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HomeMy WebLinkAboutMinutes 1991Draft - Not Aanroved MINUTES BUDGET POLICY COMMITTEE Meeting of January 16, 1991 Members Present: Aldermen Brady, Collens, Drummer, Juliar and Nelson Members Absent: Aldermen Korshak Other Aldermen Present: Aldermen Esch and Feldman Guests Present: Gerald Murphy, Bea Danielson, Jane Brown, Ann Dineer, Betty Goldstein Presiding Official: Alderman Collens, Chairman Staff Present: Vince Adamus, Sally Roethle, Robert Shonk, Bruce Zimmerman Call To Order: The Chairman called the meeting to order at 1:45 P.M., announced that due to the outbreak of the war in the Middle East this would be a short meeting, and opened the meeting to Committee discussion regarding the Chamber of Commerce report. Alderman Brady suggested that the Committee give to the Chamber a list of questions on the information presented in their report which requires further discussion. Alderman Collens added her hope that the report will open dialog regarding issues which require further analysis beyond what is required in the review of the 1991-92 Proposed Budget. Alderman Brady asked Gerald Murphy of the Chamber of Commerce if he would share with the Committee the raw material used to reach the conclusions presented in the report. She stated that a number of conclusions were presented without reference to backup data and stated that it is easy to say staff should be reduced or a library built for less but no recommendations were presented that specify departments or levels of staff cuts. Gerald Murphy responded that he would be glad to share information regarding suggestions on the library construction, but that it would be difficult for the Chamber to get into the inner workings or details regarding particular staff positions. For that reason, the Chamber is recommending a management study and a budget of $300,000 for same. Alderman Brady responded that in terms of most recommendations she finds the report irresponsible and simplistic and one which would not stand up to analysis. She stated that the information is a disservice, especially to persons unfamiliar with fiscal analysis. She stated that she would like to give the Chamber an opportunity to come back with the raw data used to create the report. Betty Goldstein of Shand Morahan commented that the Chamber of Commerce cannot supercede what the City staff can put forward regarding budget information. She suggested that the City of Evanston has inconsistencies in comparison with other towns that are more efficient or do more with less. In response, Alderman Juliar stated that the Chamber of Commerce report does not provide backup detail for that type of statement. Mr. Murphy commented that the Chamber report was carefully prepared in an effort to identify policy questions regarding City and school spending. He stated the report MINUTES OF THE BUDGET POLICY COMMITTEE Meeting of January 16, 1991............ Page Two is not meant to provide conclusions just based on data, that the City and schools have a special role regarding taxing, and that the Chamber of Commerce group deliberations on this report were part of a serious year long study. He stated that this is not strictly a research report, but that the Chamber will submit the data they used to reinforce their points. Alderman Nelson commented that he does not want to castigate the efforts of the Chamber, that when these are compared to submitted material from some other special interest groups, this is not the worst of its kind. He noted that the participants in this effort represent significant and important community segments. lie called attention to a City staff comparative study done in 1985 which was analytically detailed and reviewed aspects of the City's budget policy, which has been in effect since 1979. He stated that the City's budget policy is used to track inflation, that it should have been acknowledged in this report and that it has been an effective means of holding the line on property taxes and on debt service. The budget policy was based on substantial research and effort. He stated that he would have liked that to have been the case with the Chamber of Commerce report. Alderman Nelson also stated that specifics would have been helpful in the report and that the Chamber of Commerce seems to have demonstrated the same problem that the Council has had over time, that it cannot reach consensus on specific programs that should be cut or specific employment levels that should be targeted. He stated his interest in working with the Chamber of Commerce but would like their specific ideas on ways to reduce expenses. Alderman Collens stated that she will collect additional questions and suggestions from members of the Budget Policy Committee which will be presented to the Chamber of Commerce for further discussion. She expressed the Budget Policy Committee and City Council interest in further discussion of the report. PUBLIC COMMENT Ann Dineer noted that the preamble to the Chamber report says that it is intended to open up a dialog with other members of the community. She explained some historical notes of interest regarding the Art Center property and suggested that it would be a good idea for the City to sell the property. In response, Alderman Collens noted appreciation for the suggestion and asked that Ms. Dineer share with the Committee.an article from the Nall Street Journal on budget reductions which she had shared with members of the Administration and Public Works Committee. The meeting adjourned at approximately 8:15 P.M. and it was agreed that the Committee will meet again on Tuesday, January 29, 1991 at 7:45 P.M. to continue this discussion with the Chamber and to review its responses to the Budget Policy Committee's questions regarding the report. Respectfully submitted, A Sally ethle Assistant to the City Manager cc: Bruce Zimmerman, Acting City Manager Draft - Not Approved MINUTES BUDGET POLICY COMMITTEE Meeting of January 29, 1991 Special Meeting on Chamber of Commerce D.I.E.T. Report Members Present: Aldermen Brady, Collens, Juliar and Korshak Members Absent: Aldermen Drummer, Nelson Other Aldermen Present: Aldermen Esch and Lanyon Guests Present: See Guest List Attached Staff Present: Vince Adamus, Judith Aiello, Sally Roethle, Robert Shonk, Bruce Zimmerman Presiding Official: Alderman Collens, Chairman Call to Order: Alderman Collens called the meeting to order at 7:55 P.M. Aoaroval of Minutes: The minutes of the January 16, 1991 meeting were approved as submitted. Discussion on Chamber Report: Alderman Collens asked that the Chamber of Commerce review the details of their January 28, 1991, written responses to questions posed by the City. She stated that the City Council does not want to miss any opportunity to reduce taxes, but that the Council approach to service and citizen needs is different from that of the Chamber. After all analysis has been completed, both groups may agree to disagree. At this time the Budget Policy Committee is looking at what can be used from the D.I.E.T. report. Gerald Murphy thanked the Committee for its attention to the report and introduce6 Chamber representatives - Betty Goldstein, George Cyrus and Joe Procheska. Mr. Murphy noted that the demographic data used as a resource for the O.I.E.T. report was Donnelly Demographics, 1980 Actual and 1989-94 Projections. The Chamber selected certain suburbs which they felt would provide correct comparisons to the City of Evanston. Regarding vacancy rates and relocation decisions, he stated that it is not easy to demonstrate that taxes are a factor in business moves out of Evanston. These are often the result of other factors, but the Chamber feels that these taxes are a factor in this regard. Alderman Brady questioned the Chamber's choices of municipalities comparable to Evanston. She stated that comparability requires further analysis in the areas of age of the community, infrastructure, income, housing stock, tax base, and ranges of income. MINUTES OF THE BUDGET POLICY COMMITTEE Meeting of January 29, 1991............ Page Two Betty Goldstein urged the Committee to look at special programs which are not life safety or infrastructure related and urged the use of three to five year sunsets for these programs. She stated that the Chamber is not close enough to City operations to point out which programs, but would be glad to work with Council in making these determinations. Alderman Juliar responded that the Council has a process to review programs on a periodic basis. Alderman Korshak noted that these are reviewed selectively and that sunset clauses are added when the Council feels there is an advantage to do so. He added that the Council and Chamber representatives may make political and business decisions differently in terms of the effect on the community and residents. Alderman Brady suggested that the Chamber review the chart in the proposed budget that describes program areas as percent of total budget appropriation and asked that they consider which of these to select as nonessential City services. Betty Goldstein discussed zero based budgeting, said some businesses use it and suggested this as a method for determining spending categories. Brace Zimmerman responded that the City has used a modified version of zero based budgeting in past years, that it has not been found to the most effective budgeting method, and that the City is not aware of any governmental entities that use zero based budgeting. In a discussion on staffing, Ms. Goldstein stated that the Chamber's data on personnel comparisons were taken from a report provided by former City Manager Joel Asprooth which allowed for comparisons with other suburbs. Gerald Murphy noted that the Chamber was suggesting a six month hiring freeze and/or combining or changing the function of jobs, particularly administrative jobs that are not based on specific skill requirements. To that, Alderman Brady responded that those types of expenditure reductions are made by cutting programs. Mr. Murphy responded that programs with popularity and constituency prevent cuts, which is why the Chamber is recommending cuts in personnel and a professional management study. Betty Goldstein and Joe Procheska explained the organizational streamlining done at Shand Morahan, on a planned basis over a period of time, which allowed for streamlined operations, improved efficiency, elimination of task duplication and a downsized workforce. Alderman Juliar agreed with the professional management study suggestion in terms of analyzing functions and studying possibilities for reorganization but emphasized that any significant reduction in expenditures will require program cuts. Alderman Brady reminded those present that when a Recreation Department organizational study was conducted, certain positions were found necessary to add rather than cut, but that this resulted in improved operations and efficiency. Alderman Collens stated that the City is at a point where significant changes are ahead, including the hire of a new City Manager, and with that MU the Council will articulate goals for future operations and objectives for an outside management study. She suggested that the time to initiate this study is after the new City Manager is on board. Joe Procheska suggested that there are benefits available from a study beyond the ability of the best manager. Alderman Korshak noted that it is the Council's role to provide what people need and that the Council bases its decisions on what it MINUTES OF THE BUDGET POLICY COMMITTEE Meeting of January 29, 1991............ Page Three understands people want. Although few people give those clues clearly to the Council, it is the desire of City Council to contract, not to expand, City expenses. In a discussion regarding proposed job eliminations, Alderman Collens stated that the Chamber statement that 70 jobs be eliminated is an incorrect approach. It is first necessary to look at goals, not a number which by itself has little meaning. Alderman Brady agreed and stated that the term "administrative jobs" is very vague and poorly defined. Acting City Manager Bruce Zimmerman stated that his concern about the D.I.E.T. report, which is now a public document, is that many of the jobs listed as administrative are not, including, among others, Fire Captains, Water Plant Operators, and Communication Operators. He suggested that City staff could have helped the Chamber to define these positions if the opportunity had been allowed. Alderman Brady stated that the Chamber has not proven that the City is top heavy in administrative jobs but used this number to capture the interest of the community in an irresponsible fashion. George Cyrus responded that the Chamber believes the City can provide services with fewer people. Alderman Collens responded that the Council has to deal with numbers from the Chamber that lead nowhere. Mr. Cyrus stated that he hoped the City could reduce expenditures by freezing vacant positions and use savings toward the expense of a management study. Regarding operational spending, Betty Goldstein stated that the report figures include the total of all salaries and benefits in all funds to arrive at a $21 million dollar figure for operational expenses. Regarding capital spending, Ms. Goldstein stated that the Chamber feels that available cash from bond sales should go toward reducing the debt service levy. To that Alderman Brady suggested that members of the Chamber attend the Capital Improvements presentation that is presented annually in the summer months. She noted that the City has some projects that are overdue that have been kept on a waiting list to maintain judicious spending. Alderman Collens noted that there have been no monies raised for the new Levy Center, a small percent has been raised for the new library project. The Levy Center cost will be supported by a Tax Increment Financing district. The City does use money raised by bonds for projects, as an example, money from bond sales used to purchase roll -out carts for the new garbage collection program. In response to Gerald Murphy's offer to survey businesses on the role of taxes in possible plans to move from Evanston, Judith Aiello, Assistant City Manager, suggested that this is a broad based question that must be addressed beyond the issue of taxes and should include information regarding transportation and labor pools. Alderman Collens suggested that the Chamber give the Budget Policy Committee an opportunity to respond to Mr. Murphy's survey project. Alderman Brady discussed the problem of comparing the City of Evanston to Lake County, Arlington Heights or other communities and stated that other measures are needed in terms of comparability. Alderman Collens suggested that a business looks at a very different list of factors than a resident, including schools and recreational facilities and these add up to very different functions of comparison. Judith Aiello noted that service and MINUTES OF THE BUDGET POLICY COMMITTEE Meeting of January 29, 1991............ Page Four retail businesses look at very different factors in choosing to stay or leave a community. Alderman Juliar suggested that any study consider residential and commercial interests and that the Chamber work with the City of Evanston to get whatever correct information is needed to allow for a correct and thorough study. Mr. Murphy suggested possible interest from area hospitals in taking on certain health programs. Bruce Zimmerman responded that the City has looked at this possibility in the past. Alderman Brady noted that the City provides certain funding to both hospitals to provide many social and health related services and reiterated that the City has had the proposed discussions before with both hospitals. Regarding pension funding, Alderman Collens stated that a new actuarial report should be available in the near future. Gerald Murphy asked if there was any interest in capital asset transfers and suggested land under the parking garage. Alderman Brady suggested that Gerald Murphy, Judith Aiello and Alderman Collens discuss City property and property sales. Alderman Collens appointed this group as an ad hoc subcommittee. Members of the Budget Policy Committee and Chamber expressed mutual appreciation regarding respective interests in City expenditures. Alderman Collens stated that certain items require much more discussion, in particular the Library properties, Art Center and the definition of administrative positions. The problem now is agreeing on goals, directions and factual conclusions. She stated that there are many issues in the D.I.E.T. report which require further discussion and stated interest in continuing this at the next Budget Policy Committee on February 20, 1991. In response to Richard Stillerman's question as to what community would be comparable to the City of Evanston, Alderman Brady suggested looking at the City of Chicago's Roger's Park and Edgewater neighborhoods in terms of the demographics, needs and services. She also stated that most people live in Evanston because it is not comparable to other cities. Alderman Collens agreed, stating that the City of Evanston, in many ways, deals with urban issues and problems of larger cities versus most other metropolitan suburbs. tz- The meeting adjourned at 10:0O P.M. The next meeting of the Budget Policy Committee is scheduled for February 20, 1991. Respectfully submitted, Sally Roethle M cc: Bruce Zimmerman, Acting City Manager Q L • !S • 4:y) , , �w� 1 tf rJ7VW0 c= (Vif 47 rw7a r Ila 1rY -,y ro CW N row N r y W r? 7 5 tA91-rn o r1 cv 9-1 S 11, g n i'v7"''611/ 71411YS V�v 7"-Vj 04 -0 Lf �2 V6 sSasuav7NonTZVTMo • sz bZ 5Z ZZ TZ OZ 61 a \ LYr 91 y q !'16 Wel ly4 -I /!\ py u�f 7 �ii9ff ' ON --7�1�w�yL-}�J�j 1� o l -70(5 Cl f :133HS NI-NOIS rl Draft - Not Anoroved MINUTES BUDGET POLICY COMMITTEE Meeting of February 20, 1991 Members Present: Aldermen Collens, Brady, Korshak and Nelson Other Aldermen Present: Aldermen Esch and Feldman Members Absent: Aldermen Juliar and Drummer Guests Present: See Guest List Attached Staff Present: Vince Adamus, Judith Aiello, Jeanne Lindwall, Sally Roethle, Don Wirth, Don Wright, Joe Zendell, Bruce Zimmerman Presiding Official: Alderman Collens, Chairman Cali to Order: The Chairman called the meeting to order at 7:55 P.M. Aporoyal of Minutes: The minutes of the January 29,.1991 meeting were amended on page two, paragraph 4, line 7 to read: "Alderman Korshak stated that there is a world of difference between budgeting in the private sector and budgeting in the public sector. The essential charge in the private sector is to achieve efficiency in making a profit. The average shareholder has no significant role in this regard. In the public sector the essential charge is to provide citizens with those services they clearly require (e.g., fire and police protection, garbage pickup, etc.) plus additional services the citizens appear to want (e.g. library, recreation, human services, etc.)." With that change the minutes were approved as submitted. Manaqement Study Recommendation: Alderman Collens began discussion on the Chamber of Commerce recommendation that a management study be recommended, noting that certain items in the Chamber report require specific action. She suggested that the Committee take action on the recommendation to the City Council that necessary resources for professional management/personnel be made available. In discussion, Alderman Brady stated agreement with the idea but not at this time. She suggested that this is one of the best ideas in the D.I.E.T. Report but took issue with the suggestion that this project be taken to the Council for a funding commitment prior to the hiring of a new City Manager. She then offered a modification that the management study remain a priority of the Budget Policy Committee to be dealt with at the time that the Budget Policy Committee meets with the new City Manager and together they determine what type of study is needed. Alderman Korshak noted that the idea for the study originated with the Chamber and that they suggested a contribution for the cost of the study. In response, Gerald Murphy stated that the Chamber had contributed time over the last year in preparing the D.I.E.T. Report and suggested that the Chamber could mobilize its professional members as volunteers for the study.- However, he stated that he will ask the Chamber to consider a cash contribution toward the cost of a study. Alderman MINUTES OF THE BUDGET POLICY COMMITTEE Meeting of February 20, 1991............ Page Two Korshak noted that it would be helpful to a new Manager to have an expression of interest from the retiring Council and suggested their involvement in the management study. Alderman Brady responded that she felt it would be most helpful at this time to keep the idea for the project in the Budget Policy Committee so that its thrust is not lost. She suggested that the Committee prepare a memorandum to the City Council regarding this discussion. In response to Gerald Murphy's suggestion that the project idea be referred to the City Manager Search Committee, Alderman Collens responded that she would take that idea under advisement. issuance of Bonds. Policies and Procedures: Alderman Collens reminded the Committee of a presentation several months ago at the Chamber of Commerce in which Ron Noreen and Bob Shonk gave a presentation on the bond process which she felt was very helpful. Noting a suggestion in a section of the D.I.E.T. Report, she suggested that this presentation be repeated at a time that would allow all members of City Council to attend and discuss significant issues in regard to issuance of bonds, policies and procedures. Alderman Esch agreed and Alderman Korshak suggested setting a tentative date in May or June at which time there will be three new members on the Budget Policy Committee. Alderman Nelson suggested that this presentation be scheduled prior to the City's annual issuance of bonds. He noted that we go through a process to evaluate requests for proposals and it may be appropriate to do this with bond counsel. He noted that Ron Noreen is viewed as incredibly knowledgable in this area and that to schedule this type of presentation in advance would be a worthwhile exercise for the members of Council. Acting City Manager Bruce Zimmerman noted that there is a tight time schedule prior to the 1991 bond issuance and that to attempt to do this in the spring may be difficult. Alderman Nelson responded that it was his intention that this presentation could stimulate ideas in the Council and that we may be able to time the issuance of bonds in a way which improves the City's interest rate. He suggested that this could be interweaved with an RFP process and that after all these years it may be a good idea to conduct a request for proposals in the coming year. Mr. Zimmerman responded that in terms of the timing it would be best to schedule this type of process for the fall and that would then allow sufficient and adequate time for the 1992 bond issuance. The Committee agreed to postpone the RFP selection until the fall of 1992. Noyes Cultural Arts Center Alderman Collens noted that a staff report on the program elements for the arts includes the Noyes Cultural Arts Center and the Arts Council. She noted that there are six positions in these two separate elements which provide staffing for two different types of activities. She noted that the City of Evanston does own the F Arts Center on Sheridan Road at the lakefront. It is privately supported by members and class offerings and there is only one tenant in the main building and �- two tenants renting the coach house. Betty Goldstein clarified the D.I.E.T. Report point that the City gets no revenue from the Arts Center building at the lakefront, which it owns. Alderman Korshak stated that, in his opinion, the City is entitled to a more equitable return. Alderman Nelson stated that identification of the Arts Center speaks to the capital plant of the City and begs the question as to whether or not the City needs to maintain these different properties. In addition, he _� posed the question of whether or not the City is using it in the most efficient manner. He noted that the,D.I.E.T. Report simply seems to raise these points and bring to the forefront the question of whether the City needs to do an analysis E MINUTES OF THE BUDGET POLICY COMMITTEE Meeting of February 20, 1991............ Page Three from a policy point of view regarding the return on investment, property use, service provided to the public based on City policy and a means to enhance the maximum return to the City of Evanston. He noted that the revenue from the Church/Chicago air rights sale of $1.4 million balanced the City budget for FY1991-92. He noted that in the past he had suggested that the parking lots be sold and that other ideas that can be explored, but suggested that "to finger" the Arts Center is too narrow an approach. Alderman Brady suggested looking at operating costs for the Noyes Cultural Arts Center for FY1991-92 and pointed out that there are no City revenues required from the tax levy for FY1991-92 and the operation is totally supported by program revenues generated by activities at the Noyes Cultural Arts Center. She suggested that operation costs are not the problem and policy questions regarding the City's capital plant raised fascinating issues, one of which is whether or not it would be wise for the City to sell the Clark property (the Arts Center at Sheridan Road) which is located between two different park districts. She challenged the Committee to consider whether or not it is in the City's best interest to risk its metropolitan standing (with its focus on the arts) and suggested that the use of the buildings be considered in that light. She suggested that when the lease for the Arts Center expires in 1995 it is expected that changes would be made. Alderman Collens noted that the Arts Center has been advised to get a longer lease for better grant standing. The Arts Center directors have been advised that in 1995 the City will renegotiate, but under very different terms. Alderman Nelson suggested that a capital plant analysis be used to look at 10, 15 and 20 year reversion rights. Joe Zendell noted that between 1990 and 1995 School District #65 has a buy back option on the Noyes Cultural Arts Center building. Alderman Nelson noted that District #65 could save money by reconverting the Noyes Cultural Arts Center building as a new school if it is needed to meet the growing school -age population. He also noted that Chiaravalle rents the old Miller School and that the purchase of that property was amortized. Alderman Korshak questioned why the City is paying any money to maintain the Sheridan Road Center as an art gallery. Alderman Coilens moved and Alderman Nelson seconded the following motion: "That the City examine its lease with the Arts Center and the City's obligation to pay for expenses with an eye toward the amount of money spent at the Arts Center and operating expenses for the past years. This should include a legal review of the contract and the City of Evanston's obligation regarding maintenance and upkeep and City costs of operation which should not exceed income from the property." In discussion, Mr. Zimmerman noted that the lease clearly states that the City of Evanston is responsible for roof repairs and maintenance and major mechanical systems. He noted that this was a big issue in the City of Evanston at one time. Alderman Coilens noted that the Arts Center executive report notes that since 1986 the Arts Center organization has spent $44,252 in capital improvements on the building. Alderman Nelson suggested that a policy statement be created to direct City management to examine how future properties are to be handled. Any future third party leases should be written so that there is no cost to the City of Evanston regarding capital expenditures or any other costs and that the lessee is to maintain and improve the building for the period of the lease and that the City of Evanston will own the improvements at the end of the lease. The Committee unanimously agreed on the terms of the policy statement. MINUTES OF THE BUDGET POLICY COMMITTEE Meeting of February 20, 1991............ Page Four Alderman Collens stated that as Alderman of the Ward, beach front property is very important in the north end of Evanston. She stated she could not conceive of any interest in the purchase of property without riparian rights and next to a parking lot. Alderman Nelson disagreed, noting that a Marriott convention center at the site would get an overflow from the Kellogg School of Business and that there is a market. Alderman Collens questioned whether this would be compatible with an R-1 district. George Cyrus commented that property by the water front would sell in about two or three weeks if listed with a realtor and that the property is salable without riparian rights. John Wertymer introduced himself as a member of the Chiaravalle and Noyes Arts Center boards and stated that the Committee should not bypass operating costs and that these are major cost burdens. He noted that some art buildings are run by wealthy funders who could conceivably contribute funds to the operation. Alderman Brady noted that operating costs are very important as these affect the tax levy. In further discussion regarding the Noyes Cultural Art Center and the Arts Council, Joe Zendell noted that the Arts Council supports theater and artists who contribute to Evanston's economy by purchasing supplies, being patrons and students and that those and other factors have a definite economic impact on Evanston. in conclusion, Alderman Nelson urged that the Committee keep the utilization of separate capital assets on the Budget Policy Committee agenda. Gerald Murphy added that the Arts Center lease does not have a cancellation clause and that future leases such as this should include a cancellation clause. To that Mr. Zimmerman noted that the lease is over 15 years old. Evanston Public Library Building Prolect: Alderman Collens noted that issues raised in the D.I.E.T. Report include location of the new library and whether it ought to be a mixed or single use facility. The Report questioned whether the City could remodel the current site or locate at another site such as the District #65 property. She noted that the City of Evanston City Council deliberations on the library were extensive and that Alderman Feldman agreed to elaborate on the work of the City Council's Library Committee. She noted that the City Council, the Library Committee and the Library Board have had extensive discussions on this and agreed repeatedly on the present plan. Alderman Korshak commented that the Levy Center, the Library and the Research Park have been intertwined from the start, but dealt with separately. Alderman Brady strongly disagreed, noting that the Council dealt with these projects together. She noted that this discussion has been ongoing for five years and that the majority prevailed on the decisions for all three properties. Alderman Collens added that the Library Committee, the Council and the Library Board started with the program statement to determine needs and what had to be done to meet those needs. She noted that the project is now at a $23 million cost and that to restart a study and say it has to be done for less or use less square feet would create a -_ major problem and backward step for the City. Alderman Feldman stated that the Library project was exhaustive in terms of the research, study and time. He noted there was no clear consensus at the beginning and that a variety of perspectives and views were represented on the Committee, including Aldermen Rainey, Morton, Collens, Rudy, Juliar and Feldman. Cost was always a factor, but the goal was to do it correctly from the start and understand the community and library needs. Site selection was a critical decision as was use by the optimum number of people and a new library that would intrude on community MINUTEs OF THE BUDGET POLICY COMMITTEE Meeting of February 20, 1991............ Page Five consciousness and that Evanston would view with pride and want to use. He noted that a study had been done on reasons people use the downtown library and how the library impacts on the business and commerce in Evanston. The Committee looked at many downtown sites. The Dominick's site in the Research Park was explored and the developer offered to place the library underneath a parking structure. The Committee felt that the library structure should stand as a separate structure, not under or over a parking lot. He acknowledged that the present site had some drawbacks but also had many features. Alderman Feldman stated that the sense of the Committee was to explore issues beyond access and optimum use and that the library symbolized aspirations, character and quality of the City of Evanston. He noted that for those reasons the present site was chosen as the best. He noted the Committee's unique experience listening to testimony and evidence. Through the lengthy period of study the group very slowly came together on one decision. He added that anyone having gone through this process would have come to this decision in terms of the present site, location and space. Alderman Nelson commented that this inquiry is more global than a discussion of the Evanston Public Library and new Levy Center. He suggested that attention be given to the Budget Policy, that this is a Budget Policy Committee and recommended attention be given to paragraphs two and three of the City's Budget Policy which require that the CPI limitation is separately applied to the Debt Service Tax Levy and that the principal amount of General Obligation Debt paid through property taxes shall not exceed $50,000,000 at any one time. Alderman Collens responded that much of the D.I.E.T. Report is a fundamental challenge to the City's Budget Policy but recommended that the Committee address the D.I.E.T. Report and issues that need to be resolved. Regarding the Library Plan, Alderman Collens explained that many hours were spent on careful research that the citizens deserve. She stated that to use the present site for a Levy Center, with or without housing as suggested in the D.I.E.T. Report, would require another site location. She further noted that the District #65 site, suggested in the Report, was determined to be too small for a public library even if the the downtown site value considerations were to be given up. She provided Mr. Murphy and the Chamber a digest of Library Committee minutes as a review of the record of the lengthy proceedings. She noted that extensive studies by architects and engineers were done and the results incorporated into the current plan. She noted that the idea of the addition of the Levy Center to the library was discussed at length with the Levy Center Board, the Leisure Learning Center, the Evanston Public Library Board and the Library Committee and -determined to be unworkable. She added that, although there were some very interesting ideas in the Report, major pieces do not work. In response to a question from Mr. Murphy, Alderman Collens noted that parking at the Library site will be provided underground. Jeanne Lindwall noted that the plan for the new site maintains the same number of parking spaces for library patrons. In response to Gerald Murphy's statement that the project seems to include an overstatement of costs for parking, Jeanne Lindwall responded that the City cost estimates include a 20% contingency and an escalation factor for 1992 dollars. She noted that the $23 million cost estimate includes the cost for land acquisition, demolition, furnishings and landscaping in addition to the other project costs. Gerald Murphy offered to provide the worksheet he used to evaluate the project MINUTES OF THE BUDGET POLICY COMMITTEE Meeting of February 20, 1991............ Page Six costs he felt were too high and noted concern regarding funding, debt service costs, and an increase in the tax levy. Alderman Collens responded that the Capital Improvements Program is reviewed by City Council every year. She noted that the City is not selling $23 million in bonds in 1991-92 for the project. Jeanne Lindwall added that when the winning architectural design is selected the budget estimate for the project will be refined, that the City is insisting on cost management, and selection of a firm which will carefully monitor construction to save as much expense as possible for the City. She noted that all officials and staff involved want to do this project as inexpensively as possible, in a manner that will exhibit civic pride and result in a project that speaks to what this community is all about. Betty Goldstein asked if Evanston taxpayers can afford a $23 million library project given that people are saying that Evanston cannot survive the current tax rates. Alderman Feldman responded that the question is very legitimate, requires public input, but that many people do not like taxes but support the plans for a first class new public library. He suggested there are costs people are willing to bear based on priorities and that the ultimate question is left to residents of Evanston, noting that the Council hears many sides of issues surrounding projects such as this. Alderman Korshak noted he has heard from many residents who say they cannot afford to live in Evanston, suggested that the question here is whether Evanston can afford what it would dearly love to have, and added that the responsibility for this belongs to the Council. Alderman Esch added that everyone would like to see a functional building that is pleasant to see but the City has underfunded contents required for the library before and asked whether the City will dedicate funds for the required supplies for the new library. She stated that many Evanston residents use other suburban libraries because they are better and suggested that the City has to find better ways to find out how to do what is needed. Alderman Brady added that the City will need to look at the expense of maintaining branch libraries and a Bookmobile in light of expenditures needed to support the new downtown library. She stated that she is proud of the work the City Council has done on this project, is excited about the competition and enthusiastic about all the work that has been done, according to policies and procedures in an open process. References for Committee Action: In discussion regarding the capital improvement timing issues, Alderman Nelson noted that the Budget Policy cap on capital improvements and debt service is $50,000,000 and has been since 1979. He suggested that this could be reduced to $40,000,000 in an effort to reduce the levy and that the Council discusses this annually. He noted that every year the City works its budget to meet the Budget Policy. If tax cuts require cutting bonded debt, decisions have to be made within the Budget Policy limitation. He stated that the policy works, that it limits debt and that the capital plan is reviewed every year. He noted that the General Fund and Debt Service Fund are calculated separately. Jeanne Lindwall explained that the Capital Improvement Plan provides for five year programming and that only the current year is approved within this plan. Regarding the future need for branch libraries and bookmobiles, Aldermen Collens and Brady offered that it is too early to make decisions in this regard at this time and suggested that this matter be held in Committee for later discussion. MINUTES OF THE BUDGET POLICY COMMITTEE Meeting of February 20, 1991............ Page Seven The Chamber's suggestions on building the tax base, on pages 12 and 13 of the D.I.E.T. Report, were referred to the Economic Development Committee. Ongoing Budget Policy Committee considerations were agreed to be included as part of future Budget Policy Committee agenda items, including policy and the Consumer Price Index limitation, spending and pension funding. Alderman Nelson suggested that the Chamber look at paragraph 3 of the City's Budget Policy and keep in mind that the City has kept its levy at 95% of the rate of inflation and that that does lower the tax rate. He suggested that the Budget Policy also be appl.ied to expenditures and noted that pension funding is very difficult and that if fully funded the pension costs would shoot up tax rates by 40% to 509:. Ouarterlv Financial Report: Alderman Brady moved and Alderman Collens seconded approval of the Quarterly Financial Report, unaudited for the period ending November 30, 1990 as submitted. Motion approved. AdJournment: The meeting adjourned at approximately 10:15 P.M. The next regularly scheduled Committee meeting was set for March 20, 1991. Respectfully submitted, Sally Roethle NOTE: The March 20, 1991 meeting was cancelled. The next regularly scheduled meeting date for the Budget Policy Committee is April 17, 1991. MINUTES OF THE BUDGET POLICY COMMITTEE Meeting of May 15, 1991 Members Present: Aldermen Brady, Lanyon, Feldman, and Drummer Members Absent: Alderman Neloon Staff Present: Vince Adamus, Pat Casey, Robert Shonk, and Bruce Zimmerman Presideng official: Alderman Brady, Chairman Summary of Action: The meeting was called to order at 7:15 P.M. Alderman Brady noted that this is the first meeting of the newly appointed Budget Policy Committee. She introduced Patrick Casey as the new Assistant to the City Manager/Budget officer, who would be staffing this committee at subsequent meetings. Alderman Brady noted that there are currently five aldermen appointed to the Committee, and that she anticipates a sixth Committee member being appointed by the Mayor, in accordance with the City Council's resolution establishing the Budget Policy Committee. Alderman Brady stated that she was viewing this evening's meeting as a procedural meeting to establish the Committee's schedule for addressing a number of agenda items carried over from the prior Budget Policy Committee. These agenda items were outlined in the May 9, 1991 memorandum included in the Committee's meeting packet. Manaaement Studv Alderman Lanyon stated that value analysis has been used for the analysis of City services, as well as Engineering projects. He stated that it is a participatory process that involves staff and outside consulting services and recommended that it be considered as one approach for committee consideration. Alderman Lanyon noted that Howard Ellegant, a resident off Evanston, performs value analysis and is currently working on a book circulation study for Evanston Township High school. Alderman Feldman noted that the Human Services Committee and Mental Health Board have established a system of measurement of the value of different agency services throughout Evanston. He suggested that throughout this process, the Committee discovered that a lot of value judgments were subjective, despite efforts to assign numerical rate rankings. Alderman Feldman suggested this experience may be relevant to the City'.s consideration of a management study. -2- Alderman Lanyon stated that because value analysis requires extensive involvement from. City representatives, it would provide an alternative to the use of an outside consultant who may not be familiar with with City operations and services. Alderman Drummer stated that he believes value analysis should be given some consideration because it could be less costly than a management study. Alderman Drummer stated that he perceives a problem because the City Council has had difficulty in making program cuts in the past. Alderman Feldman emphasized that whatever kind of management study is undertaken must provide the kind of information needed by the City Council, as well as the kind of information needed by the community. The Committee requested that staff research whether there is literature on the pros and cons of the value analysis approach. Alderman Brady noted that the City would need to have a management study currently underway in order to have an impact on the preparation of the FY 92-93 budget. She suggested that it seems appropriate to conduct the study during FY 92-93 in time to impact on the FY 93-94 budget. she suggested that at the November Budget Policy Committee meeting the City Manager present his ideas on a management study along with estimated costs and suggested sources of funding. The Committee agreed that would be an appropriate time for the Committee to provide direction to the City Manager on the scope of the management study and also to analyze different evaluation alternatives that could be used for the management study. Bond Issuance Policies and Procedures Alderman Brady suggested that the Committee consider these policies and procedures once the Rules Committee has completed its consideration of the city's budget policy. Finance Director Robert Shonk suggested it might be timely to make a presentation on this matter in September. He noted that the City will be actively involved in the bond issuance project at that time, but emphasized that a consideration of this issue in September would not affect the September 1991 bond issue. The Committee agreed with the suggestion that z presentation on this subject to the Budget Policy Committee be held in September of 1991., with completion of Committee consideration and the development of any recommended actions by the Spring of 1992. Citv Pronerty Rentals and Citv Canital Assets In response to a question from Alderman Brady, Assistant. City Manager Zimmerman stated that staff will need some time to develop a summary of the City's capital assets and suggested that it would be appropriate for the Committee to consider this issue in October after it has completed its consideration of budget policy. --3- Alderman Brady noted her belief that the City should not sell off capital assets simply due to a budget crunch and that other factors must be evaluated. Alderman Drummer noted that some of the suggestions on Alderman Nelson's list of items to be considered include capital asset items. He suggested that some of Alderman telson's ideas are prudent but that the Council has been reluctant to address those ideas. Alderman Lanyon noted that it would require some time to study the issue of capital assets. Alderman Feldman stated that it will be important to look at the City's use and purpoee for owning these assets but agreed that it is time to look at this question. Alderman Drummer stated his belief that by the end of the year, the Budget Policy committee should be well. on .its way to analyzing a few of the capital asset items included in Alderman Nelson's list. He emphasized that he believes citizens are very interested in what the Council will do about the cost and efficiency of government. The Committee agreed to consider this subject further during the fall of 1991. Review of Alderman Nelson's List of Items to be considered RE: Budget Changes and Changes in operations of Citv Programs and dices Alderman Lanyon requested that staff transmit to the Committee prior information considered by the Administration and Public Works Committee concerning the sale of the Sherman Avenue garage. Alderman Brady noted that Alderman Nelson has suggested the need for City Manager input on his list of ideas. She suggested that the following approach could be used for dealing with Alderman Nelson's list. 1. The Budget Policy Committee should decide to either accept or reject the ideas on his list for further consideration. 2. For those items that the Budget Policy Committee believes should be considered, the Committee would then make references to the appropriate City committees for further analysis of the items. Alderman Brady suggested that staff group the items in Alderman Nelson's list on the basis of the appropriate Committee for consideration of the item. 3. For those items that the Budget Policy Committee votes not to consider, Alderman nelson can then make references from the City Council floor. 4. Alderman Brady noted that a number of suggestions involve the issue of privatization and requested that staff assemble background information on the privatization of municipal services and transmit this information to the Budget Policy Committee. She suggested that this background information may provide the Committee a basis for dealing with many of Alderman Nelson's ideas concerning privatization. -4- xn regard to privatization of Health Services, Alderman Feldman noted that information has already been prepared for the Human Services Committee on this matter. Alderman Lanyon noted that it would be helpful to know the current year appropriation for each of the items included on the list. Alderman Brady suggested the number of full --time equivalent positions assigned to each item would also be helpful. The Committee agreed with Alderman Brady's suggestion that the Budget Policy Committee try to deal with this List as an agenda item shortly after completion of its Budget Policy deliberations. (;Jtv Budget Policy The Committee noted that in addressing the Budget Policy, the Committee will need to consider policies concerning capital improvement program funding, debt service funding, pension funding, the property tax limit as well as an expenditure limit. Mr. Zimmerman suggested it might be helpful to the Committee if staff prepared information analyzing the impact of different Budget Policy guideline options. He suggested that before considering the feasibility of reducing the present limitation on the property tax, implementing an expenditure limitation, or making other revisions to the Budget Policy, it would be useful for the Committee to have information illustrating the numerical impact of such changes on the property tax or budget appropriations. The Committee agreed that such information is needed and scheduled meetings on June 26 and July 17 for the consideration of the city's Budget Policy. Alderman Drummer reminded the Committee that a lot of emphasis can be placed on the policy, but that thre real issue in his mind is the need for cutting expenditures. There being no further business, the meeting was adjourned r at 9:00 P.M. Assistant City Manager BZ/cw DRAFT - NOT APPROVED MINUTES BUDGET POLICY COMMITTEE June 26, 1991 Members Present: Alderman Brady, Nelson, Lanyon, Feldman, and Esch. Members Absent: Alderman Drummer Staff Present: City Manager Eric Anderson, Vince Adamus, Judy Aiello, Patrick Casey, Kathy Elg, Robert Shank, Bruce Zimmerman. Presiding Official: Alderman Brady, Chairman Summary of Action: The meeting was called to order at 7:37 p.m. Alderman Brady introduced and welcomed Alderman Esch to the Committee. Alderman Brady requested a motion to approve the minutes of the meeting of May 15, 1991. Alderman Feldman moved for adoption of the minutes, seconded by Alderman Lanyon. The Committee voted 5-0 in favor of passing the minutes. Responding to a question by Alderman Lanyon, Chairman Brady requested that the agenda items discussed at the May meeting be held until after the City Manager gave his presentation of the budget policy. Alderman Brady introduced Eric Anderson, City Manager. Mr. Anderson referred to a number of tables that were passed out to the committee. The charts showed the expenditure and revenue projections for the next fiscal year. Mr. Anderson summarized what the result would be if the current budget policy were retained. The first year growth, based on 95% of the CPI, would increase the levy approximately $1,192,416. The second year, at 95% of the CPI, would see an increase of $1,252,036. This would increase the average taxpayers bill by $39.00 the first year and $40.00 the second year. Mr. Anderson reviewed the two major assumptions used to prepare the _ projections for fiscal year 1992-93. The first being that one time revenues used in the 1991-92 budget, totalling S 1,689,411, are not available for use in the coming year. The second assumption is that annual increases in employee compensation will continue as required by bargaining agreements. Mr. Anderson noted that the loss of revenue from State and Federal resources makes us more and more dependant on local sources. Currently, the local tax _= base is stagnate or experiences a very low rate of growth from year to year. Evanston is unique in the number and kinds of services offered to the community. Evanston faces an external crisis as well as an internal crisis. The external crisis arises from the taxpayer (i.e. the burden taxes place on = each taxpayer: residential, commerical and industrial). t The internal crises exists within the city's revenue/expenditure structure. _� The City has to be prepared to deal with its problems now or the situation will compound. Alderman Brady inquired if the State did not extend the surcharge how would the goals be affected. Mr. Anderson stated that the targets established will be more difficult to reach but does not feel the targets should change. Mr Anderson described the implementation process. Senior staff members have been selected. Each member will be involved with their own department as well as other departments. The system prevents reductions in one department from affecting the operations of another. Alderman Feldman pointed out that this technique allows or puts into place a tool for the organization to monitor itself on a continuing basis as opposed to a one time outside study. In response to Alderman Brady's question, Mr. Anderson stated that this policy does not stop the City Council or the City Manager from suggesting service reductions if deemed appropriate. However, if reductions are made by City Council it will not count toward the established targets. Alderman Nelson inquired about the revenue figures as compared to the inflation rate.. Robert Shonk, Finance Director, stated that revenues have only increased about 1% annually. Increases in fees and charges to meet these goals have not been considered. This however does not preclude the City from raising rates where appropriate in response to increased costs or inflation. New revenue sources are not being considered at this time to help meet these targets. Mr. Anderson returned to the Police and Fire Pension Funds to reiterate that this portion of the policy not be changed. In addition, Mr. Anderson stated that when a modification of this part of the policy is possible, he will return to the Budget Policy Committee with recommendations. Mr. Anderson requested that Alderman Nelson's list of suggestions and the DIET report be referred to staff to be included in the analysis. These documents are important pieces of information and should be included in all analyses. Mr Anderson also requested that a management consultant not be considered at this time. The senior management staff needs time to construct its own proposals to meet the established targets. Alderman Nelson moved to table the recommendation for a management consultant, Seconded by Alderman Feldman. The committee, by consensus, agreed to table _ the management study. Members of the Committee expressed that City Council has to be prepared to take a tough stand on the reorganization of staff. There may be instances where the same level of service can be performed with less staff. There may be times when a drop in the number of staff will be considered as a service reduction when this may not be the case at all. The City Council and public have to give management a chance to prove its recommendations. 9 Members Present: Members Absent: Staff Present: Presiding Official: Summary of Action: MINUTES BUDGET POLICY COMMITTEE June 26, 1991 Alderman Brady, Nelson, Lanyon, Feldman, and Esch. Alderman Drummer City Manager Eric Anderson, Vince Adamus, Judy Aiello, Patrick Casey, Kathy Elg, Robert Shonk, Bruce Zimmerman. Alderman Brady, Chairman The meeting was called to order at 7:37 p.m. Alderman Brady introduced and welcomed Alderman Esch to the Committee. Alderman Brady requested a motion to approve the minutes of the meeting of May 15, 1991. Alderman Feldman moved for adoption of the minutes, seconded by Alderman Lanyon. The Committee voted 5-0 in favor of passing the minutes. Responding to a question by Alderman Lanyon, Chairman Brady requested that the agenda items discussed at the May meeting be held until after the City Manager gave his presentation of the budget policy. Alderman Brady introduced Eric Anderson, City Manager. Mr. Anderson referred to a number of tables that were passed out to the committee. The charts showed the expenditure and revenue projections for the next fiscal year. Mr. Anderson summarized what the result would be if the current budget policy were retained. The first year growth, based on 95% of the CPI, would increase the levy approximately 51,192,416. The second year, at 95% of the CPI, would see an increase of $1,252,036. This would increase the average taxpayers bill by S39.00 the first year and $4O.00 the second year. Mr. Anderson reviewed the two major assumptions used to prepare the projections for fiscal year 1992-93. The first being that one time revenues used in the 1991-92 budget, totalling S 1,689,411, are not available for use in the coming year. The second assumption is that annual increases in employee compensation will continue as required by bargaining agreements. Mr. Anderson noted that the loss of revenue from State and Federal resources makes us more and more dependant on local sources. Currently, the local tax base is stagnate or experiences a very low rate of growth from year to year. Evanston is unique in the number and kinds of services offered to the community. Evanston faces an external crisis as well as an internal crisis. The external crisis arises from the taxpayer (i.e. the burden taxes place on each taxpayer: residential, commerical and industrial). The internal crises exists within the city`s revenue/expenditure structure. The City has to be prepared to deal with its problems now or the situation will compound. If the present situation is allowed to continue, in five or ten years even more dramatic steps will have to be taken to bring the City's budget into balance (i.e. major layoffs and dramatic service reductions). The demand for dollars will not decrease, infrastructure needs will increase and the costs of services will continue to rise. If the City can hold the line in the next two years, we address the crises now and avoid the harsher consequences of inaction. The City Manager recommended freezing the property tax levy for the next two years. The total property tax levy would not exceed the level of fiscal year 1991-92. Included is the elimination of reliance on one time revenues and continuing normal salary increases. Translated into monetary figures, the City would need between five and seven million dollars to be cut over a two year period. The majority of this amount must be dealt with in the first year if this proposal is to succeed. Recommended guidelines are no eliminated services, and no position reductions, except those accomplished by attrition. Alderman Feldman asked if staff knew how many positions become vacant on an annual basis. Assistant City Manager Zimmerman stated that approximately 50 to 75 position become vacant each year. Mr. Anderson stated that staff already has identified current vacant positions and which of those can be held without affecting services. If key program positions become vacant and cannot be filled from the inside, those positions will be filled from the outside so that programs do not suffer. However, if non -essential vacancies occur, they will be held or filled by an internal transfer. Mr. Anderson recommended that the policy regarding the Police and Fire pension funds remain the same for the present. The policy regarding these funds will be considered at a later date. If the manager is unable to reach the targets proposed, he will return to the Budget Policy Committee and the City Council with suggestions for service cuts and staff reductions. In order to avoid surprises and to assure good communications, the Manager will meet with the Budget Policy Committee concerning the progress of these changes. Major issues that arise will be communicated for Council discussion and input. Prior to the beginning of the 1993-94 fiscal year the City Manager will return to the Budget Policy Committee and City Council to review the progress. If the opportunity to do more arises, more will be done; if we cannot reach the specified targets other options have to be discussed. Alderman Canyon requested that the City Manager review the use of surcharge monies. The current Council policy states that any monies received from the extension of the surcharge be used for property tax relief in fiscal year 1991-92. Mr. Anderson proposed to limit the fluctuation of the levy by spreading out any additional monies over a three year period. If the surcharge extension generated an additional $733,000 in fiscal year 1991-92, instead of having the entire amount applied all at once, he recommended it _ be allocated evenly in fiscal years 1991-92, 1992-93 and 1993-94. This allows the tax rate to stabilize and the City to gain an additional amount of investment income. Alderman Brady inquired if the State did not extend the surcharge how would the goals be affected. Mr. Anderson stated that the targets established will be more difficult to reach but does not feel the targets should change. Mr Anderson described the implementation process. Senior staff members have been selected. Each member will be involved with their own department as well as other departments. The system prevents reductions in one department from affecting the operations of another. Alderman Feldman pointed out that this technique allows or puts into place a tool for the organization to monitor itself on a continuing basis as opposed to a one time outside study. In response to Alderman Brady's question, Mr. Anderson stated that this policy does not stop the City Council or the City Manager from suggesting service reductions if deemed appropriate. However, if reductions are made by City Council it will not count toward the established targets. Alderman Nelson inquired about the revenue figures as compared to the inflation rate.. Robert Shonk, Finance Director, stated that revenues have only increased about 1% annually. Increases in fees and charges to meet these goals have not been considered. This however does not preclude the City from raising rates where appropriate in response to increased costs or inflation. New revenue sources are not being considered at this time to help meet these targets. Mr. Anderson returned to the Police and Fire Pension Funds to reiterate that this portion of the policy not be changed. In addition, Mr. Anderson stated that when a modification of this part of the policy is possible, he will return to the Budget Policy Committee with recommendations. Mr. Anderson requested that Alderman Nelson's list of suggestions and the DIET report be referred to staff to be included in the analysis. These documents are important pieces of information and should be included in all analyses. Mr Anderson also requested that a management consultant not be considered at this time. The senior management staff needs time to construct its own proposals to meet the established targets. Alderman Nelson moved to table the recommendation for a management consultant, Seconded by Alderman Feldman. The committee, by consensus, agreed to table the management study. Members of the Committee expressed that City Council has to be prepared to take a tough stand on the reorganization of staff. There may be instances where the same level of service can be performed with less staff. There may be times when a drop in the number of staff will be considered as a service reduction when this may not be the case at all. The City Council and public have to give management a chance to prove its recommendations. ` � k Alderman Feldman moved to adopt the proposed budget policy as presented by the City Manager which included the addendum regarding the distribution of the Income Tax Surcharge. Seconded by Alderman Lanyon. The Committee voted 5-0 in favor of the motion. The Committee moved an to schedule other business. The presentation on the issuing of bonds is scheduled for the September 11, 1991 meeting. The discussion on capital assets and City leases will be scheduled for the October 16, 1991 meeting. The discussion of the Sherman Avenue garage will be included in the October meeting. The Committee decided to cancel the meeting of July 17, 1991 and meet next on August 21, 1991 and again on September 11, 1991. Being no further discussion the meeting adjourned at 9:I2 p.m. d Draft - Not Aoproved MINUTES BUDGET POLICY COMMITTEE September 11, 1991 Members Present: Aldermen Brady, Drummer, Feldman, and Nelson Members Absent: Aldermen Lanyon and Esch Other Aldermen Present: Newman, Fiske, and Moran Staff Present: City Manager Eric Anderson, Judy Aiello, Bruce Zimmerman, Vince Adamus, Judy Witt, Robert Shonk, Kathy Elg Presiding Official: Alderman Brady, Chairman Summary of Action: The meeting was called to order at 1:39 p.m. Minutes Alderman Brady requested a motion to approve the minutes of the meeting of August 11, 1991. The Committee voted 4-0 in favor of passing the minutes. Long Term Capital Improvement Financiaa Process and Bond Sales The Committee called on City Manager, Eric Anderson who briefly explained the importance of the City's Capital Improvement Plan (CIP) as it is integrated in the budget. Mr. Anderson stated that the CIP is not a separate budget and is critical to our success of keeping the property tax levy constant. Mr. Anderson introduced Mr. Ron Norene of Norene and Associates. For the past ZZ years, Norene and Associates has worked as the City's financial advisor. Norene also handles Lake Bluff, Wilmette, Skokie and a number of other North Shore communities. Currently, there are only 54 AAA ratings in the United States for municipal general obligation bonds. Four of these are in Illinois. Three of those are Norene clients. In 1988, the water bond rating earned by Evanston was AA-1. This was the highest water bond rating in the U.S. at that time. Mr. Norene explained the important aspects to gain a high credit rating. Credit analysis is similar to trend analysis. The past and future prospects are more important than the present. Neither the purpose of the bond issue nor the size of the issue is a strong factor to the rating. Factors that determine ratings are property tax rates, debt per capita and debt per assessed value. Mr. Norene serves as the direct liason between Evanston and the City's bond raters. Evanston is rated by Moody's. Norene prepares the official statement, also known as the disclosure document. This explains what makes Evanston unique, giving an opportunity to present financial and socio-economic characteristics of Evanston. Unique assets to Evanston are Lake Michigan, Northwestern, and the continued replacement and repair of its infrastructure. Page two budget policy r , � The AAA rating the city has earned is to be preserved and guarded. This calls for explaining any significant changes that occur in the City to Moody's. Instances include the new library, a new Mayor or City Manager, and pension litigation. Mr. Norene explained why the City sells bonds on the competitive market rather than negotiated. Over the past six years, 77% of Noreng's bond sales were sold competitively. Over the last ten years, all $128m worth of Evanston bonds were sold competitively. Mr. Norene explained why the competitive market is better for Evanston's bonds. The market chases after high-grade municipal bonds. In most instances, the best opportunity for GO and revenue bonds is a public competitive sale. Committee discussed the timing of the City's bonds. Mr. Norene showed a chart that demonstrated the minimum and maximum volume of sales for the twelve months. No trend is present. However, December may show the heighth of sales. Municipalities are often trying to beat new income tax laws for the coming year. Alderman Nelson asked if any day of the week shows a trend. Norene stated that long-term borrowing costs have been very constant. The sequence of events within the city and preparation by Norene affects the timing of the sale. The philosophy for the last ten years is: when the amount of money needed for the CIP is finalized, Norene prepares for sale, examines the market, and goes ahead with the sale. Bases points would not be saved if we were to have sales on another day. Mr. Norene stated that it would not be wise for the City to have a bond sale for Special Assessments. The cost to prepare the sale would impact on the citizens. GO bond sales are the proper avenue for special assessments. Following Mr. Norene, Mr. Robert Shank, the Finance Director, spoke about the history of debt financing for the City of Evanston. Home rule powers were granted to the City in 1970 which allowed the City to issue bonds upon its own approval rather than by annual voter referendum. Prior to I973, the last GO bond sale was in 1959 for the development of our five lakefront beaches. That was done by referendum. In 1968, parking revenue bonds were sold to finance the Sherman avenue garage for S2.3m. The entire issue totalled $2.8 m. In 1973, Council approved its first bond sale under their own powers granted by Home Rule. Creation of the first CIP occurred when Council took a broad look at the City's capital needs in the 1970's. Five bridges were totally replaced with this money. Purchasing the Robert Crown Center was the debt issue for which we received our AAA rating. This issue also included parking, street and sewer improvements, and purchasing the Civic Center. The City went to a five-year plan in 1984. Before that, capital improvements were laid out yearly. The issue for 1980-1984 included the Service Center, repaving North and Southwest Evanston, sewer improvements, street lighting, and major water improvements to handle additional water customers. page three budget policy The program for 1984-1988 was less ambitious. For 1990-1994, a new approach was developed by which one year is rolled in and another year is deleted. This requires the staff to constantly update the CIP. Major portions of this issue include the new library and more sewer improvements. Debt is retired from various sources, not just property taxes. Four funds use the property tax levy: general, fire and police pension and debt service. The audit will show when debts are retired. Alderman Brady asked how the debt owed relates to our budget policy. Debt service is the payment made on our outstanding debt. Policy states that debt shall not exceed S50m. Mr. Shonk watches the total, making sure the City does not exceed that limit. Alderman Brady reminded the committee that the first year of the budget policy, the debt service levy was not included. Currently, there is $5m set aside for the new library. Notes will be used for construction to be sold in years 1993, 1994, 1995. Capjtal Improvement Program Process Following Mr. Shonk, Ms. Judy Aiello, Assistant City Manager, explained the CIP program more specifically. She gave a five year perspective of the City's capital plan. The plan shows what areas the city will work on during specific years. This year, projects were not categorized as being "necessary" or "desirable" as in previous years. Everything is "necessary" this year. The A&PW Committee will receive a detailed list of the final plan in the fall. The CIP Committee reviews projects that come in over and under budget. This year, the use of the excess $18,000 will be recommended by staff, to be approved by A&PW. Alderman Feldman questioned the criteria to guide the committee in prioritizing the needs of the City? Each department develops steps to improve their systems and sets maintenance agendas. Alderman Moran, with experience from the HHS committee and the Recreation Department, stated that facilities develop a list of priorities. Ms. Aiello agreed, adding that assessments are made by each department in the plan. This year, the GIP is more fine-tuned than in previous years. Ms. Aiello stressed the point that the City is never caught up, projects and improvements are on -going. Alderman Brady asked if problems will arise by approving the CIP in the fall instead of the summer, as done in previous years. Ms. Aiello explained that by the time it takes to get specs and plans, selling in the fall will better match our time frame. She believes cost estimates will be better since we will have more planning time. Fail approval of the CIP will be the City's new schedule. Mr. Anderson explained that by tailoring the capital and operating budgets so the timing is simultaneous, the "price will be consistent with project." - Council then has the total scope and extent of project. The City does not have to commit totally to a project when it starts in CIP. Engineering and design could be in the CIP one year with construction slated for the following year. During that year, time is available to determine more - exact construction costs. Authorization can occur in portions. At each portion there is an opportunity for the Council to vote for, against or postpone a project. page four budget policy .1 " Alderman Moran asked Mr. Norene if there is a publication available for members to understand the bond process more thoroughly. Mr. Norene said he will get the Public Service Association Book for members. Mr. Norene then left the meeting. Update of progress towards Budget Policy Goals, Fiscal Year 1992-93 Mr. Anderson reiterated that the Police and Fire pensions are separate issues from the budget policy. The City originally anticipated a $5m gap if the income tax surcharge was not extended. The surcharge was approved at a level the City would use S750,000 for abatement in FY92-93. Expenditure reductions have amounted to S800,000. This $800,000 includes the postponement of the CIP bond issue saving $585,000. All departmental proposals may not occur during this fiscal year; reductions will fall into FY93-94. Reductions come from reorganizations, changes in structure, but no lay-offs. Although all the changes are not in place yet, temporary approval has been received from the budget team and submitted in budget requests. Revenue estimates are conservative at this point. Mr. Anderson anticipates closing the remaining gap with a Slm one-time revenue for FY92-93. In FY91-92, $1.688m in one-time revenue was used. In FY93-94, a smaller portion of one-time revenue may be used. By FY94-95, there should be no need for -one-time revenues to balance the budget. Alderman Newman is concerned with hearing about the proposed reorganizations too late. He would not want staff to go through the time of making changes, if the Council may not approve. Mr. Anderson replied that the Aldermen will hear about the changes through traditional budget channels in the various committees. In December, the budget will be presented as a whole to the entire Council. Mr. Anderson stated that Council would not be able to make complete judgment on individual changes; the entire budget is needed to understand the organization. Isolated changes are difficult to present to Council. City staff is reducing expenditures through attrition. Employees working in positions penned for attrition are informed by their department heads. Available options in the organization are discussed. The employee must be given time to leave, to find other employment. If an employee leaves after February 1, the budget needs funds available to support that employee. We are anticipating this by setting up a contingency fund. Besides implementing reductions by attrition, an early retirement program has been offered to employees. This proposal was approved at the September 16th Council meeting. Every department, board and commission has participated in this budget process. Committee discussed the new tax proposed by the Commission on Aging. Mr. Anderson stated that increases in a department's revenues does not justify increasing their request. This is not an effort to make the operation work more efficiently. He explained that Commission on Aging will go through the process of being reviewed by the Human Service Committee and our budget staff. page five ' budget policy Alderman Fiske asked Alderman Newman to give an example of an objection Council may have with changes staff may propose? He replied that reducing the police force by ten officers through attrition would likely be objectionable. Mr. Anderson explained that this would be viewed as a reduction in service. Budget policy does not allow a reduction in services. Removing employees from what the public perceives as service is against budget policy. On the other hand, the support and management staff could be reduced without affecting public service. Alderman Brady stated that she is putting full faith in Mr. Anderson's budget recommendations. She recommended the Committee do the same, giving the new policy a chance. Mr. Anderson added that staff may have to go back on proposals if a change does not work. Alderman Moran noted that boards and commissions have an advocacy role, but ultimate decisions are made by Council. Alderman Feldman stated that any activity directly related to serve the citizens should not be jeopardized He states that there is a difference between administrative cuts and cutting the heart of the program. Alderman Brady asked Mr. Anderson to relay memos to the Committee outlining significant reorganizations. The background analysis would be helpful for the Committee to understand changes. Mr. Anderson said the issues with the greatest impact will be transmitted to the Committee. They will be presented in major pieces to the Committee as the budget is prepared. He noted, however, that the Committee will not receive a full-blown presentation, and warned that pieces may stimulate more questions. For the record, Alderman Nelson stated that he supports the City Manager, but that we should not hesitate to cut services. Some services have run their course of usefulness to city. Alderman Brady clarified that, yes that is an option. However, it is not pursued because of budget policy, but independently. Other Business The Committee moved on to schedule other business. The discussion on City assets and leases is scheduled for the October 16, 1991 meeting. The discussion of the Sherman Avenue garage will be included in the October meeting. The Committee would meet again on November 20th. Being no further discussion, the meeting adjourned. Draft aN t�Annroved MINUTES BUDGET POLICY COMMITTEE OCTOBER 16, 1991 members Present: Alderman Brady, Alderman Feldman, Alderman Lanyon Members Absent: Alderman Drummer, Alderman Esch, Alderman Nelson staff Present: city manager Eric Anderson, Assistant City Manager Bruce Zimmerman, Vince Adamus, Robert SHonk, Kathy Elg. Presiding official: Alderman Brady, Chairman summary of Action: The meeting was called to order at 7:36 p.m. Minutes. Alderman Brady requested a motion to accept the minutes of September 11, 1991. It was stated that the minutes of the September meeting were done very well considering the amount of technical discussion that occurred regarding the City's bond sales. The committee voted 3-0 in favor of passing the minutes. Capital Assets and Citv Owned Prooertv. Chairman Brady began the discussion by reviewing the reasons this subject is before the Budget Policy Committee. The possible sale of capital assets was mentioned in the DIET report. Capital assets cost a tremendous amount of money to Maintain and operate. Through the course of prior budget discussions it was suggested that the Committee once again review these items and begin to formulate a policy regarding the continued support and possible sale of any capital asset. Alderman Feldman stated that he was present at the Budget Policy meeting when this subject first arose and that it was the opinion of the Committee at that time that the City should re- examine the buildings it owns, leases and other items to insure that the City is receiving the most out of these assets. Alderman Brady continued that the committee should identify those assets which need to be reviewed and that some of the assets listed will never be considered expendable. These assets inc]ude park land and shelters, beachfronts and public safety and operational buildings. Discussion turned to the number of parking lots that the City owns and operates. The committee requested guidance if it is in the realm of the Budget policy committee to establish a guideline that would mandate that all parking facilities become self sufficient. Staff indicated that the Committee could begin discussion in this area but should also be aware that the Mayors Committee on Parking Needs considers these issues and should be involved in any discussion that took place. Alderman Feldman asked if there were parking lots that can be redeveloped similar to Church and Chicago. Staff responded that there may be but needed to consult with the Traffic Engineer to be more specific. The City Manager suggested that staff review each lot on a case by case basis and decide the availability for redevelopment. Alderman Brady restated that the Budget Policy Committee should limit it self to the question of if a lot should be revenue neutral or subsidize. However the information on redevelopment would be helpful in the discussion. The City Manager suggested that a summary of each lot be done to show who it serves and if it is available for a mixed use. The Manager stated that the City could sell the two downtown parking structures but the effect would be to lessen the support by the City of the Downtown area. The two garages added valuable parking spaces and encourages shoppers to come into the area. In addition there is no guarantee that once sold these structure would be retained as parking. If the garages were sold to a private operator and they remained as parking structures the price of parking in the downtown area would escalate at a tremendous rate. The possibility of the privatization of the two parking structures has been addressed by the Lockheed parking study. The Mayors Committee on Parking is currently reviewing this study. Mr. Zimmerman added that the City currently subsidizes the parking garages by approximately $580,000 per year. The subsidy comes directly from the fees and charges generated by the city wide parking system and not through general taxing funds. Alderman Brady suggested that the issue of selling or redeveloping the Sherman Avenue garage be left to the Parking Committee. However the Budget Policy Committee should concern itself with the amount of the subsidy allowed in the operation of the public garages and parking lots. Alderman Feldman reiterated that it would be in the best interest of the City to re-examine the properties the City owns and if it is better to keep them or possibly sell them for redevelopment. The Committee turn its attention to the other properties owned by the city. Alderman Brady requested further information the 1817 Church Street Building, The Evanston Art Center and Coach House, Miller School, Ecology Center, North Branch Library, and Noyes Arts Center. Alderman Feldman noted that the Noyes Arts Center ,is very close to market rate for rentals and continues to have a high .1 occupancy rate. Additional information was requested regarding buildings and property that the City leases from other entities. Alderman Brady also stated that the Committee should look at the policy of renting the second floor space to the Lekotek Organization. A three year lease has recently been signed with Lekotek. If space is need for City functions this should be the first consideration. It is possible that the Township may wish to move into the second floor space instead of finding a location outside the building. The City Manager presented a brief review of the current status of the 1992--93 budget and suggested that staff is currently working very diligently to accomplish the targets established by the budget Policy. Mr Anderson stated that the City would not have to increase the tax levy and that the abatement proposed for the 1991- 92 levy should be possible. Major changes in the proposed 92-93 budget will include a reorganization of the Parks, Recreation and Forestry Department. This reorganization will not effect the service delivery structure but will take advantage of a retirement to streamline this department. Another example of the changes for 1992--93 will be a reduction in personnel in fleet service which will lower chargebacks to the General Fund. Additional changes will be made in all funds and not be concentrated only in the General Fund. There are still many outstanding issues which need to be resolve before December. Currently the issue of funding Police and Fire Pension remains unresolved. However there may be legislative action in Springfield that will alter the scope of this problem. There being no further discussion the Committee voted to adjourn at 9:10 p.m.