CITY OF PICKERINGTON

FINANCE COMMITTEE OF COUNCIL

CITY HALL, 100 LOCKVILLE ROAD

THURSDAY, APRIL 20, 2006

REGULAR MEETING

7:30 P.M.

1. ROLL CALL. Mr. Wisniewski called the meeting to order at 7:30 P.M., with roll call as follows: Mr. Wisniewski, Mr. Hackworth, Mr. Fix, Mr. Smith (arrived at 7:45 P.M.) were present. No members were absent. Others present were Judy Gilleland, Lynda Yartin, Linda Fersch, Chris Schornack, John McGory, Steve Grasbaugh, Dan Horne, and others.

2. APPROVAL OF MINUTES OF March 16, 2006, Regular Meeting. Mr. Fix moved to approve; Mr. Hackworth seconded the motion. Roll call was taken with Mr. Hackworth, Mr. Fix, and Mr. Wisniewski voting “Yea.” Motion passed, 3-0.

3. FINANCE DIRECTOR:

A. Review and request for motion to approve draft ordinance amending the 2006 appropriation, Ordinance 2005-98. Mrs. Fersch stated she had no appropriations for this evening’s meeting.

B. Finance Director’s Report: Mrs. Fersch stated she had provided a report to the Committee and she would be happy to answer any questions.

(1) Impact Fee Report. Mrs. Fersch stated a report had been distributed to the Committee and to date our total amount received in impact fees is $284,594.08. Mr. Fix clarified we are assessing the shells for the impact fees and we will not be going retroactive on the tenants versus the shells.

(2) Investment Report. Mrs. Fersch stated interest rates are rising and she has been investing in some federal agencies at 5.174 percent and a 30-day CD at 4.79 percent. Mrs. Fersch stated it is expected the rates will be raised one more time so she is still investing short so we can catch it when it starts to go up.

(3) Review of Vendor Report. Mrs. Fersch stated the report had been provided to the Committee in two formats. She stated the first shows vendor purchases and the second shows what has been done monthly and year to date. Mr. Fix clarified the report shows the amount that has been encumbered for legal fees so funds are there when bills come in. Ms Gilleland stated we have encumbered the general monthly fee and also some work that will be paid out of the Diley Road fund. Mr. Fix clarified the monthly retainer is in the budget and other fees will depend on lawsuits or whatever projects come up. Mrs. Fersch stated work Schottenstein does on any acquisition work for Diley Road is paid for out of a different fund, so this figure could be higher but it is not all coming out of General Fund. Mr. Wisniewski stated he noticed that last year we paid Ceranet $880 and this year we are close to $17,000. Mrs. Fersch stated part of this is last year’s carry over and also some work will be done when we are developing the program for on line payments. Mr. Schornack stated he thought last year’s bill was paid in January and we also paid up front for this year, but he would get Mr. Wisniewski more information on that.

Mrs. Fersch stated CORMA met yesterday, and the costs for our professional liability and property and casualty will be increasing. She stated the increase could be as much as $50,000. Mrs. Fersch further stated she had hosted a health savings plan seminar for the Consortium and we are looking at offering this option to the various cities. Mrs. Fersch clarified the health savings plan is where the employee and the employer place funds in an account and receive a debit card. When you go to the doctor you would use the debit card to withdraw from this fund until you meet your deductible. She stated it has some advantages, but we still need to get more information before we make a recommendation. Ms Gilleland stated the City of Westerville just went to this program this year and we are monitoring that to see how it works. Mrs. Fersch stated the Committee had also requested information on a flexible spending plan, and why we do not have pre-tax on our deductions. She stated this would need to be set up as a flexible spending plan and involves more than just being able to take pre-tax on your deduction for your premium. Mrs. Fersch stated the plan would be monitored by a third-party and there is a fee per employee. Mrs. Fersch stated Worthington and Gahanna have this plan right now. Mrs. Fersch stated if we want to pursue this we will need to pass legislation for the premiums to be pre-tax and for the flexible spending. Ms Gilleland stated she would like to continue to look at this and consider at the end of the year when we are looking at the entire package.

C. Review and request for motion to approve draft resolution to approve the 2007 Tax Budget to meet the July 15, 2006, deadline as set forth in the ORC, Section 5705.28. Mrs. Fersch stated this is a basic budget and by State law is required to be passed by July 15, 2006, and filed with the County Auditor by July 20, 2006. Mrs. Fersch stated she has outlined some of the key items on the first page for information purposes. Mrs. Fersch stated what is required in this budget is the General Fund and Police Department because they are receiving property tax millage. She stated the Budget Commission will vote and recommend that we have the same millage, the 2.3 mills and the 5.5 mill Police levy, then Council will approve it and it will go on for next years taxes. She stated for the other departments, they just want to see the basics. Ms Gilleland stated what Mrs. Fersch has done is put our current budget format in the County’s format so they can make some projections for next year. Ms Gilleland stated a lot of this will change at the end of the year when we get into our actual budget cycle and this is a broad-brush estimate for the County purposes so we can collect our property taxes.

Mrs. Fersch stated she had distributed to the Committee a copy of the full text of the proposed “TEL” amendment to the State Constitution, an estimate of the impact it would have on the City’s budget, and other information from the Ohio Municipal League. Mrs. Fersch stated this will be on the November ballot and she did not feel that there was a lot of thought put into this amendment. Mr. Wisniewski stated he did not understand how this amendment could be beneficial to cities, but he felt it was very detrimental. Ms Gilleland stated she understood this came about as a way to reduce taxes and cut government waste, but there are a number of things that are in the grey area. She stated she felt we should watch this as the November election gets closer, however, right now anything we did might get lost with the primary elections coming up. Ms Gilleland stated this is something we will continue to watch.

Mrs. Fersch stated she had also provided the Committee a Hotel/Motel Tax summary showing all of the items that were legitimate expenditures from these funds. Ms Gilleland stated the funds are to be spent for the promotion of the City.

Mr. Hackworth clarified that with regard to the Tax Budget we are at 10 mills and are included with the Township, the County, and the School District. Mr. Wisniewski moved to forward the resolution to adopt the 2007 Tax Budget to Council; Mr. Fix seconded the motion. Roll call was taken with Mr. Wisniewski, Mr. Fix, Mr. Smith, and Mr. Hackworth voting “Yea.” Motion passed, 4-0.

4. PERSONNEL DEPARTMENT:

A. New Employee Update. Mrs. Fersch stated we have hired the new staff engineer, Brenda VanCleave, and one new police officer, Nathan Fries. She stated we are in the process of accepting applications for a part-time Deputy Municipal Clerk.

Mr. Hackworth stated he understood Mrs. Fersch had released $75,000 for contingency items and Ms Gilleland stated that was correct and she would cover that under Other Business if there were no objections.

B. Review and discussion regarding Flexible Spending Plan. Mr. Wisniewski stated this was discussed earlier.

5. DEVELOPMENT DEPARTMENT: Update.

A. Review and discussion regarding Cover TIF. Ms Gilleland stated Mr. Steve Grasbaugh of Peck, Schafer & Williams, is our TIF attorney and was present this evening to talk to the Committee regarding the TIF. She further stated Mr. Schornack is our in-house TIF Liaison, and Mr. John McGory is also working on this issue. Mr. Grasbaugh stated he would give a brief explanation on what a TIF is, how it is put in place, what the process is, etc. Mr. Grasbaugh stated he would also brief the Committee on the TIFs that are already out there, and generalities about the proposed TIF. Mr. Grasbaugh stated the acronym TIF stands for Tax Increment Financing and is basically when a new building is put up it increases the value of the property, and when a TIF is put in place instead of the taxes on that building being levied as they normally would be levied, they are abated and the developer pays a TIF payment in lieu of those taxes. He stated those TIF payments can be used for two purposes, one to compensate the school district to the extent that they have lost money, and to pay costs of public improvements that benefit the property the TIF was done for. He stated it does not affect the current taxes on the property, they are collected as they always have been, there is no abatement to the current taxes. He stated the developer is paying the same amount of money, they are paying taxes or TIF payments, but it is the same amount. Mr. Wisniewski clarified the payments are on the improved value of the land. Mr. Grasbaugh stated there is a methodology where the TIF can start parcel by parcel and it can run up to 30 years. He stated the TIF payments start when something is built on the parcel, so if something is built on one parcel next year, the 30-year period would start; if nothing happens on another parcel until five years from now, the 30-year period starts five years from now. So, you always get the full benefit of the TIF. Mr. Grasbaugh stated the purpose of TIFs are to encourage development, you are not taking away existing taxes you are encouraging development to come in that will increase the tax value. He stated you are just taking a bit of it away for a number of years, but there are other benefits going to the other jurisdictions over time. Mr. Grasbaugh stated, however, if you are going to do a TIF for more than 10 years or 75 percent of the value of the improvement, you have to get the school district’s approval. He stated you cannot do any TIF without telling the school district about it, and unless you make them whole, give them what they would have gotten if there had never been a TIF there. Mr. Smith clarified that only if the TIF is over 10 years or 75 percent of the value do we have to make the school district whole.

Mr. Grasbaugh stated the process of a TIF is to negotiate with the developer on what is going to be done and where, and once that is all agreed upon you send notices to the school districts with a 14-day notice prior to Council’s action on the TIF. Council would pass an ordinance that would authorize the TIF and an agreement with the property owner. He stated an exemption form must be filed with the County that goes to the State of Ohio, and until that is done there is no exemption.

Mr. Grasbaugh stated there are two types of TIFs, one being an incentive district and that is essentially a TIF on residential property. He stated there are also non-school TIFs and other TIFs. He stated a non-school TIF is when you adopt the legislation you are essentially assuring the school district that they are going to get their money, and the other says you are taking a portion of their income. Mr. Grasbaugh stated when the public infrastructure is paid off, the TIF goes away, and the maximum amount of time for a TIF is 30 years. Mr. Wisniewski clarified that the agreement with the developer usually spells out specific improvements that will be done, however, the legislation can be written so that if there are other public improvements down the line that will benefit that property over the 30 year period, if there is money left over you can spend it on that. Mr. Fix further clarified that once the public improvements are paid for and the TIF goes away, the property taxes then get distributed in the normal process. Mr. Grasbaugh stated the goal here is to do non-school TIFs, project TIFs that pay for the project’s infrastructure and there is no risk to the City’s General Fund. He stated you would not be paying money out of your General Fund for the project, and that is what we are talking about. Mr. Grasbaugh stated you can negotiate with the developer for a Letter of Credit that states if the TIF monies are not sufficient to pay the debt, you will draw on the Letter of Credit. He stated with regard to the TIF we will talk about tonight, we have the same goal, the City will not spend their money for the improvements.

Ms Gilleland stated Mr. Dan Horne, with Equity Investments who is the developer we are working with on this TIF is also present this evening.

Mr. Grasbaugh stated that part of the property that Equity is hoping to develop in this TIF is already in an existing TIF. He stated it has been there for a number of years, but nothing has happened on the property so you are not getting any TIF payments off of it. He stated subject to Council approval, that property will be removed from the old TIF. He stated the old TIF continues on the other properties out there, but the property that Equity will be in control of that is not developed, will be removed from the old TIF. He stated the new TIF will be a 30-year non-school TIF and when the revenues come in the County Treasurer will automatically set aside the amount the school district would have gotten in taxes and it goes directly to the school district. He stated the rest of the money comes to the City and that money will be used, by agreement, to build Stone Creek Drive. Once Stone Creek drive is paid off, the money can be used for other improvements. Mr. Grasbaugh stated the City has a couple of issues; you don’t want to spend your own money, and, you don’t want to use your debt capacity in any way, shape or form to finance improvements because you may need it for other things down the road. He stated what the general plan is for the City to put the TIF in place, and you will authorize a TIF agreement with the developer that guarantees that the developer will pay the TIF revenues. He stated you will also authorize a construction contract between the City and the developer that tells him to build the roadway and once the roadway is built we will pay him the money if and when the TIF revenues come in. He stated then the developer realizes that they will not get all of their revenue back for something like 12 or 13 years. He stated the developer would get an interest component like on unpaid bills, but they only get paid if they build something that generates the money to pay for it, do if they don’t perform as they suggest they are going to perform they don’t get paid and you don’t have any risk. He stated statutory cities cannot do this, counties cannot do this, and townships cannot do this because they are all subject to the state competitive bid statutes, but you are not because you are a charter city. Mr. Grasbaugh stated the developer has asked for, and we are in the process of talking about it, but they may request that we do a special assessment on the property to the extent the TIF isn’t performing.

Mr. Horne stated the development being proposed is on a 17.6 acre tract that has three existing office buildings. He stated the plan is for a 7 to 8 acre office project on the south side of the property, and about 40,000 square feet of retail space on the north side. He stated the intent is to refurbish the buildings that are there as office condominiums, and they felt the mix worked well with the risks they are taking on as far as the TIF aspects are concerned. Ms Gilleland stated there are other opportunities in this area that we will be talking with Equity about in the future. Mr. Grasbaugh stated he hoped they would be able to bring the actual documents and draft legislation to the Committee next month so you will know exactly what is being proposed. Mr. Grasbaugh stated if the Committee members had any questions, please feel free to contact him.

6. CHAIRMAN: Mr. Wisniewski stated he had nothing to bring forward this evening.

7. OTHER BUSINESS: Ms Gilleland stated because we have reached the end of the first quarter of the year, Mrs. Fersch feels comfortable releasing $75,000 toward our contingency list. She stated she had provided a listing with her recommendations of items to be funded at this time. Ms Gilleland stated if the Committee concurs with these items we just need a motion to approve these appropriations. Mr. Smith stated he supported funding the Violet Festival and the Olde Pickerington Village Business Association, however, we also need street paving. Ms Gilleland stated we have $100,000 on the contingency list for street paving, and we all know that is not nearly enough. She stated she and Mrs. Fersch have talked about this a great deal, and they have determined to review the contingency list at the end of April after all of the income tax has come in. Mr. Wisniewski stated the $75,000 would not fund the street paving so in speaking with Mrs. Fersch and Ms Gilleland it was determined we should try and fund as many of the smaller needs as we could. Mr. Fix stated that made a lot of sense, however, he was stuck on the idea of the community funding a festival that should be self-funding. Mr. Wisniewski stated that was something that was scheduled to be discussed in Safety Committee. Ms Gilleland stated it was her recommendation that we fund the Violet Festival to the extent we can this year, and then give them a plan for next year. Mr. Wisniewski stated it was his understanding that we would start cutting back on funding each year. Mr. Fix stated he understood that, but next year it would be his recommendation that we provide some services, but the financial burden is on them. Mr. Wisniewski moved to forward the appropriations to Council; Mr. Smith seconded the motion. Roll call was taken with Mr. Wisniewski, Mr. Smith, Mr. Hackworth, and Mr. Fix voting “Yea.” Motion passed, 4-0.

8. MOTIONS:

A. Motion for Executive Session under Section 121.11(G)(1)(b), Matters involving an employee’s or public official’s employment, Section 121.22(G)(2), Purchase or sale of public property, Section 121.22(G)(3), Conference with law director regarding pending or imminent court action, and Section 121.22(G)(4), Matters involving bargaining sessions with public employees. Mr. Wisniewski stated no executive session was necessary this evening.

9. ADJOURNMENT. There being nothing further, Mr. Wisniewski moved to adjourn; Mr. Fix seconded the motion. Mr. Hackworth, Mr. Fix, Mr. Smith, and Mr. Wisniewski voted "Aye." Motion carried, 4-0. The Finance Committee adjourned at 9:25 P.M., April 20, 2006.

RESPECTFULLY SUBMITTED:

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Lynda D. Yartin, Municipal Clerk