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Admin Committee Minutes 2003 05-08-03 Page 1 of 6 UNITED CITY OF YORKVILLE APPROVED BY THE ADMINISTRATION COMMITTEE MEETING ADMINISTRATION THURSDAY, MAY 8, 2003 COMMITTEE WITH 6:30 P.M REVISIONS 8 -14 -03 In Attendance: Alderwoman Rose Spears Alderman Paul James Alderman Richard Sticka Mayor Art Prochaska City Administrator Tony Graff Finance Director Traci Pleckham Guests: AICP Roger Dahlstrom of NIU Presentation: Fiscal Impact Study by Roger Dahlstrom of NIU NIU's AICP Roger Dahlstrom began by stating the study is based on the Grand Reserve Development Proposal which is principally a residential proposal. It has a 40 acre commercial area added prior to this report. He said that the dwelling unit counts and acreage have not changed. They have 2,650 dwelling units that involve detached single family, attached single family and 300 rental units as well. He said the report takes you through the verbiage of the process of the analysis; what is included and how we approach some of the information, some of the data sources that they use basic things about assessment factors. He said that unless they are extremely upscale, that residential developments generally do not support themselves from a fiscal impact standpoint. He pointed out that it was not unusual or unique to any community it is just the way it is. That is the reason whey land use planning and community development include what is known as balanced growth. That would be with the concept of making sure there is adequate commercial and industrial land use space to support the residential. The reason for this is because the residential component usually consumes more in service costs than it produces in revenue. He said that they have used a number of different approaches with in the context of the analysis. Some things that he felt needed to be pointed out specifically were the 2 ways to view retail sales tax generation from a development. One way is to look at the generation of retail sales tax from the commercial component. You would want to take a look at what is a likely mix of commercial uses. You would also want to take a look at the outside sources for instance the Urban Land Institute which has different types of figures for different types of commercial uses and what their growth sales are likely to be. That then is converted into a sales tax. There is a certain factor in there for redistribution in case nothing is added to the retail base. Mr. Dahlstrom said it would also be a good idea to add some method in which to assign some form of revenue from a population base for retail sales tax. There is more explanation of the method on page 5 of the study packet. If the City has what is called stand alone communities or island communities then population base could be added. You can make a good assumption by how much more retail sales tax is going to be generated because those people are going to consume with in the community. He said that they went back ten years and looked at the City's trend of population and the trend of retail sales tax. From that they felt that Yorkville is still in the situation of where there is a positive relationship to additional residence and additional retail sales tax. Mr. Dahlstrom said that they felt the relationship between the two are not yet strong enough to say another person means another So they then took the projected value of the homes and with various calculations reduced that to an income then to a disposable income and also an income for various types of goods. He said that though this was a very complex calculation but it did get i Page 2 of 6 them to a point where they felt very comfortable with assigning some level of retail sales tax to additional population for the development and community. One thing that they point out in the verbiage that is very important is that they feel it is a valid assumption of a ten year projection period. The reality is though that the community is expanding, the people are expanding. The City might already be bumping up to Oswego and Montgomery as we grow. When that happens then the retail sales tax becomes a metropolitan/marketing function. One other very important consideration, which would be the most significant in this report than in the earlier one, is that the City of Yorkville has increased its fees for various items of capital improvements in the community. Those items have substantially increased financially since the earlier December report. Essentially where the City was at before was that the fees that the fees that were charged per dwelling unit had been at $1,200 minus the $300 that went to the Park Protection District and this report focuses only on the municipality, so that was taken out. It ended up being a $900 per dwelling unit charge. When the existing charges and new charges were included, NIU came up with $4,800 per dwelling unit which $3,900 per unit more. That makes a substantial difference in the cash flow in the early years. Mr. Dahlstrom went on to illustrate that point by referring to the bar chart on the back of the study packet. He explained that the chart showed what to expect on an annual, year by year basis, the balance of revenue and expenditures given from the nature of the development proposal. It is also looked at from a balanced basis over a 10 -year period and how things the positives and negatives balance out. Given that formula by which NIU has laid out, they think that the City would be about 4 million dollars to the good, over a 10 -year period and present value. He said that present value must be looked at because of the cash flow in the early years that would not be there in the later years. It would be about year 6 when it would reach the break even point which is still slightly positive then after that it would go into negatives. A great deal of the positive flow comes from the fees which eventually decrease and go away as the dwelling units are built out and there are no more building additional units or permits. Mr. Dahlstrom said that the good news from a community developing stand point and in large part thanks to the staff that the City of Yorkville has found a way to get into a positive cash flow balance over the 10 -year period. The bad news is that like any other presently residential development that ultimately it goes to the negative simply because it consumes more in service costs than it generates revenue. On page 2 of the report were listed the number of expenditures and revenues used for the basis of the study. Mr. Dahlstrom said that the bottom line is that the City really needs to take a look at this development in the context of how does it fit into the community. He said that if that many roof tops do get built then the City will likely see not only additional commercial development, then at least additional activity in the existing commercial development. Alderman Richard Sticka asked how the City would show a negative cash flow if there would eventually be more roof tops which brings in more businesses and also brings in more sales tax. Mr. Dahlstrom said it is because this development component doesn't include a major commercial component. If the City did have a major commercial development then it would be a positive balance. Finance Director Traci Pleckham pointed out that NIU did not assume any commercial development when the study report was done. It is a basic analysis. Alderman Sticka felt that it ought to be made clear that this study is not looking at all the potential revenue that could move into Yorkville and that the chart can not predict the exact future revenue with out the potential commercial revenue. Mr. Dahlstrom stressed that this report is not a balance sheet for the community. This is a balance sheet for one isolated development. It is a device that prepares a community on how to look at the future phases of development. i Page 3 of 6 Alderman Paul James said that it is the committee's opinion that the chart did not show what could logically happen with commercial development. The committee's concern is that the chart would reveal a cogent outlook for the City's future developmental revenue. Alderman James said that the committee had also discussed what they thought would be appropriate and that they would like to discuss and introduce those concepts as well. Mr. Graff asked if a counter chart could be added particularly knowing that the City has a historical balance and that the community has balanced the budget consistently over the last 10 years. Particularly over the last 5 years with all the growth and commercial that have come in and that the City has not raised taxes but has lowered them. He pointed out that from the December report that for every dollar that is brought in there is a $1.15 to pay for that resident. He said that they know that there is a definite impact on every residential person that comes into the community. The community has been able to maintain and put money in the bank and now can take it out of the next 5 -year period and show that to give a correlation. Alderman James mentioned that the feed back from the residents is that if the Grande Reserve is brought in then the existing taxes will go up. Their concern is that as the new development happens then existing taxes will be going up. He also felt that there should be supporting documentation, to show that over the last 3 -5 years the City has been able to keep the tax rate the same while growth has been going on. He thought that there should also be data to show what would happen if the town had no more growth and what kind of impact that might have on Yorkville. Mr. Dahlstrom said that he couldn't say what kind of impact that inceased growth would have but pointed out that with historical growth both commercial and residential growth has been incremental in nature. He said that if the City were to ask them to do a study on the entire comprehensive plan, then it would probably look similar to the current report because it includes more than one single development. That is why they put in that particular verbiage at the end. It is very difficult to look at any residential development in isolation outside of the context of the larger community development and not see a negative picture. The average price of a home in Yorkville on the 2000 census and update it by the consumer price index it doesn't come close to the values of the homes that are being proposed in the planned development. Therefore one could argue that the homes in this development are supporting communitive services to a larger extent than the existing homes. Mr. Dahlstrom said that this type of verbiage was comprised in the earlier report. Alderman Sticka said that if this chart says that the impact will be negative than it would cost the City a lot of money. Mr. Dahlstrom said that if the City were to approve this plan of the proposed development and then never had another thing built in the community, then yes it would cause a negative impact but felt that that was not the way it would work out. Alderman Sticka said no. Alderman James asked if they decided not to approve the development or any other developments after, then would the impact for the existing growth shoot up. Mr. Dahlstrom said that it would. Alderman James felt that as an impact study then that issue should have been addressed in the study. Mr. Dahlstrom said that that is why communities attempt to have a balanced land view plan and balanced growth perspective because this impact is not an unusual situation. Alderwoman Spears felt that if the community were to take a look at the current impact study that they would have a negative outlook towards the Administration. Mr. Dahlstrom said that they would need to look at the fact that it would be a large development that would build out over a ten year period. He went on to explain how the formula was calculated given from the spread sheet in Page 4 of 6 the packet. He said that every time some one would move into the new development there is a $706 cost. If the projected amount of people is doubled it might mean that the City staff could also be doubled. He also explained the possibilities of declining per capita costs on an economies scale. On an accumulative basis of the projected amount of $706 per person that could add up to 3 million dollars more of a net surplus. He went on to explain the other columns and the sur plus and revenue amounts after a grow -out of ten years based upon the study. Mr. Dahlstrom said that they would like further discussion and dialogue on this and that some consideration should be made for the economies of scale, sales tax per capita, and the possibility of a special census. This item will be further examined and researched by Mrs. Pleckham and Mr. Dahlstrom. OLD BUSINESS: Minutes for Approval/Correction: March 13, 2003 This item was tabled. Review Planning Coordinator's Fees Mr. Graff reported that Planning Coordinator Anna Kurtzman is very highly productive and detail oriented. She is able to track all the annexation agreement data and keeps it on a spread sheet. She passes on the spread sheet to staff for a final review. When working on the annexation agreement she charges the developer. Alderwoman Spears asked that if the staff meets with Mrs. Kurtzman to discuss an annexation agreement, do they pay her for that meeting. Mr. Graff said that some times they do particularly if they are having a strategic and/or negotiating discussion about it. Alderwoman Spears felt they should ask the city attorney to see whether the planning coordinator should be charging the developer for the negotiating discussions rather than the staff. Mr. Graff said that he would ask Attorney Kramer about that. He said that Mrs. Kurtzman does have a level of expertise of what needs to be taken care of in the field of urban planning. This item will come back to the next Administration Meeting on Thursday, June 4, 2003. Water Accounts — Update This item was tabled. New Entry Way Sign — Update Mr. Graff stated that the sign should be in by Monday, May 12�'. This item will come back to the next Administration meeting on Thursday, June 4, 2003. NEW BUSINESS: Engineering Assistant Position Mr. Graff stated that City Engineer Joe Wywrot did a job description review for the Engineering Assistant position and that the labor attorney is reviewing it. They are hoping to create the engineering position particularly at the lower level where they can some times use the back up support. He said that after speaking with Mayor Prochaska and looking at the budget they would look to have this position in form by September. They are first looking at having a job description together and not yet hire anyone until the position is certain. Alderman Sticka felt that the job description should include the knowledge of Auto CAD Software. I I i Page 5 of 6 Mr. Graff mentioned that the current Engineers Assistant does do project tracking and creates spread sheets. He said that the position primarily is defined as a secretary with knowledge of engineering operations. This item will come back to the next Administration meeting on June 4, 2003. Renaming of Faxon Road The committee decided that the new name for Faxon Road should be chosen from the approved list of street names. They felt that the developer could look over and choose a new street name from the approved street name list. Minolta Copier Proposal Mrs. Pleckham said that she is looking into the possibility of a lease option for the copier since the costs of running the copier around $12,000 a year. She contacted Minolta and they analyzed all the current copiers in the buildings and what the current costs have ran. See attached proposal. She mentioned that the proposal shows the billing broken down in to monthly billing. She said that Minolta has proposed to bring in all new copiers with the exception of the ones high lighted in the proposal because they are either new copiers or not under contract. She said that with the new proposal Minolta took the monthly volume of just the new letter alone and equated it out to $462 versus the $764 that the City is now paying to out source it. They did that across the board by giving comparable copiers and then equated the costs that the City would have on a lease agreement and came to a total that is actually less than what the City is paying annually on servicing and toner. She mentioned that Minolta services a lot of municipalities. Alderwoman Spears thought that they should have a few other companies come in and give comparables. Alderman Sticka agreed. Mrs. Pleckham said that she would look into it. This item will come back to the next Administration Meeting on June 4, 2003. Revised City Engineer Job Description Mr. Graff stated that he would get more documentation on the job description speak with Bob Smith. Mayor Prochaska added that the description should to also include that the engineer should have the ability to manage people. This item will come back to the next Administration meeting on June 4, 2003. GASB 34 Fixed Assets Policy Mrs. Pleckham stated that all the Department Heads had reviewed this policy and the only comments that came back were to get more definitions on the Capital Asset category on page 4 of the policy. She said that she has made a request from the auditors to give more definitions for that category. This item will go to COW following the auditor's response for the clarification of the Capital Asset category. ADDITIONAL BUSINESS: Mr. Prochaska mentioned that they had been notified by the County Clerk's Office that the levy extends beyond the tax cap. The City will have to reduce the levy. The most obvious reason for this is that the cap is at 1.016% which makes it a very low cap. He said that they are over $47,500. The tax rate will go down because the existing value of homes went up. I Page 6 of 6 Mayor Prochaska said that they will need to speak with the County because he thought that the calculated 8.7% reassessment rate of property in Yorkville was too high. He felt that they needed more information and clarification on how they came up with that assessment number. Alderwoman Spears mentioned that they are waiting on information from City Clerk Jackie Milschewski about getting help with minutes. She is checking with a firm to see if they could assist with the minutes. There was no further additional business. Meeting adjourned at Minutes by Theresa Brady Revisions by Jackie Milschewski, City Clerk, per the Administration Committee � i