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2015.07.22_FAB_Minutes_Regular TOWN OF HIGHLAND BEACH MINUTES OF THE FINANCIAL ADVISORY BOARD REGULAR MEETING Wednesday,July 22,2015 9:00 A.M. Members Present: Chair Gerald Gitner, Board Member Dragos Alexe, Board Member David Buchsbaum, Board Member Bruce Giacoma,Board Member Edward Kornfeld, and Board Member Lori Wolin. Also Attending: Finance Director Cale Curtis, Town Clerk Valerie Oakes, Deputy Town Clerk Patrice Robinson, Commissioner Carl Feldman, Commissioner Louis Stern, Commissioner Rhoda Zelniker, Town Manager Beverly Brown, Public Works Director Ed Soper, Police Chief Craig Hartmann, Interim Library Director Suzi Hayes and members of the public. CALL TO ORDER: Chair Gitner called the Regular Meeting to order at 9:00 A.M. in the Town Commission Chambers. Roll call was taken by Deputy Town Clerk Robinson followed by the Pledge of Allegiance. 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 REOUESTS: There were no public comments. PRESENTATIONS: A) Introduction of New Member Wolin. Member Wolin introduced herself and stated that she was a previous member of the Code Enforcement Board. She provided her background information regarding her education and work experience. She has been a resident of Highland Beach for 13 years. B)2015 -2016 Proposed Budget—Finance Director Cale Curtis Finance Director Curtis explained the budget process. The budget process formerly kicks off the end of April and the beginning of May. The department heads meet with the Town Manager and Finance Director where budget worksheet forms and expectations are distributed. The department heads take about 15-20 days fill out budget requests and Financial Advisory Board Regular Meeting Minutes Wednesday,July 22,2015 Page 2 of 7 worksheets submit them back to him where I compile them meet with the Town Manager scrutinize and look at the budget requests and gather further information in regard to them at that point as the requests go through they go into the recommended column of the budget. Right around the first week of July we receive the estimated taxable value from the Property Appraiser which kicks off the formal process with the Town Commission.A week after that the budget document is delivered to the Town Commission. After that the Town Commission holds the first formal special meeting regarding the budget where they set the tentative maximum millage rate, which took place on July 14, 2015. This is the rate that is advertised on the preliminary tax notices that are sent out around the middle of August. The tax rate is an adjustable rate as we go through the budget process. It can always be lower, however, raising that tax rate is significantly harder and costly as we have to re- advertise and provide notice again to all taxpayers in Highland Beach via certified mail. In the beginning, we typically ask the Commission to set the tentative maximum millage rate at the higher end of the spectrum with the idea that as we work through the process we can ultimately lower the tax rate. Finance Director Curtis continued his presentation which included discussion of the town's taxable value, understanding your tax bill, unassigned fund balances, town's tax rate, general fund revenues, general fund expenditures, water system proposed budget, sewer system proposed budget, 5-year capital improvement plan, and millage rate scenarios. Please see attached Exhibit A. -Finance Director Curtis explained that the unassigned fund balance for the general fund is the town's reserve funds that are not assigned to any particular purpose and is commonly known as the rainy day fund. The Commission can use it at their discretion to lower taxes, to pay off debt and to fund one time capital improvements. It is estimated that the fund will have a surplus in 2016. He further explained that the water and sewer funds have their own versions of the unassigned fund balance. Chair Gitner asked if there is an objective to have a certain amount or percentage in the unassigned fund balance or does it just happen. Finance Director Curtis responded that it just happens. He said the town has a very healthy fund balance. He explained the designations for fund balances such as disaster recovery and budget stabilization. Chair Gitner asked if it were two million or five million would he feel better or worse. Finance Director Curtis responded that more is not always better in this case because it becomes a policy decision. The town has a good unassigned fund balance given the structure of the five year capital improvement plan. As we start getting larger projects in there we will be able to expend those funds. Chair Gitner asked if there was a ratio or percentage of the annual budget or five year budgets and is there any kind of a goal or objective standard. Finance Director Curtis responded that the Government Finance Office Association has a standard of 2/12 of the budget which we have assigned. Chair Gitner said it is over and above that. Finance Director Curtis responded that it is over and above the standard. The town does not have a standard for unassigned fund balances. It is essentially a comfort level of the Town Commission and a policy decision of theirs. Chair Gitner said that we are the Warren Buffet of towns. Financial Advisory Board Regular Meeting Minutes Wednesday,July 22,2015 Page 3 of 7 Finance Director Curtis explained that the town tax rate is split between the debt service rate and the operating rate. The debt service tax rate is determined by the annual principal and interest payments on our existing debt when applied to the town's taxable value for that year. It is voter approved debt that is an automatic calculation that the Town Commission does not have control of.They have control over the 3.95 operating rate which has been in place since 2013 and is also proposed in 2016. As our assessed values go up and we pay down the principal and interest on our debt service the debt service tax rate ultimately goes down. The proposed tax rate is about a 1%decrease from the prior year. He discussed the proposed budget highlights which included an increase of approximately $48,000 based on estimated revenues and expenses of$11,551,450. He explained that all debt service is currently in the water system. The Commission has made a policy decision to fund those debt service payments not by user fees of the water system but by ad valorem taxes. All of the ad valorem taxes flow into the general fund in order to cover the debt service payments we have to transfer those funds into the water systems. The number essentially doesn't change until the principal and interest changes in the water system. Chair Gitner asked if that means that by paying off a debt that we have freed up the liens on FPL and the communications so that if you wanted to do it again you could pledge those again. Finance Director Curtis said yes they can be pledged again. He explained that the amount in reserves represents the surplus amount of revenues over expenditures. It gives the Commission a cushion of funds within the fiscal year that are put into the budget and the Commission can authorize use of those funds without creating a major budget amendment if something unforeseen were to come up.He discussed the personnel expenses for non-bargaining and bargaining employees and a reclassified library position. Member Kornfeld asked if the reclassified position is now responsible for the entire IT structure. Finance Director Curtis responded that the position is currently vacant and we are using outside IT contract services. Funds are budgeted for a part-time position that would become a liaison for town wide IT services. Member Kornfeld asked if the library had their own IT person and if the town used an outside consultant. Finance Director Curtis responded that the library had a full-time person and the town had their own full-time person that was supplemented by an outside vendor.Right now we are fully serviced by an outside vendor. Chair Gitner asked since the position is vacant had any consideration been given to evaluating having a full time contract rather than having our own employee as to which is more efficient. Finance Director Curtis said we are in the process of doing that now as we are in a testing period with the IT consultant. Member Alexe asked why the 5% merit program was eliminated. Finance Director Curtis responded that it was a longstanding program that has been in the town which unfortunately morphed into a 5% increase for everyone. Feedback from the Commission has been that they are not satisfied with that type of program. We have proposed an alternative to eliminate the status quo of the 5%merit increase and have introduced cost of living instead. Member Alexe asked if there should be some type of performance based program in which employees that excel in their duties can be rewarded more than the 2% as 2% is not an incentive to do a good job. Finance Director Curtis said everyone will still be evaluated Financial Advisory Board Regular Meeting Minutes Wednesday,July 22,2015 Page 4 of 7 based on their performance however this budget has taken the raise and the incentive to do better away from the evaluation. Member Kornfeld asked if the 5% became automatic every year which was not working so it was replaced with 2%COLA and 2%step increase. Finance Director Curtis responded yes that is essentially what happened. Chair Gitner said everyone was better than average.Finance Director Curtis said in defense of everyone since we are a small agency there are not a lot of places for employees to hide and not do a good job. He continued his presentation and discussed operating expenses, capital expenses and other general fund expenses. The proceeds from the state revolving fund (SRF) for the water system proposed budget represent the planned proceeds from the state that would fund our major capital improvement projects in the water system those being the two referendum issues — water main distribution lines on our side streets and the calcite CO2 delivery system in our water treatment plant. Chair Gitner said that in the real world that number represents debt that has to be paid back. Finance Director Curtis said both revenues and expenditures are balanced for the proposed budgets for the water and sewer systems. The 2nd-5d'year of the capital improvement plan are the Town Commission'slans and no funds are appropriated at this time as it is used P as a forward planning tool for major projects. He discussed millage rate scenarios. Q Department Head Budget Presentations • Public Works—Ed Soper, Public Works Director Public Works Director Ed Soper provided a presentation regarding the budget for the Public Works department. Please see attached Exhibit B. Public Works Director Soper said there is an increase in personnel expenses due to longevity bonuses. Operating costs have increased due to the replacement of the membranes used to process water. The department is looking to engage a consultant to complete a rate study. Two main projects are the water main replacement and re-mineralization. The SCADA system which is the computer system that runs the water plant needs to be upgraded. Member Kornfeld asked about the progress of the two major projects. Public Works Director Soper responded that they were advertised and a good response has been received, the selection committee has reviewed the responses and will provide the recommendations to the Town Commission. The next step will be to enter into contract negotiations with the selected consultants. Chair Gitner asked when is construction expected to start. Public Works Director Soper said one year after it is approved. Member Buchsbaum asked had there been communications with the community regarding the water main replacement so that they are not surprised by potential expenses associated with the water main replacement. Public Works Director Soper said the issue has been discussed at previous meetings. We are responsible for replacing anything that the Town owns and anything that is generally beyond the meter is the responsibility of the property owner. It has been communicated fairly well. The homeowner is not obligated to change out their service but in order to enjoy the full benefit of the program and the new pipes it would be a good idea. Many of the service lines are old and we recommend that they are replaced. There are some Financial Advisory Board Regular Meeting Minutes Wednesday,July 22,2015 Paae 5 of 7 places that the Town's line extends into private property and if those sections are disturbed they will be replaced by the town. Member Buchsbaum said communication is important in order to prevent blowback. Public Works Director Soper said the contractor that the selection committee is recommending for the water main project did the AIA project and seem to be very astute,good communicators and good community liaisons. We are looking forward to working with them on this project. • Police - Craig Hartmann,Police Chief Police Chief Craig Hartmann provided a presentation regarding the budget for the Police department. Please see attached Exhibit C. Police Chief Hartmann discussed the license plate recognition camera system. The ability to use the cameras on state governed roads is expected to come back before legislation for approval. His presentation provided a breakdown of personnel costs and operating expenses. Member Alexe asked about revenue and if tickets are issued. Chief Hartmann responded that tickets are issued but the revenue received is a very small amount that comes back from the state. A small amount of tickets are issued which does not generate revenue. • Library—Suzi Hayes, Interim Library Director Interim Library Director Suzi Hayes provided a presentation regarding the budget for the Library. Please see attached Exhibit D. Interim Library Director Hayes discussed her tenure as Interim Library Director and the various uses of the library. She noted that there isn't a line item for adult programs because they are funded by Friends of the Library. The line item for repairs has increased due to the replacement of the carpet. The capital outlay for enclosing the terraces was discussed in regards to planned use for the space. It was recommended that only one terrace is enclosed in order to evaluate potential usage. Chair Gitner asked as a personal user if there is a system in place to handle the parking when events are scheduled at the library and at town hall. Interim Library Director Haves said there is an informal system which is the reason for the concerts starting at 5 p.m. since town hall closes at 4:30 p.m. which frees up the parking on the eastern end. St. Lucy's has very generously offered space and we have taken advantage it. We have tried to spread out our events so that they are not happening at the same time. There have been frequent announcements about carpooling. Chair Gitner asked why would there be an informal system instead of having a system. Interim Library Director Haves said the library is not on the same IT system as town hall which makes it difficult to coordinate calendar events. This week we will be moved to the town's system which will allow us to make adjustments as needed. Chair Gitner encouraged the town to spend the money to enclose the terraces. Financial Advisory Board Regular Meeting Minutes Wednesday,July 22, 2015 Paze 6 of 7 APPROVAL OF MINUTES: • March 16, 2015 —Regular Meeting Chair Gitner called for a motion to approve the March 16, 2015 Regular Meeting minutes, as presented. MOTION: Member Giacoma moved to approve the minutes of March 16, 2015 Regular Meeting as presented which passed unanimously. Member Wolin abstained from voting. OLD BUSINESS: No old business. NEW BUSINESS• At this time,Finance Director Curtis provided an opportunity for the board to ask questions regarding the overall budget. Member Giacoma asked about the status of the sidewalks as they are in a difficult condition. Finance Director Curtis said there are funds in the budget for a landscape architect to come in and complete a feasibility analysis which will include improvements to the walk path such as safety and aesthetics. Member Giacoma asked about the legal responsibility as far as people riding bicycles on the path versus the bicycle paths that are on either side of the road. Finance Director Curtis said he does not believe that he can respond to the legal aspects. The law is that bicycles should remain on the bike path or paved shoulder and the walking path be reserved for walking pedestrians. Member Giacoma said sometimes people do use it and it is dangerous as a runner. Chair Gitner shared his view as a walker and mentioned the signs that are posted regarding using an audible bell. Chief Hartmann said that bicycles are legally allowed on the walk path which is a state law. Chair Gitner asked if skateboarders are required to use an audible signal. Chief Hartmann said he believes it also applies to skateboarders. Chair Gitner said part of the problem is that it gets exasperated by the condition of the walkway when all of a sudden someone comes up to you when you are not looking and you go into an area where the walkway is raised and you can trip. There is a compounding issue. Member Kornfeld asked if catastrophe insurance was needed. Finance Director Curtis responded that we do have catastrophe insurance. Our major catastrophe would be a hurricane. The deductible is 5% of the scheduled value. Our reserve funds will be able to sustain the deductible payment in the event of a total loss. At this time there was discussion regarding scheduling the next meeting. Finance Director Curtis said that the Commission will have at least two budget workshops in August. The Commission may request that the Board meet again to discuss specific items. The Financial Advisory Board Regular Meeting Minutes Wednesday,July 22,2015 Page 7 of 7 workshops will be held on August 4th and 25h. Chair Gitner asked if would make sense since everybody is here to schedule a meeting for the first or second week in September and we can change it if necessary. By consensus, the Board scheduled to meet tentatively meet on September 2nd at 9 a.m. ADJOURNMENT: There being no further business to come before the Board, Chair Gitner called for a motion to adjourn the meeting at 10:17 a.m. MOTION: Member Giacoma moved to adjourn the meeting at 10:17 a.m. Member Buchsbaum seconded the motion, which passed unanimously. APPROVED: ��►��c� 08 -Gtr a�i 5 Gerald Gitn C[�-- Dragos Affe-,11oard Member bcw"f GI &__� David Bu sbaum, Board Me er TOWN SEAL Bruce Giacoma,'hQ4rd e ber Edw . 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