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Minutes 07-13-11 Budget MINUTES OF THE SPECIAL MEETING, BUDGET WORKSHOP HELD IN THE LIBRARY PROGRAM ROOM, 208 S. SEACREST BOULEVARD, BOYNTON BEACH, FLORIDA, AT 9:00 A.M., ON JULY 13, 2011 PRESENT: Jose Rodriguez, Mayor William Grlove, Vice Mayor Woodrow L. Hay, Commissioner Steven Holzman, Commissioner Marlene Ross, Commissioner Lori LaVerriere, Interim City Manager James Cherof, City Attorney Janet Prainito, City Clerk I. Welcome Mayor Rodriguez called the meeting to order at 9:08 a.m. II. Utilities - Capital Improvement (CIP) Fund Kofi Boateng, Director of Utilities, reviewed the executive summary that had three parts; introduction, fund structure and key projects. The Utilities program works under State and Federal mandated regulations and the consumptive use permit with the South Florida Water Management District. The permit is the key driver for some of the projects to be implemented over the next five years. Generally, the objective of the CIP is to address the future needs of the community, provide a reliable system to meet the needs of the citizens and sustain the environment. Mayor Rodriguez asked if there were any decisions for the Commission to make based on the planned CIP budget. Mr. Boateng responded many projects require a bond issue and that would be presented by the Finance Department. Mr. Atwood advised the total budget would not be the amount of bond. A bond would be requested this year and then another bond the next year depending on the rate study. Vice Mayor Grlove wanted to discuss the project that would fit within the CIP and then discuss the projects for bonding. Mayor Rodriguez wanted to focus on the projects in the CIP for the next fiscal year that needed Commission approval, whether it is a bond or non-bond project. The bond would be addressed before the budget was adopted. Ms. LaVerriere indicated the scope of projects should be approved and the bond would be brought forward in August. The remainder of the projects would be in the capital funding. It would be adopted and finalized at the September budget hearings. 1 Meeting Minutes Special City Commission Budget Meeting Boynton Beach, FL July 13, 2011 Mr. Boateng explained there are three funding sources. One is the net revenue over expenses and is used to support, renew and replace the infrastructure. The second funding source is the 404 fund for projects to add capacity to the system. Capital fees are charged for new customers to support the projects. The other funding source would be the bond issue. Mr. Atwood interjected the priority is the critical nature of projects, not necessarily the funding source. Mr. Boateng added the regulatory mandates are a key priority within the budget. Barb Conboy, Administrative and Finance Manager, attempted to explain the funds. The 404 fund was for growth and capacity and had a balance. In the past, monies were borrowed from that fund to put into reserves. The reserve status was not good, with a balance of approximately $2 million. Money had to be borrowed to proceed with projects. There were priorities and they would be targeted for the borrowing of outside funds versus using the funds in the 404 account. At some point, the monies taken from the 404 for projects would have to be replaced. It was estimated that $6 million would be moved over to reserves. Tony Davidson, Budget Coordinator, interjected the 403 fund had a deficit as a result of not obtaining the bond issuance earlier. The 404 was healthy and the Commission gave permission to transfer money to the 403, contingent on the bond issuance. The 406 fund is at zero from the last bond issue. The 404 funds could only be used for expansion of the system. The next bond issue would shore up the deficit in the 403 fund. The 403 funds pay for the ongoing maintenance for the utility system. Mr. Boateng explained the projects that were mandatory. The first project was the East Plant rehabilitation and expansion projects for $13.2 million. The objectives of the projects were to meet new regulations. There would have to be several bond issues to cover all the projects. Ms. Conboy added the assumption for bonding was $20 million in the current budget and then $6 million, $26 million, $7.5 million, $6.5 million and $6.5 million for future years. The rate study was being revised that would provide more accurate information. The bond issue over the next five years would total $52 million. A financial consultant advises on the timing of the market, rates and borrowing schedules to determine the bond issuance time frames. The debt service is included in the proposed budget. The estimated debt service would be $1 million a year with a final debt service in 2029 of $5 million. Commissioner Holzman inquired if there were any projects that were optional, outside the mandatory regulations. Michael Low, Deputy Director of Operations, advised the budget had been reviewed and security upgrades and a few other rather basic maintenance items had been pushed out as far as possible. The neighborhood projects were also important since they improve service to the customers and eventually reduce the operating costs. 2 Meeting Minutes Special City Commission Budget Meeting Boynton Beach, FL July 13, 2011 Ms. Conboy advised the CIP is broken into neighborhood utility improvements, water supply and plant improvements, wastewater, miscellaneous and regional. Mr. Boateng continued the East Water Plant Rehabilitation and capacity expansion projects were extracted from the list. The other group of projects would be the ion exchange and surfical well projects. Two years ago, many of the projects that were not relevant to the expansion of the system because growth had slowed were moved to the outer years and only the essential projects for the City were kept. There are four projects within the East Plant rehabilitation and capacity expansion project. The objective of the project was to meet new regulations, expand the treatment system to meet future needs and rehab the East Plant. The Plant is close to 50 years old and it was last rehabbed in 1980. The projects would ensure as the City grows, there would be adequate capacity in terms of water storage to buffer any emergencies. There would also be improved energy efficiencies at the plant. The ion exchange is part of the West Plant project to move 20 million gallons of water a day from the west wells to the East Plant for treatment. The west wells do not have salt water intrusion and more of that water supply can be sent to the East Plant that has a higher treatment capacity than the West Plant. The ion exchange would pre-treat the water at the West Plant before it was sent to the East Plant. Part of the project includes the pipes being laid to connect the two plants. A pump station at the West Plant would be needed to assist in pumping the water from the West to the East Plant. The plan was to expand the East Plant capacity from 8 million gallons per day to 24 million gallons per day even though the population is flat. It is anticipated by the year 2025 additional water would be needed. Mr. Low interjected the consumptive use permit has more restrictions in 2013 from 8 million to 6.5 million. The East Plant is permitted at 19.4 under a grandfather provision. Under the current regulations it would only be given a capacity of eight to nine million gallons. The City has to bring the capacity up. The maximum demand has to be used for permit purposes. The West Plant is more expensive to operate and uses electricity as the driving force. The East Plant distribution system has a larger demand and the goal would be to get more capacity out of the East Plant. It allows more water to be stored in the aquifer storage and recovery wells for drought conditions. Mayor Rodriguez inquired if there would come a time that all water demands would be supplied by the West Plant. Mr. Boateng agreed it was possible, but would be determined by the South Florida Water Management District. The treatment at the East Plant is more traditional, but the cheapest method. The West Plant treatment uses more current technology, called nano filtration, by moving water through membranes requiring a lot of pumping energy. It appears the current arrangement of transfer of water from the West Plant to the East Plant would solve any future water shortages. 3 Meeting Minutes Special City Commission Budget Meeting Boynton Beach, FL July 13, 2011 The central Seacrest corridor was designed to improve water service and drainage capacity in the area. The boundaries are Woolbright to Boynton Beach Boulevard on the north, 1-95 on the West and the FEC tracks on the East. There have been a significant number of complaints from the area. The entire project would take approximately two years for the design work and completion by 2015. Commissioner Holzman commented the improvements have been needed for more than ten years. The residents should not complain about the inconvenience. The recent construction involved the sewer lines only on two streets. On the bond issue, Mr. Atwood, explained there had to be a rate study. In 2011, the bond was approved for $17,255,000. It has not been done pending the rate study and the bond coverage ratio was an issue when the rate increase was reduced, delaying the bond issuance until the rates went up. The bonds should be issued before October 1, 2011. The rates pay for the bond debt service. III. Transportation Ms. LaVerriere indicated the proposed budget eliminated the funding for transportation. The Local Option Gas Tax revenue would now be placed in the General Fund. The transportation program cost close to $250,000 a year and the revenue was $200,000 plus approximately $20,000 from advertising. The Financial Advisory Committee recommended eliminating the program and replacing it with other alternative options for the residents. A comprehensive report of other transportation programs had been presented to the Commission comparing the various modes. The current routes were covered. The proposal was to budget $50,000 to develop a taxi subsidy program. It was hoped a more structured program could be presented by September 30, 2011. It would include assisting the riders to transition to the new opportunities. Mr. Livergood would contact Palm Tran on a new program concept designed for individual communities. Vice Mayor Orlove thanked staff for the report that had been prepared. He felt it was important to advise the citizens as soon as possible of any change and the City was investigating other systems. It was hoped a complete package would be presented during the budget hearings. The subsidy program would be a pilot project. The administrative aspect had to be streamlined for staff. Commissioner Holzman understood the Gas Tax proceeds had to be used for transportation within the City. Mr. Livergood advised there was $1.4 million in receipts from Gas Tax, and expenses that are eligible would double the figure. The entire Street Division's $1.2 million budget is all Gas Tax eligible, as well as road maintenance projects and sidewalk repairs. Commissioner Holzman felt it was important the citizens understood the Shopper Hopper was not funded with property taxes dollars, rather the Gas Tax receipts. He favored limiting the service rather than eliminating it during the transition to another system. 4 Meeting Minutes Special City Commission Budget Meeting Boynton Beach, FL July 13, 2011 Mayor Rodriguez suggested reducing the operating days and the impact. Mr. Majors explained the transit coaches are provided by the County. Any type of modification would have to be presented to the County. The County is fully aware the future of the program was being discussed. The County had not been approached for any type of amendment or modification. Mr. Majors stressed 85% of the funding was for personnel and the remaining 15% covered fuel and insurance. Staff would have to be reduced. Vice Mayor Orlove pointed out in 2009/2010 the operating expenses of the Shopper Hopper was $270,000 with revenues of only $9,500. The City subsidized each trip at $20.59. Two organizations provide a similar service for the citizens. Vice Mayor Orlove would oppose continuing the current system in any capacity. Mayor Rodriguez agreed, but contended a more solid plan of available options should be fully developed before the existing service is terminated. There was not enough information available and all options should be explored, including a scaled down version of the current system. Mr. Livergood stressed a decision should be made quickly so the community can be notified. There was consensus to have Mr. Livergood look at all options and bring back a final recommendation, including using the Shopper Hopper services as part of the option. Mr. Majors noted the challenge would be with the employees and the labor contract calls for a 60-day notice. Vice Mayor Orlove wanted to see the price point that the City would be subsidizing for a reduced program. Mayor Rodriguez argued the cost should come down and the rate should be raised. Mr. Livergood discussed the origins and destinations would have to be decreased. The destinations can be reduced, but the origins would go to the entire community and remain the same. Mayor Rodriguez thought it could be based on the volume history. Mr. Majors reiterated the bulk of the cost was for staff. A downsized program would still involve staff, and the cost would not decrease as much as proposed. There was consensus to maintain the budget appropriation of $50,000. The Senior Advisory Board and Senior Center participants were aware of the issue. The meeting was recessed at 10:23 a.m. The meeting was reconvened at 10:36 a.m. Mayor Rodriguez established the Fire Assessment would increase from $68 to $88 per single-family household and a comparable percentage for commercial properties based on square footage. The increased revenue was reflected in the budget at the roll back rate. A resolution had to be adopted setting a preliminary rate that cannot be increased, for the purpose of the public hearing that had been advertised for September 6, 2011. Ms. LaVerriere reported the commercial rate is 16 cents per square foot and would increase to 20 cents per square foot. Industrial warehouse would increase from four cents per square foot to five cents per square foot. Institutional increases from 17 cents per square foot to 22 cents per square foot. A nursing home would increase from 17 cents per square foot to 49 cents per square foot. 5 Meeting Minutes Special City Commission Budget Meeting Boynton Beach, FL July 13, 2011 Interim Chief Carter explained the nursing home rate of 17 cents is at the buy down rate. The normal rate would be higher, but the City allows the nursing homes to buy down to the industrial rate. The hardship exemption was given to 15 - 20 applicants. Last year the Fire Assessment collected $3.5 million of a $18.7 million Fire Department budget. Ms. LaVerriere indicated the City was at a very low percentage for fire assessments. The proposed rate would increase the ratio to 43.56% of eligible costs and cannot cover emergency management system expenses. The proposed Fire Department budget for this year was $19.1 million. The new assessment would net $1,045,000 in additional revenue. The assessment monies are only allowed to be used for fire protection services because it adds value to property. The fire protection budget was approximately $11 million. The proposed rate would result in revenue of $4.7 million, representing 43.56% of the fire related budget. Other municipalities have a much higher rate and much higher percentage. Attorney Cherof presented a preliminary rate Resolution, R11-074, that would need to be adopted with the rate as $88 per residential unit, 20 cents for commercial, industrial warehouse five cents, institutional 22 cents and nursing home 49 cents. Mr. Atwood remarked the $88 was per dwelling unit. Motion Commissioner Hay moved to adopt the resolution at the rates just stated. Commissioner Holzman seconded the motion. Mayor Rodriguez determined the budget was at break even with the roll back rate. Mr. Atwood reviewed the revenue changes that included increasing the traffic safety fund by $100,000, potential fee increases of $150,000 and reduction of six firefighters for $376,000. Other expense reductions eliminated the $25,000 contingency from the City Hall budget, $1,000 reduction in business meetings, National League of Cities membership for $5,400 and $54,000 from the hydrant inspections. Business inspection services were being sold to Hypoluxo for $29,000 annually. There was also a split in the CRA police detail amounting to $240,000. It would result in a budget surplus of $1,000. Commissioner Ross inquired if the Commission wanted to have a discussion on furloughs and weigh out the option. They could be significant numbers. It was determined it could be discussed at the Commission level. Vote The motion passed unanimously. Attorney Cherof presented Resolution R 11-073 adopting a proposed millage rate of 7.4 to balance the budget. It would provide a surplus of $1,000 and leave $600,000 above 6 Meeting Minutes Special City Commission Budget Meeting Boynton Beach, FL July 13, 2011 the required reserve. Mr. Atwood indicated the ad valorem revenue at 7.4 mills would be $226,000 higher than last year. Vice Mayor Orlove asked for the amount of increase with 7.6 mills. Mr. Atwood replied each tenth of mill represents $316,000 and at 7.6 mills it would be $632,000 over the 7.4 mills. It would approximately $900,000 over last year. Commissioner Hay noted one tenth of a mill would reinstate the six firefighters. Motion Vice Mayor Orlove moved to set the millage rate at 7.6. Commissioner Hay seconded the motion. Mayor Rodriguez would not support 7.6 mills. He would support 7.4 mills that would balance the budget. The higher the millage is set, the harder it would be bring it back down. Vice Mayor Orlove commented the rate can go up now and come down before final adoption. The special projects or wish list items have not been discussed. He would like to have more money go to the Children's Schoolhouse Museum, the Little League ball fields and the firefighters restored. A rate of 7.6 for discussion purposes could then be adjusted down. Mayor Rodriguez commented the consensus was to not include restoring the firefighters. Setting the rate higher would negate the budget discussions that had gone on and would seed dollars that are not real, with an impact on the citizens. Vice Mayor Orlove argued the increase in fees as recommended by the Financial Advisory Committee was estimated and the change from 6.76 to 7.6 would equate to $6.67 additional property tax per month. He contended the citizens would prefer to have the firefighters be made whole as opposed to losing an ambulance and crew in Station #1. It may ensure the Children's Schoolhouse Museum has adequate funding to draw people to the downtown and could bring money to have the ball field maintained by the Little League to ensure the success of the program. Commissioner Holzman wanted to clarify the six firefighters were not on the wish list by consensus and the issue would not be returned unless one of the three on the prevailing side requested reconsideration. Commissioner Holzman asserted only the items on the wish list could be discussed further. There was disagreement among the members on the process. Mayor Rodriguez stressed, if more money is available, more items would be added back in and the three days of budget workshop discussions would have been wasted. Commissioner Holzman agreed. 7 Meeting Minutes Special City Commission Budget Meeting Boynton Beach, FL July 13, 2011 Commissioner Holzman continued, the rate of 7.4 mills would provide a small surplus with the potential for more in the traffic safety fund. The Commission had worked hard to get the budget balanced. He recalled last year, as soon as the rate was increased, little projects were reinserted to spend every dollar with nothing saved. The 7.4 rate kept the budget lean and mean and allowed the opportunity for additional savings if revenues increased. He could not support a rate above a budget neutral situation and a 7.4 millage rate. Commissioner Hay had struggled with the budget over the last three days. Boynton Beach is a great City and the third largest municipality in the County. The City offers full services to its citizens as a result of great leadership in the past and present. The roll back concept is generally not understood and seen as an increase in taxes. The Commission would be criticized no matter what rate is set and next year could be the same scenario of raising the tax millage. An increase of three tenths of a percent would bring in approximately $1 million without much cost to the citizens per household, per year. Commissioner Hay supported a millage rate of 7.6 so the rate would not have to be increased next year. It could allow the firefighters to be brought back and the one unit at Fire Station #1 and still have a cushion for next year. The lower rate would result in raising taxes and decreasing services. If the City is operating at the 2005 levels, the millage rate was 7.5 then. The citizens do not object to paying for good response times and good services. Mayor Rodriguez commented the budget includes $500,000 of salary increases for the Fire Department. No one else in the City had gotten increases. If the firefighters would give up the increase, there could be an opportunity to give back those firefighter positions. Commissioner Ross was concerned it was premature to consider eliminating a unit at Station #1. She did not want to go above a millage rate of 7.4. She did want to fund the Children's Schoolhouse Museum and $20,000 for the Little League. It was a partnership that had developed with the two organizations. Mayor Rodriguez advised there was not a consensus for a rate of 7.6 and called for an amended motion. Motion Commissioner Holzman amended the motion to 7.4. Commissioner Ross seconded the motion. Commissioner Ross asked for clarification on the budget status at 7.4 mills. Ms. LaVerriere explained with the CRA policing revenue being including as cost sharing, there would still be a minor deficit. Mr. Atwood advised a rate of 7.5 would balance the budget. The six firefighters, money for the Museum and Little League could not be 8 Meeting Minutes Special City Commission Budget Meeting Boynton Beach, FL July 13, 2011 added back in. Cuts would have to be made elsewhere to offset the add ins. There is $546,000 in the budget to cover raises for the firefighters. Vice Mayor Orlove reiterated a rate of 7.6 would not be locked in and the Commission could maybe work down to 7.4. He wanted to give a cushion for further negotiation. He urged the Commission to consider 7.6 and not 7.4. Mayor Rodriguez challenged the firefighters to show their concern for the citizens of Boynton Beach. Vice Mayor Orlove argued that was exactly why the rate should be set at 7.6 mills until the firefighters ratify a contract rather than locking the Commission into one position. Mayor Rodriguez recognized the merit of Vice Mayor Orlove's argument, but it would give away the leverage that was needed by building in a cushion. Commissioner Ross asked Attorney Cherof for the status of the union negotiations. Ms. LaVerriere responded a counter proposal had been offered and it would be discussed in the Commission's closed-door session. Vote The motion passed 3-2 (Vice Mayor Orlove and Commissioner Hay dissenting). Mr. Atwood made it clear the 7.4 millage rate would not balance the budget. Commissioner Hay could not believe a millage rate was set that did not balance the budget. Commissioner Ross inquired if the funds received from the Wastewater Treatment Board could be anticipated next year and added to the budget. Ms. LaVerriere advised the money goes to the Utility Fund with no impact on the General Fund. Mayor Rodriguez allowed public comment. Herb Suss, 1711 Wood Fern Drive, asserted the 7.6 rate would have built in a cushion. He applauded the two Commissioners for supporting the 7.6 rate. The citizens should have been given the courtesy to talk before the rate was decided. The citizens would support the Fire Department. Building in a cushion would have been a sensible solution. The Children's Museum could have been a flagship with additional funding, but it was turned down. Mayor Rodriguez attempted to explain he was extending a courtesy allowing the public to speak. The public hearings on the budget were before the Commission at a regular meeting. Don Scantlan, 13 Cedar Circle, spoke on his own behalf. The Shopper Hopper program should undergo a means test and the result would be the Palm Tran Connection. His research revealed the citizens were reluctant to fill out the six page 9 Meeting Minutes Special City Commission Budget Meeting Boynton Beach, FL July 13, 2011 application form. The City offered to have staff assist in the task. Mr. Scantlan felt the Shopper Hopper should be gone and setting aside $50,000 should have been questioned. Raising the rate to cover the expenses would not be a solution because a taxi would be a better expenditure. The staff that would be eliminated could apply to Palm Tran because they would need drivers for the new routes or the taxi service would need drivers. Support for the Little League should only be considered if there is support for other organizations throughout the City, such as reinstituting the Police Athletic League. It should be a package deal. The PAL program was doing its own fundraising and able to continue their programs. Mr. Scantlan recommended a strategic planning conference be scheduled so a vision and mission statement can be created. The services to be provided by the City could be outlined and it would prioritize the budget discussions and projects to be accomplished. Terry Lonergan, 45 Rutland Lane, discussed the millage rate as a single-family home owner who had paid approximately $2,200 in taxes. She expressed her experience that taxes were much higher in other areas of the country. Arguing over a $20 or $40 tax increases for the services provided by the City of Boynton Beach was ludicrous in her opinion. Mark Karageorge, 240A Main Boulevard, thought the purpose of a workshop was to arrive at a balanced budget, but the millage rate set created a deficit with nothing for emergencies. Mr. Karageorge had found the citizens do not mind paying for police and fire safety. There does need to be restructuring of all collective bargaining agreements to achieve more savings. Mr. Karageorge suggested money should be allocated for abatement for the 3,000 homes in foreclosure. It had affected the value of property throughout the City. Mr. Karageorge also questioned the increase in budget for the City Manager office and Legal Department as they should set an example for the rest of the Departments. No one else coming forward to comment, Mayor Rodriguez adjourned the meeting at 11 :28 a.m. (Continued on next page) 10 Meeting Minutes Special City Commission Budget Meeting Boynton Beach, FL July 13, 2011 ATTEST: CITY OF BOYNTON BEACH L - -- 11