City Council

MINUTES CITY OF DEKALB SPECIAL MEETING OF CITY COUNCIL NOVEMBER 21, 2017 The City Council of DeKalb, Illinois held a Special meeting on November 21, 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 5:01 p.m. A. ROLL CALL City Clerk Herrmann called the roll, and the following members of the City Council were present: Alderman Bill Finucane, Alderman Mike Marquardt, Alderman Pat Fagan, Alderman Kate Noreiko, Alderman Mike Verbic, Alderman Tony Faivre, and Mayor Jerry Smith. Alderman Dave Jacobson arrived at 5:09 p.m. Also present were: City Manager Anne Marie Gaura, Assistant City Manager Patty Hoppenstedt, City Attorney Dean Frieders, Finance Director Molly Talkington, Deputy Police Chief John Petragallo, Deputy Fire Chief Jeff McMaster, Community Development Director Jo Ellen Charlton, Public Works Director Tim Holdeman, Information Technology Director Marc Thorson, Human Resources Director Cris Randall, and City Clerk Susanna Herrmann. B. 2017 PROPERTY TAX LEVY Finance Director Talkington provided an overview of this item, stating that at the Joint City Council and Finance Advisory Committee (FAC) meeting on November 16, 2017, Council provided additional feedback on the estimated property tax levy, specifically to keep Police and Fire Pension funding at the 7.0% investment return rate. She explained that at the November 13, 2017 meeting, City Council approved the estimated levy to equal 105.2% of last year’s levy, resulting in an overall levy of $13,237,341. She added that staff has prepared two options for adoption of the 2017 property tax levy that are viable under the Truth in Taxation notice at 105.2% of the 2016 extended with abatements levy: 1. Adhere to the FAC’s Recommendation: Fully fund Police and Fire pensions through property tax at a lower investment return rate of 7.0% and keep minimal funding for Illinois Municipal Retirement Fund (IMRF), or 2. Implement a Lower Tax Levy: Eliminate the minimal funding for the IMRF from the tax levy ($72,506), reduce funding for Police and Fire pensions at the 7.0% investment return rate by $445,970. The funding for IMRF and the portion of the Police and Fire pensions will be absorbed by other General Fund sources at the loss and/or reduction of other core City services. Mayor Smith paraphrased Finance Director Talkington’s summary and requested additional feedback from her, which she provided. Special Meeting of City Council Minutes November 21, 2017 Page 2 of 10 City Manager Gaura added that staff composed option two based on clear direction from the Council. She stated that staff is willing to explore other options. Mayor Smith requested clarification that the 7% investment rate will be utilized in both options. Finance Director Talkington confirmed. Alderman Finucane observed that the projected tax rate presented in both options is higher than he expected with consideration to Council’s request to leave the property tax rate exactly the same. Finance Director Talkington provided a detailed explanation. There was a brief discussion between Alderman Finucane and Finance Director Talkington. Alderman Fagan asked if the DeKalb Public Library (the Library) levy had raised since FY2017. Finance Director Talkington stated that the Library levy is staying the same. She added that the Greek Row SSA had raised from $14,000 to $21,000, with information included in the documentation provided to Council. City Manager Gaura provided more information regarding the Greek Row SSA. Discussion ensued between Alderman Marquardt and Finance Director Talkington regarding the specific dollar amount represented in both the first and second option. City Manager Gaura added that option contains a 5.9% annual increase to homeowners in order to fully fund Police and Fire pension obligations at the current 7% rate. She then stated that option two contains no increase or decrease. Alderman Noreiko stated that she feels strongly obligated to ensure that the Council meets the City’s Police and Fire pension obligations. She expressed hesitancy to step back from IMRF funding, concerned that it will send the wrong message to the community. She added that she is willing to support the first option. Finance Director Talkington provided additional information regarding the compatibility of both options with the Truth in Taxation notice. Alderman Jacobson asked if staff had the updated projections through 2022. Finance Director Talkington responded in the negative. Alderman Jacobson stated that the reality is that there needs to be a reduction in personnel for the Police and Fire Departments or there needs to be a reduction in current salaries.  Special Meeting of City Council Minutes November 21, 2017 Page 3 of 10 Alderman Verbic added that Council and staff could begin finding efficiencies and graduate the expected return rate. City Manager Gaura addressed Alderman Verbic’s comment and stated that municipalities typically experience 0.25% increment changes. Alderman Faivre commented that the second option would increase the General Fund balance to 30%. Finance Director Talkington provided preliminary projections through 2022 and explained their relation to the two options. Alderman Jacobson stated that the only way to reduce expenditures is to reduce either head count or salaries. Alderman Verbic stated that if we worked down more gradually, we could shoot for 6.5% without harming services. Finance Director Talkington commented that the tax base will grow with growth from development. Mayor Smith reiterated Council’s options. Alderman Faivre stated that he supports the second option. Alderman Verbic stated that he also supports the second option. Alderman Noreiko stated that she supports the first option, with room for compromise. Alderman Fagan favored the second option. Alderman Finucane stated that he supports the second option with continued discussion for making further cuts. He clarified that the city needs to completely fund all of the pension obligations at 7.0%. Alderman Jacobson stated that he is willing to support a third option that will bring the 7.5% down to a 7.25% with a push to meet 7.0% next year. He commented that the Bond Rating and the tax base need to be protected. Alderman Marquardt stated that he is in support of the first option. Alderman Jacobson left the meeting at 5:37 p.m. Alderman Jacobson returned to the meeting at 5:37 p.m. Alderman Marquardt provided an explanation for his support of the first option and expressed his belief that it will provide the City with more flexibility in regard to the budget. Special Meeting of City Council Minutes November 21, 2017 Page 4 of 10 Finance Director Talkington noted that there was a potential for a shift in the investment rate by relying on less-stable revenue sources. Alderman Marquardt used her comments to further validate his reasoning. Alderman Jacobson declared his stance. Alderman Noreiko stated that she would consider a compromise at the 7.25%. Alderman Faivre recalled the presentation by Moody’s and noted that they would like to see the City exhibit more reliance on property tax funding. Consensus was reached. City Manager Gaura added that the 7.25% rate can be included as an option on the agenda for the next City Council Meeting. A brief discussion ensued between Alderman Faivre and Finance Director Talkington. Mayor Smith declared that there will be no increase to the property taxes in FY2018. Alderman Jacobson stated that there needs to be a change in the way the City handles the budget process. C. FY2018 PROPOSED ANNUAL BUDGET City Manager Gaura stated that based on direction from Council at the joint meeting with the FAC, staff has provided a proposed annual budget with a 5% expenditure reduction. She clarified that staff is requesting feedback on all aspects of the budget and highlighted several important issues regarding infrastructure for Council’s consideration. She discussed the feedback from the FAC in regard to the development of a new TIF district in order to continue the momentum in the downtown area. She also noted the upcoming five-year financial plan meeting with the FAC and added that FY2019 budget discussions will begin in January 2018. She continued, stating that staff needs direction from Council in regard to prioritizing TIF funding. She then stated that the November 21, 2017 Committee of the Whole (COW) Meeting will include a Public Hearing on the tax levy at 5:00 p.m. The Regular City Council Meeting held on the same night will include a Public Hearing on the budget at 6:00 p.m. She listed the three scenarios to be included in the budget. Alderman Verbic commented that he is interested in seeing all of those scenarios with either a 0% or 0.5% sales tax increase. City Manager Gaura stated that staff will evaluate those scenarios but the information may not be readily available for the next scheduled agenda. Alderman Fagan commented Council could consider a 0.25% increase.  Special Meeting of City Council Minutes November 21, 2017 Page 5 of 10 Alderman Noreiko mentioned the potential decrease in funding to social services and proposed that cuts be made only by 50% initially, in order to provide a warning to organizations that may be affected. She added that she would not be opposed to eliminating funding to all Northwestern Medicine entities. Alderman Jacobson expressed his belief that even a 50% cut in revenue to Social Services is impractical. He referred to the list of cuts presented to Council and verbalized his intent to send an email communication to fellow Alderman with a list of his preferences for cuts. Alderman Fagan referred to the inclusion of the STEAM Learning Facility in the FY2018 budget documentation and questioned the validity of its placement. City Manager Gaura responded that it could be removed. Brief discussion ensued regarding the STEAM Learning Facility in reference to the FY2018 budget. Alderman Fagan noted the employee count in the documentation and stated that the salaries are significantly higher than they were in FY2008 or FY2009. Brief discussion ensued between Alderman Jacobson and Alderman Fagan regarding this information. City Manager Gaura gave historical perspective of the employee count and current salaries and explained the importance of the department structures in the organization. Alderman Faivre noted some of his observations in regard to the structure of the organization and expressed his uncertainty of its efficiency. He then requested that staff provide the assumptions in revenue growth in order to prepare Council for upcoming projection discussions. Finance Director Talkington directed him to the last page of the budget document where any changes to assumptions were recorded. Mayor Smith listed the issues that require Council direction and briefly discussed them with City Manager Gaura. He then asked for a consensus from Council. Alderman Verbic suggested a partnership with the Park District to alleviate some of the strain on the City for the cost of the DeKalb Municipal Band. Alderman Finucane suggested that Council follow the direction of Mayor Smith. City Manager Gaura reiterated that the updated direction from Council in regard to the budget will not be included in the agenda for the November 27, 2017 City Council Meeting due to the upcoming Thanksgiving holiday. She added that the change can be made before the December 11, 2017 City Council Meeting agenda is posted. Special Meeting of City Council Minutes November 21, 2017 Page 6 of 10 Alderman Finucane expressed his desire to continue current discussions rather than postponing them to a future meeting. A brief discussion ensued between Mayor Smith and Alderman Finucane. Alderman Jacobson shared his opinion that staff will not be able to provide sufficient information to Council by the November 27, 2017 Regular City Council Meeting. He suggested that Council allow staff a reasonable amount of time to compile a document that will accommodate all of the changes. Mayor Smith asked Alderman Jacobson if he felt comfortable going through the document one item at a time, to which he responded in the affirmative. Alderman Marquardt suggested that Council begin by discussing the transfer of TIF funds. He recalled the FAC recommendation to continue utilizing TIF funds to support the General Fund through the five year remainder of TIF 1. He briefly discussed the details of that recommendation with Finance Director Talkington and asked Council members if they wanted to step it down or keep it. City Manager Gaura provided a brief background on the recommendation from staff in regard to this issue and stated that the goal was to address the Council’s priority of having more money towards other capital projects. Finance Director Talkington stated that staff kept the FY2018 General Fund transfer amount the same and eliminated the TIF 2 transfer in FY2019, totaling over $113,000. She added that the transfer from TIF 1 was also reduced by approximately $120,000. She explained that this will keep funding within the last years of the two TIF districts that can be applied to development activities. The total reduction from the General Fund in the first year is estimated at $232,820 and over the five year plan totals an estimated $591,687. There was discussion between Council and Finance Director Talkington regarding a TIF phase out plan and possible inter-fund transfers. City Manager Gaura added that Council can choose to decrease TIF support to the General Fund gradually or sustain a large reduction at the end of the TIF District. Discussion took place regarding a scenario in which the TIF District expires. Finance Director Talkington reiterated the multiple options presented to Council. City Manager Gaura followed up by recommending that Council postpone policy changes on inter-fund transfers until after a decision is made in regard to the proposed new TIF District. Finance Director Talkington clarified that the discussed proposals are merely considerations and will not impact the budget for FY2018.  Special Meeting of City Council Minutes November 21, 2017 Page 7 of 10 City Manager Gaura added that the only impact these decisions would have is on the current preference of Council to modify the assumptions in the five year financial forecast. She explained that the current forecast contains a step-down plan from TIF support. Alderman Jacobson mentioned that the goal is to keep as many of the properties that are at or below their original TIF value in the TIF district. He explained that with the upcoming expiration of TIF 2, there is a potential for increased revenues from incremental raises on property taxes for properties exiting the TIF District. Finance Director Talkington acknowledged Alderman Jacobson’s comments and reminded Council that their direction established at the current meeting will significantly change the information provided in the budget document. Mayor Smith echoed Alderman Jacobson’s concerns that Council will not be able to make an informed decision at Public Hearing scheduled during the November 27, 2017 City Council Meeting. Finance Director Talkington mentioned that the two Public Hearings scheduled during the November 27, 2017 COW and Regular City Council Meetings have already been publicly announced and would remain on those agendas. She stated that First Reading of each item would need to be adjusted if Council chose to proceed in that direction. Alderman Jacobson voiced his belief that there will need to be an additional Special COW Meeting in order to discuss concerns with the proposed budget and gather a consensus. He suggested discussing whether or not to keep the one million dollar funding provided by TIF dollars for road maintenance. Finance Director Talkington noted that the road funding was adjusted due to the one million dollar increase in the Motor Fuel Tax (MFT) fund. She referred to Public Works Director Holdeman for additional information. City Manager Gaura interjected that it was the goal to provide more funding for streets. Public Works Director Holdeman provided detailed information regarding the Motor Fuel Tax (MFT) and the funds available within that balance for FY2018. Mayor Smith referred to the budget document and began discussing the potential budget cuts presented for each department, beginning with the Community Development Department. Alderman Finucane verbalized his preference for going through each item individually in order to thoughtfully make adjustments that may become evident through the process. Council and staff began discussing each item contained in the budget document item by item, with consideration to the reductions desired by Council. Alderman Marquardt suggested that Council set a dollar amount and direct staff to meet that requirement however necessary. Special Meeting of City Council Minutes November 21, 2017 Page 8 of 10 Alderman Verbic and Alderman Noreiko concurred. Alderman Faivre provided his ideas for items on the list that require further discussion. Alderman Finucane commented that some of these items are policy issues and agreed with fellow Council members that they require further discussion. City Manager Gaura discussed the agenda packet for the November 27, 2017 City Council Meeting and some of the items that Council can expect to be placed on that agenda. Council and staff discussed their intentions for moving forward with the staff recommended reductions. City Manager Gaura recommended that each Alderman make a list of items that they believe require more discussion before a policy change is made. Alderman Jacobson suggested that each Alderman complete their own survey to quickly establish which items they believe require more discussion. City Attorney Frieders stated that it would not violate the Open Meetings Act (OMA) for each Alderman to participate in an individual survey. Brief discussion ensued regarding the method to which Council would like to present their preferred items of discussion to staff. Consensus was reached. Alderman Fagan left the meeting at 7:07 p.m. Discussion ensued amongst the Alderman regarding the proposed sales tax increase. Consensus was reached. Alderman Noreiko asked where the proposed gasoline tax would come in. Finance Director Talkington stated that it was not included in the proposed budget document. Alderman Finucane added that a one cent increase would generate approximately $180,000 in revenue that would need to be designated to transportation in accordance with the Lockbox Amendment in the State Constitution. Alderman Faivre stated that he would be interested in seeing a scenario that contains a 0% tax increase along with the other proposed scenarios. He then added that he could be in support of a 0.25% tax increase where the revenue was specifically earmarked for police officers.  Special Meeting of City Council Minutes November 21, 2017 Page 9 of 10 Alderman Marquardt left the meeting at 7:10 p.m. Alderman Fagan returned to the meeting at 7:10 p.m. Mayor Smith asked if any of the Alderman could support a budget with a proposed tax increase that exceeds 0.25%. Alderman Jacobson expressed interest in seeing all options. Finance Director Talkington reminded Council that the five year plan does not include the full 1% projections because the Streets and Fleet are in a different fund. Alderman Marquardt returned to the meeting at 7:12 p.m. Mayor Smith asked Finance Director Talkington what the rationale was behind the FAC recommendation to increase the sales tax by 1%, to which she explained. She added that she needs additional direction before she can determine how to present the different options to Council at the next meeting. Alderman Faivre agreed with the FAC recommendation to utilize sales tax revenue for capital or police, not for operations. Alderman Jacobson stated that he will support a sales tax increase for Streets and Fleet only, and it will likely include a Sunset Clause. Alderman Finucane and Alderman Jacobson discussed alternative resources for funding, including the possibility of raising the MFT. Council and staff discussed the local MFT and the impact it would have on funding the City’s operations. Mayor Smith commended staff for attempting to ascertain Council’s complete direction and stated that these decisions are very difficult to make. He mentioned two written communications that he received from citizens, one from Melissa Burlingame and one from Courtney McNamara. D. PUBLIC PARTICIPATION William Heinisch stated that the residents of the City can’t afford a sales tax increase. He shared his perception that the General Fund balance increase is due to the lack of proper funding being distributed to necessary projects. He stated that we need to remain competitive in order to experience any population growth. He discussed the impact of raising the 1% sales tax and expressed his opinion that doing so would negate the recent growth the City has experienced. Dewayne Brown discussed the Toyota-Mazda Plant and the factors that he believed contributed to the company’s decision to establish their business elsewhere. He noted the tax crisis in Illinois and its influence on the economy. Special Meeting of City Council Minutes November 21, 2017 Page 10 of 10 E. RECESS FOR EXECUTIVE SESSION OF CITY COUNCIL 1. Approval to Hold an Executive Session to Discuss Personnel as Provided for in 5 ILCS 120/2(c)(1). MOTION Alderman Verbic moved to hold an Executive Session; seconded by Alderman Faivre. VOTE Motion carried on an 8-0 roll call vote. Aye: Jacobson, Finucane, Marquardt, Fagan, Noreiko, Verbic, Faivre, and Smith. Nay: none. Mayor Smith declared the motion passed. Mayor Smith closed the meeting to the public at 7:39 p.m. Mayor Smith opened the meeting to the public at 10:34 p.m. F. ADJOURNMENT MOTION Alderman Faivre moved to adjourn the Special COW Meeting; seconded by Alderman Marquardt. VOTE Motion carried on an 8-0 voice vote. Aye: Jacobson, Finucane, Marquardt, Fagan, Noreiko, Verbic, Faivre, and Smith. Mayor Smith declared the motion passed and the meeting adjourned at 10:34 p.m. ________________________________ SUSANNA HERRMANN, City Clerk Approved by City Council: January 8, 2018.