DeKalb’s Business Friendliness

I am rapidly developing a crush on Larry Kujovich, a member of the group of financial consultants hired by the City of DeKalb.

Still working on taking in the whole of the April 13 workshop video, I swooned this time during a discussion of image-building as part of economic development strategy.

Use terms like “image building” and “branding” and I reflexively roll my eyes because such exercises are futile when the desired image and reality live in different zip codes. But I quickly regained focus when Mr. Kujovich said this:

[I]f you survey potential businesses, would they consider DeKalb business friendly? I don’t know the answer to that question. We have heard anecdotal evidence; some say that DeKalb is one of the most business-unfriendly cities they’ve ever encountered. Well, if that’s the case, economic development will be a challenge. So, it’s something that perhaps could be addressed.

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EPI and City of DeKalb Operations

Here’s a transcript of a bit of commentary by Larry Kujovich from the dynamic duo Executive Partners and Crowe Horwath, the consultants who met with City of DeKalb officials April 13 to talk strategic financial planning.

You’ve gotta look into the future. . .Does your 5-year plan list what you need, or what is available in terms of resources. And at the end of the day, it doesn’t say what you need. If you’ve got to fund all your capital requirements, all your replacement funds, AND fully fund your pension plans, you’ve got a hole that is HUGE. You need to know what that hole is, even if you can’t solve it right now. Because you’re making short-term decisions, and maybe — we talked earlier about the half-million savings, or the million dollars, how can we use it? — you may need that to do just what you’re doing today, three years from now. And if you don’t have that visibility, you’re gonna get yourself in a box where you spend it now and you don’t have it in three years. Now again, this is my private sector experience; if we didn’t do this THERE, we’d be bankrupt.

Mr. Kujovich also recommended a culture change, in which the focus shifts from the requirements of the organization to an outcomes-based model that asks how best to deliver what the citizenry needs. In other words, he’s asking the bureaucracy to act like less of a bureaucracy.

Watch the full video here. The operations portion begins roughly an hour in, following the discussion of revenue opportunities.

Correction: Pilots, PILOTs & Water

In a recent post about the latest Executive Partners, Inc. (EPI) involvement with the City of DeKalb as its financial consultant, I expressed anxiety about a proposal to privatize the city’s water.

Turns out, that’s not the EPI proposal for the Water Division, and I’m sorry to have led you astray.

It’s a PILOT (not pilot) program. PILOT stands for “payment in lieu of taxes,” and is sometimes spelled PILT as well.

Among EPI’s tasks this round is identification of potential new revenue sources. One of its suggestions is to add up the assets of the Water Division, calculate what Water would be paying in taxes if it were a private company, and then charge us the amount of the calculation.

A preliminary assessment shows net assets and potential annual in-lieu tax payments to be $26 million and $186,000, respectively.

Again, sorry for the error.

DeKalb’s Pension Picture Updated

I’ve added FY2012 numbers to the set of charts you’ll find in DeKalb’s Pension Funding Progress. They come from the latest Comprehensive Annual Financial Report (CAFR).

dyerware.com


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New Council Gets a Good Start

City of DeKalb employees and the group Ellwood Historic Neighborhood have hatched a new plan just in time to take up a line item in the FY2014 budget: Buy up multi-family homes in the north 5th Ward, convert them to single-family and resell each property at a loss. In fact:

“We have worked with a local realtor and contractor to identify a willing seller of a multiunit house in the neighborhood,” said David Castro, a member of the Ellwood House Neighborhood Group, a group of residents who have worked with the city in the past to restore the area.

Council has put this plan on hold. Good for you, council members! Personally, I would, too. I agree with Ald. Jacobson that DeKalb should not get into the business of property speculation. First and foremost because it is so, so bad at it (see: empty lots downtown). Read the rest of this entry

DeKalb’s Hiring Spree

The City of DeKalb got rid of 30+ employees at the beginning of FY2011 in order to balance its budget. There followed a year of quiet, but now we’re in the midst of a hiring spree.

YoY Comparison of
Full time Equivalent
Employees (FTEs)
FY2012FY2013FY2014+/- Over
FY2012
Administration17.52022.25*+4.75*
Police
80.0786.0787.57+7.5
Fire
545358+4
Public Works434444+1

Here is what it has done to personnel expenses.

Selected
Personnel
Expenditures
FY2012FY2013FY2014+/- Over
FY2012
Salaries12,614,05413,301,20714,163,263+1,549,209
Health Ins3,320,7253,746,7403,810,939+490,214
Pensions/FICA4,466,7794,199,3244,870,100+403,317

And here’s what the FY2014 budget narrative (PDF p. 29) says about the increases:

Total Personnel Services reflect an increase of 4.5% percent over FY2013. Most of this increase is attributable to a 15% percent increase in pension costs. Wages reflect increases based on collective bargaining agreements. Our insurance consultant informed us in March that the City’s health insurance premium will increase by 4.5% percent[.]

The latest pension cost increase is distressing, but in terms of dollars it is neither the only source nor the primary source of rising personnel costs, which make up some 83% of the General Fund budget.

So we’re looking at these expenditures going up $2.4 million over a two-year period. However, personnel expenses as a whole are expected to rise only about $1 million. In my opinion, this has given council and others a false sense of security that our revenues are naturally growing to cover the ongoing, rising expenses — so let’s try to tug the curtain away. Read the rest of this entry

The DeKalb Area Rental Association (DARA) has sent city council members a letter and with general budget recommendations for FY2014.

EPI, of course, refers to Executive Partners, Inc., their latest report to the city and the April workshop we talked about yesterday.

DARA to Council p1 photo budgetinputletterfy2014p1_zpsb41eef46.jpg

Jump for more. Read the rest of this entry

EPI is Back

*Post corrected May 21*

Executive Partners, Inc. (EPI) was hired four years ago to help put the City of DeKalb on a more sustainable path financially.

The fix didn’t take, so they’re back. EPI met with city officials at an April 13 special meeting.

Mr. Nuehring stated he will discuss opportunities for revenues. He noted that there are approximately 375 fines and fees and enforcement can be a challenge. He added that a full review of all may be necessary. The question was asked of staff yesterday, he said, if fines and fees are viewed as revenue or used for public safety and compliance. Staff stated they are meant for public safety and compliance. Mayor Povlsen agreed.

DeKalb’s personnel expenses are going up $1 million in FY2014, but most of its core revenues are slipping. Property taxes are still flat, city sales tax has been reduced more than $100,000 in the past year and the utility tax revenue estimate for FY2013 is $320,000 less than the year before. Are we really supposed to believe the timings of the new rental housing registration program, towing/impounding regulations and steep increases in fines are coincidental and not responses to continuing revenue shrinkage? Read the rest of this entry

The DeKalb Chamber of Commerce wants a new annual allocation from the city.

The DeKalb Chamber of Commerce is requesting $45,000 from the city to create an event coordinator position to take over the events that Re:New DeKalb has run for years…Re:New DeKalb will undergo a fundamental shift later this year, said Frank Roberts, the president of the organization’s executive board. He said the organization will broaden its focus to include economic development in the entire city, public safety, and creating a marketing brand for DeKalb.

First of all, that’s some serious mission creep they’ve got there. Secondly, the Chamber already gets $50,0000 per year from DeKalb’s Economic Development Fund for marketing and tourism.

Speaking of the Econ Fund:

The money would come from the city’s economic development fund, which is funded by the city’s hotel/motel tax. Biernacki said the city expects to see a boost in this fund with the new Hampton Inn and Suites being built at the corner of South Annie Glidden Road and Taylor Street.

No, I’m thinking the money probably wouldn’t come from that fund. Reason(s): the Econ Fund always a) gets a transfusion from the General Fund, and/or b) runs in the red. Read the rest of this entry

I was ready to get all congratulatory on Alderman Dave Baker for allowing electronic public input during discussions at the April 8 council meeting, but it turns out the celebratory spirit was premature because the texting was of a personal nature.

Baker Cell Phone Use photo BakerTextingFOIA_zps8cabe931.jpg

A Freedom of Information Act opinion says that electronic communications made during meetings are public records, but only if they have to do with public business.

Could be Mr. Baker had an actual emergency, in which case I hope everything turned out OK. However, he does this a lot so I’m guessing most days he’s just being rude.

Some municipalities might choose to ban electronic communications during city meetings, but I’m torn. Sometimes it’s better to know without a doubt who the jerks and louts are.