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FINANCE / CLAIMS
COMMITTEE ACTIONS
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MARCH 11, 2004
ATTENDANCE: Bruce Kimmel, Chairman; Ken Baker; Doug Sutton; Carvin Hilliard; Douglas Hempstead; Michael Coffey (arrived at 8:12 p.m.)
STAFF: Tom Hamilton, Finance Director; Fred Gilden, Comptroller; Alan Lo, Project Manager; Lisa Biagiarelli, Tax Collector; Ken Whitman, Tax Assessor
Chairman Kimmel called the meeting to order at 8:02 p.m.
The following correction was made: on page 4, first paragraph under “Overview of Various Tax Relief Measures,” last line -- change $1,000 to $600.
** MR. SUTTON MOVED TO APPROVE THE MINUTES OF JANUARY 8, 2004 AS CORRECTED.
** MOTION PASSED UNANIMOUSLY.
January 22, 2004
CHAIRMAN KIMMEL MOVED TO APPROVE THE MINUTES OF JANUARY 22, 2004 AS SUBMITTED.
MOTION PASSED UNANIMOUSLY.
February 12, 2004
The following corrections were made: on page 4, fourth paragraph, third sentence – amend to read “Mr. Hilliard said that landlords pass an increase in property taxes on to the tenant.” On page 4, last paragraph, first sentence – change 3 years to 4 years; delete entire second sentence. Add a sentence that reads “Mr. Hempstead said that he was in favor of a two-year phase in plan.”
CHAIRMAN KIMMEL MOVED TO APPROVE THE MINUTES OF FEBRUARY 12, 2004 AS CORRECTED.
MOTION PASSED UNANIMOUSLY.
Mr. Hamilton said that Mr. Armand Madeo, who formerly acted as director of the City’s data processing department, notified the ITT Committee that the City’s existing backup and/or recovery system was inadequate, obsolete and needed to be replaced. An RFP was prepared soliciting responses from anyone interested in providing this service to Norwalk. Mr. Hamilton said that 22 firms responded, four were short-listed and interviewed extensively. Hi-Link Computer Corp was chosen. Chairman Kimmel said that he was pleased that the process was solved quickly. Mr. Hamilton said that Hi-Link Computer would start providing service a week after the contract was awarded to them.
CHAIRMAN KIMMEL MOVED TO AUTHORIZE THE MAYOR TO ISSUE A CONTRACT TO HI-LINK COMPUTER CORPORATION FOR A BACKUP AND RECOVERY SOLUTION FOR THE DATA PROCESSING DEPARTMENT AT CITY HALL FOR A TOTAL AMOUNT NOT TO EXCEED $85,741.30. ACCOUNT 09041361-5777-C0286.
** MOTION PASSED UNANIMOUSLY.
CLAIMS COMMITTEE
Receive Monthly Claims Report; Review/Approve Claims for March 11, 2004 Report
Ms. Biagiarelli presented the report of the Claims Committee, and said that there were three special requests, which because of their dollar amount, had to be brought before the Finance meeting. She said that the refund to Kostowski and to Prudential were court stipulated; the payment to Von Bargen was due to an overpayment. Ms. Biagiarelli said that the reports are net of refund; refund is taken out of the tax account. She said that the three refunds would appear on the March report. Mr. Hamilton said that the refunds bring down the revenue from what is shown on the report. He added that tax appeals are estimated in the budget.
MR. BAKER MOVED TO APPROVE THE CLAIMS REPORT.
MOTION PASSED UNANIMOUSLY.
Narrative on Tax Collections; Receive Report/Discuss
Ms. Biagiarelli said that collections are going well and are ahead of last year. 96.8% of the total tax levied has already been collected. She said that billings would be handled in June in conjunction with the Assessor’s office. The $5 fee was implemented on February 17th, and to date there have been very few complaints.
Chairman Kimmel asked about the property sale. Ms. Biagiarelli said that she had not spent any time working on its preparation. She said that she felt strongly that something should be done, but because the assistant position was not filled as promised, her workload didn’t allow the extra time needed. She said that last year she began working on the sale, which is always a massive undertaking, in mid-March and that she is still cleaning up paperwork from last year and is doing the best she can being short staffed. She said that the current tremendous workload is making her uncomfortable about the next fiscal year beginning July 1st.
Mr. Hamilton said that the budget reflected a 98.2% collection rate; the actual collection rate was 98.5%. This year collections are 1% above last year, and he applauded Ms. Biagiarelli for her more than successful efforts. The property sale netted approximately $2 million for 100 properties. He said that the department continues to perform well toward collection of back taxes. There has been no determination made as to when the sale will be held this year; it may be pushed to next year. He said that while the goal for next year is aggressive, it is not unattainable. Chairman Kimmel asked that Ms. Biagiarelli provide the delinquent list for the Committee’s next meeting. He asked if Ms. Biagiarelli felt the City was being penny wise and pound foolish, to which she replied “absolutely.” Mr. Hamilton said that he didn’t feel it wise right now to add $20,000 for the part-time wages of an assistant tax collector so that Ms. Biagiarelli would have more time available to run the sale. Rather he wanted to encourage the continued strong performance of the tax office. He said that he reviewed this with Ms. Ann Twomey, who agreed that $20,000 would be sufficient to proceed with the hire possibly next year. Chairman Kimmel felt the decision should not be predicated on how much money was available, adding that necessary adjustments could be made to accommodate the part-time position. He suggested obtaining information from similarly-sized nearby towns about how they handle this situation in their own towns. He said that he was committed to meeting the goals but working on delinquencies while having difficulties in the office would ultimately cause problems. Mr. Hamilton said that he agreed with Ms. Biagiarelli but that not much could be done at the present time. He said that declining State revenues and increased expenditures have created a tight budget situation. The City was able to decrease total expenditures by 2.6% last year, although health insurance rose 14%. Chairman Kimmel said that he understood the situation, but felt that the tax collector’s office was different from other departments because it generated revenue which helped other departments overall. Mr. Hilliard asked if anyone had considered contracting the work out, saying that an incentive could be offered. Ms. Biagiarelli reiterated that holding a sale was a very effective way of bringing in revenue. Formerly, collection of back taxes took much longer – upwards of two years -- when the process was handled by attorneys. Ms. Biagiarelli said that because back taxes are not considered consumer debt, there are limitations on how much can be charged for the properties at the sale. Mr. Coffey said that Ms. Biagiarelli did an excellent job. Mr. Sutton expressed concern about using outside sources because of their “notorious” heavy handed tactics. He said he would prefer the task to be handled in house but wished there could be additional staff to assist. Ms. Biagiarelli said that she received the support of the Common Council and the Mayor for last year’s sale. It is a good tax relief and also lowers the mill rate.
REPLACEMENT OF UNDERGROUND FUEL TANK PROJECT
Mr. Lo said that last year $46,000 was received to remove two underground oil tanks on DPW property – one from the garage and the other from the administrative building. During fall of last year, water seeped into the heating system and caused it to fail. When contamination was later found by the DEP, a notice to cease operations was issued. The soil needed to be dug up and temporary tanks installed. The work, which is now completed, cost approximately $17,000. Mr. Lo said that the next phase of the project would be to purchase new tanks for underground mounting. Ballards and fencing would be installed around the tanks. The money to accomplish this project would be sought from this year’s capital budget through special appropriation. Mr. Lo said that another contaminated tank was also found at the Lockwood Matthew’s Gate House. He said that a consultant was hired to perform pressure testing of the tank. Mr. Coffey asked for the name of the consulting firm and added that pressure testing is very risky; Mr. Lo said that it is the most accurate but does carry risks, which were carefully weighed before the decision was made. He said that the tank was not old, and because it was of fiberglass construction there was less of a risk. Mr. Coffey asked how much fuel leaked into the environment. Mr. Lo said that it was not yet known; the DEP has since confirmed their comfort level. Soil testing had not yet been done. He said that the soil closer to Smith Street is more stable, and a concrete slab would be poured. The tanks would be monitored for five years. Cost was the determining factor in installing the tanks outside rather than inside. Mr. Hempstead asked if there could be State funding for remediation. Mr. Lo said that it may be looked into. The Department has kept accurate documentation of the events.
MR. HEMPSTEAD MOVED TO AUTHORIZE THE SPECIAL CAPITAL APPROPRIATION FOR THE REPLACEMENT OF THE UNDERGROUND FUEL TANK PROJECT, ACCOUNT NO. 09047100-5777-C0297, SUPPLEMENTAL APPROPRIATION: $78,864.
MOTION PASSED UNANIMOUSLY.
ISSUANCE/SALE OF NORWALK GENERAL OBLIGATION
REFUNDING BONDS
Mr. Hamilton said that it was a wise decision to replace the City’s existing $20.7 million of variable debt with that of a fixed rate, approximately 3.2%. He said that when the bonds were first purchased, variables were substantially outperforming fixed rates by about 3.8%. That is no longer true. It is the belief of the City’s financial advisor that interest rates will remain low through the fall of 2004 and then begin to rise. Mr. Hamilton said that refinancing at a fixed rate would allow the City to restructure a portion of its principal repayments. There would be a large drop-off in debt service once the City’s indebtedness ($2.5 million) to the Maritime Center is satisfied in 2013.
Mr. Baker wondered what the impact of refinancing to a fixed rate would be if the economy were to hit another snag. Mr. Hamilton said that he did not know the answer, and had no crystal ball, but reiterated the City’s intent to follow the advice from their financial advisor. He said that the economy is growing, and indicators point to an economic recovery. Mr. Coffey asked when the actual purchase to fixed would be made, and at what rate. Mr. Hamilton said that the City would lock in at 3.2%; 3.5% was budgeted. He explained the three “players” in the bond market – the Bond Council, financial advisors (banks, independent financial institutions, etc.) and underwriters. Mr. Hamilton said that he would continue discussions on this with the financial advisor, and UBS would be asked to provide additional financial data; it was hoped that the refinancing would be completed by June. Mr. Gilden added that 30 days’ notice would be required to get out of the existing variable debt structure.
CHAIRMAN KIMMEL MOVED TO APPROVE THE RESOLUTION AUTHORIZING THE ISSUANCE AND SALE OF CITY OF NORWALK GENERAL OBLIGATION REFUNDING BONDS, SERIES 2004 AND TO FURTHER AUTHORIZE THE ISSUANCE IN ANY SUCH AMOUNT AS SHALL BE NECESSARY TO REFUND ALL OR ANY PORTION OF THE $20,700,000 CITY OF NORWALK VARIABLE RATE DEMAND GENERAL OBLIGATION BONDS, SERIES 2002, DATED AUGUST 21, 2002 (THE “REFUNDING BONDS”).
MOTION PASSED UNANIMOUSLY.
OPERATING CAP, PHASE-IN, ELDERLY TAX PROGRAMS
Chairman Kimmel said that he was asked to approve the phase-in numbers, and due to time constraints, he scheduled a special meeting for March 17 at 8:00 p.m. to hold a public hearing. Mr. Hamilton said that he did not have all the data prepared; only information on single-family residences was available.
Elderly Tax Programs (Abatement)
Chairman Kimmel said that he felt tax evaluations should be done on an average of every four years. Four years ago the current program was adequate, but it seemed obvious that tax deferment programs were becoming increasingly necessary to make it easier for seniors to remain in their own homes. He said that he has not personally received, nor been notified that any others have received, correspondence from seniors relative to this subject. Mr. Whitman said that there are approximately 1,000 seniors in the tax credit program, and the number has decreased by 30-40 people over the past four years. Mr. Hilliard wondered why the number is decreasing, and further wondered if seniors are aware that the program exists. Mr. Whitman said that there is a fair amount of advertising in the Senior Center, through senior services, local newspapers and a senior news letter. He said that the income to qualify for a $600 tax credit is $22,200; income to qualify for a $550 tax credit is $22,200-$39,600. Income figures are taken from a person’s IRS Form 1040 adjusted gross income less medical expenses. In response to Mr. Sutton’s question, Mr. Whitman said that the age to qualify remains at 65. He said that the mill rate would not be affected by the tax credit program. The committee members discussed at length the methods by which abusers of the system could be found and ultimately removed from the program. Mr. Coffey said that knowing there were abusers of the system was particularly offensive to him, and he offered his support in whatever way it would be most useful.
Chairman Kimmel said that the Committee needed to decide whether the credit should remain as is, be lowered or be raised. Messrs. Coffey, Hilliard and Hempstead recommended leaving the credit amount as is. Messrs. Baker, Sutton and Kimmel recommended raising the credit by $50. Mr. Hamilton said that raising the level would cause a budget impact and so this would need to be carefully watched. He said that relief should be offered to the seniors with the greatest need. Mr. Hilliard suggested moving forward with the recommendation of Mr. Whitman. He said that while everyone is aware that it is a tight budget year, the bottom line should be looked at in relation to who would be receiving the services. Mr. Whitman said that the issue is a complicated one. Chairman Kimmel said that this item would require a full discussion in the Ordinance Committee, and if changes were to be made, that would be the appropriate place to have them happen. He suggested that Mr. Coffey, the ordinance chair, invite Mr. Whitman to attend one of their meetings to address the issue for everyone’s better understanding.
CHAIRMAN KIMMEL MOVED TO ALTER THE RANGE OF THE INCOME CREDIT FROM $550 AT THE LOWER END TO $800 AT THE TOP END AT A COST TO THE CITY OF NORWALK OF $70,000 TO BE MADE AVAILABLE TO THE NEEDIEST SENIOR CITIZENS.
** MOTION PASSED WITH TWO ABSTENTIONS (MR. COFFEY, MR. HEMPSTEAD).
Chairman Kimmel said that the item would go to the Common Council and then to the Board of Estimate and Taxation. Mr. Hamilton said that the mill rate could not be set until the tax credit amount had been agreed upon. A public hearing would be required, and this would most likely take longer than the budget process would allow. He said that the Board of Estimate and Taxation should be asked to build this into their calculations and accommodate the change. Mr. Coffey said that he fully supported the tax credit program but without additional information from Mr. Whitman was not prepared to vote approval of a raised amount. Mr. Hempstead concurred. Chairman Kimmel asked how long the implementation process would take. Mr. Whitman said that he needed the final number before May 15th so that the tax bills could be mailed on time. Mr. Hamilton said that the Board of Estimate and Taxation should be notified that discussion of this item was ongoing and that the final decision was not made at tonight’s meeting. A public hearing would still be required and then the Ordinance Committee would make an adjustment within the contingency.
Phase-In
Mr. Whitman said that as it regards the revaluation, the grand list was filed on February 27th, and it increased from $6.5 billion last year to about $10 billion this year. He said that all real estate notices were sent on March 1st; anyone could appeal their tax bill until March 22nd by filing an application. He said that there were nearly 200 requests for appeal appointments. Mr. Hamilton spoke about the list he prepared regarding single-family residences, and said that the Fourth Taxing District was used as an example. The revaluation would increase taxes from $4,879 to $5,398, or $519 which is an approximate 10.64% increase. He said that it was not possible to calculate the phase in on a city-wide average. In 1999 there was a tax increase of about 20%; this year’s impact would be less. Over one-half of the residences would see a tax increase. Chairman Kimmel asked what the percentage was of those who would be levied an increase vs. enjoy a decrease. Mr. Whitman said that he did not have an answer; the recalculation would be a major undertaking. Mr. Hamilton said that the budget could not be prepared based solely on the grand list. Approximately 47% of residences would receive a tax increase; about 26% would have a zero increase or lower. It was safe to say that 80% of the City’s residents would have a tax increase. Mr. Hempstead said that it was for this reason that he supported a two-year revaluation because it allowed a cushion between when the payment is complete and when another revaluation is done again. Otherwise, there would never be a year when someone could enjoy not having to pay a higher amount. Mr. Coffey said that he supported the four-year implementation, primarily because it would help many people maintain their homes; Mr. Hilliard agreed. He said that he didn’t want seniors to have to sell their homes because they couldn’t afford the taxes. Mr. Whitman said that most of the senior citizens would receive a decrease in taxes as a result of the revaluation. Chairman Kimmel said that he agreed with Mr. Coffey and Mr. Hilliard. Mr. Hempstead said that he disagreed because if the tax base shifted from residential to commercial, everyone would vote for a full implementation instead of the phase-in.
MR. COFFEY MOVED TO APPROVE A FOUR-YEAR REVALUATION.
MOTION PASSED WITH ONE VOTE IN OPPOSITION (MR. HEMPSTEAD) AND ONE ABSTENTION (MR. BAKER).
Cap
Mr. Hamilton referred to his memorandum of March 8th to the Common Council. He said that the budget office identified an expenditure error – the incentive payment for recycling was omitted and added back in. A $10,000 change was made to supplemental auto. Mr. Hamilton said that most departments had their proposed budgets reduced. The Board of Education requested a 9.2% increase in expenditures; it was reduced to 6.2%; the Board of Estimate and Taxation approved a 5.15% increase. The committee members discussed the contents of Mr. Hamilton’s March 8th memorandum. Mr. Hamilton said that a great deal of work had gone into the budget preparation. All debt ratios would continue to be monitored. He said that the City has the financial capacity to carry the debt but it does affect the budget. He said that most of the major items were moved to the capital budget; the I.T. increase was due to software maintenance expenses because the City felt that department needed to be enhanced. Mr. Hempstead commented that those in the police department are receiving hefty increases. Mr. Hamilton said that five new positions were created. Mr. Hempstead said that he wanted to feel comfortable that the increases are legitimate and asked for additional information. Mr. Coffey asked that the committee move to a vote.
CHAIRMAN KIMMEL MOVED TO APPROVE THE PROPOSED OPERATING APPROPRIATIONS CAP IN AN AMOUNT NOT TO EXCEED $207,172,893.
MOTION PASSED WITH ONE VOTE IN OPPOSITION (MR. HEMPSTEAD).
MR. COFFEY MOVED TO ADJOURN.
MOTION PASSED UNANIMOUSLY.
The meeting was adjourned at 11:00 p.m.
Respectfully submitted,
Carol A. Wiggins for
Telesco Secretarial Services
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