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Minutes - 11/08/2004 - Committee of the WholeMINUTES OF THE NOVEMBER 8, 2004 SPECIAL COMMITTEE OF THE SPECIAL WHOLE MEETING OF THE PRESIDENT AND BOARD OF TRUSTEES OF THE VILLAGE OF OAK BROOK APPROVED AS WRITTEN BY VILLAGE BOARD ON NOVEMBER 23, 2004 1. CALL TO ORDER- The Special Committee of the Whole Meeting of the Village Board of Trustees was called to order by President Quinlan in the Samuel E Dean Board Room of the Butler Government Center at 7.30 p m President Quinlan indicated that Agenda Items 3 and 4 were mistakenly placed on the agenda and he asked the Board for concurrence to be struck. The Board concurred with agenda items 3 and 4 being stricken 2. ROLL CALL. Village Clerk Linda Gonnella called the roll with the following persons PRESENT President Kevin M. Quinlan, Trustees Stelios Aktipis, John W Craig, Susan Chase Korin, Asif Yusuf and Elaine Zannis ABSENT: Trustee George T Caleel IN ATTENDANCE- Richard B Boehm, Village Manager; Jeffrey Moline, Assistant Village Manager; John Carpino, Acting Chief of Police; Robert Cronholm, Fire Chief; Dale L Durfey, Jr., Village Engineer, Bruce F Kapff, Director of Information Services & Purchasing; Robert L. Kallien, Jr., Director of Community Development, Darrell J Langlois, Finance Director, Meg Klinkow, Library Director; Michael J. Meranda, Director of Public Works; Nelson Patras, Interim Bath & Tennis Club Manager and Trey Van Dyke, Golf Club Manager The Board had concurred with President Quinlan's recommendation earlier in the meeting to strike Agenda Item 3 Approval of Minutes and Agenda Item 4 Unfinished Business from the agenda as they had been mistakenly placed on the agenda 5 NEW BUSINESS: A. 2005 BUDGET PRIORITIES President Quinlan explained that the meeting is held for the Board of Trustees to discuss in detail the budgetary process and for the Board to give direction to the staff Manager Boehm read a prepared statement coordinated by Finance Director Langlois that addresses issues before the Board of Trustees The Village's financial situation has been in a state of decline for a number of years The loss of revenue from sales and SPECIAL COMMITTEE -OF -THE -WHOLE Minutes Page 1 of 10 November 8, 2004 5. telecommunications taxes, deferrals of numerous capital projects and purchases, required compliance with State mandates (Police and Fire Pensions) and other factors has resulted in a number of financial issues that need to be addressed. The Village presently has only received one distribution of the new non -home rules sales tax The number of demands on the budget is significant and although the financial picture is in fact brighter than in the past, it will take a period of time before all of the issues may be addressed The focus of the budget for 2005 includes • An expectation that the Village will receive approximately $2 4 million in 2005 from the new Non -Home Rule Sales Tax • Due to the restrictions on the use of the funds, the Infrastructure Fund is being completely reconstructed for 2005 • The Engineering Department and most Public Works Department expenditures will be shift to this fund, resulting in a normal operating budget for this fund being approximately $2 0 million • In addition to the non -home rule sates tax, transfers from the Water Fund, General Fund and the availability of MFT revenues brings the total average revenue for the Infrastructure Fund to $3 0 million This results in approximately $1.0 million annually available to fund roadway, drainage and safety pathway projects traditionally associated with this fund. This amount may not be sufficient in some of the outlying years in the Five Year Plan (2008 and 2009) and may result in having to spread out some of the expenditures the next time the Roadway Plan is prepared • The end of the year cash balance in the Infrastructure Fund is currently estimated at $2 1 million Staff will likely recommend transferring $1 0 million of this balance (which is unrestricted utility tax) to the General Fund in 2005 in order to build reserves It is possible that the cash balance in the Infrastructure Fund could be reduced to $200,000 at the end of 2005 due to construction of several bike trail projects and from there the Village would begin to build it back up to a six month level. • Proposed General Fund Budget for 2005 1. No new staff positions. 2. Department budgets have increased beyond normal inflationary amounts due to some of the one time reductions instituted for 2004 (such as training reductions, budgeting for deferred hiring of some existing positions in the Police and Fire Departments, etc ) 3. $150,000 has been included in each year of the Five Year Plan for forestry and beautification 4. The total capital budget in the General Fund for 2005 and 2006 combined may exceed $1 5 million (the actual list is still being finalized) • The December 31, 2004 cash balance in the General Fund is projected at $6 6 million as compared to the reserve requirement of $8.3 million which is 4.75 months of operating expenses compared to the six month policy SPECIAL COMMITTEE -OF- THE -WHOLE Minutes Page 2 of 10 November 8, 2004 5. • Restoration of the six month reserve is among the highest priorities for most Board members based on the recent Village Board budget survey For 2005 and 2006 it is expected that the reserve requirement will stay relatively flat at approximately $8 3 to $8 4 millions (this is due to moving several Public Works and Engineering expenses to the Infrastructure Fund). • Staff is striving to get cash reserves back to the six month level by the end of 2006. In order to do this, the Westchester Park property must be sold (most Board members indicate that it still should be sold). Consistent with the survey results, staff will not count on this for 2005 but will include $900,000 in the Five Year Plan for 2006 If the land is not sold in this time frame it will delay the length of time in reaching the six month reserve target • Most of the survey responses from the Village Board indicated that restoration of Equipment Replacement chargeback ranked somewhere near the middle This position conflicts somewhat with the Board's philosophy on reserves in general in that if equipment replacement charges are not budgeted for and funded the Village would in fact be spending reserve and not building them. This program actually adds to the Village's reserves, it does not subtract from them Since this program has not been funded for the past two years, restoration of some form of funding is required or this fund will likely be exhausted by 2009. The General Fund and Infrastructure Fund requirement for equipment replacement in 2005 is approximately $550,000. • Other unexpected issues having a material impact on the 2005 Budget include declines in telecommunication tax revenues, reductions in court fine revenues, increased legal expenses, loss of funding for Independence Day and increased liability insurance premiums. These negative variances are expected to exceed $600,000 annually since the last budget was prepared • After building reserve, providing for normal operating expenses, catching up on some capital items and re- institution of the equipment replacement charges, it is unlikely that any other initiatives covered in the survey may be addressed until 2007 or later (including reserving funds for the DuPage Housing Authority lawsuit) without re- prioritization of financial priorities (such as the rate of return to the six month reserve target, service or staffing levels, etc ) Trustee Aktipis commented there is a certain amount of discrepancy with the three top issues that the Board has identified to be incorporated into the new budget. In reviewing all of the ratings of the survey prepared by the Board of Trustees and Village President the first priority is the restoration of the General Fund, second priority is to approve the subsidization for the cost of base service residential garbage collection and the third priority is to reduce other taxes currently assessed by the Village such as utility or telecommunications taxes. He noted that some of the items that are incorporated into the budget by the staff are further down the line in priority by the Board and he asked how both views could be harmonized Manager Boehm explained that as staff prepared the budget report they did not reflect SPECIAL COMMITTEE -OF -THE -WHOLE Minutes Page 3 of 10 November 8, 2004 0 5. some of the Board's priorities. He reflected that this discussion should have occurred before the Board completed the budget issue survey. Staff would meet the Board of Trustees priorities as suggested which will affect the Village's revenues and greatly cut expenditures If this occurs, staff will have to review staffing and service levels Trustee Aktipis noted there may be difficult decisions to be made ahead and the Board will have to meet to discuss this further for the Village employees, to control the budget and fulfill the goals. Trustee Yusuf stated the Village employees are the key to the level of service the Village provides its residents The Village cannot afford to let that deteriorate and the Board should not sacrifice the Village's basic services in order to fund some of the proposed reductions Trustee Korin asked how much funds have been spent in the Beautification Fund Manager Boehm explained that some funds have been spent for pruning trees and some planting at the Library Public Works Director Meranda indicated that there have been some sporadic replacement trees throughout the Village He stated the idea is to re- emphasize the whole beautification plan and have a landscape architect determine how to proceed. It is projected to fund the plan for five years to implement the whole sequence of design. It would include gateway signage also. Manager Boehm explained there are potential donors for the gateway signage including Rotary and a potential developer Trustee Zannis suggested in the Equipment Replacement Fund there is an option to partially fund this plan President Quinlan cautioned that in the years previous to this administration that this was the method in handling the budget and the Board made a choice that training would be defer and the replacement programs would be deferred to get the budget in line He voiced his concern that if items are deferred that there will be a depletion in services and there could be a deficiency in our staff without proper training Trustee Zannis agreed with President Quinlan's statement that equipment cannot necessarily be deferred to maintain or restore services President Quinlan stated he is reluctant to offer free garbage service until the Board is sure that public services are provided properly to the residents Trustee Zannis noted that the subsidized garbage was ranked second by the Board but she believes that it should be taken off of the table in order to address other issues Finance Director Langlois explained that Trustee Caleel had indicated that the reserves in the General Fund were his top priority and that the garbage subsidization and tax reduction would be near the bottom in priority SPECIAL COMMITTEE -OF- THE -WHOLE Minutes Page 4 of 10 November 8, 2004 21 5 Trustee Craig asked to defer the garbage subsidization until staff presents a better picture of the budget President Quinlan asked the Board to again prioritize the budget issues #1. Restoration of the General Fund operating reserve to the six month level Trustees Aktipis and Zannis agreed that the Village should maintain the accounting practices for the General Fund as they have in the past with a six month reserve. Trustee Craig concurred but also requested to defer capital items or new programs. Trustees Korin and Yusuf also agreed to the six month cash reserve in the General Fund President Quinlan stated that $17 million needs to be made up in the General Fund. He explained that the direction of the Board to the staff is to prepare the budget and all line items fall subsequent to meet the restoration of the General Fund operating reserve to the six month level Finance Director Langlois asked if this could be accomplished by deferring capital expenditures in 2006 to the second half of the year Trustee Zannis asked if this would include projected income from Westchester Park Director Langlois stated it would include Westchester Park in 2006 with two years to sell the property Manager Boehm remarked that marketing efforts will begin again to sell this property. Manager Boehm noted that there was an assumption that the Village staff returned all of its training dollars to its past levels The budget does not reflect returning to training dollars that were in place several years. An assumption was made that some training dollars were returned to departments but not to the previous levels #2 Catch up on capital items deferred the last several years. #3. Reduce other taxes currently assessed by the Village such as utility or telecommunications taxes Finance Director Langlois indicated that the following budget issues all ranked in the 5's in priority. restore departmental operating budgets to levels required to maintain existing Village Services; reinstatement of equipment replacement charges; approve the Village subsidization for the cost of base service residential garbage collection and fund tree planting and Village beautification efforts Director Langlois then noted that the following were prioritized by the Board of Trustees as the lowest in priority reinstate the Village Board Contingency Line Item; add one additional building maintenance employee in order to properly maintain properties including significantly larger buildings and adding personnel in the Public Safety Departments SPECIAL COMMITTEE -OF- THE -WHOLE Minutes Page 5 of 10 November 8, 2004 5 President Quinlan noted that Trustees Atkipis, Craig, Korin and Zannis ranked the reduction of utility taxes as their second highest priority that could be done within the Village's budget Trustee Zannis stated she was never in favor of the utility tax and that it should not have been passed then Her priority is to try and have it reduced to the 4% level She does not believe that the Village should tap all of their resources as much as possible but return it to residents when feasible. She believes that if the monies are available that they will be spent and if not, the funds will not be spent President Quinlan asked why she would rank this so much higher than restoring departmental operating budgets to levels required to maintain existing Village services. Trustee Zannis stated she believed the department budgets, when she first joined the Board of Trustees, were comfortable and now they are not as comfortable. She does not believe they should be returned to that original comfortable level just yet The Village citizens should be taxed less and keep the budget tightened Trustee Aktipis stated this is a classic conflict of taxing residents and providing services. His general attitude is to tax as little as possible He was in favor of increasing the sales tax in that area so that the Village would not have to tax in other areas. He believes that the tax could be kept under control at 4% and to make ends meet with that particular approach. Trustee Korin commented on the utility tax benefits the corporate residents as well but had a concern for this winter with the highest natural gas prices seen in history She asked if the increase to the utility tax has to be a whole percent or could it be reduced by a half of one percent. President Quinlan reminded the Board that the only tax the corporate residents pay in Oak Brook is the utility tax as they have no property tax. He suggested that this is a minimalist cost to the Village's corporations and a way for them to contribute to the maintenance of a Village in which they benefit Trustee Aktipis remarked that some residents should be and he believes are clearly concerned that this is a tax that is clipping upwards in a significant way because of the increase in the cost of gas The tax is imposed on the actual cost of gas rather than the actual consumption of gas He suggested that the Village be fairer in the way it applies the tax based through a formula that takes into account consumption rather than the continuing cost of gas Trustee Yusuf asked if the Village could tax the gas per therm or electricity per kilowatt hour. Finance Director Langlois explained that electricity is presently taxed in that method by consumption and the gas is not Director Langlois indicated that he is not sure that this could be done for gas as there is a provision in the State Statute that states gross receipts taxed. The switch of electric from gross receipts based to consumption happened at the time of deregulation of electricity as it was instituted solely to address deregulation He is not sure that the Statute provides for this but he will research this SPECIAL COMMITTEE -OF- THE -WHOLE Minutes Page 6 of 10 November 8, 2004 PAN 5 further. Director Langlois explained that there is use tax provision related to gas instead of this but the municipality must be a home -rule community Director Langlois also indicated that half percentages could be instituted. President Quinlan had Director Langlois calculate the amount of tax, if reduced by one percent that it would save on average $13 00 per household annually. Trustee Zannis stated the message being sent to residents is huge if the tax is reduced The Board then discussed the second priority item of catch up on capital items deferred the last several years Finance Director Langlois commented that if the Board proceeds in their prioritized budget issues, there would be no funding for this President Quinlan requested Director Langlois to estimate the revenue figures for a one percent decrease in the utility tax for gas or one -half of one percent as requested by Trustee Korin Director Langlois explained that both of these issues would take precedent over the pre - funding of equipment and that schedule would have to be revised Manager Boehm clarified that there is a reserve in the Equipment Replacement Fund but that it will expire in 2009 President Quinlan noted that the fourth priority, which is for the fund tree planting and Village beautification efforts, would place the restoration of operating budgets to the fifth priority by the Village Board Trustee Korin inquired as to how much equipment is being placed in the Equipment Replacement Fund and what is shifting from the Equipment Replacement Fund to the Infrastructure Fund Finance Director Langlois stated that essentially nothing is shifted as the Equipment Replacement Fund is basically a savings mechanism. No funds have been saved for two years for equipment purchases This initiative basically starts saving for equipment replacement again. The sum of all amortized replacement costs of the future and factoring of interest to pre -fund the cost of equipment Trustee Korin recommended increasing the fund incrementally such as $250,000 this year, $400,000 next year and the following year $600,000 Trustee Korin noted the $300,000 decrease of the telecommunication tax revenue and the reduction of court fine fees in relation to the DUI's. Director Langlois explained that this was in the budget last year as one of the ways to produce a balanced budget at the end of the budget process Trustee Korin asked if the Board ever discussed this in the budget process Manager Boehm explained that it was presented by Director Langlois as one of the revenue projections when staff reduced expenditures Trustee Zannis suggested that the document did not state that this revenue projection is based upon approval of DUI's prosecuted in -house Trustee Korin remarked that the Board discussed overweight truck fees but the DUI's were not discussed until March Director Langlois indicated that the fines should be approximately $55,000 but they are not tracked separately Trustee Korin addressed increased legal expenses and how to determine the legal budget for next year Director Langlois explained that the way the budget is constructed at the SPECIAL COMMITTEE -OF- THE -WHOLE Minutes Page 7 of 10 November 8, 2004 present time is basically four accounts are created in the Legal Department. The accounts are outside legal services, Village Attorney, Village Prosecutor and legal contingency There are four line items in the Legal Department budget to separate those costs Trustee Korin stated there still is the overage expenditures of the legal fees President Quinlan asked if the Ad Hoc Committee has a report to date. Trustee Aktipis could not indicate when there will be results from that Committee. The two resident members of that Committee are analyzing the data given to them from the Village and then they will participate in a meeting Trustee Aktipis will report back at the next Village Board meeting if the Committee is ready to give a report Trustee Korin then addressed the loss of funding for the Independence Day celebration She asked if other entities had been contacted in this regard President Quinlan indicated that other entities have been contacted but did not know if anything had resulted. Trustee Korin noted that last year when the Board discussed the Independence Day operation, the Board had made a motion to come to some sort of a determination for the 2005 celebration in January, 2005. She asked Interim Bath & Tennis Club Manager Patras if changes were being considered to reduce the cost of the event and still have a nice fireworks display. President Quinlan asked how much monies were made in the concessions in 2004. Manager Patras indicated that no revenue was made from this event. Trustee Zannis suggested that in 2003 $900 was made in revenue. Manager Patras offered that staff is reviewing different options for parking and receiving quotes from other companies that provide parking services for the January meeting Director Langlois clarified that the budget as drafted is being reduced from $85,000 to $75,000 for the Independence Day celebration. Trustee Yusuf asked if funds were included in the 2005 budget for the Autumn Fest. Director Langlois indicated that $5,000 has been allocated in the budget. Trustee Yusuf noted that there was a $2,200 profit from this year's Autumn Fest and he commended Trustee Craig for this as never before has the Autumn Fest been profitable Trustee Craig stated the entire Committee was involved in the event. Trustee Craig also noted that the Sports Core may not have a cash deficit this year while including the debt service, which is only the second time in eleven years that this has occurred. Trustee Zannis asked if the Sports Core fees at the golf club would be increased a $1.00 per round Director Langlois suggested that this is a normal process President Quinlan explained that Golf Club Manager VanDyke has developed more golf outings this year which has increased revenues and with better weather next year, there could be a tremendous increase in revenues. Manager VanDyke clarified that the golf fees have been increased every year for the last fourteen years. Staff accesses the market to determine the golf club's market position and to determine what fees could or could not be raised He noted that many golf courses are discounting now and staff needs to be sensitive to that issue in the 2005 budget. SPECIAL COMMITTEE -OF- THE -WHOLE Minutes Page 8 of 10 November 8Y2004 I. 5 President Quinlan asked what other high level strategic direction is needed from the Board of Trustees for the 2005 budget. Finance Director Langlois suggested that the Board would like some scenario for relief in the utility tax that may be offset by a deferral of the equipment replacement charge President Quinlan asked that both scenarios be presented such as without a reduced utility tax and a reduced utility tax The number one priority of the Board of Trustees is the restoration of the General Fund operating reserve to the six month level to occur over an eighteen month time frame The second highest priority of the Board of Trustees is catch up on the capital items Manager Boehm noted that at least one Trustee suggested deferring some capital items such as screening HVAC at the Library. The Public Works building roof project and HVAC screening would be deferred until the roof was replaced Trustee Aktipis stated that a new roof on a building should have higher priority than screening anything He indicated that if that roof requires immediate attention it should be the first priority Manager Boehm indicated that the Public Works building roof has been deferred for several years Public Works Director Meranda explained that the screening would occur at the same time with the new roof and so both would need to be deferred if that is the wish of the Board. In regards to the Library, there is a cat walk that has to be prepared with the screening of the HVAC Trustee Zannis and Trustee Korin concurred that the Public Works building should have priority Trustee Yusuf asked if the screening is really needed at this time on this building. Community Development Director Kallien suggested that the repairs should be done as the Village's maintenance of their buildings is some of the worst in Oak Brook Manager Boehm indicated that the garage doors need to be repaired first Public Works Director Meranda recommended moving the screening of the Library HVAC and Village Hall to 2005 and fixing the Public Works building roof and HVAC screening in 2006 Director Langlois noted that the sales tax revenue may be adjusted once the data is received Community Development Director Kallien noted that there are some substantial projects in the next year that may affect the revenues generated as they are all redevelopments in Oak Brook. He also suggested that revenues could be increased with a business license fee and inspection and fire inspections related to new construction requires a fee. Fire Chief Cronholm noted that the fire inspection fees were increased three years ago. Trustee Korin asked instead of through the businesses, that the Board discussed SPECIAL COMMITTEE -OF- THE -WHOLE Minutes Page 9 of 10 November 8, 2004 42� 5 contacting the landlord for the billing process of fire inspections which is easier to implement twice a year Fire Chief Cronholm indicated staff will study this further to determine if this process is feasible Trustee Korin suggested considering that new businesses in Oak Brook make a donation to the Beautification Fund. President Quinlan recommended instead that a business license fee may be more acceptable with a cost for fire inspections. The consideration of a business license fee will be brought to the Board of Trustees for further discussion Trustee Aktipis recommended to not implement a fee for new businesses and to consider waiving the fire inspection fee their first year in Oak Brook. B. EMPLOYEE SERVICE RECOGNITION EVENT President Quinlan indicated that the annual Employee Recognition Dinner was abolished in the 2004 budget due to budget constraints The General Fund was charged $22,000 while the actual cost of the event was approximately $16,000 He stated that he is an advocate to recognize Village employees but to balance the budget also It was recommended to combine the annual holiday party and to recognize the tenured employees for their years of service to the Village of Oak Brook It was explained that the Village will pay for the cost of the food only The Board of Trustees concurred that the combined event be held as a dinner and placed on the Village Board November 9, 2004 agenda for approval 6 ADJOURNMENT Motion by Trustee Craig, seconded by Trustee Yusuf, to adjourn the Special Committee -of- the -Whole Meeting at 9 34 p.m VOICE VOTE Motion carried ATTEST Linda K Gonnella, CMC Village Clerk SPECIAL COMMITTEE -OF -THE -WHOLE Minutes Page 10 of 10 November 8, 2004