HomeMy WebLinkAbout2010-11-09 Special MinutesPursuant to proper notice in accordance with the Open Meetings Act, the special meeting was called
to order at 6:00 pm by Village President Daniel J. Staackmann who led the assemblage in the
pledge of allegiance. In attendance were:
Elected Officials: Mayor Daniel J. Staackmann, and Trustees Dan DiMaria, Larry
Gomberg, William Grear, Sheldon Marcus, John Thill, Maria Toth,
and Village Clerk Tony Kalogerakos
Absent None
Village Staff: Village Administrator Joseph F. Wade, Corporation Counsel Teresa
Hoffman Liston, Community and Economic Development Director
John D. Said, Deputy Police Chief Brian Fennelly, Public Works
Director Andy DeMonte, Deputy Public Works Director Jae Dahm,
Family and Senior Services Director Jackie Walker- O'Keefe,
Building Commissioner Ed Hildebrandt, Finance Director Ryan
Horne, Fire Prevention Director Bill. Porter
Also Present: Numerous members of the public and media
Mr. Wade noted this was the Village's third Budget Workshop for this year. Much of the
information presented at this meeting had already been presented to the Board but would be
reviewed at this time, especially the budget information regarding the Village's Water /Sewer Fund.
Mr. Horne then gave a PowerPoint presentation. He reiterated the 2011 budget objectives were a
balanced budget, longer term sustainability, and to meet internal and external expectations of the
Village. He noted property taxes paid by Village residents included much more than taxes received
by the Village. The percentage of the real estate tax bill which actually goes to the Village depends
on where the property is located. Tax bills differ depending on the elementary and high school
districts; only 12% to 15% of the total property tax bill is paid to the Village of Morton Grove,
Mr. Horne then reviewed the Village's tax levy. The levies for 2008 and 2009 which were collected
in 2009 and 2010 respectively had no increase. Village staff is proposing a 3.5% increase in the
proposed 2010 levy which will be paid in 2011. Mr. Horne then noted the bulk of the increased
property taxes would be used to pay for public safety pensions. The proposed levy did provide for a
$210,000 increase for debt service, which was attributed to General Obligation Bond series 2010A
and 2010B. Mr. Horne also noted the Village's debt service expenses had risen in 2010 from a
projected $1.5 million to $1.7 million, in part because of the issuance of the 2010 General
Obligation Bonds. The 2011 budget amount for debt service was projected at $19 million. Mr.
Horne reported every one percentage increase in the Village's tax levy would provide an additional
$96,492 of increased revenue to the Village. Mr. Horne then stated if the Village were to pass a
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3.5% tax levy, the 2011 Budget would project a very small ($13,000) surplus. This would be the
first balanced budget since 2007. Mr. Horne also noted fund balances would be maintained at
approximately 24 %. The impact on the increased tax levy would be approximately $10 per year for
$100,000 of fair market value of residential property. For example, a 3.5% levy increase for a
residential property with a value of $300,000, would equate to $30 per year. If the Village were to
pass a 4% levy, a home with a $300,000 market value would pay approximately $34 per year.
Mr. Horne then provided a brief introduction of the Village's water /sewer accounts. These are
proprietary funds classified as Enterprise Funds. Services are provided on a cost recovery basis.
No part of the Village's property taxes, sales taxes, or other sources of revenue are used for this
fund. The fund relies solely on revenue received by water customers. Mr. Horne noted the
Water /Sewer Fund revenues were estimated to increase by approximately $4.8 million in 2011
when compared to the estimated revenue for 2010. The largest source of this increase is the use of
the 2010 General Obligation Bond Proceeds. The remaining increase of $620,000 is due to the City
of Chicago automatic water increases. The expenses for the Water /Sewer Fund — Water
Department, were expected to increase by $564,448 to a total expense of $872,393 due in part to an
activity relating to the 2010 General Obligation Bonds. The Sewer Department Fund was expected
to decrease by $190,884 to a total expenditure of $702,311 due to personnel cost allocations and a
reduction in principal and interest costs since the IEPA loan and the Vactor truck loan were paid off
in 2010. The Administration Fund was expected to increase by $303,812 to a total of $990,250.
This increased cost was due in part to personnel cost reallocation, increased contractual services
regarding the new flood control program and increased payments to MERF. In summary, the
Water /Sewer Fund totals were expected to increase by $4,000,316 to a total expense of $10,502,784
with expenses exceeding revenues by $634,037. Bond proceeds are included as a source of funds
and offset the cost of the bond projects. The resulting deficit is therefore "operational in nature ".
On January 1, 2010, the Water /Sewer Unrestricted Fund balance was $2,988,850. By December 31,
2010, the unrestricted fund balance was expected to be $1,683,014. By December 31, 2011, the
unrestricted fund balance was expected to be $1,047,97 7. Mr. Horne noted this fund balance was
misleading because it includes hard assets which cannot be readily purchased or sold. Mr. Horne
stated a fund cash flow analysis is more informative. Mr. Horne noted the fiscal year 2004 cash
flow showed a net decrease in cash of $4,790. In 2005, the cash flow had a net increase in the
amount of $646,455. In 2006, the cash flow showed an increase of $437,623. In 2007, the fund had
a positive cash flow in the amount of $100,097. In 2008, the fund showed a decreased cash flow of
$300,721. In 2009, the fund showed a decreased cash flow of $394,910. It is estimated in 2010, the
fund will show a decrease in cash flow in the amount of $1,196,517. Cash and cash equivalents for
the years ending 2007, 2008 and 2009 were $1,354,624, $1,053,903 and $658,993, respectively.
The 2010 and 2011 ending balances for cash and cash equivalents are currently estimated to be
deficits of ($537,524) and ($914,561), respectively.
Assistant Public Works Director Joe Dahm then reviewed the proposed enterprise maintenance,
repair and replacement projects, and capital projects for 2011. Mr. Wade noted these projects
should be taken into consideration with substantially completed 2010 projects which included the
painting of the north water tower, replacement of the 100 year old water main along Dempster
Street at a cost of $1.8 million, and the major repair work to the Waukegan Road/Emerson water
main at a cost of approximately $500,000. Mr. Dahm noted in 2011 projects would include
replacement of water mains on New England and Carol Avenues, replacing aging fire hydrants,
replacing all water meters with fixed based antennas, replacing a 20" feeder main, and replacing
water main river crossings. The south water tower was also expected to be replaced.
Mr. Horne then reviewed the Municipal and Financial Service Group analysis of the Village's
Enterprise Fund. He noted the Village authorized the study pursuant to Resolution 07 -31. The
study was completed in March 2008 and its findings, based on projected water sales at the current
rate revenues, would be roughly 49% less than required cash revenues in fiscal year 2009 with
subsequent significant shortfalls annually thereafter. The study also found the Village has a
significant amount of water and sewer infrastructure that has exceeded its useful life. The Village's
senior citizen water discount cost the Village approximately $190,000 per year, and the Village
does not charge new customers a capital connection fee to buying into water and sewer systems.
The study recommended the Village increase its water and sewer costs over the next five years and
make significant investment in its water and sewer systems over the next ten to twenty years. This
study also recommended the Village eliminate the senior discount program and impose a capital
connection fee. The study also recommended the Village establish two reserve accounts, an
operating and maintenance account and a repair, renewal, and rehabilitation reserve account. The
operating and maintenance reserve account should include 90 days of operating and expenses, and
the repair, renewal, and rehabilitation account should be based on the useful life of the water /sewer
systems. The study recommended the Village invest $1 million annually in its water distribution
system and $500,000 annually in its sewer system. The study also recommended the Village move
forward with proposed increases to its water rates, and adopt a capacity fee for water and sewer
totaling $558 for a 5/8" meter connection. Based on this study, Village staff recommends a 3%
increase in water and sewer rates, an adoption of a meter replacement fee, the elimination of the
senior discount fee, and the adoption of a capacity fee for new services.
Mr. Horne then introduced the chairperson of the Village's Finance Advisory Commission Doug
Steinman, Mr. Steinman stated the Finance Advisory Commission had reviewed all aspects of the
Village's finances but it viewed the Water Fund as a glaring, immediate need. If operational funds
are not increased, there will be a need to sell bonds which in addition to requiring increased fees to
pay the bonds, the taxpayers would also have to pay debt service on the bonds. In answering a
question from Mayor Staackmann, Mr. Horne stated negative balances in the Water Fund would not
be favorable to future bond ratings. Mr. Steinman stated his committee recommended phasing out
the senior .rater discount over a five year period. He stated the committee felt eliminating the
discount entirely and immediately would be perceived as unfair. Trustee DiMaria stated currently
water discounts are granted to certain seniors who do not need it. He believes all discounts should
be need based. Mayor Staackmann stated Morton Grove is the only community in our area that
offers water discounts. Crystal Lake and Palatine offer discounts much lower than the Village. He
stated it was the Village's job to be fair to all residents and. the Village has a dire need for funds at
this point.
Public Works Director Andy DeMonte asked the Board to remember no part of Village's taxes goes
to the Water Fund. It is difficult to make cuts in this essential service and currently the senior water
rate discount creates a critical deficit. It is essential to the health and safety of the Village the water
system be maintained.
There being no further discussion, Trustee Thill moved to adjourn to Executive Session, to discuss
pending litigation, personnel issues, and potential sale of real estate. The motion was seconded by
Trustee Gomberg and approved unanimously pursuant to a voice vote at 7:13 pm.
At the conclusion of the Executive Session, Trustee DiMaria moved to adjourn the special meeting.
The motion was seconded by Trustee Marcus and approved unanimously pursuant to a voice vote at
7:43 pm.
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Minutes by: Tony S. Kalogerakos, Village Clerk
Special meeting minutes.11 -09 -10