HomeMy WebLinkAbout09/27/1990 FC minutesFINANCE COMMISSION
Minutes of the Meeting
September 27, 1990
I Call to Order
The meeting was called to order at 7:35 p.m. Commission members in attendance
were Richard Bachhuber, Paul Davies, Vince Grochocinski, Newt Hallman, and Ann
Smilanic. Also present were Larry Smith of the Daily Herald, Finance Director
David Jepson, and Assistant Finance Director Carol Widmer.
II AAPproval of Minutes
The minutes of the July 26, 1990 meeting were accepted as presented.
III Public Safety Building Financing
David Jepson reviewed the plans for financing the proposed Public Safety
Building. The Village Board considered several options available to them and
determined that it would be prudent to borrow the least amount of money possible.
With that in mind the financing for the $6,992,000 facility would be funded from
a $4 million dollar bond sale, $2,500,000 from the State Income Tax Surcharge
and the balance from investment income. The Village Board felt a tax increase
of less than $10 a year per household over a five-year period would be an
acceptable amount for a Mount Prospect Resident. The bonds would be sold before
December 31, 1990. It is expected that the average cost of borrowing the funds
will be 6-3/4% and the Village will be able to earn 7-1/2% on the proceeds.
If the referendum passes in November, the tentative schedule for the building
would be as follows: the engineers would prepare detailed plans within 60 days
and prepare a bid package; bid requests would be sent out in January and be
evaluated in February; the contract would then be awarded in March of 1991. In
April, the move to temporary facilities and demolition of the old building would
begin with construction to follow. The expected completion date is July 1, 1992.
IV Acquisition of Citizens' Utilities Water System
Over the past 15 years, many of the residents served by the Citizens' Utilities
System have been unhappy over the quality and the cost of the water. However,
in 1987 Citizens' Utilities negotiated a contract with the Village of Glenview
which should result in Glenview supplying Lake Michigan Water to Citizens'
Utilities by 1992. The problem of water quality should be resolved at that time.
A number of the residents in that area asked the Village Board to consider the
purchase of Citizens' Utilities and so a feasibility study was prepared by
outside consultants. According to the January 1990 report prepared by Greeley
and Hansen, the estimated cost to purchase the Citizens' Utilities System would
be about $15 million. Known improvements to the system could add another $5
million to the cost. It was pointed out that the costs would be paid by the
users of the system, not the residents in other areas of the Village. If a
financing plan consisting of a 25 year, $20 million bond issue is used, the owner
of a $160,000 market value home ($25,000 equalized assessed valuation) who used
90,000 gallons annually would pay $290.25 for water and sewer and a special
service area tax of $408.00 for a total of $698.25 per year. The same resident
would pay $501.12 annually if Citizens' continued to own the system. Therefore,
it would cost the typical resident $197.13 annually or $16.43 monthly to fund
the purchase of the system.
If the Village Board decides to proceed with the purchase of the system, a
referendum in the area serviced by Citizens' Utilities would be held to determine
if the residents support the acquisition. Also, the Village would have to
coordinate the project with Prospect Heights since that Village is also serviced
by Citizens Utilities. The next step in the process will be for Greeley and
Hansen to provide firmer cost estimates.
V Finance Director's Report
David Jepson reported on the progress of the Stormwater User Charge project.
RJN Environmental Associates, Inc., the firm retained to study flooding in the
Village, was asked to research and recommend a user fee system. In connection
with their study, RJN has surveyed about 50 other municipalities who have
established user fees and they have found that having a separate funding source
is the most successful way to handle the situation. A base rate has been
established for single-family houses with incremental charges for non-residential
property. It is expected that the stormwater study will be ready in early
November and the user fee report mid to late November.
The annual Water and Sewer System Revenue and Expenditure Analysis for the 89/90
fiscal year was then reviewed. Schedule I was prepared on a full accrual basis
and does not include capital expenditures or principal payments on bonds but
does include depreciation and interest expense, the schedule shows a net income
of $48,799 for 1990 compared to a $85,075 loss for 1989 and retained earnings
of $10,849,155 for 1990 as compared to retained earnings of $10,800,356 for 1989.
The schedule shows the results of the Village's operation on a basis similar to
the operation of a privately owned and operated utility. However, it was
mentioned that the objective of a municipal utility is to establish rates to
break-even and not to include a profit margin as in private industry.
Schedule II is the schedule which has been prepared to determine the adequacy
of Village Water and Sewer rates. This schedule shows a comparison of water and
sewer revenues and expenditures modified to include only those revenues and
expenditures dependent upon water and sewer rates. The amounts reported have
been converted to a value per 1,000 gallons to compare with the actual Village
rate. For 1989/90 the Water and Sewer System shows revenues of $4,526,954 and
expenditures of $4,336,742 with an excess of revenues over expenditures of
$190,212. Revenues were $2.88 per 1,000 gallons for 1989/90 and expenditures
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$2.76 with a 12¢ per 1,000 gallons excess. The 1990/91 budget projects estimated
revenues per 1,000 gallons equal to $2.83 and estimated expenditures equal to
$3.19 with a deficit of 36¢ per 1,000 gallons. The Village's combined water and
sewer rate was increased on May 1, 1984 from $1.53 per 1,000 gallons to $2.10
and then was not increased again until May 1, 1988. At that time a two-phase
increase was adopted. On May 1, 1988 the rate was increased to $2.30 and on
May 1, 1989 the rate was increased to $2.50. We are currently in the second
year of the last rate increase and it appears that rates will need to be
increased May 1, 1991 and probably again on May 1, 1992.
The next meeting is scheduled for October 25, 1990.
The meeting was adjourned at 9:05 p.m.
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Respectfully submitted
Carol L. Widmer
Assistant Finance Director