DeKalb Times

DeKalb County Finance Committee met Sept. 2.

Here is the minutes provided by the committee:

The Finance Committee of the DeKalb County Board met virtually via Zoom. Chairman Bagby called the meeting to order at 7:00 p.m. Those Members present were Mr. Scott Campbell, Mr. Steve Faivre, Mr. John Frieders, Ms. Dianne Leifheit, Mr. Jerry Osland, Ms. Linda Slabon, and Chairman Tim Bagby. A quorum was established with all seven Members virtually present.

Others present via Zoom included Gary Hanson, Pete Stefan, Derek Hiland, Christine Johnson, Sheila Santos, Jim Scheffers, Nathan Schwartz, Paul Borek, Cohen Barnes, Cortney Strohacker, Mark Pietrowski, Laurie Emmer, Roy Plote, Karen Cribben, Kathy Lampkins, Greg Millburg, Bridge Nodurft, and WLBK.

APPROVAL OF THE AGENDA

It was moved by Mr. Osland and seconded by Mr. Faivre to approve the agenda as presented. Those Members voting yea were Mr. Campbell, Mr. Faivre, Mr. Frieders, Ms. Leifheit, Mr. Osland, Ms. Slabon, and Chairman Bagby. The motion carried unanimously.

APPROVAL OF THE MINUTES

It was moved by Mr. Campbell and seconded by Ms. Slabon to approve the minutes of the August 5, 2020 Finance Committee Meeting. Those Members voting yea were Mr. Campbell, Mr. Faivre, Mr. Frieders, Ms. Leifheit, Mr. Osland, Ms. Slabon, and Chairman Bagby. The motion carried unanimously.

PUBLIC COMMENTS

There were no public comments.

PROPERTY TAX SALE RESOLUTIONS

DeKalb County Treasurer/Collector Christine Johnson shared that the County, as Trustee, held the annual Sealed Bid Auction of Surplus Properties recently and sold seven properties. Ms. Johnson reviewed areal maps of the properties requested the approval of the seven Property Tax Sale Resolutions.

Ms. Leifheit moved to forward the seven Resolution to the full County Board recommending their approval. Mr. Osland seconded the motion and a roll call vote was taken. Those voting yea were Mr. Campbell, Mr. Faivre Mr. Frieders, Ms. Leifheit, Mr. Osland, Ms. Slabon, and Chairman Bagby. The motion carried unanimously.

DEKALB COUNTY ECONOMIC DEVELOPMENT CORPORATION – BRANDING INITATIVE

DeKalb County Economic Development Corporation’s Executive Director Paul Borek, DCEDC Board President Cohen Barnes, and DeKalb County Convention & Visitors Bureau Director Cortney Strohacker joined the Committee and spoke on the DCEDC launching of a marketing initiative around their new branding program called “Unbound Opportunities”.

The County Board’s Economic Development Committee voiced their support for the branding program forwarded the idea to the Finance Committee to review the financial component.

Mr. Borek reviewed with the Committee what the Countywide impact has been of since being awarded the DeKalb County Enterprise Zone. He additionally explained how they have come to this branding initiative stage through the Comprehensive Economic Development Strategy and the DeKalb County Thriving! Plan.

Mr. Barnes briefly reviewed the presentation (https://dekalbcounty.org/wp- content/uploads/2020/08/cb-dcedc-branding.pdf) that the Economic Development Committee was shown. He highlighted the “why” behind the branding strategy and says the goal is to attract new businesses but also new residents, pointing out that the County’s 25 to 45-year-old population is declining.

The messaging behind “Unbound Opportunities” is to create a more diverse palette of opportunities for people of varied races, religions and ethnicities, change the current perception of citizens already within the community, expand the quality of life in the county through usage of specific attractions and entertainment venues, leverage business retention and attraction effort, attract and retain a strong and diverse workforce to support businesses, and more strongly integrate county with NIU and other education institutions.

The return on the investment for the initiative would potentially be Business Attraction, Job Creation, Capital Investment, Increased Population/Residential Development, Increased Retail/Commercial, Increased Employment, Hourly Wages, Median Wage, Median Family Income, Decreased Poverty Indicators, and it would have a Countywide Impact.

Mr. Barnes continued to share that in order to successfully accomplish this initiative, it would require a full-time County Marketing Manager. This person is the driving force behind the success of the marketing plan outlined in the Branding Playbook. He/she is the brand’s visionary and steward of the overall vision and marketing strategy. The County Marketing Manager’s role & responsibilities were outlined.

The DCEDC Representatives were seeking $765,000 in funding over a three-year period for the Implementation of the Branding Strategy and further requested that DeKalb County underwrite this entire cost using the County’s Opportunity Fund. Mr. Barnes argued that would allow the plan to be put into effect immediately to take advantage of opportunities such as families moving out of the city and suburbs because of COVID-19.

Several Committee Members did not support the idea of the County paying for the entire initiative. Ms. Leifheit commented that unless everybody in the County buys into this kind of

project, she doesn’t see the future of it lasting. Mr. Hanson additionally commented that he would like to see more diversity in funding the project.

Board Chairman Mark Pietrowski promoted the initiative and agreed that now is the time for the County to pursue such a program out of the Opportunity Fund.

More discussions ensued. Mr. Frieders noted that he didn’t feel the Committee was ready to make a decision on this item until after they heard the FY 2021 Administrative Budget Recommendation later on the agenda and asked to hold this item for further discussion towards the end of the meeting.

NURSING HOME BOND SALE

The County sold $13,000,000 in bonds in August to pay for the Rehab & Nursing Center Expansion Project which is expected to open in late 2020. Construction activity in 2019 and 2020 was funded with Rehab & Nursing Center cash reserves and internal borrowing. In total, bonds and cash generated $15,000,000 to cover the total “all-in” project costs authorized by the County Board. The bonds were issued for 30 years at the excellent average interest cost of 2.23% and all debt will be retired by operating revenues of the Rehab & Nursing Center. The low interest rate is reflective of the County maintaining its Aa1 rating from Moody’s, the second highest rating an entity can achieve. Annual debt service payments will range from a low of about $624,000 to a high of about $683,000. The debt service payment in 2021 will be $680,449. The bonds will be fully retired on December 15, 2050, subject to a call provision beginning December 15, 2030.

The timing for issuing this debt provided for a favorable interest rate and therefore allowed the County to capture some unexpected cash proceeds. These funds will be used for two purposes. First, $1,000,000 will be returned to the Rehab & Nursing Center by December 31, 2020, which will allow them to address other capital needs for their 20-year old facility. Second, $220,000 is retained in the Project Fund until 2022, at which point the funds can be transferred to the General Fund. This money will serve as additional protection for any unexpected drop in Nursing Home operating revenues due to the impact of COVID-19. This is important because it is from these operating funds that bond payments are made and should they be insufficient, then general County revenues will need to make up the difference.

2010A AND 2010B BOND REFUNDINGS

Mr. Stefan explained that the County sold $16,000,000 in bonds in late September, 2010. This money was used to finance the Courthouse Expansion Project, planning stages for the Jail Expansion Project, and issuance and interest costs associated with the bond issue. The debt for this project will be repaid from sales tax money generated from a special “tax sharing agreement” with the City of DeKalb from sales at the former County Farm property (east side of Sycamore Road). The bonds, when sold, were expected to be fully retired on December 15, 2029, subject to a call provision as of December 15, 2020.

It is that call provision that the County will be invoking in the fall of 2020 and will refinance the $9,900,000 bonds that are currently due each December 15th from 2021 through 2029. Given the favorable bond market in 2020, this refinancing is expected to save the County just under $1,000,000. The debt restructuring should reduce the annual debt payments by $100,000 (including for the necessary set-aside made during 2020). This item is a key piece to the FY 2021 Budget and more information regarding this item will be brough to the October Finance Committee Meeting.

DATA FIBER NETWORK SUSTAINABILITY

Information Management Director Sheila Santos explained that in 2010, DeKalb County Government was awarded a BTOP grant to construct a 130-mile network across DeKalb County and Northern LaSalle County in Illinois. For nearly 10 years, this network has provided the Community Anchor Institutions (CAI) and non-profits in the County with drastically improved connectivity. The existence of the DATA network has driven competition to “step up their game” and provide enhanced connectivity of their own.

While the County has focused on the CAI and not-for-profit community, the County’s partner, DeKalb Fiber Optic, LLC (now owned by Syndeo Networks), has provided commercial access and fiber leases under the terms of the grant special award conditions. DFO was a named entity in the grant and was a subcontractor on the installation of the grant network. The partnership with DFO has led to significant improvement of broadband access in the area, including formation of a new company to provide access to our rural residents at speeds and costs equal or less than what our urban residents pay. DFO has also provided IRU’s for multiple entities expanding their own broadband business plans in the region.

Ms. Santos continued to explained that in the past 10 years, the competition has “caught up.” The County is even seeing the State of Illinois creating a Consortium pool service for schools, leasing fiber from DATA, but taking away a significant portion of DATA’s revenue used to support the network.

The State of Illinois is funding a significant infrastructure improvement that includes roads and bridges which will require significant relocation of DATA facilities, a task that will rapidly deplete the maintenance funds available from CAI annual fees. Every year there are thousands of 8-1-1 “locate tickets” called in for marking our underground fiber path whenever there is an excavation in the vicinity around the DATA fiber. At the same time, there is ongoing maintenance on handholes, re-locating fibers, and general costs associated with the plant. DFO/Syndeo contributes to the maintenance costs, but as CAI fees continue to trend down, the total maintenance cost on an aging network continues to increase.

The backbone network equipment is nearing its end of life and support contracts are becoming very expensive. The customer premises equipment, while still operating, is beyond its depreciated life. Much of the network equipment will need to be replaced soon. With COVID- 19 causing significant reductions in revenue for the State of Illinois, the State plans to start taxing Ethernet services such as what DATA delivers to CAI’s. This would necessitate the County becoming a telecommunications carrier, something that it has neither the ability nor the desire to do.

Ms. Santos shared that ultimately the County is looking to transfer the grant funded assets. She is continuing to explore all the different options that couple potentially come from a transfer agreement and do ensure that they do what is best for the County. Ms. Santos expressed that as she has more information she will return and update the Committee through the process.

COURTHOUSE BUILD-OUT PROJECT

Mr. Hanson reviewed that at the May Finance Meeting, the Committee reviewed a draft Resolution to move forward with the Courthouse Expansion Project but it was ultimately decided that because of the current pandemic and uncertainty of the County’s future budget status, they would hold off on going forward with the project and reassess things at the August Meeting.

Mr. Hanson additionally reiterated that the project is currently at the point to go out for bid. The financing plan which is estimated to cost around $1,700,000, including the architect fees already approved, would be managed by the DeKalb County Public Building Commission with the funding for this project to come from three sources: (a) $686,000 from monies received from the City of DeKalb from the close-out of their 23 year Tax Increment Financing District #2, (b) $411,000 from a one-time generation of revenue which came about because of the change in timing of when sales tax revenues are disbursed to the County from the City of DeKalb under the sales tax revenue sharing agreement, and (c) $603,000 from the County’s Opportunity Fund.

Mr. Hanson noted that the money is still available but questioned if the Committee thought it was the right time to move forward.

The Members decided that they would like to hear the FY 2021 Administrative Budget Recommendation before making any further decisions on this item.

ADMINISTRATIVE RECOMMENDATION OF THE FY 2021 BUDGET

Mr. Hanson began by sharing that the FY 2021 Budget is a Balanced Budget with conservative projections on revenues. He also called it a budget of “no” because there is not much new in it. The no, though, really started with the Departments. They were asked to bring firth budget requests that basically did not increase to the degree though could, and by and large, everybody did that, so that was a huge start of arriving at a budget that is balanced.

Mr. Stefan shared that the 2021 Budget represents revenues and expenditures from 100 cost centers across 53 different and independent funds. Revenues have been estimated realistically, but on the conservative side with special attention paid to COVID- 19 impacts. Expenditures have been estimated realistically, but on the aggressive side to provide somewhat of a cushion for unexpected events. The vision is that expenses should reflect a “pay as you go” philosophy and not delay financial obligations for future generations. Much planning has been done to smooth out expenses in the long-term and minimize large “bumps” in expenditures in future years which are then difficult to deal with from a budget perspective with the Asset Replacement Fund being a prime example of this type of strategy.

The cost-of-living adjustment (COLA) under the Property Tax Cap Law is set at 2.3% for the 2020 levy year for 2021 collections. This amount ($552,000 total for all levies) is based on the consumer price index for all urban consumers as published by the U.S. Department of Labor. This increase is incorporated into the property tax levies found on Attachment A. An additional 0.8% ($189,000 total for all levies) is included for the increase from new construction. Another 0.4% ($100,000 total for all levies) is included as an additional contingency for new construction should that end up at higher levels than current estimates.

The equalized assessed value for the County is expected to increase by 5% to $2,297,488,000 for the 2020 levy year which funds the FY 2021 budget. This will be the sixth consecutive year that the assessed value has increased following five consecutive years of declining assessed value. New construction EAV is projected to remain steady as well and is expected to account for 0.8% of the growth in the County’s assessed value at approximately $17.5 million. The value of the average home is expected to increase about 5% in tax year 2020. Looking back three years, the value of a $200,000 home in 2017 will have increased, on average, to more than $233,000 in tax year 2020.

At the end of 2019, the General Fund unassigned fund balance was $10.8 million or 40% of total expenditures. 2020 operating results will be greatly impacted by the effects of the COVID-19 pandemic in terms of significant revenue loss and expenditure increases. The net effect is expected to result in a decrease in fund balance of $1.5 million for 2020 leaving the General Fund with a remaining fund balance of $9.3 million as of December 31, 2020. With 2020 being presented as a balanced budget, that same level of fund balance is expected to carry over to December 31, 2021 and, with 2021 expenditures being budgeted at $29.7 million, that level of fund balance is equivalent to 31% of General Fund expenditures which is about $1.8 million in excess of the 25% target level.

The goal for the 2021 Budget was to present a balanced budget for the fifth consecutive year in spite of the COVID-19 pandemic impact to the local economy, allowing the County to maintain a strong fund balance to adequately meet cash flow needs and weather unexpected emergencies. With that as the ultimate goal and a 0% increase as a guideline, departments then submitted their overall requests for 2021 and, with their cooperation, the goal of a balanced budget was accomplished. It is represented by the originally submitted budget requests which are accepted as presented in the FY 2021 Budget Workbook that is distributed to the County Board (and available to the public) via the County’s website, along with the highlights and exceptions as noted in the following paragraphs and in attached schedules A to D. The overall Budget is $98,118,300 which includes $31,276,800 for the General Fund.

Mr. Stefan further reviewed each of the items within the FY 2021 Administrative Recommendation with the Committee. Lastly, County Board Members, Department Heads, and Outside Agencies are once again offered an “appeal process” to object to this Budget as submitted by the County Administrator and Finance Director. All appeals should be submitted by September 25, 2020 (September 23rd for Departments under the Law & Justice Committee) so that they made be heard by the appropriate County Board Standing Committee and, if successful at that level, will be considered by the Finance Committee at either its October 7, 2020 or November 4, 2020 meeting. The Budget is expected to be adopted by the County Board at its November 18, 2020 monthly meeting.

The full FY 2021 Budget Recommendation can be viewed by clicking the link below: https://dekalbcounty.org/wp-content/uploads/2020/09/fn-fy2021proposedbudget.pdf

Mr. Campbell moved to send a Resolution to the full County Board recommending planning the FY 2021 Budget on file for public inspection. Mr. Faivre seconded the motion. A roll call vote was taken. Those voting yea were Mr. Campbell, Mr. Faivre Mr. Frieders, Ms. Leifheit, Mr. Osland, Ms. Slabon, and Chairman Bagby. The motion carried unanimously.

COURTHOUSE BUILD-OUT PROJECT.CONTINUED

After review of the FY 2021 Administrative Budget Recommendation, the Committee decided that the build-out of the third floor Courthouse shell space (and other remodeling associated with that project) should be put on hold until at least some time in the first quarter of 2021. While the money is (currently) available in the Opportunity Fund to finance this project, the Committee felt with the uncertainty caused by COVID-19 on the County’s revenues and expenses, it would be wise to hold off on this project until they can be sure the funds are not needed just to keep our basic services afloat. The architect design work is completed, as well as documents are ready to go out to bid, so once the County Board does give the go-ahead on this project, it should move forward quickly.

DCEDC – BRANDING INITATIVE.CONTINUED

The Committee went back to the discussion regarding the DCEDC’s request for $765,000 in funding over a three-year period for the Implementation of the Branding Strategy and further requested that DeKalb County underwrite this entire cost using the County’s Opportunity Fund.

The Committee did not support funding the entire initiative alone. Mr. Campbell suggesting coming up with a funding mechanism that involved matching funds with a limit.

Mr. Faivre commented that he thinks the County should be involved in funding the initiative and that DeKalb and Sycamore are not small participants in this County and that they need to cough up their share of this if this initiative is going to benefit the whole County.

Mr. Faivre moved to forward a Resolution to the full County Board stating that the County provide partial funding, using the Opportunity Fund, for the DCEDC Branding Initiative by providing matching funds over a three-year period at the rate of contributing one dollar for every two dollars DCEDC raises for this branding initiative for up to a third of the plan’s budget, which would be a total County contribution limit of $85,000 per year or $255,000 in total. Mr. Osland seconded the motion.

Mr. Campbell moved to amend Mr. Faivre’s motion by changing the rate of contribution and for the County to contribute one dollar for every one-dollar DCEDC raises for this branding initiative for up to a half of the plan’s budget. Chairman Bagby seconded the motion. Those voting yea were Mr. Campbell. Those opposed were Mr. Faivre, Mr. Frieders, Ms. Leifheit, Mr. Osland, Ms. Slabon, and Chairman Bagby. The motion failed.

Chairman Bagby called for a roll call vote on Mr. Faivre’s main motion. Those voting yea were Mr. Campbell, Mr. Faivre, Mr. Frieders, Mr. Osland, Ms. Slabon, and Chairman Bagby. Ms. Leifheit was absent during roll call. The motion carried.

CLAIMS REVIEW

There were no questions in regards to the August County Claims.

ADJOURNMENT

Ms. Slabon moved to adjourn the meeting at 9:59 p.m. Mr. Osland seconded the motion. Those voting yea were Mr. Campbell, Mr. Faivre, Mr. Frieders, Ms. Leifheit, Mr. Osland, Ms. Slabon, and Chairman Bagby. Motion carried unanimously.

https://dekalbcounty.org/wp-content/uploads/2020/09/min20-finsep.pdf