Finance: July 20th 2015
MINUTES OF THE FINANCE COMMITTEE MEETING
Monday, July 20, 2015 – 7:30 p.m.
Main Conference Room – Mayfield Village Civic Center
The Finance Committee meeting was held on Monday, July 20, 2015 in the Main Conference Room at the Mayfield Village Civic Center. Mr. Saponaro called the meeting to order at 7:30 p.m.
Present: Mr. Saponaro, Mr. Marrie, Mr. Marquardt, and Dr. Parker
Also Present: Mrs. Mills, Mr. Wynne, Chief Edelman, Mr. Thomas, Chief Carcioppolo, Mr. Marrelli, Mr. Metzung, Mr. DiNardo, Mr. Esbor, Ms. Wolgamuth, and Ms. Heath
1. Discussion of a motion to authorize an expenditure in an amount not to exceed $24,207.30 to Breathing Air Systems for purchase of air compressor system and carbon monoxide monitor.
Mr. Saponaro asked, Chief, any different information from Caucus?
Chief Carcioppolo replied, no.
Mr. Saponaro asked, does anyone have any additional questions regarding this? Does everyone recall what it is?
There were no additional comments.
The Committee recommended Item #1 for approval.
2. Discussion of a motion to authorize an expenditure in the amount of $8,084.00 to TAC Management Co. for new server.
Chief Edelman stated, nothing new on this.
Mr. Saponaro asked, was this a budgeted item?
Chief Edelman this is included in dispatch upgrade costs.
The Committee recommended Item #2 for approval.
3. Discussion of a motion to authorize an expenditure in the amount of $20,978.50 to Collection Auto Group for the purchase of a new GMC Sierra 1500 (1/2-ton pick-up).
Mr. Saponaro asked, anything additional to this, Doug?
Mr. Metzung replied, we did get the quote for the cap system that we will have on it. It will slide on it. That will be another $4,700.
Mr. Saponaro asked, any questions? There were none.
The Committee recommended Item #3 for approval.
4. Discussion of a motion to authorize an expenditure in the amount of $18,374.91 for the purchase and installation of plows and safety lighting from Best Truck Equipment for three new pick-ups.
Mr. Saponaro asked, any other information on this?
Mr. Metzung replied, no.
Mr. Saponaro stated, okay, pretty much the same. Any questions? There were none.
The Committee recommended Item #4 for approval.
5. Discussion of a motion to authorize purchase of 1,500 tons of salt through the ODOT winter salt program from Cargill Salt at $52.98 a ton.
Mr. Saponaro stated, as we recall, the summer salt program was much higher. Cargill did not bid the summer salt program. Has anything else changed?
Mr. Metzung replied, no.
Mr. Saponaro stated, okay. There was a substantial difference from the summer to the winter.
Mr. Marrie asked, summer was $80? Wasn’t there something in the paper about them going after the salt companies?
Mr. Wynne replied, they were going after both Morton and Cargill for salt sold during 2009, 2010 and 2011. The judgment will be divvied up amongst all of the municipalities that used those companies during those years. We have filed our claim. We should hear by the end of the year.
Mr. Saponaro stated, it will be interesting to see what effect that has on the pricing that we just went through and how it affects the program. Any other questions or information? There was none.
The Committee recommended Item #5 for approval.
6. Discussion of a motion to authorize going out to bid for Senior Snow Removal program for 2015-2016.
The Committee recommended Item #6 for approval.
7. Discussion of a motion to authorize a change order in the amount of $82,605.00 to Burton Scot Contractors for the following additional road work: Beta Drive Traffic Calming, Thornapple Drive Paving and SOM Center Road Southern Underpass Paving.
Ms. Wolgamuth stated, I apologize. This was not on the Caucus agenda. This was something that was raised at one of our weekly department head meetings. Tom Cappello advised that because the road program for this year, it’s currently out to bid, it does not look like we will be actually doing any paving this year. If we can get the waterline in, the paving will happen in the Spring of 2016. Many times we do little extra projects on the road program as the work gets done and there’s extra budget. The 2014 Road Program has not been closed out. I don’t really know why that is. There is money remaining there. If we wanted to do these small projects, we checked with the Law Department and they said that because it’s already been appropriated for roadwork, that would be allowed and we would not have to go to bid separately on these items.
Mr. Marrie asked, same contractor?
Ms. Wolgamuth replied, same contractor.
Mr. Wynne replied, the bid amount for the 2014 Road Program was $959,000. As of today we have $138,000 left. They did the rejuvenation of asphalt. That piece was about $21,000-22,000. So we have about $100,000 from the 2014 Road Program that came in under budget. I compared unit pricing. Based upon the quotes now and the quotes last year, the unit pricing is the same with a lot of additional items that were not a part of the bid process last year. The pricing looks reasonable.
Mr. Saponaro stated, excellent. And Tom is recommending these items?
Ms. Wolgamuth replied, yes. Unfortunately he is not here today.
Mr. Marquardt asked, the projects are already underway?
Ms. Wolgamuth replied, no.
Mr. Saponaro asked, the underpass, Doug can you report on that?
Mr. Metzung replied, the southern underpass is a series of box culverts that were put together. That makes the floor slightly uneven. Since we have never had any access to go anywhere, we have never done anything. The north underpass, if anyone has noticed, we paved through that. When we did that, we opened it up. Now, what we are looking to do is pave and even the floor out so we don’t have a series of trip hazards.
Dr. Parker asked, what about issues such as the drainage and lighting with the tunnels?
Mr. Metzung replied, we have discussed the lighting. The Chief wants cameras. We want to get some lights down there. The drainage at the north underpass is bad. The sewer pipe that leads from that drain goes all the way to basically the falls in the middle of the Metroparks, Buttermilk Falls. It’s got no grade to it. We have had to fight that fight for forever. Maybe another layer of asphalt at some point.
Dr. Parker asked, is there some way to raise it so that there is drainage away from there?
Mr. Metzung replied, that raises the height. We have to be very careful because coming out of the tunnel you can’t raise it. You have to have 14 feet. That’s the code. The box is 14 feet. Every three inches that we add makes it that trickier.
Dr. Parker stated, whatever we can do to make that more functional, more user friendly.
Mr. Metzung stated, this year it has been less problematic. A couple years ago, every time it rained, we had to sweep the muck out of there. I don’t recall that we have done that this year, so I think it’s less problematic. We got it to drain a little better. But it’s tough. Do we look to do that maybe next year when we do it on a paving to add that extra inch or two?
Dr. Parker asked, does the southern one have any issues at all like the northern one?
Mr. Metzung replied, no.
Mr. Saponaro asked, are these projects ones that were contemplated and not completed in 2014 or are these new projects and we are using the 2014 funds?
Mr. Metzung stated, paving the underpass came about really because of the sidewalk, so we have a path coming down that becomes usable. The paving on Thornapple, it was getting a little bad but we held out until we started to do that year’s road program. With the construction work on the sewers on Eastgate and Meadowood, it accelerated that piece. It’s only the piece from Meadowood to the west to SOM Center Road.
Mr. Saponaro asked, by Smakula?
Mr. Metzung replied, right. Around that little corner where the road is failing pretty badly. Depending on when we go do that sewer project, that could be a couple two, three years. The road needs to be addressed now.
Mr. Metzung stated, the third one is from the Greenway Trail Project that would create a raised crosswalk across Beta. When I say raised, we are talking six inches. It makes it more visible to passersby.
Mr. Saponaro asked, in the roadway itself?
Mr. Metzung stated, yes.
Mr. Saponaro stated, it also acts as a speed bump to a certain extent.
Mr. Marrie asked, for safety reasons?
Mr. Metzung replied, yes.
Mr. Wynne stated, we were contemplating doing that last year and all the flooding happened in August. We have had the engineering studies done as far as how to handle the flooding on Beta so we put it off until we were able to figure out how to tackle it.
Mr. Saponaro asked, so if we are holding off on doing part of the road project until 2016 and the funding for 2015 will be held to complete that and then the new budget will be for 2016 for those projects that are contemplated, so we are going to be in the situation where once it’s completed in 2016, we are using the 2015 budgeted funds?
Mr. Wynne replied, correct. Once we get the bids back for the 2015 Road Program then we have to appropriate the funds.
Dr. Parker asked, will the bids hold until 2016?
Mr. Wynne replied, yes. Just like with the sewer program.
Mr. Saponaro stated, okay. What other questions does anyone have regarding these? These need to be approved?
Ms. Wolgamuth replied, yes.
Mr. Saponaro stated, okay. We need to do these. It is a timing issue from where we are at.
The Committee recommended Item #7 for approval.
8. Discussion of a motion to acknowledge receipt of financial reports for June, 2015 and to approve of same as submitted.
Mr. Saponaro asked, has everyone had the opportunity to go through these? Are there any questions? Ron, is there anything in addition that you want to highlight?
Mr. Wynne reported, I mentioned las month that $376,000 of that huge increase in June reverses in July, but even with that reversal, at the end of July, our year to date collections are still $450,000 above where they were last year. So it looks like a strong year for us.
Mr. Saponaro replied, terrific. Again, we are on track so that when the $1.1 million comes due in the bonds, we are going to pay those off?
Mr. Wynne replied, yes.
Mr. Saponaro stated, so we will be done with those. Those bonds were related to what project?
Mr. Wynne replied, it was General Obligation Notes. Every year we paid down about a couple hundred thousand when they came due and then sold additional notes to pay the balance. The original sale of the notes paid for the golf course, ballfields and Wilson Mills properties.
Mr. Saponaro asked, those will be off the books?
Mr. Wynne replied, yes.
Mr. Saponaro stated, great job. Any other questions? There were none.
The Committee recommended Item #8 for approval.
9. Discussion of the First Reading of Ordinance No. 2015-20, entitled, “An Emergency Ordinance authorizing and directing the Mayor and President of Council to enter into an economic development grant and incentive agreement between the Mayfield Community Improvement Corporation, Mayfield Village, Ohio, and Quality Electrodynamics.” Introduced by Mayor Rinker and Council as a Whole.
Mr. Esborn reported, these Agreements were provided at Caucus. They have been revised. In the last two weeks, I have been working with Mark Guidetti from the Law Department to make all of the revisions brought up during Finance Caucus. We have addressed termination, we have added MCIC in places where they needed to be added in and cleaned up some definitions. All of the changes made apply to both Agreements.
Mr. Saponaro asked, has QED looked at these? When I spoke with Mark and went through with my revisions, he said some of these were what QED requested, they liked that language. Have they looked at this? Do they have any issues?
Mr. Esborn replied, this revised version was updated even earlier today. They have not seen the very most recent. They did contribute language in the process. They gave their okay on sections as well.
Mr. Saponaro asked, anything you want to particularly highlight other than the requested changes? Are you looking for us to get this approved? What is your timing on this?
Mr. Esborn replied, I am requesting approval on both the QED Agreement and the Freedonia Agreement. With the QED Agreement, the incentive is structured the way it is because of the buildout work they have to do at their new location. Their current Lease expires in November. The Freedonia one because in a nutshell they have timed their process that if they get a commitment from Mayfield Village by the end of July. If they don’t get a commitment by the end of July, they will continue looking. That’s why I am requesting approval on both this evening.
Mr. Saponaro stated, one of the problems I see with it is even though it generates $160,000 in income tax revenue for the Village per year, we need to have that defined as a minimum income tax revenue requirement. If you look at the Freedonia Agreement, you put that in the part of the definition. I had told Mark that we need to have it in there because that’s our benchmark.
Mr. Esborn asked, that the value should be?
Mr. Saponaro replied, if you look at the Freedonia Agreement under Section 1, Income Tax, minimum income tax revenue, it has to state $160,000 because we don’t have a benchmark there. You need to have that within the definition.
Mr. Esborn stated, we intended for the minimum revenue to be relative to the company and not uniform.
Mr. Saponaro stated, it’s not. In Freedonia, it’s $90,551.00.
Mr. Marrelli stated, it’s not spelled out.
Mr. Saponaro stated, otherwise it’s a general definition without a number attached to it and then there is no benchmark so if you don’t meet it, even though it’s five years and they don’t meet it in year two, and we have already given them upfront, then we have to have a mechanism to get the monies back. My concerns the last time was the terms that were defined or not defined. There is some confusion in the defined terms. There was ambiguity. I wanted to make sure everything made sense. Consistent terms were not being used within the Agreement. It’s still our intention that at the close of each year the Village will provide QED or Freedonia in writing the report from RITA?
Mr. Esborn replied, one of the things that came up in Caucus was whether that would come from MCIC. I thought we put that in there. It says it will be sent from RITA to the company, MCIC and the Village.
Mr. Saponaro asked, so if there is a dispute, the company notifies MCIC and the Village in writing and then the Village will request within 30 days a report from RITA. The report then goes to the company, MCIC and the Village. But, if you look at Section 4(b), after the close of each year, it says, the Village will notify the company in writing of the collected amount of income tax revenue, and income tax revenue should be capitalized, it is a term of art. Then it says, the company may request that the Village obtain from RITA the total amount of income tax revenue that RITA has collected from the Village and the Village within 30 days will request a report showing the company’s withholding tax receipts.
Mr. Esborn stated, that should be MCIC.
Mr. Saponaro asked, Ron, don’t we get the report from RITA? We are putting language in here that doesn’t even matter. If they have a dispute, they may dispute it, but it is coming directly from RITA. What doesn’t make sense to me is that you have this income tax level that is being disputed in Section 3(c) but they are already getting the report. I don’t know what their mechanism is. If they get the report, they can dispute it, but I don’t really know how they are going to dispute it because RITA is the one providing the report.
Mr. Wynne asked, are you talking about the company?
Mr. Saponaro replied, yes. We are going to provide it for them. We are already going to give it to them.
Mr. Wynne stated, I think it is annual accountability to them of where their finances have been and in calculating the rebate.
Mr. Saponaro stated, that I understand. We give them an opportunity to dispute it by going back to RITA and asking them for a report within 30 days of the dispute, but they already got the report because we already gave it to them.
Mr. Wynne stated, basically the same report we just gave them.
Mr. Saponaro replied, right. It doesn’t make much sense to me.
Mr. Wynne stated, it might have been drafted thinking we would give an internal report without having documentation
Mr. Saponaro stated, there’s language in here that’s not correct still. In concept it’s fine. I don’t know if from a global standpoint it’s okay, but as written it’s not okay.
Mr. Esborn replied, passage would have an impact. We can correct the language. I am concerned about the effects of not passing it.
Mr. Saponaro stated, I understand that. What I want to be clear on and maybe we need to talk to Mark on this to make sure is that, so for example in 3(c) if the company disputes the income tax level, that’s not a defined term. The defined term is Income Tax Revenue. We have to be consistent with our defined terms or it doesn’t make sense.
Mr. Esborn replied, passage tonight of the action to approve execution would provide-
Mr. Saponaro stated, the negotiation aspect of it.
Mr. Esborn continued, we really could then afford to take the time we need.
Mr. Marrie asked, so should we pass it tonight?
Mr. Saponaro replied, it’s going to have corrections to it so that it is consistent. The problem is it is still not consistent in the way it needs to be.
Mr. Esborn stated, even if there is some level of review that Council wanted beyond.
Mr. Saponaro replied, they will get it anyways. Even if we approve it tonight, Council is going to get the final document anyways.
Mr. Marquardt stated, we are passing the final document if we vote on this.
Mr. Saponaro stated, again, we can’t ask Council to approve something that looks like this. If you are asking us to allow you guys to negotiate it, we can amend and do that. This has to be in final form.
Mr. Marrie stated, that’s why we couldn’t pass it then.
Mr. Saponaro stated, unless you amend it. It has to be in final form.
Mr. Esborn asked, there’s not the ability to pass something substantially similar? The changes we are talking about are changes in language. Mark mentioned today when we talked about this that if what was passed was substantially similar to what was executed, then there could be passage.
Mr. Saponaro stated, again, most of the changes I am talking about are you have receiving grant money, but it’s capital “G”.
Mr. Marrelli asked, is it grammar issues?
Mr. Saponaro replied, it’s that but it’s also redundancy here. We are not providing the mechanism with, the company will notify MCIC and the Village in writing of the dispute. They will do that within a 30 day timeframe so we clean that up.
Mr. Esborn replied, I think I hear what you are saying. Yes, if there is passage and we then correct the language, then we can amend. I still think that the passage would have the affect for the companies of Village commitment which I think is the biggest thing from my perspective.
Mr. Marquardt stated, if you are passing it, you are passing the document.
Mr. Saponaro stated, we need to get that from Mark Guidetti. We need him to weigh in on that.
Mr. Marquardt stated, I am opposed to this. I won’t vote for it, number 1. $400,000 up front with very loose terms as far as their commitment is not acceptable as a business proposition.
Mr. Saponaro asked, have you gone through this?
Mr. Marquardt replied, I know the concept. $400,000 up front.
Mr. Saponaro asked, where’s the loose terms, Bill?
Mr. Marquardt replied, I read the thing. In 5 years, maybe they have made their commitments, maybe they haven’t. If they go out of business.
Mr. Saponaro stated, if they have them in the first year, they owe it back to us.
Mr. Marquardt stated, we would give them $400,000.
Mr. Saponaro replied, they have to give it back. What do you want to do, do you want to get a standby letter of credit?
Mr. Marquardt asked, why not measure one year at a time and then see if they make it?
Mr. Saponaro stated, they could have left and you would have lost all of that as well. I respect your opinion, but instead of going back to it.
Mr. Marquardt stated, I didn’t vote for it. I am not in favor of the concept number 1, number 2, I have seen too many of these documents that, oh, we will put it on and change it later. It gets changed later, but it is not what you put into the thing. If you are going to pass something, I won’t vote for it, but if you are going to pass it, make sure the documentation is right.
Mr. Saponaro replied, I don’t disagree. I have no problem with that. If we are not going to have what we want in there, then as a Council we can’t vote for it. I agree with that. Conceptually if we are voting on conceptually that’s one thing, but that’s not what this ordinance is. That’s not on you. We have to make sure our Law Department is giving the proper protections here. The problem is is that there is language in here that leaves a lot of ambiguity and a lot of open items and that’s a problem. I think that from the perspective if the companies are looking for us to come up with, Council has blessed this, Council’s blessed the concept.
Mr. Esborn stated, if it’s impossible to have passage tonight,
Mr. Saponaro replied, you are not going to have passage here in order to get there.
Mr. Esborn stated, because we have a company that will resume their search if they don’t pass some sort of commitment by the end of July. Passage of the Agreement was going to be that form of commitment. If not that, if there’s a way –
Mr. Saponaro stated, as the Economic Development Director, you can go back and you can say to them, the Council’s approved conceptually, but that’s not the issue. We are talking about the way the language reads. The language is inconsistent and a little ambiguous. This is the first time we are entering into something like this. We cannot have our benchmark project here be an agreement that looks like this. It’s not good. We are not presenting and coming across with the authority we need to in making sure this is tight so we can be protected. That’s what my concern is. From here it starts. This becomes a public document and from this public document everything becomes scrutinized and when it does, if I am looking at this from an attorney perspective, it’s not good. I agree with you Bill. I think that we cannot pass something that we do not agree with the language. That’s not against you. We need to get back together, maybe you and I and Mark can sit down and we can go through this and explain what the issues are because I think we need to do that.
Mr. Esborn stated, Mark is representing the Law Department tonight. He might be able to provide his input on the subject.
The Committee deferred action on Item #9.
Discussion of the First Reading of Ordinance No. 2015-21, entitled, “An Emergency Ordinance authorizing and directing the Mayor and President of Council to enter into an economic development grant and incentive agreement between the Mayfield Community Improvement Corporation, Mayfield Village, Ohio, and The Freedonia Group, Inc.” Introduced by Mayor Rinker and Council as a Whole.
The Committee deferred action on Item #10
ANY OTHER MATTERS
Mr. Saponaro asked if there were any other matters. There were none.
There being no further business to discuss, the meeting adjourned at 8:03 p.m.
Mary E. Betsa, Clerk of Council