HomeMy WebLinkAboutMeeting Notes 3-04-2015
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BUDGET COMMITTEE
Meeting Notes - March 4, 2015
Committee present: Eric Levine - Chairman, Herb Engman, Pat Leary
Staff present: Mike Solvig, Judy Drake, Jim Weber
Others present: Bill Goodman
Meeting was called to order at: 12:00 p.m.
AGENDA ITEMS:
• Review and approve meeting notes.
Committee members reviewed and approved the meeting notes from January 28, 2015.
• Financial Report for the Year Ended December 31, 2014.
The Committee reviewed the Financial Report for the Year Ended December 31, 2014. Mr. Solvig
noted that these are the final numbers the 2014 accounting closed with. These numbers are still
subject to audit, and will probably change slightly when the 2014 Audit is completed.
Mr. Solvig invited the Committee’s attention to the Sales Tax report on page 7. December
collections came in at $356,967.92, much higher than estimated in the preliminary year-end
report. December 2014, the 4th Quarter of 2014, and Fiscal Year 2014 set new records for sales
tax collections. Total collections for 2014 were $3,135,084.21.
• Follow-up Discussion on Town's Reserve Funds and Accounts.
Mr. Solvig asked the Committee members if there were any questions or comments from last
month’s discussion.
Jim Weber addressed the committee regarding changes to Public Works’ fleet replacement
schedule and how these related to the fund balance in the Sewer Fund. The Town currently has
two pieces of equipment used for cleaning sewers; a 2004 SECA Sewer Jet and a 2006 Pipehunter
Sewer Vacuum. Both pieces of equipment are trailer mounted, which requires the use of a truck
to tow each piece of equipment to a jobsite, which can result in some crowded jobsites, especially
when both the sewer jet and sewer vacuum are required for the work. Both pieces of equipment
are also under-powered due to limitations on the size of the engines that can be installed on the
trailers.
This equipment is scheduled for replacement in 2016 at a combined estimated cost of $350,000.
During staff discussions, it was recommended the replacement for this equipment should be a
combined sewer jet and sewer vacuum unit mounted on a heavy-duty truck chassis. This would
allow for a more efficient and higher powered piece of equipment. However, the estimated cost
of this unit could be up to $500,000. As this equipment is used only for sewer work, it would be
appropriate that the cost of the new equipment be charged to the Sewer Fund. The information
was discussed by the Committee. This will be reviewed again as part of the 2016 budget
recommendations from Public Works.
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The Budget Committee’s recommendations regarding the Town’s reserve funds and accounts will
be discussed with the Town Board at a future study session.
• Follow-up Discussion on Capital Budget Process.
Mr. Solvig informed the Committee that when he was recently looking through some older
budgets, he found that the Town Board did annually approve for Town staff to proceed with
developing design and cost figures for specific capital projects for the next year. His proposals
regarding the capital budget process discussed at the last meeting would not be a significant
departure from the past practices of the Town Board.
• Discussion on Asset Management.
The Committee reviewed the Town’s various asset schedules. These schedules include:
- Five-Year Capital Improvement Plan, contained in the annual Ithaca Town Budget.
- Town of Ithaca Infrastructure Assets memo prepared by Jim Weber in June 2013, updated in
February 2015.
- Property Insurance Schedule of Buildings and Structures.
- Property Insurance Schedule of Vehicles and Equipment.
- Town of Ithaca Parks and Trails Schedules.
- Fleet Replacement Schedule, prepared by Public Works Department.
After review of the existing schedules and discussion, it was the consensus of the Committee that
the information contained in the various schedules has been adequate for budgeting purposes
and there is not a lot to be gained from investing additional staff time.
• Discussion on 2015 Bond Issue.
The Town is scheduled to issue $3,210,000 in new long-term debt this year to finance the
following listed projects included in the 2015 Capital Improvement Program:
Coddington Road Water Main – Phase 2 $ 760,000
Sapsucker Woods Water Tank Replacement 1,650,000
Honness Lane Improvements 500,000
Marcy Court Improvements 300,000
Mr. Solvig stated he hopes to close on the bonds no later than September 1. He would like to
continue with Douglas Goodfriend of Orrick, Herrington & Sutcliffe as Bond Counsel, and John
Shehadi of Fiscal Advisors & Marketing, Inc. as Bond Advisor. Total bond issuance costs are
estimated at $39,600 as detailed on the schedule shown below:
Amount
Bond Attorney - Orrick, Herrington & Sutcliffe 18,500.00$
Bond Advisors - Fiscal Advisors & Marketing, Inc.8,400.00
Bond Rating - Moody's Investors Services 10,500.00
Printing & Mailing - Premier Printing Services 2,200.00
Total Estimated Bond Issuance Costs:39,600.00$
Estimated Bond Issuance Costs
Staff has identified potential cost savings for two of the projects:
- By changing the style of the tank from a pedesphere to an elevated composite tank, the cost
for the Sapsucker Woods Water Tank Replacement can be reduced by an estimated $250,000.
This could reduce the amount to be bonded from $1,650,000 to $1,400,000.
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- The Town has approx. $110,000 in unexpended bond proceeds remaining from Phase 1 of the
Coddington Road Water Main Replacement. These funds could be used to reduce the amount
to be bonded from $760,000 to $650,000.
Based on these reductions, it would be possible to reduce the amount of the new debt issued
from $3,210,000 to $2,850,000, as shown below:
Amount Amount Issuance
Budgeted Bonded Costs
Coddington Road Water Main - Ph.2 760,000$ 650,000$ 9,000$
Sapsucker Woods Water Tank 1,650,000 1,400,000 19,500
2015 Road Improvement Program 800,000 800,000 11,100
Total - 2015 Capital Projects 3,210,000$ 2,850,000$ 39,600$
2015 Capital Projects
The estimated issuance costs of $39,600 represent 1.4% of the expected bond proceeds.
Bond Resolutions: The agenda contained two Bond Resolutions for the 2015 Bond Issue. The first
was for the Honness Lane Improvements, budgeted for $500,000. The second was for the Marcy
Court Improvements, budgeted for $300,000. The disadvantages with this approach are 1) each
project cannot spend more than the amount of the bond proceeds received, less any bond
issuance costs, and 2) any remaining bond proceeds cannot be used for any other purpose than to
pay the principal and interest on the subject bonds.
After discussing these resolutions with our Bond Attorney, Douglas Goodfriend of Orrick,
Herrington & Sutcliffe, it was decided to combine them together in one resolution, now known as
the 2015 Road Improvement Program, for the combined amount of $800,000. The advantages of
this approach are 1) the Town could spend more than the amount originally budgeted on a project
if needed, as long as total combined expenditures do not exceed $800,000, and 2) if both projects
come in under budget, the Town Board could determine additional roads to be included, as long
as the work is the same as described in the Bond Resolution and meets the Type II SEQRA action.
If the Town Board did not want to include any additional roads, any remaining bond proceeds
would be used to pay the principal and interest on the subject bonds.
Either approach is acceptable for bonding purposes. The combined approach offers the Town
additional flexibility in how the bond proceeds could be used. The Bond Resolution is on the March 9
agenda for consideration by the Town Board. (The Bond Resolution was subsequently adopted by the
Town Board on March 9, 2015, Town Board Resolution No. 2015-030.)
• Review Investment Policy
This item will be rescheduled for a future meeting.
• Property Tax Cap and Property Tax Freeze Programs.
Mr. Solvig gave the Committee members a handout addressing frequently asked questions on
government efficiency plans and the property tax freeze. In order to qualify for property tax
rebates to property owners under the second year of the Property Tax Freeze Program, the Town
will be required to stay under the tax cap and enter into a government efficiency plan. This
efficiency plan must produce cost savings of at least 1% in each of the fiscal years 2017, 2018 and
2019. Mr. Engman reported that TCCOG has not identified any areas that would provide the
annual 1% savings under the current rules. Their efforts remain focused on pushing the look-back
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period back to include 2011, where the savings from the health insurance consortium could be
included.
This subject will be discussed on an on-going basis as further information becomes available.
• Other Items.
- Refund of Delinquent Water Charges for Lake View Cemetery: Mr. Solvig reviewed the
resolution authorizing a refund of delinquent water charges to Lake View Cemetery. Mr.
Solvig reported that the Cemetery’s 2015 property tax bill included $1,311.65 in delinquent
water charges from 2014, out of a total tax bill of $1,504.21. These charges go back to the
incident with the broken water pipe at the cottage at the end of 2013, when the cottage was
abandoned by the former groundskeeper. Due to the financial difficulties of the Cemetery,
the Town previously refunded $640.46 for 2013 delinquent water charges on the 2014
property tax bill.
The Resolution will be on the March 9 agenda for consideration by the Town Board. (The
Resolution was subsequently adopted by the Town Board on March 9, 2015, Town Board
Resolution No. 2015-031.)
The meeting was adjourned at 1:34 p.m.
Next Meeting: Wednesday, March 25, 2015 at 12:00 pm, Town Hall - Aurora Room