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02/27/20122-27-12 COW Page 1 of 5 COMMITTEE OF THE WHOLE – Minutes of Meeting February 27, 2012 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, February 27, 2012. In attendance were: PRESENT: Village Board Staff Harriet Rosenthal, Mayor Kent Street, Village Manager Robert Benton, Trustee Jenny Maltas, Assistant to the Village Manager Mary Oppenheim, Trustee Bob Fialkowski, Finance Director William Seiden, Trustee Eric Burk, Assistant Finance Director Barbara Struthers, Trustee Barbara Little, Director of PW and Engineering Thomas Jester, Trustee Bob Phillips, Assistant Village Engineer Alan Farkas, Trustee Dan Busscher, Superintendent of Street and Utilities John Sliozis, Police Chief Rick Wilk, Deputy Police Chief Thomas Keane, Deputy Police Chief Clint Case, Building and Code Enforcement Sup. Peter Coblentz, Village Attorney Matt Weiss, Computer Systems Coordinator Andrew Lichterman, Management Analyst Public Comment There was no public comment. Review of Proposed Fiscal Year 2012-13 Budget Mayor Rosenthal encouraged Village officials and staff to consider transitioning to a calendar year budget in the near future. She noted the calendar year budget will be less confusing to the public, many surrounding communities have already made the transition and she advised leaving the logistics of the transition for staff to figure out. Attorney Coblentz noted the Village has home-rule authority and is able to make the changes. Trustee Seiden expressed his concern over the property tax levy increase that has accrued over the past few years. He noted the Village has a responsibility to keep the tax levy low and suggested keeping the marginal increase on the General Fund levy to less than 5% of the tax levy from two years ago. Finance Director Fialkowski presented highlights from the proposed FY 2012-13 Budget. He noted General Fund revenues project a 4% increase in the property tax levy, no increase in base sales tax, slight increase in home-rule sales tax, 6% increase in hotel/motel tax, no increase in telecommunications tax and a 5% increase in building permit fees. He noted the projected numbers for the income tax, motor fuel tax and use- tax are from the Illinois Municipal League. The water and sewer utility funds currently 2-27-12 COW Page 2 of 5 show a 2.5% increase in the rate but he noted these funds are struggling and have a negative cash balance. There will be a discussion later on the various scenarios put together that would address the issue these funds. Trustee Jester asked why there has been a reduction in water consumption. Mr. Fialkowski pointed out it is a combination of low-flow efficiency devices, a change in economic behavior and a result of the weather. Trustee Farkas acknowledged the Village is carrying over a $4 million fund balance in the Vehicle Equipment Replacement Fund (VERF) and questioned if a transfer should be made out of this fund. Mr. Fialkowski noted we are contributing less to this fund each year, as the Village is extending the life of the equipment. He noted transferring money out of the VERF may not be viewed as a good financial practice by the rating agencies. Mr. Fialkowski noted that if the $4 million is close to the value of our equipment, taking money away from the fund would not be a best practice. Mayor Rosenthal asked Mr. Fialkowski to prepare an analysis on the fund to compare the value of the equipment and the fund balance as well as to show the impact of spending down the fund. Mr. Fialkowski presented three exhibits to address the water/sewer fund deficits. He noted Exhibit A is the status quo approach, Exhibit B combines the two funds and results in the water fund subsidizing the sewer fund. Mr. Fialkowski recommended Exhibit C, which proposes a sewer user charge increase over the next three years (10%, 5%, 5%). This would result in an increase of about $22.00 to the average user during the first year over continuing the recent practice of 2.5% annual increases. The Board considered Exhibit C the most prudent alternative as it addressed the structural problem in the funds. Trustee Oppenheim asked about the Deerfield Road overpass/underpass maintenance costs. Director of Public Works, Barbara Little noted the overpass requires periodic sand blasting and the underpass will need some maintenance each year. Mr. Fialkowski noted the bulk of the budgeted amount is related to overpass maintenance. Trustee Jester asked about the projected salary and wage increases for personnel. Mr. Fialkowski noted the Public Works contract stipulates and 3% increase. The Police contract specifies a 2.5% increase as they negotiated the 3% increase last year – so the end result of the contract is that the Public Works and Police Union end the FY2012- 2013 with the same increase. To match the union contracts, all other non-union employees are projected at a 3% increase. Assistant to the Village Manager, Jenny Maltas described a five year strategy for Information Technology. She reported the current budget contains items related to training and Microsoft upgrades. She noted the long term goal is to switch from Lotus Notes to Microsoft Exchange, which will better integrate with the Munis financial system. Nearly $50,000 is budgeted for in FY 2012-13 fiscal to upgrade to the new version of Microsoft Office and to train personnel on the changes. Larger expenses will be required in three years to replace network equipment and to create a backup connection at Public Works for disaster recovery. 2-27-12 COW Page 3 of 5 Ms. Maltas noted the Village is conservative in their approach when replacing IT equipment and only recommend replacement when equipment is no longer supported and if the equipment broke down it would cause a significant impact on operations or if the equipment is no longer functions appropriately for what it needs to do. She reported this is the exactly the case with the Trustee’s laptops, as the manufacturer is out of business and replacement parts are very difficult to find. She noted $1,500 is budgeted this year, per laptop for replacement this year. She noted iPads or other tablets are also an option and are cheaper than laptops, but the budget reflects a replacement of laptops. Trustee Struthers noted the importance of having a Village computer to keep Village materials separate from personal information. Trustee Jester suggested the Computer Systems Coordinator, Matt Weiss, consult with each Trustee individually to better determine the needs of the group. Ms. Maltas advised that whichever option is decided it needs to be consistent and used by all Trustees. Mayor Rosenthal indicated that she does not want to have laptops replaced unless it is absolutely necessary. Trustee Oppenheim stated laptops are not a perk for Village Trustees but rather the most economical and efficient way to conduct business. Assistant Finance Director Eric Burk described the proposed Fund Balance Policy. He reported the Village is required to adopt guidelines by which the Village will classify fund balance in its Comprehensive Annual Financial Report (CARF) in order to comply with the Government Accounting Standards Board (GASB) Statement No. 54. He noted the five categories described in GASB Statement No. 54 and their definitions. The five categories are:  Non-Spendable Fund Balance  Restricted Fund Balance  Committed Fund Balance  Assigned Fund Balance  Unassigned Fund Balance. Mr. Burk reported that the proposed policy states that the fund balance of operating funds should not be below 40%, General Fund should not be below 30% and cash investments, parking funds and 911 funds shall have at least 25% fund balance. He noted the Board would need to formally adopt this policy during a regular meeting. Trustee Farkas requested to see the Village’s past fund balance trends and history. Trustee Seiden was interested in fund balance policies adopted by other municipalities. Village Manager Street gave examples of how different Village revenue streams and financial stability is part of determining the appropriate fund balance policy for a community. Trustee Oppenheim complimented staff on preparing a detailed budget document in a user-friendly format and that she appreciated the additional detail presented in this year’s budget. 2-27-12 COW Page 4 of 5 Review of Capital Improvement Plan Ms. Little summarized a 5 year plan for transportation and infrastructure projects as well as a 5 year plan for sewer and water projects. Ms Little noted Cook County Highway Department is scheduled to conduct roadway improvements on the eastern portion of Lake Cook Road in 2013 and the Village has postponed improvements to Deerfield Road to avoid having two east-west arterial streets under construction at the same time. Deerfield Road will likely undergo roadway improvements in 2014. Mr. Phillips presented three options to the Board illustrating the project scope and cost breakdown for reconstruction/rehabilitation of Deerfield Road and also contemplates the option of a Jurisdictional Transfer (JT) of Deerfield Road from the Village to Lake County. The first option is for a 70/30 funding split for a patching and resurfacing project with no JT. The second option is for a full reconstruction project paid for by the County if the Village commits to a JT. The third option is also a full reconstruction project but funded entirely by the Village and without a JT. Trustee Jester inquired about the breakdown of the funding and requested to see the specifics. Mr. Street responded staff will present a revised document specifically outlining the funding from Federal, County and Village governments for both the Deerfield Road and Pfinsgsten Road improvements projects following receipt of a Memorandum of Understanding regarding the JT from Lake County. Fee Schedule Discussion Management Analyst Andrew Lichterman presented a proposed fee and fine schedule. He noted having a centralized fee schedule will increase transparency and staff efficiency and allow for annual review. The fee schedule would be codified and referenced throughout the Municipal Code. Mr. Lichterman highlighted a proposed change to charge a flat $0.55 per square foot for new single- family and two-family residential building permits in lieu of the current complex fee based on construction materials and level of construction. Code Enforcement Supervisor Clint Case noted the $0.55 flat fee would also be inclusive of the plumbing, heating and electrical inspections. Mr. Lichterman presented a proposed construction impact fee of 0.5% of the estimated cost of construction for consideration. The revenue from this impact fee would be placed in the Infrastructure Replacement Fund and help mitigate the impact of construction on the Village’s infrastructure. When residents or businesses obtain a building permit, the result of the construction is additional trips of trucks, vans, etc. on the Village’s roads and this impacts the life span of the village’s roads. Mr. Lichterman noted even with the additional impact fee the Village’s building permit fees would be very competitive with surrounding municipalities, and in most cases lower than surrounding municipalities. 2-27-12 COW Page 5 of 5 Trustee Farkas noted the proposed fee schedule and streamlined changes are advisable and would like to find more opportunities to increase efficiencies. Mayor Rosenthal noted the impact fee is strongly justified and appropriate to offset the additional demand construction activity puts on Village roadways and there was general consensus from the Village Board to move forward. Mayor Rosenthal asked why there is a waiver for seniors for projects up to $10,000. Mr. Case reported that this is something that has been in the code for a long-time. The Village Board agreed that this waiver did not make sense and should be eliminated from the code in the future. Ms. Maltas reported staff will work with the Village Attorney Coblentz to prepare an ordinance implementing the fee/fine schedule for presentation at an upcoming Board meeting. Adjournment Trustee Oppenheim made a motion to adjourn. The motion was seconded by Trustee Benton. The meeting adjourned at 9:05 p.m. Respectfully submitted, Andrew S. Lichterman Management Analyst