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HomeMy WebLinkAboutApproval of Joint Village Board and Finance Commission Workshop Minutes 08/14/2018 BoardDocs® ProPage 1 of 1 Agenda Item Details MeetingSep 11, 2018 - COMMITTEE OF THE WHOLE AGENDA Category2. APPROVAL OF COMMITTEE OF THE WHOLE MINUTES Subject2.2 APPROVAL OF JOINT VILLAGE BOARD AND FINANCE COMMISSION WORKSHOP MINUTES OF August 14, 2018. AccessPublic TypeAction Public Content 8-14-2018_Joint_VB_FC_Workshop_Minutes.pdf (30 KB) Administrative Content Executive Content https://www.boarddocs.com/il/vomp/Board.nsf/Private?open&login10/11/2018 JOINT VILLAGE BOARD AND FINANCE COMMISSION WORKSHOP MINUTES -August 14, 2018 - rd 3 Floor, Village Board Room Village Hall, 50 S. Emerson Street 1. ROLL CALL– CALL TO ORDER The meeting was called to order at 6:00 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, Colleen Saccotelli and Michael Zadel. Finance Commission members present included Chair John Kellerhals, Pam Bazan, Trisha Chokshi, Vince Grochocinski, Don Ocwieja, Thomas Pekras and Mary Rath. Staff present included Village Manager Michael Cassady, Assistant Village Manager Nellie Beckner, Village Clerk Karen Agoranos, Communications Director Howard Kleinstein, Community Development Director William Cooney, Community Development Deputy Director Consuelo Arguilles, Building & Inspection Services Director William Schroeder, Human Service Director Julie Kane, Human Services Deputy Director Esther Martinez, Fire Chief Brian Lambel, Police Chief John Koziol, Police Deputy Chief Timothy Griffin, Public Works Director Sean Dorsey, Public Works Deputy Director Jason Leib, Finance Director David Erb and Management Analyst Alexander Bertolucci. 2. CITIZENS TO BE HEARD None. 3. FINANCE COMMISSION WORKSHOP 3.1 2018 Mid-Year Budget Review and Preliminary 2018 Property Tax Levy 1) Mid-Year Review – 2018 Finance Director David Erb stated the Village’s financial position remains strong. There was one amendment to-date that increased total budgeted expenses from $123.7 million to $126.2 million for primarily carry-over items across multiple funds. While projected revenue receipts were reduced $1.6 million to adjust for investment income related to pensions, sales and use taxes and other revenues. Mr. Erb stated revenues account for five percent loss of Local Government Distributive Fund revenues starting July 1 and fee reduction in sales tax administration fee. He stated expenditures increased $7.8 million from the current amended budgeted for expenses related to the new police and fire headquarters relocations and increased pension amounts due to mid-year retirements. He stated sufficient funds are on hand to cover additional spending from budgeted amounts. Finance Director David Erb stated the General Fund also received one amendment to-date increasing total budgeted expenses from $54.8 million to $55.0 million. This increase includes capital costs related to an intersection study, other commodity and contractual service line items, and anticipated drawdown of $1.4 million. He stated projected receipts increased $1.1 million to a total of $54.5 million. Staff will be refining year-end estimates during the budget process for 2019. 8/14/18 Committee of the Whole Page 1 of 4 2) 2018 Projected Property Tax Levy Finance Director David Erb stated the annual levy is used to pay public safety, debt service and pension obligations. The final 2017 levy ($19.1 million) was a 1.92% increase over the 2016 levy. The initial 2018 levy was $19.8 million, a 3.92% increase over 2017. The revised 2018 levy totals $19,405,016 and reflects an increase of $317,751 or 1.66%. Mr. Erb stated that increases to the police and fire pensions portions of the levy are planned to receive General Fund subsides to smooth necessary pension levy increases. The subsidy in 2018 is $420,000. He stated for a home valued at $350,000 the estimated tax bill increase from 2017 would be $18. The following responses from staff were provided to questions from the Village Board and Finance Commission: The police and fire pensions funding variations are due to different requirements for payouts every year and the fire pension has greater requirements. The projected decrease in property tax levy increase is related to police and fire pension profiles. Projected property tax levy assumes a good and growing economy. 4. FINANCING DISCUSSION 4.1 New Police and Fire Headquarters Revised Financing Plan Discussion. Finance Director David Erb provided opening comments regarding the revised financing plan and introduced Andrew Kim and Bob Lewis from PMA Financial. PMA Financial also presented the original financing plan back in April. Discussion at the April 3, 2018 Village Board meeting included the bond issue (Series 2018A) to finance the purchase of the new police headquarters property and fire headquarters property. Bonds were sold April 18, 2018. Also discussed at that meeting was the proposed construction financing for both the police and fire headquarters buildings. The financing plan consisted of two additional bond issues; $21.9 million dated October 1, 2018 and $15.9 million dated May 1, 2019. Both issues anticipated the use of capitalized interest to cover the first 36 months of interest payments. Mr. Erb stated comments received during the March 27 open house, as well as by the Village Board and Finance Commission, suggested staff consider using available funds on hand to minimize the use of capitalized interest. He stated the revised financing increased the use of available funds on hand from $750,000 to $3.5 million and reduced the bond issues from two to a single issue planned for October of 2018. The $3.5 million in General Fund reserves used to support this project would be drawn down over a four-year period. Even if no savings are realized during the draw down period, General Fund reserves would remain above the 25% benchmark entering 2023. Mr. Erb stated there are a number of benefits of going to a single bond issue: Avoiding market risk from potential rate increases, Reducing total issuance costs by not having two separate bond sales, and Lowering the overall principal amount of the issue. 8/14/18 Committee of the Whole Page 2 of 4 Andrew Kim provided an updated on the municipal bond market and Bob Lewis reviewed the changes in plan of finance. The following responses from staff were provided to questions from the Village Board and Finance Commission: The average cost of issuance goes down as issue size gets larger. $32 million sale would cost more than a $20 million sale, but when the two financings are added together it would total more than a $32 million issue. Only paying fix cost components once. Estimated difference between one and two sales is $50,000 to $75,000. The winning bidder has the lowest true interest costs which is a composite of their interest component and proposed fee. Average fee would be lower for a larger financing than smaller financing. Assuming a 25 year issuance as it fits within the current bond levy so there would be no increase. The two side by side scenarios both fit into the funding plan and do not increase the debt service portion of the property tax levy. Total cost is less expensive using reserves over a four year period. It is anticipated that operating surpluses will additionally support reserves to fund the $3.5 million. One bond issuance eliminates the risk of not being able to get a second issuance if economy changes or other significant events occur. Anticipate to have rating calls around September 4. The Village has a Standard & Poor’s rating. Normally a municipality would only need one rating but as bond issues get larger it is best to attract as many investors as possible and some investors have criteria for two bond ratings. PMA advised receiving a second bond rating through Fitch Rating. This week the municipal bond market has been its highest all year ($11 billion dollars’ worth of supply). Advance refunding were eliminated by the federal tax reform bill. Call dates for bond issues that were maturing over the last two or three years are no longer there or they were already advance refunded. In 2020 the refunding activity will normalize. PMA does not anticipate a significant uptick in supply. Mr. Erb closed the presentation and stated the first reading of a parameters ordinance will be held at the August 21 Village Board meeting, with a second and final reading on September 4. Bonds would then be sold by competitive bid on September 24, with final closing and receipt of funds on October 16. 4.2 LEED Certification Discussion of New Police Headquarters and Fire Headquarters/Station 13. Building & Inspection Services Director William Schroeder provided background on the US Green Building Council (USGBC) LEED Certification program. He explained how the program has evolved since 1993 with certification benchmarks increasing as energy conservation codes become more stringent. For example, Fire Station 14 was built in 2009 with a LEED Gold certification. Those standards would now only meet LEED Certified criteria which is two tiers below the gold level. Also Station 14 provided the experience that not all energy conservation techniques are practical for 24/7 buildings. He provided examples of recycled grey water, sensor lighting controls and automated facets. He stated LEED certified buildings increase construction costs and the hope is that 8/14/18 Committee of the Whole Page 3 of 4 throughout the building’s life cycle enough money will be saved to offset the initial rise in construction, commissioning and oversight costs. The general range for construction cost increase related to LEED certification is 2-5% of construction cost. Some examples of impacted materials are: certified wood and its proximity to the jobsite, special adhesives, additional insulation products, extremely efficient mechanical systems, and water collection/reuse systems. The documentation and duplicative design processes that are required to achieve a certification in the LEED program is costly to perform adding as much as 1% to the cost of hard construction. The final cost increase due to LEED to any project is in the form of enhanced commission which are generally about 1% of construction cost. Mr. Schroeder stated increases to construction cost will be similar from the requirements of the Illinois Energy Codes to the LEED certification process; however, the oversight, enhanced commissioning costs and recertification maintenance costs associated with LEED certification can be saved. The end result will be extremely efficient buildings for the foreseeable future, regardless of actual LEED certification. Mr. Schroeder stated staff requests permission to move forward with the design and construction of the new Police and Fire projects with no LEED certification being pursued. The following responses from staff were provided to questions from the Village Board and Finance Commission: Construction would follow current code. Staff will review the Net Zero Energy Building Program from the Illinois Clean Energy Community Foundation. There was general agreement to not pursue USGBC LEED Certification for the new Police and Fire headquarters. 5. ANY OTHER BUSINESS None. 6. ADJOURNMENT The meeting adjourned at 7:59 p.m. Alexander Bertolucci Management Analyst 8/14/18 Committee of the Whole Page 4 of 4