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Minutes 01-10-11 MINUTES OF THE FINANCIAL ADVISORY COMMITTEE MEETING HELD ON MONDAY, JANUARY 10, 2011 AT 6:00 P.M. AT THE LIBRARY ROOM "A," BOYNTON BEACH, FLORIDA PRESENT Don Scantlan, Chair Michael Madalena, Vice Chair George Feldman David Madigan (arrived at 6:07 p.rn.) Merline Pamplona William Shulman Terry Lonergan, Alternate Kurt Bressner, City Manager Barry Atwood, Finance Director Wayne Segal, Public Affairs Director Chair Scantlan called the meeting to Order at 5:59 p.m. The Recording Secretary called the roiL Motion Mr. Shulman made a motion to move Ms. Lonergan to full member status for this meeting. Mr. Feldman seconded the motion that unanimously passed. It was requested a discussion on membership openings be added to the agenda following approval of the minutes. Motion Vice Chair Madalena moved to approve the agenda as amended for tonight's meeting. Ms. Lonergan seconded the motion that unanimously passed. 1. Approval of I\1inutes: . October 4, 2010 . November 15, 2010 . November 29, 2010 Motion Vice Chair Madalena moved to approve all three meetings. Mr. Shulman seconded the motion that passed unanimously. 1 Meeting Minutes Financial Advisory Committee Boynton Beach, Florida January 10, 2011 2 Membership Openings (added item) The ordinance establishing the Financial Advisory Committee provided that members be removed without the action of the City Commission for missing more than four meetings per year for any reason. It was noted Mr. Jergensen and Ms. Castello had resigned from the Committee after missing four meetings, thereby creating vacancies for a regular and an alternate member. Chair Scantlan felt the ordinance would be appropriate if the Committee met monthly. However, since the Committee had been meeting twice a month, he suggested a recommendation be made to review the appropriate portion of the ordinance. As the recommendation pertained to a policy issue for the Commission to consider, Mr. Bressner advised he would request staff prepare a report to the Commission to include language proposed by the Committee. Discussion ensued and the Committee agreed the appropriate number of absences to remove a member would be three consecutive absences, or a total of six in a calendar year. (Mr. Madigan arrived at 6:07 p.m.) Motion Ms. Lonergan moved to direct staff to put before the Commission a request to revise the Code to address three consecutive absences, or a total of six in any given calendar year. Vice Chair Madalena seconded the motion that passed unanimously. Kurt Bressner, City Manager, advised an agenda cover sheet would be prepared for the first meeting in February. As there remained a great deal of work to be accomplished by the Committee, Chair Scantlan believed the Committee should continue to meet twice a month, and requested a consensus, if the Committee concurred. Ms. Pamplona agreed, but felt the meetings should be limited to a two-hour maximum. There were no objections to continuing the meetings twice a month or to the two-hour limitation. The issue of the vacancies was discussed. Mr. Bressner noted the vacancies would be filled by Commission appointments and would also be targeted for the first meeting in February. Individuals interested in applying could access the application forms on the City's website. It was suggested individuals known to the Committee members who might be interested in serving be encouraged to apply as soon as possible. It was noted Ms. Lonergan, currently an alternate, would not automatically be moved up to regular member status, as this would be the responsibility of the appointing Commissioner. 2 Meeting Minutes Financial Advisory Committee Boynton Beach; Florida January 10, 2011 (Mr. Madigan left the meeting at 6:12 p.m.) 2, Review, discuss and approve final draft questions for Citizen Survey along with distribution and timing. Mr. Shulman commented on the term "cookies" in the Introduction section. He felt this term might deter individuals from filling out the survey. It was noted the language would not be seen by persons completing the survey. Chair Scantlan understood a Beta Test had previously been provided to the public and inquired whether any results or recommendations had been received. Mr. Bressner advised while comments had been received, the Beta Test was provided more for content to ensure the proper flow of the questionnaire. With regard to question 10, sub-question 5, an increase in the Fire Assessment from $68 to $88 resulted in an increase of approximately $1.67 per month. ivlr. Shulman felt the increase would be agreeable to residents. The fee for non-residential buildings was calculated on a square-footage basis and would increase approximately 30%. Mr. Shulman felt the 30% might serve as a deterrence and believed reference should be made only to the $1.67. Mr. Bressner explained the $1.67 amount would not be accurate because, as noted above, non-residential properties were assessed on a square-footage basis. It was suggested an example be included explaining what the increase would be for a 1,000 square foot, non-residential building. The members concurred. With regard to question 8, sub-question 1, Vice Chair Madalena commented the millage rate shown was for Boynton Beach only. He inquired as to the manner in which the City's millage rate would be affected if the County's variables were taken into account. Mr. Bressner explained Boynton Beach had maintained its millage rate, while the County had increased its rate for the last three years. Mr. Bressner would not wish to include a variable over which the City had no control. His recommendation would be to focus on the City's overall tax rate, as the survey pertained to City programs, services and costs. (Mr. Madigan returned at 6:35 p.m.) It was noted subcategories and numbering within the subcategories could be confusing to participants. As such, Wayne Segal, Public Affairs Director, agreed to "tweak" these areas. Question 11, sub-question 2, asked the participants how much he or she agreed or disagreed that the taxes and/or user fees described should be raised to the extent the City was able to maintain the high level of services. Mr. Shulman felt someone might 3 Meeting Minutes Financial Advisory Committee Boynton Beach, Florida January 10, 2011 agree strongly with franchise fees if the fees were believed to be reasonable. If participants they felt the figure was too high, they would strongly disagree. The question should be more specific as to the quantity of the rates. It would be difficult to make a judgment if had been agreed the fees were very significant rather than reasonable. Chair Scantlan believed if one strongly agreed, one would allow a greater quantity change. Ms. Lonergan felt the Committee was gIVing too much credence to the general homeowner who would be filling out the survey. As a means of capturing the data, Chair Scantlan suggested the question could be asked in the manner currently set forth, followed by a question asking whether the participant would be in favor of a franchise fee increase in the amounts described. Mr. Bressner believed franchise fees should be stricken from the survey. The City did not have the discretion to raise franchise fees and, if anything, might be required to lower them. The City had no direct control over franchise fees, as they were based upon agreements entered into with the utility/cable companies. Mr. Segal explained he had not thought of a specific fee amount at the time he designed the question, but rather was attempting to capture the frame of mind of the participant. If the homeowner were amenable, an exact amount could be provided at a later date. Mr. Bressner indicated business owners would be completing the survey as well as homeowners and could be tracked back to user classes. Homeowners responding to the survey might not object to an increase in a Business Tax Receipt, but could object to increases in user fees and rentals. Chair Scantlan believed it would be possible to include both a qualitative question and a quantitative question. If a participant agreed to an increase in user fees, a follow-up question would request an amount to which the participant would be amenable. Mr. Segal reiterated the purpose of the question was to gauge the frame of the survey respondent, and not to crunch the numbers at this time. The members concurred the survey should be straightforward and simple. The survey referred to an Adopt-a-Park program and asked to what extent the participant would be interested in the program as a way to help maintain the City's parks without increasing taxes. A number of activities were included. Mr. Shulman questioned "graffiti and vandalism reporting," as he did not feel citizens should be reporting vandalism caused by other citizens. He inquired whether this could be modified to report the results of vandalism and graffiti. Mr. Bressner suggested, "... report vandalism that has occurred," The members concurred. For those completing the survey, contact information was optional. It was again emphasized, the intent of the survey was to gauge the mind of the participant. 4 Meeting Minutes Financial Advisory Committee Boynton Beach, Florida January 10, 2011 Chair Scantlan commented on the question which asked why the respondent moved to Boynton Beach. He preferred to see examples under City amenities to include a City recreation box. The members agreed to include "City amenities such as recreation," an open text box to capture narrative comments, specifically in questions 6 and 8, and an "other" option box that could include family. This would pertain to question 3 relating to businesses as well. Mr. Madigan suggested the members consider engaging a professional who was proficient in creating surveys. While the members had offered sound ideas, Mr. Madigan did not believe the thoughts were being assembled properly. Mr. Bressner disagreed. Chair Scantlan felt the survey was good and believed the process should move forward. Mr. Madigan demonstrated support for the Chair and offered the following motion. Motion Mr. Madigan moved that the Committee accept and adopt the survey questionnaire as presented with the recommended changes that went around the table today. Mr. Shulman seconded the motion that passed unanimously. Chair Scantlan did not believe Board action was required for the City to determine the manner in which the survey would be printed, provided the content of the questions and answers were those approved by the Committee. He also did not believe Board action was necessary for the City's use of Survey Monkey as the online solution or the manner in which the City chose to make the survey available offline. The members concurred. The Committee thanked Mr. Segal for his input. 3. Presentation and status of member research on their selected projects (10-20 minutes) Members . George Feldman - #11- Golf Course Revenue Options Mr. Feldman had approached Dan Hager, Golf Course Manager, to discuss various marketing avenues. Mr. Hager had developed an online golfing program that provided revenues generated and the number of people on the golf course at a given time. Revenue updates could be provided every half hour. 5 Meeting Minutes Financial Advisory Committee Boynton Beach, Florida January 10, 2011 Messrs. Hager and Feldman had developed a marketing campaign targeted for Wednesday, December 22, 2010, offering 15 free golf balls to the public. Wednesday had been selected, as historically it was known to be a slow day in the industry. The event appeared to be successful, as 115 150 18 -hole rounds had been played that day, netting an additional $900 in revenues. It was anticipated the promotion would be offered again in January, a typical post - holiday time of the year. Mr. Feldman pointed out that while the Golf Course had enjoyed profits of $200,000, Mr. Hager had been asked to cut 15% from the budget. Mr. Bressner remarked that if Mr. Hager did realize a return on his investment which could be substantiated, he might not have to make the targeted 15% cut. This could be a recommendation put forward by Mr. Feldman. Other marketing strategies suggested by Mr. Hager included a separate tee -off for women, as 50% or more of all golfers were women.. Mr. Bressner noted Mr. Hager worked with charities including Susan G. Komen for the Cure and the Heart Association. It was remarked Mr. Hager had not engaged in scramble golf tournaments. Mr. Feldman would follow up with Mr. Hager to determine whether tournaments would be considered. A report would be provided to Mr. Bressner for distribution to the Committee. ♦ Michael Madalena - #25 and #26 — City Pension Costs Vice Chair Madalena distributed a handout which included a report from Florida Tax Watch, a consortium of industry leaders in the State that would be making recommendations for government costs savings for 2011. The Florida Pension Retirement System would be the organization's top priority. Recommendations included eliminating or reducing the defined benefit plan and increasing the use of defined contribution plans. The State of Florida currently utilized both plans. It was anticipated participants would be moved to a defined contribution plan with a freeze of the current • plan benefit. Another possibility was the implementation of a hybrid of both plans. Participants would be moved to a defined contribution plan for future years. Another recommendation called for participants to contribute more to the plan. Vice Chair Madalena would be attending a Town Hall meeting on January 20 in downtown Palm Beach and would review the issues discussed at the next Financial Advisory Committee meeting. The handout also included articles from the Palm Beach Post and Bloomberg Report pertaining to various city, county and state municipalities around the country and what they were facing. As a result of the current economic climate, -it was anticipated benefits would be eliminated, taxes would be raised or both would occur. The market had gone through 10 years of a flat -to- negative period during which most cities were 6 Meeting Minutes Financial Advisory Committee Boynton Beach, Florida January 10, 2011 ramping up their costs and expanding their services. For the City of Boynton Beach, this has resulted in a $90 million unfunded liability shortfall for the City's three pensions. In order to control the City's pension obligations, it is recommended changes to the plans be made sooner rather than later. The longer the City delayed, the more the general revenue wouid have to be used to pay for this benefit which could result in reduced services or increased taxes. Some townships were going into receivership or their pensions were being taken over by the State. The City of Boynton Beach must establish a tax schedule for a millage rate for all the residents, or the City would be mandated to do so by a higher authority. Although the report was written for the Florida Retirement System (FRS), Vice Chair Madalena could acknowledge that the recommendations contained in the report were his. References to the Florida Retirement System (FRS) could be stricken, with the City of Boynton Beach being inserted in lieu thereof, as the City currently provided a traditional defined benefit plan that was too expensive to maintain. Mr. Bressner noted the City had engaged the services of Segal Pension Consultants and had reviewed a number of the issues at the local level. The Segal Report had been presented at a previous meeting. If structural changes were to be made to the local pension system, it would still be necessary to fund those pension benefits and meet the investment targets. Officials from the Town of Palm Beach were reviewing this issue carefully and considering options to blend their pension system. Some communities funded the cost of their pension system from bond proceeds. However, the debt service would still have to be satisfied and sufficient earnings would be required to meet service and pension obligations. It was believed the bond market would be facing a slippery slope for the next year or so. Mr. Bressner noted City staff had spoken with the City's financial advisor with regard to alternatives. Vice Chair Madalena pointed out that pension plans were wonderful tools to attract and retain employees, and if Boynton Beach was one of the first cities to dismantle its defined benefit program, a large exodus by staff could ensue. Vice Chair Madalena felt he was well within reach of providing a deliverable for the City Commission relating to City pension costs. . David Madigan - #33 - Merge CRA Functions; #32-Selling of City Assets; #31-Hiring Freeze; #40-Voluntary Separation Program and Early Out 7 Meeting Minutes Financial Advisory Committee Boynton Beach, Florida January 10, 2011 Mr. Madigan note he had been in contact with Messrs. Bressner and Atwood pertaining to all four areas. With regard to merging the Community Redevelopment Agency (CRA) functions, Mr. Madigan felt it was best "politically" to leave the CRA alone at this time. He believed a window of opportunity could be available on February 1st or after the March election of the City Commissioners. With regard to selling City assets, Mr. Madison had requested the financials on the property, but had not yet received them. Mr. Bressner advised no master document existed that provided values on all of the properties. He could provide a list containing the square footage, a map and exhibit evidencing the City's inventory, and insurance appraisals. These would assist Mr. Madigan in making a qualitative evaluation on the property. Mr. Bressner noted an appraisal of City Hall had been obtained approximately three years ago before the market dropped. The hiring freeze was already in progress. jvlr. Bressner noted a soft hiring freeze had been in effect since 2007. Mr. Madigan hoped the Voluntary Separation Program and Early Out could be reinstated for fiscal year 2010/2011. Mr. Bressner noted a Commission resolution had been adopted in Mayor June 2010 authorizing the program which provided employees with a window of opportunity in which to participate. Mr. Bressner believed the program was under active consideration by the Budget Committee for this coming fiscal year. Mr. Bressner would provide Mr. Madigan with copies of the program documents, and Mr. Madigan could make recommendations if he felt they were necessary. Mr. Bressner suggested Mr. Madigan contact Sharyn Goebelt, Human Resources Director, on this item. . Don Scantlan - #24-Paperless Billing; #52-City Service Survey Chair Scantlan noted the City Services survey had been completed. The information provided to Chair Scantlan relating to paperless billing appeared promising and was being further pursued. Mr. Atwood was in the process of working with a company regarding electronic payment of Boynton Beach water bills. Progress had been made, and Chair Scantlan would be notified of a demonstration date. . William Shulman - #39-HOA Contributions to Programs; #10-Increases in City Revenues With regard to Item 39, Mr. Shulman noted the purpose of the project was to solicit donations, either in kind or by monetary contributions, from the Homeowner Associations (HOAs) in the City to purchase equipment for City departments. The 8 Meeting Minutes Financial Advisory Committee Boynton Beach, Florida January 10, 2011 departments could not afford to pay for the needed equipment as a result of the budget crunch. The methodology would include obtaining a list of the names and addresses of all Homeowners Associations (HOAs), Chairpersons and Boards of Governance. It would be necessary to ascertain the equipment needed by the Library, Police, Fire and Recreation and Parks Departments. A letter would be prepared and mailed requesting the various HOAs: . Make a donation to purchase a specific piece of equipment described in the letter; . Make a donation which would go into a pool with other Homeowner Association (HOA) contributions; or . Make a donation to be placed in a general fund to be turned over to the specific departments based upon need as determined by the City I\.JI_~___._ IVldfldyer. A letter of appreciation would be prepared and sent to those Homeowners Associations (HOAs) that responded and contributed to the program. The City Manager's Office had agreed to provide typing assistance. Mr. Shulman was in possession of a list of 200 Homeowners Associations (HOAs). He felt 10% of the envelopes would be returned for incorrect addresses, but he anticipated responses from 50% or 60% of the Associations. With regard to Item 10, Increases in City Revenues, Mr. Shulman was in possession of a list of 21 areas in which revenue increases were possible. A sampling of the areas included fines and forfeitures, rents, Marina boat slips, beach parking permits, Tennis Center and Golf Course revenues, pool fees, other recreational facilities, fire assessment, Library room rentals and internet usage. Mr. Shulman would determine the annual estimated revenues received, if applicable, the method of increasing the revenues, and the anticipated additional revenues. He believed he would be able to provide this information by the next meeting. . Merline Pamplona-#18-Forestry/Grounds (Cost/Benefit); #17- Parks/Recreation (Cost/Benefit) With regard Item #18, Forestry/Grounds, Ms. Pamplona suggested a possible revenue increase; requests for grants; if possible, and solicitation of volunteers. With regard to cost reductions, she suggested personnel be decreased, noting the departments that had reduced services would likely result in fewer employees. Other areas to be explored would include irrigation and urban forestry. She also suggested consideration 9 Meeting Minutes Financial Advisory Committee Boynton Beach, Florida January 10, 2011 be given to the reduction of operating and non-operating expenses, including maintenance for the medians. The current budget provided up to $550,000, and she suggested this be reduced 50%, resulting in a savings of $275,000. Mr. Bressner noted staff had already cut back on maintenance, which included trimming palms in the medians, from twice to once a year. Water service had been cut back for some of the medians, as the department had exhausted its funds for water service and utilities. Mr. Bressner pointed out the cutbacks in maintenance had adversely impacted the appearance of the areas affected. Ms. Pampiona suggested that prior to the sale of vacant properties, mowing be cut back to reduce costs. She would explore this further. Chair Scantlan suggested levels of detail be furnished when suggesting the 50% cut. He also suggested Ms. Pamplona prepare a list of questions for the departments to determine in what areas monies could be saved. The questions would be submitted to Mr. Bressner, and he would begin contacting the departments. Ms. Pamplona would contact Forestry to determine budget amounts for ground maintenance, a bieakdown of non-opeiating expenses and possible ieductions; net savings resulting from a reduced work schedule relating to median ground mowing, irrigation and urban forestry and a possible reduction in personnel. For Recreation and Parks, Ms. Pamplona suggested a possible revenue increase, pursuing additional grants, soliciting volunteers, increasing fees, adopting a park and increasing rentals for City facilities. With regard to cost reduction, she suggested staffing needs would decrease for those departments having reduced services. Ms. Pamplona also suggested program fees be increased by $10 or programs/activities be cut. Ms. Pamplona suggested the elimination of the Transportation Division, which would include the Shopper Hopper and transportation for seniors and students. This would result in savings of approximately $240,000. These services could be funded by grants or supplemented by the implementation of a nominal fee for services that are currently provided free of charge. Other serJices could be eliminated. Reduced services at the Denson Pool and other facilities would result in reduced personnel and a decrease in the level of maintenance. Ms. Pamplona also suggested the elimination of non-revenue-generated programs, such as self-improvement, social activities, life skills and mentoring, as well as the elimination or reduction of minimal revenue-generated programs. Chair Scantlan encouraged Ms. Pamplona to review the budgets for the departments referred to above and to be prepared to make a recommendation regarding the 15% cuts within the next few weeks. 10 Meeting Minutes Financial Advisory Committee Boynton Beach, Florida January 10, 2011 Alternate . Terry Lonergan - #27-Shopper Hopper (Cost/Benefit) Mr. Lonergan advised she had attended this afternoon's Senior Advisory Board meeting, as the members were directly involved with the Shopper Hopper. Currently, riders are charged 50 cents per trip. Ms. Lonergan had inquired of Denise Chamberlain, Senior Advisory Board Chair, whether an increase in the fare to $1 or $2 per trip would impact the ridership. Chair Chamberlain felt the riders would eventually agree to the charge. Ms. Lonergan was advised by Chair Chamberlain that the elimination of the Shopper Hopper for the Senior Center would result in the Center's loss of accreditation. No information had been provided by Chair Chamberlain as to the perquisites provided by accreditation. The Shopper Hopper transported people from their homes to the Senior Center, and it was believed one had to be independently mobile in order to utilize this service. It was not known whethei the Shoppei Hoppei made any stops to Oi fiOm nursing homes. Accreditation attracted visitors to the Center, as it was generally known accredited facilities were overseen by a national organization and provided legitimate programs. Mr. Bressner was not aware that the elimination of the Shopper Hopper for the Senior Center would result in the Center's loss of accreditation and he requested this be verified. It was suggested the implementation of a bus pass could provide a possible source of revenue. Ms. Lonergan explained the Senior Center had charged nominal fees for some refreshments and many events were free of charge. Other than the 50-cent fare, no revenues were received for the Shopper Hopper. Ms. Lonergan noted previous conversations with Wally Majors, Director of Recreation and Parks, in which Mr. Majors suggested corporate entities such as Walgreen's, CVS, Simon Properties and Publix be approached for significant contributions, as they benefited directly from the Shopper Hopper's ridership. Ms. Lonergan advised that the Village of Wellington had contracted with one or more taxicab companies to transport anyone within village limits at a cost of $2 per ride. The fare was subsidized by the Village. Mr. Bressner added the taxicab subsidy program provided a certain level of service for transportation which he believed was limited to four trips per customer per month. In addition, the Village was also going to set aside funding for a trial para-transit system. The Village had contracted with Palm Tran to provide handicap transportation and a parallel program to be subsidized by the Village. The cost for these programs was well under $200,000, the cost for the Shopper Hopper program. Mr. Bressner would provide detailed information on the programs. 11 Meeting Minutes Financial Advisory Committee Boynton Beach, Florida January 10, 2011 4. Discussion of fiscal year 2011-2012 Budget Schedule for the City and timing of the Financial Advisory Committee Recommendations Mr. Bressner advised the Budget Committee would be meeting January 11, 2010 and would appreciate the first draft of the Financial Advisory Committee's recommendations by mid-March, if possible. The recommendations should include the items addressed at this meeting including consideration of tournaments for the Golf Course, a mechanism for developing a revenue stream for donations, large-target items, implication of the 15% cuts required by City departments and the citizen survey as a work product. Staff had already reviewed a number of these items as well. Property tax values were expected to drop further this year, and preliminary and final figures would be available by June 1st and July 1st, respectively. Budget workshops would commence in July, and the first hearing for the millage rate would be set by the end of July. Staff looked forward to specific recommendations from the Financial Advisory Committee to continue from mid-March all the way through the July workshops. 5. Other Business Vice Chair Madalena disclosed that one of the Vice Presidents of VALIC Financial Advisors, Inc., the firm with which Vice Chair Madalena is associated, had contacted the City of Boynton Beach requesting to be added to the City's vendor list relating to Deferred Compensation. The next meeting would be held on January 24, 2011, 6:00 p.m. at the Library. Adjournment Motion Mr. Madigan moved to adjourn. Mr. Shulman seconded the motion that passed unanimously. The meeting adjourned at 8:05 p.n. D/I cAfrLd Stephanie D. Kahn Recording Secretary 1/11/10 12