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Minutes 12-19-11 MINUTES OF THE FINANCIAL ADVISORY COMMITTEE MEETING HELD ON MONDAY, DECEMBER 19, 2011 AT 6:00 P.M. AT THE LIBRARY ROOM "A," BOYNTON BEACH, FLORIDA PRESENT Don Scantlan, Chair Barry Atwood, Finance Director Dennis Dougherty Tim Howard, Assistant Finance Director George Feldman Lori LaVerriere, Interim City Manager Terry Lonergan William Shulman Jeffrey Fisher, Alternate 1. Call to Order Chair Scantlan called the meeting to order at 6:00 p.m. The Recording Secretary called the roll. A quorum was present. Chair Scantlan requested a motion to move Mr. Fisher to a regular position for the meeting. Motion Ms. Lonergan moved to advance Mr. Fisher from an alternate to a regular member for the meeting. Mr. Feldman seconded the motion that unanimously passed. There was brief discussion that in the past, alternates were asked to handle only one task; however, if desired, they could take on more. Lori LaVerriere, Interim City Manager, suggested Mr. Fisher contact Commissioner Ross about being moved to a regular member. The Committee had lost three members and there were no other candidates. Ms. LaVerriere agreed to check with Janet Prainito, the City Clerk, to determine if applicants automatically are put on each agenda. Mr. Fisher commented he had two items which were the Local Sales Tax and Fees for Services in Other Cities. Based on information provided to him by Barry Atwood, Finance Director, Local Sales Tax cannot be levied without a citywide election. Given the economy and mood of the citizens, the odds of any passage were unlikely. Chair Scantlan pointed out the item was on the matrix because someone thought there was value to be gained in making the effort and ascertaining whether it should be done regardless of whether it would be implemented. That decision belonged to the City Commission. The Committee's responsibility was only to obtain three sets of data and make a recommendation to the City Commission. 1 Meeting Minutes Financial Advisory Committee Boynton Beach, FL December 19, 2011 Mr. Fisher commented he would read the information provided by Mr. Atwood and then research the issue with the public. Mr. Shulman differed and suggested Mr. Fisher's time may be better spent on another item. Discussion turned to fast tracking items. If the research was done and the Committee could make a conclusion, the member should complete the form and contact Mr. Atwood to place the item on the next agenda. There was consensus status reports were not needed. Commissioners could stay apprised of the issues via the minutes and, if needed, Ms. LaVerriere could always bring an issue to their attention. As to the final report, the format at the workshop held with the FAC and City Commission was very good, and the City Commission was focused. Tasks completed ahead of time would still be included in the report made at the workshop. The budget process would start in April, and last year, the workshop was held in May. In light of the upcoming shortlist of City Managers, and if change occurred, Mr. Atwood, as the liaison, would carry forward the information. There were 18 items unassigned and Chair Scantlan noted not all items were assigned last year, nor did they all have to be addressed at this time. 2. Approval of Minutes — November 21, 2011 There was one change to the minutes, which was the meeting was called to order at 6:00 p.m., not 5:58 p.m. Motion Ms. Lonergan moved to approve the minutes. Mr. Feldman seconded the motion that unanimously passed. 3. Continue reviewing selected assignments for next year • A list of Study Topics is attached • Consider adding / deleting topics The list of study topics was reviewed. Mr. Shulman volunteered to take Items 22, 23, and 24 which were previously assigned to Ms Pamplona and requested the matrix be updated. There were no objections to his request. The members agreed to review the items on the matrix denoted with a question mark. 3. Merge CRA Functions The City handles payroll, Human Resources, and ITS services for the CRA. At one point, the CRA could have moved into City Hall, and the item was on the matrix in order to gain some dichotomie• economies of scale. The City also merged with the CRA regarding marketing and basically assisted them with items they would otherwise have 2 Meeting Minutes Financial Advisory Committee Boynton Beach, FL December 19, 2011 outsource. As to whether there was any further savings that could be gained through bids, the CRA operates under different rules, and they were not bound by identical procurement procedures. There was agreement this item would be removed from the matrix. Motion Mr. Shulman moved to remove Item 3. Ms. Lonergan seconded the motion that unanimously passed. 7. Recreation /Parks (Cost/Benefit) Ms. LaVerriere noted last year, Parks was merged into Public Works. There were two groups of recreation programs. One was revenue producing. Under this system, the City has a contract with a provider and receives a percentage of the fees. Recreation and Parks recently created a prioritized list and staff underwent a full review. There was a cost benefit discussion held and if there was an ongoing study, Mr. Dougherty could review the information. Ms. LaVerriere stated she would contact Mr. Majors about the matter. Chair Scantlan reminded the members the FAC gives an independent assessment. If staff was working on a study, it could be reviewed since City staff was one of the three sets of data points the members use when making recommendations. Staff was researching value and some costing of recreation programs. Mr. Dougherty could be an independent observer. Mr. Atwood recommended considering, when reviewing the information, comparing the fees with other cities, and identifying which programs contribute to the General Fund and the Revenue Fund. Ninety thousand dollars was transferred from the Revenue Fund into the General Fund. It was noted Ms. Pamplona took staffs recommendation and incorporated it into her recommendation on other items. Part of it had to do with incorporating Facilities crews to maintain parks. There was some consolidation. Mr. Dougherty had a copy of Ms. Pamplona's recommendation last year and would review it. 4. Partnerships (Chamber of Commerce) This item had to do with outsourcing Chamber of Commerce duties; however, the Chamber was a separate entity. Glenn Jergensen, a former member of the Committee, had suggested the item to obtain more revenue for the City. Motion Mr. Feldman moved to remove this item. Mr. Shulman seconded the motion that unanimously passed. 3 Meeting Minutes Financial Advisory Committee Boynton Beach, FL December 19, 2011 9. Expense Allocation Analysis. The members agreed to remove this item from the matrix. Motion Mr. Dougherty moved to remove Item 9. Mr. Shulman seconded the motion that unanimously passed. 10. Property /Casualty Insurance Costs The FAC had discussed having these audited; however, it required expertise the Committee did not have. Ms. LaVerriere noted the Risk Manager pursued these items, looking for the best deal, and it would be beneficial to speak with him. Accordingly, there was agreement to keep the item on the matrix, but it would not be assigned to anyone this year. 11. Public Works Services The members discussed someone should go to the Public Works Department to see if further savings could be identified. Ms. LaVerriere noted at the FAC workshop with the City Commission last May, there was lengthy discussion of the reduction of services. Since Mr. Feldman was working on another item involving Public Works, he agreed to take this task. 13. Development Services The members discussed this item was a review of the department, Business Tax, Permitting, and other aspects. Ms. LaVerriere commented the department was just reorganized, and Quintus Greene, the Development Director, was no longer with the City. A comparison of what other cities charged had not been done, and this information would be helpful. Chair Scantlan thought this was more of an analysis of efficiencies and he requested leaving this item unassigned. There were no objections to the request. 14. County /City Services Redundancies. Chair Scantlan had taken this item and was attempting to find similar services along the lines of Animal Control, but the City did not offer that service any more. One item of discussion was the Fire Department. Mr. Atwood pointed out Boynton Beach citizens do not get taxed for County fire services but do for police. Ms. LaVerriere stated County Commissioner Paulette Burdett was beginning to look at this item to separate the Sheriff's Office from the County budget because there were issues with the Sheriff's budget every year. She did not know if it would be successful. 4 Meeting Minutes Financial Advisory Committee Boynton Beach, FL December 19, 2011 The Sheriff's office handled the jail, court services, the juvenile system, and provide services the City does not, such as Hazmat, the bomb squad. and air support services. After brief discussion, Chair Scantlan stated he would research the item. There were no objections. 18. Contracts without expiration dates This item was researched and there was only one contract without expiration, which was for the City Attorney. Ms LaVerriere commented the City had closed all its open contracts She pointed out some contracts had automatic renewals and the City reduced many of its five -year contracts to three -year contracts although there were a fair amount of contracts that were longer than three years. Requests for Proposals help save the City money, and it was a normal procurement process. She noted the City Commission had become more conservative with its contracts, decreased their duration, and watched them closely. Attorney Cherof had a contract with the CRA, but not the City Ms. LaVerriere explained the that under the contract for City Attorney services, the City pays a retainer to the firm and then bills for scrviccp the City attorney bills for additional services. Mr. Atwood explained there was a benefit to having institutional continuity in this area and commented if the City hired new bond counsel each time it issued a bond, it would be expensive. Mr. Shulman commented on the Sarbane Oxley Act, which mandated rotating auditors every five years. The debate was the American Institute of CPAs did not want to rotate them, and the Public Oversight Board of Accountants wanted to uphold the Act. It was very costly for companies to switch auditors each year because the auditors would charge a high fee the first year. Alternatively, a different perspective would be gained with a new auditor. A fresh set of eyes could identify any issues. There was discussion if a staff attorney was hired, one would lose the depth of resources of the whole firm. Different attorneys within the firm work on different items and bill on an hourly basis. One staff attorney could not accomplish the work of an entire firm on his /her own. An analysis of hiring a staff attorney, versus retaining an attorney from a firm had not been done in a long time and inviting the City Attorney to a meeting to discuss the item was suggested. The City Attorney has been with the City for many years and the contract was a good contract. He also worked with the City and could provide a list of accomplishments. Chair Scantlan requested this item be placed on the February 13th meeting if Attorney Cherof was available, and Ms. LaVerriere agreed to request he put together a presentation. After the presentation was held, Ms. Lonergan could commence her review of the topic. 5 Meeting Minutes Financial Advisory Committee Boynton Beach, FL December 19, 2011 19. School House Museum (Cost Benefit) The members discussed Ms. Pamplona had reviewed this item last year. The Museum's funding was initially cut, and then restored by the City Commission. The Museum was a separate, non - profit entity and the City's involvement was an annual contribution through a management services contract. The City pays for the utilities and maintenance. Discussion turned to non - profit entities needing audits to seek grants. Ms. LaVerriere, as City Manager, who sits on the Board commented the museum just issued an RFP for audit services. The Executive Director of the Museum used to be a City employee; however, the City decided the position needed to fundraise and be in more of a non - profit status than a City employee was allowed. Therefore, the City decided to enter into an agreement with the Museum and would have two seats on the Board so the City would have some oversight. The cost/benefit analysis, from the City's standpoint, was whether the City wanted to continue to contribute to the Museum. Its total budget was about $550,000 and the City contributed around $200,000 The members discussed if they should include a question about the Museum on the Survey. Chair Scantlan suggested the statement, "The City supports its culture and history by providing approximately $200,000 to the Schoolhouse Children's Museum. Do you think this is a worthwhile undertaking for City funds ?" should be included on the survey. Discussion followed if the City did not contribute the money, the Museum would probably go out of the business. It was important the Museum have its audit conducted and have internal controls in place. The $73,000 Quantum Grant, which was recently obtained, was a tremendous accomplishment, as the grant was difficult to obtain and required a lot of reporting. It earned the museum credibility. Mr. Dougherty agreed to take this item. Since the Museum was a separate, non - profit entity, Ms. LaVerriere was uncertain it would fall within the purview of the Committee. Chair Scantlan thought the Museum could provide information such as how many people used the Museum, what the community support was, what would happen if the City support went away, and what their options would be then. Ms. LaVerriere thought the Executive Director would discuss the issue with the Committee member and there were no objections to including a question about the Museum on the survey. 20. Unfunded Mandate Review Ms. Lonergan received a list of the unfunded mandates and did not know what could be done as the mandates totaled over $10 million. She noted there might be one item that could be accomplished, but several were tied to collective bargaining. After discussion there was agreement to remove the item from the matrix. 6 Meeting Minutes Financial Advisory Committee Boynton Beach, FL December 19, 2011 Motion Mr. Dougherty moved to remove. Mr. Shulman seconded the motion that unanimously passed. It was noted Mr. Feldman was handling items 2 and 12. 20B. Financial Condition of the City. Mr. Atwood stated this item was put on the agenda, but was never discussed. The task was a huge undertaking. The item was put on the agenda because it was part of the Code. Motion Mr. Dougherty moved to remove the item from the matrix. Mr. Shulman seconded the motion that unanimously passed. 20C. Debt and Debt Service Motion Mr. Shulman moved to remove the item from the matrix. Mr. Dougherty seconded the motion. Chair Scantlan commented a member could research whether a City of this size and budget had debt that was too high, too low, or just right. Mr. Feldman pointed out Boynton Beach was one of the few cities that had its own water plant and sanitation departments. Mr. Atwood stated all of the City's debt was Utility Debt and the City's bonding capacity was predicated on the City's fiscal health. Chair Scantlan sought to determine if the City was or was not ridiculously in debt for a City of its size, and if they were missing opportunities to start projects using General Revenue Funds. Discussion followed the City could sell its water department and relieve its debt services. Water was valuable and was a commodity private enterprise was interested in; however, the General Fund receives about $5 million from water fees and $3 million from sanitation fees. Vote The motion unanimously failed. Mr. Feldman commented this item could be researched while he was researching Item 12, Utilities Service and Sale/Transfer to County, and agreed to make a separate recommendation on it. He also requested assistance with input on the public utility side. 7 Meeting Minutes Financial Advisory Committee Boynton Beach, FL December 19, 2011 • 21. Analysis of Residential versus Commercial Taxes The purpose of this item was relative to the City's revenue, and more specifically, what contributions to the tax base were received from commercial entities versus residential entities. A suggestion was made to compare Boynton's tax base to that in Delray Beach. Discussion followed the information was available from the Property Appraiser's office and the rate could be the same, but the valuation be different. Further discussion followed the commercial tax base could be addressed through economic development. Boynton Beach was rolling out an Economic Development plan that included a stakeholders committee. Ms. LaVerriere thought a member of the Financial Advisory Committee should be on the Economic Development committee. Mr. Fisher would address this item and conduct an analysis of the residential and commercial tax base and trends and comparisons with other cities. Ms. LaVerriere agreed to email him the economic development implementation strategy. 22. Business License Tax — Competitive Analysis Mr. Shulman had agreed to research this task. 23. Business License Fees Chair Scantlan stated this item was identified last year. Mr. Atwood stated the fees can only be increased every two years. 24. Tax Fee Structure Analysis Chair Scantlan requested either Mr. Fisher or Mr. Shulman research ad valorem taxes. He requested ascertaining, for example, if property values dropped another 10 %, and the City wanted to raise ad valorem taxes 2 /10ths of a percent, to the revenue neutral rate, what the real effect would be to the citizens. He noted for the last three years, that comment never carried the weight it should. The newspapers focus on rates, but the concept of the roll -back rate and its effect on the citizens was not understood. Overall, it should be a net zero effect City -wide. The newspapers treat the matter as a tax increase and residents oppose taxes of any kind. The public believes if property values decrease, taxes should decrease because they did not have as much wealth in the property. The question should be if the starting point should be the revenue - neutral figure, or if it should be last year's ad valorem rate. The net result would be a reduction in what people pay in taxes, and their tax bill could go down, although some homeowners' taxes may increase contingent on the Save Our Homes Act if they have not met the 3% cap, even at the same ad valorem rate. Chair Scantlan emphasized a study on what to use as the starting point was needed. Mr. Shulman agreed to perform a tax restructuring analysis (ad valorem.) Mr. Bressner 8 Meeting Minutes Financial Advisory Committee Boynton Beach, FL December 19, 2011 had done a study which indicated if going to the roll -back rate as revenue neutral to the City, how many citizens might be impacted. Chair Scantlan requested the sample size be increased from 40 to 120 as the information did not carry the weight it should have. It should be better known it was zero income to the City. Chair Scantlan noted in good times, when the property values were increasing, the City should be held to the revenue neutral figure and the tax rate may go down as property values go up. Discussion followed there was an inherent mistrust of local governments. Ms. LaVerriere pointed out the City had not used the roll -back rate in four years. 25. Sale of vacant land analysis Ms. LaVerriere stated the City Commission voted to sell three land parcels. The appraisals were ordered and the City was preparing to go out for bid and then it will go back to the City Commission to decide whether they will be sold. It was noted the list provided to the Committee contained all of the vacant, city -owned properties, and many of the properties had lift stations, easements, deed restrictions, associated with them. Of the 19 parcels, the City Commission voted to sell only three. After further discussion, there was agreement this item would remain on the matrix but would be unassigned. 32. Police Services 33. Fire Services. Chair Scantlan did not think anyone would take these items on, unless they had knowledge of pensions. He was unsure if pensions were a financial matter as opposed to a Human Resource matter or whether someone knowledgeable about what it takes to hire talent and attract talent to a city, with the pension plan being part of that, was needed. He thought actuarial experience was not necessary, only one who could research whether the pension plans were commensurate with other cities hiring this type of talent. It was more of a comp and pension analysis. Discussion followed much of the information was already available and other cities may have input into their pensions, which a reviewer may not understand. A pension was a deferred benefit, but was it appropriate to the salaries paid in a region to attract talent. The FAC is supposed to close the budget gap. Additionally, Blue and White Collar Union negotiations were ongoing followed by Police negotiations in 2012 and Fire, the year later. Unions could provide some information and Human Resources could provide the rest. Mr. Atwood cautioned pension benefits could be reduced for future employees, but not existing employees. Ms. LaVerriere commented the League of Cities was sponsoring bills regarding pension reform, and the Legislature wanted to give municipalities more local control. A comparison would be made to determine if the City was overpaying firefighters. Ms. Lonergan agreed to look into the item regarding Police Services and Ms. LaVerriere 9 Meeting Minutes Financial Advisory Committee Boynton Beach, FL December 19, 2011 agreed to obtain the information from the fire chief. Other municipalities were considering a bifurcated system, but it was a difficult item. The Legislature also eliminated spiking by eliminating overtime. Other than Police services, the remaining items, due to lack of capabilities and committee members, were tabled for the rest of the matrix. 4. Review drafts for questions to be used in next Citizens Survey Draft 1 — 26 questions resulting from discussions at the November 21st meeting Draft 2 — 17 questions combining /eliminating duplicate questions and those not having an impact on the General Fund and property taxes. Chair Scantlan liked Draft 2 with the addition of a few items. One was an introduction explaining how answering the questions honestly would help the Commission. The second was an open -ended question about what citizens would do to close the $3.5 million gap. Chair Scantlan had indicated he would conduct the analysis. There was already agreement to include a question along the lines of what should be done with the Museum and the majority of the members also wanted a question about the Old High School on the survey. After brief discussion, there was agreement each member would design a question for the next meeting. 5. Discuss dates and techniques for collecting Citizen Surveys Chair Scantlan had voting district maps with him. Discussion ensued if there could be 200 serial numbered samples sent requesting the recipients go online to complete the survey or mail the paper survey back. If online, the serial number from the mailing would need to be entered. He thought this would indicate that all areas of the City were represented. Mr. Atwood indicated he had tried to address that with survey question No. 5, but Chair Scantlan felt the question would be analyzed after the fact. Chair Scantlan sought to tell the Commissioners that they sent randomly selected citizen surveys to every voting district, and the residents from those districts were given the opportunity to respond. Last year, there were almost 300 responses received. Mr. Shulman commented the members worked diligently on the survey and he thought the results were not as good as they should have been. He spoke with Commissioner Bill Orlove and inquired if he could help and he responded he would. Commissioner Orlove further suggested the members speak with the Commissioners about the effort, and he would request the Commission urge their constituents to respond to the survey. This item would be discussed in further detail at the next meeting and Mr. Atwood thought the City may be able subsidize the cost of a 200 piece mailing. 6. Confirm future meeting dates: January 9, 2012, February 13, 2012, and February 27, 2012. 10 Meeting Minutes Financial Advisory Committee Boynton Beach, FL December 19, 2011 Mr. Atwood confirmed the fourth Monday of the month was available. Accordingly, there was agreement to meet on the second and fourth Mondays of the month commencing in February. 7. Adjournment There being no further business to discuss, Mr. Feldman moved to adjourn. The motion was duly seconded and unanimously passed. The meeting was adjourned at 8:18 p.m. ' ( 1 - 1 kiLtiLl))kiL 0 iiAA Catherine Cherry Recording Secretary 122011 11