Sangamon Sun

City of Lincoln Council met April 23.

Here is the minutes provided by the council:

The Public Hearing regarding the Fiscal Year 2019-2020 Budget of the City Council of Lincoln was called to order by Mayor Seth Goodman at 7 p.m., with proper notice given. Attendance was noted.

PRESENT:

Alderman Steve Parrott Alderman Tracy Welch Alderwoman Michelle Bauer Alderman Ron Keller Alderman Dayne Dalpoas Alderman Jeff Hoinacki Alderman Ron Fleshman

PRESENT:

City Administrator Elizabeth Kavelman Treasurer Chuck Conzo

City Clerk Peggy Bateman

Streets Superintendent Walt Landers

Building and Safety Officer Wes Woodhall

Police Chief Paul Adams

Fire Chief Mark Miller

City Attorney John Hoblit

ABSENT:

Alderwoman Heidi Browne

PRESIDING:

Mayor Seth Goodman

THE LINCOLN CITY COUNCIL HAS ESTABLISHED A TENTATIVE BUDGET RESOLUTION IN THE AMOUNT OF $22,876, 721 BEFORE TRANSFERS, FOR THE FISCAL YEAR BEGINNING MAY 1, 2019:

Public comment was welcomed by the Lincoln City Council. Mrs. Wanda Lee Rohlfs came forward to discuss Resolution 2019-384, the working budget for FY 2019-2020. She also wanted to discuss a recent letter to the editor that she had submitted to The Lincoln Courier over the weekend.

She talked about her call to action for the citizens of Lincoln to look into the budget, she said she tried to get more people involved. She said during the hearings, she had a hard time following along, and wanted to know if the budget that is online as the one she received in March. She said we usually use the previous year's budget as a template, in order to proceed with that next year's budget, but sometimes, she said, there is a need to make revisions in the budget. She said sometims those changes call for line items to be added, and those line items are usually voted on by the council.

She said a few things she noticed was the line items for much is what is called, permits, license, fines fees, etc. was missing. She said the state statute requires a line item such as this, to be included, a line stating the revenue from all sources. She said, with this line item missing-it was a concern for her. She said line items for every revenue source should be listed.

She said the Corporate Property Tax-it could not be $2,535 as it was listed. She said property taxes are thought of as all property taxes brought in from the city. She said the city had gone from $1.4 million down to $2,535. She said we know corporate property taxes bring in more than that-and that sometimes these taxes are transferred directly into accounts, she said that amount of money, she wanted to know as a taxpayer what corporate property tax amount was being transferred into the city.

She also touched on the Pekin Street parking lot (library parking lot), that is not owned by the library. She said she did not know why a $20,000 increase was added to this parking lot line item, considering all the other roads, streets, bridges etc. projects are needed.

She also found TIF increment line item differences and was interested in those discrepancies. The TIF area included a property tax increment of $135,000 with $15 of interest. with the city's contribution being: $42,053 - the total revenue would be $177,068. While the expenditures being $173,018. A difference of about 3,250 of revenues over expenses. She asked what happened to this money.

She then mentioned the Hotel/Motel Tax line item. With the same situation. Revenue projections were at $175,025 with expenditures being $166,773 -she asked: Where was the remaining $8,252? She wanted to know where the remaining amount was. And she had trouble following where the Lincoln Depot rent was coming from.

She said as she had stated in a letter to the editor, she was not saying anything was wrong, she just had some concerns. Treasurer Chuck Conze said if you look at previous budgets there was a balance left, and that you try not to spend down to the last nickel and that was why there was a balance over and above expenditures. He said this was not unusual.

Her question was that if he had an $8,000 figure, how that would balance out with the overall bottom line figure.

She said when you do a budget, don't you plan on your revenues and your expenses being the same. He said ideally your revenues would exceed the expenses. He said the $8,000 would remain in the fund for future years.

He said you sat over there for several years. And that he hope she didn't vote to send every nickel in every fund. He said the TIF Balance, what that transfer is-he did not know what that increment was going to be. He would not transfer more into the TIF Fund than what was needed, he said it would zero out, or be very low. He said having more in there, having a larger amount to transfer-would only be in the evet that they needed it. He said the transfers are all as needed. He touched on the fire truck. He said if the TIF increment covers it all there won't be any transfers. The transfers are as needed.

She then asked about the projection page and the amount for the depot rental: $10,800, she asked him to go through the process of when this comes in. It's now 90 percent. The city does not restrict where they pay the rent from.

He moved to the Library Parking lot and the revenue projections sheet-he said the fund is on page three, there is $20,000 in grants and there is a double asterisk next to this. He said it's pending on the approval of a grant. He said there may be some expenses associated with that, if the city was going to pay it it would be covered by a state grant. He was not prepared to cover this topic tonight.

City Administrator Beth Kavelman mentioned that this was the Farnsworth Group bill dated back to 2015, and that the council had agreed not to pay this bill. Mrs.Rohlfs then asked about this.He said its $20,000 that the city contends that it does not owe to the group this bill from some work they claim to have done awhile back.This would be subject to the state grant, and that was why this was in there with the asterisks. The bill is actually $25,000, there is $5,000 remaining in the account.

He moved to the property tax, these projections list the corporate property tax, $2,535, that portion of the tax levy goes in the GRF for any purpose, the rest was outlined further down in the GRF. He said if you go further down, there were sub funds and audit funds.

He covered sub funds, Mrs. Rohlfs said she had looked into all those funds, but it was not clear what the city gets in corporate property taxes. He suggested she reads the tax levy ordinance. He said the ordinance does list that. She wanted it to be put in the budget and to be able to see all transfers out. He said there are no transfers, they're all paid out of sub funds. He said it was the same as it was 10 years ago when she was there. More on electronic transfers into sub funds was continued.

He said there was no need to transfer it to. He said we have expenditure lines for the audit, IMRF contribution, ESDA contract. He said expenditure lines are all listed in the budget document. [Inaudible].

He said in the past it has shown transfer to fire pension, but they do not have to do that. She said when you say, "transfer," you mean transfer to, and when you transfer to you don't have to transfer from. He explained you're transferring it to these funds which are not a part of the GRF. He said you're not transferring property tax revenue and it does not have anything to do with the IMRF, audit fund, public benefit fund [inaudible] etc. are not part of the GRF and are not a part of the tax revenue [inaudible].

He said when she looks at her tax bill, there's a line that says corporate property taxes. He said the tax bill would only show the amount for the City of Lincoln, however, the ordinance breaks it down. But her bill would not.

Conversation continued.

He said the city is taxing district, the county is, the parks district, the cemetery district..he said those are the taxing districts.she said these were done through an ordinance.

He said yes. nothing about this has changed. He said property tax levees have been around, there is nothing new about this. He said they go back further than the 1930's. [Inaudible]. He said there was nothing new about this. She said, but all of this originally comes from a line item that says. [inaudible]. He said on your property tax bill... he said that was the same as it has always been.

Mr. Rick Hoefle came of Lincoln forward next to share concern over a small issues, he said he knew last year when the city did not have a city administrator, he said Peggy signed for the budget... he said it's a city administrator doing the budget this year. City Administrator Kavelman said she wanted to, but Treasurer Conzo spearheaded it. Mr. Conzo said if he may... he got a lot of input from the city administrator and the department heads and that she was underestimating her input on it.

Mr. Hoefle wanted to urge the treasurer to be careful with this, as under city code-the city administrator is responsible for preparing the budget and handling the proceedings on the budget, but yet from what he has seen-it has not happened. Mr. Hoefle said in today's world,with all the questioning what people are doing, with watchdogs, they needed to follow procedures.

Treasurer Conzo said that has happened, and he is the scribe, he said the city administrator was not there when they did some of other ones and that he gave her some supporting documents. He said she has been active...

Mr. Hoefle said he was surprised, because former city administrator (Clay) was active when he was here, he directed things. Treasurer Conze said he did the revenue projections then and he ironed out things and did the presentation at the council meetings. Mr. Hoefle wanted to make sure everyone was aware of their own city codes, and the need to follow them and the formal procedures. He said he had a couple of other questions-most things related to the TIF and then he wanted to talk about economic development.

He said you folks voted in a truck and went out for bids outside the city, he said he understood there was a savings-but they have three local dealers, even if they would cost more, they should have been the ones to put in the bids.

He said what you're saying to businesses is pay taxes, be good citizens, but don't worry about it-we don't care about your business. He said you're losing convenience for our citizens. Alderman Parrott weighed in on two of the bids, and then said one bidder did not come back with a bid apples for apples, after numerous attempts. He did agree though that they should try to keep things locally. He said it's kind of hard to even chose them if they're not going to cooperate on the request.

Mr. Hoefle's problem was that precedent had been set. And that over the years, business had been lost. He said he's tight with his money, but the business should have been local. He gave Wes kudos on a bid for code enforcement. He said he got bids locally. He said they're telling those businesses that they don't matter.

He then wanted to hit on the TIF, as he was concerned about it. He said he's getting calls from people. He said the talk now is about bankruptcy, which will effect projections on the city's budget. He said whoever buys the property now is going to immediately protest/dispute their taxes. He said the tax assessment last year was around $3 million. He said the property will sell for much lower than $3 million, he said you're going to be looking at a significant reduction. He said about $94,000 was projected in TIF money, but yet they only took in $133,000. Mr. Hoefle we carried over a surplus from the year before, which was actually taxpayer money, it was just transferred.

He said you and I had a conversation with Alderman Fleshman and Lance Rainforth and that you, (Mr. Conzo) supported that, and that he was positive that the TIF would support itself. Mr. Hoefle said he disagreed with him, and that was when they knew it was already in bankruptcy, so, Mr. Hoefle wanted to know if it would support itself. Mr. Conzo did not remember saying it would support itself, but rather it was their hope that it would. He said we don't know what will happen in the 2019 tax year. He said the tax bills that taxpayers will receive will be based on 2018. Mr. Conze said they would expect the TIF to be the same as it was in 2018, but appeals going forward are going to be for 2019 tax year, 2020 tax year­ and if it sells for less it will be in lower tax increment. He did not ever remember saying prior to this... Mr. Hoefle interrupted saying that he was fighting him tooth and nail that the TIF proceeds were in it, and that he had said they were taxpayer dollars, but that Mr. Conze said they would have the amount of TlF in order to do it, and that he said yes, for this year, but not ongoing.

He then asked how much was in the TIF account. There was $27.44 [inaudible]. Mr. Hoefle said the consensus of the public-is they don't think the TIF is legal, they think it was a fraud. The wanted to know lf it was a grant, a gift or a TIF-he said he talked to legal counsel and they don't think it's a TIF-he said something is wrong with this and he would like to know and what people are asking him is if this is going to be a tax burden for the city. Mr. Conze said the time for that was when this was created. He wanted to know with bankruptcy if the city could be responsible for any of this as the city agreed to enter into something that was questionable.

Alderman Ron Fleshman said the conversation that he recalls was that Treasurer Conze projected revenue that within 4-5 years, that if things escalated, the TIF would be able to fund itself then, but not immediately. Mr. Hoefle said he had asked when that 4-5 years began, because up to last year, when he was on the council, the city had paid almost 100 percent of that TIF bond, and the TIF bond was already four years old.

Mr. Fleshman said moving forward this year with the budget, the taxes are for 2018, so they'd move forward as if the revenue is going to be there, possibly with whatever happens with properties of concern, they would have to adjust from there.

Mr. Hoefle said people are calling it a bond now, rather than a TIF. He said he is trying to explain what little he knows about it-he said there are hints that there's lack of transparency , improper handling of the budget, and that people don't want this to end up like the chamber or alliance, and that there are still questions going on with this because of their money handling and budget practices. He said he is getting calls, and he's trying to answer them. He did not want to see anyone coming into question under this.

He said there have been people putting this information out.. and that people have talked to certain people... Mrs. Leslie Hoefle stood up and talked about the investigation into various questionable items regarding the TIF, fiber optics, revitalization plan. they took these to five different agencies. They were told things did not add up and that there might have been things turned over...that a five percent of a kick back was awarded to vendors, if preferred vendors were used.

She said the numbers they used got them to the states attorney, to the FBI, IRS, back to the FBI etc. She said these numbers are critical, they do not lie, and they are still being asked for information. She said transparency is huge and that people are following this, because of this TIF and this bankruptcy. She said the agencies are truly interested in this. She said the public feels they were being lied to.

Mrs. Hellen Rainforth mentioned that she and Treasurer Chuck Conze spoke about three weeks ago and that it was an absolute falsehood that no one brought it to his attention when the TlF was being created and everything that this was an absolute falsehood. She said she and her family stepped forward right away and said this was not a legal situation and that her family went to Mayor Snyder,the Logan County State's Attorney Jonathan Wright, and that they then went higher. She said this has not been an immediate situation this has been over at least a four year period and that they have tried to remain somewhat silent about it. She said she had told Chuck every check he signed-he was culpable, she said everyone knew it was a scam.

Mr. Conze said that he did not say that no one pointed it out to him, but when it was created, there were not a lot of people speaking against it and as a result, that and probably a number of other things, the TIF Development Agreement was approved. He said he knew she pointed it out to him.

Mrs. Rainforth said they pointed it out to every authority figure and they got to all of them.She said Ithink it is all in process. She said there are peoplewho are culpable and will be capable. She said transparency is vital. She said downtown Lincoln has been decimated in the chambers because of what has been allowed to take place. She wanted to asked again. was it a grant,was it a gift, or was it a TIF - she said three weeks ago he said it was grant.

He said a TIF grant. She said David Lantern and Keith Snyder said it was a gift. She said it was never legally set up correctly and that they knew it from the beginning. She said a lawyer came down from Chicago and walked downtown Lincoln with them. She said transparency was vital to protect everyone sitting there right now. She said it was being looked into backwards.

Mr. Lance Rainforth wanted to weigh in next. He started by saying he was one of the few people there 5- 6 years ago with the TlF concerns. He said he thought it was a good meeting with Mr. Fleshman, Chuck and Rick Hoefle had six to eight months ago, but the conversation-to bring people up to speed, they are revenue negative on TJF and have been from day one because when the TIF was created, the city wrote a check for $2.3 million, with the expectation that the downtown would be flourishing, they'd make it up.

He said they went back to Snyder time and time again...saying the tax base wasn't oacking it up. He said the tax base did not back it up, it was actually shrinking. There is a diminishing tax base in Lincoln, as does Illinois. No one took the cautionary tale from retailers and from the business community who generate the city's taxes. They were revenue negative, talking about making it up with the GRF, no one was being genuine to the taxpayers, they're on the hook for the TIF. They are still on the hook for the TIF. They will still be on the hook for the TIF. Under that definition, they do not have a TIF.

The TIF does not meet the criteria of a TJF, they do not have a TIF. It does not function as a TIF as all the money as given away ahead of the funding being available, before they collected the money. The city got the cart in front of the horse. He said most of them weren't there at the time, but for those who are, he thought it should really haunt them. He said this has done damage.

He said they went into a conversation about projections, the four of them projected about getting to revenue neutral, he said everyone was sitting there talking about projections of year 12, year 14... that they could still be able to come out net positive on the back five years, back six years.

Because then he said they discussed that he had petitioned to lower his taxes based on comp, revenue changes in the downtown. As State Bank of Lincoln got their taxes lowered 70 percent. And it dropped below the TIF line. Many, many businesses followed suit because of Chicago and Sangamon Streets, at the hands of MMIL, they dropped the property values to where everyone qualified. He said they are now diminishing through the TIF, because of the group of people who took the $2.3 million, brought the valuations down, down, down...

He said then after that conversation they were now projecting years, 17', 18, and 19' which left them two to three years on the net positive of the TIF. Now, he asked where do you suppose we are, genuinely­ each one of you, based on the loss of the bottle factory... he said it was no one's fault here. He said it is the circumstances of Illinois, it effects the business community as a whole, it effects the tax collection as a whole.

He said if they don't come through this situation through the foreclosures of the MMIL's, and however the U.S. Attorney handles the MMIL's... and whatever Regions decides to do with the FDIC and the federal investigation and court hearing... He said they went and defrauded a banking institution, which is a federal crime. He said we are talking about a federal issues, and that it was just one issue. He said it is now a concern, after seven or eight years of coming to the chambers of trying to explain how downtown Lincoln business works-they will never reach neutral with your TIF. He said he said that he said that six to eight months ago that he said it was time to tell the taxpayers, when you use the term TJF, it's not genuine, because you are using the general revenue fund to backfill the TIF. He wanted to set the record straight because there was some confusion about the meeting the four of them had about projections.

He said we are not looking at a revenue positive situation with the TIF. He said it is a huge hole for the budget and council to fill annually. He said it's a very large budgetary conversation going forward on any projects they project out. He said they are holding the bag on the TIF. That they are backfilling a TIF that is diminishing. He said when it comes to a fire station, or a road, or whatever it is coming down the pike - bear in mind that they are holding the bag for the MMIL fiasco for another 16 years. Mr. Conzo said he did not disagree with him.

Mr. Rainforth then said he may have misunderstood when he was sitting in the back about the library parking lot. Mr. Lance Rainforth then wanted to know if it was 2015 for the library parking lot. For a bill that might be owned to Farnsworth Group. He said you're certainly not going to make whole on a bill from four or five years ago... Mr. Conzo said, but prior to that it would be a grant for the state...he said he was confused as the details are from 2015. Mr. Conzo said that this is why the city was not paying it on demand. Mr. Rainforth said it's 2019 now, he wanted to know if everyone knew about what was going on. He wanted to make sure the city was not going to make whole on a bill from four years ago. Mr. Rainforth asked the city attorney to speak to it. He asked if he had been in on the budget conversations­ Mr. Hoblit said he had not been.

Mr. Conzo was doubting very much that the city would pay this bill, but he wanted to anticipate worst case scenarios. He said they paid a bill for the same amount three years ago. Mr. Rainforth asked if he would be looking in to that. Mr. Hoblit said he would look into this as it is $25,000. Mr. Conzo said he did not think the city is wrong, but that no one was paying this. But they budgeted for it in the event that they were wrong. He said we paid a bill for that same amount three years ago. He tried to anticipate worst case scenarios, he said.

Mr. Rainforth said he immediately had a visceral reaction to the TlF seven years ago with former Mayor Keith Snyder. Mr. Rainforth said that was why he approached the council seven years ago with the half glass full scenario with Keith Snyder. He said everything needs to be done properly through the budgetary process. He said we can fix this, we all have the means and the money to do it, but he said this needs to be done properly through the budgetary process. He said there are a lot of people watching this.

Alderman Fleshman wanted to bring up the meeting that they had had and the facade TIF grant came up during that same meeting, Mr. Rainforth said-correct. It was a separate situation talked about at the same meeting. He said his request was to change this from a fa<;ade TIF grant... his request was to change that to a factade grant to a business that falls into the TIF district...

Mr. Rainforth weighed in and said. actually Ron, what the conversation was... the factade grant was started years and years ago. It used to be up to $10,000, and you have to have receipts for it and a lot of people took advantage of it. He said that was not the TIF, unfortunately, when the TIF started to show itself, past leadership was throwing the factade grant TIF as one, to highlight the successes of the programs when in actuality they were blending two programs. He said it was confusing a lot of people in the community. He said they were combining them, and it confused a lot of people in the city.

He said the businesses are in the trenches. There was miscommunication on the TIF grant and the TIF fa

He said he does respect and appreciate what the council does and most people in the community do not have a clue or want a part of it. He said it all has to match up.

Mrs. Wanda Lee Rohlfs then came forward to ask about the Telecommunications Tax and how it previously was listed in the budget. She said the most the city had ever received was $280,000. Mr. Conzo said, yes... and it had dwindled and it's now about $21,000 a month. That was the main tax that used to go to the TIF district. He said it has dwindled, it used to be around $40,000 a month, and now is around $21,000 a month. So, he said even..every year since the TIF was created, it had dwindled. He mentioned the loss was due to changes with the rise of mobile phones. She said this money is going to have to come from somewhere.

Treasurer Chuck Conze said she was absolutely right and there are big problems with the TIF and he has never disputed that. He never was particularly enthused about the idea, it wasn't his idea to do it. But he said what he's trying to do is to manage what they have and to minimize the cost of this to the taxpayer. He said there is a limited amount of things... he said this is something that should have been done years ago when this was created, but the council at the time did not see fit to do it that way. He said this will have to be addressed as best as they can.

He said the TIF increment is paying part of it, so there is some value in having 1t. Mrs. Rohlfs said something [inaudible]. Mr. Conzo said we have not received any property tax year for this year, but it's not going to get up to $177,000. Mrs. Rohlfs said something [inaudible] about the tax increment amount [inaudible]. Mayor Goodman called for any further comment.

City Administrator Beth Kavelman had a question about the Hotel/Motel Tax, she said it should be a double entry, and wanted to know if that was happening. Mr. Conze asked her what page she was on. She said it was on page 12, expenditures to the tourism bureau. She asked if the group turns around and writes a separate check to the city for $900. He said it's a separate check. She asked how long they had been doing that. He said it is in the revenue line. He said it goes into the GRF and not back into the Hotel/Motel Tax Revenue fund.

Mayor Goodman called for further discussion.

ADJOURNMENT:

There being no further discussion to come before the City Council of Lincoln, Mayor Goodman called the hearing to a close at 7:56 p.m.

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