Update: The Budget and The Pool Construction Bond

The 2010 City Budget
The Legislative & Finance Committee (L&F) held its final budget hearing on Feb. 28th, in advance of the March 2nd Committee of the Whole (COW) meeting.

Councilman Leo Lombardo, a self-proclaimed fiscal conservative who is smart and also possesses a great deal of common sense, declared that it was a “pretty lean budget” and that there was “not much else you can honestly cut” from it.

As far as I was concerned, that was a top notch endorsement from the head of L&F.

The budget assumes that city salaries will be frozen in 2010—a concept that is disconcerting to many but is actually a much less drastic approach than that taken by other cities in the area. Pepper Pike, for example, is laying off workers, cutting remaining workers’ salaries by 10 % and also requiring those workers to take an additional 15 % pay cut through the use of mandatory, unpaid furlough days. The pay freeze is not a sure thing at this point; labor negotiations are continuing in the city.

Based on the no-raise assumption, the 2010 budget has a $150,000 surplus (projected revenue over projected spending). In a city the size of ours, that’s not much of a cushion. But as I’ve said before, at least it’s something.

Here are a few details from the L&F meeting:

1. Lombardo and Councilwoman Cathy Murphy showed that you can’t get much by them. They both noticed that Finance Director Tony Ianiro had shortchanged the city’s permanent improvement fund by $ 50,000.
2. L&F made clear that putting money in the budget and spending it are two different things. Murphy repeatedly talked about waiting to see how much revenue the city actually takes in before “pulling the trigger” on some spending.
3. $ 50,000 was included in the permanent improvement budget for dealing with the old church building. That topic is up for discussion again at this week’s COW meeting.
4. The L&F members (Lombardo, Murphy and Councilwoman Lisa Stickan) did what they could to help out the Parks & Recreation Commission (P&R) with regard to their deficit-spending budget (the second in two years). L&F suggested that $ 26,000 that P&R has decided it wants to spend on 2 “Funbrella” pool shades ( $ 11,000) and for either a tennis court shade area or baseball fencing ($ 15,000) could be taken from the park improvement fund rather than from P&R’s operating fund. That reduced P&R’s projected deficit spending from over $ 46,000 to $20,338. Of course, that also significantly reduces the amount of money left in the park improvement fund, and P&R's emergency reserve fund will also continue to shrink.

The budget will be discussed at the COW meeting. It is scheduled to be adopted on March 23rd.
More Details About the Bond for Constructing the City’s New Swimming Pool

When he met with L&F earlier in the week, Recreation Director Dave Ianiro indicated that P&R wants council to rescind the ordinance that requires P&R to contribute $ 50,000 a year to reduce the bond debt that the city took on in 1997 for constructing the new pool and pool house.

That subject was a topic for discussion at the Feb. 28th L&F meeting. Here are some additional facts about that bond and the pool construction:

• Council placed an issue on the ballot in the mid 1990’s asking voters to approve spending money to replace the city’s swimming pool. The voters said no---twice.
• The 1997 Council (Mayor Scott Coleman and Councilman Ed Hargate were members), came up with a plan to bypass the voters and to get the pool constructed anyway. Council planned to obtain bonds to pay for a number of city projects. It agreed to include constructing a new pool and pool house as a bond-funded project in exchange for P&R’s agreement to use $ 50,000 from its budget (P&R gets 1 mil of property taxes each year for its exclusive use) to help pay down the bond debt.
• Council passed an ordinance in 1998 memorializing that agreement. It requires P&R to pay $ 50,000 a year for 18 years. P&R has six payments left under the ordinance.
• A 27 year bond was used to get money to pay for the pool construction. P&R's payment obligation ends after 18 years. At that time, P&R will have paid $ 900,000 of the original $ 3,140,000 bond debt (not including interest).
• When asked whether P&R would end up paying the full cost of the new pool and pool house, Mayor Coleman answered with an emphatic “No.” The arrangement always anticipated that taxpayers would pay for part of the construction cost--even though they had voted the pool construction issue down.
• If council rescinds the pool funding ordinance (it has yet to discuss the issue), taxpayers would end up picking up the tab for the last $ 300,000 that P&R owes to the city and P&R would end up with a $ 300,000 windfall.

Don’t get me wrong. While I have reservations about how it was achieved (going behind voters’ backs is never a good idea in my book) I’m very happy that the city has the new pool. Both the old pool and old pool house were undersized and obsolete. They needed to be replaced.

Having chartered a course to achieve that goal without voter approval, however, it is very troubling that P&R now wants to reneg on its part of the bargain--especially when its reason for doing so is so that it can continue on a path of oblivious, unbridled spending.

We are in a severe economic recession. The city is projected to experience a significant decrease in revenue this year. City workers are being asked to accept pay freezes. Yet P&R, not content with its $ 630,000 in revenue, is actively angling to get even more money to spend--at taxpayer expense.

I guess that shouldn't be a surprise. As Dave Ianiro indicated at the last L&F meeting (and as P&R's 2010 deficit-spending budget makes clear), P&R has no intention of changing what it's been doing. Its big problem--as P&R sees it--is that its revenue isn't keeping up with its spending. It thinks it can fix that problem, at least in the short term, by having council rescind the pool bond ordinance.

P&R has shown that it doesn't really care about finances--its own, the city's or taxpayers'. But they are not entirely to blame. Mayor Coleman keeps reappointing the same individuals to P&R---giving his unbridled support and stamp of approval to their free-spending ways.
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Feb. 23rd Budget Meeting. What A Difference A Year Makes---Or Not

Feb. 23rd council meeting. MIA: Mayor Coleman (#2 in 2010)

A Year Makes A Big Difference
Recreation Director Dave Ianiro presented quite a different appearance at the Feb. 23rd Legislative & Finance Committee (L&F) meeting than he did a year ago.

A year ago, it took several attempts to get Dave Ianiro to show up at the meeting to discuss the Park & Rec budget, and when he finally appeared, he brought a great deal of “attitude” with him. The discussion proceeded with difficulty because Ianiro seemed unfamiliar with the details of his budget. In fact, Finance Director Tony Ianiro, his brother, had to answer many of the questions posed by L&F.

It was quite a different story when Dave Ianiro met with L&F this week. He came prepared to discuss and explain the Park & Rec budget, and did so in a suitably calm and respectful manner. The discussion was quite congenial and productive. It went quite smoothly.

A Year Makes No Difference

It seems pretty clear that Dave Ianiro has paid attention to the criticism leveled at the Parks & Recreation Commission (P&R) over the past few months and is making a concerted effort to address those concerns.

I have yet to see any signs that P&R has reacted in a similar fashion.

While P&R did recommend fee increases for summer programs this year (the first fee increase in six years), it did so reluctantly, bowing to reality only after it learned that Highland Heights ordinances require council to approve city recreation fees.

Dave Ianiro repeatedly emphasized, when talking about the 2010 P&R budget, that P&R “wants to maintain its programs the way they are;” and that it “wants to progress” further with spending on park. Indeed, nothing had changed--P&R submitted a deficit-spending budget similar to its 2009 budget.

Basically P&R seems to saying: “If you don’t want us to deficit spend, then give us more money to cover our deficit-spending.”

Cut back? Retool? Do something different? Those strategies clearly still aren’t a part of P&R’s playbook.

P&R’s latest financial plan apparently includes trying to reneg on its obligation to help pay off the bond used to finance the construction of the new swimming pool in 1997. The backstory is this: Apparently P&R was very anxious to get a new pool, but the city didn’t have the money to pay for it. So P&R cut a deal with council (Scott Coleman and Ed Hargate were members of that council): If the city obtained the financing, P&R would contribute $ 50,000 a year for 20 years (out of the 1 mil in property taxes that it receives each year) to retire the bond debt. The amount that P&R contributes is only a portion of the total bond debt; city taxpayers pick up the rest. Dave Ianiro told L&F that P&R wants council to rescind the ordinance memorializing the arrangement. P&R's rationale is twofold: 1) its revenue has decreased due to the elimination of the personal inventory tax (the city lost that extra tax money too);  and 2) “there’s more money in the (city’s) general fund that in ours (the P&R fund)”.

In other words, P&R's position is: “The city has more money than we do, and we want some of it.”

Here are some P&R budget facts to consider:

• In 2009, P&R received over $ 645,000 in revenue (mostly from its 1 mil in property taxes) and spent over $ 733,000. This year, P&R is again planning to spend more than the $ 630,000 in revenue it is projected to receive--- further depleting their shrinking emergency reserve fund..
• The city and P&R are in the same boat with regard to decreasing tax revenues—the difference is that the city has to stretch its shrinking revenue to service the needs of an entire city, whereas P&R spends all of its money on just two things: the park and recreation programs. Even though it is the only group in the city with its own income source, P&R seems to believe that is being shortchanged because its revenues are not keeping up with its spending.
• One service department employee is assigned to work in the park fulltime during the summer to cut grass and help maintain the park’s physical environment. A couple of years ago P&R decided to hire students as additional groundskeepers and maintenance workers. According to Tony Ianiro, P&R spent $ 40,000 in 2009 for 8 fulltime seasonal maintenance workers in the park (wage: $ 11 an hour). The 2010 budget again includes $ 40,000 to pay for 8 fulltime seasonal workers to work along with the service department employee cutting grass, cleaning the bathrooms, and emptying garbage cans in the park.
• The 2010 P&R budget includes $10,000 for pool repairs. P&R has known about a worsening pool leak for several years, but despite all of its deficit spending on other items, P&R did not allocate the resources necessary to fix the problem. Nor did P&R bring the situation to council’s attention (it came to light only after an eagle-eyed council member noticed a vague reference to a pool leak in P&R minutes last fall). This year the P&R budget does include some repair money, but as Dave Ianiro acknowledged, the budgeted amount likely won’t be enough to fix the pool. (“If I had to bet, $10,000 will not be enough.”) P&R has no current plan in place for fixing the pool or for paying for any excess repair cost. One strategy they have suggested is to get through another swim season by capturing the leaking water and recycling it back into the pool through the pool filter system.
• Dave Ianiro told L&F that next year P&R hopes to replace the dirt on the park’s ballfields with expensive, specialized dirt (because apparently regular dirt is, well, too dirty).

Despite all of their outrage at being publicly criticized for their deficit spending last year, P&R clearly has no interest in changing its ways. It continues to be almost defiantly out of touch with current financial realities (it’s called a severe economic recession folks), P&R also seems to have lost perspective about its mission---which is simply to offer safe and fun summer activities for kids and to create a park that residents of all ages can enjoy. For example, while P&R is keen to spend lots of money on things like fancy new pavilions, special infield dirt and Progressive Field-type baseball lighting, it has yet to install a biking trail or walking path in the park.

Why not? I'm not a betting person, but if I was I bet P&R would tell you it’s because, with $ 600,000+ a year in revenue, they simply don’t have enough money to work with.
L&F is hoping to finalize the budget this weekend and discuss it at the March 2nd Committee of the Whole meeting.
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A Very Troubling Evening—Part Three

There were several discussions that left me troubled as I left the Feb. 16th Committee of the Whole Meeting.


Troubling Discussion # 3—The Old Church Building Near City Hall
Council returned to the topic of the old church building in anticipation of L&F’s upcoming discussion of the city’s 2010 capital improvements budget. The conversation about what to do with the building has been going on for a year now. It was nice to hear the newly elected council members weigh in on the topic for the first time.

Some background. The city bought the church property in 2007 after the head of Bass Energy told Mayor Coleman that the property was needed in order to put a gas well on the city hall property (that plan was later abandoned). The building has a leaking roof and is mold-ridden, unsafe, and uninhabitable. Mayor Coleman has repeatedly acknowledged, the city did not have any intended use for the building when the property was purchased. And, as several council members have put it: “We bought the property for the land, not the building.”

What was troubling about the discussion on Feb. 16th was the continuing, obdurate refusal by Councilman Frank Legan and Councilman Ed Hargate to embrace reality regarding the building--and that Mayor Coleman supported them, despite having stated last April that the building was “becoming an eyesore” and that he leaned “toward taking the building down.”

Councilman Hargate returned to his theme from a year ago, which basically came down to his preferring to allow the decrepit, unsafe building to continue standing rather than take it down and create what he called a “lawn”. Hargate dismissed suggestions that the property, by itself, had intrinsic value for the city and that the community might benefit from having green space in front of city hall, next to the new Highland Road pedestrian pathway.

Legan, too, returned to old territory. A year ago he began beating the drum about “exploring all options” before making a decision to tear the building down. It’s been a year now and Legan has yet to come up with a realistic, concrete plan for using the building or, more importantly, for funding its renovation and continued operation. At the Feb. 16th meeting, he finally conceded that the city couldn’t afford to restore the building (at an estimated $ 773,000 cost, not including interior renovations), but instead of embracing that financial reality, Legan engaged in pie-in-the sky speculation, arguing that the building should be allowed to stand because grant money might be available---from somewhere--for renovating it.

All I can say is that when he finds that illusive money tree, Legan should let the Park & Recreation Committee know about it; they surely could use some extra dough too.

A 2008 structural engineer’s report, which the city commissioned, lays out in blunt detail the substandard and decrepit condition of the building--- and the huge amount of money that it would take to merely bring the building up to code. (My October 2, 2009 blog contains a detailed discussion of that report.)

Significantly, although Legan was given permission during a September 1, 2009 Committee of the Whole meeting to use the city’s website to solicit suggestions from residents regarding possible uses for the old church building, only pictures of the building---and not the structural engineer’s report---were posted online. It was utterly misleading (and very disappointing) that Legan withheld that very relevant structural and financial information from residents.

Meanwhile, Legan and Hargate's stall and delay tactics mean that the unsafe, uninhabitable and mold-ridden building has spent another year deteriorating even further (it was sitting unheated, with a leaking roof, even before the city bought it in 2007).

As Councilwoman Lisa Stickan pointed out: “If this was a privately owned building, it would’ve been condemned and torn down a long time ago. The only reason it has not is because we (the city) owns it.”

This discussion has dragged on long enough. Enough with all the hand-ringing, the wearing of rose colored glasses and the speculating about money falling from the sky. It’s time for council to do what it was elected to do---make a decision and move on.
To read past discussions on the building:
http://www.highlandhts.com/docs/city_council/committee%20minutes/2009/04-21-09_council_committee_minutes.htm
http://www.highlandhts.com/docs/city_council/committee%20minutes/2009/04-21-09_council_committee_minutes.htm
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