Finance Committee - Regular Meeting

Okay, welcome everyone to the City of Joliet Finance Committee here Tuesday, August 18th at 5.30 in City Hall Chambers. Roll call. Councilwoman Reardon? Here. Councilman Hugg. Here. And Pat Mudder and myself are all here. Minutes to get a motion on the minutes, please. Motion to approve. I'll second. All in favor? Aye. Motion passed. Citizens to be heard on agenda item. Since we have a number of citizens here, would anyone like to speak on agenda item at this time? Seeing none,

Yeah, so the first item you have is a resolution proving the 2026 grant for the museum This agreement is the same as it has been in previous years Substance of the agreement is 25,000 for events at the museum campus 125 thousands for operations and events at the prison and a hundred thousand for operation and events at the main museum campus in the rail museum so bringing it for your consideration, this item is in the 26th budget. It is a reimbursable grant, so they have to submit eligible expenses that meet those categories.

Questions? Thoughts? Anyone? Okay. Moving to... Regulations the municipal use tax of the city of Joliet. Yes, so

this is only changing the mechanism and how people file their tax returns with the city and so it's customary for most local governments to require if there is an equivalent state tax to include a copy of that return just to justify the amount of the tax that they're submitting to us and if there is no state tax just some internal report and so this ordinance makes a change to our code to require that when they're filing Joliet administered taxes that they have to do a copy of their State return, if there's an equivalent, or internal reporting from their systems, if there is not.

Makes sense. So, Kevin, as you've talked in the past, by far the majority of cities of our size have done this?

Our size is smaller, you know, mid-size. If you look at some of our neighbors, they do that. In fact, the business, so I'm working with business services. They're the ones that administer it out of the clerk's office. They had a demo today of our current software, who's think City of Crest Hill uses them and you know it actually recognizes whether their returns attached and verifies that the information they're reporting is the information that's on that return so there is some integration that actually helps you know With mistakes if you will like we talked about what happens if somebody accidentally attaches their shopping list to it It would error out and recognize that that's not a return if they are using a Internal report because they don't have there is not a state returns for example amusement tax There was generally not a state return from what I understand for amusement tax Then they just indicate That it's an internal report and then the system will allow it to go through if they find out that it was in fact The shopping list and then they'll work with the business. Obviously people make mistakes But technically if this is adopted the return would not be deemed filed unless it had the attachment the correct attachment with it Obviously we want compliance not just fines. And so somebody makes an honest mistake They'll work with them to get the correct one as long as everything matches then everything will be fine.

I

Because it's just, if I understand you correctly, would be a similar form that they're already filing.

Literally, they're attaching a form they've already filed with the state, or will be filing with the state.

Has anybody been doing that in the past anyway? Here? No.

They currently don't have a mechanism on the portal to accept the attachment. So they're working through that now.

Basically, nothing's changed, just the accountability. Yeah.

Could be, you know, generally it could be like I've used in the past a copy from their POS system, right? So if they've got a POS system, anything from their accountant that just shows, you know, that. If you're like admissions, if you use Ticketmaster, something from Ticketmaster shows how many tickets you sold, that kind of stuff.

And is this form then monthly?

Some of the taxes are monthly, some are quarterly.

Quarterly.

Things like fuel, food and beverage are monthly. Some of the lesser frequent items are quarterly.

Questions? How about moving to banking services?

So you've got a resolution approving a banking service agreement. This would be as a result of an RFP that staff did earlier this year. We solicited competitive proposals from financial institutions. We had four responses. One of the requirements that you had to have a full service branch, one of the responses does not have a full service branch, so they were disqualified. Did an analysis. The financial institution that provided the best deal for the city was JPMorgan Chase. It's our assessment that as a result of the agreement, the benefit to the city from the other proposal are about $227,000 in interest, additional interest, and $50,000 in fee savings. from the next highest proposal. And so our recommendation is to move forward with JP Morgan Chase. We currently use Old National. It is our intention to still have accounts at that institution. I think the council knows that it's in our finance. We have accounts at many financial institutions, different products at different times, different interest rates. And so we still intend to do that with Old National. Just another tool in our arsenal to save the city money and generate interest.

If I understand it correctly, most of the institutions that put a bid in also had an opportunity to meet with you and review their business. Yeah, I've met with all of them.

Questions? Yeah, what's the interest rate for? I believe Chase is the one that you're recommending.

So the interest rate, with many institutions, there's vary based on the current interest rate market. And so as of August 1st, I'm opening it up. Their money market interest rate was 3.56. Old National's was 3.67. The difference there is that between Chase and Old National, there's an additional seven plus million dollars that would be earning interest. So based on that is where the additional savings comes in. So we looked at this as a proposal for based on the fees that would be charged what's the balance to not have to pay fees and so there's many ways to look at it that was one of the ways we looked at it and so we would be getting an earnings credit so therefore at JP Morgan Chase, the minimum balance to avoid fees based on the activity we requested was 3.6 million. Old Nationals, it was hard to administer, go through, evaluate because they didn't follow the RFP process where we asked for a specific level of transactions. Their proposal did not include all of those transactions. However, with the transactions they did include, the minimum balance at Old National would have been 10.2 million. Since they didn't include it, we knew that would be higher, but we still used the 10.2. So it's a difference of that roughly $7 million that would be earning interest.

I guess what caught my attention, Kevin, is you said that we'll pay less in fees. Mm-hmm. Over the other one. How many were there besides Old National?

So there were three qualified technical proposals. Busey, their fees were actually higher than, the fees were the highest and their earnings credit was the lowest.

So the highest interest rate came from Old National?

Based on current rates today, yes.

You said that we're going to make more money off the interest from Chase at a lower rate.

I'll have more money earning interest. why we're going to create a sweep account so that anything above the roughly 3.6 million would be swept into that higher that interest account where at old national we'd have to have that threshold above 10 million dollars so you've got seven million dollars earning interest that wouldn't be the other correct correct once again don't don't have all of the information to fully evaluate the old nationals, it would likely be higher because there's roughly 5,000 to 7,000 transactions that are not included in old nationals proposal because they didn't quote it.

So on the minimum for each, one is 3.5, one is 10?

Yeah.

That doesn't earn any interest?

Correct. Because due to the evaluation, that's the earnings credit, it's needed to generate enough earnings credit to wipe out the fees. Now, keep in mind, activity is going to go up and down each month, so there's going to be an evaluation. Interest rates are going to change, but as it sits in a specific point in time, that's how it shows. When I did this back in March, Chase's interest rate was higher than Old National's. But based on the different points in time we've evaluated it, the assessment is the same. The reason is that extra $7 million earning interest. if we have $10 million in there? In our normal course of business, like tonight's council agenda probably has invoices more than $3 million. And so we have more than $3 or $10 million in the bank at any one time, right? Because we have to make sure we can cover our checks that we're going to write. And so that's where that sweep concept would come in, is it be able to pull from the other account. So obviously we'd have... I ran this at $15 million. So assuming an average within these two accounts of a $15 million balance, that's the amount. Obviously, that balance goes up, the numbers change. It does.

After we pay, it drops considerably, and we have to move money in there from the general fund and what have you. So is the interest then based on daily?

Yes.

No, go ahead. You had a question about that, right?

Well, I was just saying, but you're saying the basis for the old national is $10 million. We will start earning interest at $3 million.

Yeah, $3.5 million.

$3.5 million per owner. Right. And how do we save $50,000 on fees?

Because if we maintain that balance of $3.6 million, it will generate enough earnings credit not to pay the fees.

And what is it with the other kids?

Well, one was 3.6, 10.2, but once again, it didn't include all the transactions, slightly higher. The next one was 67 million.

Who was 67 million? Busey. Okay, so we'll forget about that. Right. So it was 10 million for Old National? Correct. And we will have usually 10 million in there. So there'd be no fees, right?

Correct, but I'm losing interest on $7 million. Right. That's that $227,000.

I'm comparing the two headlines you gave me. Yes. I'm trying to figure out if we're saving $50,000, and it sounds like we won't save $50,000. What you're saying is we'll save that $50,000 if we're down to $3.5 million because we'd have fees from Old National. $50,000 from today. But we'd always have more than $10 million. Correct. So there's going to be no fees from either, right? Correct. So there's no savings either way for the fees.

From today, there's a savings.

But the fees are waived at a certain time and at a certain point. One's higher than the other. And we're always above both. So we won't have fees anyway. Correct. That's not really a consideration. All that's left is the interest rate on that. And we would be making a lower interest rate marginally, but on roughly $6.5 million.

Based on today's rates. Right. Well, once again, when I did this in March, it was the opposite.

Whatever the rate is, Kevin, we'll make that. with the one you're suggesting, Chase, we'll make it on six and a half million out of 10 million instead of zero out of 10 million.

So I'll give you an example. As part of the RFP, Old National was at 3.35, I believe. Since then, they've increased their interest rate. So that's what I mean. Rates change. And when we did this back then, Old National was 3.3. Chase was, I think, 3.6-something. So my point is things will change. The one thing that has remained constant throughout this evaluation is that additional $7 million is making a huge impact regardless of interest rates.

The threshold for interest remains the same. The threshold for interest. One is $3.5 million. One is $10 million. And if we only have $10 million in for Old National, we get nothing. But we get $6.5 million worth of interest on $6.5 million for Chase. Correct. The last question I have for you, you and I talked about this on the phone. You were saying something about processing.

Well, I guess every bank has their own systems. technologies, and so having worked with Old National Systems myself, I've got Christine here as well, who's the Assistant Finance Director, we use Old National Systems today. We currently have accounts at J.P. Morgan. We use their technology. We've done demos on additional technologies at J.P. Morgan. And so just the way the staff interacts with the technologies, everything we do is highly technical. We get a lot of transactions out of ACH. We have to do research. We've got to get copies of checks. And so the technological platforms from our perspective are more advanced at Chase than they are at Old National. And it would create some efficiencies among the staff in doing their jobs. So from that perspective, we also feel there's potential time savings and efficiencies in our internal processes just with the technology difference.

And I believe we have state representatives. I think we have all national. Correct. Is Busey here too or no?

No, I don't believe so.

Is there anybody from either of the banks that would like to add to what we just discussed and maybe if something was misunderstood?

I'd like to just add a couple things. Sure, can you step up to the podium?

Yeah, please, yeah.

Um, just two things for consideration. Um, at the first RFP. Could you just, ma'am, could you just state your name? Oh, I'm so sorry. Sherry Rabaki.

Thank you.

Thank you. Um, at the first RFP Chase was at 2.57 money market rate. We were at 3.35. So just to clarify.

That was their interest. There was checking account interest rate, not their money market.

I'd like that to be verified. Um, because that was, we were looking at those numbers. Okay. Anyway, and then the other, I would say, notable item would be when we developed the RFP, we were basing it off of, because we're the incumbent bank, so we had some intel that helped us identify what the best rate would be from an earnings credit perspective to make sure that there wouldn't be any fees waived. And over the past few years, the lowest average monthly balance was around $13 million. So, so when we came back with a 0.6 earnings credit rate, that would, we just, we knew that that would offset the fees, um, and that the rest of the funds could be swept. So, um, just a clarification on that when we created RFP and no comment on the, um, I would say on the processing and. They have great technology to chase scientists.

Well, they're worldwide. Admittedly, yes. Is it accurate that we have 10 million of them, right? Mm-hmm. Their RFQ says that we'll start earning at $3.5 million. Anything above $3.5 million, we'll get whatever the current interest is, and yours is $10 million threshold? So, yeah, based on what Kevin said, yeah.

So if the balance falls below the $10 million, then our earnings credit wouldn't offset the full fees. So while Chase's would. So, yeah.

You guys were here last night. Okay. That's all I have for questions.

Kevin, do we, would we have to make any changes electronically to adapt to what Jay said?

No, we wouldn't have to make any changes electronically. I mean, obviously we'd have to, you know, go through and just, you know, we have positive pay, and so it's just making sure that the format from our financial system, which we've already verified, would upload easily. But other than that, no.

So there's no reason to check the IT on anything? No.

I've already consulted with them. They're aware of what we're doing and don't anticipate a problem.

And how long are we committed to this?

So this is a five-year deal where it would lock the fees and the earnings credit basis for five years, meaning they couldn't come in and say the per transaction fee is going to go up over the next five years. They can't change their earnings credit. The city, if we're not getting good service or we want out, we have the ability to get out before then without a penalty with certain notice provisions. So this is an agreement where we're not locked to anything but the bank is.

Okay, moving to item 10191, resolution authorizing the purchase of vehicles and declaring certain vehicles as surplus for the tri-county auto theft.

Yeah, so this is, I would call it a housekeeping item, and the reason is This is not city funds, but because we're the grantee of the state grant that funds the Tri-County Auto Theft Task Force, and that grant can only fund the Tri-County Auto Theft Task Force, the vehicles that they own are titled to the city of Joliet. And so based on the municipal code, whenever we want to get rid of something, we have to, you have to, the council has to deem it as surplus. And so this resolution deems these three vehicles as surplus, and then as I call it, belt and suspenders, authorizes the purchase of the other vehicles. The council in the past adopted an ordinance that transferred spending authority to the board. Their board has approved this. And so I wanted to make sure you guys were well aware of what was going on so you didn't just look like, okay, we're getting rid of three cars. Now they're down three cars. No, they're going to be trading these in new ones. I've spoken to the director of Tri-County. These vehicles are four-wheel drive, a little bit larger, and the ones they're trading in are two-wheel drive and smaller. And so they... It's being funded by the grant, and so they felt it was a good use of resources to upgrade the fleet.

And what municipality has to be the grantee, and where are the grantees?

We're the largest single municipality. There's some counties, but I think given those structures, they prefer that Joliet handle it. And I want to stress, this is not taxpayer money. This grant cannot be used by the city but for Tri-County.

And to be clear, too, Tri-County itself does not qualify as a grant receiver. They're not a legal entity. Right. So that's the only reason we're calling. Yeah.

Right.

Yeah. And we're spending their money. We're approving kind of like the library.

Yeah.

Same thing.

Kind of. Yeah. All right. Thank you.

Pat, if you could take the first one, 10155 by itself, I'd appreciate it. Well, I think I'm moving for a motion. Okay.

Well, then you want me to split them out into two? Yes, the first one. I'd like to make a motion to move item 10155 to the full council with this committee's recommendation to approve.

I'll second that.

All in favor?

Aye. Aye.

Nay. Okay. Go two to one. I can't think of their names. I don't know. Either way, we know what you mean. I'm like John Adams or something.

Me.

I was going to go horse, but I didn't. It's all true. You know, nay, horse. All better than vulnerable. We've all been better than vulnerable, right? Okay. Motion to move items 10187, 10190, and 10191 to the full council with this committee's recommendation to approve.

I'll second that. All in favor? Aye. Any opposed? Same sign. Motion passes.

moving on to reports you've got the sorry you've got the monthly finance report for july i will say not a lot on you know substance i'd say boring is good when it comes to this one overall and the general fund revenues are in line with budget expenses are below budget We do have certain revenues that are still trending above budget and the same ones are kind of trending below. The ones above are things like video gaming, sales tax, and income taxes. I've included income in, it's called replacement or personal property replacement, which is a component of corporate income tax. Those are all trending slightly above budget. I will note that the trending above budget is shrunk from earlier in the year So we're watching that but it's still trending above and then permits charges for service and interest income are trending below budget and the general fund for sewer and water Those it's been kind of consistent a little bit. It's a little above little below each month this month It's it's above budget or within budget on sewer and water. So nothing exciting there parking I have a trending according to budget. Both expenses and revenues are slightly above expenses. I will tell you a result of employee retiring and then having their cumulative vacation and stuff bought out. So I expect that to get back in line as the year progresses and then continue the revenue slightly above budget. But all in all, I would classify it as within budget.

Question, Chairman. Just to clarify, sewer and water, I think you're referring to an expenditure where you said above budget or within budget?

Within.

Okay. You said above budget or within?

Revenues are slightly above, but I'm going to call it within. Expenses are slightly below. Okay. So I'm going to – when I say slightly, I mean like this. So as an overview, I'm going to just classify it as within budget.

Okay. So parking has always been our – And I didn't ask you ahead of time. So do you have any updates on how things are working on the streets and in the parking lot?

So in the – I will say revenue, you'll see. I mean, revenue is a little bit – but the struggle we're running into is we're still sorting through the technology. There's a delay in getting the reports and information in time for this. And so I'm showing above – it may be greater above, but – We're kind of still getting acclimated to that at the deck. We have technologies at the commuter lots, but this one is the deck technology. And then we've launched for people who have monthly passes, employers that buy. another technology so they can do that online instead of having to come in and they can manage those accounts and so we're kind of we're still in the implementation phase and some of that but at the deck it's moving through and it's trending better than the deck was before and it's I want to say to the point where it's offsetting the street so so far it's doing what we expected no negatives is probably the best way I would put it but as we get sort through the monthly pass situation that'll tell us some more as well but we're trying to increase service as we're doing what's happening

Well, that's the best I've heard so far. Kevin, street parking fines go into this line of revenue?

Yeah, they're supposed to, yes. And that's, once again, that's a manual entry because Katie, the person who runs adjudications, has to send us that out of the system so that we have to make that. So she's doing that every quarter. Okay.

will we be kind of folding that in with our other technology that we're doing for

for Katie or for the parking people yeah so the parking yeah the enforcement is all automated they drive an LPR car and so Katie just has to run a report each month and then let us know because it's two technologies they don't integrate and so the entry was always a there's always a You book them one entry for the month. And so now she just has to break it out for us.

But it's still electronically submitted? Mm-hmm. Okay, that's all. Oh, yeah, yeah. That's what I was thinking. Oh, no, yeah. No, please don't.

My clerks have a system they can go into to see if people have paid and apply payments and stuff like that. It's just a reconciliation at the end of the month so we can book the revenue.

On CTIS, we're working very hard to get that. We appreciate those. Sponsors and things like that.

Yeah, we appreciate those efforts. And then the exceptions, these are the invoices that are in between meetings, reimbursements, utilities, and so on. Be happy to answer any questions. Moving on, you've got the museum's quarterly report. Greg Pierbold is in the audience, and so I just want to highlight some things as I normally do on the report. This one is their annual report that ends June 30th of 2026. Main highlights there, over the last 12 months, they had 17,300 people at the prison. 13,300 at the museum campus. Another 5,000 in addition to that 17 at the big house ball game. So I did confirm that's on a double count. It's 17 that went to the prison and another 5,500 at the ball game. And then another 2,800 at various concerts. Visitors came from 52 different countries and 49 states slash U.S. territories. Greg and I spoke. No one from Delaware or North Dakota showed up. So those two states he's got to work on.

Greg, did you see a lot from the Route 66 anniversary? Yeah, please.

Good evening, Mr. Chair, committee members. Greg Fierbolte from the Julia Air Circle Museum. Yeah, the story of this is the Route 66 centennial, and we have certainly seen a spike in visitorship. So this is pulled primarily from our ticketing data, so it's good hard data that we got. We hope it continues. It's obviously a big year. It's getting a lot of attention, and We're proud of what we've done so far. We still have six more months to get North Dakota to Delaware. Let me cook. So, yeah, we're just excited. We, as always, appreciate the support from the city and the partnership with the city. And it's been a great year, and we've got a lot more to go. But the centennial is kind of doing what we would hope it would do for us in terms of attendance.

Greg, you have an estimate of when Jam will be able to do it on their own and not take taxpayer dollars?

Sure. I guess what I'd say is that we always hope the city will support us. We would always look to the city to do that and do more. Certainly, we've grown portfolios, so to speak, with adding the prison over the years, adding the railroad museum. So it's always been a partnership for us, and we hope it continues for as long as it can. Oh, you don't see that, right? I hope not, no.

So it's not going to be able to support itself? Well, I always hope we have a partnership. That's not answering my question. Thank you.

Anything else? Anyone else? Thanks. Great.

Thank you.

Final agenda item just to talk about is the travel expense report. Predominantly public safety again. It is smaller than normal, but predominantly public safety. Still some others are within it. And then I have one more statement at the end about budget, because we can never not talk about budget.

Any questions about travel? No.

So I just want to update the finance committee. We've launched the 2027 budget at the staff level. We've been busy working on it. We're wrapping up department meetings with the city manager. That's where the department heads meet with the city manager to talk about what they've asked for. Gives her and the budget committee, new for 27, we added a budget committee to help vet the budget. It's all internal staff. But here are those so that we can, as a committee, make a recommendation to the city manager for what gets presented to the council. And so our goal is to present a balanced budget to you at the council level in October. And so with that, um, you know, it's a heavy lift. I, I, I can't underscore it. I think today I said, I don't know whose idea it was to do this on an accelerated base. Cause it's killing me, but, uh, we are on, I still on the track to meet that goal. So I wanted to share that with, with you. Um, and also I want to thank, you know, council members, the mayor, city manager, the staff I've heard from a lot of people already on budget. And so. know everyone's given a lot of time so far I know it's not in the public and so I want the public to know we are working it's not something that just gets put together that you know elected officials staff put a lot of time and effort into this and so it does a lot that goes in before it comes to the public setting and so I just want to thank everyone for spending the time so far and I know we have still some time to go but thanks so far

Kevin, you and I have talked. I'm sure you've talked a lot. You know where I stand. I do. Question. In the process, is it used? Process is plural. Used to come to the proposed budget. What process is used to find places to come?

So we, I'll be honest, sitting on that committee, we hear what they're currently spending money on, what they want to spend money on that they don't, and then we look at, you know, quite frankly, the bigger picture, you know, the thought is council members' initiatives, things that are hot-button topics, things that we've heard, you know, that you guys want, and we kind of mess everything together. I mean, the biggest challenge, as all of you know, you've all run businesses, is I only have a pot of money, and how do I allocate that pot, right? So that if I spend money here, it may take from something. So we're working through trying to figure out things like where does an initiative score in the big scheme of things? And so we look at, you know, impact to citizens, service, continuation of services, if somebody asking for a new service, stuff like that.

And I understand, you know, when it comes from up here, when the majority has a frivolous request and it becomes law, it's a democracy, then you have to fund it. All right, thank you.

Thank you, Kevin. Thank you.

Moving on then. New or old business, not for final action or recommendation? Public comment. Anybody from the public that would like to comment, this would be your time to comment on anything that we either talked about or we didn't talk about.

Motion to adjourn. Second. All in favor? Aye. Aye.