HomeMy WebLinkAboutMinutes - 05/08/2000 - Committee of the WholeCOMMITTEE OF THE WHOLE MEETING
MAY 8, 2000
A Committee of the Whole Meeting of the McHenry City Council was called to order
by Mayor Cuda at 7:30 P.M. on Monday, May 8, 2000 in the Council Chambers of the
Municipal Center. At roll call the following Aldermen were present: Bolger, Glab,
McClatchey, Murgatroyd. Alderman Baird arrived at 8:14 p.m. City Staff in attendance
were: City Administrator Lobaito, City Clerk Althoff, Director of Parks and Recreation
Merkel, Assistant Administrator Maxeiner.
Mayor Cuda reported, although Council at its April 19, 2000 regularly scheduled
Council Meeting, rejected the implementation of a telecommunications tax to fund the
construction of a recreation center facility, Staff was directed to investigate and develop
alternative funding options. Mayor Cuda requested Assistant Administrator Maxeiner
summarize the five funding options he presented in his May 8, 2000 memo. Assistant
Administrator Maxeiner presented the following five funding scenarios:
Option #1: Request via advisory referendum authority to implement a 5%
telecommunications tax to construct and operate a $9.4 million recreation facility,
excluding an indoor pool. Under the terms of Option #1, is it assumed no property tax
increases would be implemented to construct and operate the recreation facility. A
telecommunications tax sunset clause, however, could be implemented, permitting the
expiration of the tax once the bonds mature in fifteen years. The cost to City of McHenry
residents would vary according to telephone usage.
Option #2: Request via binding referendum authority to levy a property tax
increase to fund the construction and operation of a $9.4 million recreation facility without
an indoor pool. Under the terms of Option #2, it is assumed property taxes would be
utilized to fund both the operations and debt service on the construction bonds. The
property tax rate would increase an estimated $.24/$100 of equalized assessed valuation
in the first year. A property owner with a home valued at $150,000 would see an increase
his/her property tax bill of approximately $120.
Option #3: Request via advisory referendum authority to implement a 5%
telecommunications tax for the construction of a $12.0 million recreation facility including
an indoor pool, and request via binding referendum authority to levy a property tax to
operate the recreation facility on an annual basis. Under the terms of Option #3 it is
assumed the 5% telecommunications tax revenues will be sufficient to service the bond
debt over the twenty year maturity period. The property tax rate will increase an estimated
$.126/$100 of equalized assessed valuation, providing for the operation deficit, which has
been estimated to be between $150,000 and $350,000. A property owner of a $150,000
home would see an increase of approximately $63 in the first year.
Option #4: Request via binding referendum authority to levy a property tax to
construct and operate a $12.0 million recreation facility including an indoor pool. Under the
terms of Option #4, it is assumed the initiation of a property tax to pay for the debt service
on construction bonds and the operating deficit would increase the tax rate to $.33/$100 of
equalized assessed valuation. A property owner with a home of $150,000 would see an
increase of approximately $166 the first year.
Option #5: Request via binding referendum authority to levy a property tax to
construct a $12.0 million recreation center with an indoor pool and request via advisory
referendum authority to implement a telecommunications tax to operate the facility on an
annual basis. Under the terms of Option #5, it is assumed a telecommunications tax of
approximately 3% would be sufficient to meet the estimated operating deficit of $150,000
to $350,000 and the property tax rate would increase to $.21/$100 of equalized assessed
valuation. A property owner with a home valued at $150,000 would see a $103 increase in
the first year.
Mayor Cuda opened the floor to audience comment.
Tom Sack of Wiltshire Drive, addressed Council. In response to his inquiry
regarding the creation of a park district, Staff replied the cost of creating a new tax district
was prohibitive. Assistant Administrator Maxeiner specifically cited administrative and
overhead
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costs. Mr. Sack noted property taxes are a permitted tax deduction. A telecommunications
tax is not. In response to Mr. Sack inquiry, Staff also noted the $9.4 million figure includes
the purchase of equipment, fixtures, interior amenities, and additional staff.
Joe d'Angelo, local businessman, addressed Council, stating, although he opposed
the creation of a telecommunications tax, he supported the construction of a recreation
center via an advisory referendum.
Ginger Morton, addressed Council, noting she was a healthcare professional, and
strongly supported the construction and development of a recreation facility.
Bill Cowan of 3508 W. Biscayne Drive, addressed Council and suggested the
implementation of a community privilege contribution or CPC, as opposed to a
telecommunications tax to fund the construction of a recreation center. He also offered his
services to train volunteers in providing referendum question information to the general
McHenry community.
Val Hobson of 4308 Sioux Lane, addressed Council an inquired as to the status of
existing recreation programs if the construction of a recreation center is not approved.
Director of Parks and Recreation Merkel reported some programs will be eliminated. The
girls' dance programs are already in jeopardy. The renovation and expansion of
Elementary School District 15 schools has reduced the quantity of available classrooms.
Staff also noted a community privilege contribution, CPC, would not be enforceable and
could be engaged in a volunteer basis only.
Mark Justen a local businessman and resident addressed Council. He questioned
the $9.4 million construction figure noting the Healthbridge Fitness Center was constructed
four years ago at a cost of $7.4 million. Staff responded the proposed cost two years ago
for the City's recreation center was $8 million. However, construction costs have
significantly increased over the past two years. In addition, the proposed City facility
includes classrooms and a community center. The $9.4 million figure also includes $1
million in contingencies. In conclusion, Mr. Justen noted the Village of Round Lake
approved a telecommunications tax for downtown improvements. Mr. Justen's Round Lake
Village business pays approximtely $12.89/month as his portion of the Village of Round
Lake's telecommunications tax.
In response to Ginger Morton's inquiry regarding the need for such excessive
consideration and discussion by the City Council regarding the recreation center issue,
Council members responded the inception of a new tax deserved the Council's complete
consideration.
In response to Mayor Cuda's inquiry regarding the property tax increase associated
with Option #3, Assistant Administrator Maxeiner explained the $63 property tax increase
on a $150,000 property might be reduced in subsequent years if the City of McHenry
experiences an increase in assessed valuations. The $63 property tax increase might also
experience a decrease if the City of McHenry experienced additional growth.
At the initiation of Alderman Glab, some discussion followed regarding project
phasing. Staff noted pool construction was typically phased in between years three and
five. Assistant Administrator Maxeiner also noted, although Council could authorize
bonding for the full $1.0 million, financing could be phased over a period of time.
Shirley Wilson addressed Council noting the inclusion of an indoor pool in the
recreation facility was imperative, particularly for seniors.
In response to Alderman McClatchey's request, a straw poll of the audience was
taken regarding possible funding options as outlined by Assistant Administrator Maxeiner.
Option #1 received 0 votes
Option #2 received 0 votes
Option #3 received 7 votes
Option #4 received 2 votes
Option #5 received 7 votes
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Option #3 was the request for authority via advisory referendum to implement a 5%
telecommunications tax for the construction of a $12.0 million recreation facility with an
indoor pool and authority to levy a property tax to operate the facility on an annual basis,
via binding referendum.
Option #5 was to request authority via binding referendum to levy a property tax to
construct a $12.0 million recreation center with a pool and request via advisory referendum
authority to implement a telecommunications tax to operate the facility on an annual basis.
Option #3 would increase property taxes by an estimated $.126/$100 of estimated
of equalized assessed valuation, and Option #5 would result in an increase of an
estimated $.21/$100 of equalized assessed valuation. Option #3 would request a 5%
telecommunications tax, while Option #5 would request a 3% telecommunications tax.
Alderman Baird arrived at 8:14 p.m.
In response to Ms. Wilson's request for clarification, Staff noted only property
owners would be affected an increase in property taxes, while all City of McHenry
residents and businesses would be impacted by a telecommunications tax.
In response to Mr. Justen's request for clarification, Staff noted the implementation
of both a property tax and telecommunications tax was necessary to offset the expense of
pool construction and operation.
In response to Council recommendation, Assistant Administrator Maxeiner noted the
bond repayment schedule could not be extended beyond the twenty-year maturity terms
without affecting the bond rating.
John Vlcek of 805 Pearl Street, addressed Council. Mr. Vlcek inquired as to when
the City of McHenry might become a home rule community. A home rule community can
implement an increase in the sales tax rate. Staff noted a community's population must
reach 25,000 before obtaining the home rule status. The City of McHenry's growth has
been modest, and, in all likelihood, will not reach 25,000 until 2002 or 2003. Some
discussion followed regarding estimated revenues and operating expenses.
City Administrator Lobaito reported fitness center membership was estimated
between 1,500 and 2,000 members. Staff assumed user fees would pay for the recreation
center, fitness center, and classroom expenditures, but not for the operating expenditures
of an indoor pool. Staff anticipates a $200,0004400,000 pool operating expenditure deficit
per year. Further discussion followed regarding an Olympic- versus a therapy -sized pool.
In response to Mr. d'Angelo's inquiry, Staff noted 5% was the maximum rate a
community could implement for a telecommunications tax. Staff also noted a
telecommunications tax of approximately 3% would be sufficient to meet the anticipated
operating deficit of an indoor pool.
City of McHenry Parks and Recreation Department employee and City resident
Kathy Quick noted participants in the City of McHenry's recreation programs included
residents from Island Lake, Johnsburg, McCullom Lake, Richmond, and Spring Grove.
John Vlcek of 805 Pearl Street addressed Council requesting individuals living
outside the corporate boundaries of the City of McHenry and participating in recreation
programs, be charged a higher fee than City residents.
In response to City resident Bruce Uhl's inquiry, Staff explained membership and
user fees will be associated with fitness center membership and recreation program
participation.
Alderman Bolger opined placing the issue of a recreation center on the November
ballot was inappropriate until after the high school referendum question was successful.
He suggested Council consider constructing a smaller building with classrooms and
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phasing in multi -purpose courts and an indoor pool.
Alderman Glab supported the inception of only a telecommunications tax,
particularly in light of another high school referendum question attempt. Further discussion
followed.
Alderman McClatchey opined City residents would approve both the high school
referendum question as well as the City's recreation center referendum question.
In response to audience inquiry, Staff explained collection of a 5%
telecommunications tax over 20 years would not garner enough monies to offset
anticipated indoor pool operational expense deficits. Further discussion followed regarding
additional revenue sources to offset the pool operation deficit.
Motion by McClatchey, seconded by Baird, to recommend to full Council the
following recommendation regarding funding the recreation center:
Request via an advisory referendum authority to implement a 5%
telecommunications tax to build and operate a $9.4 million recreational
facility.
Voting Aye: McClatchey.
Voting Nay: Bolger, Glab, Murgatroyd, Baird.
Absent: None.
Motion failed.
It was the consensus of Council an indoor poor was a required amenity of any future
recreation center.
Alderman Bolger recommended potential benefactors be contacted regarding
recreation center contributions.
Motion by Bolger, seconded by Murgatroyd, to authorize McHenry resident Bill
Cowan to create a recreation center sub -committee to develop and provide information to
City residents about the proposed recreation center referendum.
Voting Aye: Bolger, Glab, McClatchey, Murgatroyd, Baird.
Voting Nay: None.
Absent: None.
Motion carried.
Motion by Glab, seconded by Baird, to recommend to full Council recreation center
funding option #3, requesting via advisory referendum authority to implement a 5%
telecommunications tax for the construction of a $12.0 million recreation facility including
an indoor pool and request via binding referendum the authority to levy a property tax to
operate the facility on an annual basis.
Voting Aye: Glab, McClatchey, Baird.
Voting Nay: Bolger, Murgatroyd.
Absent: None.
Motion carried.
Alderman Glab recommended the indoor pool be phased in after a three-year period
to reduce the initial property tax increase to City of McHenry residents.
Joe d'Angelo, local businessman, requested Council implement a sunset clause on
the 5% telecommunications tax, once the recreation center bonds have been retired. It was
the consensus of Council to include a sunset clause provision in any referendum question.
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Motion by McClatchey, seconded by Glab to adjourn the meeting at 9:20 p.m.
Voting Aye: Bolger, Glab, McClatchey, Murgatroyd, Baird.
Voting Nay: None.
Absent: Motion carried.
Motion carried.
The meeting was adjourned at 9:20 p.m.
Mayor
City Clerk