FINANCE COMMITTEE MEETING AUGUST 19, 2014

Committee Chair Ms. Vaughn opened the meeting at approximately ­­­6:00 p.m. Members of the Committee in attendance were Ms. Vaughn, Ms. DePledge and Mr. Licht. Present from Council were Mr. Hoefle, Mr. Evers and Council President D’Ambrosio. Mrs. Quinn-Hopkins was absent and excused.

In attendance from the Administration were Mayor Morley, Finance Director Slocum, Law Director Klammer and CBO Menn.

Also in attendance were members of the public.  

RESOLUTION TO PROCEED: DEMOLITION OF UNSAFE STRUCTURES

Ms. Vaughn: I have been receiving calls from residents for quite a long time about one particular structure on Stevens. Blvd. To my best knowledge I never received information from the Building Department but I cut an article out of the paper that listed that particular structure was to be demolished on or after July 31st. Then I received the packet today listing all the houses to be demolished and it was not on there. I thought that now I look like a total fool because I told a lady that it was to be demolished. I called her back to apologize and advised I would check it out tonight. It was torn down yesterday so I really felt stupid. I appreciate receiving the list so I can at least be on top of it.

Mayor Morley: The first round was on Stevens Blvd. The ones you have now are the new ones.

Ms. Vaughn: Mr. Menn, would you like to discuss the list of houses and how the demolition will proceed?

Mr. Menn: The staff pretty much did all the leg work before me. They went around the City and investigated different properties that were deemed to be a nuisance or a hazard. This is a list you are looking at. The County Land Bank is partnering with us to demo these homes. We are here tonight to see if we can start the process and for Council to deem these a nuisance or a hazard.

Ms. Vaughn: We have draft legislation authorizing the City to proceed with demolition. Any comments from the Committee?

Mayor Morley: An injunction was placed on Beachpark – a property from the first round.

Mr. Menn: The first part was Beachpark, 351st Street, Stevens and Woodstock.

Mr. Klammer: The hiccup on Beachpark was that service on the bank went to the Bank of New York – Melon – we are trying to straighten it out.

Mayor Morley: We just received and injunction to not tear it down and Mr. Klammer, Mr. Menn and I met with the real estate agent and the lawyer representing the bank. We walked through and took pictures. The residents came out and said to tear it down. But, you know how it works with an injunction. We have to wait until we sit in front of a Judge.

Mr. Klammer: By the time the bank found out – they said last Thursday – and demolition was set for Tuesday - it did not provide a lot of time for the Judge to deliberate.

Mr. Licht: Is there any cost to the City with this?

Mr. Menn: It is all through the County Land Bank.

Mr. Slocum: We advanced some costs to the Land Bank and will be reimbursed.

Mr. Menn: It is called the County Land Bank but it is not through the County.

Mayor Morley: It is through the State and Attorney General’s office

Mr. D’Ambrosio: Did 351st Street come down today? I know it was scheduled.

Mr. Menn: No. I am hoping it will come down tomorrow.

There were no further questions or comments.

Upon review, the Committee agreed to move this matter forward to the next regular Council meeting.

 

Mr. Menn was excused from the meeting at this time.

 

TAX INCENTIVE GRANT: THE KILROY COMPANY DBA TRUST TECHNOLOGIES, INC.

Ms. Vaughn: Mr. Slocum?

Mr. Slocum: Trust Technologies is looking to relocate their operations from Mentor. Mr. Mark Plush, CFO is with us this evening. I will have him provide a brief overview of the company. He has a decision point he has to make in the next day or so and we will need to make the agreement consistent with his decision. The decision is consistent with the tax incentives we have to offer – he can either go with them guaranteeing a $2 million payroll for the next 10 years and receive a 6 year rebate – however if there is a year he does not make it we have the ability to go back and cancel it. We have not had to face that with others. Conversely we propose that he commit to a $1.5 million and instead of 6 years and consistent with our policy he would get it for 5 years. He informed me today that he currently has a payroll of $2.1 million. But he would get a rebate of 50% of whatever is actually paid in a given year. If it goes gang busters and he has $4 million in payroll he will be happy and we will be happy.

Mr. Plush: Trust was actually started in 1967. The current owner Bill Kilroy purchased the company in 1995. So the company has been around about 40 years. We manufacture some pretty precise parts for gas turbine engines and airplane jet engines. We do things with very difficult materials – high temperature in uses – with very difficult geometry. We are not your typical machine shop. There are not a lot of companies in the United States that can do the things we do. Today, our fiscal year ends in September and there will be little bit more than $16 million in annual sales. We have a facility today in Mentor and one in Greenville, South Carolina. Companywide we have about 70 employees – about 30 in Mentor and 40 in Greenville. We see a lot of exciting growth going in the aerospace industry especially with new jet engines for single aisle airplanes like 737’s. There are a couple programs called LEAP. We have actually done some work on parts for those programs. Gas turbine engines are growing really rapidly. Most of our customers are Fortune 500 customers. Our major customers are Woodward, GE, Parker, and Goodrich. The project we are looking at we are investing – between us and the landlord – a little less than $1 million of improvements to the building. The landlord is picking up a little over half million and we are picking up a little less than have million dollars of the specific improvements to the building. We are looking for some exciting growth in our business having gone through a rough patch with the sequester and cut back on military aircraft. I am glad to answer any questions and thank the Committee for entertaining our request.

Mr. D’Ambrosio: Mr. Slocum, this is actually a 10 year agreement but their incentive is for 6 years if they go with the $2 million and 5 years if they go with the $1.5 million. What if they go with the $1.5 million and are in the 7th year and don’t reach the $1.5 million and the incentive part is done?

Mr. Slocum: Theoretically we then have to make a decision between the Administration and Council as to what position we want to take with the company. We can request the entire amount back. It is an option.

Ms. Vaughn: We have never done it.

Mr. Slocum: We want to be friendly and if they would run into the situation like they had a 2008 I know I would make recommendations there. If you are dealing with a company that is looking elsewhere after 6 years – that may be someone you want to go after.

Mr. Plush: The lease we are negotiating and we are very close to signing is a 10 year lease with a 5 year option.

Mayor Morley: We had a company this year that fell short and we did negotiate with them. We did not take the money back but worked in the interest of both parties.

Ms. Vaughn: We are business friendly.

Mr. Plush: I provided some presentation that gives a brief summary of the company and shows some pictures of the parts we manufacture.

Mr. Slocum: The grant will go for the calendar years for five years starting January 1, 2015. For the sub period you are looking to start the relocation to here shortly.

Mr. Plush: Hopefully we can start moving in the end of October. That may be optimistic. We will start December 1st.

Mr. Slocum: We are going calendar years.

Mr. Licht: I know aerospace is a fast growing market. You mentioned the LEAP program that is a big program for the 737. I am excited to have a company like you coming to Eastlake and wish you the best of luck.

Mr. Plush: Thank you very much. We are excited. Essentially it will be a brand new facility for us. The inside will be totally renovated.

Mr. Licht: And the clientele are very stable. They are all big name companies. I am looking forward to it.

There were no further questions or comments.

Upon review, the Committee agreed to move this matter forward to the next regular Council meeting.

 

CONDITIONAL USE PERMIT: COMMUNITY BUS SERVICES, INC., 34929 CURTIS BLVD., EASTLAKE (Richard Thomas, Agent)

Ms. Vaughn recognized Jim Zambataro, General Manager, for the Cleveland operation.

Mr. Zambataro: We are a family owned business. Mr. Richard Thomas wanted to come tonight but he has been ill for the last two days and asked me to be here. This company was formed in 1931 by the present owner’s dad. It is a family orientated business. We do school busing and have contracts with Willowick, East Cleveland schools, some Cleveland schools. We are all over the Youngstown, Warren and Columbus areas. The brothers took it over in 1980 and we since we came into the Cleveland area two years ago we have been turning away business – which is really good. The present location where we are going in will have 65 employees the end of next week. We are a training facility also so we look to add 15-20 more employees. All of our people who are coming into the City are FBI fingerprinted and checked every year, VCI checked every year. They all wear uniforms like this so when they are walking around the City you will know who they are. That being said since we started this deal about a month ago or so Eastlake and the Dalad Group who we have been working with have been great. We will be putting $200,000 into the garage to build a state of the art garage. All the permits and all the right things will be done.

Mayor Morley: I spoke with Dalad Group last week. They will end up putting in over $1 million in improvements into the building. This is the old Gould building. With both parties moving in there the building is completely filled.

Mr. Zambataro: We signed a 5 year lease with options. So, we plan on being here a long time.

We are not asking for anything. If someone was to go out and get the training we give it would cost them $5,000 - $6,000. So, if you have people in the community who are looking to be part-time school bus drivers or charter service drivers send them on down because we will be more than happy to accommodate them.

Ms. DePledge: I am very excited that both companies are coming in. I think it is great for the City. Anything we can do to help you or make it easier let us know. We want you here.

Mr. Licht: You came highly recommended with some good referrals.

Mr. Zambataro: Check with the school boards or anyone we deal with – we strive for that. It is part of our business.

Ms. Vaughn: You went through all the proper procedures – the Planning Commission – and it all came back with excellent recommendations.

There were no further questions or comments.

Upon review, the Committee agreed to move this matter forward to the next regular Council meeting.

CONTRACT: EASTLAKE SENIOR CENTER LIGHTING UPGRADE: ZENITH SYSTEMS, LLC: $15,452.00

Ms. Vaughn: Mr. Slocum?

Mr. Slocum: Previously we had approved the purchase of the lights but not the installation. Originally when the lights were purchased it was Mr. Semik’s intention to have Mr. Rubertino do the installation. Now, Service Director Rubertino is doing something else these days and we need to have this done. We had three bids and are recommending the lowest of the three. This will be paid totally out of the Senior Fund. No General Fund money will be used for it.

Ms. Vaughn: I checked that out to make sure because we had not anticipated this expenditure but the money is in there.

Mr. Slocum: We had budgeted extra money in that fund for projects like this. It is our recommendation that you approve this.

There were no further questions or comments.

Upon review, the Committee agreed to move this matter forward to the next regular Council meeting.

 

CONTRACT: PUMPS/NORTH & SOUTH RIVERVIEW, FARRAGOT DRIVE, WEST ISLAND DRIVE: BUCKEYE PUMPS, INC.: $65,378

CONTRACT: TOWABLE GENERATOR W/TRAILER: GENERATOR CONNECTION: $18,350.70

Ms. Vaughn: Mr. Slocum?

Mr. Slocum: These items will be paid out of the Sewer Fund #501. As it relates to the pumps the stations already have the Flygt type pumps in them. We are looking for a replacement for them. There is only one dealer for Flygt pumps and it is the sole supplier. If we were going to try to get another pump you would have to retrofit everything and it would be cost prohibitive.

Ms. Vaughn: The reason we are doing this is?

Mr. Slocum: Maintenance. To ensure we can keep the pump stations working.

Ms. Vaughn: Will they improve or maintain what we currently have?

Mayor Morley: Maintain.

Ms. Vaughn: Instead of just maintaining is there any way we can improve with bigger pumps or generators?

Mr. Slocum: I think the pumps at the pump stations are correctly sized. I have not heard anything that they are not correctly sized. However, there is maintenance and we need to keep these pumps operational.

Mayor Morley: I think when we talk about the generator – that is where we may be looking down the line – we have talked about getting backup generators for the Galina area that will cost about $48,000 - $50,000. That was one of the items we asked for with the OPWC money and ended up getting the slab replacement for Willowick Drive which we needed desperately. Mr. Gwydir will get some more numbers for the generator that is not a towable one and will be permanent in that area.

Ms. Vaughn: The pumps and the generator run together. It is nice to see this Council has done its homework. I want to thank you all for getting your packets and reviewing them so we some proper questions and good information available - which is not always the case.

Mr. Licht: Does the WPCC have any input on something like this?

Mr. Slocum: No, this is our section that we maintain.

Mayor Morley: Our Wastewater Collection Operator Mr. Mastrocola met with City Engineer Gwydir to go over this.

Mr. Slocum: This is an Eastlake decision – not a WPCC one.

Mr. Evers: What about the rails? The pumps have to be raised and lowered.

Mr. Slocum: It includes the installation. I have not been apprised that there are any other costs associated with it.

Mr. Evers: It was just a curiosity on my part because I have been with Mr. Mastrocola and watched him raise and lower the pumps. Some of the rails are in bad shape.

Mr. Slocum: Buckeye Pumps will be doing the installation. That is their issue to resolve.

Mr. Evers: It will be our responsibility when the pump has to be pulled out and maintained.

Mr. Slocum: Once it is in – but it is their job to install and we will be getting new equipment in there.

Mayor Morley: The generator is towable in case of power outages.

Mr. Slocum: Several of the pump stations do not have automatic generators like the Quentin Road pump station. In the event of power outages our people have to go there every couple of hours and hook up the generator and then move to another station. This will give them the ability to do it.

Mr. Licht: The quotation does list the stainless steel guide rails.

There were no further questions or comments.

Upon review, the Committee agreed to move this matter forward to the next regular Council meeting.

 

MISCELLANEOUS

RE-APPROPRIATION

Ms. Vaughn: Mr. Slocum?

Mr. Slocum: There are two areas – in Civil Service – the testing and medical testing for the police officer we want to bring on board was not budgeted for. This is to put money in to allow us to pay for the testing we have already incurred. We will not be spending the money we had in Legal Administration this year. It will not have any effect on the General Fund – if you look it is zero. The CRIF fund for the stadium – we had $60,000 appropriated and are already looking at $65,000 in expenses this year and we may have others. As a safety net we are asking to have $40,000 more appropriated. We have the money available to re-appropriate. In this case the Certificate of Estimated Resources has in excess of $100,000 we could appropriate if we need to. Anything over $12,500 needs to come back to you. I do not anticipate we will need to come back for any further re-approriations in this fund this year.

There were no further questions or comments.

Upon review, the Committee agreed to move this matter forward to the next regular Council meeting.

CONTRACT: 2014 ASPHALT PAVEMENT REPAIR PROGRAM: Chagrin Valley Paving, Inc.: $272,951.00

Ms. Vaughn: We just received the bids for the asphalt and are going with the lowest and best. They are recommending Chagrin Valley Paving, Inc. with the base bid being $252,431.00 with an alternate bid of $20,520.00 for a total amount of $272,951.00. That seemed to be lower by $7,000.

Mayor Morley: The streets are listed in the back of the information.

Mr. D’Ambrosio: Is this a mill and fill or is it a complete tear out?

Mayor Morley: We approved Burton Scot to do all the milling the beginning of the year.

Mr. D’Ambrosio: This will be the asphalt and labor.

Ms. Vaughn: It is pavement repair.

Ms. DePledge: Have we used this company before?

Mayor Morley: I believe we have not but I spoke with our City Engineer who advised they have done good work. Burton Scot won the profiling. Mr. Gwydir said there are no issues with Chagrin Valley Paving.

Mr. D’Ambrosio: This is the first time we have gone out for bid for this. We usually went out for the profiling and the Service Department did the paving. I know it takes almost 3/4th of a Department to do this.

Mayor Morley: That is part of the reason we looked at contracting out the concrete work and this work. Since this was the first year we have gone out for bid we are a little behind bid wise. Next year we can identify roads the beginning of the year. One of our Road Foremen and Service Director Rubertino checked out the roads.

Mr. D’Ambrosio: This is good. It frees up our guys because it does take up half of the Department if not more.

Mayor Morley: It is probably the whole Department in our City.

There were no further questions or comments.

Upon review, the Committee agreed to move this matter forward to the next regular Council meeting.

BUDGET REVIEW

Ms. Vaughn: Mr. Slocum?

Mr. Slocum: When you take a look at the budget right now there are two areas that have my concern. The income tax – we are a bit behind right now year to date by about $180,000 short of our projection based on historical. If that does occur we have already tabled a project at the Police Department that will save about $40,000 and there will be additional monies from Legal. With the overall spending it traditionally comes in a little bit less – it will not come in more. Hopefully we will be able to deliver a positive end in the General Fund but it will be tight. There are no ifs, ands or buts with that. If it goes negative the last month or so we will have to make it up next year. The other area of concern is dealing with the hotel bed tax. We had budgeted $110,000 and my guess is we will probably be somewhere around $20,000.

Mr. Klammer: There is a lawsuit pending now. A receiver has been appointed. We have a cross claim against the defendant as well.

Mr. Slocum: The bottom line is I don’t think we are going to collect money this year. If this fund goes short than its shortness is going to be contributed to the Bond Redemption Fund and if there is a shortage there guess where it comes from - the General Fund. We have had conversations with the Commissioners about possibly getting them to make good on their initial grant they gave the City. They cut it back the last couple of years at a cost to us of about $110,000 - $115,000. I think there is a possibility we may end up getting that money this year and if that happens we should cover this shortage plus have a little additional to be able to move money into the bond redemptions and less will come from the General Fund. It is still part of a shell game. I do not know for example what type of dollar amount I am going to get from the Estate Tax. We budgeted $5,000 the beginning of the year and have collected $10,000 or $11,000 and we have not had a second half settlement. We will not have the big paydays we had in the past because anyone who died as of 1/1/2013 and forward is no longer subject to the Estate Tax. But if the estates have not settled previously we are still entitled to that money. I do anticipate we will get some money. How much? It will be something. I would be lying to you if I told you I was not holding my breath with this.

Ms. Vaughn: We all are. You are doing a good job.

Mr. Slocum: The credit goes to not just me but the various managers in the City because they are looking to ensure any dollars we are actually spending are absolutely necessary. I have the easy job – I add and subtract numbers. They have to manage functions and try to provide quality services with limited and reduced funds. My hat is truly off to them.

Ms. Vaughn: It is nice to hear everyone is working together. It is very refreshing.

Mr. Licht: I read somewhere that the State had approved additional workers comp. Is there a possibility we could get something?

Mr. Slocum: I think there is a possibility we will get some additional money in there also. It only makes sense it will come in this year.

Mayor Morley: We got an email this week that there is supposed to be some money.

Mr. Slocum: I do not have any actual amounts.

There were no further questions of Mr. Slocum.

BALLOT ISSUE: PROPOSED 0.5% CITY INCOME TAX INCREASE

Ms. Vaughn: Has anyone had any feedback of the proposed increase in the City income tax?

Ms. DePledge: Nothing.

Mayor Morley: Not a large amount of feedback. Some are not happy. People that are providing positive comments do not want to raise taxes and voted no on all previous items but have advised they will vote yes on this one because they actually see we are trying to do something where in the past they did not. But, that is a handful. The silent majority in this City are the ones that scare me. We usually have the ones who are very boisterous and the ones who say nothing and just go vote. There is no feel out there that I am feeling warm and fuzzy about.

Mr. Licht: I had a lengthy article and received no calls.

Ms. Vaughn: I have talked to people in the neighborhood and people I know the biggest complaint I get is why everyone passes the School Board’s levies and not the City’s. That is a big issue in the City – which the School Board is taking all the money and leaving the City without any. Everyone knows how many issues are on the ballot.

Mr. Slocum: I want to make sure we are all on the same page with one item because I have heard this from several people – that we projected $800,000 earlier – why are we going for $1.5 million? The fact of the matter is we projected $800,000 which did not include anything for heath care for which I anticipate to see something – hopefully manageable. There is a lot of deferred maintenance that is not occurring in this City.

Ms. Vaughn: Yes, it has been going on for a long time.

Mr. Slocum: We have gone out for bid twice with the Police Department and don’t have the money to fix it.

Ms. Vaughn: Isn’t the Fire Department roof coming before us?

Mr. Slocum: That will be coming in under the Fire Levy. There are other items – we have cut down on police cruisers and purchased one this year.

Mayor Morley: Our roof needs repair, the salt bin will happen – we are waiting on the bids to come back.

Mr. Slocum: The $800,000 is a stop gap measure. It is not an operational. This deferred maintenance has to occur or that Police building will fall apart – actually fall apart.

Mr. Morley: I have responded to residents that we need breathing room and do not want to keep going back to them. Tonight was refreshing. We have payrolls of $2 million and $2.5 million. There may be others. There is the Community Bus Services. But in the end we need to get moving.

Mr. Klammer: It can work both ways. Some residents will say we are getting more tax money. Sometimes they just don’t understand.

Mr. Evers: Mr. Slocum, did you say you need $40 million in payroll to make up $800,000 in payroll taxes?

Mr. Slocum: That is about right.

Mayor Morley: We are working on it – we all are. I have no issue with what we are doing.

Ms. Vaughn: At some point in time we have to get together to decide a plan of action – to do things individually or as a group to make sure the word gets out. Our Gazette articles are fine but there has to be another way to reach residents.

Mayor Morley: We are going to have meetings here in October.

Mr. Hoefle: I have been getting good feedback from the people I have been talking to. They see we are making changes and are trying and they see we need help.

Mr. Slocum: The income tax thing is a totally fluid number. We have had a long term agreement with a company that has been repaying a past due deficiency. The good news is in January it will be paid in full. That is good that we have been making collections but we collected about $70,000 of the past due monies that will not be included in our numbers for next year.

Mr. Licht: Reciprocity – if for some reason that ended up happeng will that affect everyone who works in Eastlake or only Eastlake residents?

Mr. Slocum: It only affects Eastlake residents who do not work in Eastlake.

There were no further questions or comments.

 

REGOGNITION OF PUBLIC

There was no one who wished to speak.

The meeting was adjourned at 6:47 p.m.

dac

 

                                                                        APPROVED: ___________________________

                                                                                                                                                                                                                        DATE: ________________________________

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