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07/31/2017COMMITTEE OF THE WHOLE – Minutes of Meeting July 31, 2017 The Village Board met as a Committee of the Whole in the Council Chambers of the Village Hall at 6:00 p.m. on Monday, July 31, 2017. In attendance were: PRESENT: Village Board Staff Harriet Rosenthal, Mayor Kent Street, Village Manager Bob Benton, Trustee Andrew Lichterman, Assistant Village Manager Thomas Jester, Trustee Barbara Little, Director of PW and Engineering Mary Oppenheim, Trustee Robert Phillips, Deputy Director of Public Works Dan Shapiro, Trustee Justin Keenan, Public Works Analyst Barbara Struthers, Trustee David Fitzgerald, Management Analyst Desiree Van Thorre, Human Resources Coordinator Eric Burk, Finance Director ABSENT: William Seiden, Trustee Public Comment There was no one present for public comment. Strategic Planning: Capital Project and 2018 Preliminary Budget Plannin g Manager Street introduced new Human Resources Coordinator Desiree Van Thorre. She recently started in her position. Manager Street stated that the purpose of the meeting was for the Mayor and Trustees to provide direction to staff regarding preparation of the 2018 budget. He noted that the Village is winding down a three-year capital program this year. Finance Director Burk outlined his memo regarding preliminary budget planning. He noted the major factors to consider include capital improvement funding, loss of revenue due to the new State budget, increasing costs and a potential property tax freeze. Mr. Burk noted that reductions in the Local Government Distributive Fund from the State and new State administrative fees would reduce Village revenues by approximately $265,000 next year. This would contrast with approximately $500,000 in operating expense increases from commodity, contractual and personnel costs. Trustee Jester noted that the increase cost for water would be offset by higher user fees. Mr. Burk noted the State continues to discuss a property tax freeze for up to two to four years. The Village self‐imposed a property tax freeze on its 2016 levy for collections in 2017. He noted that the Village’s most recent EAV increased roughly 7 percent due to new apartment complexes and increasing property values. A $100,000 increase to the General Fund levy would allow the Village to keep its rate approximately the same assuming the EAV increases another 3 percent. Trustee Jester does not believe there will be a freeze next year from Springfield. Trustee Struthers stated she would like to increase the levy to capture the EAV from new C.O.W; July 31, 2017 developments, such as AMLI and Woodview. Trustee Oppenheim noted that a property tax freeze is a potential threat that is important to remember. Mayor Rosenthal stated that if property taxes are frozen by the State, they would most likely still allow for debt service. She noted that with the state in its current position, a property tax freeze would put the Village in a more difficult place to take on debt through bonds. She would like to keep the reserves at 40 percent to keep the Village in a better position if the State freezes property taxes. Trustee Jester would like to increase the levy to capture new growth, effectively keeping the property tax rate flat. He stated he would like to use the revenue for bonding for long- term assets while replacing expiring debt service with new debt service. Mr. Burk noted that a 3 percent EAV increase would bring in about $100,000, which isn’t enough to issue bonds. Trustee Oppenheim inquired if Trustee Jester was comfortable with issuing bonds in excess of that amount. Trustee Jester indicated he was, citing positive expectations for sales tax growth from new development in Deerbrook Mall. Mayor Rosenthal stated that she expects to see sales tax growth from new retail development in the coming years, but does not believe it will be enough next year to cover the cost of bonding. She stated that she will continue to work with the Northwest Municipal Conference to push for e-commerce and service taxes. She stated she is not interested in raising the prepared food and beverage tax. Trustee Shapiro inquired about a local tax on packaged alcohol. Mr. Lichterman noted staff would investigate that option. Trustee Struthers stated that she would like staff to investigate a per gallon local gas tax. Mayor Rosenthal noted local gas prices are already high and the tax may lead to more people purchasing gas outside of the Village. Mr. Burk noted the Village does not know the per gallon gas sale figures in the Village, making estimating revenues difficult. Mr. Lichterman reported that when staff met with gas station owners last year when implementing the prepared food and beverage tax, the owners noted they would strongly oppose a local gas tax because it would negatively impact their business. Trustee Oppenheim inquired about a storm water tax. Mr. Phillips reported that some neighboring communities charge a tax based on the square footage of impervious surface on their property. Trustee Struthers noted that such a tax would help to limit the amount of impervious surface in backyards and reduce the burden on the storm water system. Ms. Little noted that she pays about $35 per quarter in a storm water fee for her property in Highland Park. Trustee Jester stated he does not believe the storm water costs are as great as the sum such a tax would collect. Mayor Rosenthal stated this tax would only apply to residents of the Village and she would prefer for visitors and non-residents to help cover the cost of capital projects. Mr. Phillips provided a history and description of previous capital improvement programs. Since 2007 the Village has consistently completed between $2.2 million and $19.5 million in capital improvements each year. He noted that staff prioritizes projects based on the condition of a roadway surface, underground utilities, traffic volumes and other factors. Mr. Phillips stated that public infrastructure has an estimated life cycle. C.O.W; July 31, 2017 Maintaining that infrastructure requires a steady and annual process that allows for assets to be replaced as they reach a targeted age. Mr. Phillips presented four options based on cost and maintaining road conditions above a surface rating of 70. The first option was “status quo” where the Village would continue to execute street rehabilitation projects that are at the same level as those completed over the past 10 years. The second option called for rehabilitating or reconstructing 5 percent of Village streets per year. The third option would repair 7 percent of Village streets per year. The fourth option would repair 9 percent of Village streets each year for five years. Mayor Rosenthal inquired if the Village has the manpower to cover all of the options without hiring extra staff. Mr. Phillips noted the Village has some other capital projects planned and some outside help may be required. Mayor Rosenthal asked which option would be practical for the Village to achieve. Mr. Phillips noted that the fourth option is possibly too aggressive, but staff could manage the third option. Trustee Shapiro inquired about the cost for outside consultants to implement the fourth option. Mr. Phillips estimated consultant costs to be approximately $250,000. Trustee Struthers noted that residents appreciated having their streets fixed. Trustee Oppenheim noted there is an additional cost to residents in terms of disruption and lack of driveway access. Trustee Benton stated residents often forget about the construction- related disruptions after the work is completed. Mayor Rosenthal stated she believes the fourth option is too aggressive and would stretch thin the Village’s manpower. She does not want to add more staff. She stated she is more comfortable with the second and third options, but would prefer to go with the second option. Trustee Benton noted that he was comfortable with the something between the second and third options. Trustee Jester noted the low bond rates and inflation in the current climate may not last much longer, making now a good time to issue bonds. Trustee Shapiro agreed. Trustee Jester stated the Village has received very favorable bids the past few years and that is not likely to continue for much longer. Mr. Lichterman stated that likely only the first option can be supported with existing funding levels and all other options would require extra funding sources. Trustee Struthers stated she supported the third option. Trustees Oppenheim and Shapiro both stated they supported the third option or slightly more. Mayor Rosenthal noted this includes raising the tax levy, bonds and results in higher taxes. She stated that as the Village takes on more debt this impacts how bond rating agencies view the Village. She noted that although money is cheap to borrow right now, the Village still has to pay it back. She asked the Trustees to consider that this is just for roads and not for other infrastructure projects that would be needed in addition to roads. Trustee Oppenheim stated roads are one of the most impactful and visible services the Village provides. C.O.W; July 31, 2017 Mr. Lichterman reviewed the 10-year chart showing the bonds, taxes, federal funds and other ways the Village has paid for infrastructure. He stated the Village has approximately $2 million in infrastructure replacement funds each year, but need to come up with more than twice that per year for options three and four. Trustee Struthers wants staff to provide more information regarding a storm water user fee. Ms. Little noted this fee is being used by more communities. Trustee Oppenheim noted that commercial properties have more impervious surface and the way the fee is structured could put more tax burden on bigger, corporate facilities. Mayor Rosenthal inquired if the MFT funds are coming in regular intervals from the State. Mr. Burk stated that they were and noted the new population figures from the Special Census are included. Mayor Rosenthal stated she supports utilizing fund balance reserves for infrastructure, but wants to keep reserves at 40 percent to protect the bond rating, especially with the status of the state. Mr. Burk stated keeping reserves at 40 percent and contributing more money into the pension fund helps the Village retain its AAA bond rating. Manager Street summarized that the Village will further research estimated revenues from packaged liquor tax, local gas tax and storm water user fee. In addition, staff will prepare a property tax levy summary that captures the EAV growth from recent developments (AMLI/Woodview), effectively keeping the property tax rate flat. He noted there was consensus from the Board to retain a minimum 40 percent fund balance and to utilize balances above 40 percent to fund capital projects. Sanitary and Storm Sewer Pilot Program Mr. Lichterman reported the details of a sanitary and storm sewer pilot program. The program, as proposed, would provide a 10 percent rebate to homes to disconnect their storm sewer from the sanitary sewer system. If 650 homes participate, he estimated that it would eliminate 15 percent of inflow and infiltration. He stated this reduction would effectively prevent the Warwick Road pumping station from operating during most rain events. Trustee Oppenheim inquired how people know if they have an illegal connection. Mr. Lichterman noted that an outside plumber could check when then come in for other work and discuss the program with residents. He noted that previous sampling work could help the Village determine what homes are most likely to have their sump pump connected to the sanitary sewer system. Mr. Lichterman asked if a 10 percent rebate would be enough of an incentive on a $5,000 project. Mayor Rosenthal stated a $1,000 incentive or 20 percent would be more compelling. Mr. Lichterman noted that $320,000 would need to be included in next year’s budget to fund the program. Trustee Oppenheim asked if there are any federal grants that could help offset the costs. Ms. Little stated there are none available at this time. Mr. Street stated staff will provide more information about the kinds of homes and neighborhoods to bring a clearer picture to the Board and the public. C.O.W; July 31, 2017 There was consensus from the Board to move forward with the two-year pilot program and offering a 20 percent rebate to residents that complete the work. Adjournment The meeting adjourned at 7:45 p.m. Respectfully submitted, David Fitzgerald, Management Analyst