No sports complex chorus grows

Mar 13, 2010 — Effingham Daily News

Donna Riley-Gordon

Mar. 13, 2010 (McClatchy-Tribune Regional News delivered by Newstex) -- EFFINGHAM -- Effingham city department heads have joined the chorus of many city residents when it comes to the sports complex -- now is the not the time.

In a memo sent to the mayor and four city commissioners and obtained through the Freedom of Information Act Thursday, the department heads -- Rick Goeckner, Steve Miller, Todd Hull, Kim Jansen, Mike Schutzbach, Kevin Grigg, Frank Esker, Phil Simmons, Chris Heulsbusch, Doug Dasenbrock and Joe Holomy -- suggest the council table the sports center until a stable funding source can be identified.

"Our initial findings indicate the construction of the sports center will have an effect, not only on tax increment financing funds and hotel/motel tax funds, but also on the General Fund and utility tax rates."

And the sports complex could be put on hold. A resolution calling for the rejection of bids for the sports center is on Tuesday's city council agenda, released about 5 p.m. Friday.

Mayor John Lange said Friday he would issue a statement Monday concerning the sports center and comments contained in the memo prepared by the department heads.

"The people told us they don't want it, and we should go along with their wishes," said Commissioner Alan Harris in response to the rejection of bids on the agenda. At one time, Harris was for the sports center, but changed his stance when he realized a large segment of the public was against pursuing the project.

Commissioner Merv Gillenwater, who has never voted in favor of any of the measures related to the sports center, was surprised the resolution was on the agenda and would have preferred the item went further than rejection of bids, which essentially tables the matter.

Gillenwater would have liked to seen an agenda measure that put the issue to rest altogether -- a vote to not pursue the sports center any further.

Voters voiced opposition to the sports center in a nonbinding referendum about two years ago.

Commissioner Larry Micenheimer also was surprised the call for rejection of bids was on the agenda. Micenheimer has been a vocal supporter of the sports center, touting the benefits it would bring to the community. He contends there are also a large number of people who are advocates of the sports complex, although they may not have been as vocal as the opponents.

"It took a great deal of community effort to get the project to this point," he said. "It deserves to be on the agenda. It should be discussed."

According to the memo, dated March 9, the existing General Fund budget shortfall is expected to create a $5 million deficit for the city over the next three years.

"I question the timing because it is about how the General Fund is affected. I don't know why. The sports center is not going to be funded by the General Fund," said Commissioner Karen Flach. "They are so concerned about the General Fund, yet 10 of those individuals didn't turn down individual raises of 11 to 17 percent last year. They are worried now because of how it will affect them if there are furlough days or whatever."

The city borrowed money to cover a $2 million deficit in the budget this fiscal year, which ends April 30 and another deficit is expected this year. The budget is still being prepared, so the exact amount of that deficit is still unknown,but the shortfall is expected to be at least $1 million and could be $2 million.

Last year, it was stated that when the sales tax revenue from TIF No. 1 began flowing into the General Fund in 2013, funds would be available to pay of that loan within two years.

Lange said Friday that he recently requested city officials look at the financial situation and outlook, including everything overall, to determine whether it is logical to go forward with the sports center.

According to Lange, the group of individuals who looked at the financial feasibility and city's financial well-being was meeting with the department heads and was to try to sit down with commissioners.

Based on that financial information, Lange said he would issue a statement Monday.

Flach acknowledges there are city budget concerns, but also contends the sports complex project and General Fund budget issues are not interrelated.

"I know the General Fund is a concern and it will continue to be until 2013 when $2.7 million annually will come back to the General Fund from TIF," said Flach. "Yes, we took a loan to cover the deficit, but when TIF expires that will be put back."

The sales tax portion of TIF No. 1 expires in 2013, and those monies will then start flowing into the General Fund. The property tax portion of TIF No. 1 will expire in 2020. At that time, the property tax revenue will once again go to various local governing bodies.

Micenheimer believes the sports complex would have had a cyclical affect on TIF and hotel/motel tax funds.

"Sports tourism is renewable effort," he said. "It would draw visitors to Effingham that would have boosted the sales tax and hotel/motel tax in the TIF. It would have given back.

"Most hotel rooms sit empty through the week, this would have helped fill those rooms," he added.

The city could lose $250,000 in state funding in the coming fiscal year. The state's answer to its own financial crisis is still up in the air, so the exact amount of lost state funding is still unclear, but it is likely the city will soon be experiencing some of the fallout from the state's money woes, just as school districts have.

"We know it's a strong possibility that we will take a loss with the state budget," said City Clerk Rick Goeckner.

Goeckner, who is the chief financial officer of the city, did say sales tax within the city rebounded significantly in December, but there was still a loss of about $1 million in sales tax revenue last year.

Specific budget figures are expected in about six weeks, according to Goeckner. The city's fiscal year runs from May 1 to April 30.

The memo asks the council to consider taking a business that is a sizable contributor out of the TIF district or forgo the TIF sales tax payment for one year. While in the TIF district, the property tax revenue from that business flows into a special fund that can be used only within the TIF district. However, if the city would delete the property from the district, which it has the power to do, it would mean extra cash flow into the General Fund. The school district and other government bodies that get a piece of that property tax revenue -- like the school district -- also would see additional revenue from removing a large business from the TIF district.

In addition, forgoing the TIF sales tax payment for one year would allow those sales tax revenues from retailers in the TIF No. 1 district to go into the General Fund, while now those dollars are funneled into the TIF Fund.

However, if a large contributor to the TIF fund is pulled out of the TIF district, it would impact TIF revenue and, ultimately, the funds earmarked for the sports center.

The city plans to use $8 million in TIF funds and $4 million in hotel/motel tax revenue to fund construction of the sports center.

"It's very frustrating," Flach said. "I'm trying to do what is best for the community. Everything is in place with the budget and (Effingham County) Community Foundation. We know how we're going to build it; we know how we're going to operate it."

The city has already spent around $3 million in regards to the sports center up to this point, all of which has come from hotel/motel tax or TIF funds.

"I wouldn't have agreed to spend that money if we weren't going to do it," Flach said. "None of these projects were looked at for how they would benefit me. I looked at how they would benefit the community as a whole. But they (the department heads) are only thinking about how it concerns themselves."

However, Gillenwater doesn't agree. He said he is in 100 percent agreement with the memo and has made notes on some of the items he would like to see fine-tuned.

"If the memo comes up for discussion, I have some minor additions I would like to make," Gillenwater said. "I was glad to see the memo. I was not surprised they felt this way. I'm sure some were reluctant to sign it."

Micenheimer believes the money was not spent for naught.

"Roads are always good and land can always be used," he said. "If the bids are rejected, that doesn't mean the sports center is done. It will be postponed until the economic times change."

Gillenwater, however, feels the majority of money for the sports center should never have been spent.

"I was concerned all along that we were putting a lot of money into infrastructure that would never be useful," he said. "If this project is stopped, I will be glad. But what do we do with the property? I hope we find another use for it."

"I will look at this good and hard again," Flach said. "If I feel it is a detriment or General Fund monies will be involved, I will change my mind. It was never intended to be paid for by the taxpayer."

As for the utility tax mentioned in the memo, the department heads are alluding to the fact the utility tax has been the lifeline of the General Fund, helping beef up the fund because, by its nature, TIF tends to shortchange the flow of revenue for general use.

The memo also calls for revising the TIF budget and prioritization of capital projects within TIF and to involve the city clerk and treasurer's office in all financial matters from the beginning of a project, suggesting that may not be occurring at the moment.

Several other suggestions for bridging gaps in the budget also were put forth by the memo.

The department heads are suggesting the city establish a public works department as soon as possible. A public works department would be the umbrella for the existing water, sewer, street and public property departments. By creating a public works department that would have a public works director and supervisors, the employees would be pooled, meaning a particular employee may be sent out to work on water line issues one day and a street issue another day. This issue also is on Tuesday's agenda as a discussion item.

A reduction of consultant and attorney fees also is suggested, an issue that was discussed in recent months in regards to changing the form of city government from commissioner to manager. The measure failed in the February primary, but prior to the vote, some city commissioners said they believe these fees could and should be reduced regardless of the outcome of the referendum. However, the issue has not come up since the Feb. 2 election. The memo suggests using a consultant or attorney only when absolutely necessary.

A freeze on cost of living pay raises for all city employees, both union and nonunion, also is suggested in the memo. In regards to union employees, the contract would have to reflect acceptance. Currently the city is in negotiations with its five unions. Department heads also suggest stopping all unnecessary overtime, unless emergency situations or union contracts call for the those extra hours.

The memo also suggests increasing utility tax rates and creating a vehicle registration tax, although neither is recommended at this time.

However, as evidence that the utility tax is helping support the General Fund, another item on the council's Tuesday agenda is a transfer of utility tax funds to the General Fund.

Other cost saving measures included in the 24-item memo include not allowing city vehicles to be taken home except for emergency vehicles used by employees who are city residents; eliminate the employee service award program, stop city payment of funeral flower arrangements and appreciation gifts by city departments, giving the council the authority to determine when those arrangements or gifts are appropriate; suspension of office equipment and furniture purchases; suspension of promotional materials; decrease the minimal manning requirement for the fire department, reduction of various organizations from the General Fund, elimination of longevity compensation for future hires and elimination of the city Christmas party, giving small tokens of appreciation to volunteers instead.

Several of the items above have brought up before. Flach mentioned several of the cost-cutting measures above that had been previously proposed by the department heads.

"Our next challenge is to get the General Fund healthy," Micenheimer said.

Donna Riley-Gordon can be reached at 217-347-7151 ext. 129 or donna.riley-gordon@effinghamdailynews.com.

Newstex ID: KRTB-0432-42863079