Finance Caucus - March 4th 2013
MINUTES OF THE FINANCE CAUCUS MEETING
Monday, March 4, 2013 – 7:30 p. m.
Main Conference Room – Mayfield Village Civic Center
The Finance Committee meeting was held on Monday, March 4, 2013 in the Main Conference Room at the Mayfield Village Civic Center. Mr. Delguyd called the meeting to order at 7:30 p.m.
Present: Mr. Delguyd, Mr. Marrie and Mr. Marquardt
Also Present: Mr. Buckholtz, Chief Edelman, Mr. Metzung, Acting Chief Shrefler, Mr. Wynne, Ms. Wolgamuth, Mr. Dinardo and Mrs. Betsa
1. Dental plan for employees (Delta Dental).
Mr. Wynne reported, once again, our current contract with MetLife expires on April 1st. We went out to bid. MetLife’s renewal price was increased by 14.5%. We went to market and got a 2 year quote from Delta Dental whose network is actually better than MetLife’s network. It’s the same level of coverage. The premiums will be about the same as they are right now for the next two years.
Mr. Delguyd asked, any questions? There were none.
2. Sale of old police vehicles
Mr. Delguyd stated this was discussed at Safety and Service. You are now only selling one. Chief Edelman reported, we are asking for approval to advertise for bids for one police car.
Mr. Delguyd asked, any questions? There were none.
3. Authorization to prepare specifications and go out to bid for the 2013 Road Program.
Mr. Delguyd stated, this would include Kenwood, Sandalwood, Oakwood, Thornapple and Walnut. Mr. Metzung stated, correct. Same as in the past two years.
Mr. Wynne added, the budget for that is $1,175,000.00.
Mr. Metzung added, they will be rejuvenating the asphalt streets. Mr. Delguyd asked, is that included in the amount budgeted? Mr. Wynne replied, yes.
4. Authorization to go out to bid for the construction of the Greenway Trail.
Mr. Delguyd answered, this is the plan approved in 2012, correct, including the NOACA grants?
Mr. Wynne replied, the URS engineer’s estimate for the cost of construction is $1,183,000.00. From that we have a NOACA grant which is $866,000. At the end of last year, we had $222,000 still remaining in the Greenway Corridor Fund. We would be looking at approximately between $75,000-80,000 of additional funding coming out of the General Fund to cover that.
Mr. Delguyd asked, does that include the parking lot?
Mr. Wynne asked, the trailhead? Mr. Delguyd replied, yes.
Mr. Wynne replied, no. We applied for the grant money for the trail. It’s still in the budget, but it’s not included in this going to bid process.
Mr. Delguyd asked, so you are going to go back to NOACA for more money for the parking lot? Same thing? 80%? Ms. Wolgamuth replied, yes, that’s the plan.
5. Purchase of brackets and sign post for new street sign program (Northcoast Sign Works – not to exceed $18,000).
Mr. Metzung reported, this is so that we meet our new Federal codes. This is for the brackets and the sign post covers. This will do about half the Village that we hope to complete this year. We have 71 posts so there are going to be approximately 36 of them.
6. Street name signs (A&A Safety – not to exceed $8,000).
Mr. Metzung reported, this is for the actual street signs.
Mr. Delguyd asked, questions? Ron, did we budget for the whole project, or just half this year and half next year? Mr. Metzung replied, we did $35,000, one year’s worth.
Mr. Delguyd asked, so we are going to do these in two years? Mr. Metzung replied, yes.
Mr. Marquardt asked, $35,000? This is $26,000.
Mr. Metzung replied, I have already purchased some of it and put it together. We might have a little bit of money left over at the end of the year.
7. Spring tree planting.
Mr. Delguyd stated, we talked about 92 trees at Village Hall, The Grove, up and down SOM, and Wiley Park. This is about 30 trees more than we have historically done mostly because of The Grove. When you talk about the screen, the back of The Grove, is that the side that faces SOM?
Mr. Metzung replied, it’s the side you face if you are on The Grove.
Mr. Marquardt asked, so how much is this? Mr. Metzung replied, we are working on the budget estimate. We are looking at approximately $10,000. We don’t know what the delivery costs are.
Mr. Delguyd asked, that’s total? Mr. Metzung replied, yes. He’s working with a couple different nurseries.
Mr. Delguyd asked, and we are using that arborist? Mr. Metzung replied, we have Jim McKnight that helps us with the design of it. We have our own in-house arborist.
Mr. Delguyd asked, that’s $10,000 total for all 92 trees? Mr. Metzung replied, that’s for the trees. That doesn’t include the shipping. It’s in that neighborhood. We will have a solid number soon.
Mr. Delguyd asked, so we are saying that’s not The Grove, that’s all 92? Mr. Metzung replied, that’s all the trees, correct.
8. Sale of Service Department vehicle.
Mr. Delguyd stated, this has been discussed. You are unloading a 1999 Suburban. Mr. Metzung replied, right. We will then take delivery of another used vehicle from the Police Department.
Mr. Delguyd asked, so instead of the Police Department selling their two vehicles, they are sending one to Service? Mr. Metzung replied, correct.
9. Safety surfacing for Parkview Pool 0-40” area around play water toys (Aqua-Seal Resurfacing - $22,548.00).
Mr. Delguyd stated, this is that rubberized material. It makes sense that since we are doing sandblasting and painting, we do this as well. This also includes the Service Department doing the tearout.
10. Compensation of Parkview Pool employees – 2013 season.
11. Compensation of employees for 2013 Summer Camp program.
Mr. Delguyd stated, this was in our packets. Does anyone have any questions on that?
Mr. Wynne reported, the only change this year is the range because of the change to minimum wage. Everything else is exactly the same as it has been in the past.
Mr. Delguyd asked, are you saying there may be changes, or there are changes? Mr. Wynne replied, we have to make changes because of the change in minimum wage. Everything else stays exactly the same.
Mr. Delguyd asked, you don’t have any issues with healthcare because they are seasonal workers? Mr. Wynne replied, not with them, no. I have been attending webinars on this issue and will be going to one meeting next week on Wednesday geared toward municipalities on this law change. We are going to have issues with Police, Fire, Service and dispatch because we have part-timers that work more than 30 hours a week.
Mr. Delguyd stated, okay. We will deal with them as the issues come up.
12. Sale of old fire vehicle.
13. Purchase of vehicle for Fire Chief.
Mr. Delguyd stated, this was discussed. We are going to sell the Chief’s current vehicle and then we are going to go out for an SUV. Acting Chief Shrefler stated, Ford Explorer, not to exceed $35,000. We would like to keep the old car until we receive the new one.
Mr. Delguyd asked, any questions? There were none.
14. Community Partnership on Aging – Council of Governments Agreement.
Mr. Delguyd stated, this has been talked about extensively. We are going to go with another year at least for calendar year 2013.
Ms. Wolgamuth replied, this is to allow us a seat on their Council of Governments.
Mr. Marquardt asked, do we have a plan to get metrics on this? I have never been clear whether we have 5 people participating or 10 people? Ms. Wolgamuth replied, my understanding is that Stacy O’Brien, the Director just got new software. It’s a very old style organization. They were keeping track of things by hand. They are computerizing. I anticipate we will be getting those reports.
Mr. Marquardt asked, have you asked what you are going to see and if it’s going to be relevant? Ms. Wolgamuth replied, she assures me they are really tracking carefully where everyone comes from. Before they would have participation but wouldn’t necessarily know where that person lived.
Mr. Marquardt asked for a copy of the report to see if it is adequate. Ms. Wolgamuth will provide Mr. Marquardt with a copy once available.
15. Purchase Agreement with Governor’s Village, LLC.
Mr. Delguyd stated, this has been talked about extensively. Any questions? Mr. Dinardo asked, that’s the property fronting North Commons? Mr. Delguyd replied, yes.
16. Codification Services (Walter Drane - $5,735.00).
Mr. Delguyd stated, this is an annual expense. Are there any questions or concerns? There were none.
17. Legislation opposing passage of House Bill 5.
Mr. Wynne reported, with the current House Bill down at the State, the City Mayors and Manager’s Association had a news conference last week about this and have asked other municipalities to pass a resolution opposing the House Bill. The intention of the Bill when it was first presented was that it would be pretty much revenue neutral. It ends up that what they have currently on the floor is not revenue neutral at all and has a significant impact to a lot of the cities with some of the items. The impact to us is nominal. It’s about $35,000. It’s a one-time impact. It has to do with timing with the way they are handling estimated taxes. The impact will be the first year then it is kind of caught up again. For other cities, the impact is far, far greater than we are going to experience.
Mr. Delguyd asked, my guess is then they are going to try to impose a 2% rate across the board? Mr. Wynne replied, this has nothing to do with the tax rate. Some of the main parts of the legislation are they are looking to take the carryforward down to 5.
Mr. Delguyd asked, do we already allow that? Mr. Wynne replied, no, we are at 3, I believe. Beneficial to us is they are going to eliminate the 2106 expenses for individuals.
Mr. Delguyd asked, does everyone know what that is? It’s unreimbursed business expenses on your tax return.
Mr. Wynne stated, right now they have the Occasional Entrance Rule for businesses that come to the Village to do work, such as contractors to work on projects, once they are here for 12 days or longer, they should be paying city tax. They go back to day 1. They are extending that out to 20 days and there would be no retro, so they wouldn’t start paying until day 21.
Mr. Marrie asked, so they get 20 days free? Mr. Delguyd replied, not free, they probably pay in their location.
Mr. Marrie stated, yes, but for us, there would be no income for us for 20 days? Mr. Wynne stated, those are some of the changes.
Mr. Delguyd stated, for one instance, wouldn’t it beneficial with Panzica because the income beyond 20 days would be coming to us? But, it is probably a wash because we have some here doing roadwork for over 20 days and it would not be beneficial.
Mr. Wynne replied, yes. RITA is trying to push through a lot of these things for all of their clients as best as they can. They haven’t put a number to that.
Mr. Delguyd asked, the 5 year is just something they came up with, or is that something for most other cities?
Mr. Wynne replied, a lot of cities don’t even allow it. Federal has 3 year carryback and 20 years forward. I don’t know where the 5 came from. Most municipalities are somewhere between 0.
Mr. Delguyd asked, so are we opposing it because everyone else is opposing it? Mr. Wynne replied, yes.
Mr. Delguyd asked, is it more of a function that we don’t like the fact they are taking away home rule? Mr. Wynne replied, the reason for the opposition is that it was not revenue neutral as they initially sold it. They have already taken away the estate tax, the local government fund and the commercial activity tax from municipalities. Now this is just another step in further taking away revenue.
Council President Buckholtz asked, didn’t this originate in the Mayors and Manager’s organization? Mr. Wynne replied, yes.
Mr. Delguyd asked, any further questions? There were none.
18. 2013 Budget.
Mr. Delguyd stated, we talked about this at the last meeting.
Mr. Wynne replied, the only change was mentioned the last time we met and that’s the additional $75,000 put in to the road program budget after we got the engineer’s final estimate. That has been the only change since the draft was distributed.
Mr. Delguyd asked, do we do multiple scenario budgets? Mr. Wynne replied, no.
Mr. Delguyd stated, my question was more of, this is a budget that is put together that works, but there’s a vision in mind? Is there any shuffling of funds?
Mr. Wynne replied, no. The approach from a revenue standpoint is extremely conservative. Off of that number we have taken a look at personnel costs which are pretty straightforward. The big items are the capital projects and then we take a look at the items the Department Heads need from an equipment standpoint and projects the Mayor would like to try and tackle in the Village this year and see if the budget is able to absorb it and budget accordingly.
Mr. Delguyd asked, what was the average raise budgeted? Mr. Wynne replied, it was 3%. The wage ordinance is a three year ordinance, 2%, 2% and 3%.
Mr. Marquardt stated, I would like to see a more aggressive approach to reducing the debt. I would like to see nominally half a million more taken off the debt directed to reduce the debt and if there is any revenue surplus above plan, have that directed toward reducing debt.
Mr. Wynne asked, just because you want to see the debt reduced? Mr. Marquardt replied, yes.
Mr. Wynne stated, I always come back with if somebody else is paying your debt for you, why would you want to pay it off earlier? Mr. Marquardt replied, some of it is not other people’s. I understand the TIF and special assessments. I am talking about what’s coming out of our General Fund.
Mr. Wynne asked, the $400,000-500,000? Mr. Marquardt replied, yes.
Council President Buckholtz asked, where do we find that?
Mr. Wynne stated, the only debt we have flexibility with is the bonds which we can’t pay off early until the end of 2014.
Mr. Delguyd asked, can we talk about that for a second? We can’t touch any of the bonds until 2014?
Mr. Wynne replied, I am talking to our bond counsel about a refunding which is the same as refinancing. You have a one-time shot at doing it before they are callable. We are looking at the interest rates right now to see if that makes sense.
Council President Buckholtz asked, what is the debt service itself? The actual debt incurred? Is that the smaller numbers? Is that the charges for maintaining the debt, the interest? I am looking at the schedule, the outstanding bulk amount.
Mr. Delguyd stated, this is what will be outstanding at the end of each years. Council President Buckholtz stated, that’s the principal. Where’s the interest? Mr. Wynne replied, that’s principal and interest payments.
Council President Buckholtz asked, but you don’t have the actual cost to carry the debt broken out? Mr. Wynne replied, it’s in the detail. Our total interest expense would be starting with this $223,000, this column right here.
Mr. Delguyd asked, which ones are we looking at? Council President Buckholtz replied, $205,780.
Mr. Delguyd asked, so we are paying $350,000 on $12 million dollars in debt right now? What does that come out to? It’s 2.9%. But looking at these, which ones of these loans are repaid, like TIFs? Mr. Wynne replied, the SIBS.
Mr. Delguyd asked, the sewer constructions are not? Mr. Wynne replied, no, the sewer constructions are paid by assessments to the homeowners. The SIB, OWDA and OPWC are all funded.
Mr. Delguyd stated, so really what we are looking at paying down would be the bonds? Those are paid off in 2016? Mr. Wynne replied, no, that’s the Note. The actual bonds themselves, the $4.7 million, we can refinance them but we can’t prepay them.
Council President Buckholtz asked, are you saying that in 2017, we will have paid down all of the debt? Mr. Delguyd replied, no. When we do a refunding, is that a point when we make a big lump sum payment down?
Mr. Wynne replied, we actually end up borrowing a little bit more to pay the fees. Preliminary numbers we are looking at show that we should save $20,000-25,000 a year in interest expense over the remaining life of the bonds.
Mr. Delguyd asked, what is the prepayment penalty? Mr. Wynne replied, you can refund only one time before the callable date. There is no penalty.
Mr. Delguyd asked, what if we decided we wanted to prepay? Mr. Wynne asked, the actual penalty, I don’t know.
Mr. Delguyd asked, but there is one? Mr. Wynne replied, I would assume so. If it’s even an option. The only one we have the greatest flexibility with are the bond anticipation loans. Those are the ones that we sell every year.
Mr. Delguyd stated, that’s a 1% rate. You are not going to kill yourself over that. The bigger issue is the 3.75%. That’s really the police station.
Council President Buckholtz asked, if we did want to do something like that, how would you approach doing that? If we wanted to lower debt but raise the amount of money put toward debt without targeting any one project? Mr. Delguyd stated, it sounds like you can’t because there are pre-payment penalties. Mr. Marquardt stated, it depends on what the pre-payment penalty is. Mr. Wynne will look into it.
Mr. Delguyd stated, we are not going to pre-pay any of the funded debt. That doesn’t make sense. The bond anticipation notes are at 1%. That doesn’t make a whole lot of sense. We could always appropriate the funds into debt retirement and pay them off as the years go on.
Mr. Metzung stated, I don’t think you can transfer it out. Mr. Delguyd asked, can you transfer out of a debt fund once you transfer in? Mr. Wynne replied, you can transfer in to the debt fund. You generally cannot transfer out of a debt fund without filing something with the Court. I will have to check with Diane.
Mr. Delguyd asked, so you are going to look into the pre-payment penalty and this issue? Mr. Wynne replied, yes.
Mr. Delguyd stated, we have to look at some of the capital projects we are doing this year.
Mr. Wynne replied, like I said, we took an extremely conservative approach on revenue. Council President Buckholtz asked, it’s two million down? Mr. Wynne replied, yes.
Mr. Delguyd asked, estate tax is going away, right? Mr. Wynne replied, yes. I don’t know if anyone recalls, but back in 2009, we got that $800,000. We now have to pay back the refund, about $160,000-170,000. I budgeted $200,000 in anticipation of this.
Mr. Marquardt stated, also, driving down SOM and Wilson Mills, it struck me that our priorities are off a bit. We are looking at budgeting $550,000 for toilets and $50,000 for what I consider to be the remaining eyesore, the Community Room. That’s a room that people in the Village use year-round and love and if you look at it, it’s like a shack as it is. Yet, we are talking about over a half million dollars for new facilities we are using seasonally. Our priorities are off.
Mr. Metzung stated, that is under study, the Community Room.
Mr. Marquardt stated, that’s what I would be looking at first. Something everyone in the Village likes and uses year-round as opposed to something that is seasonal. I would shift the priorities. My priority would be on the Community Room.
Mr. Dinardo asked, do we want to spend the money on that building there? Mr. Delguyd asked, as opposed to razing it? Mr. Marquardt stated, I agree. I am not dictating what it would be. I am just saying I would rather put something that people use all the time as opposed to some seasonal toilets.
Mr. Marrie stated, I am not sure which amount should go where. I hear what you are saying, but there is a definite need for something down there. Having those kind of facilities and having women and children using the woods is just ridiculous.
Mr. Delguyd asked, the half million dollars that is budgeted, is that --- Mr. Wynne replied, all we still have is the quotes from the Metroparks and what we checked on a couple years ago on running the utilities. The architects right now are working on this.
Mr. Delguyd asked, do we consider this a 2013 project, given there is no bids out yet? Mr. Metzung stated, the intent is to do them this year. Mr. Marrie stated, they would like to get them done this year. Ms. Wolgamuth stated, or one or the other.
Council President Buckholtz was impressed by the drawings. Something could look like that in the center of town.
Mr. Delguyd stated, it doesn’t include any corporate contributions. Mr. Marrie agreed. Right now we are not talking real numbers yet.
ANY OTHER MATTERS
Mr. Delguyd asked, any other matters?
Mr. Wynne stated, I would like to make one more comment. We are planning on doing the one sewer conversion project if the money comes through. Where does Council want the focus to be on, trying to pay down the debt or putting it towards these projects?
Mr. Delguyd would think that those types of infrastructure projects are just as important as paying down the debt. Mr. Marrie agreed.
Mr. Delguyd added, either way, I would like to see half a million dollars being put in to that project. I don’t anticipate the restrooms costing half a million dollars total. I can’t see that being approved. It’s food for thought.
There being no further business, the meeting adjourned at 8:04 p.m.
Mary E. Betsa, Clerk of Council