Friday, June 12, 2015
11 June 2015 Dearborn County Council Meeting Notes
11 June 2015 Dearborn County Council Meeting Notes
Present: Randy Lyness, President, Dennis Kraus. Sr., Liz Morris, Charlie Keyes, Ryan Brandt, and Bill Ullrich.
ABSENT: Dan Lansing- on vacation
Also present: Gayle Pennington, Auditor and Teresa Randall, County Administrator, and Kevin Lynch, Commissioner.
This meeting was advertised to have NO decisions be made.
Lyness opened the meeting saying that Commissioners voted to build the $11.2 million annex. We need to find out if we can afford it. He invited Jason Semler from Umbaugh and Associates to the podium to speak to this. Jason is a partner with Umbaugh and they had worked n the jail. With him was Paige Sansone who was a 12 years with Umbaugh.
He said in talking with Randy over the phone he drew up a 15 or 20 year bond issue and what it would be. If bonding whole project. Bond counsel would be $150,000, and 1% of bonds as fee. He also had $12.6 million, which would have to be bonded to cover all of eh $11.2 million price tag. Have to pay $1.2 million for the next 10 years. 20 year bonds for 3.7% were sold by him recently.
Option 2 with using $4 million cash and bond $7.2 Million. $780,000/year payments.
Using a 20 year option reduces the annual payment. These have property tax backing to guarantee the bonds. These secure the bonds. Otherwise the interest rates go up 1/2 to 1 %. Since the property tax is just a back up you don’t have to worry about referendum because you have no intention of using it. [NOTE: But what if you do have to exercise the property tax levy?]
The next question is what revenues do you, the county, have to pay it off?
[NOTE: Now we get the sales pitch- they want us to hire them for a comprehensive financial plan.]
Jason- Maybe look at a comprehensive financial plan because of the circuit breaker law. This limits the tax rate. Businesses ( under circuit breaker law) will pay no more than 3% increase., Ag 2% and residents1%.
Gayle Pennington said we have a lot of people hitting the caps here already with the circuit breaker. This means the increases are stopped by the 1,2, or 3% cap. The circuit breaker losses are increasing.
Ullrich said you don’t want to mess with tax rate.- Impact has been worst on Ag farmers.
Jason said looking at your funds you see a trend in tax losses.
Lyness- If we are not making tax money- what to take this out of?
Jason- Riverboat Revenues or levy a new tax. That way the security of property tax in the above scenario with the bond issue would essentially become a new tax then.
Lyness asked for $100,000 assessed valuation what would the tax cost be?
NO Answer but… another sales pitch come in from Umbaugh:
Jason- You’d want the comprehensive financial plan to help decide this first. (making the case for more work for his company)
Liz Morris asked what the cost would be to do the comp financial plan.
Jason said that is Paige’s area. He also brought one plan form Scott County as an example. They had a shortfall. Like we do here.
Paige said that part of the service we provide to see how to make up that shortfall. They are doing a plan for Lawrenceburg now. She said we would benefit additionally because of this project. They would work scenarios to see how they could fund it. [NOTE: Scenarios are just possibilities based on certain “educated” assumptions. In Master Plans we have seen these needs for land use types be based on population estimates for the county. Even using conservative trends out of IU Kelley’s research our population increases were way too high. This is because of the unintended consequences of some of our policies and decisions. Example- the Riverboat coming in. Boatloads of money and then the obvious unintended consequences of the vice and crime that cultivating a climate of gambling as recreation and tax revenue created. Couple that with the perception that moving to the country was no longer the safe idyllic life that Ohioans had imagined for their kids.]
Jason said the do many budgets. Sometimes they show how circuit breaker losses could be aided by different funds. It looks on a more long term basis than just budgeting.
Bonds are callable so you can refinance them at a lower rate if that happens. The often update their reports for communities every couple years. It takes 6-8 weeks to do a plan. Cost depends on how much you want us to do. Probably looking at $35,000 probably. Some communities only use the top 10 operating funds. You could incorporate this as part of the financing for the project. [NOTE: Now we use the project funds to pay for the plan to finance the project- but we haven’t appropriated money for the project yet. And Lyness has an ethical issue here.]
Lyness disagreed with Jason- you should just use our cash for this- not part of the project. [NOTE: Well he got that right.]
Ullrich said Umbaugh has an excellent reputation.
Liz asked if there were other options. Loan from a bank would require legal documents and public approval. Usually it is bonds. Could send out proposals to Edward Jones. It is bonds. Because you are a government- it is bonds- not a bank.( get it? it is bonds not bank loans!) Debt limit is $14million for us.
Kraus asked if it could be backed up by COIT instead of property taxes. CEDIT could be added they said as well as raise COITs. Jason said property taxes are more secure than COIT. Could use Public safety LOIT and not adopt the other LOITs. ( LOIT is local option income tax)
You only levy the tax if the bonds are not being paid. [NOTE: In all these scenarios, the security for this is the taxpayers- they will pay if the county can’t get the bonds paid off. That means more taxes.]
Don’t close on the bonds until you need the money. They don’t close on bonds until they already to move dirt.
Have to have bonds and cash ready for when they start.
Kraus asked why we don’t have the final on the jail payments yet to close that out. Randall said most are out. She said she can shoot those balances out to you soon. Gayle said only a couple vendors are left. They think it’s only $30,000 left to pay on jail. There is about $9 million in the savings account- some of it is spoken for with other projects.
They think the report may not save money but it would help you make better informed decisions.[NOTE:The report will not save us money- it will tell us how to bond the money and what we can afford to pay back- barring any unknown county catastrophes. why can’t our accountant tell us this?]
Liz Morris said Lyness with a couple others should meet with Umbaugh to determine the scope and Lyness said don’t look at me! Morris said- well you’re sitting in the big chair… [NOTE: Lyness should be very careful here…]
Kraus thinks $30,000 for this and Frank Cummings costs us about $8,000 for our budget.
Paige said that she could tell them the minimum that would benefit you. And then we could throw in some others if you decide to. MORE SALES PITCH.
Lyness said we are at COIT .006 ever since we adopted it 25 plus years ago. (does he want to increase it?)
Kraus said we do have the cash on hand and it makes about 1.5% interest and then pay almost 4% in interest on the bonds. Why wouldn’t we use our savings?
Morris thought about using a mix of this.
Pennington said they can digest this and then tell her if they need another meeting.
Morris wanted a committee to meet to decide the scope of this.
Lyness wants to “get rolling,” and do what’s right.
It might involve us getting in the car and coming to Indy and meet across the table.[NOTE: Wait- we are taking a committee meeting that should be open to the public on a road trip to Indy? Transparency??]
Pennington wants Leah, the comptroller, involved. They will get total of 3 council on the committee. ( this avoids quorum) It takes 2 weeks to announce an expenditure meeting to have a decision.
Pennington will get this info to Lansing who is on vacation now.
Kevin Lynch asked to speak- was glad to hear economic development mentioned. Hopes they use those resources to increase income to the county. (that is too long a shot for payback to help this) Commissioners are behind this and thinks it is long overdue to get a grasp of where we are and look at a plan for our future. Professional excellence and working on our shared vision for the future… [NOTE: More sales pitch for a “professional” study by Umbaugh. And of course there will be no competition for this business.]
Meeting adjourned at 7:45 PM
Christine Brauer Mueller