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HomeMy WebLinkAbout07-31-2017 BAC AgendaCna 5 BT�N HOME OF PELICAN ISLAND CITIZENS BUDGET REVIEW ADVISORY COMMITTEE AGENDA 6:00 P.M. MONDAY—July 31, 2017 CITY COUNCIL CHAMBER, 1225 MAIN STREET, SEBASTIAN, FL 1. CALL TO ORDER 2. PLEDGE OF ALLEGIANCE 3. ROLL CALL 4. APPROVAL OF MINUTES: Meeting of July 10, 2017 5. UNFINISHED BUSINESS: a. Budget Update by Ken Killgore, Administrative Services Director/CFO and Committee discussion of the Draft Budget and Capital Improvement Plan. 6. PUBLIC INPUT 7. NEW BUSINESS: None 8. STAFF MATTERS: Ken Killgore, Administrative Services Director/CFO 9. BOARD MATTERS a. Comments/Discussion by Individual Committee Members b. Discussion of Topics for Next Meeting on August 14, 2017 10. ADJOURN Agenda Attachments: Minutes for Meeting of July 10, 2017 Budget Update — Ken Killgore, Administrative Services Director/CFO Select Pages from July 12, 2017 City Council Minutes. HEARING ASSISTANCE HEADPHONES ARE AVAILABLE IN THE COUNCIL CHAMBERS FOR ALL GOVERNMENT MEETINGS. ALL CITIZENS BUDGET ADVISORY BOARD MEETINGS ARE AIRED LIVE ON COMCAST CHANNEL 25 ANY PERSON WHO DECIDES TO APPEAL ANY DECISION MADE WITH RESPECT TO ANY MATTER CONSIDERED AT THIS MEETING WILL NEED A RECORD OF THE PROCEEDINGS AND MAY NEED TO ENSURE THAT A VERBATIM RECORD OF THE PROCEEDINGS IS MADE, WHICH RECORD INCLUDES THE TESTIMONY AND EVIDENCE UPON WHICH THE APPEAL IS TO BE HEARD. (F.S.286.0105) IN COMPLIANCE WITH THE AMERICAN WITH DISABILITIES ACT (ADA), ANYONE WHO NEEDS A SPECIAL ACCOMMODATION FOR THIS MEETING SHOULD CONTACT THE CITY'S ADA COORDINATOR AT 589-5330 AT LEAST 48 HOURS IN ADVANCE OF THIS MEETING. CITY OF SEBASTIAN CITIZENS BUDGET REVIEW ADVISORY BOARD MINUTES OF REGULAR MEETING JULY 10, 2017 1. Chairman Napier called the Citizens Budget Review Advisory Board Meeting to order at 6:00 p.m. 2. Pledge of Allegiance was recited by all. 3. Roll Call Present: Mr. Ed Herlihy Mr. Larry Napier Mr. Michael Frank Mr. Sergio Mota Mr. Bruce Hoffman Ms. Andrea Ring (A) Members Not Present: Mr. Harry Hall — Excused Mr. Tim Slaven Ms. Victoria Flaherty (A) Also Present: Mr. Kenneth Killgore, Administrative Services Director Ms. Susan Mann, Recording Consultant Mr. Napier noted that Ms. Flaherty has been absent for 3 meetings and asked what the procedure is. Mr. Killgore responded that it is handled by the City Clerk's office. 4. Approval of Minutes A. Meeting of June 19, 2017 Mr. Napier called for additions, deletions or corrections to the June 19, 2017 minutes Ms. Ring stated that in her opinion the minutes are not complete because they do not show her calling the Chairman out of order because a motion was not stated clearly before a vote was called for. She agreed that the minutes do reflect the video, but the video is not complete. She asked if any of the other Committee Members remember the meeting as she does. Mr. Napier explained that only the Chair can call a member out of order and in the future if there is a problem to call for a point of order. Mr. Herlihy responded that the video recordings are complete from the beginning of the meeting until the end and are not edited for any reason. Mr. Napier called for any further discussion; hearing none he called for a motion Citizens Budget Review Advisory Board Page 2 Meeting Minutes of July 10, 2017 A motion to approve the minutes as presented was made by Mr. Herlihy and seconded by Mr. Frank. Mr. Hoffman requested changes on page 3 paragraph 2, change the word passed to scheduled; paragraph 4, change upcoming budget to 2017/2018 budget; page 5 paragraph 5, change the opinion, to his opinion. Mr. Napier called for any further discussion; hearing none he called for a vote. With a voice vote, the motion passed, five in favor and one opposed. Ms. Ring opposed the motion. 5. Presentation by Ken Killgore Administrative Services Director and Committee discussion of the Draft Budget and Capital Improvement Plan Updated Recommendations. Mr. Killgore stated that his presentation will focus on the General Fund and the proposed millage rate. He showed a slide with the February 8th City Council motion regarding the budget, noting that it directs the Budget Review Committee to prepare a budget with not one penny more than we need to — to maintain our quality of life. He explained that the revenue is based on the 3.4 Ad Valorem Millage Rate and what the other changes were. He noted that the result is a net reduction of $2,935. He reviewed the expenditures and explained the changes, noting that these changes resulted in an increase of $42,391. He provided an explanation on the Early Retirement Payback, the Overview of the General Fund, details on the change in Personnel Costs, Summary of Changes, Operating Costs, Capital Purchases, Transfers, and Balancing Tactics. He stated that there was a significant increase in the taxable property values over what had been estimated. He provided an explanation of what the difference in revenue would be using the 3.4 Millage Rate vs. the 3.8 Millage Rate. He reviewed the tax roll additions and noted that there is a significant increase. He reviewed how the Millage Rate would impact property owner's taxes. Mr. Hoffman asked, regarding the proposed 3.4 Millage Rate, if he is recommending going below Rolled -Back Rate. Mr. Killgore responded that after reviewing the proposed budget with the changes that were identified he is comfortable with the 3.4 Millage Rate. He explained that the 3.4 would be sufficient to cover the City's expenses, but the 3.8 Millage Rate is going to be recommended to City Council to cover any items that may be identified before September. He stated that the City can always lower the Millage Rate, but after the tax notices are sent out it would involve a very large expense to notify residents, via first class mail, of an increase. He presented a slide showing the historical Millage Rates and explained the years that the proposed rate and the final rate were different. He provided a review of how the proposed increase in Homestead Exemption will impact the homesteaded properties, non -homesteaded and commercial properties. He explained the revenue that would be generated from the different Millage Rates and how that would affect homesteaded properties. Mr. Hoffman stated that he is astounded that the budget can be balanced at a Millage Rate of 3.4. Mr. Killgore responded that it is a result of the Early Retirement Program Citizens Budget Review Advisory Board Page 3 Meeting Minutes of July 10, 2017 savings. He stressed his concern about maintaining the Reserves to protect the City in case of a storm or other unseen major expense. He stated that although the City will receive reimbursement from FEMA for the dock repairs caused by the last hurricane, in 5 years they could require payback of those funds. Mr. Hoffman stressed his concern about how the Increased Homestead Exemption, if passed, will negatively impact the City's budget. He stated that if the City has to raise its Millage Rate to compensate for the revenue reduction the residents will be very upset. Mr. Napier interjected that the rise in property values will offset the increase. Mr. Killgore responded that is correct, but if the cost to provide services increases that is what will create the problem. Mr. Herlihy reiterated his concern regarding the shortfall that will be created by the increased exemption and the need to consider maintaining a Millage Rate that will allow the City to build a cushion to reduce the impact of the reduction of revenue. Mr. Napier stated that he would like to see an additional one-half million budgeted for road repairs. 6. Public Input Mr. Napier called for public input; hearing none he continued with the agenda. 7. Staff Matters — Ken Killgore, Administrative Services Director— None 9. Board Matters A. Comments/Discussion by Individual Committee Members Mr. Napier called on Mr. Herlihy to show his PowerPoint Presentation to the Board. Mr. Herlihy stated that he will review the presentation, answer questions and make whatever changes that are needed before presentation to the City Council on Wednesday. Mr. Herlihy reviewed the points in the budget discussions and provided details on each. There was discussion regarding road repairs and the Septic to Sewer budget. He reviewed the Key Elements in the 2017/2018 General Fund Proposed Budget and provided details on each. He reviewed the Other Items in the 2017/2018 explaining the Roads Budget, DPW Garage, Sewer Connectivity, All Aboard Florida, Working Waterfront P3, Airport and Golf Course Loan Paybacks. He continued with the Lagoon Funding and current Septic to Sewer and noted the two have been combined. He reviewed the Public Safety and City Staff Changes Reduced Costs. He reviewed the increase in the property values and stated that if the 3.8 Millage Rate, the same as this year, is used it will raise additional revenue of $342,362. He explained that the 3.8 rate is used for the tax notice only and Council can take the action they deem appropriate Citizens Budget Review Advisory Board Page 4 Meeting Minutes of July 10, 2017 when the final millage rate is set; by including this information in the presentation the Council will be aware of the amount that will be raised over what is needed to fund the proposed budget. He asked if the Board would want to suggest options for use of the additional funds for either roads, Septic to Sewer or as was discussed to build a cushion against the impact of the increased homestead exemption. Mr. Napier asked if the dock repair expense had been deducted from the General Fund Reserve Balance. Mr. Killgore responded no, that the invoice has not been paid. Mr. Herlihy explained the General Fund Reserve elements. He stressed that it has been the recommendation of the Board to "borrow" from the fund and not make permanent withdrawals. Mr. Herlihy concluded by stating the action necessary to approve the recommendation of the 3.8 Millage Rate for the purposes of the DR420 which is the same as last year's actual rate. Mr. Hoffman stated regarding Budcom Options, he would defer to the City Engineer on the roads and feels there are sufficient funds in the Septic to Sewer. He would prefer to create the cushion against the shortfall that could be created if the increase of the Homestead Exemption is passed. He stated that he supports keeping the general fund at the level it is at this time to be prepared for unforeseen expenses. He stated that he understands Council's desire to keep taxes low, but feels that consideration should be given to what the City will face in the next few years. Mr. Herlihy stated that he believes the Septic to Sewer has sufficient funds and the roads budget was set by staff to cover what they anticipated would need to be done. He expressed his concern about preparing for the shortfall that would be caused by the increased Homestead Exemption. Mr. Frank stated that he is in favor of the rolled -back rate and feels that the increase in property value will help offset the shortfall caused by the Homestead Exemption increase. Ms. Ring stated that she supported recommending the 3.8 Millage Rate to the Council to allow for any unforeseen expenses that could be identified before the final rate is set in September. She also supported taking action that would help prevent the need for a large increase when the increased Homestead Exemption is passed. Mr. Mota stated that he supports the 3.8 Millage Rate and agrees with establishing a cushion in anticipation of the reduced revenues caused by the increased Homestead Exemption. Mr. Napier stated that he supports the 3.4 Millage Rate which is less than Rolled -Back. He noted that the consensus is that there are sufficient funds in both the roads and Septic to Sewer. He asked if the Board needs to take further action since the 3.8 Millage Rate was passed at the last meeting. BUDGET UPDATE Ken Killgore, Administrative Services Director/CFO July 31, 2017 • Proposed Millage set by City Council at 3.8 by 3-2 vote. That followed an earlier 2-3 vote to set it at 3.5. (See attached pages from City Council minutes.) • Budget recommendation still presumes a 3.4 millage, which is sufficient to fund staff's recommendation on spending and funds $91,252 "payback" to reserves used to fund the Voluntary Retirement Program. • Update on latest estimate of Employee Health Insurance: o Florida Blue bid a 2.3% increase over current premiums. o If selected, difference could be used to reduce millage to 3.34. o Or the 7.7% difference could be reallocated to a wellness program and/or a reduction in the family premium and/or a merit/incentive program and/or set-aside for pay adjustments warranted by increased job duties or extraordinary performance. • Update on wage negotiations. o Had informal discussion with PEA/PBA Representative. Waiting for feedback from membership meetings before formal negotiations. • The City Council minutes reflect a statement that in FY19-20, the rolled -back rate will be an increase to offset the lost revenue from the additional $25,000 homestead exemption. Actually, the Legislature included language in the law that effectively says the lost revenue will be disregarded. So City Council will actually have to enact a "tax increase". Likely 11-12% to go from a millage of 3.4 to 3.8. • Comments on Other Funds: o Golf Course - Capital Lease for 5 years on Carts approved . Restaurant RFP received two proposals. Staff has interviewed both parties and selected the proposer that we have begun to negotiate with. o Airport — Adjusted discrepancy in rental revenue from Golf Course. o Building— No changes. o Special Revenue Funds: ■ Changed Pickle Ball funding from Recreation Impact Fees to Discretionary Sales Taxes. 4 Courts this coming year and scheduled the other 4 to be done the following year. ■ Moved total cost of Ballfield Lighting to this coming year. Regular City Council Meeting July 12, 2017 Page Four Jim Sunnycalb announced the 4th of July Parade could be seen on the Sebastian Bark Park website; and, the heat signs were still available. Vice Mayor Coy said there is also a copy of the parade on YouTube. 12. NEW BUSINESS 17.023 A. 6.52 pm The Administrative Services Director explained this is the point in the budget process that the City needs to set a proposed millage rate and displayed a PowerPoint presentation. (See attached) He described the differences from the FY16/17 Budget, employee changes, and the transfer of funds for road and Lagoon improvements. He reported that the rolled - back rate is 3.4939 but that staff provided a balanced budget based on a 3.4 millage rate. He suggested the City should look at the impact of the additional homestead exemption that will probably go into effect three years from now. Given the unknown cost of the outstanding labor negotiations, a possible increase in employee health care and possible unforeseen events, staff recommended setting the proposed millage rate at 3.8. Ed Herlihy, Vice Chairman of the Citizens Budget Review Advisory Board, presented a PowerPoint presentation explaining what the Board has considered. (See attached) He said if the millage rate is left at 3.8, it will raise an additional $464,000 but with the fantastic job by City staff, the budget is balanced with a lower rate. He said the Board recommends a 3.4 millage rate but for the DR420 set the maximum rate of 3.8. Mr. Herlihy noted every citizen will probably vote for the additional homestead exemption and taxes will have to be raised. He said the Board discussed the establishment of a cushion during the next three years to ease the burden of that lost revenue and asked Council to consider such a cushion over the summer. Mr. Dodd said the Board motion made Monday night included the recommendation to set the DR420 at 3.8, they supported the balanced budget at 3.4 and asked Council to consider the impact of the homestead exemption change but did not approve the creation of the fund to address the homestead exemption. MOTION by Mayor McPartlan and SECOND by Vice Mayor Coy to set the TRIM notice at 3.8. Mr. Hill said setting the maximum millage rate and then going back to 3.4 but there are other things to discuss spending money is a complete dishonest statement to the public; staff did a yeoman's job of producing a tax cut; this happens every year; he would not vote to set the maximum rate above rolled -back rate because that indicates they may increase taxes when they have a budget that decreases taxes. Mr. Hill said he would propose to go to rolled -back and then get below that; Council has the ability to adjust the unknown staff increase and health care expense; the homestead exemption loss could be made up by incremental increases; next year's budget is based on what they do tonight and what they adopt. He would not support the motion. Regular City Council Meeting July 12, 2017 Page Five 7.00 pm Mr. Dodd suggested they should deal with the difference between the 3.4 and 3.8 millage rate, noting if the City Manager is planning a 3% salary increase and for Council to say that is incorrect makes his negotiation difficult. The 10% health insurance increase may be in line with what is happening in the industry and they can negotiate or find another carrier to reduce the increase. He then explained rolled -back is not a term that defines a lower millage rate than what you charged last year but a term that defines a millage rate that is required for the City to collect the revenue that we collected last year. In 2019, the Property Appraiser will give the City a rolled -back number that is greater than what was collected in 2018, so in 2019 the rolled -back rate will be a tax increase. He said a 5% health insurance increase could be covered by a 3.5 millage rate which tells everybody the City is thinking about that but not the $600,000 increase from a 3.8 millage rate. He offered an AMENDMENT to the motion that Council adopt a 3.5 millage rate for the DR420 form. Mr. Hill noted the rolled -back rate is 3.4939 which would essentially generate the same amount of revenue. Attorney VanDeVoorde Hall advised they should first vote on the amendment and then the prime motion as amended. Mr. Hill SECONDED Mr. Dodd's amendment. Vice Mayor Coy said the assumption that government doesn't need a little more each year to function is a flawed and inappropriate since things get more expensive. She said for the 13 years that she has been serving, she has found people amenable to raising taxes to accomplish their requests. People are not telling her that they pay too much taxes but asking her to fix the lagoon or their road. She also supported the idea of a homestead exemption cushion, at least until they see how much the insurance increase will be and noted it would be an unfair labor practice for the City Manager to guarantee a certain increase for the employees. She said any surplus could be used towards moving the Public Works Compound to the Airport. She supported setting the millage rate at 3.8. Ms. Kinchen said she agreed with Mr. Hill and Mr. Dodd. Mr. Dodd stated in the presented budget, there is $400,000 to do the engineering study to move the Compound; the City Manager and Chief Financial Officer have put together a 3.4 budget that covers everything the City would like to do, if they move to 3.8 they are signaling that it will be 3.8 in September and he is not willing to accept that. Vice Mayor Coy offered that if the cushion was set aside they would not need to raise taxes two years from now. Mayor McPartlan said they don't know the exact number of the pay increase or health insurance cost and if more is needed after setting the rate at 3.5, they will have to send out TRIM notices to every resident within the City. They are only setting the maximum rate at this point. Regular City Council Meeting July 12, 2017 Page Six Mr. Hill said if citizens decide to increase the homestead exemption, the rolled -back rate will be presented at that time and taxes will have to be raised. ROLL CALL: Mayor McPartlan - Nay Vice Mayor Coy — Nay Mr. Dodd—Aye Mr. Hill—Aye Ms. Kinchen — Nay Amended motion to set the maximum millage rate at 3.5 on the DR420 form failed 3-2. ROLL CALL: Ms. Kinchen —Aye Mayor McPartlan — Aye Vice Mayor Coy — Aye Mr. Dodd — Nay Mr. Hill — Nay Motion to set the maximum millage rate at 3.8 on the DR420 form carried 3-2. 17.124 B. Award Construction Services Agreement for Golf Course Clubhouse Restroom Renovation/Remodel to L. H. Tanner Construction. Corp. in the Amount of $38,987 and Authorize the City Manager to Execute Appropriate Documents (Transmittal, Invitation to Bid, Bid Tab, Agreement) The City Manager said staff went out to bid, L.H. Tanner was the low bidder and recommended approval. MOTION by Mr. Hill and SECOND by Mayor McPartlan to approve staff recommendation. ROLL CALL: Motion carried 5-0. Vice Mayor Coy — Aye Mr. Hill —Aye Mayor McPartlan - Aye Mr. Dodd —Aye Ms. Kinchen —Aye 17.125 C. Consider Allowing Property Owners to Serve on City Boards and Committees (Transmittal. Applications. Advertisement) The City Clerk explained that she received an application from a property owner that requested to sit on the Parks and Recreation Advisory Board. Mr. Hill said the rules in place are sufficient. Mayor McPartlan added that the applicant can participant in the meetings and address Council at any time. It was the consensus of Council to keep the residency requirement. 13. CITY ATTORNEY MATTERS - None 14. CITY MANAGER MATTERS The City Manager thanked the City employees, the Lions Club, and the fireworks provider for the great 4t" of July. He reported that Brothers Construction is on site to repair the piers; the staging area is southwest corner of the overflow parking; unauthorized access in the construction zone will be enforced. Vice Mayor Coy asked that the summary he provided be given to the Chamber of Commerce. Citizens Budget Review Advisory Board Page 5 Meeting Minutes of July 10, 2017 Mr. Herlihy suggested that the Board recommend the 3.8 Millage Rate for the DR420 and before the final Millage Rate is set by City Council to propose to them considering establishing a fund to help offset the shortfall that will be created by the increased Homestead Exemption. Mr. Napier stated that would require a motion. Mr. Hoffman made a motion "That Ed's presentation, minus the last slide, be presented on Wednesday to City Council with the idea that we recommend the 3.8 for the 420 disclosure and that we, in line with Mr. Frank's comments, support the City's Administration Budget with the 3.4 rate, but that we want them to give serious thought and consideration to the future Homestead Exemption Referendum which will require a tax increase at some time in the future." The motion was seconded by Mr. Herlihy. Following a brief discussion about the motion's intent, it was agreed that it stated the Board's recommendation to the Council. Mr. Napier called for a vote. ROLL CALL: Mr. Herlihy —Yes Mr. Mota —Yes Mr. Napier — No Mr. Hoffman —Yes Mr. Frank —Yes Ms. Ring — Yes Motion Passed: 5 — 1 Mr. Herlihy stated that he will send the presentation to Mr. Killgore who will forward it to the Board for review. He requested that if there are any changes they be communicated to Mr. Killgore as soon as possible. Mr. Napier suggested providing the Council a memorandum rather than the PowerPoint Presentation. Mr. Herlihy explained that experience has proven that the PowerPoint is helpful in showing the Council what the Budget Review Committee is recommending. Mr. Mota supported the presentation, stating that is easier to understand the rationale if it is explained. B. Discussion of Topics for Next Meeting on July 31, 2017 Mr. Napier instructed Mr. Killgore to follow the same format for the next Agenda. 9. Admiourn — There being no further business Chairman Napier adjourned the meeting at 7:15 p.m. M Chairman Larry Napier /sm Date: