Budget Committee Meeting
September 18, 2003, 7:00pm
Civic Center Council Chambers, 1175 East Main Street
CALL TO ORDER
Chairperson Marty Levine called the meeting to order at 7:03pm.
Present: Alex Amarotico, Alan DeBoer, Ray Olsen, Cate Hartzell, Kate Jackson, Marty Levine, Jim Moore, John Morrison, Russ Silbiger, Dave Williams, and Regina Stepahin.
Absent: Chris Hearn, Don Laws, and Jacquie Christensen.
APPROVAL OF MINUTES
Approval of minutes from previous budget meeting with correction made to Regina Stepahinís name.
Moore/Jackson m/s to accept minutes as corrected.
Report from City Administrator
Gino Grimaldi spoke to the Communications Manager position memo and the goals of position are to assist city administrator, to provide ability to spend more time out in city and to assist council. Grimaldi stated that they would improve responsiveness, pertaining to requests from employees and community, create more time to research business functions for City Administrator, will let the community participate in government and will inform citizens of the services of the City. Morrison questioned the duties, what the bottom line was in the two jobs and what the dollar amount was. Grimaldi responded that there would be no adjustment in the dollar amount, only adjustments to the program. Morrison asked about maintenance of web page. Grimaldi answered that it will remain with Ann Seltzer. Morrison questioned if the communications will evolve in effectiveness. If Anne can continue to grow. Grimaldi answered that it will evolve, and she can provide more support to other departments as needed. Williams questioned the wording in the functions on the memo, the outcome, recommendations that the analyst will make. Merits on recommendations? Grimaldi will change wording. Will analyze throughout projects. Williams questioned the function of the City Attorney and Analyst. Grimaldi answered that this position will bring the issues to the attention of attorney. Williams questioned if they will negotiate with Charter or other franchises? Grimaldi answered that they will. Levine questioned the attributes, job requirements, skills and abilities needed if filling this position. Grimaldi would like a 4-year degree, masters preferred, and several years of experience in local government. Levine questioned what kind of experience in local government. Grimaldi answered as a generalist, some in communications, characteristics would be someone who is a generalist, can multi task, can communicate well, is flexible, and has the desire to move up in local government.
Stepahin commented that when Greg Scoles was the Administrator in the past, he was opposed to this position. Will they ask for more people in the future? Grimaldi answered there would not be an addition, only possibly in Human Resources. DeBoer commented that in the last four years, the City lost 2 high level positions that are being replaced. Levine questioned if they would be looking for someone on the way up and what does the City have to offer person in this position? Grimaldi answered they would probably have to move out of organization or become a Department Head.
Report On Updated Business Plan
Tuneberg spoke to plan, on history, and the data that was used to update the plan. He identified the goals in the process and the plan. He emphasized the need to evaluate assumptions, other financing options, to develop a plan that better integrated with the budget process, and how it related to the budget process. He felt that we need more information from the industry. Need someone to help with that. Expressed that they are looking for acceptance of items addressed. Referred to 3rd page of internal borrowing. Is it realistic? What is the net income, are there technology replacements that will need to be done? Suggested using the Ad Hoc Committee to get consultant. Tuneberg stated the Finance Departments goal is to come up with an acceptable adopted budget, without reviewing and revising. Process would require an annual update of the plan. Quarterly reports would show highlights. Internal reviews would be done on a quarterly basis. Moore questioned advisory committee resolve. Grimaldi answered that they developed ideas to use AFN differently and how to improve it. Hartzell added focus was on restructuring, new and expanded services, and marketing. Levine asked if any suggestions were incorporated. Grimaldi answered that the next step is bringing someone in, then they will bring it back to the committee. Levine asked what Ad Hoc in #4. Tuneberg answered it was the committee that met two years ago. The information should be tested and evaluated before integrated into business plan. Tuneberg spoke to the packet, comparison of the plan, bank loan plan, plan revision, and base plan highlights, and assumptions table. Levine questioned programming fees, 10% of what. Tuneberg answered that it is what they are currently paying plus, 10% each year. Levine asked that he is assuming it will grow 10% each year. Tuneberg answered that that was correct. Williams asked about CATV and Internet rate, 43% increase in 4-year period, if we are going to be able to charge that. Levine added that it is still less than what other communities charge. Tuneberg added that it is a balancing act, what can we charge, what programs or incentives are provided? Silbiger questioned rates on Internet, page 41. Over ten years rate has gone form $15 to $60 per month. Tuneberg answered that a change was provided in tables. Silbiger stated that the percentages were wrong, the numbers were not sustainable. Tuneberg said that cable modem services pay franchise fees, they will follow the industry practice and what we require from the incumbent, we will not charge AFN that money, and that will effect rate to customers. We are currently charging for fees and we will leave that as part of the revenue and that caused that extra percentage increase. Wanderscheid reviewed marketing and operations on handout. Committee asked for budget for these. Levine questioned consultant in plan. Tuneberg replied that other areas have money budgeted that can be transferred to AFN. Silbiger added that they would have to go to council about the franchise fee. Wanderscheid replied that was correct. Grimaldi added that they are presenting one scenario, they can work through issues, and they would like to keep rates down and create revenue. Williams asked about the consultant and the timing of use, done by budget time. He expressed the need to have plan that they believe in. He added that the numbers are not credible. Questioned what is councilís responsibility. Grimaldi replied to the length of time, they put out a request of qualifications, and there was a problem with responses received. It will take approximately 10-15 weeks. Will need to have it done before next budget process. Tuneberg referred to p. 3 of memo, five points of consideration, financing, target year for net income, when do we see need for money for technology, when will there be changes in industry? He referred to p.4 using the ad hoc committee to steer consultant. Levine stated that Charter would lower their charges to their customers. Wanderscheid responded that Charter never paid franchise fees because the FCC ruled that they were not subject to it. DeBoer added the ruling was within the last year. Wanderscheid stated it is being appealed. Williams questioned what we do if they donít meet the plan? Is there a debt limit? Grimaldi replied they focused efforts on revising plan, addressing issues with advisory group, hold off until completed other work, get this part correct. Hartzell added they can combine when they hire consultant. Morrison said that it was thought that AFN was going to be an economic generator for this community. He asked if that was still realistic. Wanderscheid responded that some is realistic. Morrison raised questions in the promotion memo. Morrison questioned the extra .5 FTE, and how it will work. Grimaldi replied that they would be in the area where Bryn sits in the front office of the Finance Department. Morrison asked if there would need to be remodeling. Wanderscheid replied that there would be minor remodeling. Morrison questioned installing equipment. Wanderscheid replied that now we have ability to sell local advertising. DeBoer questioned the income from the advertising. Ainsworth replied none yet. Levine asked if there were any marketing outside of the immediate area. Wanderscheid answered no, that they need to prepare a team that is ready to respond. Grimaldi spoke to using ad hoc for consultant. Proceed with approach from consultant. Hartzell suggested expanding ad hoc to include committee that could benefit consultant.
Ron Roth 6950 Old Highway 99 S
Roth spoke that he canít get Charter or AFN where he lives. The problem with AFN is that we are trying to compete with an identical company. If we had as much money (as the competition) we would not be $14 million in debt. He questioned why we are trying to compete. He questioned what the city is paying on interest to interfund loans. He commented that Grimaldi, Tuneberg, and Wanderscheid are doing the best job they can. He stressed that the community should be open-minded. AFN loans are more than others combined that was money well spent. We need to really think of it, as an investment. Doesnít know if AFN can work better. Cut loses possibly. Look at it seriously this year. Cannot fix itself on its own. Questioned how much money is spent to install versus subscriber revenue. Levine asked Roth if $14 million was absorbed and AFN could continue, how would he react. Ron answered he would not support that, the City could do many things with $14 million. Levine clarified his question that if there was a way they could survive. Roth answered he didnít know if could be supportive. He would believe to let the people decide. Levine clarified question again. The City would be free from obligation to repay debt. Roth answered he didnít know how to respond.
Hartzell suggested having a focus group and discussing with staff. Jackson added that staff had worked out so AFN can break even in 2006. Levine disagreed. Jackson replied that they were not telling them how to proceed. Would like to see staff move forward and bring consultant on board. Williams agreed. Levine asked what the committee thinks of the five parameters. Hartzell asked Tuneberg if there was a target for net income. Tuneberg replied that one-year of net income would be needed before internal borrowing begins to go down. Morrison adds the uncertainty in numbers, need guidance. Approves of consultant. Williams agreed. Moore agreed and would like target date to reach decision. Grimaldi committed that they would like to wrap up in time for budget in March. Silbiger questioned in March if they will have a realistic budget. Grimaldi answered it will be based on the best information available.
Tuneberg spoke to results and appreciated those who responded. Spoke to training issues with committee.
Will look into committee memberships expiring.
Administrative Secretary Finance Department