Council Minutes

April 20, 2004 Meeting Minutes

BETHLEHEM CITY COUNCIL MEETING
Bethlehem, Pennsylvania
Tuesday, April 20, 2004 – 7:30 PM – Town Hall

1. INVOCATION
2. PLEDGE TO THE FLAG
3. ROLL CALL

President J. Michael Schweder called the meeting to order. Pastor Larry Humberd of Lehigh Valley Grace Brethren Church offered the invocation which was followed by the pledge to the flag. Present were Ismael Arcelay, Jean Belinski, Robert J. Donchez, Joseph F. Leeson, Jr., Gordon B. Mowrer, Magdalena F. Szabo, and J. Michael Schweder, 7.

4. APPROVAL OF MINUTES

The minutes of April 6, 2004 were approved.

5. COURTESY OF THE FLOOR (for public comment on ordinances and resolutions to be voted on by Council this evening)

None.

6. OLD BUSINESS

None.

7. COMMUNICATIONS

A. Business Administrator – Earned Income Tax Rules and Regulations – Amendments

The Clerk read a memorandum dated April 13, 2004 from Dennis W. Reichard, Business Administrator, to which was attached a memorandum dated April 13, 2004 from Al Timko, Tax Administrator, in which it is advised that, as a result of new State legislation, the City’s Earned Income Tax Rules and Regulations must again be amended.

President Schweder stated that Resolution 11 L is listed on the Agenda.

B. Business Administrator – Tax Ordinance – Landfill Tax

The Clerk read a memorandum dated April 14, 2004 from Dennis W. Reichard, Business Administrator, which advised that Landfill Tax - .04 mills in Bill No. 12 – 2004, on the Agenda for Final Reading, should be amended to read Landfill Tax - .40 mills.

President Schweder stated that Bill No. 12 is listed on the Agenda for Final Reading.

C. City Solicitor – Use Permit Agreement for Public Property – 2004 Boutique at the Rink

The Clerk read a memorandum dated April 16, 2004 from John F. Spirk, Jr., City Solicitor, to which was attached a proposed Use Permit Agreement for Public Property between St. Luke’s Hospital & Health Network and the City for use of the Municipal Ice Rink for the 2004 Boutique at the Rink for the period May 8, 2004 to June 13, 2004, according to the terms and conditions of the Agreement.

President Schweder that the authorizing Resolution will be placed on the May 4 Agenda.

D. City Solicitor – Use Permit Agreement for Public Property – Gaelic Sports Spectacular Event

The Clerk read a memorandum dated April 16, 2004 from John F. Spirk, Jr., City Solicitor, to which was attached a proposed Use Permit Agreement for Public Property between the Ancient Order of Hibernians Lehigh Valley Division I and the City for use of a portion of Monocacy Field Complex and Memorial Pool/Ice Rink Parking Lot for the Gaelic Sports Spectacular Event for the time periods May 17, 2004 to May 28, 2004 and May 21, 2004 to May 23, 2004, according to the Agreement.

President Schweder referred the matter to the Parks and Public Property Committee

E. Director of Planning and Zoning – Elm Street Grant Proposals

The Clerk read a memorandum dated April 16, 2004 from Darlene L. Heller, Director of Planning and Zoning, to which were attached two proposed resolutions for consideration required for submittal to the Department of Community and Economic Development concerning the filing of proposals for Elm Street funds. The Elm Street Program is newly enacted State legislation designed to provide assistance and resources to mixed use and residential areas in proximity to central business districts, to enhance urban commercial areas, and to improve the viability of older neighborhoods. One grant proposal includes a request for an Elm Street Planning Grant in the amount of $25,000 for the development of a Neighborhood Revitalization Plan for the north and west side urban neighborhoods and review of the zoning ordinance to foster the viability of established residential neighborhoods. The second grant is for an Elm Street Residential Revitalization grant in the amount of $235,000 to install street lights on East Fourth Street from William to Hayes Streets, to be coordinated with the reconstruction of East Fourth Street in 2005.

Darlene Heller , Director of Planning and Zoning, advised that meetings about the Elm Street Program proposals have been held with some of the neighborhood leaders including a meeting held this afternoon. Ms. Heller affirmed there are two different proposals being submitted under the Elm Street Program. The proposal for the South Side is a Residential Reinvestment Grant to continue the street lighting project on East Fourth Street that is part of the South Side Vision 2012 plan. The proposal for the North Side is a Planning Grant for neighborhood planning in the North and West urban neighborhood sections.

President Schweder stated that Resolutions 11 T and 11 U are listed on the Agenda.

F. Rezoning Request – Northeast Corner of Arden Street and Ravena Street – I – Institutional to R-G – Residential

The Clerk read a letter dated April 16, 2004 from Joan Marie Ronca, 531 South Clewell Street, Bethlehem, which requested that the property she owns at the northeast corner of Arden Street and Ravena Street be rezoned from I Institutional to R-G Residential.

President Schweder referred the request to the Planning Commission and Lehigh Valley Planning Commission.

Mr. Leeson and Mr. Donchez moved to schedule a Public Hearing on June 1, 2004 at 7:30 PM in Town Hall.

Voting AYE: Mr. Arcelay, Mrs. Belinski, Mr. Donchez, Mr. Leeson, Mr. Mowrer, Ms. Szabo, and Mr. Schweder, 7. The motion passed.

G. Rezoning Request – Schoenersville Road and Route 22 – L-I Light Industrial to
C-S Shopping Center

The Clerk read a letter dated April 15, 2004 from Attorney James L. Broughal, on behalf of Charles Gallub, requesting approximately 32 acres of land along the west side of Schoenersville Road and the north side of U.S. Route 22 be rezoned from LI Light Industrial to CS Shopping Center.

President Schweder referred the request to the Planning Commission and Lehigh Valley Planning Commission.

Mr. Leeson and Mr. Donchez moved to schedule a Public Hearing on June 1, 2004 at 7:30 PM in Town Hall.

Voting AYE: Mr. Arcelay, Mrs. Belinski, Mr. Donchez, Mr. Leeson, Mr. Mowrer, Ms. Szabo, and Mr. Schweder, 7. The motion passed.

8 . REPORTS

A. President of Council

None.

B. Mayor

1. Administrative Order – David Brong - Director of Water and Sewer Resources

Mayor John B. Callahan read his appointment of David Brong as Director of Water and Sewer Resources, effective on April 26, 2004.

President Schweder announced that at present the Administrative Order has an insufficient number of sponsors to bring before Council.

Mrs. Belinski said she read the resume very carefully and sees no experience listed on the resume for water and sewer. Also, Mrs. Belinski said this person is a relative of the Mayor. Expressing that she has concerns, Mrs. Belinski noted that two weeks ago City Council unanimously voted to approve another appointment of one of Mayor Callahan’s relatives, Mr. Tallarico, to the Bethlehem Authority. Mrs. Belinski stated in that position the salary is a minimal stipend, there are no benefits, and she did not have a problem with that appointment. Mrs. Belinski pointed out, however, that the position of Director of Water and Sewer Resources is a cabinet level position and has a salary of $72,500 as reported in the newspaper.

Motion - Tabling Resolution

Mrs. Belinski said she would like to make a motion to ask the City Council Solicitor to first, see if this appointment is legal; and second, if it is legal then is it ethical. Mrs. Belinski further inquired if the Mayor had a say in the picking of the candidates, and expressed her understanding that there were many candidates for the position. Since the person has no experience in water and sewer, Mrs. Belinski stressed she seriously questions that the individual is being appointed to the position since he is a relative of the Mayor. Mrs. Belinski stated that she would ask for the tabling of this vote until the City Council Solicitor can give the Members of Council answers to whether it is legal and ethical, and should the Mayor have been involved in the selection process.

Mr. Leeson, while stating that the Mayor should have the right to work with the people with whom he wants to work, said, however, he does have concerns about the ethical issue, and would second the motion. Mr. Leeson stated that he would like to have an opinion before Council votes on the proposal.

Christopher Spadoni, City Council Solicitor, queried whether it is acceptable to the maker of the motion and the individual who offered the second that he report at the next City Council Meeting.

Mrs. Belinski responded in the affirmative.

Voting AYE: Mr. Arcelay, Mrs. Belinski, Mr. Donchez, Mr. Leeson, Ms. Szabo, and Mr. Schweder, 6. Voting NAY: Mr. Mowrer, 1. The motion passed.

Mayor Callahan stated “we certainly think that it is legal and ethical.” Mayor Callahan pointed out that he made no secret as to his relationship with Mr. Brong and was asked about it by a reporter last week. Mayor Callahan informed the Members that David Brong is his wife’s aunt’s husband and so is a fairly distant relationship. Mayor Callahan, adding that his wife has a fairly large family, remarked “if we went by that criteria we’d eliminate a lot of…qualified people in the City. I did an extensive nation-wide search of candidates. We had over 30 resumes submitted. I certainly have taken my time on this hiring. We narrowed it down to 14 qualified candidates.” Mayor Callahan continued on to advise that he and Michael Alkhal, Director of Public Works, interviewed all 14 candidates and eventually narrowed down the number to 3 outstanding candidates, all from the private sector. Mayor Callahan acknowledged that $72,000 is a nice salary, and stressed the amount of expertise required and the various skill sets necessary for the job. Affirming he was involved in the process and stressing that he is not going to delegate the hiring of a Department Head to someone other than himself, Mayor Callahan advised that he did not do it himself and involved other people in the process. Explaining that he did so in particular because of the thought that at some point someone might call the process into question, Mayor Callahan expressed that he “dotted every i and crossed every t.” Mayor Callahan stated, at the point at which it was narrowed down to the 3 best candidates according to him and Mr. Alkhal, it was opened up to John Spirk, City Solicitor, as well as Ronald Donchez, Chairman of the Bethlehem Authority. Then, a panel interview by the 4 City officials was conducted with the 3 candidates. Mayor Callahan said it was the opinion in talking to the people who would be relating with the Director of Water and Sewer Resources, and the different entities with which the individual would be required to interact, that communication skills would be very important. Mayor Callahan added he thinks that was one of the problems with the prior person in the position. In addition, Mayor Callahan stressed that strong management and leadership skills would be required for this position. While it certainly requires a fair amount of technical expertise, Mayor Callahan highlighted the fact that the Director of Water and Sewer Resources has to communicate with internal customers, other Department Heads, the Executive Director of the Bethlehem Authority, the Bethlehem Authority Board, outside customers, other municipalities, the Mayor, the public, and the press. Reiterating that communication skills are very important, Mayor Callahan said Mr. Brong has “those in spades”. In terms of leadership, Mayor Callahan pointed out that Mr. Brong was the Vice President of Operations for his company, and for 4 different companies Mr. Brong has been the Vice President and Manager of Operations. Mayor Callahan stressed that Mr. Brong knows how to run a businesses and how to run a company. Mayor Callahan, remarking no matter what the product is, expressed if a business is to be run then one should take somebody who knows how to run a business and put them in charge. Mayor Callahan emphasized that Mr. Brong has a B. S. in Industrial Engineering from Lehigh University, attended the U.S. Naval Academy for two years, and has a Master’s degree in Industrial Engineering from Lehigh University, in addition to 23 years of private sector experience in running profitable businesses. Mayor Callahan, affirming he knows Mr. Brong, has made no secret about it, and has known him for about 20 years, confirmed that is not the primary reason he hired Mr. Brong. Mayor Callahan affirmed that he hired Mr. Brong because of the reasons he has just talked about. Mayor Callahan stated that Mr. Brong is a known quantity, he has confidence in Mr. Brong, and he would not have put up Mr. Brong as an appointment unless he felt otherwise. Restating that a very extensive search was done, Mayor Callahan explained that while the other 2 candidates had a fair amount of technical expertise as did the last person in the position “they were severely lacking in the management aspect of it.” Mayor Callahan, highlighting the fact that the person in the position runs the largest Union workforce in the City, pointed out that Mr. Brong has run very large Union workforces in his career, and has negotiated Union contracts. While noting that Mr. Brong has made significantly more than $72,000 a year in the private sector, Mayor Callahan said Mr. Brong “takes this as an opportunity to give back to the community that gave him an awful lot. He’s a Bethlehem native. And, if in some way my relationship with Dave has energized him to take the leap from the private sector to the public sector then so be it because we’ll all be blessed to have him. If you can determine yourself it’s legal and ethical, I feel comfortable with both of those issues.”

Mrs. Belinski, expressing her concern about the water department since the individual has no experience in water and sewer, recalled that recently the Bethlehem Authority changed its engineering consultant. Mrs. Belinski said the company that was picked was very generous in their campaign contributions to the Mayor. Mrs. Belinski, noting she attended the Bethlehem Authority meeting a few months ago, remarked she had the misfortune to hear a representative of the new engineering consulting firm give a presentation saying the company could optimize the efficiency of the Water Filtration Plant with no capital investment which she asserted “is absolutely wrong.” Mrs. Belinski explained there are 10 water filters that consist of media which have come to the end of their useful life. Mrs. Belinski expressed the City does not have what she thinks are qualified people as engineering consultants to the Bethlehem Authority. Mrs. Belinski continued on to say that two weeks ago a relative of the Mayor’s was appointed as a member of the Bethlehem Authority and now there is another relative appointed as the Director of Water and Sewer “and he has no experience in water and sewer. I’m very concerned. We have serious problems in our [water] filtration plant and it is working at half capacity. And, for a long time, we’ve been trying to solve the problems and no one has solved it yet. And, for this woman to get up several months ago and say we’re going to optimize the efficiency of the plant and not spend any money, that’s why I’m really concerned about this.”

9. ORDINANCES FOR FINAL PASSAGE

A. Bill No. 8 – 2004 – Amending General Fund Budget – Health Bureau

The Clerk read Bill No. 8 - 2004, Amending General Fund Budget, on Final Reading.

Voting AYE: Mr. Arcelay, Mrs. Belinski, Mr. Donchez, Mr. Leeson, Mr. Mowrer, Ms. Szabo, and Mr. Schweder, 7. Bill No. 8 – 2004, hereafter to be known as Ordinance 4246, was declared adopted.

B. Bill No. 9 - 2004 – Amending Non-Utility Capital Budget – Communications Center Upgrade

The Clerk read Bill No. 9 - 2004, Amending Non-Utility Capital Budget – Communications Center Upgrade, on Final Reading.

Voting AYE: Mr. Arcelay, Mrs. Belinski, Mr. Donchez, Mr. Leeson, Mr. Mowrer, Ms. Szabo, and Mr. Schweder, 7. Bill No. 9 – 2004, hereafter to be known as Ordinance 4247, was declared adopted.

C. Bill No. 10 – 2004 – 1994 Bond Issue – Bethlehem Authority – Forward Refunding

President Schweder announced that Bill No. 10 will not be considered on Final Reading this evening.

D. Bill No. 11 – 2004 – Hirko Settlement - $7.39 Million

The Clerk read Bill No. 11 – 2004, Hirko Settlement - $7.39 Million, on Final Reading.

Mr. Leeson stated that Bill No. 11 – 2004 has attached to it Exhibit C which is the Maximum Debt Service Lease Rental Schedule. Mr. Leeson explained one of the questions he has concerns the column entitled Authority Administrative Expense under the category of Maximum Lease Rentals. Mr. Leeson, noting this is not something that has been discussed before, presented before, or voted on before, said he does not recognize this as appearing in any of the prior debt service schedules.

Attorney Peter Carlucci, Bond Counsel, responded Mr. Leeson is right in that those figures have not been part of the calculations that have been circulated previously. Attorney Carlucci continued on to say that type of expense is customarily built into the lease rental payment schedule for this type of financing in order to fund usual and customary administrative expenses such as the annual cost to the trustee with respect to the bond issue, any rebate calculations that need to be undertaken, as well as the cost of audits with respect to the bond issue. Attorney Carlucci advised that, even though the schedule shows a contribution of $5,000 semi-annually, the documents will provide that the only amount required will be an amount in order to maintain the administrative expense fund at a level of $10,000. Attorney Carlucci affirmed this is the same thing that was done with respect to the landfill financing several years ago.

Mr. Leeson highlighted the fact that it looks like it adds a cost of approximately $115,000 that City Council had not seen before. Mr. Leeson said he checked the Landfill Bond Issue Ordinance and did not see it there, and also checked some of the recent other bond ordinances and it was not there either.

Attorney Carlucci confirmed that for the General Obligation Bond Ordinances it would not be present because it is administrative expenses borne by the City and comes out of the budget. Attorney Carlucci explained, in this instance, the expenses are the responsibility, technically and legally of the Bethlehem Authority, since the Authority is the issuer of the bonds. Consequently, the only source of money in order to fund those expenses will come through the lease rental schedule. The reason it shows on an annual and semi-annual basis is because under the law it is required to demonstrate what the maximum possible lease rental debt will be on an annualized basis. Attorney Carlucci restated the documents will provide that the only obligation is to maintain the fund at a level of $10,000. Accordingly, if the trustee fees and the annual audit fees are only perhaps $3,500 then that will be the only amount that will be required from the City in order to restore the administrative expense fund to the $10,000 balance.

Mr. Leeson asked why the expense is showing up tonight and why did it not show up in previous debt service schedules.

Attorney Carlucci replied this is the first schedule that he prepared. In further response to Mr. Leeson, Attorney Carlucci assured him the expense is in the Landfill Bond Issue documents in that the lease agreement as well as the trust indenture make provision for the set-aside of the monies to pay these types of administrative expenses.

Mr. Leeson queried if anyone knows what those expenses have been for the Landfill Bond Issue, and added his understanding is that they have been insignificant at less than $1,000 a year.

Attorney Carlucci, advising he does not know the amount, affirmed that customarily the trustee fees are about $2,500 a year and it depends on what level of audit expenses need to be allocated.

Mr. Leeson expressed his assessment that it is an inflated number.

Attorney Carlucci, while communicating that Mr. Leeson is welcome to reduce the amount, said he has been through this before in other circumstances with other municipalities and subsequently the documents have had to be amended in order to increase the administrative expense budget to cover the costs. Affirming it is a conservative estimate, Attorney Carlucci explained it is not an authorization to spend $10,000 a year. It is only to be expended for actual costs incurred for the maintenance of the bond issue.

Mr. Leeson recalled that in March, Dennis Reichard, Business Administrator, had written a memorandum to Robert Donchez, Chairman of the Finance Committee, in which he estimated the issuance costs for the Hirko Settlement Bond Issue at around $220,000. Mr. Leeson continued on to relate that City Council then received various debt service schedules with various costs that have gone up over time, the most recent increase having been in the last seven days. Mr. Leeson asked how the difference between the originally stated estimated issuance cost of $220,000 and the most current issuance cost that he calculates at $485,000 can be reconciled.

Attorney Carlucci responded that while he did not generate the numbers on his own, he did consult with the financial advisor and is not clear what components made up the estimate that Mr. Reichard may have circulated previously so he would not be in a position to run a comparison. Attorney Carlucci continued on to advise that some of the cost estimates have increased more out of a sense of being conservative, and the overall size of the issue having been increased for the purpose of avoiding the necessity of having to come back and revisit the bond issue at a later time.

Mr. Leeson, focusing on the issuance costs, pointed out that, in the current proposed Debt Service Schedule in Bill No. 11 – 2004 for $7,875,000 in borrowing, the Costs of Issuance line item is listed at $125,000 versus $110,000 a week ago. Mr. Leeson wondered in one week where was the extra $15,000 in expenses.

Attorney Carlucci, replying it is a conservative estimate, explained it could well be that the total Costs of Issuance would come in under $110,000. However, Attorney Carlucci advised there has been additional work required in connection with the financing, there may be some additional printing costs required, the advertising expenses and filing fees go up as the bond issue increases so there are some fees that are a function of the size of the bond issue.

Mr. Leeson highlighted the fact that, in the last 7 to 10 days, the Miscellaneous Expenses line item has gone up by almost $15,000.

Attorney Carlucci, advising that is really a rounding number in that the bonds are issued in denominations of $5,000, said the Miscellaneous Expenses is a rounding number in order to add up to the $7,875,000 amount of the Bond Issue.

Mr. Leeson, turning to the Original Issue Discount (OID), recounted it was originally estimated at $0 but this week it is listed at $100,000.

Darryl Peck, of Concord Public Finance, financial advisors, said the numbers that are presented as the not to exceed are just those numbers. Mr. Peck explained that, from the time the Ordinance is considered until the bonds are actually sold in the market, the final amounts and at what levels the bonds will be priced are unknown. Mr. Peck advised that, if the model for the debt service schedule were to be kept very close to where the current market is today and the interest rates rise even slightly in the next week or so, then the company would essentially have to come back to City Council for reapproval of the Bond Issue. Mr. Peck explained this is because under the Debt Act if any one of those amounts comes in above what has been approved this evening, then the Bond Issue Ordinance would have to be adopted again.

Attorney Carlucci, advising he does not know why the OID was $0 in the initial schedule, noted it is customary in today’s market to see bonds sold with an Original Issue Discount. Up until a few months ago, it was common to see an Original Issue Premium as well but that seems to have dissipated in light of the interest rates.

Mr. Peck pointed out that the OID number should not be construed as a cost. Rather, it is a matter of how the bonds are priced. There may be higher coupons or lower coupons. In the end, the same effective yield will be paid as available in the market on the day the bonds are priced.

Mr. Leeson, while recognizing that the Administration is entrusted with the responsibility of paying the bills, acknowledged that as the law requires the maximum debt service not to exceed numbers must be set in the Ordinance and expressed he feels that is prudent. However, Mr. Leeson observed that he thinks “we’re borrowing more than we have to, and the costs are really higher than they should be.” Noting that he lacks the expertise to explain how the Costs of Issuance increased from $220,000 to $485,000 and has confidence in Mr. Reichard and his opinions, Mr. Leeson said he also wants to make sure that, if there is a ceiling amount in the Bond Issue, then there will also be a floor in terms of debt service to make sure the intent of Council as expressed two weeks ago is honored, that is to say there will be level debt service payments in the vicinity of $850,000 a year. Mr. Leeson confirmed since that time it was correctly pointed out that $850,000 was probably a low figure because Costs of Issuance as well as Capitalized Interest had to be accounted for. Affirming he acknowledges that, Mr. Leeson pointed out that in the interim he has produced a revised debt service schedule that accommodated those numbers.

Amendments to Bill No. 11 – 2004

Mr. Leeson said, in order to fulfill the intent of Council and set the floor amount, in Section 13 of the Bond Issue Ordinance, at the bottom of page 4 and top of page 5, at the end of the first sentence he would like to insert the following words: “which shall be not less than $850,000 per year.” Mr. Leeson said the same amendment would also be made in Section 15, at the end of the sentence, to insert the following words: “which shall be not less than $850,000 per year.” Mr. Leeson, pointing out this will provide flexibility in the event the number has to be higher, stated Council does not want the number to go any lower to make sure the intent of Council is accomplished.

Mrs. Belinski seconded the amendment.

Attorney Carlucci offered the suggestion that the amendment should be effective for the fiscal year beginning January 1, 2005 because there will be a capitalized debt service payment in 2004 which is less.

Mr. Leeson, agreeing it is an excellent observation, said he would accept that also as an amendment and so moved.

Mrs. Belinski seconded the motion.

The Clerk read the amendments, as follows. In Section 13 of the Bond Issue Ordinance, at the bottom of page 4 and top of page 5, at the end of the first sentence, insert the following words: “which shall not be less than $850,000 per year.” In Section 15, at the end of the first sentence, insert the following words: “which shall not be less than $850,000 per year.” Added to those sentences as amended shall be the phrase: “to become effective January 1, 2005”.

President Schweder inquired whether the amendments are permissible from the legal standpoint of actions.

Attorney Carlucci, replying yes, said the only concern he has is perhaps the last year in that if minimum payments are set in earlier years it may well result in a payment in the last fiscal year that could be somewhat less than $850,000 but if there is some flexibility it will suffice. Attorney Carlucci added it is not inconsistent with the provisions of the Local Unit Debt Act.

Mayor Callahan stated that he, as well as the Business Administrator, Dennis Reichard, who could not be at the Meeting this evening due to illness, and the City’s financial advisors all continue to strongly recommend a 12 year total level wrap around debt service schedule as originally proposed for a number of reasons. Mayor Callahan enumerated that, first, it takes advantage of the current historically low interest rate environment and makes that situation work to the City’s advantage, as Michael Setley, of Concord Public Finance, has pointed out to City Council. Mayor Callahan continued on to enumerate that, number two, it minimizes the tax burden for any given year to the taxpayers of Bethlehem. Number three, it allows for additional borrowing to fund future capital projects in the City which clearly will be needed. The $7.39 million is paid off in twelve years, which is shorter than the normal 15 year bond issue that the City would take for capital projects and which Mayor Callahan viewed as a very responsible period of time. Fifth, and most importantly, Mayor Callahan stressed it keeps a total level debt service of $2.9 million from 2004 to 2014 which was the Administration’s most important goal “because there is no reason…to look at this funding of this settlement in a vacuum.” Mayor Callahan continued on to say “we, as elected officials, have a responsibility to look at all of the City’s debt, all of its currently existing debt, and when will it pay off that debt. And, in essence, as we pay off more debt, and pay off other bond issues, what we do is take on more debt with this bond issue, and that’s the essence of a wrap around. But the impact of a wrap around neutralizes the impact in any one given year to the taxpayers of Bethlehem. If I’m a taxpayer of Bethlehem, I don’t care if my taxes are going to pay bond A, or bond B, or bond C. All I care about is what’s my tax bill at the end of the year. And, [the Administration’s]…wrap around proposal keeps a…total level debt for the City, and that’s what’s most important to the taxpayers of Bethlehem, and it will neutralize the impact to the taxpayers of Bethlehem.” Mayor Callahan said he does not “understand why we’re trying to make this any more painful on the taxpayers of Bethlehem than necessary. In my opinion, there’s nothing worse than asking people and taxpayers to pay more for less City services, and that in essence is what Council’s proposal will do this evening…Council’s plan is a tax and cut plan. It truly will deliver less for more cost. It will tax people more and give people less. It will raise taxes and cut services to pay for the rest of it. In essence, what Council has done is put the balloon payment up front. It increases the taxpayers’ burden in the…next four or five years and then drops off. In my opinion, we should let the people have their money now and, if we have to, take it from them later…as Mr. Setley pointed out…[W]hat Council’s doing is they’re putting the balloon payment for this funding of this settlement in the beginning. This is a tax increase and service reduction plan in an attempt to avoid what I think are regular interest payments that a normal consumer would do every day…I would love to fund this settlement in one year. We don’t have the money to do that. The average consumer makes those kinds of decisions every day in their life. Everybody knows that it costs less to have a 15 year mortgage overall than it does to have a 30 year mortgage. But most people have a 30 year mortgage because they don’t have the money to have a 15 or 10 year mortgage. They know it costs more, but they don’t have that choice. Most people have a 5 year or 4 year loan on their car when we’d all love to pay cash or have a 1 or 2 year loan on our car. And, some people, if times are real tight, they’ll purchase a large appliance on a credit card for a year or two, and pay for it in installments over time. So, this is not a concept that the average consumer and the average citizen doesn’t do every day in their life. Our proposal, again, doesn’t view this settlement in a vacuum. It looks at the City’s overall total debt, and, in an attempt to keep the City’s debt payment the same every year so the taxpayers can plan their lives and know what their tax bills are going to be year in and year out, we’ve wrapped this debt around the City’s currently existing debt to minimize and neutralize the impact to the taxpayers. The plan that Council put forward not only will result in a significant tax increase but it requires a $200,000 per year reduction in the General Fund…The reality is that by requiring a $200,000 reduction every year for the next twelve years in essence doesn’t fund $2.4 million of this settlement. I think at the very least Council should fund the whole settlement, if they’re going to fund it, as my proposal does, or at the very least tell me, tell the City, what services that you want to cut in order to make that $200,000 number make sense. We have contractual obligations to give a 4% pay increase on average to every employee of the City. I didn’t negotiate the contract. It is what it is and we’ve got to pay it. And, so costs go up, they don’t go down, and health care costs go up, pension costs go up, wages go up, materials, it all goes up. It doesn’t go down. And, [Council] is asking [the Administration] not only to freeze but to cut $200,000 from next year’s budget while all these other things are going up…And why we would make the funding of this settlement any more difficult than we have to is beyond me. It’s against the advice of the City. It’s against the advice of myself, [and] financial advisors. No one can really understand why this is happening.”

Linnea Lazarchak, Financial Services Manager, said she believes that Council’s “proposed debt payment schedule is the better of the two options if, one, the City had more money in the bank; two, if we had a budget that contained unnecessary items; three, and if we had a rapidly growing tax base. But we don’t. We ended 2003 with only $600,000 in cash. Last year we tried to build up our cash balance…by forcing Departments to cut their own budgets, and then by freezing spending all together, except for emergencies. We have no where to go except to a bank if something unexpected happens. We have a very lean budget that is basically uncontrollable. We have budgeted $4.5 million for medical expenses this year. As of today, we already spent $1.9 million on medical expenses. We are averaging $125,000 per week. If the remaining bills stay at this level, medical expenses will be $2 million over budget. 2003 medical expenses were only $4 million. This expense is totally uncontrollable and unpredictable. Another uncontrollable expense is our pension expense. In 2004, we budgeted $1.3 million for pension expenses which should be fully funded by State aid. In 2005, we have been told that we will have to budget $4.8 million for pension and that we will only receive $2.2 million in State aid. This means that an additional $2.6 million will have to be added to the General Fund expenses. This increase in pension expense is the result of the stock market losses which are also uncontrollable. The final large uncontrollable expense is salary. In 2004, the City will have to pay 27 pays, an additional $600,000. And, in 2005, we are obligated to pay, on average, 4% more to our City employees which equals $800,000. Even though salary expenses are a large percentage of our budget, I do not believe that we are overstaffed. The City’s main function is to provide quality services to our taxpayers, and our staff does just that. The controllable items such as official expenses, training, equipment, and overtime have been cut to the bone. Funds are not available if something goes wrong. What do we do if equipment breaks. Starting in 2005, any new equipment purchases will be added to the General Fund which will increase expenses by about $300,000. I can honestly say that a $200,000 cut to the budget would greatly interfere with the daily operations of City government. Finally, the increases in the 2005 expenses greatly outweigh the increases in the 2005 revenue. The City has great potential. The increase in development is a slow and steady process from which future generations will benefit. I believe that the projected yearly increase in revenues should guide us with our decision making along with our past history of leveling out our debt payments. In closing, I would like to state that I do not think that we should create additional stresses for the taxpayer by raising taxes for a purpose for which they will receive no benefit.”

Mayor Callahan said the only argument that he could possibly see that would speak to Council’s proposal versus the Administration’s is if one were to look at interest expense over 10-12 years. Observing there is a fairly positive interest rate environment, Mayor Callahan stated now is the time, as Mr. Setley pointed out, to borrow long, and when interest rates are high then borrow short. Mayor Callahan listed the aggregate interest expense differences among the three proposals. The interest for the original 12 year wrap around proposal was approximately $2.3 million. The interest for the Administration compromise structure proposal was about $1.95 million. The interest for Mr. Leeson’s proposal on which City Council is voting this evening is $1.64 million. Mayor Callahan pointed out that, by subtracting the amounts, the difference is $350,000 over a 12 year period of time or $700,000 over a 12 year period of time, and dividing the amounts over 12 years the difference is between $30,000 or $70,000 per year in interest costs. Mayor Callahan said, to him, that is insignificant in the context of a $46 million General Fund Budget in order not to require significant tax increases on the taxpayers and to avoid drastic service cuts. Mayor Callahan, while communicating the Administration continued to hope that a compromise could have been reached, noted there is a great deal of gap between the two proposals that the Administration put forward versus the one that Council has elected to approve this evening. Mayor Callahan reiterated his commitment to veto the Ordinance if Council approves it.

Mr. Mowrer, communicated that as a former Mayor he has tried to do what is happening, and has some general comments to make because he has been on Council, the Mayor, and is now on City Council again. Mr. Mowrer, highlighting the fact that the City has brought in bond counsel, expressed his feeling that a red flag is being sent when their recommendation is not accepted and the expert advice has been well presented. Mr. Mowrer stated he is very concerned about the General Fund Budget and the need to be aware of the potential increases. Mr. Mowrer, noting health benefits were mentioned tonight including costs, stressed that health benefits are only going to go up. Mr. Mowrer, continuing on to focus on the pension plans, said pension plans are in trouble everywhere, are unfunded, and the City has lived with it as a result of what has occurred with Bethlehem Steel Corporation. Asserting “we cannot play games with our pension for our City employees for the future”, Mr. Mowrer remarked there is no question that pension costs are going up as was indicated earlier tonight. Turning to instructions concerning acquisitions of smaller equipment, Mr. Mowrer pointed out that City Council directed, and he spoke very strongly about it, that future bond issues are not to fund small items and such items should be included in the General Fund Budget so that will be a new expense to the General Fund Budget which he said concerns him. Mr. Mowrer, stating he has read about the Bethlehem Housing Authority’s request for funding from the City, said he is not sure whether or not it must be paid back. Focusing on personnel issues, Mr. Mowrer communicated that, regardless of what the newspaper article reported about cutting employees, he hears about the need for increasing personnel. He exemplified that the EMS Bureau would like additional staff for ambulance calls, and the Block Watch groups have indicated there are not enough Police Officers to make the program work. Mr. Mowrer stated that says to him “we need more people”. In addition, Mr. Mowrer observed there will be some unforeseen areas that have not been looked at or talked about and added “they will come”. Mr. Mowrer said “the total picture is we need to watch our budget very closely because we’re going to be in big trouble, and I feel we’re going to be in big trouble, and I think [the Administration] tried to warn us that we’re going to be in trouble…”. Stressing he has great respect for Mr. Leeson and what he has done, Mr. Mowrer communicated it is nothing personal against him. Mr. Mowrer expressed “when we put off paying more to the end, we’re going to use dollars that aren’t going to be worth as much as they are today. The City’s going to be different. In ten years from now when we would have the balloon effect take place, there’s going to be a new tax increase because of our tax base, because of new industry that’s going to be built at Bethlehem Steel, because of places like Moravian Village…, and the interest rate is as low today as it’s going to be. It is not going to get lower. It’s going to go up, and it will cost us more.” Mr. Mowrer, focusing on Resolution 14,339 which requires the General Fund expenditures to be reduced by $200,000 from 2005 to 2015, said he is not sure how that can be done, and will make for incredibly difficult times. Mr. Mowrer stated he will vote against Bill No. 11 - 2004.

Ms. Szabo remarked it is continually related that City Council is going to raise the taxes unnecessarily for 2005 and the citizens are going to suffer greatly. Ms. Szabo observed the ½ mill that will be dedicated to this Bond Issue alone is not going to interfere with the Budget. Turning to the $200,000 amount by which General Fund expenses would be reduced, Ms. Szabo communicated that over the many, many years that City Council has been under the present Strong-Mayor Council form of government, there have been $200,000 in items taken out of the Budget without enormous layoffs. Ms. Szabo stressed to say that to accept the Administration’s plan means no increase in taxes for the citizens is a gross exaggeration because regardless of what plan is implemented, next year the taxes will have to be raised. Mr. Szabo added that the budget “was bled so that we wouldn’t have to raise taxes”. Ms. Szabo said “it’s just ridiculous to say a ½ mill tax is going to hurt the City so much, and it certainly will not interfere with control over other bond issues and the budget in general.” Ms. Szabo commented that is why she “cannot vote for what I keep calling Ronald Reagan vodoo economics.”

Mr. Leeson, stating that he respects the Administration’s point of view and acknowledging they have a tough job to run City Hall every day and to pay the bills, thought that more of a commitment needs to be made to cost cutting. Mr. Leeson highlighted the fact that the originally estimated costs of the Bond Issue under consideration tonight versus what is being paid “is a classic example of the need to have a sharper pencil when it comes to City budgets and City spending. And, I really challenge you to join that effort with Council to cut costs and to try to have a sharp pencil when it comes to fiscal issues. I don’t see that in the Bond Issue with the examples that I went through tonight.”

Mayor Callahan requested the opportunity for him and the Financial Services Manager to speak.

Ms. Lazarchak said she has been working with Dennis Reichard, Business Administrator, and the previous Administration on the Budget and “can honestly say there is no place to cut. In the past, I’d say yes. But the last two years, definitely not. By June, we try juggling bills, paying them late, just to meet payroll. We’re never able to take discounts. We pay things late, and it’s to the point of it being ridiculous now that we’re juggling funds. There is no excess. We have no control over the medical bills…We’re self-insured. So, on Thursdays we get a bill, and before that we have no clue how much it is. And, right now, since the tax revenues are coming in, we’re fine with it. But come September, October, November, no. In the past,…we always knew we’d make it to the end of the year because the Sewer Fund had…a cash balance, [and the] Water Fund had a cash balance so if something came up, like a high medical bill, we at least could come to Council and ask for a transfer. Now we can’t because we there’s no money to transfer over.”

Mayor Callahan said, in terms of the costs of issuance for the Bond Issue that Mr. Leeson pointed out earlier, it was pretty clear to the Mayor that “those are not the costs. Those are ceilings, and we will pay what it costs to issue these bonds. We are simply setting a ceiling so that we don’t have to go back to Council if any of those costs are over. So, we are setting it admittedly high because of the potential that interest rates go a little awry between the time that this gets approved and the time that the bonds go to market, or any other unforeseen costs so that we don’t have to start…this process over again…Those are not what the costs are. Those are ceilings to allow those costs to come in at whatever they are without having to come back to Council.”

Mr. Donchez communicated that, with all due respect, the statements made by Ms. Lazarchak are made on behalf of the Administrations that she has served. Mr. Donchez stated he has been privileged to serve on City Council since 1996 and, outside of the dedicated tax that was instituted for the Landfill debt, he thinks there have been two tax increases presented by the Administration. Mr. Donchez pointed out that is much different than the County and the Bethlehem Area School District. Mr. Donchez observed that all former Mayors when they were on City Council have always said they would like to see the cash balance at a minimum of $1 million. Recalling the projection last year was that the City would end the year with around $350,000 cash balance, Mr. Donchez highlighted the fact that the ending cash balance was $600,000. Mr. Donchez thought it was fair to say that during the budget hearings many times the numbers presented by the Administration are usually very conservative and usually come in higher. Mr. Donchez expressed that the scenario explained by Ms. Lazarchak is part of going back to previous Administrations where they did not want to raise taxes and now everything that Ms. Lazarchak said is because of the past, not that it just occurred at the moment. Mr. Donchez further stated he thinks both plans have merit, and there are pros and cons on both sides. Mr. Donchez asked Attorney Carlucci is there anything improper or illegal that City Council is proposing and is going to be passing this evening if the plan proposed by Mr. Leeson is approved this evening.

Attorney Carlucci replied no, there is nothing illegal about it, and the structure is consistent with the requirements of the Debt Act.

Mr. Donchez recalled when Attorney Carlucci made his presentation a few weeks ago and defined the wrap around he explained that the wrap around was used mostly by School Districts, and used the term growing School Districts. However, Mr. Donchez recounted that Attorney Carlucci did not use the word City and asked the reason why.

Attorney Carlucci explained there are more School Districts than there are Cities, and he does a lot more work with the School Districts. Attorney Carlucci affirmed that is not to say it is inappropriate for the City. Attorney Carlucci, confirming that some of the advantages of the wrap around debt service structure have been discussed, explained it is the ability to wrap around existing debt service so that as old debt service falls off and new debt service is increased, the amount of tax necessary to pay debt is maintained on a fairly steady, ongoing basis.

Mrs. Belinski stated she would be happy to come into Mayor Callahan’s office and tell him exactly how $200,000 could be cut from the General Fund Budget, and added “we don’t have to lay off any employees.”

Mr. Mowrer asked if it is correct that Bond Counsel still recommends the wrap around debt service structure.

Attorney Carlucci said, to be clear, the wrap around minimizes the immediate tax impact of having to fund the debt service on the proposed debt in contrast to approximately level debt service which is proposed by Council.

Mr. Mowrer asked if Attorney Carlucci recommends the wrap around.

Attorney Carlucci replied he is not recommending one or the other. Attorney Carlucci explained his function as he sees it is to point out the advantages and disadvantages of both. Attorney Carlucci pointed out that the final decision rests with the City. Attorney Carlucci, noting that the wrap around proposed by the Administration is a very short wrap around, observed that often the wrap around schedules are fairly long because the debt that is outstanding is outstanding for a very long period of time.

Mr. Peck advised that he has seen wrap around debt service structures where the principal repayment does not start as late as ten or fifteen years. Under the Administration’s proposal, Mr. Peck pointed out that debt service begins falling off in 2006, and most significantly in 2009. Consequently, Mr. Peck noted it is not a very long interest only period. Mr. Peck, with reference to the Mayor’s comments about the differences in the aggregate debt service, noted the number between the two different ranges of plans was approximately $700,000-$800,000.

Mr. Mowrer repeated that he wants to know whether Mr. Peck recommends the wrap around.

Mr. Peck, stating he is not a policy maker, said under the goals as he understood them the wrap around is an acceptable option. Based on the objectives of the Administration, it is recommended.

President Schweder, while commenting that statements made tonight can be refuted, communicated that concerns were raised of what will happen to the City. He continued on to note that statements were made that a $70,000 a year difference is insignificant but it appears another $200,000 “is close to being Armegeddon”. Focusing on the question of what is the one difference between Mayor Callahan’s proposal and Mr. Leeson’s proposal, President Schweder said it needs to be understood that Mr. Leeson’s proposal has a revenue stream to pay for the almost $8 million that is owed in the Hirko lawsuit settlement. President Schweder observed that the Administration’s proposal “believes that we will not pay next year, we’ll pay lower debts, and prosperity is somewhere around the corner. And, when the debt gets to be…$2.7 million in the out years somehow or another we’re going to have funds that will pay for this. The simple fact of the matter is that those of us who are responsible have to make a decision here…[Y]ou cannot agree to a proposal and a settlement which costs $7.9 million which was the original request but in fact is still $7.3 million and think that there is neither no pain to attach to it or that there is simply no way to provide a way to pay for it. And that’s what Mr. Leeson’s proposal does. It says that as painful and as difficult as it is for those of us sitting here…we understand that whether we were part or not of the settlement…we have a responsibility as the fiduciary responsibility of this City to pay for this settlement.” President Schweder highlighted the fact that Mr. Leeson’s proposal says there will be ½ mill which will be dedicated solely to paying off the debt and the interest that has been incurred by the settlement, and that there will be cuts as was done with previous bond issues that will be put aside to pay for this. But, he said, in no succeeding year is any Council, or future Mayor, or citizens going to be in a position where they do not know from year to year what the cost of this settlement is. President Schweder recounted that two weeks ago he said the whole premise behind Mayor Callahan’s proposal is based on the idea that in a certain year the total General Fund debt obligation of the City will be $2.9 million but $2.7 million in that year will have to go for the payment of the Hirko-Karoly settlement, and Mr. Setley, of Concord Public Finance, agreed that was true. President Schweder recalled, at that point, President Schweder said to Mr. Setley that is based on the assumption that over the period of time from tonight until that date is reached in 2011 or 2012 all the General Obligation debt service of the City in that year will simply be $200,000 which Mr. Setley also agreed to. President Schweder noted he then asked Mr. Setley if Mr. Setley could tell President Schweder at any time in the history of the City when that was ever true, and his answer was similar to “I’m not old enough to remember that”. President Schweder advised that the Debt Service of the City was reviewed for every year since the beginning of the City’s present Strong Mayor form of government in 1962 “and the answer to how many years in those 42 years has the total debt service of the City of Bethlehem for General Fund debt service been the same as what’s being proposed is going to be the solution in 2011…is never.” President Schweder, turning to discussions about how debt goes down over a period of time and that debt is being paid down, said when the General Fund debt of the City is reviewed, in 1977 it went over $2 million and has remained almost constant from that period of time because the City has found it necessary over that period of time every other year to replace a bond that is being paid down by a new bond that pays for new equipment and repairs the same as has been done in the past and will continue to be done. President Schweder, observing that arguments can be made all night about historically low interest rates, or level debt service, stressed the simple fact of the matter is, “as painful as it is for what I believe Council will do tonight…, that the same way a Council prior to when I was here took the responsibility of saying if you have a debt, and in this case it’s $7.3 million, you have to pay for it and you have to come up with a paying mechanism that allows the money to flow in to pay for that during the life of the debt. You don’t push it off and hope that something’s going to happen somewhere down the road that’s going to change that. Because if you look at the figures and if you put together any proposal which is a fiscal proposal you have to look backward as far as looking forward. And, over forty years, that’s never been the case. I think that makes the statement of why Mr. Leeson’s proposal makes sense. That’s why I intend to support it tonight…and…I guess we’ll be at this perhaps at least one more time after tonight’s meeting.”

Voting AYE on Bill No. 11 – 2004, as Amended: Mr. Arcelay, Mrs. Belinski, Mr. Donchez, Mr. Leeson, Ms. Szabo, and Mr. Schweder, 6. Voting NAY: Mr. Mowrer, 1. Bill No. 11 – 2004, hereafter to be known as Ordinance No. 4248 was declared adopted.

E. Bill No. 12 – 2004 – Amending Ordinance 4233 – Fixing the Tax Rate for All City Purposes for the Year 2004

The Clerk read Bill No. 12 – 2004, Amending Ordinance 4233 – Fixing the Tax Rate for
All City Purposes for the Year 2004, on Final Reading.

Amendment to Bill No. 12 - 2004

Mr. Donchez and Mr. Leeson sponsored the following Amendment:

That Section 1. which reads as follows:

SECTION 1. That a tax be paid and the same is hereby levied on all persons and real property within the said City subject to taxation for City purposes for the fiscal year, as follows:

Tax for the year 2004 for General City purposes, the
sum of eight and [twenty-five] hundredths [(8.25)] mills on
each dollar of assessed valuation [or the sum of
eighty-two and [five] tenths [(82.50)] cents on each one
hundred dollars of assessed valuation];

For Recreation purposes, the sum of fifty-nine
hundredths (.59) mills on each dollar of assessed
valuation [or the sum of five and nine tenths (5.90)
cents on each one hundred dollars of assessed valuation];

For Debt purposes, the sum of two and nine
hundredths (2.09) mills on each dollar of assessed
valuation [or the sum of twenty and nine tenths
(20.90) cents on each one hundred dollars of assessed valuation];

[For Landfill Debt purposes, the sum of four hundredths
(.04) mills on each dollar of assessed valuation [or the sum of
four tenths (.40) cents on each one hundred dollars of assessed valuation];]

For Library purposes, the sum of seventy-eight
hundredths (.78) mills on each dollar of assessed
valuation [or the sum of seven and eight tenths (7.80)
cents on each one hundred dollars of assessed valuation]
to wit:

Mills on Each Cents on Each One
Dollar of Hundred Dollars of
Purpose Assessed Valuation Assessed Valuation

General [8.25] [82.50]

Recreation Levy .59 5.90

Debt 2.09 20.90

Landfill [.04] [.40]

Library .78 7.80

Total - All Purposes 11.75 117.50

shall be amended to read as follows:

SECTION 1. That a tax be paid and the same is hereby levied on all persons and real property within the said City subject to taxation for City purposes for the fiscal year, as follows:

Tax for the year 2004 for General City purposes, the
sum of seven and eighty-nine hundredths (7.89) mills on
each dollar of assessed valuation [or the sum of
seventy-eight and nine tenths (78.90) cents on each one
hundred dollars of assessed valuation];

For Recreation purposes, the sum of fifty-nine
hundredths (.59) mills on each dollar of assessed
valuation [or the sum of five and nine tenths (5.90)
cents on each one hundred dollars of assessed valuation];

For Debt purposes, the sum of two and nine
hundredths (2.09) mills on each dollar of assessed
valuation [or the sum of twenty and nine tenths
(20.90) cents on each one hundred dollars of assessed valuation];

For Landfill Debt purposes, the sum of four tenths
(.40) mills on each dollar of assessed valuation [or
the sum of four (4.0) cents on each one hundred dollars of
assessed valuation];

For Library purposes, the sum of seventy-eight
hundredths (.78) mills on each dollar of assessed
valuation [or the sum of seven and eight tenths (7.80)
cents on each one hundred dollars of assessed valuation]
to wit:

Mills on Each Cents on Each One
Dollar of Hundred Dollars of
Purpose Assessed Valuation Assessed Valuation

General 7.89 78.90

Recreation Levy .59 5.90

Debt 2.09 20.90

Landfill .40 4.00

Library .78 7.80

Total - All Purposes 11.75 117.50

Voting AYE on the Amendment to Bill No. 12 – 2004: Mr. Arcelay, Mrs. Belinski, Mr. Donchez, Mr. Leeson, Mr. Mowrer, Ms. Szabo, and Mr. Schweder, 7. The Amendment passed.

Voting AYE on Bill No. 12 – 2004, as amended: Mr. Arcelay, Mrs. Belinski, Mr. Donchez, Mr. Leeson, Mr. Mowrer, Ms. Szabo, and Mr. Schweder, 7. Bill No. 12 – 2004, hereafter to be known as Ordinance 4249, was declared adopted.

10. NEW ORDINANCES

None.

11. RESOLUTIONS

Motion – Considering Resolutions 11 A through K as a Group

Mr. Donchez and Mr. Leeson moved to consider Resolutions 11 A through 11 K as a group.

Voting AYE: Mr. Arcelay, Mrs. Belinski, Mr. Donchez, Mr. Leeson, Mr. Mowrer, Ms. Szabo, and Mr. Schweder, 7. The motion passed.
A. Authorizing Execution of Use Permit Agreement – City Line Little League

Mr. Donchez and Mrs. Belinski sponsored Resolution No. 14,340 which authorized execution of Use Permit Agreement between City Line Little League and the City of Bethlehem for use of Northdale Park for Little League Baseball for the time period January 1, 2004 to December 31, 2004, with an automatic annual renewal provision, according to the Agreement.
B. Authorizing Execution of Use Permit Agreement – Lehigh Little League

Mr. Donchez and Mrs. Belinski sponsored Resolution No. 14,341 which authorized execution of Use Permit Agreement between Lehigh Little League and the City of Bethlehem for use of Monocacy Park for Little League Baseball for the time period January 1, 2004 to December 31, 2004, with an automatic annual renewal provision, according to the Agreement.
C. Authorizing Execution of Use Permit Agreement – North Central Little League

Mr. Donchez and Mrs. Belinski sponsored Resolution No. 14,342 which authorized execution of Use Permit Agreement between North Central Little League and the City of Bethlehem for use of Heimple Field for Little League Baseball for the time period January 1, 2004 to December 31, 2004, with an automatic annual renewal provision, according to the Agreement.
D. Authorizing Execution of Use Permit Agreement – Northeast Little League

Mr. Donchez and Mrs. Belinski sponsored Resolution No. 14,343 which authorized execution of Use Permit Agreement between Northeast Little League and the City of Bethlehem for use of Sell Field for Little League Baseball for the time period January 1, 2004 to December 31, 2004, with an automatic annual renewal provision, according to the Agreement.
E. Authorizing Execution of Use Permit Agreement – Northwest Little League

Mr. Donchez and Mrs. Belinski sponsored Resolution No. 14,344 which authorized execution of Use Permit Agreement between Northwest Little League and the City of Bethlehem for use of Buchanan Park for Little League Baseball for the time period January 1, 2004 to December 31, 2004, with an automatic annual renewal provision, according to the Agreement.

F. Authorizing Execution of Use Permit Agreement – Southside Little League

Mr. Donchez and Mrs. Belinski sponsored Resolution No. 14,345 which authorized execution of Use Permit Agreement between Southside Little League and the City of Bethlehem for use of Saucon Park for Little League Baseball for the time period January 1, 2004 to December 31, 2004, with an automatic annual renewal provision, according to the Agreement.
G. Authorizing Execution of Use Permit Agreement – Bethlehem Raiders

Mr. Donchez and Mrs. Belinski sponsored Resolution No. 14,346 which authorized execution of Use Permit Agreement between Bethlehem Raiders and the City of Bethlehem for use of Sell Field for League Football for the time period January 1, 2004 to December 31, 2004, with an automatic annual renewal provision, according to the Agreement.
H. Authorizing Execution of Use Permit Agreement – Bethlehem Saints

Mr. Donchez and Mrs. Belinski sponsored Resolution No. 14,347 which authorized execution of Use Permit Agreement between Bethlehem Saints and the City of Bethlehem for use of Saucon Park for League Football for the time period January 1, 2004 to December 31, 2004, with an automatic annual renewal provision, according to the Agreement.
I. Authorizing Execution of Use Permit Agreement – Bethlehem Steelers

Mr. Donchez and Ms. Belinski sponsored Resolution No. 14,348 which authorized execution of Use Permit Agreement between Bethlehem Steelers and the City of Bethlehem for use of Monocacy Park for League Football for the time period January 1, 2004 to December 31, 2004, with an automatic annual renewal provision, according to the Agreement.
J. Authorizing Execution of Use Permit Agreement – 2004 Borinquenfest

Mr. Donchez and Mrs. Belinski sponsored Resolution No. 14,349 which authorized execution of Use Permit Agreement between the Puerto Rican Cultural Coalition, Inc. and the City of Bethlehem for use of the area beneath Hill-to-Hill Bridge for the 2004 Borinquenfest for the time period June 21, 2004 to July 1, 2004, according to the Agreement.

K. Authorizing Execution of Use Permit Agreement – RiverFusion 2004 Concert

Mr. Donchez and Mrs. Belinski sponsored Resolution No. 14,350 which authorized execution of Use Permit Agreement between Illick’s Mill Partnership for Environmental Education and the City of Bethlehem for use of Sand Island West for RiverFusion 2004 Concert for the time period May 13, 2004 to May 18, 2004, according to the Agreement.

Voting AYE on Resolutions 11 A through 11 K: Mr. Arcelay, Mrs. Belinski, Mr. Donchez, Mr. Leeson, Mr. Mowrer, Mr. Szabo, and Mr. Schweder, 7. The Resolutions passed.
L. Approving Earned Income Tax Rules and Regulations – Amendments

Mr. Donchez and Ms. Szabo sponsored Resolution No. 14,351 which adopted amendments to the Rules and Regulations for Tax on Earned Income and Net Profits to be retroactive to January 1, 2003 in accordance with Act 166 of 2002. The amendments will be incorporated into the Rules and Regulations for Tax on Earned Income and Net Profits previously adopted under Resolution 14,331 on April 6, 2004.

Voting AYE: Mr. Arcelay, Mrs. Belinski, Mr. Donchez, Mr. Leeson, Mr. Mowrer, Mr. Szabo, and Mr. Schweder, 7. The Resolution passed.

M. Transfer of Funds – Health Bureau – Equipment – Bioterrorism

Mr. Donchez and Ms. Szabo sponsored Resolution 14,352 that transferred $25,775 in the General Fund Budget from the Health Bureau Temporary Help Account to the following: $1,233 – Health Bureau – Bioterrorism Account and $24,542 – Health Bureau – Bioterrorism – Equipment Accounts, to reflect the finalized grant budget.

Voting AYE: Mr. Arcelay, Mrs. Belinski, Mr. Donchez, Mr. Leeson, Mr. Mowrer, Mr. Szabo, and Mr. Schweder, 7. The Resolution passed.

N. Funding Hirko Settlement – Allocating Tax Revenues of ½ Mill and Reducing General Fund Expenditures by $200,000 – 2005 through 2015

Mr. Leeson and Ms. Szabo sponsored Resolution 14,353 that segregated and/or escrowed in a separate account .5 mill from the revenues raised from the Tax for the years 2005 through 2015 for General City purposes, all of such funds to be earmarked and designated solely and exclusively to pay off debt pertaining to the Hirko lawsuit settlement, only, and for no other purpose. In addition, General Fund Expenses shall be reduced by the amount of $200,000 for the years 2005 through 2015 for the purpose of paying off debt pertaining to the Hirko lawsuit settlement, only, and for no other purpose. This Resolution supersedes Resolution 14,339 adopted on April 6, 2004 which stated .05 mill instead of .5 mill.

Ms. Lazarchak commented the Administration would ask that the word increase be included in the Resolution to read that a .5 mill increase be added. Ms. Lazarchak explained that the present language of the Resolution could refer to the current millage rate.

Mr. Leeson stated he thinks the Resolution is very clear.

Ms. Lazarchak thought there might be confusion because the Resolution does not state a .5 mill increase from the current rate.

Mr. Leeson said he will stipulate on the record that is what it is.

Voting AYE: Mr. Arcelay, Mrs. Belinski, Mr. Donchez, Mr. Leeson, Ms. Szabo, and Mr. Schweder, 6. Voting NAY: Mr. Mowrer, 1. The Resolution passed.

Considering Resolution O through Resolution S as a Group

Mr. Donchez and Mr. Leeson moved to consider Resolutions 11 O through 11 S as a group.

Voting AYE: Mr. Arcelay, Mrs. Belinski, Mr. Donchez, Mr. Leeson, Mr. Mowrer, Ms. Szabo, and Mr. Schweder, 7. The motion passed.

O. Certificate of Appropriateness – 38 West Church Street

Mr. Leeson and Mr. Arcelay sponsored Resolution 14,354 which granted a Certificate of Appropriateness to install a fence at the rear of 38 West Church Street.
P. Certificate of Appropriateness – 42 Wall Street

Mr. Leeson and Mr. Arcelay sponsored Resolution 14,355 which granted a Certificate of Appropriateness to replace the existing slate roof and siding on the roof dormers at 42 Wall Street.
Q. Certificate of Appropriateness – 425 Center Street

Mr. Leeson and Mr. Arcelay sponsored Resolution 14,356 which granted a Certificate of Appropriateness to paint the exterior at 425 Center Street.
R. Certificate of Appropriateness – 472 Main Street

Mr. Leeson and Mr. Arcelay sponsored Resolution 14,357 which granted a Certificate of Appropriateness to replace the existing awnings at 472 Main Street.
S. Certificate of Appropriateness – 548 Main Street

Mr. Leeson and Mr. Arcelay sponsored Resolution 14,358 which granted a Certificate of Appropriateness to install signage at 548 Main Street.

Voting AYE on Resolutions 11 O through 11 S: Mr. Arcelay, Mrs. Belinski, Mr. Donchez, Mr. Leeson, Mr. Mowrer, Ms. Szabo, and Mr. Schweder, 7. The Resolutions passed.

T. Authorizing Filing for Elm Street Residential Reinvestment Funds – Street Lights on East Fourth Street

Mr. Donchez and Ms. Szabo sponsored Resolution 14,359 which authorized the filing of a proposal for Elm Street Residential Reinvestment funds with the Department of Community and Economic Development in the amount of $235,000 for the installation of street lights on East Fourth Street from Hayes to William Street. The City will assume the provision of the full local share of project costs of $23,500.

Mr. Donchez, stating that the Elm Street Program was recently signed by Governor Rendell in Easton, noted it was authored and sponsored by State Representative Bob Freeman. Mr. Donchez credited Representative Freeman for the program which, he observed is in addition to the Community Development Block Grant money to help neighborhoods. Mr. Donchez commended Tony Hanna, Director of Community and Economic Development, Darlene Heller, Director of Planning and Zoning, and other Department staff for meeting with various Block Watch groups and to try to get them qualified for some of the Elm Street Program money.

Voting AYE: Mr. Arcelay, Mrs. Belinski, Mr. Donchez, Mr. Leeson, Mr. Mowrer, Ms. Szabo, and Mr. Schweder, 7. The Resolution passed.

U. Authorizing Filing for Elm Street Planning Funds – Neighborhood Revitalization Plan

Mr. Donchez and Ms. Szabo sponsored Resolution 14,360 which authorized the filing of a proposal for Elm Street Planning funds with the Department of Community and Economic Development in the amount of $25,000 for the development of a neighborhood revitalization plan of the north and west side neighborhoods and a review of the City’s zoning and land use ordinances to foster the viability of established residential neighborhoods. The City will assume the provision of the full local share of project costs of $2,500.

Voting AYE: Mr. Arcelay, Mrs. Belinski, Mr. Donchez, Mr. Leeson, Mr. Mowrer, Ms. Szabo, and Mr. Schweder, 7. The Resolution passed.

12. NEW BUSINESS

Hirko Settlement – Police Grant

Mrs. Belinski noted that she sent a memorandum to the Administration asking where is the grant for which the City is to apply as a condition of the Hirko lawsuit settlement in order to provide the Police Department with training in civil rights. Mrs. Belinski advised that the response from Mr. Reichard was that the Administration will work with the Department of Community and Economic Development and the Police Department in exploring whether any such grant opportunities exist and in making appropriate application. Mrs. Belinski continued on to state that a letter was received from a citizen, Thomas Miller, in which Mr. Miller explained that he had called the Mayor’s office on several occasions and spoke to the Mayor’s Administrative Assistant but no one ever got back to him regarding his suggestion to consider the use of the political science departments of two local institutions of learning, Muhlenberg College and Lehigh University. Reading from the letter, Mrs. Belinski noted that Mr. Miller attested to the quality of the instructions having taken courses at Muhlenberg College, and that Professor Slane of Muhlenberg College sounded excited at the prospect of such an endeavor. Mr. Miller also contacted Dr. Olson at Lehigh University who sounded interested as well. Mrs. Belinski highlighted the fact that local people from political science departments at a local college and university are more than willing to hold training classes for the Police Department.

Mayor Callahan, observing that one of the challenges of Mayor is staying focused on certain tasks at hand, noted that for obvious reasons the funding of the settlement has been the most important issue right now. Mayor Callahan, advising there is no timetable assigned to the grant application whatsoever, said “nor are we even sure of pools of money to even seek such a grant. We are obligated as a part of this settlement to make a good faith effort in trying to apply for a $5 million grant, [with] no timetable assigned to that whatsoever. There are many issues facing the City of Bethlehem right now, and right now the application for a $5 million grant is not the most important thing…” Mayor Callahan further advised that when the funding of the settlement is finished, he will then move forward and tackle the rest of the settlement. Pointing out there is no urgency, Mayor Callahan reiterated there is no timetable assigned to it. Mayor Callahan stated at that point the City will begin to start its good faith effort and application and he will discuss with the student who audited the five classes at Muhlenberg College what potential opportunities there are to apply for a grant, as well as speak to the City’s grants administrator and any number of people as he begins to gather the facts and make a decision on that portion of the settlement. Mayor Callahan, expressing his appreciation for the citizen’s willingness to be of assistance, affirmed that the Administration responded to Mrs. Belinski exactly as to what the sense of urgency is or is not revolving around the grant. Mayor Callahan communicated that Mrs. Belinski can rest assured that the City will in due time make a good faith effort to apply for a $5 million grant.

Mrs. Belinski thought that at the least Mayor Callahan would have had his Administrative Assistant call the citizen and tell him exactly what she was told that as soon as the more important things are cleared out the Mayor will get back to the citizen. Mrs. Belinski added that the citizen is retired, is attending the City’s Civilian Police Academy classes, and is very impressed with the City’s Police Department and spoke very favorably about it.

Patriot Act

Ms. Szabo recalled that for many months there have been discussions with many citizens and Council has received messages from many citizens regarding their concern about the Patriot Act. Ms. Szabo requested that a Committee of the Whole meeting be convened for a full discussion on the Patriot Act and the impact on the civil rights of the community.

President Schweder stated he will take that under advisement.

Settling of Lawsuit – David Lloyd

Mr. Leeson, noting that he read in the newspaper that the lawsuit by David Lloyd was settled by the City’s insurance company, said he was curious to know what the insurance company paid and what was the City’s deductible.

John Spirk, City Solicitor, stated that he would get that information to Mr. Leeson.

Second Fire Station on the South Side

Mr. Donchez, in view of all the present and future development on the South Side, queried whether any consideration is being given to discussion on a second Fire Station on the South Side that he commented will be needed sooner or later in the southeastern part of the City. With the Pektor projects, the Bethlehem Commerce Center, LVIP, and Bethlehem Works, and so on, Mr. Donchez pointed out there is a lot of momentum on the South Side and sooner or later the City may be faced with the possibility of looking at another Fire Station there. Since land is now being divided and purchased, Mr. Donchez wondered whether that is something the Administration is looking at short or long term.

Mayor Callahan responded that, given the actions of tonight’s meeting, the City would be hard pressed to have another Fire Station in South Bethlehem.

Mr. Donchez commented that, with all due respect, government does not stop today because of what City Council did, and Bethlehem will continue to function and the citizens of Bethlehem will continue to be served with the utmost responsibility.

Mayor Callahan stated he will do his best to drive economic development in the City so that taxes will not be raised on the citizens but that tax revenues will be raised over time in order to fund better City services. Mayor Callahan said he has been committed in his time as a Councilperson to do three things: deliver good, basic City services to the residents, to do more with less, and to drive economic development as hard as he possibly can. Mayor Callahan, highlighting the fact that there have been a number of very positive announcements, noted that most recently there was an announcement about a $40 million development on Schoenersville Road if rezoning goes through. Mayor Callahan said “we continue to work every day to try to be a little faster, a little more efficient than the townships, and try to do a better job of delivering basic City services, and trying to be nimble so we can create opportunity for businesses to come to Bethlehem, and I will continue to do that. But basic City services costs money. It takes people to sit in a fire truck. It takes people to fight crime. People get paid salaries, and we can’t do it for free. And, at some point, we’ve got to face that reality. We all want more, but there is a pricetag assigned to the more. And I will do my best as Mayor moving forward in trying to drive economic development so that we don’t have to raise taxes in order to raise tax revenues…It takes time, and I work at it every day, and I will continue. But the reality is…there is going to be significant, as Ms. Lazarchak pointed out today, significant pressures on this Budget moving forward…”.

President Schweder inquired whether anyone in the Administration is looking at a fire house which is already built, is for sale, and is probably the second newest fire station the City built, that is the McIlvain Fire House on William Street. President Schweder recalled that the City sold it, it is back up for sale, and was probably built in the late 1960’s. President Schweder commented that the Fire Commissioner could report back on that as well.

Mrs. Belinski thought Mayor Callahan ought to take a look at the percentage of usage of some of the fire trucks. Mrs. Belinski said some of the fire trucks are sitting 70% and 90% of the time, and the tires are going flat from not being used. Mrs. Belinski continued on to say the City also has the equipment to go around to staff that fire house.

Ms. Szabo, expressing the hope that any new fire station would be named McIlvain, said that has been closed since the 1970’s and sold other times, and should never have been closed to begin with.

Ms. Szabo, remarking that Mrs. Belinski has the most amazing spy service in the Lehigh Valley, commented she would feel a lot safer and could sleep better at night if Mrs. Belinski were on the National Security Commission.

Police Department – Staffing Levels; and Community Policing

Mr. Arcelay noted that over the past five months he and Mr. Donchez have spent many evenings attending block watch meetings throughout the City. Mr. Arcelay, advising that he has been provided with the minutes from block watch meetings, said in reviewing the minutes of the meetings that he could not attend and comparing them with the meetings he has been able to attend he has continually found common issues and concerns. Mr. Arcelay stated that the citizens participation in the block watch meetings is extremely encouraging. Mr. Arcelay continued on to say the concern, the values, and the pride of the block watch members remind him of the reason he joined City Council. Mr. Arcelay advised that many of the block watch members have participated in the Citizens Police Academy training, have listened to the City Administration, have followed procedures, and have spent countless hours making telephone calls and following up on issues in their respective communities. Mr. Arcelay communicated that he has come to acknowledge the block watch groups as a strong and efficient tool. However, Mr. Arcelay expressed his concern that over the last year or so the block watch groups have come to feel disempowered and discouraged. Mr. Arcelay stressed the City cannot and should not let the groups feel this way. Mr. Arcelay explained that since November he has been receiving from Francis Donchez, Police Commissioner, Police Department staffing levels that specifically highlight the tac unit and the midnight shift. Mr. Arcelay, communicating that he has gone out into the community and has come to know the community police stations and officers, said he feels good knowing they are out in the City and are willing to respond at a moment’s notice. In reviewing the charts of the staffing levels, Mr. Arcelay said the first question that comes to mind is maybe the City does not have enough Police Officers to respond on time. Mr. Arcelay noted he also realized that maybe the numbers represented a low and contribute to case overload. Focusing on a survey he had conducted to compare Bethlehem to five other Third Class Cities for Police staffing levels during the tac and midnight shifts, Mr. Arcelay enumerated the percentages. Harrisburg has 42% of its Police force that works at night during the midnight and tac shifts, Reading has 26%, Easton has 23%, Allentown has 19%, and York has 16%. Unfortunately, Mr. Arcelay noted that Bethlehem falls at the lowest below York. Most alarming, Mr. Arcelay said on several dates Bethlehem’s numbers were in the single digits. Mr. Arcelay stated it should not be that way. Mr. Arcelay noted he is offering the information as an explanation as to perhaps why things are happening. Mr. Arcelay continued on to say perhaps the numbers need to be moved around so there is more of a peak presence. Mr. Arcelay said the information he is supplying tonight is so that a large segment of the community can listen to it in a public forum, and, more importantly, so they may be afforded the opportunity for discussion. Mr. Arcelay, noting that he and the Mayor have had many discussions about the gaps, stated he would like to see the Administration move from the current situation of offering explanations as to why things are the way they are to offering solutions.

Mr. Arcelay moved that the issue concerning Community Policing be referred to the Public Safety Committee for further review and discussion.

Mr. Donchez seconded the motion.

Mr. Leeson, Chairman of the Public Safety Committee, said Mr. Arcelay has done his homework, has briefed him periodically, and has made an effort to get a level of detail to document his suspicions. Mr. Leeson said as Chairman he accepts this issue for review and asked Mr. Arcelay to attend the meeting.

Mr. Donchez stated that one of the most successful programs that was enacted years ago by the Administration was the Community Policing Program which, he said, has been a tremendous asset. Observing it takes a special Police Officer to be a Community Police Officer, Mr. Donchez pointed out that the Officer needs to have a neighborhood rapport with people. Pointing out there are many citizens at the Meeting this evening who are members of Block Watch groups and who have attended the Citizens Police Academy, Mr. Donchez felt that many of them want to see a very good program continued and want to know how they can help. Mr. Donchez noted that he spoke with Police Commissioner Donchez about the subject last Monday. Mr. Donchez said he knows for the last 11 to 12 months the Department has been down 15 to 17 Officers, and there is a training period following the civil service test until Police Officers are on the streets. Mr. Donchez observed that many of the citizens tonight want to hear there is a sense that the City is committed to Community Policing, and want to know how they can assist the Police Officers. Stressing the Police Department is highly trained and the Officers have great professionalism and integrity, Mr. Donchez said he thinks a good discussion in the Public Safety Committee would take place. Affirming he attended three block watch meetings last week, Mr. Donchez said the first comment that comes up is that citizens have not seen their Community Police Officers, and added it is a legitimate concern. Mr. Donchez commented that many of the citizens want to make sure the City is committed in the direction of Community Policing which, he stated, has served the neighborhoods well and has been a prime deterrent in the neighborhoods.

Mayor Callahan stressed that, as he stated in the newspaper today and to William Fitzpatrick, a Block Watch captain, last night,