February 27, 2003

 

The Ellettsville, Indiana, Town Council met in special session at 6:30 PM, Thursday, February 27, 2003 at the Town Hall.  David Sorokoty called the meeting to order.   David Sorokoty, President; David Drake, Vice-President, Geraldine McIntyre, Ray Freetage and Lisa Combs-Creech were in attendance.  Sandra Hash, Clerk-Treasurer was also present. 

 

Topic of Discussion:  Financial Planning for the Town 

 

Supervisors Present: Jim Davis, Jim Ragle, Mike Farmer, Jeff Farmer and Ron McGlocklin.

 

David Sorokoty and Sandra Hash met with Barbara Clark on January 8^th, 2003 concerning setting up a Tax Increment Financing (TIF) district in downtown to encourage economic growth.  Barbara gave Gregory Guerrettaz, financial advisor and President of Financial Solutions Group, Inc. as a contact name to get additional information.  Mr. Guerrettaz attended tonight’s meeting and gave a presentation on planning for the future using a Comprehensive Financial Plan (CFP).  The term CFP was created by Financial Solutions Group, Inc. (FSG Corp.) and Mr. Guerrettaz would like the Council to consider contracting the services of FSG Corp. to compile a CFP for the Town. 

 

A CFP is a planning process / document that looks at many of the financial impacts affecting cities, towns and counties both under the control of department heads and Council’s control.  The purpose of a CFP is to create a strategy that addresses capital improvements, cash managements and debt management collectively, instead of as individual issues.  FSG Corp. considers itself as a resource and encourages Council participation in developing a CFP and vision for the Town. 

 

Key items considered when developing a CFP are, the history of income taxes, projection of future income, how cash and investments are managed, the analysis of the 16 line statement, a projected 3 year budget by department and finally, fees and charges collected to offset cost of service items.  When key items are evaluated then a strategy can be put in action.

 

A capital improvements plan should also be established.  This is basically an idea of the projects the town or entity wishes to fund along with an estimate of cost and funding possibilities for the project(s).  The goal of cash management is to achieve the best interest income rates for the town or entity by informing their banking institution how certain monies will be spent over a period of time and what funds are committed for long-term and short-term.  Banks will be more willing to give municipalities better interest rates if they are informed.  Current assets are often insufficient to fund projects; therefore, the purpose of debt management is to consider all the ways to raise funds at the lowest possible cost and with the least burden on the taxpayer.  Creating a TIF district or fining assessment fees are a couple of ways to raise funds, however, the needs should be determined to see which way would best suit the municipality.   

 

FSG Corp. believes that comprehensive financial planning allows municipalities to maximize their interest revenue while minimizing their interest cost, with the ultimate result of utilizing capital improvement funds more effectively to minimize the effect on the taxpayer. 

 

Mr. Guerrettaz gave the example of a storm water fee that could be utilized to generate funds to improve drainage.  Bloomington currently has a storm water fee.

 

Sandra explained that Ellettsville is a small community in need of a Police Station, Fire Station and Municipal Building.  We are held to a levy increase of approximately $30,000 per year and we are not going to fulfill these needs with our current structure. 

 

 

 

Therefore we need to look at what else is out there to see if there are other ways to generate the needed funds without hitting the tax rate.

 

Mr. Guerrettaz replied we could not afford all three of the buildings, but construction cost grows so rapidly that it is not always good to wait either.  The whole point is to do what is manageable.  The priorities must be established and a financial plan in place to execute the priorities.   The plan will include a matrix showing how much the town is capable of raising annually to fund a project.

 

There were several questions from the Council. Mr. Guerrettaz gave examples of solutions other municipalities had used.

 

Mr. Guerrettaz explained the 5% levy increase was a very misunderstood concept.  Budgets are regularly increased by the maximum levy, but the revenues are not all increased by 5 % giving 2003 as an example.  The levy increase statewide was only 4.8% in 2003.  The only tax affected by the levy increase is property tax.  The County Option Income Tax may only increase by 1%.  Therefore if you allow the budgets to increase by a full 5% it will cause a decrease in the cash balance. 

 

Ray Freetage expressed his concerns and need for a financial plan.  He feels we need to understand what is best for the whole town, with the first step acquiring the financial information to make informed confident decisions for the future of the town. 

 

Geraldine McIntyre suggested now would be a good time for a bond issue due to the low interest rates.  Mr. Guerrettaz agreed.

 

The fee for the plan would be between $11,000 and $15,000.  He recommends the cost be shared by multiple funds.  It would take about 90-120 days to complete the document.  The time frame also depends how quickly the Clerk-Treasurer and Department Heads can provide the information.   He presented the Council a draft agreement for review.  He also emphasized the document must be utilized to be valuable.  It can’t become the world’s largest paperweight.

 

Supervisors Comments

 

Mike Farmer suggested talking with HJ Umbaugh to discuss a financial plan.  There may be some economic benefit working with them since they already have a working knowledge with the town.  He will arrange a meeting with them.

 

Jeff Farmer questioned what we were trying to accomplish stating before we go to a financial person we need to have a plan on what we want to accomplish.

 

Ray Freetage responded, before we start building, there should be a plan on where we are going.  We have been firefighters here instead of planners and builders.  We go around putting out fires, running to resolve problems as they arise. 

 

There was a great deal of emotional discussion on the need for a financial plan and where to locate a new Police Station.  Ron stressed he does not want to rebuild in a flood plane. 

 

Sandra stated we need financial assistance if we are going to enter into a bond issue so we can be assured we have the ability to repay the bond so we are fair to our constituents.

 

Jeff Farmer stated, before we proceed with a financial plan we need to assess the needs of each department. 

 

Lisa Creech suggested another work session to allow each supervisor to explain their needs and stop running around in circles.

 

 

David Sorokoty replied the number one priority should be a Police Station.  We need to get them out of the trailer. 

 

David Drake said we should work on both the needs and how to finance the needs together.  They go hand and hand.  He questioned the other bonds.  Sandra answered the two current bonds are under the Utility Department.

 

Darlyne Sowder suggested obtaining grants.  Lisa answered with the economic slump there are not many grants available.  She has been looking on the web and there is just not much available.

 

The Supervisors and Council shared ideas on locations, the need for buildings and what areas flood.

 

Mike Farmer said the Utility Billing Office could remain in the current Town Hall if a meeting hall were provided in another building.  The Billing Office could spread out over the entire first floor.

 

It was expressed money would be saved by housing the Town Hall and the Police Station together.  The Fire Department should remain separate on the land purchased for them.

 

The Supervisors were dismissed and the Council discussed the needs of the Town.

 

The Town Council discussed the possible locations for a new Police Station.  The three choices are the Shook property, the old water tower site and the old elementary school site.  No decisions were made.

 

Adjournment

   

The meeting adjourned at 10:00 P.M.

   

 

 

_____________________________                        __________________________

David Sorokoty, President                                     David Drake, Vice President

 

 

 

_____________________________                        __________________________

Lisa Creech-Combs                                     Ray Freetage

 

 

 

_____________________________                        __________________________

Geraldine McIntyre                                                Sandra C. Hash, Clerk-Treasurer