 Thank you for coming this evening. I will call the meeting to order. Item 2 on our agenda would be roll call. Alderman Hanna, would you please do the roll call? We have Alderman Manning, Wren Fleisch, Ryan and Smith are excused. Yes. Thank you Alderman Hanna. Moving on to item number 3 is RC number 12060708 and that's by the Motor Vehicle Review Committee. And these are the recommendations that the committee recommended for the potential use of portions of the Motor Vehicle Fund. I'm not going to read the whole list. I would turn this over to Alderman Hanna who was the chair of that committee and let him give the summary. Would you like a motion to approve and send it with a favorable recommendation and then we can open for discussion? I would make a motion that we forward these recommendations to the full council with a favorable recommendation. There's a motion and a second to send the recommendations to full council with a favorable recommendation under discussion. Alderman Hanna. Thank you. Let me just give you by way of some background. The city currently has approximately a $12 million unfunded pension liability that is growing at 8% a year. So it's a substantial debt and it's growing quite rapidly. The Motor Vehicle Review Committee recommended that we use a portion of the Motor Vehicle Fund. In addition to 1.6 million that our accountants informed us was available because of lower liability for unfunded vacation and sick leave which brings it to a $6 million total. And finally to borrow the remaining funds of approximately $5.9 million from the state trust fund at 6% to pay this debt off. And the way that I like to view it is right now you have a Motor Vehicle Fund that's earning 5% interest. You've got a unfunded pension liability that's costing you 8% and we have the ability to retire $6 million of that with money that we have on hand. 8% interest versus earning 5% so it's a 3% positive spread to do that. And then we have the ability to borrow another 5.9 million from the state at 6% which is still a 2% spread over what the unfunded pension liability is costing us. The side benefit from my perspective is in the money that you borrow from the state trust fund that becomes a loan that you have to amortize and pay off. So it forces us to get out of debt. Right now that unfunded pension liability the terms are way too friendly and it's growing way too fast. Thank you. Alderman Clemonis. Thank you Chairperson Meyer. I also concur with Alderman Hannah and I also think it would be good if somehow we could also consider how we could keep up our keep on zero bounds on the liability in years to come. Because otherwise it'll be just like paying off your credit card and then letting debt grow again. And that's really nasty after a couple of years when you feel good about it and then all of a sudden it's right there in your face. So I would encourage us to consider in the coming years budget 2009 I would say how we can keep this liability current. I mean keep it zero balance and keep our obligations to pension fund at a zero balance. Thank you. Thank you Chairman Meyer. First of all you're an excellent point. I think we all would lose. I know I often have lost sight of that when we pay off the 12 million and we're wonderful but that really isn't the case. People retire all the time and the calculation is there. So thank you for bringing that. I had completely on my notes escaped me. Maybe if chairman you were chairman Mark of the of the committee and I was fortunate to make two presentations to that committee regarding how do we fund the vehicles. If in fact we pay this off and my calculations and illustrations that I provided showing taking a larger amount out of the pension fund. Then for pardon me out of the motor vehicle fund and 4.4 million. Frankly I looked at draining it. If I understand this this right. No I'll leave it as is because it's mine. If I understand this right and I guess that's what I'm looking to. We pay right now we're paying. We're not even paying the full amount of interest that's due. We're basically paying interest on interest on a compounding basis. And within 11 years this 12 million dollar debt turns into 24 million dollars if I recall the the amortization. And that's a that's a wonderful gift to my kids who hopefully will be buying a house in Sheboygan at some point. So I think it's this obviously needed to be tackled in my end of the presentation had to do with what do we do next after we pay it off. But am I right in thinking that if you take the 4.4 we suck in the 1.6. And this all relates to effect on the budget and and we borrow then the difference to pay off the 12. The effect is going to be probably neutral right now because the principal in interest on 6 million at 6% is just about what our minimum payment is now for the minimum payment that was wasn't even quite even paying the correct. I think that's obviously you work the numbers backwards to come to that. And I think that's wonderful. So the effect of the budget is zero and we're paying we're actually paying the debt down based on this. This is I was honored to to to present to that committee because this is vitally important and the whole council taking this up and addressing this. And I don't know why other councils haven't addressed it over not just last year of the year before but forever. I don't know but I think it's wonderful that we're all pulling together and doing that in the past. Councils have looked at this and they've studied it hard and they've come to the conclusion that not now. Okay measure for it now sir. She aquinesano for the city strongly endorses that we pay this off. If I could follow up. I'm sure Meyer Anna from a ben stamped point. Is that a decisive part of the truth. Okay. Because we're lowering reserve funds technically but we're paying work where subsequently paying off debt. Thank you. Thank you, Alderman Giesha. Alderman Verhassel. Thank you, Mrs. Chair. Can I ask Alderman Hanna, what would be the negative effect of, I guess, this Alderman Giesha term to draining it? I wouldn't necessarily recommend draining of it taking it down even a little bit further, say, to a million dollar balance. What would be the negative or the downside to that? I can't think of any. Well, maybe we would like to ask Deputy Director Dave Bebel. Would you have an answer for that? Please. I guess when we met as a motor vehicle review committee, which I was a part of, we looked at a number of scenarios. One of the things, if we start taking it down too far, our current internal rate of return, what we charge internal rental rate on the motor vehicle equipment, that's earning X amount of dollars. The interest earnings right now on that big pot of money that's sitting there helps offset some of the shortfalls that we haven't really adjusted those rates to cover some of the operational expenses and fuel costs and that. So my only fear is if it gets drawn down too far, our rate of recovery for replacement for vehicles in the future might not be able to cover. However, we're looking at the leasing program, which is a very favorable terms of financing for future fleet replacement. So I think the whole program is favorable. I can't tell you what the magic number is. I know with the committee level, we worked very hard to come up, I guess, to this point. So that would be my only negative or only fear is not having the availability to replace the equipment we needed. Can I follow up? Dave, you make a good point. Because I believe you're relying on about $400,000 of interest income annually. And last year, I believe it netted about $100,000 was the positive number. So you could argue it'd be in the deficit, say $300,000, some $1,000. Could we adjust the fees to compensate for that? If we adjust the rates, the impact then affects our operating budget. So then that would be an increase to our general budget for the department. And what we're trying to do is hold the line. And I think the number that we came up with, with the 4.4 and having the remaining cash reserves, as well as the leasing program, I think that ended up right around about $6 million of capacity for replacement, which is right around our full depreciation value of our fleet. So we felt comfortable with that. So as we, as a committee, could endorse it, and we endorse it at the public works level at that rate. And yeah, I guess I'm not here to say you can take more or you can't. I'm just telling you, we looked at it. It looks good. I'd be happy to answer questions about the policies of how we do replacement of fleet. Alderman Bender-Will. Thank you, Chairman Meyer. Starting tonight, it bothers me to borrow money from this account without paying it back. That's just something I have concerns over. And I have more concerns about draining it even further, because at some point it's going to bite us. That's just my feeling. And what was said tonight makes sense. What President Hanna said tonight makes sense to me. But I am concerned that we don't have a plan to pay it back so that my kids don't have the same debt in the future. In 20 years, 10 years, I don't know how long we could be in the same situation. So that bothers me the most tonight that we don't have a plan to not get to where we are right now. Thank you. Thank you. Alderman Cleyhunis. Thank you, Chairperson Meyer. I think a couple of things that come up. Just for the record, Finance Director Gephardt did recommend this some years ago in the 90s that he recommended us paying down this liability. And the former financial company that advised us said no, they didn't think it was a good idea. So that has been brought up very seriously by Richard Gephardt himself. The other thing, I also think the balance on the motor vehicle fund, we've got some other things we want to do with that balance. If we have to pay out for early retirement, money was going to come out of that. And then we were going to pay that back at 5.4% or 5.25% interest back into the motor vehicle so the money would be paid back by the department that needed that early retirement funds. So that's the way in which it can be replenished, at least in a small way. But I agree. There's a lot of people talking about that motor vehicle fund and we better keep track of the fact how much is left and not think it's just this piggy bank that everybody's going to go to because it looks a little healthier than some other funds. Thank you. Alderman Bulk. Thank you, Madam Chair. I just want to compliment the committee on taking a great first step for our town and for our committee to take this chunk of change and do this very right smart thing. Here's a big step. And the good news is, if we keep on going the way we've gone, we'll find more efficiencies in the 2009 budget. We'll find DPW's 300,000 that they need to make them whole. And perhaps in the next year, in the intervening year between now and then, we can study this a little more and take that account down even further and pay off some of these debts earlier. Pay off the debt, I'm sorry, the bond that we'd be taking out. There's no penalty for early payment. So again, we pay down this debt even faster. So while we haven't completely drained the swamp and gotten it all paid off, this is a great first step. And nothing says that we can't investigate it more in the next year and pay off more a year from now. Thank you. Thank you. Alderman Gisho. Thank you, Chairman Meyer. And actually, I was going to ask basically the same question, because I tend to agree from a gut standpoint with Alderman Gisho and saying, let's just ditch it and let the secondary program take over from the lease side for municipal vehicles, which is the part I was involved with. But I'm willing to live with the 4.4 as a test. And if we have more money, this isn't a bond. So we can. This is actually a loan from the state at $5 and a quarter. We can always pay next year maybe another half a million or a million once we kind of test this out. I would love to do it just for it. And I think Dan and I are thinking the same thing here. I would love to do that. And maybe we still can. But I'm willing to give this based on the work that was done by this committee to come up with this number as shot for just the reasons that Alderperson Bauch mentioned. Thank you, Alderman Gisho. Alderman Berhassel. Thank you, Madam Chair. Could someone explain the lease program impact? Are we that far that we know much about how a lease program may or may not work as it relates to the remaining balance that we have? I wouldn't have. Alderman Gisho, he did come to the committee and explained some options to us. Would you care to go into that? What we did was we took the amount of money that flows in on the interchange fees and the rental fees and looked at that and asked ourselves how much capacity will that buy us. For instance, if you bought equipment and did them all on three and four-year leases, what would be the benefit or the negative of doing that and how much would it cost us? So really, what it ended up doing when you did all the calculations, it came up with, to break it right down into households, do it about $50 grand a month in payments, not in payments. Actually, it's more like $40,000. I'm doing some of this for a minute. About $40,000 a month or roughly $1.5 million a year in total payments for a fleet. So for instance, hey, we need a new x, y, or z. Well, where are we at in our budget to make it neutral? So the influx of cash equals the amount of payment. Well, we can afford it this year, but next year we have a lease running off. Let's buy it next year, because then our payments will be less. And that was the concept with that. So it kind of funds itself with the interchange money. And I understand where Mr. Bebel says, we also had some interest coming in from that. Because last year, I think they took in about $800,000 into that fund. But some of that is interest income. Some of it is fees from the other department in renting equipment. So we don't know where that happy means. So maybe it's not $40,000 a month or $1.5 million a year. Maybe it's more like $300,000 a year. We just don't know that yet. But that amount of about $40,000 a month or roughly $1.5 million a year buys them about $6 million worth of lease line. And that would replace almost our entire fleet. So one of the examples of doing these leases short term three and four years is you have newer equipment, which has less maintenance, less breakdowns. Some of it will have some warranty stuff. So we will have some other phantom savings that's hard to put on paper because you really don't know about those things. And then you either turn the vehicle back in, or if it's a finance lease, you own the vehicle at the end. And you trade it in. So sometimes just give it back what you do with a car. Other times, you own the car at the end of the term. And you use it as a trade-in for another thing. So I think it was an option the committee embraced. And my final question on this while I still have the button on is, what does to hold the Department of Public Works harmless mean? So if that explains at least a little bit about that. I will turn that to you, Alderman Hanna. The concept here was to design a mechanism in place that that pension liability be attributed to departments by head count so that there'd be a cash flow back, so there'd be a mechanism in place to replace those funds that are leaving. That was the intention of that, was to not harm the Department of Public Works by this action. Any further discussion on the motor vehicle fund? My light's not working. You're still on. OK. Thank you. I guess just curious before we vote, has there been any discussion over maintaining the unfunded pension after we do this? Is there any discussion on how we can keep it low? Alderman Hanna. I think once we pay down the principle on this, our recurring contributions now will keep us current. I could be wrong, but I think we'll be fine. The problem goes, it's not something this council created or councils before us. Years ago, when we were absorbed into a different pension, the actuaries revisited and calculated that we had an unfunded liability. And that has grown over the years. 10 years ago, this may have been $2,000,000, $3 million. Alderman Born. Thank you, Madam Chair. Just to expand a little bit, Alderman Van Der Wille, I believe, are yearly a month that we'll have to pay in. It's going to be between $400,000 and $500,000. I think that's what Ms. Buzz said or mentioned at a finance committee meeting. And if we make that payment by a certain date, we will not have to pay any interest. So what we'll have to do is just budget for what the liability is. And I believe she mentioned that we should know that by April of every year what we have to pay in, and as long as it's paid by a certain date, we will not incur any more interest. So we will be keeping it current by paying it by a certain day every year. That's my understanding. OK. Any further discussion? See none. All in favor? You want to do a roll call? Yes, we will do that. All in favor of the motion, we will do a roll call. Say aye. Opposed, nay. Born. Aye. Vauke. Aye. Gisha. Aye. Hannah. Aye. Heidemann. Aye. Kittleson. Aye. Playounas. Aye. Meyer. Aye. Montmarr. Aye. Vanderwill. Aye. Verhasit. One, two, three, four, six, seven, eight, nine, ten. 11, yes. Motion passes. Moving on to item number four, which is RC1990708. By finance. And it refers to the same. Motion to file. We have a motion and a second to file. Item number four. Any discussion? See none. All in favor say aye. Aye. Chair votes aye. Opposed, motion carries. Item number five is RC20708. By finance. And it is again referring to the motor vehicle committee, the finance committee and the public works committee, which sent a favorable recommendation on the motor vehicle fund. Motion to file. Second. We have a motion and a second to file. All in favor say aye. Aye. Chair votes aye. Opposed, motion carries. Item number six is just a housekeeping item. We did not act on this when it was presented to us by Paulette Enders. And it is RC number 5090607. And it involves the TIF demonstration that she presented to us at the last meeting. And there need a motion also to file. So moved. Second. The motion is second to file. All in favor say aye. Aye. Chair votes aye. Opposed, motion carries. Item number seven is RO number 215708. By the city clerk. And it is a communication from Alderman Bourne about the state pension funds, which we have just addressed. And there I would also entertain a motion to file. Second. We have a motion and a second to file. Any further discussion? Alderman. Alderman. OK, we've got two here. Alderman Clayhounas. I want to thank Alderman Bourne as he's our resident reading service person. I don't mean that lightly. I think he takes a lot of time to read different sources that maybe we don't have time for, or we don't have an opportunity to see. And I appreciate what I've learned from what he's brought to the council. So thank you. Thank you. Alderman Bourne. I was just going to mention that I did bring this article forward late in the last council. And I think it probably kicked off the discussion. Governments in Wisconsin face costs around $17.4 billion beyond what they have already set aside to pay for pensions and other benefits promised to retirees. So when I saw this article, I brought it forward late in the last council and then had it forwarded to this council. So I just think it kicked off the discussion on the pension fund issue. And I'm glad we're addressing it. Thank you. And I believe you are correct on that. All in favor of filing RO-250708? Say aye. Aye. Chair votes aye. Opposed? Motion carries. Number eight on the agenda, RO-2490708. And that is by the city clerk. And it is also a memo to the mayor from Alderperson Groff, chairman of finance, stated February 1st, 2007. And this also is regarding the state pension fund. Motion to file. Have a motion and second to file. All in favor say aye. Aye. Chair votes aye. Opposed? Motion carries. And this brings us down to item number nine. We have a motion and second to adjourn. All in favor say aye. Aye. Chair votes aye. Thank you. Thank you.