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HomeMy WebLinkAboutPacket - 11/15/2010 - Finance and Personnel Committee City of McHenry 333 South Green Street - _ _ _ , ,, ' . www.ci.mchenry.il.us McHenry,Illinois 60050-5495 — Mayor's Office (815) 363-2108 Fax (815) 363-2119 Administration (815) 363-2100 FINANCE/PERSONNEL COMMITTEE MEETING Fax (815) 363-2119 Construction and City of McHenry Municipal Center Neighborhood Services 333 South Green Street (815) 363-2170 Fax (815) 363-2173 Aldermen's Conference Room Finance Department(815) 363-2100 Monday, November 15, 2010, 6:30 PM Fax (815) 363-2119 Parks and Recreation (815) 363-2160 Fax (815) 363-3186 AGENDA Police Non-Emergency (815) 363-2200 Fax (815) 363-2149 1. Call to Order Public Works (815) 363-2186 2. Revolving Loan Fund Application — Nicolino's Restaurant Fax (815) 363-2214 3. Vehicle Sticker Sales Mayor Susan E. Low 4. Adjournment City Clerk Janice C. Jones Treasurer Posted: November 10,2010 Steven C. Murgatroyd Aldermen WARD 1 Victor A. Sand WARD 2 Andrew A. Glab WARD 3 Jeffrey A. Schaefer WARD 4 Geoffrey T. Blake WARD 5 Richard W. Wimmer WARD 6 Robert J. Peterson WARD 7 Geri A. Condon MEMORANDUM TO: Revolving Loan Fund Committee FROM: Douglas Martin, Deputy City Administrator FOR: November 15, 2010 Revolving Loan Fund Committee Meeting RE: Revolving Loan Fund Application—Reprise Corporation DBA Nicolino's The Revolving Loan Program provides low interest loans to qualified existing and prospective businesses within the City of McHenry. The loan proceeds can be used to assist in the startup of a new business, expand an existing business, and update existing facilities to make the business more competitive, or provide an incentive for established businesses to relocate to the City. The primary goal of the program is job creation and the expansion of the sales tax and property tax base. The program was established in the late 1980's with funding from a State of Illinois grant. The City completed four loans between 1987 and 1998. Because of the limited funds available, loans were restricted to $50,000. Loan applicants were required to pay all attorney and processing fees and personally guarantee repayment of the loan. In 2003, the City used funds from the retired state grant to create the Small Business Retention Loan program with the goal of assisting businesses adversely affected by the reconstruction of Route 120. The program requires loan applicants to complete a formal application reviewed by the Revolving Loan Fund Committee which makes a recommendation to the full City Council. Working in conjunction with First National Bank of McHenry, Buddyz Chicago Pizzeria received a $75,000 loan for their new location at Riverwalk Center. The current available lending balance of the revolving loan fund is $16,700. Reprise Corporation DBA Nicolino's, located at 621 Ridgeview Drive in the Inland Business Park has submitted the attached application requesting a $75,000 loan to enhance Nicolino's Restaurant which opened its doors in 1999. In accordance with the application they are seeking: $10,000 to purchase and/or remodel their existing building, $50,000 to purchase and/or repair machinery and equipment and $15,000 for working capital. Restaurant owners Joe and Barbara Bono state in the application that they would use the funds to purchase additional kitchen equipment to start a catering and pizza business and as a result, three new job positions would be created. Currently the restaurant employs ten people. If approved by the City Council and loan underwriters, terms would be nearly identical to those afforded Buddyz including a five-year term with an interest rate equaling the prime rate currently at 3.25%. Mr. Bono has been a commercial banking customer of First National Bank of McHenry for ten years and First National has agreed to underwrite the loan. Nicolino's did have a bankruptcy claim discharged in 2006 but following the implementation of the off-track betting facility in 2005,the restaurant has been solvent. Mr. & Mrs. Bono will attend the meeting to answer inquires from committee members. Staff is seeking a recommendation to proceed with reviewing the creditworthiness of the applicant. City of McHenry Revolving Loan Fund Application 1. Information on business to be assisted: Name of Business � > Street Address of Proje City State Zip Code Name Principal in Charge Business Phone Cell Phone 1'r1 T 1 C c;,-t C 01� ° Home Address of Principal A/1 City State Zip Code SS# of Principal DOB of Principal Type of Business 1 Date Established Employer ID # Name of Bank/Financial Institution Bank Address (include City, State and Zip Code) 2. Project Description - Purpose of Request-Why undertaking the project: Revolving Loan Fund Application Page 1 3. Information on Project Impact: Job impact: # Existing Employees /0 # Positions Created =Total Relocation (if yes, identify new location in space provided): Yes No 4. Information on Participating Financial Institution: Name of Institution � LUG Street Address Or' — M cal-eo rc] L . r o'Sz) City State Zip Code Repayment Terms: 5. History and Description of Company and Principals: 2-0 ;--�4 L/ 7 Revolving Loan Fund Application Page 3 6. Information on Use of Project Funds: Land Acquisition $ Land Improvement $ Purchase and/or Remodel on Existing Building $ ! 0DO, New Construction $ Purchase and/or Repair Machinery & Equipment $ Purchase Furniture & Fixtures $ Working Capital $ �c , LZ50-CJ Other Contingencies (Identify below): $ Total Project Cost $ -7 Revolving Loan Fund Application Page 4 MEMORANDUM TO: Mayor and City Council FROM: Chris Black, City Administrator FOR: November 15, 2010 Finance and Personnel Committee RE: Vehicle Sticker Sales BackLyround Chapter 13, sections 101 through 110 of the City's Motor Vehicle Code establishes fees and regulations regarding the purchase of vehicle licenses (vehicle stickers). As shown in the attached, the typical license fee collected for vehicles is $12. School buses for non- profit entities and large trucks are $15 and $30, respectively. City of McHenry Vehicle Sticker Revenues FY2005/06—FY2010/11 (Est.) FY05/06 FY06/07 FY07/08 FY08/09 FY09/10 FY10/11 $164,291 $160,589 $157,436 $153,213 $147,191 $141,200 In addition to being difficult to administer, the vehicle sticker fee compliance has continued to decline in recent years. Reduce compliance leads to a decrease in revenues and more complaints from the public about the fairness of the fee. As shown in the table above, revenues have declined from $164,291 in FY2005/06 to an estimated $141,200 in FY2010/11. Analysis Staff researched three different options for improving the vehicle sticker sales and revenue collection process and increasing compliance by commercial and residential vehicle owners with the city's ordinance. Option 1 —Water/Sewer Billing Under this option, residential and commercial customers would be charged for vehicle stickers as part of a separate charge added to their water/sewer bills. This process is currently used by the Village of Antioch. Based on discussions with village staff, our Finance Department determined how a similar collection method could be implemented in the City of McHenry. With this method, each residential unit would be required to purchase stickers for two vehicles and the $24 dollar fee would be divided evenly among the city's six water/sewer billing cycles. For a resident to be charged for less than two vehicles, they would be required to sign an affidavit certifying the number of vehicles they currently own. The number of vehicles stickers required for purchase by commercial or multi-unit buildings with a single water/sewer account would be determined on a case by case basis. Including the vehicle sticker fees on water/sewer bills would result in higher compliance, efficient revenue collection, and improved ability to estimate revenues. However, there would be several challenges to using this method, including: • Since the city would charge each residential unit for only two vehicles, some residents would not pay for all of their vehicles and others could be required to complete an affidavit stating they have less than two vehicles. • It will be somewhat difficult to determine how many vehicles to charge for apartments, industrial, townhome associations, and retirement homes that only receive one water/sewer bill per building. • Some residents would not be charged for vehicle stickers because they are not billed for water and sewer. • With our current financial software, it would be a time consuming process to add or modify information related to the number of vehicles. Option 2—Secretary of State Data With this method, Secretary of State (ISOS) vehicle data could be cross-referenced with data in our vehicle sticker system using GIS software. A report would be produced listing all addresses in the city limits and vehicles registered at the corresponding addresses. Vehicle sticker applications could be generated and mailed out to addresses based on the report data. Using vehicle registration data from the ISOS provides several advantages over the current method the city uses to determine residents required to obtain vehicle stickers. The vehicle registration data is relatively inexpensive to purchase ($500 annually) and would provide a comprehensive list of vehicles registered within the city limits. As a result, more vehicle sticker applications would be sent to residents and additional revenue would be generated. Also, the database could be used to determine who has not purchased a sticker by the due date. There are several challenges to using this method, primarily relating to technology. First, the city would need to hire an outside person with expertise related to GIS to develop the vehicle sticker application database. In addition, the city would need to purchase new software or develop a new database to mail out vehicle sticker applications and maintain vehicle information and records on who has purchased stickers. Option 3—Contracting with Third Party Vendor Under this option, an outside vendor would match four different databases to develop vehicle registration forms that would be mailed to residents. Staff has contact a vendor, Third Millennium, who would use our current vehicle sticker and water/sewer account information, as well as the ISOS data and a national database, to create vehicle registration forms to be mailed to residents. The vehicle sticker applications would be compliant with future privacy ("red flag") regulations that prohibit the mailing of postcards with multiple pieces of personal information. Third Millennium also offers software that stores all of the information found on the vehicle sticker registration forms. This software reads the registration forms with the use of scan-able bar code and brings up all of the information on the form, including the price of the sticker. When a sticker is sold the form will be scanned, the information will be verified, and a sticker number will be assigned to each vehicle. Contracting with an outside vendor would result in additional costs in administering the vehicle sticker program. There would be a one-time cost of purchasing the vehicle software totaling approximately $5,000. In addition, there would be annual costs for developing records for the cross-referencing of databases, printing vehicle registration forms, and software maintenance totaling approximately$8,000. Using this method would most likely result in improved compliance and additional revenue. Based on estimates provided by the vendor, the city could potentially collect $228,000 annually based on the typical number of vehicles per capita. The city will not receive full compliance however should see an increase with a more comprehensive and accurate mailing to residents. In addition, the software which includes the ability to scan registrations would allow collection and maintenance of information to be done more accurately and efficiently by staff. Also, the software would provide the ability to send out second notices with late charges to those who have not purchased stickers by June 3 Oth In summary, staff believes moving forward with any of the three options would result in improved administration of vehicle sticker sales and collections, higher compliance, and additional revenue. Staff believes entering into a contract with Third Millenium to provide the software and annual services would be the best option. Staff understands the difficulty of spending additional funds to collect vehicle sticker revenue. However, this option would not only result in additional revenue collection, but also allow for less staff time being devoted to vehicle sticker sales and revenue collection.