Anticipating that the City will continue to receive diminished revenues because of COVID-19 in 2021, officials are considering selling off some of the City’s assets — including the Civic Center and Church Street garage — in a possible realignment of resources.
In a mid-year update on the budget at the Aug. 10 City Council meeting, officials reported that revenue loss for 2020 continues to hover around $12 million.
Officials had already mostly factored into that figure losses in revenue from ticket sales and other related revenues, they said on Aug. 10, if Northwestern University moves ahead and cancels its football season because of coronavirus concerns. The next day, Aug. 11, the Big Ten presidents voted to postpone all fall sports seasons, including football.
Some revenues are coming in, including $4.4 million in grant money, much of it federal, reimbursing the City for expenses in response to Covid-19, officials reported.
However, officials say the City still faces a roughly $2 million budget deficit by year’s end, and they are already looking at the ripple effect those reduced revenues will have on the City budget for 2021, Kate Lewis-Lakin, the City’s Budget Coordinator told Council members.
“Looking at our current year projections, we’re thinking that next year, hopefully, we won’t have the long-term complete shutdown that we saw in March and April of this year,” Ms. Lewis-Lakin said.
“But there will be ongoing effects from this pandemic. We’ll see still lower employment across the state — that will affect your income (taxes); lower sales tax revenue, as well as these other revenues like hotel tax and amusement tax. We may also need to make up deficit spending from 2020.”
Officials are looking at continuing to hold off filling City job vacancies next year, a move that would result in roughly $4 million in savings, she said.
But “this obviously will have a great impact on our city services, on our staff and our residents,” she said. “So we want to make sure we’re doing this consciously by looking closely at those vacancies and doing some evaluation on what those impacts will be, and making sure we share those with City Council, too, as we move forward in this process.”
In her memo to the Council, Ms. Lewis-Lakin said that “given the challenges presented by the 2021 budget, staff will also continue to work towards the selling of certain City assets, with priority given to the Church Street garage and Civic Center. Selling either of these buildings would yield funds that could be used for procuring new spaces for City operations and investing in the City’s other capital assets,” she said.
Entering the discussion, Mayor Stephen Hagerty indicated that he as well as and other aldermen he has spoken to (all whose seats will be up for election next year) wouldn’t be supportive of selling a city asset as a one-time move to close a budget deficit.
On the other hand, “I think it is on the table, and up for thorough consideration, whether you want to reallocate assets within the city,” he said. “Big organizations do that all the time. And I think that’s the conversation that the Council is really having.”
Interim City Manager Erika Storlie reinforced that view.
“If we were to consider the sale of any city-owned assets, we would need to look closely, as a collaborative conversation, about what we’d be allocating funding for — whether it would be to pay down debt, whether it would be to put towards another project. But it would not be to simply close the budget — you never want to take a long term asset and plug a short term hole.”
But Ms. Storlie, whose status could also change with the City’s currently conducting a search for a permanent City Manager, said the issue “does beg the conversation of, you know, how much land how many buildings, how many projects, should the City of Evanston hold?”
“We own a tremendous amount of buildings and land, and other amenities, and we need to evaluate whether or not that’s the most cost-effective approach,” she said.
“Overall, going forward, just from a financial perspective, it’s going to be very challenging for the City for years to come,” she told Council members. “We did not come into this pandemic with a great set of circumstances.”
Ms. Storlie said the City has seen some positive gains, including receiving word recently of interest and advantageous pricing on a recent City bond sale, due in part, “because Evanson is an amazing place and there will always be a tremendous amount of interest in people wanting to do business here and go to school here.”
“But at the same time we always have to take a cautious and measured approach how we look at our financial picture,” she told aldermen, “because there are certain areas where we’ve had some significant revenue losses.”
She stressed that a public conversation will be held over the City assets issue, “and it will be a meaningful conversation, with as much participation in the public as possible, so that we can get to a place where we have a better understanding of what is right-sized, and what is equitable and what makes sense for us going forward.”