«Present: Councilman Dwight Clark, Chair Councilman Dave Tadych Councilman Tom Henderson Also Present: Mayor Sutherland, Finance Director Mahoney, ...»
FINANCE COMMITTEE MEETING
held January 13, 2014
6:15 p.m. Conference Room
Present: Councilman Dwight Clark, Chair
Councilman Dave Tadych
Councilman Tom Henderson
Also Present: Mayor Sutherland, Finance Director Mahoney, President of Council Paul
Koomar, Councilman Lee, Councilman Vincent, Councilwoman Lieske,
Service Director Thomas, Assistant Service Director Sears, Fire Chief
Lyons, Law Director Ebert, Recreation Director Enovitch, SAFEbuilt Chief Building Official Cheatham, Operations Manager Landers Audience: Conda Boyd, Marty Mace, Kent Silverberg Mr. Clark opened the meeting at 6:15 p.m. A warm welcome was extended to newly elected Councilman Thomas Henderson, Ward 4, who has been appointed to the Finance Committee.
Mr. Clark also expressed words of appreciation to the services of former Ward 4 Councilman, Mike Young, for his role as Chairman of the Finance Committee. Mr. Clark noted the continued service of Councilman Dave Tadych, Ward 1, as he begins his fifth term of service to the Finance Committee.
Mr. Clark advised that the next meeting of the Finance Committee will include a 2013 year end synopsis of financial activity to be prepared by Finance Director Renee Mahoney.
This evening’s Council meeting agenda will include the first reading of the 2014 Annual Appropriation Ordinance. Mr. Clark expressed appreciation to Director Mahoney and all of the department directors for their hard work and input into creating this budget.
Revenue The City of Bay Village is losing $400,000 (as compared to 2013) in estate tax revenue in 2014 due to the end of the estate tax requirement in Ohio.
It is suggested that in seeking additional revenue sources, consideration be given to raising the cable franchise fee from 3% to 5% per cable television customer. Five percent is the maximum allowed by law and is currently the percentage charged in Lakewood, Avon Lake, and Fairview Park. The cities of Rocky River, North Ridgeville, and Westlake remain at 3%. Law Director Ebert stated that 60 days notice is required to the Cable Television companies, who in turn must give their customers 60 days notice. Expected additional annual revenue is $85,000. Due to the notice required, that amount of additional annual revenue will be reduced significantly in 2014, since the increased fee would go into effect in April or May, 2014. Mrs. Mahoney will adjust her forecasted revenue amount listed on the budget for cable franchise fees. An ordinance will be prepared for first reading for the January 27, 2014 Special Meeting of Council.
Minutes of a Meeting of Finance Committee January 13, 2014 Analysis of Reserve Funds (Exhibit A attached)
An analysis of Reserve Funds proceeded with Mr. Clark explaining that there are four funds:
The initial balance in all four funds in 2008 was $12,756,310.22, after receipt of a large estate tax settlement. The balance at the close of 2013 in all four funds is $6,973,749.90. A refund was due to the county in 2011 of a portion of the estate taxes in the amount of $1,353,256.86. The remainder of the expenditures were due to various sewer projects, including the Lake Road Interceptor and the Cahoon Road Sanitary Sewer Project. In 2010 and 2011, a majority of the General Reserve Funds, $1, 320,000 was used to provide break-even operating budgets for the city.
Advances from the funds for specific projects are reimbursed by zero percent long term financing, as was the case with the Bradley Naigle Intersection Project and Cahoon Aerial Sewer Project.
The Municipal Building Fund will be used for the first time in 2014 to pay for municipal improvements throughout the city, in the amount of $215,000.
Mr. Henderson asked the rationale for putting $5 million in the Bond Retirement Fund in 2008.
Mr. Clark stated that the committee wanted to make sure there was enough money to cover bond indebtedness and to show a conservative approach with rating agencies. Mrs. Mahoney noted that she is comfortable with two years of debt service in the Bond Retirement Fund. Mr.
Henderson commented that cities with our bond rating are encouraged to maintain one-third of their annual budget amount in their General Fund balance. Bay Village is in excess of that amount when you consider all of the funds.
Mr. Clark commented that the Bradley Naigle Intersection project is now complete. The City of Westlake has sent their required payment to Bay Village.
Mrs. Mahoney noted that the amount of $735,000 was restored to the Bond Retirement Fund at the request of the auditors. That amount had previously been transferred out of the Bond Retirement Fund. All funds which required replenishment, as per the City’s auditor, have been properly and fully reimbursed.
Capital Budget (Exhibit B attached) Minutes of a Meeting of Finance Committee January 13, 2014 Mrs. Mahoney distributed a document known as the Capital Budget to the members of the Finance Committee, indicating capital expenditures in 2014 by department. The total amount of equipment replacement is $680,000, street construction $525,000, and public improvements $344,000. The Salt Garage Transfer station will be reconstructed at a cost of $292,000. Of that amount, the city has $192,000 remaining in insurance reimbursement funds. Aquatic repairs total $85,000. The grand total of all capital projects and equipment appropriations by fund is in the amount of $1,826,000.00.
Mr. Clark noted that the City of Bay Village must pay one-half of the cost of the new composter shared with the City of Westlake. Bay Village’s portion is $230,000 and is included in the Equipment Replacement schedule. Street Construction includes an overlay of Osborn Road, from Cahoon Road to Bassett Road. If funds are available, parts of Wolf Road will be repaired.
Mr. Tadych stated that the only item he wants to keep repeating is the need for the Sunset area improvements. Mayor Sutherland stated that she still thinks there is a lot of engineering design work that still has to take place. Construction does not need to be worked into 2014. Mr.
Tadych stated that engineering costs will have to be paid. Mayor Sutherland stated that CT Consultants is still under contract. Mr. Clark noted that the city will have to pay their share of the engineering costs and doing some of the work there. There has also been discussion about the Columbia Road Park steps and taking a look at that as well. Mayor Sutherland noted that it is not just the roads and the sewers in the Sunset area. There is going to be a lot of private property work that has to be done because a lot of the homes there do not even have storm hook-ups at all.
The Mayor stated that “We are really not ready to go; and I am not sure the residents over there are quite unified.” Mr. Tadych stated “They are not, but they’re wishing.” Mr. Clark stated that the committee would look to develop five-year major capital plans for each of the various major departments, primarily Fire, Police and Service, to give proper due to the areas. There may be some years where there is significant cost, like the composter, or a fire engine, and we may have to push aside purchases in other areas, given the constraints on how much can be raised through millage or bond retirement. This plan is something we will try to put into place this next year as part of the budgeting process.
Mr. Clark then reviewed the individual items listed in the Capital Projects schedule to be charged to the Public Improvement Fund (#490).
SCHEDULE OF CAPITAL PROJECTS AND EQUIPMENT APPROPRIATIONS BYFUND
Mr. Tadych asked Recreation Director Enovitch if he has looked into the possibility of purchasing a new slide. Mr. Enovitch stated that they are $250,000 each, not including installation. Mr. Tadych noted that the original cost was $100,000 each.
Mr. Clark stated that the goal of the committee is to be able to put together a reasonable borrowing amount for the sum of these projects, and the same time utilize existing funds that we have available, such as in the Pool, and the Municipal Buildings Fund. A chart will be put together on what is to be borrowed. Mrs. Mahoney suggested the figure of $1,266,000. Mr.
Clark stated that this would be combined with the corpus of a note issue done last year in the amount of $1,250,000. The note will be refunded with this balance, paying off $250,000 from the prior 2013 note issue so that we continue to liquidate the borrowing from that, as if it were payable over 5 years, and issue a 2014 note, given the fact that interest rates are still very low.
Minutes of a Meeting of Finance CommitteeJanuary 13, 2014
Mr. Lee asked how this new issuance will compare to what is being retired so that at the end of the year what will be the net change in the debt situation. Mrs. Mahoney stated that we would be retiring a little more than what is being put in place. Mr. Clark stated that this will be reviewed at the next Finance Committee meeting. Mr. Tadych stated that he would expect that the interest rate will be a little higher than it is now. Mr. Clark stated that the current interest rate is.55% on the existing note, part of which is being retired.
Mr. Clark noted that the Community Gym and Aquatic Facility bonds are ones that they would like to pay off, but they are not callable. We have also talked about getting away from manuscript debt as well. Part of the reason you try to complete the budget earlier gives us license to start ordering capital items sooner than later, which is a more efficient process.
Mr. Vincent asked about the fiber optics project. Mrs. Mahoney stated that they are waiting to get a quotation from Bailey Communications. The $50,000 in the budget for fiber optics is an estimate. Computer and copier placement is estimated at $30,000 per year. Mr. Vincent asked if new computers are needed for the fiber optics. Two are scheduled for the Service Department.
Mr. Tadych noted that the cost on the T-1 line will disappear, helping to offset the cost of the fiber optics.
Mayor Sutherland congratulated Police Chief Mark Spaetzel on the acquiring of MARCS radios through the county, significantly reducing the expenditure for the city. Fourteen have been acquired. Portable radios will be included for now, and the capital expenditure request of $47,000 will include a few mobile radios as well as the base station, and possibly a few more portable radios.
Draft 5 of the 2014 Budget
General Fund Revenue – In addition to the increase in the Cable TV franchise fee, there is an expected conservative increase in municipal income tax. Refuse collection fee will remain the same. The Local Government Fund has been revised to be close to what was received in 2013.
Mr. Clark noted that the 2013 numbers shown are actual end-of-year numbers. Mr. Tadych asked Mayor Sutherland how the municipal income tax collections will be affected if the state does the collection. Mayor Sutherland stated that collection is not part of the change. The state is looking at unification of definitions.
Mr. Henderson asked Director Mahoney to comment on the methodology used to estimate property tax revenue. Mrs. Mahoney stated that the county sends a Schedule A which informs the city what the county thinks they are going to collect for the city. The county estimate (97% tax collection rate) is less than the city estimate (98% tax collection rate).
Mr. Lee asked why Refunds and Rebates are estimated at zero in 2014. Mrs. Mahoney stated that this account is for funds that we do not know will be received, until they are actually received, such as grants. The funds shown in 2013 included reimbursements from FEMA and First Energy for Hurricane Sandy storm damage. These were one-time, extraordinary refunds.
Minutes of a Meeting of Finance Committee January 13, 2014 Expenditures Transfers from General Fund that occurred in 2013 will not be necessary in 2014 for Debt Service, Workers Compensation, and Equipment Replacement Fund. The Parks and Recreation Fund transfer will be reduced. Most of the expenditures for the Street Construction fund will be bonded out. Bay Family Services expenditure has been changed to reflect the actual contract amount.
Mr. Henderson noted that the General Fund transfer to Parks and Recreation on the summary sheet is listed at $396,500, but the draft revenue budget lists it at $436,500. Mrs. Mahoney will make the necessary correction.
General Liability Insurance amount of $127,500 for 2014 will be reviewed for accuracy.
Refuse collection is estimated at $1,111,500.00 for 2014. The contract expires in 2016. The expenditures for 2013 are lower due to a credit received by the city for the sympathy strike by rubbish haulers.
Full time wages for the Fire Department includes new personnel to begin in 2014. Three additional firefighters are budgeted to begin in February. The firefighters are due to receive their retroactive pay raise from 2013 in the amount of $1400 per individual. This will be paid later this week. If they do not start until later, this will cover the amount needed for the retroactive pay.
The 2014 budget includes pay raises covered by the administrative compensation ordinance, still to be introduced by Administration and Council.
Mr. Sears was asked if the price of gasoline is going up. Mrs. Mahoney did not budget for an increase in fuel. Mr. Sears stated that it is going up slightly. The city is paying a little lower rate than they paid last year.
The Workers Compensation Fund contains a balance from previous years because of transfers of more money than was needed. Mrs. Mahoney will begin using some of that balance to fund 2014 expenses. This will help the General Fund balance this year. Mrs. Mahoney noted that the fund should be an in and out, showing a zero balance at the end of the year. The beginning balance for 2014 is $289,000.
Mr. Henderson asked about the Equipment Replacement line item in the departmental funds.
Mayor Sutherland stated that this is normally for incidental expenditures that are not capitalized.
Mr. Sears gave an example of a paper shredder for the Service Department.
Rent payable from Kiddie Kollege at the Bayway Cabin is current.