CALL TO ORDER
ROLL CALL 
PLEDGE OF ALLEGIANCE 
REVIEW AGENDA - ADDITIONS OR DELETIONS (DISCUSSION ITEMS ONLY)

• Approval of Minutes of February 4, 2008 regular City Council meeting
• Bills & Payroll

The city is responsible for the provision of safe and reliable potable water required for domestic consumption, business use and fire protection purposes in meeting current needs and sustaining future growth and development.

FY07-08 projected collections are estimated to exceed the budget estimate, but will still fall short of FY06-07 collections. FY07-08 total expenditures are estimated to be under budget. EOY fund balances will improve. About $294,000 of the fund balance is proposed to be expended in FY08-09 for capital projects; an additional $475,000 in reserves is tentatively budgeted to be transferred in FY10-11 to pay costs related to the planned construction of a new water storage tank.

The Water Fund is intended to operate as a self-sustaining enterprise account: system revenues should fully cover system expenses. The city assesses user fees for water services. The current base user fee is $3.28 per 1,000 gallons of water used. Discounts are made for senior citizens, handicapped and circuit breaker qualified residents. Portions of the city are provided service by other water utilities: Northern Tazewell Water Company serves the Sunnyland area and Sundale Utilities, Inc. serves Washington Estates and areas along Hillcrest Drive.

Personnel. Approximately 6.5 full time equivalent personnel are assigned to operations and maintenance, billing and administrative services related to the water system. These personnel are further classified as follows:

FTE Classification Function

1.86 Admin/Clerical Engineering, Gen. Supervision, Billing, Accounts

Receivable/Payable, Human Resources

2 WTP Operators Operate/maintain 2 WTP’s and ancillary duties

2.45 Dist. Sys. Mtc. Operate/repair/maintain water distribution system

0.25 Meter Reader Water meter reading

Wage and benefit costs are projected to increase substantially, by 13.7%, in FY08-09 compared to the prior year budget. Added funding for the retiree health insurance benefit is a major contributor to the increase. In addition, the FY08-09 budget anticipates a 20% annual hike in health insurance and about 3.8% annual growth in base wage costs. Total personnel costs are projected to increase by about 7.5% in both FY08-09 and FY09-10.

Operations. A wide variety of expenditures fall into the operations classification including: utilities and communication expenses, system maintenance and repair, property insurance, chemicals, etc. Notable increases have been incurred in recent years for the purchase of electricity, softener salt and other chemicals used in the water treatment process.

Capital. The following capital expenditures are planned in the coming year:

Reaction Basin Replacement $350,000 (WTP No. 1)

Water Tank No. 2 Eng. Eval. 10,000 (Cleaning, inspection and maintenance evaluation)

Water Meters 10,000 (Reduced due to meter inventory carry-over)

Water Main Replacement Program 20,000 (Undesignated)

Miscellaneous Capital 5,000 (undesignated system improvements)

Chlorine Feed Equipment Upgrade 2,000

(See Water Subdivision Development Fee Account for other capital projects related to the city’s water system.)

Debt service payments are estimated to total about $11,200 in the coming year. A summary of the outstanding bonded indebtedness chargeable to the Water Fund is as follows:

Name Purpose Amount Borrowed Retirement Date

S. Cummings Improvement Bond Water Main Ext. $112,625 June 2017

Inter-fund Transfers. Inter-fund transfers are planned for the following purposes:

• To the Motor Equipment Replacement Fund (MERF) for fuel, and repair and replacement of vehicles and equipment assigned to or shared by the Water Department.
• To the Legislative/Administrative (L/A) account to pay 10% of the total costs associated with this account.
• To the City Hall account to pay 10% of the total costs associated with this account.
• To the Illinois Municipal Retirement Fund (IMRF) to pay a portion of the retirement contributions for employees assigned to the Water Fund.

Long-Term Finances. As noted above, several recent events have adversely affected Water Department finances. The added cost of energy since the Ameran rate hike ($57,000), softener salt, chemicals and retiree health insurance have materially affected near and long-term finances. Funding for capital improvements to the water system will be directly affected. Rate adjustments will be required to address this deficiency.

Water Supply. Two new groundwater wells were put into service in March 2004. The wells continue to meet expectations. Based on anticipated residential growth projections, the wells are expected to be adequate to meet the city’s needs for 10 years.

Water Treatment. The city faces no current or anticipated regulatory compliance issues at the present time. The expansion of Water Treatment Plant No. 2 was completed this past year. Based on anticipated residential growth, current water treatment capacity is expected to be adequate to meet the city’s needs for 15 years. As noted above, funding is tentatively budgeted to replace the reaction basin at WTP No. 1. City stall is still evaluating options to determine whether a less expensive solution is possible.

Water Distribution System: Tanks. Monies are budgeted in the coming year to perform an engineering maintenance evaluation of Water Tank No. 2. Recommended work, if any, will be budgeted in later years. The cost of this work will be paid from monies transferred from the Water Tank Reserve Account.

Given the new construction that has occurred and is anticipated throughout the city, a third elevated water tank will be needed in the future. Construction of the tank is tentatively planned for FY10-11. Monies for this project will come from the Water Subdivision Development Fee Account, Water O&M and/or the Water Tower Reserve Account.

Water Distribution System: Mains. The network of mains that distribute potable water throughout the community is the weakest link of the city’s water system. As noted in prior years, special areas of concern include the following:

• Many of the city’s older, more established neighborhoods have undersized, deteriorating water mains in need of being upgraded. As noted above, funds for a regular main replacement program are not currently available.
• The distribution systems served by the city’s two water treatment plants have largely operated independent of one another. In order to improve overall system reliability and meet the increased water demand resulting from new growth, installation of variable speed control equipment is proposed in the future.
• The water systems serving newly developing areas need attention (primarily looping) to assure adequate, reliable flows and pressure. Areas of special concern include the following: existing and planned residential development north of Route 24, in the northeast quadrant, and north of Washington Estates; and planned commercial development along Cruger Road. The water main extension along Nofsinger Road to serve areas north of Route 24 is planned for 2008 as noted in the Water Subdivision Development Fee Account budget.

The city operates a public water treatment and distribution system. Like any public utility, the city must regularly extend, improve, and/or upgrade its water distribution system to enable and support future growth and development.

FY07-08 revenues are estimated to be over budget. Expenses are projected to be under budget. Year end fund balances will increase accordingly. These fund balances will be required to construct improvements to the water distribution system planned in coming years.

The city charges a Water Subdivision Development Fee in the amount of $584.50 per residential dwelling unit and $1,746.00 per acre for non-residential properties at the time final plat approval is granted for new subdivisions. The fee automatically increases on January 1^st of each year by 3.5% or the rate of inflation, whichever is greater.

All of the funds collected from Water Subdivision Development Fees are restricted to and spent solely on extensions, improvements, and/or upgrades to the water distribution system as necessary to support future growth and development. Of the total capital funding budgeted in the coming year, $145,000 is budgeted to complete the water main along Nofsinger Road interconnecting the distribution systems on either side of Route 24 and $10,000 for undesignated projects that many occur during the course of the coming year. It should also be noted that full funding for the construction of Water Tower No. 3 is tentatively budgeted in FY10-11. A significant transfer from the Water Fund and/or Water Tower Reserve Account will be required in that same year to offset some of the tower’s cost.

Several improvements are needed to enhance the delivery and reliability of water service throughout the city. The primary improvement needed in the near term entails the construction of water distribution lines along segments of Cruger, Dallas and Nofsinger Roads. As noted above, construction of the Nofsinger Road interconnect is planned for FY08-09. The city also anticipates the construction of a third water tank in the near future to accommodate its growth.

The city owns and operates two water treatment plants and faces the need to regularly improve, upgrade and/or expand the plants to accommodate future growth and development.

FY07-08 projected revenues are estimated to be slightly over budget. No expenditures were budgeted nor are any expected. The year end cash balance will improve as planned. These cash balances will be required in future years as expenses are incurred for water treatment plant expansion projects.

The city charges a Water Connection Fee for each and every new connection made to the water system. The water connection fee is $415.00 per each residential dwelling unit. The fee for non-residential usage is based on the size of the water meter. The budget estimate assumes the equivalent of 100 residential connection fee payments in the coming year. It should be noted that these connection fees are currently reduced by 50% for eligible commercial and industrial projects located in the city’s enterprise zone.

All of the funds budgeted in this account are restricted to and spent solely on improvements to and the expansion of the city’s water treatment plants as needed to support future growth and development. No expenditures from this fund are currently proposed for the coming year.

The city owns and operates two elevated water towers and intends to build a third in the near future. The cost to build, repair and maintain these tanks is significant and funds in this account are held in reserve for this purpose.

FY07-08 revenues are slightly below budget as the installation of the second set of cell phone antennae was delayed slightly. No expenditures were planned for FY07-08 nor are any anticipated at this time.

The city currently leases space on one of its water towers to two cell phone providers. All of the revenue from these lease agreements is deposited to this account.

A transfer to the Water Fund is planned in the coming year. This transfer will defray the cost of the engineering maintenance evaluation of Water Tower No. 2 planned for FY08-09.

The city extended public water service to the Beverly Manor area in 1994. Bonds were issued to pay for this project. The bonds were repaid from special assessments paid by the benefiting property owners as well as transfers from the city’s Water Fund. No further activity in this fund is anticipated.

No transactions were budgeted nor are any anticipated during FY07-08.

None

None.

The city budgets for the maintenance and repair of its fleet of vehicles and equipment as well as for the eventual replacement of that same equipment. This approach assures that cash funding has been reserved to replace vehicles and equipment at the end of their useful lives.

Total projected expenses are estimated to be considerably under budget. While operations expenses are over budget primarily due to escalating fuel costs, capital expenditures are projected to be under budget due to the deferral of the purchase of the replacement Vactor Jetter.

Annual transfers are made from each of the city’s operating departments based on those costs allocable to that equipment under each department’s use and control. The fund also receives interest earnings on its cash balance as well as proceeds from the sale of vehicles and equipment no longer required for public purposes. Lastly, Washington Park District (WPD) and Washington Volunteer Fire Department (WVFD) payments are received for fuel purchases made by each department.

Operations costs continue to escalate. Fuel costs alone are expected to increase by $20,000 (12%) over the FY07-08 projection.

Capital Needs: Funds are tentatively budgeted for the purchase of vehicles and equipment enumerated below.

$ 75,000 Replacement of three (3) police vehicles

85,000 Replacement backhoe

235,000 (net) Replacement of Sewer Cleaning Machine

20,000 Added vehicle (Public Services Manager)

The city is obligated to have an independent review and audit of its financial statements conducted annually. The city contracts for these professional services on a multi-year basis.

FY07-08 revenues and expenditures are consistent with the budget estimate.

A small property tax is levied each year to defray the cost of the annual audit. The fund also receives a small amount of interest income earned on its cash balances.

All of the expenses charged to this fund are for the payment of consulting services provided by the independent accounting agency retained to perform the city’s annual audit.

The city purchases liability insurance to protect its residents and taxpayers from financial losses that may result from claims for damages to others.

Projected FY07-08 revenues are consistent with the budget estimate. Expenses are estimated to be less than budget.

The city levies a property tax to pay these liability insurance premium costs. These funds may be used to pay insurance or self-insurance costs, for risk management programs, for legal services in protecting against liability, for judgments or settlements, and to create reserves for these purposes.

Costs related to the purchase of liability insurance are charged to this account. Property and workers compensation insurance costs are charged directly to the appropriate operating fund or account. The city currently purchases these insurance policies from the Illinois Municipal League Risk Management Association.

The city strives to maintain a minimum fund balance of about $100,000 for cash flow requirements related to pre-paid insurance premiums and unanticipated expenses that may occur in any given year.

The city provides eligible employees with retirement and disability pension benefits through the Illinois Municipal Retirement Fund (IMRF), a state-established pension program. Benefit levels are established by the Illinois General Assembly. Washington employees also participate in the federal Social Security Insurance program.

Projected FY07-08 revenues and transfers are generally consistent with budget estimates. Expenditures are expected to be under budget and the EOY fund balance will improve accordingly.

The city levies property taxes to cover most of its IMRF/Social Security contributions. Replacement property taxes received from the State of Illinois are also credited to this fund. Transfers are planned from the Sewer and Water Funds to pay all of the SSI cost and a portion of the IMRF cost of employees assigned to the water and sewer departments. While not reflected in the budget, employee IMRF contributions are paid at the rate of 4.5% and SSI at the rate of 7.65% of covered salary.

All city employees expected to work more than 1,000 hours annually (except police officers) are covered by IMRF, a defined benefit pension program. The city’s IMRF contribution is based on an actuarially determined rate. The city’s IMRF rate has been steadily increasing in recent years as follows: 2.66% (2002), 4.1% (2003), 8.37% (2004), 9.01% (2005), 10.29% (2006) and 9.82% (2007). Fortunately, it will decrease again in 2008 to 9.77% in 2007. The city’s SSI/Medicare contribution is set at 7.65% of wages.

As noted above, the majority of these pension costs are directly funded by local property taxes. These costs have been steadily escalating due to both an increase in rates and general wage inflation. In recent years, we have managed to fund these increased costs with little to no impact on existing property tax payers as the added expense has been covered by increased revenues resulting from new building and development.