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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 Mtgs. 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