City aims to set aside money to fund development

Sean C. Morgan

As it approved a city budget last week, the Sweet Home Budget Committee earmarked $200,000 for possible economic development projects during the 2017-18 fiscal year.

Following discussion on Thursday, May 25, the committee rejected a motion to allocate $500,000 from the General Fund’s ending fund balance to a newly created Economic Development Fund and chose instead to transfer the smaller amount.

The money is not slated for any specific project or program at this point, but is available for use by the community and economic development director with the approval of the City Council. The city is currently recruiting for the position, which replaces the previous community development director position.

The previous community development director, retiree Carol Lewis, supervised building, planning and parks. The new job description will include economic development efforts.

“We’ve had a series of studies done in this community,” said Councilor Diane Gerson, who proposed transferring $500,000. “We had the downtown revitalization study done in 2010. We’ve had the livability study done, and we’ve just finished the economic opportunity analysis – all of which call for the city to step up.

“I think that the economic picture right now is one in which we need to do that. We need to have funds available to assist businesses either with matching grants. We need to have funds available when industry comes in and they need something that we could assist with, which we have done in the past.”

Committee member Bob Briana noted he’s lived in Sweet Home for 17 years.

“When a new business comes into town, I drive by and I go: nine months, one year, a year and a half. I don’t know what you’re asking the city to stand up for. A lot of the businesses that come into this town, they don’t have a plan ahead of time.”

Gerson said the person who takes the new position will work to see that does not happen.

“We’re going to have an economic development director, a community development director, and that person is going to be utilized in that way, I’m sure,” she said. “That’s the person’s job, is to go out and get new businesses into town and make sure they have a business plan that makes them sustainable. We haven’t had that before, and we need that. My concern is that the economic wave is coming over us now, and if we don’t step up to it, it’s going to wash right over us.”

“With an economic development person and (if) we invest smart, we could become the hot spot in the state,” said Councilor Lisa Gourley. “Other communities have done this very, very well. We have to be smart about it. We have to invest or we’re going to lose this opportunity.”

“Keep in mind it’s not just for businesses,” said Mayor Greg Mahler. “She ran that by me. You’ve got services and infrastructure that the economic director could push toward.”

“In my opinion, we were sold a bill of goods that there was no way Sweet Home will ever be able to attract anyone to our community, but I totally disagree with that,” said Councilor Dave Trask. “We have the property. We just haven’t taken the opportunity to say, ‘Come over and we will take care of you.’ So I’m for this. She twisted my arm, but I’ve been for this for a very long time. We just haven’t put the (pedal to the metal). I think this is a good idea.”

“We have a Bi-Mart,” Briana said, also mentioning the new Dollar General store. “We didn’t have an economic developer do that. Here in Sweet Home, Main Street looks like what Lebanon used to look like. Ten years ago, Lebanon, all the stores downtown were empty. There was nothing there. Absolutely nothing. The only reason Lebanon has gotten bigger is what Samaritan has done with the college. Other than that – and the veterans.”

“Their City Council stepped up and said ‘We’re going to do something about economic development,’” Gerson said. “And their entire City Hall embraced economic development. Samaritan put up the funds, but the whole process came about because they said, ‘We’re going to do this.’”

“They did a lot of pre-planning way before business ever thought about coming to Lebanon,” Mahler said.

“I’m pretty sure that when Bi-Mart decided to come we didn’t go looking for them,” Trask said. “They came here on their own.”

“Because they saw the potential,” Briana said.

“It’s a total package deal,” Gourley said. “It’s upgrading our parks so people want to be there. It’s upgrading Main Street so people want to stop. It’s upgrading the quality of living here so that people change their idea about what Sweet Home is.

“It’s improving our medical services. The person from the college that came over the other day, she said that’s exactly where they started in Florence. We are working really hard, and each person is bringing something to the table. We are not the only ones aware of what’s happening. The people in Lebanon and the people in Samaritan have been watching and paying attention long before we figured out what was happening over there was going to affect us in profound ways, profound ways we can’t even foresee. Sweet Home is changing, and we have an opportunity and we need to jump on it.”

Finance Director Pat Gray told the Budget Committee that it needs to budget $645,000 in the ending fund balance to provide cash flow for the first four months of operation, $345,000, in a new fiscal year, from July to November, when the city receives property taxes and $300,000 to meet additional recommendations by auditors.

The “ending fund balance” is unspent money that carries forward to the following budget year where it is counted as revenue in the “beginning fund balance.”

The proposed General Fund budget had $971,000 in its ending fund balance prior to the decision to move money to the Economic Development Fund.

“I don’t disagree,” said committee Chairman Dave Holley. “But the thing that I disagree with when I look around the table is we don’t have a Public Works director. We don’t have a city planner. We have a brand new city manager.

“I can look in the budget, and yes, this year we show a million dollars in unappropriated ending fund balance, but (I) only have to look back one year to see that we had to transfer $500,000 to the public safety levy. The year before that, we transferred $500,000 to the public safety levy. It’s pretty easy to look at this big number and say we can take $500,000 off of it. It’s already been reduced by $100,000 because we’re not going to transfer out administrative costs from the Public Works funds, so we’re looking at $971,000 and change. You take $500,000 off, you’re down to $400,000. Four hundred is barely, barely enough to meet that four-month threshold notwithstanding the $300,000.

“The motion, as it stands, will bankrupt the General Fund. I think you need to do your homework just a little bit more before you start coming out with those kinds of numbers and see what we can actually afford to do.”

“I somewhat agree with you,” Mahler said. “But we talked about public safety, the council discussion was moving forward in the future we just can’t keep helping the public safety.”

“I know, Greg, but we’ve looked at history throughout this budget discussion,” Holley said. “Those are the history numbers I have to look at and I would be remiss if I didn’t bring that up.”

“I’m not sure I would support a half million dollars out of that fund,” Trask said. “That’s too much money.”

Gray told the committee to keep in mind that the figure she budgets for the ending fund balance tends to be conservative, and in 2015, the carryover was $1.8 million. In 2016, it was $1.7 million.

She also told the committee that it all doesn’t need to be transferred right away, noting that once transferred it cannot be transferred back to the General Fund for other uses. She makes a portion of the transfer each quarter. The council could review the budget mid-year and decide whether to complete the transfers based on how the projected ending fund balance looks at the time.

The committee voted 7-2 to reject a $500,000 transfer. Voting yes were Gerson and Councilor James Goble. Voting no were committee members Briana, Holley and Gerritt Schaffer and councilors Mahler, Susan Coleman, Trask and Gourley. Absent were Councilor Ryan Underwood and committee members Andrew Allen, Brent Gaskey, Dave Jurney and Mark Woody.

Briana proposed transferring $200,000, and the committee voted 9-0 to approve the transfer.

“I want to see a plan,” Holley said. “I want to know what’s going to happen with the money. I want to know who is going to set all these things in motion. I don’t disagree with the ideas.”

“I don’t think that’s going to happen at all with this City Council,” Gerson said.

“No, we’re kind of feisty,” Gourley said.

“I don’t see the harm in having the money there and available,” Trask said. “Spending, it’s another situation. In six months or December, we might not be in a position where we want to spend a dime of it.To have the availability to use it if we have a good reason to use it – I think that’s an option that we definitely ought to look at. And we don’t have to spend it. I’m very conservative. I’m not going to spend money if we don’t have it.”

The Economic Development Fund was created from the former Building Rehabilitation Fund, which had $217,000 in money repaid from a federal loan program. The Budget Committee two weeks ago talked about several ideas for using the money and renamed the fund.

The committee met May 22 to review Public Works funds and Thursday to review the General Fund. A week earlier, it reviewed the police and library budgets.

The committee voted 9-0 to approve the overall budget. The budget will go before the City Council for a public hearing in June. Following the hearing, the council may adopt the budget. The council must adopt a budget by the end of the current fiscal year on June 30.

General Fund

The city’s General Fund budget will increase from $3.2 million this year to $3.9 million in 2017-18.

On the revenue side, the budget shows a $1.5 million beginning fund balance, up from a budgeted $976,000 for 2016-17 but lower than the actual beginning fund balance, $1.7 million, in 2015-16.

The remainder of revenues in the fund are derived from fees, property taxes and sharing of statewide taxes. The budget projects an increase in property tax revenue from a budgeted $553,000 this year to $586,000 in 2017-18.

The budget projects nearly $40,000 more in building permit fees, a total of $165,000 and a reduction of nearly $50,000 in court fees, down to $134,000.

The Finance Department will grow to $390,000 from $213,000, reflecting the movement of two full-time equivalent employees from the Public Works budget, including a utility billing clerk and an office manager, whio will become an accounting supervisor. That position will acquire additional areas of responsibility.

The Municipal Court budget will remain around $300,000, but staffing will be reduced by .4 full-time equivalent positions.

The Community Development Department will increase from $191,000 to $302,000, reflecting the transfer of code enforcement from the Police Department to the General Fund and an increase in the salary of the department head, the community and economic development director.

Non-departmental spending will decrease from $971,000 to $922,000, reflecting the reduction of a janitor position as the city switches to janitorial services by Sunshine Industries and a $40,000 reduction in labor relations costs, from $50,000 to $10,000. The city completed three-year contracts with its employee groups this year.

Parks spending will increase from $239,000 to $271,000, with projects and improvements funding increasing from $46,000 to $80,000. The Budget Committee boosted that amount to $100,000, taking $20,000 from the parks line item for professional services.

The Budget Committee adjusted this total upward from 1.5 full-time equivalent employees to 2.5 FTE, adding a parks crew leader position while choosing not to approve funding for a maintenance lead worker that would have been shared among Public Works funds.

Public Works Funds

The city will receive $524,000 in state gas tax revenue. Combined with a beginning fund balance of $246,000, the budget in the Public Works Fund will be $770,000.

The funds are used for street maintenance and projects. Some $162,000 will be transferred to the city’s equipment reserve fund, its path program and the general fund.

From the proposed budget, the committee reduced the line items for technical services, professional services, operating supplies and equipment operating supplies by $10,000 each for transfer to the $1.6 million street maintenance capital fund for street projects.

That fund has $1.17 million allocated to potential street projects and maintenance.

The city’s Water Operating fund will decrease from a budgeted $2.5 million to $2.4 million. The fund is supported by $2.2 million in revenue from water rates.

The Wastewater Operating Fund will increase by approximately $52,000 to $2.7 million, paid for by a projected $2.7 million from sewer rates.

The Wastewater Depreciation Fund will increase from $1.3 million, most of which will carryover from 2016-17 to 2017-18, to $3.5 million, reflecting the first phase of upgrades to the Wastewater Treatment Plant. The fund budgets $2 million to the project and $2 million in federal appropriations to fund it.

Visitor Center Funding

The Budget Committee discussed whether to approve $15,000 in funding for the Chamber of Commerce Visitor Information Center.

Chamber President Bill Matthews said that despite the changes and difficulties faced by the organization, it has met its obligation to the city, which provided $15,000 last year and $10,000 the year before, and kept the Visitor Information Center open Monday through Saturday.

The funding is derived from the transient occupancy tax.

“The contract that we’ve had with the city, we’ve honored that contract, and we intend to do so in whatever fashion,” Matthews said. “We can survive several months, many months, under the current situation.If it takes 6 months to sell our building, we’ll be OK. We can still function very well.

“We are moving forward in positive directions. We have a developing, written business plan for the first time ever that will delineate financials and strategic things that we want to do and how we want to spend our resources.”

Without the funding of the city, Matthews said, chamber officials are not sure they can “be competitive in this marketplace.”

He noted that the chambers in surrounding communities also are supported by cities and counties.

Holley said he supported leaving the funding in the proposed budget, but Goble disagreed.

“Realistically for me, for this, it’s not good business to shell out money to something that is so uncertain as it is right now. It just does not make good business,” Goble said. “That’s like me going bankrupt and asking the bank for a loan with nothing to back it up.

“We need to work on things that’s going to draw more people, faster, farther away. For me there’s a generation gap between the Chamber of Commerce and what people are using nowadays to find information.”

“Personally, I would leave that alone at this present time,” Mahler said, noting that he doesn’t disagree with Goble but would like to give the chamber some time to see how the new management operates. “I would probably revert this back to council to make that decision on what they want to move forward with tourist-related activities and services.”

His concern is with promoting tourism, and he suggested that the money remain where it is while the Administration, Finance and Property Committee evaluates the arrangement with the chamber and sends a recommendation to council.

The committee left the money available in the budget.

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