CITY OF ROCKY RIVER

DECEMBER 18, 2006

The Committee-of-the-Whole was called to order by Mr. Hagan, President of Council, at 8:18 p.m.

Council Members Present: Mr. Gollinger, Mr. Moran, Mr. Hunt, Mr. Hurtuk,

Mrs. Bartolozzi, Mr. Long, Mr. Hagan

Administration: Mayor Bobst, Mr. Linden, Mr. Thomas, Mr. Harrington

Law Director: Mr. Bemer

Press: Mrs. Mackenzie, Mr. Saylor

MAYOR'S REPORT:

A new strength and flow study has been completed for the WWTP. The last study was completed last year. However, in early 2006, Bay Village requested that a new study be made, at their expense, because of a sewer line problem they were experiencing at the time of the last study. The results of this study determine the share of WWTP expenses paid by each city. The results of this latest study are now available, and following review by member communities, will be discussed in early February. The Mayor was pleased to announce that Rocky River's percentage of participation has decreased, as well as that of Bay Village. An increase is indicated for Westlake, and a slight increase for Fairview Park. The Mayor will distribute the executive summary to Council members.

This morning, the WWTP Management Committee met to review the budget for the coming year. They made no changes, so it will go forward in its present form.

The Cleveland Restoration Society has forwarded a recap of their year. Since 2002, they have facilitated $2.23 million of reinvestment in Rocky River. This year, 13 applications were taken, one project completed, and six projects are pending for a total of $384,000. Also submitted was a renewal for the Heritage Home Loan Program for 2007 at a cost of $5600, $200 more than last year. In the absence of Council objections, an ordinance will be prepared.

Responding to Councilman Gollinger's question of last week regarding central dispatch, the Mayor read from the original agreement which states that if any participating city wishes to withdraw, notice must be given at least 60 days prior to termination of the agreement. In the event that any participating city withdraws, the remaining participating cities have the right of first refusal to purchase the withdrawing city's interest in the equipment. The Mayor also noted that North Olmsted's council has tabled action on this issue. While thanking the Council of Governments for its offer of suspension of fees for one year, Mayor O'Grady does not anticipate that his city will move forward on participation in 2007.

The City has received notification of a DARE grant of $18,213 for the 2006-2007 school year. The Mayor praised the fine cooperative work of the Police Department, the schools and Community Challenge, which made this possible.

The school system is seeking an individual to serve as its representative on the Parks and Recreation Commission for a five-year term. Interested members of the community should forward letters to the Board of Education by December 31. The Board hopes to make its decision by mid-January.

The impact of the minimum wage on the City's payroll has been discussed. The state legislature has questions regarding seasonal workers, and there is now some question as to whether or not they will be included. The question involves a conflict with federal law. The Mayor will keep Council informed.

• •Mr. Hagan asked if Lakewood is a member of the central dispatch system. The Mayor responded that it is not, but as a member of the Council of Governments, under the contract provisions, both Lakewood and North Olmsted still have the opportunity to join under the previous agreement. Details are in Ordinance No. 134-04, passed in October, 2004.

UNFINISHED BUSINESS:

Ordinance No. 154-06: This ordinance, the 2007 budget, will be read for the third time at the next Legislative Meeting. Following amendment, Mr. Hurtuk expects to call for a vote and possible passage.

Ordinance No. 155-06: This is a companion ordinance fixing salaries for appointed employees. The ordinance will be read for the second time next week and will call for the required rules suspension.

• •Mr. Hagan thanked Mr. Hurtuk for his leadership of the budget process which is reaching the goal of passage this year. This would be the first time.

Mr. Hurtuk noted that it was possible because of the participation of all Council members.

Ordinance No. 157-06: This ordinance would eliminate the cost of jail food from the Codified Ordinances. Mr. Moran noted that the annual bid for prisoner meals was received in October. The question under discussion is whether this should be in the Code.

• •Mr. Linden commented that he had spoken to Chief Wagner who does not recall how it happened to be in the Code and does not feel that it is necessary.
• •Mr. Bemer noted that this comes up as an annual contract and fluctuates according to bids approved. He said that as codified, it requires a Code amendment each time the price changes, which is a redundancy.

MISCELLANEOUS BUSINESS:

President Hagan mentioned that a list of Council records to be retained has been distributed to Council members. The Records Commission is working on a records management program to determine which records will be retained and for what periods.

Quiet Zone Notice of Intent: Council President Hagan has determined through his research that there is one Quiet Zone in Ohio, in Moraine, close to Dayton. Their Notice of Intent was filed in 2005. From their experience, Mr. Hagan indicated that the Supplemental Safety Measures (SSM) must be delineated. In the case of Moraine, a 100' curb median was installed at their single crossing.

Another point he made was that the Federal Railroad Administration (FRA) did not issue its final report until August, 2006, and its determined process is vague, but Mr. Hagan said that the City does not have to address all four crossings in the City. Because we are creating a zone, we may look at the risk indicator for each crossing and try to reduce the whole below the risk threshold. If calculated based upon the correct number of trains (3-6) rather than what is on record with the FRA (22), the risk indicator should be decreased for each crossing. If the indicator can be decreased for the two busiest crossings, for example, that may sufficiently decrease the risk to establish the zone. He feels that we have a good start because we already have gates, lights, and some bells. The emphasis is always on safety, with the goal of SSM's keeping individuals off the tracks. He suggested the possibility of delineating SSM's for two crossings in the Notice of Intent. The inventory which will be returned may indicate how much more needs to be done. This option was not suggested earlier, but Mr. Hagan concluded that if the two crossings with the highest risk are reduced, e.g. Wagar and Elmwood which carry the most traffic, it could sufficiently decrease the risk index. He would like to move forward, by filing a Notice of Intent, or perhaps by consulting the calculator on the FRA website.

Mayor Bobst indicated that her research confirms that although the City was led to believe that in the creation of a Quiet Zone, it would have to look at risk reduction for each crossing, it now appears that it may be possible to look at the total zone. SSM's would be used to reduce the risk. The Mayor has spoken to Ron Reis, Director of Crossing Safety for the FRA and the Mayor Bob Bloomquist of Omsted Falls who will forward his city's submission with proposals to reduce the risk index for the 76 trains through their City. The Mayor will ask Mr. Mackay to look at the calculator again with the City's more accurate numbers.

Mayor Bobst indicated that in speaking to Mr. Reis, who was helpful, it appears that the process may be easier than originally thought. If enough specific information is included in the Notice of Intent, the 60-day comment period may be waived by the railroad, although perhaps not by the PUCO.

• •Mrs. Bartolozzi asked how long the process took in Moraine. Mr. Hagan will inquire.

Mr. Bemer commented that last Tuesday, he and representatives of Bay Village and Lakewood met with William Harris, Vice President of Government Affairs for Norfolk Southern. This meeting confirms the earlier reports of Mr. Hagan and Mayor Bobst. He was further pleased to report that there is a good likelihood that the $2800 fee will be waived for original signatories of the 1998 agreement. Further, the diagnostic study is primarily mandated for private crossings, but the railroad would also like to do it for public crossings. On the existing sites, even if the four-quadrant gates were chosen, gates presently in place would not have to be replaced, only supplemented with two additional gates. The City must, however, identify its wish for a full or partial Quiet Zone (10 p.m. to 7 a.m.)

• •Mr. Gollinger commented that if the City uses the risk indicator, it could be significantly changed by inventory figures. It would be easier to bring down risk factors with better compliance. He hoped to able to do this without major expenditures.



• •Mr. Bemer noted that Norfolk Southern does charge a fee for its involvement. Steps to be taken are based on the need to get below the risk level for the national threshold, and that is determined by the FRA.



• •Mr. Hagan also had information about a Quiet Zone established in Texas where 8 crossings in the zone were modified with less than $100,000.

COMMITTEE REPORTS:

Finance Committee: Mr. Hurtuk reported that the Finance Committee had met earlier this evening for its second meeting on the 2007 budget as well as the Public Hearing. This evening, revenue was discussed, as expenditures were covered in last week's meeting with directors. Council will decide if further discussion is necessary, otherwise, Mr. Hurtuk will call for a vote next week.

Parks and Recreation Commission: Mrs. Bartolozzi indicated that the Commission will meet next Wednesday at 8:00 a.m. in the Pavilion.

NEW BUSINESS:

Resolution No. 160-06: Mr. Gollinger explained that this ordinance will authorize the construction of an erosion mitigation revetment. In this case, it will be a reconstruction of an existing seawall in Breezevale Cove. The Beachcliff Board of Trustees has worked to inform other property owners. Mr. Gollinger asserted that if no concerns are raised, he will move for passage of this resolution on December 27.

Ordinance No. 161-06: Mr. Hurtuk commented on this ordinance which authorizes supplemental appropriations for the current fiscal year, noting that the main point is to prepare for 2007 operations and the passing of the budget before the end of the fiscal year. Two previous ordinances have been passed to make supplemental appropriations.

Ordinance No. 162-06: This ordinance documents transfers and is the method that has been recommended by the State Auditors.

President Hagan announced that the next Legislative Meeting will be held on December 27 at 8:00 p.m.

As there was no further business by members of Council, the meeting was adjourned at 8:55 p.m.

________________________________ ______________________________

Brian F. Hagan Misao Kurokawa

President of Council Clerk of Council

CITY OF ROCKY RIVER

DECEMBER 18, 2006

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, Mr. Gollinger, Mr. Hagan, Mr. Long

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

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

Press: Mr. Saylor

Mr. Hurtuk opened the meeting by thanking Council members for their attendance. In summary, he said, last Tuesday's meeting with all the key directors and commissioners was very informative. The focus of that meeting was expenditures. He acknowledged that the City benefits from veteran leadership which it is very fortunate to have. He noted that all members of this Council took time to establish rapport with the directors and chiefs and that communications were very good this year.

Mr. Hurtuk then asked Mr. Thomas, Finance Director, if there were substantive changes in the supplemental appropriations.

• •Mr. Thomas responded that some funds transferred represent expenditures planned for 2007 which have been moved to the end of 2006. These expenditures are in the supplemental ordinance, and the transfers are being made now to fund those departments that will need cash flow at the beginning of the year because the budget process was moved forward. Transfers in 2007 are reduced proportionately. These changes necessitated new pages for Section 6, and the transfer schedule shows that the original amount for 2007 of $8.5 million has been reduced to $6.88 million. The funds will have more impact in late 2006. The Finance Director observed that this earlier budget process will help ease the cash flow needs of department by providing funds earlier in the year.

Mr. Hutuk noted that the replacement Transfer Schedule is dated 12/15 and shows the reduced amount planned for next year. Mr. Thomas emphasized that the plan is not to increase amounts, but that the issue is timing.

Also distributed this evening was an income tax rate survey, sorted by county. This shows that the majority of communities in the area are at 2%. Some communities try to maintain the same credit for their residents.

The Mayor's remarks centered around effective budgeting. One aspect of this is Council's involvement with the directors. Members visited facilities, reviewed needs and talked about programs.

Long-term planning is also being addressed and the Administration is looking at capital projects of infrastructure and equipment, personnel compensation, and debt issuance. These considerations are continually reviewed, looking for vulnerability.

In revenues, the focus is on fund balances. This impacts the City's bond rating which was upgraded to Aa2 in 2004 and confirmed in 2005. The process of continually evaluating means looking at external factors and financial conditions, expenditures, program performances and implications of capital projects. The good news is that the City has an 18-year award winning Finance Department, is in a sound financial position with a good tax base with some growth, multiple revenue sources and a positive bond rating.

Mr. Thomas continued, noting that the County is involved in a revaluation this year and is somewhat late in providing official figures to set the tax base. Mr. Thomas estimated the total value for the City at $722 million. A phone call from the Auditor's office sets the figure at closer to $730 million, although that is not yet definite. He noted that in Section 8 is a table of tax value history. The preliminary information for next year is highlighted. He reminded Council, however, that this would be based on a full collection, which never occurs.

Mr. Hurtuk pointed out that based on the total value in the City for December of 2005 of $657 million, Mr. Thomas' projection of $722 million for 2007 which is in the budget is conservative compared to the verbal communication from the Auditor's office. He noted that the figure could have been higher because new residential projects are now included. Revenue sources include voted millage and dedicated revenue sources. It is expected that the City will hear from the Auditor soon. This projection comes closer to income tax than ever before, each about 34% of total revenue this year. Mr. Hurtuk referred Council members to the Financial Summary prepared by the Finance Director on the last page of Section 4.

Mr. Thomas noted that the City realizes 16% to 17% of property taxes. The chart includes the total of all funds. The other significant revenue item is income tax, which is projected this year to be $7.8 million. This topic is discussed in Section 8 which includes a chart showing the consistency of collections, sources of revenues and a chart of the largest taxpayers. The City and school district are the two top employers, by dollar amount and number of employees. In the top 10, most employers have more than 100 employees.

• •Mr. Hurtuk noted that Beachcliff Market Square may contribute importantly; it will be interesting to monitor. The Financial Summary in Section 4 shows that many budget amounts have remained the same. The Estate Tax was projected to be $1 million and is the same for next year. These are prudent, conservative figures showing that the City will spend within its means.





• •Mr. Gollinger pointed out another positive indication since, several years ago, the City lost its # 3 and # 4 employers. At that time there was great concern, but revenues have continued to do well.



• •Mr. Hurtuk indicated that businesses of the top 25 which are for-profit companies are growing nicely. If figures for 2004 and 2005 are available, he asked to see them.

Mr. Thomas noted that on the page before the summary, relevant revenue streams are charted. He pointed out that there is no significant spiking, and the results are consistent fund balances. This is recognized by Moody's in the City's bond rating.

• •Mr. Hagan confirmed that the high rating was continued for 2005. He recalled that debt was refinanced and interest drastically reduced. Since rates are rising again, he wondered if there is a possibility of doing this again. Mr. Thomas responded that advanced refunding creates more cost and can be done only once with any particular issue. However, he is always watching since sufficient savings can make it worthwhile. At present, he does not believe that there are opportunities.



• •Mr. Gollinger asked about the list of tax delinquencies recently published, some for large amounts. He asked if the City is at risk for losing those tax dollars. The Finance Director said that collection is contingent on the efforts of the office of the County Auditor, and their collection programs will fully collect what they can from the property, regardless of owner. Programs in place to sell tax certificates or foreclosure guarantee collection, but timing is the issue.

The Mayor asked the Finance Director to review the work of the CCA.

• •Mr. Thomas reported that the within the last 30 days, representatives of the CCA (Central Collection Agency) visited the City to follow up with a letter-writing campaign to those who did not file returns. Each day they sent letters to about 500 residents or former residents. Many were detected by looking at files of taxpayers who discontinued payments; some by those who filed state returns but not local. The results were startling to CCA personnel. For example, on the last day, two people met with three taxpayers and collected over $20,000. In response to Mr. Hurtuk's question, Mr. Thomas said that some were rentals, but many had multiple missing years. There was no extra charge by the CCA for this program.



• •The Mayor will follow up on the total amount collected. She indicated that she appreciated their efforts which not only raised funds owed the City but also cleared the database. Mr. Thomas suggested that each day probably yielded $50,000 for fund balances.

Mayor Bobst also indicated that the Mayors and Managers' Association has spent time to make sure that the local government fund remains in place. The State Legislature has convened a task force whose recommendations have been released, and it appears that the local government fund will stay in place with a 3% increase. This will be welcome as increases have been frozen for the past three years, and many communities and libraries depend upon this revenue.

In other revenue sources:

• •The Mayor said it is striking to see where the City has gone with Recreation and its projected 8000 memberships. She noted that almost every aspect of the newly-added facility is a revenue-producing asset. This provided 6% last year and is projected to rise to 10% for 2007.



• •The Senior Center remains level. Although there is revenue, it is sometimes poured back into programs.



• •Sewer Charges will generate $1.9 million.

• •The WWTP revenue of $6.9 million comes from grants, loans, contributions from member cities and sewer funding.



• •The Estate Tax revenue was $2,164,000 in 2006. Proceeds are projected to be $1 million in 2007, with no advance indications of proceeds to be collected. Mr. Hurtuk recalled that in regard to Estate Taxes, Council had taken legislative action to allocate some funds into the General fund. He turned to Mr. Thomas for to enlarge upon these changes.

Mr. Thomas explained that historically, the Estate Tax has been used for equipment purchases and permanent improvements. This year, Council formally codified the division of those revenues with 80% to capital improvements and 20% available to the General Fund. Mr. Hurtuk noted that in the past this fund has consistently exceeded projections so he felt that the estimate was reasonable.

Mr. Hurtuk observed that the City operates a $25 million budget. He said that it is fair to say that in the past the City has tried to be conservative on the revenue figures and aggressive on expenditures. Further, it has had a policy of not embarking on projects unless the revenue is consistent. Council members receive a monthly budget update and check the three key revenue figures. By the end of March, Council will have a good idea of the new year's revenue, and therefore, the capital projects. This year's budget includes four streets to repave and fewer or more will be done according to revenue.

The Mayor noted that Council, with the related contract legislation, will be able to express its opinions on projects. There has been a positive feedback on the financial summary, and the Finance Director has agreed to assemble those figures on a monthly basis so that Council members are aware of how the picture evolves.

Further, the Mayor reported on the generator question raised at the last meeting of the Finance Committee. The figures were $250,000 for the Don Umerley Civic Center generator and another $250,000 for one at City Hall. She had been able to look back at estimates made in 2001 and 2004 for diesel generators at $72,000 and more recently, $125,000. Infinity Construction, in its bid, included a generator bid as an alternate for $207,000. Since additional wiring and line work might be necessary, the estimate was placed at $250,000.

• •Mr. Hurtuk confirmed that a generator would be installed to make the Civic Center a haven in the event of a widespread power outage; City Hall would be a command center.
• •Mayor Bobst suggested that the Administration will try to find grant funds from a Firefighters' Fund or Homeland Security funds which could be available for a gathering center and command center. The Civic Center would be the priority.
• •Mr. Hagan asked if the Police and Fire Divisions have generators. The response was that both have small generators and the Court also has a small backup system. Nothing is available at the Senior Center. This could be a consideration because the Senior Center has a large room and kitchen.

In another follow-up report, the Mayor mentioned that a survey of compensation for boards and commissions has been completed. Compensation ranges from Solon's $200 for Planning Commission members, $125 for Design and $60 for BZA to Westlake's policy of no compensation. It was determined that this may be acted upon for next year.

The Community Challenge proposal has been received and reviewed by Executive Director Julie Johnson with Officer Phil, Julie Morron and Director Patterson as they will be in a partnership for the new teen center at the enlarged Recreation Center. The Administration requested an evaluation piece in the document, and a rigorous evaluation procedure has been included on page 18. This program is moving ahead to benefit the Juvenile Diversion Program, and cooperate with the Police Division and the Recreation Department. This will be the third year for the program at the same rate, and additional services and programs will be created.

Economic and Community Development Director Koran will have additional funds for economic development activities such as matching grants and additional streetscaping along Detroit Rd. and Center Ridge Rd.

Human Resources will` conduct a compensation survey. This year an increase of 2.75% was granted to employees. The Administration would like to look at both internal comparisons and externally comparable compensation. This should be completed in early 2007. There are also line items for training for directors in human resources issues.

Civil Service will require professional services as a fire entrance exam is anticipated at a cost of about $10,000 and a promotional exam for the position of captain will require another $5000.

Mr. Hurtuk suggested monitoring revenues through the first quarter to see if projections are conservative. Finance Committee meetings will then begin for further discussion on aggressive infrastructure needs to be addressed.

The Mayor commented that she is working on several policies that will impact the budget such as policies on cars and vehicle use and equipment policies. Director Whitman, Director Thomas and the Mayor are acting in accordance with the suggestions of the auditors.

Mr. Hagan commented that the Westover project is one of the largest capital projects in 2007, and will involve paving and sewer replacement. He commended the Administration because of its communication with the residents of the area. The Mayor met with residents before the project began and as a result, there have been very few calls and complaints have been handled quickly. Further, the street has been evaluated, and all problems are being addressed now so that there will be no need for further repairs.

Once more, Finance Chairman Hurtuk urged Council members to address any follow-up questions to him before next week's meeting. In the absence of further concerns, he said that it is his intent to bring the ordinance for passage on December 27.

There was no further discussion from Council, and the meeting was adjourned at 8:05 p.m.

_______________________________ _______________________________

Brian A. Hurtuk, Chairman Misao Kurokawa

Finance Committee Clerk of Council