DRAFT

CITY OF ROCKY RIVER

DECEMBER 12, 2005

Regular meeting of Council was called to order by Mrs. Bobst, President of Council, at 8:00 p.m.

Council Members Present: Mr. Gollinger, Mr. Potterfield, Mr. Frost, Mr. Hurtuk,

Mrs. Bartolozzi, Mr. Hagan, Mrs. Bobst

Administration: Mayor Knoble, Mr. Linden, Mr. Thomas

Law Director: Mr. Matty

Press: Mrs. McKenzie

The meeting was opened with the Pledge of Allegiance.

Mrs. Bobst recognized Mr. Hurtuk who requested that an Executive Session be held immediately to discuss three matters of pending litigation.

MOTION:

Moved by Mrs. Bobst, seconded by Mr. Gollinger, that, at the request of Mr. Hurtuk, an Executive Session be held immediately for a conference with an attorney for the public body concerning three disputes involving the public body which are the subject of pending or imminent court action.

Vote: Gollinger - aye Potterfield - aye Frost - aye

Hurtuk - aye Bartolozzi - aye Hagan - aye

Bobst - aye

7 ayes 0 nays PASSED

Council immediately adjourned for an Executive Session and the Legislative Meeting was reconvened at 8:37 at the conclusion of the Executive Session.

MOTION:

Moved by Mrs. Bobst, seconded by Mr. Gollinger and Mr. Hurtuk, that the reading of the minutes of the Legislative Meeting of November 28, the Special Meeting, the meeting of the Committee-of-the-Whole and the Executive Session of December 5 be waived and that the minutes be accepted as submitted.

Vote: Gollinger - aye Potterfield - aye Frost - aye

Hurtuk - aye Bartolozzi - aye Hagan - aye

Bobst - aye

7 ayes 0 nays PASSED

MAYOR'S REPORT:

The Mayor indicated that the City is continuing to address snow issues, and he said that the Service Garage is doing an excellent job. The streets are in good condition, but the City is using a great deal of salt at an exorbitant cost, so he has authorized the purchase of sand to mix with it. The cost is lower, and in some cases, it provides better traction.

The meeting with the post office officials went very well, and the Mayor was pleased to have Mr. Hagan, Mr. Linden, and Mr. Winterich join him in the talks about improved landscaping and traffic patterns, which are the City's major concerns. The meeting was productive, and he hopes to receive layouts and plans for improvement from them shortly.

DARE graduations will be held soon: tomorrow at St. Chris at 10:45 and Friday at the Montessori School at 10:30. Council members who are able to attend should let Officer Phil know when they arrive.

Discussion: Mrs. Bartolozzi asked about the salt barn which has been discussed for several years. Mayor Knoble indicated that soil testings have become an issue, as results show that the soil is not suitable in the proposed location. He noted that the City would have to spend considerably more than planned, find another location or drop the idea. He is leaning toward the last.

LAW DIRECTOR'S REPORT:

Last week, Mr. Matty and Mr. Gollinger attended the fourth quarterly meeting at the airport with Director Mok. On the agenda was noise verification. At the beginning of the year, the airport hopes to hire a consultant who will do a noise exposure map update. It remains to be seen, however, who will be the airport director, as with the new Administration in Cleveland, all Directors have been asked to tender resignations as well as documents stating why they should be retained. The airport is a regional facility, however, so continuity is important.

On the sexual predator legislation, Mr. Matty noted that Mr. Frost had requested additional maps of the City's GIS expert. Mr. Matty indicated that it does not appear that his term will permit sufficient time to see passage of this ordinance. He did advise the committee, however, to examine the amount of the City which would be off limits to sexual offenders. He reminded them that in Section D of the ordinance, additional items were added specifically from a concern for children. A church may fit that pattern, particularly with a pre-school, but a library could be questionable. Council should examine this matter. Libraries and pre-schools are included in the ordinance passed by the City of North Canton; churches are not. The entire city cannot be excluded.

Mr. Matty finally noted that a Council meeting will be required next week for collective bargaining, and also the last week in December if matters proceed as scheduled.

COMMITTEE REPORTS:

Mr. Hurtuk reported that the Finance Committee had met this evening with preliminary discussions of the 2006 Budget, both revenues and expenditures. Mayor Knoble discussed his instructions to his directors. Once wage negotiations are complete and contracts finalized, more specific discussion will be held in late January and February.

COMMUNICATIONS AND ANNOUNCEMENTS:

Mrs. Bobst noted that a letter has been received from SBC concerning Project Lightspeed. (Exhibit "A")

In response, this evening, a letter has been received from Cox Cable (Exhibit "B")

The Rocky River sports program is featured in the latest issue of Sports Illustrated, being honored as a "Good Sports" community. The recreation department will be represented at the next meeting and signage with the designated honor will be presented to Mayor Knoble and Council at that meeting. Mrs. Bobst extended congratulations to the Recreation Department.

Mrs. Bobst mentioned that the Law Director had expressed the need for a Council meeting between Christmas and New Year's Day. With the observation of Christmas on Monday, the meeting will be tentatively scheduled for Wednesday, December 28, subject to change if necessitated by negotiation schedules.

AUDIENCE PARTICIPATION:

Brian Ruic, 20358 Westover, addressed Ordinance No. 164-05. He asked if sex offenders who are present residents in those newly restricted areas would be "grandfathered" or whether they would be forced to move. Mr. Matty said there may be an enforcement issue, but it is difficult as this is new ground, with only North Canton as precedent.

There were no Council requests for changes to the Consent Agenda.

ORDINANCE NO. 164-05 BY ROBERT S. FROST

AN EMERGENCY ORDINANCE CREATING NEW SECTION 533.14 ENTITLED "SEX OFFENDER RESIDENCY PROHIBITION" AND DECLARING AN EMERGENCY

2^ND READING

Mr. Frost has learned from the Administration that there are currently four offenders living in the proposed prohibited area. One is now in prison, one lives within the proposed 1000' prohibited area of the current ordinance, one in the prohibited area if the ordinance is amended, and one outside any proposed prohibited areas. He indicated that he had proposed the prohibition of pre-schools and libraries, and Mr. Gollinger, that of churches. He noted that the addition of churches would not add significantly to the prohibited area. Questions remain on those residents who would be affected and enforcement issues. Mr. Frost feels that changes in the Code would be in protection of children, as these are locations where children are likely to be present. Mr. Gollinger also indicated that the addition of churches was not because of church attendance, but because it would provide a level of protection with activities where children might be present. The discussion will continue at the next meeting.

ORDINANCE NO. 167-05 BY BRIAN F. HAGAN

AN EMERGENCY ORDINANCE ACQUIRING A PERMANENT EASEMENT FOR DRAINAGE AND STORM SEWER PURPOSES LOCATED ON AUDITOR'S PERMANENT PARCEL NUMBERS 303-17-003, 303-17-009, 303-17-010, 303-17-050, 303-19-005, 303-19-003, 303-19-004, AND 303-19-002 AT AN ACQUISITION COST OF TEN DOLLARS ($10.00), AND AS FURTHER DESCRIBED IN THE ATTACHED EXHIBITS "A" AND "B"

2^ND READING

Moved by Mr. Hagan, seconded by Mr. Hurtuk, that the rule requiring that Ordinance No. 167-05 be read on three separate days be suspended, and that Ordinance No.167-05 be placed upon its passage:

Discussion: This ordinance has been discussed, but a question remained concerning a review of the films of the televised sewers by the engineer and Mr. Linden. Since it has been deemed satisfactory, it is time to obtain the easements.

Vote: Gollinger - aye Potterfield - aye Frost - aye

Hurtuk - aye Bartolozzi - aye Hagan - aye

Bobst - aye

7 ayes 0 nays PASSED

Moved by Mr. Hagan, seconded by Mr. Hurtuk and Mrs. Bartolozzi, that Ordinance No. 167-05 be passed as read:

Discussion: This ordinance will authorize the obtaining of easements for potential necessary repairs.

Vote: Gollinger - aye Potterfield - aye Frost - aye

Hurtuk - aye Bartolozzi - aye Hagan - aye

Bobst - aye

7 ayes 0 nays PASSED

ORDINANCE NO. 175-05 BY BRIAN A. HURTUK

AN EMERGENCY ORDINANCE HIRING DAVID J. MATTY AS CO-COUNSEL WITH THE CITY'S NEWLY ELECTED LAW DIRECTOR IN REPRESENTING THE CITY IN THREE SPECIFIC CONTINUING LEGAL MATTERS AND IN PARTICIPATING IN THE LAW DIRECTOR'S TRANSITION

1^ST READING

Moved by Mr. Hurtuk, seconded by Mr. Gollinger and Mrs. Bartolozzi, that the rule requiring that Ordinance No. 175-05 be read on three separate days be suspended, and that Ordinance No.175-05 be placed upon its passage:

Discussion: As the transition in the Law Director's office is imminent, there is no reason to delay this ordinance with three readings.

Vote: Gollinger - aye Potterfield - aye Frost - aye

Hurtuk - aye Bartolozzi - aye Hagan - aye

Bobst - aye

7 ayes 0 nays PASSED

Moved by Mr. Hurtuk seconded by Mrs. Bartolozzi and Mr. Hagan, that Ordinance No. 175-05 be passed as read:

Discussion: Mr. Hurtuk noted that this ordinance is in the best interests of the City as discussed by members of Council. It will create co-counsel for several pending legal matters and will benefit both the City and the incoming Law Director.

Vote: Gollinger - aye Potterfield - aye Frost - aye

Hurtuk - aye Bartolozzi - aye Hagan - aye

Bobst - aye

7 ayes 0 nays PASSED

RESOLUTION NO. 180-05 BY BRIAN A. HURTUK

A RESOLUTION APPROVING A CERTAIN BOND TRANSFER FROM THE ROCKY RIVER WASTEWATER TREATMENT PLANT UTILITY FUND TO THE WASTEWATER TREATMENT PLANT CAPITAL FUND AND DECLARING AN EMERGENCY

1^ST READING

Moved by Mr. Hurtuk, seconded by Mr. Gollinger and Mrs. Bartolozzi, that the rule requiring that Resolution No. 180-05 be read on three separate days be suspended, and that Resolution No.180-05 be placed upon its passage:

Discussion: This resolution, like the group that passed earlier, is a housekeeping item that authorizes the transfer of funds as provided in the budget. This method was recommended by the state auditors and should not be delayed by three readings.

Vote: Gollinger - aye Potterfield - aye Frost - aye

Hurtuk - aye Bartolozzi - aye Hagan - aye

Bobst - aye

7 ayes 0 nays PASSED

Moved by Mr. Hurtuk seconded by Mrs. Bartolozzi and Mr. Hagan, that Resolution No. 180-05 be passed as read:

Discussion: This budget transfer moves funds from the WWTP Utility Fund to the WWTP Capital Fund.

Vote: Gollinger - aye Potterfield - aye Frost - aye

Hurtuk - aye Bartolozzi - aye Hagan - aye

Bobst - aye

7 ayes 0 nays PASSED

ORDINANCE NO. 181-05 BY BRIAN A. HURTUK

AN EMERGENCY ORDINANCE TO MAKE TEMPORARY APPROPRIATIONS FOR THE CURRENT EXPENSES OF THE CITY OF ROCKY RIVER, OHIO DURING THE FISCAL YEAR ENDING DECEMBER 31, 2006

1^ST READING

Moved by Mr. Hurtuk, seconded by Mr. Hagan, that the rule requiring that Ordinance No. 181-05 be read on three separate days be suspended, and that Ordinance No.181-05 be placed upon its passage:

Discussion: This ordinance authorizes funds so that the City can continue to operate until a budget can be put into place.

Vote: Gollinger - aye Potterfield - aye Frost - aye

Hurtuk - aye Bartolozzi - aye Hagan - aye

Bobst - aye

7 ayes 0 nays PASSED

Moved by Mr. Hurtuk, seconded by Mr. Hagan, that Ordinance No. 181-05 be passed as read:

Discussion: Mr. Hurtuk explained that a significant part of the new budget are the labor negotiation contracts. Until finalized, the new budget cannot be set, and this ordinance provides temporary funds until that time.

Vote: Gollinger - aye Potterfield - aye Frost - aye

Hurtuk - aye Bartolozzi - aye Hagan - aye

Bobst - aye

7 ayes 0 nays PASSED

ORDINANCE NO. 182-05 BY BRIAN A. HURTUK

AN EMERGENCY ORDINANCE CREATING POSITIONS AND FIXING THE ANNUAL SALARIES AND HOURLY RATES FOR THE APPOINTED EMPLOYEES IN THE SEVERAL DIVISIONS AND DEPARTMENTS OF THE CITY OF ROCKY RIVER

1^ST READING

This ordinance was placed on first reading for further discussion.

ORDINANCES AND RESOLUTIONS UNDER CONSENT:

ORDINANCE NO. 168-05 BY BRIAN F. HAGAN

AN EMERGENCY ORDINANCE AUTHORIZING THE MAYOR AND THE DIRECTOR OF PUBLIC SAFETY-SERVICE TO ENTER INTO A CONTRACT FOR VARIOUS INSURANCE COVERAGES FOR THE CITY OF ROCKY RIVER WITH McGOWAN AND COMPANY, INC. FOR THE YEAR 2006 AT A TOTAL COST OF $196,919.00

2^ND READING

This provides insurance needs for the City as detailed at the last Committee-of-the-Whole. The savings in this contract over last year's is almost $85,000.

ORDINANCE NO. 169-05 BY BRIAN F. HAGAN

AN EMERGENCY ORDINANCE AUTHORIZING THE MAYOR AND THE DIRECTOR OF PUBLIC SAFETY-SERVICE TO ENTER INTO A CONTRACT FOR VARIOUS INSURANCE COVERAGES FOR THE ROCKY RIVER MUNICIPAL COURT WITH JACKSON, DIEKEN & ASSOCIATES FOR THE YEAR 2006 AT A TOTAL COST OF $10,427.00

2^ND READING

This ordinance authorizes insurance for the WWTP at a slight increase in cost.

ORDINANCE NO. 170-05 BY BRIAN F. HAGAN

AN EMERGENCY ORDINANCE AUTHORIZING THE MAYOR AND THE DIRECTOR OF PUBLIC SAFETY-SERVICE TO ENTER INTO A CONTRACT FOR VARIOUS INSURANCE COVERAGES FOR THE ROCKY RIVER WASTEWATER TREATMENT PLANT WITH JACKSON, DIEKEN & ASSOCIATES FOR THE YEAR 2006 AT A TOTAL COST OF $53,662.00

2^ND READING

This ordinance provides for the Court's insurance, and has been reviewed and approved by the Administration and by Mr. Gareau, Clerk of Courts.

ORDINANCE NO. 174-05 BY BRIAN A. HURTUK

AN EMERGENCY ORDINANCE EARMARKING THE IMPROVEMENT AND EXPANSION OF THE DON UMERLEY CIVIC CENTER AS A SPECIAL PROJECT SUCH THAT INTEREST EARNED ON FUNDS ON DEPOSIT IN THE CIVIC CENTER IMPROVEMENT SUB-ACCOUNT SHALL REMAIN IN THAT SUB-ACCOUNT AND SHALL NOT BE REQUIRED TO BE CREDITED TO THE CITY'S GENERAL FUND

1^ST READING

The City has received the $8.4 million collected in preparation for the expansion of the Don Umerley Civic Center as authorized by the voters. The interest earned on that investment, because the project cannot yet begin, is considerable, and this ordinance allows those funds to remain with the project rather than be transferred to the General Fund.

ORDINANCE NO. 176-05 BY FRANK B. GOLLINGER

AN EMERGENCY ORDINANCE AMENDING ORDINANCE NUMBER 138-05 WHICH AUTHORIZED THE DIRECTOR OF PUBLIC SAFETY-SERVICE TO PURCHASE SODIUM BISULFITE FOR THE YEAR 2006 FOR THE WASTEWATER TREATMENT PLANT

1^ST READING

Because there was some confusion over the name of the vendor and the division which actually supplies the chemical for the WWTP, this ordinance was required so that the division can be paid.

ORDINANCE NO. 177-05 BY LINDA S. BARTOLOZZI

AN EMERGENCY ORDINANCE AUTHORIZING THE SAFETY-SERVICE DIRECTOR TO PURCHASE THREE (2) 2006 FORD CROWN VICTORIAS FOR THE POLICE DIVISION UNDER THE STATE COOPERATIVE PURCHASING ACT FROM STATEWIDE FORD LINCOLN MERCURY, INC. AT A COST NOT TO EXCEED $63,787.08

1^ST READING

This ordinance authorizes the purchase of three vehicles which are planned replacements of line cars. One will be purchased with POPAS funds. Of the vehicles being replaced, one will be sold and the two remaining passed on for other City uses.

ORDINANCE NO. 178-05 BY BRIAN A. HURTUK

AN EMERGENCY ORDINANCE AUTHORIZING THE DIRECTOR OF FINANCE TO PAY THE LAW FIRM OF KEGLER, BROWN, HILL & RITTER FOR LEGAL SERVICES AND RELATED EXPENSES NEEDED BY THE CITY OF ROCKY RIVER AT A COST NOT TO EXCEED $13,502.50

1^ST READING

Mr. Hurtuk stated that it has been the practice of this Council and those that preceded it to oppose the granting of liquor licenses to gas stations. For this case, outside counsel was necessary, and this will pay their fees. A final decision in the case is being awaited.

Moved by Mrs. Bobst, seconded by Mr. Hagan, that the rule requiring that all matters on the Consent Agenda be read on three separate days be suspended, and that the stated legislative items be placed upon their passage:

Vote: Gollinger - aye Potterfield - aye Frost - aye

Hurtuk - aye Bartolozzi - aye Hagan - aye

Bobst - aye

7 ayes 0 nays PASSED

Moved by Mrs. Bobst, seconded by Mr. Gollinger, that the ordinances and resolutions of the Consent Agenda be passed as read:

Vote: Gollinger - aye Potterfield - aye Frost - aye

Hurtuk - aye Bartolozzi - aye Hagan - aye

Bobst - aye

7 ayes 0 nays PASSED

MISCELLANEOUS BUSINESS:

Mr. Matty noted that the passage of Ordinance No. 175-05 authorizes fees which might be incurred by the transition in the Law Department. However, he wanted Council to know that the current plan is to have all files transferred before the end of the year. Pending matters will have a memo attached explaining the status, and Mr. Matty will meet with Mr. Bemer to go over any questions which he may have. The ordinance will cover only post-January 1 time which may be necessary.

AUDIENCE PARTICIPATION: NONE

As there was no further business by members of Council, the meeting was adjourned at 9:20 p.m.

_______________________________ _______________________________

Pamela E. Bobst Misao Kurokawa

President of Council Clerk of Council

Please note: This is a draft copy of the minutes of the Legislative Meeting of December 12, 2005. These minutes may be revised or amended at the next Legislative Meeting.

DRAFT

CITY OF ROCKY RIVER

DECEMBER 12, 2005

Finance Committee

The meeting of the Finance Committee was called to order by the Chairman, Mr. Hurtuk, at 7:00 p.m. in the David J. Cook Council Chambers.

Finance Committee Members Present: Mr. Hurtuk, Mrs. Bobst, Mr. Frost, Mr. Gollinger

Council members present: Mrs. Bartolozzi, Mr. Potterfield, Mr. Hagan

Administration: Mayor Knoble, Mr. Linden, Mr. Thomas, Mr. Koran

Law Director: Mr. Matty

Law Director-Elect: Mr. Bemer

Mr. Hurtuk opened the meeting by stating that the agenda this evening would include discussion of the 2006 Budget in broad terms. He called upon the Mayor and Finance Director Thomas to discuss the City's present financial state and outlook for the coming year.

The Mayor indicated that the largest issue relative to the 2006 budget is labor negotiations. In preliminary meetings with all the unions, the Mayor noted that the most important issue is health care. The labor unions have shown a resistance to a cap on costs and a strong resistance to a fixed cap over three years. Fact-finding began today with the Fire Department, lasting from 10 a.m. until 5:30 p.m. Meetings with the Service Department and Police Department are scheduled for Friday. The Mayor commented that since labor costs are a large part of the upcoming budget, he cannot produce a draft until the costs of wages are known.

Further, the Mayor noted the following:

• •He has had conversations with his directors and commissioners, asking them to reduce their non-labor budgets for next year, essentially doing without anything except necessities.
  
  
• •He is also predicting that revenues will be flat for 2006 in spite of Mr. Koran's efforts. The loss of the intangible tax will more than offset budgeted increases resulting in flat revenue. At present, the budget picture is deceptive because $8.4 million has been collected from the sales of bonds approved by the voters. This money has not yet been spent, but is earmarked only for the expansion project and may give a distorted view of the cash situation of the City.
  
  

• • PERS costs will be rising, both for the City's share and for individual employees.
  
  
• •The Mayor has spoken with the City's engineering consultant on three occasions about estimates for the 2006 paving program and other capital improvements. Mr. Mackay will have preliminary figures soon. The problem in projecting costs is that if a street needs to be repaved, quite often it will also require new sewers and other components. Preliminary projections show that $1 million can be spent with very little sewer improvement.
  
  
• •No one knows as yet what the estate taxes will bring the City. At present, it appears that it will also be flat.
  
  

Mr. Thomas then explained the charts which he had prepared for the meeting.

• •The first and second pages compared revenues and expenditures for the first 11 months of 2005 with those of 2002 through 2004. This overview of financial activities shows that the pace is in keeping with that of other years.
  
  
• •The third chart showed the details of revenue sources, with 2005 figures again being the actual income through November of this year. Mr. Thomas noted that the contribution from the State of Ohio will most likely decrease and eventually be discontinued.
  
  
• •The fourth chart shows details of expenditures, and Mr. Thomas indicated that the trends are not out of line with previous years.
  
  
• •His next chart shows the ten largest income tax withholding employers in the City. Mr. Thomas noted that changes are projected which will amend this list, including the construction of a new facility in another city for the Premier Physicians Group, #4, and the loss of Target, also in the top 15.
  
  
• •On page 7 is a graph of total assessed valuation of property in the City. This has decreased because of the abolition, in the most recent State budget, of the intangibles property tax that industries pay on fixtures, equipment, etc. The reaction of the Ohio Department of Taxation was an immediate reduction of the tax base by 25% so that cities will not collect on valuations that may not be present. This decrease is not totally offset by real estate increases. This reduced assessed value also reduces tax revenue.
  
  
• •The final pages deal with the costs of operating the Court. Mr. Thomas noted that if there were to be a deficit, the costs would be allocated among the cities which make up the Court district. If there is a surplus, it would help offset the expenses incurred by the City for Court operation.
  
  

Mr. Hurtuk asked the Mayor if the goal in labor negotiations is a finalization before the end of the year. The Mayor said that it is, but probably the only possibility of meeting that goal is for the Service Department. In past years, the Police Department has not been settled until the negotiations for the Fire Department are complete. The Police Department already has the highest cap for healthcare costs.

The Fact-finder's report for the Fire Department will be filed by December 15 so it will be available for discussion and vote at next Monday's meeting. If both the City and the union accept the findings, it will become a contract. Otherwise, the matter will go to conciliation.

Mr. Hurtuk wondered if a goal for reduction of non-labor costs has been established for City departments. The Mayor said that a percentage has not been set, but in view of the flat revenues, he has asked departments not to request anything which is not essential. With a total payroll, including the Court and WWTP, of $10 million, any wage increase is costly.

Mr. Hurtuk then asked Mr. Koran if it is possible to compare, for example, losses in income when Lesco left the City and the increase by its replacement, Astor Place. He also asked about other residential conversions, and whether it is possible to track income, and therefore projected income tax, by address.

• •Mr. Koran responded that the increase in property tax is relatively easy to compute; it may be more difficult to compute income tax for 33 units.

• •Mr. Thomas felt that the Auditor may be able to help in these computations, and Mr. Hurtuk asked that, if possible, some research be done between now and late January or early February when the Finance Committee will meet again.

• •Mr. Koran did note that the addition of Lowe's will more than compensate for the loss of Target.
  
  

Turning to the Permanent Improvement Fund, Mr. Hurtuk noted that it has a larger than expected balance. He asked the Mayor if all funds have been dispersed for anticipated projects. The Mayor said that they had not, and explained that that a number of projects had not been done. Further, the lease on the Beachcliff garage ($250,000) has not yet been paid because it is not finished. Among projects not yet done are Center Ridge Road, Detroit Road; Carolyn Avenue has had to be abandoned because of lack of cooperation from Fairview Park. The Mayor commented that the choice of projects which will be financed from this fund will be, of necessity, judicious choices. He said that he would not like to spend the entire balance because the estate tax may be discontinued.

• •Mr. Hurtuk added that because this source of income could disappear, perhaps the City needs to think about other sources of revenue streams for permanent improvement projects.
  
  
• •Mr. Gollinger suggested that projections of income tax from a development like Astor Place may be premature as residents have not lived there very long. He suggested further that the City carefully track high income earners such as athletes who work both in and out of the area.
  
  

Next to be discussed were the costs to the City of operating the municipal court. Mr. Gollinger reviewed agreements made with the other cities that if a surplus occurs, it is kept by Rocky River to offset Court costs. Should the Court operate at a deficit, it is shared among all the cities. The Mayor outlined the costs: all utilities for the all-electric building, salaries for 1½ custodians, all cleaning supplies, and any building maintenance costs, such as elevator repair. Those costs are at least $150,000 to $175,000. The Mayor has spoken to the judges and they understand the situation.

Mr. Hurtuk was pleased that the Court is running at a surplus this year.

Mr. Bemer raised the question of the CAT. Mr. Thomas commented that the impact of the CAT on any municipality is, as yet, unknown. It went into effect in July, and there have been no returns.

Mr. Bemer asked if reimbursement for the personal property tax will be phased out. Mr. Thomas said that it will; the State will have a reimbursement program for a certain amount of revenue, but that will taper off, and there will be no opportunity for growth.

Two other possible sources of income for the City were briefly discussed, taxing of distributions and profits of Sub-S corporations, and a revision of the reciprocity agreement with other cities on residents' income tax. Mr. Hurtuk asked Mr. Koran and Mr. Thomas to compare other cities' policies with that of Rocky River on the question of income tax credits for residents working outside the city.

On the subject of Sub-S corporations, Mayor Knoble explained that under present regulations, such corporations must pay a reasonable salary to the owner(s) on which city income tax is due. Other net profits (if there are any) flow as investment dollars. At present, such income flows to the owner, but he does not pay any Rocky River tax on those funds. With taxation of those funds, there could be audit issues. Citing Lakewood, the Mayor noted that they have set up a city income tax office which tracks those taxes as well as rentals which form a large portion of the income tax base.

These topics will be explored further at future meetings of the Finance Committee.

The second discussion topic, formation of an Audit Committee, was then raised by Mr. Hurtuk. The Mayor commented that this committee has been suggested by every auditor for the past 30 years. In his personal research, he has asked every mayor of a city with an audit committee about its function, and has not yet discovered an exact answer. He has already been contacted by qualified members of the community who are volunteering to serve on the committee. In terms of establishing and staffing the committee, he foresees no problems, but few are qualified to know what issues will concern state auditors. Mayor Knoble said, however, that there is no reason to hold back if Council wishes to form such a committee.

• •Mr. Hurtuk indicated that following discussions with the auditors, many recommendations had been implemented.
  
  
• •Mr. Frost felt that it could be another resource in answers for Council questions. Since it is recommended by the auditors, it may be independent input for their concerns.
  
  

Mr. Hurtuk suggested that further discussion may be held at a future meeting of the Committee-of-the-Whole. He emphasized that there is no urgency, and that the committee, if formed, does not have to be done before the end of the year.

There was no further discussion by Council, and the meeting was adjourned at 7:52 p.m.

_______________________________ _______________________________

Brian A. Hurtuk, Chairman Misao Kurokawa

Finance Committee Clerk of Council

Please note: This is a draft copy of the minutes of the meeting of the Finance Committee of December 12, 2005. These minutes may be revised or amended at the next Legislative Meeting.