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HomeMy WebLinkAbout08202012 Minutes�� ��M�� ��� ��� _- HOME OF PELICAN ISIAND SEBASTIAN CITY COUNCIL MINUTES FY 2012-2013 BUDGET WORKSHOP/SPECIAL MEETING MONDAY, AUGUST 20, 2012 - 5:30 P.M. CITY COUNCIL CHAMBERS 1225 MAIN STREET, SEBASTIAN, FLORIDA Mayor Hill called the Budget Workshop to order at 5:30 p.m. 2. The Pledge of Allegiance was recited. 3. ROLL CALL Citv Council Present: Mayor Jim Hill Vice-Mayor pon Wright Council Member Andrea Coy Council Member Richard H. Gillmor Council Member Bob McPartlan Staff Present: City Manager, AI Minner City Clerk, Sally Maio Administrative Services Director, Debra Krueger Community Development Director, Joseph Griffin Finance Director, Ken Killgore Golf Course Director, Greg Gardner Police Chief, Michelle Morris Parks Supervisor, Chris McCarthy Public Works Director, Jerry Converse MIS Senior Systems Analyst, Barbara Brook-Reese Also Present: Ed Herlihy, Chairman, Citizen Budget Review Advisory Board 4. EMPLOYEE GROUP HEALTH INSURANCE OVERVIEW & RECOMMENDATIONS BY THE GEHRING GROUP The City Manager advised Council that due to the cancellation of the August 8, 2012 meeting, this item, which the Council would be requested to act on at their August 22, 2012 meeting, had been placed on the agenda for an initial presentation of alternative insurance plans. Christian Bergstrom, Director of Analytical Services, The Gehring Group, gave a Power Point presentation on proposed employee insurance plans (see attached). He reported that an RFP had been sent out and no medical insurance proposals were returned, however, proposals had been submitted for other plans. He said for 2010- 2011 the City had a 174% increase in claims, though in 2011 and 2012, which were still high, they had started to come down. City Council Budget Workshop August 20, 2012 Page Two Mr. Bergstrom said that since all proposers declined to submit a quote, it was recommended that the City stay with Blue Cross and transition to an alternate Health Plan with an increase to out of pocket utilizing the City provided Health Reimbursement Account for employees from $750 to $1500 per individual and $1500 to $3000 for families, which means the City will fund 100% of the deductible. He said with Dental it is recommended the City move to Assurant, Vision remain with Florida Blue, and Life, though it states Cigna, would actually move to The Hartford. He said wellness would continue at 100% coverage if coded as a preventive service. Mr. Gillmor asked how the RFP was structured, and Mr. Bergstrom responded it was requested they propose duplicate coverage and if they could not do so, make an alternative proposal, and that there are companies out there that look like this current coverage. Mr. Gillmor said companies do not want to use companies like Gehring, citing his discussions with Florida League of Cities, where he was advised they do not use them. Mr. Bergstrom said The Gehring Group has fifteen accounts with Florida League of Cities. Mr. Gillmor said he called BCBS to ask them questions about the plan and was dropped three to four times, spoke to two to three people, and could not find anyone who could tell him how the plan would work. He said he was in the business for fourteen years and expressed concern for the effect of charges and how they are applied, such as blending of in network versus out of network costs on the same procedure. In response to Mr. Wright, Mr. Bergstrom said the HRA funds can cover one or all members of a family up to $3000 for out of pocket costs, that Assurant Dental is significantly comparable to the current plan with Sebastian doctors, and with the medical plan the doctors are the same and people can utilize Sebastian River Medical Center. Mayor Hill reiterated that the plan as it currently exists would have increased in cost by 10%. The City Manager said the current cost is $913K and the new cost would have been $1.15M so a new plan with more reasonable cost was sought. In response to Mayor Hill's question as to how employees liked the current plan, the City Manager said at first there were some complaints but only two that made it to his desk. He said the City is beefing up the plan by paying 100% of the deductible cost, and estimated that at least 50% of employees don't ever meet their deductible, that the City could have returned $100K to the General Fund (GF) but decided instead to give it to the employees. Mayor Hill asked if there is data on the HRA card program, and the City Manager responded that for FY 12 of the $125K funded, it is anticipated that $90K will be spent, and that for FY 13 we will need $185K so will budget $160K and try to get HRA money back to the City. He said staff will track unspent funds for future years. Mr. Wright suggested rather than returning unspent HRA funds to the GF, it be kept in a separate account and rolled forward each year. The City Manager said that was a good point but we need to be cautious, and rather track it and do a budget adjustment if we need it. Mr. Wright said again he would rather see a fund set up just for health care because we may lose track of the costs. 2 City Council Budget Workshop August 20, 2012 Page Three 5. FY2012/2013 RECOMMENDED BUDGET A. Budqet Advisory Committee Recommendation — Chairman Herlihv This item was not addressed at this time. B. Budaet Presentation/Overview — City Manaqer The City Manager thanked Administrative Services Staff Debra Krueger, Ken Killgore and Nancy Veidt for their work on the budget, department heads for the good job of keeping budgets low, and all employees for continuing to provide good service to the community while sacrificing increases and taking furlough days. He then said during his presentation he will address the Capital Improvements Program which was planned to be addressed earlier. He then gave a Power Point presentation, which he said would cover two potential budget plans, setting GF service levels, regional municipal service cost comparisons, setting the foundation for long term sustainable growth, enterprise funds, CIPs, and review. The 78 page Power Point presentation printout is attached to these minutes for reference. General Fund and Municipal Survev and Conclusions — PP pqs 3- 22 Mr. Minner reviewed the GF and regional municipal service levels, comparing ten local communities, which compared assessed value per capita, average police salary, officers per 1000 population, police services costs per capita, police percent of ad valorem, police millage rate, administrative cost per capita, public works cost per capita, non- departmental cost per capita, general services costs per capita, millage rate and tax levy per capita, then GF mitigation methods such as eliminating sick leave buy back and other peres for PBA and PEA employees hired after October 1, 2011, increases in employee health care coverage costs, reductions in retirement accrual factor, and for management, elimination of longevity pay and increase in sick leave buy-back thresholds, reductions in staff, furlough days, RIFs and reorganizations, equipment deferrals, and debt refinancing. In conclusion, he stated the data shows people are happy with the services being provided, that we have reduced GF expenditures, are providing the right level of service, are a competitive governmental service provider and can manage GF services going forward with a$9,641,582 GF block. Ms. Coy said we are in a precarious balance now, our employees are phenomenal, though it is starting to show, with grass and weeds at parks because of reduced staff and it is not their fault. She said she has heard more complaints this year. Mayor Hill said we are where we need to be, due to staff's hard work and Council holding the line on taxes, and that is where government needs to be. Ms. Coy said if funding came back she would like to bring back a few folks because we can't ask employees to do more. Mayor Hill said he would like to be able to return pay cuts and furloughs, that we've seen cuts in the Building Department by their one hour closing per day and furlough days. Mr. Wright said he agreed we cannot cut the line of service anymore or put more pressure on City employees, congratulated the City Manager, Budget Board and staff City Council Budget Workshop August 20, 2012 Page Four and said it is not reasonable to expect a financial turnaround anytime soon. He said the Police Department costs at 150% of ad valorem taxes needs a solution. He said we are at the bottom and that has been accomplished with deferred maintenance of equipment, roads and other areas and we are looking at even higher costs if we don't continue to maintain them. He said we can't continue to cut to the bone and need to do something rather than cut millage. Revenue Shortfalls — PP pas 23 - 26 The City Manager said to manage the $9.6 M budget reasonably and within our means going forward we have to have a plan to move forward, but the question is where is the bottom. He said realistically we need to grow by 3% each year, noting Sebastian is 80% residential of which 75% is built out, that currently commercial is capped at 10% and the State will look at reducing that to 5% in the upcoming session. He reiterated we need to sustain the $9.6M block at 3%, stating we may go 4% in the hole for 2014 and then project 3% growth going forward. He noted the unanticipated decline in utility ($378,100) and franchise fee (443,534) revenues. FY Taxinq Recommendations and Recommended Action — PP pas 27-31 The City Manager proposed two plans. Plan A— set the millage rate at 3.5646 as is proposed in the budget and is balanced with no allocation for street resurFacing, OR Plan B— increase the millage rate to 3.7166 which would provide an additional $118,798 for street resurfacing. He said on an average house valued at $135K the increase along with the additional $1 per month ($12 per year) in stormwater assessment as proposed would equate to a total increase of $16.96 per year. He noted this proposed tax would be 63.4% less than a homeowner paid for 2006 Sebastian taxes. Mr. Wright said they had done an unbelievable job saving people money because no cost anywhere has decreased by 63%. The City Manager referred Council to the chart on PP pg 31 which demonstrates the GFOA recommended GF cash reserve balance of $2.5M, which he said, should be more like $4M due to possible disaster recovery issues. He said it also shows the reserve balance to date, the current taxing plan with no tax increase adding back in the programs we want to add back in, and Plan B roll showing the roll forward rate and new stormwater fee. In response to Mayor Hill, the City Manager said this chart shows no tax increase and plugging back in programs, but the yellow line shows the Plan B tax increase. He said the expectation is a 3% increase each year going forward starting in 2017. He continued that 2013 is a decrease of 6%, 2014 is a decrease of 4%, 2015 is a decrease of 2%, 2016 is flat, 2017 is a 1'/z % increase, and 2018 is a 3% increase. Mayor Hill asked what years are programmed for increases and the City Manager responded 2017, 2018, 2019, 2020, and 2024 and once we start growth we use the same millage rate of approximately 3.8 mills. � City Council Budget Workshop August 20, 2012 Page Five The City Manager said staff recommends Plan B, with the additional $118,798 which will buy 2 miles of streets. He said in response to Mr. Wright that there are 150 miles of streets outside the CRA and that there was a chart provided previously showing street conditions throughout the City and they have been working on those considered in decaying condition. He said life expectancy once rebuilt is approximately 15 to 20 years. Mr. Wright asked if the $118K would be an on-going deficit. The City Manager said this amount is a healthy plan but is about 1/3 of what is actually needed for street resurFacing. Mr. Wright said he was concerned that we not let the streets deteriorate too far beyond being able to be resurfaced as an option and then have to be replaced. The City Manager said this year we are focusing on the Southeast area of the City where it is high and dry and the base does not have to be redone, where the potholes can be fixed and the streets resurfaced, but when we get to areas like Tulip, Englar and Main those areas are lower and we may have to renourish the base. In response to Mayor Hill, the City Manager said we gained $200K with the 2012 street paving refinance and were able to redo three miles of streets, and in 2011 we spent $500K. Mayor Hill said we say we have been putting off streets, but in fact we have spent hundreds of thousands of dollars, so we need to be clear that this $118K is going to be considerably less than we have spent in the past, and people need to understand that this won't get us out of a situation where we have not been maintaining roads. Mr. Gillmor pointed out that the quarter round program has reduced the degradation of streets from standing water, and that the Barber Street stimulus grant helped that standing water problem tremendously. The City Manager concluded that Council could choose Plan A or B, A being the 3.5646 millage rate, balanced budget but no allocation for a resurfacing program and no use of cash reserves to subsidize, or B, being a mild tax increase to 3.7166 mills creating an additional $118,798 to provide the ability to fix some streets. Budget Advisorv Board Recommendation At this time, Budget Board Chairman Herlihy addressed City Council. Mr. Herlihy said the committee changed the way it did business this year, a lot of work was done by staff, this was the first time they were faced with a tax increase and it was the unanimous vote of the Board to recommend the 3.7166 millage and $12 annual increase in the stormwater assessment due to 1) loss of revenues in utility and franchise fees and decrease in assessed valuation, 2) the need to catch up with maintenance including MIS infrastructure which is aging, and 3) to stop spending funds out of GF reserves and keep the balance at about $4M. He said the majority of people saw a total reduction on their TRIM and all had reductions. Mayor Hill thanked him and the Board for all their hard work on the budget. The City Manager completed his review of the GF and asked if Council had any questions of staff. Mayor Hill said the City has a value of $822M, which is a reduction of 6.6%, and questioned what the affect of the increased millage would be on commercial and 5 City Council Budget Workshop August 20, 2012 Page Six industrial properties, expressing concern that business community will shoulder the entire increase and this could be detrimental to them. He said staff and Council have done a great job over the last four years of trimming the budget and have deferred maintenance on equipment. He expressed concern that we may be prematurely increasing our taxes, not the tax rate, if we are spending what we should be then rolled forward rate would be appropriate, but to say that we may be at the bottom and there may be a light at the end of the tunnel, we haven't seen an increase in property values and no decrease in the jobless rate, and the business community is still struggling, so while he supported the stormwater increase of $1 he questioned what the stormwater increase will be to the businesses. He said the business community will be paying a lot and that will be a burden, when we say the average resident will not see an increase, someone will pay it and we need to know a little bit more about the business increases so as not to harm the business community. He said at this moment he can support the rolled forward rate and the $12 per year but has a lot of difficulty saying $118K is an absolute necessity to increase taxes until he knows all the numbers. Mr. Wright said the points he makes are good and said we can ask the City Manager to come back with more information, but if we don't go to a higher rate and we will begin to get behind on maintenance of our roads and we don't want to do that, and if we want to get to a point where we want to restore employee benefits we are going to have to do something, but we should look at the numbers and it may not be as scary as we think. Mr. Gillmor said when he was first elected in 2008 there was $75K budgeted annually for road maintenance and walking the streets he could see more was needed, and we need to budget funds every year because decent roads are a level of service people want to see in their City. Ms. Coy said the Budget Board spent a lot of time on this and she would have a hard time ignoring their recommendation. Mayor Hill said he is not ignoring the hard work they did and was agreeing with the stormwater increase and the roll forward. Mr. McPartlan said in looking at his TRIM he will pay $20 more per year, and that $210 per year for a family of seven to live in Sebastian with the services it offers and his family utilizes is a great benefit and that there is a good level of service in Sebastian. He said bad roads make a City less attractive and said he was in support of the 3.71 millage rate but would like to see the effect on local businesses, and further did not think we can continue to kick the can down the road. The City Manager said he would take that direction and get some data on the commercial and residential values. ENTERPRISE FUNDS — PP pgs 32-37 The City Manager continued his Power Point presentation on the Golf Course Fund, the Airport Fund and Building Fund. He briefly addressed revenue trends which seem to be improving and proposed improvements to the Golf Course for fiscal years 2012 and 2013, economic development accomplishments including jobs creation for Airport businesses of 38-55 new jobs, establishment of a$20K funded Economic Development Division and the $275K Airport Drive East conversion and $150K Davis Street sewer. He reviewed the Building Department forecast showing a slight bump up in revenues 6 City Council Budget Workshop August 20, 2012 Page Seven and advised that the Building Department function should remain local and noted Business Tax may be moved back to the General Fund in 2014. Mayor Hill called a recess at 7:30 pm and reconvened the meeting at 7:40 pm. All members were present. Mr. Gillmor suggested that instead of total replacement of the tee boxes, perhaps some of them could be re-graded instead, and the City Manager said he could look into it and report back. Mr. Wright suggested that maybe FSL money or some other fund could be used to assist businesses to hook up to the sewer system in the CRA district. The City Manager recapped directions of Council to look at the comparison of the effect of the millage and stormwater fee increases on residential and business, tee box regrading, and water/sewer connections. He said he did not think the CRA fund would sustain that type of cost and perhaps we can look to DST or other special revenue for assistance with hookups. Mr. Wright said the hookup is about $10-20K which is not much different than the sign cost, and was concerned about how the stormwater fee impacted businesses. CAPITAL IMPROVEMENT PROGRAM OVERVIEW— PP pqs 38-40 The City Manager explained the CIP approval process which has been before the Budget Advisory Board, Parks and Recreation Committee, Planning and Zoning and will have final approval by City Council. He then cited the source of funding for the CIP from discretionary sales tax, local option gas tax, stormwater utility fee, recreation impact fees and CRA incremental property tax, and reviewed the new proposed projects. DST Funds — PP pgs 41-50 City Hall Debt Repayment -$994,621 (retires 2018) Police and Enforcement equipment replacements -$56K Paint City Hall facilities - $15K Barber Street Guardrail enhancement - $60K Cavcorp Parking Lot Project - $500K Working Waterfront Fish House - $200K Airport Drive East - $275K '/4 Round Drainage - $500K The City Manager briefly updated Council on the Working WaterFront project stating he would bring new draft leases to them on September 12th or 26th for their approval, with the idea that the City would control the Hurricane Harbor side and lease the other parcel for 25 years and assist with reconstruction of the fish house. Ms. Coy suggested, after speaking with a representative of FIND about possible matching grant funds, that he contact them. The City Manager said he had spoken with Bruce Barkett and there is a possibility they can apply for a 50/50 grant. The City Manager noted the Airport Director has applied for a$1.2M grant for Airport Drive East. 7 City Council Budget Workshop August 20, 2012 Page Eight Local Option Gas Tax — PP pps 51-56 Street Resurfacing Debt Payment $243,076 Street Light Operating Costs - $203K Transfer to GF for Culvert replacement, sidewalks, drainage, road repair -$100K RR Crossing Maintenance - $5K Recreation Impact Fee — PP pqs 57-62 Creative Playground — Jolly Roger - $100K Riverview Park Volleyball Court Lights -$20K Schumann Park Play Equipment - $25K Barber Street Sports Complex Multi-Use Field Lights -$185K CRA Tax Increment Funds — PP pgs 63-68 Operations - $87,572 Fa�ade, Sign and Landscape Grant -$20K Special Events - $36,468 Transfer to GF for Quality Maintenance -$60K Cavcorp Parking Lot Project - $250K The City Manager advised that a public meeting would take place on Wednesday, August 29th at 6 pm for staff and project engineers to present the Cavcorp plan and take comment. He said it had been properly noticed to announce that two or more Council members may attend. Stormwater Utilitv Fee — PP pqs 69-78 The Stormwater section included information with and without the $1 per month increase, comparisons with other municipalities, the 2003 debt payment which is scheduled to retire in 2022, transfer of $500K to the GF and equipment replacement. Mr. Wright asked if it was possible to refinance the stormwater bond to get a better deal and the Finance Director responded that when those bonds were issued the call date was still several years away and if you refinanced you'd have to set up an escrow account and the escrow account would not earn enough interest to cover the bond interest expense. C. Department Questions (See Recommended Annual8udqet Document) — None 6. PUBLIC COMMENTS - None 7. CITY COUNCIL COMMENTS/DIRECTION - None. 8. Being no further business, Mayor Hill adjourned the Workshop at 8:09 p.m. Appr t the September 12, 2012 Regular City Council meeting. ' Hill, ayor ATT T: � � � � � ��� Sally A. Maio MMC — City Clerk