HomeMy WebLinkAboutMinutes 2008auks cam,,.. Mimtes VMS
APPROVED
MINUTES OF THE RULES COMMITTEE MEETING
MONDAY, JANUARY 7, 2008
6:00 p.m.
Aidermanic Library
Present: Aid. Bernstein, Holmes, Jean -Baptiste, Moran, Rainey Tisdahl, &
Wallin
Absent: Aid. Hansen & Wynne
Presiding: Aid. Tisdahl
Staff Present: Judith Aiello, Darlene Francellno, Herbert Hill, Gavin Morgan, Elko
Purze & Rolanda Russell
Guest: Suzanne Calder, Mary Gavin, Mary Morris, & Bob Seidenberg
CALL TO ORDER:
Aid. Tisdahl called the meeting to order at 6:15 p.m.
APPR__QVAL OF THE NOVEMBER 5. 20 7 MINUTES:
Aid. Wollin moved approval of the November 5, 2007 minutes. Aid. Bernstein seconded.
Minutes approved.
Mr. Morgan stated that staff wanted to come to this committee with some general
direction about featuring organizations on the city vehicle stickers and to get approval
and come to the full Council to draft a policy. In the past, non -profits have been
featured on the city sticker, and after Rotary was featured in 2005 it was decided not to
feature organizations any more because it costs 5 to 6 thousands for the customization
of the sticker and to put the organization's logo on it. FAAM came before the Council
and was granted permission to have this year's sticker, which turned out to be a nice
sticker. In order to save time and not require organizations to come before the Council
staff wanted to establish a policy to grant permission of organizations in the future on a
first come first serve basis. We also wanted to make sure it is for non -profits
organizations only and to find out how the committee felt about passing the cost on to
the organizations.
Aid. Rainey's thought was that$6,000 is a lot of money and FAAM could not have paid
that. Her suggestion was maybe just put "honoring" and the name of the organization
using the city's logo. But if the organization selected can afford to do their logo they
would have to pay to have their logo done, otherwise the city's logo will be used.
Mr. Morgan said the Evanston Community Foundation and Evanston Township High
School have come forward with a request and that is how staff got to this point of
bringing it forward. The Evanston Community Foundation would like to be on next
year's sticker.
Aid. Jean -Baptiste asked why bypass the Council, usually this is a special honor that is
requested. His feeling was that the Council should still retain the responsibility. Aid.
Rainey agreed, Council absolutely has to be involved.
Aid. Wollin suggested they set a deadline for request- Already two request have come In
for 2009, she was not sure which order they came in but a certain date has to be set for
the following year and If they have competing ones then Council will have to make a
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choice. Mr. Morgan added that they would require that the request has to be submitted
In writing.
Aid. Holmes started that if it is on a first time, first serve basis suppose you have an
organization that has been in business for 50 years and their request comes a day after
someone that has been In business for 10 years. That organization that has been in
business for 50 years should be granted permission over that organization having been
In business for 10 years. Aid. Rainey agreed and said it also might where that
organization having 10 years is more worthy than the organization with 50 years and
they would just have to make that decision. Aid. Holmes agreed.
Ms. Aiello asked if the committee wanted the issue to come before the Rules Committee
or A&PW. Aid. Rainey response was A&PW, they will not make the final decision, but
the policy needs to come to A&PW.
Aid. Tisdahl asked that Mr. Morgan find out what it would cost to put "honoring" and the
organization's name. Mr. Morgan said he would look Into It.
DISCUSSION OF RULE REGARDING MO ION TO RECONSIDER,
Ald. Tisdahl asked If anyone had any concerns about this. Mr. Morgan said there was a
reference at a Council meeting. Aid. Bernstein said there were questions about when,
what and why.
Aid. Rainey said the big question was how the legal department handled it. It seems
that there wasn't a clear presentation or explanation on what to do. But when reading
the rules it looked pretty clear to her.
Aid. Bernstein said he thinks they have the omission of certain resolutions or some
other things and it should all be Inclusive. If you are on the prevailing side of whatever
it Is then you should be able to move for reconsideration. And there are some that are
limited in the rules. He understands certain things are relevant in terms of time, but It
changes though. Contracts and things of that sort that are time sensitive.
Mr. Hill stated that he believes the rule speaks for itself. It is only limited as to the time.
Ald. Bernstein said after reading it again he understands why and has no problem with It
now.
NEW BUSINESS:
Aid. Wollin said the Mayor had pointed out to her that the City Manager was hired
January 18 and perhaps the evaluation should take place in January on the anniversary
of her hiring. however, personally, since she and Aid. Holmes did a lot of the work and
with the timing of entering into this very traumatic budget season it would not be
appropriate nor would they have the time or energy to do this. Even though last year
the evaluation was not done until May, she asked If they did It after the budget was
approved would that be acceptable to the Council? Aid. Tisdahl suggested Aid. Holmes
and Wollin should do it again this year. Aid. Wollin thanked her very much for that vote
of confidence.
Aid. Rainey said she would be away for part of March but would actually like to start
talking the city manager now because they have some issues.
Aid. Bernstein added that it is a pitiable time, a lot of people and all of their historical
memory Is gone or soon to be gone. They can wait, but thinks they should start talking
about the situations that are coming because he has some concerns.
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Aid. Jean -Baptiste said that is getting Into substance and they only need to talk about
timing right now. He asked if they should schedule a special meeting. Aid. Bernstein
said they have to get the city manager involved in the process and asked if they didn't
say they were going to do the evaluation on the anniversary last year.
Aid. Holmes said they were going to try. She also added that she and Aid. Wollin may
have to get some other people to help because It is a lot of work to pull all of that
together and try to do the budget.
Aid. Jean -Baptiste agreed that they should do the evaluation after the budget because
they don't have that much time. If Aid. Bernstein is proposing a special meeting it
seems like it is executive session. Aid. Bernstein said yes he is proposing an executive
session meeting.
Mr. Hill noted that a special meeting can be had by the call of the Mayor or by the call of
3 Aldermen. What you would do is set it up to be a special meeting for the purposes of
discussing personnel. It would be executive session period and just a matter of maybe,
the Aldermen can talk to the Mayor, If the Mayor wants to do a special call.
Aid. Jean -Baptiste asked about having It on Monday since there is a Council meeting.
Mr. Hill stated they could make It executive session for that meeting and he could put
personnel on the agenda for an executive session for Monday.
The committee agreed to have an executive session on Monday, January 14 to discuss
personnel.
Aid. Sean -Baptiste asked who was representing the CMO office In Ms. Carroll's absence.
Ms. Russell said she was and would share this with Ms. Carroll. She asked if there was
anything needed in preparation for that meeting.
Aid. Rainey said nothing was needed and she didn't think they needed any staff
assistance.
ADJOURMENT•
Aid. Jean -Baptiste moved motion to adjourn. Aid. Bernstein seconded.
Meeting adjourned at 6:31 p.m.
Respectfully submitted,
Darlene Francellno
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MINUTES OF THE RULES COMMITTEE MEETING
MONDAY, FEBRUARY 4, 2008
6:00 P.M.
Aldermanic Library
Present: Aid. Bernstein, Hansen, Holmes, Jean -Baptiste, Moran, Rainey
Tisdahl, Wollin & Wynne
Presiding: Aid. Hansen
Staff Present: Judith Aiello, Julia Carroll, Darlene Francellno, Herbert Hill, Gavin
Morgan, Elke Purze & Rolanda Russell
Guest: Mattie Amaker, Vito Brugliera, Suzanne Calder, George P. Mitchell,
Mary Morris, Bob Seidenberg A Bill Smith
CALL TO ORDER:
Aid. Hansen called the meeting to order at 6.35 p.m.
APPROVAL OF THE JANUARY 7, 2008 MINUTES:
Aid. Holmes moved approval of the January 7, 2008 minutes. Aid. Tisdahl seconded.
Minutes approved.
WESSIiE USA9E BY ELECTED OFICIALS:
It was stated by Aid. Hansen that the Rules Committee did not discuss this Issue at the
last meeting because there was something of a confidential nature at the Board of
Ethics that needed to be resolved. Aid. Rainey asked If it had anything to do with her.
Staff attorney for the Board of Ethics, Herbert Hill, said the Board of Ethics considered
an Issue that could have been affected by this Council's general discussion. The Board
met In Executive Session and made a determination and the matter is confidentially
closed between the Board of Ethics and the party involved. There is nothing else that
he can report. Tonight this Committee is at liberty to act in any matter it so chooses
with respect to the issue.
With that being said Aid. Hansen stated that the ultimate question Is to decide whether
or not they are going to have a policy.
Aid. Rainey noted that the September 28, 2007 memo from the legal department talks
about things that the Committee might want to consider such as the size of type, where
things are placed, and the use of the City seal, which has never been on anything that
she has ever done on the Internet. Today she searched the Library's new website and
It is spectacular and should make this City proud. There are links on there to every
community organization in the world, anything having to do with Evanston,
transgender websites, gay and lesbian websites, NAACP's National website with their
address and local contact information, League of Women Voters, Democratic Party,
Republican Party, every single connection you can imagine. It is a magnificent website
and she was proud to see that they went to all that work to gather all that information
to make it available to the public which is important. What is interesting is that the
memo says they might want to consider "...the placement of such wording —the size of
the type on the website". One thing that caught her eye on the Library's website was
that at the top of the main page there are 3 choices, small type, medium size type, or
large size type. So you can make all the rules you want about the size of the font on a
website and people can manipulate that. Her suggestion was not to embarrass
themselves and just do absolutely nothing. She certainly did not think that unaffiliated
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people should be allowed to go around posting the City Seal on letterhead. However,
on the City's internal website there are very specific guidelines for the use of the city
logo regarding what size you can use, who can use it, where you can use it and what
you can use it for. She didn't think they had to make any new rules about that and she
would never use the logo unless she was writing a letter regarding city business to a
constituent. Her feeling was that too much time has been wasted on this issue and she
hoped they would vote to do nothing.
Aid. Holmes asked who made those very clear rules. Aid. Rainey imagined that
probably the City Manager's office and the law department. It happened when
Maureen Barry, former Assistant to the City Manager conducted the search for a new
logo. Right after the new logo was selected a link was placed on the very first page of
the City's internal website to use the logo. It is very highly controlled and you can't
just go copying it and using it.
Mr. Mitchell said there is a critical difference between linkages to Information websites
and linkages to officials of the city. Where there are multiple types of discussions back
and forth about things that are political and personal. There Is also a distinction
between one and the other. It is important for the Rules Committee to do whatever It
should do in order to control. Control doesn't mean you have to stop everything. It
means having some means of controlling what is and what is not appropriate for a
website that is Involved with the city or with the city's name and dedicated as readily
available. At the last meeting Ms. Amaker made a point about bad things happen when
good people stay quiet, he thinks this Committee can establish that. Whatever the
rules are it is the Committee's responsibility to make them and if they choose not to,
that is their choice, but if they don't make rules then they are opening themselves up
for whatever comes in the future.
Aid. Rainey stated she was not sure what Mr. Mitchell meant when he referred to
political. Discussing how tax dollars should be spent is very political. If he is talking
about electoral politics, for example, who should be elected to this or why someone
should vote for this or that, is not allowed on her website period. She made a very
clear statement that there will be no electioneering, no electoral politics. This Is an Btl'
ward website that Is for the discussion of Issues and what upsets people, what makes
people happy and things like that. Everything she does in this city is political, if you
want to look at It that way. But there wouldn't really be any reason for her to have a
message board if she didn't want to take care of political Issues, If you describe them
as the allocation of resources and the workings of the city and making things better for
people. She wants to make her ward work for the people and will continue to do that
In the way she is doing it.
Mr. Mitchell continued on stating that there were two things they were looking for.
One Involves the use of the City's "brand" and the other was the connection from the
official City website to Aid. Rainey's private website. If you look at it from that
perspective you will see why their concerns were there. They have no problem with
Aid. Rainey having her own personal website at all, that is her right and privilege to do
that. But having it connecting from the city's website to that message board is where
they have the problem. Aid. Rainey said then all links to the Library's website would
have to be removed. otherwise it is not fair.
Aid. Moran said he had not seen anything from the legal department that is suggestive
of a possibility of significantly addressing this issue. He was troubled by the
circumstances that lead to the committee taking up the Issue. There is something
troubling about somebody having a website that says this is the Sth ward website, this
Is your Alderman Ann Rainey speaking, and there appears to be a license with respect
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to this speech that suggests that pretty much everything around town Is fair game. He
has tried to think his way through this Issue and is not sure that he sees anything In
the way of a bright line or even to discern a blurry line where they as a Rules
Committee or as a City Council can take any particular action. What Mr. Hill has
provided by way of an opinion suggests the opposite, that perhaps there is confluence
of law cases, that suggests, that if someone wants to do this they can. The memo also
suggests that they can't be held liable for defamation or other untoward statements
that could be made under this license. He didn't see any particular rubber on the road
that suggests that they have a legal medium in which to address this.
The reference to the Library website and the fact that there are a broad variety of links
Is a very poor analogy to what they are talking about. Obviously in that framework
whatever sites are linked are identified to be what they are. He was sure that many of
them are non -governmental and are identified as such and this is part of the process
whereby they try to disseminate information to people, constituents and so forth to
make them better informed as they choose. He sees a distinct difference between that
and another website that is standing out there that is described as a ward website or
an aldermanic website where a lot of things are said on it. Perhaps there really is not
much to be done, but to hope that those who speak through a medium like this would
exercise the responsibility and restraint with respect to what they say. Recognizing
that what they say in this medium is being offered in a way that can legally be accepted
as at least a small part of the city's position on things. As you know you can't shout
fire in a crowded theater and you can't use what the Supreme Court is defining as
fighting words with Impunity. In terms of the First Amendment, those are not
controlled by the First Amendment or protected by the First Amendment. Bait he is a
great believer In the First Amendment and in broad discussion of public issues. He
wasn't sure what they could do in the confines of this Rules Committee with respect to
this Issue other than to learn from the experience and try to do what they can to
exercise responsible speech on a very public forum.
Aid. Wollin also agrees with the First Amendment. She wished she had the time and
technical experience to have a website because it is a great source of information. She
sees absolutely no problem with Aid. Rainey having a website linked to the City's
website. Aid. Rainey has clearly identified herself as an Alderman of the City. There
are things that they are responsible for whether they like it or no, whether it Is how
fast a street got plowed or whether someone's garbage is being picked up. People feel
comfortable In wanting that information and not having to call their Alderman. So the
fact that the Alderman can handle some of this through her website is a valuable asset
to her time management as well. But she really does think it is a free speech issue and
would say they have no right to interfere with an Alderman's website. Aid. Hansen
asked if she was making that in the form of a motion. Aid. Wollin said yes.
Aid. Holmes noted that she didn't understand any of this technology stuff so her
question may not be on target. She wanted to know from the legal department who
made the rule in terms of not using or how the logo could be used. And could there not
be a disclaimer on the website about links or whatever. In other words if you go to the
City's website is there something about linkages or whatever and is there a disclaimer?
Aid. Hansen asked if she was referring, for example, to if there are links to some type
of organization that is sponsoring some type of race, and if you clicked on that link is
there a disclaimer on the City's side saying we don't endorse this? Aid. Holmes
response was yes, because that has nothing to do with our freedom of speech. That
would just simply be holding the city harmless In terms of that. If there is a disclaimer
then she could go along with that. If there is not a disclaimer she would suggest that
they do that, now it may not take care of everything. Aid. Rainey stated that you can't
disclaim her as an Alderman, she Is a corporate official of the City. In terms of links,
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they link to hotels, the weather and all sorts of things. How can they start disclaiming
everything they link to? Aid. Holmes asked if there is a link to a hotel from the city's
website is the city recommending that hotel. She is not focusing on Aid. Rainey's
website she wants to talk about any of the other links that are there. Is there some
wording they can use because she would imagine that they are not in anyway
endorsing any of the linkages.
Mr. Hill response was that the law department can certainly draft and make available to
this committee language for their approval which would simply state that "the
hyperlinks from the city's website do not constitute an endorsement but are merely
made for the convenience of the public" or something to that effect which would cover
the Issue being discussed.
Aid. Wollin and Rainey didn't think they were necessarily related. But Aid. Holmes
thought that they are very much related because if the city is not endorsing any, It
doesn't matter if it Is Aid. Rainey or the Hilton Garden, Inn. It Is the same thing In her
mind.
From Aid. Moran's point of view that Is the difficulty with the Issue because one clearly
Is associated with the city and the other clearly is not. But how do you draw a legal
line In there and say there is a difference that you can seize upon as a difference maker
because you develop a different rule. Aid. Holmes noted that Aid. Rainey clearly said
this is her personal website.
Aid. Rainey cleared up that it is not her personal website, it Is her Alderman'c website.
She noted that furthermore you can go to the city's website and where the names of
the Council members are listed you can sign up for an Alderman's newsletter. She
doesn't know what's in the newsletter unless she signs up for it, Is the city endorsing
the newsletter? She sees no difference in the newsletter and her message board,
because she can express herself on the message board and people can express
themselves in the newsletter.
Aid. Tisdahl spoke on how she has tried looking at this every way that she could. She is
a member of the NAACP, regards this as a First Amendment freedom of speech issue
and thinks the Library links are relevant. When she uses links she doesn't assume that
everything is ok by the group that she got the link from. It is just information and that
Is what the internet is to her, a way to get Information. It is not an endorsement. If
someone makes it easy for her to get information it doesn't mean that they are
endorsing it. She agrees with Aid. Wollin, if she had the time and expertise she would
have a website because it is a way to make your constituents have an easier time
reaching you and expressing their opinions.
Ms. Amaker replied that she agrees with the First Amendent and thinks that people
should be able to say what they want to say. She also agrees that you can not yell fire
In a crowded theater. Now what does that come under? Because when you are calling
people names and talking about mothers of children you are then screaming fire. They
wouldn't be here if it wasn't for the fact that someone was screaming fire in the
theater, parents and people were annoyed. Now how do you control someone who's
screaming fire? Is that ethical? Is that in the law? What Is it? Where is it? That is the
one thing. You can have a website, link it to whomever, but you can not scream fire or
should not be allowed to scream fire especially when you are an Alderman of the City of
Evanston.
Aid. Jean -Baptiste commented on the fad that during their last 3 or 4 sessions on this
Issue he has tried to bring some closure. The criticism was that Aid. Rainey's comment
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was hurtful to the reputation of some activists, and he really believes that Aid. Rainey
believes that these people are activists and at the time that she made that statement,
he doesn't know, but she may have felt a little belligerence around the particular issue.
A particular criticism was raised and he thinks that generally speaking most of them
agree that they disagree with that criticism of labeling these people as meddlers. That
criticism was made and there was a response to the criticism and Aid. Rainey
apologized. Some people judged that apology as not being good enough, not going far
enough, or not said in the proper tone but everybody heard that Aid. Rainey apologized.
Their discussions have been testimony to the fact that it is important not to attack
other people in the city who are trying to do good things. They have engaged in this
discussion about First Amendment Rights because there were some hurtful statements
made. At this particular point in time he doesn't think they can cut off an Alderman
from having a website, but does think that they can sum up the lessons learned from all
of this which is try to control what they do to the extent that they can control it from
the website, local radio, certain publications, or if they are out speaking, etc., because
that apparently has an impact. They can't underestimate the kind of Impact that they
have. They may incite anger at people for good or bad reasons, but the reality is they
do have an influence in terms of what they do. They have to recognize the kind of
weight they bring to bear on a lot of the stuff that is going on in the city, whether It is
city business directly, school board, or other entities. So it is Important that they try
and bring closure to this with that kind of understanding. They have to police
themselves and appreciate the fact that other organizations do police them; they raise
criticism, they observe what they do and they sometimes feel harmed by what they do
and say. So it is Important to embrace all of that and try to come to terms with that.
Aid. Jean -Baptiste also noted that looking at the city's website from Aid. Hansen's
laptop, there is a disclaimer that you can click on at the very bottom of the home page.
It reads "The appearance of external links on this site does not constitute endorsement
by the City of Evanston of external web sites or the information, products, or services
contained therein. Nothing in this policy shall guarantee that a business or non-profit
organization shall be linked to the City home page. The City of Evanston reserves the
right to deny links to any Web site that contains obscene or objectionable images
and/or text. Also, the City of Evanston reserves the right to remove URLs of sites that
no longer fulfill the requirements or cannot be accessed reliably."
Mr. Brugliera a resident in the Wh ward and a frequent contributor to Aid. Rainey's
message board asked if the comments had been made in a letter to the editor, how
would they have responded? Because if somebody makes a negative comment on that
chat board it is very simple, you go on the board and contradict It. He and Aid. Rainey
do not agree on many subjects but she at least gives him the ability to criticize her and
to disagree with her on her message board. He commends Aid. Rainey because she
does not allow anonymous responses, you have to identify yourself.
Aid. Rainey added that you can't have honest discussion without some criticism. In the
last few months since the whole pension issue broke and the issue of the downtown
tower she has been subjected, as has all of the Council, on her message board to
criticism after criticism and some of it is very educational. Things like the Aldermen
are stupid and how did this happen, really very deep seeded hurtful feelings. But she
can't imagine telling somebody who criticizes on her message board that they can't
post on her message board any more. It is life, it is debate, it is very important and she
thinks it is extremely healthy.
A1d. Hansen said there is a motion on the table to not regulate or do nothing in regards
to private websites of Aldermen.
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Aid. Rainey suggested they put an asterisk on the city's front page to link to this
disclaimer policy so that everybody will know because they didn't notice that
previously.
Aid. Moran didn't think there was a need for a motion. Aid. Hansen asked for Mr. Hill's
opinion. Mr. Hill's response was since there is no action you take no action.
Aid. Rainey said then there Is no closure. Aid. Jean -Baptiste said but there are some
additions or suggestions that have been put here, the asterisk, the linkages, all of those
have to be combined and if they support that position then they ought to say that they
support it.
Ms. Amaker asked if it is possible to put in there that Aldermen will watch their conduct
or that they will not do anything that is offensive to people of the City of Evanston, or
something along those lines because something should be in there.
Aid. Hansen said there is no need to have a motion to ask staff to add an asterisk, they
are directing staff to do that.
NEW BUSINESS:
A list of names for a Blue Ribbon Panel was distributed. Ms. Carroll said the list
consists of the names she has so far and those with a question mark as to whether
they've accepted is because she wasn't clear If those individuals had been contacted.
Aid. Hansen has suggested one more person that is not on the list which would make a
nice size group of seven people.
Aid. Holmes asked if the Rules Committee has to appoint or sanction this committee or
does it have to be appointed by the Mayor.
Ms. Carroll noted that the way the Mayor indicated that she wanted to handle it was
since the appointments are generally made through her, the Council would adopt a
resolution at the next Council meeting creating a Blue Ribbon Panel with its scope of
services to be performed. The nominees would then, she thinks, be approved just like
any other appointments.
Aid. Moran stated that he doesn't know who any of the Individuals are or their
qualifications and would like to get vitae or something on each one of them. Aid.
Raniey said she sent information on her person to the Council via email.
Aid. Hansen wanted to know from Aid. Moran if he was looking for something similar to
the form they receive from the Mayor when there is an appointment. Aid. Moran's
response was that would be helpful because If they are going to offer a collective group
of people as a Blue Ribbon Panel, they need to be a Blue Ribbon Panel and he doesn't
intend to vote in favor of establishing a panel with just random people who have
something to say about the pension or the budget or whatever.
Ms. Carroll thought that maybe they could have each person submit a quick vita and
she'll attach it to the information. She does have information on Aid. Rainey's person.
It would be really helpful to get that information on the others.
A22QURMENT•
Meeting adjourned at 7:15 p.m.
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MINUTES OF THE RULES COMMITTEE MEETING
MONDAY, APRIL 7, 2008
6:00 p.m.
Aldermanic Library
Present: Aid. Bernstein, Hansen, Holmes, Jean -Baptiste, Moran, Rainey
Tisdahl, & Wollin
Presiding: Aid. Hansen
Absent: Aid. Wynne
Staff Present: Darlene Francellno, Herbert Hill, Gavin Morgan, Elke Purze &
Rolanda Russell
Guest: Ronald Brumbach, Suzanne Calder, Dave Ellis, Mary Gavin, Mary
Morris, Lorraine H. Morton, Timothy Schoolmaster, Bob Seidenberg
& Bill Smith
CALL TQ ORDER:
Aid. Hansen called the meeting to order at 6:08 p.m.
APPROVAL OF THE FEBRUARY 4. 2008 MINUTES:
Aid. Tisdahl moved approval of the February 4, 2008 minutes. Aid. Wollin seconded.
Minutes approved.
NWMC RESOLUTION RE: POLICE/FIRE PENSIONS:
Aid. Hansen stated that A&PW referred this item to the Rules Committee because they
didn't think that the language accurately reflects what they thought was going an In
Evanston. So they wanted to look at the language and figure out a better resolution to
send, if they are going to send it.
Aid. Rainey said she and Aid. Tisdahl attended the Public Safety Pension Presentation
hosted by the Northwest Municipal Conference and got some very interesting
Information but she didn't think they learned all that much. The presentation was on
the pension problems throughout the Municipal Conference area. The most interesting
part was a chart showing Evanston compared to everybody else. One of the things that
took place was George VanDussen stood up and announced to the world that we are all
In the same boat and she and Aid. Tisdahl immediately said well we'd like to get In your
boat because we are not all in the same boat. Others also criticized him for saying that
and that Is what is wrong with the resolution, we are not all in the same boat and one
resolution does not fit all of us.
Aid. Tisdahl noted that one of the charts that really interested her showed the graph
going up as municipalities pumped more money into the pensions, but the percentage
the pension was funded was going down. Aid. Rainey added that it was exactly like
that for every single community.
As far as the resolution goes, Aid. Tisdahl said she would be happy just to cut out
Section 3 and go with Section 2 because to her the Issue is to quit increasing the
benefits. She'd rather ask for what is realty important to them. They haven't had any
problems that she Is aware of with conflict of interest, disclosure of pension board
activities, transparency or any of those. So If they haven't had trouble with them she
would rather lobby for what is creating a lot of trouble for them which is the increases
In benefits.
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Aid. Wallin asked if she felt it would be helpful to put in the numbers. Aid. Rainey said
only if they are absolutely correct. Aid. Hansen said two A&PW meetings ago they
asked to be provided with Information on how they got the numbers and on the back of
the last page of the resolution memo is the response that was provided. This was
Steven Drazner's response at their last AAPW meeting to that question.
Timothy Schoolmaster strongly disagreed with those numbers and how they arrived at
them, he distributed a hand out. The actuary attributed 48 million for the police and
fire fund for the active members and the remainder for the retirees. The police share of
that is S5% and the fire share is 45% and if you multiply those out you get 26.4 million
for police and 21.6 million for fire then you divide that by the number of actives. That
is the amount of unfunded per active. Staff has taken the whole 140 million debt and
divided it by the number of actives which is not correct. He distributed the same
figures at the March 10 meeting.
Aid. Holmes said the bottom line is the City owes 140 million right? Mr. Schoolmaster
said some of that is for retirees and some of that is for actives.
Aid. Jean -Baptiste said ultimately what Is the qualitative difference in their view of
what Mr. Schoolmaster has said as to what the number Is and what our finance
department says. Will it Impact our legislators in a different way? He didn't think so.
So while they may work on trying to get as accurate a set of figures as possible, they
try to rely on their finance department to figure this out. He'd like to see them work on
the language and not get hung up with the numbers right now and maybe talk about
beyond this resolution, what Is the campaign. He was interested in hearing what the
firefighters had to say about the language.
Aid. Holmes asked for a point of clarification in terms of the point that Mr.
Schoolmaster was trying to make about the difference in terms of how they got the
figures for the actives and the retirees. Mr. Schoolmaster said staff Is taking the total
debt and dividing it by the number of the actives and what the pension board is saying
Is that the debt attributed to the actives should be divided only by the actives because
that is what it claims. it inflates the value.
Aid. Rainey asked Mr. Schoolmaster if he could give them what he believes are the two
correct figures? The response from Mr. Schoolmaster was the figures are on the
handout, it is about one quarter of the figure. Aid. Rainey felt they should plug that
number In. Aid. Jean-Baptiste's thought was that would instruct people differently If
they put in the quarter of the obligations and to their legislators it would seem to be
not so much of a problem if it is only a quarter of the City's claim. Aid. Rainey said they
are in such bad shape that they can't make it look good. Aid. Holmes stated that is her
point about the 140 million, they owe 140 million no matter what. Aid. Rainey
suggested they scratch all that out and just say 140 million. Aid. Holmes felt that Is
what they need to do.
Aid. Jean -Baptiste said there are two different entities, the municipalities have one
Interest and the firefighters have another Interest and to argue that they should put in
a quarter of this amount is not a strong a position. He did agree with the 140 million
and that this amount will have the proper impact. He also suggested including how
much they paid this year compared to the previous year and the expectation that there
will be a mounting kind of obligation.
Dave Ellis said he has gone through the resolution and thinks there should be a
resolution put forth downstate. Quite frankly he found the resolution insulting and
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polarizing. It polarizes the politicians, the citizens and the pension funds and is not
really offering solutions. It Is making statements but there are no facts to back it up
and the financial numbers are not accurate. Personally he thinks this Council is more
educated on pension issues, at least as Evanston Is concerned, than the Illinois
Municipal League. This Council has a lot more background, has had a lot more
discussions, knows the numbers, has had Ted Windsor play the history of what is going
on, and Jack Siegel brought up how things are being done legally. However, they
haven't been funding the principal they've been funding the interest and that is what
has gotten them into this predicament. Mr. Siegel represents quite a few
municipalities, he has advocated that position throughout the Northwest Municipal
League and as Aid. Bernstein has said, you do what your client asks you to do. While in
the 90's they had zero percent tax increases and increased spending in a lot of other
Issues such as affordable housing, increased infrastructure, parks maintenance, and
routine stuff in doing business. They did have zero percent tax increases for several
years in the 90's, but they haven't been funding this properly and ultimately it is the
government's responsibility to do that.
Mr. Ellis went on to say as far as the resolution goes "WHEREAS ....funds are facing
uncertainty and a financial crisis..." that is correct, "WHEREAS...... generous retirement
and disability benefits have caused the funds to Incur escalating debt that threatens
their long-term..." personally that is insulting. They don't receive social security and
they don't have health care benefits and If you feel the benefits are generous please
tell the firefighters or police about what their lives are worth, what their health is
worth and what their shorter life span is worth while they are dedicating themselves to
serving citizens to the best of their ability.
Historically it has been a negotiated process. In 1993 the Illinois Municipal league
wanted to increase the due date for the payment schedule from 2013 to 2033. They
wanted an extra 20 years and there were negotiations that went on with that. There
were negotiations around 2000 to try and increase benefits to widows who were living
on their spouse's pension benefits. This may be considered generous to a lot of people,
but if you risk your life and you die in the line of duty or if you are disabled in the line
of duty and you can't work anymore you would think that the City would have the
ethical and moral obligation to protect that group of people.
Yes there have been increases in benefits and the financial numbers which Aid. Jean -
Baptiste has talked about are accurate. "WHEREAS ...there Is no certainty that the
current benefit levels are sustainable....", almost by design the course that the
municipalities have taken by not funding this properly is mirroring a lot of what Is
going on with the housing crisis. This town has been borrowing money and putting in
minimum amounts of payments and this debt has been escalating, interest payments
and everything has been escalating, not just for Evanston, but throughout the state.
This Council had the wherewithal to identify it as a problem and took the beginning
steps of some responsible action.
The Blue Ribbon Committee is a real good Idea. What he would suggest toward the end
of the resolution are not the "WHEREAS" because he thinks they don't help anything,
but in Section 2 of the resolution "....to stop approving new increased pension benefits
for police and fire pension funds.", if that is a negotiated process that certainly could be
the City's position to negotiate what is going on.
Mr. Ellis continued by stating that there will be negotiations, and whatever resolution
comes out, he appreciates and understands that. He thinks the pension funds really do
perform all of these guidelines in Section 3 right now "...meaningful regulation and
enhanced local government funding authority." He suggested that the Council send the
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Municipal League a resolution that would follow the guidelines and the Blue Ribbon
Committee would outline some direct effects and causes.
He also suggested that the Illinois Municipal League encourage other communities to
responsibly fund the principal portion of this pension obligation so it is done properly
and that the City suggests to the Municipal League that they give the pension boards
authority to increase their investment in equities from 450/a to 750/a. They are very
limited in what they can do. Pension boards follow the letter of law and all of the
members put in their money and it is invested properly and historically it meets its
goals within a very small percentage.
These really aren't the only issues that he sees but these are some suggestions. It also
might be time for the Municipal League to start looking for some sort of Impact fee
legislation for non -for -profits that adversely effect communities for services that they
receive for free, to help out the taxpayer. The WHEREAS clauses in the resolution really
don't serve a lot of purposes and they need to be clear. The real reason for this
resolution at this point Is that there was a 5 year moratorium on any negotiations and
that moratorium is up and now there Is a negotiation process that the Illinois Municipal
League would like to get a position on and that is understandable. But they have to
work together on this. It is not just the Council's problem it is also the pension funds'
problem.
Aid. Bernstein did not like to ask another legislative body to stop doing something. He
would like to say don't approve any new increase pension benefits without funding
them or without consulting with the municipalities, that is the crux of it. But he really
likes Section 3 because he thinks that what they have to do is to talk about "...sensible
pension reforms...". That is what they need them to do and that has to be in dialog
with everybody. If they send them a notice that says don't do this, maybe he doesn't
want them to not do it because maybe there is a reason and if they can explain it and
find some assistance for them because he does not want to deny the pension funds. He
now understands that they've done a lot of increases and he knows a lot of people are
upset by the widow benefits and other things that other pension funds don't
necessarily get involved with, but police and fire are a different situation. They don't
sit in an office and there is something that he thinks justifies that. It already has been
justified so it is a separate fund, but he just doesn't like the tenor of this resolution.
His concern is unfunded because without any notification, any request, any discussions
with the ultimate payer of these debts the Genera Assembly will go ahead and Increase
them.
He didn't know how much input the firefighters or the police had with respect to those
Increases. He was guessing they have had a lot because otherwise where would they
come from. He would like to be part of the negotiations, to be at the table to bring the
municipalities problems to the forefront. That is what they are supposed to do. They
need to talk with their legislatures and say to them that they can't afford anything
more and ask if they can come up with money. They are coming up with million of
dollars. Let them put it up. His concern is that the municipalities are part of the
process, and that thestate assist with funding these mandates and work toward
sensible pension reform so that there is more. There should be two levels of pension
funding for the work that these people do. But he is not crazy about this resolution In
total.
It seemed to Aid. Moran that if they get around to appointing a Blue Ribbon committee
they could get them to work on a resolution and have them make suggestions. This
resolution is fairly meaningless. It is just a few words on a piece of paper. It doesn't
suggest anything specific and that's where they've had difficulty with this whole
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situation. There needs to be, in politics and government, a sense of accountability.
one thing that has to go into an eventual resolution, which is what Aid. Bernstein:
talked about, is that if you are going to mandate that all the municipalities in Illinois
pay a certain benefit level then you've got to have the guts to says you are going to
gather at least some of that money. He didn't know if it had to be all of the money or if
It has to be like a shared funding system between the state and the local municipalities
but something has to happen there. Obviously this Is a very politically popular thing In
Springfield, they like to pass this legislation an benefits for police and fire. It doesn't
take a brain surgeon to figure that out, but if you are going to do it, you at least have to
do It with the sense that you've got to help fund it. One thing that they need to do
some real work on, and he was not sure how much of it has to do with the state as
opposed to how much it has to do with them but he thinks it has a little bit to do with
both. When they started going around with this 140 million dollars it was like an
atomic bomb, somebody comes in and says you owe 140 million dollars and you trying
to figure out how did that happen. He had not heard that they owed 140 million
dollars.. He hadn't heard anything from anybody on this issue.
This thing is the monkey on their backs now. He has been here a long time and years
go by and quarters go by and he doesn't hear what is going on. He doesn't hear about
rates of return on investments or investments policies. He doesn't hear about how
much they are ahead, how much they are behind this quarter or the next quarter and
so on and so forth. It is probably overstating it to say that there is no opacity on this
thing but there is just no information on it. They don't have a system whereby the
people who are responsible for paying these benefits know what is going on. Maybe
that is probably partly their fault, but it might be some other people's faults to. They
need reform on that level, maybe they need to do somz things and maybe the State
needs to do some things. He has gotten tons of messages from people in the wake of
this revelation about defined benefit verses defined input. He has all kinds of people
asking him who has a defined benefit plan anymore, so somebody has to look at that
and figure out what to do about that. He knows they have statutory regulations related
to the composition of the investments that they make whether they are bonds or stock.
They've heard a fair amount about how that might be overly restricted and maybe they
need some loosening of those regulations, so they can do better when they can do
better with greater investment discretion and flexibility. If the General Assembly is
telling them that they can't go higher than 50% or 55% on that reason, they wouldn't
be doing it now, but in an up market they should be in over that if they can be. If there
are restriction that are unposed upon them by Springfield that are making It difficult to
get the job done then they need to ask them to give some relief in that regard. He just
thinks there is a lot of stuff that they would all benefit from with an examination of all
the issues and a much more focused resolution than this resolution. To him this
resolution means nothing and he wouldn't even care to send it to Springfield. He would
rather get the Blue Ribbon Committee together and get this Committee and Mr. Ellis
and Mr. Schoolmaster to start getting their thinking caps on about what needs to be
done and get it done.
Aid. Jean -Baptiste said obviously we have to engage in a campaign to try to get the
reform that will keep them as a municipality whole and healthy. At the same time we
have to take care of the firefighter's and police officer's pensions. But the reality Is In
the City of Evanston it's a family and there are issues for the firefighters and the police
officers who would be lobbying to take pensions as high as they can go and get as
much benefits as possible and they know that. But when sitting in the same room
together there are different interests being played out. The City of Evanston City
Council are like parents and one of the members of the family needs to be looked out
for. To send this resolution out to add our voice to the many groups who are saying
they need help, may be a very small drop, but it begins to inform those that are making
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the decisions that people are protesting. He was sure the firefighters are down In
Springfield lobbying as much as possible and they participate in helping some of these
individuals get elected so they are more likely to look to serving their interest. And
just like Evanston they are soft on those who serve in this municipality and we want to
do the right thing. They need to add their voice to this kind of growing protest about
unfunded mandates. They should just find a way to add that notion in Section 2 of the
resolution, send the whole thing through with the modification in regards to the
numbers, talk about the 140 million dollars liability that they have accrued and the
amount of money they had to pay this year above what they paid last year and what
the prospect Is in the future. It doesn't mean that they can not come back with a
sharper resolution down the line. This is a small step. Let's just clarify a few points,
send it through and work on a campaign. He asked if they have a lobbyist down in
Springfid.. now because when he first joined the Council Larry Sufferdin was their
lobbyist. The response from Aid. Tisdahl was the Illinois Municipal League. Aid. Jean -
Baptiste said folks don't know them down there now. We need to develop a campaign
to try and get the state legislature to not pass any unfunded mandates, bottom line.
They need to be educated and alternatives need to be presented but for now this is not
going to hurt anybody and the issue of whether it is generous or not, they are not in
the same shoes. He understands Mr. Ellis' and Mr. Schoolmaster's perspectives and
their life is much more than what any of them can pay for. But from the standpoint of
the municipality and its budget and how it needs to divvy that up it can not continue.
He is just saying that they stand in different shoes and, let's be clear, are members of
the same family.
Mr. Ellis said he is a taxpayer and is with them on this. He has been speaking for over
20 years regarding this pension issue that the funding hasn't been appropriate. This is
not an over night occasion. This has been a long time in coming, and they want to
work with them and that is why he brought some other ideas. Aid. Jean -Baptiste
replied that is fine except members of the City Council have a different position and
stand in different shoes than members of the firefighters and police officers. Mr. Ellis
said but the Council got them to the 140 million.
Aid. Jean -Baptiste said he may be right in terms of his argument, but right now in
terms of how much they got, they just can't keep getting mandates that they can not
meet They've got to balance and stand from a different position In looking for that
balance. His suggestion was that they add to Section: 2 that the City of Evanston urges
the General Assembly to stop approving a million unfunded increases In pension
benefits for the police and fire pension funds. He didn't think it was going to confuse
them for Section 3 to still be included. It Is the campaign that is going to get them, not
this sheet of paper. He also suggested that in the 6' -WHEREAS" they put "WHEREAS,
the amount of City of Evanston unfunded pension liability carried as of 2007 reach the
140 million to be satisfied by 2033" . The consequence of that is they've had to almost
double the amount of money that they've allocated from the budget and you can put
the specific numbers compared to the previous years. We send it and then focus their
attention on the campaign to try to get work done.
Aid. Hansen asked if that was a motion. Aid. Jean -Baptiste said that is a motion. Aid.
Holmes seconded.
Mayor Morton said maybe Mr. Schoolmaster and Mr. Ellis could sort of enlighten the
Council on something. This came across her desk also along with all the information,
but she didn't think about whether to talk about it because she didn't see the resolution
written as a good or accurate resolution. There were some major errors. But
according to the memo that was sent by the City Manager and she referred to Larry
Bury and says ask the General Assembly to stop making costly benefit improvements to
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the downstate Police Ilk Fire pensions. Mr. Schoolmaster said they are downstate,
everybody is. Mayor Morton said but have you been as influential in the legislature as
downstate people, because they are very active. Mr. Schoolmaster said that is union
stuff and he works for a pension fund and doesn't negotiate benefits. Mayor Morton
said that is something that people should know about. The memo also says they could
customize it as necessary. But she would have to agree with the others, even if it is
putting in one paragraph of what the pension funding was In 2004 and then In the next
one saying 2007. Usually when you look at things you want to make a comparison.
The separation of the 2004 and 2007 is a little bit great and she thinks to prove a point
that would make them all feel guilty. So to save anymore anguish on this she just
reminded them that they don't have to respond to this at all. This is not something that
Is a big deal really. And they have these legislatures that are getting the salaries so get
them to do what you want them to do that will benefit us. This language that has been
put out really is not good.
Mr. Schoolmaster said he thinks the Mayor has raised an excellent point, he thinks It
was Naperville and Rolling Meadows that considered this resolution and decided as this
Council may have that it is likely better worded. He said Aid. Tisdahl had mentioned
Section 3 and every one of those items except the last one "....enhanced local
government funding authority." applies to communities that have the tax cap and that
doesn't effect them. Now they can pass more laws if they want but they are all there
every one of them. The city's finance director every year is supposed to make a
presentation to the Council as they make their report to the state and everything else.
The Council should have been getting it quarterly on all of their returns and everything
because for 20 some years they have been provided to the finance office. Where they
are, he doesn't know. He thinks that their big objection to this resolution is
disingenuous. This suggests that the 800 pound Gorilla in the room of this funding
crisis is due to the benefit increases. Do they contribute to it? Certainly they do. The
800 pound gorilla in this funding crisis Is not putting the money In and the 1993
funding law changed. In the 4"' WHt RAS in this resolution it says "...benefit increases
In recent years have contributed to a doubling of the debt carried by police and fire
pension funds from 1999 to 2004;" that was right In the year frame that the payments
were suppose to skyrocket, that was built into it and was guaranteed and predicted.
Did the benefit increases contribute? Yes they did, but it is like saying if anybody has
ever died at some time and has drank water and therefore you know water has caused
their death, there is not a logical connection there. So they appreciate the Council's
concern about the rising cost* but the benefit increases are not the bad person here In
this thing, they are contributors no question about it.
Aid. Rainey stated that she agreed with Aid. Moran and with the Mayor that this
resolution is pretty much meaningless when It comes to their situation. And as far as
what Aid. Moran said about not knowing anything, maybe It Is their fault and maybe It
is not. She didn't think it was their staff's fault that they didn't know this because if
their finance director or others representing the City of Evanston are sitting on the
pension boards and they haven't been getting a report, they've got to put the blame on
the City Manager. Because that information was provided and was participated in by a
City staff member and they did not get the feedback. Now it Is their fault for not saying
they didn't get a report from the pension boards but not having ever having gotten it
on a regularly basis she was sure they didn't think to ask. If you don't know what you
are missing you don't know what to ask for. In terms of what we should do that Is
really productive is they ought to meet with their legislators. They ought to drag them
in here and sit them down and tell them face to face. It would be so much more
meaningful for Julie Hamos and Jeff Schoenberg to hear it from them and to see the
140 million and to talk with them and say look what they've done to their citizenry.
Rep. Hamos and Rep. Schoenberg know because they got It on their tax bills. That
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personal touch Is very important. Something else that they ought to think about is
something that became very clear this year and she doesn't know how she missed it for
all these years. A percentage of the personal property tax goes to the pension funds.
It goes to offset some of the levy so why don't they have their legislature look at what
a minute increase in the personal property tax, the state level, would do to assist the
pension funds. The amount was almost a million dollars, the percentage that they
could give to the pension funds. That Is really important. Another interesting thing
that happened at that conference was that these communities that are suffering like
they are who are subject to the tax cap have been lobbying Springfield for years, to
please relieve them from the tax cap when it comes to adding or infusing money into
raising the level for the pension cap. Springfield has voted It down every single time
that they have gone there and asked. So they are really suffering and Springfield won't
help them with that. So maybe they can get a little increase in the personal property
tax because it Is a source of funds that is statewide and the pain and the problem Is
statewide.
Aid. Tisdahl disliked this resolution as much as everyone else. However, she would still
agree with Aid. Jean -Baptiste and would like to send something as minimal as it might
be because the lobbyist that they do have and that they do pay is the Illinois Municipal
League. The Illinois Municipal league and the NWMC are their route to passing
statewide legislation on this unfunded mandate and they desperately need to have that
done. So if they want to write their own resolution and have It be an excellent one they
should do it by a short deadline so that It actually gets out and the Illinois Municipal
League can say that they have resolutions from 95% of their members or whatever.
But since they are their people in Springfield they are not going to write a beautiful
resolution and get all of the state to jump up and down and say hallelujah. So what
they need to do is work through the lobbyist that they have and she is not happy with
their lobbying from what she has seen of it so far. But if they are going to write a new
resolution they need to do it quickly or pass an abbreviated version of this one so that
the IML can say that they have 95% or whatever the percent of their members concur
that unfunded mandates on the pension are hurting us.
Aid. Hansen thought they were told there was a deadline for this because they are out
of session in May. Mary Morris said the deadline is mid April. In that case Aid. Tisdahl
said she would like them to work on this resolution.
Aid. Bernstein said some of the language Is incendiary, "generous", it is subjective and
It ticks people off. But as former Officer Schoolmaster indicated, benefits are only a
part of the deal. Aid. Moran has enumerated a whole list of what has gotten them to
this problem. So if they are going to send something like this he would take out the
"generous" In the second WHEREAS. It would read "Whereas, retirement and disability
benefits, early retirements, Investment strategies, inflation,..." etc. When they were
talking about the immigration resolution they wanted to be more inclusive. He would
add those kinds of things additionally, with respect to what has caused the problem.
He thinks that what they have chosen to do is to accept representation by Corporation
Counsel that they were following the law and they didn't ever ask the question, the
kinds of question they are asking now like what portion of this debt are they funding.
This debt did not just materialize, it has been coming forever and it is a question of
paying on the left instead of the right side. Now they are moving to pay the full
amount and they should have had that option and nobody ever gave them that option.
He takes blame because he just didn't have the questions to ask. But they were always
told they were funding it property and even Gabriel Roeder Smith & Co said they were
funding it within the realm of reasonability. But what somebody didn't say Is that they
were funding it in the lowest possible way and that is really the problem that has
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caused this drastic Increase. It has been there all along, they just had not chosen to
look at it. Again he agrees with the suggested language in Section 2, he doesn't want
them to be precluded from approving any new increase pension benefits If they need
them. What he does want them to do is to find alternate revenue sources, whether It is
from the personal property fund or something else and he wants to be consulted.
Those are the two things that he thinks they need to do. Then at the end of the day
they do need some kind of reform. So if they want to eliminate those things that are
already In place they just have to deal with it because It is a problem that exists across
the state. Skokie has a deeper pocket than Evanston does so they are not as severely
impacted because they can draw from other revenue sources. So he would remove
"generous" and add some language to the list of causes for the problem just so they
can show them that they are not just putting it on one thing. It is a combination of
factors. He really likes the idea of having the Blue Ribbon Committee give them some
kind of outline to send to Springfield because right now the General Assembly Is
dysfunctional. They can't get it together and they can't incorporate the kinds of
reforms that they need to come out appropriately.
Aid. Jean -Baptiste said can they say in the second paragraph "WHEREAS, retirement
and disability benefits, inflation, low return on pension, fund investment and other
factors." Aid. Bernstein was ok with that language and Aid. Tisdahl suggested using
"Investment restrictions". Someone else added "have contributed" and Aid. Bernstein
was ok with that also and stated that they are not going to be as successful as they
want to be. They all have contributed. He noted that Aid. Moran had listed a lot of
ideas. Aid. Tisdahl mentioned early retirements, investment restrictions, and Increased
benefits of contributing to escalating debt.
Aid. Bernstein moved to the third Whereas ".........increasing benefits without providing
additional revenues.." and added "without consulting with municipalities with regard to
their ability to pay increased benefits..." Because that is a problem, nobody has asked
them, they just said do it.
Aid. Tisdahl said that is where they will say they've asked the IML. There was a guy
from the NWMC who was the president of the pension fund and he talked about the
way that they do things there, why the pension funds keep putting in new great Ideas
for increases and then they work jointly on them. We don't put in our own bills so we
are always reading to their bills and In a compromise you always add something. That
was pretty upsetting to her to hear that that is the caliber of lobbying. That is not how
to do it, but the IML is all they've got. She would still like to take out Section 3 on the
resolution because she doesn't think those are their problems.
Aid. Bernstein suggested that Section 3 read "That the General Assembly embraces
sensible pension reforms." and leave off the rest. Aid. Tisdahl thought that was
excellent.
Aid. Moran said while talking about all of this lobbying and IML and so forth this is a
problem that is big enough that they could hire a lobbyist if they really thought that It
would save them 10 million dollars. If the City had some effective lobbying, it would
save 10, 20 or 50 million dollars, and it would be worth it to hire somebody. They
might want to think about that. Aid. Tisdahl's thought was they are hiring a lobbyist
through the IML and they should meet with them and if they are not happy then they
should hire someone.
Aid. Wollin commented on an unrelated question. She had been to a meeting yesterday
at the Constitutional Convention which will be on the ballot in November. There are
those skeptics who say the reason that people want a constitutional convention Is to
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change the pensions for teachers, for police and for fire. The teachers have taken the
position against having a constitutional convention even though It is such a democratic
Idea, because they do have a defined benefit plan for teachers in the State of Illinois.
So they are worried, whether it Is funded or unfunded. She was wondering if the police
and fire have a position on the Constitutional Convention. Mr. Schoolmaster said they
have seen in the IML song book that this is something that they want to push and yes
they think those benefits should be protected. Aid. Moran wanted to know if It was by
not having a constitutional convention. Mr. Schoolmaster said there are enough people
in the legislature that belong to the bankrupt general assembly retirement fund that
have a hard time getting rid of that. You can't change the rules, you can change some
of the new people but they don't need to change the basic rules.
Aid. Hansen asked Aid. Jean -Baptiste if he accepted Aid. Bernste€n's amendments to his
motion. Aid. Jean -Baptiste said he did. Aid. Hansen said there Is a motion on the floor
and it has been seconded
Motion carried.
Aid. Jean -Baptiste asked if they could get It tomorrow. The comment was that it is not
on the Council agenda for tomorrow.
For clarification Aid. Hansen said part of Aid. Jean-Baptiste's motion was that it would
just be the 140 million total unfunded liability police and fire pension and state how
much more they paid this year compared to last year. Aid. Holmes reminded them that
It has to say 140 million. Aid. Bernstein wanted them to remember that it is also not a
static number. Aid. Jean -Baptiste said what they want to show is that It Is a significant
Impact on the budget.
Rolanda Russell said she wanted to make sure she captured what they wanted. One of
the items talked about was Aid. Jean -Baptiste said he wanted It to be 140 million dollar
unfunded liability and then she heard someone say they wanted to have a difference
between what is owed now and later. Aid. Jean -Baptiste said they just paid a whole
bunch of money this year as compared to last year. Aid. Holmes added that they need
to make sure that it says 140 million total to be satisfied by 2033. Aid. Jean -Baptiste
added with interest.
Aid. Hansen said this will be on their April 28 Council agenda. Ald. Holmes asked if
they voted on it tonight why can't they just have a corrected copy. Gavin Morgan said
it is not on the Council agenda to be within that 48 hour period.
Aid. Jean -Baptiste said to Herbert Hill that they've got to get this in by mid April, even
if it means the City Manger's office work with the Law Department to get it In in the
process.
Mr. Hill said they would attempt to get it into the process. There Is a problem with
respect to the open meetings act and 48 hours notice on an item and right now the
agenda that is printed does not have this Item on it either as public business or as a
defined statement.
&LUE RIBBON PANEL:
Mayor Morton stated that she did not agree with the suggested charge for the
committee provided by the City Manager. She was sorry that she wasn't at the meeting
when the Blue Ribbon Committee was set up. These are some high powered people
who have agreed to be on this committee and they can't just pull them together and
say they have a problem. What she wanted to know was a specific charge for this
committee on what they really want them to do.
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Aid. Moran asked if the Mayor had received his memo. Her response was yes. Aid.
Moran said he agreed with the Mayor that they should not just completely turn them
loose. But on the other hand these are smart people and they may sit down and rook at
the situation and say they need to look at this and that.
Aid. Rainey added that she wanted them to look at whatever they think they should be
looking at. Aid. Bernstein suggested giving them the budget. that was Aid. Jean-
Baptiste's sense as well, they don't have the answers and they are asking this group of
people to come in and help them. His thought was that the Council needed to give
more feedback and start engaging in that discussion.
Aid. Holmes felt the committee needed to begin to meet.
Aid. Rainey stated that the very first thing they should do, If it hasn't already been done
is send these people a letter letting them know they are on the committee and that
Council Is getting ready to initiate their activity and that there will be a lot of
Information sent to them. This should be sent very soon.
Aid. Jean -Baptiste suggested that this committee should be staffed by someone other
than the City Manager.
Mayor Morton said the only other thing is first they will get them together and she
wondered if any of the Council would be joining them at their first meeting to help
clarify the problem.
Aid. Rainey said no. They need to give them all the Information in writing. They also
need to provide them with both packets from the Fire Pension Board and the Police
Pension Board, and all the information about how they dealt with it this year, as well as
the materials from Gabriel Roeder Smith A Cc and the Scott Balice A Association and
the actuarial reports.
Mayor Morton then asked when they would want the committee to report their findings.
The response was let them meet and sort of find out who is going to be In charge
because they all have good backgrounds and can probably take a broad look at It and
decide. Maybe they could report back sometime in August.
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OTHER:
Mayor Morton said the Council has a list of the people who applied for the City Clerk
position she would like them to look their information over let her know if they feel
there are some people that she should not put her mind on because she doesn't want to
waste her time, nor does she want to waste Mary Morris' time. She has asked that
each one of them contact Mary Morris first so she can give them an Idea of what the job
entails because they may change their minds when they find out that it Is not a
permanent job and all the work that Is Involved.
Mary Morris said she interviewed one today and has two scheduled for tomorrow. Aid.
Jean -Baptiste asked If she was making recommendations. Ms. Morris said no she was
only giving them an orientation.
Aid. Hansen asked Ms. Russell to have item V moved to the next Rules Committee
meeting.
The committee moved to go into Executive Session.
ADJOURMENT:
Meeting adjourned at 7:15 p.m.
Respectfully submitted,
Darlene Francellno
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MINUTES OF THE RULES COMMITTEE MEETING
MONDAY, MAY 5, 2008
6:00 p.m.
Aldermanic Library
Present: Aid. Bernstein, Holmes, lean -Baptiste, Moran, Rainey Tlsdahl, Wallin
A Wynne
Presiding: Aid. Tisdahl for Aid. Hansen
Absent: Aid. Hansen
Staff Present: Darlene Francellno, Samuel Hunter, Gavin Morgan, Elke Purze &
Rolanda Russell
Guest: Suzanne Calder, Mary Morris, Mayor Morton, Bob Seidenberg & Bill
Smith
Aid. Tisdahl called the meeting to order at 6:05 p.m.
jAPPROVAL OF THE APRIL 7. Z008 MINUTES:
Aid. Wallin moved approval of the April 7, 2008 minutes. Aid. Holmes seconded. Aid.
Rainey commented that these minutes were the most intense, perfectly crafted and
extra special. Aid. Wynne added that they were extraordinary she wasn't at the
meeting but really felt as though she was there.
Minutes approved.
CHICAGO OLYMPIC COMMUJEE- ZENS FOR 2016:
Aid. Rainey said the Chicago Olympic Committee will eventually ask for resolutions
from all of the communities and two members to serve. She felt they ought to
participate and have a team.
Aid. Moran volunteered to do whatever needs to be done. Aid. Wynne asked if he
would like to be one of the two people. Aid. Moran's response was yes.
Aid. Wynne moved that Aid. Moran be one of the two appointees. Aid. Bernstein said he
would volunteer to be the other appointee. Aid. Rainey seconded.
Motion carried.
Aid. Holmes noted that this event will bring some money to our community as well and
Aid. Wallin added that there would be events In Ryan Field.
Aid. Rainey said speaking of Ryan Field there Is an event planned for Thursday night
that is going to require the hiring or in the process of hiring 150 off duty police officers.
She wanted to know why they had not heard anything about this even. It is a
celebration of the State of Israel and they are having metal detectors and 50 caliber
guns on roof tops, etc.
Ms. Russell responded that on Friday night Max Rubin came to her and said he attended
a meeting at NWU and our police were there as well. This group will be charged for
extra off duty police officers and are putting together a plan. Once they have the plan
she will share it. She did not have any other background on this event other than the
group is using NWU facilities and the University's police department has been Involved
In the planning along with Mr. Rubin and our police department.
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Aid. Tisdahl said when there are large event it shuts the neighborhood down and there
Is no parking and it puts a tremendous impact on the neighborhood.
Aid. Jean -Baptiste asked that Ms. Russell find out tonight by tailing Chief Eddington
and Mr. Rubin in order to provide them with more information since the event is
scheduled for this Thursday.
Aid. Holmes noted that Chief Eddington would be at their Human Services meeting
tonight.
Aid. Tisdahl said one thing she would like to know is whether they get a tax on the
tickets that they sell for this or if they only get it on athletic events because it does
close down the neighborhood and creates havoc. Aid. Wollin said there might not be an
admission fee.
Aid. Rainey noted that the event is scheduled to start at 5:00 p.m. with 10,000 people
arriving throughout the day to the stadium and those are the people they expect to
attend the event not counting protest.
Aid. Jean -Baptiste felt there ought to be a request to the City Council so they can
understand what kind of resources they are putting out and the liability and
responsibility.
Ms. Russell said she would go and make tali to the Chief and see if he can email the
Information.
SISTER CITY - BELIZF.
Aid. Rainey said after reading all the materials and after remembering how it was
during the budget, there really wasn't much discussion on this item. She moved that
they reallocate the $S,000.00 to the Sister City -Belize. She wasn't' sure where from
but they should forget they ever did whatever they did and move on. Aid. Jean -
Baptiste seconded.
Motion carried.
Aid. Tisdahl thanked Sam Hunter for being present.
NEW BUSINESS:
None
ADJOURMENT•
Meeting adjourned at 6:13 p.m.
Respectfully submitted,
Darlene Francellno
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MINUTES OF THE RULES COMMITTEE MEETING
MONDAY, AUGUST 4, 2008
6:00 p.m.
Aldermanic Library
Present:
Aid. Bernstein, Hansen, Holmes, Jean -Baptiste, Moran, Rainey, Wollin and
Wynne
Presiding:
Aid. Holmes
Absent:
Ald. Tisdahl
Staff Present:
Kenneth Cox, Douglas Gaynor, Gavin Morgan, Elke Purze, Rolanda Russell
Guest:
Mary Gavin, Rep. Julie Hamos, Sen. Jeff Schoenberg, Bob Seidenberg, and
Bill Smith
CALL TO ORDER:
The meeting was called to order at 6:05 p.m. by Aid. Holmes.
APPROVAL OF THE MAY S. 2008 MINUTES:
Aid. Wynne moved approval of the May 5, 2008 minutes. Aid. Rainey seconded. Minutes
approved.
DISCUSSION OF STATEWIDE FRANCHISE FOR VIDEO SERVICE PROVIDERS:
Aid. Holmes noted that our state legislators were invited to this meeting to discuss both items on
the agenda tonight and Rep. Julie Hamos and Sen. Jeff Schoenberg were available to attend. She
thanked them both for attending.
Mr. Morgan noted that this was a reference from Aid. Bernstein at the last Council meeting to
discuss this with our state legislators.
Aid. Bernstein stated that multi national corporations are taking advantage of a municipality. He
is so frustrated and appalled by the presence of these AT&T boxes all over our city. He has
constituents starting to talk about boycotting the people who use AT&T services, because but for
them these boxes wouldn't have to be present. How did they let this happened because he wants
It undone. He wants to resend the legislation that gives AT&T card blanch authority to come In
and place their boxes wriere they choose without regard for the city's interest or concerns. They
are talking about a $15,000 berm project but in the short term, until they get that he'd like to
know how they go about it. Because there are certain areas that he has Called to the attention of
a couple people that obstructs vision around corners. These boxes are ridiculous, ugly and
wrong.
Rep. Hamos said this was a major intuitive in the legislature last year, to allow AT&T to have a
statewide vireo franctr.se. The public policy goal was all about getting consumers competitive
environment, to allow consumers to have choice in their video services. And up till now cable has
had a monopoly through Municipal franchise and this was all about new technology that finally
made it possible for AT&T to offer competitive services. And the competitive service will appeal to
many customers, if AT&T pnces it right and if they bundle it with their other services which they
are In the process of doing. Now with the technology to affect that, what they're told, is to create
a second box and this second box has to be dose to the first box in order for it to work. She
believes that the City Manager negotiated this $1,500 grant to allow for landscaping around these
boxes, so in a little bit of time, hopefully it they will disappear. But as far as undoing this she
didn't that that could be done.
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Aid. Rainey asked if the state got a franchise fee. Sen. Schoenberg's response was no what the
state got was a pure, pure sense of competition for what had been an exclusive franchise for
cable television services. Rep. Coulson added that the city will get the 5 percent taxes on this
plus the PEG will get an additional 1 percent. So theoretically there Is a slightly higher tax now
on the statewide franchise enjoyed under the municipal franchise, because the PEG will get a
separate 1 percent for government public access.
Ald. Bernstein went on to say that if they want to be here, fine, if they'll legislator wants to bring
up their home rule authority by telling them they can not have a monopoly on their cable or if
somebody wants to come in okay, but people who are being served should have the boxes paced
on or near their property lines. Or they should be secreted in the alley ways or some how hidden
from the common ways. He has spoken to people in Skokie who are not quite there yet but
people are going to be very frustrated. Now 10 years down the road you will go by these boxes
and not even notice them because they would have been here for 10 years but right now they are
very noticeable and they are wrong. Knowing how the city fights to keep 3 foot fences off the
parkway and homeowners are landscaping their front parkways and then we let AT&T come in
and put in a 2 x 4 concrete foundation on top of which they have an outrageous volume of box
and then homeowners come in saying they can't put up a 3 foot fence to keep the dogs off of it.
It is wrong and that kind of legislation should never be imposed on the municipality. If so %shy be
a Home Rule, why be anything.
Aid. Jean -Baptiste said they are we looking for cause and the technology and sharing with
everybody also has this negative impact. He didn't know whether the boxes could be made
smaller over the long term, but they need to start thinking of how to address this. Aid. Woil:n
stated that the only thing she could get them to do was make the numbers on the boxes smaller.
They had huge numbers on them that you could be seen from miles away and they agreed to use
smaller lettering, but that was it. Ald. Jean -Baptiste noted that they also pulled the sign because
they had some signage that said dangerous, this that and the other. He thinks It Is worth it to
communicate their concerns but wanted to know how they would go about it. step. Coulson said
she didn't think It was possible but thought landscaping Is a pretty good option. Ald. Jean -
Baptiste agreed that it is a real good option. Aid. Rainey added that if is something likes vines
you'd have to remove them all off when repairs to the boxes were needed. Sen. Schoenberg said
he could raise the Issue that there are some esthetic challenges which still need to be overcome.
Rep. Coulson noted that they did raise it, they did a great job of negotiating this grant and she
was told that it does allow for landscaping. Aid. Wollin said people on Dempster Street are Coing
3 sides of the box and leaving one side of the box open to have access.
Aid. Hansen asked didn't they require AT&T to give them their plans as to where they were
putting their boxes and they did site visits and tweaked certain areas because staff didn't feei
that It was in the right place? And they put those controls on there along with this requirerrent.
Mr. Morgan said they passed a rjght-of-wa�i ordinance. Aid. wollin added that homeowners that
are closest to the boxes can do whatever landscaping they chose.
Rep. Coulson said they did hear from municipalities that had seen the boxes and they did have
pictures of the boxes and at the key moment when you are doing public policy you have to nave
the pros and cons. There war, a public policy goal here and it has always been about choices for
consumers and the idea of tum;ng it down because of the technology might not have speeded up
enough to make it very small and discreet. She added that for municipalities what they did So to
bat for during negotiations was about the public access TV, because they wanted to make sure
the quality of programming and the access to programming was going to remain. And they did
negotiate that extra 1 percent tax to the city, so there was involvement on behalf of
municipalities during that whole negotiations, but it was about a separate thing then the esthetics
of the box.
DISCUSSION OF LOST TAX REVENUE FROM PROPERTY OWNED BY NON -PROFITS:
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Ald. Holmes commented that in their packet is a memo dated January 31, 2008 Herbert Hill to the
City Manager about the possibility of a pilot, which is payment in lieu of taxes. This discussion
has come up before and they of course just finished discussing it again In relation to the National
Louis property on Central Street and wanted to discuss it in more detail tonight in terms of what
possibilities there are. They had said earlier that they needed to discuss this with their legislators
and get some input and thought in terms of what could possibly be done. Rep. Hamos asked if
they were thinking in legislative as far as legislation. The response from Aid. Holmes was yes.
Aid. Holmes said they don't expect Rep. Hamos to have an answer but would just like to discuss
It, actually they discussed it in 2005 when looking at Northwestern. They have talked about how
it could possibly work in terms of non -for -profits that have lots of property that they don't use for
their stated business. In other words if you look at Northwestern in terms of their using property
for education that is fine, but if they have properties that are off the tax roll that are not for their
stated purpose then maybe there should be some taxes on those. Aid. Moran said In his
understanding that is the case, certainly if it is for commercial purposes they pay taxes. Aid.
Holmes said but what about residential, in terms of all the homes.
Aid. Jean-Baptiste's thought was that it is really a broad issue, he didn't know what they were
going to do next budget season or the one after that or the one after that as their cost of
operation gets higher, revenue sources becomes more and more limited. They have not -for -profit
Institutions wanting to continue to operate and be tax exempted and for the most part, most of
these institutions have been adamant and on principal that they refuse to make payments In lieu
of taxes. Aid. Tisdahl shared with them some articles regarding some movement that is going on
It the northeast where some municipalities are looking at institutions with endowments over a
billion dollars to perhaps approach legislators and try and find some kind of exception to the rule
of exempting these institutions. But overall they need some help to try and find a way to survive
what Is coming at them. With the not -far -profits getting all of me services that the city has have
to offer, we basically subsides them. That is not to say that there are no benefits, there are, but
eventually, the city ultimately bites the bullet and have no cooperation whatsoever. It Is not
because they've not made efforts to try and build good relationships it Is just that the law is on
their side and they've been totally unwilling to do anything voluntarily. He doesn't know what
atmosphere is in Springfield, or whether this issue has been tested, or whether anyone has raised
it. He doesn't know whether their lobbyist In the past has approached the legislators to say what
can be done. Maybe Rep. Hamos or Sen. Schoenberg can give some sense as to what they think
might be attainable in any way shape or form to reform some legislations down in Springfield to
help them out.
Rep. Hamos said the difference is between a voluntary prograrn and a mandatory program and
she didn't think they had ever seen a bill that requires a mandatory program. Maybe some of the
community groups talked about it when this was a big debate, but she didn't think they've ever
seen a mandatory program. To define that world be interestir•g and it would be a challenge and
would apply to lots of other communities and lots of others. I.` it is just universities that's one
thing if it is all non -profits that's another thine and non -profits with certain kinds of uses is
another thing. She would certainly be open to working with tie Council as far as thinking about
legislation. But believes the definition has to c_ worked on.
Aid. Wynne said over time they've looked at r-ograms in othe- states and Aid. Tisdahl had this
latest information looking at institutions that '-ad more than x dollars in endowments. Perhaps
there is some equity there and the term pilot comes from Pen- sylvania where obviously they
have a slightly different structure, but Philade.ahia has managed to make it work. What they are
frustrated by is that the law at this point, as A`d. Jean -Baptiste said, allows this and no one is
willing to step up and make a contribution because they don't want to set some kind of precedent
and they don't have to. And so far what seems to have worked on the east coast with large
educational institutions, which she calls a "shame technique", has not worked here. Taking the
moral high ground has not worked here and sne was not entirely sure why, but Aid. Jean -Baptiste
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is right. They are looking at budget after budget after budget and are going to need some help.
The secondary Issue Is if they can't get legislative help, at the very latest what they need to do is
come up with some sort of uniform policy that applies to anyone that comes to the city asking for
something. Stating that this Is the voluntary program and if you want a zoning variance or
something, a map amendment or tax amendment and are a non-profit then here is our program
and here is the formula and you will follow it. That is one thing they can do here, but that
doesn't really solve the problem on a larger scale for them and not that you can Control
improvement but she thinks they need some legislative help and they can't possibly be the only
municipality in Illinois that suffers the consequences of so many non -profits.
What frustrated Aid. Rainey more than the moralistic, 'no we won't pay", is the lack of political
will among her colleagues to go after some of these organizations to make payments, deliver
services, or for payments In lieu of taxes. Her thought was that way before they ask the
legislatures for help, they need to get their act together right here and figure out what it is that
they think should be done. They had a golden opportunity in the past few months to deal with
this property on Central Street. And with the exception of Ald. Jean -Baptiste and herself, there
was absolutely no Interests whatsoever in getting some kind of contribution. Which their legal
department has told them for years is perfectly acceptable, perfectly legal and perfectly
constitutional when you give a special use you offer them the opportunity to make some kind of
contribution. They don't have to do it, but then they don't have to get the special use, it is really
simple. So when they had an opportunity like that from an organization that Is not poor they
couldn't even come together on that for even a minimal amount. She would have been willing to
accept a very small amount as a token offering from the organization. She felt like an idiot after
about S minutes knowing there was absolutely no support in the room for that, So before going
to the legislature, they have a lot of work to do at home. Also, If you heard about the Blue
Ribbon Panel the other night trying to deal with the pension, they are saying you've got to go
after people for paying for fees for fire services and the chairman said and if they don't want to
pay for fire service ask Northwestern to start up their own fire station. Which she thought was a
radical comment by a fiscal conservative in the City of Evanston, where they are all different
here.
Aid. Moran noted that in the second paragraph of the 3anuary 31, 2008 memo It references .........
Illinois statute 35 ILCS 200/15-30, which allows taxing districts to enter into "mutually acceptable
agreement[s] with the owner(s) of any exempt property ........... Were the PILOT Program to
operate pursuant to the aforementioned statute, the City could not Impose mandatory PILOT
agreements on tax-exempt entities requesting special uses or other discretionary grants by the
City Council ... and any PILOT agreement between the Cry and a tax-exempt entity would be
subject to a five-year time limit with a one-time five-year extension." He has not been able to
study the legislative history on this particular statute but thinks the dear implication of the
statute is that titles can't force people to make payments in lieu of taxes in return for regulatory
authority actions. Aid. Rainey stated she was not talking about payment in lieu of taxes. Aid.
Moran went on to say that he was not sure what she ,sas talking about then because clearly they
don't have the power to tax these people. He didn't tnink any political will of this Council would
somehow transform them into having the power to tax not -for -profits. It is not within their
domain to do that, political will or no political will and aeople have to face up to that. The
question comes down to a few other considerations ore he is not sure he agrees with. The memo
is a good one but he has some skepticism about the rotion of whether they as a home rule unit
can do this aside from this state statutory provision. Because he thinks the statutory provision
strongly suggest that to enter into a PILOT agreement in return for regulatory permission to do
things, whether it is zoning or otherwise, has been passed by the legislature through the
enactment of this statute. Whenever it was enacted veould be considered something in the way
of extortion and that would be beyond the legal limits of what a municipality can do.
Aid. Bernstein said he agrees they can't force non-profit to make a payment In lieu but that's not
necessarily what they are talking about. They do have every legal right to exact payment in
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some amount, and it has to be reasonable and consistent for zoning relief, that has always been
the case and they talked: about that years ago. It is different then hitting a PILOT. With respect
to what just happened, I-,e is not opposed to taxing or getting whatever funding they can. But In
the situation with the Central Street property they are talking about people who have been here
for 21, 25 years and they started the game with one set of rues and he just doesn't like changing
the rules in the middle a the game. They have to develop a uniformity of policy and set
standards with exact payments from everybody and not just necessarily non -profits, but if you
want a special use this is what it is going to cost you. If you vrant to call it an impact fees fine, it
can be called whatever u ey want as long as they get some money in the draw. They can't force
National Louis to pay, bu; had they started under a different system and been told day one that
they would have to make an application for special use as an accommodation for whatever they
do and if granted they would be called upon to pay whatever amount. They can determine what
the particulars should be but you have to indirect, you can't do indirectly what they can't do
directly. They can't impose a payment in lieu because in fact tnat is a tax absent some kind of
consideration. He thinks they should do this because they have no choke. He stated that Aid.
Rainey might have felt o,.: of place, but she was absolutely right, they can't go on like this
The benefit of state legis�etion is that every community, which was one of the situations with
National Louis, is that the,- have facilities in 6 different Communities so what they would do would
set a precedent for those other communities said Aid. Wollin. But if there was state legislation
that every community received a certain percentage for city services that have a private
university or maybe ever, state universities that would help, which in the past has been for fire
services. She has been part of their negotiations and they have been very specific with the
amount of fire calls to the x property, everything had been documented and she and Aid. Tisdahl
presented those again recently to them. Some of those eastern, situations like Yale for example,
the community Itself was so run down and decrepit that it was to their own benefit to build up the
community so people and students would want to come there. That is not the case in Evanston,
thank God, but again they. don't have the power to force them to do it. As far as uniformity of
policy, she agrees. But sr'te remembers when they had an affordable housing ordinance where
they specifically said how much of the money had to be given to affordable housing. When she
and Aid. Hansen first came on the Council they would say to each other, how much should they
ask for and what do you Mink this developer is worth that is no,: the way to do business. So that
ordinance put In place a a, ery specific formula, not that it is great, but at least it is a uniformed
system for everybody.
Aid. Rainey's feeling was r' they rely on the state they can just forget it, because that will never
happen. The lobbying tha' will take place will completely delay .t forever. She asked Aid. Moran
how does he explain the r-,iddle paragraph on the second page of the memo because it says very
clearly, that in addition to every thing else when a non-profit comes for a special Use, you can
ask them for a contribution and yes they don't have to pay, bu: then you don't give a special use.
Aid. Moran said he didn't -.ave a problem with that. Aid. Rainey said it Is unusual because not
everybody is asking for a special use. Aid. Moran said exactly and you are In that trap and the
other trap is that if you s;i: there and pass the special use that remands a payment and for
whatever reason they car ~ afford it, it is bad precedent for the-) for a multitude of reasons. One
could be that they own pr_.Derties in other places and are going ;o get hit there if they make a
concessions or there migt•: be a whole variety of reasons. But ` you put it in there and they
don't accept it then it is come. Now maybe nobody cares, but `cr example say they don't want
the PACE program to be con Central Street or even in Evanston, and they stipulate that they have
to pay a 100 grand a year and they say they can't accept that. Aid. Rainey said that is a negative
motivation, hers would be to get them there, but to get them to pay a contribution. If this
Council were united on this matter, this debate would be going �n an entirely different direction.
The problem is that the majority of the Council is not supportive of getting support from non-
profits, financial support az-ove and beyond all their good work.
5 i-27-041 C46:04 AM
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APPROVED
They had this debate on the Council floor and it will continue as long as those who will not be
willing to exact the kind of cost from these corporations stated Aid. Jean -Baptiste and without the
law behind them they are still weak. They have the vacillation on the Council and gave different
perspectives and even when some of t„em may be strong they will go to one institution and may
come back and be soft because of other considerations and will end up being all over the place.
They need some help from the state legislators in terms of the endowment that Aid. Tisdahl
talked about. They need to find some kind of way, it may not be popular to pass a general law to
just tax every non-profit, but they need to develop some tactics to try to get at some of those
funds that they have lost all together. Inevitably they have to provide the services and as was
said it before its costing more and more to provide those services and there Is less and less
revenue sources to look at. He asked the legislators how can they get some kind of assistance
and what kind of approach would they suggest. They have homework to be done but at the same
time they need help.
Rep. Hamos stated that they have about 6 months before starting up again in Springfield and she
needs some time to craft legislation, if that is the route Council would like to try. Nothing is lost
by trying. The language needs careful definition. There are at least two pieces, basically take the
section in the second paragraph of the `rst page of the memo, "mutually acceptable agreement",
perhaps use "provided however" so that, under certain discreet circumstances there could be a
possibility for something that wasn't mutually agreeable. Tien it says "...any exempt property..."
that would have to be define which prorerty would be subject to this exemption from tilai ruse,
like the new rule that was talked about maybe a billion dollar endowment, but maybe it doesn't
just apply to universities with endowments. Someone said non -profits would apply. Rep. Hamos
continued by saying that again how do you define the size and which properties would be
Included. And the second is direct and indirect cost of services really requires definition. Then
have just a modeling for how it would work so that everybody will be very clear on what the rules
were. There is more homework to be done there but she would be interested in working to see
how they can do this.
Aid. Bernstein didn't' think that the definition that had to be changed was necessarily in the
purview of these legislators, but with Rep. Jan Schakowsky. How a not -for -profit corporation
maintains is not -for -profit status, when they have a 6 'h billion dollar endowment that they don't
like to touch for principal or the interest, when they can enter into a business relationship and
generate a revenue stream of $750 million dollars for a drug they created, or when they can pay
their CEO's upward to 800 thousands. There is a real disconnect between what makes these
people non -profits as oppose to an oil company or some other company that are theoretically for
profit. Histoncally, educational, religious, or whatever, they were all justifiable reasons for calling
these entities non -far -profits. He didn't mink they were any longer and he has talked to Rep.
Schakowsky for years about this, about c`ranging, and this is a long up hill battle, but with
respect to the state legislators. They have to get their statute on board and it has to be couched
around land use because that is their strongest methodo!ogy to go approach people for payment
and It sort of ducktails into the AT&T boxes which you know is a taking. There is no question
they have been stripped of their rights to govern their land and that is the state legislator that
has done it to them. This is appalling to nim but in the snort they have to Create legislation, a
statute in house to say from this point fc--.varc all special use of land requires the following and
come up with something. They have to set that standarC and then go to the state and say this is
what we did and maybe other municipai es ti%Ill pick up on it, this is something they have to do.
He didn't think it was going to happen from the state do -ern, it has to come from them to the
state.
Aid. Jean -Baptiste was sure he understood the distinction that it is not within their purview. Aid.
Bernstein said he thought the non -profits status is a federal statute. Ald. Jean -Baptiste said a tax
exempt status. Aid. Bernstein said that is right it is exempt rather than non -profits, but that's
federal, not -for -profits corporations are sate run and that is not where they are getting hurt. We
are getting hurt on these large, and It is always downing Northwestern, it is not just
6 1.:7{S 146 M a.1
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Northwestem, they have other areas. Evanston Hospital is sort of running itself into the ground,
he Is not sure what they are doing over there but they are working people to death, the quality of
service has really gone down, markedly, they are doing it under the names of not being able to
subsidize. St. Francis is also hitting the wall with what is happening to them with people coming
in after them, those are the 3 big ones, and they've got to avoid that. In terms of tax exempt
status for non -profits there has to be greater restrictions on what they can do. When they were
doing the Fair Share Ordinance, Alan Cubbage, the vice President in charge of community relation
said he had no problems with the fact that he lived in a tax free house, he said it was one of his
benefits. And as a set off to that he told a group of people, all of whom were against
Northwestern that he did his best to buy all of his groceries in Evanston as an offset to the taxes
that he was taking off the property and he had 3 sons in District 65 and 202. There is a real
disconnect, but that is something Rep. Schakowsky has to address. With respect to what they
can charge people for the use of their land, that is state, that is something that the legislators in
the state can help them with.
Sen. Schoenberg said the question is with the immediate financial challenges that the city is
presently facing and hoping to find some relief through a proposal like this one, would a certain
protracted court fight, hard case law working against you be the soundest investment of this
city's resources. He is intimately involved with a legislative proposal where hospitals throughout
the state voluntarily assess themselves, a percent of their revenues minus public
reimbursements, pull that money on the states behalf and receive matching federal funds. They
are current completing a 3 years 1.8 billion dollar program, while they were doing that, legislature
passed a comparable program that would provide up to 4.5 billion dollars of new federal money
over a 5 year period for hospitals throughout the state. There are a number of hospitals which
pay out more than they get back through the formula. Evanston Hospital is one of those
hospitals winch is characterized as a loser that they pay a h;gher assessment, which Is a
voluntary assessment than they receive back. What makes this work legally according to both
the state and federal courts is that that assessment is voluntary, it is not mandatory because
they have met tax exempt status. He is happy to assist as like Rep. Hamos, to assist the Council
and the City to explore what's under every rock in order to achieve the goal of finding new
resources to meet the financial challenges which the aty faces. However, a certain protracted
legal fight over a concept like this would probably cost much more to pursue than the actually
dollars that the aty would realize.
Ald. Bernstein replied that what they are talking about is changing the law, so it changes the
playing field. Clearly, they talked about resending their gun ordinance rather than fighting a
losing battle. So they are aware of that kind of concept, but what they are in need of is
something that changes the rules. Sen. Schoenberg used National Louis as an example and
asked If at the time National Louis campus was sold, was the issue of some form of payment
being made to the City for maintaining the presence raised? Ald. Bernstein responded that
actually, National Louis raised it in argument by saying that the variation between the new tax
amounts on the residential property would be more than what's coming off the tax rolls for this.
The city doesn't have the ability to raise it. Sen. Schoenberg said from the way he has
understood it the PACE Program, whicn is a very successfu! orogram, so successful to the point
where he has so:.eht to encourage a r.e�ver o-ogram, currer.: based in Highland Park to partner
with them. They weren't able to do so for lack of space. As ne has always understood It they
wanted to keep the PACE Program here in Evanston.
Ald. Wynne stated that the point is no: the worthiness of any of these not -for -profit programs,
because they are all worthy. The point is, which is what AId. lean -Baptiste referred to, is that
some of them feel that this program is more worthy than that program. What they need to have
is a uniform formuia so that that subjective aspect of it is removed. So whether it is PACE or
something else is not the point, the point is and she agrees with Ald. Jean -Baptiste that
Northwestern might think that Evanston is a lovely, leafy, green, safe place to attract parents to
write that $45,000 check for now. But Council is sitting here looking ahead at these budgets
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which are keeping her awake a night. They are trying to figure out a way to maintain this kind
of quality of life and can't seem to convince Northwestern or Evanston Hospital that they have to
partner with them with this. It is better to treat someone when they have a cough than when
they have pneumonia, but It doesn't matter what the program is, the point is help is needed to
create consistency so that when they impose some type of uniform methodology they are backed
up by legislation from Springfield in order to achieve some new revenue for them.
Ald. Holmes noted that it goes back to the point that Ald. Bernstein made several conversation
back ago when he said that if they had had something in the beginning when they first started to
talk with National Louis, that would have been different, but when it came down to the voting and
then changing, that made the difference because they have no leverage.
Sen. Schoenberg commented that Kendall College has been sold twice which theoretically was off
the tax rolls and theoretically is on the tax roils now it is vacant and is not yielding anywhere near
what it could yield if it were developed. And you have the National Louis property that abuts
Wilmette that is on the tax rolls. He asked how much is that bringing in? Aid. Bernstein said the
property is not built yet and it will be 3 years before mose properties hit the tax rolls by the time
they get them built and get them assessed.
Rep. Hamos sa.d she had suggested that without knowing what the legislation looks like and how
it would read and how it would be modeled and what it would exactly say that it's a little early to
dismiss it. They should be open to some more research and some draftsmanship and then they
should do a realistic political calculation and policy calculation.
Ald. Wollin noted the purchase of 1800 Sherman by Northwestern University took that entire
office building off the tax rolls and there was a token for 3 years of $350,000. She approached
them and said now that the 3 years is up, what Is going to be the long term. Those
conversations, and Ald. Tisdahl was part of It, did not go well at all, and she believes they made a
contribution to the schools for 3 years as well. That is a perfect example of the fact that the City
had no ability to pressure them at all to continue with even a small amount of a yearly kind of
benefit. At one of the conferences St. Paul, Minnesota found an old law In either 1919 or 1911,
that they resurrected and that is why she thinks impact fees is one of the ways they are going to
have to go, but they came up with a per foot sidewalk curbage fee. It was for snow plowing,
street cleaning, etc., their curbs were measured and they %sere assigned a certain fee per foot.
Nat -far -profits, big institutions, and resident homes which were probably only maybe 50 feet as
oppose to a larger institution had to pay this fee. There were certainly resistance from small
churches that had very little economic or some others but those that resisted said if it was going
to be applied to everybody in the city they would cEr:ainly step up and pay their share of it.
Somehow Evanston has got to get to that point and :t has been her argument for fire services
because that is what the rest of us are all paying in tneir tax bill already. They would have to
look at what other services could be included but if )ey can make big institutions pay impact fees
then perhaps that is the way they have to go. She agrees that the endowment thing sounds
quite attractive but she also understands It might r:c%t be the way for them. to go.
Historically, stated Ald. Bernstein, they went after t-e fire services fee concept and, at that point
and time, determined they would have to remove teat cost of fire services from the real estate
taxes and put it across the board in order to provice equal protection for everybody, churches,
universities, for profits, not -for -profits. His recollec:�on is that at that time the cost per
individuals was going to be higher than what they ),,ere paying in real estate taxes. Despite the
fact they were going to generate money from the c"er people there was a resounding scream
against it back then. They had done a lot of analys s about what the actual cost would be per
family. That is something to be looked at again, bu: the impact fee and an ongoing services fee
are different animals. One is a one time shot and one is ongoing. To Northwestern's credit In
terms of the 1800 building, when he received two messages one day from Lucille Krasnow, saying
she wanted to let him know, because he was going to hear about it, that Northwestern is going to
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Rules Cornrow Amifss 9/4/08
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give the city $375,000 a year for 3 years, part of which went to Districts 202 and 65, and by the
way they are buying the 1800 building and taken it off the tax rolls. He then called and left a
message for Gene Sunshine, thanking him, because it was the first time, in his experience, that
Northwestern acknowledged that their land use policies impacted the city in a negative way.
Now they've had it again recently with the blue lights that is very consistent with their attempt to
maintain the integrity of the surrounding area. They wanted to buy the blue lights for $50,000 or
something and leave the maintenance to the city. They didn't care if the blue lights were in the
1"- ward in front of 4 million dollar houses that sort of blasted the fact that there is a crime
problem with the blue light blinking. Because he thinks they were mindful of the fact that with all
the robberies and things going on on campus those kinds of messages are sent to the future
students far more than anything else, recently though they've come around and starting to
understand but dealing with them is never going to be easy. They have talked about dealing with
Northwestern from a position of strength and some of them on the Council remember how that
,came out. At any rate they need to come up with some uniform fee across the city to get
everybody to pay his or her fair share for a particular thing. Again, they need an impact fee and
service fee, they need the legislator, he doesn't expect any endowment. He can remember when
Jack Korchach brought up the tuition tax and Joan Barr said in her wisdom even though it was
tied she was going to veto it the next time and three days later there was a state statute
prohibiting the collection of tuition taxes. So they know the power of Northwestern. The
endowments are never going to be taxed but the underlying reality that creates those
endowments has to be taxed. There has to be a reality check about the variation between an
exempt and a non exempt institution.
Aid. Jean -Baptiste suggested they bring closure to the discussion and that they take a look In
every which way to find revenue. He believes it is worth taking up this fight of municipalities
subsidizing these profitable large not -for -profit institutions to their detriment and the long term
impact. It is worth the education that needs to go on to bring the legislators on board to this
Issue to begin to think of alternatives. To the extent that they can't find a way to generate the
will among the legislators then the flagship institutions of the state, like Northwestern and others
will always feel omnipotent in this fight. They have got to begin to try to develop legislation to
put out there for discussion and for study and see if they can generate that kind of discussion and
more discussion in the media around this issue and see who they might be able to win over.
Sen. Schoenberg had one suggestion along those lines might be to enlist the Northwest Municipal
Conference and some of its counterparts, the South Suburban Managers and Mayors, the West
Central Municipal Conference and the DuPage Managers and Mayors and others to explore and
seek to build a critical mass of support for a legislative proposal. Those organizat�ens did an
Excellent job just this past year on pension reform legislation and working in concert with the
municipal league and he would encourage Council as a strategy for this city to go that route.
There is always strength in numbers and ultimately they would wish to develop a critical massive
support for this kind of proposal.
Ald. Jean -Baptiste asked that the Council support a call for the Interim City Manager to take a
look at their lobbying effort and see if they can re -energize that so they can begin to formulate
the kind of legislation and to opt into these a -sites and to their legislators to try and begin this
long fight. Aid. Rainey asked are they saying in Supporting that recommendation that they are
going to avoid acting locally. Aid. Jean -Baptiste said no, because they have brought their
legislators here he thought that they needed to focus on that.
Aid. Rainey suggested that at their next meeting they put local initiative. Aid. Holmes stated that
they should. Aid. Bernstein suggested making a reference to P&D for a special use fee, for one of
a better name. Aid. Holmes said they needed to bring it back to the Rules Committee for
discussion.
NEW BUSINESS:
9 3.27.O11;46 04 AM
Hone
AD]OURMENT:
Meeting adjourned at 7:24 p.m.
Respectfully submitted,
Darlene Francellno
10
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1.27-M 8:46:04 AM
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MINUTES OF THE RULES COMMITTEE MEETING
THURSDAY, SEPTEMBER 4, 2008
6:00 p.m.
Aldermanic Library
Present: Ald. Bernstein, Hansen, Holmes, Jean -Baptiste, Moran, Rainey, and Tisdahl
Presiding., Aid. Holmes
Absent: Aid. Wollin and Wynne
Staff Present: Rolanda Russell, Melissa Bruns, Douglas Gaynor, Rodney Greene, Martin
Lyons, Gavin Morgan, Elke Purze, and
Guest: Sue Calder, Dave Ellis, Mary Gavin, Virginia Jones, Lorraine H. Morton, Bob
Seidenberg, and Bill Smith
CALL 10, ORDER:
The meeting was called to order at 6:00 p.m. by Aid. Holmes.
APPROVAL OF THE AUGUST 4, 2008_MIMUTES:
Aid. Moran moved approval of the August 4, 2008 minutes. Ald. Jean-Saptlste seconded.
Minutes approved.
pISCUSSION OF PAYMENT IN LIEU OF TAXES PROGRAM:
Aid. Holmes noted that this item is tamed over from the August 4, 2008 meeting where they had
a discussion with their state senator and representative. Then staff was asked to draft some
information and the committee has received that Information. Aid. Holmes went on to say that
Aid. Wollin could not be here tonight but submitted, via email, a question concerning the PILOT
plan proposed. It reads 'Could the city make a condition of selling city property (such as selling
to Montessori), that the new owner would make a payment in lieu of taxes to cover city services?
Right now, the city can use rental income to help cover the cost of those services. We will no
longer have that income if the property gets sold to a private entity. Ms. Russell had
mathematically figured out the city share of possible taxes if property was on the tax rolls In a
previous situation. This might be a starting point." Aid. Wollin also said she had talked to Aid.
Wynne about this but Aid. Wynne said this had not come up in discussions. Aid. Holmes opened
the floor for discussion and noted that this would be the first time discussing it.
Aid. Tisdahl thought this was a good idea.
Ms. Russell shared that she did receive an email from Elke Purze regarding this. The email stated
that since they have not talked about kt so far she didn't know whether bringing this up would be
a deal killer to them right when they are getting ready to close the deal. This is going to be very
similar to their discussions with National Louis, where you have a discussion, arrive at a dollar
amount, talk about all tr,e items and then at the tale end bnrg this forward.
Aid. Bernstein said it so::nds like they've got equal protectior. arguments. He was not certain that
they are going to be ab:e to compel there to pay a payment in lieu of taxes. That is why they are
exempt. Aid. Woliin's questions with respect to the Montesson and other kind of things, when
they sell to a non-profit they have to commit and he is thinking they can not do that legally.
They are at a real weak around.
Aid. Holmes asked about the difference between National Louis and Montessori because they are
selling the Montessori property and National Louis was not their property to sell, correct? But
they were asking for zoning relief so there is a difference.
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APPROVED
Aid. Bernstein added that as a condition of zoning relief they can impose regulations be included
which would be a payment in lieu. Because somebody Is a non-profit compelling of to make a
payment in lieu of taxes we would be doing indirectly what the law won't let us do directly and he
doesn't think they can do that. He would like that to be revisited and get a legal opinion on it
from the legal department.
Aid. lean -Baptiste stated that he thought the document provided was very helpful. There is
44.5% of Evanston land that is tax exempt. That's a lot of property that is off the tax roll. He
wanted to talk about what they started to talk about during the debate around National Louis and
take them one at a time the endowment issue and other kinds of initiatives. It seemed to him
that if they do have the discretion to impose a payment In lieu of taxes that they should pursue
that in circumstances where people are seeking some kind of relief. Not because they want to be
mean, but because as they look at the overall budget. He dreads when the interim city manager
comes before them and says what their current status Is because permits and the transfer taxes
are not bringing any money in and in almost every single way they will be down in terms of
revenue this year. Which means they are gong to be forced in positions to raise taxes
significantly or cut whole departments or whole functions. He thinks they need to embark on a
strategy of recouping that money that they end up loosing. He suggested they adopt, as part of
their policy, that proposal in lieu of taxes whenever they have the opportunity to do so.
Whenever relief is being sought by non -profits they need to impose that unless there is a
significant argument to the contrary. And that they not leave it up to strictly individual
judgments as to which way to fold whether they like the project or they've had some past
relationships or whatever.
Aid. Hansen apologized for not bring in a reference that she believes they got from the legal
department the last time they discussed this. But she thinks it talked about equal protection
Issues in terms of a mandatory PILOT Program, that they could do something discretionary when
it comes to someone coming and asking them for some type of special use. Which she thinks is
the direction they need to go and it kind of equated with when they were talking about their
affordable housing ordinance and before that they were kind of doing it on an ad hoc basis and
people that were coming that the city didn't know or weren't prepared for, etc. asking in their
discussions for contribution of affordable housing. Then they came up with the ordinance and
now have a formula so people know and it is not a surprise. That is what she thinks they need to
have if they are going to do this. She also thinks that if they can do something that. is this
discretionary idea that is what they should move towards.
Aid. Bernstein's thought was that they have to do that, but the reality is the economy is In the
tubes, they are going to get fewer and fewer requests for a variations or for a relief. Years ago
they talked about a fire services fee for the enure city, everybody across the board, and they
would create some kind of a formula by which they tax people. Take it off the general revenue
and put it on a fire services fee. He didn't know ,f Martin Lyons had ever been involved with this,
but to him the math at the time didn't seem to be that difficult. The reality is that t1-e non -profits
that are sucking up mud are benefiting from tre fire and police, largely fire, They rac asked
certain non -profits to offset sorr.e of their pension program based on the reality of ;r,nat the 5"`
fire station cost them across the board, in addition to payment by formula for any re:.ef that
people want. That is not going to be enough to make it or not. They have to start minking In
terms of assessing a fee and not calling it a tax but it is a tax, for fire services and ti'at means
churches. Now it may be on a sliding scale of gross revenues or something of that sort, and not -
for -profits might have some concession based on again their bottom line, but the hospital, the
university, and any church that can should step up to the plate and help. It is time because they
have no choice.
Aid. Holmes asked Aid. Bernstein to comment just in terms of when he talks about the fire
services, what services are he is referring to? Aid. Bernstein's response was basically he is
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talking in terms of the cost of the firefighters, their equipment, and maintenance of the isolates
which they reside, ambulances, pension and whatever it costs them to run a fire department and
create some kind of formula. This is not a new invention they have talked about this forever,
Aid. Holmes said the reason she asked is because she knows there is a cost you pay for
ambulance cost. Aid. Bernstein said everybody pays the same fee the taxpayers alone pay the
charges which have that ambulance ready to go service the call. That is the fee that we are not
paying taxes. A!d. Rainey, for clarification asked if what Aid. Bernstein was saying is that those
of us who pay taxes also pay for the ambulance. Aid. Bernstein said absolutely we pay the same,
everybody pays 5150.00 to get taken to a hospital. Aid. Holmes said it is $350.00. Aid. Rainey
said that means only half of us are paying. Aid. Tisdahl asked if there was a formula. Aid.
Bernstein said they never quite got that far, but staff actually did come up with something.
Dave Ellis said he supports what Aid. Bernstein has said. The Fair Share Committee came up with
the suggestion of negotiating with non -for -profits. He agrees that financially we are going to be
hitting some really tough times with the liability that we have, where our budget is going and it
just adds to the discussion talked about earlier. We are talking about non -for -profits in town as
Aid. Jean -Baptiste stated the 44.5% is tax exempt, what would the discussion entail when other
non -for -profits take large pieces of property off the tax rolls such as 1800 Sherman, what would
be Council's pas Lion. This is just something for Ciscussion, what would happen in the future to
address that. A!d. Bernstein said that is equal protection problem. Mr. Ellis said yes but the pie
gets smaller and smaller is what will happen. All the taxpayers and all the citizens as was said is
going to be a very tough budget year.
Aid. Moran said he was not sure where the discussion was going, whether It was about a fire
service fee, other service fees, PILOT Program or what. If it is a fire service fee they do need to
resurrect what happened historically. He couldn't remember why it was resolved to not do that.
He suspects a lot of it was political will and he is predicting there will be another failure of political
will if they decide to do that, so on that one he thinks they could save themselves a lot of money
and time. He doesn't see the sense of doing a PILOT Program, based on the memo it Is clear that
almost nobody has one of these and there are probably a lot of reasons why. He was also pretty
sure that it would be tough to survive a legal challenge which is something they have to think of.
A lot of the programs talked about in the memo one way or another focuses on Universities and
Hospitals. He can't imagine how they could escape an equal protection argument were they to
impose a payment in lieu of taxes unless they viere ready to impose it on everybody, all the non -
for -profits. He thinks the University, other schools or the hospitals will say you can't do this
under the equal protection class. If people think they should go forward with this they should
definitely get an op nion `-om the legal departrn.ent on the equal protection question. He
understands tte opinion they got on the discretionary grant premise. The difficulty is just
assuming that it is a legally sustainable premise, there are a number of questions that they
should confront now before going and doing all this work that is suggested by the memo. Going
back to what Aid. Hansen said, which is, everybody knows what they are going to get, but just
before that was a question by Aid. Jean -Baptiste who mentioned that when somebody comes In
and ask for zoning retie` :ney are going to contemplate whether they are going to demand some
kind of a payment and :-en the outcome of treat zoning effort. He is not sure what the premise
would be, do t-:ey say t-at absolutely they we"'C have to make that payment or that they
demand or no,, or :s it t-eir discretion. Legaiiy ne thinks they are in very difficult terrain here,
because that means you've got all kinds of due process challenges about making them pay
because you Con't like "em or you want to give this guy a pass. Looking at the PACE program
and the debate tnat they had. There were all of these different thoughts about whether they
should hold to their plea to fire, some though; they should, some thought they shouldn't and it
ultimately passed on a 7-2 vote. The point is there are going to be a lot of problems with that.
He was pretty confident that he knew what happen in Cambridge and Boston and the universities
there had expansion programs they wanted to build. They needed changes in zoning and
basically what they called payment in lieu of was that they paid for zoning. Almost all of these
payments were predicated strictly off a quick pro quo where the university said they wanted thls
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and were willing to pay X amount of dollars to get it and that is what they did. They could call it
anything else but that Is what they were doing. He didn't know if they should go there because
this payment in lieu is real problematic from a legal standpoint. His feeling was if they want to
get money from non -for -profits they should put together an argument justifying why they should
pay X number of dollars and go and ask them to do it because he doesn't see any other effective
or legally sustainable way of accomplishing it.
Aid. Rainey asked the purpose of levying the property tax against people who own property.
Martin Lyons responded that an equitable way to protect life and property was a tax on the
property to provide public services that no one in the private sector was willing to provide.
Aid. Rainey continued by saying number one that is why they need to think of some reason how
they can generate some revenue from those not participating in that event. The reason they
have difficulty with this whole issue of payment in lieu of taxes, extorting money from non -for -
profits, or whatever you want to call it is there are too many people in policy making positions
that are way too embedded in the non -for -profit sectors in this town. They all have friends and
relatives where many of them have worked in these organizations, they are pressured, and
lobbied, and it is a do good feeling that they have and there are plenty of non -for -profits in this
town who are far more capable of making contributions to this city in lieu of taxes or whatever
you want to call it than many struggling businesses in this town. The second thing is they can
have the argument that was just made when they have a public benefit provision on zoning
special uses, on planned developments, and on all sorts of things they have a public benefit. She
doesn't want to get caught up in definition or giving a name to this but why wouldn't this be just
like a public benefit. if you are a non tax paying entity whether it is a hospital, a crippled
children organization, a right to life group, etc. and if you are exempt from property taxes and
you come and get any special dispensation from the city on zoning or anything you need to make
a contribution to the general fund or however they define that. There are all sorts of ways to
make the formula. They should not get caught up in what it cost extra after property taxes for a
fire truck or how many 11/2 full time employees they have going to a crime, or whatever it is
because that only makes it impossible to reach a conclusion. Every one of them here tonight
makes a huge contribution to the cry, they all pay property taxes and not one of them has an
exemption. For anybody to say that the PACE program makes an extra contribution to this town
than her family or anyone else and therefore they shouldn't have to property tax is hogwash. It
Is wrong and everybody needs to contnbute the hospitals and the little non -for -profits. There
should be no exceptions and it shouldn't only be if you come and get a special use or a planned
development because what is the Lkely hood of them even doing that.
Aid. Tisdahl said she would not ha.e a problem if people knew what the deal was before they
came to make a deal. In response to Aid. Moran's comment both Harvard and MIT have a
payment in lieu of taxes that is vc'untary and is every year. It is not just for this year because
they might need a zoning, it is a oromise to pay +t in perpetuity and if they take any property off
the tax rolls they make a payment in lieu of in perpetuity. Aid. Moran responded stating they
made the agreement to make those payments because of what their city gave them. Aid. Tisdahl
said they may have given them a one time whatever but they are making those payments for the
rest of recorded time. She thinks t is possible to -regot,ate with other non -profits, hopefully with
Northwestern, that there is some -, aloe to the ser-. ices here. She and Aid. 1'1ollin tried with
Northwestern University and failec, but that doesn't mean that she thinks that that is the only
time they should do it. Aid. Rainey sa,c it has been dcne for 20 years and it has been a failure
every time except for the 1800 S'--erman where Northwestern University was just humiliated into
doing it. Aid. Tisdahl was not stressing that they will succeed but thinks they have an obligation
to make the effort and she wouic 5e in favor of a policy that lets everybody know what the deal
was before they get started on a teal, not a last minute of now they will pull this on someone.
Aid. Holmes said that goes back to what Aid. Hansen said about they have to have it up front.
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Mr. Ellis said another idea to look at is he knows where a federal government operates towns and
they have a impact on the community. They pay taxes or make payments to the communities to
keep the communities viable. Maybe as oppose to a payment In lieu maybe looking at like the
Impact fee, going along with what Aid. Bernstein said, what it costs and what the impact of that
organization is on the city budget and taking it apart and saying this is what you are responsible
for. He knows what he is responsible for and what are the bigger non -for -profits responsible for,
you can take it to an ambulance call, a police call or however you'd like to do it but that might be
another way of looking at it other than payment in ;:eu.
Mayor Morton asked if any one has quantified how much it is costing the city to provide services
to non -for -profits so that they know how much money they are talking about. She would like to
see that information in writing where someone has really studied it. Because when talking about
what you are going to do, you need to know how mich money is being talked about. She is not
talking about an ambulance cost she is referring for example, how much does it cost to provide
garbage services to churches? How much is it really costing the city to provide ordinary services?
I think we need that when we begin to talk about that.
Aid. Holmes said that is why she asked Aid. Bemste.n what services he was talking about because
the non -for -profits that she knows she believes they pay water bills. There are things that they
pay for already other than the property taxes, which she understands, but what other kinds of
services are they talking about, beside police and fire services, that they may get.
Aid. Rainey said the only portion of their budget that they can ask for help with is the money they
levy against all the property taxpayers, because they all pay, except Northwestern and a lot of
the non -for -profits don't pay sales taxes so they don't contribute that way but she thinks they
can get around that. There is a very small portion of their budget that they levy which is like 30
plus million dollars. That is the portion they need to deal with. It is not 180 million, because
people do pay their water bill and all those kinds of things and if they get a parking ticket that
goes into the general fund, so they just have to make it equitable for everybody. They are
talking about 30 plus million, that's what they need to infuse with a few more bucks from those
who don't pay.
Aid. Jean -Baptiste said he thinks if you talk about services and the specifics they will get caught
up but if they go into how much the services cost that may be a good argument to make. But he
thinks their decision has to be made on what are the needs of this city at this point and time.
Where are they going to get that money anyway anC how can they equitably approach these non -
for -profits to take part in ;his process and he doesn't mind some letters going out every day
begging them to do this. T'he reality is they have to act in a way that can begin to make them
understand that they've got to participate. And if tizey face some legal issues they may have to
confront them because what is the alternative. At some point there are some compelling needs
that they have and trey have to put themselves into the position to address those things.
Aid. Holmes said but part of the issue, which is part cf the recommendation from the staff, is that
they have to begin to do tr.e eCucat:on piece to those community organizations to help educate
them along.
Mayor Morton said maybe she is a maverick in the way she thinks about all of this. But she
thinks this whole matter of finance needs to be loake-a at in another way. She is not saying that
the direction the Council is discussing this is a wrong erection, that is not it at all. Number one,
there is nobody that disagrees with the fact that they are suppose to be 145 million in debt. It Is
unconscionable at this point and time with the economny that they have, that they have accepted
some decisions that were made or suggestions of the Council, that they take the new auditors
recommendation now as oppose to continuing to do it the way that they were doing it. They've
all received reports on all the foreclosures and pending foreclosures in Evanston. What in the
worid do they think it is going to be like next year? TI-hey now have the time to revisit and look at
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those taxes another way and cut down because next year their taxes will be higher and fewer
people will be able to pay them and they absolutely can't afford to lose their businesses. They all
thought, herself included, that if they get these condos they are going to get a whole lot of
money from them and they are on the ►vrong track. They've got to rev up a system to attract
more businesses and to support the ones that are here and maintain them because that is where
they are going to make the money. They have time between now and December to revisit the
budget and do something which can take away some of the cost to these citizens and there are
probably other things to that can be done. took at the people in your wards that have put money
in property and now can't build on them, she is not talking about the developers because that is
bad enough. It is all because of the economy. She wished that they had the time to take that
"John Brown" budget and go through it, she calls it that instead of saying something worst. Of
course, you can't understand it because of the way things are put in there. For example, if you
want to know how much money is being paid for insurance by the Council you can't tell what it is
because the amounts are assigned to different departments. On any of them, that is not the
actual amount of money, that is what is being assigned and the big totality of the money that has
been spent for that specific thing. Take that budget and take a section and go through it and
make it your thing and see what you see and then come back to the Council at some point and
see what recommendation you would h<e to make. The Mayor went on to say that she took this
up today because of a call she received snquinng as to how much money was In the budget for
the increase in the salaries of the Aldermen. But of course it was not in there but she checked
the money and saw in one place in the budget book an increase for administration of x amount of
dollars, but on the page where they listed all of the items there was less money for next year.
She suggested they study that budget and take a section and study It and see what can be
cracked down on that budget without firing people. She will guarantee they are going to come up
with some good Ideas. She is not saying anything against the way the people have prepared the
budget because that is the way it has been done. The city gets an award every year or, ,heir
budget and sure those are figures that they are looking at but she Is talking about the reality of
what they have to go through here in their city. Unfortunately over the years she didn't get the
management letters addressed to the Mayor and the City Council, she had to request them.
Please study the budget and be ready when they start on it to make some substantial
recommendations as to what can be done. She noted that the garage costs them a lot of money.
They need to took at what they can do so they can get out of those kinds of holes that are
causing them to use funds in a way that they have not budgeted for.
Aid. Bernstein said he thinks they all would like the budget to be more transparent and he thinks
they all look at every line every budget season and he was sure there are fluffs in the budget.
How much we are talking about he can't tell say, but d:cn't think they were going to be able to
squeeze that much out of the budget .s iho:-t getting r;: of departments. With the per.s.on, they
are either going to pay it now or pay it later because trey owe that money. With respect to
educating the non -far -profits about their needs, the letter that was received In response to Aid.
Tisdahl and Wollin's request for North,.%estem to pay are million and two based on actual data at
a formula about how their use of the 5`- fire station anc ,f not for the massive 3 story fire station,
they could have 4 and moved one furt^er west on Central Street, so there is a calculable number.
The letter that came back was an appa ing letter to him and an insult to the city. Gene Sunshine
in effect said not only don't they pay e-oLign, they are paying too much and the city is r.ot giving
them anything. So the city is not going to make nice ,. in these people. If they had a-,y sense,
in his mind, they would come up and he p the budget p-ocess. The city needs to come yap with
some methodology, and it can': be an :rnpact fee on non -for -profits because that is a tax and if
you can't tax them directly, you can't came up with a fee that taxes them indirectly. So if they
are not subject to paying taxes they would have to talk about changing the federal gu�dellnes.
They have to talk about getting some rn:oney from not -for -profits corporations that have
outrageously large endowments. The smaller non -for -profits that he has been involved with have
to spend down their budgets or they lose their status, ne doesn't know how the big guys get
away except that they are big guys. AT&T boxes are every where so they know how the big guys
get away with things. But the fire services fee is something that comes right out of the general
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revenue, every single person in town is subject to the safety concerns demonstrated by what
they pay in Fire in services.
In terms of the payment in lieu, Ald. Bernstein agrees with what Aid. Tisdahl said earlier, if you
come In and you know going in that you are going to want to do business here there is going to
be a fee. They have to come up with a formula for it and then collect it and if people don't want
to do business here they are sorry they can't afford to take them here. With respect to taxing or
imposing a fee or) people who sell to non -Far -profits that is illegal that is why they are non -for -
profits. They are exempt from taxes because the federal government says for whatever reason
they are entitled to not pay taxes. So they have to come up with some methodology that hits
everybody, everybody equally, proportionately, per capital, or based on street frontage. He was
not sure what it is going to be but they have to do something and just calculate it across the
board. They are not going to get rich but will get something and they are not going to make it all
with one method. They are going to impose a payment in lieu and they have right now the legal
right to impose reasonable fees for zoning relief. They can do that and have been able to do that
forever, but needs to do it now by statute so that there is a definitive formula so that a developer
or anybody that conies in and sees what the bottom line is going to be they can make a decision
of if they can make it in Evanston or not. When they come in Evanston they will know what the
costs are going to be. The next thing is some kind of a fee, if you want to go out hat and hand
and go to the non -for -profits who they think can afford it keep going. But he is not going
because they know that he is not excepting the fact that they are ever going to come through.
He has been fighting this battle for years with people on the Council. He would like them to come
forward. A strong city is In the best interest of everybody in the city. Historically the former
mayor of Ethica, New York, Ben Nichols came to Evanston and basically what they did was pretty
much illegal, they said if you want zoning relief you are going to pay for it. A.-d the new
management at Cornell was the guy who came from the University of Iowa, Hunter Rollins, who
was a real bright guy and said you don't have a right to it but they are going to do it beczlise it Is
the right thing to do. Maybe when President Bienen steps down, maybe Mr. Sunshine will stet;
down and somebody with a different loyalty toward the city he Is living in will step in. The only
alternative Is to start contacting trustees because it is Mr. Sunshine who Is running this thing,
Pres. Bienen is the guy who goes out and gets the money and he is convinced of this because of a
conversation he had when they %were talking about whether or not to settle the historical district
lawsuit and for two hours he talked to Ares. Bienen and unless Pres. Bienen is the best poker
player in the world he had no idea what was going on in this community. So the vice president in
charge of finance, Gene Sunshine makes the decisions and he is not giving the city any money.
Northwestern had a really close relationship with the Dawes mansion and he Is not giving them
any money. So they are not go —a get what they perceive as moral teachings or activities from
many institutions in town. Hosp tals are on the ropes, Evanston Hospital now has such a
diminished staff tnat he doesn't 4now how they are doing or what they are doing, everybody's got
problems.
Aid. Rainey said in, listening to tre Mayor talk about the roles of the average homeowner that is
exactly the reason why they neeC to be talking about payment in lieu or fees for service. She
could care less a --out taking money fro-n non -for -profits that is of no interest to her at all. What
is of interest to r.er is helping the taxpayers in her ward and the only way they can do that is by
infusing their general f.:nd and t-etr revenue with new sources. And if you think small businesses
can exist withau; and Influx of re,v paaulation you are crazy because they had a dry spell for over
10 years in this tcwn where they had no people in their downtown. Their stores were closed,
there were vacarcaes all over anc they had the largest surface parking lot in the world west of
Sherman Avenue and .t was a g!:ost tovin. When they started putting people downtown that is
when things stared to perk up, trey got a theater, condo buildings, etc. and you can not in any
way negate the fact that that brought new life to their community and new money into the city.
Demographics have everything in the world to do with these successes of small businesses. That
Is not what this is about, what this is about is helping those who live here and work here and she
would suggest that one of the issues that they need to revisit Is the head tax for places that
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APPROVIM
employ over a certain number of people as they are talking about small businesses. There are
file cabinets full of information about a head tax on companies with over 200 people in them and
that doesn't affect a whole lot of businesses. But the City of Chicago makes out like a bandit on
that revenue. So they have a lot of things they can look at, not just this, but in lieu of payment a
head tax is certainly a possibility. They have calculations from 50 and over, 75 and over, and
every calculation you can find and at what level and what payment.
Aid. Holmes asked if didn't someone bring that to the Council last year as a recommendation?
Aid. Rainey said she brought it to the Council eight years ago and it keeps popping up every now
and then. All they do is talk about how much they love their constituents and then they do
nothing for them except stick it to them every single solitary February 281"-
Mayor Morton said at one time she felt ambivalence about licensing their property value. She
said to Aid. Rainey that if she were sitting in her seat and read the stuff she gets from people
about what is happening it is unbelievable. One of the worse ones she got today from someone
who lives in the 8 " ward who gave the name of the realtor who is in Wilmette on how the house
was filled up with rats and roaches. This person came to Evanston to be a school teacher, she is
newly married and went into this place and said she could not believe what she found out one
night. There were maggots all over the floor and she had a time cf not getting their money back
because they were going to move, they have got to get control over the property that they have.
Ald. lean -Baptiste said the reason they are at this particular crossroad is because they realize
that they have a problem. They are trying to focus on what options they should pursue. So
everything that everybody said represents the pre -conditions to bring them here. So they've got
to talk about what they should do. He believes there was an initial proposal put on the table to
establish a process that is predictable to everyone and they need to articulate that in some kind
of motion to see whether they have support for it and try to go forward as oppose to waiting
another 3 months to come back and revisit this and not do anything.
A143. Rainey asked Aid. Jean -Baptiste what he thought about appointing a subcommittee of
Aldermen to work on this to try to frame a plan and approach. She said she would like to serve
on it. Aid. Tisdahl, lean -Baptiste and Bernstein all said they would serve.
Aid. Holmes asked If this committee would come back with a draft plan or a proposal. Aid. Rainey
said a proposal. Aid. Holmes asked could the proposal have a long term goal as well that they
continue to work with the legislators, particularly the federal. Because she really feels very
strongly that there has to be a new definition in terms of not -for -profits and particular in terms of
property that they do not use for their stated purpose. That is where a lot of the taxes are. And
she doesn't care about the Univemties or whatever but there are a lot of other non -for -profits
and churches that are not used for the stated purposes so if they could get Rep. lan Schakowsky
to take that up because it is a part of it and it is long term because nothing is going to happen
urn-1 after the elections. So as a long term goal let that be one of the subcommittee goals. Aid.
Bernstein said actually Northrreste-n University, because of its charter is the only non -for -profit
the: he knows about that has the ao.lity to do that. Aid. Rainey clarified that what Aid. Holmes is
saying is that when it was exempt probably ►vas being used and now they've slid away from
that. Aid. Bernstein said so if a ch_-ch buys a house that they use to use as a rectory and now
they start renting it they are suppose to pay tax on that, they are not exempt from tax on that.
But Northwestern is exempt from a,: property that they own because of the charter so it is a
difference. Now if they can find places that churches or whatever have gone out of use on a
par -ocular property that is one thing. Years ago when he was the Assessor, Sidney Zwick and a
couple other people helped him identify properties based on the pin number, properties that were
dow.,town that were own by non -for -profits and they submitted a list to them. Tom Hines and a
couple of them came up but certain people started off loading property, because there was this
lease holders tax that they talked about at 1800 Sherman, that's what they were going to try and
evolve at that point and time and it became less profitable to maintain those properties. That is
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something they should probably revisit but he thinks then there were fewer holdings like that.
There are a whole lot of things they've got to do.
Elke Purze said she %could prepare binders for the subcommittee of the whole history because
they have a sample policy, sample forms and everything. Aid. Rainey suggested they ought to
first meet without their minds being junked up with good ideas and just sit down and brainstorm.
Aid. Holmes asked A,. Rainey if she would pull it all together and report back to the Rules
Committee In a couple of months. Aid. Rainey agreed that she would pull it together and said
everybody would be invited to attend the meeting.
NEW BUSINESS:
None
A230URMENT:
Meeting adjourned a. 7:00 p.m.
Respectfully submitted,
Darlene I"rancellno
9 so-28-oa
RulesCornninec ttmWes 12)1•'08
APPROVED
MINUTES OF THE RULES COMMITTEE MEETING
MONDAY. DECE IBER 1, 2008
6:00 p.m.
\ldermanic Library
Present Aid. Hansen, Holmes, Jean -Baptiste, Moran, Tisda5l, Wollin and Wynne
PresMdin>v: Aid. Wollin
Absent: Aid. Bernstein and Rainey
Staff Prcsettt: Rolanda B. Russell, Interim City \Manager; Douglas Gaynor. Director, City Operations;
Martin Lyons, Finance Director; Joseph McRae, Assistant to City Manager, and Elke
Purze, Interim First Assistant Corporation Counsel
Gtem Lorraine H. Morton, Mayor, Suzanne Calder. Lea•-t:c of Women Voters; Dave Ellis,
Firefighter, Mary Gavin. Evanston Roundtable: Bob Seidenberg, Evanston Review;
William Testa, Blue Ribbon Committee member; Gcrald Gordon. Blue Ribbon
Committee member, Patrick Dillon, Fire Pension Board; Timothy Schoolmaster, Police
Pension Board; Michael Adam. Evanston Fire Dept_; Jeanne Lindw•all, citizen; Mark
Metz, Blue Ribbon Committee member; and Bill Smith, Evanston Now
CALL TO ORDER:
The meeting was called to order at 6:10 p.m. by Aid. Wollin.
APPROVAL OF THE SEPTEMBER 4. 2008 MINUTES:
Ald. Holmes moved approval of the September 4, 2008 minutes. Ale. Wynne seconded. Minutes approved.
DISCUSSION OF BLUE RIBBON COMMITTEE REPORT,
AM- AM- Wollin thanked Mayor Morton for her executive summary of the Blue Ribbon Committee report and noted
is -a-as eery helpful. Members of the Blue Ribbon Committee are present and William Testa will begin
d;scussion of the report until Chairman Mark Metz arrives.
MT. Testa stated their commission was formed by the Mayor and City Council to look into the Police and Fire
P=sion situation in Evanston whereby the unfunded actuary liability of the police and fire pensions combined,
had reached S146 million dollars as of the last accounting. To gain some insight into how they got there, what
:�,r siruation was, and w hat they might do about it, the committee began r^jctinc in the spring and continued
ifto September. The committee was comprised of many people with difl2rrnt financial backL'raunds, all
independent of Evanston government. Also by methodology it was really an investigation, fact fording and
research initiative. The committee had participation from former City M —ager Julia Carroll and both the
futner and new actuary that talked v ith the committee extensi%ely and &.,: committee did a lot of investigation
=d interviews with people throughout the stale. They read a lot of w•ritter documents on what was happening
:round the country and throughout the state with other pension plans. Thty also had a lot of stafl'support. He
-inked Steven Dramer who was Interim Finance Director w hen they stantJ and the new Finance Director,
`• amn Lyons who came 1n later in the process. The catnntitt:e leaned a~. awiu) lot about the pension situation
m E-anston as well as in Illinois and around the country and thinks the reel is a well informed document.
is terms of the conclusion, much of the unfunded liability came about as a result of a perfect storm analogy that
-•au hear about. A lot of things went wrong. if you will. as bills often do,.* seems some of it snuck up on the city
a little bit in terms of the accumulating unfunded liability. More imports: J,,- it seems what happened is the
pension investments under performed for a series of }ears and there were same adjustments to the benefit of the
mate which all contributed at the same time to a growing unfunded liabill, ti-% With the pension funds in Illinois,
-a-here no matter how careful you are and what your values and attributes are, when spending other people's
money sometimes we are not as careful as when spending our owm mono,:. Here in Illinois the pension benefits
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Ruin Conyriittee Minutes 111106
APPROVED
are determined at the State legislative level and paid by the Cin•. Somewhat opposite of the teachers benefits
where you have the opposite situation to some degree where some of the features of the pension are determined
locally by salary increases but they are paid by the State. Some of that contributed as well as to a rising
unfunded pension liability. The danger with an unfunded liability is when you get to the level where we are at
,when we are funded around only -W0 a, and if the economy- goes as it has recently. you can find yourself in a
situation where you are paying the bill for pension for active retirees out of your current city budget. That is a
situation where it happens at a time when you are already hame budget struggles and in a very bad situation.
What you do with pension funds is try to accumulate funds in your reserves as you go along. As you take on the
liabilities as you are consuming those wonderful police and fire sen-ices you are snaking a promise to your
police and fire pension personnel. You should be paying the bill as you go along by putting in reserves to the
police and fire pension funds. That is pretty much «hat happened the bulk of this is that we came to think of it
and understand it as a bill where sen-ices that ,.we've already consumed all these years in Evanston for our police
and lire pensions, for our police and fire services. The committee investigated very carefully the actuarial
models and calculations of the professionals who do this kork and indeed this is largely a bill that we owe and
are under moral and contractual obligation to our police and fire pensions to fund on a timely bases so that those
funds are secure for their retirement. The committee also investigated what some of the avenues are that should
be looked at in going forward in terms of solutions to this. fie knok s the Council has been scouring all different
revenue sources because the whole budget is under stress and didn't thins: the committee came up with any areas
that are different from the Council's in that they need to loot: at fees and assets that could be sold and made
more productive in Evanston. Any land or franchises that the private sector or public/private partnerships might
put it to use that generates more revenue than it does now and these kinds of things. perhaps sonic people who
Wright be tax exempted or more careful use of services and cxpenditures. Going forward the conunittee was
really emphatic about when you do budget for police or fire personal to he cognisant during the budget process
that it is not only the salary that you arc looking at in the budges, but the attendant pension and health care
benefits that you will be accumulating a bill for as you go forward_ Emphatically in a couple of places in the
report it says please in your budget deliberations have those numbers somewhere prominent so that you consider
whether you want more police and fire, more refuse, or social smices that you can really do that kind of careful
evaluation of what you really can pay for and what you want in the City going forward.
Mr. Testa went on to say they outlined the different revenue sources and expenditure terms that Council will be
considering in their whole budget. Some other recommendations were to make sure the staff is always fully
educated in keeping up with what is going around the state and the country in terms of pension, teachers, and
legislation and understand this so staff can brief Council on w hat is happening with pension legislation and
pension practices and so forth. In torsos of outside actuarial see -vices the city contracts with an actuary that
updates the work every 3 years of k hat it is that you ok c in a s cry intensive fashion and the committee is
recommending rolling that over. He asked that Mr. Metz to .peak on that recommendation.
Mr. Metz stated that the recommendation is every 3 y cars. The committee looked at possibly bringing in a
consultant actuary but not necessan:y replacing, the actuary. There is a value in having a long relationship
because there is certain know ledge base Lined about the actuary and about the particular population in any
blend there is a benefit. Tiie down;:de is they get too familiar and comfortable and start to really love their own
assumptions and maybe get a little blinded_ So to Let additional pzrspective the committee recommends
bringing in a consulting actuary- es e ti 3 y ears just to IL*-Nk; os e: the hctJs of work and issue an opinion. For
example, to say kklks good or adjust this one hero or t^.at ore then. and unless there were major changes you are
probably in good shape. Or if the act --an says they has e ;om..; serious di:,agreements with the other actuary
here and there you will want to oper::hat tip and really examine it and do a full review, This ,.would give the
Council an opportunity to really get a different perspectnc from time to time «hick would be very ,.valuable.
Mr. Testa said any time there is any mde-px ;ldent actuarial opinion before the Council and staff, if there is any
comparable opinions, the committee found that there is some leeway. actuaries have to make assumptions and
construct the models and they are no: perfectly certain. 1\Tien dealing with financial matters the more
transparent they are the more visible to es en one invoN ed and it should be discussed openly so that there is
more information. It is somewhat exp mire to have these actuarial estimates trade, but if there is an outside
opinion that is volunteered or someone else pays for it or constructs those kinds of estimates with the City's
Rules Con=ree MI.- :rs 1:t I OS
APPRO% 1 l)
numbers it should be considered by staff as well. The Blue Ribbon Committee had actuaries, present act•.taries.
went bank and looked at the old actuary estimates and found that they were within reasonable kinds of sets of
behavior and procedure for professional actuaries. There is the latitude in that you arc going to come up with a
differer:t set of numbers depending on who the actual actuaries are. Within reasonable bounds the actuaries
were within standard practices of what the committee found as best could be determine in looking at the
estimates that the city has. But again this is a bill that's been accumulating and w e have a contractual and moral
obligaton to pay for the services we've enjoyed and consumed for the protection of our property from fire and
public safety- and so forth. Going forward we want to be more careful on our budgeting and follow accepted
practices and keep on top of this issue in a way that perhaps we could have done better in the past.
Mr. Metz reiterated that all of the actuarial assumptions that the old actuary made are easy to look at that and say
that is what got us in trouble, it just went down, down. down in terms of our funding level. While that is true
there was an awful lot of negative experience that one would not necessarily expect over that period of time.
This has been the worse decade for investments since probably the 1930's and it just got a whole lot worse.
With that said, going forward it is going to be important to recognize and not be seduced toward certain things.
There is a set of actuarial assumptions that for a number of years were not coming true as a set. You can pick
out any one of them and think it is not so far off. but taken as a group they were all a little more on the
aggressive side than not on the aggressive side and it wasn't coming true and continued to not come true. This
is not a charge because it was not part of those meetings and the committee wasn't privy to any of those
conversations. But you can almost sec a scenario where an actuary gets paid by the City and it is not hard to
figure out that what the City wants is the lowest number they can reasonably get by with because of the other
budget pressures and things that the City has to deal with everyday. The actuary then says the people that
employ them want a lower number and there is certainly an incentive to try to give them what they want without
violating any rules or doing anything out of the ordinary. It tray be to shave some of the assumptions and
maybr when things start to go bad you tell yourself, you've got to take a long view. We fund these things over
a 30 to 50 year cycle in municipal plans, which is another point that could be argued but that is sort of how it is
done.
Historically, as the committee looked at very long cycles and very long trends then you get a City finance staff.
and not pointing fingers or naming names, but what does he. she want. That person will need to give the Council
and citizens what they are demanding and they will need money to do other things and obviously they want the
lowest number that they can reasonably come up with. In that vacuum it seems that everybody's best interest
are served by sort of being a little more aggressive and kind of hoping it works out, it is a very seductive trap,
more or less. that you can fall into. In part that may be xvhat happened. But in going forward Council and staff
has got to guard against that and do more of what ifs. What if it goes against us, where are we going to be in 5
years and model that out. Where will we be in 5 years if things don't uo well in these next 5 years. we are
alrea,!y fall mg behind instead of coming back, what if it continues to eta down. That is really what happens over
a longer period of time. In other words you can sort of nip this thing off in the bud when these things start to go
bad. It is going to take discipline and money. These benefits arc prescribed by the State and they have to be
paid_ There are some recommendations in the report about that the way chines are today. The City is going to
need to be very, very discipline in their approach to this because it isn't going to get better anytime soon.
Aid_ Wynne said that is a really good recommendation and she appreciates that, but what are the nuts and bolts
of barge discipline. What things are sort of our benchmarks that we need to have when looking back and
comp: ring and saying instead of having that sort of slight tug that really lulls %ou off track eventually. «hat
are toe things that you would recommend this Council and _.^y future Cc uncil do to make sure that we nip it in
the bu3. Because none of them are actuaries and this «as .within the range but vet when they heard from both
actiLmies they realized how broad the ranee was. She didn't think that art of them understood how broad a
specrtum it could be and still be within a reasonable predict, Lin. What are thinks that we should ask every
budget year, what are things the committee would recommend that we do''
Mr. Metz said it isn't something that is realistic to do every year because the time and expense im ested in doing
that sort of modeling and the data samples become very, very short. The committee didn't touch on this in any
detail. but in his personal opinion Council should look at this on a 3 years cycle. He looked back and saw how
3
Rules f nmmittce Mtm::es 111,08
APPROVED
that full funding percentage was dropping and (!:7Upping over these recent years going back almost consistently
over 10 or 11 years. There was only a y.ar or soin that last decade where it bounced back up even a little bit. it
is easy to say there were different assumptions l rcause of the long time, over 30 years these should even out.
His thought is you could took at it and say to the actuary model this because we've missed on all the major
assumption and the ones we've missed on are LmJz-r for 3 years in a row. We've missed by this interest rate
assumption and only achieved Mo or 609b of w:tat the assumption was or whatever the real number is. And
mortality, we've had experience worse by x96 and all the major stun'. So what if those trends continue, what
would our funding percentage look like 3 or 5 %cars from now? Then see if this continues, we could be down
from G090 or 709b if we were there, then ►►c cot:�d be downbelow - 0 when ►►c arc nowor40°� some odd
percent. _ou might say we can't take that risk because the cost later of making assumptions is going to be too
big. We have to start chipping away at this now and then start fooling with the assumptions. What that means
is more money this year, next year and the year aver that. It is a hardship and it is tough. One way to do it is go
out and say raise property taxes and we all know how that toes over. But to wait and let these things go on
because of some of the thinks that have been taLked about earlier on how- there is a very seductive draw toward
believing it is all going to work out because it will freeze up more money in the budget to do other things.
You've got to take a hard loot: ever), 3 years and see and do some what ifs and then use your best judgment.
Aid. Tisdahl asked if it is seductive for an actuss%, to low ball and give us a number that we want because then
we will ha►e more money in the budget for oche: things. «hy is it not equally seductive for an actuary that we
hire every + years to do that? And if it is not. Aho would have an independent actuary. Do the police or
firemen ha►e independent actuaries who look a: this' Mr. Metz said the idea is that the consultant actuary
would be independent because you are not offering a long term a_mwment, this is an engagement and it is a run
on. Aid. Trsdahl asked if you would have a diferent one every 3 years. Mr. Metz said you can have a different
one, they are going to get paid whether you lik: what they are told or not. %%hat matter is the charge, tell the
actuary this is a one time shot and we will pay you x amount of dollars. Get quotes from 2 or 3 of the best
recommendations from people and see if they Rill take the work and do it. The police and fire organizations
have recommendations and that is another way :o do it, let them hire somebody. But again you get conflicts of
interests so tell them you want to know if you ai a on the right track or are there serious problems. Then you've
got to read to see what they say and if they are :n a pretty close range, actuaries arc always going to find
something and they are always going to disagr=. but it is a question of magnitude. if you see big differences
like one person saying this and another saying something else and there is a huge difference then you know
you've got a problem, you've got something ywtiu really want to examine and start digging into that. Aid. Wallin
said in Iast year's budget they allocated more a mding than normal into the pension and it is very discouraging to
hear we are still falling behind, it was a big cr-mk of money that made we committed to try to put things closer
to where they should be.
Mayor %to : on asked if the funds coming in fcc E-.=s:on are in a potwith the money that comes from Skokie
and other -laces. Mr. Metz stated it is a separate trust account. there are' Boards of Trustees, one for E►anslon
police ani Evanston fire and they manage tho,: fundis and they are in►ested. They !tire professional investment
managem.nt consultants to help them manage .tie funds. Mayor Morton said she wants to know with the S140
million d.-ficit is there sufficient funds there cc u all there be sufficient funds. For example, today in Evanston
we have say 200 firemen who are paying into .'ae pc nsion fund and 200 policemen are paying into the pension
fund so ti . u know what is comins_ in. Is there : as d na that w ouldi say a rth these :additional funds coming in
that the pension fund, even thouzh we are in _. t, t►o :ldf not pa% off b% the ►car 2033 in paying the recipients at
the end ofthe fund:' Or is there a possshihtv the tit:^.en an-, polizetneri v,ould not be paid. Mr. Metz said
lets be c'.:Yr on what the under funded actuan—C hab lstN is w high shox%s w hat .ou are asking. This is not a
current %car budget shortfall. there were some ;s en now and then that made him cringe every time he saw it. it
is like there is a budget shortfall of 146 millicc dollars and that is not right, that is not on your books as a budget
item, it to not a deficit. What there is in thes` plans is that the actuary looks at these plans and says based on
the benet:ts that have accrued and %% hat they a c pred2ctang for the future you only have 40 some odd percent of
the morcy that you will need eventually to pa-, this. In other words now we should be about double where we
art. We'%a got to pay off this deficit. we've zat to chip away at that. What does that mean? lie does not recall
exactly but he didn't know that there was any -eport that said that at this rate you are going to run out of money
to pay benefits on x date. lie didn't think any'l-oody reported on that but that is the question. it is clear that if we
4
RL::c Cunmacce Mmulm 12 1 °JS
APPROVED
only have 40 some odd percent of what is needed for a while people are going to get paid. But unless we start to
correct this it will Let down to a situation where the funds are broke. People are retiring with accrued benefits
and the City is taking a dollar out of its coffers and paying it directly. more or less, at a rate to participants. That
is to be avoided and right now that is illegal because you've cot to fund these things.
Mayor Morton stated she noticed in the report that you can't say anythi.-ig is certain over the whole 23 years as
to certain monetary things. You can't say that some people «ill die and won't need the funds, none of that was
calculated but how can the City ever know what to do if the state legislature continues to give benefits that were
not in place at the time that we started all of this. Will we never know or will we always be in debt'? Mr. Metz
said they noted and spent a lot of hours discussing that sort of disconnect a little bit or it certainly has been in
the past although he understands it is getting better, them is a better cooperation. The legislature as far as he
understands it is looking more closely at what will be the impact on the municipalities if we grant this increase.
But still in his mind. you've got a legislator that has the authority to grant these benefit increases. For example,
firefighters are rock stars right now and he says that with no malice whatsoever, they provide a tremendous
service for our communities. But what legislator in the state would think that politically, purely politics that it is
a good idea to vote against something that the firefighters want. That is a pretty easy decision to make things
much easier if you don't have to pay the bill or balance the budget that is being paid for. That is kind of the way
he looked at it. now maybe overly simplified. but that is sort of the situation that exist. It is over simplified and
he knows they are, working on some checks and balances and things, but that is an issue. It just seems to him
that needs to continue to be addressed with the legislators through our lobbying efforts and our local legislators
that we can influence to really look at that situation and begin to understand what is going, on here.
Ald. Holmes noted she was interested in the report where it talked about the retirement ace and the number of
disabilities and is guessing the actuary was suppose to put that into their assumptions. She asked if it is the
actuary's responsibility to get those from the City or the City gives them to the actuary. How does that work so
they would und:rstand better about the perfect storm of negative things that were happening? That it was very
conservative on looking: at the number of the age of retirement and that people are retiring earlier than normal or
earlier than in past years and that there are more people with disabilities and those kind things.
Mr. Testa said all you can do is guess at what people's behaviors are going to be because you don't know when
they are going to decide to retire. You don't know how long they are going to live and we are worrying that
people will live a lot longer than they use to. But the actuary has to make a guess about this from their projects
on how much you are going to have to pay out in the future. Not only do you have to guess, but you can't look
at just Evanston firefighters and police people so you have to some place get a population, an average of people
around the country and those change very slowly. You have to decide which population sample that you Use
and it is changing and our Evanston firefighters like the United States firefighters and hov long they will live or
when they will d_ci,'._ ;o retire. So even if you do choose the correct Guesses based on the average of the United
States and have up-to-date numbers there still might be differences that you don't know exactly until you get
there. Evanston firefighters might be different than other firefighters or they may take care of their health better
than others. +
Ald. Holmes s•.ated t; at is where she is trying to make the connection beriveen City staff and the actuary in
terns of looking at o_: own data in terms of retirement and disabilities. etc. so that she would have a clearer
picture. She ur.,!cnzz_=d; the comparisons have to be done but v6 ants to know what the s•. stem is or is there a
system. Mr. Testa ro%M that the actuary understands what population Wimples they are 4<mg when they make
their guess. Yo;:'d F % e to discuss with the finance staff' or voursely es with the actuary _,:+out what makes you
think those pros} le a.: like our people or is there any reason to think th re are differences in how long they'll
live or retire. From -:.ere it becomes judgment, there is no wa}- to oth.rwise do it. Cho,,the sample you think -
am probably mast lik. your firefighters age and so forth.
Mr. Metz said relativ.}y speaking one of the problems you get is a very, very small population here, so your
standard devia::on is going to be huge because of little tiny population just because it is Evanston. That is part
of Mr. Testa's plan. no matter what you choose you are going to have deviations from time to time. But you can
look at it and say %%c can look at our population and even talk to our people about what they say to each other
5
Rules Cmm-.:age Minutes 1 J 1108
APPROVED
about what their plans are. There is a lot that can be done and you can look and say find a different population
and a different assumption because this one is going to be too lone. That kind of scrutiny over these
assumptions is going to be helpful over time, to really scrutinize them and try to apply it as best you can with
full recognition that you are going to be wrong most of the time. Ald. Holmes said she just remembers they had
a conversation, she believes last budget year, about retirement age and had asked if there was some way to begin
to look and project a little bit better. Mr. Metz said mortality is even a better example, there is no way to make
mortality assumptions based on populations the size of our departments. They use a mortality table with there
large segment population and that changed. That was one of the assumptions that have changed from the old
actuary to the new actuary. But again it is a matter of how does this line up with all the other assumptions. Is it
more considerate or less?
Gerald Gordon commented that toward the end of their first meeting they kind of all looked around at each other
and their gazes fell on \fr. Metz to be the reluctant Chairman and he has done a marvelous job. In response to
Aid. Tisdahl's comment about who do you trust for an actuay he turned attention to page 1 I of the report. On
the first line from tht vear 1997 to the first line in the year 2007 were under the previous actuary. This is
information reported every year in the Comprehensive Annual Financial Report. This information was on page
86 in the 2007 year. lie asked Mr. Lyons if he was intcnding to continue reporting this. Mr. Lyons said yes.
\fr. Gordon said from 1997 to the first line in the year 21k17 the unfunded liability for both fire and police
pension funds combined went from $48 million to S99 million dollars that is more than double. The City
Manager, Finance Director, Mayor and all of the Aldermen are required to look at what is happening with this
unfunded liability on 3 current basis. He is not trying to place blame only pointing out that it is there and we
have to use it. The second line of the year 2007 is when Gabriel Roeder came on board and increased the
unfunded liability. The State constitution in Article IN' provide; that pension benefits may not be reduced, it is
clearly stated that pension benefits may not be reduced for any pension group in the state. That is one
consideration we have to deal with. Another is in article III and Article VI of the statutes it is clearly spelled
out that an approved actuary evaluate pension requirement and that after the police or fire make their statutory
contribution, around 9 or 9 1/, percent, any and all shortfall after that is the taxpayers obligation. There is no
way of getting around that. It is clearly stated in the statute and the constitution. There is another constitutional
probation which is that the pension plans must be fully- funded by the year '033. If that doesn't change that
means we have to have our shortfall paid up by then no question about it per the constitutional provisions. The
committee also looked at pension obligation bond and learned that the interest on bonds in the period from June
until now was not as high as what it would cost us to borrow. and so the pension obligation bond is just
unfeasible so there is no relief there.
Mr. Metz said actu_Ily it would make it worse because it would pretty much totally eliminate any flexibility that
the City has year to year. Because even with all of what a e are- in there still exist this flexibility to make more
contribution in sore.: years and less in others and all that as you manage this thine. Once you issue bonds you
pay it. The none} :hen would go into the funds and make that fully funded funds. But the Crty will owe this
other obligation and pay it. It is ridged and there is no relief and he is not even sure if he understands what that
might do to the cit-'s ability to borrow for other thints. But that mould ha%a to be looked at also. Basically,
just from purely an investments standpoint which is Hhat \fr. Gordon is alluding to is this doesn't make any
sense riubt now bL- that might change. Again. that condition n-ay come back and that is what the committee
said. this is somet_'-gale the Council should revisit and 1c4,k at from time to time. but right no%v there doesn't
appeared to be tha, a good idea.
\fr. Gordon asked far clantication from Mr. Lyons on %%hat is the cost of --i annual actuary report" Mr. Lyons
said it all depends on «hat we are doing. But the last few a4;.d we tyerc only at about h to - thousand dollars
for each fund but -,!ease don't quote him on that. Mr. Metz sa..i but may have run as high as 10 thousand
depending on wha: they wanted.tfr. Lyons added then a consulting actuary who is just revi;wing someone
else's work would l e less because they are not going _o in anJ doing all of the work over again, they are going
to review assumpt:ons. The every 3 year person is not going to be as much. To to one step further than the
question asked wbL-ther it is 15. 20 or 30 thousand dollars what we are talking about is a firm who is watching
over a 250 million dollar operation, fire certainly spend more than that on engineers on a'_.5 million dollar
project or on any project. So money spent is well spent to Let that independent verification and we now have
RukesConTrc—..ee %finutrs it 108
APPROVED
tw•o sources that are geeing closer together. The state actuary is closer to our actuaries now• than they've ever
been before.
.Aid. Rollin asked if police and fire review the actuary or do they hire their ow-n? Timothy Schoolmaster stated
they are required arm ally to certify a number to the Council that they are suppose to levy and yes they have
hired their own. It was their study in 2006 that uncovered all of this other stuff and they will continue to review
them. They, are re-_�;ottably satisfied with what GRS is doing and that they are doing it. The Council will
certainly hear from them if they don't. The board has also talked with Mr. Lyons and his predecessor. There
might be a point on sharing the cost of the actuarial bet they probably want a little more input into what the
assumptions arc, but he doesn't think they are going to get crazy over what they are now.
Aid. WolIin asked if the fire department does the same thing. Patrick Dillon replied yes they pretty much take
no issue with GRS. But to make a point the key component that is different on their board, which he has sat on
since I985, was the fuzance director of the City of Evanston was a member of their board for each and every
}car from 1985 until as recently as August of 2008. Not only was that person a member of the board. voted on
beard issues, was active as treasurer of the fund, but was a fiduciary of that board. So any notion that people
,Acre unaware of the candition of the funds on an annual basis is mistaken_ He is not pointing ringers it is just a
question that that infornution was readily available and out there each and every year. But their fire board is
happy with GRS's numbers and at this point they think it is a favorable report. There are just a few things as far
as entry age, death. rrtirem-ent and so forth, but for the most part the key is the assumptions. That finance
director that has been sitting on that board since 1985 sat in with their investment consultants each and every
year at quarterly mectings_ When you start talking about 71,2 or 7.250�b assumptions on investment returns he
was sure that look drat µ hen that report is there but it has always been with their mix up till now 45°. i of the
investments, that's butt very, very, very agtressivc and they have stated that_
Mr. Lyons spoke on wt saying always because in the 80's and 90's you had investment rates in double digits
for one year CD's, you had huge investment returns and that was before they hit the stock markets. it doesn't
matt
er the investment it is just that during those times when the funds were earning 10, 11 and 12 percent
interest the actuary had in there 8°6. The evidence shows that we have been low for 10 years, but we spent 5
years with it the other way. This fund did not go up over a I00°o funded during that time, there are a lot of
Illinois funds that were o` cr 100* b funding during that duration. So it goes back to what was said, the taxpayers
are on the hook and that in the times when the investments are doing really w ell the levy can go all the way
dovLm to a certain dirr:rishrncni and w hen things aren't going well the levy has to go up to compensate or any
funding source from t. e Cit, .
Mr_ Dillon stated that :: is c^:Nrtant to realize politically that the City of Evanston has a place at the table in the
Illinois Municipal Lea, it %& ho typically %%hen these benefits are negotiated :s certainly at the table. They
nekttiate with the Sta:e Fire Union to come across with these benefits and typically benefit increases and that is
hoµ that number got o_t to 2033. When you extended that deadline to fully fund it came with 1) significant
increased contributior-s :.ore active firefighters and also extending that number out to 2033, significant impact.
Tha: is just a notion why you �ay how do we know we don't have any input into this. you certainly do. you've
had :rnput all along. .A". Wollrn added that it has been her experience that the Illinois Municipal League has
also been under a lot cf f re;s.: e to be a little bit more aggressis a in their repr:sentation of cities and
mur.:cipalities. Mr. D:::on sz:j it is important for the Council to know that it is not Something that happens in a
vac:::zn it is a nrtona Trtic, Mr. Sehkx)Imaster noted that the Speaker of the House lets no bills Lo up or
doµn without the .Mur.:c:: a League and the Unions on the ether side.
Dave Ellis started of b-. brit t_`iaaking the Blue Ribbon Committee. His hat is of to their good work and what
they've done. They',6e ..:en talking about liabilities that are passed and liabilities that are future and the only
other thing that he is tl =Lie__ currently is how to limit, to some extent from today forward, future liabilities that
the vision funds may cr tak=i: on. One way the City could do that is by hiring people that would be less ofa
burden or potential liab,*:ry to the City, i.e_, somebody that would be younger, in better health and likely to
serve longer. If you tyF:zzlly hire people who are over 40 or people that are not in great shape or whatever that
is up to Human Resources sad the City to determine what that would be, but that would Iimit to some extent the
7
Rules Corr._:sr %Iinuin 12/1;0I
APPROVED
pension funds liability. After listening to the Blue Ribbon Committee he hopes the Council will embrace or take
action on a policy prior to next year and the elections or at least set the foundation or framework so they don't
hand this off to the next Council and they don't have to keep learning as they are going. He believes the
actuaries. Mr. Metz and the board will tell you that the longer they lei this time go on the greater our liabilities is
going to become and they want to limit whatever potential liability they are suppose to. Aid. Wollin said she
understands that but in looking at some of the recotn-mmdation and she was not so sure that some of them are
easily attainable but she agrees with %fr. Ellis.
Mr. Dillon said it is Important to realize that the retired firefighters. of u hich he is, are allowed to stay in the
City's health plan but pay full cost of premium. So just like everyone else in this room and every where they are
shouldering the burden of these very costly health plan programs. which the Blue Cross PPO now runs a retired
firefighter with a family plan in excess of SIS00 a month. That is not something they are getting that no one
else is getting. They like everyone else are paying extraordinary dollars for their health care coverage. Aid.
Wollin said maybe their administration can do something about that_
Mr. Gordon was not sure he understood what Mr. Metz said about actuaries in previous cycles and asked that he
clarify. 'Re reason he asked Mr. Lyons what the cost of an actuarial study is because that is germane here. Mr.
Metz said he talked about that in two different con:cxt, one was how would you have oversight. And the
question is do we change actuaries ever}, few years to get a dit?crent perspective or new perspective on the plan
and its finances. The committee discussed that option and sort of came to the conclusion, as a group. that it
might be better to instead of requiring that the actuary be replaced ev cry so often just to have another actuary
look over their work- and offer a second opinion. The rt-ason being. as he said earlier, there are a lot of benclits
to an actuary becoming more familiar over a longer period of time with plan populations. They arc going to be
able to understand what's going on inside a particular plan better as years go by. But to counter that you've got
the full problem and that is you becoming too familiar and you begin to fall in love with your own assumptions
a little too much and maybe need a dose of reality. They kind of settled on every three years as a look and then
it came up again, should we do that, how often should we have someone look. he thinks was the question or
there about. His thought is doing it every year, even if there were a benefit to it as Mi. Lyons pointed out,
would not be prohibited by cost. Rather, he thinks it is that the data sample gets so small that you sort of loose
sight of the longer term picture.
Mayor Nforton asked if in the public safety pension paymcnts do recipients receive automatic raises each year.
Mr. Schoolmaster said there is a 30,o raise after age SS every year. Mr. Lyons said it also depends on the type of
pension out there and asked if the disability pension is still 3°o on the original base" tilt. Schoolmaster
responded yes on the original granted amount. Mr. Lyons said so in that case a disability pension doesn't go up
3% compounded it is just a flat 39b on the original. Mr. Schoolmaster said yes at age 60. Mr. Lyons said so 3%
is the short answer but it can be a little different de, ending on the tv t+r of pension granted.
Mayor Morton noted that .Mr. Dillon mentioned he has been on the board for a long time. llas there been any
concern from any ofthe members about the difference in the amount of the receipts of your investments. As
compared to other pension funds where you would knou all these years that the pension funds for the two
departments that the assets have not received nearly as much monc} as the other funds. So that you could say
something is w-rong someplace, looking at page 22 of the report the police have done well, but in I998 the
Illinois Municipal Retirement received 12.6310 on :l ctr investment re ,rn and the Police received 12.0310' and in
1999 the police we : all the way down to 6.340. w '-tle tie Illinois Retirement Fund went all the up to
20.93"0. She just w o ndered has that ever been a consld--rauon tr' at omLth-m- needed to be done along time
ago. Mr. Dillon sta:cd that what's important to realize is you can't really compare the INIRF fund to Police and
Fire funds. because statutorily they don't have the _same m% es:mrnt pt�1 a%ailable to them, by no measure.
There is a concern when you look at the fire numbers 21X)l was not a %ery LLW year, nor'_002 market as a
whole. But when you compare those figures forth;: string of years from _'001-2007 they met or were near very
close to their number. So to compare the IMRF funds to police or tirr funds is an apples and oranges argument
because the IMRF has so many different options on the investment sldc. As you look into what has happened in
the last'_ months, dramatically they are actually a little on the conservatl%a side on the equity mixed with their
fund. He would hazard to guess as the end of the year numbers come out their performance is going to be
RutcsC.x=ftwcktanxrs t2'1OS
APPROVIE D
judged that they didn't do as bag as some other people and that is what it is going to show. There is no doubt
that is what it is going to show -,A hen you have a greater exposure to these markets. Right now with these
markets, he has never seen ntarkcLs like these, and is sure \fr. Metz can concur, these arc markets he has never
seen and there is no blend of in%cstments that is immune at this point and time. There is really no where to hide
right now.
Just for a point of information for everybody else Mr. Ellis said the RIRF is funded 10V 0 every year and the
City payment is 100° 0 where police and fire were 4010. What Mr. Dillon said about apples and oranges, it is not
the same funding: if you have more money you can make more money. \fr. Schoolmaster added they were i9'6
in the middle of October. It is similar to the Northwestern endowment. He recently had lunch with Wilt
McClain and they've lost a whole Iot bigger piece of their pie than we have. They do have bigger pus but they
lost a bigger percentage of it.
Mr. Metz said there are two things that sort of are related but separate. Number I they are operating two
relatively stroll plans here and each plan has to have its own set of professionals who bet paid and it is just less
money to invest. As a committee he thinks they agree there are a lot of advantages that could be had if
somehow these plans all over the state could be combined. Now the politics of that are not lost on him and it
may be completely pie in the sky. Here you've got IMRF that displayed their losses the), sustained this year
nms between the hick 40's and the tow 100 and something percent fully funded year end year out. lie thinks
that by anyone's measure that he has talked to in the State of Illinois these are like fully fund, very, very w ell
run, very tightly managed, the hest professional management that money can buy, and because of the size of it
their cost as a percentage of the assets if eery, eery low. If you take whatever hundreds of municipalities all
over Illinois each with their owls little police and lire funds and look at what their cost are because of size. Then
you aggregate all of that we are spending an awful lot of money in this state and not getting probably as Food a
result as we could if these wcrc super funds that we participated in as a municipality. That is a huge political
animal.
Mr. Lyons said we used to have no portability whatsoever. An officer that stars in Evanston had to end his
career in Evanston or lose a portion of his pension. to the last 10 years portability comes in and you now have
officers being able to move and take their career to date pension with them, it's an actuarial calculation, not an
enact science. So each fund is designed not to take harm by that person moving and that is the same thing IMRF
has basically, that any IMRF employee can go to another IMRF employer and take their identical pension
benefit with them. Mr. Dillon sari that is a personnel issue.
Mr. Metz said this year they were very fortunate not to have more exposure to equities because they would have
gonen hammered even more in thhis down turn. But over a longer period of time there is I think that a group of
investment professionals that w ce z charged with the responsibilily could get iogciher and pretty much agree and
come to a consensus on what the proper asset allocation is at that point and time, for that year, and for that
quarter even for a plan. Ile can pretty much guarantee you that most of the time the restriction of 4P1 equities
is going to get In the way. Bcca:_;.c it is now riding at the growth potential that normally you would look for in
markets. So there is something A —Ling w ith this whole idea of let's protect the municipalities and the little plans
from themsel%es. You could ar_::. that maybe a tiny little town in central or southern Illinois might need that
protection, but as the legislature ::.cy need the protection of that sort of restriction. But you know- we've cot
hundreds and merely million dulls combined but it is well cnuugli c'. n .%about combining with the rest of the
start inhere a c,ty like E\ anstun _ arc t:strictlon ov er a long period of nme are in the way. They are hurting
thetas and every dollar �x e don't z=m in return is a dollar that the taxpayers of the City of Evanston have to pay.
He understands t2he inient but thinks it is unevenly applied and there IS no rea-son for that and it is costing us
money in Evanston and in simila: situation. They've got to find a way in the legislature to get the handcuff's off
and aIIow rhos: boards or who ev" is charged \with the responsible for the final decision. With the help of their
professionals that they've hired to make decisions as to the proper asset allocation at any given point and time
which will chance up and down. If they did that over time the funds would earn a greater return than they have
historically and would have earned more in the past than they have earned historically had that restriction not
been in place.
Rules C.rr.zncc .%ttr."tts lZT0
APPROVED
Mayor Morton asked what happens is Chicago at their pension fund. Mr. Schoolmaster's response was they
have separate police, separate fire, and separate municipal workers. It is a different anicle the w ay they did it
they separated it by size of municipalit. and Chicago is t1=t only one that qualified. The Chicago police have S-i
billion, fire has a S ^illion but they a.= paving out $850 million a year more than Chicago was were taking in,
Chicago is about Al 4:-re Evanston is or worse. Mr. Lyons said we are not paying out more than we are taking in,
otherwise we woul_:.-.'t ha►e any real -_-�iwth at all. If we still had the real growth up until this %ear in
investment balances :t is just that we nevd to be taking in a lot more than w e are paying out in order to get the
funding percentage -, _
Mr. Dillon stated the one thine you wait to understand is that what your active payroll cost versus what is going
on in benefits and if that number starts going up dramatically that's when you are really going to see some
problems. Mr. Ellis aided that as the cctinunittce also mentioned it is a good budgetary idea to look at the cost of
the employee as a new hire and look a: the overall cost. What does it cost when you hire a policemen or
fireman, what is the Stability the City may incur from the date they are hired from the time they retire. If you
hire somebody when then are 45 years of age as a policeman or fireman you know they are not going to make as
much of a contributon so w hat is the ortst going to be. Ald. Wollin said she thinks he is right and that is one of
the factors but ther are other factors as well with experience and bringing in police and fire from other
communities that a.: ready to go.
REPORT FROM THE SUB -COMMITTEE OF TIM RL.1_FS CO\i%SITiFE ON PAYMENT IN LIFI' OE
AXES:
Aid. Wollin stated sbe is not on this chrrimittee but knows that one of the recommendations for incremental
revenue sources is to bring in non -for -profits.
Mr. Lyons reported that the group bczan first trying to define that they weren't going to be looking at not -for -
profits generically. They are looking for the not -for -profits that do not pay taxes. They want to make that a
clear distinction that what they are looking for is tax exempt organizations. The group then talked about
whether to take a r-vaad approach or a targeted approach- For instance, the targeted approach currently is that if
someone is coming in for some kind of variation then they would look for a payment in lies of taxes and if it is a
tax exempt organic -lion they will ask for a payment in lieu of taxies to grata the variation as a condition. The
group is looking a= expanding that idca to bringing in potential issues of zoning or other chances. The other part
of the meeting co%.rrd the coal of sta:-•ring an education program as far as getting out the information to all of
our tax exempt non-for-p-tifits that t l: city has a funding crises and this can impact the services they enjoy
presently. So in rrdrr to keep those where they need to be they should consider this voluntary non -for -
profit program an4 :his is what those funds would he wed for. Whether or not that education will go to a more
broader base reve--:te raising effort hz would refer to th_ members of the committee, but they didn't really get to
that part of that. ae go:p did talk ; utte a bit about la zer _coups that are tax exempt versus smaller groups and
decided to approach all of them. A_z:n a lot of it was bZ.ed on education.
Aid. Ilolmes thouzhi the -Jucation r :ece is super because it is based upon the budget committee
meetings that wer_ held back inShe said the community was involved in that and they talked a lot about
it in that this wog :J be another taken that in terms of :rally pulling the community in and asking for help and
letting them do that. Tf ,- committee _�idn't say when b, ;: definitely saw that as a big piece of Letting the
community nor; c ol% ej and ed,,;c_:.nv each other. In:enm Can Manager Ru_.=ell added that in addition to the
education they rer-ly w: ,.-d to en_�_ c the communit% m helping to .olve the problem. So s,=inv off the
meeting with detln:nc %; Hat the prc,c3;m is and then ac-ually asking the community 10 help them solve it. Then
making sure that -v the tame they enJed the meeting t..y would have some corn- fitment to try to find some
solutions. She be --.eves nat severa:.ears ago there wa_< a meeting and some of the Alderr :n said they thought
they were makir,_ some progress bL.: didn't have the 'k nd of follow-up that was needed. This time they want to
have the follow-L.-_ in the meeting -D that they are truly engaged in helping sot%a that.
Mayor Morton aged if the reconun--ndation is that the funds you would get from that would go towards paying
off the pension fl_Ttd" fir. Lyons said it could be, espccially those that were one time PILOTS where that would
be one way to a-v and take a shot = :he unfunded liability so you were depending on Pilot revenues for ongoing
10
Ft u1cs Cone: = M im vxs I Z I%
APPRO%TD
operations. it is just a way to try and whinle down the unfunded liability, any chance you've got, but that you
didn't take those Pilot revenues and say %, a are going to use those to cover police salaries.
.'Mayor Morton asked if they had the motley to pay ofithis S145 million what would be the plan as to the amount
of trkiney they would have to pay every year to pay it off. Would you divide that 5145 million by 23? Mr.
Lyons response was no, actually it would be the formula as put together in an actuarial report. It can be affected
by the actuarial method that the actuary uses. But in just general terms it is going to be an increasing balance
method that even year you take a little Nigger bite of what is owed until the last one. It is not unlike how TiF
increments grow. The last payment is going to be the biggest and the last payment, theoretically, is where you
ha%a the most money- to pay. So it would always be increasing and trying to Let ahead of just the normal
inflationan• and demosnphic chances o:'the group so that percent number Lkks up. Going back to the point
made about staft'havine issues or Council haying issues with seeing the numbers staying there they are not
being an incentive to get their percentag~ up. One way to go after this is to have a framework that the Council
could adopt that says if they have 2 or 3 rears in a row of negative balances say 44% down then these key
assumptions must charter and you put it in a framework to say if it drops by 3°o they need to change the
invr:tmeni assumption by a quarter. Th:re is something that just goes out there in a general framework that any
future Council can aggregate. You can have it as a funding policy like you have a current general fund.
minimum fund balance policy but then it gives staffa leg to stand on to say per your policy we are bringing to
you this chance rather than, no it is you: idea to raise taxes.
Aid. Tishdal asked if they need make a motion. Mr. Lyons said he would bring back to the Rules Committee
kind of a boiler plate to say here are a frw options. Because when you think of it, you don't warn to play
actuary you want to say here are a few k;y assumption that you will adjust with the actuarial approval and that is
how you would manage the ups and downs of the funding level.
Aid. Wollin said that is a great idea and they look forward to Mr. Lyons bring that information back to them_
Mavor ..Morton wanted to know what will happen with property taxes for the next 5 years. \Mr. Lyons didn't
know• about the taxes but said he did know that the revenue going into those funds will need to go up over the
next 5 years in order to bring the funding level up.
\Mr. Schoolmaster noted to keep in mind that the actuary's use a 5 year or whatever you tell them smoothing so
it doesn't all hit at once. He didn't see them getting out of this for awhile. \Mr. Metz shared that they use a
smoothing that is more like 30 to 50 y t=rs. Right now if you had an actuarial lost this year of lets just say 20
million dollars and let say you have Zv years left until this fictitious date of 2033 when we are suppose to be
fully funded. Because we lose 20 mill:, n dollars this year in actuarial lost does mean we owe 20 million dollars
next year. What you Pay is you add on 1 2e of that 20 million to what you are already paying off. Now next
yc-ar. lets say the market rebounds and now we have a 20 million dollar actuarial Lain, you don't get to take the
whole 20 million and say we don't ha,. a to pay any money this year, you cet to use again about 1: 20" of it or
%ha-tever the amortization period is to offset past actuarial loses. That is the smoothing technique that is used
and it is aver really lone periods of tit -- and this 2033 law- he thinks is statutory. Mr. Schoolmaster said yes he
thins it was extended from 2020. Mr. Metz +tent on the say that it will change then because on the face of it
males no sense, but t?tat is a long: stor;.. The point is the 2033 statutory requirement that you be fully funded
h:s actu.aliv shorten amortization c:- 7cKi that an aetuan• would normally use to do this leveling out. again.
the+• use a smoothing of more like 30 years, 50 year is extreme but 10 years w ould be kind of the run of
the mill for public fun is. ile thinks p:nvate pension funds are required, unless it has changed, the amortization
period could not bz less than 10 years nor more than 30 years. Most of them would kind of shoot at 20 years in
the priy ate class and trite public sector _:such longer.
On behalf of everybody Mayor Morton thanked the members of the Blue Ribbon Committee on a fantastic job.
She commented that she actually read :his and could understand it, and was just thrilled with that because so
many- times you get things and read it but don't know what it is talking about_ Anyone picking this report would
understand it and again she thanked tlxtrn very much for giving this very valuable service to the City.
LIU
Ruld Co=n=c 161inuies IJ1;08
APPROVED
Mr. \letz said one of their coals was to make the report readable. He %vas indeed the reluctant chairman and
didn't volunteer for that pass but was really blessed to have some very dedicated and very competent and
passionate people working with him. They had sonic good spirited debates and a lot of thoughtfulness went into
this. But while they u ere tuning the finishing touches over this. which word smithery took sometime just
getting it down to be the %ay they wanted it. every time he would read it would occur to him that the
committee's job uas the easy one. So many times they would run up against an issue and realize that was not
their decision but the Cir, Council's decision. over and over they came to that point. He appreciates the task
that Council has going ahea3 in dealing with this and anything they can do to help as a resource. he thinks he
can speak for all of the tnem— bens of the committee in saying they are absolutely ready. willing and able to help
in any way they can with th s issue.
DISCUSSION OF PROCESS FOR BUDGET %IEF.TINGS:
None
DISCUSSION ON CITIZEN COMMENTS:
Aid. Wollin said this item :.as to do with limiting citizen comments to 45 minutes and that needs to be firm
because they have so man% issues coming before the Council.
Aid. Jean -Baptiste said w Eat Ald. Rainey wanted to say regarding this item is that they not separate the agenda
and non -agenda items so that when an individual conics up to speak on two different issues that they speak only
once during their allotted t_-ne. As oppose to hating them come speak once to an agenda item and then have
them come back to speak «xn a different issue.
Mayor Morton pointed out :hat she understands what he is saying but the only opportunity that citizens have to
say anything is either at a coommittec meeting. and she has notice that they've had to restrict citizen comment in
some of those comminces- arld at Council meetings. As a caution she thinks that any public body such as one
that is supported by public funds has to remember that you have to hear what your constituents want you to hear
and you have to provide = opportunity for them Aid- Jean -Baptiste said this is just an administrative concern
that if someone wants to speak to item that is on the agenda and also wants to talk about something else that is
not on the agenda while thx person is before Council let them speak on both items.
NEW BUSINESS:
None
ADJOURMFNT:
Meeting adjourned at 7:29 p.tn.
Respectfully submined.
Darlene Francellno
12