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09-11-2006 - Special Budget "'- o CITY COUNCIL OF EDGEWATER SPECIAL MEETING SEPTEMBER 11, 2006 7:00 P.M. COMMUNITY CENTER MINUTES CALL TO ORDER o Mayor Thomas called the Special Meeting to order at 7:00 p.m. in the Community Center. ROLL CALL Mayor Michael Thomas Councilwoman Debra Rogers Councilman Dennis Vincenzi Councilwoman Harriet Rhodes Councilwoman Judith Lichter City Manager Jon Williams City Clerk Susan Wadsworth Assistant City Attorney Nicholas Palmer INVOCATION Present Present Present Present Present Present Present Present There was a silent invocation at this time. Mayor Thomas asked the public to remember the people that died five years ago today and the firefighters and police officers that tried to save their lives. MEETING PURPOSE The purpose of the meeting was to hold public hearings (1st Readings) on Ord. No. 2006-0-28, adopting final millage rate of 6.15 mills per $1,000 of assessed taxable value and Ord. No. 2006-0-29, adopting final budget for fiscal year 2006/2007. 1st Reading, Ord. No. 2006-0-28, adopting final millage rate of 6.15 mills per $1,000 of assessed taxable value Assistant City Attorney Palmer stated there is a specific statutory framework for the adoption of the City budget and millage rate. He stated Mayor Thomas has asked him to outline and lead this discussion for purposes of this meeting. This is a public hearing on the tentative budget Page 1 of 39 Council Special Meeting September 11, 2006 .: o o and proposed millage rate for the City of Edgewater. Notice of this hearing was contained in the notice of proposed property taxes mailed by the property appraiser. The City Council has previously set a proposed millage rate of 6.45 mills, which represents a 31.05% increase in millage over the roll back rate of 4.9219 mills. Prior to any discussion the Mayor should now call upon the Director of Finance to make a brief presentation which discusses the following two issues: the percentage rate increase in millage over the roll back rate necessary to fund the budget and two the specific purpose for which ad valorem tax revenues are being increased. Interim Finance Director Brett Tanner made a staff presentation. (Powerpoint Presentation attached) City Manager Williams informed Council that Councilwoman Rogers requested a reconciliation of the increase in General Fund revenues verses expenditures. He then went over the changes between FY 2006 and FY 2007. He then went over the Summary of Funds - Revenues and Expenses for FY 2007. City Manager Williams pointed out that Councilwoman Rogers also requested an accounting of items that were approved in previous fiscal years that obligate dollars for future periods. He went over the debt back to FY 2005. City Manager Williams then commented on the Projected Impact Fee Revenue with regard to residential projects. Assistant City Attorney Palmer stated the Mayor should now call upon the general public to speak and ask questions. City Council may participate in this public discussion and should respond to questions posed by the public. After the conclusion of the Citizen Comments Council will then again have the opportunity to discuss the budget amongst themselves. Mayor Thomas opened the public hearing at this time. The following citizens spoke: William Perry, 1221 Commodore Drive, property owner in Edgewater, commented on this being a sad day five years ago when our country was attacked by terrorists. He felt the terrorists wanted to kill our system of doing business and Page 2 of 39 Council Special Meeting September 11, 2006 .- o o bring this country down. From his prospect over the past two years the tax increases have taken away 25% of his retirement income. It seems that he is being attacked by his own government. He has one piece of property that he owns, taxes have gone from $6,000 to $12,000 this year. He can't go to his tenant to raise the rent to cover this. He attended the County Council meeting last Thursday night. They want the millage rate rolled back. They want government waste stopped. They want the City to stop spending money like there is no end to it. People can't pay the taxes on value that is assessed by the tax assessor. They can't spend that value. It is inflated and bloated. There is no way people are going to be able to pay these taxes. They must take action to correct this. Five years ago he paid $9,000 a year in taxes. He has $82,000 in tax bills this year and he is going to have to borrow money to pay for it. These are commercial holdings he has for his retirement. Ordinary people can't live and work in this County because they can't afford it. He made investments, industrial property, to rent out to people to bring business and industry in here to provide jobs and the City of Edgewater builds an industrial park and goes in competition with him. He felt the City should stop buying property and sell what they've got and stay out of business. Business is for business people. Linda Small, 1629 willow Oak Drive, stated it has not been lost on the citizens that when they started hollering the proposed millage rate when from 7.45 to 6.15 like that. That means they can give more. 6.15 is not enough. It needs to hurt just like it hurts them. If 6.15 is their comfort zone, then they need to get down in the trenches with them. They need to cut out some overtime and perhaps they need to look at their cell phone bills. There are a lot of ways corporate America cuts their budget and the City needs to do the same thing. They hold the Council responsible and accountable for that. They expect that 6.15 will not be approved. It's not low enough. Ms. Small referred to a quote by City Manager Williams from Sunday's paper. "At our proposed rate of $6.15, an average single family home will pay about $400 in taxes this year. She asked if that is a singlewide on a half an acre. She didn't know anybody in the room that was paying $400. Ms. Small stated the Consumer Price Index this year is 3.5%. There is nobody in this room that got a 21% increase Page 3 of 39 Council Special Meeting September 11, 2006 .- o o in their wages over last year. She feels he shouldn't get it either. She knows it isn't all about Edgewater. She knows it is about the Hospital District, the School District and the County. Everybody says it's not only them. They are Edgewater residents and the buck stops here. They have a tax on gasoline in Volusia County. She commented on the ridiculous informational bills they have received on their water for the last six months. They are getting over it pretty quick. 3.5% CPI this year, not twenty-four. Their perception is the fifth year of runaway government spending. It has got to stop. Dominic Capri a , 606 Topside Circle, stated before they started on this budget the Council voted to approve a 5.95. Even with that it is an increase in taxes. Taxes have been increased year after year. He would like to see one year where they would go back to the rolled back rate, which would break them even. He doesn't see that happening tonight. He hopes since Council voted for the 5.95 they would at least see that. He asked why they are transferring money out of the Stormwater Fund into the General Fund. He commented on people not being aware of this. If they can transfer that kind of money and then pick up the paper and see where the City Council is thinking about raising the stormwater fee. He feels they are robbing Peter to pay Paul. He commented on the CPI being 3.15 and not getting 3.15 on their social security. Reverend Ray Vath, 2703 Kumquat Drive, stated he has been in Edgewater for twenty-five years and he has a few pieces of investment property of which he makes a small income to supplement his social security. On the money he has invested he is getting 10% and 11%. But he still has the headaches of tenants, maintenance, run around, do this, do that, taxes and insurance. Everything just keeps going up. This year in order to just stay even he has to raise his tenants rents $50 per month. He has some pretty good tenants that take good care of the property like it is their own. When he tells them that, he is going to lose them and he doesn't know whether he is going to get ghetto people or not. Reverend Vath stated the Mayor and City Council voted to go into the real estate business to build an industrial park. Developers start out with one little house, go to two, go to four, go to ten, go to fifty bigger and bigger and bigger. AS they go along they learn many mistakes they Page 4 of 39 Council Special Meeting September 11, 2006 o o don't do the second time. Now they have to spend $200,000 because somebody didn't watch the contract that we would have to put in the streets and sewers in the industrial park. We should never go into business using taxpayer money. If they hadn't gone into that business, maybe there would be a few bucks left to build a Police Station that everybody says we need so bad. James Daily, Pine Tree Drive, stated he wanted to take a little note against the $400 per month. He had his proposed property tax notice from the County and it said this year he would pay $857.24 in Edgewater taxes. Next year it will be $1,123.38 in Edgewater taxes, which is an increase of 31%. He stated the numbers are way off. He made mention of Morgan Gilreath, County Property Appraiser, stating that Save Our Homes is creating a problem. He said every year for the past five years all the local governments have been increasing their spending by four to five times the price index, some years ten. They said the value we pay taxes on went up by 27.9% last year. If they held their rates constant and Edgewater's assessed values grew the way they were, they should have 20% more money than last year. He has an aunt that lives in New Jersey and she is paying $500 less a year in taxes than he is. He stated they are going to destroy the whole Florida retirement. He then commented on the increase in taxes with the other taxing authorities in Volusia County. How do they expect the local residents to be able to afford when all their tax bills are going up 25% or 30% per year, especially if they aren't Save Our Homes protected. Carol Ann Stoughton, 2740 Evergreen Drive, thanked the public for being there. She felt they also should have been at the budget meeting last week and then they would have found out the debt with this private venture that was acquired through the last regime, the last Mayor and the last City Manager. The City is in debt over $333,000 plus dollars per year for fifteen years. Wasn't that a bargain to go into the building and Parktowne plaza business? She stated Councilwoman Rogers has noticed many items in the budget that were slick. Now the public is slowly getting intimidated with three minutes to speak. She feels this is a sin. They used to have five minutes. This is America. They are also being intimidated with policemen coming to their houses if they decent in any manner and they know what that is about. The average person in Edgewater makes $25,000, not $100,000. Therefore they won't be able to Page 5 of 39 Council Special Meeting September 11, 2006 o o stay here. Just the rich are going to be able to live here. She used to live in New Jersey and her taxes were only $3,000. Her taxes now are $2,600. She asked how much money they paid for stormwater plans with Professional Engineering. How much money are they going to continue to pay? She felt the stormater should have been done a long time ago. We have so much money the City doesn't realize what is being spent in this town and how it is being spent and $8,000 in raises. She was so proud of the public for being there and informed them they needed to get more involved. There are a few certain people that come to speak and they try to intimidate them. They have a right to speak. This is America. Rick Rosen, Old Mission and SR 442, agreed with the taxes and trying to keep them down. He stated they have a disaster problem coming off of Coral Trace because the water is not draining. It was never put under Old Mission Road. They went to him 100%. He feels Mr. Wadsworth needs to get involved. He came home Thursday night and the back of his orange grove was under two feet of water. The water pipe doesn't go under Old Mission Road. It goes directly underneath the drainage for Old Mission Road to go towards his property. It cannot go to SR 442 and across. He knew it wasn't on the agenda but the Council knows his problem and he needs it taken care of as an emergency. He will be speaking to Mr. Wadsworth tomorrow by phone. Dot Carlson, 1714 Edgewater Drive, representing ECARD, commented on an article in the paper that the height cap is going to keep businesses out. How many tall businesses were coming in to begin with in the last two years before they started the petition on height. She didn't think there was enough incentives to bring businesses in. What they have brought in is thirteen projects of houses, 13,000 homes are coming in to Edgewater. Not that many businesses and no place for anybody to work. When you bring in people you have to have services. When you have services that increases taxes. Developers pay impact fees one time. After that he doesn't care what happens here. They pick up the road fees and the crime. Right now trying to get out on U.S. #1 from Edgewater Drive is bad enough. She spoke of the traffic that will be generated from these projects. The City didn't annex property in for businesses. If they want to put something tall out by the interstate, fine put it there but let's have something. All they are doing is paying for people to come in and live. Use up the water Page 6 of 39 Council Special Meeting September 11, 2006 o o and use up the services and they are stuck with it. That is what their taxes are going to be spent on. Andy Anderson, Pine Tree Drive, commented on an article in the newspaper regarding the people of the City having to pay $300,000 for fifteen years on the debt service alone, that's not principle. He asked how they got in a mess like that and who on the Council voted to bring them into this thing. He stated City Manager Williams is quoted as saying we really ought not to be in the real estate business. He concurred with City Manager Williams and felt the City should get out of it as soon as possible and stay out of it. He feels they should leave that to the professionals that know how to handle this kind of thing. Leon Robitzsch, 326 N. Riverside Drive, commercial property owner of 1737 S. Ridgewood Avenue, stated his taxes are going up 45% this year. An employee at the volusia County Tax Appraiser's office told him that was based on the property in his neighborhood based on the selling prices of last year. She told him that was a State law and they had to go by the State laws for determining what the proposed tax would be for the following year. If that is a State law, he didn't see how the City or County could do anything about that. They say that you have to have adjustments every year for the property that was sold the previous year. He didn't know what the City or County could do other than lower the millage rate. His brother in law has property on Old Mission Road and his taxes went up 285%. He feels this is wrong. He can understand the problems the City Council has but the way he understands it they have to go by what Volusia County assessed on the properties. He didn't know if the Council could override that and lower the taxes other than through millage. He feels the County is inflating their property values. He has no objection with anything the City Council has done or any of the departments of Edgewater. He feels everybody has done a good job with what they have to work with. He doesn't like his property taxes going up and he doesn't agree with it but he feels it is the system we have is wrong and should be redone. He appreciated the good work the City has done. Brad Jones, 1815 May town Road, business owner in Edgewater, stated they currently rent industrial buildings and try to pull out-of-town businesses to Edgewater. They compete with cities like Port Orange, Ormond Beach and Daytona Beach. In the past they have been able to beat their rent Page 7 of 39 Council Special Meeting September 11, 2006 o <) and services. Currently they are building more industrial buildings in ParkTowne to bring more people in. The way the tax rate is going right now, if they have to keep bringing their rents up, they aren't going to be able to bring people in. They don't have the people here to fill the jobs that employers are looking for. If they have high rents and have to have people come from outside, they won't come. That will kill our City. He loves this City and has been here for twenty-five years but they can't keep taxing theirselves and try to compete with very large cities. Angie Wallace, 2718 Yule Tree Drive, stated she is a realtor but she is new. She hasn't sold any property yet. Since she has been a realtor the first thing that people ask her is not how many bedrooms or bathrooms it has or the square footage, not the year the house was built or is it on the water, they ask what their taxes are going to be. She stated she has a lot of people that are saying it is the City, the County is saying it is the City and the County has given her figures saying we aren't the sixth highest in the State. We are sixth highest in the State if you average everything together. If you just take the County's line on that, we are actually 65th in the State. Supposedly it isn't coming from the County. After looking at the budget, she sees huge gaps that she never knew existed. This new budget verses what was spent last year, there is $100,000 here and $100,000 there all coming from administration, all coming from the higher up people getting raises. It looks to her like there is at least a 10% increase in their budget for their salaries alone. Her husband is a truck driver and they average about $60,000 a year. With $60,000 a year in income she can't afford to buy a house because of what her taxes would be. She then commented on a home her mother-in-law built in 2001 and if she were to sell that house the taxes people would pay if they purchased her home would double. Her assessed value on the house went from $139,000 to $195,000 in one year, which is a 45% increase. Her husband doesn't get an increase in pay of 10% a year and she doesn't think anyone at the City should either. Lori Ellis, 2203 Needle Palm Drive, stated she has been a resident for a year and a half. Her proposed taxes are going from $1,800 to $4,600. She stated she liked Edgewater and there is a reason she bought here and her husband decided to start a business here. She is worried about living here and raising her son here. He likes his Page 8 of 39 Council Special Meeting September 11, 2006 o o school and she likes her home but $2,600 she is going to find next year to remain in her home. She asked if anybody could explain to her where she is going to get $2,600 and why she should get $2,600. She is used to government misappropriating funds all the time but when it comes out of her pocket and other people's pockets, it's driving people away. She sees more for sale signs in her neighborhood then she does mailboxes. She feels this is a wakeup call and if she has to leave Volusia County, she is in an industry where maybe she can maybe, she can't. She gets her income from Daytona Beach and she brings it and spends it in Edgewater. She doesn't know where she is going to come up with $2,600. She is the sole breadwinner in her family until her husband makes money with his small business. Jim Stoner, lives in Edgewater, stated he has spent more years in corporate boardrooms than he cares to admit. He retired here and bought a really nice home. He bought a rental property. Kind of hedge planning retirement benefits, which were taken away from him through corporate America. In the boardrooms, the board is accountable to the stockholders. In his mind, the residents are the stockholders and the Council is the board. The board says we are going to make ex-number of dollars this year. That is the way it is and it goes down to the department heads to say this is what you have to spend. They have to perform to the board and stockholders expectations. In corporate America if the stockholders don't like what the board is doing, they will be replaced. Nestor Olijnyk, owns a business in Edgewater, stated he didn't agree with the raise and felt Council should pick it up wherever it comes from the budget this year that they got hit from the left and right. He mentioned natural gas and electric going up. He felt they were doing this at the wrong time. He further commented on everybody being affected and everything going up and this being too much. He then commented on his property taxes going up. He feels Council has to do something this year. John Cordeiro, 1515 pine Tree Drive, stated it has just been revealed lately that Edgewater is $48 million in the hole. If that didn't happen, they could go back to the roll back rate on the millage. He asked how the City got to be $48 million in the hole. Page 9 of 39 Council Special Meeting September 11, 2006 o o Mayor Thomas stated it was an awesome turnout tonight and he was glad everybody came. He asked the men to give up their chairs for the ladies. Mayor Thomas asked City Manager Williams to explain how they got here and how many meetings they have had to shave this budget. He questioned where everybody was when they held the other meetings on the budget. City Manager Williams explained in January 2006 they began preparing FY 2007 expenditures. Since then they have had numerous budget meetings within City Hall to address the millage rate and expenditures, and to identify potential areas for savings to help address the millage rate. They have had at least three or four budget workshops addressing the millage rate and then identifying areas as well throughout this process. They brought back to Council what he described as a win-win budget. They recognize it was Council's intention to roll back the millage rate. He shared as a taxpayer the same sentiment and feeling. They have some situations that they are dealing with. They have a change in philosophies with regard to the ParkTowne Industrial Park and the real estate business. If the action plan that was described on the 31st comes to fruition, they could potentially bring back a half a million or more dollars worth of savings next year, which is equivalent to a half a mill. Those are potential areas they have identified unfortunately it does not address everybody's concerns tonight. They also got to address the amount of Water & Sewer Fund transfers that are being made to the General Fund. They have had comments from the auditors that tell them they have to place a heavier emphasis on balancing the budget with less emphasis on operating transfers, which affects everybody's water and sewer rates. They have identified and addressed that this year. This transition began six months ago and they have put every effort they could into addressing those issues prior to tonight. However they have had to come back to Council and describe they aren't able to get there. They will set an action plan in place that as soon as this budget is adopted, they go to work and address those areas where hopefully next year they can bring back a potential reduction in the millage rate above and beyond what they have offered tonight. City Manager Williams addressed Ms. Small's comments. He stated the quote in the paper is not incorrect. If you Page 10 of 39 Council Special Meeting September 11, 2006 o o take the average taxable value of a single family residential home in the City at the proposed tax rate, it is about $90,000. Assuming everybody has a $25,000 homestead exemption at $65,000 taxable value at 6.15 mills, that taxpayer would pay City taxes of $399.00. He recognized there are those that are above the average and below the average. Mayor Thomas asked City Manager Williams if he was instructed by Council to lower the millage rate. City Manager Williams informed him he was. Mayor Thomas asked City Manager Williams if he was instructed in the future to do his best to lower the millage rate in the future. City Manager Williams informed him that was a very clear message. Mayor Thomas asked City Manager Williams if he was not instructed if they could sell the land in ParkTowne to get out of debt to do that. City Manager Williams informed him that was correct and further stated those items will help save taxpayer money. They will address the millage rate and help towards the cause of lowering taxes. Mayor Thomas stated the problem is the property value went up and that is what they estimated the taxes on. They are trying to lower the taxes and go in the right direction. There are some things they need to straighten out and they will straighten them out and they have been straightening them out. Councilwoman Lichter stated she also lives here and is on a teacher's retirement budget. Because of that she doesn't get social security for her dead husband. She was a public employee in Connecticut and didn't put money in. The $6,800 she makes from the City for working an average of three hours a day, social security is taken out which she doesn't receive. Councilwoman Lichter pointed out she too is on retirement and she does pay taxes in Edgewater. She felt it was hard for them to all realize that the Tax Assessor sets the price of your house. That increase in value came from him. She suggested the lady who had such a large increase should go to the satellite office on Canal Street and find out why. On all the money that goes for education, for hospitals and all the things on the list, Edgewater gets Page 11 of39 Council Special Meeting September 11, 2006 o o back for every dollar approximately a quarter. That is what they are trying to run the City on. In terms of the gentleman that talked about the industrial park that has small business here, our Economic Development Board and herself have been trying so hard to improve Hibiscus, Guava and the streets with the small businesses hoping they could work together and with the Economic Development Board working with them to get a sign on SR 442 saying what businesses were in there and try to clean up the streets. She mentioned coming from Connecticut where an industrial park was profitable. A gentleman stood up and talked derogatorily about the industrial park, which was selling pretty good in the beginning. His wife was the one that was honored for naming the park. Now they realize perhaps things have slowed down and that maybe it isn't the best thing to be in the real estate business and they have addressed to City Manager Williams to sell the extra property. There are so many things involved in taxes. We have an emergency fund that in our Charter says we have to have a certain amount of money in it for disasters. We haven't had the right amount in that for several years now. The reason most recently is the hurricanes truly set us back. She mentioned the damage to the Shuffleboard Courts that had to be torn down and the promise made to them that the City would rebuild it. She also mentioned the cost of everything going up. Councilwoman Lichter stated she couldn't account for pension boards and raises and things that have been established for many years in this community. She didn't set that pattern and they are even looking into that. It is the most difficult sensitive thing to try to say to employees that were never in a union that now they can't have what they were promised. They are still looking for ways to fix that situation. Councilwoman Lichter spoke about not being able to afford a site built house. She lives in a manufactured home in Edgewater Landing that she pays a Homeowners Fees there as well as taxes. When there is damage in a hurricane, her insurance has gone up. She had a $5,000 deductible. They are all in the same boat but people want the services in this City and there are some capital projects that if you wait longer it is going to cost more. When she moved here fifteen years ago, there were septic tanks and dirt roads in Florida Shores and every Council hesitated and was afraid to pay for those things because they knew it would Page 12 of39 Council Special Meeting September 11, 2006 o o hurt the people but they kept waiting and it kept costing more and more. She mentioned some of the roads being done with grants and the last group being paid by 1/3, 1/3, 1/3. She commented on the homeowners on each side of the street paying 1/3 and the City paying 1/3, which is paid by the taxpayers. She commented on the effort that has been made to cut the budget to get it down. She also pays taxes here and she, as a public servant, resents the remark made about the diapers. She does this as community service because she loves her City and loves her Country. She doesn't look at herself as a dirty politician. Mayor Thomas applauded Councilwoman Rogers' efforts, time and diligence that she has put into this budget. Councilwoman Rogers stated she did ask for a reconciliation and this wasn't exactly what she was looking for. The last time they had a meeting there was the talk about the 6.15 millage. She went back to the meeting Mr. Capria was talking about when they were trying to get an established beginning point at something other than 6.45. She and Councilman Vincenzi both voted on 5.95 and it is a majority vote. It was 3-2 and that didn't pass. She wanted to start off at 5.45. Her reasoning had to do with something that when she started coming to the meetings when she first moved to the City about three years ago, the millage was increased by about a point. It was supposed to be because we were losing money in the pension and they needed to have the pension be at a certain amount, or the investment total to pay for the pensions of the City workers. The very next year she came to the meeting and prior to the meeting she spoke to Mr. Hooper regarding the pension and asked him if the investments were doing well. He said they were. She was expecting they would have a reduction in millage due to us doing better. At the end of that meeting and at the end of the workshop and the whole session of the budgets, our millage was not reduced. Our millage has been reduced since then by half a point and it wasn't because of the pensions doing well. She was told that the investments had not done well. She has learned that the investments were not the problem. The big crux of it was something that was brought out at the last meeting that Carol Stoughton started investigating and researching and that is this City has two plans, a defined benefit plan and a defined contribution plan. She further commented on the defined benefit plan. Over time that plan has not worked very well for the City. The City now is offering a defined Page 13 of39 Council Special Meeting September II, 2006 o o contribution plan, which is now approximately at 12%. Any new employees that started working for the City back to 1995 are in a defined contribution plan and the City contributes around 12%. It is less risk to the City and more risk to the employee. The defined benefit plan is exactly opposite. We have employees with this city that have retired that are continuing to work. She doesn't have a problem with that. These people are able to continue to receive the accrued benefit under the old defined benefit plan. If they were a new person they would have to be receiving the benefit under the defined contribution plan. We have a huge problem with that issue. We have people that are working for the City that are receiving pension benefits and receiving accruals under a 24% defined benefit plan where anybody new receives it under the defined contribution plan at 12%. That is one issue she finds is a big problem and they have been told it is going to be worked on and that they will see the changes in the future. She doesn't like to talk about changes in the future especially when they are dealing with tax dollars and money now. She wants to see it now. They have been told this problem in the past had to do with the investments not doing well. That was not true at all. It had more to do with the defined benefit plan, the defined contribution plan and the employees that are receiving benefits and still working for the City. The other problem has to do with the land held for sale, the industrial park. We received approximately $1,188,000 in sales income last year having to do with the industrial park. Only $500,000 of that went to reduce the debt on the land. She asked where the other $600,000 was. When that property was purchased and the City decided to become a developer, if she would have been on the Council she would have asked for it to have a separate accounting so any money coming in for that would have been directly used to payoff debt directly related to that. She asked why the other $600,000 didn't go to reduce the debt or why aren't we using it now instead of increasing the expenditures this year of approximately $300,000 in debt service. Why did it go back into the General Fund and get diverted to all these other areas? Councilwoman Rogers then commented on approved expenditures from previous operating periods obligating future periods. When these items are brought to the Council during the course of a year and they are asked to vote on something to increase our budget to amend our budget and she doesn't see the Councilpeople with their budget workbook in front of Page 14 of39 Council Special Meeting September 11, 2006 o o them, she feels this is a problem. People are not looking at the budget we have and whenever they amend a budget they need to be careful how they amend it and why. It was approved by the previous Council and now they are having to eat almost $500,000. She feels that is part of the problem as well as the pension and the industrial park. Councilwoman Rogers then commented on City Hall. We do not have a proper building for our City workers and for the Council to have meetings. It isn't very pride forming. What we do have is an Animal Shelter that is going to get built. That got approved and there is some problems with that. The citizens of this City voted on a ballot for a $500,000 animal shelter. We may be able to sell that industrial park land and we may be able to come out at a break even point. That isn't going to be the case with the animal shelter and that is going to be a continuing, growing would that isn't going to get better. Councilwoman Rogers stated one of the biggest things she has heard when she talks about pensions is employee morale. She feels for anybody that thinks their job is threatened but in corporate America nowadays people aren't guaranteed they can go work somewhere for twenty or thirty years and retire and receive a nice cushy retirement. She has two girls that are going to school and she is telling one of them who has a really good logical, brain to go and get a political science degree and get a government job that way she gets a pension. Her other daughter is going to go and do something creative, which she doesn't feel fits into government. She hears various people say they are paying taxes. Her taxes are extraordinary. She lives on Riverside Drive. She is no rich person like some people want to think. She has a husband that gets up every morning and puts on his work clothes and she makes his lunch and he goes and he works. He is a contractor and he works his rump off. She didn't think there was anyone that could say in construction that it is all making money. It is a lot of hard work. She has been up on roofs and shingled roofs. The only reason they have what they have is because of the way that man works. Her husband is going in tomorrow for a test at the hospital that she is very concerned about. It has to do with his physical self. We all work. We all pay taxes. She didn't think she would get to retire in the City and she loves the water and she loves to fish. She doesn't see in another ten or twenty years where she can afford on the income they are putting Page 15 of39 Council Special Meeting September 11, 2006 o o aside and the investments they are making, she doesn't see that they will be able to live here and pay the taxes. Go to North Carolina and buy a piece of property. The millage rate is .33. In the future her taxes are going to be between $10,000 and $15,000. Right now they are around $5,600. The way they look at their homestead is this is an investment. She can't even look at it as a principle resident anymore. Councilwoman Rhodes stated she didn't have as much to say as she did questions to ask. Councilwoman Rhodes asked Ms. Ellis to come forward. Her total tax bill went up $2 this year. She lives in Florida Shores and has lived here for twenty-eight years. Councilwoman Rhodes questioned Ms. Ellis regarding her tax bill going up $2,600. Ms. Ellis stated it was $2,800. It was $1,800 this year. Her proposed for next year is $4,600. Councilwoman Rhodes asked if she looked at the difference line items and if it was spread across the board or in one item. Ms. Ellis stated if this thing doesn't pass it still goes up to about $3,400 if it doesn't pass. If it does pass it is $4,600. Councilwoman Rhodes asked Ms. Ellis about just the City of Edgewater's taxes and if she knew how much those increased. Ms. Ellis stated she didn't memorize the line item. She is looking at the bottom line because that is what she is responsible for. City Manager Williams stated Ms. Ellis was welcome to come in and talk to him and they can go through it. The question he would ask is if it is a brand new home. Ms. Ellis informed him it is a twenty-year old home. City Manager Williams thought a market value adjustment is probably what has taken place, which brought the tax rate up to the market value and she is paying the difference. City Manager Williams asked Ms. Ellis to get with Assistant City Manager Liz McBride and give her her phone number and they will call her and have her come in. Councilwoman Rhodes stated the expenditures from previous operating periods in her opinion is a little misleading in the fact that the water meter capital lease is $452,670 but if she isn't mistaken we signed a contract with Johnson Page 160[39 Council Special Meeting September 11, 2006 o o Controls and they did a study and they guaranteed us or they would pay it that the cost for this would come out of the savings the City would get from putting in the radio read meters. She stated this is not tax dollars. The Animal Shelter was another thing. That was approved by the voters. They don't have an option with that. It is going to cost money to run it. We used to pay money to the Humane Society and they would never let them see their books so we stopped doing that and we are trying to do it ourselves. To euthanize animals, costs money. To pick up and feed animals costs money. We are going to bare that cost whether they do it themselves or somebody else does it for them. She asked if the Ford Motor Credit was the lease on the motorcycles. City Manager Williams stated when they started the budget process this year they described the need to quit adding fixed cost in the term of debt service. One of the ways they described doing so was to transfer moneys from the General Fund into the Capital Projects Fund and then they would accumulate those moneys and then through the budget process they would come back to Council and make the request to make those purchases. They were concerned that continuing to add fixed cost; we are setting ourselves up for potential failure. That is what the Ford Motor Credit represents as capital expenditures associated with vehicles. Councilwoman Rhodes stated each department head was told no more than 5% increase in their department. She asked if this was correct. City Manager Williams confirmed that was correct. A few weeks ago in Sunday's paper under the Idea section there was a pretty big discussion referencing taxes and the need for tax reform and the strategies that different governments should pursue in trying to control expenditures. He mentioned Mr. Gilreath stating there should be a cap placed on local governments to control the costs and that cap should be around 3%. Tonight they heard the Consumer Price Index was a little over 3% and they are presenting a budget that represents a 2.6% increase in expenditures overall for the General Fund. We are well below the Consumer Price Index and well below what Mr. Gilreath has suggested. Councilwoman Rhodes wanted to address the pension issue. Her husband goes to work everyday and he works his rump off too and he wears a gun. He is a police officer in Daytona Beach and he doesn't get paid crap but he gets a defined benefit pension that they are basing their retirement on. Page 17 of39 Council Special Meeting September 11, 2006 o o She doesn't have a problem with reworking the pension in this City. The point is when these employees were hired in the 70's they got a pension plan and their pension plan allowed them certain benefits because they didn't get it in pay. One of those benefits is they can retire and collect their pension. She felt Councilwoman Rogers had a good point regarding the people that are working and collecting a pension should be in the defined contribution plan now and not the defined benefit. We have hired lawyers to work this out. You can't just tell people that have worked for thirty years that the pension they have been promised they aren't going to get. She thinks when you tell people something that ought to be the way it is. They were told something and they are entitled to it. They can try to rework it to benefit the City as much as possible, but they base their life on this. It's not okay. Councilwoman Rhodes further commented on the problem with the millage rate. She has said this many times. In 1999 the millage rate was 6.44 and now it is 6.45 and fixing to go to 6.15 or even lower. The point is anybody that could run their household eight years ago on what they are running their household on today, it's almost impossible. The City of New Smyrna has five more square miles than we do. They have only got less than 2,000 people more than we do and it costs them almost twice as much to run their City as it costs us to run ours because they have taxable value, twice of what we have because they have a lot of businesses and that adds taxable value and takes the burden off the residences. She agreed with Ms. Carlson. Our focus should be on commercial, not residential. Anyway they can make that accommodation, anything they can do as a City to encourage it and help it, they should be doing. Councilwoman Rhodes stated she pays taxes here and doesn't want to pay one penny more nor does she want the taxpayers to pay one penny more than they have to. Councilwoman Rhodes stated we have 90 lots left in ParkTowne. At $60,000, that is $5.4 million when it is all said and done. At the end of the day they don't know if ParkTowne is going to cost us money or not. They are hoping not. She asked the question at the time why do they want to get into the real estate business. They got the money interest free and it is still interest free. We don't pay interest on that money that we bought ParkTowne with. Hopefully they will sell it and it won't cost the Page 18 of39 Council Special Meeting September 11, 2006 o o taxpayers a dime. It was a unique situation. The purpose was to encourage industry and jobs and businesses in this City, to lower the tax burden on the residents of the City. At that time, the resident tax burden was 83%, now it is 75%. Still too high but it is coming down and they are working to make that happen. She wants them to understand that the Council is doing everything they can to keep this as low as they can. Councilwoman Rhodes asked the percentage of this year's budgeted expenses over last year. City Manager Williams informed her 2.6%. A gentleman in the audience asked if that was all funds or the General Fund. City Manager Williams informed him that is the General Fund, which is the fund the residents pay their taxes to. A gentleman in the audience stated the total Edgewater expenses, the total money the City of Edgewater spends asked how much higher that is going to be last year verses the coming year. City Manager Williams stated the discussion they are having right now focuses directly on tax and the tax is directly related to the services the General Fund provides. A gentleman in the audience stated what he was getting at was if the General Fund stays constant and the Capital Fund doubles, then the total City of Edgewater spending could go up. City Manager Williams informed him they are only proposing $500,000 in expenditures to capital projects. He then commented on the Fund structure and Enterprise Funds. A gentleman in the audience stated it was $31 million this year and asked how much it was last year. City Manager Williams informed him $35 million. City Manager Williams further commented on the way the Enterprise Fund is structured. The cost of doing business is recaptured through user fees. A gentleman in the audience asked if they are currently transferring surplus out of the Enterprise Funds into the General Fund. Councilwoman Rhodes informed him yes. We do that to keep the tax rate low. Page 19 of39 Council Special Meeting September 11, 2006 . o o Mayor Thomas asked the gentleman in the audience where he was during the workshops when they were discussing this. Dominic Capria called a point of order and stated since they let the previous gentleman speak that he wanted to speak. Mayor Thomas stated he wasn't allowing him to speak and that Councilwoman Rhodes had the floor. Mr. Capria stated all he wanted to say was. Mayor Thomas informed him he did not have the floor and that Councilwoman Rhodes had the floor. Mr. Capria stated Mayor Thomas let the other gentleman speak. Mayor Thomas stated he did not allow him to speak. Mr. Capria stated yes you did and he wanted to say something. Mayor Thomas informed him he was out of order. Councilwoman Rhodes asked if it could wait until she was finished. Mr. Capria informed her yes. Councilwoman Rhodes thanked him. Councilwoman Rhodes wanted the public to understand that this is a no win situation. No matter what the taxes are they are too high. She is doing her best to keep them as low as she can and Councilwoman Rogers is a huge help. She sees things that the rest of them don't. She appreciated the time she has put in on this. Councilwoman Rhodes stated when you talk about the $600,000 and where did it go. It went into the General budget. That is where it went. When money comes into the General budget from outside sources, that means you don't have to raise taxes to pay the General budget so you do everything you can to get money into your General budget. Councilwoman Rhodes appreciated everyone for coming. She has heard everyone and will do her best to make them happy. Dominic Capria, 606 Topside Circle, stated they have been talking about the salaries and the budget. Some people have come up with $7 million and some have some up with $9 million. He thinks it is closer to $9 million. Nobody is telling them that they have to add 35% to 40% on that for benefits. That is another $3 million to $4 million. Councilwoman Rhodes stated she thought the $9 million included benefits. Mr. Capria informed her it did not. Page 20 of 39 Council Special Meeting September 11, 2006 o o Councilman Vincenzi stated he thought they have beat this horse to death. He wanted to say there are problems in the city. He has always been advocating a lower tax rate trying to get the City Manager to cut wherever possible. His opinion is he can't go any lower than 6.15 without cutting services. He didn't necessarily agree with this. He said a long time ago he wouldn't vote for anything more than 5.95 and he is sure even that won't make many of them happy but it is a start. His theory is if you have the extra revenue you start cutting back taxes and over a number of years you can get it back in line. There are a lot of problems the City has like salaries, benefits, annual leave and sick leave buy back, which is a benefit he has never had but people in this City do and it is costing the city a lot of money. But unfortunately these problems are not solved over night. They take awhile. They have to be recognized and then you have to work up a plan to take care of them. He thought City Manager Williams was trying to do this. He inherited a lot of these problems from the previous City Manager or administrations from twenty years ago even. It's not anyone's single fault but the problems are here and have to be dealt with. He sympathized with everyone. He has to pay taxes too. He doesn't like it when it goes up and he is doing his best to cut expenses and make the City cut their expenses wherever possible. Mayor Thomas stated if he had his choice, they wouldn't have any taxes. But you have to look at the reality of things. This country was based on taxation without representation. He spoke about living in the woods. He has done a lot of research on this too and the richest City in Volusia County is Daytona Beach Shores because they have condos and that is where their tax base comes from. You can't compare us to New Smyrna because a majority of the people don't want condominiums and they would be willing to pay a higher tax base not to have condominiums. As far as the commercial aspect, they are trying to get some commercial. There has been some boondoggles in the past. He asked City Manager Williams how long he had been City Manager, a week? They can't expect him to do that in a week. He mentioned the meeting he has had with City Manager Williams on shaving the budget and how many meetings City Manager Williams has had with the department heads. He then mentioned how many meetings City Manager Williams had had with Personnel Director Debby Sigler regarding the pension benefits. He feels they are going in Page 21 0[39 Council Special Meeting September 11, 2006 o o the right direction. They can't do it all at once; they have to do it a little bit at a time. There was a fifteen-minute recess at this time. The meeting recessed at 8:40 p.m. and reconvened at 8:55 p.m. Assistant City Attorney Palmer stated at this time the Mayor should ask if there are any questions to the tentative budget. Motions to amend the tentative budget should be considered and voted upon. Prior to any vote, however, the Mayor should call for public comment and questions on any of the proposed amendments. The motions to take the form, a motion to amend the tentative budget of the City of Edgewater distributed along with the budget message of the City Manager dated September 11, 2006 in the following manner and then describe the proposed amendment. The City Council should not vote on the adoption of the final budget at this time, but only upon any amendments to the tentative budget, if any. Mayor Thomas opened the floor to proposed amendments to the proposed budget to the Council. There was some concern expressed due to Councilwoman Rhodes and City Manager Williams not having returned from the break. Mayor Thomas asked if he could open the meeting up to the public. Assistant City Attorney Palmer informed him he should open it up to the public after a motion to amend the tentative budget. For each motion to amend, there should be a period for public comment and Council debate. Mayor Thomas stated he was just trying to expedite things. Councilwoman Lichter clarified that the motion to adopt the final millage rate would be 6.15 if they wish to make that motion per $1,000 compared to what they said before. Assistant City Attorney Palmer informed her if the budget is not amended it is his understanding that the millage rate of 6.15 would be appropriate for the current budget. Councilwoman Lichter stated so you have to make a vote to amend it because they already had a tentative thought in mind that was higher. Assistant City Attorney Palmer stated if they wanted to amend the budget in any way the millage would then have to be recalculated before the millage ordinance could be adopted. Page 22 of 39 Council Special Meeting September 11, 2006 i o o Councilwoman Lichter stated so the motion they are looking for is to amend the budget. Assistant City Attorney Palmer stated if there are any such motions. Mayor Thomas asked if there was a motion to amend the proposed budget. Councilwoman Lichter stated and the proposed budget is the one that they previously. Is that correct? Mayor Thomas informed her that was right. The updated outline. Councilwoman Lichter stated outline at first and the lowering of that would be an amended. Mayor Thomas stated they weren't talking about the millage, they were talking about the proposed budget. City Manager Williams stated the budget they have before them is presented at 6.15 mills. He thought if they were to amend it at this point they would probably recess, they would go back and crunch numbers if they were going to amend the millage rate and then bring back from that perspective. At this point, there is no recommended amendments from staff's perspective. It is 6.15 mills. Assistant City Attorney Palmer stated the City Council does not have to make any motions to amend the budget. If Council so desires now would be the time to amend the proposed budget prior to adopting the millage ordinance. If there is no motion to amend, they can move on to the millage ordinance. Mayor that. there Thomas asked if they had Assistant City Attorney weren't any motions. to hear from the public on Palmer informed him not if Councilwoman Rogers stated this budget was given to them the last time they met. 6.15 was the proposed millage rate. They went through and talked about it. The items she brought out tonight wasn't saying they could make these changes right now. She is well aware they can't with the pension. The reason she brought out what she did was to inform the citizens what they were previously told wasn't accurate in regards to the pension and to enlighten everyone regarding the million dollars in sale proceeds that we received last year due to the industrial park and the fact that only $500,000 of it went to the debt service. She isn't painting a great picture. What she is trying to do is paint the picture of where we are at and they have to Page 23 of 39 Council Special Meeting September 11, 2006 o o do what they have to do because they are approximately at roughly $1.35 million over what we received in tax revenues last year. Whenever she asked for reconciliation, what she is getting at is trying to be able to explain to the citizens that out of that $1.35 million roughly $300,000 has to do with the debt service with the road construction in the industrial park, not the debt service of the debt on the land. That is there and already in the budget. That $300,000 has to do with Base Leg and Rowan Way. The two roads they have to build because of previous contractual obligations to those people that purchased land. Also approximately $280,000 because of the defined benefit and defined contribution plan difference. She is fully aware that the people that started in 1970 had that plan and there is nothing against our City people. That is the way the plan was but they needed to make it clear so the public understands what is out there. That approximate amount of $458,000 having to do with wastewater and that was something that was approved last year that is affecting this year's budget. When they are looking at numbers saying how did the City and why did the City increase things to spend an additional $1.35 million they didn't go through departments and each department head start increasing their budget. It is because of these big-ticket items. She doesn't like it. We have a City Manager who used to be a Finance Manager and she has spoken to him and she is going to give him the benefit of the doubt and trust him and have faith that this time next year he is going to come back and say this is what they were able to do and she is going to hold him to that. Next year she is going to be nailing him for those things that she is pointing out now is the reason why they can't go below the 6.15. She doesn't like it. She would rather it be 5.45. She would rather it be 3.5 and go back to a roll back but we have debt. You can't increase the income and the outflows and do all these wonderful things without a thought process. Right now we have outflows that we are obligated to. The outflows exceed what we have coming in so there is a tax increase and the 6.15 is the way according to the Finance Department they are indicating to them is the best thing that they can do short of them getting an outside firm to come in and audit the books and she doesn't think that is going to show them anything right now. When that time comes it is going to be to show them other things but right now they have a family and this is the best they can resolve it at this point. She has to trust the Finance Page 24 of 39 Council Special Meeting September 11, 2006 . o o Manager, now City Manager. As far as amending this, she doesn't see how. Assistant City Attorney Palmer read Ord. 2006-0-28 into the record. He stated the Mayor should now entertain a motion by the City Council to adopt a tentative millage rate of 6.15 mills for the fiscal year beginning October 1, 2006 and ending September 30, 2007. The Mayor should then call for public comment and questions prior to the vote on the tentative millage rate. Mayor Thomas asked if he heard a motion to that affect. Councilwoman Lichter so moved. Assistant City Attorney Palmer stated the motion needed to specifically state the millage rate of 6.15 mills. Councilwoman Lichter stated 6.15 mills starting in fiscal year October 1, 2006 and ending in September 30, 2007. Adopting the final millage rate of 6.15 per $1,000 of assessed taxable value. Assistant City Attorney Palmer stated the Mayor should now open the floor for public comment and Council discussion. Mayor Thomas stated it hadn't been seconded. Councilwoman Rhodes seconded the motion. Mayor Thomas asked for a roll call vote. Assistant City Attorney Palmer informed him prior to the vote that he had to open it up for public comment and Council discussion. Mayor Thomas opened the public hearing. Assistant City Attorney Palmer stated for the record, all comments that were made during the previous public hearing are carried forward to this public hearing so there is no need to repeat any comments made during the previous public hearing if they choose not to. The following citizens spoke: Page 25 of 39 Council Special Meeting September 11, 2006 o o Linda Small, 1629 Willow Oak Drive, stated when they talk about reducing taxes, millage rates and budgets the common response from their elected politicians is what would you give up for it? What services would they have them cut? That is no longer an acceptable response. This is 2006. They expect them to be an innovative, forward leadership team. This time next year she hopes that is what they will see sitting there. Dominic Capri a , 606 Topside Circle, stated Florida Inland Navigation District, the dredging, which Mr. Williams has said in the proposal, they haven't heard anything about that proposal, involves approximately $1.7 million. He would think that they should have some idea how much money they are going to get out of that, if any. That should go to reduce the budget. Mr. Capria stated they sold an acre of land in ParkTowne for $71,500. That should go to reduce the budget. He asked where it went? City Manager Williams stated they have an amendment to the ParkTowne agreement that is on tonight that if they approve it will allow them to be able to sell that. In the General Fund they only make appropriations for revenue if it is measurable and available. Pending approval of that agreement they will be able to sell that property but as to when, he couldn't give them a date when they would actually close so there is no appropriations made there. Mr. Capria stated what he is hearing is they don't know where it will go yet. That is quite a bit of money and could reduce our budget. Mr. Capria stated they took in approximately $3.2 million from FEMA and he knows a lot of it has gone to build things that were destroyed. $3.2 million is a lot of money and he knows some of it is going to pay the workers. He could understand some of the money coming out to pay the workers in overtime but if they didn't have the storm they were paying the workers out of the budget as it was. He asked if the City paid workers out of the FEMA money. City Manager Williams stated they got reimbursement for expenditures incurred as a result of the storms. Emergency protective measures, for the debris removal. Those types Page 26 of 39 Council Special Meeting September 11, 2006 o o of expenditures were incurred and those types of expenditures were reimbursed. Mr. Capria asked if any money was left over after all of that. City Manager Williams informed him FEMA wasn't in the business of letting you make money off of them. Councilwoman Rhodes stated in fact, we didn't get all we should have. Mr. Capria stated the way he understands it we might have money coming in from FEMA. City Manager Williams stated we have revenue budgeted for this fiscal year to the tune of $243,000, which is directly related to the shuffleboard courts. Mr. Capria stated Mr. Hooper originally said it was $500,000, then $380,000, now it is $243,000. He didn't know whom to believe. City Manager Williams stated FEMA has described to them that once we go through and rebuild they can ask for any reimbursements above and beyond the original project worksheet. Mr. Capria asked how much was in the General Fund and how much was in the Reserve Fund as of today. City Manager Williams informed him they estimated the fund balance today but they also made some estimates on the rest of the revenue that they would collect through September 30th. They estimated that to be $3 million. Mr. Capria stated and they can't use any of that to reduce the millage rate. Councilwoman Rhodes informed him the Charter won't let them. City Manager Williams informed Mr. Capria it was an estimate at this point. Mr. Capria asked where in the Charter it says that. Councilwoman Rhodes stated the Charter says they need 15% to 25% in the Reserve Fund. Mr. Capria stated he was talking about the General Fund. City Manager Williams informed him that is the General Fund. Councilwoman Rhodes informed him the Reserve Fund is in the General Fund. Page 27 of 39 Council Special Meeting September 11, 2006 o o Mike Thompson, Volco Road, stated he had a millage chart that showed Daytona Beach at about 6 %%. Daytona Beach has got a ton of high rises and a ton of businesses. The City is saying they need businesses to bring the tax rate down but he is looking at Deltona, which doesn't have a business in it, and it is pulling in at a 4% tax rate. He asked if anybody cared to give him an answer on that. He mentioned Deltona having a couple of shopping centers and two or three convenience stores. It is hard for him to believe that the City is coming in almost where Daytona is and they have got the beach lined with high rises from one end to the other. He spoke of the businesses on International being on top of each other and they have a tax rate of almost 7%. He again mentioned Deltona pulling in at a 4% tax rate. He asked if anybody could explain to him how they do this. Councilwoman Rhodes stated she could spend an hour explaining why Daytona's tax rate is so high and if they wanted to call her she would be glad to tell them. Mr. Thompson stated if Deltona can come in at 4%, why can't we. Councilwoman Rhodes informed him Deltona has no services. Carol Ann Stoughton, 2740 Evergreen Drive, stated she is all for a private investigation, other than our auditors, to investigate the funding that this town is in debt from and for the past six years. She thinks they need an independent auditor here. They should see where the money went. Her and Mr. Thompson first started this investigation and with regard to the Charter. We have a Charter that governs our town. We have limitations on borrowing and reserves. When she first asked Mr. Williams it was told they hadn't even reached 15% and would not reach 15% until the end of the year. Yet at another meeting he said they were at 21%. They have limits on borrowing. She doesn't see a General Fund in our Charter. She doesn't see anything in there so if they have this slosh money over here she doesn't see any reason why they can't lower the taxes. Whoever was responsible for ParkTowne plaza, it's lawyers, it's City Managers. Everybody else. The lawyers have errors and omissions policies and they should be taking a task on it. They should not be paying for roads because of this fiasco that was started and today it is costing the taxpayers $333,300 plus a year for fifteen years. She feels the newspapers Page 28 of 39 Council Special Meeting September 11, 2006 '" o o have not given fair press to the debt the City is in and what has been going on here. They aren't there to assail them. They want answers. They want their taxes lowered and they want to know when raises are given. As when Mr. Hooper resigned, he gave out $10,000 in raises. How do raises get accounted for? Is there a Personnel Department that evaluates persons and their job merits or do they just hand them out? She doesn't feel it has been fair because the garbage men and everybody else make the least and they do a lot of work. She started when the last Mayor said they needed to get rid of them. She is into finding out what is going on. She felt City Manager Williams should know what was going on because he was Finance Director and she was hoping he would get that job but she felt he should have exposed what was going on here all along and she feels in time he will. City Manager Williams asked if Council wanted him to address the fund balance issue. Mayor Thomas told him to go ahead. City Manager Williams stated the calculation of fund balance. If you go back to your most recent audited financial statements, FY 2005, at the end of FY2005 calculated fund balance or reserves, which are one in the same, was calculated to be 10.1%. To make that estimate today, you start where you end. You add the revenues you have collected minus the expenditures to give you an estimated fund balance and that is what he has described tonight as the $3 million. The 21% was what they estimated when they had the last workshop. Every day that they add revenues to the general ledger and they incur additional expenses, that number changes. It will end at the end of our accounting period of September 30, 2006. They will go through an audit process. There will be certified financial statements issued and then they will know the exact amount of the fund balance. James Daily, stated he thought one of the main reasons everybody was there was they think, if everybody looks at Page 9 of the big book, they did roll back, they did 4.92. If they were, now they are at 6.15. That is a difference of $1.3 million in property tax revenue. The real estate market is already flattening or softening. If they can't manage the City to the point where they automatically get another $1.3 million in revenue to break even, how are they going to sustain this course? They keep talking about Page 29 of 39 Council Special Meeting September 11, 2006 o o bringing in business to diversify the area. going to recruit business when they have the property tax in the State, County combined? the highest cities in the County. How are they highest This is one of Angie Wallace, 2718 Yule Tree Drive, stated the City of New Smyrna's meeting was today at 5 o'clock and their proposed millage roll back rate is 3.3671. If they approve the budget as it stands now it is 3.7593. Although she realizes they have a little over two times what we have in taxable value, that taxable value is coming from people that have been here a long time, people whose values are capped. She was looking through the budget today in preparation for coming to the meeting and she pulled up the same chart, which is Page 14 of the budget, showing that Edgewater has the second highest millage rate in the County. The other thing she noticed was that the taxable value in Edgewater has increased 37.13%. With the adoption of the 6.15 mills, that represents a 24.95 increase over the current roll back rate. That is a huge amount considering the people don't get that kind of increase. As Councilwoman Rogers said, there are some things in the budget that are constant that they know are coming. She spoke of what she does if there isn't as much money coming in as going out. She doesn't do anything that isn't necessary. There are a lot of things in the City budget she doesn't feel is necessary. She asked why there are cop cars sitting in people's driveways and why they aren't doubled up and left at the station for the next shift to use. Why are there Fire Chief cars and fire cars sitting here that haven't moved in months? Why if you go outside right now are there six to eight City vehicles sitting there unused and yet she saw the Ford Motor Credit for $186,000. That is a huge amount. Why do they get a new car? She can't afford to get a new car. She can't afford to go out and pay double what her car payment was now. That is essentially what they are doing in a lease. If she doesn't have the money coming in that she has going out then she tightens her belt. She felt maybe that is what the City needed to do. She mentioned all of these things being brought in before the current Council was here. She came into a marriage where her husband was $40,000 in debt and she told him no more going out. Maybe that is what the Council needs to do. It may not have been their problem to begin with but it is their problem now. She feels all of the spending on things the City doesn't need is ridiculous. She then commented on the tax levy on Page 11 of the Page 30 of 39 Council Special Meeting September 11, 2006 o o budget. it will years. why the It was at $4,066,000 in 2005. This proposed year be $6,456,000, which is an increase of 40% in two That is a huge increase. She doesn't understand City needs that. Andy Anderson, Pine Tree Drive, stated there are some people he knows that have retired from the City on disability because they had a weight problem. They got so big that they had heart attacks and they were still young people. He is in his 70's and is probably one of the oldest people in the room. These people are in their 40's which he feels is young. He mentioned this because he feels it is a way to save some money. They are retired on disability and they are drawing 67% of their pay because they got sick and he was sorry they got sick. He feels for them but the City has to pay that and then they have to hire somebody to take their place. It didn't seem to him like the City has a weight problem for its employees. They might have like some cities in some states in some corporations where they have a system by which they must maintain their weight so they don't get sick and have to retire. He didn't know if the City had something in place. If they don't, he felt they should have one and that it would save the City a lot of money and the people wouldn't be getting sick in the first place and the taxpayers wouldn't have to be doling out all this extra money because of what happened from the rumors. He would like the Council to take this into consideration. Dave Ross, Needle Palm Drive, congratulated and thanked the Council for their hard effort. He feels they are on the right track. He knows it has been hard and he understands the problems Councilwoman Rogers has described. They are doing the right thing. Keep up the good work. Mayor Thomas closed the public hearing. The MOTION CARRIED 4-1. Councilman Vincenzi voted NO. 1st Reading, Ord. No. 2006-0-29, adopting final budget for fiscal year 2006/2007 Assistant City Attorney Palmer read Ord. 2006-0-29 into the record. He stated the Mayor should now entertain a motion to approve. Mayor Thomas entertained a motion to that affect. Page 31 of39 Council Special Meeting September 11, 2006 . o o Councilwoman Lichter so moved. Mayor Thomas stated approve the proposed budget. Councilwoman Rhodes made a motion to approve the proposed budget, second by Councilwoman Lichter. Mayor Thomas asked if he should open it up for public comment. Assistant City Attorney Palmer informed him yes. For the record, any comments made during the previous public hearings are carried forward for this public hearing. Mayor Thomas opened the public hearing. Councilwoman Lichter asked Assistant City Attorney Palmer if he meant the proposed comments should be included in that amendment or was he opening it up again for more comments. Assistant City Attorney Palmer stated the public hearing should be reopened but all comments made during the previous public hearing will be carried forward into the record and made part of this public hearing. The following citizens spoke: Angie Wallace, 2718 Yule Tree Drive, stated the budget is too high. Cut it down. Dominic Capri a , 606 Topside Circle, stated it is really a shame. All he has heard is people don't come to the meetings. Well they came and talked and the Council voted against them. Carol Ann Stoughton, 2740 Evergreen Drive, stated she still feels there should be an independent, even if it is the Attorney General, to investigate the moneys that have been going, and gone and spent and debted for the past five years. They should know what has been going on. They should know where it has went. The Council doesn't know and they rubber stamp it, the two on the end. The others she gives credit. Mayor Thomas closed the public hearing. The MOTION CARRIED 4 -1 . Councilman Vincenzi voted NO. Page 32 of 39 Council Special Meeting September 11, 2006 01 o o Mayor Thomas entertained a motion to adjourn the special meeting. Assistant City Attorney Palmer recommended he first entertain a motion to the affect scheduling a public hearing to adopt the final millage and budget at second reading. The motion should be to the affect a motion that a public hearing to consider the final millage rate and final budget be scheduled for September 25, 2006 at 7:00 p.m. at a Special Meeting of the City of Edgewater to be held in the Community Center, that the hearing be advertised in accordance with the provisions of Section 200.065, Florida Statutes, and Section 1.01 of Article I of the City of Edgewater Charter, that the appropriate Ordinances necessary to adopt the final millage rate and final budget be prepared by the City staff, and that all other action necessary to comply with the requirements of Section 200.0645, Florida Statues be undertaken. Mayor Thomas asked if they have to read that into the whole motion. Councilwoman Rhodes stated so move. Councilwoman Lichter pointed out they didn't have a copy. Assistant City Attorney Palmer stated so moved would be appropriate. Councilwoman Rhodes stated she so moved. Councilwoman Lichter seconded the motion. The MOTION CARRIED 5-0. Mayor Thomas entertained a motion to close the Special Meeting. Councilwoman Rogers stated prior to closing the meeting. She is sad. She wanted to see a lower millage rate. But based upon everything she has said and what she has qualified with the 6.15, she has talked to the City Manager that we have currently and she has made mention that they need to have the financial statements, the audited financial statements reviewed by an outside independent auditor and she knows there are problems. She works full- time. The position they have up there is they are to make Page 33 of 39 Council Special Meeting September 11, 2006 ,,' . \) o decisions and policies based upon information given tot hem and they are to trust that information. She has always been taught that if you can't be trusted with little you can't be trusted with much. She asked if they could vote at this time to take request for proposals from other firms to have an independent auditor review these items. She would personally like to communicate with this firm because she has questions and concerns. They have had a handful of meetings and she has spent time with City Manager Williams but there are still too many question marks out there and they don't have enough time to go through all of it and try to fix this budget. On September 23rd or 24th, FIND is going to be meeting and talking about the dredging material that Mr. Capria brought up, that she has been bringing up, wanting to know if we are going to get any money and we should be able to get some money and that definitely would have helped the budget but it's not in time. They aren't going to have the money realized and in here so they can utilize that. Councilwoman Rogers made a motion that they hire an outside independent firm, that they get some proposals and have them look over our books, audit our books or do whatever is the proper term when we already have an accounting firm that audits our financial statements. It's the same firm we have had for four to six years and we do have problems from around 1999 through now there are some concerns so there. Councilwoman Lichter called for a point of order. Mayor Thomas stated there is a motion on the floor and asked for a second Councilwoman Rhodes seconded the motion. Assistant City Attorney Palmer stated if the Mayor wanted to entertain the motion it was appropriate. Councilwoman Rhodes seconded the motion. Councilwoman Lichter stated if it was an agenda item and known to the public, she would feel comfortable voting on it. Coming out of the clear blue sky she does not. She feels it should be on an agenda. Assistant City Attorney Palmer stated there is no legal requirement that that type of motion be at an advertised public hearing. A possible Page 34 of 39 Council Special Meeting September 11, 2006 '-I .. o o alternative motion, if Councilwoman Rogers' motion fails, would be to place this on a future agenda and advertise it in accordance therewith. Councilwoman Lichter asked how much that kind of audit costs at that moment. City Manager Williams informed her very easily it would be between $40,000 and $60,000 if they just voted to approve a millage rate and budget that does not make any appropriations for an audit of which they are talking about. Councilwoman Rhodes asked when our contract with our auditors right now expires. She questioned being able to go out for RFP's. City Manager Williams stated they are talking about an audit in addition to an audit. Councilwoman Rhodes stated she is trying to combine both things so it doesn't cost the City any more money out of the budget. She stated our books our audited every year and suggested they get another auditor this year. City Manager Williams informed her we are under contract and it was a three-year contract. They would have to look at the terms of that contract. He stated changing auditors at this stage of the game is not prudent. He suggested if they are going to make a change that they wait until after this audit has been completed. We had a local municipality that decided to make a change similar to this and it is his understanding that they still have not received certified financials as of this date. He feels this would delay the process. Those firms have established the time frame that they are going to come out and do their interim testings and their audit works and that schedule has already been set. Those are the challenges they will be faced with when they go out for an RFP. If he understands the motion correctly this is a separate independent review. Councilwoman Rogers stated her proposal on the $60,000 is to squeeze it. Take it from somewhere else in the budget. She thinks this is something that the City needs. Councilwoman Rhodes stated we are audited every year and we have changed auditors and gone out for RFP's in the past so she wasn't understanding, other than scheduling, why if they wanted to, if the contract was up and she knows they usually go out for RFP's earlier in the Spring rather than wait until now but could it not happen this way. Other than scheduling, what is the problem? City Manager Williams stated they have already begun the audit for this fiscal year. They were here last Friday and did their Page 350[39 Council Special Meeting September 11, 2006 " o o interim testing. They are going to potentially go out for services. They are going to bring in a separate firm. They are going to have to acquire the audit papers from this firm. They are going to come in and they are going to establish their own audit procedures and guidelines. That is going to be a major change in what the City is used to dealing with at this point in time and it is going to delay the issuance of the financial statements of which he believed Councilwoman Rogers' has expressed she wants to know very soon and very early what those financial statements are. That will delay it and will probably be potentially going into the next budget workshops without audited statements. He wasn't guaranteeing that but that will delay the financial statements. Councilwoman Rogers stated to clarify she knows we have McDirmitt to begin this audit. What she would like to see and it wouldn't be as costly is an audit of those statements that we have received already for the last couple of years and then if discrepancies and what not are found then you go further because her concern is how did this City get into such a mess in this period of time when everyone was lead to believe that we were not in this situation. It keeps coming back to haunt us. It keeps rolling and growing and growing. Councilwoman Lichter questioned if this was a different motion then that they need. Councilwoman Rogers stated no. Mayor Thomas stated there is a motion on the floor and it has been seconded. Councilwoman Rogers stated so they need to vote on it. Mayor Thomas stated to bring an independent auditor to go over. Councilwoman Rhodes stated to go over and above our auditors. Councilwoman Lichter stated she just changed it. City Manager Williams confirmed they were suggesting he take the certified financial statements that have been issued and the audit has been conducted in accordance with the rules that the auditor general of the State of Florida has set out and give them to them and say is there any issues. Councilwoman Rogers stated not just that but the actual detail. In other words, the work papers from the auditors that we have currently, their detail so they can have an outside independent auditor give us an opinion upon what they did. City Manager Williams stated you want two audits to be going on at the same time. Councilwoman Page 36 of 39 Council Special Meeting September 11, 2006 o o Rogers stated no, let's just go backwards. The financials from last year, the audit from last year. That report. All of those auditors work papers provided to a new auditor for him to review it and give us an opinion and then if discrepancies and whatnot are discovered and items are alerting them to some potential issues then they will bring it back to the Council and say we want to go further, whether they go backwards or forwards. Let's take last year's and say review those and give them everything. City Manager Williams asked if they want him to ignore this year's audit. Councilwoman Rogers stated she understands they are obligated to this year's audit. Since City Manager Williams just mentioned that the CPA firm was here last week she wouldn't want to rock the boat in that way. Let them do their job. City Manager Williams informed her he felt she was putting an unreasonable demand on that Finance Department. They have a small Finance Department and they are in transition. They are going to have to address both firms as they come in and they are going to have to address both questions. He felt this would be extremely tough. Councilwoman Rhodes stated she is basically asking for an auditor to audit the auditor. Councilwoman Lichter stated it is a different motion is what she is trying to say. City Manager Williams stated with last year's work papers and last year's work schedules. Councilwoman Rhodes stated that should all be there. City Manager Williams stated it is there but what he is describing is that department is going to have a whole different firm come in. They are going to start scrutinizing all those schedules. Carol Ann Stoughton asked what they have to hide. Councilwoman Rhodes stated we don't have anything to hide, which is why she is seconding the motion. City Manager Williams stated they are going to have this year's audit that they are trying to get prepared for now, producing schedules. Councilwoman Rogers asked when they would be done with this year's audit. City Manager Williams informed her they are scheduled to be onsite November 29th. Councilwoman Rogers asked when they would be done. City Manager Williams informed her they would be done December 5th. Councilwoman Rogers stated fine, then they will have the next firm come in afterwards. Page 37 of 39 Council Special Meeting September 11, 2006 o o Mayor Thomas asked Councilwoman Rogers if she wanted to amend her motion to have the independent auditor come in after the auditor we have hired now. Councilwoman Rogers stated exactly. After the audit that we are in the process of right now is completed then they will bring in another auditing firm that they will seek an RFP for to come in and review last year's audit, review this year's audit and the workpapers and schedules and whatnot and give us answers because right now they don't have answers. Councilwoman Rhodes stated it might be easier to have them both going on at the same time. Councilwoman Rogers stated that would be too much for them. City Manager Williams stated there is no way. It's possible but they would put an unreasonable demand on those folks. Councilwoman Rhodes stated she didn't want to do that. She is convinced that our auditors are good and that there are no problems. So she would like to see an audit because if there is she would like to know about it but she really didn't think there is. Councilwoman Lichter felt the new motion would be fine. She suggested they move on because of the lengthy agenda package. Mayor Thomas stated there is a motion on the floor that has been seconded. City Clerk wadsworth asked who seconded it. Mayor Thomas stated Harriet and asked Councilwoman Rhodes if she still wanted to second the motion. Councilwoman Rhodes stated and the motion was to go out for RFP's for an auditor. Councilwoman Rogers stated and that that auditor would come in after this auditor is done so they don't have an overlapping. Councilwoman Rhodes stated she would still second that motion. Mayor Thomas asked for a roll call. The MOTION CARRIED 5 - o. Assistant City Attorney Palmer announced that the final budget hearing and final millage rate hearing would be held on September 25, 2006 at 7:00 p.m. in the City of Edgewater Community Center. Page 38 of 39 Council Special Meeting September 11, 2006 o o ADJOURNMENT There being no further business to discuss, the meeting recessed for fifteen-minutes before the Regular Meeting. 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