Wilmette Park District
Financial Planning & Policy Committee
Monday, October 27, 2014
6:30 p.m. – Village Hall Training Room
Commissioners/Committee: Chair Olvany, Brault
Staff: Wilson, Eppelheimer, Bingham, Lambrecht, Bowen, Holloway, Felicicchia
I. Meeting Called to Order
Meeting called to order 6:30 p.m.
II. Approval of Minutes
A. Commissioner Brault moved to approve the minutes from September 30, 2014, seconded by Olvany; all voted yes, the motion carried.
III. Communication and Correspondence
IV. Recognition of Visitors
Eric Anderson, BMO Capital Markets
Committee decided to go to New Business to accommodate visitor.
V. New Business
A. Proposed Debt Refinancing Options
Superintendent Eppelheimer reviewed the packet showing the graphical representation of taking advantage of low interest rates and refunding a portion of the 2016 debt. This would move taxes to be collected on the 2015 tax levy to the 2014 tax levy. The taxes on the 2014 levy will pay debt due in 2015 as well as the proposed refunding issuance. The addition amount to be levied in 2014 equals approximately $630,000, but would reduce the 2015 levy. The bonds could either be privately placed or bought by the District at a rate of about 1.0%. Bond is taxable as the District is advance refunding for the second time; IRS requires a second advance refunding be issued at a taxable rate. The bond maturity length of one month and refunding would be very insensitive to rates given maturity duration. The rate is estimated; costs of issuance are reasonably firm at $8,500 with these factors.
Director Wilson stated that we cannot achieve the goal of maintaining today’s tax rate if we wait. The refinancing has to be filed by the end of February. Commissioner Brault asked if the District is using non-referendum related cash to actually then pay the $630,000. Superintendent Eppelheimer stated yes, as the taxes would pay the new debt and the 2016 debt would be defeased. Director Wilson stated that we are accelerating the tax collection to pay off an accelerated payment schedule. Director Wilson stated that this has nothing to do with the referendum and no language is needed in the referendum. This is a separate bond ordinance just like other refunding the District has done.
Commissioner Brault asked if the overall cost of this issue would be about $20,000. Eric Anderson stated that the cost would be between $9,000 and $11,000. Mr. Anderson stated that the $8,500 is the cost of issuance and $538 is the interest expense; which comprises the $9,000. Mr. Anderson commented on another option; Option 1 which is $8,500, cost for the reduction of 2016 debt or Option 2 which is $11,000, cost for the reduction of five years of debt. He stated that it really is all issuance costs because the interest value for a month at 1% on $630,000 is negligible. Superintendent Eppelheimer stated that in Option 2, the proceeds go to escrow and the future retirement is paid by an escrow agent. Mr. Anderson stated that it would be a legal and economical defeasance but we would not hire an escrow verification agent as that would cost another $2,000. Commissioner Olvany asked if Mr. Anderson thought Option 2 was a marketable security. Mr. Anderson stated that Option 1 or Option 2 is the same relative to their marketability. Commissioner Brault commented that if we go forward with Option 2 and then we go forward with a referendum, the funding schedule could be slightly better. Mr. Anderson stated yes and then we would lower the refunding requirements. Mr. Anderson stated that with Option 2 there is a bit more guesswork to what the final cost would be; call it $10,500 to $11,000. It is also going to be dependent on what is made in escrow. Director Wilson stated that the $11,000 is a combination of interest and issuance cost. Director Wilson asked if the pressure will be off if the referendum passes. Will this achieve potential savings as well, due to less refunding the District will have? Mr. Anderson stated that this is a number we will not know until we get there. Mr. Anderson will put together a range for the Committee to review. Commissioner Olvany stated that we need to agree tonight on one of the two different Options. He stated that Option 2 seems to be the better direction to go. Commissioner Brault agreed. Commissioner Brault would like to target the closing for the other side of the referendum. The Committee agreed.
Commissioner Brault moved and Commissioner Olvany seconded a motion to recommend to the full Board approving refinancing, Option 2. All Agreed.
B. 2014 Truth-in-Taxation Resolution 2014-R-10
Superintendent Eppelheimer reported that the Board determines by resolution the amount of the total tax that it estimates will be levied for 2014 for all tax supported funds (excluding the Debt Service Fund). He briefly reviewed the information in the packet. The proposed increase in the tax levy for Tax Cap Funds is 1.5% which is equal to the 2013 CPI and therefore, could account for some growth in new property. The percentage increase shown in the resolution would be 1.04% which would not require a special tax increase notice or a public hearing, but notice and hearing will be conducted as best practice. The increase in the total proposed tax levy would be 0.0%. Discussion ensued on the impact of loss and costs added by the county before the final levy is placed on the tax bills.
Commissioner Brault moved and Commissioner Olvany seconded a motion to recommend to the full Board approving Truth-in-Taxation Resolution 2014-R-10. All Agreed.
C. Proposed FY 2015 Administration Budget
Superintendent Eppelheimer reported on the Administration budget which accounts for Administration, Finance, Communications revenue and expenses, as well as all the special funds. The packet represents what the District’s projections are for each of the funds, as well as the expenses for next year. He stated that on page one is a profit and loss statement within the umbrella of Administration.
Superintendent Eppelheimer reported that there is a fair amount of revenue from the District’s rental which is for the cell towers. Superintendent Eppelheimer walked Committee through revenue and expense items. Commissioner Brault commented that capital was just over $2 million. Superintendent Eppelheimer stated the $1.5 is for artificial turf at West Park and another $980,000 is in the capital amounts for the Lakefront Master planning.
Commissioner Olvany questioned the health benefit premiums of 8.5% which seem high. Superintendent Eppelheimer noted that PDRMA stated the national average was about 13%. Director Wilson commented the District has experienced this rate increase over the last several years, but the District has had offsetting changes in their covered population that have driven the increase back down to zero.
The Committee recommended the Administration budget move forward to be included with the overall annual budget.
D. 3rd Quarter Financial Results
Superintendent Eppelheimer walked Committee through the report. He stated overall the District is ahead of budget both on the operating levels surplus as well as the net surplus. The revenue from Recreation Facilities was below budget with the cooler seasonal temperatures and the golf season starting late both contributed to the decrease. Superintendent Eppelheimer stated that the capital expenses are about $400,000 under what was budgeted.
E. Professional Services Review
Superintendent Eppelheimer commented that he sent a note out to surrounding park districts to see if they had policy on professional services. He stated he received several responses back stating mostly they had no policy in place. Carol Stream, on a yearly basis, reviews specific areas and discusses their services. Committee agreed that the District should have a schedule in place of reviewing service providers. Director Wilson stated that staff will come up with a schedule and a list of who they think should be on the review schedule. Committee members agreed.
VI. Unfinished Business
A. Non-Tax Revenue, Advertising on WPD Property
Director Wilson reviewed Skokie and Glenview Park District policies and guidelines for their advertising and sponsorship opportunities. Director Wilson asked the Committee what they would like the District to do regarding advertising. Director Wilson suggested blending the two policies together since both had beneficial information. He stated that Glenview puts on about 70 smaller community events per year. Skokie will sell space on the back cover of their brochures. Director Wilson stated he does not want to turn the District brochure into a telephone book. The only real way to make money on this is by selling space; do we really want every time we are inviting someone to an event to be a sales pitch? Commissioner Olvany stated he likes the unobtrusive ways of advertising. Commissioner Olvany stated he agreed with Director Wilson and did not want to turn the brochure into advertisements. Director Wilson stated that the District is already engaged in unobtrusive advertising. Committee agreed that based on the lack of revenue it does not make sense to pursue. Commissioner Olvany stated if there is an easy advertising opportunity then grab it but otherwise don’t pursue. Superintendent Bingham stated that what a lot of these communities have are big business industries that pursue them to advertise. Director Wilson stated that staff will write up a policy. Committee agreed they do not need to see it but that one should be in place.
VII. Next Meeting
The next meeting is scheduled for November 24, 2014.
There being no further business to conduct, the meeting was adjourned at 7:45 p.m.