Minutes of the Regular Meeting of the Gurnee Village Board - February 3, 2014

  

MINUTES OF THE REGULAR MEETING

OF THE GURNEE VILLAGE BOARD

 

GURNEE VILLAGE HALL

February 3, 2014

 

Call to Order

Mayor Kovarik called the meeting to order at 7:30 p.m.

 

Other Officials in Attendance

Patrick Muetz, Village Administrator; David Ziegler, Assistant Village Administrator/Community Development Director; Bryan Winter, Village Attorney; Scott Drabicki, Village Engineer; Erik Jensen, Management Analyst; Christine Palmieri, Director of Human Resources; Chris Velkover, Information Systems Director; Tom Rigwood, Director of Public Works; Fred Friedl, Fire Chief; Kevin Woodside, Police Chief

 

Roll Call

PRESENT:       4- Hood, Wilson, Ross, Balmes     

ABSENT:         2- Park, Garner

 

Pledge of Allegiance

Mayor Kovarik led the Pledge of Allegiance.

 

 

 

A.  PUBLIC COMMENT

 

None.

 

B.  APPROVAL OF CONSENT AGENDA

It was moved by Trustee Balmes, seconded by Trustee Ross to approve the Consent Agenda as presented.

 

Roll call,

AYE:                4- Hood, Wilson, Ross, Balmes        

NAY:                0- None

ABSENT:        2- Park, Garner

Motion Carried.

 

C. CONSENT AGENDA / OMNIBUS VOTE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Village Administrator read the consent agenda for an omnibus vote as follows:

 

1.  Approval to utilize a temporary staffing service to fill budgeted

      Information Systems contract position for the remainder of the Fiscal Year 2013/2014.

 

2.  Approval of Communications Shift Leader Wendy Mann’s request to participate in the Village’s tuition assistance program in pursuit of a Associates Degree in Communications from College of Lake County.

 

3.  Approval of Police Department’s request to send Officer Martin DePerte and Officer Tom Woodruff to Urban Tactics Live Fire training in Lake Comorant, Mississippi, from April 14 – 18, 2014, at a cost not to exceed $800.00.

 

4.  Approval of Payroll for period ending January 25, 2014 in the amount of $731,701.18.

 

5.  Approval of Payroll Transfer Journal for period ending January 25,

      2014 in the amount of $725,219.60.

 

6.  Approval of Bills for the period ending February 3, 2014 in the amount of $663,307.79.

 

It was moved by Trustee Balmes, seconded by Trustee Wilson to approve the Consent Agenda for an omnibus vote as read.

 

Roll call,

AYE:                4- Hood, Wilson, Ross, Balmes          

NAY:                0- None

ABSENT:        2- Park, Garner

Motion Carried.

 

D.  PETITIONS AND COMMUNICATIONS

 

 1.   Approval of a Proclamation designating February 9 – 15, 2014 as

      Future Business Leaders of America-Phi Beta Lambda (FBLA-PBL) Week in the Village of Gurnee.

 

      Mayor Kovarik read proclamation into record.

 

It was moved by Trustee Ross, seconded by Trustee Balmes to approve of a Proclamation designating February 9 – 15, 2014 as Future Business Leaders of America-Phi Beta Lambda (FBLA-PBL) Week in the Village of Gurnee.

 

Voice Vote:      ALL AYE:         Motion Carried

 

 

E.  REPORTS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trustee Garner

Arrived at 7:50PM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1.  Presentation of pavement evaluation survey results and discussion of infrastructure funding alternatives.

 

      Village Engineer Scott Drabicki presented the following Power Point presentation to the Board:

 

      Pavement Evaluation Survey Results and
Infrastructure Funding Alternatives

 

      Pavement Evaluation Background

 

  • 113 centerline miles
  • 121 miles used to normalize pavement width
  • Pavement Condition Index (PCI) used to provide a single numerical rating of pavement condition for comparison purposes
  • 4 year evaluation interval is recommended

 

      2013 Pavement Evaluation

 

  • Historically evaluations were done by engineering staff and output was about 1/3rd of the Village each year.
  • Contracted with Infrastructure Management Services in 2013 to evaluate all Village roadways.
  • IMS provides a rapid and objective evaluation using laser camera technology.

 

      Results of Pavement Survey

 

  • 2007-2011 partial pavement surveys by staff had an average PCI value of 72 (Fair to Good)
  • 2013 pavement survey by IMS had an average PCI value of 63 (Fair)

 

      Village Engineer’s Observations

 

  • Each roadway must be looked at individually as condition and deterioration varies greatly. The following observations are general in nature:
  • Once a PCI declines to about 56 the intrusion of water causes a rapid decline in condition in a very short period of time. The cost to rehabilitate at this stage begins escalating significantly as structural damage occurs. To provide the best value to the community the goal is to avoid falling below a PCI of 60.
  • A PCI of 56 on un-maintained pavement is expected at an age of about 17 years.
  • With a current average PCI of 63 the Village of Gurnee roadway network is expected to decline below the 56 level in approximately 3-4 years.
  • Lower cost preventative maintenance and minor rehabilitation is the best value to the community. i.e. crack sealing and patching
  • Staff is confident we can consistently achieve a 20-25 year life between major rehabilitations with minimal investment in preventative maintenance and minor rehabilitation.
  • 121 miles divided by 20 years = 6 miles per year.
  • Staff estimates approximately $6.0 million should be spent annually to maintain 20 year cycle.

 

      Village Administrator Pat Muetz presented the following Power Point presentation to the Board: 

 

      Issue

 

  • The Village of Gurnee does not have a dedicated funding source to maintain municipal infrastructure.
  • As a results, we are falling behind on pavement maintenance.
  • Important to remember, infrastructure also includes:
    • Sidewalks – 146 miles
    • Street Lighting – 1,683 lights
    • Buildings – 5 main operating facilities
    • Water Main – 182 miles
    • Water Storage – 4 elevated tanks, 1 ground storage tank
    • Sanitary Sewer Main – 84 miles
    • Storm Sewer Pipe – 134 Miles

 

      Tonight’s Focus…Roads

 

  • Funding roadway maintenance with General Fund surplus has been insufficient to appropriately maintain the roadway system.
  • As we move forward and roads continue to decline, while costs go up, the issue will only get worse.

 

      Funding Alternatives Reviewed

 

  • Property Tax
  • Home Rule Sales Tax
  • Utility Tax
  • Municipal Gasoline Tax
  • Bond Issue
  • Fund with Current Revenues

 

      Home Rules (HMR) Sales Tax

 

  • Currently 0.5% = $4.4 million annually.
  • The HMR sales tax does not apply to the purchase of groceries, drugs, or licensed vehicles. 
  • Administered and collected by the State, thereby eliminating the need to add additional staff or funding to manage collection.
  • Increase by 0.5% generates $4.4 million additional revenue.
  • Funds can be dedicated solely for infrastructure improvements via policy adopted by Village Board.
  • Effective January 1 or July 1 annually.

 

      Statewide HMR Sales Tax Comparison

 

  • According to the Illinois Department of Revenue, there are 175 communities in the State levying a Home Rules Sales Tax.  Of these, 72.6%, or 127 communities, are at 1% or greater.  The remaining 27.4%, or 48 communities are less than 1%. 

 

      Major Shopping Facilities –
HMR Sales Tax Comparison

 

  • Staff looked at the home rule tax rate of communities with major shopping centers.  A total of 36 communities across the State were reviewed.  Of these 36, 78%, or 28 communities, were at 1% or greater, with the remaining 22%, or 8 communities, at 1% or less.  The only Illinois shopping center in the area lower than Gurnee is Vernon Hills, which does not levy a home rule sales tax, however, there is talk of implementing a tax in the coming fiscal year. 

 

      Utility Tax

 

  • Imposed on all persons engaged in the business of distributing, supplying, furnishing or selling gas or electricity for use or consumption within the Village.
  • Can be percentage of gross receipts or unit based (per therms or per kilowatt hour).
  • Regressive in nature - proportion of an individual’s income devoted to consumption declines as income increases, persons at the lower income levels, therefore, tend to pay a larger share of their income in utility tax.
  • Among 77 municipalities in Illinois surveyed in early 2012, 49 had an electricity tax and 40 had a natural gas tax.
  • Many communities surveyed stated that these taxes are specifically dedicated to capital improvement program funding.

 

      Municipal Gasoline Tax

 

  • Imposed upon the privilege of purchasing motor fuel at retail facilities within the Village.
  • Gas station has the duty to collect tax from each consumer at the time of the motor fuel sales transaction.
  • Submitted on a monthly basis.  Village staff processes payments and monitors collection activity.
  • Gurnee has 10 gas stations.
  • Using IDOT traffic counts, staff estimates the following revenue:
  • $174,000 – Tax rate of $0.01 per gallon
  • $261,000 – Tax rate of $0.015 per gallon
  • $348,000 – Tax rate of $0.02 per gallon
  • $435,000 – Tax rate of $0.025 per gallon
  • $522,000 – Tax rate of $0.03 per gallon
  • $609,000 – Tax rate of $0.035 per gallon

 

      Bond Issue

 

  • The Village of Gurnee currently has $15 million in outstanding debt.
  • Per Village’s Debt Policy, allowed to issue up to 8.625% of EAV – currently at 1.20%.
  • 8.625% of EAV = $94 million.

 

      Debt Retirement

 

  • Series 2012 - $413,000 annually, final payment FY 15/16
  • Series 2009 - $850,000 annually, final payment FY 17/18
  • Series 2011 - $1,200,000 annually, final payment FY 22/23
  • While the retirement of debt will assist with funding, at best, starting in FY 18/19, it will be 20% of what is needed. 

 

      Hypothetical Bond Issue

 

  • $7,500,000 bond issue each year for the next four years - $30 million in total.
  • Each issue has a term of 20 years.
  • Rate on bonds is 4%.
  • We will pay ~ $2,250,000 per year.
  • $2,250,000 x 20 years = $45 million

 

      Fund with Current Revenues

 

 

  • With a $4 - $5 million gap in funding (15% of General Fund), supporting a capital program with current General Fund revenues would require drastic cuts that would negatively impact service levels.
  • For example:
    • Cut the Police Department by 35%; or
    • Cut the Fire Department by 50%; or
    • Cut Community Development and Public Works street operations completely.

     

      Next Steps

 

  • Village staff is seeking feedback on how to proceed:
    • Status Quo?
    • New revenue dedicated to infrastructure improvements?
    • Something in between?

 

Questions:

 

Mayor Kovarik explained the Village has never had a way to fund Capital Infrastructure.  She said staff can make cuts in the budget but won’t be able to cut $4 or $5 million from the budget without severely impacting service levels.  Mayor Kovarik said this has been talked about numerous times but a decision has never been made.

 

Trustee Hood said based on the presentation, the sales tax is the most attractive option.  He said nobody wants to touch Property Tax, however, it is less elastic than sales tax.   He continued to say while considering new revenue, the budget must be carefully reviewed to make sure there is no fat in it.  With regards to bonds, Trustee Hood stated it’s really not a good idea to borrow money against our future.  He concluded by saying it’s better to make the tough decisions today, rather than pass the burden to future generations.

 

Trustee Balmes said she concurs with Trustee Hood.  She said she isn’t for any taxes and is concerned if sales tax is raised people will go across the border to Kenosha and Pleasant Prairie for bigger items.  She stated some people will drive in order to avoid sales tax.

 

Mayor Kovarik said property tax is going to cost more the resident more than shopping locally.

 

Trustee Balmes said if property tax was considered, she thinks that putting our pensions on it would make more sense from her perspective.  She continued to say that relying solely on sales tax is risky, but she also understands that non-residents pay a large portion of sales tax.

 

Mayor Kovarik said 60% of sales tax comes from out of towners and that helps relieve the burden on business owners and residents.

 

Trustee Balmes said nothing comes from our industrial sector in the way of direct revenue as they do not pay property tax.  While the employees may shop in Gurnee, a lot of revenue is forgone due to no property tax.

 

Trustee Garner said he doesn’t know what the solution is.  He said he feels we need to rethink how we run the Village of Gurnee.  Trustee Garner continued to say the easy way out is to add a tax, but that is not the solution.  He said the reality is we ran up a tab we can’t pay.  He continued to say for the past nine years he has sat on the Board and it continues to do the same thing.  He said everyone is going to have to pay and employees might have to take less benefits but we need to come up with a real solution.  He said the private sector gives out 1% raises and the Village continues to give out 5% and 6% increases.  He questions if we are doing the best we can.  Trustee Garner said the Board needs to stop and think and not worry about what other communities are doing.  He ended by saying the Village needs a different solution this time.

 

Mayor Kovarik said the budget hearing is coming up and Trustees can go line by line and try to find $6 million to cut.  She said the other option is the Village can continue to underfund capital infrastructure.  She said everyone has the opportunity to find cuts during the budget hearing or we can adjust service levels as it relates to resurfacing roads.  

 

Trustee Wilson said he understands where Trustee Garner is coming from.  He said he agrees we need to look for budget cuts.  He continued to say he doesn’t believe a property tax is the answer and if the Village were leaning towards a sales tax, it would make sense with the addition of Macy’s.  He said he would also be against borrowing money.  He ended by saying we need to start looking to run the Village more like the private sector.

 

Trustee Ross said many people in the Village don’t even realize we don’t have a property tax as the other entities in the Village levy property tax.  She continued to say now it will be difficult to bring back and will impact people on fixed incomes. She said sales tax is paid be people who are choosing to spend funds they have available.  She continued to say we have to save our streets and it will be difficult to find the money within our budget by cutting services because our residents expect a high level of service. 

Mayor Kovarik said the big picture is our roads will start to deteriorate quickly as they were built in the late 1980s and early 1990s.  She said we can stay on the same path we are on, but there is a consequence.  She said if we do nothing we need to be honest and explain it to the community.  Mayor Kovarik continued to say it seems like the motor fuel tax and utility tax is off the table and we are looking at the possibility of splitting up the taxes if pensions were put in the property tax.  She state the Village will work on holding a town hall meeting to get community feedback. 

 

F. OLD BUSINESS

 

None.

 

G.  NEW BUSINESS

 

None.

H.  PUBLIC COMMENT

 

None.

I. EXECUTIVE SESSION

 






Adjournment to Executive Session

 

 

 

 

 

 

 

 

 Recall to Order

 

The Village Attorney stated that tonight’s Executive Session will reference:

5 ILCS 120/2 2 (c) (2) which states:  Collective negotiating matters between the public body and its employees or their representatives, or deliberations concerning salary schedules for one or more classes of employees.

5 ILCS 120/2 2 (c) (5) which states:  The purchase or lease of real property for the use of the public body, including meetings held for the purpose of discussing whether a particular parcel should be acquired.

It was moved by Trustee Balmes, seconded by Trustee Garner to adjourn the meeting into Executive Session.

Roll call,

AYE:                 5- Hood, Wilson, Ross, Garner, Balmes   

NAY:                 0- None

ABSENT:          1- Park

Motion Carried.

 

Mayor Kovarik adjourned the meeting into Executive Session at 8:32p.m.

 

Mayor Kovarik recalled the meeting to order at 9:03 p.m.

 

PRESENT:       5- Hood, Wilson, Ross, Garner, Balmes     

ABSENT:         1- Park

 

Closing Comments

None.

 

Adjournment

It was moved by Trustee Wilson, seconded by Trustee Balmes to adjourn the meeting.

 

Voice Vote:      ALL AYE:         Motion Carried.

 

Mayor Kovarik adjourned the meeting at 9:04 p.m.

 

 

Andrew Harris,

Village Clerk