HomeMy WebLinkAboutMinutes - 8/16/2004 - Finance and Personnel Committee , �
FINANCE AND PERSONNEL COMMITTEE MEETING
Monday,August 16,2004
Aldermen's Conference Room, 6:30 p.m.
`— In Attendance: Committee Members: Chairman Alderman Murgatroyd, Alderman Bolger
and Alderman Peterson. Absent: None. Also in Attendance: Mayor Low, City Administrator
Maxeiner, Director of Finance Kline, Community Projects Coordinator Hobson, City Attorney
McArdle and City Clerk 7ones.
Also in Attendance: Trey Covalt Owner, Main Street Station
Sarah Sutschuk Reporter, NW Herald
Chairman Alderman Murgatroyd called the meeting to order at 6:30 p.m.
Discussion Resarding Tom and Trev Corporation Lease
Main Street Station
City Administrator Maxeiner informed the Committee that the City leases the Main Street
Metra Station from Union Pacific Railroad Company for $1.00. The City sublets space, which is
occupied by Main Street Station Restaurant, to Trey Covalt, principal of Tom and Trey
Corporation. Mr. Covalt has inquired about the City's willingness to re-open the current lease
agreement. Mr. Covalt indicated the current lease amounts were predicated on the expansion of
the area within the building committed to the operation of the Main Street Station Bar and
Restaurant. A schedule of the lease agreement follows:
November 1, 2000 to December 31, 2000 $350.00
January 1, 2001 to September 1, 2001 $375.00
\,. September 1, 2001 to September 1, 2002 $800.00
September l, 2002 to September 1, 2003 $875.00
September 1, 2003 to September 1, 2004 $950.00
September l, 2004 to September 1, 2005 $1,025.00
September 1, 2005 to September 1, 2006 $1,100.00
Mr. Covalt stated the restaurant and bar encompasses approximately 1,900 sq. feet of the
building. Responding to City Administrator Maxeiner's inquiry regarding why the lease was
signed if the terms were objectionable, Mr. Covalt stated it was indicated the terms of the lease
were not negotiable.
Responding to Alderman Murgatroyd's inquiry regarding the timing of Mr. Covalt's
request and whether Mr. Covalt had a dollar amount he considered equitable to begin discussion,
Mr. Covalt stated he made inquiries of Mayor Cuda when the rent jumped from $375/month to
$800/month.He was informed by Mayor Cuda that nothing could be done because the matter had
already been addressed by then City Administrator Lobaito. He stated he had no particular dollar
amount in mind, but thought the current rate excessive.
Mr. Covalt, responding to Alderman Peterson's inquiry, informed the Committee tha.t the
corporation pays for maintenance up to $2,500 and the City is responsible for anything over that
amount. Mr. Covalt pays taxes on the leasehold improvements.
� Alderman Bolger opined he supports re-opening negotiations regarding the lease, citing
some concessions may be in order due to the age of the building, the location of the building and
length of tenancy.
Finance and Personnel Committee Meeting
August 16, 2004
Page 2
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Chairms�n Alderman Murgatroyd requested that Mr. Covalt provide a written request,
outlining what he believes to be a reasonable rent for the space occupied for the Committee's
consideration. Mr. Covalt agreed to provide a letter to the Committee.
City Administrator M�einer suggested upon receipt of Mr. Covalt's letter the Committee
would have an opportunity to consider the request. Following committee deliberation Staff
would contact Mr. Covalt with the Committee's decision.
It was the consensus of the Committee to table further discussion regarding this matter
pending receipt of correspondence from Mr. Covalt detailing his request.
Discussion Regarding NISRA Taz Le�
City Administrator Maxeiner reiterated that at the July Finance and Personnel Committee
meeting Alderman Peterson suggested Staff examine the feasibility of eliminating the City's
vehicle sticker program. Alderman Peterson opined, and Staff concurs, that the vehicle sticker
program is costly to administer, difficult to enforce and highly unpopular with residents.
However, City Administrator Ma�ceiner stated with a projected budget shortfall for the current
fiscal year it would be difficult to justify the loss of$160,000, which the vehicle sticker program
generates annually. At the July Committee meeting Alderman Peterson suggested rather than
forego the revenue from vehicle sticker sales a levy on real estate property be used to replace the
$160,000. City Administrator M�einer stated while the City is subject to tax caps, recent
�, legislation would permit the City to levy, up to 4.0 cents per $100 of EAV, to fund the provision
of recreational services for clientele with special needs. It was the consensus of the Committee
that Staff research the feasibility of a 1VISRA Tax Levy and the topic be discussed further at the
Finance and Personnel Committee meeting scheduled on August 16, 2004.
City Administrator M�einer informed the Committee that the City cunently utilizes
General Revenue to fund participation in NISRA, with annual dues in excess of$80,000. He
noted other supporting costs, within the Parks and Recreation Department, would also qualify for
the new levy, which would allow the City to replace the $160,000 realized from the sale of
vehicle stickers with a Special Recreation Levy.
City Administrator M�einer stated using 2003 EAV figures the City could assume an
additional rate of $0.0282 per $100 of EAV would be necessary to generate $160,000. The
impact upon the awner of a home with a market value of $200,000 would be approximately
$18.78 annually. Currently, vehicle sticker fees are $12 per vehicle. The same owner of a home
with a market value of $200,000 would save money if they owned two or more vehicles
requiring vehicle stickers.
City Administrator Maxeiner informed the Committee that due to property tax caps taaL
rates have declined over the past several years, despite the City levying the maximum allowable,
and discounting the Special Recreation Levy available in 20Q3. He indicated the rates have
declined as follows over the past four years:
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2000 $0.0017
2001 $0.0087
2002 $0.0176
Finance and Personnel Committee Meeting
August 16, 2004
Page 3
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2003 $0.0141
City Administrator Maxeiner indicated that implementing an increase of 2.8 cents per
$100 EAV would produce the first property tax increase since 1997.
City Attorney McArdle arrived at 7:00 p.m.
Alderman Bolger opined the vehicle stickers designate whether or nat an individual is a
resident of the community. He indicated he would not favor abolishment of the vehicle sticker
program.
Alderman Peterson reiterated that the vehicle sticker t� is cumbersome and pointed out
that not every resident of the community acknowledges the tax and pays it. He encouraged the
Committee to consider the 1VISRA T�Levy.
City Administrator Maxeiner encouraged the Committee to await the results of the
Special Census in an effort to ascertain if the City would qualify for Home Rule, and if so, what
options would then be available. It was pointed out that if a NISRA Tax Levy was approved by
the Committee the levy should be initiated by October 2004. City Administrator M�einer also
noted the attorneys are still working on various provisions of the Recreation Center Agreement
between the City of McHenry and the YMCA, which could impact the tax levy.
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Chairman Alderman Murgatroyd stated he would like to have a better understanding of
the Special Needs Parks Program.
It was the consensus of the Committee to table the discussion pending receipt of
additional information.
Elected Officials Comnensation
Chairman Alderman Murgatroyd informed the Committee that this item is being pulled
from the Agenda until a later date as all the information necessary has not been received and
assembled. City Administrator Ma}ceiner responding to an inquiry stated Staff is awaiting
responses to the survey.
Discussion Regarding HoteVMotel Compensation
Community Project Coordinator Hobson informed the Committee that the McHenry
County Economic Development Corporation (MCEDC) has assembled a proposal for the
development of a McHenry County Convention and Visitor's Bureau (MCCVB). The aim of the
MCCVB would be to:
• Promote McHenry County as a destination for conventions, weekend getaways, sports
competitions and special events;
• Facilitate access to State funds; and
• Facilitate collaboration between public and private entities to attract additional patrons to
� restaurants, shopping, lodging and amenities in an effort to generate additional tax
revenue.
Finance and Personnel Committee Meeting
August 16, 2004
Page 4
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Mr. Hobson reiterated that Council unanimously voted on July 21, 2003 to support the
MCCVB, however at that time funding was not discussed. He stated that funding the
development and operation of the MCCVB would consist of a collaborative effort between the
County and municipalities for the first three years. The County has offered to contribute 80%,
60% and 40% respectively over the 3-year period. The contribution percentage each community
would be required to contribute toward operating costs would be calculated based upon the
number of hotel rooms within each community.
The City of McHenry's portion would be 12.72% of the total, with the calculation based
upon 133 rooms, as follows:
• $11,000 Year 1
• $12,000 Year 2
• $14,500 Year 3
• $18,SOG Year 4
Mr. Hobson noted the State requires two criteria, which must be met in order for a
tourism effort to be recognized as a Convention and Visitor's Bureau:
1. A full-time employee devoted to running the Bureau; and
2. A Marketing Plan.
Mr. Hobson noted in order to fund the associated costs the City is entitled to establish a
`— Hotel Operators' Occupation Tax up to 5% of the gross rental receipts. The revenue collected
from a HoteVMotel Tax would be used solely to promote tourism and conventions within the
municipality or to otherwise attract overnight visitors to the municipality. It is the intent that a
portion of the taaL revenue go towa.rds the MCCVB and the remainder be utilized for City tourism
initiatives.
Mr. Hobson noted that should the MCCVB not materialize within 36 months the City of
McHenry's portion would be rescinded.
Staff requested the Committee recommend to the City Council institution of a 2.5%
HoteUMotel Tax, effective when administratively feasible, with the revenue to be allocated to
fund Caunty and City of McHenry tourism initiatives, with the understanding that should the
MCCVB not materialize within a 36-month period, the portion invested by the City of McHenry
would be rescinded.
Responding to an inquiry from Alderman Bolger it was noted that the City of Crystal
Lake has not yet committed their HoteUMotel Tax to the MCCVB. A brief discussion ensued.
City Attorney McArdle suggested the money collected should be held in an escrow
account by the City of McHenry until the State of Illinois accepts the establishment of the
MCCVB, at which time any money collected would be distributed appropriately. The
Committee concurred with City Attorney McArdle's suggestion.
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Finance and Personnel Committee Meeting
August 16, 2004
Page 5
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Motion by Bolger, seconded by Peterson, to recommend to Council to draft an ordinance
establishing a 2.5% HoteUMotel Tax, effective when administratively feasible, allocating
revenues to fund County and City of McHenry tourism initiatives subject to the money collected
being held in escrow by the City of McHenry pending the State of Illinois' acceptance of the
establishment of the MCCVB.
Aye: Murgatroyd, Bolger, Peterson.
Nay: None.
Absent: None.
Motion carried.
Adiournment
Motion by Peterson, seconded by Bolger, to adjourn the meeting at 7:25 p.m.
Aye: Murgatroyd, Bolger, Peterson.
Nay: None.
Absent: None.
Motion carried.
Respectfully submitted,
�. C_
Steven C. Mur�;atroyd, C airm
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