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HomeMy WebLinkAboutMinutes - 9/15/1998 - Finance and Personnel Committee � FINANCE COMMITTEE MINUTES September 15, 1998 Members Present: Chairman Alderman Murgatroyd, Alderman McClatchey Others Present: City Administrator Lobaito, City Clerk Althoff, Alderman Glab, City Auditor John Eder Finance Chairperson Alderman Murgatroyd opened the meeting at 7:00 p.m. 1997-98 AUDIT REVIEW City Administrator introduced City Auditor John Eder of Eder, Riedel & Company stating Mr. Eder was in attendance to review the 1997-98 audit. Mr. Eder drew the committee's attention to the following audit highlights: -an $8,000,000 increase in equity from 1996-97 figures to 1997-98 figures -a S 1 ,000,000 increase in revenues from 1996-97 to 1997-98 figures `-- -a 1997-98 $877,955 excess in revenues over expenditures as compared to the S 1 ,581,000 1996-97 figure -a net water/sewer 1997-98 net income of $192,008 Mr. Eder noted the S 192,008 income figure for the water/sewer enterprise fund was income from day to day operations only, no hook-up fees, etc. were included in these figures. Staff also noted the water/sewer rate increase would not yet be reflected in this figure as the rate increase was effective with the May billing. Mr. Eder noted pages 34 and 35 provided a comparison of actual revenue and expenditure figures to appropriated revenue and expenditure figures. Pages 36 through 51 provided specific information on individual "special funds" such as civil defense, vehicle license, IMRF, etc. Pages 53 through 61 deal with the enterprise funds where the intent of the municipality is that the costs of providing goods or services to the general public on a continuing basis be recovered primarily through user charges. Mr. Eder also noted the addition of the Federal Financial Compliance Section stating as the City of McHenry participated in grant programs exceeding 5449,000. City Administrator Lobaito noted both Community Development Block Grants had been completed as well as the Clean Lakes McCullom Lake Project leaving only the L-- COPS grant program active. Mr. Eder also informed the committee any federal Finance Committee Meeting Minutes � September 15, 1998 Page Two grant audit required by the city is done on an as needed basis and is not covered under his standard audit contract with the City of McHenry. In response to committee inquiry he suggested the committee members read the audit footnotes in an effort to obtain an accurate overall picture of the City of McHenry's current financial condition. Mr. Eder, referencing the management letter drew the committee's attention to Item #1 regarding the probable shortage of funds in both the Project Assessment and Special Assessment funds. He cited a variety of reasons for the shortfall and noted several options could be considered to rectify the problem. Two options presented were an increase in the public benefit tax levy portion and diverting interest funds from the water/sewer bond and interest reserve account into these funds. Mr. Eder suggested Harold Warren and/or former Principal Account Clerk Susan Christensen be hired to assist city staff with the correction. Item #2 addressed the computer hardware problem associated with the front cash register. Mr. Eder noted the cash register is left open during the day to facilitate customer service. City Clerk Althoff noted with the update of Year 2000 � compliance software this problem will be addressed and corrected. Item #3 addressed the development of an accounting procedures and policy manual. City Clerk Althoff noted Principal Account Clerk Christensen has developed a manual however the finance committee has never reviewed or formally approved the document. Some discussion followed regarding the resignation of Principal Account Clerk Christensen and the delegating of her duties until a replacement can be found. Mr. Eder also offered to assist City Administrator Lobaito in interviewing Ms. Christensen's replacement. City Administrator Lobaito noted the replacement Principal Account Clerk will be a Grade 5 position with the future Administrative Services Director responsible for the budgeting, investment of funds, etc. Mr. Eder suggested an individual with a strong municipal finance background be sought. In response to Finance Chairperson Alderman Murgatroyd's inquiry Mr., Eder stated a method could be developed to account for "carryover projects". Mr. Eder also suggest the committee consider requiring a footnote at the end of the budget document citing "the legal adoption of expenditures for the City of McHenry is enacted through an Appropriation Ordinance which always reflects higher figures." Some discussion followed regarding the adoption of the Budget Process. � Finance Committee Meeting Minutes `.- September 15, 1998 Page Three Alderman Murgatroyd noted on page 28 of the audit a typographical error in the paragraph relating to bond retirement. The year 2007 should in fact reflect the year 2006. City Auditor Eder was excused at 7:50 p.m. Finance Chairperson Alderman Murgatroyd requested City Administrator Lobaito request Mr. Eder's presence during interviews for prospective Principal Account Clerk candidates. Finance Chairperson Alderman Murgatroyd called for a recess at 7:50 p.m. to convene the Revolving Loan Committee Meeting. The meeting was reconvened with committee members Finance Chairman Alderman Murgatroyd and Alderman McClatchey in attendance in addition to Alderman Glab, City Clerk Althoff and City Administrator Lobaito at 8:10 p.m. REVIEW OF OUTSTANDING CITY OF MCHENRY BOND ISSUES City Administrator Lobaito stated in response to Finance Chairperson Murgatroyd's `— request a report on the status of City of McHenry outstanding bond issues was created and presented for committee review. A debt payment schedule was also presented. City Administrator Lobaito stated a total of four bond issues were outstanding; two attributable to the Water/Sewer Fund and two General Obligation issues associated with the construction of the Municipal Building and the extension of sanitary sewer to properties east of the Fox River. In addition City Administrator Lobaito cited the installment contract for the Country Club Estates Project in the amount of $600,000. The City of McHenry pays an annual public benefit amount of 535,000 for this specific project. In response to Alderman Glab's inquiry City Administrator Lobaito noted all sales tax revenue received from the east of the river properties is credited to the 1997A Eastside Sewer Extension Bond issue. Some discussion followed regarding the cost of services, specifically street repair and maintenance, for this area and the availability of funds. Finance Chairperson Alderman Murgatroyd noted property tax monies collected from this area would cover a significant portion of these costs. In response to Finance Chairperson Alderman Murgatroyd's inquiry City Administrator Lobaito noted the statutory requirements for municipal bonding authority for General Obligation Bonds is limited to 8.625% of the municipality's Assessed Valuation. The Assessed Valuation for the City of McHenry in 1997 was 5348,539,000. City Administrator Lobaito reported the City of McHenry currently `-- has issue.d Alternate General Obligation Bonds or Revenue Bonds and has no outstanding General Obligation bonds. He noted the City of McHenry's financial condition limits it's ability to issue bonds much more realistically than the statutory limits. Finance Committee Meeting Minutes September 15, 1998 �, Page Four In response to Alderman McClatchey's inquiry regarding the status of recreational facility discussions, Chairman Alderman Murgatroyd responded the previous information regarding the City of McHenry's current debt obligation was provided in preparation of the recreational facility discussions. Chairman Alderman Murgatroyd opined the real financial concern would be operating costs as opposed to construction costs for the proposed recreational facility. City Administrator Lobaito informed the committee Financial Consultant Harold Warren was investigating the desirability of refinancing the 1990 Municipal Building Obligation Bonds as current conditions warrant this review. The City of McHenry could refinance the existing obligation balance at a lower rate saving approximately 540-$50,000 or bond for more monies at a lower rate with a longer payment schedule. BANKING SERVICES REQUEST FOR PROPOSAL � City Administrator Lobaito informed the committee staff is recommending the Finance Committee recommend to full council the authorization of staff to initiate Requests for Proposal for city banking services. A proposal draft document was presented for committee review. City Administrator Lobaito opined it would be in the city's best interest to explore the variety of services offered by the numerous financial institutions located within the corporate limits of the City of McHenry. In addition to current banking services received staff is recommending the following additional services: -credit card usage for utility bill payments, building permits, and special assessment payments. -utility billing automatic account debits -direct deposit of employee paychecks. It is also staff's recommendation to request new bids every four years to coincide with the Mayoral election. Motion by McClatchey, seconded by Murgatroyd, to recommend to full council the authorization of staff to solicit Requests for Proposal for city banking services including, but not limited to, credit card usage, automatic account debiting and direct deposit availability. Voting Aye: McClatchey, Murgatroyd � Voting Nay: None Absent: Baird Motion carries. Finance Committee Meeting Minutes September 15, 1998 � Page Five Motion by McClatchey, seconded by McClatchey to adjourn the meeting at 8:35 p.m. Voting Aye: McClatchey, Murgatroyd Voting Nay: None Absent: Baird The meeting was adjourned at 8:36 p.m. Steven Murgatroyd Fina ce Chairman � �