City Council

MINUTES CITY OF DEKALB SPECIAL COMMITTEE OF THE WHOLE MEETING NOVEMBER 7, 2017 The City Council of DeKalb, Illinois, held a Special Committee of the Whole meeting on November 7, 2017, in the City Council Chambers of the DeKalb Municipal Building, 200 South Fourth Street, DeKalb, Illinois. Mayor Smith called the meeting to order at 7:00 p.m. A. ROLL CALL City Clerk Herrmann called the roll and the following members of the City Council were present: Alderman Dave Jacobson, Alderman Bill Finucane, Alderman Mike Marquardt, Alderman Pat Fagan, Alderman Kate Noreiko, Alderman Mike Verbic, Alderman Tony Faivre, and Mayor Jerry Smith. Also present were: City Manager Anne Marie Gaura, Assistant City Manager Patty Hoppenstedt, City Attorney Dean Frieders, Finance Director Molly Talkington, Police Chief Gene Lowery, Fire Chief Eric Hicks, Community Development Director Jo Ellen Charlton, Public Works Director Tim Holdeman, Human Resources Director Cris Randall, Economic Development Planner Jason Michnick, and City Clerk Susanna Herrmann. B. FY2018 PROPOSED ANNUAL BUDGET Finance Director Talkington reminded Council that discussion will pick up where it left off at the November 6, 2017, Special Committee of the Whole meeting. Using a PowerPoint presentation, Community Development Director Charlton discussed the trend in the City’s overall assessed value and explained that the higher the value, the lower the property tax rates become. She stated that one of the major struggles of the City is the high property tax rate and the difficulty it causes in marketing the City as livable. She noted some of the development projects the City is currently working on, including the Annie Glidden North Revitalization Plan, the new Central Business District TIF Feasibility Plan, and the STEAM Learning Center. Community Development Charlton commended Assistant City Manager Hoppenstedt and City Attorney Frieders for their participation in the activities of the Community Development Department and stated that their dedication has made it possible to continue daily tasks with the current staff. She continued with a summary of staffing needs presented in the budget for the Community Development Department and discussed the difficulties in filling open employment positions. Special Committee of the Whole Meeting Minutes November 7, 2017 Page 2 of 9 Community Development Director Charlton concluded her portion of the budget overview by discussing the Annie Glidden North Revitalization Plan, the downtown TIF district, and the options Council has in sustaining redevelopment in those areas. Finance Director Talkington explained the correlation between the property tax levy and the Police and Fire pensions, noting that the property tax levy is built to fully fund pension obligations at a 0% investment return. She also noted that the budget included an increase in the Home Rule sales tax by 1% and provided a visual breakdown of the use of those funds, using a Power Point presentation. She added that the water fund balance meets the requirement of 25% (at 26.1%) and the DeKalb Taylor Municipal Airport (Airport) fund for FY2018 is balanced with the new fuel pricing strategy. She also mentioned that the Finance Department is interested in gathering Council direction on TIF funding. Alderman Finucane mentioned earlier discussion of an increase in the local Motor Fuel Tax (MFT) and observed that there was no information regarding that discussion included in any of the literature from staff. Finance Director Talkington explained that the MFT was considered a funding option for streets and fleet as a component of the five-year plan but it would need to be reevaluated. Discussion ensued between Alderman Finucane and Finance Director Talkington regarding the consideration of MFT in regard to the proposed budget. Alderman Noreiko asked if there would be no need to transfer funds to the Airport because it would be self-sustaining for FY2018. Finance Director Talkington confirmed that was correct. City Manager Gaura commended Airport Manager Cleveland and Public Works Director Holdeman for the accomplishment of making the Airport self-sustaining, but explained that the Airport fund would need to repay the general fund for the money transferred to it in previous years. She added that staff will finalize that information and present it to Council at the joint meeting with the Finance Advisory Committee (FAC) scheduled for November 16, 2017. Mayor Smith discussed the fluidity of the budget document and verbalized his assessment of the process to Finance Director Talkington, who confirmed. City Manager Gaura recommended that Finance Director Talkington walk Council through the FAC recommendations contained in the budget document. Consensus was reached to move forward with Finance Director Talkington’s assessment of the FAC recommendations Finance Director Talkington discussed recent FAC meetings and summarized the recommendations that were determined.  Special Committee of the Whole Meeting Minutes November 7, 2017 Page 3 of 9 Mayor Smith asked if those recommendations coincide with staff and Council direction regarding TIF phase out. City Manager Gaura addressed his question by discussing the Special Committee of the Whole meeting regarding TIF phase out that was held on September 21, 2017, and explained her interpretation of the dialogue that took place. Alderman Jacobson left the meeting at 7:49 p.m., and returned at 7:51 p.m. Discussion ensued between Mayor Smith and City Manager Gaura regarding TIF phase out options. Alderman Noreiko asked Finance Director Talkington if the FAC would be able to explain their reasoning for their recommendations at the joint meeting scheduled for November 16, 2017, to which Finance Director Talkington replied yes. Finance Director Talkington mentioned that the FAC is in support of the creation of a new TIF district. She listed other recommendations that were established at the November 2, 2017, FAC meeting and explained the impact of the state income tax figures in the City’s budget. She provided historical perspective on past use of TIF funds and noted that the City would still be receiving $1 million in funding. However, the FAC recommended moving that amount to the MFT fund instead of to the TIF fund. City Manager Gaura explained the reasoning behind that decision. Discussion ensued between Council and staff regarding the general fund balance and current Illinois Municipal League (IML) projections. City Manager Gaura commented that she had incorrectly stated that the Special Committee of the Whole meeting regarding TIF phase out was held on September 21, 2017. The correct date was September 19, 2017. Discussion ensued between Alderman Jacobson, City Manager Gaura, and Finance Director Talkington regarding a previous FAC recommendation. Alderman Noreiko asked Finance Director Talkington for clarification of the process taken to collect the figures presented in the budget document, and Finance Director Talkington provided them. Alderman Finucane discussed the amount needed to keep the general fund balance at 25%. Finance Director Talkington provided possible courses of action for Council to take in order to maintain the 25% General Fund balance. City Manager Gaura noted page 82 of the budget document and stated that the City is ending FY2017 with approximately $100,000 more than what was budgeted for in that line item. Mayor Smith suggested that Council preliminarily make a reaction to the FAC recommendations prior to the joint meeting scheduled for Nov 16, 2017. Special Committee of the Whole Meeting Minutes November 7, 2017 Page 4 of 9 Melissa Burlingame spoke in support of budgeting for safety and development in DeKalb and stated it is important for Council to support all residents, not just the affluent ones. She also spoke in support of transferring TIF funds to support development and stated she appreciates the TIF phase out strategy. She spoke of the Annie Glidden North Revitalization Project and emphasized the importance of supporting those improvements in order to promote a sense of community identity for the residents in that area. Dwayne Brown noted the projected decrease in shoppers on Black Friday and mentioned discussion regarding the City hiring three new police officers. He discussed a conversation that took place between Mayor Smith and Sandy Springs, Georgia, Mayor Rusty Paul regarding the structure of their governing organization. He noted some of those characteristics, specifically their utilization of contracted employees for daily operations. Alderman Jacobson expressed discontent that Council is not going through the budget document for each department line item by line item. He verbalized his concern that Council is not getting an accurate depiction of where the money is being spent. He also stated that the transmittal letter was not appropriate. City Manager Gaura commented that she is aware of how things were done before she came to DeKalb, and explained that a detailed examination of the budget is a staff role, followed by the responsibility of the presentation of that information to Council prior to receiving direction. She mentioned that cuts were so severe the previous year that staff had difficulty operating. She expressed her belief that there are fundamentally different viewpoints between Council and staff regarding the purpose of their role but assured Alderman Jacobson that this is the standard process in municipalities in Northern Illinois. City Manager Gaura continued, stated that she disagrees with Alderman Jacobson’s concern that he is not given a fair opportunity to provide input and stated that staff regularly takes direction from Council and incorporates that direction into the budget. She also mentioned that staff has used recent Special Committee of the Whole meetings to gather more feedback and direction from Council to incorporate into the budget. City Manager Gaura addressed Mayor Smith and strongly recommended that he take a look at TIF funds in order to ensure that staff is able to appropriately accommodate the wishes of the Council. Mayor Smith commented that he always asks questions of each and every staff member. He expressed appreciation for the executive summaries and transmittal letters due to the length of the budget document. City Manager Gaura suggested that Council members reach out with questions and concerns so that staff can gather the necessary information. Alderman Jacobson stated he is tired of PowerPoint presentations and doesn’t believe that Council is appropriately involved in priority setting or the creation of the budget. He  Special Committee of the Whole Meeting Minutes November 7, 2017 Page 5 of 9 reiterated his concern that the current process is inappropriate. City Manager Gaura responded that department heads will present highlighted information in detail at the next meeting. Alderman Jacobson stated that the proposed budget is not balanced and that Council members need an intimate understanding of where money is being spent. Alderman Verbic expressed that he is not as interested in going through the budget line by line, but he is interested in making structural changes. He added that there needs to be policy discussion regarding a cap on regular wages and stated that if the City continues to let regular wages outpace growth and revenue, there will be tax increases on a regular basis. Alderman Noreiko concurred with Alderman Verbic and provided historical perspective on previous budget discussions during her time as Alderman. Alderman Verbic stated that over a four year period, wages will grow 14%. He suggested that setting that at 10% could increase the chances of the City acquiring sustainability. Mayor Smith commented that Council needs to look at the budget document at large and individual line items if they are pertinent to the overall goal. He stated that a budget is a one year document and a fluid plan that can be modified. He addressed Alderman Jacobson’s concern with the fund balance projection included in the budget and added that if Council can make decisions to positively impact that number, then they should move forward in that direction. He expressed his belief that Council may not be able to accomplish all of their goals with the FY2018 budget. Finance Director Talkington commented that looking at individual line items can cause an individual to lose sight of the bigger picture. She stated that the focus of conversation should pertain to the services provided by each department, or on the redirection of funding. She suggested that Council consider what services the City should provide and at what level. She explained that the real discussion is in the detailed information of services provided and this budget is focused on the big changes in safety and development, which are highlighted through memos and transmittal letters. Alderman Faivre discussed historic tax rates in the City and added that he wants to start with a zero increase budget and then discuss adding services and comparing cost. Finance Director Talkington referred to the PowerPoint presentation to show the 2016 tax levy district. Alderman Faivre stated that Council will not be able to accomplish all of their goals in FY2018 and sacrifices will have to be made. He added that he wants the tax rates to remain the same and frame the budget and policy discussions around that stipulation. Finance Director Talkington responded that the next meeting will address those concerns. Special Committee of the Whole Meeting Minutes November 7, 2017 Page 6 of 9 She also mentioned that the City’s recent downgrade on Moody’s Investment Rating scale implicates a recurring Police and Fire pension issue City Manager Gaura added that if staff begins with a zero increase budget and moves forward, the City will begin at a reduction based on wage increases. Alderman Fagan concurred with Alderman Faivre and provided his own suggestions for looking at factors other than personnel and cost. A brief discussion ensued between Alderman Faivre and City Manager Gaura. Alderman Finucane reminded viewers and attendees that the property tax levy is a relatively small portion of the budget. He added that the estimated EAV would have to increase significantly in order to keep pace with current pension obligations and future projections, which Council will need to look into. Alderman Jacobson quoted Albert Einstein, “We can’t solve problems by using the same level of thinking that we used when creating them.” He shared his perception of current staff roles and salaries and how they relate to the budget process. Mayor Smith asked Alderman Jacobson if he saw any efficiencies coming from the FAC. Alderman Jacobson responded that they presented very basic choices, and decisions were being made without thoughtful input from Council regarding those matters. He declared that residents in the community can’t afford to pay any more in taxes. Alderman Verbic added that part of the challenge of using comparable municipalities for a basis of judgment is that the state of Illinois is broken. He stated that Council and staff need to begin comparing the City to out of state municipalities in order to be able to offer efficiencies to tax payers. Discussion ensued between Alderman Marquardt and Finance Director Talkington regarding state income tax and how it will impact the City’s budget. Alderman Jacobson contributed his knowledge of the distribution of the LGDF payments. Discussion between Alderman Marquardt and Finance Director Talkington continued. Alderman Jacobson commented that he would like staff to provide a list of options for a 5% cut to general fund expenditures. Additionally, he proposed a 5% internal cut to the general fund balance and requested that staff provide a list of options for Council to consider in order to move forward in that direction. Alderman Fagan referred to a previous meeting where Finance Director Talkington had discussed other municipalities with a lower general fund reserve percentage, and asked her to discuss that information for the benefit of the public.  Special Committee of the Whole Meeting Minutes November 7, 2017 Page 7 of 9 Finance Director Talkington discussed the city of Champaign, Illinois, and their two general fund policies. The first leaves a 1.5% cushion in recurring expenditures, and the second looks at expenditures minus transfers. Alderman Verbic echoed Alderman Jacobson’s request, but stated he is interested in looking at that information with a 2.5% reduction applied. Alderman Jacobson clarified that the 5% option will establish a ceiling for cuts. Alderman Jacobson left the meeting, returning at 9:24 p.m. Alderman Marquardt inquired about the TIF transfer indicated for FY2018, to which Finance Director Talkington provided information. Alderman Marquardt then stated that the City levies dollar for dollar in regard to real estate taxes and continued to explain the correlation between the property tax rate and the EAV. Finance Director Talkington provided her own perspective on the subject and explained the steps she took in that regard to compose that section of the budget document. Mayor Smith summarized the consensus of Council and stated that residents are not interested in any tax increases. Alderman Jacobson commented that either a 2.5% cut or a 5% cut will address the financial discrepancies in the proposed budget. Alderman Verbic asked if there had been a status update on the loan to the DeKalb Public Library (the Library). Finance Director Talkington stated that the Library has not yet received their grant funding from the state so the levy will remain the same as FY2017. Mayor Smith added that he very recently received a letter from Library Director Emily Faulkner containing that numeric value. Alderman Jacobson asked if it would be possible to reach out to the Library or the state for a status update on the above mentioned grant funding. Mayor Smith added that the Library currently has an approximate $500,000 liability to the City. City Manager Gaura confirmed that value. Brief discussion ensued regarding the Library. City Manager Gaura verbalized her interpretation of the direction from Council to consider a 2.5% to 5% reduction in the general fund expenditures. Alderman Marquardt inquired about excluding the request for additional police officers from the budget and expressed interest in seeing the changes that would incur. Special Committee of the Whole Meeting Minutes November 7, 2017 Page 8 of 9 City Manager Gaura noted the upcoming holiday but assured Council that staff can provide those options with consideration to the changes they have requested. Mayor Smith asked Alderman Jacobson if his suggested 5% reduction is in reference to an overall cut or selective cuts based on the options staff will provide to Council. Alderman Jacobson replied that he is interested in seeing all options. Mayor Smith shared his opinion that the best option would be to consider the 5% reduction across all areas of the budget. City Manager Gaura stated that she does not recommend that option. She recommended allowing staff to come up with a list of options for Council’s consideration. Mayor Smith retracted his previous comment and explained that he simply does not want to repeat past practices. Alderman Noreiko discussed the impact of cutting social services would have on the community. City Manager Gaura again stated that she is seeking direction from the Council regarding specific budget concerns and requested that Council provide feedback on any social service cuts that are off the table. Alderman Faivre asked if there are any social services receiving funding from the City that are not meeting requirements, or that are supported by a larger organization. He used the Ben Gordon Center as an example and noted that it is now being supported by Northwestern Medicine. Alderman Verbic stated that everything is on the table from his perspective. Alderman Jacobson stated that Council will need to look at this on a case by case basis. He expressed interest in conducting discussions that pertain to altering social services provided by the City. Community Development Director Charlton mentioned that Police Chief Lowery spent a significant portion of time at a meeting the day before discussing the increase in crime in the Annie Glidden North area and how to combat it. She stated that people who live in poverty often resort to desperate measures and noted that a lot residents in that area heavily rely on social services provided by the City. She went on to discuss Community Development Block Grants and the difficulties the Community Development Department has been experiencing with them in regard to the community. Mayor Smith stated that all aspects of the budget will be considered for financial cuts, with the exception of the Police Department. City Manager Gaura corrected him, stating that everything is on the table for consideration. Consensus was reached. C. PUBLIC PARTICIPATION There was none.  Special Committee of the Whole Meeting Minutes November 7, 2017 Page 9 of 9 D. ADJOURNMENT MOTION Alderman Jacobson moved to adjourn the Special Committee of the Whole Meeting; seconded by Alderman Fagan. VOTE Motion carried on an 8-0 voice vote. Aye: Jacobson, Finucane, Marquardt, Fagan, Noreiko, Verbic, Faivre, Smith. Mayor Smith declared the motion passed and meeting adjourned at 9: 48 p.m. _____________________________________ SUSANNA HERRMANN, City Clerk Approved by City Council: December 11, 2017.