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HomeMy WebLinkAbout07/11/2017 Joint Village Board and Finance Commission Workshop Special Meeting of the Committee of the Whole Joint Village Board and Finance Commission Workshop July 11, 2017 1. ROLL CALL— CALL TO ORDER The meeting was called to order at 7:05 p.m. in the Village Board Room of the Village Hall, 50 South Emerson Street, by Mayor Arlene Juracek. Trustees present included William Grossi, Eleni Hatzis, Paul Hoefert, Richard Rogers, Colleen Saccotelli and Michael Zadel. Finance Commission members present included Chair John Kellerhals, Pam Bazan, Trisha Chokshi, Vince Grochocinski, Thomas Pekras and Mary Rath. Staff present included Village Manager Michael Cassady,Assistant to the Village Manager Nellie Beckner, Finance Director David Erb, Public Works Director Sean Dorsey, Fire Chief Brian Lambel, Police Chief Timothy Janowick, Community Development Director William Cooney, Public Works Deputy Director Jason Leib, Village Clerk Karen Agoranos, Communications Director Howard Kleinstein and Administrative Analyst Alexander Bertolucci 2. APPROVAL OF MINUTES Approval of Committee of the Whole Meeting Minutes of May 9, 2017. Motion made by Trustee Hoefert seconded by Trustee Saccotelli. Minutes were approved. Approval of the Joint Village Board and Planning &Zoning Commission Workshop of June 13, 2017. Motion made by Trustee Zadel seconded by Trustee Grossi. Minutes were approved. 3. CITIZENS TO BE HEARD None 4. DISCUSSION ITEMS 4.1: 2016— 2018 Budget Review and Preliminary 2017 Property Tax Levy, 1) 2016 Year-End Results Finance Director Erb stated there were three amendments to the 2016 budget that included adjusting for carry-over items primarily due to capital programs and bond refinancing. The total budget increased from $112.5 to $128.7 million. He stated General Fund actual results returned a surplus of $1.5 million on revenues that was attributed to growth in sales and use taxes along with departmental savings. Total year savings by departments equaled 3.5% which is up from 1% to 2% average savings. Mr. Erb reviewed the General Fund balance of 35% at 12/31/2016, fund balance policy range 20% - 30% and the directive to transfer to operating/capital fund for balances above 30%. The following responses from staff were provided to questions from the Village Board: Joint Workshop-Committee of the Whole Page 1 of 4 7/11/17 • Per the fund balance policy, over 30% fund balance triggers transferring funds to other operating and capital funds and above 50%fund balance requires mandatory draw down below the 50% level. • Three comparable communities that have AAA bond ratings have 50% fund balance or more. The Village is addressing deficiencies to get a AAA bond rating that includes growth in EAV and multiple years of growth in the general fund. • All bond agencies do interim evaluations and are not waiting for the next bond issuance since for some agencies that could be 2 or more years. • Illinois premium on interest rates because the state's financial condition. 2) First Quarter Review—2017 Finance Director Erb stated there were two amendments to-date primarily for carry- over items across the Capital Improvement, Flood, Water/Sewer, Vehicle Replacement and Capital Improvement funds totaling 2.6 million. Mr. Erb explained this is not new money but expenses budgeted in previous years being carried over to current year due to timing of projects. Also created initial 2017 budget for newly formed Prospect/Main Tax Increment Financing District totaling $0.7 million. There was no change to projected receipts and there is insufficient history to support any change to expenses. Fund balance remains at $18.6 million, 34.7% at 12/2017. He stated there is no significant impact to the 2017 budget from the recently approved state budget. The impacts will begin in 2018. 3) 2018 Revised Forecast Budget Finance Director Erb stated the overall growth in revenue is projected at 0.35%; however, this net increase also accounts for the reduction in revenue from the Staffing for Adequate Fire & Emergency Response (SAFER) grant coming to an end. The total village budget for expenditures excluding capital increases 2.1%. He provided an overview of projected General Fund revenues and expenditures which increase 1.9% ($54.3 million) and 2.1% (54.3 million) respectively. He stated the 2018 Forecast Budget assumes no reduction in state collected revenues. 4) 2017 Preliminary Property Tax Levy Finance Director Erb stated the annual property tax levy is allocated to pay public safety, debt service and pension obligations. He stated the initial 2017 levy included in 2018 Forecast Budget was $19.5 million, a 4.37% increase over 2016. Since then the Village decided to phase-in the public safety pension levies changes by utilizing reserves to offset the increases resulting from the Society of Actuaries revised mortality tables. Reserves commitment for this offset total $2.1 million over 4-years. He stated the Preliminary 2017 Levy totals $19,087,265, an increase of$359,959 or 1.92%. Finance Director Erb noted that the Police Pension Levy decreased 1.3% ($44,252) and the Fire Pension levy increase 10.8% ($295,637). There are a number of factors amounting to Police Pension changes: greater than anticipated interest earnings and the Village's new actuary firm finding previous errors creating higher estimates. The following responses from staff were provided to questions from the Village Board: • There are a number of factors contributing to the police and fire operations showing no increase such as investment returns being greater than assumed. The younger workforce and tier 2 pensions plans are not having the greatest impact at this time. Joint Workshop-Committee of the Whole Page 2 of 4 7/11/17 The reason why the Fire Pension levy increase is a little higher is because the property tax subsidy was reduced. 5) Impacts on Village— State Budget Passage Finance Director Erb provided a summary of the recently approved State Budget and potential impacts to Village finances. Two notable impacts are Local Government Distributive Fund (LGDF) payments will be reduced by 10% ($646,668) for 2018 and the creation of an ongoing sales tax collection service fee of 2% ($424,000). The following responses from staff were provided to questions from the Village Board: • The Village collecting its own sales taxes would be costly. 4.2: Water and Sewer Rate Study Final Report Public Works Director Sean Dorsey introduced the Water and Sewer Rate Study and David Naumann, Randy Patchett and Claus Dunkelberg of Burns & McDonnell Engineering Company. He stated this is one of the first studies where we have taken a very in-depth look at capital needs, rate structure and a longer term horizon. Traditionally, the budget includes a two year look ahead and the Capital Improvement Plan has a five year look ahead. This study provides a financial and rate roadmap to 2025. Public Works Director Sean Dorsey reviewed water and sewer cost drivers that include loss of Special Service Area (SSA) #5, accelerated lead service line and water main replacement, reduced consumption, tighter water loss rules, 1% annual replacement of water and sewers mains per best practices, and general system improvements (i.e. hydrologic models and addressing high/low water pressures). He also provided an overview of the characteristics and status of the Villages water& sewer infrastructure and recommended capital improvements. The following responses from staff were provided to questions from the Village Board: • The annual water quality reports shows that the Village does not have a lead leeching issue. • Treated water from Chicago provides a film over the pipes further insulating lead pipes or solder from entering the water system. • 8 inch water main size is the minimum standard. It provides better fire flow and does not break as frequently. • Depending on the location of an elevated water tank south of the tracks it would have different impacts on existing infrastructure. If placed further south of Public Works improvements would be needed. Burns & McDonnell, Rate Study Lead, Dave Naumann presented the financial factors and recommended rate changes from the Water and Sewer Rate Study. He stated that nationally utility rate increases are outpacing inflation (Average Water & Sewer Index increase: 5.5%, Average Consumer Price Index Increase: 1.5%). The factors contributing to rising utility rates includes reduced growth and consumption leading to lower revenues for many utilities, increasing regulations and aging facilities require renewal and replacement. Mr. Naumann presented the financial planning principles and core assumptions applied to the study. He reviewed revenues under the existing rates, operation and maintenance expenses and funding capital improvements. Overall, revenues under existing rates are Joint Workshop-Committee of the Whole Page 3 of 4 7/11/17 not sufficient to fund anticipated operation and maintenance and capital costs. He stated the proposed increase of 8.0% (3%to 5% above current annual volumetric rate increases) to the volumetric rate, implementing a water fixed fee varying by meter size and maintaining the existing sewer rate structure with future increases will set the Village on course to achieve a renewal/replacement cycle of 120 years including capital improvements by 2025. It is also recommended to consider a three to five year rate plan and re-evaluating. Mr. Nauman state that in 2018, a typical Village residential user will see a monthly bill increase of$5.90. In 2019, the change is $5.35. The following responses from David Naumann and staff were provided to questions from the Village Board: • Staff worked with the Finance Commission and evaluated several rate scenarios before ultimately deciding on the recommended rate structure. • Most residents have one inch or less water meter size. • Grants are minimal and tied to economic distress. • Northwest Suburban Joint Action Water Agency intends to retire current debt in 2020 reducing annual rate service. The study does not include the 2023 expected debt issuance to repay for the water main relocation during the I-90 widening project. • Study built in some growth in volume; however, it was very conservative. • Next step is to build the study's recommendation into the 2018 budget. Public Comment Louis Goodman 310 N School St The following responses from the Village Board and staff were provided to questions from the public. • State disbursements of LGDF have been timely. • There may be additional financial impacts resulting from the State's budget. 5. MANAGER'S REPORT None 6. ANY OTHER BUSINESS None 7. ADJOURNMENT The meeting adjourned at 9:22 p.m. Alexander Bertolucci Administrative Analyst Joint Workshop-Committee of the Whole Page 4 of 4 7/11/17