The tape of this meeting is on file in the Council Clerk’s Office.
TO THE HONORABLE COUNCIL OF THE CITY OF ELYRIA, OHIO:
The Finance Committee held a meeting on Monday, October 30, 2017 at 7:30 P.M. in Council Chambers.
PRESENT: Committee Chair Stewart, Members Tanner, Madison, Baird ABSENT: Lotko
OTHERS PRESENT: Mayor Brinda, Safety Service Director Siwierka, Law Director Serazin, Finance Director Pileski, Assistant Safety Service Director Brubaker, Assistant Finance Director Farrell
1. Approval of the 10/10/2017 Finance Meeting Minutes.
Baird moved and Tanner seconded to approve the minutes of the 10/10/2017 Finance Committee Meeting.
2. The matter of removing a lot mowing lien from the property at 947 Oakwood St. which was placed inadvertently on the property’s tax duplicate.
REFERRED BY: Assistant Safety Service Director Brubaker.
Mrs. Siwierka said that the lot mowing charges were sent to the Lorain County Auditor’s Office in error, it was an error of the address.
Baird moved, seconded by Tanner to recommend a resolution to remove lot mowing charges that were inadvertently placed on the tax duplicate of the property of 947 Oakwood St.
3. The matter of applying for and accept if offered, Grant Funds of up to five million dollars, known as the Bloomberg Mayor’s Challenge.
REFERRED BY: Mayor Brinda
Mayor Brinda explained that the City of Elyria was offered this opportunity through the Bloomberg Foundation. Elyria was one of 300 communities invited and we accepted the challenge. Fifteen community partners have been assembled to choose Elyria’s main focus which ended up being; to lower Elyria’s poverty rate by 5% and close employment gaps. Currently in Elyria we have an estimated 1,600 manufacturing jobs open. Employers are having a difficult time filling those including some entry level positions. There are also pilot employers who have offered to change their employment criteria to include screens in policies, more family friendly policies and collaborative in the wrap around services. We would be combining the work experience with a social service intervention. Even if we don’t get any money the Community Partners Group wants to continue to work together. They will be giving out 35 Challenge Grants and if we meet that criteria we would be eligible for one of 5 one million dollar grants and one five-million dollar grant will be awarded for full implementation.
There is no match requirement and the city has nothing to lose and everything to gain.
Baird moved, seconded by Tanner to recommend applying for and accept if offered, Grant Funds of up to five million dollars, known as the Bloomberg Mayor’s Challenge.
REFERRED BY: Mayor Brinda
Mayor Brinda stated that the way the committee report was read was not the way that she sent the referral through. She said that council needs to consider the transfer of funds into the Elyria Community Improvement Corporation, which is actually a separate 501C4. That would create the loan fund. Council would be designating the transfer of the funds for the purpose of creating a GAP Finance Loan Fund. But, the actual establishment of the Loan Fund would be done by the Elyria Community Improvement Corporation. As explained in Executive Session, the City is trying to assist a large Northeast Ohio business with the relocation of their Corporate Headquarters. They are considering the former Macy’s building. The owner has asked and the Elyria CIC has complied with the owners request to sign a confidentiality agreement. It is recommended that the City assists in establishing this loan. It will help reinvigorate the Mall area. The business in question will make an investment of 3.362 million dollars and create 22 new jobs over three years. A loan of $500,000 is needed to provide GAP financing. This is one of the reasons that Community Improvement Corporations (CIC) were created, to be able to meet the need for GAP financing when other traditional financing cannot complete a deal.
There have been questions related to the legality of using demutualization money for this purpose. Mayor Brinda referred to a legal opinion from Elyria CIC’s legal counsel, Todd Baumgartner. Mayor Brinda presented a memorandum to Council and it is attached herewith, made a part thereof and designated as Exhibit “A.”
Attorney Todd Baumgartner sent a memorandum which explains the type of fund that can be deposited into the Elyria CIC by the City. That memorandum is attached herewith, made a part thereof and designated as Exhibit “B.”
Also, attached herewith, made a part thereof and designated as Exhibit “C” is the Code of Regulations of the Elyria Community Improvement Corporation.
The Elyria Law Director and Finance Director have both reviewed the documents and have agreed that these demutualization funds can legally be transferred from the City to the Elyria CIC for the purpose of creating a loan fund. It is the responsibility of the Elyria CIC Board of Trustees to determine if a loan request is worthy. Council does not make this determination but does have a say so through it’s designated appointees, which are Law Director Scott Serazin and Council Member Jack Baird. The CIC is also required to have the Mayor on board and also the Mayor’s Legal Counsel is part of the board as well as an Elyria Citizen, Pete Duffield, who is a CPA with Beckett Corp.
Mr. Madison asked, if once Council makes a decision, does that mean that the City no longer has access to those funds, since the funds have been moved over into another account? The Mayor answered that question, stating Yes, that is correct. Though, in the contract negotiations, they could use some of the same criteria that are used in other abatement projects. And clauses could be added. Counsel will be negotiating this.
Baird moved, Tanner seconded to get the matter on the floor and to amend the previous committee report that was made in error and which has been re-worded.
Tanner moved, Baird seconded to approve a donation of $500,000 of demutualization funds from the City of Elyria to The Elyria Community Improvement Corporation for the purpose of creating a GAP Finance Loan Fund. (Mr. Madison noted for the record that he abstained from this vote).
MOTION CARRIED – ABSTAIN = 1 (Madison) COMMITTEE REPORT WRITTEN
Mr. Baird asked the Mayor to speak on the leveraging of the amount the City received and what we’ve gotten out of it. Mayor Brinda said the most significant project was the reconfiguration of Route 57 and the 49th Street Bridge. Ultimately that project totaled almost twenty three-million dollars and the City’s match was less than a tenth of that. There was money left over which is where this unexpected level of demutualization funds are now available and the good news is we will get it back again. The criteria of investing and knowing that we will get it back again for re-use is a plus for our City. The improvement of Middle Avenue was also used with some of those funds and other Federal and State projects. Those funds have gone a long way.
REFERRED BY: Finance Director Pileski
Finance Director Pileski started by saying that HB 49 is also know as the Bi-annual Budget Bill and contains a provision that gives companies the option of filing their net profit returns with Ohio as opposed to the cities or their agents, in our case, being the Regional Income Tax Agency (RITA). If a company opts to file with the state of Ohio, it takes away the city’s rights to audit those returns. The State will collect the money and give it to the cities quarterly. Currently we receive it twice a month from RITA and they withhold one percent for their collection fee. The state will try to take over municipal income tax collections completely. Mr. Pileski doesn’t know how cities will survive with getting their main source of revenue quarterly as opposed to twice a month. There has been a coalition of around 200 municipalities that have retained counsel to file litigation challenging the constitutionality of these changes to the Ohio Municipal Income Tax Law and Elyria has to take some type of position against it.
Mr. Serazin said that by giving up control of taxing authority, it will make the cities very vulnerable to the state. There are three options that Elyria can consider; first: Elyria can pass a resolution supporting the action of the people who are opposing this legislation, to get it repealed or declared unconstitutional. It’s unlikely that the State Legislature will do anything with respect to repealing it, being as how they are very clearly anti-municipality. Second: Elyria can join in the lawsuit that has about 200 municipalities involved in it and it would cost $8,000. Third: there could be a joint action in the Lorain County Common Pleas Court and the Regional Income Tax Agency and it would be filed at the Common Pleas Court level. We might get better action at a local Common Pleas Court as opposed to a State Court. The firm that will be used for this litigation is Walter Haverfield and the lead attorney is Steve Byron. The City would not be obligated to pay any of the attorney fees. We would be part of a joint litigation in this action and it would be filed locally. It would only cost some time and effort. The letter of engagement is lengthy and it explains the process. There is no guarantee that Lorain County will be the venue chosen. This needs to get going as soon as possible to get an injunction. There will be no fees for Elyria, RITA will pay the fees and it will be filed in Lorain County and every possible step will be taken to stop House Bill 49.
Baird moved, Madison seconded to recommend a Resolution of Opposition and support of Challenging Ohio House Bill 49 to prevent it becoming law.
6. The matter of a request to amend the 2017 Permanent Appropriations.
REFERRED BY: Finance Director Pileski
The NSP and Block Grant fund changes are requested by Ashley Scott. We will be moving Grant monies to the NSP Fund and the Block Grant Fund. The Health Grant Fund does owe the General Fund some monies. The amount of $15,845 is sitting in the Health Grant Fund and we would be moving it into the General Fund.
Mr. Serazin brought up a request for $930 to be moved from Legal Administration, line item Membership Fees to line item Professional Services to pay an invoice owing LEADS for 2017.
Mr. Pileski said that the request to move the $930 is in the same major account and therefore does not need an appropriation change.
Baird moved, Madison seconded to recommend amending the 2017 Permanent Appropriations.
7. The matter of an unencumbered bill in the amount of $795.00 from the Law Director’s Office for a bill from LEADS – Ohio State Highway Patrol.
REFERRED BY: Law Director Serazin
As explained the unencumbered bill is from 2016, Invoice # L2403 for LEADS – Ohio State Highway Patrol.
Baird moved, Madison seconded to recommend payment of an unencumbered bill in the amount of $795.00 from the Law Director’s Office for a bill from LEADS – Ohio State Highway Patrol.
Colleen Rosado, Secretary