Rate increases have city funds back in black

Oct. 12--This year's audit shows the city of Highland is in good financial shape.

"We want to keep it that way, considering the ups and downs we had in 2008 with the financial recession," said City Manager Mark Latham.

During a presentation at the Oct. 2 Highland City Council meeting, Mark Korte from Scheffel Boyle Certified Public Accountants explained while the audit shows that the total assets of the city decreased about $1.5 million, the city recorded a total net equity increase of approximately $300,000. Korte also reported that the city recorded a decrease in liabilities, of about $3.3 million, ending the fiscal year with total liabilities at $40,698,789.

Overall, Korte said for the fiscal year ending April 30, 2017, the city had an increase of net assets of $283,499. This was due in part to an increase in the net assets of the city's business-type activities of $240,365. These activities include all of the city's utilities made up from the electric, water, sewer and solid waste funds. Korte said all of these accounts should be self-sustaining and operate off of revenues from user fees, not tax revenue.

Korte said for the first time in eight years the city's Water Fund has reported a profit, with a net income of $244,834. This increase in income might be attributable to a water utility rate increase in January 2016, according to Korte.

The Sewer Fund also reported an income of $176,149, while the Solid Waste Fund exhibited positive net growth of $90,091.

"The Sewer Fund had had two full years of the new sewer rates and this resulted in the Sewer Fund reporting a profit for three consecutive years," Korte said.

Korte said this year out of all of the utility funds, the Electric Fund was the only one to report a net loss, which was also the case in last year's audit. The fund reflected a loss of $270,709. But Korte said this may change in the future.

"There was an electric rate increase implemented in January of 2017," Korte said. " The city should see the full effects of the rate increase in the next fiscal year."

For Highland Communications Services, the city's fiber to premises project, Korte said revenues for the Fiber Fund increased by $241,000. But expenses also increased by $177,000.

The city also had an overall decrease in general governmental expenditures of about $3.1 million, while other sources of city governmental revenue sources increased.

Korte also said that the audit demonstrates a 1.4 percent growth in city revenues from property tax. Sales tax and non-home rule sales tax also increased, according to Korte. The audit also shows that there was also an increase in the property tax rate by 1.82 percent.

"Increased pension and insurance costs contributed to the increase in the property tax rate," Korte said.

But along with increasing property tax rates, Korte said that the overall assessed valuation of property within the city limit has increased by 1.57 percent.

Finally, Korte said that the city has remained consistent with the last nine fiscal years and still has a legal debt margin of $15.6 million. The city's general obligation debt has been paid off since 2008, according to Korte.

Other business

Financial reports approved

The council approved the 2017 Treasurer's Report in addition to the Combined Annual Financial Report (audit).

Tax abatements approved

The council also approved the following levied tax abatements for:

-- 2013 General Obligation Sewerage System Bonds;

-- 2012 General Obligation TIF Bond;

-- 2014A Korte Recreation Center Bonds; and

-- 2014B Street Bonds

All of these bonds are paid by funding sources other than property taxes like sales taxes, among other things. In order to ensure good rates, the city backs the bonds with property tax levies, if those other taxes do not make enough revenue to cover the payments. Since they did, the levies were abated.

Manufacturing Day proclamation

Mayor Joe Michaelis proclaimed Oct. 9 as Manufacturing Day in Highland.

Art in the Park request approved

The council approved a request from the Highland Art Council to place signage around town to help promote the organization's annual Art in the Park event. The event will be Oct. 14 and 15 at Lindendale Park.

Trick or Treat Trail approved

The council approved the annual Trick or Treat Trail, which is sponsored by the Highland News Leader. The event will be Oct. 27 from 2 p.m. to 6 p.m. During the event children will get to trick-or-treat at businesses around the Square. The News Leader also requested a police presence and the use of bathrooms for the event. The event will be taken down after 6 p.m. and is expected to draw about 400 people. The rain date for the event is for Oct. 28.

Appointments approved

The council approved the appointments of Heather Maire Warren and Steven (Tom) Thomas Mifflin to the Tree commission. Warren and Mifflin will replace Jason Stroehlein and Darrel Newman who have asked to resign from the commission, according to a memo from Michaelis. Warren's term will expire in July 2018 and Mifflin's term will expire in June 2019.

The council also approved Michaelis's assignment of Larry Brammer to be chairman of the city's tree commission. Darrel Newman, the current chairman, recently resigned. Brammer's term as chairman will expire on June 30, 2018.

Health insurance renewed

The council approved the renewal of the city's health insurance packages plans and changes for the coming year.

The city will stick with their health insurance provider Cigna Healthcare. The city is expecting an overall 3 percent premium increase, according to the city's Human Resource Director Lisa Shoeck. Shoeck also said the city will offset the increase by participating in the Cigna Max Health program, which provides rewards to the city for having employees participate in specific wellness activities each year for the three years of the plan.

The city will also offer another plan design, with a health savings account option. This allows employees to save money for out-of-pocket medical costs, it has a lower premium rate and a higher deductible, according to Shoeck.

The city's dental insurance will experience a 9 percent premium increase. However, Shoeck said that does not equal a large financial impact.

Shoeck said the city will also be keeping its VDP vision plan at a 2.6 percent premium increase.

For group life insurance and voluntary life insurance there will be no change in premium rate for the city or employees, according to Shoeck.

Platted improvements accepted

The council approved the adoption of the second addition and improvements to the Autumn Crest subdivision.

The city received a request from Chris Korte on behalf of L & G Real Estate Inc. asking that the city accept the dedication of the improvements to the subdivision and releasing a letter of credit from Bradford National Bank for $41,588, according to a memo from the Assistant City Manager Lisa Peck. The council approved the acceptance of these dedications which included water mains, sanitary sewer mains, storm sewer, concrete curb and gutter, and concrete street improvements in the subdivision.

Nuisances ordinance changed

The council approved the creation of a new city ordinance chapter specifically for defining "Nuisances" within the community. This ordinance used to share a chapter with the city's Health and Sanitation Code. But the amendments made during the council meeting give the section its own chapter. Assistant City Manager Lisa Peck said that most of the changes were to clarify and simplify language regarding the definition of a nuisance.

"The attached ordinance will replace the current nuisance ordinance and will better define terminology and content, making it simpler for residents to understand and comply with while also making it easier for staff and counsel to enforce," Peck said in a memo.

Peck also said that a small section was added pertaining to graffiti. Peck said the city does not have a problem with graffiti, this section was only added to be consistent with the state's definition of nuisance.

Bidding procedure waived

The council approved the waiving of standard bidding procedure for a construction contract to apply a restorative seal on asphalt city streets.

Corrective Asphalt Materials (CAM) of South Roxana, Illinois will be paid $126,405 to place CRF Restorative Seal on city streets, increasing the street's life by five to seven years. Gillespie said the city has tested this material on other city streets and was pleased with the outcome. City Manager Mark Latham said that CAM is the only company that can provide the service to the city, which is why bidding procedure was waived.

Battery bid letting approved

The council allowed the bid letting for the purchase of replacement batteries from the Southeast Nordbery Room and the Westside substation within the city's Electric Department. The estimated cost of the project is $40,000 according to the Director of Light & Power Dan Cook.

In a memo to the city, Cook said the batteries in both locations have well exceeded their expected lifetime.

"We are starting to see degradation of the cells and need to replace them before we have total failure," Cook said.

This project was budgeted for the current fiscal year.

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