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1993-10-11 - Village Board Committee of the Whole - Minutes REVISED & CORRECT. • VILLAGE OF BUFFALO GROVE COMMITTEE OF THE WHOLE MINUTES OF FINANCIAL POLICIES WORKSHOP October 11, 1993 The Financial Policies Workshop was called to order by President Mathias at 6:55 P.M. Eileen Marsh was appointed Clerk Pro Tern. Roll call indicated the following present: President Mathias; Trustees Marienthal, Reid, Rubin, Braiman and Hendricks. Trustee Kahn was absent. Also present were William Balling,, Village Manager; Lee Szymborski, Assistant Village Manager; William Brimm, Director of Finance and Joseph Tenerelli, Village Treasurer. Phil Versten, Administrative Assistant, arrived at 7:15 P.M. REVIEW OF UPDATED FINANCIALS AND TRENDING Manager Balling stated that the 6 month financial report would be available at the November 15 meeting, but currently indications are that revenues and expenses are trending well in all funds. The final audited numbers of the Corporate Fund show that the year closed in a better position that indicated at budget presentation last spring. The only area of concern is the decline in growth in play at Buffalo Grove Golf Course. It is anticipated that BG Golf Course will be 9-10% off last year's play levels by closing this year, which is on top of a 10% decline the previous year. There is a variety of reasons for this, including weather, general economic trends and increased competition for golfers in the area. Mr. Balling stated that he believes this trend can and will be reversed with the closing of Thorngate Country Club, an increased marketing effort and hopefully good weather in the next golf season. \•1 Trends in the Corporate Fund are excellent. Sales tax revenues are moving up, the stabilized supplemental income tax will help, the transfer tax has been successful and in June posted a $40 million transaction, translating into a $121,000 transfer tax. This is all taking place in an environment where property taxes are being lowered yearly. Regarding the Food Service, the numbers for Chipper's are moving up and Snack Shop at Arboretum will again make money this year. Several Trustees voiced concern with the consistency of quality at Chipper's and while progress has been made with regard to service and presentation problems, there is still room for improvement. Also, bar service is viewed as unsatisfactory. More life and spirit must be injected into the operation. .11r. Balling stated that he believes Chipper's has established itself with the lunch trade, but work must be done to match that with the dinner trade. Property Taxes Manager Balling stated that our recognized goal is to leep the levy clown and our tax levy presentation has been structured to reflect that goal. Truth In Taxation Finance Director Brimm reported that the Tax Levy Ordinance would be ready for public hearing and Village Board consideration on November 15, and abatements will be considered at the second meeting in December. Due to the reporting requirements of the statute, we will be above 1 .05„ of last year's extension, but final net rates are predicted to be below last year's levy. President Mathias requested a net to net report by November 15, 1993. 1 4 Enterprise Fund Policies Manager Balling reviewed the Enterprise Funds, i.e. , Food Operations, Golf and Water & Sewer. He presented a concept whereby the golf and food enterprise would support each other and put an end to draws from the Corporate Fund. This would allow us to repay the Corporate Fund from Chipper's on an annual basis. There was extensive discussion by the Trustees on their concerns regarding Chipper's food consistency and presentation. They also felt there was a lack of attentiveness and personality on the part of the bar staff which needs to be addressed. There was extensive discussion concerning the possibility of eliminating the dinner service and replacing it with scheduled small parties and events. Trustee Rubin made a suggestion regarding turning the entire food operation over to a contract operator. Mr. Balling stated that he did not feel we could find an operator who would be willing to purchase this operation at a price that would approach our investment and we would, in essence, be writing off all of our expenses with no opportunity to recover any of the monies used from the Corporate Fund. There was further discussion concerning turning the entire operation over to banquets and parties only. Mr. Brimm stated that one important factor in Chipper's success is getting more golfers walking through the golf course and this will certainly generate revenue. He also pointed out that there is only one more payment due on the kitchen equipment ($75,000) and once that debt has been cleared, this will have an impact on Chipper's overall performance. President Mathias asked Air. Brimm if once the final payment has been made, would Chipper's be in the black. Mr. Brimm indicated that they would have a good chance of at least breaking even. There was a consensus to give the operation one more year in which to achieve break even status. If that does not take place by next year, further consideration will be given to turning the operation over to a contract operator or making some other major change in the operation. There was also discussion regarding expanding the facility at Arboretum Golf Course. Mr. Balling stated that with the lack of demonstrated financial success with the Chipper's operation, he would be very reluctant to pursue an expansion at Arboretum with the additional debt service. Mr. Balling outlined a concept involving the temporary addition of a modular addition at Arboretum that would provide locker rooms, washrooms and a dining tent structure to accommodate golf outing banquets. Special Census An additional revenue source for 1994 would be to conduct a special census. Mr. Balling stated that Planning Department projections indicate that there are an additional 2000 residents in Buffalo Grove since the 1990 census. Both the MFT and income tax would benefit from adding these 2000 people to the census roles. After discussion, it was determined that the benefits of conducting a special census would outweigh the cost. It was determined that the May-September window would work best for us. Vehicle Stickers There was extensive discussion on the cost of enforcement of the vehicle sticker program. Many Villages have discontinued their vehicle stickers and substituted other taxes, including Wheeling and Vernon Hills. We would need a replacement tax of approximately $400,000. This could be achieved with a Home Rule Sales Tax increase of 1/4% We could realize half of that amount, or $200,000, with a liquor/prepared food tax. Trustees expressed some concern with dropping vehicle stickers as a revenue source and some time in the future having to reinstate it. The Village Board indicated that further investigation should be undertaken on the feasibility of a replacement Home Rule Liquor and Prepared Food Tax of 1%, with a $200,000 fund balance transfer as a contingency to be used in the event of a shortfall, replacing the 1994 vehicle sticker program. The Village Board requested that the recommendation be presented to them at a future Board Meeting. Sales Tax Our revenue from sales tax is growing, but there is concern with the quality of retail tenant and possible loss of commercial acreage to residential uses. With not much commercial land remaining in our planning area, there is a lot of pressure on Milwaukee Avenue to be developed with commercial uses. 94-95 BUDGET OVERVIEW Salaries & Benefits Lee Szymborski reviewed the Pay Plan assumptions adopted by the Village over the past 12 years and reviewed the Pay Plan as used in Buffalo Grove. Lee reviewed the pay range adjustment history over the past 5 years which gives a picture of how the criteria used in our Pay Plan have served us over the years. A survey will be taken in November of comparable communities regarding any planned adjustments and a determination will be made at that time, for inclusion in the budget, of the recommended adjustment for the upcoming fiscal year. Regarding benefits, Lee reported that Buffalo Grove is one of two communities who have shown a reduction in health insurance rates over the past year. Mr. Balling outlined the steps taken over the past year to help reduce these rates, including utilization of Cost Care, Mandatory Second Opinion and initiating a PPO which shows promise for next year. Staffing Issues Mr. Balling explained that contained in the MIS Study is a recommendation for an administrative staffing expansion, namely, an MIS Director, whose responsibility it would be to coordinate the overall system management, training, and system implementation. This is possibly the only staffing expansion contemplated for the next fiscal year. Trustee Braiman asked if the proposed MIS staffing position would be a permanent one. ,\ir. Balling responded that he believed it would be. Trustee Reid gave an explanation of how this position would fit in and why it would most likely have to be a permanent one. Trustee Hendricks questioned if there would be savings realized by going to another full time firefighter in light of the high amount of overtime budgeted by the Fire Department. Mr. Balling responded that Chief Allenspach has considered this and has determined that we have not yet reached the point where a savings would be realized by going to an additional firefighter. CIP Lee Szymborski highlighted some of the changes and additions from last year's CIP that were scheduled for 1994-95. Regarding the Wisconsin Central, Mr. Balling stated that we would not be pursuing grant funding for the train station parking lot because without it, we will have maximum flexibility in making the parking available to Buffalo Grove residents. The 94 Transportation Bond �•/ Mr. Balling explained that this would probably be renamed as it would be used for things other than transportation. This bond issue will be in the $3.5 million to $4 million range, depending on where the MIS study fits in, if at all. Bill Brimm then outlined the elements of the bond. These included: Wisconsin Central Program Buffalo Grove Road Improvements 50% of the 94 maintenance element of the MFT Busch Rd. /Weiland Rd. Construction (intersection) B.G. commitment to Ill. 83 project (B.G. Rd. to Rt. 22) Buffalo Grove Rd. lane study ( Rt. 22 to Hwy. 45) Long Range Financial Planning Bill Brimm reviewed the methodology for budget growth forecasting which has been used for the last several years. This year's forecast growth target is 5.10%. MIS Direction The Management Information Study report was distributed to the Board. Mr. Balling explained the study and some of the recommendations contained therein. He outlined that while the entire plan may not ever be implemented, it does provide a helpful road map for us to get the Village to a level of technology that will be beneficial to productivity. President Mathias adjourned the meeting at 9:55 P.M. Eilee Marsh, Clerk Pro Tern VILLAGE OF BUFFALO GROVE COMMITTEE OF THE WHOLE MINUTES OF FINANCIAL POLICIES WORKSHOP October 11, 1993 The Financial Policies Workshop was called to order by President Mathias at 6:55 P.M. Eileen Marsh was appointed Clerk Pro Tern. Roll call indicated the following present: President Mathias; Trustees Marienthal, Reid, Rubin, Braiman and Hendricks. Trustee Kahn was absent. Also present were William Balling, Village Manager; Lee Szymborski, Assistant Village Manager; William Brimm, Director of Finance and Joseph Tenerelli, Village Treasurer. Phil Versten, Administrative Assistant, arrived at 7:15 P.M. REVIEW OF UPDATED FINANCIALS AND TRENDING Manager Balling stated that the 6 month financial report would be available at the November 15 meeting, but currently indications are that revenues and expenses are trending well in all funds. The final audited numbers of the Corporate Fund show that the year closed in a better position that indicated at budget presentation last spring. The only area of concern is the decline in growth in play at Buffalo Grove Golf Course. It is anticipated that BG Golf Course will be 9-10% off last year's play levels by closing this year, which is on top of a 10% decline the previous year. There is a variety of reasons for this, including weather, general economic trends and increased competition for golfers in the area. Mr. Balling stated that he believes this trend can and will be reversed with the closing of Thorngate Country Club, an increased marketing effort and hopefully good weather in the next golf season. Trends in the Corporate Fund are excellent. Sales tax revenues are moving up, the stabilized supplemental income tax will help, the transfer tax has been successful and in June posted a $40 million transaction, translating into a $121,000 transfer tax. This is all taking place in an environment where property taxes are being lowered yearly. Regarding the Food Service, the numbers for Chipper's are moving up and Snack Shop at Arboretum will again make money this year. Several Trustees voiced concern with the consistency of quality at Chipper's and while progress has been made with regard to service and presentation problems, there is still room for improvement. Also, bar service is viewed as unsatisfactory. More life and spirit must be injected into the operation. Mr. Balling stated that he believes Chipper's has established itself with the lunch trade, but work must be done to match that with the dinner trade. Property Taxes Manager Balling stated that our recognized goal is to keep the levy down and our tax levy presentation has been structured to reflect that goal. Truth In Taxation Finance Director Brimm reported that the Tax Levy Ordinance would be ready ` , for public hearing and Village Board consideration on November 15, and abatements will be considered at the second meeting in December. Due to the reporting requirements of the statute, we will be above 1.05% of last year's extension, but final net rates are predicted to be below last year's levy. President Mathias requested a net to net report by November 15, 1993. Enterprise Fund Policies Manager Balling reviewed the Enterprise Funds, i.e. , Food Operations, Golf and Water & Sewer. He presented a concept whereby the golf and food enterprise would support each other and put an end to draws from the Corporate Fund. This would allow us to repay the Corporate Fund from Chipper's on an annual basis. There was extensive discussion by the Trustees on their concerns regarding Chipper's food consistency and presentation. They also felt there was a lack of attentiveness and personality on the part of the bar staff which needs to be addressed. There was extensive discussion concerning the possibility of eliminating the dinner service and replacing it with scheduled small parties and events. Trustee Rubin made a suggestion regarding turning the entire food operation over to a contract operator. Mr. Balling stated that he did not feel we could find an operator who would be willing to purchase this operation at a price that would approach our investment and we would, in essence, be writing off all of our expenses with no opportunity to recover any of the monies used from the Corporate Fund. There was further discussion concerning turning the entire operation over to banquets and parties only. Mr. Brimm stated that one important factor in Chipper's success is getting more golfers walking through the golf course and this will certainly generate revenue. He also pointed out that there is only one more payment due on the kitchen equipment ($75,000) and once that debt has been cleared, this will have an impact on Chipper's overall performance. President Mathias asked Mr. Brimm if once the final payment has been made, would Chipper's be in the black. Mr. Brimm indicated that they would have a good chance of at least breaking even. There was a consensus to give the operation one more year in which to achieve break even status. If that does not take place by next year, further consideration will be given to turning the operation over to a contract operator or making some other major change in the operation. There was also discussion regarding expanding the facility at Arboretum Golf Course. Mr. Balling stated that with the lack of demonstrated financial success with the Chipper's operation, he would be very reluctant to pursue an expansion at Arboretum with the additional debt service. Mr. Balling outlined a concept involving the temporary addition of a modular addition at Arboretum that would provide locker rooms, washrooms and a dining tent structure to accommodate golf outing banquets. Special Census An additional revenue source for 1994 would be to conduct a special census. Mr. Balling stated that Planning Department projections indicate that there are an additional 2000 residents in Buffalo Grove since the 1990 census. Both the MFT and income tax would benefit from adding these 2000 people to the census roles. After discussion, it was determined that the benefits of conducting a special census would outweigh the cost. It was determined that the May-September window would work best for us. Vehicle Stickers There was extensive discussion on the cost of enforcement of the vehicle `./ sticker program. Many Villages have discontinued their vehicle stickers and substituted other taxes, including Wheeling and Vernon Hills. We would need a replacement tax of approximately $400,000. This could be achieved with a Home Rule Sales Tax increase of 1/4% We could realize half of that amount, or $200,000, with a liquor/prepared food tax. Trustees expressed some concern with dropping vehicle stickers as a revenue source and some time in the future having to reinstate it. The consensus was that the vehicle stickers would be dropped for 1994 and the revenue would be replaced with a Home Rule liquor and prepared food tax of 1% and a $200,000 fund balance transfer as a contingency to be used in the event of a shortfall. Sales Tax Our revenue from sales tax is growing, but there is concern with the quality of retail tenant and possible loss of commercial acreage to residential uses. With not much commercial land remaining in our planning area, there is a lot of pressure on Milwaukee Avenue to be developed with commercial uses. 94-95 BUDGET OVERVIEW Salaries & Benefits Lee Szymborski reviewed the Pay Plan assumptions adopted by the Village over the past 12 years and reviewed the Pay Plan as used in Buffalo Grove. Lee reviewed the pay range adjustment history over the past 5 years which gives a picture of how the criteria used in our Pay Plan have served us over the years. A survey will be taken in November of comparable communities regarding any planned adjustments and a determination will be made at that time, for inclusion in the budget, of the recommended adjustment for the upcoming fiscal year. Regarding benefits, Lee reported that Buffalo Grove is one of two communities who have shown a reduction in health insurance rates over the past year. Mr. Balling outlined the steps taken over the past year to help reduce these rates, including utilization of Cost Care, Mandatory Second Opinion and initiating a PPO which shows promise for next year. Staffing Issues Mr. Balling explained that contained in the MIS Study is a recommendation for an administrative staffing expansion, namely, an MIS Director, whose responsibility it would be to coordinate the overall system management, training, and system implementation. This is possibly the only staffing expansion contemplated for the next fiscal year. Trustee Braiman asked if the proposed MIS staffing position would be a permanent one. Mr. Balling responded that he believed it would be. Trustee Reid gave an explanation of how this position would fit in and why it would most likely have to be a permanent one. Trustee Hendricks questioned if there would be savings realized by going to another full time firefighter in light of the high amount of overtime budgeted by the Fire Department. Mr. Balling responded that Chief Allenspach has considered this and has determined that we have not yet reached the point where a savings would be realized by going to an additional firefighter. CIP Lee Szymborski highlighted some of the changes and additions from last year's CIP that were scheduled for 1994-95. Regarding the Wisconsin Central, Mr. `./ Balling stated that we would not be pursuing grant funding for the train station parking lot because without it, we will have maximum flexibility in making the parking available to Buffalo Grove residents. The 94 Transportation Bond Mr. Balling explained that this would probably be renamed as it would be used for things other than transportation. This bond issue will be in the $3.5 million to $4 million range, depending on where the MIS study fits in, if at all. Bill Brimm then outlined the elements of the bond. These included: Wisconsin Central Program Buffalo Grove Road Improvements 50% of the 94 maintenance element of the MFT Busch Rd. /Weiland Rd. Construction (intersection) B.G. commitment to Ill. 83 project (B.G. Rd. to Rt. 22) Buffalo Grove Rd. lane study ( Rt. 22 to Hwy. 45) Long Range Financial Planning Bill Brimm reviewed the methodology for budget growth forecasting which has been used for the last several years. This year's forecast growth target is 5.10%. MIS Direction The Management Information Study report was distributed to the Board. Mr. Balling explained the study and some of the recommendations contained therein. He outlined that while the entire plan may not ever be implemented, it does provide a helpful road map for us to get the Village to a level of technology that will be beneficial to productivity. President Mathias adjourned the meeting at 9:55 P.M. )17a/Li Eile Marsh, Clerk Pro Tern