Monday, June 23, 2003
The meeting was called to order at 6:00 p.m. Members present were John Goelz, Pat Shanahan, Mark Wyss, Debra Cherek, Darcy Alatalo, and Alderman Koehler. Also present were Bob Kufrin and Barb Guckenberger.
Item 2. Review and approve minutes (3/12/03, 01/20/03, 10/21/02, 05/20/02)
The October 21, 2002 minutes should be amended to show that Debra Cherek was present. Alderman Koehler made a motion to approve the minutes listed above, as amended. Debra seconded the motion. All aye; motion carried.
Item 3. Discussion on investment options
Bob informed the committee that about three years ago we solicited and received a variety of investment proposals from roughly five firms. They submitted copies of their materials for the committee, made their presentations, we did some reference checking and the committee made a recommendation to move forward with a specific firm. We’ve been with our current advisor for 2-2½ years. We don’t have a long term contract. We have some investments that would take some time to get out of. If the goal was to look at a switch by the end of the year, the process could start now. Bob indicated that he was not specifically looking to make any changes right now, but historically the information has been brought to the Finance Committee on occasion for review. Proposals from companies have been coming in and the issue was brought up. He recalled having reviewed the investment mix three years ago. Darcy made a motion not to change the current investment structure and to revisit the issue when the year end reports are complete. John seconded the motion. All aye; motion carried.
Item 4. Discussion on special assessments
The committee wishes to discuss the issue again in September. Years ago the city put in infrastructure using special assessments. If a water line or street went in, years ago the city would do the work and assess the abutting property owners for some or all of the cost of the improvements. If you lived on a farm and water went past your house, you were charged on a front foot basis for some or all of the cost of that project. If you had a parcel size in excess of three acres, then all of the excess above three acres was deferred and you were only assessed for the portion in excess of 115 feet on what’s left. What happened was that the city put in all of the improvements, borrowing the money and then we would pay it back and the property owners had indefinite deferments for all of these large parcels. There was no repayment required once the deferment was granted. We were out in the range of $5 or $6 million in outstanding deferred assessments. On the old deferments there was no requirement that it be cashed in when the property changed hands. If we put a water line past your house in 1975 and every 5 years that land sold, the deferred assessment continued on. Later, we changed the policy so that deferred assessments ceased when the property changed hands if it was sold to someone other than a family member. The former mayor was very concerned that these deferments were slowly increasing in size and never reducing. In 1989 the Water Utility took over the assessments for water and sewer line projects and they then made the business decision whether or not there was a great enough return to warrant putting in water and sewer. The Utility started to deny projects because they made no sense from a financial perspective. The developers had no financial risk in keeping things next to one another and the intervening property owners suffered no loss because they got the water and sewer and didn’t have to pay it back until some time in the future when they sold the land. In the early 90’s there were many complaints that the city was loaning out money without a reasonable expectation of being repaid. There were a couple of committees that tried to come up with a special assessment policy. The Finance Committee made the recommendation that deferments should be limited to more than 20 years and an interest component was added. As parts of the city are left with in-fill, there are still some large parcels where now we’re encountering problems where the existing homeowners have failing septics or failing wells and they want someone to pay the cost to bring that infrastructure. Normally if it was an assessed project, they would pay on a front foot basis. Since those assessments are now not deferred are substantial. Some people complain that the improvements are too expensive and that it’s going to force people to sell their land. When the committee changed the policy in the past, an inducement to pay off old balances was included. Up until 1990, every public improvement project was done by the city and the city bid it out, contracted it, and did special assessments. We had tens and thousands of dollars in special assessments every year. In the early 90’s we got out of the business of requiring everyone to only use us because developers said they could save money and we only did about 10 special assessment projects per year. If it happens once a year now that’s a lot because the general premium is anywhere between 20-25% if the city is involved. If the developer foregoes the special assessments, they save months of time that the city would be involved in the project and they’re able to negotiate on all of the pricing for all of the materials going in the ground. Now developers have decided that they’ll give water and sewer to the people that they go by just so they can get the work done in the time that they want instead of dragging it out for months. Now we’re starting to see a few of these odd large parcels where it’s not developer-driven, it’s neighbor driven. The only borrow we’ve done since 1991 was for the new police station. If we were to start doing these projects, it would be displacing dollars from a general purpose public improvement, because we won’t borrow funds for a improvement that would be paid for out of special assessments, except in the cases of water and sewer, where the water and sewer utility could be directed to pay by the council. By law, if the state budget is approved, it will preclude borrowing money for three years. A discussion with the auditors (Virchow Krause) was tentatively scheduled for a Finance Committee meeting on July 21st. In the past, issues have come to the Committee at the direction of the mayor. The city is currently considering the issue of joint dispatch with South Milwaukee and Cudahy. Bob will distribute copies of his report to the committee for their review. The committee decided not to discuss impact fees again at this time.
Item 6. Election of new Chairperson
Alderman Koehler made the motion, seconded by Debra Cherek, to appoint Darcy Alatalo as Chairman and to appoint Debra Cherek, seconded by Darcy Alatalo, as chairman. All aye; motion carried.
As listed in the January 20, 2003 minutes, Debra again requested that all finance Committee members be given an updated profile of all of the members with current e-mail addresses and phone numbers.
Alderman Koehler encouraged the committee members to attend Council meetings, particularly when recommendations from the Finance Committee are being considered.
Alderman Koehler made a motion to adjourn at 7:35 p.m. All aye; motion carried.