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Minutes - 09/27/2021 - Finance CommitteeFinance Committee September 27, 2021 7:00pm Call to Order The Finance Committee meeting of September 27, 2021 called to order by Trustee Michael Manzo at 7:01pm in the Upper Level Conference Room of the Butler Government Center. Roll Call PRESENT: Trustee Mike Manzo, Trustee Larry Herman, Trustee Asif Yusuf, Jim DePhillips, Al Koren, Jim Tomaselli and Don Adler ABSENT: Anne Huber and Moin Saiyed ALSO IN ATTENANCE: Finance Director Jason Paprocki Approval of Minutes August 20, 2021 Motion to approve the Meeting Minutes of August 20, 2021 made by Mike Manzo seconded by Larry Herman. All in favor no opposed. Minutes approved. Public Comments No public comments Discussions and Presentations Sale of Cellular Contracts – Jason Paprocki Jason Paprocki begins the conversation by providing a handout and saying that currently the Village has 5 cell towers. He explains that as the leases are up the Village is getting offers from some companies to pay a lump sum upfront in lieu of lease payments. He goes on to say that with the leases as is the Village will collect around one million dollars over the next five years, and the highest offer is a one-time payment of two million dollars. It doesn’t seem to benefit the Village of take the money up-front. The Village has received the below offers: Symphony Wireless (SW) -- Brian Katz 1200 Oak Brook Rd $1,980,000 50/50 – 50% New Customer to SW (Perpetual) $2,076,000 – 100% New Customer to SW (Perpetual) 2213 Tower Rd $722,000 – “50/50” 50% New Customer to SW (Perpetual) $806,000 – 100% New Customer to SW (Perpetual) 2011 Windsor Dr No offer since there are no current tenants. SW is willing to make an offer once there are tenants Landmark Dividend (LD) – David Westlake 1200 Oak Brook Rd and 2213 Tower Rd $1,475,000 -- 20 Year $2,4000,00 -- Full Buyout (Perpetual) MD7 (Representing T-Mobile) – Amanda Miller 1200 Oak Brook Rd – “Renegotiate” T-Mobile Lease T-Mobile is offering: MINUTES OF THE SEPTEMBER 27, 2021 MEETING OF THE FINANCE COMMITTEE OF THE VILLAGE OF OAK BROOK APPROVED AS WRITTEN ON NOVEMBER 2, 2021 Monthly Rent: Starting on October 12, 2021, the rent under the lease will be One Thousand Six Hundred Twenty-Five and No/100 Dollars ($1,625.00) Monthly ($2,500 Now). On March 12, 2024 a Twelve Percent (12%) Term - 5 years escalator will take effect. OR Lump Sum Payment Option: Provide a one-time lump sum payment of $342,000.00. In return, you will grant a ninety-nine (99) year easement on your property and assign the lease rights and rental income under your lease with T-Mobile to MD7 or an affiliate of MD7. Conversation ensues regarding the pros and cons of leasing versus sale of the cell towers. The consensus is that leasing is better for the Village. The discussion shifts to the Village soliciting new business for the towers or having a broker do it on their behalf, other ways to grow revenue, control of aesthetics and understanding the market. It is suggested that the Village asks DMMC for information from other municipalities in the area to see what they are receiving for their cell towers. Sales Tax Power Point – Larry Herman Trustee Herman begins his sales tax presentation. He starts by asking for input from the committee before he presents to the Board. He goes through the tax rates for surrounding communities, noting that Oak Brook’s tax rate is by far the smallest and that consumers benefit greatly from that. He goes on to say that Oak Brook needs to start marketing itself as the low tax rate destination. Trustee Herman explains that Oak Brook receives 1% tax that goes into the general fund and .5% that goes into the infrastructure fund. The dollar amount representing that 1% has only gone up .65% in the past 30 years, which is far below inflation. One factor is that more entertainment entities are moving into the mall where retail once was. And also retail moving to online and not brick and mortar. The Village is faced with a dilemma of sales tax revenue not growing at inflation levels and expenses, especially public safety pension expenses, are growing at a faster than inflation rate. There are some avenues that the Village can explore to close the gap, one would be increasing the .5% infrastructure tax to 1%, another could be adding a food and beverage tax or adding an amusement tax, or business district tax. Adding any type of tax would bring the Village more in line with neighboring towns, but then we would lose the distinction of being the low tax place to shop and dine. So, why are sales tax revenue, not where they should be? Continuing to go through his slides, Trustee Herman explains that Illinois has some of the most complex sales tax laws in the country and businesses become unsure of how to apply their sales to those laws. He goes on to explain the current tax structure for merchandise that is ordered at a store and goes on to the difference between sales and use tax. Larry Herman believes that if stores are in compliance with Illinois law and apply sales tax correctly, Oak Brook would be receiving more in sales tax, which would alleviate some of the financial struggles that the Village is currently seeing. He then goes through the metrics that allow Oak Brook to be paid sales tax for transactions made in Illinois. In conclusion Trustee Herman would like to see Oak Brook do everything it can to continue to maintain its substantial sales tax advantage and then market the low sales tax percentage and not implement a food and beverage or amusement tax. The only way for that to work is to make a level playing field and ensure that all the retailers are complying with sales tax laws. Trustee Herman is confident that there are retailers in Oak Brook who not paying the correct sales tax and he would like to see this rectified. He would like to see retailers voluntarily comply and believes that they need to be educated and made aware. Conversation ensues regarding retailers and sales tax. And the need to market the fact that Oak Brook is a low tax community. Not just a low cost place to shop but a low tax place to live. It is touched upon that the State of Illinois is not going to audit retailers because it does not affect the amount of sales tax that the state gets. Tim Geigis asks if there is a reason why a retailer wouldn’t comply with charging the correct sales tax and Trustee Herman answers that he believes that because the tax laws are so complex they are just unaware that they are not in compliance. Conversation continues regarding how to get the word out to the retails and why this hasn’t been a problem in the past. David Carlin asks whether the Village of Oak Brook has asked for a formal opinion from the Illinois Department of Revenue and whether it would be prudent to wait for that opinion or have some type of court guidance before addressing this any further and possibly causing strife between retailers and the Village. Trustee Herman answers that the IRS will not offer an opinion letter on a general principal to the Village, only to the retailer. And the Village does not want to have the retailers audited. David Carlin goes on to say that the Chamber would be willing to sit down with any retailer and explain that municipal services cost a lot and ask them to comply. The thought that a license may or may not have been withheld makes the business community nervous, they don’t want to play the leverage game. David Carlin reminds the committee that it’s the retail businesses that fund fire, police and public works departments that service the entire Village since residents do not pay a municipal tax. The consensus of the committee is to recommendation to the Board to proceed with trying to get the retailers to comply with the sales tax rules as presented by Trustee Herman. Pension History – Jason Paprocki Finance Director Paprocki hands out a document showing the rates of return on the pension funds going back many years and then a comparison to public funds. He then gives a summary of contributions and the unfunded liabilities. And the figures from the actuaries. Conversation continues regarding fund transfers, rates of returns, pension reform, legislation and other pension issues. Budget Process – Jason Paprocki Jason Paprocki runs through the Budget Process and the time line. Trustee Manzo would like to see the Budget presented to the committee before going to the Board. Conversation ensues regarding capital improvement and how they are presented in the Budget and 5 Year plan. It then shifts to the Sports Core Budget. Questions regarding the Water Sale come up and Michael Manzo answers that the sale has been rejected by the DuPage County Water Commission, he does not know what the next steps are. Trustee Herman would like to see the Village evolve into using Capital intake forms instead of using a plug in the 5 year plan. Business Registry Trustee Manzo asks the committee for a consensus on instituting a business registry. Trustee Herman shares his vision of having the business registry grow from an information gathering tool into a resource for the businesses so they can request Village services and have better connectivity between the business community and the Village. The desire is not for it to become a revenue stream but for it to be a communication tool. Trustee Herman’s belief is that the registration fee would be nominal, maybe $50 and that would cover administrative costs. Jason Paprocki shares that the licensing software is $50,000 up front with an annual fee and there are many additional modules that could be used for additional costs. Trustee Herman states that the Village is limited regarding the scope of a business registry because they are not home rule, he is looking for interest from the committee and the Board and the next step would be to have the Village Attorney research restrictions and then the development of the business registry would go from there. Chief Arie is asked for his opinion, he shares that without a business registry, from a public safety point of view, there is no way to know who is there or who is left, who is in the process is changing, if the locks have been changed, contact information for busted pipes or smoke in the building. It believes that it would be helpful for police and fire to have a registry and a way to better gauge daytime populations. Conversation ensues and the pros and cons are levied. David Carlin states that the Chamber is opposed to a business registry, since their Board is made up of business leaders this should be a view into what the business community is thinking. The commercial community is concerned about how noncompliance is going to be handled. Mr. Carlin then brings up the cost of the business registry system for the Village being $100,000 plus the cost of staff for database maintenance, especially for data that will be changing daily. He goes on to say that the information that is being requested through a business registry is readily available through, building permits, occupancy permits, fire inspections and other means, instead of spending a large sum of money to implement something new the Village should use the data they already have. David Carlin shares his concern for the potential for corruption and the Village using leverage against businesses. Trustee Manzo concludes the discussion saying that there’s a lot of work that needs to be done but the consensus of the Finance Committee to move forward with creating and implementing a Business Registry is the first step. The Finance Committee’s recommendation to the Board is to have a business registry in the Village of Oak Brook. Adjournment Motion to adjourn made by Mike Manzo seconded by Don Adler. All in favor no opposed. Meeting adjourned at 10:00pm. ATTEST: ________________________ _____________________ Connie Reid Date Executive Assistant Village of Oak Brook