Minutes of the Meeting of the Finance Committee of Council Held in the Caucus Room of the Municipal Building On Saturday, November 3, :30 A.M.

Transcription

1 Minutes of the Meeting of the Finance Committee of Council Held in the Caucus Room of the Municipal Building On Saturday, November 3, :30 A.M. Committee Members Present: Chairman, Ward 2 Councilman Dennis McBride Ward 1 Councilman Bob Butkowski; Councilwoman-at-Large Tammy Holtzmeier Others in Attendance: Finance Director Bill Logan; Mayor Bryan Jensen; Asst. Finance Director Beth Raicevich; Ward 4 Councilman Scott Radcliffe; Council President Craig Witherspoon 2019 Budget Mr. Logan stated that we will go through the budget briefly and stop and look at anything that the Committee wants to look at. He pointed out that there were hard copy packets on the table if anyone needs one. Mr. Logan said, as you know, we have gotten away from meeting with each Department Head as we used to do, but at any time if Finance Committee or Council wants to have a specific budget meeting with any Department we can certainly line that up. Mr. Logan said that he would first like to briefly run over the assumptions. The income tax is the City s highest revenue source and we are budgeting anticipated revenues at about 3.8% higher than The revenues for 2018, through October, are about $600,000. more than the budget and about $1.2 million dollars higher than 2017 actual revenue. Since about 2008 we are averaging about 7-1/2% up each year in income tax revenue. Mr. Logan stated that for the property tax, 2018 is a six-year full reappraisal of all property throughout the County so right now in our budget the 2019 budgeted revenue is about $5,286,919. However, the General Fund and Police Pension Fund property tax revenue will increase a little bit once those new appraised values are in place in January. General Fund will probably get an extra $200,000. according to what the County is projecting now with the appraised values. Mr. Logan said that Building Permits are budgeted at $750,000. for 2019 which is $100,000. higher than the 2018 budget year to date building permit revenue through October 22 nd is $954,000. Mr. McBride noted that the building permit revenue is budget-neutral; we cannot charge and make money on those. Mr. Logan said, no, we are covering our Building Department expenses. Mr. Radcliffe asked if building permits were still continuing to rise and Mr. Logan answered that, residentially this year, he thought it is going to be around 100 new homes. Commercially for next year, he did not know of anything at the moment but there are still plans along Chester Road. Mr. Logan stated that the Motel Tax revenue in the 2018 General Fund budget was about 3-1/2% higher than 2017 revenue. Total revenue budget is about $250,000. and we should reach that this year. We started collecting the extra 3% bed tax in December of 2017 so this year we have revenue in the General Fund and then revenue in Fund 285, which is Economic Development and Tourism. That is really not growing; we are not seeing a huge increase in our hotel tax revenue other than the extra 3% into the 1

2 285 Fund. He thought that generally, the hotels are steady. Mr. Butkowski asked if there have been discussions about where we want to go with that Economic Development role now that we have some funds and Mr. Logan said that we have budgeted some improvements to the Jameson House and have used some of that money for different promotional type expenses but nothing major. Mayor Jensen had stepped out of the meeting for a moment and when he returned, Mr. Butkowski told him that they had just been talking about the motel tax and the funding that we have available and where we stand moving forward in regard to economic development. Mayor Jensen said that is something we will need to get a Finance Committee meeting together and see where Council wants to go with that. Originally, we thought that there was a fund that the revenue had to go into but we found out it really does not, so since it does not have to be used in a certain way, he thought that Council needs to decide where that money should go. Mr. Logan stated that we have been putting all that extra 3% into a specific fund, the Economic Development and Tourism Fund, and we are going to pay back the General Fund for the advancement of money toward purchasing the Jameson House; it was about $100,000. Mr. McBride stated that he thought that once we pay the General Fund back and do some renovations to the Jameson House, that we do need a game plan moving forward. Mr. Logan said that TIF revenues are budgeted for 2019 at 13-1/2% over our actual 2018, which was $5,335, revenues were 30% higher than 2017 and that is primarily due to new commercial development. Next year we are looking at both some new development coming on and again, the reappraisal values. So TIF revenues are really starting to materialize in the way that we had hoped years ago. What that means is that we can use more and more of those TIF revenues for debt service on the Nagel Road Interchange, and the Rt. 611 improvements (Recreation Lane and the Stadium and the Y) and that just takes pressure off the General Fund. As TIF revenues grow, so does our General Fund balance. Mr. Logan touched briefly on the Water and Sewer Funds. He said that we generally just put in placeholders so we have a 4% rate increase in the budget which would not become effective until August. We review the rates each year and come to Council in June or July with what we suggest doing. Those funds are building nice reserves even though they are paying down some of the short-term notes, and the pace of our rate increases should slow down. The volume of water consumption keeps going up because of the hotels, Rose Senior Living, and things like that that drive that water volume up and we benefit from that in more and more water reserves, and sewer to some extent, too. We still have not seen any rate increase from North Ridgeville for sanitary sewer and do not know when that will happen but he is sure it is coming sooner or later. We do have kind of a projection of rate increases from Avon Lake; they are taking their sanitary sewer rates up because of capital improvements, etc. to their treatment plant. Mr. Logan noted that he had listed other revenue that the Committee can look at at their convenience, and he then moved on to the expense assumptions. Operating Expenses are the day to day operating supplies, etc. and we generally budget those the same if the departments are running at or less than budget, except in cases where we know that certain things are happening, such as the price of road salt, which is doubled this year. And that price is dictated through ODOT; we have to place orders by a certain date and so are kind of stuck with those orders. For capital outlay, we are budgeting $2,862,000. vs the 2018 budget of $2,695,000. The General Fund budget for capital projects is $1,425,000. and that is down a little from what we are expected to spend in 2018 of $1,730,000. But we are budgeting new note proceeds to fund the Elizabeth, Puth, and Joseph 2

3 sanitary sewer project and more than likely we will be borrowing about $4 million dollars to do that project if it happens next year. Going back to revenue, Mrs. Holtzmeier asked for an explanation of the refund of the RITA retainer. She noted that it has been down for the last two years. Mr. Logan responded that he is budgeting conservatively at $175,000. The actual for 2015 was $251,000. vs at $236,000. What that is, is that RITA distributes our income tax every month. They withhold 3% for their cost of collections and in June of every year, they reconcile their costs for the year. If their net cost of collections comes under what they have charged, then you get that money back. So our true net cost of collections for 2017 was like 1.7%. They are withholding 3% every month, so we record revenue every month and we record that cost of collections as an expense every month. Then in June we get back any overage we have paid. Mr. Logan said that for Debt Service, our long term debt service payments for 2019 will be about $5,680,000. General Fund is paying about $650,000. of that and TIF revenues are paying $2,107,000. so between General Fund and TIF, that is about half of that debt service. The rest of the debt service pament is from Water and Sewer Funds, Special Assessment Debt, and some Recreation Income Tax funding. Mr. Logan stated that for Notes Expense, we have at the end of this year, $19,150,000 of notes outstanding. The water revenue notes include both the meter change-out project and the Mills Road water tower. The meter change-out project we will pay off completely in January; there is $2 million dollars left on it. The General Obligation road improvement notes are for our share of Chester Road. The park land acquisition notes are for Creekside and that is still $1,100,000. As you know, MetroParks is paying us $50,000. each year for 10 years and that goes towards paying down these notes. The recreation facility notes is the Veterans Park entrance. We have not taken major steps yet to pay down the notes for the pool. We are trying to wait until we get the TIF revenues and recreation income tax revenues coming in. We are getting to a position where soon we will be able to start really paying those down more. The water notes we have concentrated on just because we have the water and sewer revenues and fund balances, but as TIF grows and recreation income tax grows, we will start being able to pay those down. And then he is showing the potential new borrowing for the Elizabeth, Puth, Joseph sanitary sewer project. There is no borrowing for the Nagel Road improvement project. You will see in the capital projects that we are looking at doing the roadway on Nagel Road, from Middleton up to Detroit, but not that intersection yet. So we will have the funding and Mr. Cummins is applying for OWPC funds for that which would cover about half of that cost. Mr. Logan said that in Wage/Compensation assumptions, overall compensation is budgeted at $18,657,000. which is about 4% higher than the 2018 budget but again, we will come in less with actual expense than what the 2018 budget was. In the wage increases we always have to look at the bargaining units. This year we are negotiating with AFSCME and the Teamsters Union. The Teamsters Union is the building inspectors and AFSCME is the Street Department., Utilities Department, Parks Department, and about 9 or 10 office clerical people. So when we are negotiating with those bargaining units, we tend not to put any kind of increase in the budget except for a new hire. There is a 2-1/2% increase budgeted for firefighters, police (both rank and patrolmen) and non-bargaining unit personnel. Personnel increases include 2 additional full-time firefighters for the full year, 3 additional full-time police patrol officers (one for the full year and 2 to start in July), one additional full-time Street Dept. laborer, and one additional full-time Utilities Department laborer. There are some increased part-time wages as needed, primarily in the Recreation Fund and Senior Center and then replacement of employees as needed. One known retirement is our Chief Building Inspector but that is not until later in 3

4 the year and also one police officer. Mayor Jensen added that the police and fire hires are additional employees, not replacements. Mr. Logan continued, for health insurance assumptions, we went to a new plan with this year where it was kind of a shared funding plan and it is working as we thought it would. There will still be large claims each year but our loss ratio is not out of line at all. We do not have all the final renewal information yet but it sounds like in the next couple weeks, we will be sitting down and going through that with our consultants. There are 91 employees on family coverage, 24 on single, and we still have 22 employees on health insurance waivers. If you are not taking the health insurance, you are paid $1,440. a year. Our health insurance right now is through MMO, vision and dental through Delta Dental, Anthem, Blue Cross and when we offer the health insurance to people, we really offer it as a package where you cannot take just the dental but not the medical and vice versa. It is going well and Ms. Raicevich is running a nice wellness program with Norm Elias from the Police Department. That is starting to gain a little momentum and we are actually getting dollars back from Medical Mutual. Ms. Raicevich noted that we get $1,500. a year for wellness programs and you have to use it within the year. Mr. McBride asked if we are doing two different health insurance rates for those who participate in the wellness programs and those who do not and Mr. Logan said that for the family coverage, if you participate in the wellness program, there is a $50. per month reduction in your premium. A single person receives a $25. per month reduction. Ms. Raicevich added that you must meet all the criteria to receive the reduction. Mr. Logan said that a 6% increase is budgeted for health insurance in the 2019 budget. Mr. Logan said that pension contributions have not changed: City contribution for OPERS is 14%, for OP&F Fire 24%, and OP&F Police 19-1/2% The employee s share is 10% for OPERS, 12-1/4% for both Police and Fire and there is nothing right now that is telling us any of those are going to change. Workers comp is approximately 2-1/2% per payroll. We have been running very well with our claims recently so our 2019 budgeted premiums are really not much higher than what we have experienced for And then we are budgeting $100,000. for 2019 for retirement payment. When a long-time employee retires, they are paid for any accumulated sick time and comp time. They get paid up to half of their sick time up to a maximum of 960 hours and then of course any unused vacation and things like that. Mr. Logan stated that the Social Services budget is the money we give to Community Resource Services, Neighborhood Alliance, the Meals on Wheels program, Lorain County Office on Aging, and Love-a-Stray. Mayor Jensen noted that we will always come back to Council for any increases in these amounts. We do not want anybody who needs our assistance to be left out and we will give Council the option to fix that right away. That is all coming out of the General Fund and we just call it the social services line. Mr. Logan briefly went over the Fund Budget, which lists all of our funds, starting with the General Fund, going down through our Special Revenue Funds, Debt Service Funds, Capital Project Funds, and Enterprise Funds. He said that, to him, the General Fund is the most important each year. The first column is our estimated balance at the end of this year, so that is what we are estimating when we put the budget together back in May. If our budgeted revenues exceed our budgeted expenses, then he is good. In other words, he does not need to project higher balances for these funds. We are projecting the General Fund at $4.4 million, but that is going to be at least $6 million by the end of this year. He does not need to put that in there; if we had a huge amount of expense here exceeding our budgeted revenues, he would factor that in but we always want to show a General Fund budget with revenues exceeding expenses. Looking at the other funds, you will see that some are negative but that is ok 4

5 because we have adequate beginning balances to cover that. And again, even with some of those funds, the balances will be a little higher, some a little lower. But this is just kind of walking forward. The beginning balance plus revenues less expenses, basically equals what we are saying will be the end of next year s balance. And these are all unencumbered balances, meaning this does not take into account any purchase orders issued in each fund. Mr. Logan said that he supplies this schedule to the County when we submit our budget, which will be done before the end of the year. He breaks out the Property Tax revenue wherever there are funds affected by that and shows that separately to the County. There was some discussion about creating a separate reserve fund which would be restricted by Ordinance and which would help our bond rating down the road. But it would also tie up money that could be used for street improvements and other projects. Mr. Logan said that he thought we were still a couple years away from looking at something like that. But the reserve is growing, and that is the nice thing. Mayor Jensen added that we are not yet to the point where all the residents are pleased with the road conditions and some of the other things we have to do. We do want to get back to the top bond rating and we know without a fund balance that keeps increasing we will not get there so we have to slowly increment that but we also have to keep in mind that we have some major spots where we are trying to fix things. Mr. Logan noted that the schedule states that in total our budgeted expenses next year will exceed our budgeted revenues by $2,934,000. Of that number, $2,813,000. Is capital project spending, note pay downs, and things like that. So if you look at water and sewer funds, he is projecting them each to go down in total but yet still have what he considers to be decent reserves. These are paying off notes; each of those funds is paying off that final $1 million dollars on the meter change-out project, and that is an option that he and the Mayor have discussed. We do not have to pay those down yet. We could pay them down by half a million or something less and let them roll for another year, and obviously incur the interest for another year but his preference would be we pay them down and get them off the books. Mr. McBride asked what the average interest rate is on those and Mr. Logan said that if we roll them for another year it is going to be 2%, maybe 2-1/4% as rates are rising. If we fix it at long-term, then we are stuck for 10 years at those rates and paying the debt service every year. He pointed out that of the $800,000. expense out of the capital improvement water fund, $600,000. is paying down the water tower notes also. Mr. Logan noted the Department budget. Ms. Raicevich said that they talked with every Department Head individually and went over their budgets and this schedule just shows where there are variances from last year, such as a new employee or any large capital expense. We have not increased wages yet because of the current union negotiations. Mayor Jensen stated that Parks and Recreation Department has the biggest increase. Mr. Logan added, and that is because of capital outlay for playground equipment at Every Child s Playground, at Schwartz Road Park and Northgate Park, and for replacing some of the turf on the playground area at Veterans Park. Mr. Butkowski asked about the large increase in operating expense under All Other Special Revenue Funds and Mr. Logan responded that, more than likely, that is because recreation income tax revenue is in there and so recreation income tax revenue is paying some debt service on the notes as well. He believes that is the reason but he can double check and confirm that. Mr. Logan stated that we kind of budgeted the same amount for the Aquatic Facility. He just met with Tom Fattlar, the Manager, and he wanted Mr. Logan to make a couple comments on it. One is that we are going to lose $8-$10,000. of revenue that they had this year because of the 121 passes that were 5

6 sold to the Westlake residents (they used our pool while their new pool was under construction). Mr. Fattlar is not proposing any kind of major rate changes except for possibly less of a discount on a season pass purchase. Mayor Jensen said that he also talked briefly with Mr. Fattlar and they want to come back to Council with a couple ideas. One is maybe trying to promote more to our businesses to let them do those punch passes. Another idea was a friends and family pass, where a member can bring somebody who is outside the community. Mr. Fattlar also had some other ideas to make up for the lost revenue. For expenses, Mr. Fattlar wanted to do one change on the splash pad and Mr. Logan said Mr. Fattlar put $20,000. on the budget for that and he knows they need to do preventative maintenance on all 8 of the pumps for $24,000. Also, they want to buy an ice machine for $5,000. so we may need to dip into General Fund money to get those things up to where they would like them at the Aquatic Facility and this budget does not reflect that yet. Mr. Logan said that one of the nice things about having this Finance Committee meeting on November 3 rd, is that he would like to have a budget in front of Council at the first Work Session in December so we have this whole month to make revisions. Mr. Butkowski stated that we changed the comp plan for Steve Cochran and his company for obtaining pool sponsorships, etc. and he asked how his revenue looked this year vs last year. Mr. Logan responded that his actual revenue is down a little from last year but Flavorseal, one of the major 5-year sponsors, always pays at the end of the year so that is $10,000. we know is coming yet and there are one or two others, maybe another $4-$5,000. we know we have coming yet. If those monies come in this year, Mr. Cochran will get from the 12-1/2% commission level to 15%. We should be settling up with the concession people, Big Show, any day now and will get about $4,800. revenue from that, which is what it has been each year. He believes that contract is up, and if Council wants to go out for an RFP with vendors, Tom Fattlar has some opinions on that so we may want to have a Finance Committee meeting with him just to talk about the Aquatic Facility in general and the Committee agreed. Mr. Logan mentioned the Storm Water Utility Fund, which we started collecting on in February and started billing the revenue but did not really budget any expense until July. The operating expenses and wages are roughly 10% of what Street Department was. Mr. Butkowski said that years ago, we had a list of about $20 million dollars in stormwater upgrades and asked if there has been any more discussion of what projects we might start taking on now that we have started generating revenue in that fund. Mr. Logan said that the City Engineer and Brian Bruce from the Utilities Department have been working with that on water and sewer projects and he thinks in there they have some storm sewer replacements, etc. Mayor Jensen stated that we are going to start covering ditches and our initial look right now is trying to go down French Creek Road and get the one side completely covered. There are two culverts that we need to extend so we can get the sidewalk over there. We will get the ditches all covered this year coming up and the following year we would request that they put the sidewalks in. He hopes to get a list to Council of where we are going to start covering ditches first; get those covered so we can then get sidewalks. Mr. McBride noted that the storm sewer catch basins are failing all throughout the City and asked about funding for those. Mayor Jensen said that we are taking that expense out of the Storm Water Utility Fund as well and he wants to have a list of the failing catch basins for spring. Mr. Radcliffe asked about streets; he knows some have had concrete issues and they appear to be failing. He asked if those are on the list and Mayor Jensen responded that we are getting a list together now. A short break in the meeting was taken at 9:15 A.M. After the meeting resumed, Mr. Logan briefly went through the major revenue sources. He said that income tax is our largest source of revenue and this includes the $10 million he has in there for 6

7 Enterprise Funds. Mr. McBride asked how much of the income tax revenue is from people working in the City of Avon but who do not live here, and from people who work and live here. Mr. Logan pointed out a schedule that shows how we track the different types of income tax payers by rate code, meaning the 1% general income tax, the ½% safety forces, and the ¼% recreation income tax. RITA breaks all that down every month. The recreation tax is paid by everybody working in the City whether they live here or not. If you live here in the City but work elsewhere, you still pay one-half of that safety forces income tax. You see the withholding on the schedule and that is the payroll tax; that is all the employers withholding the income tax and submitting it every month. Net profit is the business income tax and the State is starting to collect some of that. We have had $64,000. distributed to us by the State this year for filers who are filing through the State. Individual income tax are those filing and paying, such as that extra ¼% in some cases. In some cases these are people in business for themselves and paying the entire amount in, that kind of thing. So to Mr. McBride s question, from the numbers that RITA can show us, we believe that of the roughly 20,000 people who work in Avon, 20% of them are probably Avon residents, and the other 16,000 people working in the City come from other cities. Whatever their cities income tax rates are, they may get full credit in their city or partial credit. Mr. Logan then pointed out a schedule showing the trends over the last 10 years. Our income tax has grown about $1 million dollars a year on average, roughly 7-1/2% each year was the first year that we collected the recreation income tax. The bulk of the income tax, the 1%, is benefiting the General Fund, the ½% safety forces income tax is split equally between fire and police, and then the recreation tax is split equally right now between the Park Operating Fund and the Recreation Income Tax Fund and the money that is going in there we are using to pay mostly debt service on the Rt. 611 improvements and the City s share of the Stadium debt and the YMCA debt. We can also use the recreation income tax to pay down notes on the pool, for any park/recreation-related activities, and for purchasing park properties. Mr. Butkowski asked when the bonds associated with the Stadium and the YMCA are callable and Mr. Logan said that we did an advance refunding in 2016 on the bond for the City s share of the Stadium. That was the real large one where we are saving over $3 million dollars a year on the interest payments. We did a small refunding last year on the Stadium s share of that debt service. The baseball team continues to make their payments, per their operating agreement, which is a 15 year agreement, ending in We have not refunded the YMCA debt yet because those were issued in 2010 but now with interest rates climbing, it does not make as much sense to do an advance refunding. The YMCA pays us their share of their debt service every month and we make debt service payments twice a year in June and December, per State of Ohio statute. Mr. Logan stated that property tax is not nearly as large a source of revenue anymore for the City as income tax is. He noted the schedule that showed the trend since The General Fund and the Police Pension Fund are not voted levies so they will both benefit a little bit once the new appraised property values are out. The other levies, the Fire Equipment Fund, and the Street Operating Fund, do not expire for a couple years. The current property tax levies are shown on the schedule and the last collection year for those is also on the schedule. We do not have any tax levies coming up ourselves for awhile. For the library, 2021 is their last collection year and that affected millage right now on the library is about.55. Mr. Logan said that we keep a detailed file on all the TIF revenue that comes in and he had included the last page of that file in the schedules. He pointed out the actual revenue of $5,335,000. that we collected in 2018, an increase of $1,229,000. over Now we are collecting on 225 parcels and there are a little over 500 TIFed parcels in the City. We will collect on a few more this next year. The property value of all the TIFed property we are collecting on is about $241 million. We are paying out to the 7

8 school their share of the TIF revenue, which is roughly 2/3. Mr. Butkowski asked if the County reassessment of property values impact the TIFs and Mr. Logan responded, absolutely. Mr. Logan stated that he has projections for TIF revenue that go out to 2028, but in 2019, he is starting with that full value of $241 million dollars then the factors that we are adding on are the $11.7 million of new commercial development; appraisal value increases on specific properties is roughly $24 million. Then he is backing off about $3.2 million because there will be some entities challenging their property values. The bottom line is that he is saying we are going to be up about 13-1/2% in full value revenue, so the revenue we are projecting is $6,055,000. of which the school will get $3.8 million. So total TIF revenue is about $700,000. higher than last year. Mr. Logan said that the last schedule to look at briefly with regard to revenue is the motel bed tax schedule. In late 2017 we started collecting the extra 3% for the Economic Development and Tourism Fund. Our actual revenue through August this year is $301,000. and that is divided equally between General Fund and the Economic Development and Tourism Fund. We think we will end up this year at about $451,000. and we are budgeting $500,000. for next year. Mr. Logan said that he met with the Mayor and the City Engineer and got some good estimated cost numbers from the City Engineer for capital projects for next year. We are doing the French Creek/Briar Lakes Lift Station abandonment as a sanitary sewer project and it is coming out of Fund 406, Sanitary Sewer Replacement and Depreciation. With that, we are going to resurface the road from N. Long Road up to Detroit and a portion of that is not truly a part of that sanitary sewer area where we are replacing the sewer. We have about $1.4 million budgeted for that entire sewer project and that includes the work on Century Lane; that whole area is getting a new sewer. But we also have to pay for that last portion out of the road program funds, so that is what that $100,000. is. The $812,000. French Creek Road resurfacing is west to the Sheffield line on French Creek Road and that would follow the first part of the project. Mayor Jensen said, or it could be before it, but either way, we looked at it as part of the project. He added that it will be sewer, road, ditches, and the following year sidewalks. Mr. Butkowski asked if we have determined how we are going to pay for that sewer and the Mayor answered that we are going to assess portions of it. Mrs. Holtzmeier asked if better lighting could be considered there along with all the other improvements because it is so dark at night and there is so much traffic now. Mayor Jensen stated that we need to get our roads back to where they should be and then do the lights after that. Detroit Road is going to be repaved, probably in 2020, and Rt. 83 is the next year. Once we get those two major arteries done, we should have a pretty good handle on most of the roadways, then we can do the ancillary things like the lighting. Also, the Service Director wants to get fiber down those roads and we can do fiber at the same time. Mr. Logan stated that the other road project on this schedule was Parkview, budgeted at $251,000. and we have cost estimates on that. Then the Nagel Road project, from Middleton to Detroit, is a cost estimate of $1,123,000. and OPWC would fund about $500,000. of that. So the way the budget is laid out now we have $1,250,000. coming from the General Fund. We know we will have about $80 $100,000. that we can use from our Fund 401, the Master Capital Improvement Fund. Any funds that remained when a capital project was finished, rather than transferring them back to the General Fund, we transferred them to this 401 Fund. 401 Fund can then be used for any sort of capital projects so that would reduce that number by a little. Mr. Logan said that we are budgeting $3,750,000. for the Elizabeth, Puth, Joseph sanitary sewer project but that is not on the schedule. He added that engineering work is going on now. That is one where we 8

9 are budgeting to take a new note of $4 million dollars and then as far as assessments there, that is all to be determined but the City will certainly be paying a good portion of that project. The other thing in the capital projects budget but did not happen this year is the American Way/Chester Road improvement project and that is an OPWC project for this year which is roughly $1 million dollars of which OPWC will cover about half. Some of those funds may come from the Water Capital Improvement Fund depending on the water portion. Mr. Logan stated that another thing in the capital projects is the Avon Veterans Memorial over by the playground and he put $200,000. in the budget for that. We have been awarded a grant for that by ODNR; we will incur all the costs, the expense, and get it done and then we will submit for reimbursement. Mr. Logan stated that for capital outlay (equipment, vehicle purchases, etc.), he tried to just show some of the expenditures over the last few years. In the 2019 budget, Building Department is pretty straightforward, Finance Department is really nothing more than a placeholder if we would have to upgrade our software, etc. City Hall General includes traffic signalization, fiber installation, and that kind of thing. Mr. McBride asked why these items are under City Hall and Mr. Logan said we pay our traffic signalization technician through a City Hall Department. You could argue it could go to another Dept. Solar crosswalks, network infrastructure, the Centracs improvements, the A-I units, radar units for intersections, fiber installations. We are progressing with the fiber installations. Once those are in and working they reduce what we are paying for internet access so at the Street Department that is a little over $400/month that will go away. So those are different things that we have going on that are in the budget at the moment. The total capital outlay budget is $2,762,000. for this upcoming year. Mr. Logan said that in Fire Department, we have budgeted for a training tower to be put on the grounds of the Fire Station. There was some discussion regarding this and the Mayor said that the Fire Department will be giving a presentation to Council at the beginning of the year in regard to the tower. Mr. Butkowski questioned the $135,000. other line item under the Police Department. Mr. Logan responded that is more or less a placeholder. He just wanted to have something in there assuming that we will be doing something down the road for building improvements. Mr. Butkowski asked if the $350,000. for Police Station building improvement was for the roof and Mr. Logan answered, yes. Mr. Logan pointed out that we continue to make improvements for the Street Department, such as the purchase of the salt brine machine and the new leaf vac. They are looking at $182,000. for one new plow truck. Mr. McBride asked if we could add a street sweeper and Mayor Jensen said that we are talking about that. The Streets Supt. is looking into it but he does not have any figures yet to present to Council. Mr. Logan stated that they did some improvements at the Senior Center this year (painting, new walls, rearranging a little) and they want to continue to do a little next year. They want to move offices upstairs, reconfigure things, etc. so that $50,000 is for that. For Parks & Recreation, the amount budgeted is mainly for playground equipment improvements, etc. The $70,000. there is for two pickup trucks. For the Community Center we put in $75,000. for next year for siding and a new entrance door. A lot of improvements were done there this year. Mr. Witherspoon asked if the Senior Center had requested a bigger bus and Mayor Jensen responded that they are going to see if they can get out of their lease. If they cannot do that then at this point we are not going to do anything. If they can get out of it and we can work it out, then they are going to try and get a bigger vehicle. Then that will have to come back to Council. 9

10 Mrs. Holtzmeier said, going back to Parks & Recreation, at Veterans Park, the one thing she hears consistently through all the sports seasons, is the surprise that we have never paved the parking area around the playground where it is all stone. Mayor Jensen said that he would like to have some paving included in the bid for the other exit there at Veterans Park. Mr. Logan stated that $50,000. Is in the budget for Stadium improvements. That is money that comes directly from the team, the marquee revenue, and we have been meeting with Tom Kramig, trying to work out the details to the agreement and that revenue. Mr. Butkowski said he knew there has been talk about needing to replace the turf at the Stadium in the next few years. Mayor Jensen said that they are meeting with Tom Kramig about that also now and there was then some discussion concerning the turf. Mr. Logan said there is a total of $700,000. In the capital outlay budget for Utilities Department and this is our Water and Sewer funds. We have a couple of leased vehicles that we are paying on, $200,000. is budgeted for the roof at the Utilities Building, $200,000. for rebuilding pumps around the City, and we put in a placeholder of $126,000. Mr. Logan said he just wanted to touch on debt service and he showed his long-term debt schedule going out to These are known payments of what we pay each year. He showed a schedule that is broken down by where the funding is coming from. $900,000. will probably be transferred in from General Fund this year and $500,000. next year. General Fund pays debt service on certain things like the Police Station debt, and certain pieces of the debt where TIF cannot be used and there are no other funding sources. Through 2028, the average annual debt service is $5,976,000. and of that number, the General Fund will contribute on average $503,000. or about 8% of it. That is the real talking point when we talk with Moody s or other credit rating agencies or at looking at new debt, etc. This City has so many other long-term debt funding sources than the General Fund, the primary one being TIF. There are also special assessments and that funding is a little over $1 million dollars per year on average. Third party funding is another source, such as the baseball team, the YMCA, and the post office. That is $628,000. on average each year through We do not fund a lot of our debt service with property tax or with General Fund monies and most of our debt that is issued has what is called an income tax pledge behind it, meaning we can use income tax toward our general obligation long-term debt. If we max out on the TIF on all the debt service it can pertain to, any extra TIF money can then start being used toward certain projects and things as long as they fall within the way our Ordinances read. Mr. Butkowski asked if the TIFs are in place for 30 years and Mr. Logan said it is his understanding that once Council passes the Ordinance, that is when that 30-year clock starts running although we are checking into that. Mr. Butkowski asked, and how far along are we? Mr. Logan said that the first TIFs were in 2006 and The Nagel Road Interchange TIF came on in 2009 or We passed a TIF for City Hall in 2013, which covers our City Hall property. That is only going to kick in, obviously, when this City Hall is gone and there is commercial development. But his understanding is that the 30 years starts after that Ordinance passed, so we are five years in. Mr. McBride asked if there was a way we can renew the TIFs, particularly in areas where property is not developing? Mayor Jensen said that, hopefully, when you look at the TIF, if we manage it right, we are going to have a surplus of money when we get toward the end. TIF was set up to help us put all this infrastructure in so as long as we are doing it the way it is supposed to be set up, we will be in really good shape in 25 years. Mr. Logan noted that there will be a new Ohio Tax Commissioner with the new Governor coming in. That does not mean they can just start changing things that have been in place forever but it always concerns him that at 10

11 some point, somebody may want to try to change the way the TIF rules are but we certainly are not the only community in Ohio taking advantage of TIFs. Mr. Logan had another schedule which was broken down by the reasons for the long-term debt and it reflects refunded debt that we have done over the last couple of years. Those refundings result in almost $4 million dollars of lower debt service in the life of these bonds. The very bottom of the schedule shows the Chester Road special assessment debt that was issued last year, all being paid by voluntary assessments. Mr. Logan said the last part of the debt that he wanted to show is the short-term notes that are outstanding. In 2019 we are planning to pay down roughly $3,450,000., reducing our notes outstanding from $19,150,000. to $15,700,000. and that would be before issuing any new notes. Hopefully, by 2022 we can have the $4,250,000. water tower notes all paid off. It will take a little longer for the recreation facilities notes for the pool and the infrastructure that went in over there, but we do have funding sources such as TIF and recreation income tax. And then there are the Chester Road notes, the $3,950,000., which includes about $1.1 million for the Creekside acquisition. The Chester Road part of those notes will be paid from General Fund monies over the years; we cannot use TIF on Chester Road improvements. Any time we issue debt, we are subject to debt limitations as well. A couple things that are helping are: 1. We are paying down our notes so that frees up room to borrow new money, and 2. With the new appraised property values coming out in January, the debt limitations tie into the total assessed value, so with total assessed value going up our debt limitation can go up as well. Even though we have all these funding sources for our debt, we are still governed by those limitations; you cannot just issue new debt even though you have so many different sources of repaying it. Mr. Butkowski felt this would be a very valuable spreadsheet to put on our website for the public to understand how we are actually funding this debt and Mr. Logan said he could do that. Mr. Logan noted that there is now a digital transparency platform on the website containing the debt paydown graph. He added that this digital platform is a dynamic, evolving thing, and if Council wants to put something in there, it can be done. That is technically our community financial report now. It is digital; we are not going to print one anymore. Mr. Logan stated that our next step is to tighten up this budget. He would not plan to put something in front of Council until the first Work Session in December, and then ideally ask Council to pass it at the first Regular Meeting in December and then he would get it to the County. They need our budget by the end of December. Mr. Logan stated that he thought he heard the Committee say that they would like to meet with Tom Fattlar and have a Finance Committee meeting around the Aquatic Facility and that is fine. Also, he thought that it would be good to have a Finance Committee meeting in early January around the capital projects and have the City Engineer and the Service Director attend that meeting. Beyond that, it did not sound like the Committee wanted to meet with any other Department Heads, at least not about their budgets right now. Mr. Butkowski thanked Mr. Logan for putting all of this together and the Mayor added, yes, there is a lot of work involved in this for Mr. Logan and Ms. Raicevich. Mr. Butkowski then noted that in his years of being on Council so far, he has not heard so much talk about OPWC money as he has heard in the past couple years. He thinks it is a credit to the 11

12 Administration to be able to find revenue sources beyond just coming to the taxpayers and that is great. Mr. Logan said that Ryan Cummins, the City Engineer, is really on top of that and getting that grant money each year. The grant money that we are getting for the Avon Veterans Memorial is an every fiveyear thing and Mr. Cummins submitted four or five projects for that. Mr. Butkowski said it would be good for us to list how much funding we have gotten from the OPWC year over year just to see what that actually looks like. Mr. Logan said that he could do that; he has a year to year schedule. Mayor Jensen stated that because Council is so supportive, it allows the Administration to go after these grants, because it always takes a portion of the City s tax money to obtain them. If say, we get $1 million dollars in grant money but it costs us $500,000., Council is always willing to support that. Mr. Cummins applies for everything and though we have not gotten a lot of grants, we keep applying. Mr. Logan noted that the Clerk of Council just submitted the paperwork for the recycling grant so we will get our $33,000. for this year s recycling program. As for the OPWC grants, if you do not take advantage of them every year, you are just not doing what you should be doing but Mr. Cummins is on top of that. Mayor Jensen added, but, again, if it were not for Council s support we just could not do those things. The meeting was adjourned by Mr. McBride at 11:15 A.M. Transcribed by Gail Hayden, Assistant Clerk of Council 12

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