City Council Watch: Budget and Finance Committee 12.16.13

December 16, 2013 at 4:22 pm

Two major issues were discussed in this morning’s Budget and Finance Committee meeting:

  1. Funding for energy saving capital improvements
  2. Funding for the MLK interchange.

The committee also took up the motion to move the city manager communication director under the office of the mayor.


Agenda Items 3 & 4: $7.3 million bond for energy saving capital improvements

What is this issue?

The city is seeking $7.3 million in bonds to fund improvements to city lighting (mostly in the form of streetlights) which will generate $468k in energy savings. Traditional bulbs will be replaced with LED lighting. It is estimated that this will create 78 jobs all complying with city minority contracting requirements.

The bonds are being paid for with the energy savings so this in no way impacts taxes. The bonds are also guaranteed through Honeywell (the lead contractor) so if savings don’t materialize, Honeywell will cover the costs.

Q&A Summary

Question: Why can’t we use this money for other projects?

Budget Office: Because the money is being financed by operating savings. If we don’t do the project, we don’t have the savings. If we don’t have the savings, we can’t get the financing.

Question: Why do we have to vote on this today?

Lead Contractor: In order to start in the spring, now is the time to start. There is also concern that waiting until next year will impact prices. If it is approved now, contractors can be locked down at existing prices.

Question: What are you doing to ensure African-American and women owned businesses are involved?

Lead Contractor: Working within the city guidelines for minority hiring. In particular, have hired electrician contractors who we are familiar with from Phase I & II of this project to make sure these companies are not simply pass through or front companies (companies who pose as minority-owned business but usually outsource the work to non-minority businesses)

Motion: Passed

Voted for: Seelbach, Flynn, Mann, Sittenfeld, Young, Simpson

Abstaining: Smitherman, Winburn, Murray (all seemed for the vote, but wanted until Wednesday to ask more questions)


Agenda Items 5&6: $20 million in city funds for MLK interchange

What is this issue?

Total cost of the project: $105 million ($60 million from the state, $20 million from the city, and $25 million in OKI loans). The meeting today is about the $20 million city funding.

Q&A Summary

Question: Will this raise property taxes?

Budget Office: No. The city is anticipating a number of bonds maturing (reduction in city’s obligations) so that this debt will fit within the existing debt portfolio. Basically, this replaces expiring projects.

Question: What happens if property taxes decrease?

Budget Office: Projects would have to be prioritized.

Question: What is the expected ROI?

Project Mgr: A study was performed by UC. I don’t have the numbers with me. Study is located here.

Question: Is there any private investment?

Project Mgr: No.

Question: Are there ongoing operating costs and who will pay?

Project Mgr: City streets will need to be maintained by the city.

Comment from Wendell Young:

This is a transformative project. Transformative projects cost money. That’s the nature of a transformative project.

Comment from Chris Smitherman:

Residents should be given due time and economic respect on this project. I hope the city will be respectful of the use of eminent domain.

Motion: Passed

Voted for: Unanimous


Agenda Item 7: Communications position moved from city manager to mayor’s office

What is this issue?

A communications person, formerly under the non-partisan city manager, is being moved to the mayor’s office

Commentary from P.G. Sittenfeld:

There is one conflict of interest that might arise. In the case that the council and mayor disagree on an issue, communications should reflect the needs of the city, not the mayor.

Motion: Passed

Voted for: Unanimous