City Council

MINUTES JOINT CITY COUNCIL AND FINANCE ADVISORY COMMITTEE CITY OF DEKALB MAY 16, 2015 The Joint City Council and Finance Advisory Committee meeting of May 16, 2015, was called to order at 8:37 a.m. by Mayor Rey. ROLL CALL City Council members present were: Mayor John Rey, Alderman David Jacobson (arrived at 8:43 a.m.), Alderman Bill Finucane (arrived at 8:40 a.m.), Alderman Michael Marquardt, Alderman Bob Snow, Alderman Kate Noreiko, Alderman David Baker, and Alderman Monica O’Leary. Finance Advisory Committee members present were: Chair Mike Peddle, Connie Golden, Tom Teresinski, Mike Verbic, and Lynn Neeley. Others present were: City Manager Anne Marie Gaura, Assistant City Manager Patty Hoppenstedt, Finance Director Cathy Haley, Fire Chief Eric Hicks, Police Chief Gene Lowery, Streets Superintendent Mark Espy, Community Development Director Ellen Divita, Utilities Superintendent Bryan Faivre, Airport Manager Tom Cleveland, Account Technician Carri Parker, and City Clerk Suzanne Pupino. Guests: Burns & McDonnell – Regional Practice Manager Randall Patchett, Principal and Business Development Manager Ted Kelley, and Project Manager David Naumann. Not present: Finance Advisory Committee members Thomas Gearhart and Dave Conlin. WATER INFRASTRUCTURE PLAN AND WATER RATE STUDY PRESENTATION City Manager Gaura provided an overview of what to expect in the meeting regarding the Capital presentations for Fleet, Equipment and Streets. Utilities Superintendent Bryan Faivre gave a brief summary explaining the water fund budget was amended to include the update to the Water System Master Plan (WSMP), in conjunction with the Water Rate Study. He stated that the WSMP looked at the overall water system, capital needs and future demands. It also looked at the current water rates. Alderman Finucane left the meeting at 8:46 a.m. Burns & McDonnell (B&M) representatives Regional Practice Manager Randall Patchett, Principal and Business Development Manager Ted Kelley and Project Manager David Naumann proceeded with their Power Point presentation on the Water Rate Study. Alderman Finucane returned to the meeting at 8:49 a.m. City Council approved minutes on July 6, 2015 / Finance Advisory Committee approved minutes on July 14, 2015  Joint City Council and Finance Advisory Committee Meeting May 16, 2015 Page 2 of 6 Mayor Rey asked Superintendent Faivre if the west side of Annie Glidden Road is included in the study area. It was included in the numbers, it was not included in the maps. Most of that area is private water main owned by NIU. The discussion led to the amount of demand that NIU have versus a residential community. The concern of fire flow was addressed and Fire Chief Hicks explained that on NIU Campus the taller buildings have a fire pump that will push the water to that particular floor with as much pressure as if it were on the ground floor. The problem he stated he comes across is when they have a 4 inch water main on one side of the street and an 8 inch main on the other. Superintendent Faivre added that on First Street the current mail replacement staff are taking a 4 inch line and replacing it with an 8 inch line that will connect to a 10 inch line to Second Street via Franklin Street. Community Development Director Divita questioned if the study had incorporated any future demand. B & M responded that the study included all areas of expansion, residential, commercial and industrial. They added that if the City has someone that is a heavy water user the City will need to assess the situation to accommodate that need. B & M gave our current system a B+ rating. Fire Chief Hicks asked how the City can decrease the ISO Rating. B & M stated that to decrease the ISO rating staff will need to increase our fire flow. To do this the City would need to increase the size of the water mains. Committee Chair Peddle added that the decreasing the ISO rating pays off, even if at some cost to citizens, they would get at some point some cost if not all of that back through their fire insurance rates. Alderman Finucane referenced the list of water rate comparable communities in the presentation. He added that he would like to know how many of them own their own wells and how many get their water from Chicago. B & M stated that there were many on the list that own their wells. He added that Hoffman Estates have a 100 million gallon/day pump station and 30 delivery structures. Hoffman Estates have a different type of system but yet rates are comparable. B & M added that the City is undervaluing water and the price is changing. They stated that water systems are increasing about 5% per year, and staff does not see communities increasing their rates accordingly. Committee Chair Peddle wanted the public to understand that staff are only talking about the water portion of the bill and not the entire bill will be affected by this increase. Finance Director Haley added that garbage and sewer have their own increases separate from the City as the City provides the billing for those services. She included that staff is looking at billing every other month, half of the City is billed one month and the other half is billed the next month. This helps determine leaks a lot faster and the residents will not get such a large bill. Alderman Jacobson asked how NIU is being billed currently. Superintendent Faivre responded that NIU pays in the amount of consumption. Mayor Rey called for a 10 minute break at 9:43 a.m. Mayor Rey reconvened the meeting at 9:58 a.m. A roll call was not taken. City Council approved minutes on July 6, 2015 / Finance Advisory Committee approved minutes on July 14, 2015  Joint City Council and Finance Advisory Committee Meeting May 16, 2015 Page 3 of 6 CAPITAL BUDGET DISCUSSIONS – FLEET AND EQUIPMENT, PROJECTS (STREETS), WATER AND AIRPORT Finance Director Haley commented that the water rate study recommendation had not been incorporated into the current budget and this will be a separate action item after the start of FY16. The current budget is showing status quo where our rates go up annually per the change in the CPI. No water main replacements have been incorporated in to the FY16 budget at this time. Mayor Rey stated the water fund has $859,000 above the fund balance policy in reserves that can be dedicated to water main replacements in the future. Finance Director Haley presented the new requests for the Water fund which included a new FT water division employee, a percentage of the salaries for both the IT Director position and the HR Director position, outsourcing UB printing, a new backhoe, a new floor scrubber a new GPS and new financial software dollars. Alderman Baker asked why the City cannot email bills to residents and staff can pay online. Finance Director Haley explained that our current financial software is limited to what it can do although the City currently e-mails out to residents who sign up for the program. She confirmed that the current software being used is called MSI (parent company-Harris Computers) and that the City incorporated this software in January 2013. The Council questioned why the City even went to MSI if it did not have the all capabilities to serve the City’s needs. Finance Director Haley explained that at the time of the conversion the City was promised an upgrade and that Harris Computers is not going to provide that upgrade. She added that they do have an alternate program called Smart Fusion, but that program is not as functional either. She stated that she has gone back and forth with Harris. Finance Director Haley confirmed that if staff were to proceed forward a full blown RFP would be coordinated. She mentioned that Munis is the program that the City switched from to go to MSI. Finance Director Haley could not comment on why the City previously changed programs, as MSI is a COBOL system similar to what she used 20 years ago. Assistant City Manager Hoppenstedt added that currently the City would look for software that had a full HRS module, which would have a complete employee database and allow for true HR reporting and processing. Staff is using Access and Excel to supplement what MSI is unable to provide. Alderman O’Leary questioned why the City is so deficient and why the Council was told one thing and that never happened. Committee Chair Peddle asked for clarification on the payment in lieu of taxes. This is a transfer from the Water Fund based on property valuation that they have but do not pay City taxes. Alderman Marquardt left the meeting at 10:40 a.m. Alderman Marquardt returned to the meeting at 10:42 a.m. Committee Member Teresinski asked for further information on the requested position in the Water Division. The Water Maintenance position that would be responsible for water main repairs, service repairs, and valve repairs. Currently there is a two-person crew (one in hole and one in Backhoe) and can be unsafe. City Council approved minutes on July 6, 2015 / Finance Advisory Committee approved minutes on July 14, 2015  Joint City Council and Finance Advisory Committee Meeting May 16, 2015 Page 4 of 6 City Manager Gaura asked the Council and Committee if there is a direction that they would like the staff to take with regard to the water rate study. Alderman O’Leary stated that she would like more time to look it over. Committee Chair Peddle added that while looking it over the Council will need to address the street issue and consider all of the capital issues together. Alderman Finucane suggested that part of their discussion staff will need to look at what the total % of the rate increase would be over the next nine years. Committee Member Verbic asked for a listing of the rates for each scenario including water, sewer, and garbage. Street Superintendent Mark Espy left the meeting at 11:01 a.m. Alderman Jacobson asked if the rates were increased would the City see a decrease in usage. Superintendent Faivre confirmed that there will be a drop, but over time the residents will go back to their normal rate of usage. Alderman Jacobson questioned what the trends are based on the increases in the past years. Superintendent Faivre stated that the rates have been falling about 2.5% every year since 2005. So for the past 10 years, water sales have fallen 2.5% every year. The CPI have averaged about 1-2% every year, so technically the City has lost revenue generation. B & M stated that it is not a direct correlation. Superintendent Espy returned to the meeting at 11:04 a.m. Alderman Noreiko asked about the Senior Assistance Program and if it is impacted by these increases and what it is. ADPW Water Resources Faivre answered that senior citizens who have a lower income receive an 80% discount on their water utility bill. Finance Director Haley that it is an annual application process. Committee Member Verbic asked if the TIF districts can use TIF monies for the infrastructure work to help offset these compounding increases to residents. City Manager Gaura stated that when discussing TIF for FY16, staff will be looking at where the projects are and where staff can transform certain areas in the community, especially downtown. The City have been using TIF dollars in the street program, and with the TIF districts phasing out in the next 5 years, staff would not recommend using TIF for infrastructure whether it be streets or water. She added that there are other projects that can have an impact on the community and it is really putting off the long term issue of how the City will fund streets in the future. The Council and Committee requested that Burns & McDonnell to come up with scenario 4 to see the increase to the flat rate. B & M reiterated that the Council and Committee wants them to look at scenario 1 as prime base case and see what happens if the City went to more of a user fee to basically a service fee to accomplish a similar fund balance. B & M will work on another scenario and present it to the Council and Committee at a later meeting. Finance Director Haley mentioned that she looked back three years and found that the Airport has had an income gain and a deficit for cash flow purposes. Committee Member Teresinski confirmed that they were going to talk about the one off items, but questioned the $200,000 that is not included in the transfer. He stated that he looked at their operating numbers taking the capital out City Council approved minutes on July 6, 2015 / Finance Advisory Committee approved minutes on July 14, 2015  Joint City Council and Finance Advisory Committee Meeting May 16, 2015 Page 5 of 6 and the project spending and just the net operating basis, it appears that the Airport is still losing about $200,000 in FY16. Finance Director Haley confirmed that the Airport is still operating in a deficit. She added that the airport did end up with a positive cash balance at the end of FY15. City Manager Gaura added that when staff went through the airport budget they looked at two revenue sources in the next 6 months (1) hanger rental as those agreements are coming up so there’s potential for additional revenue and (2) landing fees. There may be other things but those are two that will have an impact on the overall budget. Assistant City Manager Hoppenstedt left the meeting at 11:25 a.m. City Manager Gaura requested that they skip the street presentation with City Engineer/Interim Public Works Director Laskowski’s absence. This will be presented at the next meeting and she requested that the Council and Committee look over the handouts provided and the five different options of the street proposal. Superintendent Espy mentioned that this is the second year that street operations has been zero funded for their equipment. He added that it will impact the snow removal in the next couple years. Alderman Finucane requested a list of exactly what is being replaced. Police Chief Lowery stated that the two Tahoe’s requested are replacing is hard to tell, as the PD has seven vehicles in a category that have over 130K miles, five vehicles in another category that have over 100K miles, and of that five – three of them have over 140K miles. Alderman Finucane stated he would like to be aware of those things. Assistant City Manager Hoppenstedt returned to the meeting at 11:27 a.m. Fire Chief Hicks explained that the FD has nine utility vehicles, eight of those are 10 years old. He added that one of the fire engines rust is getting so bad that if you push on the lights the light would fall inside the body. Committee Chair Peddle asked Fire Chief Hicks to explain what mileage can do to a vehicle besides the rust. Fire Chief Hicks explained that a vehicle sat outside most of its life it gets to the point of reliability. Break lines rust through and that is not something the City wants someone riding in the back of. Superintendent Espy spoke about P23 it is one of the main route snowplows in section 2, this trucks new price was a little over $80K, and so far the City has spent over $60K on this vehicle in repairs. He added that last winter alone it went down 9 times in the middle of snow removal. He also commented that the cab corner where the driver sits, the diesel emissions come through the floor. Finance Director Haley commented that Fire Chief Hicks has shown an excellent use in best practices. Purchasing a used ladder truck saved the City thousands of dollars. She added that staff does not need the newest and greatest, the best of the best, or the shiniest, staff have used are limited resources very well. Alderman Finucane left the meeting at 11:58 a.m. Mayor Rey asked City Manager Gaura what is the next step. She explained that ultimately what is in the budget is what staff has gone through. The departments outlined have come in with a number of requests. The ones that are recommended in the budget are the most critical to be done this fiscal year. Currently the City does not have any reserves for the replacement of fleet and equipment and has not had one in place for over 16 years. 10 years ago, the City went out and borrowed to City Council approved minutes on July 6, 2015 / Finance Advisory Committee approved minutes on July 14, 2015  Joint City Council and Finance Advisory Committee Meeting May 16, 2015 Page 6 of 6 purchase new and used vehicles and equipment and that 10 year period is coming due. Vehicles is one major issue that staff needs to address. The FY16 budget has minimal requests for vehicle and equipment. ALTERNATIVE REVENUE SOURCES Mayor Rey requested that the discussion on the Alternate Revenue Sources be deferred to Wednesday (next meeting). Finance Director Haley asked the Council and Committee to look over the memo provided and call her with any questions. She stated that the staff will do a wrap-up on Wednesday. Alderman Finucane returned to the meeting at 12:05 p.m. PUBLIC PARTICIPATION Resident Ron Naylor commented that he was pleased to see the water study delivered today. It truly addressed some of the concerns that he and others have. He complimented the staff, Bryan Faivre and the Consultants. He added that if he would support it, it would be scenario 1. He asked the Council and Committee to remember when the City had a series of 10% increases for period of time to get back on track. He stated that the residents need to remember that the bill is for three separate services. Mr. Naylor stated he has a problem with the payment in lieu of taxes. Mr. Naylor mentioned that the airport funding will always have a discussion on it paying for itself. He added that there are very few airports our size that are self-sufficient. He commented that the majority of the funding are state and federal grants and none of that money is filtered through the City. He questioned why that has to be included in the Airport budget dollars. CONFIRM NEXT MEETING DATE AND TIME Alderman O’Leary asked if they can schedule another meeting as half of the agenda was not covered and more discussions are planned for Wednesday. Alderman Baker suggested the 21st. Mayor Rey scheduled the 27th as a tentative meeting. The next confirmed meeting is Wednesday, May 20, 2015 at 5:00 p.m. ADJOURNMENT Mayor Rey requested a move to adjourn, moved by Alderman Jacobson and seconded by Alderman O’Leary. The meeting adjourned at 12:17 p.m. __________________________________________ SUZANNE PUPINO, City Clerk Minutes prepared by Account Technician Carri Parker City Council approved minutes on July 6, 2015 / Finance Advisory Committee approved minutes on July 14, 2015