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2012.08.20_FAB_Minutes_Regular•'* 16 N (,t`'y�� '•m TOWN OF HIGHLAND BEACH iell 0MINUTES OF THE �'y'`•:f FINANCIAL ADVISORY BOARD 4%wflOR10�•= REGULAR MEETING Monday, August 20, 2012 9.30 AM Members Present: Chair Gerald Gitner, Board Member Ronald Brooks, Board Member David Buchsbaum, Board Member Bruce Giacoma, and Board Member William Gross. Also Attending: Mayor Bernard Featherman, Vice Mayor Ron Brown, Commissioner Dennis Sheridan, Commissioner Louis Stern, Town Manager Kathleen Weiser, 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 9:30 a.m. in the Town Hall Conference Room followed by a roll call taken by the Deputy Town Clerk. ADDITIONS, DELETIONS OR ACCEPTANCE OF AGENDA: Chair Gitner called for any additions, deletions to the agenda, hearing none, the agenda was accepted as presented. PUBLIC COMMENTS AND REQUESTS: Chair Gitner called for any public comments and requests. Mayor Featherman — Several people have called me on the changing of dates, and we should have one specific date. Have you all determine a specific time on a specific day in the month that you will meet rather than changing it each time? Chair Gitner — What we try to do is accommodate all of the volunteers here, to accommodate the individual calendars. We have set aside 9:00 a.m. on Thursdays as a usual time, but invariably everyone gets involved in various parts of their personal lives and so, we thought it was good to accommodate everybody to the extent that we can so the entire board is in attendance. Mayor Featherman — I would like to ask a question to each member of the board. I have had about a dozen calls over the past two months that they would like to see the board meetings televised like the other boards. I would like to go around the room and perhaps you can say are you against it or for it? Chair Gitner — Mayor, this is my meeting and I'll ask the questions, please. Anybody else in the public have any comments they want to make? (No one from the public had any comments.) We have had a suggestion from Financial Advisory Board Monday, August 20, 2012 Page 2 of 10 the Mayor that we reconsider whether or not we, as a group, wish to be on television. We have had this discussion a few times before, and I have already expressed my views. I think we should let each of us comment that and take a vote. We are not legally required to be televised. I think the board has been functioning well. There has been a good frank exchange of views, ideas, etc. My experience has been that once you get in that room, it becomes more of a show -and -tell performance and people start to wear suits and ties, rather than being comfortable in shorts and shirts. As one of you, I can do it either way. I understand the reason behind the Mayor's request, but I want to open this up for everyone to vote the way they want. Member Buchsbaum — I was not here for the previous discussion on that topic. I do not have strong feelings on that either way. I would like to accommodate the other members if they have stronger feelings than I. I have no particular view with respect to the subject. Member Giacoma — Personally, I think it is full disclosure. I think there is something comforting about the fact of letting the public know what we are thinking. We are in a sensitive time with the millage rate increasing, and the possible need to defend that situation. Having been on a lot of boards in the past, I have always been a big believer of full disclosure. If that means television, I am not opposed to the idea. Member Brooks — I have no objection, yes. Member Gross — I can go either way. Chair Gitner — So that is two abstentions. Member Gross — I will move to a yes. Chair Gitner — The committee having a consensus that everybody, including myself, agree that the next time we meet it will be in the Chambers. By consensus, the Board agreed to hold their meetings in the Chambers. PRESENTATIONS: No presentations. APPROVAL OF MINUTES: • June 7, 2012 — Regular Chair Gitner — I have one clarification. Does anyone know when the original walkway was built? In the minutes it reads that the proposed spending for the interim repair will be functional for a decade. I am not sure that we want to have that in the minutes. Deputy Town Clerk Oakes — As a point of clarification, that language was written verbatim from what the Town Manager said at the meeting. Are you trying to change the wording? Chair Gitner — No, I am trying to clarify because the impression that is left is that for $75k there will be ten years of life for the walk path. It does not compute. Member Giacoma — We do not have a reference point. Chair Gitner — There appears to be a misstatement. I am not trying to change the minutes, but at least have it on record for these minutes. Member Giacoma — I do not think it is a misstatement; it is accurate information. We need to find out when the walk path was done to clarify the statement. Financial Advisory Board Monday, August 20, 2012 Paae 3 of 10 MOTION: Member Giacoma moved to approve the minutes of June 7, 2012, Regular Meeting as presented. Member Gross seconded the motion, which passed unanimously. OLD BUSINESS: A) General Discussion of Financial Topics Follow -Up: Investment Options/Policy (Memo Topic #1) Director Curtis — While my schedule has not allowed me to meet with any investment managers over the summer, it still remains as a priority on my desk to meet with our banks and other prospective investment companies to come up with a proposal that will safely improve our investment income. Member Giacoma — It is an inappropriate time. Director Curtis — Hopefully, by the next meeting I can report on this topic. Chair Gitner — If Member Giacoma cannot attend a meeting, I am available. Member Buchsbaum also volunteered. • Sale of Surplus Property (Memo Topic #2) Director Curtis — The Town issued a Request for Proposals (RFP) to solicit for a commercial realtor, which was advertised early last week. Submission deadline for proposals will be September 10t'. Following the receipt of proposals, an evaluation committee consisting of Member Gross, myself, and one additional staff member will review the proposals to develop a shortlist for the Commission to consider hiring a realtor. This item should be on the Commission's agenda in October. Member Gross — In what newspapers, did you place the advertisement? Director Curtis — The advertisement was placed in the Palm Beach Post, and was sent to eight realtors. Two of the realtors contacted the Town months prior to the advertisement release and the other six realtors are local and were found on Google. Chair Gitner — Is this a contract that will ultimately go to the Commission for approval? Director Curtis — Yes. • Monthly Financial Report (Memo Topic #3) Director Curtis — The latest monthly financial report indicates the Town is on pace to meet its budget projections. This topic is open for discussion. Chair Gitner — Have you been getting feedback on the change in the report as far as the presentation? Director Curtis — There have been comments on the report that it has definitely made progress. Chair Gitner — Maybe a monthly topic might be of interest to be included on a routine basis. Board members can provide feedback directly to the Finance Director. Financial Advisory Board Monday, AuEust 20, 2012 Page 4 of 10 • Capital Improvement Plan (Memo Topic #4) Director Curtis — The Town Commission was provided, through the annual proposed budget, a 5-year capital plan. A majority of the items affect the enterprise fund (water and sewer). The Delray Beach Fire Chief submitted paperwork to replace the fire truck sooner than anticipated, this is listed under the FY 2014-2015. I am working with the Fire Chief to gather information such as reduced costs and maintenance costs that I will be able to present to the Commission when the time comes. Member Giacoma — Would we be responsible of the expenses for that vehicle being onsite? Director Curtis — We would be responsible for the purchase, yes. There may be some recoverable reduction in maintenance costs that we would have to negotiate through the contract. Chair Gitner — Would this be a smaller truck, not the ladder truck we have now? Director Curtis — I believe it would still be a ladder truck, but it would be smaller, lighter and more mobile to reach more areas within the town. Chair Gitner — Given the present interpretation, would such a truck have to go to the voters? Director Curtis — It will depend on the cost when that time comes. Chair Gitner — Given the change in the Charter, what is the threshold that an item would go before the voters? Town Manager Weiser — Currently the Ordinance is on first reading and it is to take the language out of the Charter. They have not had the second reading, so I cannot tell you what will be the outcome. Chair Gitner — Would it be the net cost that is proposed to the voters, or the full cost including the trade-in? Town Manager Weiser — If the Commission adopts what was proposed during the first reading, then it would not go to the voters. Chair Gitner — So there is nothing in State law that requires this to go to the voters? This is self-imposed? Town Manager Weiser — I think we are the only city that does that. Director Curtis — This evolved from a Capital Improvement Plan to a Capital Plan. We had request for police vehicles, which are being incorporated to show a cycling in and out of police vehicles. This is a working document and gives us an idea as to where we are going. This is not to say that we are purchasing an item during a specified fiscal year. Chair Gitner — Would it be helpful to the board members to invite the department heads on a routine basis to understand future needs? Member Giacoma — I think it is appropriate and prudent to have projections that we are working against. I agree with you entirely. Member Gross — Good idea. Chair Gitner — I will work with Cale and the Town Manager to set up a schedule. Member Giacoma — It would be a good idea to have a policy set for replacements, so Financial Advisory Board Monday, August 20, 2012 Page 5 of 10 there is conformity. Member Buchsbaum — The only risk is that we get into policy - making rather than financial advisory. Chair Gitner — We do not set policy; we only provide facts. Director Curtis confirmed that he would work with Chair Gitner to set a schedule for department heads to meet with the Board. • FY 2013 Budget (Memo Topic #5) Director Curtis — On July 9th, the Town Manager released the proposed budget for the Town Commission. Shortly after, on July 20t", the Town Commission held a Special Meeting to adopt the tentative maximum millage rate. This is the upper limit on the tax rate the Commission may use during this year's budget process; furthermore, this is also the rate that is advertised on the TRIM notice. While the proposed budget recommends a tax rate of 3.7876 (this rate would fully close the operating budget gap), the Commission chose to set a slightly higher tentative maximum millage rate of 3.95 (the purpose was to provide flexibility throughout the budget process by increasing the available tax revenues). If formally adopted, the higher tax rate of 3.95 would generate an additional $274,000 that could be used to offset some of the $1 million needed from unassigned fund balance for the cost of all proposed capital improvements. Then, on August 7th, the Commission held their first budget workshop to discuss details of the budget as well as the millage rate. At this meeting, the Commission discussed the town hall renovation project and the use of unassigned fund balance. The Commission will hold another workshop on August 21 st to discuss this further. Prior to that meeting, members of the Commission will speak with the Town Manager and me regarding possible ways how to trim an additional $200-$400k from the general fund budget as requested by one of the Commissioners. With operating budgets spread thin by prior year cuts and increasing costs, finding an additional $200-$400k will be difficult, if not impossible, without impacting personnel benefits, salaries, hours of administrative operations, and the level of service to the residents. The next budget workshop is scheduled for Tuesday, August 21, 2012 at 1:30 pm. They will review generated ideas proposed for any cuts and they are expected to make their final adjustments to the tax rate and budget in preparation of their first public hearing in September. Member Buchsbaum — At a 3.95 millage rate, what would be the increase from the previous rate? Director Curtis — For the town, it is about a 12% increase. Chair Gitner — What percentage increase was there in the valuation available to assess the millage rate against? Director Curtis — There was an increase in the Town's assessed value of 1.5%. Chair Gitner — There is a policy of adding $50k a year to the contingency. We were talking about topping the whole thing up at one time, any progress on that? Dir. Curtis — We are talking about the disaster recovery account in the assigned fund balance. It is a reserve set aside. Prior Commission/Administration, set a policy to fund the disaster recovery account by $50k each year up to a maximum of $500k. I believe what Chair Financial Advisory Board Monday, August 20, 2012 Paze 6 of 10 Gitner wants to discuss is the idea of increasing it to the $500k threshold... Chair Gitner — It is not at $500k now. Dir. Curtis — It is not at $500k now. Chair Gitner — It is two- fold since we have the unassigned fund balance. We all agree that we need a disaster pool, so immediately take from the unassigned fund and fill it up to stop calling it the unassigned fund. We could recommend a policy to increase it by the Consumer Price Index (CPI) factor in $15k increments, so the pool is always there for its purpose rather than waiting two, three, four years, this makes it automatic. Member Brooks — What constraints are put upon that after the set goal has been reached? Chair Gitner — It has an assignment as opposed to being unassigned (available for any use). I think it is in everybody's interest to get the pool up to where everybody thinks it should be since we do have this unassigned fund balance. We should recommend to the Commission that they immediately move to fill the pool (disaster recovery reserve) and possibly have a CPI adjustment on an annual basis. Member Gross — Doesn't that depend on what the final millage rate is going to be? Is there money in the unassigned fund? Chair Gitner — The money is there. The whole purpose is to have this money available to the Town Manager in the case of a disaster. The reason to bring this up is because it makes no sense to add $50k a year when the money is available, so I would like to make a recommendation to the Commission. Member Giacoma — Clearly this is in the best interest of the town; however, I want to be sure that we are working in sync with the Commission and they are comfortable with this recommendation at this moment in time. Chair Gitner — The Commission has already decided to fund this account; it is just being fund on a $50k yearly basis. MOTION: Member Buchsbaum moved make a recommendation to the Town Commission to take a portion of the reserve fund that would be necessary to fill up the disaster recovery fund to the already agreed upon amount to $500k. Chair Gitner — I would like to amend the motion. Member Buchsbaum — Go ahead. Chair Gitner — [Amended motion; language added to the main motion.] To have the commission consider whether or not the fund should increase on an annual basis by some factor to be recommended by the Finance Director, be it CPI or something like that. AMENDED MOTION: Member Buchsbaum moved to make a recommendation to the Town Commission to take a portion of the reserve fund that would be necessary to fill up the disaster recovery fund to the already agreed upon amount of $500k, and to have the commission consider whether or not the fund should increase on an annual basis by some factor to be recommended by the Finance Director be it CPI or something like that. Member Giacoma seconded the motion. Discussion: Financial Advisory Board Monday, August 20, 2012 Page 7 of 10 Commissioner Sheridan — How much is required to meet that balance out of the reserves? Director Curtis — $150k. By a show of hands, the motion passed with a 510 vote. Commissioner Stern — Does that recommendation carry a CPI? Chair Gitner — Yes, it is a recommendation to the Commission to task the Finance Director with recommending something, sort of a factor, whether or not CPI is appropriate. I do not know whether you all use CPI or some other factor that the Finance Director would recommend. B) Fund Balance: Develop Strategies to Identify the Proper Amount and to Preserve it. Director Curtis — At this time, it appears that the Town Commission has taken a major step toward preserving the Town's unassigned fund balance by tentatively adopting a tax rate that fully closes the Town's operating budget gap, thus eliminating the need to draw down again on our surplus funds for annual, on -going operating expenditures. Chair Gitner — The term "unassigned fund balance"- should we broaden the pie and categorize these different pools of money? We have a capital budget, we have a disaster relief fund, so why have an unassigned fund? It does not seem like a very good term. Director Curtis — As far as the term, we are mandated to call it the unassigned fund. The Governmental Accounting Standards Board (GASB) issued a statement that we had to implement last year, and that is where that term comes from. We can recommend to the Commission to name the different pieces of the pie, but the unassigned fund balance is what the town has left over that is not assigned. Member Brooks — Are the projects such as the fire truck and the reserve fund prioritized? If we have a pie of $100, how would we break that down? Director Curtis — The Commission started such a prioritization through their three-year strategic plan. Chair Gitner — Did the plan have numbers attached to it though? Director Curtis — The plan had estimated figures to it, yes. Commissioner Stern — Also a numerical value. Director Curtis — Some were not necessarily quantifiable. The ones that have a numerical value, I will incorporate those figures. Chair Gitner — Please make this an agenda item for discussion at the next regular meeting. Member Buchsbaum — If we have a minimum of 16.7% in the unassigned fund balance, what would that number be with the changes that we made today and the 3.95 millage rate that is projected? Director Curtis — The last monthly financial report has a section for fund balance, which gives a breakdown of each classification. The 16.7% is not included in the unassigned fund balance. In the policy that we have set it is called an assigned fund balance, which is put aside for that 16.7% to provide us with two -months of operating expenditures. The current balance is $1.8 million. Member Buchsbaum — Where are we currently projected with this budget? Director Curtis — Approximately $1.9 million. Member Gross — That is after taking out the Financial Advisory Board Monday, August 20, 2012 Paae 8 of 10 money for the disaster relief fund? Director Curtis — $100k will be taken out of the unassigned fund balance, if the Commission approves this recommendation. Chair Gitner — Which is over and above the two months? Director Curtis — Correct. NEW BUSINESS: Chair Gitner asked for any New Business items. Member Gross — Has the bank taken back the vacant lot located at 3200 S. Ocean Blvd.? Commissioner Sheridan — Yes, they have. Chair Gitner — Is anyone from the Town talking to the bank? Mayor Featherman — No, not that I know of. Commissioner Sheridan — I know that they took it back for $1.5 million. Chair Gitner — The $1.5 million was owed to them and they foreclosed? MMor Featherman — They were the only bidder there. It went for $1.5 million. Member Giacoma — So clearly, the bank doesn't want to own it. Mayor Featherman — I am sure they don't. Chair Gitner — If there is a way to use the Boca property to swap with or even assign the bank the first million and half dollars of the proceeds to get 3200 S. Ocean Blvd., we could do some creative financial engineering that shouldn't cost the town any money. I would be the first in line to pay $1.5 million for a property worth ten times that amount. There would need to be a plan in place for the use of the property prior to the purchase; otherwise, if the town owns the property, it will come off the tax rolls. How much do they pay in taxes in to the town? Director Curtis — I will find out. Mayor Featherman — There is a possibility to move the town offices such as the Police Department and the Library needs parking. We could move the entire [town hall] facilities to a facility like this that would be available. Chair Gitner — At 3200? Muo - Featherman — Yes. Chair Gitner — I got a feeling that it would take a long time to build. Mayor Featherman — I don't know. We can probably get some sponsors. I have spoken to sponsors to see if they would have it named after themselves. I did meet with one bank and four people from their bank, but I have not done anything further because I feel it has to go to the Commissioners to get approval to do something like that, but I did meet with a bank. I met their Vice President. Chair Gitner — This idea emanated from having a town park for the townspeople, and that property happened to be in the middle of the town. Who is the center point on an item like this? Manager Weiser — This was not a high priority item in the Strategic Plan, and that would be a policy decision of the Commission. Chair Gitner — This is an opportunistic option. It might be there for the taking. I would be happy to work on thinking of ideas. Mayor Featherman — Originally, we had thought about having a park there and getting sponsors to name the park after themselves. That is the reason we thought about it at the time. However, we have not pursued it any further. It is a good subject for the Board to bring up. Member Gross — That may come up with the request for proposals from commercial realtors. Financial Advisory Board Monday, August 20, 2012 Page 9 of 10 Chair Gitner — Does this come within the purview of this Board? Director Curtis — No. Chair Gitner — Maybe we should have a motion to request the Commission to task the Board with looking at the implications of various land uses. Manager Weiser — I think the Commission has made the policy decision to hire a commercial real estate agent hoping that the agent would look into that scenario. However, the Commission has not made having a park a high priority because that would take money off the tax rolls, which is less revenue. Chair Gitner — What I am suggesting is that the potential uses are researched as to whether it should be a park, housing, etc. Do we want to make a motion requesting that the Commission task the Board to research this information without having a preordained decision? Director Curtis — The realtor will review those opportunities and bring the information to this board or the Commission. Mayor Featherman — Mr. Chairman, you have an appraisal of the properties in Boca Raton; of course, they need to be re -appraised, but it gives you an idea that it could have gone for as much as $10 million back in 2006 I believe, or 2007. You can use that probably as collateral on something you are working on, no matter what item you are working on, to use that as a collateral until it is sold. Chair Gitner — I think we need some financial engineering. I am not sure you are going to get that from a realtor or broker. My experience with realtors/brokers is that they do well when you tell them what to do. I am looking for my colleagues to want to ask the Commission so we can delve into this deeper. We are not asking to spend any money. We simply do not want to overstep our boundaries. MOTION: Member Giacoma moved that the Financial Advisory Board, by its definition as far as what our responsibility is, we would like to be involved with the Commissioners on this project. If we can lend any insight and assistance whatsoever, we would be delighted by our definition. Member Gross seconded the motion, which passed unanimously by a show of hands. Mayor Featherman — When I reactivated the Financial Advisory Board, the prior board had been on television. Look what is happening now. We have a great advisory board, I'm proud of you, and I want you to know that. I have said it all over town. The Board scheduled their next regular meeting on Thursday, September 20, 2012, at 9:30 AM. Member Brooks — How many recommendations have we made to the Commission? Have we received a response? Director Curtis — I will provide a list of recommendations sent to the Commission, and their action. Commissioner Stern — Member Giacoma, when you are riding up and down the bike trail, do you find it better on black top or concrete? Member Giacoma — Concrete is preferable. It has more tenacity, it's evener, it's a sure thing. It will be less prone to the crack falls, basically the weather changes. Commissioner Stern — Not being a softer Financial Advisory Board Monday, August 20, 2012 Paae 10 of 10 ride? Member Giacoma — That is correct. It is not a softer ride. I ride on the street, and I run on the sidewalks. I am not worried about that, honestly. The sureness of the surface, basically, you cannot beat with concrete. Poured concrete is clearly the safest way for a person to basically navigate. Commissioner Stern — There is a huge difference in cost. Member Giacoma — I know it is, sir. I do know the difference. I do apologize for that, but as we are all getting a little bit older, it is the insurance of safety, plus the test of time, it is going to last a lot longer. ADJOURNMENT: There being no further business, Chair Gitner called for a motion to adjourn the meeting at 10:24 AM. MOTION: Member Giacoma moved to adjourn the meeting at 10:24 AM. Member Brooks seconded the motion, which passed unanimously. APPROVED: �----� Gerald Gitner, Chair Ronald Brooks, Board Member David Buchsbaum, Board Member William Gross, Board Member TOWN SEAL ATj T S`TE Valerie Oakes, CMC, Deputy Town Clerk Date: September 20, 2012