FINANCE COMMITTEE MEETING
Monday, February 27, 2012 – 6:00 p.m.
1. Call to Order & Roll Call.
Committee Members: Chairman Steve Jasinski, Ald. Michalczyk, Sean McDermott, Scott Musillami, Steve Drazner
2. Approval of the Minutes: November 29, 2011 and January 30, 2012.
3. Presentation on Quarterly Investment Report for the period ended January 31, 2012.
4. Presentation of Monthly Treasurer’s Report for January 2012.
5. Discussion item related to a City contribution to the Illinois & Michigan Canal National Heritage Corridor.
6. Discussion item related to proposed FY13 budget for General and Hotel/Motel Fund.
7. Other Business.
8. Adjourn to Executive Session to discuss personnel.
MINUTES OF THE FINANCE COMMITTEE MEETING
CITY OF COUNTRYSIDE – CITY HALL
FEBUARY 27, 2012 – 6:00 P.M. COUNCIL CHAMBER ROOM
1. The meeting was called to order at 6:00 P.M. Present: Chairman Jasinski, Aldermen Michalczyk, McDermott. Also present: Mayor Ed Krzeminski; City Clerk Sharon Sweeney; Aldermen Jas. Jasinski, Musillami, Pondelicek. City Administrator Gail Paul; Assistant Sharon Peterson; Finance Director Steven Drazner; DPW Essig, Dep.Clerk Bartelt; Police Chief Ruth (6:20 pm).
APPROVAL OF MINUTES
2. The minutes of November 29, 2011 were approved with the correction to replace the work reassess with rebate on page 2, paragraph 5.
The minutes of January 30, 2012 were approved as written.
PRESENTATION ON QUARTERLY INVESTMENT REPORT FOR PERIOD ENDING JANUARY 31, 2012.
3. Fin. Dir. Drazner reviewed the memo noting that since CD interest rates are very low, he recommended not tying up the funds. FD. Drazner told the committee that the State Bank of Countryside would no longer be participating in the CDARS program for their municipal or corporate customers and recommended opening a new CDARs account with MB Financial. The CDARs program allows a customer to invest one large amount in CDs which is then spread among several banks so each individual CD is below the FDIC limit of $250,000. In response to Mayor Krzeminski’s question about current interest rates, FD Drazner explained that interest rates are the lowest in the Illinois Funds account since they invest in extremely low risk securities. Mr. Drazner asked about transferring funds from IL Funds to IMET since the IMET interest rate is currently at .28% while IL Funds is only at .07%. It was recommended to transfer out of Ill. Funds and into IMET to maximize earnings, and if a minimum needs to be maintained to do so. Adm. Paul asked to look into short term CD’s (more than 6 mos) if the rate is higher then lock some into that.
MONTHLY TREASURER’S REPORT FOR JANUARY 31, 2012
4. Fin. Dir. Drazner reviewed the major revenues, noting that sales tax is ahead of budget by about $200K. The legal and some overtime accounts are over budget but almost all other accounts are at or below the budget target. Year to date, the General Fund shows a surplus, however, no contribution has yet been made to the Police Pension fund. A question was asked about the difference between fund balance and cash balances included in the financial report. Fin. Director Drazner responded that fund balance includes assets other than spendable cash such as receivables or illiquid assets such as fixed assets in the case of the Water Fund. . For practical purposes, cash is more important to focus on than fund balance.
There was some additional discussion about the Water Fund in which expenses are well below budget. This was explained by FD Drazner that this was primarily due to infrastructure improvements for water main replacements not yet started. Mayor Krzeminski asked the amount for the Police Pension contribution. Mr. Drazner stated $900,000 was budgeted but not yet contributed. There would be more discussion on this when talking about the General Fund budget.
ILLINOIS & MICHIGAN CANAL NATIONAL HERITAGE CORRIDOR
5. Mr. Drazner presented the request from this organization for a City contribution of $1,500. Ald. McDermott recommended approving this request. Ald. Jasinski questioned if this expense is acceptable. It was decided to include on the next Council Meeting agenda for further consideration.
CONTINUED BUDGET DISCUSSION – GENERAL & HOTEL FUNDS
6. There was additional discussion on the Fiscal Year 2013 proposed budgets for the General and Hotel/Motel Funds. Finance Director Drazner stated that he reduced the budgeted police pension contribution by $200,000 based on the actuarial valuation received for FY12.
For the Hotel/Motel Fund, the Countryside Business Association would not be having a carnival but rather a different type of summer event. It was agreed to leave overtime in the Hotel Fund for this event in the budget but reduce it $2,000 to $15,000 since the new CBA event would not require as much city labor as a carnival. It was further discussed that in additional to the overtime, it was agreed that the City would continue to contribute $48,000 to the CBA and for FY13, half of this amount, or $24,000, would go towards billboard advertising and the other half would be the City’s contribution to the CBA’s summer event.
Other items discussed included adding $1,800 to the budget for Administrative Adjudication Clerk stipend. At a minimum, this position devotes at least a half day of work each month. This item will be added to the budget should it be approved by the Human Resource Committee. If approved, this could be applied retroactively as of January 1, 2012.
An amount of $2,500 would also be added to in the General Fund legislative department budget for a diamond achievement award through the Rotary.
Of the largest adjustments for the proposed budget included an additional amount totaling $250,000 would need to be added as a capital project for street widening associated with the IDOT project along Joliet and LaGrange Rd. This was concern that this would be not a onetime expense, and Adm. Paul said none of these improvements are in the State’s 5 Year Program. We will also need to contribute at least as much as $250,000 for each intersection IDOT is planning to improve, ie East and 55th St. F.D. Drazner also was instructed to include $3,000 for a Community Garden, with hopefully acquiring a matching local grant for another $3,000.
In the Water Fund, an additional $25,000 was added for equipment purchases, with same amount being reduced from Infrastructure- water main replacement. The equipment will specifically be used to purchase a VXU, a remote water reader, and a utility locator. Mayor Krzeminski raised the question of the WCMC Task Force Assessment invoice of approximately $500 requesting the City to make a voluntary contribution towards WCMC legal fees related to the City of Chicago water rate hikes. This $500 payment would be taken out of this fiscal year but there was some concern that this could be an ongoing expense rather than a onetime contribution this matter would be further discussed at the next Water Committee.
DPW Dir. Essig asked if the Welcome Signs would be replaced. The expense would be approximately $30K and it would be expended from the Hotel/Motel fund. Discussion ensued regarding solar vs. electric to each sign, presently the logo doesn’t match the letterhead. DPW Dir. Essig was instructed to obtain three options and bring back to committee.
Mr. Essig said the Spring Cleanup costs have gone up slightly. Last year we budgeted $30,000 and spent $8,500, so this year the cost will probably be around $15,000.
7. F.D. Drazner presented an analysis regarding a potential payment in lieu of tax for H&R Block which operates out of Countryside Plaza. . FD Drazner’s analysis calculated that the sales tax per square foot for other businesses in that development ranged between $3.50 to $5.50 per square foot, excluding any local taxes (i.e. restaurant tax). Since the H&R Block does not generate any substantial sales tax, it was the consensus to recommend that a PILOT fee be set at $4.50 per SF, or $6,750 per year, with no annual CPI increases and would be effective with calendar year 2012. . . This recommendation will be contingent on the Zoning Board’s recommendation to also assess a PILOT fee for this business and the ZBA committee will be meeting on 3/6/12. If Zoning Board agrees to a PILOT fee, the recommendation of $6,750 will be brought before City Council for formal approval on 3/14/12.
8. F.D. Drazner informed the Committee that he was contacted by a municipal bond underwriter that stated the City has a refunding opportunity on the 2006 general obligation bond issue used for water infrastructure improvements. This firm ran the numbers and stated that the City could realize a $270,000 savings for the remaining life of the bonds, with the caveat that if rates increase in the near future the savings could go to zero. The firm, Bernardi Securities, Inc. would be paid out of the new bond proceeds and issuance costs have already been factored in the net savings amount. Other issuance costs would include a financial advisor, bond counsel, and rating agency fees, all of which would be deducted from new bond proceeds. . Mr. Drazner was directed to contact bond counsel to start preparation and get the bond refunding ordinance ready for the 3/14/12 City Council meeting. . There was a question from Ald. Jasinski about the underwriter’s background and staff commented that they had a history of working with this firm in the past and some research would be done to make sure there were no negative implications against the firm. The refunding would be contingent on interest rates remaining steady over the next four to six weeks and that the City would realize a minimum net present value savings of 3% on the deal. Finally, FD Drazner also brought to the Committee’s attention some good news that the City’s credit rating went up two notches, from A1 to AA2 due to the rating agencies recalibrating municipal ratings to a more global scale.
This information should go into the next Newsletter.
9. Ald. Jasinski moved with Ald. Michalczyk seconding to adjourn to executive session at 7:00 pm to discuss salaries and carried unanimously.
Dated: ______________________ __________________________
Steven Jasinski, Chair