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08-12-1997 - Budget Workshop CITY COUNCIL OF EDGEWATER BUDGET WORKSHOP AUGUST 12, 1997 7:00 P.M. COMMUNITY CENTER MINUTES CALL TO ORDER Vice Mayor Martin called the Budget Workshop to order at 7 : 00 p.m. in the Community Center. ROLL CALL Mayor Jack Hayman Excused Councilman Danny Hatfield Present Vice Mayor Louise Martin Present Councilman Michael Hays Present Councilman David Mitchum Present City Attorney Krista Storey Present City Manager George McMahon Present City Clerk Susan Wadsworth Present Police Chief Lawrence Schumaker Present MEETING PURPOSE The purpose of the meeting was to continue discussion of the FY1997/1998 budget. Overview of City Enterprise Funds budget - Utilities Director and Public Works Director Utilities Director Terry Wadsworth presented an overview of the Utilities Department budget by identifying there was no need for any increase in rates and impact fees . There was no increase in Personnel . He was asking to trade a full time person whose position was open and take a part time person he hired last year and make them full time. Mr. Wadsworth then explained the slight increase in expenditures and revenues . Mr. Wadsworth further identified they wanted to get a little more aggressive with some of the activities they weren' t able to do because of the CIP and RIP. He spoke of fire protection they wanted to do, lines that needed upsizing and replacing, and extensions of the reuse service to the medians for beautification projects . 1 Council Budget Workshop August 12, 1997 City Manager McMahon asked Mr. Wadsworth to highlight the major priorities that happened this last year. Mr. Wadsworth commented on the fire hydrant program as it related to fire protection. He also spoke about the meter replacement program. Mr. Wadsworth informed Council they had some more work to do on the reclaimed storage and delivery system to finish up the on-going project. He also spoke of using the Mango Lake for storage and withdrawal . St. Johns was going to permit them to withdraw one million gallons a day from the lake for supplemental reuse makeup water. He further identified they still had to go through DEP to put the reclaimed water in the Mango lake . Mr. Wadsworth then commented on rebuilding one lift station this year and two more next year, which they now had the in-house capability of doing. Mr. Wadsworth spoke of having a cross training program for personnel to help with coverage and callouts . He also commented on wanting to do some customer service improvements to be a little more responsive on the public on water complaints and water quality situations. There was then a discussion regarding the fire hydrants being refurbished in-house. Mr. Wadsworth spoke of some of the hydrants that had been taken out of service due to being discontinued. Mr. Wadsworth identified there was $40, 000 budgeted in the Water Department budget with $35, 000 being a carryover from this year. He then spoke of putting off the SCADA system, the Supervisory Control and Data Acquisition Computer System for the Water Plant due to there being more emerging companies that have contacted the City and trying to be more cost competitive. The other $5, 000 was for covering the windows at the Water Plant, which also served as the City' s Emergency Operations Center. Councilman Hays questioned how our impact fees compared with other cities . Mr. Wadsworth identified they were very comparable for ones in this area and especially along the coast. Councilman Hays spoke of providing water lines and infrastructure which affected economic development. He asked if it would be a good idea to start looking at a slight increase in those fees to handle future growth. Mr. Wadsworth explained they would have to justify it by the type of improvements they were doing and that there were some things that were restricted in what they could consider in determining those fees . He also pointed out they couldn' t justify any more increase in impact fees right now. 2 Council Budget Workshop August 12, 1997 City Manager McMahon complimented Mr. Wadsworth for the cross training program which had helped keep costs down. Mr. Wadsworth identified on Page 45 and 46 there was $20, 000 that had been added to Utility Services for Wastewater that had been taken out of Contingency. City Manager McMahon presented Council with an update on the status of the County agreement for the sale of wastewater. If the County decided to work with the City their impact fees would pay for the upsizing of our lines and the lift station that would be responsible for transmitting the sewer. Vice Mayor Martin asked Fire Chief Vola if they had something left over from last night. City Manager McMahon informed Council they had further detail on the Economic Development Board and the report of the VCBDC with regard to the projects they were working on. Fire Chief Vola pointed out last night the Mayor directed staff to come back with a report on the issue of the Safety position and whether or not the funding for that position could be better utilized as a Firefighter/Paramedic with the additional responsibilities of the Safety program. He identified it could be done and pointed out the current position for training officer in the Fire Department had been vacant for several years, which they had a desperate need for as well as for a Paramedic to fill in during vacation and sick time. By combining the Operations and Training Officer position, a Firefighter/Paramedic Position and the Safety Officer position, it would equate to similar dollars and they would get a multi-role employee. He confirmed it could be done if that was Council' s direction. City Manager McMahon spoke of trading off a full-time position for the combined function under one person and also identified that could be done and was probably a more effective use. He also informed Council the claims investigation could be done internally or contracted. City Manager McMahon informed Council if that was the direction wanted to take he wanted to know before the end of the night in order to give the person ample time to be able to find something and help them with any opportunities they could. It was the consensus of Council to combine the Training Officer Paramedic, Operations Officer and Safety Officer positions into one position which would eliminate the position of Safety Officer. There was then a discussion regarding combining a job they already have now with a job they already have now and making a job for a firefighter. Fire Chief Vola commented on a position they had that was vacant, where they were adding to the duties and responsibilities for this position. This would give them one more full-time position 3 Council Budget Workshop August 12, 1997 for a Firefighter/Paramedic, which would move them in the direction of beginning to prepare staffing for the new Fire Station. Councilman Hays then commented on doing some reorganization to get the work done and provide the service for the least amount of money. City Manager McMahon then provided the detail of what the Economic Development Board was planning for next year. Vice Mayor Martin asked City Manager McMahon if he felt the $3, 000 increase was warranted. City Manager McMahon felt it was reasonable based on the detail the Economic Development Board had provided. Councilman Hays referred to the comment regarding residential growth not paying for itself. He felt if development didn' t pay for itself that maybe they needed to revisit impact fees . City Manager McMahon commented on providing sound infrastructure. Councilman Hays pointed out a big part of the rationale for doing the CIP and the road project was to encourage business and economic development. He spoke of the impact fee issue addressing growth. He questioned the older lift stations that needed to be redone being impact fee eligible. Mr. Wadsworth informed him they were not impact fee eligible but they could use Repair and Maintenance and Renewal and Replacement money for that, which were funds that were restricted in a different way. They could use impact fee money for new lift stations but not for repair or maintenance of existing ones . City Manager McMahon felt it was important to point out that Edgewater was not out of line of any other community around here with regard to impact fees for new development. Councilman Hatfield spoke of Brevard County receiving $37 million in incentives to bring Boeing into Brevard County to build a factory there. He was afraid they were going to run businesses away if they didn' t control their impact fees in bringing businesses in. Instead of increasing the impact fees to pay for the growth themselves the businesses are bringing a big tax benefit, jobs, income and finances into the City. Councilman Hays felt he was receiving conflicting information or was confused with regard to residential growth not paying for itself and questioned why it didn' t pay for itself. He felt they had done a lot in Edgewater to encourage economic growth. Councilman Hatfield felt they should be a business friendly community. Councilman Hays felt they had demonstrated their friendliness in being able to step out as a residential bedroom community and building an infrastructure that would support business . Mr. Munoz spoke of impact fees pertaining to a specific infrastructure or service provided by the City. He further identified they didn' t have restrictions on 4 Council Budget Workshop August 12, 1997 commercial property values as they had a 3% cap on residential or CPI, whichever was lower. Vice Mayor Martin commented on the referendum that was placed on the ballot in November 1992 that did away with ad valorem tax for new business and new construction, which she felt should have been a help. She spoke of having to do the capital improvement projects in order to bring business in. City Manager McMahon commented on the tax abatement program that was passed by the Council at that time. He further commented on the amount of service the City provided to the businesses compared to the residences . City Manager McMahon spoke of working with the VCBDC who was able to put in additional money so they could assist people like Scott Porta and Oscar Zeller. Councilman Hays felt that both sides benefitted. Councilman Hays asked about the Public Works Department budget on Page 35, Other Contractual Services with regard to the $35, 000 budgeted for micro-paving. He asked that the dollars that weren' t spent in the existing budget be carried over as a Contingency to make sure they had enough money for maintenance or replacement of some of the City' s equipment. Stormwater City Manager McMahon informed Council that 50% of the revenues in the Stormwater Utility budget were committed to debt service for the City and could not be used for operational expenses . City Engineer Kyle Fegley went through the items that had a glaring increase in either percentage or monetary figures such as Regular Salaries, Vehicle Repairs, and Road Materials and Supplies . He then commented on the large decrease to Machinery & Equipment. City Manager McMahon pointed out the overall budget had a decrease of 8 .27% . There was then a discussion regarding the increase in the Depreciation as a result of the improvements they had been constructing which had become assets and depreciable over the life expectancy of 30 or 35 years . Refuse and Sanitation Public Works Director Hugh Williams identified there was no proposed increase in the monthly pickup fee or recycling fee. The expense of recycling to the City would go up and they would know that shortly. He believed there would be enough funds available to cover the recycling cost for this year. They were proposing two pieces of equipment for next year, an additional clam truck and an additional 5 Council Budget Workshop August 12, 1997 rear compactor. He further identified that Personnel was staying the same. City Manager McMahon called Council' s attention to Professional Services, which was a mandate of the State that the City had no control over with regard to the old landfill and establishing a monitoring system and producing the necessary reports, even though the landfill had been closed for ten to fifteen years . Mr. Fegley further provided an update at the request of City Manager McMahon of what information needed to be provided to the State as it related to ground water being monitored and well construction. There was further discussion regarding $20, 000 being budgeted which was a one-time construction cost and the monitoring fee being between $500 and $1, 000 a year, as this was an unfunded mandate . Mr. Williams informed Council they received the license renewal on the incinerator this year which was good for five years but personally he wanted to get out of the incinerator business . City Manager McMahon commented on the Self Insurance Fund and identified the need to discuss the possibility of dropping the retention from 100 to 5, 000 for public officials' liability. City Attorney Storey pointed out last year they dropped their retention on general liability. Mr. Munoz informed Council data was being put together of all the City' s liabilities, which they expected to be in the $110, 000 range per year. Mr. Munoz referred to Page 57 . Councilman Hays asked if they were talking about line item 53450, which they were . Councilman Mitchum questioned what the Self Insurance Fund balance was . City Manager McMahon believed it was around $621, 000 . Mr. Munoz identified what that amount included. Councilman Mitchum spoke of having a Self Insurance Fund that started out at a million dollars and it didn' t seem they were putting the money back into the fund. He felt the balance seemed to be creeping steadily down, which he didn' t want to see continue . City Manager McMahon pointed out the fund did not generate any income except for the interest earned. City Manager McMahon pointed out some of the money had been used for insurance . Councilman Mitchum felt the departments needed to be billed for their share of that. City Manager McMahon recommended at the close out of the fiscal year with the remaining amount of money they have to take a portion of that and put it back into the Self Insurance Fund. Councilman Mitchum pointed out they talk about doing that every year and that the Fund had been 6 Council Budget Workshop August 12, 1997 depleted by $379, 000 . Mr. Munoz informed him this year they were going to be using $110, 000 to pay for insurance coverage . Councilman Mitchum confirmed at the end of this year the fund balance would be $511, 000 . He felt that wasn' t a Self Insurance Fund and instead was a Premium Fund. Mr. Munoz explained they weren' t maintaining the high retentions because the premium costs had gone down and the option was to pay the premiums . He spoke of the Self Insurance Fund originally being set up so that every fund put a pro rata share of money into it to build it up. City Manager McMahon informed Councilman Mitchum the claims paid out of that fund this year, other than the insurance, were under $10, 000 . Councilman Mitchum explained the Self Insurance Fund was set up as a "self insurance fund" and was not set up to pay premiums out of. He was not satisfied with that. This wasn' t a Self Insurance Fund, it was a depleting premium fund which he had a big problem with and felt they needed to do something with it. Councilman Hays questioned how much interest was earned on this last year. Mr. Munoz informed him $43, 659. There was then a discussion regarding how much had been paid out in direct claims . Councilman Mitchum felt the money paid out in claims should have come out of the interest earned and the rest of the interest earned should go towards premium or administrative and then each department should be billed for their proportion of the $110, 000 . The balance of the fund should never fluctuate other than to loan another department money and earn interest off of that money back. He felt the Council either needed to abolish the Self Insurance Fund or put the Self Insurance Fund back to where it was and make it a Self Insurance Fund and not a premium paying fund. City Manager McMahon informed Council they could designate what they wished. He recommended they designate a portion they want to go back in there and in the future they could expense it to each department. Councilman Mitchum explained it only took about four years to put the million dollars in the Self Insurance Fund, which wasn' t touched until 1991 and had been depleting since then. He further commented on premiums being paid out of that, which wasn' t the intent. City Manager McMahon identified if they didn' t wish to pay premiums out of it they could expense them in the General Fund. There was then a discussion regarding the Self Insurance Fund saving the City a lot of money in premiums . Councilman Mitchum mentioned at one point they were paying upwards of $300, 000 . Mr. Munoz informed 7 Council Budget Workshop August 12, 1997 him that was what brought about the Self Insurance Fund. Councilman Mitchum explained that was why it only took three or four years to put a million dollars into it. City Manager McMahon recommended the Council make a policy decision if they wanted to expense the premiums in the General Fund. Councilman Mitchum felt having the Self Insurance Fund wasn' t saving them money any more like it did ten years ago. City Manager McMahon informed him it covered them for retention and for claims . City Attorney Storey spoke to the issue of it becoming more cost effective to lower the retention. City Manager McMahon identified the whole issue of insurance, retention and first dollar coverage needed to be looked at as a part of the policy. He suggested the fund be moved into the unappropriated fund reserve and that they do away with the Self Insurance Fund or take the amount of money from the unappropriated fund reserve and put it into this and say no other insurance payments would be made out of this fund and would be billed back to the department. He further identified a lot of things had changed in ten years . Vice Mayor Martin asked if the $300, 000 was a loan through a department. City Manager McMahon informed her when they built the evidence building, they borrowed from the Self Insurance Fund with the understanding it would be paid back in five years . He felt it was important for the Council to feel comfortable with whatever they decided to do. Councilman Mitchum spoke of having money in the fund balance and the aspect of having a major catastrophe come through. Councilman Mitchum asked City Manager McMahon to take a serious look at this and bring back some recommendations at their first meeting in September, which he agreed to do. He informed Council he wanted to have a policy decision from them at that time. City Manager McMahon asked Council if they wanted staff to look at lowering the retention from 100 to 5, 000 . City Attorney Storey explained the public officials' liability policy covered them for employment related issues such as sexual harassment, which could easily run up quickly, which was the rationale behind dropping the retention. Councilman Mitchum commented on the good job being done by the Insurance Committee in handling the claims . City Manager McMahon informed Council along the way the City had saved money through the Self Insurance Committee for small claims . 8 Council Budget Workshop August 12, 1997 Councilman Mitchum felt it seemed like their premiums were down from what they were. Mr. Munoz identified they had cycled and were up and down. Councilman Mitchum then expressed concern with being hit with a million dollar judgment and questioned to what point the City was covered and to what point did they have to dig it out of the City' s balance. Mr. Munoz identified the City had some sovereign immunity. Mr. Munoz then listed the City' s liability insurance and retention amounts . Councilman Mitchum felt they were very fairly decent coverages . City Manager McMahon informed him the City periodically had all of its insurances reviewed and they bring back recommendations to Council . All of their assets were currently being updated. He didn' t feel they were over insured but did feel they were well insured. Mr. Munoz pointed out if they raised the retentions up to a higher level the premiums would drop dramatically but the risk would increase. Councilman Mitchum spoke of one of the things they did in previous years was subsidize the budget with the unappropriated fund balance until they got to an all time low. One of the things City Manager McMahon did was made a major commitment to build that unappropriated fund balance back up and they had done just that. Councilman Mitchum commented on subsidizing each department' s budget with the Self Insurance Fund by paying their premiums for them. Councilman Mitchum expressed his appreciation to staff for the hard work that was put into the budget. ADJOURNMENT There being no further business to discuss, Councilman Hatfield moved to adjourn. The meeting adjourned around 8 : 15 p.m. Minutes submitted by: Lisa Bloomer, CMC 9 Council Budget Workshop August 12, 1997