HomeMy WebLinkAboutMinutes - 03/27/1989 - City CouncilSPECIAL MEETING
MONDAY, MARCH 27, 1989 8:00 P.M.
The Special Meeting of the McHenry City Council was called to
order by Mayor Busse on Monday, March 27, 1989 at 8:00 P.M. at City
Hall. At roll call the following Aldermen were present: Bolger, Nolan,
Lieder, Smith, Patterson, Serritella. McClatchey arrived at 8:10 P.M.
Absent: Teta. City staff in attendance were Attorney Narusis and Clerk
Gilpin, Director of Finance and Personnel Vitas.
Also in attendance were Jim Althoff, President of the McHenry
Township Fire Protection District Board of Trustees; Dr. Ralph Morris,
President and Julia Johnas, Director of the McHenry Public Library
District; Superintendent Robert Cassidy and Board President Kevin Barher
of McHenry Elementary School District #15; Board President Steve Cuda and
Superintendent Robert Swartzloff of McHenry High School District #156.
Also in attendance were the following developers: Butch Meyer of
McIntosh Ltd.; Roger and Don Gerstad of Gerstad Builders; John Cunat of
Cunat Bros., Inc; Iry Coppel of Leisure Technology; John Cottingham
representing the John Fritsch property and Edward James of James Building
Corp. (Additional members of the audience are listed on page 7).
Plan Commission members in attendance were Don Toole, Tom Uttich
and Bill Wilson.
Council
Mtg.
Attendance
Special
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Mayor Busse welcomed everyone to the meeting and announced that
the purpose was to gather information from all of the public agencies Developer
regarding developer donation fees. He then turned the meeting over to Donations
Alderman Gary Lieder, Chairman of the Finance Committee.
Lieder explained that eight months ago the Council decided to
review developer donation fees in the City. In deciding how to approach
the project, it was learned that a proposal from a consultant firm would
cost $30,000. The Council decided to work together with the public
agencies to gather information and save the taxpayers those consulting
fees.
During the past eight months there have been joint meetings with
school boards and developers concerning this project. The Finance
Committee met and determined what fees might be appropriate to meet the
City's needs and now wanted to hear from the other public agencies as to
what fees they felt would be appropriate to meet their needs. He said
the purpose of tonight's meeting was to give everyone an opportunity to
present their opinions so that the City Council has as much information
as possible before it takes any formal action. He anticipated the
Council would take formal action in the next two or three weeks. He
asked that only comments be presented and that there be no debate at this
time.
The first fee to be discussed was the Water Capital Development
Fee which is currently $400.00 and the Finance Committee was recommending Capital
it be raised to $500. The Sewer Capital Development Fee which is Development
currently $750, the Finance Committee recommended be raised to $1,500.
Mayor Busse explained that justification for these increases was obtained
through engineering studies done by Baxter & Woodman in connection with
construction of the new South Wastewater Treatment Plant and the
anticipated construction of a new water tower.
Butch Meyer of McIntosh Builders questioned why the fees had to
be raised, since there seemed to be a healthy balance in the Water and
Sewer Department as of 12-31-88. He noted that approximately $1,200,000
was expended from the Water & Sewer Capital Development Fund and he
questioned what part of that money had been used for operations, what had
been used'for major capital expenditures and if any had been transferred
to other funds. Busse said that all of those figures were available and
he would share those figures with him.
Lieder explained that the reason the increases were discussed
was the projected cost of adding new sewer and water facilities and at
the same time, try to keep a healthy balance within the accounts. An
$800,000 balance would not cover much if you considered that the sewer
plant expansion would cost approximately $2,000,000 per each 5,000 P.E.
and a new water tower about $500,000.
March 27, 1989
Page 2.
Basically, Meyer's comment
should be raised because there was
time in the Water/Sewer Funds.
was that he didn't feel the fees
a sufficient balance at the present
Don Gerstad of Gerstad Builders, addressed the Council and
presented an eighteen page document containing questions and comments on
each of the developer donation fee proposals. Several questions were
presented on Sewer and Water Capital Development Fees. He felt the Water
Capital Development Fee was adequate as it is currently and that based on
letters from Baxter & Woodman, sewer proposed fees should not be $1,500
but around $1,200. He felt that prior to the Council taking any action,
it should look at answers to all of his questions. His questions
concerning Sewer Capital Development Fees were on page 10 and 13 of his
handout with the Water Capital Development questions listed on page 14 of
the handout.
The next fee to be discussed was the Capital Development Fee for
the McHenry Public Library District. It is currently $100 per building
permit. Dr. Ralph Morris, President of the Library Board, estimated that
the Library's portion of the impact fees would need to be approximately
$500 per household in order to cover the new residents cost of Library
capital improvements. The factors they took into consideration to
justify this $500 request were as follows:
The Library has provided full Library service to the entire
School District since January, 1988, although no tax
revenues will be received from that expanded area until
June, 1989. The Board of Trustees felt that such action
was warranted in light of the essential nature of library
services to school children of all ages.
2. According to a recently adopted twenty year building
program compiled by a nationally recognized library
consultant, the present Library is already 35% smaller than
would be required to serve its present population. A
twenty year building program is necessary in order for the
Library to qualify for construction grants. The
Northeastern Illinois Planning Commission estimates that
the Library service area will have a population 58% larger
in twenty years.
3. As of July 1, 1989, the Library will increase access to
library patrons of the most extensive library services in
the State of Illinois by affiliating with the North
Suburban Library System.
4 By factoring in the neighboring adjacent towns, Crystal
Lake Public Library receives 21% of the developer fees
collected by the City of Crystal Lake and Woodstock Public
Library receives 27.5% of the developer fees collected by
the City of Woodstock.
5. Their tentative $500 fee was arrived at by means of taking
25% of the School Developer Fees as was done in Crystal
Lake.
By suggesting a flat fee per house, the Library Board said it
was not ruling out an impact fee formula that could be developed based on
percentages. However, since time was of the essence, their best estimate
today was $500 per household. In answer to a question, Julia Johnas
replied that the present Library population is 27,000 and of that, 13,500
are City residents. In determining the Developer Donation Fee, it was
based on the percentage of new residents in the City only.
In answer to a question, Dr. Morris said it was his belief that
it should be the Board's position that the short -fall in space of 35%
should be covered by existing residents and any need to expand beyond
that point should be passed on through impact fees. Dr. Morris said that
was his viewpoint, but that it had not been discussed by the Library
Board as yet.
March 27, 1989 Page 3.
Butch Meyer suggested that the Library District should figure
out what its needs are and come back with hard and fast numbers. They
should not base their request on what other towns are getting. Dr.
Morris explained that Julia Johnas had done studies on current cost
perhousehold which ranged from $435 to $487 per household. Johnas said
she would share her information with the Finance committee so the Council
could consider it in their deliberations.
Lieder stated that he felt he and the members of the Finance
Committee could work with the Library, take a look at their numbers and
put it in some kind of a scope plan similar to what they did with schools
to provide a report that would justify figures for Library donation fees.
The next issue to be discussed was a proposed new developer
donation fee for Public Safety. It was brought to the City Council's
attention first of all by the McHenry Township Fire Protection District.
In discussions at the Finance Committee, it was suggested that warning
sirens for the City's Civil Defense Fund could come under that category
as well as police protection. Currently, there is no developer fee for
civil defense or police, but the Finance Committee suggested a fee
between $200 - $300. Also, there currently is no developer fee for the
Fire District, but they were requesting a $250 fee.
Althoff presented a letter outlining what they perceived their
cost to be for constructing and equipping a fire and rescue facility on
six acres of property they own on Bull Valley Road, just east of the
tracks. His figures determine that if a $250 impact fee was collected
for four years, at an estimated 1200 building units per year, a new
facility could be built at a cost of $1,205,000. He explained that due
to a change in the structure of the Fire District caused by incorporating
the Rescue Squad into its operations and paying full time day help, funds
do not accumulate as quickly as in the past. He stated that they saved
for six years to construct the existing building which is completely paid
for. Althoff stated he stayed strictly within the confines of the City
limits in discussing the Fire District's needs for these developer fees.
Gerstad pointed out that if a bond were levied, the entire Fire
Protection District could pay for a new station and equipment. He didn't
think new homeowners should pay for a new station. Because the District
developed over the past 30 years under good management and was able to
save money for a new station, he didn't feel there should be a change in
that policy by requiring developer donation fees from new homeonwers.
Meyer asked if a residential unit, a commercial building and an
industrial building would all pay the same $250 fee. Alderman Lieder
said that the only question asked of the Fire District was what they
wanted to charge for a residence. It would be up to the Finance Committee
and the City Council to decide how to break out those costs relative to
industrial and commercial buildings. As yet, nothing had been decided.
Lieder reported that concerning Park Developer Fees, the Park
Committee made a recommendation to the Finance Committee to raise the
fees from the current $400 per unit to $1,200. Alderman Patterson,
Chairman of the Park Committee stated that basically the City has a park
system that has not been able to put any infrastructure in the ground
since the swimming pool was constructed seven or eight years ago.
Developers have been donating land as part of their annexation
procedures, but money is needed to pay for the operational costs of the
park system.
Patterson stated that basically the developer donation fees were
needed so that money could be put aside for captial expenditures to
upgrade and improve services for everyone in the City. He stressed that
the City does not have a Park District, 100% of the operations of the
parks come from General Funds. There is no separate tax levied for park
purposes.
March 27, 1989 Page 4.
Aldermen Smith and Bolger both stressed that it was just the
Park Committee's recommendation that the fees go from $400 to $1,200.
It had not been discussed by the Council.
Meyer noted that $660,000 had been collected in Developer
Donations Fees for parks. His question was "has $660,000 been spent in
land acquisition and improvements since 1978 and where did that money
go?". Gerstad ask the Park Committee to share its information as to how
it arrived at the figure of $1,200 and how they justify that in
relationship to the current ordinance which deals with land only.
School Developer Donations were the next items to be discussed.
A sheet explaining their developer donation cost methodology was passed
out to those in attendance. Kevin Barber, President of the Elementary
School Board explained that they were looking at the impact on the
schools not only in terms of land acquisition, which is how the ordinance
is written, but also on the impact by the need for new structures. Their
figures revealed that the net capital cost per dwelling of a 3-bedroom
home was $3,011, for a 4-bedroom home $4,259 and a 5-bedroom home
$7,700. The current fee is $200 for the elementary school. The original
ordinance was written in 1977 and the C.P.I. has increased over 100%
since that time.
It was the elementary school's recommendation that Developer
Donation Fees be increased from the current $200 to a minimum of $2,500 -
$7,700 depending on the bedrooms in a unit. The $2,500 minimum request
was just for the elementary schools and not to be split with the high
school. Barber said the Board wanted a 65%-35% split of the Developer
Donation Fees between the high school and elementary schools because the
elementary school has the pupils for nine years, whereas the high school
only has them for four years. The Board also requested that the City
Attorney rewrite the language in the current ordinance so as to broaden
the allowable capital expenditures.
Lieder pointed out that Developer Donation Fees cannot be used
for daily operations or for hiring additional staff. The general public
has some misconceptions that if developer donations are increased , it
would alleviate operational costs for the schools, which is not what
developer donations can be used for.
President Steve Cuda, of the High School Board, reported that
the High School request was as follows: 3-bedroom $2,395; 4-bedroom
$3,697; 5-bedroom $6,279.
His Board suggested a 50-50 split of those fees between the
elementary school and the high school. Justification for his figures
were based on the same study and report as the elementary school
presented. He noted that they were not requesting that the developers
pick up the total costs of building a new school, but only 50% of the
actual cost. The high school based their 50-50 request on the fact that
building schools and purchasing land for high schools is more expensive
than for elementary schools. They also asked that the City consider
changing the ordinance to permit the funds to be used for more than site
improvements or site acquisition.
Butch Meyer pointed to the fact that the City of McHenry doesn't
have a big enough tax base in commercial and industrial development (in
non -impacting industry and commerce). Seventy three percent of McHenry's
assessed valuation is residential, 22% is commercial, 4% is manufacturing
and 1% is agriculture. In Woodstock, 55% is residential, 32% is
commercial and 11-12% is manufacturing. It was his opinion that if the
City keeps building single-family homes, the cost of purchasing homes
will be too high and people won't be able to afford the taxes. By
studying these Developer Donation Fees, he hoped that the City would get
the idea and put a new thrust on where it should be going and that should
be the commercial and industrial route. He urged the City Council to
refocus its attention on commercial and industrial planning to establish
a bigger tax base.
March 27, 1989
Page 5.
When asked what he felt would be a fair developer donation fee
for schools, Meyer said that based on the study done by the City of
Crystal Lake, he suggested a fee of $2,340.
Gerstad stated that he did not agree with Meyer on the amount of
the developer donation for schools. He felt $400 was still almost
enough." He based his contention on fact sheets that he had in his
handout on pages 3, 4, 5, 6, and 7. He pointed out that there was no
case law for using developer fees for school construction, but just for
land acquision".
Meyer stressed that instead of considering the Naperville study
or any other ordinance, facts and figures derived from the City of
McHenry only should be used. The facts should be generated from here and
not someplace else.
In answer to another question, Lieder explained that the County
should be appraised of developer donations being collected in the City so
that it could also collect them for areas outside the City which impact
on City schools and services.
Lieder suggested that Narusis investigate how to make sure that
housing units outside City limits can be authorized and ordered to charge
impact fees. He said this information should be given to the Council
before it makes any decision on impact fees. Busse said it wasn't fair
that City residents should be the .only ones paying for acquisition of
land or improvements for additional school sites. People outside the
City limits should also pay their fair share.
It was pointed out that if one City was within a mile and
one-half of another City's limits, such as McHenry and Bull Valley,
McHenry could not charge developer donation fees inside the Bull Valley
City Limits.
Cuda said that District #156 administrators took into account
the growth outside the City limits when they came up with the suggested
developer donation figure. What District #156 was requesting is 25% of
what they feel the impact would be for each dwelling unit.
Lieder said he feels these are the things the Council would have
to address: 1. Current residents purchasing new homes, 2. Compare
currently annexed territory to those territories that aren't currently
annexed, 3. Developers who already have sold documents on homes and 4.
Possibly eliminating the concept of one, two and three -bedroom fees and
going to one fee for all dwelling units.
A member of the audience, Scott 3rane, said that he was
appearing on behalf of a property owner to observe tonight's meeting. He
felt that the Council should look at what other communities in
surrounding areas are charging because if the City's fee is too high, it
could cause people to build elsewhere and would leave his client sitting
with vacant land. He said his client has no problem with fees being
charged if they are comparable to surrounding communities.
Butch Meyer pointed out that at the present time, to build a
4-bedroom home in McHenry, including capital development and building
fees, it costs approximately $2,900. The minimum range on the fees as
presented tonight would be from $6,700 to $6,800. That's a 200%
increase. Since it took 10 years to raise these fees, Meyer asked that
the Council "consider the possibility of stretching the increased fees
over six, twelve, eighteen months because right now, it would be giving
developers an immediate increase, just like that. We ask our suppliers
to give us six months notice on a price increase. We're asking the same
consideration. We are not arguing as to the necessity of some fees, but
we are arguing as to the necessity of some others. We ask that the
Council consider some way to phase this in to make logical sense to
everybody," Meyer concluded.
Gerstad pointed out that in addition to the fees already
mentioned, "There are so-called hidden fees of retained personnel,
annexation fees, etc. If you propose a $4,000 increase as was submitted
by the Finance Committee, you would be taking the fee from maybe $3600 to
$7600, you would be the highest in the County and in the whole northwest
suburbs by a couple thousand dollars. With the average house price being
$113,000, that represents about seven percent of the house just in impace
fees. I think that is way out of line".
March 27, 1989 Page 6.
Lieder pointed out that these were just numbers given to the
Council tonight and they not had a chance to discuss or address any of
the figures. He knew that this would be a very emotional issue and he
wanted to insure that the process he took would have a lot of input and a
lot of study. He felt that the meeting tonight exemplified the concept
that both the developers and the entities can work together to get good
input. It is now up to the Council to deliberate and come up with a
recommendation, he said.
Richard Losch, a homeowner in McHenry, commented that in 1977
when the $2700 developer donation fee was imposed, it must have seemed
awfully high to those home prices. Home prices haven't stayed the same
since 1977 and it seemed to him there had been a moratorium on donation
fees. Nothing else has stayed the s.3me in building or buying a home for
the past ten years, he said.
Busse summarized Losch's comments by saying we should probably
take the median family house price in 1977 and see what the percentage of
the fees were at that point and compare the proposed fees with a median
family house price today and see if the persentage is higher or lower.
In closing, Lieder saic he will encourage the Council to move
forward on setting the fees as soon as possible. Since there is so much
to consider and review, it will probably take several meetings to
complete the task. It will be put on the April 5, 1989 Regular Council
Meeting agenda to begin deliberations.
Motion by Lieder, seconded by Nolan, to adjourn.
Voting Aye: Bolger, Nolan, Lieder, Teta,
McClatchey, Patterson, Serritella.
Voting Nay: Smith.
Absent: None.
Motion carried.
1ty erc Mayor
March 27, 1989
Page 7.
Additional Members of the Audience
NAME
Toni Donahue
Dave Gelwicks
George Lane
Tom Roach
Shirley Roach
Richard Losch
Bob Nielsen
Craig Neuhausel
Scott Drane
Dennis Birmingham
Scott Dixon
ADDRESS
BUSINESS
3112
Bretons Dr., McHenry
3817
W. Waukegan Rd., McHenry
Real Estate
McHenry Chamber
406
Kensington, McHenry
McIntosh Ltd.
406
Kensington, McHenry
McIntosh Ltd.
6310
Chickaloon, McHenry
Management
Consultant
100
Lexington Dr.
Zale Developer
Buffalo Grove
6101
Chickaloon, McHenry
Taxpayer
410 Greenwood
Glencoe
McHenry
McHenry
Hopkins & Sutter
McIntosh Ltd.
Prime Development