South West Illinois News

Mt. Vernon City Council met March 5.

Here is the minutes provided by the Council:

Mayor John Lewis called the meeting to order.

Father Ben Hankinson of the Trinity Episcopal Church gave the Invocation

The Pledge of Allegiance was recited.

Roll Call:

Roll call showed present: Council Member Jeff May, Council Member Donte Moore, Council Member Jim Rippy, Council Member Mike Young, and Mayor John Lewis.

Presentation Of Journals:

The Journals for the February 20, 2018 Regular City Council Meeting and February 26, 2018 Special City Council Meeting were presented to Council for any additions, deletions or corrections.

Council Member Donte Moore motioned to approve the Journals as presented. Seconded by Council Member Mike Young. Yeas: May, Moore, Rippy, Young, and Lewis.

Visitors/Citizens Requests/Addresses From The Audience:

No comments were heard.

Approval Of Consolidated Vouchers For Accounts Payable:

The Consolidated Vouchers for Accounts Payable were presented to Council for approval.

Council Member Donte Moore motioned to approve the Consolidated Vouchers for Accounts Payable in the amount of $521,906.79. Seconded by Council Member Jeff May. Yeas: May, Moore, Rippy, Young, and Lewis.

Bids & Quotes:

City Manager Mary Ellen Bechtel presented the bid results for the Veterans Park Tennis Court Maintenance. Three bids were received for the repair, crack filling, and repainting of the six tennis courts at Veteran’s Park. The lowest responsible qualified bidder is Jax Asphalt for $22,966.05. Jax Asphalt built the tennis court initially.

Public Works Superintendent Matt Fauss spoke on the storm sewer which runs underneath the tennis courts. Fauss examined the storm sewer and found cracking in the sewer main due to age. He stated that the cracking will not contribute to a failure of the sewer.

Council Member Jim Rippy motioned to award the bid for the Veterans Park Tennis Court Maintenance to Jax Asphalt for $22,966.05. Seconded by Council Member Jeff May. Yeas: May, Moore, Rippy, Young, and Lewis.

City Manager:

City Manager Mary Ellen Bechtel requested Council’s permission to seek bids for the remodel of Fire Station #1. Since the Fire Station is a City building, the Council needs to give permission to bid this project. No City funds will be used as the Foreign Fire Tax will finance it. The Foreign Fire Tax Board controls the use of this tax. The project proposes to renovate the bathroom, living quarters, and exercise facility at Fire Station #1.

Council Member Mike Young motioned to approve the request to seek bids for the remodel of Fire Station #1. Seconded by Council Member Donte Moore. Yeas: May, Moore, Rippy, Young, and Lewis.

City Manager Mary Ellen Bechtel introduced Finance Director Merle Hollman to present the Third Quarter Budget Review. Hollman distributed handouts representing the Operating Cash Balance and Operating Working Fund Balance for the General Corporate Fund and the Public Utilities Fund.

Hollmann explained that the General Corporate Operating Cash Balance as of 01/31/18 is $3,734,674, however soon the City will be paying the second half of the property and casualty insurance premium of $456,000. The General Corporate Operating Working Fund Balance as of 01/31/18 is $3,867,549. The actual General Corporate Operating Surplus after nine months is $474,497. The reason for the surplus is that the Revenues are at 74.1%, while the Expenditures are at 70.0%.

Hollmann explained that the Public Utilities Fund Operating Cash Balance as of 01/31/18 is $441,120. The Public Utilities Fund Operating Working Fund Balance as of 01/31/18 is $700,967. The actual Public Utilities Fund Operating deficit after nine months is ($43,030). The reason for the deficit is that the Revenues are at 75.2%, while the Expenditures are at 76.5%. He reported that Water Purchases increased $97,219. The increase may be contributable to numerous water leaks. A Water Loss Analysis will be prepared at the end of the fiscal year.

Hollmann presented two analyses for the General Corporate Working Fund Balance Projections and Revenue Projections based on calling or not calling the four laid off employees back. The Revenue assumptions is the continued 10% reduction in State Income Tax.

Not Calling Back Laid Off EE’s; W. F. Balance Projections; Month’s Exp. on Hand:

4/30/2018; $3,593,051.;

4/30/2021; $2,778.144.; 2.4 Mos. Exp.

Calling Back Laid Off EE’s; W. F. Balance Projections; Month’s Exp. on Hand:

4/30/2018; $3,593,051.;

4/30/2021; $2,003,300.; 1.7 Mos. Exp.

Merle Hollmann presented worksheets showing multi-year comparisons for the 1% Sales Tax, the 1% Home Rule Sales Tax, and the State Income Tax. These are the three major General Corporate revenue sources.

Hollmann reported that for the 1% Sales Tax, there was a 3.4% decrease or ($131,063) in revenue for first eight months of 2016-2017 Fiscal Year and for the first eight months of the 2017-2018 Fiscal Year revenue is down 1.2% or ($41,471).

Hollmann reported that for the 1% Home Rule Sales Tax, the State of Illinois is continuing to charge a 2% administrative fee. There was a 3.0% decrease or ($84,659) in revenue for first eight months of 2016-2017 Fiscal Year and for first eight months of the 2017-2018 Fiscal Year the revenue is down 1.4% or ($32,605).

Hollmann reported that for the State Income Tax, the State of Illinois is continuing to charge a 10% administrative fee. There was a 7.8% decrease or ($108,070) in revenue for first nine months of 2016- 2017 Fiscal Year and for first nine months of the 2017-2018 Fiscal Year the revenue is down 3.6% or ($36,413).

Hollmann reported on the Loans and Interfund Loans as of 01/31/18. The total principal due on the loans is $37,732,560 and the total interest due on the loans is $11,502,268. If the City does not pay off the loans early, the total loan cost is $49,234,828.

Council Member Jeff May stated that in actuality all revenue sources are down in the last two fiscal years.

City Manager Mary Ellen Bechtel stated that Department Heads have worked hard to manage their budgets. The Police Department has been understaffed for several months. In January, four officers were sent to training. She is hoping for a balanced budget with some excess at the end of the fiscal year.

City Manager Mary Ellen Bechtel presented the Proposals for the Park Plaza Redevelopment. City Manager Mary Ellen Bechtel reported that for several years the City has been in a lawsuit with the owners of the former Park Plaza. Last fall, the owners decided to end the lawsuit and donate the property to the City for redevelopment. Now the City is required to demolish the buildings or bring them up to code. Four interested parties submitted proposals regarding the redevelopment of the property. Each proposal is different, and it is not an easy task to choose which proposal has the best return on investment and is in the best interest of the City. The interested parties were invited to attend this City Council Meeting to present their proposals.

#1 - Dan Black of Black & Sons/InnoTech Mfg. Black spoke on his business and how sales and job production have increased. As his business grows, there is a need for more adequate space. Employees to be retained is 30, then plus an additional 50 within the first year and another 30 employees the second year. Black’s proposal had four parts:

1. Convert the former Woolworth/Flooring Center Building into the InnoTech Manufacturing Facility. Estimated cost: $1,150,000, Non-Prevailing Wage: $900,000. Estimated timeline: six to eight months.

2. Renovate the exterior of the former Kroger unit and the rest of the Mall to revise the appearance. Estimated cost: $555,000, Non-Prevailing Wage: $415,000. Estimated timeline: two to three months.

3. Renovate the three rental units immediately west of the Post Office to “White Box” status. Estimated cost: $1,465,000, Non-Prevailing Wage: $1,145,000. Estimated timeline: four to five months.

4. Renovate the Wards Building. Estimated cost $1,000,000

Black stated that he is willing to take possession of the property as soon as the City receives the environmental report. He explained that if he owns the facility he would not be subject to the Prevailing Wage Act.

Council Member Mike Young asked how Black would feel about another development in the large parking area in front of the mall. Black was not opposed to the idea.

Council Member Jeff May asked about the City’s environmental liability. City Manager Mary Ellen Bechtel explained that the City is in the chain of environmental liability even if the City sells the property. Black explained that his proposal will not involve disturbing the underground as the work will be from the ground up. Council Member Jim Rippy asked if there is asbestos in the building. Black replied none that he is aware of.

Council Member Jeff May asked what the financial impact on the real estate taxes would be. Bechtel explained that more information about how the property will be developed is needed before a reasonable estimate of the real estate tax impact is determined. She stated that the last tax bill, issued before the City received the property, showed a value of $512,478. The Equalized Assessed Value (EAV) was $170,826. The tax bill was around $18,000 with $3,905 from the Downtown TIF Increment.

City Manager Mary Ellen Bechtel asked Black what percentage of development costs he was expecting the City to reimburse him. Black replied 100% of the construction costs, plus the cost of fencing.

Mayor John Lewis asked if Black was assuming that TIF funding would cover the payments on the bank loans sufficient to retire the principle and debt on the project. Lewis asked what if there is not enough money in the TIF to fund the project. Black replied that he would expect the City to pick up the difference.

Bechtel reported on the costs to demolish Unit 3 ($39,500), asbestos/lead removal ($10,000), and reinforcement of the outside walls ($200,000).

Project financing: First option, Bechtel explained that if the City owns the property, the work will be done at prevailing wage. If the City did all the work at prevailing wage using Black’s cost estimates, the total project cost would be $5,492,493. Bechtel based the loan over 13 years because the TIF program goes for 13 more years. She reported that if the City did no other TIF projects over the 13 years, the estimated total TIF Funds available is $4,550,000 and the City would be short about $900,000 for this project.

Second option, Bechtel explained that if the City donates the property to Black “as is”, non-union workers will do the work. The total estimated project would be $4,645,325. Black stated that if the City uses bond money for financing instead of bank loans, the City must retain ownership. Council Member Jeff May stated that would cause the City to spend $1 million more. May clarified that Black would take on the loan debt and renovate the buildings. The City would pay Black back from the Downtown TIF revenue stream.

Council Member Donte Moore clarified that if TIF funds are used on this project, no other projects could use the TIF funds for 13 years. Bechtel said all Downtown TIF projects would end now. Any proposed projects would be suspended, and all funds allocated towards this project. Currently, four businesses have applied for Downtown TIF funding.

Dan Black stated that another option might be him taking the old Woolworth’s building and the City demolishing the rest of the mall.

#2 - Trevor Borowiak/Borowiak’s Enterprises City Manager Mary Ellen Bechtel stated that immediately upon Borowiak obtaining the Park Plaza property, they will enter a long-term lease with Crossroads Bible Church of Norris City, Illinois. The buildings #1, #2, and #3 would to be leased to Crossroads Bible Church. Then Crossroads would begin their construction phase. The City would be responsible for demolition of buildings #4, #5, and #10 ($211,000), asbestos/lead removal ($50,000), reinforcement of the outside three walls ($300,000) and repair the building #9-Post Office ($80,000). Borowiak would remodel buildings #6, #7, and #8 at a cost of $750,000 to $1,000,000. The lease of building #9-Post Office would transfer to Borowiak. Borowiak reported that several restaurants, laundromat, pet center, and a large farm supply retailer have expressed interest in this location.

Bechtel stated that Trevor Borowiak has experience renovating old dilapidated buildings. Over the last seven years, he has renovated four buildings and turned them into productive entities.

Project financing: The City’s cost on this project to $641,000 or more depending on the demolition costs and reinforcement costs of the outside walls. Borowiak did not request any incentive from the City. Bechtel stated that even though this property is within the Enterprise Zone, he would not get property tax abatement, but the project would receive Sales Tax abatement for building materials. Council Member Jeff May clarified that as with Black’s proposal, the City could have Borowiak pay for the costs and then receive reimbursement over time from the City out of the TIF District revenue.

#3 – Mary Burgan/Milano Rail Services Mary Burgan explained that Milano is a fourth-generation business which located in Mt. Vernon in 1967. Milano’s largest asset is their rail access. They ship directly to steel mills by rail instead of by trucks. Milano’s Logistics began five years ago to diversify their services by expanding and offering different services by rail. Currently, there are 25 employees. Burgan expects 8 new jobs in the next year. They are working with Strategic Rail Financing, a market and business development firm from Philadelphia. John Elliot, Senior Vice President of Strategic Rail, spoke on what his company does and the economic impact that a project like this will be to our community.

Elliot explained that the Milano site has access to three railroads; Union Pacific, Norfolk Southern, and Evansville Western. Milano proposes to connect the Park Plaza to its rail interchange. He presented three letters of support from Mt. Vernon industries supporting Milano’s plan for a “transload facility”.

Milano proposes to redevelop the Park Plaza mall property as a “transload facility” where they will load and unload railcars, and stage and store materials for local businesses that do not have their own rail sidings. They request that the City relocate the post office, demolish the buildings, remove lead and asbestos, convey a clear title, and rezone the property to “General Industrial”.

Project financing: Mary Burgan explained that to redevelop the Park Plaza site, Milano needs a clear slate with the buildings cleared and rezoning to “General Industrial”. The City would be responsible for demolishing all units ($464,000), lead and asbestos removal ($120,000), and relocation of the post office ($380,000).

Milano agrees to pay $475,000 for the property in the form of $25,000 cash paid upon closing and $450,000 as a “Forgivable Redevelopment Note”. The Note is forgiven when Milano makes investments and creates jobs on the property. The Note would require reimbursement to the City if Milano sells the property or business before either making investments in the property or creating new jobs. They will pay the property taxes going forward.

Both the City and Milano would agree to reopen 7th Street to through traffic, agree to waiving time- of-day switching restrictions, agree to allow a potential new rail siding to the Park Plaza property to cross Newby Ave, and updates to truck routes to Milano and new development sites.

Council Member Jeff May clarified that the City’s upfront cost is $939,000 to hand over to Milano’s a clear slate at Park Plaza. He asked if it would be a better option if the City reimburses Milano instead of the reverse. John Elliot and Mary Burgan replied that that option is worth considering.

May asked if an economical value be placed on the indirect jobs created or retained by this proposal. Elliot replied that the value would be hard to determine, since they are working on plans with specific customers. The figure of 100 indirect jobs created or retained is a conservative number.

Mayor John Lewis asked that in the Forgivable Redevelopment Note for $1 forgiven for every $1 invested in capitalized improvements if the railroad tracks were negotiable. Burgan replied yes.

Council Member Donte Moore asked about the cost of opening 7th Street. City Manager Mary Ellen Bechtel explained that the City will still be writing an ICC Grant for $271,000. The timeline would be as soon as Evansville Western Rail could secure the grant funds from the Railroad Safety Funds. Council Member Jim Rippy asked why the reopening of 7th Street is involved, since the City has been asking for the reopening for months. Mayor Lewis explained that the reopening of 7th Street would be a benefit to the proposal. The City needs to work with the State of Illinois to create a truck route on 7th Street to Route 15. Bechtel stated that there are two routes to consider. One is south to Route 142 and the other is north to Route 15.

#4 – Rondell Swope Swope explained that he does not propose to demolish the Park Plaza and burdening the City with any additional money for the building. He explained that Park Plaza is a shopping center and his goal is to get shops back into the center. Swope stated that the first item is the opening of a Family First Resource Center. The Center would provide services such as; child care/youth center, before and after school program, fatherhood center, senior services, and addiction programs. The second item is implementing a plan with Horizon Developers Group to develop a staffing agency, and protective services. The third item is the development of a retail center.

Project financing: Rondell Swope will be seeking Federal Grants to fund the Family First Resource Center and private funds to open the retail stores.

Council Member Jeff May asked how much of an investment will go to this property. Swope replied $1.8 million in private funds and grant receipts depend on the program developed. He said that they partner with Ford Family and Ford Family receives most of the grants that they apply for. There are no tenants lined up for this property. May stated that his biggest concern is a lack of a comprehensive plan.

Mayor John Lewis clarified that Swope desires that none of the buildings be demolished. The proposed timeline is one year following the completion of the Park Plaza remodeling.

Summary: City Manager Mary Ellen Bechtel requested direction from the Council on how to proceed.

Council Member Jeff May stated that before someone is chosen the following should apply; 1). Whoever is involved needs to have some upfront skin in the game; 2). Needs financial modeling to better understand the economic uplift of revenue for the City in the form of sales tax, income tax, and TFF funds; 3). Needs to determine which project is the least expensive for the City. Council Member Donte Moore asked how long it would take to prepare the financial modeling. City Manager Mary Ellen Bechtel stated that she would need assistance, because there is a lot of information to collect for every project. May stated that there are many issues to determine which is the best option for the City and the most cost efficient.

Mayor John Lewis stated currently, the taxpayers are receiving nothing from this property, so something is better than nothing. He is looking at what will be the best for the taxpayers. Council Member Jim Rippy stated that he is looking at the number of jobs to be created. Bechtel will search for someone to prepare an economic model.

City Attorney:

Corporation Counsel Bill Howard presented for second reading an Ordinance Revising Article 21-125, Article 21-126, Article 21-127, and Article 21-128 of the Revised Code of Ordinances relating to sign regulations.

Council Member Jeff May motioned to adopt Ordinance #2018-07, an Ordinance Revising Article 21-125, Article 21-126, Article 21-127, and Article 21-128 of the Revised Code of Ordinances relating to sign regulations. Seconded by Council Member Donte Moore. Yeas: May, Moore, Rippy, Young, and Lewis.

Corporation Counsel Bill Howard presented for First Reading an Ordinance Approving a Real Estate Purchase Agreement for Property Located at 1200 S. 26th Street. The property is no longer necessary, useful to, or in the best interest of the City to retain. The Purchase Agreement is with James Green. City Manager Mary Ellen Bechtel explained that currently on this property is a dilapidated mobile home and garage. She proposes to transfer this property to James Green to demolish the mobile home and clean-up of the lot.

Council Member Jim Rippy motioned to suspend the rules to vote on an Ordinance. Seconded by Council Member Mike Young. Yeas: May, Moore, Rippy, Young, and Lewis.

Council Member Donte Moore motioned to adopt Ordinance #2018-08, an Ordinance Approving a Real Estate Purchase Agreement for Property Located at 1200 S. 26th Street. Seconded by Council Member Jim Rippy. Yeas: May, Moore, Rippy, Young, and Lewis.

Corporation Counsel Bill Howard presented for Council’s consideration a Resolution Approving an Agreement with Automated Merchant Systems for Credit/Debit Card Payment Processing. Customers using their credit/debit card will pay a convenience fee of 2.95% to cover the cost and the fee will be collected at the time of payment. City Manager Mary Ellen Bechtel explained that this will allow credit or debit payments in the Office of the City Clerk, the Office of Billing Services, and online.

Council Member Jim Rippy motioned to approve the Resolution Approving an Agreement with Automated Merchant Systems for Credit/Debit Card Payment Processing. Seconded by Council Member Mike Young. Yeas: May, Moore, Rippy, Young, and Lewis.

Corporation Counsel Bill Howard presented for Council’s consideration a Resolution Terminating the Revolving Loan Program. City Manager Mary Ellen Bechtel explained that the Illinois Department of Commerce and Economic Opportunity has mandated a Revolving Loan Fund Closeout Program during the year 2018. Bechtel stated that the City has a choice on how the City’s Revolving Loan Program is terminated. She presented the following scenarios:

Scenario # 1: City does not buyout its existing revolving loans, but turns them over to the DCEO:

$ 1,697,419 Existing cash funds in the city's revolving loan fund (will be returned to DCEO)

$ 405,944 Outstanding balances of 6 existing revolving loans (will be bought out by DCEO, net of write-off's)

$ (428,737) Amount of revolving loans written off since 10/1/1992

$ 1,697,419 Amount of grant funds available to city if the city does not buyout its existing revolving loans

Scenario # 2: City does buyout its existing revolving loans, using general corporate funds:

$ 1,697,419 Existing cash funds in the city's revolving loan fund (will be returned to DCEO)

$ 405,944 Outstanding balances of 6 existing revolving loans (will be bought out by city's general corporate fund)

$ 0 Amount of revolving loans written off since 10/1/1992 (does not enter computation)

$ 2,103,363 Amount of grant funds available to city if the city does buyout its existing revolving loans

$ 405,944 Difference

Under Scenario #1, the City would pay the State of Illinois $1,697,419 and the City would apply for a $1,697,419 grant to pay for eligible infrastructure improvements.

Under Scenario #2, the City would pay the State of Illinois $2,103,363 and the City would apply for two grants in the amounts of $1,697,419 and $405,944 to pay for eligible infrastructure improvements. Bechtel stated with this option the City assumes the risk of six remaining loans defaulting. She feels that the existing loans are a good risk. If any of the revolving loans written off since 10/1/1992 makes payments, then money would be sent to the State.

Bechtel reported that as soon as the City sends the money to the State of Illinois, the State will approve the grant because it has gone through all the State’s grant review processes.

John Paul Braswell stated that the Revolving Loan Program has benefited the community by helping small businesses. Bechtel reported that the Greater Egypt Regional Planning Commission will still have a Revolving Loan Program for regional businesses.

Council Member Donte Moore motion to approve the Resolution Terminating the Revolving Loan Program and selecting Scenario #2 for the buyout. Seconded by Council Member Mike Young. Yeas: May, Moore, Rippy, Young, and Lewis.

Corporation Counsel Bill Howard presented for Council’s consideration a Resolution to Approve an Agreement with Krehbiel and Associates, LLC for Auditing Services. The Agreement will be for three years.

Council Member Jim Rippy motioned to approve the Resolution to Approve an Agreement with Krehbiel and Associates, LLC for Auditing Services. Seconded by Council Member Mike Young. Yeas: May, Moore, Rippy, Young, and Lewis.

Corporation Counsel Bill Howard presented for Council’s consideration a Resolution Approving a Development Agreement with Justin Qui and May Chen for the Development of a Fujiyama Japanese Steakhouse. City Manager Mary Ellen Bechtel explained that Fujiyama’s will receive Enterprise Zone Benefits which is property tax abatement of 100% the first year and 50% the second year. After Fujiyama’s is open the City will reimburse them 50% of the 1% Retail Tax up to $30,000.

Council Member Mike Young motioned to approve the Resolution Approving a Development Agreement with Justin Qui and May Chen for the Development of a Fujiyama Japanese Steakhouse. Seconded by Council Member Jeff May. Yeas: May, Moore, Rippy, Young, and Lewis.

Mayor:

Mayor John Lewis reported on the February statistics from the Public Utilities, Fire, and Police Departments. The Police Department responded to 1,747 total events. The Detective Division was assigned 57 new cases, cleared 45 cases with arrests, and referred 14 cases to the States Attorney. The K-9 Units were deployed 18 times and the Tactical Unit was deployed 2 times. The Fire Department responded to 251 alarms and the Fire Inspection Department conducted 60, 10A inspections, 2 facility inspections and held one public education seminar. The Public Utilities Department repaired 11 water leaks and handled 26 sewer incidents.

City Council:

No comments were heard.

Visitors/Citizens Requests/Addresses From The Audience:

No comments were heard.

Executive Session:

At 8:57 p.m., City Manager Mary Ellen Bechtel requested an Executive Session under 5 ILCS 120/2 (c) (6) – The setting of a price for sale or lease of property owned by the City.

Council Member Donte Moore motioned to go into Executive Session under 5 ILCS 120/2 (c) (6) – The setting of a price for sale or lease of property owned by the City. Seconded by Council Member Mike Young. Yeas: May, Moore, Rippy, Young, and Lewis.

At 9:06 p.m., the Regular City Council Meeting reconvened.

Roll call showed present: Council Member Jeff May, Council Member Donte Moore, Council Member Jim Rippy, Council Member Mike Young, and Mayor John Lewis.

Adjournment:

Council Member Jeff May motioned to adjourn. Seconded by Council Member Mike Young. Yeas: May, Moore, Rippy, Young, and Lewis.

The meeting was adjourned at 9:08 p.m.

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