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HomeMy WebLinkAbout2001-01-04 Transcription January 4, 2001 Budget Work Session Page 1 January 4, 2001 Budget Work Session 8:30 AM Council: Lehman, Champion, O'Donnell, Vanderhoef, Wilburn, Pfab, Kanner Staff: Atkins, Karr, O'Malley, Mansfield, Herting TAPES: 01-01 BOTH SIDES; 01-02 BOTH SIDES Lehman/Want a tablet to take notes on? Champion/Yes please. Lehman/Anyone else? O'Dormell/I would like one. Pfab/I'll take one if you've got one. Atkins/I can get more. Champion/I can just take (can't hear). Lehman/Anybody else? (can't hear). Lehman/At 8:30 we're going to start, what I'd like to do if we can, Steve's going to make a presentation this morning, rather than take questions during the presentation if we can kind of record the questions we've got, when your through Steve. Atkins/Bless you, if I misspeak or something please. Lehman/That's fine, but other than that just so in the interest, I suspect that any of the questions we may have might be answered later in your presentation so. Atkins/Okay. Lehman/So record questions, let the presentation proceed and at the end of the presentation if we've got questions or things we need to know we'll do it at that time. This represents only a reasonably accurate transcription of the Iowa City council meeting of January 4, 2001. WS010401 January 4, 2001 Budget Work Session Page 2 Kanner/Will you tell us the agenda though before you start today's session? Atkins/Yep, I'll tell you that, yep, I'll take care of that. Lehman/All fight your on. Atkins/Before we start there are two new reporters sort of in the back room, anyone introduce themselves. woman/(can't hear). Atkins/Okay. woman/(can't hear). Atkins/Okay. Welcome. All set to go. O'Donnell/Ready. Atkins/Everybody got coffee that needs it, wants it, pens poised. Lehman/Don't be upset if somebody gets up and gets a refill while you're talking, it's not that your presentation is dull. Atkins/Yea, I will candid with you, I was a little uncomfortable taping this session because sometimes I, no I really am. Champion/We all are. Atkins/Well no. Lehman/Well it's not (can't hear). Atkins/Well no, no it's, and I've told myself heck with it. It's going to go on and go on with the. O'Donnell/It's really all we can do. Arkins/I mean I bought a new coat and did everything for this meeting and. O'Donnell/I didn't. This represents only a reasonably accurate transcription of the Iowa City council meeting of January 4, 2001. WS010401 January 4, 2001 Budget Work Session Page 3 Atkins/No and you didn't. Lehman/So you must have really thought it was really warming up with a short sleeve shirt. O'Donnell/It's 35 degrees out, this is a heat wave. Lehman/All right enough of that. Atkins/Okay, what I laid in front of you you do not need to drag out just yet. This is a packet of all the overheads I'm going to use so you can just refer to them. Vanderhoef/I don't have one. Atkins/Oh somebody took yours. Vanderhoef/Thank you. Atkins/So you can doodle on them as I'm using them. A good many of them are just copies of pages from the budget document but I thought I'd put them all in one packet and if you don't want to use them you may set them aside. Okay. I'm catching a little cold so please forgive me. What we'll do is that I'm going to start with a very basic kind of walk through of budget issues. There are a number of corrections that we have to make in the budget document, most of which are very minor and we'll do that either as we move along but we will be giving you some substitute pages. There's nothing in there that's dramatic it's either just the computer did a hiccup or somebody' s eyes got crossed when they were entering the information but we'll get those corrected for you. My schedule would be that I would hope today to spend on the general fund, expenses, revenue (can't hear), very broad policy issues associated with the budget. On the 22nd which is a Monday we have a meeting beginning at 1:00 it's at that meeting that I would intend to do capital projects, all of the department directors would involving the capital plan will be invited, they will be here, we will step you through that, your certainly flee to ask me capital questions but I do plan a session on just capital projects for you. Lehman/And that' s the 22nd? Atkins/And that's the 22nd right. You have an evening session scheduled for the 23rd, we're putting together now some of the Board Commission members, Senior Commission, they'd like to come and talk to you, we should be able to move through that fairly quickly and still allow ourselves some time on the evening of the 23rd. And then you have a session scheduled for the 30th which I do not have This represents only a reasonably accurate transcription of the Iowa City council meeting of January 4, 2001. WS010401 January 4, 2001 Budget Work Session Page 4 an agenda for yet, hopefully by then we'll be in a position that the floor is basically open for you all to sort of take her from there. So those are the four sessions I have scheduled. Now there are certain sort of ground rules, we've talked about this in the past, when we prepare a budget, there' s all sorts of influences, you all know what they are so we won't spend a whole lot of time with those. Individually you may agree or disagree with a particular proposal or issue and I would remind you that's it's your collective decision that counts and if there's conflict between two of you on an issue and if we have to get down to counting noses we get down to counting noses and that will cause me to move onto the next issue. If I happen to say to you, you can't do that, please do not take offense, it's usually a matter of law and I didn't write those laws I just so. IfI say to you, you shouldn't do that, that' s a note of caution, and I'll explain to you why I happen to feel the way that I do about an issue. I do believe we have sufficient sessions planned right now, I'll be candid with you, there' s not a lot of latitude in this particular budget. There are a couple major issues that you'll have to deal with. We do have the state law and the deadlines and I promise to keep you on track with respect to satisfying those state laws. I think, oh and the citizen summary, the document that we send out, a couple hundred of those, we send that out to every board and commission member, not just to the chair, so we send, and it's a summary of the budget. That's in the process of preparation as we speak and we'll have that out shortly. If there are any questions along the way Ernie, I understand exactly what your saying, if for some reason somebody is desperate I'll record a question, get it written down so it's not forgotten, you don't have to worry about it, we can then move on. So anything? Wilburn/Steve will the community events, that group be the same night as the commission members the 23rd, 241h? Atkins/Yea, yea. Remember we were unable to come up with an official committee thing whatever, okay. We'll, we've got to figure out what to do on that one. Okay any other questions before we kick her off'? Please, again feel free to get up and down it doesn't bother me. We have a three year operating budget, and we have a multiple year capital improvement plan. To my knowledge we are the only city in Iowa that actually uses a 3-year operating budget because we do balance our budget for three years. By law you can only appropriate money, that is in affect set it aside and authorize an expenditure for one year. We have extended that thought process into a three year budget plan, just simply to allow us to project some of the issues that you' 11 be dealing with, I think you understand then the wisdom of being able to put that with. We could go longer, but being subject to the state legislature and federal govermnent, once you get beyond three years guessing kicks in and not real budget budgeting. Remember a budget is an estimate, we do not for example have our final valuations. The tax rates that we have proposed to you are proposals, they will get amended because we do not This represents only a reasonably accurate transcription of the Iowa City council meeting of January 4, 2001. WS010401 January 4, 2001 Budget Work Session Page 5 have the final value. We think we're pretty close, one percent one way or another but it does get down to the point where we, when we're making those decisions there is other information to be derived. You must adopt a budget and it must be in the hands of the state no later than March 15. Understanding that we begin the process of budget submittal sometime in September, for implementation in July. The budget is balance in accordance with the state law, we're never quite sure what's next. Legislature will begin their thing shortly. One of the issues that we will face is the proposal by the Farm Bureau and that there be a property tax limitation. If that is to occur or were to occur basically all bets are off because we'd have to recalculate what our financial position would be. The City Council, a number of years ago adopted policies that guide the preparation, very basic policies, and this is where, oh good. Pfab/I didn't do it on purpose. Atkins/The bulb goes out and there goes the session. There we go. These policies affect both operations and the capital plan. There are circumstances that are created during the course of any fiscal year that might challenge these policies. I will do my best to identify those for you, call them out as we move through the budget review process. One we know for sure is that the policy on capital improvements that is, and it's not listed here, it will be in our debt, the 25 percent policy of our debt levy will be exceeded if you adopt this budget and the budget associated with the library referendum and we'll take you through the consequences of that a little later on. The other policy is our cash reserve position is less than that particular policy and I will have a specific discussion with you. It in affect means that we've stretched our budget to just about as far as we can stretch it. You saw on my budget message where our ability to absorb any new general fund projects and programs is severally limited if not nonexistent unless your willing to do away with other progrants and services within the general fund. The state as you know regulates our tax base, regulates the tax rates which in affect totals the amount of money we have available and now with the proposed property tax limitation the amount of money would also be potentially regulated. In affect you'd go in an allowance, and I'll begin to work through the consequences of that. There will be in this budget particularly when it comes to the time to discuss our capital plan a potential challenge to our credit rating, there are only three cities in Iowa that have the AAA rating, and there are only like 40 in the nation. It does have significant long term financial consequences, the $20 million dollar bond issue if you have a AAA rating or a A rating amounts to almost a $1 million dollars in savings over the 20 year life of a debt so it is something of financial consequence to us. In your budget document pages 5-11 identify the financial and fiscal policies that we use on a day to day basis, if you recall we use our budget as an operating document as well as an policy document, we try to incorporate what your thinking is directed into financial terms and we use it to manage as well as an expression of public This represents only a reasonably accurate transcription of the Iowa City council meeting of January 4, 2001. WS010401 January 4, 2001 Budget Work Session Page 6 policy. Most of those policies are of long standing, they've been there for many, many years. They are tweaked on occasion but nothing really in there of any major consequence other than those I've identified up here. The one percent contingency is in place, we believe we are close to, we need to discuss the AAA credit rating, we have not altered any of our low income programs notably those in the utilities, and recreation again those are all that your familiar with. And wherever practical we have shifted our 8.10 because of it' s cap, some of those expenditures to debt which has a different set of regulations, again I'll explain those as we move through. Okay with that. In your packet the next chart is again in very general terms to give you a heads up on sort of what you expect these are budget issues, things, items that you need to be aware of and concerned about as you move through and make your decisions. We have a declining general fund cash reserve, we do exceed the debt levy policy, bottom line you could reduce other projects and bring it down to 25 pement, of course the decision that you have to make is what other projects in the capital plan. We are now officially without the machinery and equipment tax base, that amounts to about $700,000 a year in lost income to the general fund. We were receiving a minor reimbursement from the state, that is now gone. The state aid that we do receive, and remember we're not like the school district, the school district gets about half of their budget from various state programs, we're in the 5 percent neighborhood. But it is of some consequence, those revenues to us have not grown, they' re flat, so obviously the effects of inflation on the use of those revenues can have a profound effect several years out. I remind you and again caution you that the general fund is not in a position to absorb any major new spending, we do have and we'll show you an extensive capital improvement plan, the last 6 or 8 years we've seen that as far as a tax expense grow substantially but on the other hand we've also done a lots of projects. A couple years we adopted an informal capital plan policy of 4 years and $40 million dollars worth of general obligation debt. I've taken it as policy and extended that basic principle in balancing this capital plan. What we finally came up with was $10 million dollars a year general obligation debt we felt we could absorb comfortably with the retirement of other debt and still not place us in any financial jeopardy. Again laying the library $18 million dollar debt on top of that is a policy question we have to discuss. Our credit rating still remains AAA, we are A rated with respect to our revenue bonds, both of which are the best you can get. As we go through the budget any capital expenditure that requires new personnel such as the new fire station we're proposing, those things will be identified for you, again keep that in mind to ask those questions. Grow the tax base, the community has indicated that they do not wish to have a sales tax which is our only available major source of revenue which means we have to work within the restrictions of the property tax. There's an interesting conflict we have is that the state fully realizes that cities are the economic engines, we have the infrastructure and the This represents only a reasonably accurate transcription of the Iowa City council meeting of January 4, 2001. WS010401 January 4, 2001 Budget Work Session Page 7 facilities to cause economic growth to occur within the state, and yet continues to take away from us the very resources we need. Adding to that the internal policy conflicts, conflict not of negative sense that you all have amongst the seven of you growing the tax base becomes a very interesting issue with respect to how we're going to accomplish that in order to do all the things that I believe you want to see done. Proposed property tax limitation is a farm bureau proposal and the legislature will have that early in its session because it's already been framed. Fulfillment of master plans we do have a number, a master plan documents that we may want to schedule for separate discussion in the form of allowing the directors of the departments to update you. But when these plans are adopted there's a public expectation, if you recall you allowed me to address the Parks and Recreation Commission to remind them that in the preparation of their own master plan that if they wish to expand any recreation or park programs substantially that draws upon our 8/10 levy it's simply going to cause us a great deal of difficulty. There are certain operating expenses that quite frankly folks there' s really not a whole lot we can do about it which also adds to the concern for property tax limitation. And we are subject to the private market, we go into the market to buy fuel, to buy cars, to buy trucks just like everybody else and we're subject to those cost increases. Fuel has been notable, in two years the for example in transit, our fuel bill was about $80,000.00, we now have it budgeted at about $140,000.00. Now that' s not any dramatic change in service, that' s just and you know we're a bulk buyer and we're able to bargain a little a lot better than most folks but the cost of fuel is up substantially. This is one that I remind you of with regularity is that we have loads of new land that we're getting from a variety of sources that over the long term will be a significant and I believe a positive consequence with respect to the city. The difficulty is that we're inventorying the land at best, there' s real no development proposals and by development that' s subject to debate but I believe if we're going, I mean if we're going to own this land the public should be entitled to be able to access it and enjoy it and often we cannot provide either a trail system, you understand the, we went through this last year. And the budget also proposes fee increases for our parking system, storm water, refuse collection and housing inspection and I will take you through those specifically. But those are the things to begin thinking about as we move through the budget. This is page 19 in your budget book and it's probably got more numbers than you ever want to look at but it's very important to our financial future. How to read this is that Fiscal Year 2002 is the budget proposal you have, I think you can see that fight at the top. We show these other years for historical purposes, I mean we can go back pretty much as far as you want to go back. Generally speaking you'll note under taxable assessed value in 02, those two numbers that I've circled and then above it is the 52/48, generally speaking we run fairly consistently over the years that our tax base is 52 percent residential and 48 percent This represents only a reasonably accurate transcription of the Iowa City council meeting of January 4, 2001. WS010401 January 4, 2001 Budget Work Session Page 8 commercial/industrial. Now there are some aberrations in there, down in the year 2000 it evened out at 50/50 but historically beyond what I have on this document you can feel comfortable saying that 52 percent of our tax base is residential. That's important that you note that because that' s the one that's subject to the rollback which has a profound effect on our revenue. The way you read this across is when it says 100 percent assessment and you see residential at $1,719 billion and then commercial at 932 for a total of $2.652 that is the value of the property in the city. Now by law the state rolls back the value, you see the next number of residential, they on occasion will do that with commercial and industrial. You then establish the taxable, that's the critical number, that which can be taxed, of the taxable assessed value for the two items. So while the value of the property in the city might be $2.6 billion the taxable assessed value, that is what you apply the tax rate times tax base equals tax revenue is $1.8. Now the far column of hand written numbers beginning with 2.45 and reading down, when I try to show you there is how our value 100 percent has increased over at least the 7 years that we have on this page. You'll see the larger numbers of 7.2, 8.5, and 15 percent, those are reassessment years, in affect through the City Assessor reassess the property every other year. By law, state law, we must keep our values current, if not the state has the power to come in and do an across the board adjustment to property tax values. The question there becomes faimess, we have traditionally as a community, all the governmental jurisdictions, taken this very seriously and we do keep at working those values current. The important thing to note is that seven year average is a 6 pement growth, now in itself that's a good number, if we were having real growth in our values, taxable values of 6 percent, we wouldn't be sitting here ringing our hands because those are good numbers. The problem is you need to read over to the next average where the taxable value after you apply roll backs on other factors is 3.6 percent annually. As you can see barely ahead of inflation and has the affect that we can sort of continue spending at the rate we are spending the taking of any new initiatives, where in affect I believe precluded from doing. Those other two numbers are to give you some sense of how the other values grow, our industrial/commercial grows, has an average annual rate of about 4.3 percent, and our residential values have grown at an average of about 3.9 percent, but the most important one is back to that 3.6, that's the fonndation, that' s our taxable base, now when you have that taxable base you can then apply the tax rates which we'll also discuss in a minute because they're also regulated. Are we okay on all that? I know that's a mountain of information. Yes Steve. Kanner/What' s the anticipated direction on the rollback, state rollback it went up this year, is it anticipated to continue to rise? Atkins/Personal opinion is I can not comprehend it getting much higher than that, in fact going back the other direction. Now if you read down in Fiscal 96 it was 67, in This represents only a reasonably accurate transcription of the Iowa City council meeting of January 4, 2001. WS010401 January 4, 2001 Budget Work Session Page 9 fiscal 90 thereabouts take that back, yea fiscal 90 it was 81. It's steadily headed downhill and these 1 and 2 percent glitches, where last year it was 54.8 and this year it's 56.2 and the year before that it was 56.4, it's settling in in that general number, but since 1990 and for budget planning purposes folks that's pretty important for us, it's taking a precipitous drop and I can't, and remember it~s tied to agricultural values and a state formula that says you can only grow your tax base by a maximum of 4 percent a year. That's another, and that's how they get controlling the growth in taxable value, not only the rollback. Steve I wish I could give you a better, I just simply don't know, I wish I could predict that but I can't. Kanner/Do they do this one year at a time or do they have a multi-year plan? Atkins/One year at a time. We get a notice I don't know about two days before we're suppose to submit the budget to you of what that number is, they do it annually. It's unfortunate but that's how we have to budget in Iowa. Okay are we okay with that? Kanner/Could you keep that on for just a minute while I? Atkins/Sure. I can get you a copy of those numbers if you'd like. Kanner/I got it, thank you. Atkins/Okay. We can come back to that. I'm sorry was somebody raising their hand? Ernie I'm getting audience questions is that okay? Lehman/Well I think let' s wait. Atkins/Let's take one, you go ahead. woman/(can't hear) Karr/I won't be able to hear any of it, I'm not picking up any of it. Lehman/You'll have to speak at the microphone. Caroline Dieterie/I think it might be interesting and important if you could explain please the basis on which the state decides the rollback. Atkins/Agricultural land values. Dieterie/Yes of course but what affect, I mean what suppose they come up with a value, what makes them decide that they will do this rollback? This represents only a reasonably accurate transcription of the Iowa City council meeting of January 4, 2001. WS010401 January 4, 2001 Budget Work Session Page 10 Atkins/They take in aggregate all of the residential values in the state, all the agricultural values, apply a formula, develop the rollback. Dieterie/Right but I meant the sense behind the formula. Atkins/I'm not so sure there is any sense behind the formula. (can't hear). Atkins/I don't know how else to answer the question other than how I've mnswered it, okay. This is intended, and I'm not going to spend a lot of time on this one, this is to give you some history, and since I don't see any real changes forthcoming I've served on two committees, the legislature has created a conunittee, all of which to deal with the issue of rollback over the last 4 or 5 years, it simply has not changed, I don't expect it to change. I think there's a notable issue here that you will discuss later on when it comes to economic activities, it does shift the burden to commercial and industrial because they are taxed at 100 percent of value. There will come a time and I believe it's beginning already with the values that our utilities are beginning to challenge deregulation, that the commercial/industrial folks are going to demand a more favorable tax position. You've seen it happen, remember a year ago when we went through the discussion where apartment owners in our town in particular were converting to condo's and you take those apartment buildings which were income producing and then they are converted to condominiums, and into converting them to condominiums they enjoy the rollback and thereby lessen the tax, they're tax obligation as I told you then and I don't see any change, I haven't seen anybody lower their rents that take advantage of that particular part of the law, but what it does is simply further erodes our tax base. And in our town multiple family is an important part of the housing in our community. Is there any time you want to spend on this folks because you, I think you know all about it. This is page 17 in your budget book and these are, that is the fiscal year we're working with, we're showing you a little bit of history, one year as well as what our projections are. And I think you understand the law, we have a tax rate, we'll discuss those times the tax base which we just discussed equals our tax revenue. Now in Fiscal 02, the one that I've marked by law we have a general levy of $8.10, that' s for any legitimate government purpose, that is a maximum, it has been $8.10 forever. We also levy a $.95 transit, that levy and you will see the amount of money just to the left of the number that is generated. That $.95 transit levy is an also a maximum, it was changed in 1993 when it used to be $.54, the legislature authorized $.95. I have no idea how 95 and 54 and how they come up with those numbers, there's something somewhere. We levy $.21 cents $.21 and a This represents only a reasonably accurate transcription of the Iowa City council meeting of January 4, 2001. WS010401 January 4, 2001 Budget Work Session Page 11 half cents for tort liability, it is down a tad bit and this is where we have enjoyed the benefit of our insurance cost, general property liability have not grown but the value of our property has grown which allows us to make this slight adjustment. The only thing we can charge against that levy is the cost of our insurance program, that's again specific by law. We have a. Yes lrvin. Pfab/You mean your talking insured, your also talking self-insured? Atkins/Well part of our policy is self-insurance, you know we have stopped loss, yes that is tree. Pfab/I mean so when your saying insurance that's a bigger name than policy? Atkins/Yes. The $.27 cents that the library receives was a result of a referendum 4-5 years ago, you may recall that. We received that directly into the general fund, at the time of that levy passage, we increased the library staff and made a number of adjustments to their budget and we received it directly into the general fund, it's, again that was discussed extensively at the time, allowed them to grow their staff. Right now the income generated if you broke it out is sufficient to cover those costs. Wilburnj Is that a state max. too? Atkins/That is a state max. yea. There is a lot Ross, 13 and a half cents, 27 cents, 54 cents, 67 and a half, for some reason this $13 and a half number and multiples I honestly, I do not know why. Vanderhoef/Part of the (can't hear). Atkins/Beg your pardon. Vanderhoef/Part of the old mill? Atkins/Oh could be I just don't know. Vanderhoef/It seems like that's where that came in that one mill. was equal to something with the. Kanner/That makes sense. Atkins/Okay the next tax rate is the emergency levy, that's an unfortunate title, it's not, we're not into an emergency and what the state has done is that look we'll give you some latitude and something like two-thirds of the cities do use this levy. But This represents only a reasonably accurate transcription of the Iowa City council meeting of January 4, 2001. WSOI0401 January 4, 2001 Budget Work Session Page 12 emergency, and I believe their thinking was because it's available for virtually anything, you can transfer it to capital, to debt, to water, to sewer, to anything you want. In our case we chose to use this levy because we had maxed the 8.10 and there were programs and projects that we wished to undertake. We have the employee benefits levy, that is an unrestricted levy in the sense that you can levy the full cost of employee benefits and that includes FICA, health insurance, pension payments, things such as that can be charged against that levy. Now we believe that that's going to go up a tad bit because we're getting our final health insurance numbers. Over the last several years we've been able to keep that number fairly flat but all the prognosticators and our general review indicates that we're going to have, we're going to experience an increase in our health insurance cost. We provide a very comprehensive health package for our full and our permanent part time employees. I expect that number by the time we balance the budget will have to be increased slightly. Yes Irvin. Pfab/Is there a max. on that number? Atkins/No is there not a max. There is a max. in the sense of what items you can charge against it but the number can go to cover employee benefits. Now what we have done in the past and will continue to do is that when the state took over the police and fire pensions, something we used to manage, we were in a position that we had just recently finished a few years prior to that, an actuarially study, and our police and fire pension was fully funded. What happens then is that those cities that were not fully funded have to levy some additional tax to cover it because we were fully funded and the final calculations that were made by the state we ended up with a reserve, that is there were money's in affect left over. So what we have done is that over the last seven years and we project we have another three years to go we have gradually reduced that reserve and paid the police and fire pensions from that reserve so thereby we do not have to levy a tax to cover it, now that will eventually go away but our thinking was that that allows us some reprieve, it was also to our good fortune that we had seen in advance that we wanted to make all of our pension plans actuarially sound and then the state decided to jump in and take it over. I do remember the day sending them a check for $17 million dollars and my hand still shakes thinking about that but the state now runs all the pension plans for all the city employees. Moving on, the debt service levy is just that, that's our general obligation debt, we'll spend more time on that. You will note the tax rate in 01 bottom line 14.757 reading across. Our proposed tax rate of 14.812 it is up very little, I will tell you now learning what we've teamed, we do expect that to increase slightly, probably closer to 15 but in the neighborhood of something less than a 2 percent growth and it's due to a ~vhole variety of factors we don't have our final values yet, we have some ideas we want to share with you on our cash reserve position to improve it's, and the employee benefits, all of those have a beating on it and of course debt service projections. Because that This represents only a reasonably accurate transcription of the Iowa City council meeting of January 4, 2001. WS010401 January 4, 2001 Budget Work Session Page 13 means there is new debt proposed in here, if you choose not to sell it that draws, that brings that number down. But the bottom line and the important thing for you to note here is it is up slightly, now somebody might say well how do we do that? Well if you look at that number, you'll notice a substantial increase, that's the year the library debt would come on, we're not proposing to sell the library debt this coming fiscal year. Now there's a whole slew of factors that affect that, but our bond counsel and the research Kevin has done is that we thought about taking that debt and splitting it, there are some significant disadvantages in accordance with 1RS code and securities and exchange regulations. Particularly due to the private sector component of that project, remember when the library wants to build some space and lease it. If we sell it all at once it maximizes our ability to deal with that issue, but regardless you will see somewhat of a spike in the tax rate to cover the debt associated with the library in that fiscal year. We show a tax rate in 04, again a slight increase and then after that we did some very preliminary projections, virtually everything that affects that tax rate is driven by capital projects, how much general obligation debt, and I'll show you that comparison. If you look, setting aside debt for a moment to give you a picture of how difficult it is at times to balance the general operations. If you set aside debt, our tax rate in fiscal 98 for operating purposes for getting debt is 11.18. By 04 we expect it to grow only to 11.71, and yet we will have added fire stations, new library, all the other things that or new library staff in there, what I'm trying to point out to you is that your policies on debt and capital project substantially drive any tax rate discussions because if you will note in 98 we had a tax rate of 1.61 that will grow in 04 to 4.57 and if you look at the total tax rates 12.79 current budget of 14.81 which as I said is going to have to go up a tad bit, to 04 it's up to 16.2, again what's driving our tax rate is our capital projects. Okay. Kanner/Could you note for later discussion what contingency funds this year, that were used this year came out of capital funds versus general funds? And what that total amount was on that. Atkins/Let me make sure I have that, I may be able to answer that for you Steve. We have a general fund contingency account which is 1 percent of our operation, in the neighborhood of $300,000. That is used for general fund activities, we maintain a small (can't hear). (END OF 01-01 SIDE ONE) Atkins/I'd have to look it up, a couple hundred thousand dollars. Now ask me again specifically so I can answer for you. Kanner/We have that contingency fund, I want to know. This represents only a reasonably accurate transcription of the Iowa City council meeting of January 4, 2001. WSOI0401 January 4, 2001 Budget Work Session Page 14 Atkins/The general fund. Kanner/Well the $300,000. Atkins/Right the general fund okay. Kanner/I want to know, we approved a number of projects, I want to know if any came out of capital funding versus that general $300,000 funding. Atkins/Okay I can tell you, I can't imagine why we would take anything from the general fund to support capital, that's, there's just, there's no margin in that. Now certain projects come in from a bidding standpoint over budget, some projects come under budget. Our tradition has been that we are, those under budget far exceed, am I doing okay I can't imagine where we would take anything. I may have to do a little research for you Steve but I can't imagine using the general fund to subsidize a capital project. I mean I'd be very surprised if we did that. Kanner/Or Vice versa. Atkins/Or vice versa. Kanner/For instance the Englert. Atkins/Okay here's how the Englert was financed. The Englert was financed, it was $700,000, we in affect borrowed from ourselves, we said we will buy, in fact the closing was yesterday folks, we no longer own the Englert, someone else does. The Council committed $200,000.00, we will show eventually $200,000 in general obligation debt and/or a loan from ourselves for which we have to pay income from our reserves for that $200,000. The rest of it we're just carrying it for them, so that's how we're doing it. Kanner/Yea but I mean what we're actually putting out, so there' s a $200,000 plus loss tax property taxes. Atkins/Yea you got it, yes. Kanner/Where is that coming from? Atkins/Well the loss property tax is lost, that's gone, it just is not there anymore. Karmer/But the $200,0007 This represents only a reasonably accurate transcription of the Iowa City council meeting of January 4, 2001. WS010401 January 4, 2001 Budget Work Session Page 15 Atkins/That we will pay, we've already contributed our $200,000. Kanner/Right, where is that coming from? Atkins/That will come from, I'm assuming either general obligation bonds or we will borrow from one of our reserves. Kevin O'Malley/That' s correct, we'll probably be taking that money from our general fund reserve. Atkins/General fund reserve okay but it's due to be paid back, we owe $200,000 to the $700,000 cost, the other $500,000 we're carrying for them, they gave us a $100,000 check yesterday, they have four more payments of $100,000, okay, okay. The charts are handy here if you all want to, now this is page 45 the next one in your budget book and I'm sorry for all the old eyes but those are small numbers. What I'm going to do is step you through what I believe are the major revenue issues, that is this is the income to the general fund. As we read down the column you want to look at is the third column, where it says City Manager proposal, that's your fiscal 02 budget and then we project 03 and 04. Property taxes generated by the 8/10 levy, and if you read across that's the 14,018, 14,303. You have that line? From fiscal 00 to 01 14,018 to 14,303 is a 2 percent increase so you can understand the difficulties. From 01 to the proposed budget is a 6 percent increase most of which will be due to new construction and revalues. Then from that year to 03 1.5, that's an off-year and then from 03 to 04 four percent. These are reasonably conservative numbers, and a good bit will have to do with the commercial/industrial and in particular utilities. That is an average of 3.3 percent annualized growth in the 8/10 levy, and you know everything that has to come out of that again you traderstand difficulties. Transit levy is $.95 cents, Library levy is 27 cents, Tort levy is 2.15 extrapolated out. Kanner/What ~vas it again from 01 to 02? Atkins/01 to 02 is a 6 percent increase. Vanderhoef/Do we get the increased assessed value on residential one year and commercial the next year? Atkins/Generally that's I understand how they go about the process, generally speaking Dee. Vanderhoef/So when we go from like 01 to 02 you said that's a reassessment year. Atkins/Yep. This represents only a reasonably accurate transcription of the Iowa City council meeting of January 4, 2001. WS010401 January 4, 200l Budget Work Session Page 16 Vanderhoef/And we got a 6 percent increase. Atkins/Yep, yep, that's also new construction. Vanderhoef/Yea new construction. Atkins/We had a good year this year for example in our new construction activity projected (can't hear). Vanderhoef/But might that be the commercial year and then the other year might be residential? Arkins/Could be, I can find that out, Deb make a note of that, we'll find out, go ahead Deb if you can answer it, yea. Deb Mansfield/The Assessor's office has been changing the company that they do assessments with so over the last couple years they've done commercial and industrial reassessments and residential assessments, so usually the pattern has been that they do all properties in one year, comxnercial/industrial and residential all get reassessed at the same time every two years. But they've been changing, they went with Vanguard and so we've actually been seeing reassessments over a two year period consistently so they've thrown us a little bit off schedule that way. Vanderhoef/Okay, so that may explain why we've got a big blip of 6 and then we go to 1.5, if we averaged the two out we probably would be taking into affect the assessments, okay. Atkins/We can go back and track these whether it was 2 pement the year before that. Yes Irvin. Pfab/What is the state policy on industrial development where there' s a tax rebate? There's a number 75 percent and I don't remember how that was that got the assessor was telling me. In other words. Atkins/Oh, I don't know the assessment, I mean that' s a whole body of knowledge, I can tell you that the industrial/commercial values for tax purposes are 100 percent of in affect the fixed assets. I suspect they have an income approach as well as an actual replacement value approach that they use and they ultimately come up with a value on the property. This represents only a reasonably accurate transcription of the Iowa City council meeting of January 4, 2001. WS010401 January 4, 2001 Budget Work Session Page 17 Pfab/I have some documents, I don't have them with me, no I don't. Is there something about 75 percent either a discounted 75 percent first year valuation or they're assessed at 75 percent? Atkins/Sorry I don't know, if you have something I'd be happy to look at it for you, I just don't recall that, I understand the process is. Pfab/I didn't have a chance to sort it out so I thought maybe you knew it off the tip of your tongue. Arkins/No, nope I don't know that one. Deb is there anything that rings a bell for you on that 75 percent on assessment? Deb knows that better than anybody on staff but she' s shaking her head like she' s not sure. Mansfield/I think he's talking about tax abatement. Atkins/Okay. Mansfield/Which is done through the assessors office and doesn't hit our. Atkins/There is a tax abatement process by ordinance that folks can apply for but that' s applied against the real value, and that real value is determined by either income or replacement and then it's reduced to 75 percent. There's a schedule of those things, I could. If you make a note of that Irvin I'll look it up for you. Pfab/Okay I have the documents at home, I don't have them here, I'd have to slip home and get them. Kanner/Do you have to apply to the state for that? Atkins/Assessors office. Mansfield/Right, local assessors. Atkins/Local assessor. Kanner/And what' s the criteria for getting that? Mansfield/I'd, you'd have to check with the assessors office. Kanner/Could we find out how many we have that are doing that? Atkins/Sure, well we would show that in our. This represents only a reasonably accurate transcription of the Iowa City council meeting of January 4, 2001. WS010401 January 4, 2001 Budget Work Session Page 18 Kanner/Criteria. Atkins/Hang on Irvin one second I'll be right with you. Pfab/Okay because I was going to make a comment while you were looking. Atkins/We show exemptions, TIF's and things such as that as, that' s already factored in, and in our case because we don't use it extensively those are reasonably small numbers when it comes to the full value of the thing. But as far as criteria that just doesn't come to me we can find that out for you. Pfab/Okay I understand, my understanding is and I stand to be corrected is that because there was competition by various municipalities to entice new businesses to come to them the state says well let's just put a stop to that, we'll just rim it from the state level so no matter where these companies locate they're going to get the same tax abatement and it's like 25 percent first year something like that. Arkins/There' s a tax abatement process that was adopted by ordinance by this council, not this council, a long long time ago that allows people to apply for it. I can look that up for you and show you how that, there's another set of criteria. Pfab/I think I have the list at home. Atkins/You probably do yea there' s a schedule to it, yea. Kanner/And can you break out which are TIF's on those property tax that you listed on the previous, property values? Atkins/Did you get a note of that Deb? Thank you, we'll get that for you. Personal property replacement is at one time the state taxed personal property, many years ago they did away with that. That number 320 and change has been that number forever. Machinery and Equipment, you can see in 00 we received $40,000 the last fiscal we had $200,000 and now we project 0, that's the big loss of income. Housing Permits, again I'm just kind of moving down the list, Housing permits we project an increase over the fiscal year from 150 to 200 because we're proposing a rate increase, now those are housing permits not building permits, and we'll explain that in detail. Further down, gas and electric use tax, I think we know with some certainty and the state has required us to calculate this is that the property tax on gas and electric utilities will go away and a consumptive tax will be developed as and we are assured by the state that it will be revenue neutral, I do not believe that. And that is a big component, I mean the largest tax payer in town is the utility company. State population allocation has not changed, there is, you This represents only a reasonably accurate transcription of the Iowa City council meeting of January 4, 2001. WS010401 January 4, 2001 Budget Work Session Page 19 know our population may grow and others may decline, that number never changes because of the gyrations they go through every year to amend the number and it's been 629 forever. Pfab/Steve. Atkins/Yes. Pfab/Back year a change in the tax on gas and electric, you say it's going, consumptive tax, what do you mean by that? Atkins/As I understand it what the state will do is that they will tax the units that are produced, sold to you and I and then that number will be recalculated and remitted back to us in place of property tax and it's suppose to be revenue neutral. Pfab/So it's very similar to a value added tax? Atkins/No it's very similar to a sales tax. It's sold to them and then it come back around to us, it's a consumptive tax. Pfab/I think this is something we really have to be awfully careful when you look at what's going on in California right now, deregulated utilities. Atkins/I will be candid with you, I don't think there's a thing you can do about it, the state's hell bent on doing this and they're going to do it. And right now I'm trying to protect our fiscal interest as a matter of policy I may not agree with them but our fiscal interest I'm trying to preserve. Pfab/We have to be extremely careful of not leaving any stone unprotected so. Atkins/Well. I wish you the best I just don't think it's going to happen. Kanner/So you're saying in this current fiscal year is when the consumption tax went into affect? Atkins/No we have to do both Steve, we had to calculate the property tax and then we also had to calculate a formula that might be, it's an interpretation, we had to do both, and then we got the lesser. Mansfield/They make us calculate the property tax with the gas and electric company valuation so when we're coming up with our tax rate their valuation rate is in. And then they make us back out the gas and electric company and keep the tax rate and the gas and electric companies are essentially paying our property tax rate This represents only a reasonably accurate transcription of the Iowa City council meeting of January 4, 2001. WSOI0401 January 4, 2001 Budget Work Session Page 20 right now for three years and after three years they make no guarantees, so for three years they're saying gas and electric will pay the equivalent of your property tax rate after that who knows. Pfab/Is this a time when we maybe want to be thinking about our own utility, or our own generation? Atkins/Well if it's deregulated I'm not sure that what' s going to happen if you don't own one right now, I really don't know Irvin, the whole thing is, and your right the California experience is. Pfab/It makes you. Atkins/Giving, a pause. Karmer/Just to clarify further so at zero in fiscal year the previous fiscal year 00, where is that then, why is that at zero? Atkins/Deb will explain it to you. Mansfield/Because it' s included in property taxes in 00 in FY00 the 14,018,463 property taxes includes revenue from the gas and electric companies, they were paying it as a property tax. Kanner/What was it approximately? Was it about the same amount as this year? Mansfield/Their valuation has been relatively steady and so I would say probably they were probably paying a little less because our tax rate was a little less. And in FY01 that 14,303,514 does not include revenues from the gas and electric in property taxes, their revenue has been moved down to the excise. Karmer/I think it's something the Council should look at about municipality owned power, it doesn't mean we have to generate it, we can buy it, other cities in Iowa and it's done in numerous states, San Francisco and other cities, large and small are looking at it. Atkins/There' s a process that and we studied this about two years ago and (can't hear) didn't because we thought they were going to deregulate a couple years ago and it's a term called "retail wheeling" and in affect what it means is we go to Noah Dakota or someplace to look for the purchase of power, the biggest issue Steve and the rest of the Council is aggregating it, how we can we get as many potential customers. I mean if we were going to go out and just buy it for ourselves they're going to shoe us away, but if we were going to buy it in affect for the whole This represents only a reasonably accurate transcription of the Iowa City council meeting of January 4, 2001. WS010401 January 4, 2001 Budget Work Session Page 21 community or something such as that, that certainly improves your bargaining power, but the deregulation component isn't there just yet to grant us the ability to do that. We had a study done a couple years ago trying to figure out whether we could do what your suggesting. Kanner/Well there are two different things the aggregating together is separate from a municipally owned power. Atkins/Yes. Kanner/So those are, it doesn't soand like. Atkins/There are two issues. Kanner/A municipal owned power was studied necessarily. Atkins/No we did not study a municipally owned power, one because of the expense involved and then two the law at least as I understood it didn't really provide any serious economic advantages to us, that doesn't mean it hasn't changed, and thirdly is that something the community is interested in seeing us do, because I suspect that's a huge borrowing on our part because we'd have to buy it. And whether it would be approved politically is a question you all would have to discuss yea. Pfab/Maybe there' s no state advantages but there might be market advantages. Atkins/Oh yea there' s no doubt on that. Yea. Well one of the other thoughts we had was trying to hook up with the University, they've got a jet power plant right there, maybe we could aggregate everything downtown into a district and buy the power from there because there' s very little associated with transmitting that power to downtown but those are the kind of thoughts we had. Okay State, Bank Franchise tax is just that, the state taxes banks and then they return a portion of that bank tax to the cities, at one time it was something like 55/45, the state kept 55 pement and then 45 percent was returned to the cities by fonnula. Now on the surface that sounds really good because many of the banks around here are very prosperous and we would enjoy the benefit but the problem was the state kept it and said we will only return up to this and we keep the rest, that's why the nu_mber's flat, I'm convinced that number would be substantially larger but state changed the law because they needed the money. And I think the rest of the things, the sale of land reading over into 02, 03, and 04 at 450, 450, 450, that is Peninsula and now that we have a developer we are negotiating with a developer a pay out, we have applied an interest factor to it, that was part of the agreement now. We bought the land for a $1.3 million and this is sort of a general reflection that it will be paid This represents only a reasonably accurate transcription of the Iowa City council meeting of January 4, 2001. WS010401 January 4, 2001 Budget Work Session Page 22 over a period of three years. Now keep in mind because we didn't project that far out in 05 and 06 that goes away, because these are moneys we borrowed from our cash reserve position and we book that as an asset to our reserves now. Lehman/Steve just as observation, I will be gone but in place of that there should be some hopefully property tax revenue is going to (can't hear). Atkins/Oh Ernie I understand that, I'm assuming, we made the assumption it will be a successful project and the X number of units are going to be built are going to be paying property taxes etc. however it's also the public service requirements on the dense population as proposed for the Peninsula I suspect for example they're going to want a bus route. So I mean those kinds will also apply. Pfab/A quick question. Atkins/Sure. Pfab/Now will the fees for building permits and what not be identical whether they're located out there or out anywhere else? Arkins/To my knowledge when they build a property they have to submit for a building permit fee just like anybody else, our building permit fees are running fairly flat, although we've had a pretty good year, those may be a tad, if the Peninsula is successful, Irvin that may pop up a tad bit. I mean when the Peninsula project is successful. Champion/Right. Atkins/You' 11 notice loan repayments, Pass Through Grants, University Railroad, you remember we had to act as the agent. That's an aberration in our 00 budget that $900,000 we had to receive the grant and give it back to them so it skewed our what it appears to be our revenue as well as spending but we were doing that as a courtesy ofthe University. Yes sir. Pfab/The item right above that, I'm just curious, my curiosity is peak. Atkins/City Attorney charge back. Yea what we do is that the City Attorney' s office works on a variety of projects and what they do is almost like a regular legal office there are certain things that they can charge to water funds, to sewer, to landfill, to refuse, to capital projects, in this case we make an estimate of those that can be charged to the general fund. And it's a way of providing some self supporting aspect for the Attomey's office. We've done that for about 6-7 years, that' s fairly recent. This represents only a reasonably accurate transcription of the Iowa City council meeting of January 4, 2001. WS010401 January 4, 2001 Budget Work Session Page 23 Pfab/So I presume that's the same way up above the gas and electric use tax the charge back. Atkins/No an administrative charge back is a lot broader because we apply insurance, staff time, I mean a whole variety of factors we charge against various funds for the services that anybody in the general fund might provide, we've got a whole schedule for that, it's a fairly common practice. Kanner/So it's a way of taking it out of the 8.10 levy and putting it into levy' s where there's room for growth? Atkins/You've got it. Kanner/And just one other question, that state population allocation it's basically $10.00 a person across the state. Atkins/Yep. Kanner/For small, mid and large size cities? Atkins/They created a formula and what they do Steve is they I think tinker with the formula in order to keep it at $600,000 or whatever that $10.00 number is because we've obviously had population growth and it has not been reflected in that number. I think that number has been 629 or there abouts 8 years or more. Transfer from a road use tax, we receive based on our population so much money form the state, we finance things such as traffic engineering, street maintenance, and that's, there's a separate road use tax budget within your budget. Employee benefits is that we have to set a separate levy and then transfer it, that' s a matter of law, same with the emergency levy, same with parking funds, same with transfers from our reserves. In keeping with the policy of taking out of the 8.10 certain items that 02, 03, 04 GO bond we buy certain selected capital equipment through debt in order to reduce our 8.10 obligation for capital equipment, we show that as a receipt. Everybody okay with that? Kanner/Could you explain a little morn about that last thing you mentioned, the transfer in for the GO bonds and give an example of(can't hear). Arkins/What we do is we try to write a policy, or have tried to write a policy that if we're going to buy certain selected capital equipment and let' s say that selected capital equipment must have at least a five year life, we project it will be useable for five years. We will take those selected items and then we will identify them and then we will sell a general obligation note generally with a five year life on it, we don't This represents only a reasonably accurate transcription of the Iowa City council meeting of January 4, 2001. WS010401 January 4, 2001 Budget Work Session Page 24 want to go much longer than that. Then that equipment which would normally be purchased out of the 8.10 is purchased out of this $500,000 but we have to show it as a transfer from GO into the general fund in order to be able to accomplish that. We have some, oh those huge lawn mowers, I mean those things cost $30,000 - $40,000, there' s 7 or 8 years you know we'll keep one of those and that's the kind of thing we would charge against this. A desk chair no, we don't do that. Lehman/Steve this is a matter of convenience rather than going out every time an item comes up we have established the pool in this case a half a million dollars a year. Atkins/Yes, and that is an estimate, it may be 505, it may be 480, it may be how we schedule equipment, marked units for example in the police department, we have a 60,000 mile, 18 month on how we turn those over because they're no longer economical. We will buy a fire truck which has generally 15 to 20 year life with GO debt. Because we can demonstrate that we will do the borrowing for that particular piece of equipment and it's likely life will be such that we can justify debt financing for that. But small items, no, that's all back in the 8.10. Vanderhoef/But this also allows us greater flexibility in our 8.107 Arkins/That' s what I was pointing. Vanderhoef/When I first came on Council we had a reserve account for some of these kinds of things and it just became prohibitive to balance the budget without having some debt for some of these large items, we could no longer finance them (can't hear). Karmer/Why do you choose not chairs and you choose lawn mowers? Atkins/We choose lawn mowers because of the life of the, first of all it's usually an expensive item, and secondly it's life. If I'm going to borrow the money I'm going to make sure it has a life at least equal to what the extent of the debt is. The chair on the other hand, chairs for example over in the emergency dispatch center, we turn those over every two years. And the reason is there' s an employee there 24 hours a day, 7 days a week, and they just wear out, so that' s how we do it, it's a fairly detailed selection process. Wilburn/The Transfer from Road Use Tax is that related to the Federal Transportation to the state? Atkins/No, what it is is the state has a gas tax as we all know, (can't hear) a gallon. The state has a pool of money, that road use tax, gas tax is then divvied up by state policy, and I believe cities receive about 19 or 20 percent of the aggregate amount. This represents only a reasonably accurate transcription of the Iowa City council meeting of January 4, 2001. WS010401 January 4, 2001 Budget Work Session Page 25 The state gives us of that, say 20 percent, all the cities in the state share in those moneys. And the way the money is distributed is a nose count, what is your population, it's never any reflection of what road projects are. And each year they calculate that number, I believe this year it's $87.00 per person, so you take our population of 60,000 times $87.00 that' s the amount of money, that is a portion of this $3.3 million dollars for this years budget is a portion of $60,000 times $87.00, the remaining money is then available for capital projects restricted but is available for road use related capital projects. There's a, in your budget book you'll see a summary of the road use tax distribution, we've had a long standing policy of trying to maintain approximately a million dollar balance every year and when we spend it to that point in the road use tax and the reason we have done that with the understanding that if we have a special project that comes along some major street or some unique grant we can move quickly to say we know have our match money we're ready to go. Irvin. Pfab/Are we on the state's preferred list of being recipients of roads they don't? Atkins/Anybody who will take one is on the state's preferred list of yea. I expect that you'll be hearing in the next year or so from the state they're going to want to unload roads, now what economic advantage is there going to offer us. I promise you Irvin before we say yes we'll. Pfab/Okay I would say it might be a good idea to start planning our policy. Atkins/Yea well, I'm assuming the policy is sure we'll talk to you about it but it's still your highway, now if you want us to maintain it for you let's talk about that, yea. Ernie I've got 10:00 do you want to take a quick break? Lehman/Yea. Vanderhoef/Wonderful idea. (Break) Atkins/Lights out. We'll talk now again in summary terms about the general fund expenditures. This is page 23 in your book also part of the handout. When you look at payroll and I ask that you notice at the bottom under total expenditures, in our general fund they are at about the rate of general inflation. Keeping in mind in 02 we have the beginning of staffing the new fire station as well as Library employees. That 16 percent in 2000 is aberration again, remember what we did with the Pass Through Grant of over a million dollars, that pushed the expense up and there was 27 pay periods so you back those things out our spending has been again just about at inflation. Payroll as you know is our largest operational This represents only a reasonably accurate transcription of the Iowa City council meeting of January 4, 2001. WS010401 January 4, 2001 Budget Work Session Page 26 expense, it's also the most fluid, you can see there and read across we collectively bargain with about 400 of our, take that back over 400 of our 570 full time employees and those represented by collective bargaining. Agreements when we calculate our payroll we use turnover ratios, generally speaking we lose in the neighborhood of about 3-5 percent of our employees during the course of a year, quits, resignations, retirements, all those circumstances, we calculate that. The benefit program is substantially driven by someone other than you, health insurance is, it's provided by agreement to our employees, that the benefit cost in particular when it comes to pension is driven by the state and federal government, they determine the rates that we pay, we translate that into the property tax askings that are necessary. We believe and we have not in the past done this that we can continue to bargain responsibly with our employees, we don't get into huge economic debates, we deal with the issues of collective bargaining and there does not over the years, we've been generally satisfied with the results of the bargaining process. We go into the recruitment market like everybody else, we've had a great deal of difficulty in our technological positions, we are beginning to experience some turnover in some of our I guess you'd call it technical. For example, those of you know Rob Winstead he's been with us nine years, Rob' s leaving us to take a promotion, going to the City of Cedar Rapids as a Senior Level Engineer. You know with that goes nine years worth of so that does happen. Lehman/Steve you have a contingency line here starting in FY01, is that to take care of situations such as difficulty in recruiting technical people? Atkins/It's really intended to cover virtually anything that might come along, something that might break that we didn't expect. We don't show it in the actual because we've closed the books, there' s no reason to show a contingency when you've closed the books and that each year when you have an actual it will always show a zero. It allows us to respond if there is something that I can't think of a circumstance right now, it just allows us to respond to those, emergencies is too strong a term. Champion/Like something like a big wind storm would that? Atkins/Generally speaking what we try to do if it's our street maintenance people we maintain a contingency in our road use tax also that allows to deal with those issues. Now that big wind storm in 98 where we were spending money big time, we were drawing down our reserves, now we have been guaranteed that FEMA would reimburse us. I do know that, was it Deb not to long ago, we just finished the flood of 93, got our final payment. So 7 or 8 years to get around to getting us paid, but you have to be prepared for those things now on the wind storm I don't know where we are on that. Do they still owe us any money? This represents only a reasonably accurate transcription of the Iowa City council meeting of January 4, 2001. WS010401 January 4, 2001 Budget Work Session Page 27 Mansfield/They owe us the state 10 percent on a couple of, on the big debris project. Atkins/Okay. Mansfield/The other thing with the contingency is fire department overtime. Atkins/Yea overtime when we get a big fire. Mansfield/When you have temporary disabilities during the year or. Arkins/Those are the kind of things, but it allows us to respond without having to come back to you for authorization. Yes. Pfab/I know you show zero here, could I ask you what was the balance when you closed off the books? Atkins/I can't tell you what the balance was, I can tell you the budget is 1 percent, we always keep it in the $300,000. Pfab/No but I mean. Atkins/What was left over? Pfab/Right. Atkins/Would you make a note to find out for us? Okay we show what we spent out of that. So we budget normally in the neighborhood of 98 percent of what our actual payroll is. A couple years ago we tried a 95 percent and it was too tight, we really struggled, really. Champion/We talked about that. Atkins/Yea we talked about that and so we're back to the 98 percent. A couple cautions, whenever we calculate payroll is that could there be a dramatic economic change that has some affect, yea, we really haven't seen any. Is there the potential for an arbitrated labor settlement? Our history has been that we don't have to do that, I mean we've had grievance arbitration's but not on labor agreements. Could there be a change in the state law? Yea, the state in fact just changed police and fire pensions. We were paying in at a rate of 17 percent for those employees, we calculated actuarially that we only had to pay 13 percent of the value of that payroll, the state said continue to pay 17 percent and benefits were increased for certain select employees. Of course the federal law changes, social security, This represents only a reasonably accurate transcription of the Iowa City council meeting of January 4, 2001. WS010401 January 4, 2001 Budget Work Session Page 28 Medicare, just like any other business out there that we have to, we track those and try to keep an eye on them. Something about payroll, always keep in mind is that if you add new personnel and then the sate were to freeze us you've made a commitment, it just makes it more difficult for management purposes. Karmer/Was that, the cut back to 95 percent was that in fiscal year 99, on the year 19987 Atkins/Do you know what year that was Deb? Mansfield/It was last year. Atkins/Last year. Lehman/Yea. Atkins/Because we only tried it one year and it was just too tight, we were struggling with that, we didn't have the turnover we had, yea. Kanner/There was, Karen Kubby was I think the one that descented, everyone else agreed to that. Atkins/I don't recall. Lehman/She descented on the entire budget so I don't know whether it was that or (can't hear). Karmer/I recall the discussion, wasn't it majority was for the 95 percent except for her? Champion/We were willing to try. Atkins/Well I recommended it too. Kanner/You recommended it? Atkins/Oh yea, I said let' s try this, let's see what, I mean we did not want to go to that emergency levy, we didn't do those things, and it just didn't work. Now it wasn't a crisis, it just didn't work. Vanderhoef/Where do we budget for the contract engineers project? Atkins/Generally speaking, generally, when you designate a capital project, fix Dodge Street $1 million dollars. And we contract for any kind of service, we charge that directly against that project. Now our own in-house engine, we do have an This represents only a reasonably accurate transcription of the Iowa City council meeting of January 4, 2001. WS010401 January 4, 2001 Budget Work Session Page 29 account Dee internally for some smaller jobs but as you know engineers are not cheap, we normally have to when we go into under contract we can certainly show you those because we keep track of all of those, we charge it directly against the project. So when you create the project you are saying to me you have an authorization to spend on that particular project and we will do engineering work that way. Vanderhoef/Because otherwise we would go out and consultant fee too? Atkins/I beg your pardon. Vanderhoef/Otherwise they would go out into general consultant fees. Atkins/Yes, they'd, yes, yea. Now for example with Rob leaving we're going to have to make some changes because Rob was the Iowa Avenue Streetscape Manager, all those, out the door he goes with all of that, we've got to figure out yet how to cover that so. Another line item of expenditures is what we call commodity and service charges, generally speaking these are issues that are very much driven by the private sector, we go out on the market and buy goods and services just like really anyone else. We pay market rate, we have a number of joint purchase agreements with other jurisdictions. We often use multi-year contracts in order to get better prices. If you look at the line item for commodities and service charges, the history is such that we keep those pretty snug because those numbers generally run under looking at Service and Charges current budget of $6 million, $6.2, $6.2, $6.4 is our projections. So it's growing at a rate of just a tad bit rate of inflation, and that pays for a variety of activities. Champion/Steve would Service and Charges include utilities? Atkins/Yes. Champion/And you think that' s a big enough increase? Atkins/We believe it's going to be a little snug, what we decided to do was those were, those accounts that we don't have as much control over. For example, weather related accounts, if it's extremely cold it costs more to heat this building and then of course it's been extremely cold, costs more to heat this building and the cost of utilities are going up, we then go to other services and charges and say this is a year we're going to have to back off on a couple of those things to try to. So we try to do is not cause, by using a three year plan we try to not cause the budget to spike because then you get sort of a false reading, we could push up those expenditures and then the next couple of years sometimes a spending level is expected there and no. So we try to flatten those things out as best we can. This represents only a reasonably accurate transcription of the Iowa City council meeting of January 4, 2001. WSOI0401 January 4, 2001 Budget Work Session Page 30 Kanner/Steve. Atkins/I mentioned to you the fuel charges but that's a biggie. Yes Steve. Kanner/Is it just arbitrary you put utilities in services and charges rather than commodities someone decided one time? Atkins/We have a chart of accounts and in commodities there's a list of items you can charge in accounts, we call those our 7,000 accounts and that' s an accounting number. And then we have a series of, yea we have a list of so that each operational department, the cost of fuel our vehicles is let' s say account number 8600, everybody' s is 8600 for that particular item and that' s how we account for it. We have a chart of accounts that shows that. Pfab/Are those charts of accounts somewhat universal for other municipalities? Atkins/I don't think so, I mean ours is universal in our world. Pfab/But there is no. Atkins/When we're audited they select the particular item regardless of what number it might be or something such as that. Mansfield/Can I comment on that? Atkins/Sure Deb. Mansfield/With commodities it usually means that there's not a person involved in providing the service, like if we're buying paper or it's just buying a product, there's not a person associated with that service. Under Services and Charges it generally means that there' s a person involved with providing a service to us or that your buying it from the gas and electric, there' s a service provider. Atkins/Okay thanks Deb. And then Capital Outlay, again those numbers and that, a lot has to do with replacement schedules, we try to keep that number as a percentage of our general operating budget, you will have on your list for example the budget reductions, I have a summary list of budget reductions I made for you and you'll see that Parks wanted to buy particular a new truck and I took it out saying this is not the year we can afford that we may put it in a projection year in anticipation of something but if Parks is going to have a replacement truck then I don't question that as much as I would for any new items. And that's why those numbers can run fairly, we use to buy our fire equipment from our general fund and those can be This represents only a reasonably accurate transcription of the Iowa City council meeting of January 4, 2001. WS010401 January 4, 2001 Budget Work Session Page 31 some big ticket items. Recently we replaced all of our breathing apparatus, we were going to go through a schedule of replacement and it just simply for the safety of the employees it made sense to us to buy it all at once and it was well over $100,000 but now we have all new equipment, everybody has the same thing, and of course in future years that expense item will drop off enough that you'll begin to see some of those changes, that' s Capital Outlay. Anything else about just general funding, again I have gone through program by program, department by department, that' s later but I think if you can see that our general fund expense is a reasonably frugal budget. Yes sir. Kanner/Capital funding you said part of the reason it's going down is because we made big purchases now? Atkins/Some. Kanner/But also it is because some of it is being transferred to debt? Atkins/Yes that is part of it too. Kanner/That' s the strategy that you're using more and more? Atkins/Now remember though this general fund, this is our total capital outlay because we show as a receipt $500,000 from the debt service fund, so this is 391 plus $500 that means of that some of that may be paid for by that $500,000. Kanne~ In addition to the transfer there are other things that your putting in. (END OF 01-01 SIDE TWO) Atkins/No not really, no, generally on capital (can't hear) Steve everything's going to be somewhere shown, it's going to be in that number a portion of which may be paid by debt and then the remaining let's say if we did the full $500,000 so $891,000 of capital outlay is being paid from 8/10 levy, $500,000 of it is being paid for the debt service levy, that' s how you would read that. Kanner/But we're also purchasing, aren't we purchasing any, let's say vehicles with besides the $500,000 transfer with other general obligation bonds. Atkins/Oh, okay yes, now I got you. Yes. Karmer/Are we doing more of that? This represents only a reasonably accurate transcription of the Iowa City council meeting of January 4, 2001. WSOI0401 January 4, 2001 Budget Work Session Page 32 Atkins/We will buy buses next year, we have 6 new buses coming on line and we will match with general obligation debt. We have the new fire pu_mper and the related equipment for the fire station on 4 station, that's general obligation debt. Lehman/This is more routine sort of replacement. Atkins/This is generally routine. Lehman/No 5 year or (can't hear). Atkins/Yea, for example we replace probably six or seven market units on that cycle, that's when they come up, that' s budgeted in there because we can't justify debt for those things because of the mover. We have an equipment replacement fund for our big stuff; for example the compactor out at the landfill, if you've seen that you know what that thing looks like. That' s probably a half a million dollars but of course it has a 12-15 year life easily. We depreciate our big rolling stock, transfer those moneys into an equipment replacement reserve independent of this. Do we buy more equipment than this shows? The answer is yes, water fund, sewer funds, refuse. A refuse packer is about $100,000, probably has a life of 4-5 year maybe, then you beat a packer big time and they're $100,000 a pop. Buses are about $280,000 a piece. Kanner/Well just to finish Irvin, so the strategy though is it in part to try to get more out of the capital outlay from the general fund and into the greater debt service? Atkins/It is, just the other way, it is intent to minimize as much capital outlay out of the general fund 8.10 as we can, transferring it to other funds. I want to minimize the effect of capital equipment on the 8.10, that's the goal. Karmer/And that' s been a greater strategy the last few years, one reason it's going down? Atkins/Yes, that's part of it yes. Kanner/Part of it. Atkins/Part of it right, and that allows us more flexibility on the 8.10. Irvin. Pfab/I have some experience that was kind of that surprised me but I was very delighted. When the police cars came up for salvage to be sold, I was amazed at the money that they brought and I questioned, I watched the bid letting and what have you and I made some guesses at what they would bring. And apparently the equipment department, I don't know what it's, transportation. This represents only a reasonably accurate transcription of the Iowa City council meeting of January 4, 2001. WSOI0401 January 4, 2001 Budget Work Session Page 33 Atkins/Well it's in the Department of Public Works, Equipment Maintenance Division. Pfab/Their procedures and their maintenance's are so good that they have developed a reputation of delivering very very fine equipment and the market's going to pay for it. Atkins/Yep, we get similar purchasers with some regularity and it's, and I do think it's because of the guys and the men and women out at equipment maintenance. Pfab/I think we should be very thankful that they do as good a job as they do. Atkins/I'll take that as a "that a boy" and make sure they hear that and girl. Okay. Anything else? Well we looked at Revenues and General Fund Expenditures. Pfab/Does this have a page number of not? Atkins/Page number yes, it's page number 26 in your book and iCs in your handout also. What I want to point out to you here is the concern for the declining cash balance. Now remember the further out we go the harder it is to project. In some instances if we have multi-year labor agreements it's a lot easier then because we know for sure exactly what we're going to have to pay. Projecting what utility companies are going to do and our utility bill is well over a million dollars a year. So you don'tneedmuchofaswinginapercentagetoboostthat. We have a five year average and your policy was 20 percent, our five year average as shown is 22.2 percent so we're on point, I would note if you'll, it says although the cash balance is a percent is 5 percent, five year average or 20 percent, the cash balance in 04 is projected to decline to less than 15 percent minimum which is not I forgot the word "not" in accordance with the Council policy. Now I don't want to spend a load of time today, the important issue is our cash position is declining, this is contrary to your policy, however, we are going to make some adjustments when we get the new values and they'll be some tweaking of the tax rates and we believe we can boost that number. But the importance of that number is that how we meet our cash flow, that' s how we can respond to emergencies if necessary. That's also a factor used in our credit rating, that the credit companies that evaluate us say how well we do or don't do in maintaining our cash. I don't want you to adopt this budget until we really go to work on that and Kevin and Deb are already in the process of doing it, we have got to get that number up a tad bit. And I would like to approach no less than 15 percent in that 04 projection year, again it's still, that's a three years away. And so we're doing that, I just want to point out to you that adopting a new fire station, library employees, all the things that we'd like to do and the people associated with that does cause this to diminish. And we've got to get that back up, I will give you some proposals on that not at this session because this was put together at the time, when we sort of This represents only a reasonably accurate transcription of the Iowa City council meeting of January 4, 2001. WSOI0401 January 4, 2001 Budget Work Session Page 34 put this together and it's all final and since then we've decided to do a little more work. Maybe even tweaking the capital outlay and the debt and you understand but we've got to get that thing back up, I don't think that's, that' s not acceptable to me and I would hope it's not acceptable to you. We have a good policy, it's served us well for lots of years, let's get it back up there. Yes Steve. Kanner/Is it also necessary to have it above the shortfall and receipts? How do you cover that if you don't have that cash reserve? Atkins/We have several cash reserves, the one that's the most important is the one that supports the largest fund. That's the general fund, that's what your looking at. We have for example, $7 million dollars sitting in a landfill reserve anticipating the closure of the landfill in about 25 or 30 years. We could use those moneys to meet cash flow, we can use those moneys on occasion to do some short term projects but that law is very clear, we must maintain that big reserve called the Landfill Closure Assurance Fund. You could not, you could not use that account in particular to meet some operations, we have reserve accounts in water, we have reserve accounts in sewer, just like when we do our investing we pool all of our resources, but for credit rating purposes, they don't look at that way, they look at that each of them separately, and the general operation, this means the day to day functioning of the government, that's the one they're most concerned with. We can meet our cash needs by the use of other funds, and what we try, we could go out and in fact you can, it's not uncommon where businesses establish a line of credit but then you have to pay interest and we have chosen historically not to use any borrowing to meet our day to day operational needs because it just simply costs us more. So we can do it, we have an account in the sewer fund which is one years's interest on bond payments. That's in case everything went to hell in a hand basket. The bond holder knows sitting in an account is one year's payment on principle and interest so that gets them over the crisis. We have an account of $2 million dollars called a construction reserve, in order to improve the credit rating of our sewer bonds we created this reserve, which in affect means that if there's something that goes wrong with the system and your now a bond holder they know that you have $2 million dollars available to you immediately, you must repay it and we're allowed to use it on short term. But those are some of the kind of reserves we maintain. Karmer/It would be helpful to me if we could get a list of all our different reserve funds. Arkins/Sure. Kanner/What interest rate we're getting on them. This represents only a reasonably accurate transcription of the Iowa City council meeting of January 4, 2001. WS010401 January 4, 2001 Budget Work Session Page 35 Atkins/We gave you that, remember that' s that quarterly report because we aggregate all of those but I understand what you're saying. Kanner/Okay and what' s been drawn on them on the reserve funds and when we expect to pay them back internally, and why it was drawn. Arkins/Sure, we have all of that, we'll get that for you. Got a note of that folks. Karmer/Thank you. Vanderhoef/So I have a question on the short fall on receipts when we look at historically. Atkins/Yes. Vanderhoef/It has not changed depreciably. Atkins/Yea. Vanderhoef/And yet we recognize the increase in our costs. Atkins/Right. Vanderhoef/So are we shortchanging ourselves if we don't increase our shortfall of receipt reserve there for? Atkins/What we do is when we close the books at the end of the year we have traditionally, this is out of $30 million dollar budget, we will have a swing in our receipts of about 1 and a half, maybe 2 percent. Now in numbers, that's $500,000 so you understand the magnitude of it, that's 1.75 percent of our general fund. End of the year, that means we clean up all of the accounts, everything that's coming in, remember these are estimates. When you take that and project that in aggregate $500,000 this year, $500,000 the next, it does have an affect on the cash balance, and we factor that in Dee. In the early now these numbers are declining because clearly our expenses are going beyond our receipts. But the budget is balanced, we have reasonable reserves, what's going to happen in 05 and 06 I couldn't tell you? I did look up the report that I did for you in 1997 and it called for, we had not added a fourth fire station, that 04, 05 and 06 would be our toughest years. And we're pretty well keeping on track, now the numbers vary a tad bit, but not dramatic, our projections have been pretty accurate. What if for example there was no fourth fire station and that' s a commitment of over half a million dollars a year instead of $4.295 that' s going to be closer to $6 million dollars, that alone, you can see the swing. And the point that I'm trying to make This represents only a reasonably accurate transcription of the Iowa City council meeting of January 4, 2001. WS010401 January 4, 2001 Budget Work Session Page 36 to you is that when you make an operational commitment of something for example as expensive as a fourth fire station we have three new library employees in here, and some other odds and ends but those are the biggies, it has accumulative affect on your spending. Okay. We will spend a little more time on this a little later on. Let me sort of give you just a thumbnail sketch of what it all means in taxes. Here' s where we are today, Fiscal 01, Fiscal 02, the budgets your dealing with, now remember this number is going to increase slightly which will bring that up a tad bit but generally speaking I have assumed because the improved position of the rollback 54 to 56 has a beating, an increase slightly in the tax rate, our increase in the debt service, all of that combined means that a family owning a $100,000 is going to pay about $25.00 more a year with this budget. Now on the surface that' s. Pfab/Where do you get the $25.00? Atkins/Subtract 809 from 833. Pfab/Okay, hello, I'm. Atkins/Now when we get into our projection years with the debt coming on line, big debt and that' s the cumulative affect of your current capital plan plus the library referendum you can see those numbers begin to go up. And I'm also showing you 20 percent of the property tax paid is for capital, 21, 26 and then it jumps to 28. So that portion, so folks say my taxes are going up that' s true, most of that increase is directly associated with the cost of capital borrowing and debt because operationally folks we don't have that much margin anyway, remember that earlier number that 11, it doesn't change much and so our flexibility and our operational budget draw down a reserves, other things, those all have an affect on this. Lehman/Steve I may have missed this but in your projections for taxes did you, what sort of adjustment did you make for increased valuation because of the (can't hear)? Atkins/I did not do that. Lehman/So that could have a. Atkins/And that could have a bearing on it. Lehman/And it would be a positive affect. This represents only a reasonably accurate transcription of the Iowa City council meeting of January 4, 2001. WSOI0401 January 4, 2001 Budget Work Session Page 37 Atkins/Yes it would, it would but again I don't know what those. Lehman/You can't I know. Atkins/I can't, but I did keep the rollback up trying to factor some increase in there. Yes sir. Pfab/It's a positive except if your a homeowner. Atkins/Well. Pfab/I mean it's. Atkins/And I would hope you would bring that up for future debate is because the bottom line is the homeowner still has enjoys the benefit of the rollback business and industry don't. If you're going to talk about growing your tax base, that' s the one you want to grow, not this, you know this is frock with political discussion I understand that. Pfab/Oh I know, I just said that because we just, it's not a one sided. Atkins/Oh yea, it's all protected. You're correct Irvin, Yes. Kanner/Will you get us also the most current county and school rates that they're paying so we could. Atkins/I can get you a comparison, I, yea, we can get those Steve. Kanner/For the total tax package that a. Atkins/Generally speaking remember the 40/40/20 rule. Kanner/Yea I know that if we could get more exact figures what the current levy' s are for the county and the school. Atkins/We will, we can get you the current levy I haven't seen their proposed budgets, I know the county doesn't calculate this. Lehman/I can bring my tax bill. Champion/Right it has everything. This represents only a reasonably accurate transcription of the Iowa City council meeting of January 4, 2001. WS010401 January 4, 2001 Budget Work Session Page 38 Atkins/Now, yea, it's on your tax bill, but I mean the county I don't think calculates this far out and nor does the school. Lehman/No but it tells you what the breakdown is for the tax new year. Atkins/Okay. Generally speaking, excuse the term, that's the General Fund, receipts, expenditures, general affect on. What I want to start on next is our Enterprise funds, is there anything on General fund? Champion/I'm allergic to this place. O'Donnell/I am too. Atkins/What are you allergic to? Champion/Nothing. Lehman/Budget. Atkins/Bad news. Anything else on this one general fund? For our purposes the way we run, manage, is that we have something called Enterprise Funds, and that in affect means that the income to the fund, let' s use the water, is a result of some fee or charge and all expenses to that fund come from that particular fee or charge. And we use and it's called an enterprise it's run in affect like a business, there are two funds that do not pay their way, transit and the airport. Transit requires a subsidy of some consequence, airport proportionally speaking a similar one. We keep books for the transit system the way it is because of the variety of state and federal aid programs and everything that kind of pours into that, it's just easier for us to account, and you'll see, you would see in your budget we do show a transfer of property taxes from the 95 cent levy as well as the general fund that subsidizes the operations of transit. We do show a transfer from the general fund to the airport to subsidize their operations. But our other funds, refuse collection, the $11.00 you pay a month pays for all the refuse collections services, landfill we have a tipping fee, to grout we charge you so much and again Fm going to break these all out for you in a moment. Parking, the same way, parking is intended, in fact parking subsidizes the general fund because the fines from parking are receipt to the general fund so that's, those are Enterprise Funds, that' s sort of how we do business. Now there' s a narrative description of these on pages 27-28-29 in your budget, I want to show you and I'm going to start with the first one that I have is our parking fund. And I want to identify for you what I believe to be sort of the major issues upcoming with respect to that fund. First of all Tower Place and Parking and we will have a rate adjustment proposal for you is due to open summer of next year, the commercial component is as you all understand it in the This represents only a reasonably accurate transcription of the Iowa City council meeting of January 4, 2001. WSOI0401 January 4, 2001 Budget Work Session Page 39 process of being sold off. The project has slowed down somewhat, severity of the weather, couple other factors but we still anticipate opening next summer. The Near Southside Transportation Center is a parking garage and other features but as you see in a minute it is an asset to the transit system because it's funded by the Federal Transit Administration, and I'll explain that to you. We have pending the new debt debit card system which I think you understand how debit cards work where we have some software changes we have to make in our operations but we would hope to have a proposal to you very shortly on how that system would be working. The park, it says Parking Officers, it's suppose to say Parking Offices, they will be moving into Tower Place, they are currently over in Dubuque Street Parking garage, Dubuque Street will remain the center for maintenance, fixing meters and such as that, but the offices as you know them will be located over in the new Tower Place. We have a proposal and we'll show you that again on increasing various rates, we have factored into budget balancing, the loss of the Iowa Avenue meter revenue, and we raise as a future issue because with the library decision being made we are finding lots of interest in the 641A lot, we will be bringing that issue to you for discussion because your going to have to give us some direction on where we go, as you know the library feels strongly about trying to preserve surface parking to the fullest extent. Some of the development proposals and general ideas do that others do not but these are issues associated with the operations of the parking fund. We prepared a report for you, oh I don't think it was too long ago, that the parking fund was rebounding and that our revenue projections from the downturn of the opening of Coral Ridge Mall, I don't think there's any doubt that's where we have to attribute that. Those numbers are on the way back up, not to the sufficient level we think we can avoid a rate increase particularly in the out years. The general operation again of the parking system accommodates all the things that I think you know of that have been going on in the last few months. Generally that' s sort of an overview of that, that fund I want to show you give you a feel for and we will calculate this in a better fashion for you. Pfab/What page? Atkins/That is not in your book, I apologize I just got that yesterday so please forgive me but I'll get you a copy of it. What we're basically proposing is that these new rates go into affect as soon as practical, Tower Place in particular, that only makes good sense to us that when we open the door charge the rate that we're going to charge. I will give you a copy of this folks so you don't have to scribble, I apologize for not getting it to you quickly. It's pretty straight forward, the income is well over $160,000 a year, we do have some debt that's going to be paid off shortly and with that and with new income we think that the parking fund can be restored to it's original prosperity. Yes sir. This represents only a reasonably accurate transcription of the Iowa City council meeting of January 4, 2001. WS010401 January 4, 2001 Budget Work Session Page 40 Pfab/As far as our debit card system or whatever, is that the term you use? Atkins/Debit card right. Pfab/Okay so people will only be able to go in and out, swipe the card so they will not pay for any excess time? Atkins/Here' s how I understand it will work, you will buy a card and let's say the card has a value of $50.00, you will go out, you've pulled in to park and you leave. It has market going in, market going out, it will tell you how much is left on the card there will be a display screen, so if you drive in and have $50.00 of value and by the time you drive you swipe it again and it says $48.50, that' s how much value you have. And we will sell these cards in some kind of increment to folks, that' s basically how it's intended to work. Pfab/I think that if we have to raise the rate at this place with the use of the debit card I think there are advantages to the public versus say over here at Chauncey Swan. Atkins/Chauncey Swan it won't work. Pfab/I know but you gamble, will I be there, or will I won't. Atkins/Yea I understand. Pfab/Or not do I get caught. So I mean think that it is a fair thing, is it ever possible to do something like that with the meters? Atkins/I don't know. Pfab/I believe there is but, over some time but I mean at some point. Atkins/We designed if I remember details, we designed Chauncey Swan with the ability to go to a staffed, I mean to do away with the system that's there and to go to so we could do, we have to reconfigure it but we can do that. I would think we want to wait and just see how successful and I personally think the debit card is going to be successful. Lehman/(can't hear). Atkins/Yea, son or daughter, it's a college student I could just, she' s got to go to work, and back and forth to class. Champion/And you can do that at Chauncey with just a debit card. This represents only a reasonably accurate transcription of the Iowa City council meeting of January 4, 2001. WS010401 January 4, 2001 Budget Work Session Page 41 Atkins/Yea. Champion/And I'm just not sure the details, as far as meters are concerned I would suspect that would be really really expensive, I just don't know Irvin. Lehman/It's also a policy issue as far as rumover on the meters, I think perhaps there are a lot of people who would not like to see those used as storage spaces for cars. Atkins/Yep, I will get this to you, the budget numbers that you have do not include this because I want you to discuss that so we will take that as a separate issue. Pfab/My only point was is as the public looks at this and looks at it as another 20 percent increase, I mean I think there's some value there they're getting if you can use the debit card and I think that. Atkins/Lessens the sting a little bit. Pfab/Pardon. Atkins/Lessens the sting of it a little bit. Pfab/Right. It also now debit cards will be sold without a hair cut on them? Atkins/Hair cut, I don't understand. Pfab/In other words a charge to buy. Atkins/Oh you mean a fee for selling the card, I never, I can't imagine why we'd want to do that but I mean. Pfab/But I presume they're rechargeable right? Atkins/Yea, I do understand that that' s what you can do you can buy more time on them. Pfab/You charge it's kind of like a postage meter. Atkins/I couldn't tell you. I know my Menard's thing, you now that's how I, I got one of those as a Christmas present so I just spend off the thing. Kanner/Steve. Last year when I offered the budget amendments to increase the parking rates I did some investigating and I got some information that we could increase it even more than that and still not affect the amount of people using the parking This represents only a reasonably accurate transcription of the Iowa City council meeting of January 4, 2001. WS010401 January 4, 2001 Budget Work Session Page 42 ramps and I was wondering if you could a look at that you know from perhaps from JCCOG's, what is the upper amount that they project that we could charge and not affect parking rates. Because what I found and I believe this was JCCOG's information is that we could go another at least I0 or 20 cents above your projected increases and still not affect parking. Atkins/I think your going to have to address that to you all but if you want me to do some options I can. Champion/No I'm not interested. Lehman/Are there four, that's what Steve I would have to ask the Council if there's interest in pursuing that. Atkins/The 60 cents is what the University charges. Kanner/What I'm asking for is the information, there have been studies that have been to see what is the rate of increase will affect parking. JCCOG's makes reports on that in general and I think it would be useful for us to know what is the amount of increase that could be charged before they project a decrease in use of garage because there is a correlation between price and the amount of people that use it. So if there's an option we could go another 20 cents and it's projected that people will still use the garage is at the same rates, that's something we might want to make a decision so it becomes a political decision of whether we want to make it easier at lower rates or we want to go up higher and bring more money into the general fund. So I think it would be worthwhile to have that information and I think. Atkins/If it's available I can get it. I mean I can give you some more numbers. Karmer/I think it's worth asking JCCOG's and our transportation planners. Atkins/I'll get it unless I hear otherwise from you. Champion/I'm not interested. Lehman/I have no interest in it but. Atkins/If you want me to get it I'll get it. Okay. Vanderhoef/I have one question, the one thing that seems to be missing in the numbers for me at least is the loss of revenue from fines from meters when we decreased the number of meters out there. This represents only a reasonably accurate transcription of the Iowa City council meeting of January 4, 2001. WS010401 January 4, 2001 Budget Work Session Page 43 Atkins/We factored into financing the understanding that Iowa Avenue meters are going away, that' s already been factored in. Vanderhoef/It has. Atkins/Yea I did that. Vanderhoef/So the dollars looked like in the general fund the receipt of transfer was staying up or growing a little bit. Atkins/I'd have to defer to Joe on how he got to that number Dee but I can certainly ask that question. Would you make a note of that? Vanderhoef/I maybe missed that but I was curious. (Can't hear). Atkins/Time out. Wilburn/Steven have you heard that the University is considered? Kanner/What? Wilburn/Have you heard or received the University is considering their parking ramp? Kanner/I just, I asked, I believe it was JCCOG's that I asked last year or I saw it in a report that they said. Atkins/If it's there we'll find it. Pfab/Dee I don't know if I understood your question, were you asking a decrease in fines? Vanderhoef/Decrease in fine moneys coming in because we have less metered where the possibility for a fine comes in and here on the sheet the parking fines are showing going up rather than going down and that is a direct hit on the general fund because that's where those dollars go. Atkins/I think I can assume Dee is that if you read in 00 it's 473, we dropped it to 390 and it's back to 450, that' s what Fll, and I'll have to confirm that with Joe. Vanderhoef/Well I'm looking at the other sheet. This represents only a reasonably accurate transcription of the Iowa City council meeting of January 4, 2001. WSOI0401 January 4, 2001 Budget Work Session Page 44 Lehman/Page 75 in the budget. Vanderhoef/It's showing, 01 $440,000 and then in this budget they're showing $480,000 going to $500,000 in 03 and 04. Atkins/I'm sure there's an logical explanation I just can't tell it to you right now. I'll find out for you, make a note of that, we'll get that back to you. Okay anything else on that because I want to run you through time is flying by. Page 79 in your budget is the Transit System and there's a lot of unique things here that we need to get you filled in on. Operationally the bus fares continue to be a declining portion, that's on page 79 in your budget. Rider ship is flat, if not down a tad bit, I did look up, I thought you'd be interested in 1983 was our peak year, 2.465 million riders. This year we're down to 1.256, it's about half. Lehman/Is that a trend that's occurring all over the country? Atkins/It's all over the country, yea. The Council about 8 or 9 years ago in fact had a policy that transit must pay 40 percent from the fare box and they simply just had to do away with the policy or we were going to have to gut the transit system and I remember the debate and we've since long dropped that. I'll get back to that in a minute, let me just, I'll walk you through those numbers and I'll take you through those issues. If you look under the receipts, Federal Grants and Federal Intergovernmental Revenue, we thought at one time about 4 years ago we were going to lose all that, in fact we were put on notice. Congress for whatever reason didn't do that, and we're projecting that we will continue to receive that assistance, that Federal Intergovernmental Revenue. The state has talked about it but never really made a much of an effort, the one that I want you to notice the most is the transfer from the general levy and I'm going to give you some specifics, in the 01 budget it was $460,000, we are projecting in 02, we're going to bring it down to $330,000, one is we need some room in the general fund, two the reserve position I felt was a little high so you'll notice that the ending balance is being drawn down a tad bit with our projections, I'm not uncomfortable about that but I wanted you to be aware of that. Now there's some unique things about Transit that we need to talk about and this will be on your budget policy issues for later discussion. We are proposing that we end the shuttle in the summertime. We just simply do not have the rider ship to justify the shuttle, in other words while school is in session we'll run the shuttle, when school's out we won't. We are proposing that the east side loop be changed in frequency to match the west side loop, in affect it's twice a day, we'll take you to the details, and we will transfer those hours gained, it will not reduce the budget to the Towncrest, Oakcrest This represents only a reasonably accurate transcription of the Iowa City council meeting of January 4, 2001. WS010401 January 4, 2001 Budget Work Session Page 45 routes, where we have increasing demand and we can get back to half hour service for those. Kanner/What are those routes? Atkins/Towncrest and Oakcrest, I will give you a detailed presentation on that when we're all done with so because I want Joe to take you through it. It does not change the budget but it does change as far as policy on what direction we're going to go with respect to operations. At what time in fact Emie I think Mary Sue Coleman came to you about increasing the shuttle at night, remember we talked about it. It's something, we have not proposed that, it will continue running the same hours but again it would be a shuttle while school is in session, again transferring the hours. Lehman/That would, you say while in session, but it would continue to run for example during winter break. Atkins/Yea, basically school starts and school ends, that's the idea. Lehman/Summer only. Pfab/Is that University schools, that's what your talking? Atkins/Yes. Kanner/Do you anticipate that the loss in the number of riders will be picked up, the loss of the number of riders in the shuttle will be picked up by increase in these other routes and therefore will help continue to get the same federal money7 Arkins/That's kind of the part of the thinking is that we have some demand from those other routes that we ought to be able to pick up some ridership on this thing. We won't know obviously until we try the thing but the summertime ridership is really really just I mean drops off dramatically so but your right I think we'll be able to accomplish what your suggesting. Bus acquisition, and this is just a heads up and you'll see it in the capital plan, we have to buy 6 new full size buses and 7 para transit buses will be coming on for replacement in the next year. We will be paying for our share from debt, we have a small reserve but we no longer maintain a reserve for those buses. The current funding is 83 percent Feds, 17 percent city, that was one that we really nervous about the potential for losing the thing, so far that's been preserved so that is more of a heads up. Kanner/Steve. This represents only a reasonably accurate transcription of the Iowa City council meeting of January 4, 2001. WSOI0401 January 4, 2001 Budget Work Session Page 46 Atkins/Yea. Kanner/Does the parking transit look at different types of fuel for the buses, we use diesel I assume and a lot of cities are starting to look at, I don't know if it will hint natural gas anymore but alternative fuels, electric that are cleaner and probably cost the same too, I think some of our neighbors to the north are using some different. Atkins/I have understood that Joe gas looked at some of those, I'll get a status report on what he's done, and I know propane was considered, in fact we did an experiment 10 years ago and that one failed miserably. But some of the other options I don't know the specifics if Joe's done that. Kanner/And I would think there might be more federal money if you do a little innovating buying. Atkins/Well sometimes I think we attribute innovation to the federal government that they certainly don't deserve, I think we do it for practical reasons more than anything but I will find out for you. Kanner/Well there, I did also get a hold of this book which people might like to look, this is from the federal transit. Atkins/FTA. Kanner/Authority and there' s some grant money for transportation, and community and system preservation pilot programs that just started two years ago, it's highly competitive. Atkins/There is a federal program pending and we have not factored it in and I'll try to explain it to you in abbreviated terms. Traditionally the big systems throughout the country get all the federal money, I mean we don't get it. But there are many smaller systems like ours that also provide a very high level of service and we were getting the short shrift of this, so what's happening now is the Fed' s are refiguring their formula' s for distribution of federal assistance and looking at small efficient and high service level systems like ours, we deserve additional federal aid. And we fit into that category, that could have a profound affect because it could be a new operating revenue you know the difficulty is of course, he who giveth can taketh away and the Fed's can do that to us. But that's something that I know that Jeff and Joe are watching but it's small system federal financial aid which we should enjoy the benefit of if they follow through on it, now that' s if. This represents only a reasonably accurate transcription of the Iowa City council meeting of January 4, 2001. WS010401 January 4, 2001 Budget Work Session Page 47 Near Southside, the Near Southside Transportation Center is funded by the Federal Transit Administration and it has basically three components, bus depot, day care center, and we're reviewing proposals and parking garage. The Fed's have pledged $9.6 million dollars of a $12 million dollar project, when I say the Fed's it's the Federal Transit Administration. We will have to show that that transportation center is an asset of the city to the transit system not the parking. Now that facility will generate income, we will charge rent for the bus depot, we will likely have to charge some rent for the day care center. We will get income from people who park their cars there, all of that income is credited to the transit system not the parking fund. So what you have is parking revenues subsidizing the transit system. Yes. Lehman/Let me ask you, the revenue that are generated by that facility I assume will be used to pay off the bonding for that facility. Atkins/No it won't, the Fed's will not permit that, we will have to finance our share from either cash or general obligation debt, we can charge the operations of that facility. For example Joe Fowler's parking people can run it and we can charge that but the income, we have to come up with our match and no income from this facility can be used in affect to pay for our commitment to it, it all must go. Vanderhoef/(can't hear). Atkins/Yes. Now and we're working on a financing plan which when we do capital I'll take you through that. Lehman/Even the income from the daycare rent can not be used to off set the cost of the portion of the facility? Atkins/The operational cost yes. Lehman/No but the cost of capital cost. Atkins/Very simple, here' s what we think, here' s a scenario, don't hold me to these numbers. We think that the Near Southside Transportation Facility ought to generate in the neighborhood of about $250,000 a year in income, income plus depot rent, day care, people park their cars, whatever. We estimate that it will cost about $90,000 to $100,000 a year to run it, somebody to take the tickets, somebody to clean it, all those things, that's about what Chauncey does. Net $150,000 round numbers, that $150,000 must be in revenue to the transit system. Lehman/It basically out of our general (can't hear) decrease the amount of general fund commitment to the transit. This represents only a reasonably accurate transcription of the Iowa City council meeting of January 4, 2001. WS010401 January 4, 2001 Budget Work Session Page 48 (END OF 01-02 SIDE ONE) Atkins/We must make our commitment, okay, so the important thing in the policy discussion your going to have, I mean this is kind of unusual where your taking a what you think of people are saying your building another parking garage well yea but the income from it help support transit, that's the scheme of things on how they want to do it. Now we'll have to have a discussion about that because if that occurs that lessens the property tax from the general levy which is the balancing number that we use, the $330,000 that you have in this current budget if you get a new line item income of say $150,000 that number can go down or you can choose to expand services, and that's where you have to have your debate and discussion with it. But I want you to know that it is not shown in this budget because it's still to new and we're still trying to polish this thing and I need to have your understanding on how you want to finance the capital end of it. But the bottom line is the Near Southside Transportation Center is an asset to the transit fund, not the parking fund, or anything else. Yes sir. Pfab/This might be a good time to bring up something I was going to go up and talk to Jeff about and I brought it up before and that is not utilizing the underground space under that big footprint. Arkins/Yea we've talked about it. Pfab/And okay it costs too much to park there, what about just making it space to use we have underground space in this building, we have underground space up here. Atkins/Anything is possible but I will tell you the instructions that I have given the consultant and the staff is that it's a $12 million dollar project, no more. Pfab/Okay is it, we'd be smart to put on the top floor. Atkins/We can that's being designed in that you can put another level of parking rather than underground. Pfab/Okay but are we missing out on something, if we're looking at a 100 year footprint in this downtown area, it just doesn't make sense not to utilize that space underneath there for city storage, if there's going to be a commercial unit to that, is there. Arkins/Remember commercial is out, remember we took that out. Pfab/No, no, eventually. This represents only a reasonably accurate transcription of the Iowa City council meeting of January 4, 2001. WS010401 January 4, 2001 Budget Work Session Page 49 Atkins/Eventually yes. Pfab/Is there any reason why that couldn't be used as storage, workshops, other public facilities, or private facilities that could be rented out? Arkins/Yea, and I mean this respectfully how do you pay for that7 Pfab/Oh that was. Atkins/General fund, and that's where we're running into trouble. Pfab/It has to come out of general fund. Atkins/Where else would it come from? That's my point, is that you can create the space, and I don't want to create the space and rush to fill it. Pfab/Right. Arkins/And in principle you're not wrong, practically I don't know we'd pay for it. Pfab/In other words it's space that we could not rent out. Atkins/I doubt it. Pfab/But that's your premise, I'm not saying you're right or wrong Fmjust (can't hear) premises but that's your point your making is that it? Atkins/Yes. Pfab/Okay. Atkins/But the important thing, the real real critical issue you have with respect to understanding our transit fund is the fact that it's a major new asset to be booked and the income derived if you push up parking rates. Can you set different rates for that? I suspect you could. Do you want to? But the point is it's an asset now that we did not have in the past. Okay. Next is the Wastewater Fund, I will try to move through these fairly quickly. In wastewater and it's page 80 in your budget book. We have basically no dramatic change, we did put in somewhat arbitrarily $300,000 in anticipated new expenses, we have a rate increase of 5 percent which is the last one proposed for August 1st and that' s been our schedule, we will be doing some borrowing later on, just in This represents only a reasonably accurate transcription of the Iowa City council meeting of January 4, 2001. WS010401 January 4, 2001 Budget Work Session Page 50 fulfilling our obligations to the current contract. We will begin spending down probably far more dramatically than those numbers represent the 20 percent cash position that we have. Here after and in your book you'll see the bond reserve accounts and all the things I think had mentioned earlier unless you really want to spend some time on those things those are all obligations for debt. We don't see any, we will be in compliance with the new ammonia standards for the Feds. with respect to wastewater. No major changes, yes sir. Kanner/We voted recently for the water bond, for the water. Atkins/Water or wastewater? This is wastewater. Okay Kanner/Wastewater and also water, rates are going up, if Coancil decided a majority that wanted to make it lower the rates again and not have that 20 percent down payment, is that possible then to refinance the bonds and get longer term bonds and? Atkins/I think we're 27 year bonds now, if we're going to refinance I suspect it's probably not available for about 5 years, there' s usually some front end commitment on those things. If you were to alter the rates without dramatically influencing the income then I don't think there would be a problem. If you alter the rates and it affected the income that would affect our credit rating and while you wouldn't get dinged on this in the future you, I'm sure you'd have to pay more for your bonds anyway. I guess the short answer is you can do what you want to do but you still have got to generate the income to pay the debt and of course we have a consent agreement with the DNR and the EPA that we will fulfill those standards. I can't imagine they would look favorably for any reason we were not able to fulfill our capital commitments on the thing, and that would be my only concern. I'd have to take you through the numbers to see if it would work (can't hear). Vanderhoef/There could be consequences though that. Atkins/Oh sure there's consequences. Vanderhoet7 Affect us big time in the long ran. Kanner/I know that' s what I'm trying to see if we can get a sense. Atkins/I'd be. This represents only a reasonably accurate transcription of the Iowa City council meeting of January 4, 2001. WS010401 January 4, 2001 Budget Work Session Page 51 Kanner/I don't think this Council would change it but possible future Councils to change because the rates are very high and a future Council might say we want to lower the rates and we want to take some of that 20 pement. Atkins/We're spending the 20 percent already. Lehman/That will be gone. Kanner/We're spending it in a sense but in a sense we can get it back by general, some bonds that we would, additional bonds that we would secure I would imagine, that's what I'm trying to figure out. Atkins/But see my concern Steve is the security and the security is measured by the income and if the income remains consistent and there isn't some dramatic whether you raise or lower then I'm okay with what your proposing to do but if it affects our income dramatically then there' s not going to be a market for our bonds and so we're not going to be able to borrow, and if we can't borrow then we can't fulfill the capital, if we can't fulfill the capital then we're contrary to the consent decree. Pfab/Just on a real quick point here, I understand that in some areas there is some interest in regional water system. Atkins/Yes. Pfab/Is this? Arkins/Water or waste, this is wastewater. Pfab/Okay I'm sorry. Atkins/We're going to talk about water in a minute, then ask that question because I'll tell you about it. Page 84 in your budget is the water system, the project itself is moving along, it's been substantially treated the same as we did with wastewater. We've added money in anticipation of operational cost increases. You all know what the issues pending, the sale of the land, that the current water plant is on, a good bit of that sale will accrue the benefit to the water when we sell that to the University. Kanner/Where does that show up here? Atkins/It doesn't, you won't see that in here Steve because I'm not sure when the University's, we've been talking with them off and on for months, they gave us This represents only a reasonably accurate transcription of the Iowa City council meeting of January 4, 2001. WS010401 January 4, 2001 Budget Work Session Page 52 an offer, we sent them back and we haven't heard back from them for a couple months other than we know they want to buy this property. I think it's them settling on what they're willing to pay and as soon as I know something specifically I'm going to bring it to you and that' s cash in the sense of and it would be credited to this budget. Now the influence on rates and other capital projects we'll have to wait and see. Lehman/That wouldn't be a sale that would take place prior to the completion of the present for the new plant anyway. Atkins/I think it can Emie, I think we can sell that, I think you can sell the current water plant site anytime you want. Lehman/Even though we still need to use it. Atkins/As you know you flip the switch there's a lot to doing to flipping that switch and that plant will have to remain in operation for a while, the, and the plant is virtually of no value to the University, what they want is the ground. That' s what they want out of it, and we're in the negotiation process who's going to tear down what and what's the value of this, I mean, because it's really like a donut, everything around it is owned by the University and I think they see that as a potential academic site. We have to have a pump station for downtown, we must have access to the Jordan well, we still want to use that well, there' s nothing wrong with that well. Lehman/And the storage tank. Atkins/And the storage tank, we would like to get a longer conunitment to that which is in the parking ramp itself. Yes sir. Pfab/Maybe we just solved the problem of who to rent the space under the transportation center to is the University. Atkins/Fill it fill of water. Kanner/Steve do we have to? Atkins/I'm sorry I didn't mean to be smartstick. Pfab/No. Kanner/Do we have to sell that to the University or can we sell that to anyone? This represents only a reasonably accurate transcription of the Iowa City council meeting of January 4, 2001. WS010401 January 4, 2001 Budget Work Session Page 53 Atkins/General policy position taken a number of years ago was that we had a. Go ahead Ernie. Lehman/We struck an agreement with the University in the acquisition of this property directly across the street where we have an agreement with them they sold us that property based on a same, on a formula and our agreement with them was we would sell them the water plant site based on the same formula, so we have an agreement to sell that to the University of Iowa. Atkins/Now if they choose not to do it. Lehman/Then we can sell it to anybody, we basically have an agreement with them. Atkins/We have been approached informally to answer that other question for you from the rural water districts about selling water and that' s very very preliminary and what I would say to you is we have sufficient capacity to produce, our resources clearly exceed our production capacity. I mean we've done very well in securing well resource. What we have done and none of this is in the form of a firm position with you is that I've talked to public works and indicated to them we must preserve our ability to plan for the future of our city, that is the land around it, fringe areas and so forth. And that I don't want some separate water district or entities selling water or any kind of a public utility within that development. Outside of that I think we have some reason to talk, but we need to, I believe we need to preserve our ability to plan our city as we see fit and not have another competing jurisdiction. Most of these rural water districts simply want production, sell us water, we don't want anything to do with your planning and whatever but the, so we'd have to strike some kind of deal that protects us and at the same time if we have sufficient capacity choose to sell it. Now if we choose to sell it that's a big customer, big customer means more money, that has an aftbct on rates, and are there things we can do and the answer is yes to that. Pfab/But other words if, we would, yes our obligation is to our city limit, I mean our future. Atkins/Yes our future city limits. Pfab/Right our future city limits, but is there any reason that on a certain length of time if these entities come to us and say we would like to buy some water or whatever, yes we'll do it for X amount of years and then at that point. Atkins/Yes, yes, yes, yes, can be done, but see they have to make a big capital investment and that' s the thing they need to cover. I don't have anything else on water, next one is refuse. We have talked about changing refuse, and you'll notice under This represents only a reasonably accurate transcription of the Iowa City council meeting of January 4, 2001. WS010401 January 4, 2001 Budget Work Session Page 54 Capital Outlay $123,500 that is to re-equip our trucks with a lift. Now it's not as easy as you thought because we cannot extend that service to all parts of our city. For example on the north side, there' s just simply no way that we can do that unless your going to dramatically change parking policy it could be very difficult, that's being explored, but more importantly both landfill operations and refuse, the Solid Waste Advisory Group I've asked them to explain how we best can expand the recycling component of our current services. Right now we have 12,000 plus residential stops that we make. We amount to about 10 percent of the landfill, folks don't know that but their other 90 comes from other cities and jurisdictions and we're trying to implement as many worker friendly policies in the operation. Our five day work operation is about 600 stops per day per crew, when you add in recycling and yard waste we make about 1.5 million stops per year. In the years I've been here we have not had anyone retire from refuse collection, and the reason is it's just terrible, back breaking work, now our folks, I mean they don't collapse, they will seek other jobs and so we're trying to balance the public service, getting as much out of this system as we can and the worker friendly. We spend down the reserve, we have not had a rate increase I believe since 95, I can get you that exactly and our numbers have been flat, in fact we lowered them and so we anticipate that not next year but maybe in 03 depending on new services you might try to offer or propose or some other changes, we may have to consider a rate increase, it won't be dramatic, we may just go back to where we were. But refuse collection is something that's going to get a lot of scrutiny in the next year or so, we really want to be able, and there' s lots of serious policy questions, downtown, recycling of apartment buildings, mobile home parks, all of those things are opportunities that we're missing in recycling that we need to take a run at. And I really can't give you a good number on what rates might have to be to provide all of those services and your willingness to likely contract for some services whether we provide it or not through our own employees and I'm thinking specifically multi-family units and mobile home parks. I mean we have hundreds of people in mobile home parks that everything goes into the dumpster out the door. So those are a lot of things coming up, I don't have answers for you other than I want you to be on notice that we're going to change, we'd like to change these things that's likely to occur a rate increase. Yes sir. Pfab/How will we come up to date as to what's going on with this recycling group? Atkins/First of all you mean the Solid Waste Committee? Pfab/Right. Atkins/I ~vill be giving you a memorandum summarizing it, we have not met, we've met unofficially to discuss this lift proposal but some of the ideas that were putting This represents only a reasonably accurate transcription of the Iowa City council meeting of January 4, 2001. WS010401 January 4, 200l Budget Work Session Page 55 forth I'm going to ask them in fact I think we meet in a week or so I'm going to ask them to develop an agenda, bring that agenda to you and say here' s the kinds of things we want to go after and I'm already talking to you about it and all I see your heads nodding like those are all good ideas and that's the thing I'm going to have for you. Pfab/Will they be public meeting? Atkins/No, no just staff. Kanner/Did you say the lifts were in the capital budget? Atkins/We have them proposed Steve but I've told the staff we will not proceed until we spend a lot more time reviewing it. If you would prefer you may strike it and I can bring it back to you but at the time the original proposal was we thought this was a really good idea, we still think it's a good idea but it's scope is going to have to change somewhat just simply from a variety of factors. Lehman/Steve can't we approve this in the budget and yet have an opportunity when the actual time comes to make that decision to have? Atkins/Oh you, there's no doubt. Lehman/What I'm saying we could make provision to make it a possibility without approving it when it comes right down to it. Atkins/And the other thing to keep in mind is that it's likely to require ordinance amendments anyway and your going to see those things but we just, I just want to think this one through very carefully because our refuse collection in my judgment is one of the better services we provide and there's lots of good things we can do particularly recycling, that's being encouraging. Yes sir. Kanner/From what your saying it sounds like these are ones that will not eliminate personnel. Atkins/No there' s no intent to do that. Kanner/But I'm assume though your looking at a variety of automatic pickup, some that would eliminate personnel, a number of cities have that, and again like you said I don't know if we can do that here but. Atkins/I don't believe we can for one reason, snow banks, in a warm weather climate you can do the one person truck, I mean I've seen, my sister lives in Phoenix and I've This represents only a reasonably accurate transcription of the Iowa City council meeting of January 4, 2001. WS010401 January 4, 2001 Budget Work Session Page 56 been there and it goes down the street, you've got to put it at a certain spot. Our intent is we've got two people on the crew, he's still going to, he or she is going to have to roll this thing out, what we try to eliminate Steve is the lifting motion so you roll the thing out, it's tipped, dumped, put back, roll it back, that saves the employees back, that is not a change in personnel, it's just a change in operational policy, that's the plan. Champion/You're not trying to get rid of personnel your trying to keep them. Atkins/Well yea this is, it's a tough tough job, and (can't hear). Lehman/A person truck' s would be a tremendous expenditure, that would be (can't hear). Atkins/Yes, and I don't think we could deliver on that in our particular climate and Chuck, Public Works Director Chuck is concerned about uniformity of policy, the more suburban design neighborhoods where there's very little on street parking that should work well, older neighborhoods, it's a bare so. Wilburn/I think it was Waterloo I saw in the news has I thought they had the one person truck. Atkins/Cedar Falls I think has something like that, it's a very small pilot project, and we're watching that. Wilburn/But I saw they were having problems with the snow banks and yea. Atkins/Yea, we've got to consider the employee, got to consider the public service, I see us expanding the public service, affecting the rates, as you, well, I'm (can't hear) you understand this is going to be a much more complex issue and for a long period of time we were pretty well fixed with our recycling and all and now we realize we've got to do more, I mean there' s just no reason why we can't, particularly apartment buildings and mobile homes. Kanner/So are, let me get this straight, are you also the staff committee on the solid waste is going to look at the possibility of bringing commercial retail into our mandatory system? Atkins/Yes, I've asked them to do that, one of the problems we're having in downtown for example Steven is that Sally' s dumpster, and Tom Dick, Harry's dumpster, this one' s a mess, four different trucks driving by this guy decides to maintain it, this person doesn't, it's just a mess and that's, there' s got to be some uniformity. Another city I served, we basically authorized a franchise, we drew a downtown, everybody, here' s your dumpsters for your three business, one truck, pick it up, This represents only a reasonably accurate transcription of the Iowa City council meeting of January 4, 2001. WS010401 January 4, 2001 Budget Work Session Page 57 we send you a bill and it's done. It just cleans the place up you know, well you understand, okay, that' s on our list though. Landfill, so I can get you out of here by 12:00. There is one really cool thing happening and that is our new recycling center is going to open pretty soon, yep, that will be in the spring time. A couple things to think about, we are not proposing any changes in the tipping fees, the fiscal position of the land fill remains healthy, we're not seeing the decline in volume like we once did but we're still way down from what we used to be. We will need to build a new cell and we anticipate that, that's a whole in the ground, in 04, we do expect some new regulations forthcoming with respect to monitoring ground water and we are prepared to accommodate that. One element of the recycling center that we would like to add and we'll be getting back with you on that is we'd like to add the furniture project and the salvage barn so truly you can go to the landfill and it's as you kno~v how we're going to lay the thing out, you can get your old chest of drawers or take something I mean, truly make it a recycling center, that you can take your garden waste out, virtually anytime that it's open. We will in fact, I'm sure we will, we will expect more non hauler traffic so we're going to have to try to find a way to make that entrance a little more friendlier to folks because right now, it seems like most everything that comes in is in a truck and we want to encourage folks to do it. The salvage barn and the furniture project are currently on airport property and eventually would be moved out. We're talking with those folks, I do expect we have paid the furniture project about $17,000 a year to help support the staff person there. One of the issues is that if we bring that in do I staff it with city employees, do we do it by contract, those are all the things I have not brought back to you yet, we're trying to make it a comprehensive recycling center. Yes sir. Wilburn/I guess another would be, just if it's contracted with the current staff(can't hear) just administrative space of a filing cabinet, space for a filing cabinet. Atkins/Sure, sure, I don't see any reason why we can't do those kind of things. Well the difficulty is that I, whenever you have the potential for two groups of employees our employees who work there represented by collective bargaining agreements, policy procedure working shoulder to shoulder with another group of employees operating under a completely different set of circumstances thereds always the potential for conflict. If we can resolve those easy enough then that's not a problem, if we can't then we may have to tell these folks if you want us to do this we'll have to staff it, that will push the cost up because our per hour rate being higher than theirs. But I wanted you to know we are trying to make this a landfill recycling center as comprehensive of a recycling center as we can to encourage traffic out there. No again, nothing really to change dramatically in the operations of the. This represents only a reasonably accurate transcription of the Iowa City council meeting of January 4, 2001. WS010401 January 4, 2001 Budget Work Session Page 58 Champion/Steve do you have a design when we did that, you know the new area of the recycling center, the new building, do we have a road design with it? Atkins/Yea, it's kind of rough, yea, we're still, it's still under construction, remember we have the drop off spots where you can back your car up, drop your yard waste, move on, there's a, I mean you'd be weighed in and out, we'll have a spot with a, let's say I come out with the old bedroom suit, or something like that, we don't want that to go in the landfill, we want that to go to the salvage barn so if we can do all those kinds of things in the same spot then I think we really have a real tree recycling center. Airport, the generally speaking is nothing particularly dramatic about that, please note under the general levy is does increase and that' s associated with some capital projects. We will plan to pay for those from the general fund, we have not figured out if we can fit those into the CIP and into borrowing which would draw that down. We do not have income projected because we do not have a draft agreement yet with the airport and I'm assuming the committee will meet before long with respect to the noah airport commercial and how they're going to pay back and whether, how rental incomes would have to be booked. I'm sure it'll be hooked directly to them but the obligations that the airport has to you, with respect to you advancing the money for the construction of that industrial park. The master plan is proceeding, as you know the final offer is out there on some property, to my knowledge we've not received any response from that. I do want to point out that when we do capital projects with the closure of the north/south ranway with the addition of the north airport commercial park, and the proposed capital project of extending Mormon Trek around the airport, the economic development focal point it all changes fairly quickly if are to you approve all of these projects, that will come up at capital budget time for you to see that but we do have in the budget projected that the airport is going to play a little bigger role in economic development than they have in the past simply because of the availability of land and some of the other things that are going on. Karmer/You say the north commercial income is not factored in anywhere? Atkins/No it is not Steve and I'm sorry but we just don't have that agreexnent finished, it's in rough draft, I know the Airport Commission is anxious, I've, there's some legal issues that are getting batted around, we'll get you something before too long, the project is proceeding and it's, it will require you and the Airport Commission to come to some agreement on how to distribute any moneys. Broadband, in your packet this week was a detailed memo about some of the issues that you all debated the other night with respect to who' s going to get what. This represents only a reasonably accurate transcription of the Iowa City council meeting of January 4, 2001. WS010401 January 4, 2001 Budget Work Session Page 59 If you wouldn't mind I'd just as soon because a lot of staff time went into the preparation of that memo, look at that, we can bring this back up to you later on, I just think it's something that you need to get a feel for all of the issues. Generally speaking the numbers, the number crunching, it's all balanced, everything's all okay, it's some of the policy questions that your going to have to debate with respect to PATV and those other issues. And my final one is Stormwater and that's on page 85. Last year we recommended to you sort of a per monthly charge to pay for storm water, these numbers are not particularly good, it appears that the best laid plans issues we can't do it simply. The Federal regulations, state laws are going to require us to come up with a formula to be applied per property per impervious surface, you remember all the things we talked about. I'm sorry I just don't see any way around that, we've got to meet those federal regulations, if we don't come up with some sort of a fee it's got to come right out of the general fund and the debt service fund and we just simply can't afford to do that I mean we're talking you ~know half a million dollars a year easily to be spent just on storm water projects. We have to have a plan in place in like three years, I'm sure we'll accomplish that but I'm going to have to bring back to you some options. The simple system is just unless there' s a change in perspective from the legal it's going to get complex. Lehman/You mean like if we measure each individual property the amount of roof area, driveway. Atkins/Emie has a parcel of ground that his sits on and his house covers 40 percent of that 10,000 square feet and he has a driveway that covers another 5 or 6 percent, so bottom line is that your footprint covers 50 percent of that 10,000 square feet, you thereby create about 5,000 square feet of impervious surface. It means when it rains it hits it and bounces off and it runs to the street, you are causing X whatever that is to the storm water system storm water management. Somebody else big lot, all right I know your shaking your head but there' s a fairness about that. Champion/Crazy. Atkins/I don't know how crazy it is but. Lehman/No it's fair. Champion/We're going to have to go out and measure everybody's house. Lehman/The complexity. This represents only a reasonably accurate transcription of the Iowa City council meeting of January 4, 2001. WS010401 January 4, 2001 Budget Work Session Page 60 Atkins/It's already, I mean we have pretty much all of that information available in our GIS system and we'll be able to do that, the question is when I first send you a bill to the Champion house. Champion/I'm ready to move out (can't hear). Atkins/No now remember Connie you may have, you have a big house, three story house, it's the footprint. Champion/Oh. Atkins/What does it cover? In fact your lot maybe a big lot and you only cover 20 percent of it so there' s just a lot of, I've got to spend some time with you, the difficulty is the public explanation of these kind of things are not going to be easy, yes Irvin. Lehman/This is another discussion. Atkins/Oh this is another discussion for another day, I just. Champion/How do they determine where the water falls? Pfab/Straight down. Champion/I mean, from my house, but I believe me I don't mind paying any fees, that' s not the reason I'm bring this up. The water from my house basically falls into my, half of my lot where I don't have a house so it doesn't go into the street at all. (All talking). Arkins/Take that Connie times about a 1,000 phone calls and you'll understand what kind of explanation, I mean there must be 25,000 parcels of ground in this town. Champion/I can't imagine. Pfab/Somebody hasn't called you yet. Atkins/Somebody hasn't called you yes. Lehman/You're the only one who hasn't called. Vanderhoef/It's going to happen. This represents only a reasonably accurate transcription of the Iowa City council meeting of January 4, 2001. WS010401 January 4, 2001 Budget Work Session Page 61 Atkins/It's going to happen. Vanderhoeff They've done it all over the nation already. Atkins/We will figure it out I just wanted to let you know that I thought the simple system, Solon, North Liberty, they already have them in place, Ames, they've already done the simple one time charge to create funding to pay for this, I haven't finished the legal debates yet so we will make it simple but we also want to make it fair. Karmer/Tell me again the $420,000 per year is coming now out of the sewer? Atkins/No it doesn't exist, the $420,000 was to have been $1.80 per month per utility bill, we never implemented it, you never passed an ordinance implementing that. I'm showing this, there is no money in this account, and to show it accurately it should say all zero' s but I wanted some way to flag this issue for you, there is no storm water money now. Kanner/I thought didn't we informally agree to? Atkins/Yes you did and then that' s when all the legal came crashing down, I drafted one, we sent it off to bond counsels, we were checking all the people that had, I mean could we retire debt from it? And that's when it crashed. Kanner/So your going to propose that again to at least get that money that we need to prepare our plan? Atkins/I don't think I can because I don't think it's legal right now, I have got to come up with another option for you and I don't have that yet. Vanderhoef/Cities who did it early got that done with that kind of approach and now it's. Atkins/And now it's being challenged. Yes sir. Pfab/Do you know when we finally have our first earth covered roof, the demonstration? Atkins/No. Lehman/I don't think we have planned yet. Pfab/It's (can't hear) you say it's going to happen. This represents only a reasonably accurate transcription of the Iowa City council meeting of January 4, 2001. WS010401 January 4, 2001 Budget Work Session Page 62 Atkins/I've seen that once in my career, yea. Lehman/It's called cave. Atkins/No one fellow did do that. Vanderhoef/Oh yea, sure. Pfab/Not only that a lot of cities are requiring planning's under roofs for other reasons, air conditioning. Atkins/Now if I could since we're drawing near if you could go to the last three or four pages of that handout, where it says Major Budget Reductions, you got that, what I identified for you is I wanted you just to have a feel for the things that I changed that I took out, I just feel obligated to point that out, you know this isn't excruciating detail we did make adjustments to operations so, yes. Lehman/Just a clarification, are these reductions or things that we're not funded? Atkins/They were not funded. Lehman/So they're not reductions, they're just items that were not. Atkins/For example. Lehman/Requested but not funded. Atkins/I'm looking at Urban Planning, they wanted a half time associated planner to do Historic Preservation and District Planning, it cost $25,600, I did not put that in the budget so those are just, I wanted you to know those things particularly when some of the Boards or Commissions might come. Now again it's not complete because we would reduce an account here and there and you understand that process. And then the last page. Kanner/Excuse me, the Senior Center the County only pays 20 percent of the. Atkins/Budget. Kanner/The capital cost. Arkins/They pay 20 percent of the budget. Kanner/Which would include the program specialist? This represents only a reasonably accurate transcription of the Iowa City council meeting of January 4, 2001. WS010401 January 4, 2001 Budget Work Session Page 63 Atkins/It ~vould have yea. Kanner/Okay so. Arkins/Okay so $24,600 is what it cost, we would have got $4,800 from the county. Kanner/They pay 20 pement of everything across the board? Atkins/That' s right. Kanner/Okay. Arkins/Then on budget questions, what I tried to do because I think I mentioned you early on is I wanted to identify concerns, policy issues, things I thought you likely would discuss. This is my list, you need to add to them as you see fit, we are prepared to walk through these in detail, not at today' s session but at an upcoming session, add to, take away from, I just wanted to give you something to get you started on what I believe are some of the policy questions. Some of them are very straightforward, fee increases parking, now clearly your going to want to discuss that in detail. But I think everything else is pretty straightforward. The next session we have it would be my intent to do capital projects, we have a handout for you today in your budget document we only gave you the one year receipt summary, what I meant to give you was the five year, how we're going to pay for this thing over five years. So pages 131,132, and 133 draw a line through them, don't need them, insert these pages which are five year summaries of receipts, the capital projects themselves are fine. What we will do unless you want to do it differently is that at the next meeting 1:00 on the 22nd I will have everybody here, in your budget book we break it down by streets and bridges and we will walk you through the 02, 03, 04, and 05 projects. Before doing that I will do unlike I just finished with you a summary of debt service, capital financing, and then we' 11 get all the staff there to answer your specific questions about capital. Then that next night the 23rd is Boards and Commissions, sometime available and then hopefully on the 30th is a free day open for you to give me direction on whatever you want to do. We'll try to get these things looked up for you and back to you in the next couple days. Karmer/Ernie. Lehman/Yes. Kanner/One thing I would ask the Council (can't hear) budget questions is the Family Resource Center and I was wondering if we could, I don't know if we'll be able to This represents only a reasonably accurate transcription of the Iowa City council meeting of January 4~ 2001. WS010401 January 4, 2001 Budget Work Session Page 64 fit it in before the end of January but maybe in February to have a work session where we got a letter from the person in charge of that from the city perhaps come and talk with us about that and there are a number of questions we had on whether we were providing those services in an adequate way or is there perhaps a better way to provide those services. Atkins/I met with Joan a week or so to go over the thing, it is not a huge amount of money, but there is an appropriate request if we choose to get into these things as a matter of policy, I'd like to be able to throw in the hopper, it some bearing on the Broadway Improvement Group (BIG), they have some interest in these kinds of services. There's a variety of ways we can do it, but I, it's new enough to me and I suspect it's new enough to all of you that we probably would want to do some sort of a work session so Joan could come by and explain it to you in a little more detail. Champion/I am going to (can't hear). Atkins/It's not a big amount of money but it's also relationship with the school districts, we have not traditionally had so I think you kind of need to talk through all those things, so unless I hear otherwise from you I'll take Steve's suggestion and work something out because I think you want Joan here for sure, she knows it very well. Kanner/Yea I think it would be good. Atkins/Okay I'll take care of it. Substitute pages, we've got a couple minutes, are there any questions you have for me? My voice is almost gone. Lehman/The questions I have I'm not going to try to start with a few minutes. Atkins/Okay. Vanderhoef/Likewise. Champion/Well it was a good session. Atkins/Thank you for your attention. Vanderhoef/Yes thank you. Arkins/We'll have at it. Adjourned 11:45 AM. This represents only a reasonably accurate transcription of the Iowa City council meeting of January 4, 2001. WS010401