HomeMy WebLinkAboutMinutes - 8/27/2012 - Finance and Personnel Committee FINANCE AND PERSONNEL COMMITTEE MEETING
'`- Monday,August 27, 2012
Alderman Conference Room, 6:00 p.m.
In Attendance: Committee Members: Chairman Alderman Wimmer, Alderman Blake
and Alderman Schaefer. Absent: None.
Also in Attendance: Mayor Low, City Administrator Morefield, Deputy City Administrator
Martin, Finance and Accounting Manager Lynch and City Clerk Jones.
Alderman Santi arrived at 6:15 p.m.
Alderman Condon arrived at 6:30 p.m.
Chairnian Alderman Wimmer called the meeting to order at 6:00 p.m.
Public Inuut
No onc signed in for Public Input Session.
Discussion Regarding Cellular Antennae Lease Buvout Offer
4225 Sioux Lane and 1415 Industrial Drive
Deputy City Administrator Martin informed the Committee that Staff has received three
� written offers to purchase easements and rights to the City's three cellular leases:
• AT&T (New Cingular);
• U.S. Cellular; and
• T-Mobile
at the Sioux Lane Water Tower, 4225 Sioux Lane, as well as the land lease with Verizon,
which has a monopole tower at the public works garage located at 1415 Industrial Drive.
Alderman Santi arrived at 6:05 pm.
Deputy� City Administrator Martin informed the Committee that the City owns the water
tower on Sioux Lane and three companies lease ground space and tower space from the City.
All equipment is owned by each respective lessee.
Unison, Crown Castle and Communications Capital are seeking to purchase an easement to
access the property and water tower on Sioux Lane, as well as an easement to access the
Verizon monopole site at the public works garage. Deputy City Administrator Martin noted
the City is solely the landowner at the public works garage property, but has no ownership
rights to the tower.
Over the last 20 years the market for internet, cellular phone and other wireless services has
� shrunk due to mergers and acquisitions (i.e., AT&T Cingular). Wireless companies are
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Page 2
consolidating sites and terminating redundant leases seeking other ways to reduce costs and
remain competitive. The four major companies in the industry are:
• AT&T;
• Sprint-Nextel;
• T-Mobile; and
• Verizon.
Sprint-(�extel is the only company of the four which is not on either the Sioux Lane Tower or
the Ve�izon monopole at the public works garage.
The tiv•ee companies which have submitted proposals are primarily looking to capture and
control long-term financial revenue in the form of purchased "umbrella" easement rights and
assignments of existing leases. These companies concentrate on the purchases of public and
private leases on a nationwide basis. Deputy City Administrator Martin noted that should a
sale be finalized, the City would still retain control and ownership over the actual water
tower and surrounding property.
Deputy City Administrator Martin provided the Committee members with a financial
`- summary of the City's existing leases, including rent paid to date, together with future
anticipated rent payments with calculations included regarding individual agreements. The
figures are based upon all the carriers exercising their options to extend the leases, which are
typically five-years at a time, up to a total of 29-30 years. The summaries included how
many years future rent the lump sum offer is equivalent to, percentage rent split between the
City and company should additional tenants seek to locate at either the Sioux Lane site or
Industrial Drive monopole site and forfeited rent for the life of the leases should the City
accept an offer.
Deputy City Administrator Martin presented some pros and cons to entering into this type of
agreement with a third party:
• The City would lose some revenue if all the leases extend to their full term;
o Conversely, a lump sum payment of several hundred thousand dollars could
be used to assist in current and/or future capital projects.
• Many cellular companies are seeking rent reductions, so the City's projected future
revenue could be reduced.
• Entering into this type of agreement adds an additional layer of bureaucracy.
• Future mergers could reduce the City's revenue intake.
Deputy City Administrator Martin informed the Committee that each of the offers contains
similar provisions, including additional land area requests for potential future tenants.
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Staff is seeking direction from the Committee regarding whether to pursue these offers
further, noting several bargaining points can be made by Staff to make the offers more
appealing to the City. If the Finance and Personnel Committee directs Staff to explore the
requesi s in greater detail, Staff requests a motion to authorize Staff to work with
representatives from the companies interested in purchasing the cellular leases at 4225 Sioux
Lane ��nd/or 1415 Industrial Drive and directions regarding whether to provide lease
agreerr ents at a future Finance and Personnel Committing meeting or directly to City
Counci l.
Altern��tively, Deputy City Administrator Martin stated the Committee could elect not to
pursue any of the attached offers further.
Responding to an inquiry from Alderman Schaefer, Deputy City Administrator Martin stated
that en�ineers have advised that structurally there should not be any additional tenants on the
tower.
Chairman Alderman Wimmer opined he is more comfortable waiting to see if the companies
might be willing to make an offer more advantageous to the City regarding the leases.
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Following a brief discussion, it was the consensus of the Committee to elect not to pursue
any of the offers further at this time.
Assi�ned Fund Balance
Finance and Accounting Manager Lynch informed the Committee that in February 2009, the
Governmental Accounting Standards Board ("GASB") issued Statement No. 54, which went
into effect during Fiscal Year 2011/2012. The objective of GASB is to enhance the usability
of the financial statements by defining the fund balance categories in governmental funds.
Finance and Accounting Manager Lynch explained that the fund balance categories defined
by GASB are:
• Non-spendable;
o Balances that cannot be spent because they are not expected to be converted to
case or they are legally or contractually required to remain intact.
• Restricted;
o Constraints are placed on balances by external parties or by law.
• Committed;
o Balance that can only be used for specific purposes, as a result of City Council
action through an ordinance or resolution.
• Assigned;
o The City Council delegates the authority to someone to assign balances for a
specific purpose, and
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Finance and Personnel Committee Meeting
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Page 4
• Unassigned;
o Leftover balances that do not fall into other categories.
Finance and Accounting Manager Lynch noted that Council recently adopted a resolution
provid ng the City Administration, with the advice and consent of the Finance and Personnel
Committee, the authority to assign balances for a specific purpose.
Finance and Accounting Manager Lynch provided the Committee a breakdown of the City's
fund balances as of Fiscal Year 2011/2012, broken down into major funds (i.e., General and
Rec Center), as well as other governmental funds. Included in the General Fund are the
following funds:
• Annexation;
• Alarm Board;
• Band;
• Civil Defense;
• Revolving Loan; and
• Tourism
�-- The other government funds are Pageant, Character Counts, Audit, Capital Improvements,
Capital Equipment, Debt Service, Motor Fuel Tax, Developer ponations, TIF, SSA #1; SSA
#4 and SSA #6. The assigned function was used to separate the funds that are consolidated
in order to give a more detailed picture of what the total fund consists of.
Motion by Blake, seconded by Schaefer to accept recommendations by Staff regarding the
Assigned Fund Balance, as presented.
Aye: Blake, Schaefer, Wimmer.
Nay: None.
Absent: None.
Motion carried.
Alderman Condon arrived at 6:30 pm
Review of Elected Officials Salaries
City Administrator Morefield informed the Committee that, at the City Council meeting on
August 13, 2012, a suggestion was made that it may be appropriate to conduct a review of
salaries of elected officials.
City Administrator Morefield provided the Committee with a summary of the current salaries
for elected officials. He stated that comparing this type of information with that of
surrounding communities can be difficult based on the size of the community and type of
`.. government (i.e., Strong Mayor, Mayor-Manager, Mayor-Administrator, etc.). Further
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Page 5
complicating the process is the number of regular, special and/or ad hoc meetings of the
electeci body and specific duties and responsibilities of various elected officials.
City Administrator Morefield noted the process of determining salaries for elected officials is
subjective, as there are no true market comparables. Each community has its own set of
needs and responsibilities. In preparation of the meeting, City Administrator Morefield
stated he conducted a cursory review of three McHenry County communities, Algonquin,
Lake in the Hills and Woodstock. He provided the Committee with the information garnered
from each community regarding the salary for the Mayor, Council, City Clerk and Treasurer.
The information was based on information in the City Code and did not take into
consideration specific responsibilities of the positions.
Chairnian Alderman Wimmer agreed with City Administrator Morefield that in looking at
the salaries of surrounding communities it is difficult to make a comparison.
Alderman Schaefer suggested the Committee address the salary of the City Treasurer.
Responding to an inquiry from Alderman Schaefer, Finance and Accounting Manager Lynch
stated there is no statute that requires a municipality to have a treasurer. Alderman Blake
�, opined he has no issue with any of the elected officials salaries with the exception of the
Treasurer position, which he would like to change.
A discussion ensued regarding the position and duties of Treasurer of the City of McHenry
and salaries for elected officials. Chairman Alderman Wimmer asked that in considering the
position of Treasurer the Committee members recall that during the last election a
referendum was defeated that recommended the City Treasurer position be an "assigned"
position rather than an elected position.
Respo�iding to an inquiry by Alderman Blake, City Administrator Morefield stated he would
inquire of City Attorney McArdle what would be involved in changing the City Treasurer
position.
Motion by Schaefer, seconded by Blake recommending the City Code be amended to reflect
a reduction in the City Treasurer salary to $1.00 per annum.
Aye: Blake, Schaefer, Wimmer.
Nay: None.
Absent: None.
Motion carried.
New Business
No new business was discussed.
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Adi ournment
Motion by Schaefer, seconded by Blake, to adjourn the meeting at 6:37 p.m.
Aye: Blake, Schaefer, Wimmer.
Nay: None.
Absent: None.
Motion carried.
Respectfully ubmitted,
Ri�i•d W. Wimmer, hairman
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