Finance Committee, June 2017

July 31st, 2017  |  Published in Observer Reports

Finance Committee

June 19, 2017

 

Members present: Council members Nancy Moore (chair), Sean Malone, Earl Williams, and Rob Zimmerman; citizen members Martin Kolb, Linda Lalley, and Brian Rosenfelt

Others present: Mayor Earl Leiken, CAO Jeri Chaikin, Planning Director Joyce Braverman, Principal Planner Ann Klavora, Assistant Finance Director Cheryl Arslanian, and MAS Financial Advisor Matt Stuczynski

 

The meeting was called to order by Ms. Moore at 7:30 a.m. The minutes of the May 15, 2017, meeting were approved with minor corrections.

 

Agenda—Committee actions:

  • Approved an application for a $10,000 grant to build a bike path along Warrensville Center Road in the new Van Aken District. No matching funds from the city are required.
  • Waived normal competitive bidding procedures to approve a design-build contract with Perk Co. Inc. for a 2018 improvement project to replace stamped concrete sidewalks on Lee Road. The selection of the design-build team was done through a competitive process. One other design-build contractor was considered but was rejected due to inferior experience. Several other contractors failed to provide a bid. The cost of the contract will not exceed $514,516 (a $264,318 increase from the budgeted amount). The budget increase is due to continued concrete deterioration and the inclusion of a 20 percent construction contingency fund. According to Ms. Chaikin, the additional funds are available in the General Capital Fund, which is at $1.3 million, $300,000 above normal levels because of additional monies from the Shaker Town Center Capital Fund. According to Mr. Baker, using the Shaker Town Capital Fund for sidewalk improvements along Lee Road makes sense.
  • Approved a contract with HNTB for traffic engineering services in an amount of $123,000. Engineering services will include traffic studies of the timing of lights along Warrensville Center Road and the Lee/Van Aken intersection. Three proposals were considered and HNTB was selected based on past experience with the city and their proposal to improve the Lee/Van Aken intersection (the site of multiple accidents). A total of $125,000 was approved previously in the 2017 capital budget. Small timing changes in the traffic lights are included in the price. New traffic lights and large changes are not included. Mr. Kolb questioned the timing of the study given coming changes to the Van Aken district. Mayor Leiken stressed the importance of controlling traffic patterns to ensure the success of the new Van Aken district.
  • Approved the issuance and sale of $735,000 General Obligation Bonds for street improvements with a term of 20 years and $325,000 General Obligation Bonds for park improvements with a term of 15 years. All of these improvements would be made for the Van Aken District. The committee also voted to approve the issuance and sale of $2.265 million General Obligation Bonds for sewer improvements with a term of 20 years. According to Mr. Baker, total bond debt may vary based on terms and premiums. Mr. Stuczynski is helping the city evaluate bond options. The $2 million loan from the Capital Fund to the Sewer Fund must be repaid this year using bond revenue. According to Mayor Leiken, the Van Aken District developer took on far more monetary risk that what is being proposed that the city take on and that Van Aken debt financing has been incorporated into budget projections. According to Mayor Leiken, the sewer debt should be manageable based on revenue projections. According to Mr. Baker, the legal debt limit for the city is $45 million and the requested debt is $3 million. Several members of the committee expressed concerns including the “real risk” if the Van Aken developer goes bankrupt and the total amount of the city’s debt service. According to Mr. Baker, Shaker Heights incomes went up 4 percent last year and there are no “ominous clouds on the horizon.” Bond rates are still going down and the delay in issuing bonds for the sewer work has not hurt the city.
  • Approved the issuance and sale of $2 million of one-year Street Resurfacing Improvement Notes.
    • According to Mr. Baker, street improvements are typically budgeted on a two-year cycle and the debt service cost is 1.2 percent.
    • The committee agreed that budgets for street improvements should be reviewed annually.
  • Item 6: The committee approved execution of certificates by the Director of Finance and the payment of amounts due upon certain contracts without discussion.
  • Item 7: Mr. Baker presented the 2017 First Quarter Update.
    • Revenues appear to be within projections despite the fact that income tax revenue was down in the first quarter (shortfall already made up in May).
    • City employees got a 2 percent raise this past year and spending went up over $1 million, but all departments cut spending on personal service. Spending increased less than anticipated in the 2017 budget.

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