07-28-2008 - Workshop
CITY COUNCIL OF EDGEWATER
WORKSHOP
JULY 28, 2008
6:00 P.M.
COMMUNITY CENTER
MINUTES
1. CALL TO ORDER
Mayor Thomas called the Workshop to order at 6:00 p.m. in the
Community Center.
ROLL CALL
Mayor Michael Thomas
Councilwoman Debra Rogers
Councilwoman Gigi Bennington
Councilwoman Harriet Rhodes
Councilman Ted Cooper
Acting City Manager Tracey Barlow
City Clerk Bonnie Wenzel
City Attorney Carolyn Ansay
Present
Absent
Absent
Present
Present
Present
Present
Present
PLEDGE OF ALLEGIANCE, INVOCATION
Mayor Thomas saved the silent invocation and pledge of allegiance to
the Flag for the Regular Meeting.
2. RESULTS OF THE COST ALLOCATION STUDY AS PREPARED BY GOVERNMENT
CONSULTING SERVICES COMPANY
City Manager Barlow turned the meeting over for introduction to
Finance Director John McKinney for the presentation regarding the Cost
Allocation Plan Study Phase 1.
Finance Director McKinney commented on being at the meeting to discuss
the first phase which was the cost allocation. He introduced Rick
Adkinson, with GCSC, who was doing the cost allocation for the City.
Finance Director McKinney informed Council the first thing they wanted
to remember tonight was they had two types of people that pay fees in
the City, the taxpayer which is a tax and the rate payer on their
Enterprise Funds. This allocation study was to determine what was the
fair share of what their rate payers should pay the General Fund for
services the City provides. In the past arbitrarily money was moved
from the Enterprise Fund to the General Fund with no real rhyme or
reason. This gives a reason and a scientific format that was easy to
understand based on the budget. He then asked Rick Adkinson to come
up and explain what they had done for the City.
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Council Workshop
July 28, 2008
Rick Adkinson, Government Consulting Services Company, presented
Council with a handout and went through the attached Powerpoint
Presentation regarding the Cost Allocation Plan and Rate Study for
Phase 1. He first described what a Cost Allocation Plan was and why
they felt Edgewater should have a Cost Allocation Plan. He then went
on to describe GCSC's Approach and Methodology and the Allocation
Process and Assumptions.
Mr. Adkinson then went over their Recommendations based on the Cost
Allocation Plan which summarizes the allocation alternatives and leads
them to the need to consider some policy decisions. He then commented
on Implementation of the Policy Decisions.
Councilman Cooper questioned if Mr. Adkinson was saying with grants
that they acquire that they shouldn't allocate that across the City in
different areas that all had involvement in the grant. Mr. Adkinson
stated he was saying they shouldn't allocate the costs associated with
providing these support services to those. They could do it. They
were very small numbers. For all of the grant funds and impact fee
funds he thought the total allocation would be about $10,000 so it
wasn't a material consideration.
Mr. Adkinson finished his Powerpoint Presentation by briefly going
over the Policy Decisions - Other Revenue Opportunities.
Councilman Cooper stated he noticed that as he went through the book
that John provided for them and Mr. Adkinson just touched on it again,
he took the taxes and things of that nature where he said at this time
he didn't recommend doing that but he was also saying they should take
a look at that. If he understood the practice they are to be cost
allocating funds which helps them with cash for situations where they
are in now from the statements and so on and so forth and they had a
system in place to go ahead and do that. He asked why it wouldn't
behoove them to go ahead and implement everything at this time if they
are going to do it. Mr. Adkinson informed him it certainly would be
in the City's best financial long term interest to do that. His
comment was basically that that wasn't part of the study they did to
look at that. He wasn't prepared to say what the impact of doing that
would be.
Mayor Thomas asked staff if that was feasible.
Finance Director McKinney stated Mr. Adkinson would be better able to
answer this question based on where he comes from. He retired from
the City of Tallahassee, which is predominantly State governmental
agencies. Because of that they don't pay taxes. He spoke of their
water rates being extremely high in order to pay for the general
government of Tallahassee. He referred to Page 43 of the CAFR. If
they look at our biggest taxpayers within Edgewater, AT&T & FPL are
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Council Workshop
July 28, 2008
the biggest. If they were an AT&T or FPL right now the City's
Enterprise Funds are sitting on roughly $80 million in assets. That
is what they paid for it but doesn't necessarily mean the Property
Appraiser would value it at. Let's just assume what was in their
books was what the assessed value would be. They could take the $80
million and come up with a tax rate. They could do that but he felt
in fairness on the cost allocation portion he believed if they were
looking at Finance's budget, over $300,000 is IT, two people plus
three people that do nothing but work for the Enterprise Funds, which
was $181,000. With three of his staff members, 95% of their time is
working for Environmental Services. They don't provide one dime to
that cost. He believed this was a start but with where they are at
and where they were going to come with the millage rate, he felt if
they just went with this they would be okay for the time being. He
then commented on potential franchise fees with the commercial
dumpsters. If they do cost allocation, they do payment in lieu of
taxes, they do the whole gamut, he told Council to remember the rate
payers would pay an increased rate.
There was a brief discussion regarding seeing a lot more revenue if
they were a private enterprise than they are currently. He then spoke
of not being in the business to make money in the governmental funds
either. They are supposed to break even. Where they are currently is
their break even.
Councilman Cooper asked if what was laid out for them here actually
generated enough capital exchange that Finance Director McKinney felt
they wouldn't be into that "robbing Peter to pay Paul". He asked if
they would be okay or if this was something they would still be forced
to look at every year. Finance Director McKinney informed him if they
went with the Cost Allocation Study, which they would discuss at the
Regular Meeting, with tentative millage, this is what they need.
Councilwoman Rhodes stated this eliminates that and asked if they
would have the opportunity to go over and above the Cost Allocation.
Acting City Manager Barlow informed her he wouldn't lock in that they
wouldn't have the opportunity. This would discourage the Council from
doing that. Councilwoman Rhodes commented on the auditors being
discouraged because they have been doing this for years. He stated
Finance Director McKinney commented on this being a good business plan
as he compared it in direct comparison to a private enterprise. They
still own this business that provides this product and this service so
they still have opportunity for cost containment through operational
costs through establishing the budget which indirectly had an
influence on the rates themselves verses if this was a private
enterprise such as Florida Power & Light where they have very little
to no influence on their rates. He described this Cost Allocation
Study as being the best of both worlds and that this aspect of their
business is appropriately compensating the General Fund for the
services and they still have rate control containment.
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Council Workshop
July 28, 2008
Councilwoman Rhodes didn't know how they were going to do this and
questioned if they were going to do a resolution. City Manager Barlow
informed him Council would give them direction that they wanted them
to utilize this method going into the budget preparation process.
Councilwoman Rhodes stated they couldn't go outside of that without
coming back to Council. Finance Director McKinney informed her what
they were coming before Council for was the methodology. If Council
agrees with the methodology, this is based on this year's budget. If
there were any dynamic changes to how the budget is, every year this
is going to be updated with the current information and it would go up
and it would go down. Councilwoman Rhodes stated but the methodology
gives them a percentage. Finance Director McKinney stated that was
correct. Councilwoman Rhodes stated from the way she read it the
percentage is good for probably five years. Her point was they were
going to use that methodology for the next five years and whatever
that number is that number is. If that number is $800,000 and they
need $1 million they can't without coming back to Council take the
millage. As long as they keep within the methodology that was fine
but they couldn't arbitrarily say the General Fund needed $500,000
more than this was generating. Finance Director McKinney informed her
that was correct.
Councilman Cooper asked Finance Director McKinney if he felt
comfortable that he was covering his basis. Finance Director McKinney
informed him yes.
Mayor Thomas asked if there was enough flexibility in this plan to
cover Plan B such as a natural catastrophe such as a hurricane or
wildfires. Acting City Manager Barlow stated it would come back to
Council and spoke of this being where the City's reserves come into
play.
Mayor Thomas felt this was an excellent goal but that they needed to
leave some flexibility in case something does happen. Finance
Director McKinney informed him from a budgetary standpoint, they start
the year every year with the expectation that he just finish the year
with a minimum of 15% reserve, which was what Council dictated by
Charter. They are already doing that in the General Fund.
Finance Director McKinney stated they had 45 to 60 days of operating
reserves but that was separate from this. Councilwoman Rhodes didn't
think the two should intermingle. Once they go to the General Fund
from the Enterprise Fund then the rates have to go up to compensate
for that. One way or another somewhere in the City if there is a
natural disaster and they have to have funds for it it is coming from
one place or the other. She would like to keep them kept separate.
Acting City Manager Barlow commented on there being opportunities with
Council's approval. He reminded Council this was a workshop and they
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Council Workshop
July 28, 2008
couldn't take formal action but by consensus of direction if Council
likes this they could incorporate this in their budget preparation
process as a revenue and be able to show them how they got that
revenue.
Finance Director McKinney stated it would show up directly as a
general admin charge by fund within the General Fund and the
Enterprise Funds it would show up as an expense and be labeled General
Admin charge.
Councilwoman Rhodes felt they absolutely had to do it. Mayor Thomas
again sated it was an excellent goal.
Councilman Cooper commented on having an emergency fund but questioned
if they were to consider pigeon holing some money to support that how
other cities had done. Mr. Adkinson informed him every city doesn't
do it the same way. He spoke of some cities being self-insured for
their property insurance. Other cities rely more heavily on the
insurance markets to rebuild. It's a combination of things.
Typically it is a very sound practice to build healthy reserves.
Councilman Cooper referred to Ms. Dewees' department where her costs
are lower than her revenue and they implement something of this
nature, they hurt her again and force those rates to go at a much
higher rate. That would be one reason he wouldn't impose the tax on
stuff like that because her department would get clipped the worst.
Councilman Cooper then commented on self-insurance and asked if it was
advantageous. If they started making this Fund could they get a point
where they might be able to afford self-insurance? Councilwoman
Rhodes stated they used to be. Finance Director McKinney informed him
he had already spoken with our insurers about that. They aren't big
enough and when they consider their premiums for next year had a
decrease of $138,000, they would have to fund three and four times
that to build up their reserves up front and he didn't think they were
in a position to set aside a million plus over the next few years to
build up their property liability, etc. For $138,000 annually they
are getting the best bang for their buck. He commented on also
inquiring about workers compensation. We just aren't big enough and
they aren't in a financial position to do that.
Councilman Cooper felt if they started pigeon holing money in three or
four years they may be in a position that it may be advantageous.
Mr. Adkinson commented on there being a number of different aspects to
the City's insurance program such as liability, property and worker's
compensation and it doesn't necessarily have to be attacked as one
problem so they could do it piece meal. The City of Tallahassee is
obviously much larger and it is probably easier for a larger
governmental entity like that to attack this kind of problem.
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Council Workshop
July 28, 2008
Finance Director McKinney commented on being self-insured in
Titusville.
Acting City Manager Barlow stated essentially what he was hearing was
Council was comfortable with this and staff would continue on and
affect this in their budget preparation. The City Council agreed.
3. CITIZEN COMMENTS
The following citizen spoke:
Ben Fanselow, 321 Schooner Avenue, thinks this is a very good plan but
he was a little discouraged about having a constant rate of inflation.
He stated his problem with talking numbers right now is what would the
rate of inflation be if it continues at the end of the year and what
would it do to those numbers. He thought the fund should be 20%
because they have a problem. He wanted to know how much the State and
the government in general would supply funds for disasters. He is a
first responder and has been in a lot of towns smaller than Edgewater
who have no insurance. He thinks someone on the Council should have a
list of first responders and how they would respond when there is a
disaster. It is important that they have that.
Mr. Fanselow then spoke of 9 counties having 15 trailers. They are
United Methodist and all the people are trained as first responders.
First responders have to be called into the area. When the tornado
hit Tomoka, the next day they were cutting trees and repairing roofs
and they had the equipment to do it. The problem he sees is it
depends on which towns they go in. He has been in towns where they go
into every house door to door and have a screen and see what the
problem is. The same thing with government buildings, churches,
hospitals, etc. That plan saves money and helps the City. What the
city needs is somebody to marshal all the responders so that if there
is a disaster within the City they could bring these forces to help
and they would reduce the cost of improving it because they bring
their own stuff to fix it up. He thinks inflation at the rate it is
going that the numbers weren't reflected in the budget because nobody
knows which way things are going. He then commented on the cost of
oil and oil trading.
Acting City Manager Barlow stated as Mr. Fanselow referenced the
inflation as they talked about these percentages are the fixed numbers
for the five years. This is a percentage of staff time or operations
of the General Fund budget that support the Enterprise Fund budget.
When he they talked about inflation it would be recognized and
influenced in the budget numbers. He spoke of that being factored in
as far as this would accommodate the inflation for five years.
6
Council Workshop
July 28, 2008
Acting City Manager Barlow then commented on Mr. Fanselow's reference
to citizen emergency response teams with a disaster. The City of
Edgewater has a very comprehensive emergency management plan that
addresses that and all of that is folded into Volusia County's
Emergency Operation Plan as well and all of that is coordinated out of
the Volusia County Emergency Operation Center post disasters and the
City of Edgewater had liaisons dedicated out there to help coordinate
and organize response county-wide of these volunteer organizations.
They have a very systematic approach and utilize those volunteers.
4. ADJOURNMENT
There being no further business to discuss, Mayor
workshop until their Regular Meeting at 7:00 p.m.
adjourned at 6:38 p.m.
Thomas adjourned the
The workshop
Minutes submitted by:
Lisa Bloomer
7
Council Workshop
July 28, 2008
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