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FINANCE COMMITTEE 2012/09/17 Minutes I. Call to Order and Roll Call Chairman Pandaleon called the meeting to order at 6:30 p.m. Present: Mayor Cowhey, Aldermen Pandaleon, Novit, Waldeck, Schoenheider, Tack, Palmer and Adelman. Absent: Alderman Moore. Quorum present. There were approximately 10 people in the audience. Staff present: Robert Kiely, Jr., City Manager; Elizabeth Holleb, Finance Director; Diane Hall, Assistant Finance Director; Michael Thomas, Public Works Director; Cathy Czerniak, Community Development Director; Dan Martin, Superintendent Public Works; Bob Ells, Engineering Supervisor; Victor Filippini, City Attorney. II. Consideration of Minutes from the Finance Committee Held on July 16, 2012. Alderman Palmer made a motion to approve the minutes from the Finance Committee meeting held on July 16, 2012. The motion was seconded by Alderman Schoenheider. The motion carried unanimously by voice vote. III. Approval of Contract With Foley & Lardner LLP for Bond Counsel Services for Special Service Area 25, 26 and 29 Bond Refinancing Ms. Elizabeth Holleb, Director of Finance stated after the 2011 bond refunding the City approached Lake Forest Bank on behalf of the residents to refinance the bonds held by Lake Forest Bank for SSA 25, 26 and 29. Ms. Holleb stated that Lake Forest Bank has offered to reduce each bond issue’s bond interest rate by 1.5%. Ms. Holleb stated the City received a cost proposal of $7,000 per issue for the preparation of the necessary bond documents. The Committee discussed the cost of the contract will be passed through to the property owners and a net savings will be realized for each property owner. Following discussion, Alderman Palmer moved, and seconded by Alderman Adelman to award the contract for bond counsel services to Foley and Lardner LLP in the amount of $21,000. The motion carried unanimously by voice vote. IV. GENERAL FUND BALANCE RESERVE POLICY Ms. Holleb stated the current Fund Balance Policy for the General Fund is 15% of operating revenues plus accrued sick and vacation. Ms. Holleb stated the bond rating agencies are now taking a closer look at municipalities fund balance policies for bond ratings. Ms. Holleb stated that while GFOA’s best practice recommends a balance of no less than two months of regular operating revenues or expenditures a better benchmark for the City is to compare to other Aaa rated communities in Illinois. Ms. Holleb stated these communities report higher fund balance reserves than the City’s current policy. Ms. Holleb also stated that another concern is the possible impact of the State budget crisis on future City budgets. The Committee discussed the recommendation of increasing the fund balance reserve in the General Fund from 15% to 25% of operating revenues. The Committee discussed the City has historically kept reserves in excess of the 25% in the General Fund. Following discussion, Alderman Palmer moved, and seconded by Alderman Adelman to change the City’s current fund balance reserve policy in the General Fund from 15% to 25% of operating revenues. The motion carried unanimously by voice vote. The City of Lake Forest FINANCE COMMITTEE Proceedings of the September 17, 2012 Meeting 6:30 p. m. – City Hall Council Chambers Finance Committee Meeting Minutes – September 17, 2012 V. FY2014 Mission Statement Ms. Holleb stated that as part of the annual budget process, the City Council affirms the City’s mission statement. Following discussion, Alderman Novit moved and seconded by Alderman Palmer to accept the FY14 Mission Statement. The motion carried unanimously by voice vote. VI. FY2014 Fiscal Policy Ms. Holleb stated that recommended changes were on pages 2, 3 and 5 – 7. Ms. Holleb reviewed each recommended change. Ms. Holleb stated the change on page 6 includes the recommended fund balance change as discussed earlier. The Committee discussed the proposed changes and suggested section I.7 be amended from “to allow for reduced spending” to “so that spending may be reduced.” Following discussion, Alderman Novit moved and seconded by Alderman Palmer to accept the FY2014 Fiscal Policy as recommended with the suggested wording change to section I.7. VII. Other Business The Committee discussed the changes to the Flash report that will give a high level overview of the revenues and expenses using a three year average of comparison. The Committee discussed the decline in Real Estate Transfer Tax revenue and has requested additional information each month detailing the number of homes on the market. Mr. Michael Thomas, Director of Public Works discussed the water ban has been lifted for the year and residents will be notified in the spring of the annual watering regulations from May 15th to September 15th. He stated that the Water Plant is running at full capacity and will recommend a reduced number of membranes to be purchased in FY14. Mr. Thomas discussed the price per ton has gone down for recycled material. He stated that the City will continue to watch the market. He stated that revenues have decreased and it continues to be less expensive for the City compared to bringing the materials to the landfill, as well as better for the environment. He stated that the final recycling carts will be distributed by October 1st. Mr. Thomas discussed the research the City is working on in regards to a possible well at the Golf Course. He stated the City has met with a well company and the proposed project will be discussed at the November budget meeting. The Committee discussed the timing of the proposed project would need to be completed in the winter when the ground was frozen. Mr. Thomas introduced Bob Ells, Engineering Supervisor to the Committee. He stated that Bob would be supervising all engineering projects. Mr. Victor Filippini, City Attorney stated that language to the proposed contract with Teska Associates has been made regarding the “hold harmless” section. VIII. Opportunity for the Public to Address the Finance Committee: None IX. Adjournment There being no further business, Alderman Palmer moved, seconded by Alderman Novit to adjourn the meeting at 7:15 pm. The motion carried unanimously by voice vote. Respectfully Submitted. Diane Hall Finance Committee Meeting Minutes – September 17, 2012 Assistant Finance Director