HomeMy WebLinkAboutMinutes - 10/20/1999 - Finance and Personnel Committee �, FINANCE COMMITTEE MEETING
October 20, 1999
Committee Members Present: Baird, McClatchey, Murgatroyd
Others in Attendance: Mayor Cuda, City Clerk Althoff, Alderman Glab, City
Administrator Lobaito, Assistant Administrator Maxiener, City Engineering Firm
Representative Carl Moon, Developer Roger Gerstad
Finance Chairperson Alderman Murgatroyd opened the meeting at 6:35 p.m.
He stated the purpose of this meeting was to review the revised water capital
development fees as per direction at the September 30� Committee Meeting.
WATER CAPITAL DEVELOPMENT FEES
Finance Chairperson Alderman Murgatroyd stated the revised water capital
development fee incorporates an interest expense to finance future capital
improvement projects. The calculation assumes a project-financing amount of
60% and 20-year bond maturity at 5% interest. The revised water capital
development fee for a single family home would be $2,659. Some discussion
followed.
In response to committee inquiry, Baxter and Woodman representative Carl
Moon explained if the bond maturity were reduced to ten (10) years the water
� capital development fee would be reduced to $2,345 for a single family home.
In response to committee inquiry Mr. Moon noted, as stated at the September
30th committee meeting the cost differential between the water treatment plant
and the storage facility was due in most part to the greater engineering design
and project supervision.
Developer Roger Gerstad expressed concern regarding the proposed increase.
He recognized the City's need to maintain it's infrastructure integrity, however
he opined it should not prohibit any individual from attaining the American
Dream of owning his/her own home.
Mr. Gerstad also questioned the inclusion of�50,000 in the capital project
improvement costs for land acquisition. He stated past City of McHenry
practice was to require a land donation from developers. Mayor Cuda noted the
figure was included as the most recent capital improvement project, the River
Road sanitary sewer lift station required a $50,000 land purchase. Staff noted
the near-impossibility of determining the land value for future capital
improvement projects at the time of donation. Mr. Gerstad was asked if
developers would consider paying the associated preliminary costs to determine
site viability prior to donation.
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Finance Committee Minutes
� October 20, 1999
Page Four
The appraisal produced a per acre value of$113,000. This value is significantly
higher than the present value of$30,000. CPI adjustments have increased the
present value to $36,820. A review of land cost has not been completed since
1991. Staff noted parkland donations are calculated by a Subdivision Control
Ordinance formula. The formula is based on population generated from a new
subdivision and acreage of land needed to serve that population. The ordinance
permits the following scenarios:
acceptance of land in lieu of cash.
acceptance of a combination of land and cash
acceptance of cash in lieu of land.
Alderman Murgatroyd expressed some surprise at the $113,000 figure. City
Administrator Lobaito noted council has recently supported the acceptance of
cash only as it is generally agreed the City of McHenry is land rich.
Alderman Baird requested staff investigate whether the original land value was
calculated using the same population formula.
City Administrator Lobaito also noted staff calculated park donation fees based
on the $113,000 land value with both the 1989 Illinois School Consulting
Service (ISCS) figures and the most recent 1996 (ISCI) figures. The resulting fee
� differential was minimal.
It was noted the fee increase was significant due to both the increase in the fair
market value figure as well as the increase in the population ratio as
determined by ISCI.
The committee directed staff to develop and present several scenarios utilizing
the 1996 ISCI ratios and based on a fair market value figure of$50,000,
$60,000, $70,000, $80,000 and $90,000. If feasible these figures can be
reviewed at the next finance committee meeting scheduled for Wednesday,
October 27th at 7:00 p.m.
Motion by Baird, seconded by McClatchey to adjourn at 7:26 p.m.
Voting Aye: Baird, McClatchey, Murgatroyd
Voting Nay: None
Absent: None
Motion carried.
The meeting was adjourned at 7:26 p.m.
�l y:c�I l.l,c�l�-�' .G—"�
Steven Murgatroyd, �hairpe son
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Finance Committee Minutes
� October 21, 1999
Page Three
unreasonable particularly when compared to capital development fees of
surrounding municipalities.
Some discussion followed regarding average per day water usage amount.
Mayor Cuda noted staff provided average usage for typical single family homes
in both Fox Ridge and Windsor Park Ridge subdivisions. The average use/day
was approximately 376 gallons.
In response to Mr. Gerstad's inquiry, Chairperson Alderman Murgatroyd
stated for calculation purposes an occupancy density of 3.5 persons per
household will be used.
It was the consensus of the committee to make a formal recommendation for
full council consideration at this evening's meeting.
Motion by Baird, seconded by McClatchey to recommend to full council an
increase in water capital development fees based on project financing of 60%
with a 10-year bond maturity at 5% interest as follows:
Meter Size Capacity Ratio Connection Fee
�. 5/8" x 3/4" 1.00 $ 2,345
1" 3.33 � 6,566
1 1/2" 5.33 $ 11,256
2" 10.0 $ 18,760
3" 23.0 $ 42,210
4" 67•0 $117,250
6" 67.0 $117,250
g" 233.0 $422,100
to take effect 90 days after the passage of the amending ordinance.
Voting Aye: Baird, McClatchey, Murgatroyd
Voting Nay: None
Absent: None
Motion carried.
PARK DONATION FEES
City Administrator Lobaito noted council authorized staff, at their regularly
scheduled June 14, 1999 council meeting, to hire an appraiser to determine the
"fair market value" of an improved one acre of land located within the City of
McHenry's corporate boundaries. The value would be used to determine future
park donation fees.
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Finance Committee Minutes
� October 21, 1999
Page Two
Finance Chairperson Murgatroyd also noted future project costs were based on
the construction of shallow wells. F�,tture needs and requirements may result
in the need for deep aquifers resulting in higher costs. A lengthy discussion
ensued.
Chairperson Alderman Murgatroyd did note capital development fees for both
water and sewer are reviewed periodically. Sewer capital development fees were
increased in 1991. Mayor Cuda opined previous capital development fees
collected were not sufficient to pay for development. The City of McHenry has
been operating at a deficit for several years. The last two capital improvement
projects required the issuance of bonds for financing.
The discussion continued. Mr. Gerstad requested and received clarification
regarding the estimated project cost figures for both a water supply system and
water storage. Chairperson Alderman Murgatroyd noted Legal and
Administrative Fee costs including legal fees and bond consultant and issuance
costs. It was the consensus of the committee the increase in the water capital
development fees was reasonable and based on accurate cost figures.
In response to Chairperson Alderman Murgatroyd's inquiry, Baxter and
� Woodman representative Carl Moon reported if the bond maturity were
decreased to a 10-year time frame, the cost of providing water supply and
storage for future users was reduced from $770 per P.E. to $670 per P.E.
Finance Chairperson Alderman Murgatroyd suggested the committee
recommend a 10-year bond maturity as opposed to a 20-year bond maturity.
STORAGE CAPACITY
In response to Mr. Gerstad's inquiry regarding the $75,000 cost factor for site
work, Baxter and Woodman representative, Carl Moon, noted site work includes
water main and hydrant connections in addition to piping and valve
connections. Some discussion followed noting municipalities inevitably pay
higher costs than private entities for these types of improvements.
Mr. Moon also noted the capital project improvement figures included a cost for
a special foundation. He explained the figures utilized to calculate the costs of
providing water supply and storage for future users were not the least expensive
but a representative figure. The concept behind these calculations is to allow
for monetary accumulation in the event additional capacity is needed in the
future for on-going development. Chairperson Murgatroyd stated existing
residents should not be charged for future development.
Alderman Baird stated his support of the 10-year bond maturity time frame.
�.. He also opined the new water capital development rate doesn't appear