CITY OF ROCKY RIVER

DECEMBER 12, 2006

Finance Committee

The meeting of the Finance Committee was called to order by the Chairman, Mr. Hurtuk, at 8:30 a.m. in the David J. Cook Council Chambers.

Finance Committee Members Present: Mr. Hurtuk, Mr. Gollinger, Mr. Hagan, Mr. Long

Council members present: Mrs. Bartolozzi, Mr. Moran, Mr. Hunt

Administration: Mayor Bobst, Mr. Linden, Mr. Thomas, Mr. Patterson, Mr. Winterich,

Chief Wagner, Mr. Harrington, Chief Flynn, Mrs. Calladine

Also present: Judge Gravens, Judge Fitzsimmons, Magistrate Valponi, Mr. Bracken

Mr. Gareau, Ms. Comery

Mr. Hurtuk opened the meeting by noting that all members of Council were present, and he thanked them for clearing their schedules in order to attend this meeting. He then made the following points:

• •It is not the function of Council to set policy, but members should have dialogue with directors and commissioners about their needs and any changes from last year's budget.



• •These should be "zero-based budgets", meaning that they should start from zero each year with justification for every item. He acknowledged that in reality, it does not happen, but he would expect to ask some probing questions.



• •Nothing will be discussed which has not been previously approved for inclusion in the budget.



• •While this meeting is focused on appropriations, some revenue issues may also be discussed.



• •On the last page of Section 4 is a Financial Summary, a synopsis of what Council is attempting to dissect. Revenue is in the low 20's and without the WWTP and Court, the budget is about $25 million. The summary will be further discussed at next Monday's meeting, but Council members will find that it is a valuable resource, showing where we have been and where we are going. He recommended that it be used as a reference.



• •In last month's financial report, it was an encouraging sign that the payroll tax is where it was expected to be. Although December can be a light month, Mr. Hurtuk is encouraged that revenues are level.

Mayor Bobst thanked everyone for their willingness to consider this important topic at a busy time of year, and she thanked directors for their willingness to expedite matters by initiating in August and September a process which typically would be beginning now. She also thanked Finance Director Thomas for his expertise and guidance on this first budget as mayor, and Director Linden for his assistance on an aggressive budget for capital projects and equipment.

She indicated that she has asked directors to hold the line on expenditures because of capital needs and the opening of the expanded Civic Center in the next few months which will add to operating costs. Their goal should be to find real ways to save and justify their expenditures, always keeping in mind how to benefit and strengthen the community.

The Mayor pointed out that this budget includes aggressive capital spending, but that these expenses have been prioritized and will be continually evaluated in view of revenues. This sound and effective budget process involves a decision-making process which offers challenges and opportunities about how to best address setting the City's philosophy and priorities and deciding what supports it. Future needs are also being considered. The Administration believes that the two most important goals are safety and services, and is looking at programs which support all members of the community, young and old. In this way, the budget is more than balancing revenues and expenses.

The Mayor pledged to continually evaluate the budget, because not only revenue but external factors and needs will affect financial conditions, programs and implementation of capital projects and equipment. In this way, dollars can be expended in the best way possible.

Director Michael Patterson came forward to discuss appropriations for the Recreation Department. The Council discussion leader, Mrs. Bartolozzi, presented a list of questions based on her study of his budget: How did he arrive at the $800,000 figure for expected revenue which seems ambitious? What about the other revenues? Who are the new employees? What will be the impact of the minimum wage increase on this budget?

Mr. Patterson responded that in looking at other facilities, the staff found that in most cities, about 40% of the population joins in the first year or two, and it levels at 30% to 35% thereafter, plus corporate memberships. For next year, that would be about 8000 members, which he says is aggressive, but achievable. As to other revenue, an indoor pool, babysitting and other new services will generate income. Traditionally, the only facility which does not is the gym, and that challenge has been met with programming and developing other sources of revenue.

Four new staff members will be added: applications for the first two are now being accepted, an aquatic manager and a fitness manager. Because these managers will be developing programs, training staff and creating manuals, he would like them to be hired soon. At a later date, a maintenance person and an additional custodian will be hired. Mr. Patterson noted that this budget reflects the opening of the facility for six months, since the targeted date is in July, although the pool may not be ready until a later date.

• •Mr. Hurtuk asked how the new memberships will be handled. Mr. Patterson explained that full-year memberships will be sold, so that a majority of the money will be received in 2007. Would the memberships in 2008 drop? The Recreation Department will market them, and typically, some will be sold during the holidays, so they will try to keep the numbers up.



• •Mr. Long asked if there will be carryover from existing memberships. Mr. Patterson said that if memberships have not expired, credit would be given, but the amount has yet to be determined.



• •Mr. Hurtuk again noted that the tax issue has paid only for the bricks and blocks-that operation of the facility is up to the City. He has a long-term concern about the costs which will be incurred. It was noted, however, that the outdoor pool had exceeded expectations which is encouraging as the City looks to the new facility.



• •Mr. Hagan asked if the salaries of the additional personnel are included in the grand total for recreation. Mr. Patterson said that those salaries are included.



• •Finance Director Thomas said that the appropriations and revenues are almost even in this department.

Mr. Patterson explained that the largest category of part-time employees who will be affected by the minimum wage hike will be the concession workers who are presently paid $5.25 to $5.75 hourly. If that rises to $6.85, it will increase that budget item. Lifeguards are generally paid about $6.50, so the difference is minimal. To Mrs. Bartolozzi's question of the number of affected employees, Mr. Patterson responded that the number would be 15 to 20 in the summer months.

• •Mr. Gollinger indicated that last year's budget contained additional coverage because of the new outdoor pool. He asked if there are additional costs to cover in consideration for the new numbers. Mr. Patterson said that there would be six months' operation of the new building in this budget. With two years' experience with the outdoor pool, he is comfortable with the numbers. Further, summer may be longer this year because the opening of school will be later.



• •Mr. Gollinger then asked about a contingency plan if the ambitious membership numbers do not materialize. Mr. Patterson said that revenues will be monitored and staff will be cut if necessary. Further, more programs will be offered which will bring more people into the center. Finally, he reminded Council that there is a contract with Fairview General Hospital which will generate revenue, since a $4 per patient fee will be paid in addition to the lump sum contract. The Mayor interjected that those patients will have a

defined time to use facilities. Many of those patients will be orthopedic and cardiac rehab patients.

• •Mr. Hurtuk asked if there is a sales strategy for selling memberships to more than one facility. Mr. Patterson said that nothing is final as yet, but under consideration is a 10% discount to residents who join both indoor and outdoor facilities.



• •Mayor Bobst observed that the parks are also covered by this department, and will receive $250,000 in capital improvements. This will be covered later in the meeting.

Next on the agenda was Service Commissioner David Winterich. Mr. Gollinger, discussion leader, pointed out that the Service Department impacts the lifestyle of every member of the community. He asked the department to continue the good job that it is doing. Increases in this budget are primarily due to increased personnel costs and energy costs for the vehicles which are used daily. He asked Commissioner Winterich if there is anything major that is new in the budget. Mr. Winterich responded that there is not. It was noted that increases and changes in the number of personnel are issues between the department and the Administration.

One change noted by Mr. Winterich is an increase in recycling; the bins are emptied more often. Mr. Gollinger asked if the City is losing revenue to charitable bins placed around the City. Mr. Winterich commented that it is a good service for those in other parts of the City and that if bins are not convenient, they may not recycle. Consideration is being given to another flag box for the Service Garage, however, as residents often bring them there.

Mr. Linden added that one major goal for the Service Department is to solve the problem of scooters. Dick Baker of Baker Motors is looking for used scooters which can be revamped. The scooter with a trailer that was tested has not worked out as hoped. That company is discussing manufacturing a scooter. Another firm in Texas is trying, also, but having problems with the EPA. Mr. Hurtuk asked if perhaps they should be dropped. Mr. Linden said that because having scooters saves on the number of employees required, he will not consider that possibility. A bonus is that it alleviates the problem of cans on the tree lawn.

• •Mr. Moran asked if the two packers to be purchased will replace existing vehicles. Mr. Winterich said that they will, and the two oldest packers will then be used for leaf collection.

Mr. Gollinger praised the department's leaf collecting ability, saying that this year the leaves were collected weekly. Mr. Winterich also mentioned that the men are careful to maintain the vehicles so that they do not break down.

• •Mr. Hurtuk noted that the City is not considering this step, but asked what would happen to the equipment if the City were to decide to use an outside contractor for refuse collection. Mr. Linden responded that if a contract is well written, the contracting firm buys them. But he added that it should always be kept for at least one year.

The Police Division was represented by Chief Wagner. Discussion leader, Mr. Moran, asked about some of the equipment purchases and changes. Chief Wagner mentioned that the department would like to begin replacing some walkie-talkies and radar units. The fleet of cars will be in good condition with this year's acquisitions, and some equipment was purchased last year with grant funds. Some walkie-talkies are 12 -13 years old and at this point, some problems can be expected.

Mr. Moran noted that equipment purchases are from two areas, police and POPAS. The Chief confirmed this, indicating that two cars will be purchased from the police budget and two from POPAS, which stands for Police Officers on Patrol Arresting Speeders. That fund will also be used to purchase laser units. Later in the discussion, Mr. Long asked for an explanation of POPAS, and the Chief elaborated, saying that it is a program brought to the City about seven years ago which set up a separate account. When citations are written on I-90, the fines are deposited into this account. The cost of police overtime to patrol that road and some equipment is purchased from the account. To date, the fines have more than covered those expenses. Occasionally, a detail is assigned to a specific street which is having trouble with speeders, but the majority of citations under the POPAS program are written on I-90.

A third area of police activity is the Marine Patrol. Mr. Moran pointed out that Rocky River is the only city with this service between Cleveland and Lorain County. The patrol answers a fair number of calls every summer to assist boaters or search for victims lost on the Lake. Chief Wagner said that all calls are answered, from both east and west. The patrol is also mandated to watch for traffic from Canada. Their completely outfitted boat is able to handle all but the worst storms. It also performs 350-400 inspections a year. Mr. Moran noted that some funds are received from the state to support this service.

Mr. Moran then asked about the large amount allotted for education. Chief Wagner explained that as part of their contract, officers earn an educational bonus of percentages of base salary for associate or bachelor degrees. These amounts are set by ordinance. He said that only one or two officers do not have these degrees. The figure rises annually as base salaries rise.

• •Mr. Hagan asked about the figure of $100,000 set aside for prisoner expenses. Chief Wagner said that it will probably not be entirely spent, but about 100 prisoners are booked per month, or 1200 per year. It seems as if every one has a health issue, many due to drugs, and the City is responsible for their health care, both medical and dental. A recent inmate had a degenerative bone disease which required medication at $200 per dose. About $3000/month is spent for food. Responding to another question from Mr. Hagan, Chief Wagner confirmed that most of their prisoners are awaiting hearings.



• •Mrs. Bartolozzi asked if prisoners are guarded when in the hospital. Chief Wagner said that only those arrested for felonies are guarded.



• •Asked how the motorcycles are working out, Chief Wagner said they are excellent public relations tools, although they have written fewer citations than expected. At present, there are no plans to purchase another.

To discuss finances of the Wastewater Treatment Plant, Superintendent Jeffrey Harrington came forward. Mr. Hunt, discussion leader, asked him to address major expenses. Mr. Harrington explained that his expenses are cost driven. Last year, the cost of chemicals rose, and, most significantly, EPA regulations require increased use of landfill space for sludge which also greatly increases costs. The most cost-effective way to dispose of sludge produced by the WWTP process is to contract for removal to a farm. Currently pending regulations, however, will again force the WWTP to increase its use of landfills with a corresponding rise in costs. Still pending is an additional regulation which would prohibit the sending of sludge to a farm during the three winter months.

Asked about the increase in the amount for the land lease, Mr. Harrington stated that the land belongs to Rocky River and by a 1982 lease agreement will increase $57,000 for 2007.

Mr. Hunt then asked about large projects. Mr. Harrington responded that the $2.3 million interest-free loan received this year will fund six projects which are in the design and engineering process. Some lines installed in 1961 will be replaced; failure of those lines could close the plant. Under study is the best way to approach and fund other capital improvements. Since the plant's EPA permit has been renewed and there will be no new system requirements for the next five years, the feeling is that this will be a good time to approach repair and replacement projects. Currently under way is 20-year old carbon steel equipment that is being replaced by stainless steel.

About a year ago, the City applied for $5.1 million in Issue 2 funds and received the 20-year interest-free loan of $2.3 million. This year, in September, another application through DOPWIC (District One Public Works Integrating Committee) and the Public Works Commission has received tentative approval for a grant, loan and City contribution. The plant's contribution will be divided among the four cities which comprise the district, and Rocky River's share will be approximately 29%.

• •Mr. Hurtuk asked about the flow study which determined the percentage of the City's costs. Mr. Harrington indicated that the study is done every four years unless all communities vote to do it after three years. Under these circumstances, the plant's Utility Fund underwrites the study. Any single city may request a flow study at any time at their own expense. The most recent instance was in 2005 when Bay Village paid to have an additional study done; results are pending.

Appropriations for the Fire Division, found in Section 6, pages 15-16, were discussed by Chief Christopher Flynn. Council's discussion leader for this section, Mr. Moran, noted that the entire budget rose from $2.9 million last year to $3 million for this year, including $175,000 for central dispatch, so the increase is minimal.

Chief Flynn noted that the dispatch center has been open since March and has coordinated the efforts of four Westshore cities. At this time, Lakewood and North Olmsted have chosen not to participate. He indicated that grants had purchased the equipment, and the appropriation in the budget is for operating expenses. Chief Flynn feels that the dispatch center is invaluable because it saves time in responding to emergencies by allowing the responding department to leave immediately without worrying about additional help. Further, trained operators stay on the line with callers. The City has not had an increase in personnel in 20 years. If necessary, cities help each other, and over a period of time, a balance is achieved and cities receive as much as they give.

• •Mayor Bobst advised Council that she will meet tomorrow morning with Mr. Linden, both chiefs and the director of

  the dispatch center to discuss an evaluation protocol for the community.




• •The Chief was then questioned about the educational item on page 15. As with the police division, a percentage of base pay is earned for fire personnel who are paramedics and EMT's as well as for college degrees.

In equipment purchases, the division will buy some SCBA units (self-contained breathing apparatus) this year to replace a portion of those which are outdated and nearing the end of their useful lives. Also to be purchased is a new rescue vehicle.

• •Mr. Linden pointed out that purchasing an ambulance at this time will allow the City to keep the retired vehicle as a spare. Answering Mr. Gollinger's question, another squad will not be hired to man the vehicle. It will allow repairs to be made to the other vehicles or be assigned to the home football games. Mr. Linden underlined the importance of this vehicle which he said is the most important. While he has redundancy in all other vehicles, he has not been able to keep a spare in this vehicle until this year.

Mr. Gollinger asked if the City receives $175,000 in benefit from central dispatch. He pointed out that there had been no problems before, and that the needs of the community were being met. Further, there was no staff reduction, so Mr. Gollinger questioned the payback for $175,000. He also wondered if residents have a better fire rating which would then reduce their insurance costs. Chief Flynn will investigate.

• •Mayor Bobst indicated that this is why the evaluation is being done.



• •Chief Flynn believes that the value is there and has been demonstrated in the Pease, Linda, Old Detroit and Riverside fires, because it got the help rolling faster than the old mutual aid policy would have.

Mr. Hurtuk asked about the fluctuations and increases in overtime costs.

• •Chief Flynn pointed out first, that fire houses must be staffed 24 hours a day during all holidays. This will automatically increase overtime. This accounts for about $40,000 per year. Further, when fire fighters are gone for extra training, their shifts must be covered on an overtime basis. Schooling is expensive because there is the cost of the class, lodging and the cost of overtime to cover the shift.

The final question concerned repair of fire hydrants. Chief Flynn said that the cost of repair is approximately $3000 per hydrant, and some are damaged on a regular basis. If the person who did the damage can be cited, he/she pays to repair the hydrant. However, many are not caught, and the hydrants must be repaired. At present, only five of 1100 hydrants are broken.

• •Mrs. Bartolozzi suggested the possibility of moving some hydrants which are regularly damaged, since frequent damage would indicate that they are in bad locations. Mr. Linden said that that has been done, but only on a limited basis as it is very expensive.

Director Carole Calladine came forward to answer questions from Mr. Hagan about Senior Services. Mr. Hagan commented that he was proud that the City offers such a fine program, noting that revenue is found in Section 5, p. 4 and appropriations, Section 6 p. 24.

Mrs. Calladine summarized her department by noting their total budget is $1,223,948.24; that there are 8 full-time employees, 24 part-time, and 150 volunteers. Their wage total is 43% of the budget, and she praised the volunteers, saying that they could not offer the programs they do without them.

New to the Center last year were:

• •A garden behind the building and a drainage system,
• •A freezer for the deli lunch program,
• •A car for transporting seniors who do not need the handicap van. This enabled them to prolong the life of the more expensive van.
• •An analog television and projector supporting programs, classes, travelogues, and Thursday movies.

Revenues were generated by:

• •Classes (lifelong learning, exercise, health & wellness) which were more than self-supporting, costing $32,500 and generating income of $51,400;
• •The deli lunch program which cost $31,000 and generated $52,000;
• •The gift shop, $34,000 and generated $50,000
• •50 trips which cost $169,000 and generated $177,000. Mrs. Calladine emphasized that no trip was made unless it was sufficiently subscribed to make it self-supporting. This year's line item has been increased because trips to Italy and Alaska have been planned.

The Director continued by noting that in social services, Kathy Gibel has headed an outreach program for seniors in need with about 65 cases at any given time. The transportation system served 900 riders last year, making 8000 trips per year. They have also given support to caregivers, grief support and bridgeworks.

This year, new carpeting is required for the gift shop and staff area, which will be a major undertaking because the area is divided into many small areas. Under consideration is a new type of carpet tile such as that installed in the library. They would also like to continue outside improvements and landscaping.

• •Mr. Gollinger urged the director not to stint too much on the carpeting. With seniors, safety is an important factor and he would like to see quality carpeting installed at the Center.
• •Mr. Hurtuk explained that the new type of carpet tile is being used in many commercial applications, is of very high quality, and not inexpensive.

Mr. Hagan asked if there is an increase in the number of individuals being served by the Center.

• •Mrs. Calladine commented that 1500 have subscriptions to the Quill, but it is difficult to assess exactly how many people are served. There are those who come for single events, such as flu shots or the 90+ luncheon, and the staff is trying to find ways to attract them for other events and programs.

To discuss Court appropriations, Judge Maureen Gravens, later joined by Judge Donna Fitzsimmons, as well as Magistrate Barbara Valponi, Mr. Michael Bracken, Clerk of Courts William Gareau, and Ms. Debbie Comery were in attendance. Mr. Hurtuk led the discussion.

Judge Gravens, the 2006 Administrator, thanked the Mayor and Finance Director Thomas for starting the budget process earlier. Their budget is slightly higher this year because of 3% salary increases.

Mr. Hurtuk asked how the Court generates its revenues.

• •Mr. Gareau explained that the Court receives a $35 fee per case plus fees for special projects and computer technology. Money is also sent to the State. Since 1996, the Court has operated on court costs alone. According to an agreement made in the early 1980's, if insufficient fees are generated, any shortfall would be charged to the cities which make up the district, pro rated on the number of criminal traffic cases referred.

Mr. Hurtuk noted that the number of cases has decreased by 8500 this year.

• •Judge Gravens commented that the Court is not in business to make money, and has no control over traffic enforcement. Some cities have had fewer cases, but nothing can be done about it. The Court is comfortable, however, that there will be no deficit this year, and a meeting is planned for next week to discuss long-range planning for Court finances.

Mr. Hurtuk expressed Council's appreciation for their fiscal responsiveness.

• •Mr. Gareau added that the collection agency which is used for those who do not pay fines assessed, helps a great deal.

Asked if there is anything Council or the Mayor can do to help, Judge Gravens responded that the Court is not averse to good revenue, but it cannot control what is presented. They have, however, tried to keep within their means by monitoring expenses and revenues monthly to be sure that they remain fiscally responsible. Insofar as possible, funds have been shifted into the computer fund.

Mr. Gollinger commented that Council has enacted legislation to tighten building codes. He has been heartened by feedback from inspectors of the Court's handling of cases with seriousness, and he expressed appreciation for their support. Property maintenance issues often generate complaints, so he is pleased to see that the Courts are sending the right message.

• •Judge Gravens pointed out that Council has given the Court the authority. The Court is also dealing with issues of foreclosure, ownership transfer and bankruptcy. The judges have a busy court and are juggling many responsibilities.

Mr. Hurtuk thanked all the guests from the Court for their cooperation and noted once more his appreciation for their discussion of budgetary items at this early date. If unexpected issues arise, changes are always possible. He suggested the possibility of those in attendance speaking to their colleagues about traffic enforcement.

The final topic, Equipment, Engineering & Capital Improvements was presented by Mayor Bobst. Referring Council members to Section 7, she noted that this is an aggressive program of capital improvements and equipment, prioritized for 2007. She pledged that the Administration will approach these projects, mindful of the budget.

The City has 180 miles of aging storm and sanitary sewers which present great unmet needs. Much work has been done on the sewer system, and the Mayor said that she is proud of the leadership that has made that possible. Now it is time to develop a sewer rehabilitation plan which she hopes to finalize in 2007. This will take the next large step forward and provide, over the next several years, a guide to what needs to be accomplished and how it will be funded. She would like to meet with Council in January and February to discuss this project.

Mayor Bobst then reviewed the list which includes the following:

Hampton Interceptor Engineering

City Hall Roof

Salt Barn

Westover Storm & Sanitary Project with Repaving - includes the water line

Valley View Interceptor Sewer Lining

Spencer Road

Yacht Club/Riverdale Engineering - may not be done yet as URS has not yet completed it soil

testing

In Annual Programs:

Overflow Monitoring

Emergency Sewer Repairs

Crack Sealing

Sewer Televising and Dye Testing

Street Repaving - Contractors: Cottonwood, Gasser, Goldengate, Morley, Fire Station Driveway

These are done in this order as funds permit. Each project will be assessed

as to sewers and if some require more work, others may be done next year.

Park Improvements are accomplished with Cox franchise fees. And will include work on the City Hall Playground Equipment, Skate Park Equipment, Dasher Boards, Elmwood Cabin Deck and Clocktower Renovation.

Under Miscellaneous Improvements:

Project Engineering

Civic Center Generator - The Mayor noted that City Hall also has no generator. The Administration will investigate the possibility of grant funds.

Riverdale Pump Station Gas Engine

Lake Road Professional Services

Civic Center Workstations (4)

Storage Building

Mr. Long asked if funds to establish a Quiet Zone will be allocated for this year. The Mayor said they are not. They will be discussed for 2008, with many other future projects.

Because of time constraints, Mr. Hurtuk announced his intention to adjourn the meeting, but he urged Council discussion leaders with unanswered questions or brief comments to prepare to discuss them at Monday's meeting, which will be held at 7:00 p.m. The main focus of that meeting will be revenue which is tied to capital improvements, but additional questions of appropriations may be raised. For example, adjustments may need to be made on street repaving. It was noted that there was one street from each ward on the list.

Mr. Hurtuk thanked all for their attendance, and said hefelt that pivotal points had been raised. He commented that the City is lucky to have the directors that it has; that he appreciates their tenure, and hopes that they are doing succession planning.

There was no further discussion from Council, and the meeting was adjourned at 11:30 a.m.

_______________________________ _______________________________

Brian A. Hurtuk, Chairman Misao Kurokawa

Finance Committee Clerk of Council