07-15-2013 - Budget Workshop CITY COUNCIL OF EDGEWATER
BUDGET WORKSHOP
JULY 15, 2013
5:00 P.M.
COUNCIL CHAMBERS
MINUTES
1. CALL TO ORDER, ROLL CALL
Mayor Thomas called the Budget Workshop to order at 5 : 00 p.m. in the
Council Chambers .
Present Mayor Michael Thomas
Councilwoman Christine Power
Councilwoman Gigi Bennington
Councilman Gene Emter
City Manager Tracey Barlow
City Clerk Bonnie Wenzel
City Attorney Aaron Wolfe
Excused Councilman Mike Ignasiak
2. DISCUSSION OF FY 2013/2014 BUDGET
City Manager Barlow described this year as being the most challenging
budget they have had to balance in his tenure .
Mr. McKinney then compared the "2004" and "2014 Property Tax on a
Residential Home in Edgewater" .
Finance Director John McKinney went through the attached Powerpoint
Presentation. He described the City' s revenues as being at the 2004
levels .
Mr. McKinney started the presentation by commented on the "Median
Sales Prices - Single Family Residences 1998-2012", "Tax Roll Net
Increase in Real Property Just Value - Excluding New Construction",
"2004" and "2014 Preliminary Tax Roll Taxable Value by Property
Class", "Tax Analysis", and "General Fund Revenues" .
Mayor Thomas asked Mr. McKinney to give him an example of what Sales &
Use was, which he did at this time.
Mr. McKinney continued his presentation by commenting on "PILOT
(Payment In Lieu of Taxes) " .
Mayor Thomas asked Mr. McKinney if he was suggesting they should sell
the City' s utilities . Mr. McKinney informed him absolutely not. City
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Budget Workshop
July 15, 2013
Manager Barlow clarified by explaining hypothetically if the City
didn' t own those utilities, the amounts identified were what a private
company would pay. In his opinion, the PILOT would still require
those subsidiary businesses that the City manages, such as water and
wastewater and they pay a portion of those taxes which gives them
another reason not to sell the utilities but they would still be able
to charge them a little bit of what a private industry would pay for
taxes. He felt this was a win-win for the sustainability of the City
owning those and eliminating another reason not to sell those
utilities .
Mayor Thomas mentioned the garbage. City Manager Barlow informed him
those were PILOFF, Payment in Lieu of Franchise Fees .
Mr. McKinney explained for Councilwoman Bennington how he came up with
the amount of 5% with regard to PILOT for utilities .
Councilwoman Bennington pointed out the primary reason the City had
its own utilities was because it is better, they get better service
and they have control of it; not because it' s cheaper. City Manager
Barlow further mentioned the Council controlling the rates .
Mr. McKinney confirmed for Councilwoman Bennington that the $381, 703
for Water & Sewer and the $63, 581 for Stormwater were figured into the
ad valorem taxes that were being presented to them tonight as part of
the revenue . Councilwoman Bennington stated hypothetically if they
wanted to raise the 5% a little higher to keep the average taxpayer
from paying more ad valorem tax they could. Mr. McKinney informed her
they could. City Manager Barlow informed her whatever they did with
the PILOT/PILOFF would affect future rates as well . Councilwoman
Bennington felt ad valorem taxes were unfair taxes and that user fees
were the fairest tax. She felt the ad valorem taxes should come down
and if the users rates go up they have to be more conservative. City
Manager Barlow felt they may have a little more control based on being
the end user. Mr. McKinney informed Council if they were to take it
to the millage rate, the $491, 215 and the $62, 594 would be the actual
PILOT fee that could legitimately be substantiated to be paid to the
General Fund.
Councilwoman Bennington understood in the economic time wanting to
ease things in but sometimes it is easier to just do it and get it
over with.
Councilwoman Power asked if there was room in the Enterprise Fund for
this . Mr. McKinney informed her based on the study that was done two
years ago, they had projected a 6% annual increase in the Water &
Sewer rates . With the final debt restructuring they did last year and
other efficiencies Environmental Services had done and putting off
some of the projects, they were anticipating a 2 1/2% increase for
next year versus a 6% . Even by adding the new PILOT fee, they were
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Budget Workshop
July 15, 2013
still able to reduce the anticipated increase for next year. The rate
study does support this fee at a reduced increase to the rate payers .
There was further discussion regarding the projected rate increase and
the five year escalator and whether the Enterprise Funds were set up
that they could handle the 5% bump. Mr. McKinney spoke of shifting
more to the ratepayers verses the taxpayers . City Manager Barlow
commented on this being part of the balance talking about economic
development going forward.
Councilwoman Bennington spoke of the percentage of ad valorem taxes
compared to all the other types of taxes they have and the fact that
they are a bedroom community and industry was so small and wasn' t
coming in the way they anticipated. She was looking out for the
people that are here.
Mayor Thomas felt that most of the public' s perception of government
is they are crooks so they are going to think they are trying to hide
something. They weren't trying to hide something and were trying to
sustain their budget in a manner where they could provide services to
the public as they were doing now but they were going to be fair about
it. If you use it you pay for it. They are trying to shift the
burden to the users and be fair. City Manager Barlow spoke of this
being a rational methodology that was used by other communities and
Edgewater being unique in the fact that they are a full service
community.
Mayor Thomas spoke of Edgewater being a bedroom community and most
citizens moving to Edgewater because of cheaper living. They were
doing everything they could to shift the burden.
Mr. McKinney confirmed that Council wanted him to revisit the PILOT
fee at utilizing the same millage rate that any other property would
pay and asked if they wanted him to use the operating millage rate
only or also include the voted debt service for the animal shelter.
City Manager Barlow recommended he only do the operating millage rate.
Mr. McKinney informed Council he would be working with the City
Attorney on the necessary language to be included in the budget
resolution that they would be bringing to Council in September. He
agreed to adjust that accordingly.
Councilman Emter mentioned this modification not impacting the water &
stormwater operations much this year with a minor increase . He asked
about going beyond that in terms of capital costs, replacement,
machinery and those kinds of things to break down in a hurry and if
they would have, ongoing, enough reserve to be able to deal with those
kinds of issues down the road with this kind of reduction in their
revenue stream. Mr. McKinney spoke of Burton & Associates building
this into the rate structure and of it being easier to do a smoothing
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Budget Workshop
July 15, 2013
of a rate increase over time. He further commented on it being best
to base the PILOT fees on the prior year audited financials, which in
this case was 2012 .
Mr. McKinney continued his presentation by commenting on the "PILOFF
(Payment in Lieu of Franchise Fees) " with regard to Refuse, which
would be based off of the prior year audited charges for service and
also figured at 5% .
Mr. McKinney then commented on the "Cost Allocation Update", "General
Fund Expenditures", "Employee Benefits" .
Councilwoman Bennington asked how long they would have the eleven
employees left in the General Employee Pension. Mr. McKinney informed
her the last General Pension employee was eligible for retirement in
2018 .
Mr. McKinney spoke of Council authorizing a separate pension valuation
study to look to see if there was a different way they could possibly
go back to the General Employee Pension on future funding methodology
as there were employees in that pension that could potentially be
around 20 or 30 years from the date of retirement and if there was a
different strategy that they could utilize for paying those future
promised benefits .
Mr. McKinney then identified the "Budget Changes" from the June 3rd
workshop until today.
Councilman Emter asked what the net was as a result of the changes
made to the budget. Mr. McKinney informed him with everything that
had been done they went from a variance of $1 . 6 million to $134, 249.
He further spoke of this having to do with the directors going through
their budgets and making reductions .
Councilwoman Power asked Mr. McKinney if the difference between using
last year' s millage and the 5% was about $110, 000 . Mr. McKinney
informed her it was $108, 526 was the total difference going to the
stated millage rate. Councilwoman Power confirmed if they put that
against the $134, 000 that takes that down. Mr. McKinney informed her
it did. City Manager Barlow asked what millage rate that was based
on. Mr. McKinney informed him 6. 876. Mayor Thomas asked what the
millage rate was last year. Mr. McKinney informed him 6. 5.
Mr. McKinney then went over the "Budget Considerations" and
"Staffing" . Mr. McKinney informed Council elimination of any one of
the positions would result in a service level reduction.
Councilwoman Bennington asked if they were positions that were coming
up that were still figured in the budget. City Manager Barlow
informed her they were currently funded in the budget with the
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Budget Workshop
July 15, 2013
exception of the Leisure Service Workers . The other three bulleted
areas were presently open positions that he hadn' t authorized to fill
until they can balance the budget going in. Every one of those
positions was much needed. Over time they have brought the staffing
level down to a critical level and any other reduction would affect
level of service. He could not recommend not filling any of those
positions .
The Budget Considerations and Staffing were both figured in the budget
that was being presented to Council. Every position was currently
funded in the budget.
Mr. McKinney identified that at the current time none of the listed
"Capital Outlay" items were funded. City Manager Barlow reminded
Council on their agenda tonight they would be establishing a maximum
millage rate. They can always reduce the millage rate . He urged
Council not to get overburdened with trying to balance the budget
tonight as he still had additional labor negotiations and they would
not be able to. They were going to plan another Budget Workshop on
August 5th at 2 p.m. so they could get more in detail with the budget.
Mr. McKinney continued his presentation by commenting on the
"Construction Projects" . There was further discussion regarding the
Rotary Park Trailhead.
Mr. McKinney informed Council they currently had $500, 000 earmarked
for City Hall . In the upcoming budget he had placed an additional
$100, 000 . He asked Council if that was something they wanted him to
still fund going into next year' s budget. Councilwoman Bennington was
the spearhead on getting that done to begin with but this year she
wanted to see how it all came out in the wash when they get through
with the budget before they decide to take that out or not . City
Manager Barlow informed her that would be his recommendation as well .
Councilwoman Bennington felt if something had to go that would be the
first thing she would get rid of this year. Councilwoman Power felt
even if it was a question of half of it in order to keep a police
officer. City Manager Barlow informed Council they had been
approached on some properties that had been target properties they
were interested in selling so by having that it could be reapplied
towards purchase of that property and sold later back to the City Hall
fund. He cautioned them not to cut themselves too short in future
planning.
Mr. McKinney continued his presentation by commenting on the "General
Fund Debt" . They were at $11 million just over five years ago in the
General Fund and were at less than $1 .7 million now.
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Budget Workshop
July 15, 2013
Mayor Thomas asked what the total debt was . Mr. McKinney informed him
he would have that for them at the next meeting but that it exceeded
$35 million.
Mr. McKinney then commented on "Street Resurfacing" .
Councilwoman Bennington felt they needed to keep up with the streets
before they get behind. She also pointed out that most of streets
proposed were in Edgewater Acres, which City Manager Barlow identified
as one of the original residential subdivisions in Edgewater. He
spoke of a study that was put together by Ms . Dewees that determined
they should be budgeting at least $500, 000 a year just to keep up and
they haven' t funded that amount yet for several years .
There was a brief discussion regarding the cost to repave Flagler
Avenue being $195, 000 . City Manager Barlow felt if they couldn't do
Flagler this year that they should make it a top priority for next
year.
Mr. McKinney continued his presentation by commenting on the "Use of
Fund Balance" and "Fund Reserves" .
It was the consensus of Council to keep the Charter reserve at the
current $2 million for the unknowns that may not surface until mid-
year or later.
Mr. McKinney continued his presentation by comparing the "2004" and
"2014 Property Tax on a Residential Home in Edgewater" .
Mr. McKinney then commented on the "Rolled Back Rate vs . Final
Millage" .
Mayor Thomas asked if there was a State penalty. Mr. McKinney
informed him based on State Statutes, they cannot exceed 6. 876 mills
with a majority vote . There was no penalty but it would take a
unanimous vote of all members of Council to exceed that number.
Councilwoman Bennington confirmed the budget was being presented at
6. 876 mills and that they needed a majority vote for this one. Mr.
McKinney informed her that was correct.
Mayor Thomas asked Mr. McKinney how he came up with the 6. 876 mills
figure, which Mr. McKinney and City Manager Barlow explained for him.
Councilwoman Power asked if they come up with the high tonight if it
could be above the 6. 876 mills . Mr. McKinney informed her absolutely.
City Manager Barlow said no and explained they come up with the high
tonight they can' t go above that number without notice but they can go
back. Councilwoman Power asked if the highest could be set at seven.
Mayor Thomas informed her they couldn't do that because they didn' t
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Budget Workshop
July 15, 2013
have five people. Mr. McKinney informed him they only needed the
unanimous vote at the public hearing on September 23rd. City Manager
Barlow understood the Mayor' s question and identified that that rule
was only in effect for the final adoption of the millage .
City Manager Barlow identified that starting in 2008 through 2011 was
the hardest hit of the recession. They have gotten through the
hardest part of the recession. To maintain the level of services and
continue to maintain the community they would have to go above roll
back.
Councilman Emter spoke of the curve having a high peak on it and by
doing what staff did they smoothed the peak out. He felt in the long
run that was good for the community rather than having violent jumps
either up or down. To try and keep it level was totally appropriate .
Councilman Emter asked what the difference was in revenue between 6. 87
and 7 . 0 . Mr. McKinney informed him approximately $72, 600 .
Mr. McKinney informed Council in tonight ' s regular meeting they would
be setting the millage . They had tentatively scheduled an August 5th
workshop at 2 p.m. as well as August 19th at 5 p.m. The first public
hearing would be September 9th at 6 p.m. and the second required
public hearing would be September 23rd at 6 p.m.
Mayor Thomas wanted a list of three things they can do in Edgewater.
He then commented on the things you can do in Edgewater and the
services the City provides that the City doesn' t charge for.
3. ADJOURNMENT
There being no further business to discuss, the Budget Workshop was
adjourned at 6: 06 p.m.
Minutes submitted by:
Lisa Bloomer, CMC
7
Budget Workshop
July 15, 2013
L"/ ._
City of
1LEID Inc.1951 ATER
Edgewater
Budget Workshop
July 15, 2013
"The New Reality
for
Edgewater
Rewind to 2004 at
2013 Expenses"
1
Volusia County Property Appraiser
Morgan B.Gilreath.Jr.,MA..A.S.A..C.F.A.
Median Sales Prices-Single Family Residences(SFR)
1998-2012
250,000 .-1
1 2001-2006 144i Increase 2006-2012 42'a Decline 1
i 217,000 4% 1
1 17% 1
1 199,9%) 1
200,000- 1
183,000
a) 1 29% 172,000 i
i
ci 1
T. 1 19% -17% :
a 1 14M01 MOOD -44% 1
o
150000- r
si 1 19%
15 V 110,000 ,." vo,,,, 90).
C 8% 101,000
• 100 111
.- - ALIN
lc , I.
000 i f Market rose Qr.per yr. .—
O 75,500 78,500 82A° 2000•2912,mndian SP in
2 2012 would be 0131,285.
__50,0N- 1 1
0 , , ■ ■ , , ■ , , ■ ■
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
City of Edgewater
Tax Roll "Net Increase in Real Property Just Value"
"Excluding New Construction"
40.00 •'
34.01
3000
22.41
2000
14.14 14.99
00
tr9.78
10. 11.--1_ —
3.93
1.70 N.
—OP— III
2004 2005 2006 2007 20011 '' '
(10 2013 2014
.00)
(14.94)
(20.00)
(16.23) (16.69)
(17.92)-
(30.00) ------
•%of Net Change in Taxable Property Value
2
2004 Preliminary Tax Roll
Taxable Value By Property Class
Tangible
Personal
Property
6.0% -
Vacant
Commercial
7.0%
Industrial
4.0%
Residential
75.0%
2014 Preliminary Tax Roll
Taxable Value By Property Class
Tangible Personal Property
Agricultural Vacant 6.5%
65%
0.2%
Centrally Assessed
0.4%
Commercial
11.5%
Industrial
6.2%
Institutional
0.4%
Residential
68.3%
3
I, Tax Levy
Total Budget
Tax Analysis ■Fund Balance
Cost Allocation
16,000,000 - a PILOT/PILOFF
14.356,423 14.107,382
1 3,934,557
14,136.921
14,000,000
11,952,770 11,956,023 12.544.666 13,194,640
12,207,802 12,197,558
12,000,000
#�
t
10,935,692
' l
10,000,000 t -
(t j E 1 ( ; €1 ;
S ` i. - ]:::::: 1- -I r 1 I
14 tit
.----
2014- 2013- 2012- 2011- 2010- 2009- 2008- 2007- 2006- 2005- 2004-
6.876 6.50 6.47 6.59 6.36 5.90 5.20 5.70 6.45 6.45 6.95
I
General Fund Revenues
PILOT/PILOFF
Licenses&Permits Cost Allo
Miscous Taxes
n
Sales and Use
4
PILOT (Payment In Lieu of Taxes)
Component's Calculated Share of Ad Valorem Tao:
Capital Assets a 9-30-12(per CAFR)
Land 966,228 269,239 1,235,467
Buildings&Improvements 65,802,935 8,303,352 74,106,287
Machinery&Equipment 8,097,586 967,538 9,065,124
Total Capital Assets 74,866,749 9,540,129 84,406,878
100.00% 100.00%
74,866,749 9,540,129 84,406,878
+1,000 +1,000
74,867 9,540 84,407
FY2012 Millage 25.0268 25.0268
Componet's Total Calculated Share of Ad Valorem Tax 1,873,675 238,759 2,112,434
FY 2012 Millage 6.5612 6.5612
City Portion of Ad Valorem Tax 491 215.71 62 594.69 '.553 810.41
Water&
Sewer Stormwater Total
FY 2012 CAFR Charges for Services 7,634,056 1,271,620 8,905,676
Percent 5.00% 5.00%
Total PILOT $381,703 $63.581 $445.284
PILOFF (Payment In Lieu of
Franchise Fees)
Refuse
FY 2012 CAFR Charges for Services $2,638,024
Percent 5.00%
Total PILOFF $131,901
5
Cost Allocation Update
FY2014 FY2013 FY2012 FY2011 FY2010 FY2009
Proposed
- - 30,151 12,495 12,250 12,278
648,044.00 581,937.00 559,555 460,837 451,800 451,855
243,302.00 190,166.00 182,852 154,667 152,000- 151,634
91,057.00 64,976.00 62,477 56,763 55,650 55,616
982,403 00 837,079 00 835,035 684,762 671,700 671,383
General Fund Expenditures
Non-Departmental CityC ncil Cory Clerk Finance
IS% I% 2% 5%
Communny Development
Personnel 4%
Beatification City Manager
2% 2%
Leisure Servces`
° Police
5,37:s_,,, _______ �25
4
Animal Control z
to
Economic Development
Fire/Code---------- City Attorney 1%
26% I%
6
Employee Benefits
• Compensation - Step Plan $36,950
• Health insurance and other benefits 5%
Increase
• City Pension Experience Study
• Police 59.7%
• Fire 25.9%
• General 127.1%
Budget Changes
• Reduce POS to HMO $ (41 ,471 )
• PILOT / PILOFF $ 577, 185
• Renegotiate EI.N.D. debt $( 150,000)
• Pension Changes $( 124,830)
• Eliminated Raise $(120,220)
• Eliminated Motor Unit $ (26,621 )
• Eliminated ACO Position $ (50,000)
Budget Considerations
• Employee Vac & Sick Cash In $321 ,957
• Evaluate Staffing $295,793
• Capital Outlay $ 147,667
• Construction Projects $414,000
Street Resurfacing $ 175,385
Staffing
Additional Reductions that may have to be
considered
• 2 F/T Fire Fighter Positions $ 113,249
• Reserve Police $27,259
• Police Officer F/T $73,917
• 2 F/T Leisure Service Workers $81 ,368
8
Capital Outlay
Unfunded Millage
Kubota Utility $ 11,245 $ 0.01920
Kubota Utility 11,245 0.01920
Police Interceptor 34,714 0.05950
Police Interceptor 34,714 0.05950
Explorer—Fire 34,100 0.05825
F250—Leisure Services 21,649 0.03700
$ 147,667 $ 0.25265
Construction Projects
Funded Millage
Park Ave&Old Mission* $ 60,000 $ (0.1030)
Flagler Ave Sidewalks* 37,000 (0.0633)
US 1 Sidewalk Construction* 50,000 (0.0860)
Kennedy Park Seawall* 35,000 (0.0600)
Rotary Park Trailhead 75,000 (0.1282)
Hawks Park Expansion 57,000 (0.0975)
City Hall Replacement 100,000 (0.1710)
$ 414,000 $ (0.7090)
The Above Amounts are Matching Amounts
9
General Fund Debt
Animal Shelter (G.O.) $ 355,000
F.I.N.D. (Parktowne) $ 337,019
Station 55 Replacement $ 690,000
2010 Fire Rescue Unit $ 127,334
2013 Vehicle Leases $ 160,583
$1,669,936
Street Resurfacing
LAKE AVENUE(N) $ 21,231
LAKE AVENUE(S) $ 17,546
MARY STREET $ 7,352
ADELE STREET $ 18,755
ANN STREET $ 21,472
OCEAN AVENUE-FLAGLER TO PLANT $ 12,608
ALICE STREET $ 23,248
EDITH STREET $ 8,967
LINDA STREET $ 9,484
JEANNE STREET $ 9,290
FERNALD STREET-New Hampsire to Ocean $ 25,434
$ 175,385
10
Use of Fund Balance 8 Ad Valo5
Ad Valorem Proceeds
7,000.000 __...
6,209,694
6.219,068
5,791,544 _
6,000,000 - -
5,230,103 5,243,485
5,000,000
3,632,246 4,515,489
4,283,690
3,770,241
4,014,168
4,000,000
3,632,246
'
3,000,000 f -' #.. �. E 1 ---
' ! ,
ii itif
2.000.000 -.
1.000.000 0
, lifir 3*4 c50 2013.6.50 2012-6.47 2011-6.59 200-636 2009-590 2008-520 2007.570 2006-645 2005-645 2004-695■
Fund Reserves
General Fund Reserves
• Charter 16.74% $2,000,000 (Goal
is 17%)
• Designated City Hall
• $500,000
11
2004 Property Tax on a Residential
Home in Edgewater
Volusia
School Board City of Edgewater (1) County
$399.06 $284.60 1,
(34.25%) $318.82(27.36%) (24.42%) '
Other SE Volusia Hospital District $106.43 9.13%
TOTAL TAX BILL Taxes St.Johns River Water Management District 21.19 1.82%
$1,165.26 $162.78 Florida Inland Navigation District 1.77 .015%
13.97% East Volusia Mosquito Control 10.92 .94%
Port Authority 4.13 .035%
This graphic displays what a homeowner pays in ad valorem taxes on a homesteaded property in the
City of Edgewater with an assessed value of$70,874 less a$25,000 Homestead Exemption taxable value
of$45,874
2014 Property Tax on a Residential
Home in Edgewater
School Board City of Edgewater (1) Volusia
$374.68 2' County
(45.65%) - $177.49(21.62%) $176.13
`' (21.46%)
i
2014 TAX BILL Other SE Volusia Hospital District $83.12
$820.85 Taxes St.Johns River Water Management District 0.85
2004-$1,165.26 $92.55 Florida Inland Navigation District 0.88
Difference 11.27% East Volusia Mosquito Control 5.32
($344.41) Port Authority 2.38
This graphic displays what a homeowner pays in ad valorem taxes on a homesteaded property in the
City of Edgewater with an assessed value of$66,754 less a$50,000 Homestead Exemption.Taxable Value
of$26,944
(1)Operating Millage of$6.876 and$0.058 for Voted Debt Service Millage
12
Rolled Back Rate vs. Final Millage
9.00% -
8.00%
7.00% �- 91
6.00%
5.00% . . . . _.
. . •Rolled Back Rate
4.00% L - Final Millage
3.00% IMMO
2.00%� . .
1.00% '.. .__ ...._.
I I
0.00% _:.
2014 2013 2012 2011 2010 2009 2008 2007
25
Notice
Proposed Property Taxes
TRIM Notice
F.S. 200.065(2)
13