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HomeMy WebLinkAboutMinutes - 10/29/2007 - Finance and Personnel Committee FINANCE AND PERSONNEL COMMITTEE MEETING `-- Monday, October 29, 2007 Aldermen's Conference Room, 6:30 p.m. In Attendance:Committee Members: Chairman Alderman Murgatroyd, Alderman Peterson. and Alderman Schaafer. Absent: None. Also in Attendance: Mayor Low, City Administrator Ma�ceiner, Assistant City Administrator Hobson, Director of Finance Black, Director of Parks and Recreation Merkel, Superintendent of Recreation Witt and Deputy City Clerk Kunzer. Chairnian Alderman Murgatroyd arrived at 6:45 p.m., explaining he was detained in traffic. He called the meeting to order at 6:45 p.m. Discussion Re�ardinQ Recreation Center Finance Director Black stated the Committee reviewed proposed operating expenses and revenues for a proposed recreation center at its October 1, 2007 meeting. At that time, the Committee requested the following information prior to the next Committee meeting: 1. Refine expenditure data; 2. Quantify cost saving by utilizing existing Staff in place of potential part time employees; 3. Develop revenue estimates based on a larger service area; 4. Make available the designs of a proposed recreation center. Director Black noted the information had been provided and then began summarizing each of the � following categories: Operating Expenses Director Black noted all information provided is based on a 40,000 squaze foot facility that operates 100 hours per week. The cost of the facility would add approximately $498,000 to the Park Department operation expenditure budget. He noted by utilizing e�sting clericaUfront desk staff 60 hours per week and paying for part-time clericaUfront desk staffing only 40 hours per week,the expenditures could be cut by approximately $22,400 annually. This adjustment would mean the operating expenditures would be reduced to$475,600. Operatin�Revenues Director Black stated, following the Committee's recommendation, Staff increased the proposed service area to 35,000 persons to more realistically estimate membership. The total projected revenue based on these adjustments is $430,650. Director Black noted program revenues would likely increase by $80,300 and miscellaneous revenues would provide an additional$10,000. Director Black noted the projected expenditures minus the projected revenues leaves a deficit of approximately$�5,000 which would have to be paid from the General Fund. Director Merkel stated such items as equipment replacement have not been included in the initial projections for the facility. Responding to Chairman Murgatroyd's inquiry, Director Merkel stated the equipment replacement line item would likely be in the $10,000 per year category. Fitness equipment is typically replaced every three years. Director Merkel also noted it would depend upon whether the City chooses to purchase equipment, lease equipment, etc. � Finance and Personnel Committee Meeting �.. October 29, 2007 Pa�e 2 Some discussion occuned regarding the amenities of various other health/fitness clubs in the area and how they would impact the success of a City-owned facility. Alderman Schaefer opined the City should have a facility which does not just focus on fitness but on providing space for all park programs and activities. Chairman Murgatroyd concuned stating the City needs to ensure the facility has space for the various programs, events and activities. Chairman Murgatroyd stated the City needs to address future needs for running its parks programs, the amount of space required, the current rental fees being paid, etc. Responding to an inquiry, Director Merkel stated approximately 25% of park programs are held in area churches and schools. The rental costs are passed on to the participants. He stressed the City is looking for a recreation center for the entire family and not just the adult fitness market. Such a facility could be marketed differcntly than other fitness centers. Alderman Schaefer stated it would not be practical to operate a facility having a$45,000 deficit. He stated he would like to move forward with plans for the recreation center, but the City needs to find a way to make it work without running in the red and being dependent upon General Fund monies. Director Black noted the expenditures have been cut to the very minimum. Any modifications would have to come on the revenue side of the project. Responding to an inquiry by Alderman Schaefer, Director Black noted the proposed fee schedule ha.s been compared to other fitness centers in the area. He noted if � the cost of using the facility is raised too high, particularly for non-residents, the usage would likely decrease as the public might deem it too costly. City Administrator MaYeiner stated it is not feasible to move forward with this project until the City obtains answers to some potential threats to City revenue. Chairman Murgatroyd noted all of the budget constraints during the past few years. He stated if this project were to move forwazd and lose revenue,the General Fund would need to absorb any shortfall. Director Merkel sta.ted it typically takes 3-5 years in order to obtain/generate maximum revenue ability from a recreation center. He noted in 3-5 years the center would be less likely to be a drain on the General Fund. Attorney MeArdle amved at 7:10 p.m. Mayor Low stated the department has worked very hard to build up the number and variety of parks programs, activities and events. She noted it is possible the City could lose leased space on any given month (from churches or schools) and this could present a problem if a site was no longer available for programs or activities. Question was raised as to a possibility of partnering with Centegra. It was pointed out efforts were made to work with Centegra; however, Centegra wanted to have total control of the fitness center, and would dictate when City residents would be able to use the facility. � Finance and Personnel Committee Meeting '�. October 29, 2007 Page 3 Alderman Peter�on inquired what size of building would be adequate to accommodate park programs, activities and ev�nts. Director Merkel responded a 40,000-50,000 square foot building would be needed. City Administrator Maxeiner noted recent discussions have occurred regarding expanding the Police Deparhnent to include the second floor if/when the Parks and Recreation Department vacates the Municipal Center upon moving to the recreation center. City Administrator Maxeiner stated the reconfiguration��f the current parks offices to accommodate the Police Department is not without expense as well. If recreation center deficits are covered by the General Fund,there would be less money available to convert park space to Police Department needs, or for any other use as determined by Council. Discussion continued. Alderman Cond��n arrived at 7:15 p.m. Director Merkel noted the City has never levied for its Northern Illinois Special Recreation Association (NISRA) dues. He stated the money, if levied would not be subject to the taac cap, and funds could be utilized at Council discretion. Some discussion occurred. City Administrator Maxeiner inquired what the next step in the discussion should be. Chairman Murgatroyd noted the size of the recreation facility would dictate the available membership. He suggested th� Committee should look at other revenue sources such as a NISRA levy and increased � program fees. H�;stated if funds are freed up due to a NISRA levy, Council would have to determine how they want to use that money: Does Council want to keep it dedicated for recreational purposes? Chairman Murgatroyd stated Council also needs to look at potential threats to City revenue and determine if constructing a recreation center at this time is fiscally sound. Chairman Murgatroyd stated he would prefer seeing a recreation center budget which included a worst-case scenario. The actual would then be easier�o live with. City Administrator Maxeiner suggested further recreation center discussion could be tied into the general budget discussions scheduled to begin in the near future. Adiournment Motion by Schaefer, seconded by Peterson,to adjourn the meeting at 7:28 p.m. Aye: Murgatroyd, Peterson, Schaefer. Nay: None. Absent: None. Motion carried. Respectfully submitted, C__- � Steven C. Murgatroyd, Chai �.