2014.07.25_FAB_Minutes_Regular TOWN OF HIGHLAND BEACH
MINUTES OF THE
FINANCIAL ADVISORY BOARD
REGULAR MEETING
Friday, July 25, 2014 9:00 AM
Members Present: Chair Gerald Gitner, Board Member Ronald Brooks, Board Member
David Buchsbaum, and Board Member Bruce Giacoma. Also Attending: Finance
Director Cale Curtis, Deputy Town Clerk Valerie Oakes, Town Manager Kathleen
Weiser, Vice Mayor Ron Brown, Commissioner Carl Feldman, Commissioner Dennis
Sheridan, and Commissioner Louis Stern.
CALL TO ORDER:
Chair Gitner called the Regular Meeting to order at 9:00 AM. in the Town Hall
Conference Room. Roll call was taken by the Deputy Town Clerk Oakes.
ADDITIONS, DELETIONS OR ACCEPTANCE OF AGENDA:
Chair Gitner called for any additions, deletions to the agenda, hearing none, the agenda
was accepted as presented.
Chair Gitner announced that there is currently a vacancy on the Board due to Mr. William
Gross completing his term on the Board. Mr. Gross was recognized by the Board for his
expertise, knowledge and input that he provided in the past three years serving on the
Board.
PUBLIC COMMENTS AND REQUESTS:
No public comments and requests.
PRESENTATIONS:
No presentations.
APPROVAL OF MINUTES:
• April 11, 2014 — Regular Meeting
Chair Gitner called for a motion to approve the April 11, 2014 Regular Meeting minutes.
Financial Advisory Board Regular Meeting
Friday, July 25, 2014 Page 2 of 5
MOTION: Member Giacoma moved to approve the minutes of April 11, 2014 Regular
Meeting as presented. Member Brooks seconded the motion, which passed unanimously.
OLD BUSINESS:
A) Update on the Sale of the Surplus Property
Finance Director Cale Curtis reported that since the FAB's last meeting, Boca Raton
has had to amend their Comprehensive Plan as there was an inconsistency with the
zoning and underlying land use. The Town and the buyer are working together on
the application process. The amendment has made it through the Boca
Environmental Board and the Planning Board process, and the application has been
submitted for review to the Boca City Commission for their regular meeting in
August. Following the approval of the Comprehensive Plan amendment, the buyer
has 10 days to close on the properties.
Member Giacoma — What is the deadline? Director Curtis — November 30
NEW BUSINESS:
A) Review of the Town's Debt Schedule
Director Curtis — At the last meeting, the Board requested that I provide a schedule
of all of the Town's debt instruments. The average interest rates are under 3 %. All
loans are serviced by ad valorem taxes except for one that matures next July.
Director Curtis continued to explain the debt schedule (see attached Exhibit `A').
Chair Gitner — Were you able to get any feedback as to how a pre- payment would be
treated by those four loans? Are they on the back -end or pro rata? Director Curtis —
The one response that I did receive was from Bank of America regarding the 2007
promissory note. If we were to make a partial pre - payment on the loan, it would first
be applied to any accrued interest then to principal. It would not change the annual
debt service payment; it would reduce the length of the amortization schedule. Plus
there would be a pre - payment penalty.
Chair Gitner — Is that the promissory note from the state loan? Director Curtis —
With the state loans as I understand it, there are no pre- payment penalties, but I have
not received feedback as to how the pre- payment is applied. Chair Gitner — It seems
as there is no upside to paying off the debt. The question is what we should do with
the money from the sale of the surplus properties. Should we pre -pay the debt or use
the money to pay for capital improvements? It is important to maintain the Town's
credit worthiness.
Financial Advisory Board Regular Meeting
Friday, July 25, 2014 Page 3 of 5
Member Buchsbaum — Looking at the future, what is a general estimate of the
Town's General Fund? Director Curtis — The outlook is great. We are using
reoccurring revenues to cover our operating expenditures. We are using our
unassigned reserves for one time capital improvement projects. That was the trend
last year, and that is what is proposed for this budget. I do not see a change in that
for the following years to come.
Chair Gitner — Our recommendation would be to not pay down the instruments,
given the current environment. Additionally, review your authority to place money
in CDs. Member Buchsbaum — I think that it is good forward planning. Member
Giacoma — It is responsible.
Member Buchsbaum — Is the emergency fund fully funded at $500,000.00?
Director Curtis — In 2012, the FAB made a recommendation to fully fund the
Disaster Recovery Fund balance. The formal plan was to fund that account by
$50,000.00 each year until it reached a cap of $500,000.00. This Board's
recommendation was to fully fund that and then create a cap that has an inflationary
adjusted measure. I created a revision to the fund balance. My recommendation was
to make the fund a percentage (1/12) of the then in effect general fund budget, which
is equivalent to a month of operating expenses. The Commission was very receptive
to the cap of 1 /12 however, they did not want to fully fund it right away. They
decided that the fund balance account be funded $100,000.00 a year until it reaches
the cap of 1/12% of the then in effect general fund budget.
Chair Gitner — It is not sequestered money; it is merely a label. Director Curtis —
That is correct; it is an accounting designation. The Commission could reallocate
those funds with a motion and affirmative vote.
B) Discussion on the Proposed FY 2014/15 Budget
Director Curtis presented the proposed FY 2014/15 budget provided to the Board
(see attached exhibit `B').
Presentation Questions:
Chair Gitner — In reviewing the capital budget, for example, are there any items in
there for replacements of air conditioners because of the efficiency of replacing them
sooner rather than later? I was thinking of long term investments such as changing
the light fixtures. Are there any projects that have an automatic savings for
efficiency? I would suggest looking into those projects.
Chair Gitner — (page 4) Is the diminution the result of filling the gap rather than
raising taxes? Director Curtis — Yes. The gap is the one time capital expenditure.
This is not a gap due to a reoccurring operating cost or maintenance cost.
Financial Advisory Board Regular Meeting
Friday, July 25, 2014 Page 4 of 5
Chair Gitner — (page 6) Does "Friends of the Library" have a separate budget?
Director Curtis — Yes, it is completely separate from the Town. The Library
Director has a budget from the Town of $60,000.00 for books, DVDs, subscriptions,
and all of their media.
Chair Gitner — (page 8) How do you balance the enterprise funds? Is it a political
decision to not increase the water rates? Director Curtis — The Commission has
made the policy decision to cover the debt of the water fund with ad valorem tax
dollars. The fees that the water fund charges for water goes almost exclusively to
the cost of producing that water, not the debt. The Town's voters have allowed us to
pay for the debt with ad valorem dollars. A majority of the municipalities use the
rates to pay down their debt.
Chair Gitner — Do other towns raise the rates to cover the operating expenses?
Director Curtis — It is a policy decision. The gap is increasing every year; we are
hiring a consultant to review the capital improvements of the fund and the fee
structure.
The Board requested a comparison list of other similarly situated municipalities.
Member Buchsbaum — What is the reserve for the water system? Director Curtis — It
is around $900,000.00, today. Next year we will have to look at our options such as
rate increases or a transfer from the general fund. The increase is maintenance costs
such as the purchasing of chemicals.
Member Giacoma — My concern is the reserve. We should be building during
relatively good times. I think that we are at a good time to go to the residents and
raise the rates. If an emergency occurred, then we will be vulnerable and it is not
fiscally responsible.
Member Buchsbaum — What is the shortfall in the water fund? Director Curtis — The
shortfall is $610,000.00. Essentially we have higher expenses and lower
consumption.
By consensus, the Board agreed that this is the time to look into the water rate
structure.
Member Giacoma offered to assist in the vetting process of hiring a water rate
consultant.
The Board requested to meet the Public Works Director.
Chair Gitner stated that the Financial Advisory Board is available to assist with the
budget, if needed.
Financial Advisory Board Regular Meeting
Friday, July 25, 2014 Page 5 of 5
ADJOURNMENT:
Chair Gitner announced that the next Financial Advisory Board meeting will be held on
Friday, September 5, 2014 at 9:00 AM.
There being no further business, Chair Gitner called for a motion to adjourn the meeting
at9:44
MOTION: Member Giacoma moved to adjourn the meeting at 9:44 AM. Member
Brooks seconded the motion, which passed unanimously.
APPROVED:
Gerald Gitner, Chair
Ronald Brooks, Board Member
p-6 ,, �--
David Buchsbaum, Board Member
Brn Tacoma oazd Member
Vacancy
TOWN SEAL
'
abAit:C. C
Valerie Oakes, CMC
Deputy Town Clerk
Date: _I - 5 - a 0 14
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TOWN OF HIGHLAND BEACH
DEBT SCHEDULE
GENERAL GOVERNMENT -2014
TOTAL PRINCIPAL INTEREST BALANCE PLEDGED
DEBT PAYABLE PAYMENTS INTEREST Date to REVENUE PREPAYMENT
10/1/2013 913012014 9130/2014 9/30/2014 RATE Maturity TERMS
GENERAL GOVERNMENT
2005 BANK LOAN $ 839,014.00 $ 413,11100 $ 21,210.00 $ 425,902.00 2.88% (7/01/15) 1/2 CENT & CST NA
AVG
TOTAL GENERAL GOVERNMENT 9 839,014.00 9 413,112.00 5 21,210.00 5 425,902.00 2.85%
BUSINESS TYPE- ACTIVITY -2014
BUSINESS TYPE- ACTIVITY
2005 BANK LOAN $ 19,072.00 $ 9,391.00 $ 182.00 $ 9,881.00 2.88% (7/01/15) 1/2 CENT & CST NA
2007 PROMISSORY NOTE 3,554,889.00 178,289.00 118,591.00 3,376,600.00 3.41% (2/07/29) ADVALOREM $ 217,864.00 AS OF 05/01/14
STATE LOAN- OW502901 6,652,874.00 551,305.00 187,119.00 8,101,389.00 2.87% (3/15/24) ADVALOREM NA
STATE LOAN- DW500200 2,663,618.00 124,066.00 74,245,00 2,539,560.00 2.82% (3/15/30) ADVALOREM NA
STATE LOAN- DW500201 712,124.00 33,789.00 18,367.00 878,356.00 2.61% (3/15/30) ADVALOREM NA
AVG
TOTAL BUSINESS TYPE- ACTIVITY 5 13,602,376.00 5 596,820.00 9 398,504.00 9 12,708,565.00 2.92%
TOTAL GOV'T- WIDE DEBT 5 14,441,389.00 9 1,309,932.00 5 419,714.00 9 13,131,457.00
FUTURE IMPACT SCENARIOS
LAND SALE PROCEEDS $ 3,500,000.00
INTEREST PRESENT VALUE DIFFERENCE
OPTION 1- INVEST PROCEEDS $ 613,636 508,848 108,788.00 3 YEAR LADDER INTEREST- 15 YEARS (ASSUMES 5% INCREASE IN RATE EVERY 5 YEARS)
OPTION 2- PAY DOWN DEBT (2007 NOTE) $ 734,820 444,368 290,45100 INTEREST SAVINGS OVER REMAINING 15 YEARS. (INCLUDES PREPAYMENT FEE OF $217,864)
OPTION 3- OFFSET DEBT FOR FUTURE CIP $ 875,665 582,056 313,609.00 INTEREST PAID ON $3M 15 YEAR BANK NOTE AT 3% PLUS $25K (COUNSEL AND CLOSING COSTS)
Note: Staff Is researching what the financial Impacts would be If the Town were to make full or partial prepayments on these loans. We are awaiting responses from the Bank and State and hope
to have more Information by the time the FAB meets on July 25th.
Proposed Operating Budget
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..4 014 -2015
TOWN OF HIGHLAND BEACH
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The Town's Taxable Value
$2,400,000,000
$2,200,000,000
$2,000,000,000 N
$1,800,000,000 0
$1,600,000,000
■ ■
$1,400,000,000 �
■ v ■
■ ■
$1,200,000,000
$ 00,000,000
2007 2010 2011 2012 2013 2014 2015
2
Bill
Understanding Tax
Total tax bill is split among multiple taxing How Highland Beach Taxes
authorities: Are Divided
•Public School
•County
•Highland Beach
Special
•Special Districts (6) Districts
12% County
Total tax bill provides for: 25%
•Police /Fire Protection Hig hland
'Public Schools Beach
•Improved Roads 24%
•Parks and Recreation
•Sanitation Disposal Public
Schools
39%
Highland Beach's portion is less than a
quarter of the total tax bill. 201 3 Tax Distribution
3
Unassigned Fund Balance
$ 5,000,000
$4,500,000
$4,000,000
$3,500,000
$3,000,000
$2,500,000 : o
$2,000,000 0
$1,500,000 : o
$1,000,000 N.
$ 500,000 - -
N
$_ i_ T
e Ox
Vim * Does not include $3.5 million in
land sale proceeds 4
Town Tax Rate
6 4.8673 --
4.8054
5 _ 4.6413 • Debt Service
4 • Operating Rate
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2014 -2015 General Fund
Proposed Budget Highlights
Revenues Expenditu
■ Taxable Value increase 6.27% ■ Personnel Services increase 5.1%
■ Balanced Budget achieved • Health Insurance up 8.73%
Reclass P/T to F/T in Clerk's Office-
with: Electronic Filing Project- $22k
• No tax rate increase • Operating Expenses up 4.3 %:
• Ad valorem taxes up $430k • Scanning/Electronic Archiving $27k
• $42k decrease in permit • Fire services agreement up $102k
revenues (contractual)
• Fire Vehicle Maintenance Fee $130k
• $409k from unassigned fund • Fire Station Repairs- $15k
balance to cover capital • General repairs /maintenance to Town
projects facilities up $33k
• Solid Waste Collection up $16k
• Library Media- $60k
6
Capital Outlay
General Fund- $426,000 co. • o
■ Public Works: v o
• W/P Kitchen Renovation (termite infestation)- $7,000
• Replace PW Truck- $27k
• Replace air handler (library)- $40k
• Replace Gator 4x4- $10k
■ Other General Gov't
• Virtual Server Upgrade- $15k
■ Police Department:
• Replace two (2) police cruisers and equipment- $76k
• Purchase/Install License Plate Recognition System- $68k
■ Fire Department:
• Exhaust System for Diesel Fumes- $30k
■ Library:
• Enclosure of Library Terraces- $150k
• Replace (3) Computers- $3,600
Water System Proposed Budget
Revenues Expenditures
■ Charges for Service: ■ Personnel:
$1,980,720 $1,068,000
■ Miscellaneous: ■ Operating Expenses:
$143,000 ° $1,321,600
• Transfer from GF (debt): ► Capital Outlay:
$1,286,000 $305,000
■ Appropriation from Reserve: ■ Debt Service:
$ 610,000 $1,298,850
► Reserve for Contingency
■ Total estimated revenue $ 26,270
$4,019,720 ► Total estimated expenses
$4,019,720
8
Sewer System Proposed Budget
Revenues Expenditures
■ Charges for Service: ■ Operating Expenses:
$1,010,000 $1,074,650
■ Miscellaneous: ■ Capital Outlay
$3,000 $44,000
■ Reserves: � ►Reserve for Contingency:
�.� . g y
$127,303 $21,653
► Total estimated revenue ► Total estimated expenses
$ 1,140,303 $1,140,303
c 9
5 Year Cap Improvement Plan
Estimated Annual
Fiscal Year Fund Project Name Initial Cost (est.) Costs /(Savings) Funding Source
General Fund Replace Police Cars (2) $ 72,000 na General Fund's Unassigned FB
General Fund License Plate Recog Cameras $ 68,000 $ 2,500 General Fund's Unassigned FB
General Fund Replace Fire Apparatus $ 830,000 na General Fund's Unassigned FB
General Fund Replace Fire Rescue $ 325,000 na General Fund's Unassigned FB
General Fund Exhaust System- Fire Station $ 30,000 na General Fund's Unassigned FB
General Fund Enclose Library Terraces (2) $ 150,000 $ 1,000 FOTL Fundraising/GF's Unassigned FB
2014 -2015 General Fund Replace Air Conditioner- Library $ 40,000 na General Funds Unassigned FB
General Fund Replace PW Pickup w/ SUV $ 26,500 na General Funds Unassigned FB
Water "Smart" Metering Upgrade $ 55,000 na Water Fund's Unassigned FB
Water Air Handler- Chemical Room $ 50,000 na Water Fund's Unassigned FB
Water A/C Replacement- RO Plant $ 75,000 na Water Funds Unassigned FB
Water Exhaust Fan Replacement $ 60,000 na Water Funds Unassigned FB
Sewer Telemetry Replacement $ 30,000 na Sewer Fund's Unassigned FB
General Fund Replace Police Cars (2) $ 72,000 na General Fund's Unassigned FB
General Fund Repave Town Hall Parking Lot $ 71,000 na General Fund's Unassigned FB
General Fund Replace Library Carpet $ 59,000 na General Fund's Unassigned FB
2015 -2016 General Fund Streetscape- design /architect $ 85,000 na Open Space & Recreation's Unassigned
Water SCADASystem $ 70,000 na Water Fund's Unassigned FB
Water Purchase Calcite Flow System $ 950,000 $ (30,000.00) Bond Proceeds /SRF Loan
Water Side Street Water Mains $ 3,220,500 na Bond Proceeds /SRF Loan
General Fund Replace Police Cars (2) $ 68,000 na General Fund's Unassigned FB
2016 -2017 General Fund Streetscape- construction $ 775,000 na General Fund's Unassigned FB
Water Replace RO Cartridges $ 500,000 na Water Fund's Unassigned FB
General Fund Replace Police Cars (2) $ 68,000 na General Fund's Unassigned FB
2 017 -2018 General Fund R eplace PW Boom Pickup $ 75,000 na General Fund's Unassigned FB
Replace Pickup Truck $ 35,000 na Water Fund's Unassigned FB
2018 -2019
10