Minutes - 03/25/2002 - Committee of the Whole1
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MINUTES OF THE MARCH 25, 2002 COMMITTEE OF THE
WHOLE MEETING OF THE PRESIDENT AND BOARD OF
TRUSTEES OF THE VILLAGE OF OAK BROOK APPROVED
AS AMENDED BY VILLAGE BOARD ON APRIL 9, 2002.
CALL TO ORDER:
The Committee of the Whole Meeting of the Village Board of Trustees was called to
order by President Bushy in the Samuel E. Dean Board Room of the Village Commons
at 7:34 p.m.
The Deputy Village Clerk Carol Harty called the roll with the following persons
PRESENT: President Karen M. Bushy, Trustees George T. Caleel, John W. Craig,
Susan Korin, Elaine Miologos and Alfred P. Savino.
ABSENT: None.
IN ATTENDANCE: Stephen B. Veitch, Village Manager; Michael A. Crotty,
Assistant Village Manager; Debra J. Jarvis, Fire Chief, Darrell J.
Langlois, Finance Director; Ruth A. Martin, Library Director; Michael J.
Meranda, Public Works Director; Bonnie Sartore, Bath & Tennis Club
Manager and Alice Filinovich, Accounting Manager.
Report — Interim Financial Review
Village Manager Veitch reviewed the interim financial report with the board Members.
In 2001 the Village experienced a large decline in sales tax revenue due to the loss of
revenue from a specific taxpayer, a generally slowing economy, the 9/11 event and
internet commerce. This situation posed significant problems not only with maintaining
existing service levels but also addressing various staffing needs in the public safety
departments and other objectives of the Village.
In order to address these issues, the Village increased the telecommunications tax and
utility taxes on electric and natural gas from 3% to 5 %. The Board also revised its
policy with respect to the utility tax whereby 1% of the 5% tax is allocated to the
General Corporate Fund and 1% of the 5% tax is allocated to the Equipment
Replacement Fund. These changes will help provide the resources necessary to enable
the Village to add three police officers and three contract paramedics during 2002. At
the Village Board's request, the hiring of these additional positions has been deferred
until July 1, 2002 in order to allow for assessment of the financial status of the Village's
major operating funds.
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General Corporate Fund
Revenues
Sales tax, the Village's largest revenue source, was under budget by $39,623 at the end
of February. This revenue source bounced back in March, and as of today exceeds
budget by $22,069 or almost 1 %.
State shared revenues (income tax, use tax, replacement tax, and photo processing tax)
are under budget by $18,939. This variance is likely due to the recession (income and
replacement taxes are primarily effected) and to the decrease in the Village's population
as a result of the 2000 census.
After experiencing the lowest revenues in several years, permit revenue is $73,715 over
budget and $68,396 over the same period in 2001. This is due to increased permit
activity but also the comprehensive fee adjustments recently enacted by the Village
Board. Elevator inspections are over budget by $8,775 due to increasing the semi-
annual inspection fees from $50 to $75. This account will likely end the year
approximately $17,000 over budget.
Interest revenue is currently $9,787 under budget and will likely struggle to meet the
budget amount of $425,000. This is due to the current low interest rate environment as
a result of action taken by the Federal Reserve Board.
Expenditures
In Program 425- Library Building Project, the expenditure amounts are budgeted "net"
of the budgeted amount to be received from the Library Foundation. As of today, their
share of the project is approximately $1,100,000, and the Village has received donations
totaling $400,000, leaving a gap of approximately $700,000. This potentially could
have an impact on the Village's financial reserves depending on the length of time that
the General Corporate Fund will be required to finance this obligation.
In summary, the General Corporate Fund as a whole is tracking very close to budget
through the first two months of the year.
Hotel Motel Tax Fund
In Program 171- Hotel/Motel Tax, expenditures are $100,842 over the year -to -date
budget amount due to approximately $141,000 of 2001 invoices not being paid until
February, 2002. This variance is only a timing issue.
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Infrastructure Fund
Revenues
Taking the year to date amount of $94,968 and adding to it $86,959 for the
Infrastructure Fund's share of Com Ed's March 4 payment, the total of $181,927 results
in a negative budget variance $68,073. Approximately $42,000 of this variance is due
to the NICOR situation, approximately $12,000 is due to reduced Com Ed receipts, and
the remainder is the result of allocating revenue for budget purposes to the first two
months of the year. For Com Ed there are 10 months remaining to recover this variance
and any positive variances can be used to offset the $110,000 shortfall projected for
NICOR. As to other potential offsets, it should be noted, that many positive variances
often arise in this Fund due to such items as favorable bids or delayed payouts on capital
proj ects.
Expenditures
The spraying of Gypsy moths scheduled this spring is currently estimated to cost the
Village $13,000. Although this expense was not specifically budgeted in Program 365 -
Forestry, there will likely be offsets available in this or other Infrastructure Fund
programs to cover this expense.
Sports Core Fund
For the Fund as a whole, there are no significant variances through February.
Self- Insurance Fund
Health and dental claims are approximately $49,000 under budget through February.
Although one or two large claims can have a significant impact on these numbers, the
leveling off of claims after several years of double -digit increases is encouraging.
In conclusion, there are hundreds of small variances scattered across many budget
programs that have not been addressed here. However, at least through the first two
months of 2002, all of the Funds appear relatively on target for most of their budget
goals.
Manager Veitch summarized that at this point it appeared that staff was on target, but he
did not believe that any adjustments should be made one way or the other until further
financial information was available.
On a positive note President Bushy reported that there were two new retailers moving
into town, one of which sold high- ticket items.
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Trustee Savino felt that the figures were positive and that all indications were that the
economy was picking up. He felt that the good news should lead us to begin looking
toward fulfilling the public safety personnel needs due to the long procedure of hiring
and training. Assistant Manager Crotty explained the hiring process and reported that
the Village currently has filled the vacant positions in the Police Department. Manager
Veitch responded that the new positions were only budgeted for six months.
Trustee Savino also felt that the restraints on the purchase of materials for the Library
should be lifted. Trustee Craig also spoke in favor of material acquisition.
Trustee Caleel disagreed and felt that it was more prudent to wait until staff had more
figures.
Discussion ensued relative to the contributions from the Library Foundation and how
this affected the Village budget.
Trustee Miologos asked what the increase of the utility taxes would net the Village.
Finance Director Langlois responded that 40% of the total $5,000,000.00 estimated
utility tax revenue is additional money. Discussion revolved around the commitment to
reverse the added utility tax if the retail tax revenue rebounded.
Discussion revolved around the Gypsy Moth infestation and the pessimistic viewpoint
of the State. Manager Veitch responded that there were a number of factors that could
contribute to the annihilation of the Gypsy Moth.
Trustee Miologos asked for additional booking information on the Bath and Tennis
Club reports. Trustee Caleel asked why financial information was not included for all
of the bookings. Bath and Tennis Club Manager Sartore responded that at the time of a
booking the financial arrangements are not made for several reasons. She indicated that
the menus are distributed at the time of the booking, but prices are not discussed
because they would not be guaranteed beyond a certain point.
3. Discussion — Ambulance Transport Fees
The Village Board their meeting on February 26, 2002 reviewed several pieces of
information regarding ambulance fees, the cost of providing ambulance services, and
the Village's cost recovery efforts for providing this service. At the request of the
Board the following options are presented.
Option 1 has the resident rate remain unchanged at $375 and increases the non - resident
rate to $500. This would be the first time that the Village would charge differing
resident /non- resident rates (a practice that is employed in 11 of the 17 jurisdictions
surveyed).
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While the $500 fee would be slightly over the average and median rates, within a year
or two it is quite possible that others charging below this amount would increase their
fee, and there are already six other jurisdictions at or above the $500 level. It should be
noted, however, that a $500 fee would be the third highest among the survey group for a
BLS call.
Option 2 increases the non - resident rate to $500 and decreases the resident rate to $300.
This would put the resident rate right at the median, which has been selected for
comparability due to the number of towns not charging any fee depressing the average
rate (and excluding the towns with no fee from the average rate calculation decreases
the population by almost 30 %). Although this option places Oak Brook at the median
rate, it should be noted that most if not all of the jurisdictions surveyed collect real
estate taxes for the services they provide, and many assess utility taxes as well.
Option 1 would generate an estimated $41,100 in additional collections from ambulance
billing. If option 2 were selected, the estimated amount of new revenue would decrease
to $32,900.
These options were put together prior to information received regarding Medicare
billing changes and will potentially impact these recommendations.
In response to the Balanced Budget Act of 1997, on January 25, 1999 Medicare issued
final rules (with a comment period) that would implement revised billing procedures for
ambulance services. These new rules were originally scheduled to be implemented on
January 1, 2001. As is the case with numerous issues at the federal level, the
implementation of the new rules was deferred and changed several times.
Accordingly, staff has monitored this issue from a distance, knowing in the future there
would be some adjustment likely in the way the Village bill's Medicare for ambulance
service. On Friday March 22, 2002 the Village received notice that the rules have been
finalized and would be effective on April 1, 2002. This is obviously short notice.
Staff's understanding of the new rules regarding Medicare billing is as follows:
A bundled rate charge for service and a charge for mileage are the only charges that
would be considered by Medicare. Billing for supplies, drugs used, etc. (this
methodology is not currently utilized by Oak Brook but is in practice in many other
jurisdictions) will no longer be considered. Medicare will determine both the charge
for service and the mileage rate irrespective of any local considerations, unless by
chance our current bundled fee is lower than the Medicare rate.
• In order to receive the maximum reimbursement from Medicare staff will have to
differentiate between three levels of service: basic life support (BLS), advanced life
support level 1 (ALS 1), and advanced life support level 2 (ALS2).
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• Effective April 1, 2002 the Village will be mandated to accept assignment of
benefits for these services. This means the Village is required to accept only what
Medicare pays and may not bill the patient except for their deductible or co- payment
amount (currently the patient is billed for the balance of what Medicare does not
pay)-
• There is a five -year phase in of the new rules in that the reimbursement is calculated
on both the new method and the old method. There is a 20% weighting on the new
method in the first year, increasing by 20% each year until 100% is reached in year
56.
Based on an initial review of the new rules, staff would estimate that the Village would
receive approximately $201 for a BLS transport, $236 for an ALS1 transport and $514
for an ALS2 transport once the new rules are fully implemented. In order to qualify to
receive the $514 reimbursement the existing rates would need to be increased above
$470 and the Village would have to bill for mileage. At this point staff has not analyzed
the mix of calls in order to estimate the financial impact, but it appears this will reduce
the revenues received since the Village will be required to accept assignment.
Staff would still like to receive the Board's reaction to the fee recommendations
presented. However, before going forward with the actual changes, a comprehensive
review of the new Medicare rules must be done because they may further impact the
recommendations.
Trustee Caleel commented that he felt that the discussion was moot at this point and that
discussion should wait until more is known about the Medicare changes. The consensus
was that differentiation between resident and non - resident was the only decision that
could be made. Additional discussion resulted in the consensus that the rate structure
should be designed to give the highest probability of maximizing Medicare recovery.
4. Discussion — Water Meter Reading System
Nicor Gas has given notice of its intent to cease providing meter reading services as of
September 1, 2002. This date could be negotiable provided that the Village is making
substantial progress on instituting a new system.
The data collected for water billing purposes is shared with the Hinsdale and Downers
Grove Sanitary Districts for purposes of their billing. It is logical that as the Village's
procedures and costs change so should the terms under which the resulting data are
shared with these other users. Staff has a meeting set to begin to explore this subject
with the Hinsdale Sanitary District, the principal user of our data.
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Four options for addressing the water reading problems are:
OPTION A — Outsourcing
In this scenario, the Village would attempt to locate and contract with a vendor who
would provide the labor and supervision necessary for obtaining meter readings.
Obviously, cost is the major reason why outsourcing the service can be attractive.
However, as of this writing, staff has been able to locate only one vendor (they presently
read Naperville's meters) that has shown any interest. As a result of two meetings held
with representatives of the company, staff did not have confidence that they could
perform the service without considerable attention and Village staff supervision. In
addition, the lack of control the Village would have over the individuals actually
performing the service (and walking through yards) is a concern. This, coupled with the
other considerable disadvantages listed, leads staff to ranks as the third best option,
provided that the Village locates a qualified vendor.
OPTION B — Hire part -time employees
In this option, the Village would seek to employ regular part-time employees for the
sole purpose of collecting meter readings as was done prior to 1990. In order to continue
with our existing practice of reading residential meters on a bimonthly basis and
commercial meters on a monthly basis, staff estimates that it would take approximately
1.0 Full Time Employee to collect the necessary 34,800 readings annually.
As briefly mentioned, this option failed miserably the last time it was utilized.
Obtaining, and of more importance, retaining dependable, competent part-time help is
near impossible. Experiencing high employee turnover in this area would have a
significant negative impact on both the Water division and the Finance department.
Water division personnel would have to scramble to collect readings and /or train new
hires taking them away from routine maintenance and emergency repair work. This
would be an ongoing major problem and therefore rank it fourth, as the least desirable
of the options presented.
OPTION C — Hire 1 full -time and 1 part -time employee
In this option, staff would seek to employ one full -time employee and one regular part-
time employee for reading meters. The Village would hope that staffing meter reading
with a full -time employee would mitigate the disruption associated with turnover. A
part-time employee would also be required to cover absences, assist with meter reading,
and to provide backup should there be turnover in the full -time position, as there is
currently no Water division employees available to backup this position.
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Although more costly than part-time employees, this option would be more desirable in
that the Village's experience indicates that there would be less turnover with a full -time
employee. In addition, this option may provide for some additional hours that could be
utilized for other water division tasks and snowplowing backup as well. Therefore, staff
ranks this option second.
OPTION D — Automatic Meter Reading (Radio) Systems
An automatic meter reading system eliminates the need for physically visiting each
residence and manually transcribing meter readings. This is accomplished by a
transmitter connected to the water meter that emits a radio signal containing the meter
data to a receiver. There are two types of automated radio systems utilized today for
collecting readings. One is a mobile system wherein the readings are collected by a
portable computer typically installed in a vehicle. In this scenario, a Village employee
drives around the water service area (within a fixed radius) collecting the readings. The
second type is a fixed radio system wherein permanent antennae are strategically
located throughout the water system, negating the need for an employee to drive around
the system.
The meter reading information is transmitted over cellular telephone lines to Village
Hall where the information is processed for water billing.
Automated meter reading is becoming the industry standard. Although the initial cost is
considerable, the gap narrows considerably when viewed over a ten -year period of time
compared to Options A and B. The convenience, accuracy, and reliability of technology
from a long -term perspective leads staff to recommend an automated system for reading
meters. Staff ranks an automated meter reading system first due to the long -term
benefits as noted.
FINANCING THE PROGRAM
The Village's current water rate structure assesses a $5.00 per month service charge
(designed to recover the cost of meter reading and billing) in addition to a consumption
charge of $2.60 per thousand gallons. Regardless of whichever option is selected an
eventual adjustment in the rate is required. Since the cost of meter reading has no
relationship to the amount of water consumed, staff recommends that recovery of the
additional costs associated with meter reading be accomplished by increasing the
monthly service charge.
The cost associated with an automated system are considerable and are "front loaded ".
There are sufficient funds in the Water fund to absorb the initial capital outlay of an
automated meter reading program. However, an outlay of this magnitude was not
contemplated during the last five -year planning process. As such, an increase of $2.00
per month in the monthly service charge to $7.00 per month would be recommended
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The Village receives annual payment from the Hinsdale and Downers Grove Sanitary
Districts for providing them with usage information for their billing purposes. Staff
would seek to renegotiate the fees charged for this service due to the substantially
higher costs to be incurred.
Public Works Director Meranda explained that 80 percent of the meters in the Village
would accommodate the automated systems, but 20 percent would need to be replaced.
Director Meranda demonstrated an automated system.
Discussion ensued relative to the funding to pay for the capital outlay.
Additional discussion revolved around going forward with an RFP for the automated
systems and the information gained from that process.
Manager Veitch added that the notice from Nicor stipulated that they would cease
reading meters as of September 1, 2002. He divulged that Nicor has indicated that,
provided the Village is making progress toward finding an alternative to their service,
that they would continue their service until the Village is able to convert to a new
system.
Trustee Caleel asked how long it would take to put a system into effect. Director
Meranda responded that it could be done within a three to six month time span.
Additional discussion ensued relative to the fees charged by the sanitary districts and
adjustments for summer water usage for pools and irrigation systems. Director Meranda
indicated that discussions were scheduled with the sanitary districts and this topic would
be pursued.
5. ADJOURNMENT:
Motion by Trustee Craig, seconded by Trustee Caleel, to adjourn the Committee-of-the -
Whole Meeting at 9:05 p.m. VOICE VOTE: Motion carried.
ATTEST:
inch onnella, CMC
Village Clerk
COW 032502
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