Talkington explained that the Police Department has done a deep dive into their staffing levels and because short staffing is causing more overtime and then causes stress resulting in sick time or on-duty injuries. The staffing plan is a three year plan to add seven officers to be more proactive instead of reactive. The funding for these hires would not go into effect until 2019 due to the timing and current vacancies. With the increase of the staffing, more administration is needed which includes bringing the part-time Human Resources Generalist to full-time. She added that the Police Department would be converting to digital radios for better communication between other governmental agencies. She explained the re-allocation of the funds from the termination of the Peace Road Interchange. There was a discussion between the Committee and staff regarding the termination of the Peace Road Interchange. Finance Director Talkington continued with her presentation on the Streets and Fleet condition. She added that there is an immediate need for vehicle replacement throughout the City. Committee Member Teresinski asked about the fleet purchases. Finance Director Talkington responded that the sales tax increase would be split between the funds. Finance Director Talkington explained the improvements to the downtown area. She added that this would increase the tax base of those properties. Finance Director Talkington continued by explaining the future development projects in FY2018 resulting in the budget increases to support the development efforts. A discussion ensued with the Committee and staff relative to the funds used from Community Development Block Grant (CDBG) for administrative costs. Chair Peddle asked Assistant City Manager Hoppenstedt to explain what Camiros is. Assistant City Manager Hoppenstedt explained that Camiros is a planning and development consulting service that is focused on the Annie Glidden Revitalization Plan. Fire Chief Hicks arrived at the meeting at 5:35 p.m. Finance Director Talkington continued her presentation of the FY2018 budget. She added that the FY2018 taxable base is increasing. The County did provide an estimate of 5.2% or $26.3 million in increase taxable property and $11 million was from new development that will help fund other core services throughout the City. Finance Director Talkington continued explaining the funding to support key priorities. Fire Chief Hicks and Deputy Fire Chief McMaster left the meeting at 5:40 p.m. The Finance Advisory Committee approved these minutes on November 2, 2017. Finance Advisory Committee Meeting October 30, 2017 Page 3 of 5 Fire Chief Hicks and Deputy Fire Chief McMaster returned to the meeting at 5:41 p.m. Chair Peddle stated that the City is not funding pensions by the financial policies. He added that the property tax levy is supposed to fund Police, Fire, IMRF and Social Security. He stated that the City would need an additional $1 - $1.2 million to fully fund the pensions. Police Chief Lowery arrived at the meeting at 5:42 p.m. Committee member Teresinski commented on the built-ins and would like to see the key revenue streams and an explanation of the previous projections provided. Chair Peddle stated that he is troubled based on the presentation of the funding to support key priorities. He added that the amount of $2.6 million for streets and fleet is not enough to bring the streets up to where we need to be. He mentioned that with the new revenue source, he would like to be shown the longer term package of what is needed. Committee Member Neeley asked to see the charts that were emailed to the Committee. Committee Member Partch questioned why three officers are costing over $300,000 and asked what is being done to change the pension assignment. Finance Director Talkington explained that it depends on the tiers on which they are hired and that there are two tiers. A discussion ensued between the Committee and staff about the amount devoted to the new hiring of the Police Officers in FY2018. City Manager Gaura arrived at the meeting at 5:50 p.m. Economic Development Director Charlton arrived at the meeting at 5:55 p.m. Human Resource Director Randall left the meeting at 6:02 p.m. Committee Member Neeley mentioned that she was grateful with the assumptions that were provided. Committee Member Teresinski questioned the amount of on page 236 in the FY2018 budget showing the assumptions. Human Resources Director Randall returned to the meeting at 6:07 p.m. A discussion ensued between the Committee and staff on the assumptions of the FY2018. The Finance Advisory Committee approved these minutes on November 2, 2017. Finance Advisory Committee Meeting October 30, 2017 Page 4 of 5 Chair Peddle stated that difficult decisions need to be made and the Committee needs to recommend something for the Streets and Fleet. He added that the Committee needs to go through the budget and decide what the Five-Year Plan will look like. Police Chief Lowery left the meeting at 6:25 p.m. Police Chief Lowery returned to the meeting at 6:26 p.m. Chair Peddle mentioned that the Property Taxes are explainable. He added that the total Sales and Use Tax, the majority of the increase is the 1%. He asked if the Committee needs to look at the assumptions of the increase of the revenues. A discussion ensued between the Committee and staff on the revenue calculations. Assistant City Manager Hoppenstedt left the meeting at 6:44 p.m. Committee Member Steve Parker left the meeting at 6:44 p.m. Committee Member Steve Parker returned to the meeting at 6:46 p.m. A discussion ensued between the Committee and staff with regard to census numbers and Northern Illinois University enrollment related to the per capita calculation. Assistant City Manager Hoppenstedt returned to the meeting at 6:53 p.m. The discussion continued between the Committee and staff regarding the revenue calculations. Chair Peddle asked for clarification under General Fund expenditures relative to wages in the budget. The discussion continued between the Committee and staff regarding the wage calculations. Committee Member Parker expressed his concern on the timing of receiving the budget and having the opportunity to provide recommendations by the next meeting. Chair Peddle explained that the transmittal letter would provide guidance on how to read the document. He explained that the main area to focus on would be the general fund. Committee Member Neeley stated that what is very helpful is the section on page 237. She added that it is a great tool. The Finance Advisory Committee approved these minutes on November 2, 2017. Finance Advisory Committee Meeting October 30, 2017 Page 5 of 5 Chair Peddle added that the budget document contains all pertinent information relative to the financial information for the City. 6. OTHER ITEMS 1. Home Rule Sales Tax 0.75% increase would raise approximately $2.8 million annually. Chair Peddle stated that the information provided within the budget clarifies the request within the budget. Chair Peddle called for public participation due to late arrivals. Bessie Chronopoulos commented that she thought there was going to be more discussion on Tax Increment Financing (TIF) Funds. She also stated that the Committee should be meeting more often and sooner. She added that frequent meetings were brought up by Council and Committee members. Chair Peddle responded that the meetings did start in August and will be meeting earlier next year. He added that the Five-Year Financial Plan would be enhanced next year and use it earlier as the budget is being developed. He mentioned that there would be more discussion on the TIF once the City has begun the appropriate steps in the process that is required. He stated that it would not be until April/May 2018 until the TIF is brought to a review board. Committee Member Conlin asked about how much detail the Committee should go into regarding the FY2018. Chair Peddle asked that if there are items that a member has questions on that they should bring it to the Committee. He explained the appropriate way to communicate to the City and Committee by Opens Meeting Act regulations. 7. CONFIRM NEXT MEETING DATE AND TIME The next Finance Advisory Committee meeting will be on Thursday, November 2, 2017, at 5:00 p.m. to review the Fiscal Year 2018 Budget and Recommendations. 8. ADJOURNMENT Chair Peddle requested a motion to adjourn, moved by Committee Member Parker and seconded by Committee Member Teresinski. The motion passed by a unanimous vote. Meeting adjourned at 7:09 p.m. _______________________________________ Carri Parker, Account Technician III The Finance Advisory Committee approved these minutes on November 2, 2017.

Agenda

AGENDA Finance Advisory Committee Meeting Monday, October 30, 2017 5:00 p.m. Police Department – Training Room (Second Floor) 1. Call to Order 2. Roll Call for Attendance 3. Public Participation 4. Approval of Minutes a. Minutes of the Finance Advisory Committee Meeting of October 17, 2017 5. Review Fiscal Year 2018 Budget Recommendations 6. Other Items a. Home Rule Sales Tax 0.75% increase would raise approximately $2.8 million annually. 7. Confirm Next Meeting Date and Time a. Thursday, November 2, 2017 at 5:00 p.m. at Police Department i. Review Fiscal Year 2018 Budget and Recommendations 8. Adjournment The Finance Advisory Committee’s role (as listed in Chapter 54-11) is to provide well-reasoned, financially sound recommendations to the Council. Meetings and reporting shall be on a project-by-project basis or as otherwise assigned by the City Council. The Finance Advisory Committee shall work in cooperation with the City Council and the City Manager to analyze the City’s financial policies, long term financial stability, options for greater efficiencies and possible revenue and expenditure modifications. MINUTES FINANCE ADVISORY COMMITTEE CITY OF DEKALB OCTOBER 17, 2017 1. CALL TO ORDER The Finance Advisory Committee meeting of October 17, 2017 was called to order at 4:59 p.m. by Chair Peddle. 2. ROLL CALL Committee members present were David Conlin, Lynn Neeley, Steve Parker, Tom Teresinski and Chair Mike Peddle. Staff present: City Manager Anne Marie Gaura, Assistant City Manager Patty Hoppenstedt, Finance Director Molly Talkington, Public Works Director Tim Holdeman, Community Development Director Jo Ellen Charlton, Economic Development Planner Jason Michnick and Customer Service Representative Kendall Frerichs. Staff present in audience: Police Chief Gene Lowery, Fire Chief Eric Hicks and Public Works Management Analyst Patrick Di Diana. Committee members not present was Committee Member Ron Partch. 3. PUBLIC PARTICIPATION No Public Participation 4. APPROVAL OF MINUTES 1. Minutes of the Finance Advisory Committee Meeting of October 5, 2017. MOTION Committee Member Teresinski moved to approve the minutes; seconded by Committee Member Neeley. VOTE Motion carried on a unanimous vote. Chair Peddle declared motion passed. 5. ASSET MANAGEMENT PLAN PHASE I – STREETS AND FLEET RECOMMENDATIONS Public Works Director Holdeman presented a summary of the Asset Management Plan for Streets and Fleet. He explained the needs for the current condition of the $1.4 million for Fleet and $3.8 million for streets. He mentioned four different scenarios The Finance Advisory Committee have not approved these minutes. Finance Advisory Committee Meeting October 17, 2017 Page 2 of 7 presented in previous meetings: 1) increase MFT, 2) vehicle sticker, 3) trash hauler fee, and 4) sales tax increase. He added that from feedback received that there was a common concern with administration costs of implementing the scenarios. He added that staff is only recommending the sales tax increase at this time. Chair Peddle requested each Committee Member to comment. Committee Member Conlin stated that he is frustrated with raising the sales tax. He mentioned that the vehicle list that was provided in previous years he is having trouble visualizing the need for fleet. He added that for streets we need to make adjustments to accommodate the need. Committee Member Teresinski stated that having a comprehensive strategic plan to encompass all aspects and this plan would look at the capital needs. He stated that looking at the conditions and history that there is a need. He added that he has a difficult time with the one-offs. He suggested to look at trend lines and what is impacting the city. He added the any discussions on capital should come after the financial plan is finalized. He suggested that if anything is put in place that this amount be restricted for streets and fleet capital, similar to how the water rate increase was established last year. Committee Member Parker stated that the 1.0% increase would not affect most people. He added that he does not notice the fleet, but does recognize the street conditions. He stated that he is in favor of the 1.0% sales tax increase. Chair Peddle added the growth in the EAV came in double than expected. Committee Member Teresinski asked if this was based on 3M. Economic Development Planner Jason Michnick confirmed. Committee Member Neeley agreed that something needs to be done. She stated that she is in support of balancing things out. Chair Peddle stated that for the past five years the capital needs have been brought to the Committee. He added that they have not been getting any better by not doing something. He mentioned that from listening to the Committee that there is some type of an agreement. He added that the amount that is needed is $3 million. He suggested that there are no viable means that have been presented that does not involve gaining more revenue in some way. He stated that he did not like the rebate and that it would have added more problems. He agreed that when the revenue is identified that the source will need to be protected and only used for street and fleet. Chair Peddle explained that any decision needs to look at the long-term. He added that the idea of bonding will be determined how much we invest in streets and fleet and how much the Committee is comfortable with. Committee Member Conlin asked why the sales tax was raised in 2008. The Finance Advisory Committee have not approved these minutes. Finance Advisory Committee Meeting October 17, 2017 Page 3 of 7 Chair Peddle stated that the Committee started after that time, but could remember that the city had a deficit of $1 million for insurance. He added that since then those items causing the deficit have been resolved. A discussion ensued between Committee Members and staff with regard to the Financial Plan, EAV values and the tax increase. City Manager Gaura explained the condition of the fleet and asked the department heads to comment. Fire Chief Hicks and Police Chief Lowery both mentioned issues where emergency vehicles broke down during an active scene. Committee Members and staff continued discussing the condition on the fleet and the differences between citizen use and city use. Chair Peddle proposed a $3 million revenue source through a sales tax increase with a sunset of five years. He added that an analysis be done to find the other funding resources to find the remaining amount needed. A discussion ensued between Committee members with regard to the tax increase. Chair Peddle requested staff take the recommendations and come back to the Committee on October 30th with a proposal with using the model what a 0.75% sales tax increase would produce, 1.0% sales tax increase assumptions and restrictions are to put a sunset on these funds. Chief Lowery left the meeting at 5:24 p.m. Chief Lowery returned to the meeting at 5:25 p.m. A discussion ensued between Committee Members and staff regarding the projections for sales tax and how the State of Illinois tax is being collected and distributed. Economic Development Planner Jason Michnick left the meeting at 6:27 p.m. Economic Development Planner Jason Michnick returned to the meeting at 6:28 p.m. Community Development Director Charlton left the meeting at 6:37 p.m. Assistant City Manager Hoppenstedt left the meeting at 6:38 p.m. Committee Member Parker left the meeting at 6:39 p.m. Chair Peddle left the meeting at 6:39 p.m. Committee Member Neeley left the meeting at 6:39 p.m. The Finance Advisory Committee have not approved these minutes. Finance Advisory Committee Meeting October 17, 2017 Page 4 of 7 Chair Peddle returned to the meeting at 6:40 p.m. Finance Director Talkington left the meeting at 6:40 p.m. Chair Peddle requested that the Committee discuss each item separately and requested that all presentations be posted to the city’s website. Finance Director Talkington returned to the meeting at 6:41 p.m. Chair Peddle stated there is not a quorum at 6:42 p.m. Committee Member Parker returned to the meeting at 6:42 p.m. Committee Member Neeley returned to the meeting at 6:42 p.m. Chair Peddle stated there is a quorum at 6:42 p.m. Community Development Director Charlton returned to the meeting at 6:46 p.m. Assistant City Manager Hoppenstedt returned the meeting at 6:46 p.m. Chief Lowery left the meeting at 6:48 p.m. Chief Lowery returned to the meeting at 6:50 p.m. Chief Hicks left the meeting at 6:54 p.m. Chief Hicks returned to the meeting at 6:56 p.m. City Manager Gaura explained to the Committee where to locate the Committee information through the Boards & Commissions>Finance Advisory Committee. She added that you can find everything for the past couple years and stated that the current presentations will be added as well. 6. TAX INCREMENT FINANCING (TIF) – INTERFUND TRANSFERS AND NEW TIF Economic Development Planner Michnick presented the projected revenues and expenses for the remaining years of the TIF Districts. Two different methodologies were used to project a high and low revenue. Expenditures were categorized into reoccurring expenses, contractual obligations, and discretionary spending. Based on the revenues and expenses, it is estimated that they are between $11.96 - $13.83 million to spend on projects. Committee Member Teresinski questioned the property sales tax that is redistributed back to the City. He mentioned that he does not see eliminating it and if there is no other purpose for the TIF to apply it to streets and fleet. The Finance Advisory Committee have not approved these minutes. Finance Advisory Committee Meeting October 17, 2017 Page 5 of 7 City Manager Gaura stated that the City Council asked that the more that can draw down the TIF transfer the more that can be used for economic development. She added that the Council is satisfied with the downtown redevelopment. Committee Teresinski responded that would be great if there was an operating budget that was supporting itself. A discussion ensued between the Committee and staff on the TIF district and historical decisions. Committee Member Parker stated that he would need to research the TIF district before making any comments. Committee Member Conlin added that he would need to do more research on the TIF. He questioned on where the money was spent, what the economic impact was and what the return on investment was. MOTION Committee Member Teresinski moved to recommend the proposed reduction; seconded by Committee Member Conlin. VOTE Motion failed with 0-5-1 vote. The Finance Advisory Committee failed to recommend the proposed reduction. City Manager Gaura left the meeting at 7:21 p.m. City Manager Gaura returned to the meeting at 7:24 p.m. Chair Peddle commented that the new TIF being proposed would, 1) overlay a portion of the Central Business TIF, 2) would not be an extension of an existing TIF, 3) still in exploratory stage, and 4) has not been a review committee to discuss. Economic Development Planner Michnick presented the proposal of a potential boundary that concentrated on the commercial properties that are assessed at amounts less than the current base EAV in the Central Area TIF. Other potential areas to include in the TIF were the south side of Lincoln Highway, west of the river, to the police station. Another potential area was the Ellwood Historic Neighborhood. He also explained the process of removing parcels from existing TIF districts and placing them into the proposed TIF. Chair Peddle excluded himself from the conversation and appointed Committee Member Teresinski as Interim Chair at 7:41 p.m. The Finance Advisory Committee have not approved these minutes. Finance Advisory Committee Meeting October 17, 2017 Page 6 of 7 Economic Development Planner Michnick continued with presenting other potential areas to include in the TIF were the south side of Lincoln Highway, west of the river, to the police station. He added another potential area was the Ellwood Historic Neighborhood. He also explained the process of removing parcels from existing TIF districts and placing them into the proposed TIF. A question and answer discussion ensued with the Committee and staff with regard to the new TIF proposal. Committee Member Parker stated that he likes what’s happening downtown and if there is a way to continue the growth then he supports it. Interim Chair Teresinski stated that he is not against the new TIF. Committee Member Conlin stated that he is in support, but the transparency has to be there. He added that everything has to be clear. MOTION Committee Member Conlin moved to recommend the proposal of a Central Area TIF as a new TIF, and the current TIF expiring and remaining funds be ported to the new TIF; seconded by Committee Member Neeley. VOTE Motion passed with 4-0-2 vote. The Finance Advisory Committee passed the proposal of a Central Area TIF as a new TIF, and the current TIF expiring and remaining funds be ported to the new TIF. Chair Peddle returned to the table at 8:09 p.m. 7. COMMITTEE RECOMMENDATIONS a. Sales tax increase of 1.0% for Streets, Fleet & Operations - See above discussion in item #5 b. Multi-Year Plan for TIF Interfund Transfers - See above discussion in item #6 c. Creation of new TIF - See above discussion in item #6 8. OTHER ITEMS Committee Member Teresinski asked about the Airport advance. He would like the committee to discuss this topic and a balance. 9. NEXT MEETING The Finance Advisory Committee have not approved these minutes. Finance Advisory Committee Meeting October 17, 2017 Page 7 of 7 a. Chair Peddle confirmed the next meeting will be on Monday, October 30, 2017 at 5:00 p.m. at Police Department to Review Fiscal Year 2018 Budget Recommendations. 10. ADJOURNMENT Chair Peddle requested a motion to adjourn, moved by Committee Member Parker and seconded by Committee Member Conlin. Motion passed by a unanimous vote. Meeting adjourned at 8:13 p.m. _______________________________________________ KENDALL FRERICHS, Customer Service Representative The Finance Advisory Committee have not approved these minutes.