HomeMy WebLinkAbout~Master - Special Meeting of the Ames City Council 02/01/2002MINUTES OF THE SPECIAL MEETING
OF THE AMES CITY COUNCIL
AMES, IOWA FEBRUARY 1, 2002
The Ames City Council met in special session at 2:00 p.m. on Friday, February 1, 2002, in the Council
Chambers of City Hall, 515 Clark Avenue, pursuant to law with Mayor Tedesco presiding and the
following Council members present: Goodhue, Hoffman, Quirmbach, and Vegge. Council Member
Wirth arrived at 2:10 p.m., and Council Member Cross arrived at 2:15 p.m.
FY 2002/03 BUDGET OVERVIEW: City Manager Steve Schainker, Finance Director Duane Pitcher,
and Budget Officer Carol Collings were present to review the documents contained in the budget
packet as distributed to the City Council.
City Manager Steve Schainker advised that the development of this financial plan for the City was,
by far, the most difficult of all the previous years of his tenure. He explained that this was due
primarily to three factors: (1) the City has been faced with another decrease in taxation due to the
rollback, which now will exempt residential property up to about 51% of its assessed value, i.e., a
loss of $84,000,000 in assessed valuation; (2) due to the downturn in the economy, the City saw
decreases in funding (in our base budget) from a number of significant revenue sources: Local
Option Sales Tax receipts, building permit fees, interest earnings, and Road Use Tax/other state
revenue sources; and (3) the City will see an increase in debt service due to the passing of the bond
issues for the Ames Quarry and Fire Station #3.
According to Mr. Schainker, the news is good regarding fees to cover the cost of operating our major
utilities. He advised that the City is not proposing any increases for next year for the Electric Utility,
Sanitary Sewer Utility, Storm Sewer Utility, or Water Utility. He stated that the Resource Recovery
Utility will need the Council’s greatest attention; in order to avoid a negative fund balance in
2002/03, some form of revenue enhancement is needed.
Mr. Pitcher reviewed a series of Special Reports for the 2002/03 Budget. He advised that the
2002/03 budget calls for a 5.26% ($.49) increase in the overall tax rate from $9.36/$1,000 of taxable
valuation to $9.85/$1,000 of taxable valuation. Mr. Pitcher explained that the General Levy, which
typically finances major portions of our public safety, community enrichment, transportation, and
general government programs, will see a $.09 increase. Mr. Schainker said that this Levy is impacted
the most by our declining economy where we are projecting a decline in General Fund revenues of
approximately $450,000 from the previous year’s base. Mr. Pitcher explained that the Employee
Benefit Levy currently is devoted solely to financing the City’s annual obligation to the state-
mandated Police & Fire Retirement fund. He told the Council that its projected cost will increase by
$60,432 in 2002/03 to $807,665, and this budget reflects a rate increase of 1.85% for this obligation.
The Council was also informed that $289,990 will come from a trust fund that the City has
maintained to mitigate the tax impact of these contributions. Pertaining to the Transit Levy, which
represents the City’s contribution to our three-party partnership and Government of the Student Body
to support transit operation, Mr. Pitcher said this budget includes a 7.5% increase in City tax support
to CyRide. Mr. Pitcher stated that the Debt Service Levy, which generates funds needed to pay the
annual principal and interest payments for General Obligation Bond indebtedness, is estimated to
be $7,016,529. He said that the City is fortunate to have a balance in this fund to reduce the impact
of these debt payments ($650,000 from this balance will be used in 2002/03). Mr. Schainker
reminded the Council that $774,831 is required to make debt payments for the Ames Quarry and Fire
Station #3. Mr. Pitcher said that, even without those two major projects, the City’s debt service
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requirements will increase by $446,974 in 2002/03 to cover the major street projects approved in the
Capital Improvements Plan.
Mr. Pitcher reviewed the Current and Proposed Debt Service and the Long-Term Debt Service
Estimate. He explained the dollar value and percentage change of the Total Levy by property type.
Sample tax calculations for Residential, Commercial, and Industrial properties were given. Mr.
Pitcher explained sample tax calculations if there were no changes in roll back: The overall tax rate
increase needed to finance the 2002/03 budget would be $.01, rather than $.49. Council Member
Hoffman reminded the citizens that residential roll back is mandated by the state, not the City.
The property tax cost of services per residence was given (based on a $100,000 home): For 2002/03,
the calculated tax will be $509. In 2001/02, the calculated tax was $526. Council Member
Quirmbach pointed out that none of these monies are allocated to fund the arts; that comes from
other funding sources (primarily Local Option Taxes). He also pointed out that if arts programs were
to be funded from property taxes, it would equate to $3 per $100,000 valuation. Council Member
Hoffman asked for a report showing operational costs only for the various programs (not including
debt service).
Mr. Schainker advised that, unless the City gets some return much higher than expected in the next
year in Road Use Tax Revenue, we will have to look at cutting some services or identifying other
sources of funding, such as property taxes, in programs that are funded by Road Use Tax funds.
Changes in Employment Levels were explained by Steve Schainker. He will provide statistics on
average turnover and current vacancies to the Council at their next budget meeting (February 5). He
also explained changes in fees and service charges being suggested for 2002/03.
Carol Collings summarized the revenue and expenses for the General Fund. She reviewed Local
Option Tax revenue. Council Member Quirmbach asked to have staff report on what the unreserved
fund balance has been for at least the past five years.
Steve Schainker told the Council that he is recommending that the City utilize $48,000 from the
Hotel/Motel Tax Fund to help finance our in-house economic development efforts. He gave the
history behind the most-recent increase to this fund as voted on by referendum and how its proceeds
were to be distributed.
Regarding Leased Housing, Carol Collings pointed out that revenues do exceed expenses. She said
this is due to continued hard work by the Housing staff to keep the lease-up rate high; for the first
time in many years, we are meeting our average lease-up goal of 95%, which ensures that federal
funds cover our administrative costs.
Mr. Schainker advised that estimates received from the state for 2001/02 and 2002/03 for the Road
Use Tax are much less than earlier estimates. He explained that due to excess revenues previously
contained in this fund, the City is able to withstand the anticipated $321,479 deficit in Road Use Tax
revenues.
Regarding the County-Wide Affordable Housing Partnership, Mr. Schainker explained that the three-
year obligation of the entities involved will expire this year. He said that Story County has indicated
that they are experiencing budgetary limitations and will not be wholly contributing for the cost of
program administration ($92,000 annually). Mr. Schainker advised that the City has enough funds
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to continue this program for one more year with the administrative costs being allocated from other
funds.
Regarding the Park Development Fund, Steve Schainker informed the Council that in 2002/03, it is
his recommendation that the normal allocation of $100,000 not be transferred in from Local Option
Taxes due to cutbacks caused by decreased revenues.
Carol Collings explained that Economic Development is now a fund on its own (it formally was tied
into the Hotel/Motel Tax Fund). She said that revenues in this fund come from loan repayments and
approved loans and include the proceeds of $100,000 contributed by the Electric Fund. Mr.
Schainker explained the Electric Utility’s contribution to the General Fund in lieu of taxes, which
will be $1,082,818 in 2002/03.
The Enterprise Funds (Water Utility, Sewer Utility, Electric Utility, Parking Operations and
Improvement, Transit Agency, Storm Sewer Utility, Ames/ISU Ice Arena, Homewood Golf Course)
were explained by the City Manager.
Council Member Wirth left the meeting at 4:00 p.m.
Regarding the Resource Recovery Plant, Mr. Schainker pointed out that the two major funding
sources are the tipping fee charged to the haulers and tax support on a per capita basis under
contractual arrangements with other communities. He said that the per capita charge to the
communities as partners in 28E agreements to haul their garbage to Ames will be adjusted in
2002/03 to reflect the 2000 Census. Mr. Schainker explained that the three factors affecting
Resource Recovery operations are fires at the Plant, gasoline costs to haul the rejected materials, and
the increased cost of landfill charges by the Boone County Landfill. Mr. Schainker advised that he
is suggesting that the per capita fee be increased from $10.50 to $11.75 and increasing the tipping
fee from $45 to $52.75 per ton. He said that a transfer from the General Fund of $158,889 and the
payment of $315,000 in Debt Service would make up Ames’ share of the per capita. Mr. Schainker
outlined other options available to deal with the negative balance of this Fund. He explained that the
real policy issues are (1) does the Council want to get out of the negative balance the first year and
(2) do they want to increase the per capita, which ultimately affects property taxes. Discussion was
held on whether the tipping fee should be increased.
Council Member Goodhue left the meeting at 4:10 p.m.
COMMENTS: Moved by Hoffman, seconded by Cross, to direct staff to place on a future agenda a
review of the rental housing ordinance as it relates to external maintenance.
Vote on Motion: 4-0. Motion declared carried unanimously.
ADJOURNMENT: 4:30 p.m.
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Diane Voss, City Clerk Ted Tedesco, Mayor