FINANCE COMMITTEE OF COUNCIL
CITY
HALL, 100 LOCKVILLE ROAD
WEDNESDAY,
AUGUST 20, 2008
EXPENSE
SUBCOMMITTEE
9:10
P.M.
1. Finance Committee of Council’s Subcommittee to review Expenses opened at 8:50 P.M., with Mr. Fix, Mr. Sabatino, and Mr. Sauer present. Others present were Cristie Hammond, Tim Hansley, Lynda Yartin, Linda Fersch, Chris Schornack, Ed Drobina, Brenda VanCleave, Paul Lane, Jennifer Frommer, Mike McKinley, and others.
2. APPROVAL OF MINUTES OF August 6, 2008, Meeting. Mr. Sauer moved to approve; Mr. Sabatino seconded the motion. Roll call was taken with Mr. Fix, Mr. Sabatino, and Mr. Sauer voting “Yea.” Motion passed, 3-0.
3. SCHEDULED MATTERS:
A. Review and discussion regarding outsourcing the Urban Forestry activities. Mr. Fix stated the Committee had received a memorandum from Mr. Drobina showing that the maintenance of the commercial route trees would run approximately $25,000 per year to outsource. Mr. Drobina stated that was correct, however, the cost the first year would be the most expensive because some of the trees are fairly large and it would take quite a bit of trimming. Mr. Fix stated we currently trim those trees and Mr. Drobina stated the company providing the quote seemed to think they needed more done to them. He stated that company had indicated that if you prune the trees properly you would only have to prune them every three years. Mr. Fix stated the way he read this then was that if we paid $25,000 the first year, we wouldn’t have to do it again for two years after that. Mr. Drobina stated that is what he understood, however, there may still be some small incremental costs annually. Mr. Drobina clarified he had requested the quote on the trees from the east railroad tracks up to I-70, plus Lockville Road a little bit on Columbus Street by the Circle K. He stated that is what he considered our commercial area. Mr. Sabatino further clarified that the builders pay so much per tree and then the City buys and plants the trees. Mr. Sauer stated his question would be if it was decided to go this route, exactly how much would it save the City. He stated there will still be expenses associated with the urban forestry program, so he would like to know exactly what amount would be saved. Mr. Fix asked Mr. Drobina if he and Mr. Schornack could look at that and bring that information back to the next meeting.
B. Review and discussion regarding outsourcing Building Department activities. Mr. Lane stated he had distributed some building department service cost comparisons at the beginning of the meeting. Mr. Lane stated the first document provides a cost comparison to several different consultants who provide different aspects of the building department services. He continued the four functions he was looking at were Chief Building Official Services, Commercial Plan Review, Residential Plan Review, and Inspections. He stated the firms listed in red on the document are the firms we have dealt with in the past or are currently dealing with. Mr. Sabatino stated it seemed with an hourly rate one individual could take more time to do the same document as another individual would. Mr. Fix inquired if Mr. Lane had looked at getting a cost per inspection or per document and Mr. Lane stated he had not spoken to anyone of doing it a different way. Mr. Sabatino stated he thought there could be a way to devise a system, different than we are currently using, where for pretty much everything involved in these four areas we had vendors give us a price per piece rather than per hour. Mr. Fix stated he thought the problem with that was that they would estimate high, and Mr. Sabatino stated we did not know what the estimate was when doing it by the hour. Mr. Lane stated the hourly rate is an industry standard for how they bill, and the documents vary depending on the quality of the documents. Mr. Sabatino inquired what we charge the customer for a commercial plan review and Mr. Lane stated there is a processing fee based on the square footage, then we have a flat rate of $125 per hour. Mr. Sabatino inquired if we couldn’t get quotes based upon a job function, and if not, why not. Mr. Sabatino stated he felt we could save a large amount of money by doing this, and doing it the way we are currently does not make it right or cost effective. He stated he felt we should examine how to do things rather than just continue to underwrite overhead hoping that someday things turn around. Mr. Lane stated the second document outlines the way we pay our plumbing and electrical inspectors. Mr. Hansley stated by paying these inspectors the way we do ensures they are available to us to do the inspections. He stated with a low volume of inspections, if you do not find a way to compensate them at some guaranteed rate then they may or not be available to you when you need to have the job done. Mr. Sabatino inquired if we were trying to do things more efficiently or are we just trying to create a rate to justify the overhead. He stated we now have overhead that we are not using and that is inefficient. He stated in these times this is not an efficient way to do these tasks. Mr. Fix stated when doing 40 homes a year there is no efficient way to do it, and Mr. Sabatino stated he felt a per job basis would be the way. Mr. Sabatino stated Violet Township does these jobs on an as needed basis. Mr. Hansley stated he had lunch with Bill Yaple today and they have the same problem we have, trying to keep the guys busy and available for the limited number of inspections. Mr. Hansley stated we have talked about combining forces or contracting with the same group, and we are willing to discuss that. Mr. Fix clarified the inspectors we pay daily get their assignments by e-mail and when they complete the inspection they e-mail us the results. Mr. Lane stated as of August 15th, Mr. Lewis has done 277 inspections, which works out to an average of 2.95 inspections per day. Mr. Fix clarified an inspection takes anywhere from 15 minutes to an hour and a half. Mr. Fix requested Mr. Lane to see what we rate we could get on a per inspection basis and Mr. Lane stated on the first document two of the firms have given a rate per inspection. Mr. Fix inquired if there was a down side to going to a per inspection rate rather than a daily rate, and Mr. Lane stated he did not see one, however, the per inspection rate would probably be higher. Mr. Fix requested Mr. Lane get an estimate from our inspectors to see what the rates would be on a per inspection basis, and provide that to the committee for the next meeting. Mr. Sauer stated he thought the idea of combining forces with the Township made a lot of sense and he would like to see those discussions continue. Mr. Lane stated he was to meet with Mr. Yaple next week and Mr. Fix stated then at the next meeting if he would report back to this committee with the results of his discussion with Mr. Yaple regarding exploring the possibility of combining forces for inspections.
C. Review and discussion regarding Engineering costs. Ms VanCleave stated she has been asked several times what an engineer does for the City so she searched the web and came up with a job description for a city engineer, and distributed the job description to the committee. Mr. Hansley stated Ms VanCleave and Ms Frommer were present to answer questions regarding the engineer duties. Ms Frommer stated she had prepared a memo that she distributed to staff and the committee members tonight. She stated she had taken the August 6th memo from Mr. Hansley that the committee received at the last meeting, and put together a summary of hours over the past five years that represents the hours of engineering service of a general nature and what that has cost you. Ms Frommer reviewed her memorandum with the committee and stated she would answer any questions. Mr. Fix stated in times of low volume, the way our retainer is set up now, Ms Frommer is more profitable. He stated in times of low volume, the way things are today, there is no benefit to having a retainer versus having someone on staff. Mr. Hansley stated for the basic engineering, water utility engineering, storm water utility engineering, storm water utility engineering, sanitary sewer engineering, traffic engineering, because we are still a growing City, we have not hit a low volume. Mr. Fix stated for the sake of conversation that low volume is highly unlikely, and even if we got it it would not make any difference from a monetary standpoint. He continued, given that, having a well qualified, well rounded person here full time would have additional benefits as opposed to not having Ms Frommer full time because she has other clients. Mr. Fix asked if Mr. Hansley and Ms Frommer could come up with a good number they could agree on that that looks like. Ms Frommer stated the lion’s share of the difference is Mr. Hansley has about 1,000 hours per year saved, and he had not accounted for plan review and the number was a little low on what the retainer was. She stated she felt if you got someone who could literally do everything she does, you could likely have 250 to 300 hours of that person’s time available to do something else. Mr. Sauer stated he would question how realistic that might be. Mr. Sabatino stated it comes down to the skill set of the person you would hire. Mr. Hansley stated he thought the question for this committee is if you change is there the potential to save up to $150,000, and the answer is yes. He stated the bigger side issue is the conflict of interest, and for example we had Stilson engineered the Meadows culvert as the contractor and then she is the city’s engineer to inspect that work. He stated that made him wonder who was the independent person and that caused him concern. Mr. Sauer clarified that Category B services are engineering services that are outside the retainer, and Ms Frommer stated since the new retainer was negotiated that has not been used much any more. Mr. Fix stated as he understood it, Ms Frommer was estimating 300 hours could be saved by having a person in-house and Mr. Hansley was estimating that number to be 1,000 hours. Mr. Fix stated using 500 hours and Ms Frommer’s calculations, that amounted to $35,000, and Mr. Hansley estimated we could see some revenue generated by in-house plan reviews at approximately $35,000. Mr. Fix stated then that saved $70,000. Ms Frommer stated it would depend on the person you would get. Mr. Fix stated that assuming 20 percent of the work that is currently covered by the retainer needs to be farmed out because we do not have the expertise between our two engineers to do everything, that would amount to an expense of $20,000, leaving a savings of $50,000. Ms Frommer stated she was keeping CIP projects totally separate, and using Mr. Fix’ $50,000, she thought that was a decent number. She stated in CIP projects she thought that was an area where you needed the professional liability to do design, the time to do the design, did it make sense without a draft person on staff, and things like that. Mr. Fix stated he would remove CIP from the equation. Mr. Fix stated if through CIP, etc., we found another $25,000 that would put us back at $75,000. Mr. Fix then stated it appeared that everyone agreed then that $75,000 was a reasonable number that could be saved by having the engineer in-house. Ms Frommer stated not that she was arguing with Mr. Fix’ logic, she agreed with his logic, she just thought there were so many what if’s involved. Mr. Fix stated if all of the what if’s were correct, the question becomes did it make sense for this body, at this time, to try to save $75,000 giving up what we would give up with Stilson in exchange for the theoretical savings of $75,000. Mr. Fix stated he felt there was a lot of value that Ms Frommer and her firm brings to the City, and Ms Frommer stated she did not doubt that. Mr. Fix stated he thought this was a question that should be posed to all of Finance Committee and he would like to have Mr. Hansley and Ms Frommer to come up with the process just reviewed and be prepared to present it to Finance at their next meeting. Mr. Sabatino stated it all comes back to hiring the right person, and he thought Mr. Hansley would be the one to do this. Mr. Hansley stated he thought he and Ms Frommer could combine their two memos into one that would be presented to Finance. Mr. Hansley stated he felt it would still be an advantage with a full time engineer because it would remove the conflict of interest issue. Mr. Fix stated he would like to put on the record that this conversation is in no way a reflection of anyone’s feelings about our engineers, and he appreciated Ms Frommer’s willingness to help the City figure this out. He stated further he felt Ms Frommer represented her firm extremely well and did a great job for the City. Mr. Sauer stated he shared Mr. Fix’ opinions as well, and he felt Ms Frommer did a great job for the City. Mr. Sabatino stated if Mr. Hansley and Ms Frommer could come up with something he felt that was what we needed.
D. Review and discussion regarding projected revenue and expenses for 2009. Mr. Fix stated this item would remain on the agenda for the next meeting.
4. ADJOURNMENT. There being nothing further, Mr. Sauer moved to adjourn; Mr. Fix seconded the motion. Mr. Fix, Mr. Sauer, and Mr. Sabatino voted "Aye." Motion carried, 3-0. The Expense Subcommittee adjourned at 10:35 P.M., August 20, 2008.
RESPECTFULLY SUBMITTED:
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