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08-15-2005 - Budget Workshop ,. . ""'tI,-.- (.) (,) CITY COUNCIL OF EDGEWATER WORKSHOP AUGUST 15, 2005 5:30 P.M. COMMUNITY CENTER MINUTES CALL TO ORDER Mayor Schmidt called the Workshop to order at 5:30 p.m. in the Community Center. ROLL CALL Mayor Donald Schmidt Councilman James Brown Councilman Dennis Vincenzi Councilwoman Harriet Rhodes Councilwoman Judith Lichter City Manager Kenneth Hooper City Clerk Susan Wadsworth Paralegal Robin Matusick Present Present Excused Present Arrived at 5:31 p.m. Present Present Present MEETING PURPOSE The purpose of the meeting was to discuss the budget for fiscal year 2005/2006. City Manager Hooper informed Council he was going to talk about Revenue Changes, some of the things that are being implemented this year that is going to increase some of that. He informed them he would also be talking about FEMA Reimbursement with regard to how much we are going to get and the cost of the three storms. He would also be talking about the reserves with regard to the status and where the City is going. He went on to say he would also be talking about Personnel Expenses and Pension Plans. He would be wrapping up with all of the Capital Improvements. A lot of those are dependent on FEMA reimbursement or impact fees and other sources of funds. City Manager Hooper went over his initial report regarding increasing Fees/Fines/Surcharges that had automatic increases. (Attached) They are proposing having effective October 1st are those fees that are 3% or CPI (Consumer Price Index) and for the most part the CPI this year is o o -~ 3.5%. He also mentioned the Impact Fees for Capital that have an ENR # (Engineering News Record) which is 4.1%. Impact fees will automatically be adjusted as of October 1st at 4.1%. These include things that are building related and construction related. City Manager Hooper then spoke about service fees, water, sewer, deposits, and reclaimed that are CPI adjustment to keep the City current with the current increases that are up with fuel and other types of annual increases that are impacting those fees. City Manager Hooper went over a list of steps the City has to follow for FEMA reimbursement. They have been extremely different to work with and have changed project managers countless times. We are at the stage now where all the project worksheets have been submitted. We have written authorization as to what they are planning to reimburse. We don't have all the checks in hand but they have identified their plans. Some of those are appealable. City Manager Hooper then went over Category A with regard to debris removal. He also went over what the City paid out in labor and equipment and the estimated reimbursement amount. The Council is seeing somewhere around $4 million and we will be getting $3.5 million back. Anything reported in 72 hours was 100% reimbursement. Anything after that was going to be at a 90% reimbursement. The argument ensues over which streets and which roads. He spoke of emergency protective actions the City had done. To date, we have received $2,046,000 with another $1.4 million coming in hand. We will probably wind up with $4.11 million leaving about $1.5 million out of the City's pocket. After the storm event it cost us about $5,896,000 for everything involved with the three storms. They will reimburse $4.1 million. He spoke of the insurance money the City will be receiving to replace the shuffleboard courts. The storms cost the City out of reserves $1.5 million. He spoke of mention being made last year by the auditors that the reserves were low. They were. That is where a lot of it went. Page -2- Council Workshop August 15, 2005 Q o ~ Mayor Schmidt asked how come nothing else is covered with insurance. City Manager Hooper stated there ,is some in there but that was a fairly small amount. He asked Leisure Services Director Jack Corder or Paralegal Matusick if he knew how much what they had in pavilions and other park facilities that were for insurance. Paralegal Matusick didn't know off the top of her head but she agreed to provide him with a printout. There was a brief discussion regarding terms and conditions of FEMA with where the shuffleboard courts would be replaced. He mentioned replacing 16 courts at Rotary Park using insurance money, some FEMA money and some of the City's money. Mayor Schmidt and Councilwoman Rhodes papers that City Manager Hooper had. them with a copy. asked for copies of He agreed to provide City Manager Hooper commented on one of the things they learned is if you used City staff for the labor portion FEMA wasn't paying much. Everything contracted was pretty much a no question. Their issue was the City had to prove how much debris it picked up, from what streets, when it got to the landfill. He commented on the trucks having to be counted when they went to the landfill to make sure they were full. It was an ordeal and a process and still being argued about are some of the streets he defined for Council. Councilwoman Rhodes commented on the money being spent this year. City Manager Hooper stated the money has either been spent or contracted for. We contracted for the debris and hired a private contractor. We have paid a portion. We still owe about $2.5 million. The labor part on our staff has been spent. Some of the materials for repairs have been spent. Councilwoman Rhodes asked how much has been spent out of City coffers. City Manager Hooper informed her $1.5 million has either been spent or signed up with a contract to be spent. We are playing with FEMA money first but it will be spent. Councilwoman Rhodes asked for an actual amount of what dollars have gone out of our City. Page -3- Council Workshop August 15, 2005 Q o . City Manager Hooper stated the only people we owe right now are Crowder Gulf for the debris removal in the amount of $2.5 million. Out of the $5.8 million there is $2.5 million we have contracted to pay for that we haven't paid for. Our $1.5 million is in that portion of it. Councilwoman Rhodes stated so we are signed up to pay for it but we haven't paid it yet. City Manager Hooper informed her that is correct. That doesn't mean that money hasn't been spent in other areas. All those areas for labor had been paid. All the employees that worked overtime were paid. Councilwoman Rhodes stated how much money was out of the $1.5 million have we already paid this year. City Manager Hooper stated honestly you paid it all. The City is waiting on FEMA to pay us the balance and that is what we are paying Crowder Gulf. Councilwoman Rhodes asked have we paid $1.5 million out of taxpayer dollars yet for the hurricanes. City Manager Hooper stated yes you have. The reimbursement coming back will offset some of that. Councilwoman Rhodes stated once the FEMA money comes in, our $1.5 million has already been spent out of our revenue so it doesn't matter where you will get money from and how you will pay it that has been taken care of. City Manager Hooper stated all you are talking about then is cash flow, what the government pays you verses your obligations. Councilwoman Rhodes stated next year, barring no natural disasters this year, in the 2006 budget there should be no money for these events. The money should be going to the reserve fund to pay back what we have spent. City Manager Hooper informed her the only technicality to that is if the FEMA money doesn't come in by September 30th. That could trickle into next year's budget. City Manager Hooper confirmed we would not be reimbursed for the $1.5 million of City money that was spent. Councilwoman Rhodes stated unless there is another natural disaster she does not want any more tax dollars spent for hurricanes out of the 2006 budget. Our tax dollars can then go to reimburse the reserve fund so they build that up according to our Charter. Page -4- Council Workshop August 15, 2005 Q o City Manager Hooper stated the only caveat there is if FEMA doesn't pay what they have promised to pay. That is the only way what was described by Councilwoman Rhodes will not occur. City Manager Hooper then described the Reserves. Our reserves for next year should be $1.5 million, which is based on the 15% the Charter requirement for the general operating fund. He feels today they are looking at $1.3 million. At the end of the year, the City should have a reserve of about $1.3 million. Councilwoman Rhodes asked if they could have a reserve fund that they can see. City Manager Hooper commented on creating a reserve that is funded by creating a line item, a funded reserve account. Councilwoman Rhodes wants to see what goes into it and what goes out of it and it needs to be maintained at a level according to our Charter. Councilman Brown stated it sounds like they are close to where they need to be. He feels it is a pretty good recovery for what we lost in the hurricanes. City Manager Hooper commented on it having conditions to it. This budget right now is not balanced. It is about $1.5 million out. Between now and the time the Council has the final hearing, he has make $1.5 million of cuts or find $1.5 million in revenue. He confirmed he could get there. This is also based on the 6.45 millage rate. Each mill produces about $800,000 and he is getting an impression that it would be nice to reduce it by half a mill. If that is the case that is another $400,000 he has to find. Councilwoman Rhodes stated so it would take us two years to get the reserve account back up instead of one. Councilwoman Rhodes asked if they could set a millage rate contingent upon no natural disasters. City Manager Hooper informed her no. They have to set the rate by September 30th so the Property Appraiser can send out his notices and it can't change. Page -5- Council Workshop August 15, 2005 o o Councilman Brown asked if with the 6.45 millage rate they would have the $1.3 million back in reserves by next year. City Manager Hooper stated by the end of next fiscal year. Councilman Brown stated if they lower the rate it would take approximately two years to do so. If we had another storm and we lowered the millage rate there will be no money to cover the storm. It depends on which way you want to go, if you want to have the money there in case or if you want to lower it and take a chance. Councilwoman Rhodes stated or you could lower it, because when the storms happen it takes a year to get all the revenue and expenses. You could lower it and if you had storms, then you would have to raise it. If you lowered it a half a mill now and you had storms this year, next year you would have to raise it a mill. City Manager Hooper stated and in the interim you are cash poor. If they wouldn't have had the $1.5 million in reserves, they would have been in trouble. They would have been at a bank and they would have been borrowing against something in the future or borrowing from other funds. City Manager Hooper then went over Personnel Expenses/Pensions. He commented on the list of all City employees that was provided to Council that lists all their salaries and expenses, from insurance, dental, health, and life and what percentage is covered by the City. He commented on there being four types of retirement plans for City employees, general defined benefit, Fire, Police and a 401A. There are 68 people in the general defined benefit, 32 people in the Police Pension Plan, 24 people in the Fire Pension Plan and 76 people in the 401A. City Manager Hooper went over problem areas in the General Fund. He commented on the huge expense for the general defined benefit plan. They will be hiring some consultants to advise the City what to do. City Manager Hooper then described the Police Pension Plan and the numbers being fairly steady. The general defined benefit plan adds no new people. The Fire Pension Plan has younger people with very low turnover. This is a plan that is growing but its numbers are good. Page -6- Council Workshop August 15, 2005 o o City Manager Hooper stated he is not happy with Principal. In their last meeting they had a very honest discussion that he can't put up with those kinds of numbers and they would be looking to change. He will be looking to the Boards for input. Councilwoman Rhodes asked if it is realistic that it can be changed. City Manager Hooper stated they can get rid of Principal and get a firm that will do better with investments. Councilwoman Lichter commented on when she was a teacher, early retirement was encouraged either by continuation of a health plan or a bonus amount of money. That is something that should be thought of also. City Manager Hooper stated it has and it has been part of what he has used to encourage some of the more expensive, older employees. They have done some of that with about eight to ten people. They have a few they are talking to. It is a case-by-case basis. He commented on this being a cost benefit to the City. City Manager Hooper then went over the Annual Required Contribution Stated in Dollars. (Attached) If you totaled up the whole contribution, $850,000 is what the City puts into that one particular fund for the General Fund. Councilwoman Rhodes questioned why it seemed to have gone up so much more this year than last year. City Manager Hooper commented on an actuarial being done every year. He commented on a total salary including overtime going into a Pension Plan and this being questionable. The plans call for any income to be eligible and most plans do. He spoke of Principal's person telling the City how much they need to invest to keep that total pension plan solvent. They do some averaging and try to dampen out the peaks. Obviously with this plan, that has not worked. Part of his frustration with them is the rate of increase. It seems to have nothing to do with the stock market. Page -7- Council Workshop August 15, 2005 o o City Manager Hooper then went over some of the changes Principal came back with. They are going to hire a Pension Plan professional consultant. They met with him Friday and he was very impressed with their view of the plan and some quick summaries of what they thought they could do to change. They were also astounded by the 42%. They have never seen such a number and they represent 200 cities in the State. Councilman Brown asked what would happen if you didn't put the 42% in but you went back to what it was and took out the overtime and did whatever increase it would be per year normally and take out that, what would be the circumstances? City Manager Hooper commented on the penalty parts. He thinks they will probably under fund a little bit but that can't be a steady game. It's a risk. Councilwoman Lichter asked if the employees put in a set percentage of money themselves toward their retirement plan. City Manager Hooper stated each pension plan has a contribution. Councilwoman Lichter feels maybe an angle to look at is for the City employees to put in a little more in order to keep it solvent. City Manager Hooper stated that is part of what they are going to explore at a Pension Board meeting. The Police and Fire pay a substantial amount larger than the General Fund employees. Councilwoman Lichter feels they have to think of the whole general citizenry and the problems that everybody is facing with the increase in everything. City Manager Hooper stated if you sum up all those dollars you are at $1.5 million to $2 million. You have a sizeable amount. Most of the expenses of running the City in the General fund is salaries and benefits. Councilwoman Lichter asked the percentage the employees put into the first plan. Finance Director Williams informed her 2 ~ percent. City Manager Hooper stated and that went up two or three years ago. Before that it was nothing. Page -8- Council Workshop August 15, 2005 Q o City Manager Hooper then went over Capital Projects that are included (Attached) the list of proposed in the FY2006 budget. City Manager Hooper first commented on the computer upgrades that are included in the list of Capital Projects. Councilwoman Lichter asked how long the upgrades last for. She spoke of in the future they talk of City Hall or something else, is this hardware still good? Does it move with us or are they talking again of total new. City Manager Hooper stated it lasts. It doesn't stay as current. The hardware lasts pretty good. The software you are going through continuous updates. Councilwoman Rhodes asked if there is a contract the City can pay for and get automatic updates. City Manager Hooper informed her yes and the City does that. City Manager Hooper then commented on the vehicles included in the list of Capital Projects being leased. Councilwoman Rhodes asked if impact fees still cover it if they aren't replacements. City Manager Hooper stated if they are new. Councilwoman Lichter questioned Volusia County having a fire engine they use for emergencies not for fires but for rescue or sick people. Fire Chief Barlow stated the City has a transport capable rescue unit that has water on board can transport patients also. City Manager Hooper further commented on the local grant matches that are included in the list of Capital Projects. City Manager Hooper also commented on the Animal Control Shelter in the amount of $500,000. This is the first year in which that millage will kick in and start accruing. They are working on that particular site. Somewhere in here is the cost of that particular site under Water and Sewer that he thinks they will wind up purchasing from the County. On the 17 acres they will have tanks for the reclaimed, for the water storage and the water repumping. With that they will be able to site the shelter on there also. Page -9- Council Workshop August 15, 2005 o o Mayor Schmidt asked to talk about road resurfacing. He knows they didn't touch any of their allotted money this year. What City Manager Hooper has done is through grant money and that sort of thing the stuff that has been paid so far but more and more, there is one street in particular, Travelers.. He believes in the last couple of weeks he saw an insurance claim come across where someone damaged a vehicle on some of the manholes where the road is sinking around them or the manhole is lifting. He doesn't know of any other street that they need to do something with. He spoke of continuously fixing potholes at the intersection of 22nd Street. He questioned if there is a way they can get that road done. City Manager Hooper stated it is all storm related. He put a freeze on everything. We haven't bought anything we didn't have to until we knew what FEMA was going to pay as well as the insurance, which included resurfacing. The paving that was done on Riverside Drive and the parking lot of City Hall was generally grant money and other money we were able to get. He agreed to make that happen this year. He will get with Environmental Services Director Terry Wadsworth, who has a priority list and they will pick three of those. He was glad to see the Needle/Mango behind the 17th block lake paved and 35th Street between the railroad tracks and Volco Road. Councilwoman Lichter asked if the City is caught up on the ordering of street signs. Leisure Services Director stated they just put the last order in and it should be coming in in 30 days and the second order is just now being dispersed. City Manager Hooper commented on the shuffleboard courts. They, Jack Corder, himself and the Consultant that is designing the courts, had a meeting last week and there were probably 100 people in this room to talk about it. The Council promised they would look into the ability to share with New Smyrna Beach. Once they found they wouldn't get any FEMA money or insurance money if they did that, they were looking at other options. The people that showed up seemed pleased that Rotary Park was a good answer for them. Page -10- Council Workshop August 15, 2005 o o City Manager Hooper further stated the total for the shuffleboard courts including the clubhouse, courts and site work is about $450,000 and he described the City would probably get about $250,000 back from insurance. Some of that is General Fund money to make up the difference. Councilwoman Lichter feels that is a wonderful spot because she doesn't feel that park is utilized as much as it could be. City Manager Hooper commented on a grant match and continuing on with the ECHO project and the FRDAP. City Manager Hooper went on to talk about some ParkTowne issues that are coming up. ParkTowne money comes from the sale of property and grant money. You see in here $300,000 that the County has given. They are supposed to be here tomorrow to deliver that check. ParkTowne is hinged on as we sell property so those dollars look like big dollars but they are out of the sale of the property. They may be augmented some by road impact fees if it is strictly roads. City Manager Hooper commented on there being several Water and Sewer maintenance issues. To date, for the most part that is working well. The conversion of meters has been good. We are up to well over 60% now. They will go with the first radio read billing on the 28th of this month. City Manager Hooper stated what they are finding is reclaimed. They have a few meters now, as they are going trough neighborhoods they are starting to put in reclaimed at the same spot. It is going to be very nice to be able to give these folks some time of if we were charging you this is what it would be. They are averaging about 40,000 gallons per month. City Manager Hooper commented on the 17-acre property the City is going to purchase across from Hacienda del Rio on the west side. The County is willing to trade some water capacity for the property. Page -11- Council Workshop August 15, 2005 o o City Manager Hooper informed Council they have to finish up the master plan for stormwater. So far they have been very good at approving projects. They are seeing throughout the western side of the County a lot of developments that went in three to five years ago all having flooding issues. It is fortunate that we are corning through this major development cycle after that and have learned about compensating storage and positive outfalls and all the things that make all of these work. They have spent a fair amount of money on aerial and surveys so the drainage patterns through the City are known going in and not as much of a mystery as what some of the other consultants or engineering firms have had to deal with. City Manager Hooper commented on a summary out of the General Fund. This is about $9 million of improvements. The General Fund has about $2 million. Water and Sewer is about $2 million, Refuse Fund $78,000, and Stormwater is a much larger number. Also of that is the issue going on in Parktowne. Not necessarily a stormwater issue but funded out of there. The grants and special revenue that are the amount for the animal shelter and all of our grant projects. Councilman Brown stated a large portion of your water bill shows stormwater. He asked if there is some way they can tell the people exactly what they are getting for that money. City Manager Hooper stated they can do that by incorporating it into the City newsletter. He commented on when the City went into the Shores the people paid for a portion of that and his understanding was that half of this fee is dedicated just to pay the debt service for that area. The other half of the fee is strictly for maintenance. This is the one utility fee that is not working. They have solved just about everything else. This is the one that is in trouble and have to do something with in the very near future. Page -12- Council Workshop August 15, 2005 o o Councilwoman Lichter stated when the roads were paid for in Florida Shores there were three different methods but the last large amount of roads were 1/3, 1/3 and 1/3. One side of the street, the other side of the street and the general taxation of the population of the City was the other third. In the stormwater, is the City paying three times or is the stormwater situation being handled the same way as the roads. Environmental Services Director Wadsworth explained the entire stormwater component of the road improvement projects in Florida Shores is being born by the rates from the entire City. He doesn't think there was any assessment done on the stormwater. He thinks the rationale was it benefited the community as a whole so that debt service has been divided among the entire rate-paying base for stormwater. City Manager Hooper stated the stormwater fee is $6 per month and half of that goes to debt service. That has another eight to ten years and that is paid off. Councilwoman Rhodes asked if they could refinance that at a cheaper rate. City Manager Hooper informed her they could. They have looked at refinancing. Part of the problem with the stormwater is the fund itself is in such poor condition. To fund that, they would have to create a super utility and put the water the sewer and the stormwater together and fund all of it and they are looking at that. ADJOURNMENT There being no further business, Mayor Schmidt adjourned the workshop with the Regular Meeting to follow. The meeting adjourned at approximately 6:50 p.m. Minutes submitted by: Lisa Bloomer Page -13- Council Workshop August 15, 2005