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2012.01.26_FAB_Minutes_Regularr ':m TOWN OF HIGHLAND BEACH '" • ' =ems MINUTES OF THE �h •''•* = FINANCIAL ADVISORY BOARD REGULAR MEETING Thursday, January 26, 2012 9.35 AM Members Present: Chair Gerald Gitner, Board Member Ronald Brooks, Board Member Bruce Giacoma, and Board Member William Gross. Also Attending: Mayor Bernard Featherman, Town Manager Kathleen Weiser, Acting Finance Director Cale Curtis, Deputy Town Clerk Valerie Oakes and a member of the public. CALL TO ORDER: Chair Gitner called the Regular Meeting to order at 9:35 a.m. followed by a roll call taken by the Deputy Town Clerk. ADDITIONS, DELETIONS OR ACCEPTANCE OF AGENDA: Chair Gitner added the approval of the December 16, 2011, Regular Meeting minutes and called for a motion to approve. MOTION: Member Giacoma moved to approve the minutes of December 16, 2011, Regular Meeting. Member Gross seconded the motion, which passed unanimously. Chair Gitner called for any additions, deletions or modifications to the agenda. Hearing none, the Chair called for a motion to accept the agenda as amended. MOTION: Member Giacoma moved to accept the agenda as amended. Member Gross seconded the motion, which passed unanimously. PUBLIC COMMENTS AND REOUESTS: None. PRESENTATIONS: • Announcement: Currently One (1) Vacancy Deputy Town Clerk Oakes advised that there is currently one vacancy on the Board; however, an application has been submitted. The Town Commission will interview the applicant at the Workshop Meeting on January 31, 2012. Financial Advisory Board Minutes Thursday, January 26, 2012 Page 2 of 6 OLD BUSINESS: Chair Gitner stated that the Board would discuss Agenda Item 5B prior to 5A B) Review of the Town's Water Rates & Structure Director Curtis — A request was submitted from Ron Brown, President of Bel Lido Homeowners Association, to review the Town's water rates and structure to determine if there are any inequalities in the billing of single-family and multi -family accounts. In Mr. Brown's letter, he questions the water rater structure and claims that the three-tier system penalizes single-family consumers for using more water. The water rate structure produces nearly identical charges for a single-family home vs. a multi -family dwelling. At the Town Commission Workshop Meeting on June 27, 2006, the Commission came to a consensus that water rate increases were needed to bring Highland Beach's rate structure up to a comparable position with neighboring communities; a consensus that the rate change was needed to fund the water system improvements that were needed; and rate changes were also desirable to help offset the general fund subsidy to the water fund. Finance Director Curtis distributed an example of the tiered water rate structure (attached as exhibit `A'). Chair Gitner — If a homeowner leaves town for six months and does not use any water, is there a minimum fee billed? Director Curtis — Yes, they are billed a $30.00 base charge every two months. The sewer fee also has a base facility charge. Chair Gitner — How does the base charge compare with surrounding municipalities? Director Curtis — It is lower. Director Curtis — The letter from Mr. Brown correctly identifies that the tier two -dollar amounts of the multi -family and single-family rates are different, with single-family having the higher rate. However, he does not state that single-family users have to use more water than the multi -family user before entering the second tier of billing. By consensus, the Board has found the Town's water rates and structure appropriate, which should be included in the response letter to Mr. Brown. Chair Gitner — Does it make sense to have a consultant review the system and determine if there are any significant capital expenditures needed in the foreseeable future? Member Giacoma — A 10-year Water Plant Plan should include the expected maintenance and expenses anticipated annually. Director Curtis — There is not a 10-year plan. Engineers have told the Public Works Director that there is a 40-50 year life expectancy on the RO Plant. We do not see any major expenses for this water plant in the next 10 years. Member Giacoma — Would it be appropriate for the Board to meet with the Public Works Director? Financial Advisory Board Minutes Thursday, January 26, 2012 Paze 3 of 6 By consensus, the Board agreed to request the attendance of Jack Lee, Public Works Director, to provide where we are, what we expect, where we want to go, when was the original plan done, and are there any obsolescence risks (i.e. an original or an approved substitute manufacturers not creating replacement parts). A) General Discussion of Financial Topics Follow -Up Investment Parcels Chair Gitner — Should the Town hire a commercial realtor to give an assessment of the properties and evaluate alternatives such as land swap for 3200 S. Ocean Blvd., lease the property and provide other suggestions not yet contemplated? MOTION: Member Giacoma moved to make a recommendation to the Town Commission to retain, on a contingency basis, a qualified Commercial Broker to provide a written assessment on the two investment parcels located in Boca Raton and report the market valuation, the potential of a land swap, lease or some other use of land. Member Gross seconded the motion, which passed unanimously. Proceeds Used from the Property Chair Gitner — It appears that Resolution No. 755 is self-imposed. We could sponsor a resolution to address the issue of proceeds used from the property to not restrict the use to solely payoff the water service debt. Member Gross — It may not be self-imposed; it could be part of an indenture. Chair Gitner — Director Curtis researched this issue and preliminarily found that this resolution could be amended by a vote of the Town Commission. MOTION: Member Gross moved to make a recommendation to the Town Commission to review and amend Resolution No. 755 to eliminate restricting the proceeds of the sale. Member Giacoma seconded the motion, which passed unanimously. Investment Options/Policy Director Curtis — The Town's yearend financial report was distributed. Questions were raised regarding the Town's investments and their performance. The Town's entire cash reserves are invested in money market accounts earning very little interest. The Town's investment policy has limited investment choices by putting a maximum 1-year maturity limit on investments and a requirement that 50% of the investment policy be placed in readily available money market accounts. As requested, attached to the agenda packet are the following documents to compare the Town's investment policy with State Statutes and other recommended practices: 1) Florida Government Finance Officers Association (FGFOA) Recommended Practices for Cash Management and Investing (Investment — 1); 2) Florida Statutes 218.415 (Investment — 2), which provides the framework and regulation on local government investment policies; and 3) The Town's current investment policy with proposed changes (Investment Policy-2012 vl). Chair Gitner — In the Revised Investment Policy, on page 5, VI, 1, change (excluding U.S. government backed investments). Financial Advisory Board Minutes Thursday, January 26, 2012 Paze 4 of 6 Chair Gitner — What percentage do we need to keep liquid in the bank? Director Curtis — The policy calls for 50% of the total investment fund. Chair Gitner — I think we need to reverse the objectives. Director Curtis — Concurs. Chair Gitner — Do we want to limit the investment choices by putting a maximum one- year maturity limit? Director Curtis — I am proposing to change from one year to five years; however, I am open to suggestions. Member Giacoma — We want low rates that are bulletproof. I think we should have the capability to extend to five years. Chair Gitner — Does the Board need to approve the revision to the Investment Policy? Director Curtis — The Board's recommendation will be forward to the Town Commission for their approval. By consensus, the Board appointed Board Member Giacoma to work with the Acting Finance Director on the revisions to the Investment Policy. When ready they will share the results with the FAB for further review. Fund Balance Director Curtis — Further input on this matter may come from the ongoing Strategic Plan. For the last four years, we have dipped into cash reserves to balance the budget. At the present level of such "dipping" we have about six more years until the reserves are depleted. The Board should discuss strategies to preserve the fund such as tax rates, alternate investments, expense programs that are not providing value, interest rate/investment policy, etc. Chair Gitner requested that Director Curtis survey towns situated similar to ours as to the amount kept in reserves and their target amounts both to an absolute amount and as a percentage of annual expenditures. What guidance do we give the Commission? What impact does the level of the reserve have on the borrowing rate for the Town? Director Curtis — The fund balance is compared to the general fund's annual budgeted expenses. Chair Gitner suggested this be added to the agenda of the next regular meeting. NEW BUSINESS• A) Review of the Town's Investment Policy This item was discussed during Old Business. Meeting Setting Chair Gitner stated that there have been questions on the format of the meeting. He remarked that there has been good back -and -forth conversation. Does anyone have any comments whether it should be changed, or is everyone comfortable with the way we are running business? Member Gross — It is very nice and casual. Member Giacoma — It is a conversational mode and it is appropriate. Nobody is stepping on anyone's words. There Financial Advisory Board Minutes Thursday, January 26, 2012 Paae 5 of 6 is a mutual respect for one another. It is productive conversation and it is not stilted in ceremony. Member Brooks — I agree. By consensus, the Board found that meeting in the Town Hall Conference Room is appropriate and productive. Should the Board need to move to another location to accommodate the public, they are willing to do so. Meeting Time The Board discussed changing the meeting time. By consensus, the Board agreed to switch the meeting time from 9:30 a.m, to 9:00 a.m. Chair Gitner asked Mayor Featherman if he had any comments. Mayor Featherman stated that a newspaper article indicated that there should be 15-20% in reserves. Director Curtis explained that the figure is a recommended practice from the Florida Government Finance Officers Association (FGFOA). The 15-20% is for budget stabilization throughout a fiscal year. There is a period of approximately two months that tax receipts fall stagnant (cash flow falls but two months of expenditures are coming in). The 20% represents the two months that the cash flow begins to run short. A municipality could choose to take the risk of having just 20% set aside for a shortfall and nothing else. Chair Gitner — At the next meeting, the Board will discuss the possibility of having a capital line from a commercial bank and the amount that should be in the reserves. Member Gross — Find out how much Boca Raton, Delray Beach and Deerfield Beach keep in their reserves. Member Brooks — Has anyone completed a source of funds survey? What do we have available incoming? What assets do we have besides the parcels in Boca that could be liquidated if we were trying to improve the overall situation without taxation? If not, could this survey be done? Member Gross — We are starting to do that now with the evaluation of the property. ADJOURNMENT: The Board tentatively set February 17, 2012 at 9:00 a.m. as the next meeting date. There being no further business, Chair Gitner called for a motion to adjourn the meeting at 10:37 a.m. MOTION: Member Giacoma moved to adjourn the meeting at 10:37 AM. Member Gross seconded the motion, which passed unanimously. Financial Advisory Board Minutes Thursday, January 26, 2012 Page 6 of 6 APPROVED: , Gerald Gitner, Chair T .C—/ is • X Board Member r-- ber William Gross, Board Member Vacancy TOWN SEAL ATTESTED: U Valerie Oakes, CMC Deputy Town Clerk Date: 3 ,P, ID,