Finance Committee

1 FINANCE COMMITTEE MEETING MINUTES 2 Tuesday, January 7, 2025 3 (Approval Pending) 4 5 Agenda Item No. 1. The January 7, 2025 meeting of the Finance Committee was called to order 6 by Chairperson Denise Bhirdo at 2:30 P.M. 7 8 Agenda Item No. 2. Roll Call 9 10 Present: Chairperson Bhirdo and members Louise Howson and Nate Bell. 11 12 Staff: Village Administrator Julie Schmelzer, Finance Director/Treasurer Vlad Gannik and 13 Clerk Heidi Teich 14 15 Others: Justin Fischer and Adam Ruechel of R.W. Baird & Associates, Amber Drewieske of 16 CLA, Kurt Harff, Ken Church, Dick Burress, Deb Fitzgerald, Sally Pfeifer, Tim West, Chris 17 Schmeltz, “James” and Laurel Harff 18 19 Agenda Item No. 3. Approval of the Agenda 20 A motion was made by Howson, seconded by Bell that the Agenda for the January 7, 2025 meeting of the 21 Finance Committee be approved as amended to move Comments and Correspondence to follow the 22 presentation by CLA at Item 6.a due to limited time constraints by CLA staff. Motion carried – All ayes. 23 24 Agenda Item No. 4. Approval of Minutes 25 A motion was made by Howson, seconded by Bell to approve the minutes of the December 10, 2024 26 meeting of the Finance Committee as presented. Motion carried – all ayes. 27 28 Agenda Item No. 6. Discussion/Action Items: 29 a) CLA Presentation; Debt and the Budget Process 30 Bhirdo prefaced the presentation by CLA by asking Drewieske about closing a TID. Drewieske 31 responded that any money remaining in the TID is first dispersed among the taxing jurisdictions 32 based on their calculated interest in the TID. At this time, it is not expected that TID #1 will have 33 any excess funds, unless the village acts to extend the life of the TID beyond 2028 to try and 34 recover additional unreimbursed projects costs. 35 36 Schmelzer asked if any final money available in the TID could go towards affordable housing. 37 Drewieske responded that the village must qualify for an extension and to use the funds for 38 housing. The entire last increment would then need to be used for housing. 39 40 Bell asked for further information on extending or not extending the TID. Drewieske noted that 41 one factor in determining whether to extend a TID depends on unreimbursed costs and which 42 funds need to be repaid. A second factor is weighing the value being put back on the tax roll to 43 decide if it makes sense at the time. 44 45 Drewieske added that there are 3 to 4 other types of TID extensions one could qualify for, in 46 addition to affordable housing. She did not have the information immediately at hand, but 47 reminded the board to check on the deadlines for filing extensions should they wish to pursue  Minutes of the January 7, 2025 Meeting of the Finance Committee - approved 1 one. When extending a TID, they could first conduct an audit to confirm that there are eligible 2 expenditures to be repaid and then request the extension through the Joint Review Board. 3 Ruechel added that the option to extend a TID for one year for affordable housing can be done 4 by board motion. The requirement is that 75% of the increment collected must then be used for 5 affordable housing. The remaining 25% can be used for any type of housing. 6 7 Drewieske walked the committee through the process needed if they were to redo the tax bills for 8 2024. She explained that net new construction determines allowable levy limit for village. The 9 total allowable levy in 2024 increased by 1%, approximately $31,000. Debt on the levy was 10 increased by $300,000 in consultation with Baird. This keeps the total levy and capital projects 11 about the same, and the only change is in debt service. Cash on hand must then be used to pay 12 the debt service, but this is only sustainable for about a year. Alternatively, a transfer from the 13 General Fund (GF) can be made to cover the principal and interest payments. To keep the GF 14 whole and cover operational costs (payroll, maintenance, AP’s, etc.), they can reduce the capital 15 projects levy. This can have an impact on those projects that are in great need, such as roads and 16 infrastructure, and require additional borrowing to fund the costs. 17 18 Drewieske added that the only way to really reduce taxes is to adjust the debt service line on the 19 levy limit worksheet, which was displayed on the screen during the meeting. The village is 20 currently at 35% of the limit, which is healthy. If the village takes from the debt service to reduce 21 taxes, it becomes difficult to restore that in the future. Bhirdo remarked that she is not interested 22 in reducing debt levy as they have worked very hard to get where they are now. She would 23 prefer to revisit the Capital Improvement Plan (CIP) and reduce the CIP levy by about $400,000. 24 Bhirdo prepared some revisions to the CIP, which were shared with the members and posted on 25 the village website. Schmelzer asked about the implications of reducing the CIP, and Ruechel 26 cautioned that deferring maintenance items too long, causing them to require more to fix, could 27 result in the need for future spending referendums. 28 29 The committee acknowledged that the debt process is not simple, and there are many intertwined 30 parts. They need to carefully consider the consequences of any action taken to reduce debt and 31 how that will affect the village’s ability to take on additional debt in the future. The village is 32 already not utilizing all of its allowable levy, which will lead to tough decisions down the road 33 on which projects can be undertaken and which need to wait over the next number of years. 34 Ruechel added that if it is truly the board’s desire to keep taxes flat, that is only realistic for about 35 one year. Then the board will need to address the consequences of that action as it affects its long- 36 term planning. 37 38 At 3:17 P.M, the committee thanked Drewieske who needed to leave the meeting due to a prior engagement. 39 40 Schmelzer stated that a degree of debt is needed for the village to operate. Without debt, the 41 village cannot secure loans or borrow at a reasonable rate in the case of an emergency. She asked 42 Justin Fischer of R.W. Baird to speak about the current projects that the village has planned. 43 Fischer noted that the village has been planning to get to this point, where they are poised to 44 complete some larger projects in the CIP, for the past ten years. Since 2017, the village’s existing 45 debt has been being paid down and the village is now at the point where they can do some 46 necessary projects without significantly impacting the tax levy. These are projects that are 47 expected to have a useful life of 20 years or more, such as the Mill Road Triangle project ($2 2  Minutes of the January 7, 2025 Meeting of the Finance Committee - approved 1 million) and new administration building ($3 million). The debt for these projects is spread out 2 for 20 years and allows the levy to remain at $850,000 or less (as stated on the Levy Limit 3 worksheet) if there are no additional future capital projects that require borrowing. Two 4 upgrades in two bond credit ratings have also helped to receive lower interest rates, which 5 benefits the taxpayers, and allows the village to move forward with their improvement plans 6 without sliding backwards. The village is fortunate to currently be in a position where they do 7 not need to borrow for capital projects, which could change in the future. 8 9 Howson asked if there was a debt management policy in place, and other than the policies 10 presented in the CIP and budget documents, Bhirdo noted that they have followed best practices 11 in her time on the board. Howson inquired about “refunding” as mentioned in the sample debt 12 management policy shared by Baird. Fischer explained that this is the process where outstanding 13 debt is evaluated for opportunities to refinance at lower rates. The goal is to achieve at least 2% 14 savings when refinancing. Given the current interest rates, Fischer does not feel it is time to look 15 at refinancing current debt. 16 17 The committee thanked Fischer for his insights, and he left the call at 3:30 P.M. 18 19 Agenda Item No. 5. Comments, correspondence, and concerns from the public 20 Correspondence for this meeting was received from Rodney Hedeen, Sister Bay and Florida, 21 who repeated his earlier statements on high taxes in Sister Bay. 22 23 Chairperson Bhirdo asked if anyone wished to offer any comments, and the following 24 individuals spoke: 25 26 Richard Burress – 2340 Maple Dr – shared that he has spoken with Chairperson Bhirdo and 27 reviewed meeting minutes from the past five to seven years. He stated his belief that there have 28 been real village-level misunderstandings going back to the start of the budget process this past 29 year. The taxpayers were affected by a 10.8% increase, and there is no way to know what will 30 happen with the TID in the coming year. He again expressed his concern with the maintenance 31 of the village and the impact on the taxpayers because there will be another increase next year. 32 Burress elaborated by noting that additional funds from other sources, such as PRAT, room 33 taxes, and state aid, don’t seem to be helping the village because spending is out of control, 34 citing the new public works building as an example as well as the purchase of the former 35 Logerquist property. 36 37 Bhirdo responded to Burress’s concerns by explaining the difficulty of someone in the role of 38 trustee who has had to make the tough decisions of when to invest village funds, such as the 39 past purchase of the waterfront properties. She explained that she is bothered by the repeated 40 comments that the village is overspending now, but this spending is because the village did not 41 act for years, and they can’t continue to put things off. She understands that the public may not 42 like the decisions that she personally has made, but she is coming from an informed position 43 and is trying to do the best for the village. As such, she noted that she wants to continue with 44 the Mill Road Triangle and administration building as they are already built into the debt 45 service. After those two projects, they can see what more can be done with the CIP and push 46 other projects out if they need to. 47 3  Minutes of the January 7, 2025 Meeting of the Finance Committee - approved 1 Tim West – 2217 Mill Circle – also expressed his unhappiness with the tax increase. He stated 2 that he does see the need for a new maintenance building but feels the former Logerquist 3 property is being underutilized for storage. West questioned the feasibility of providing 4 affordable housing if taxes keep increasing, which is not affordable. West also acknowledged 5 the true concern of the trustees to do what is in the best interest of the public, but how that gets 6 communicated will be important. 7 8 Howson agrees that communication is key. She would like the committee and board to 9 formulate a plan to move forward which includes why they are taking those particular steps 10 and keep the public informed to the greatest extent possible, knowing that some members of the 11 public do not attend the meetings or read minutes. 12 13 Ken Church – 2295 Hill Road – shared that he likes the idea of moving forward cautiously with 14 CIP. He does not support spending additional money to go through the process of refunding 15 tax payments and asked that the committee try not to increase taxes further in the future. 16 17 Bell shared his final comments on the topic stating that any adjustments they make now may 18 not have a visible impact next year. It is the long-term impacts that they need to focus on, make 19 corrections as they are able, and hope to stay on course for the future. 20 21 Agenda Item No. 6. Discussion/Action Items cont’d 22 b) Tax Levy; Consideration and Recommendations 23 The village received estimates costs to make an adjustment to the 2024 tax bills in the range of 24 $40,000 to $60,000. The committee members weighed the additional costs against their desire to 25 correct the tax amount to a zero increase and determined that it is simply cost-prohibitive to do 26 so. They will continue to move forward with additional cuts to the CIP for future planning. 27 28 It was the consensus of the Finance Committee to recommend to the board that they take no further action 29 at this time on the 2024 tax bills. 30 31 c) Review CIP 32 Bhirdo prepared some proposed changes to the 2025 Capital Improvement Plan. As a result of 33 the ensuing discussion, the committee came to the following conclusions: 34 35 i. The committee does not want to act on the demolition of the existing public works 36 building at this time but also does not want to tax the public again for the funds as they 37 were already committed in the current CIP. Therefore, the $75,000 for the demolition can 38 be restricted for use by a board motion, or, if left unspent, gets moved to the general fund 39 balance. This will be clarified with the auditor. 40 ii. Wayfinding Signage will be removed from the CIP in its entirety at this time, and referred 41 back to the Parks, Property & Streets Committee for review. 42 iii. Bhirdo proposed a non-binding referendum question on a spring ballot for funding of 43 village hall renovations (approximately $3 million), as well as village spending for a new 44 post office (approximately $2 million). As it is too late to prepare those questions for this 45 April, they could be ready for the April 2026 ballot. 46 iv. A suggestion was made to move the engineering of the village hall from 2026 to 2027, or 47 remove it from the CIP altogether. Schmelzer requested that they wait until the CBDG 4  Minutes of the January 7, 2025 Meeting of the Finance Committee - approved 1 award is announced, as they may need matching funds. A determination of how to 2 proceed with the village hall in the CIP will be made in the fall. 3 v. The post office will be removed completely from the CIP. 4 vi. The future of the property at 2313 Mill Road, once vacated, will be referred to the Parks, 5 Property & Streets Committee. 6 vii. The future use of the former Wiltse property shall be referred to the Housing Committee. 7 It is necessary to keep it in the CIP until they receive notice of any grant awards which 8 require proof that there is a plan for the property. In the meantime, all dollar amounts 9 and year references will be removed from that page in the CIP and Wiltse Infrastructure 10 simply becomes a placeholder page. 11 viii. Page 35 of the CIP indicates that General Obligation bonds are to be used for Flintridge 12 Road improvements. This should be changed to Cash. Ruechel explained that they have 13 the flexibility to levy for street improvements for small dollar projects, but they may also 14 consider that the useful life of a road is 20 years or better and spread the payments out 15 over that time. This is ultimately a decision the board makes when the situation arises. 16 ix. Money for the Waterfront Park playground equipment shall just sit for the time being. 17 The village should also look for fundraising opportunities or grants to build up the fund. 18 As that fund is being established, they can plan for expanding the equipment at the sports 19 complex as well. 20 x. The Woodland Trail designation shall be generally renamed as the “Trails” fund in the 21 CIP. The current trail names shall remain as is for the Comprehensive Plan and Outdoor 22 Recreation and Transportation Plan. The existing $55,000 in the fund should be restricted 23 for engineering and beginning in 2026, allocate $100,000 annually to the fund. 24 xi. An ADA walkway is needed at Pebble Beach. The proposal will remain as is pending 25 further research on the donations made towards the purchase of Pebble Beach. 26 xii. The CIP page 49 incorrectly states that there is $55,000 in reserve for the ice rink. There is 27 currently no money in reserve, so the entire $90,000 is needed for new hockey boards. 28 However, as the Friends of the Ice Rink group is working to fundraise for a new rink, this 29 should be removed completely from the CIP as the boards will be resolved with the 30 construction of the new facility. 31 xiii. Ice Rink Warming House funds on page 50 should be adjusted to show $200,000 in 2026, 32 and $100,000 each year thereafter. The name on the page should be changed to 33 Community Center/Warming House and the description should include language 34 indicating that these are the village’s portion of funds towards the project. 35 36 d) Financial Policies and Procedures 37 Included in the meeting packet was a summary of significant accounting policies currently in 38 place. The committee discussed the need to develop more formal procedures as they move into 39 budget planning for 2026, specifically regarding TID calculations. Schmelzer indicated that the 40 TID amounts known at the time of budget preparation are accurate in calculating an operational 41 budget. Bell suggested that it is made very clear that those figures are operational until the 42 finalized TID numbers are known. Modified workbooks for calculating the budget with more 43 accurate estimates of the impacts of TID valuations will be presented in the coming year. 44 45 Schmelzer noted that she will prepare a draft budget policy for the committee to review at a future 46 meeting. 47 5  Minutes of the January 7, 2025 Meeting of the Finance Committee - approved 1 e) Financial Contingency Plan and Budgeting 2 Due to time limitations, this agenda item will be addressed at a future meeting of the Finance Committee. 3 4 Agenda Item No. 7. 5 Discussion Regarding Matters to be Placed on a Future Agenda, or Referred to a Committee, 6 Official or Employee. 7 8 It was the consensus of the committee that the following recommendations be made: 9 • Refer to the Village Board to take no action on a refund of 2024 Property tax bills 10 • Refer the review of Wayfinding signage to Parks, Property & Streets 11 • Refer to the board a proposal for adding non-binding referendum questions to the April 12 2026 ballot for village hall renovations and a potential new post office building 13 • Refer to Parks, Property & Streets a discussion on the property at 2313 Mill Road 14 • Refer to the Housing Committee a discussion on Wiltse property infrastructure 15 • Discussion on a Financial Contingency Plan and Budgeting 16 17 Agenda Item No. 8. Next Meeting 18 The next meeting of the Finance Committee has yet to be determined. 19 20 Agenda Item No. 9 Adjournment 21 At 5:41 P.M. a motion was made by Bell, seconded by Howson to adjourn the January 7, 2025 meeting of 22 the Finance Committee. Motion carried – all ayes. 23 24 Respectfully submitted, 25 26 Heidi Teich, 27 Village Clerk 6