City treasurer reviews finances with eye on future         

Fifth Street project discussed

[MAY 16, 2006]  City Treasurer Les Plotner led Lincoln City Council members through a review of current city finances, obligations and what lies before them.

Plotner said that the city entered the new fiscal year on May 1 with $154,507 in the general fund. That's not much money, he said. There was $370,000 left at the end of last year.

As of today there is $20,852 in the general fund balance. That includes payroll and bills for the month. That's not much of a balance, Plotner said. On the upside, he said that sales tax and income tax will be coming in yet.

However, large bills could come in before that happens, like the $414,000 check that was just taken to the bank. Of that, $300,000 was to the Sysco project; those funds were transferred from the contingency fund to the general fund. If other big bills come in, the city could possibly come up short and may have to transfer funds to cover them.

He is concerned over a delay of promised funds from the state for the Sysco/Commerce Park development. In total, $1,696,933 is expected to help with infrastructure costs. It was originally said that it would take six to eight weeks, and it is now nine weeks.

"We've not received one dime from the state of Illinois. Hopefully they don't forget that money," Plotner said.

Not counting land purchases, the city laid out $1,287,592 in 2005-2006, Plotner said.

Plotner then led the council in a summary review of what the city has committed to.

Goody's/Dollar Tree development

• $515,000, paid at $65,000 per year over the next eight years

• This gets paid from sales tax. Sales tax increased by only $65,000, so it's not like it's been a big boost, Plotner said. Staying even is better than losing, but it's not been a huge sales tax increase.

General obligation bond

• $176,000

• Paid by levy; the last payment will be this December.

Wal-Mart

• $255,685 in debt certificates for infrastructure and development; paid at $33,000 per year for 10 years.

Plotner also reviewed the projected sales tax and property tax agreements with Sysco and Wal-Mart.

Sysco sales tax

Years one to five: Up to $50,000 city gets to keep. $50,000 up to $130,000 rebated to Sysco for infrastructure costs. Over $130,000 the city gets.

Years six through 20: Up to $90,000 city gets to keep. $80,000 up to $180,000 rebated to Sysco for infrastructure costs. Over $130,000 the city gets.

Wal-Mart sales tax

The city will continue to receive the same amount of sales tax that Wal-Mart has averaged over the last four years: $325,000 per year. Any increases in sales tax over that amount, up to $585,000, will be used reimburse Wal-Mart for the infrastructure that they have laid on behalf of the city.

For example if Wal-Mart had $470,000 in sales tax, the city would keep $325,000 and the remaining $145,000 would be turned back to Wal-Mart.

The city could sell the 26-plus acres of commercial property that Wal-Mart has agreed to give the city to pay that down.

Enterprise zone

• Sysco: Under the enterprise zone, property owners receive 100 percent property tax abatement the first five years and 50 percent abatement the second five years.

• Wal-Mart: The same property tax relief as Sysco.

Plotner said that he did this review to prepare for the Fifth Street project. Then he said that it was just good timing that Kevin Hyde walked in the door and he was able to ask him about financing options. He and Melanie Riggs worked in gathering figures to go with the information they got from Hyde.

Hyde suggested that alternate revenue bonds could be used, but you must have a source of funding to pay them off. Such as 50 percent of the annual motor fuel tax could be designated.

However, in checking with Tracy Jackson, the streets superintendent, it was agreed that the city needs most of that to maintain streets. Nor would the state likely approve use of motor fuel tax funds on a $4 million project. The bonds would need some other revenue stream.

The alternate revenue bonds would be subject to a backdoor referendum. However, the city could also put them to the voters to approve.

"I agree that Fifth Street is vital," Plotner said. He then said to the council, "As you consider the possibilities for Fifth Street, you also need to consider that you don't bankrupt the city in the process.

Aldermen voted unanimously to accept the revised intergovernmental agreement with both Logan County and West Lincoln Township for the Fifth Street project. Likewise, they unanimously accepted the engineering agreement with Hanson Professional Services.

The county did not bring forth the agreement to discuss as anticipated at last Thursday evening's work session. Some board members are concerned about the financial commitment of the city.

It is a clause that city attorney Bill Bates advised the committee to add that seems to be at issue. In the agreement it was added that the city would agree to enter work contracts if and when the city has the money available to proceed. Without this clause the city would be required to enter a contract whether or not they had the money, Bates said.

This is intended to protect the city from obligation to any contracts. It is to keep the work from going foward if there is no revenue is available, Bates said. You don't want to be boxed into a contract if you don't have the money, he said.

The city also added wording saying that they would diligently pursue funding to show their commitment. Finance chairman Verl Prather said that the city has entered this with good faith and he hopes the county can see that.

Terry Werth attended the city meeting last evening, saying that he was there representing himself and not the county board.

Council members asked if he would bring the agreement forward for a vote at tonight's meeting and he agreed.

The agreement with Hanson's is to perform a study of the Fifth Street project. They have been working with the county on the project in the past years and have the base information. Lisa Krammer from Hanson's previously said that it will need updating.

The agreement would enable the study to be done. A total of $772,000 in federal funding, divided between the city and the county, is available to do the study, and any remainder would roll over toward the estimated $5 million project costs.

Alderman Buzz Busby said he hopes the county will pass the agreement so the study can get done, and then the city can go out and look for funding. You can't get federal money without the study. "You have to have that study," he said.

It would take Hanson's six to eight months, and if started now, it would be available for the city to take on their D.C. trip. It would be the project they would present when they go there next January, Busby said.

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