HomeMy WebLinkAbout07/25/1991 FC minutesFINANCE COMMISSION
Minutes of the Meeting
July 25, 1991
Call to Order
The meeting was called to order at 7:30 p.m. Present were Chairman Richard Bachhuber;
Commissioners Paul Davies, John Engel, Vince Grochocinski, Newt Hallman, James Morrison,
Thomas Pekras, and Ann Smilanic. Also present were Finance Director David Jepson and
one member of the news media. Earl Sutter was absent.
II Approval of Minutes
The minutes of May 31, 1991 meeting were accepted as written.
III TIF Project Financing Update
Finance Director Jepson reviewed the history and progress of the Village's Downtown
Redevelopment Tax Incremental Financing (TIF) Project. He reported the original plan was
approved in 1985 and included five target areas. The original plan was amended in 1988 to
add the northerly portion of the block bounded by Main Street, Central Road and Wille
Street. The new area represents Target Area F. Target Area A includes the Hemphill
Townhome development and the relocation of Busse Florists. Target Area A is completed
except for a brick sidewalk along Northwest Highway which is scheduled for the 91/92 fiscal
year. Target Area B includes the east side of Maple Avenue between Busse and Evergreen
and originally was planned to be a townhouse development. Mr. Jepson said there are no
current plans to develop this area. Target Area C includes the east side of Emerson between
Busse and Central. Target Area C was originally planned for office/commercial with
associated parking. Mr. Jepson reported that the properties at 3 and 5 South Emerson in
Target Area C had been purchased by the Village. The building at 3 South Emerson has
been demolished and the Village is currently renting out 5 South Emerson.
Target Area D includes the Fannie May building, frontage on Northwest Highway and Main
Street and the balance of the Village Hall block. Mr. Jepson stated there had been some
preliminary discussions with property owners, but that it appeared that no new development
would be taking place in the near future. Target Area E is the block which includes the
Senior Center and the Library. The Village has acquired the former V & G Printing building
and is nearing completion of expanded parking facilities. This project will complete Target
Area E.
Target Area F is the area west of Main Street which was added to the District in 1988. It
includes the portion of the block from Northwest Electric to Central Road. The Village has
acquired the Prospect Theater property and the residence at 17 South Wille. The theater was
demolished and the residence is currently being rented. The redevelopment of this block will
be part of a phased project that extends west to include the old Public Works Facility on Pine
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Street. The Village has entered into a preferred developer agreement with Broadacre to
develop this area.
Mr. Jepson then reviewed a financial report which shows actual sources of financing and
project expenditures from the inception of the project through April 30, 1991 along with
budgeted amounts for the 91/92 fiscal year. The report shows a negative balance of project
funds of $68,522 as of April 30, 1991 but there is expected to be a balance of approximately
$379,000 as of April 30, 1992. The increase in funds in 91/92 is due to the sale of Series
1991B bonds on May 7, 1991. Mr. Jepson also stated that the TIF property tax increment
of $234,500 expected in 91/92 would substantially pay for the debt service requirements of
$254,000. The expected balance as of April 30, 1992 will provide approximately $300,000 for
property acquisition and/or improvements and $79,000 for debt service.
The Commissioners discussed the procedures and life cycle of a TIF District. Mr. Jepson
explained that property values are frozen when a district is formed or amended with any
increase in property taxes due to increased assessed valuation coming to the Village for debt
service on outstanding bonds. The maximum time period for a TIF District is 23 years. At
the end of that period, or any time that all the bonds are paid, the additional taxes revert to
the taxing bodies.
Village Medical Benefit Costs
Finance Director Jepson reviewed recent medical benefit cost trends with the Commission.
Mr. Jepson pointed out that the net cost to the Village for the fiscal year ending April 30,
1991 was $1,059,024 compared to $415,492 for 1985/86. (Net cost is the Village's actual share
of the cost; i.e. total cost less employee, library, and retiree contributions). During the five
year period since 1985/86, the net cost per employee increased from $1,746 in 85/86 to $3,879
in 90/91, for a jump of $2,133 per employee, or 122%. Because medical costs are increasing
faster than had been expected, the revised estimate for the current fiscal year (91/92)
increased to $1,205,385 and the projected net costs for 92/93 are $1,418,300. The net cost per
employee is estimated at $4,415 for 91/92 and will jump to $5,195 in 92/93. Mr. Jepson stated
that at the current rate of increase, Village costs will double every four to five years.
The Village is not alone in facing this dilemma. Most neighboring communities are
experiencing similar increases, and a recent series of articles in the Chicago Tribune stated
the average corporate increase is expected to be 24 to 32 percent.
Mr. Jepson then explained two financial schedules which had been supplied to the
Commissioners. The first schedule categorized 90/91 costs by group (Village Employees,
Library Employees, and Retirees) and by the type of cost. The second schedule shows the
actual costs for 91/92 and projected costs for 92/93. During the explanation of these
schedules Mr. Jepson stated that for 90/91 the Village underfunded medical costs by $135,463
and that due to the revised estimate for 91/92 a budget amendment of $160,000 would be
needed for 91/92. For the 92/93 budget year, the Village contribution is estimated at
$1,400,000, some $500,000 more than was provided in 90/91. He said that the increase from
what was originally budgeted in 91/92 to the amount projected for 92/93 is $375,000. This
amount is $93,400 more than the entire tax levy increase proposed for the 1991 tax levy.
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Mr. Jepson then stated that he had reviewed the Village's Plan with Ed Stasica, a health care
economist and a Mount Prospect resident. Mr. Stasica said the Village had a very generous
plan and recommended changes in the following areas:
1. Join a Preferred Provider Option (PPO) network. It is estimated that this will cost
about $4,900 per year but that the Village should realize approximately $25,000 to
$30,000 in savings through discounts.
2. Develop a more equitable cost-sharing arrangement with plan members. Higher
deductibles, co -payments, and higher contribution levels could help accomplish this.
Mr. Jepson pointed out that when the deductible and the employee contribution
were added together, the employee paid 14% of the total cost in 1985/86 compared
to 8.8% in 90/91.
3. Establish wellness programs to help prevent or mitigate medical costs in the future.
Mr. Jepson commented that the escalating costs are also having a serious effect on Retirees because
they pay the full cost of the calculated premium. He concluded by echoing the concern that at the
current rate of increase medical care will become unaffordable in the future.
The Commission members unanimously agreed that the Village should move toward more cost-
sharing with employees.
V Multi -Family Refusal Disposal Costs
Finance Director Jepson reported that the bid specification for a new sold waste contract
called for two options regarding multi -family charges. The first option was a fee based on the
number of multi -family residential units and the second was a fee based on the number and
capacity of the refuse containers. An analysis of the two options indicated that for the first
year of the contract the charge based on the number of units would total $779,078 compared
to $540,595 for a rate based on the number and capacity of refuse containers. The total
charge for the Arc container rate is actually $188,396 less than the total amount being paid
to BFI under the current contract. Over the three year term of the contract, the savings are
$432,006 over the current contract.
Mr. Jepson said that an analysis of the container charges indicated there would be some
inequities in the distribution of the charges between townhouses and apartments. Under the
container charge, some townhouse complexes would pay considerably more than they are
currently paying and some apartment complexes would pay less. An equitable solution seemed
to be to contract with Arc for the container fee and then for the Village to bill the multi-
family complexes on a unit fee basis for their share.
The advantage of this arrangement would be that the Village would realize the lower
container cost and at the same time maintain lower rates for all the multi -family units. It
would also provide means whereby an incentive discount for recycling could be established.
The recommended plan included maintaining the current monthly unit rate at $4.30 per unit
for the first year and increasing that amount 8% per year for year 2 and year 3 of the contract.
Any multi -family complex that actively recycles would be eligible for a 10% discount from the
stated rates.
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Mr. Jepson stated that Lisa Angell, the Solid Waste Coordinator, will be meeting with each
multi -family association and explain the potential recycling discount. The discount will go into
effect February 1, 1992.
The Commissioners expressed satisfaction that the recommended approach is good for the
Village and for the multi -family complexes.
VI Other Business
Mr. Jepson reported to the Commissioners that as a result of the action by the State
Legislature, the Village will continue to receive additional State Income Tax receipts and
Surtax receipts. Because the Income Tax and Surtax receipts are placed into the same fund,
the Village has been receiving an additional 1.67% (1/12 of 20%) of State Income Tax along
with 5.9% of the total as Surtax receipts. Under the new legislation, the Village will continue
to receive the 1.67% additional Income Tax for 7/1/91 - 6/30/93 and 3% Surtax for 7/1/91 -
6/30/92 and 4.4% Surtax for 7/1/92 - 6/30/93. For the current budget, Income Tax revenues
should be increased approximately $300,000 and Surtax receipts by about $600,000. Mr.
Jepson said he will prepare more information when copies of the legislation become available.
In regard to property tax caps or the freeze of assessed valuation for one year, Mr. Jepson
stated the Village would not be affected because the Village does not have a tax rate
limitation. However, the Library, school districts and park districts will be affected. Again,
more specific information will be provided when it becomes available.
The next regular meeting will be Wednesday, August 28, 1991 rather than Thursday,
August 29, 1991. Commissioner Hallman requested a report on the test of regular vs.
premium gasoline at the next Finance Commission meeting.
VII Adjournment
There being no further business the meeting adjourned at 9:50 p.m.
DCJ/sm
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Respectfully Submitted,
David C. Jepson
Finance Director