Rock Island Today

Members of the City of Moline Committee of the Whole met Tuesday, April 19.

Committee members are in charge of a variety of issues that relate to the City of Moline. They meet regularly.

Here are the meeting minutes as provided by the City of Moline Committee of the Whole:

City of Moline

619 16th St.

Moline, Illinois 61265

Committee-of-the-Whole Minutes

Tuesday, April 19, 2016

PRESENT: Mayor Scott Raes (Chair)

Alderman Quentin Rodriguez (Ward 1) Electronically until 7:49 p.m.

Alderman Mike Wendt (Ward 3)

Alderman John Zelnio (Ward 4)

Alderman Lori Turner (Ward 5)

Alderman Kevin Schoonmaker (Ward 6)

Alderman Sean Liddell (Ward 7)

Alderman Stephanie Acri (Alderman At-Large)

ABSENT: Alderman David Parker, Jr. (Ward 2)

STAFF: Lew Steinbrecher, City Administrator

Maureen Riggs, City Attorney

Tracy Koranda, City Clerk

Alison Fleming, Human Resources Manager

Lori Wilson, Parks Recreation Director

Nate Scott, Information Technology Manager

Bryon Lear, Library Director

Kim Hankins, Public Safety Director

Jeff Snyder, Battalion Chief

Scott Hinton, City Engineer

Kathy Carr, Finance Director

Jeff Anderson, City Planner

Mike Waldron, Public Works Director

Tony Loete, Water Distribution Manager

Chris Mathias, Property Management Coordinator

Scott Williams, Police Pension Trustee/Police Detective

OTHERS: Mark Matthews, Child Abuse Council

Emily Cummings, Child Abuse Council

June Fahlenkamp, Resident

Hunt Harris, Resident

Anthony Watt, The Dispatch

Alice Kang, WHBF Local 4 News

Mayor Raes called the meeting to order at 6:30 p.m. in Council Chambers.

Proclamation

A Proclamation from the Child Abuse Council to declare April 2016, as “Child Abuse Prevention Month.”

Presentation

Kathy Carr, Finance Director, gave an overview of the attached detail regarding Moline Police and Firefighters’

Pension Funds.

Committee-of-the-Whole Minutes April 19, 2016

Page 2

Agenda Items

1. An Ordinance amending General Ordinance No. 88-3-2 related to the establishment of an Enterprise

Zone in the County of Rock Island, Illinois, pursuant to an Intergovernmental Agreement with the

Cities of Moline, East Moline and Silvis, the County of Rock Island, and the Village of Milan, Illinois,

by revising Section 3, Exhibit A thereto, to include new territory within the Illinois Quad Cities

Enterprise Zone. Chris Mathias, Property Management Coordinator, stated that Bi-State Regional

Commission is assisting the Illinois Quad Cities with applying for a new Enterprise Zone (EZ). The Cities of

Moline, Rock Island, East Moline, Silvis, Village of Milan and County of Rock Island will all be asking their

councils and boards for permission this month to submit a joint application for a new Quad Cities EZ in July

of 2016. While the new EZ will be very similar to the existing one, Staff has removed some residential areas

to save space for expansion of the zone as enterprise zone is limited to 15 square miles in size and the City of

Rock Island, who is currently not in the zone, will be added. A motion was made by Alderman Turner to

approve. Seconded by Alderman Zelnio. Motion passed unanimously.

2. A Resolution amending an Intergovernmental Agreement between the Cities of Moline, East Moline

and Silvis, the County of Rock Island, and the Village of Milan, Illinois, which established an

Enterprise Zone now called the “Illinois Quad Cities Enterprise Zone,” by adding the City of Rock

Island, Illinois, to the Intergovernmental Agreement and changing the zone boundaries to the Illinois

Quad Cities Enterprise Zone; and authorizing the Mayor and City Clerk to execute the amended

Intergovernmental Agreement between the Cities of Moline, East Moline, Silvis and Rock Island, the

County of Rock Island, and the Village of Milan, Illinois. Chris Mathias, Property Management

Coordinator, explained that Bi-State Regional Commission is assisting the Illinois Quad Cities with

applying for a new Enterprise Zone (EZ). The Cities of Moline, Rock Island, East Moline, Silvis, Village of

Milan and County of Rock Island will all be asking their councils and boards for permission this month to

submit a joint application for a new Quad Cities EZ in July of 2016. While the new EZ will be very similar

to the existing one, Staff has removed some residential areas to save space for expansion of the zone as

enterprise zone is limited to 15 square miles in size and the City of Rock Island, who is currently not in the

zone, will be added. A motion was made by Alderman Zelnio to approve. Seconded by Alderman Wendt.

Motion passed unanimously.

3. A Resolution authorizing the Mayor to make application, to enter into an agreement, and to execute

all necessary assurances and certifications to the U.S. Department of Housing and Urban

Development for CDBG entitlement funding under the Housing and Community Development Act of

1974, as amended, of certain projects and programs for fiscal year 2016; and approving projects &

program recommendations of the Citizens Advisory Council on Urban Policy (CACUP) for the use of

2016 Community Development Block Grant funds (CDBG) and the 2016 Annual Action Plan, which

contains said projects and programs; and authorizing the Mayor to implement those approved

projects and programs upon the approval of the City of Moline 2016 Annual Action Plan by the U.S.

Department of Housing and Urban Development and to exercise any and all powers required to

obtain such funding and to implement those approved projects as set out in Exhibit A. Jeff Anderson,

City Planner, indicated that the City of Moline is a CDBG entitlement community with national objectives

of the Community Development Programs. A proposed statement of community development objectives

and projected use of funds has been advertised and are consistent with the national objectives of the

Housing and Community Development Act of 1974. Citizens Advisory Council on Urban Policy also met

on April 4, 2016 and recommends approval of the 2016 Annual Action Plan. Additional documentation

attached. A motion was made by Alderman Wendt to approve. Seconded by Alderman Turner. Motion

passed unanimously.

4. A Special Ordinance authorizing the discharge of firearms in conjunction with a deer removal permit

issued by the Illinois Department of Natural Resources. Maureen Riggs, City Attorney, stated that

Moline residents June Fahlenkamp of 4826 5th Avenue and Hunt Harris of 901 46th Street have incurred

Committee-of-the-Whole Minutes April 19, 2016

Page 3

excessive damage to landscaping and shrubbery resulting from deer on their properties. The Illinois

Department of Natural Resources has made a site evaluation and has verified the extensive deer-related

damage and has determined that the issuance of a Deer Removal Permit is warranted to reduce the deer

population at these locations. In order for the permit to be approved, the City must allow for the discharge

of firearms within City limits for the duration of the permit, which would be sixty days with the possibility

of an extension. The permit would be issued only for 901 46th Street as it is a larger parcel that would be

safer for hunting. A motion was made by Alderman Schoonmaker to approve. Seconded by Alderman

Zelnio. Alderman Liddell made a motion to amend by requiring the property owner to give a written

statement that the deer meat would be made available for human consumption. Seconded by Alderman

Wendt. Motion to amend failed on the following roll call vote: ayes: Aldermen Wendt, Liddell and Acri;

nays: Aldermen Zelnio, Turner, Schoonmaker with Mayor Raes breaking the tie with a nay vote. Motion to

approve passed on the following roll call vote: ayes: Aldermen Wendt, Zelnio, Turner, Schoonmaker, and

Liddell; nays: Alderman Acri.

5. A Resolution authorizing the Mayor and City Clerk to execute a Contract with Civil Constructors Inc.

for Project #1253, 2016 Bridge Maintenance Project, in the amount of $289,180.00. Scott Hinton, City

Engineer, explained that bids were opened and publicly read on April 5, 2016, for Project #1253 with the

following results:

$289,180.00 Civil Constructors Inc.

$306,755.75 Era-Valdivia Contractors Inc.

$424,591.00 McCarthy Improvement Company

$454,222.75 Brandt Construction Co.

Civil Constructors Inc. submitted the lowest responsible and responsive bid. A motion was made by

Alderman Liddell to approve. Seconded by Alderman Schoonmaker. Motion passed unanimously.

6. A Resolution authorizing the Mayor and City Clerk to execute a Contract with Walter D. Laud Inc. for

Project #1247, 2016 Residential Street Reconstruction Project, in the amount of $738,756.00. Scott

Hinton, City Engineer, stated that bids were opened and publicly read on April 12, 2016, for Project #1247

with the following results:

$738,756.00 Walter D. Laud Inc.

$748,493.50 Miller Trucking & Excavating Inc.

$819,554.70 Valley Construction Company

$985,793.40 Brandt Construction Company

$1,051,364.50 McCarthy Improvement Company

Project #1247 includes the reconstruction of 14th Street from 18th to 19th Avenues, and 24th Avenue from 6th

to 7th Streets. Reconstruction will include a new water main, sanitary sewer, and storm sewer. Walter D

Laud Inc. submitted the lowest responsible and responsive bid. A motion was made by Alderman

Schoonmaker to approve. Seconded by Alderman Turner. Motion passed unanimously.

7. Other - Scott Hinton, City Engineer, presented an update on the status of the 40th Street reconstruction

project south of 32nd Avenue. The project will include new underground utilities and new 27’ wide concrete

pavement and sidewalks on both sides. The design is nearly complete and right-of-way and/or easements

are required from nearly all of the adjacent private property owners before the project can move forward to

construction. Staff has made contact with most of the property owners and most are in favor of the project

and have indicated they are agreeable to donating the right-of-way and easements. The City Engineer

advised that two property owners at the far south end of the project are opposed to the project and will not

donate the necessary right-of-way and easements. This means that the planned cul-de-sac at the south end

will have to be eliminated from the project and the project stopped short. Further, two additional property

owners on the west side at the south end of the project are in favor of the project and will donate the rightof-way

and easements, but only if the sidewalk is eliminated adjacent to their properties and the impact to

Committee-of-the-Whole Minutes April 19, 2016

Page 4

their properties is minimized. The City Engineer advised that while eliminating the cul-de-sac and the west

sidewalk at the south end is not desirable, it is a better option than stopping the entire project short due to

the lack of right-of-way and easement dedications. Alderman Wendt suggested that the entire sidewalk be

eliminated on the west side of the street as a cost saving measure. Alderman Acri suggested that the one

lane of parking be placed on the same side as the sidewalk if the sidewalk is only placed on one side.

Alderman Turner added that many residents were in favor of sidewalks on both sides and voiced her opinion

that sidewalks should be placed on both sides. Council took no action and the City Engineer advised that

the project would proceed as described above unless Council directed differently.

Informational

Nate Scott, IT Manager, gave an overview of the attached detail regarding Request For Proposals for Fiber Optics

Network.

The meeting adjourned at 8:23 p.m.

Respectfully submitted,

Tracy A. Koranda

City Clerk

Overview of Moline

Police and Firefighters’

Pension Funds

April 19, 2016

1

2

How are Moline Pensions Funded?

• There are three sources of funding

– Member Contributions

– Employer Contributions

– Investment Income

• Since member contributions are fixed by statute

and investment income varies based upon market

returns, employer contributions need to fund the

balance and thus are variable.

3

Pension Financing

• Pay as you go

• Advanced funding (aka Actuarial Funding)

– Creates Generational Equity

– Takes advantage of long term investment

returns on money set aside for retiree benefits

4

Downstate Fire Pension Funds

Retirement Age - Age 50 with 20 years of

service

Retirement Formula - 2.5% of final salary

for each year of service.

Maximum Annuity - 75% of final salary

after 30 years of service.

Salary Used to Calculate Pension –

Salary on last day of service.

Annual COLA - 3% compounded.

Employee Contributions - 9.45% of salary.

Downstate Police Pension Funds

Retirement Age - Age 50 with 20 years

of service

Retirement Formula - 2.5% of final

salary for each year of service.

Maximum Annuity - 75% of final salary

after 30 years of service.

Salary Used to Calculate Pension -

Salary on last day of service.

Annual COLA - 3% compounded.

Employee Contributions - 9.91% of

salary.

5

6

Three Prominent Features of

Funding Requirements

• Amortization period – period of time taken

to pay down an unfunded liability

7

Three Prominent Features of

Funding Requirements

• Amortization period – period of time taken

to pay down an unfunded liability

• Amortization Method - Level dollar vs

Level % of payroll amortization

8

Level dollar vs Level % of payroll

9

Three Prominent Features of

Funding Requirements

• Amortization period – period of time taken

to pay down an unfunded liability

• Level dollar vs Level % of payroll

amortization

• Smoothing of investment returns

10

Funding Requirements in Illinois

• Prior in January 25, 1993, the Illinois

Pension Code required plan sponsors for

downstate police and fire pension funds to

be fully funded within a 40-year period on a

level dollar basis as of 1/1/1980 (with

unfunded liabilities paid in full by 2020).

11

Funding Requirements in Illinois

• 1993 Reforms (PA 87-1265) required level

percentage of payroll amortization level and

changed the initial date of the amortization

period to July 1, 1993. As a result,

governments now required to fully fund by

2033 (new 40-year period).

12

Funding in Moline

• In 1993 City Council discussed both the

funding methodology and actuarial

assumptions which the City would use for

future valuations. Council recommended

the shorter amortization period (continue to

used 2020) and the conservative

amortization method (level dollar) after

hearing the pros and cons for each. The city

followed the shorter/higher funding until

1998 when it could no longer afford to do

so. 13

Funding Requirements in Illinois

• 2010 Reforms PA 96-1495 requires

municipalities to levy a tax on taxable

property at a rate to generate revenue equal

to normal cost of the fund plus an amount

sufficient to reach 90% funding level by

fiscal year 2040. The minimum required

contribution is to be calculated using a level

percentage of payroll, required investment

return smoothing over five years and added

an enforcement mechanism to start FY2016.

14

Funding in Moline

• In 2009 City Council authorized a payment

of an additional $50,000 to each pension

plan.

• In 2011 City Council authorized a payment

of an additional $400,000 to each pension

plan.

15

Significance of Unfunded Liabilities

and Impact on Employer Rates

The following are some of the possible reasons for

the existence of an unfunded liability:

- Annual contributions to the plan being less than

the amount required

- Benefit Improvements

- Experience under the plan is less favorable than

assumed under the actuarial assumptions

- Mortality rate, age at retirement, wage inflation,

disability rates, investment returns,

16

Simplified Illustration of Normal

Cost and Unfunded Liability

Suppose a person has promised to give you $10,000 in 10 years. Assume that

person wants to start a savings program so that they will have the $10,000

when promised and that the account will earn 5% each year.

Year Amount of Deposit Balance with Interest

1 $760 $ 800

2 $760 $1,635

3 $760 $2,515

4 $760 $3,440

5 $760 $4,440

6 $760 $5,425

7 $760 $6,500

8 $760 $7,620

9 $760 $8,800

10 $760 $10,000

17

Simplified Illustration of Normal

Cost and Unfunded Liability

Suppose a person has promised to give you $10,000 in 10 years. Assume that

person wants to start a savings program so that they will have the $10,000

when promised and that the account will earn 5% each year.

Year Amount of Deposit Balance with Interest

1 $760 $ 800

2 $760 $1,635

3 $760 $2,515 $2,410 (short $105 in interest)

4 $760 $3,440

5 $760 $4,440

6 $760 $5,425

7 $760 $6,500

8 $760 $7,620

9 $760 $8,800

10 $760 $10,000

18

Simplified Illustration of Normal

Cost and Unfunded Liability

Suppose a person has promised to give you $10,000 in 10 years. Assume that

person wants to start a savings program so that they will have the $10,000

when promised and that the account will earn 5% each year.

Year Amount of Deposit Balance with Interest

1 $760 $ 800

2 $760 $1,635

3 $760 $2,515

4 $760 $3,440

5 $760 $4,440 -> promised amount now $11,000

6 $760 $5,425

7 $760 $6,500

8 $760 $7,620

9 $760 $8,800

10 $760 $10,000

19

Investment Returns and Fund

Performance

• Permissible Investments:

– Government bonds

– Certificates of deposits

– State Treasurer’s Investment Pool

– Money Markets

– Commercial Paper

– Up to 10% in Illinois Life Insurance companies

20

Investment Returns and Fund

Performance

• Diversified stock portfolios if:

– $5 million in assets 45% into stocks

– $10 million in assets 65% into stocks

45% in 1997, 60% in 2011, 65% in 2012

• Prior to August 1997 pension funds were

not allowed to invest in equities of any kind

21

Interest Rate Assumption

• Interest rate assumption is a projection of

the rate of investment earnings on the

fund’s assets and is a long range assumption

for the 40 year amortization period.

22

Interest Rate Assumption

• In 1981-1984, interest rate assumption was

8% and was increased to 8.5% in 1985

Year Fire Police

1981 9.0% 9.8%

1982 10.7% 11.0%

1983 10.3% 12.2%

1984 11.7% 13.7%

1985 12.0% 11.4%

1986 10.7% 11.6%

23

Interest Rate Assumption versus Actual

• In 2010, interest rate assumption was lowered to 8.0%,

then to 7.5% in 2011 and 7.0% in 2014.

Year Fire Police

2000 11.21% 12.22%

2001 9.25 8.68

2002 -2.32 -3.82

2003 -3.20 -5.71

2004 14.78 12.33

2005 3.93 4.55

2006 8.41 7.30

2007 5.75 7.46

2008 -11.28 -11.54

2009 1.91% 9.23 24

$0

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

$7,000,000

$8,000,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Police and Fire Pensions City Contributions

The City’s contribution to the Police and Firefighters’ Pension funds has

increased significantly over the past 10 years. It has increased from

$2,274,463 in 2006 to $7,031,346 in 2015.

25

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Police and Fire Pensions Percent Funded

Police

Fire

While the funding from the city has increased

substantially over the past ten years, the level of funding

as calculated by the city’s actuary for these two pension

funds has gone down. The Fire Pension was funded at

65.7% in 2004. For 2014 it has dropped to 34.8%. In

2004 the Police Pension Fund was 65.7% funded and it is

now at 45.1% funded.

26

This chart shows the level of unfunded liability over a ten year

period for both funds. In 2014 the total for both funds

exceeds $95 million. The current unfunded liability equates to

more than $682,922 per active employee or more than $2,199

per capita for our citizens.

$0

$20,000,000

$40,000,000

$60,000,000

$80,000,000

$100,000,000

$120,000,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Unfunded Liability Police and Fire Pensions

27

83

81 81

79 79

70

71

72

73

74

75

76

77

78

79

80

81

82

83

84

85

86

87

88

89

90

FY 2011 FY 2012 FY 2013 FY 2014 FY 2015

MOLINE POLICE PENSION FUND

Active Employees

28

76

79

81

84

87

70

72

74

76

78

80

82

84

86

88

90

FY 2011 FY 2012 FY 2013 FY 2014 FY 2015

MOLINE POLICE PENSION FUND

Beneficiaries

29

46,285

48,300

50,412

52,992

55,220

$44,000

$46,000

$48,000

$50,000

$52,000

$54,000

$56,000

FY 2011 FY 2012 FY 2013 FY 2014 FY 2015

MOLINE POLICE PENSION FUND

Average Retirement Benefit

30

2.223 2.281

3.075 3.115

3.543

0

0.5

1

1.5

2

2.5

3

3.5

4

FY 2011 FY 2012 FY 2013 FY 2014 FY 2015

MOLINE POLICE PENSION FUND

Employer Contribution History

($ in Millions)

31

2.4%

10.2% 10.1%

6.2%

0.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

FY 2011 FY 2012 FY 2013 FY 2014 FY 2015

MOLINE POLICE PENSION FUND

Rate of Return

NOTE: All investment returns in this chart are based upon market values.

32

66 66

59

61

58

55

56

57

58

59

60

61

62

63

64

65

66

67

68

69

70

71

72

73

74

75

FY 2011 FY 2012 FY 2013 FY 2014 FY 2015

MOLINE FIRE PENSION FUND

Active Employees

33

101

98

103

104

107

90

92

94

96

98

100

102

104

106

108

110

112

114

FY 2011 FY 2012 FY 2013 FY 2014 FY 2015

MOLINE FIRE PENSION FUND

Beneficiaries

34

48,561

49,561

53,537

55,427

57,517

$46,000

$48,000

$50,000

$52,000

$54,000

$56,000

$58,000

FY 2011 FY 2012 FY 2013 FY 2014 FY 2015

MOLINE FIRE PENSION FUND

Average Retirement Benefit

35

2.622 2.679

3.280

3.480 3.489

1

1.5

2

2.5

3

3.5

4

FY 2011 FY 2012 FY 2013 FY 2014 FY 2015

MOLINE FIRE PENSION FUND

Employer Contribution History

($ in Millions)

36

2.58%

9.71% 10.01%

6.10%

0.20%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

FY 2011 FY 2012 FY 2013 FY 2014 FY 2015

MOLINE FIRE PENSION FUND

Rate of Return

NOTE: All investment returns in this chart are based upon market values.

37

Pension Assets

Plan 2015 2014

• Fire $26,416,203 $27,428,623

• Police $34,325,384 $34,156,882

38

Fire Police

Assets, 12/31/2014 $27,428,623 $34,156,882

Interest $640,306 $402,222

Employer Contribution $3,482,362 $3,523,625

Employee Contribution $423,692 $574,324

Other Income $33,014 $27,320

Pension Buy Back $16,923 $0

Loss on Investments ($421,786) ($275,796)

Pension Payments ($4,942,888) ($3,951,961)

Pension Refunds ($67,251) $0

Administrative Expenses ($176,792) ($131,231)

Assets, 12/31/2015 $26,416,203 $34,325,384

39

40

41

42

43

44

PA 093-1990 effective 3/11/2005

45

PA 095-0530 effective 8/28/2007

46

PA 095-1056 effect 4/10/2009

47

PA 096-1260 effective 7/23/2010

48

49

50

51

52

Kathy Carr

309-524-2071

CITY OF MOLINE FIBER NETWORK

RFP SUMMARY & ILLUSTRATION

Project Summary:

- Initial efforts prompted by QCIC-Net

- Worked with School District

- Initiated research of fiber options through RFQ responses

- Mapped out an “ideal route”

- Calculated speeds and costs of all current connections

BENEFITS OF FIBER OPTIC NETWORK

Short-term benefits:

- Immediate increase in network speed for all locations

- Improvement of all basic services across network

- Ring topology for redundancy

- Dedicated City fiber for performance and security through IRU

- Expansion of additional services across network

- Elimination of “go-between” software to access network

Long-term benefits:

- Addition of services on network: smart traffic, cameras, SCADA expansion

- Wireless hotspots, private and public

- Interconnects with City partners: WIU, QCIC, School District, Metrolink, Airport

CITY FACILITY

OVERVIEW

Summary of Current

Connections and

Speeds

CITY FACILITY

OVERVIEW

Route Proposed in RFP

CITY FACILITY

OVERVIEW

Proposed Route and

QCIC-Net

FIBER RFP SUMMARY

Next Steps:

- Bids due this Friday, April 22

- ROI calculations to determine budget feasibility

- Negotiation(s) with vendor(s) on different build possibilities, IRU terms

QUESTIONS?