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2019.08.20_TC_Minutes_RegularO� N1GHLgNO s � v � s O RIDP' TOWN OF HIGHLAND BEACH TOWN COMMISSION SPECIAL MINUTES Town Hall / Commission Chambers 3614 South Ocean Boulevard Highland Beach, Florida 1. CALL TO ORDER Date: August 20, 2019 Time: 12:00 PM Mayor Zelniker called the Regular Meeting to order at 1:30 p.m. in the Commission Chambers and asked those present to kindly silence all cell phones. 2. PRESENT UPON ROLL CALL Commissioner Evalyn David Commissioner Barry Donaldson Commissioner Peggy Gossett -Seidman Vice Mayor Greg Babij Mayor Rhoda Zelniker Town Manager Marshall Labadie Town Clerk Lanelda Gaskins 3. PLEDGE OF ALLEGIANCE Town Commission led the Pledge of Allegiance followed by a moment of silence. 4. ACCEPTANCE OF THE OF THE AGENDA Mayor Zelniker asked if there was a motion to accept the agenda as presented. MOTION: Commissioner David moved to accept the agenda as presented. Commissioner Donaldson seconded the motion, which passed unanimously. 5. CIVILITY PLEDGE Town Clerk Lanelda Gaskins read the Civility Pledge: We will be respectful of one another even when we disagree We will direct all comments to the issue We will avoid personal attacks "Politeness costs so little." By: Abraham Lincoln Town Commission Special Minutes Page 2 of 33 Date: August 20. 2019 6. PRESENTATION BY RACOUEL McINTOSH OF GRAD & ASSOCIATES REGARDING THE COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE TOWN FOR THE FISCAL YEAR ENDING SEPTEMBER 30, 2018. Ms. Racquel McIntosh, with Grau and Associates introduced this item and gave a briefly review the audit report for Fiscal Year ended September 30, 2018. She stated page one was the Independent Auditor's Report, which indicated there was an unmodified, clean Opinion noting Grau believed the Financial Statements fairly presented the financial position of the Town for the Fiscal Year Ended September 30, 2018. She reported there were no new GASB standards to be implemented in the current year. She stated page 88 was the report on the Town's Internal Control over Financial Reporting and Compliance; Grau did not detect any material weaknesses or significant deficiencies in the internal controls. She noted there were some internal control findings, but no material weaknesses or significant deficiencies. Ms. McIntosh stated the Town of Highland Beach qualified for a Single Audit, which was a combination of Compliance Audit and Financial Statement Audit as related to the State Revolving Fund Loan. She stated the Single Audit indicated in Grau's opinion the Town complied in all material respects with the program requirements for the State project. She stated page 92 showed the State Revolving Loan (for the drinking water facility construction) which was tested during the Single Audit. She stated page 94 was the Schedule of Findings and Questioned Cost, which revealed there were no findings, or questioned costs related to the State Project, which was audited. She stated on page 95, the report on the Town's compliance with Florida Investment Statute 218.415 showed, in Grau's opinion the Town was in compliance with all the material requirements, except for the Continuing Professional Education requirement, which was a result of a change in the Finance Director Position. She stated page 97 was the Report to Management, which contained two findings: one related to the Budget and the other related to adjusting journal entries. She stated Grau had discussions with management who recognized the causes of the findings and were taking corrective steps for the issues identified. Vice Mayor Babij stated he had no questions or comments. Commissioner Donaldson stated he had no questions or comments. Commissioner David stated she had no questions or comments. Commissioner Gossett -Seidman stated she had no questions or comments. Mayor Zelniker thanked Ms. McIntosh. Mayor Zelniker noted Public Comments were limited to three minutes and asked for speakers to state their name and building/address for the record. She asked if there were any Public Comments; hearing none, she closed Public Comments for this Item. Town Commission Special Minutes Date: August 20. 2019 Page 3 of 33 7. DISCUSSION AND ACCEPTANCE OF THE PROPOSED BUDGETS FOR FISCAL YEAR 2019-2020 FOR THE FOLLOWING GENERAL FUND OPERATING DEPARTMENTS: Town Manager Labadie noted there were many funds to be reviewed, starting with the General Fund. He noted there were approximately $433,950 dollars in changes accepted by the Commission, which brought the original gap of approximately $700,000 dollars down to $294,000 dollars, which would be the point of conversation moving forward. He stated there were a couple of options to consider for elimination of this $294,000 budget gap: a millage increase of 0.1127 or a pledge of $294,500 dollars from reserves. Finance Director Matthew Lalla reported the Budget Highlights included: • Increase in Total Millage Rate of 3% (7.2% over the rollback millage) • Slight decrease in Debt Service millage • Increase in Fire -Rescue budget of approximately $215,000 dollars due to Contract increases with the City of Delray Beach • Funding of salaries and benefits required under the Town's Collective Bargaining Agreements • Funding of capital projects including an ERP (Town -wide financial information system), Town Hall Renovations (Security, Offices), and Vehicle Replacements (Police, Public Works) Finance Director Lalla noted originally there was a proposed increase of 0.3337 mills; the revised millage increase was 0.1127 mills. He explained this would cover the needed $294,000 dollars or a mixture of revenue pledging could be used to cover the needed $294,000 dollars. He displayed a list of General Fund Budget cuts totaling $433,950 dollars. He noted the proposed millage increase put the Town at the same millage rate as Fiscal Year 2017. He stated Town taxes represented approximately 20% of total taxes paid by Town residents, with the County and Schools making up the majority of the tax bills with approximately 10% going to other taxing authorities such as South Florida Water Management District, the Children's Services Counsel and Public Health. He displayed a chart which illustrated the breakdown of General Fund Revenues. He noted 80% of revenues were generated by property taxes. He displayed and discussed a chart which illustrated the breakdown of General Fund Expenditures. He noted roughly 60% was allocated to Police and Fire Services. He noted the Town entered the Fiscal Year 2020 with a strong financial position. He stated there was an unassigned fund balance within the General Fund which was equivalent to approximately 47% of General Fund Expenditures and Transfers Out. He noted a pledge of $700,000 dollars in 2018 Fund Balance dollars was committed to balance the Fiscal Year 2019 Budget. He reported for Fiscal Year 2020 there was a new Special Revenue Fund for the Building Department which complied with recent State Legislation requiring segregation of these funds. He noted there was a transfer in from the General Fund as the Town was not permitted to use Building Permit Revenues to pay for the Town Planner position; therefore, the $52,000 dollar transfer which was new for the FY -2020 Budget represented the net cost between revenues generated by the position and the personnel cost associated. He reported another Special Revenue Fund was for the Discretionary Sales Surtax. He noted $315,000 dollars was allocated towards the crosswalk project, $50,000 dollars was allocated to security improvements within Town Hall, and $45,000 dollars was allocated for street sign replacements and painting of the emergency generator building (costs were split between the sales tax fund and the water fund). He displayed a chart which illustrated the breakdown of the Water Enterprise Fund. He noted there was significant capital outlay of $435,000 dollars within the water fund and the revenue assumption was based on a 3% increase in water and Town Commission Special Minutes Page 4 of 33 Date: Aueust 20.2019 sewer rates effective October 1, 2019. He explained the 3% increase generated roughly $62,000 dollars. He displayed a chart which illustrated the breakdown of the Sewer Enterprise Fund. He noted there was an assumed 3% increase in sewer rates. He displayed and discussed a chart which illustrated the breakdown of 2020 Capital Projects. He displayed and discussed charts which illustrated the Millage Rate Scenarios and Millage Impact on Homeowners. He noted most homeowners in the Town would see a tax increase of approximately $56 dollars with the millage increase. Town Manager Labadie reported the Major Initiatives for FY -2020 included the Crosswalk Project. He noted the New Strategic Plan would be developed which created a "game plan" for how the Town moved forward as a community, and how the Town allocated and aligned resources and anticipated potential cost points. He stated the town would review the integrity of Sanitary Sewer System and implement the new ERP System (financial system, utility billing, and building department). He explained the new ERP System would improve productivity, transparency and reporting. He reviewed the upcoming Budget meeting dates including Public Hearing dates of September 5th and September 19th, 2019. He noted September 19th, 2019 was the last opportunity to make changes to the Budget. Commissioner David had no comments. Commissioner Donaldson had no comments. Commissioner Gossett -Seidman had no comments. Vice Mavor Babii had no comments. Mayor Zelniker opened the floor for Public Comments and noted each speaker would be limited to three minutes. John Ross stated he lived at Casuarina. He asked if the $700,000 dollars from reserves in 2019 was being paid in 2020 or if this had already been removed from the reserves. Town Manager Labadie responded last year the Commission approved the use of $675,000 dollars to fill the Budget gap. He explained moving forward with this year's Budget, at this current point there was a Budget gap of $294,185 dollars. Mr. Ross asked if the ERP was considered a capital improvement project. Town Manager Labadie responded in the affirmative. Mr. Ross asked if any savings were promulgated due to the ERP. Town Manager Labadie responded in the negative. Mr. Ross asked why the ERP was being obtained if no savings were promulgated. Town Manager Labadie explained the ERP would improve productivity. He noted a lot of unnecessary time was spent "doing things the old way." He explained the various reasons why the ERP was necessary: improved communication and connectivity between departments, improved accounts payable/receivable, and improved simplicity of use. He noted the Town currently paid maintenance costs for software programs which were extremely out of date. He indicated the Budget numbers were based on two proposals from municipal software companies in the area. Mr. Ross stated there were measurable savings found in increased productivity and through removal of maintenance fees for current software. Town Commission Special Minutes Page 5 of 33 Date: August 20, 2019 Mr. Ross asked if there was a cost estimate for the future necessary sewer upgrade. Town Manager Labadie responded this would be reviewed during the Public Works discussion. He discussed some of the problems in the system and noted a video survey would be conducted to determine what the necessary sewer upgrades would be and the cost. Mr. Ross noted the cost for sewer repairs could be significant. He stated he worried with the expenditure of $700,000 dollars out of reserves in 2019 and the possible expenditure of $300,000 dollars in reserves in 2020 the Town had $1 million dollars less available for capital expenditures such as sewer repair. Mr. Ross asked if the Building Department was supplemented by tax funds. Town Manager Labadie responded in the negative; it was 100% funded by fees charged. Mr. Ross asked about the water rates. Town Manager Labadie responded there was a rate study in use dated November 2015 through 2020, an update to that study for the next five year window was underway, and an estimated 3% rise in rates was applied to the rates for FY -2020. Mr. Ross noted the General Fund provided the difference in the rate revenue versus water plant operation cost. He stated he felt the water rates in Highland Beach rewarded the profligate use of water. He stated it would be better to reward those who saved water. He suggested a revision of the rate schedule. John Stump stated lived in the Ambassadors. He asked what the shortfall in income was in relation to the total expenses in the General Fund. Town Manager Labadie responded $294,185 dollars. Mr. Stump asked if taxes were being raised to cover this gap. Town Manager Labadie responded in the affirmative. Mr. Stump asked if any discussion was held regarding the possibility of reducing expenses in an effort to reduce the gap. Town Manager Labadie responded in the affirmative. He noted the initial gap was reduced from an initial $675,000 dollars by approximately $433,000 dollars to reach the current $294,000 dollars. Mr. Stump congratulated the Town Manager for his efforts and thanked the Commission. John Boden stated his address was 3407 S. Ocean Blvd. He asked about the larger expense items which made up the $700,000 dollar Budget gap in 2019. He asked if it was possible to raise the water and sewer rates to reflect a profit to build against future sewer repair costs. He asked if it was possible to build additional funds into this Budget to speed the completion of the Building Department. Finance Director Lalla explained the $700,000 dollars was not spent on specific expense items, but was a revenue item used to balance the budget in 2019 and avoid a millage increase. Town Manager Labadie noted Delray Fire was a large surprise expense in 2019, there were some legal expenses related to instability operationally, and there were costs related to Collective Bargaining adjustments which combined equaled approximately $700,000 dollars. He explained the budget increase was discovered after the maximum millage rate was set and the Town did not have many options for funding this gap. Finance Director Lalla noted in regards to the water and sewer rates, research was being conducted regarding the possibility of building a reserve over time to anticipate forthcoming capital expenditures within the system. He reviewed the various points of the water and sewer rate study. He noted when a resident paid the monthly charge a healthy portion of the charge was related to an availability fee as opposed to a consumption fee. Douglas Hillman stated the water rate study completed in 2015 included a chart which showed the water rates in several dozen towns in South Florida; Highland Beach had the lowest rate by 20% or more. He stated since 2015 Highland Beach rates went up by 3% annually; however, he Town Commission Special Minutes Page 6 of 33 Date: August 20, 2019 believed every town's rates went up annually; therefore, Highland Beach most likely still had the lowest rates. He noted if the rates went up 10% (rather than 3%), at $20,000 dollars per percent, the Town would bring in half of the remaining budget deficit through water revenue. He stated he did not believe a 10% increase in water rates would be problematic for the residents. He suggested a rebate program for those who used less water as an incentive program for reduced water consumption. He noted this was an excellent environmental program and also a way for residents to counter the 10% rate increase. He stated the Town should obtain the new water rate chart for review. Rick Greenwald stated he lived on Tranquility Drive. He stated he understood the more water generated, the less it cost per gallon. He stated he was concerned about the Fire Safety Contract with Delray Beach. He noted the cost was over a third of the Budget, it seemed to be rapidly escalating, and Highland Beach had no control over the increase in cost. He asked if the contract amount was fair and indicated this could be determined by comparing what other municipalities paid for this type of service, and how many fires and EMT rescue calls Highland Beach had annually. He asked if alternatives had been considered. Town Manager Labadie stated the Town Attorney provided a history regarding this matter at previous meetings. He noted extensive research had been conducted regarding options and alternatives and rates; Delray was significantly lower in cost than the other options by several million dollars. He stated this did not mean the Town would stop searching for alternatives; the Town would do due diligence. He explained Delray Beach had cost elements which were out of the Town of Highland Beach's control and hopefully these would be brought under control by Delray; however, Delray Beach was currently the best option. He discussed the various options which were investigated and discussed the costs associated with EMT and fire response calls. Commissioner Gossett -Seidman stated during a meeting with Delray she learned the Delray Beach Fire Safety fees could increase 5% to 10% per year. She stated she asked Town Manager Labadie to determine the cost to Highland Beach if Delray Beach had a 5% to 10% increase annually. She stated she also learned many buildings in Town had not been constructed to allow access by the current ladder truck; due to landscaping, parking ramps, etc., the buildings were not accessible. She noted Town Manager Labadie agreed to look into adjusting codes to address this issue. Commissioner Donaldson stated the suggested ERP system was consistent with a recommendation made by the Financial Advisory Board, to move in a direction which would enable the Town to examine different scenarios and conduct better financial forecasts. He stated he understood the systems being considered were nimble and could be used to plan these types of what -if scenarios. He stated he believed the ERP system would be an excellent tool for all Town Departments. Vice Mayor Babij encouraged interested parties to watch the last Financial Advisory Board Meeting to hear the presentation regarding the Fire Department and Delray Beach. He noted the next lowest price for Fire Safety was $2 million dollars higher than Delray Beach. He explained the prices and alternatives would be revisited in the future. He stated Highland Beach labor costs and Delray Beach labor costs both went up 5% last year which was why there was a 5% rise in the Fire Safety contract costs. He stated the 5% rise was not an unreasonable number. Town Commission Special Minutes Page 7 of 33 Date: August 20, 2019 Mayor Zelniker indicated the Fire Safety contract with Delray Beach was discussed regularly. She explained Boca Raton refused to partner with Highland Beach and if Highland Beach chose to institute its own fire department it would cost millions of dollars more than what Highland Beach was currently paying. She explained last year the millage rate was set prior to knowledge of the rate increase. Finance Director Lalla stated a budget was basically a package of estimates and based on the package of estimates associated with the FY -2019 Budget there was a $700,000 dollar short fall which was made up with the use of General Fund reserves. He stated in 2018 there was a pledge of $300,000 dollars to balance the budget. He stated the General Fund ended 2018 with a surplus of revenues over expenditures of about $160,000 dollars which did not include the $300,000 dollars in reserves. He explained similarly at the end of 2019 he did not believe the full amount of $700,000 dollars would be necessary to balance the budget; he felt it would be more in the vicinity of $150,000 dollars to $200,000 dollars. Vice Mayor Babij_ asked if he understood correctly the Town would not actually use the budgeted $700,000 dollars from reserves, but would only use approximately $200,000 dollars from reserves. Finance Director Lalla responded in the affirmative. Vice Mayor Babii asked if this was attributed to what was currently being budgeted. Finance Director Lalla responded in the negative; this was due to a mixture of many factors. He explained revenue sources might come in higher than anticipated, some expenditures might be lower than anticipated and he believed once the FY -2019 budget was balanced the Town would only need to utilize between $150,000 dollars to $200,000 dollars of the pledged $700,000 dollars in reserve monies. A. Town Commission Town Manager Labadie summarized the Budget sections. Finance Director Lalla stated the Town Commission Budget was increased from FY -2019 by $10,944 dollars (6%) due to personal services, FRS rate increases, and operating expenses related to advisory board member', stipends, printing and, publications, postage costs, and travel and per diem costs for the Florida League of Cities conference. He noted the increases were offset by a reduction in the expense account of Town Commission Members from $1,500 dollars per Member to $500 dollars per Member. He stated the changes were outlined in the Budget worksheet following the summary page. Vice Mayor Babij stated the advisory board member stipends were $3,000 dollars higher than last year. He asked for the reasoning for this. Town Manager Labadie stated it was anticipated the frequency of meetings would increase which tied into the increase in projects which required planning. Vice Mayor Babd asked about the Spring Fling and Light up the Holidays events. He asked if the costs were related to what was spent previously for these events. Town Manager Labadie explained these event costs had been covered in the past with differing funding sources; however, these events were primarily Town Commission events and as such it was decided to budget for the costs with the Town Commission budget. He noted the budgeted amounts did not anticipate the potential savings the Town was attempting to obtain. Vice Mayor Bab! asked why the Town Commission shirts were budgeted at $1,000 dollars. He noted this would be approximately $100 dollars per shirt. Commissioner Gossett -Seidman recommended omitting the Town Commission shirts; she felt this was wasteful. She noted an inexpensive name tag would Town Commission Special Minutes Page 8 of 33 Date: August 20, 2019 suffice during public events. Commissioner Donaldson stated he felt during public events it was good to have the Town Commission shirt as it helped the public to clearly identify the Town Commissioners. Commissioner David stated she did not feel this was a major budget issue. She noted the full $1,000 dollars was not actually spent annually for shirts. She asked how much the shirts actually cost. Town Clerk Gaskins indicated the shirts cost approximately $75 each including the Town logo. Vice Mayor Babii recommended budgeting for one shirt for each Commissioner at $75 dollars each. Mayor Zelniker recommended the shirts be purchased through the Town Commission expense accounts as needed rather than being included in the budget. MOTION: Vice Mayor Babij moved to change the line item to one shirt per Commissioner budgeted at $375 dollars total. Commissioner Gossett -Seidman seconded the motion. UPON ROLL CALL: Vice Mayor Babij Yes Commissioner David Yes Commissioner Donaldson Yes Commissioner Gossett -Seidman Yes Mayor Zelniker Yes Motion carried 5 to 0 vote. Mayor Zelniker stated in regard to the advisory board stipend, she was a big supporter of volunteering, and most towns did not pay $25 dollars for a volunteer to attend meetings. She noted she would not wish to be paid to volunteer. She stated this was a $10,000 dollar line item and she did not feel the advisory board members needed to be paid; the amount was insignificant to the individual board members. Town Manager Labadie noted:this line item could be reduced to $7,500 dollars. Mayor Zelniker noted the library volunteers came twice a week every week annually and did not get paid $25 dollars for volunteering. She stated she did not believe the Town should be paying volunteers. Commissioner David asked if the advisory board members would stop attending meetings if the stipend was discontinued. Mayor Zelniker indicated if the advisory board members were paid stipends the library volunteers should be paid stipends as well. Commissioner Donaldson stated the amount should be reduced to $7,500 dollars. He stated it was a modest amount and was an acknowledgement of service. Vice Mayor Babii agreed and indicated the subject of eliminating the stipend could be addressed at a future date. Town Commission Special Minutes Date: August 20, 2019 Page 9 of 33 MOTION: Commissioner Donaldson moved to reduce the advisory board stipend line item to $7,500 dollars. Vice Mayor Babij seconded the motion. UPON ROLL CALL: Commissioner Donaldson Yes Vice Mayor Babij Yes Commissioner David Yes Commissioner Gossett -Seidman Yes Mayor Zelniker Yes Motion carried 5 to 0 vote. Commissioner Donaldson noticed the Highlander postage was included in two different locations in the budget. Town Manager Labadie stated he believed one line item was purely postage, and the other was assistance for assembly and printing. Commissioner Donaldson noted the Highlander was a nice publication and he asked if the Commission was interested in publishing the Highlander quarterly rather than twice annually. Commissioner Gossett -Seidman stated she felt an email version of the Highlander would be more economical. She suggested surveying to obtain emails from residents, in an effort to move toward an email system of communications. Town Manager Labadie noted this was a discussion often held by Staff. He explained some residents preferred emails, some did not; some preferred mailings, while others were not in Town to receive mailings. He stated the website was being reorganized to be mobile friendly and he believed this would give the Town a stronger presence of communication as a whole. He noted an online newsletter would save time and money. He reported the newsletter cost approximately $20,000 dollars to publish twice annually. Mayor Zelniker noted residents in the past complained when the Highlander was not published. She stated she felt there was still a need for the printed Highlander publication. Commissioner Gossett - Seidman indicated there were residents in Highland Beach who did not wish to receive the publication through the mail and would prefer email communication. She suggested reconsidering the glossy structure of the publication which was costly. She suggested the publication be mailed out upon request in an effort to transition to an email communication system. Town Manager Labadie noted the newsletter could be mailed to single family homes, but delivered to condo associations in bundles for distribution; this would bring the cost of postage down. He stated another option was pick up only; the newsletters could be distributed to the library, Town Hall, and condo associations for residents to pick up a copy if desired. Mayor Zelniker asked how many homeowners were mailed copies of the newsletter. Town Manager Labadie indicated every homeowner in Highland Beach was mailed a copy first class which was expensive. Mayor Zelniker recommended a single mailing annually. Douglas Hillman stated he lived in Dalton Place. He stated the Coastal Star was well read; however, the Coastal Star was not sent out through the mail, it was distributed to condo associations in bundles and set out where residents could pick up a copy. He agreed the Highlander could be mailed to single family homes, but distributed to the condo associations for pick up. He recommended enlisting the condo managers for assistance. Town Commission Special Minutes Page 10 of 33 Date: August 20, 2019 Commissioner Gossett -Seidman asked if the Town could sell ad space in the Highlander in an effort to cut costs. Town Manager Labadie responded in the affirmative; however, there was a cost of time and effort to solicit and procure advertisements. Mayor Zelniker stated she felt it was unethical to procure advertisements for the Highlander. Mr. Hillman noted realtors would be pleased to advertise in the Highlander. He stated he believed not only would this defray costs, it might produce revenue. Discussion ensued regarding the potential mailing savings, distributing to condos, Highland Beach consisting of 70% condos and 30% townhomes, villas and single family homes, and increasing or decreasing Highlander publication frequency. Mayor Zelniker asked if Census postcards were included in the Town Commission postage budget line item. Town Manager Labadie responded in the affirmative; the postage line item included all mailings by the Town, not just the Highlander. He recommended a 50% reduction in postage costs if the Commission chose to deliver the newsletter to condo associations in bundles. Commissioner David noted with the Census coming up the budgeted postage amount should not be reduced; it was possible the funds would be needed. MOTION: Commissioner Gossett -Seidman moved to deliver the Highlander to condos in bundles, deliver via mail to single family homes, townhomes and villas, and revisit the quality of and possible versions of the Highlander at a later date. Vice Maw Babii seconded the motion. UPON ROLL CALL: Commissioner Gossett -Seidman Yes Vice Mayor Babij Yes Commissioner David Yes Commissioner Donaldson Yes Mayor Zelniker Yes Motion carried 5 to 0 vote. Mayor Zelniker asked if enough money had been budgeted for the Light up the Holidays celebration as it was to include the 70thAnniversary of Highland Beach this year. Town Manager Labadie responded in the affirmative. MOTION: Commissioner Donaldson moved to accept the Town Commission Budget as amended. Commissioner David seconded the motion. Town Manager Labadie clarified this included a $625 dollar reduction in uniforms and a $2,500 dollar reduction in advisory board stipends. Commissioner Donaldson agreed. Town Commission Special Minutes Page 11 of 33 Date: August 20, 2019 UPON ROLL CALL: Commissioner Donaldson Yes Commissioner David Yes Commissioner Gossett -Seidman Yes Vice Mayor Babij Yes Mayor Zelniker Yes Motion carried 5 to 0 vote. B. Town Manager Finance Director Lalla stated the Town Manager Budget reflected an overall decrease of $73,730 dollars. He noted there was an increase in personal services due to anticipated merit increases and FRS rating increases. He stated this was partially offset by reduction in deferred compensation contributions. He indicated the most significant change was a reduction in operating expenses due to the elimination of an environmental consultant expense. Town Manager Labadie discussed several of the line items including possible reductions in line items to be presented at the next Budget meeting. He noted Town Strategic Planning was to begin in 2020. Commissioner Donaldson asked how the Town Manager Budget tied into the annual performance and compensation package. Town Manager Labadie explained all salaries anticipated the 5% maximum performance increase; however, during the review process this would most likely be reduced. He noted the Town Manager did not receive a performance increase. Commissioner Donaldson asked about the $7,500 dollars in professional fees. Town Manager Labadie explained this included a possible Strategic Planning Consultant. Commissioner Gossett -Seidman had no questions. Commissioner David asked if the $7,500 dollars would be enough to cover a Strategic Planning Consultant. Town Manager Labadie responded he hoped to obtain a consultant initially to establish the framework of the Strategic Plan; however, if the Consultant was needed for the entirety of the process then more than $7,500 would be needed. He noted the potential savings in the Town Manager Budget could be captured as additional funds for a Consultant. Vice Mayor Babij had no questions. Mayor Zelniker had no questions. She stated Public Comments were opened for this Item. She asked if any present wished to speak; hearing none, she called for a motion. MOTION: Commissioner David moved to accept the Town Manager Budget as presented. Vice Mayor Babd seconded the motion. Town Commission Special Minutes Date: August 20, 2019 UPON ROLL CALL: Commissioner David Yes Vice Mayor Babij Yes Commissioner Donaldson Yes Commissioner Gossett -Seidman Yes Mayor Zelniker Yes Motion carried 5 to 0 vote. C. Town Clerk Town Manager Labadie indicated next was the Town Clerk Budget. Page 12 of 33 Finance Director Lalla reported page 4 of the Town Clerk Budget was overall a $33,106 dollar increase (approximately 9.7% increase). He explained an increase of $3,800 dollars was due to personal services changes in terms of merit increases and FRS rate increases, offset partially by a reduction in educational incentive pay. He stated there were increases on operating expenses from tuition reimbursement and funding of a document management initiative to scan more documents within the Clerk's Office, and within the Town in general, offset by a reduction in the anticipated election costs in FY -2020. Town Manager Labadie reported the budget included outsourcing the scanning of documents in an effort to catch and digitize paper records (historic documents). He stated there was to be a change in Agenda Management Software; however, he did not believe this was accurately reflected in the Town Clerk's budget. He explained the new system would cost approximately $8,000 dollars less; he would ensure this was corrected. Commissioner Gossett -Seidman reported it was possible the newspaper notice requirement was abolished and replaced by electronic notification during the next Legislative Session which would be a savings. She asked why the Town was leasing a copier, rather than purchasing a copier. Town Manager Labadie responded it was more cost efficient to lease a copier as the lease cost included any needed repair cost. He noted a new high production copier could cost up to $20,000 dollars to purchase. Vice Mayor Babij asked if the $8,000 dollar line item correction in the Agenda Manage Software line item was reflected in the budget gap amount. Town Manager Labadie responded in the affirmative. Vice Mayor Babij asked if the outsourcing of document scanning for historic documents was to be a one-time cost, or a continual cost. Town Manager Labadie stated this would be an annual cost for a couple of years; it would take a couple of years to get all of the historic documents digitized. Finance Director Lalla noted this cost would also be found in future budgets for other departments as each department was digitized. Commissioner Donaldson asked if the document scanning was being completely outsourced. Town Manager Labadie responded in the affirmative. Town Clerk Gaskins explained current documents were scanned in-house; only the retrospective documents were being outsourced. Town Commission Special Minutes Page 13 of 33 Date: August 20. 2019 Discussion ensued regarding in-house scanning versus outsource scanning. Mayor Zelniker asked if there was funding for temp agencies included in the Town Clerk Budget. Town Manager Labadie responded the Town Clerk Office would be fully staffed shortly and he did not believe a temp agency would be needed. He stated there was funding which could be reappointed if there was a need for a temp agency hire. Mayor Zelniker opened the floor for Public Comments. She asked if any present wished to speak; hearing none, she called for a motion. MOTION: Vice Mayor Babd moved to accept the Town Clerk Budget as amended. Commissioner Gossett -Seidman seconded the motion. UPON ROLL CALL: Vice Mayor Babij Yes Commissioner Gossett -Seidman Yes Commissioner David Yes Commissioner Donaldson Yes Mayor Zelniker Yes Motion carried 5 to 0 vote. D. Finance Department Town Manager Labadie noted the Finance Department requested a part-time accounting clerk. He noted the Audit went well. He noted the Finance Department facilitated the FAB. Finance Director Lalla reported overall there was a budget increase of $157,255 dollars, the bulk of which was $125,000 dollars for the ERP financial inf6rmation system. He noted in the personal services area there was an increase of $17,555 dollars due to merit increases and FRS rate increases, which were partially offset by a reduction in educational incentive pay and health insurance allowance. He stated operating expenses were up $14,705 dollars for an increase in contractual services to reflect actual uses of temporary personnel and in increase in tuition reimbursement. He stated part of the increase in personnel costs was due to the addition of a part time accounting clerk to maintain internal controls and improve customer service in the utility billing area. Commissioner Donaldson congratulated the Finance Department for receipt of a Certificate of Achievement for Excellence in Financial Reporting from the Government Finance Officers Association. He stated he was pleased to see budgeting for the ERP financial information system; he felt this was a great move forward for the Town of Highland Beach. He noted he approved of the changes in the personnel department. Town Commission Special Minutes Page 14 of 33 Date: August 20, 2019 Vice Mayor Babij asked about the pre -audit and miscellaneous accounting auditing line item for $14,000 dollars. He asked if this was an in-house item. Finance Director Lalla responded in the negative; this was a contractual arrangement. Vice Mayor Babi noted some municipalities offered online paperless billing and wondered if the Town of Highland Beach could consider this in the future in an effort to reduce postage costs. Finance Director Lalla stated this could be considered in the future. Commissioner David noted optional online billing for residents was an excellent idea. She stated the new ERP software was an important improvement. Mayor Zelniker agreed with online billing. Town Manager Labadie stated the new ERP system would enable online billing. Mayor Zelniker opened the floor for Public Comments. Douglas. Hillman stated he lived in Dalton Place. He stated he believed the Town Commission should consider forming a Compensation Committee, possibly comprised of one Commissioner and a resident or two, as well as a member of the Financial Advisory Board. He stated this Committee could work with Senior Town Management helping to establish annual goals. Mayor Zelniker asked if any others wished to speak; hearing none, she called for a motion. MOTION: Commissioner David moved to accept the Finance Department Budget as presented. Commissioner Donaldson seconded the motion. UPON ROLL CALL: Commissioner David Yes Commissioner Donaldson Yes Commissioner Gossett -Seidman Yes Vice Mayor Babij Yes Mayor Zelniker Yes Motion carried 5 to 0 vote. E. Public Works Department Mayor Zelniker called for a 5 minute break; following the break she noted Mr. Hillman had distributed copies of the 2015 Water Rate Study to those present. She asked Mr. Hillman if he wished to discuss the Study. Mr. Hillman noted he was able to get a copy of the 2015 Water Rate Study. He reported the Study compared Highland Beach rates to 23 other municipalities and indicated Highland Beach had the lowest rates; significantly lower rates by far compared to many municipalities. He explained this information was what he used to legitimize his idea of Highland Beach raising its rates by 10%, (7% more than the intended 3%) to produce an additional $140,000 dollars in revenue. Town Commission Special Minutes Page 15 of 33 Date: August 20, 2019 Vice Mayor Babij asked if Highland Beach was the only municipality, which billed a flat rate rather than charging by usage. Town Manager Labadie responded in the affirmative; aside from Jupiter which also charged a flat rate. Pat Roman, Interim Public Works Director, indicated the Town of Highland Beach had a three - tiered billing system. He explained the rates in Highland Beach went up after 30,000 gallons of water use and up again after 50,000 gallons of water use. Commissioner Gossett -Seidman stated townhomes, villas and single family homes felt penalized by the usage rates. She asked Mr. Roman to address this. Mr. Roman indicated Deidre McCarty from the Finance Department would be better suited to address this. Commissioner Gossett - Seidman asked this to be addressed in a future meeting as she received numerous complaints from single family home, villa and townhome residents regarding the water rates. Vice Mayor Babij asked when the new Water Rate Study would be available. Town Manager Labadie responded in four to six weeks. Vice Mayor Babij noted once the Water Rate Study was received the Town Commission would review the study and address these issues. Finance Director Lalla noted currently the Water and Sewer debt service cost was covered with ad valorem taxes. He stated if this cost was transferred to the Water and Sewer Department there would need to be a sizeable jump in Water and Sewer Rates. Mr. Hillman noted Highland Beach needed a plan to increase rates over time to cover debt service costs. He suggested the Town anticipate the Study revealing Highland Beach rates as being low and establish a reasonable rate increase immediately in an effort to capture revenue. He recommended an incentive for those who used less water. Town Manager Labadie noted the Public Works Department consisted of three components: Water Treatment and Distribution, Sewer Collection, as well as Facilities and Ground Maintenance. Finance Director Lalla reported there was an overall decrease in the Public Works Department of $35,750 dollars, the bulk of which came from a $25,000 dollar reduction in capital outlay associated with one time projects, as well as a shifting of project funding using discretionary sales surtax. He stated there was also a decrease in personal services of about $8,700 dollars associated with the health insurance allowance and a $2,000 dollar reduction in operating expenses. He stated there was an increase in contractual services for landscaping and tree replacements, and some centralization of general maintenance expenses. He stated the Water Enterprise Fund reflected an overall decrease of $225,555 dollars, most of which was a reduction of personal service expenses, associated with the elimination of a Utility Maintenance position and the associated cost of retirement and healthcare. He noted there was a reduction in operating expenses due to reduction in professional fees for structural engineering, as well as reduction in general maintenance expenses. He stated there was an increase of approximately $75,000 dollars in capital outlay, primarily for painting projects and replacement of air conditioning components. He reported there was an increase of $15,000 dollars related to the utility billing module of the ERP. He reported the Sewer Enterprise Fund reflected an overall increase of $96,000 dollars, $95,000 Town Commission Special Minutes Page 16 of 33 Date: August 20, 2019 dollars of which was related to capital expenditures for planned rehabilitation of Lift Station No. 4 and replacement of a truck used in the sewer department. Town Manager Labadie reported the Water and Sewer Funds were budgeted in separate locations. He noted a large share of personal costs related to the Public Works Department fell within the Water Budget. He explained the General Fund Component of the Public Works Budget was included in this portion of the Budget, which was primarily facilities and grounds maintenance. Vice Mayor Babij asked about line item 534.000 with a variance increase of $28,000 dollars. Finance Director Lalla explained the primary contributor to the increase was an $8,000 dollar increase for treat replacements, and an increase in landscaping services of $20,000 dollars. He noted these increases were a reflection of actual experience from the current year. Vice Mayor Babf asked about line item 546.000. Finance Director Lalla reported the increase associated with line item 546.000 was $19,000 due to centralization of maintenance. He explained there would be reductions in maintenance in other departments, such as police and library, which combined would roughly equal the increase in maintenance seen in line item 546.000. He explained if there had been no centralization this line item would actually have been decreased. Vice Mayor Babij asked how maintenance and repair estimates were calculated for items such as A/C repairs, electrical repairs, etc. Mr. Roman responded this number varied year to year and was calculated based on the age of the A/C units and other equipment. Vice Mayor Babij asked if this number was often close to the actual amount spent. Mr. Roman responded in the affirmative. Vice Mayor Babii asked about the vehicle repair and maintenance costs. Mr. Roman explained the vehicles were getting older and would need additional funds for repair and maintenance. He noted the previous year's costs and upcoming needs were considered in calculation of this line item. Commissioner David stated last year line item 534.000 was budgeted at $122,000 dollars, but actual expenditure was $144,000 dollars year-to-date. Finance Director Lalla explained the $122,000 dollars was an automatically generated number, and the Budgeted number for 2020 ($150,000 dollars) better reflected actual experience. Commissioner Gossett -Seidman asked when the Town last bid out the landscaping service. She asked if landscaping services could be combined with mangrove trimming and pest control. Mr. Roman explained mangrove trimming could only be completed by certified trimmers and was bid out two years ago. Commissioner Gossett -Seidman stated she felt this could be re -bid. She asked about tree replacement. Mr. Roman explained the Town of Highland Beach was responsible for the Royal Palms along AIA, and was required to replace the palms through the DOT whenever necessary. Commissioner Gossett -Seidman asked if the Royal Palm tree replacement could be held until after the DOT completed its roadwork project in 2023/2024. Mr. Roman responded in the negative; the Town was contractually obligated to replace the Royal Palms as needed. Commissioner Gossett -Seidman asked the Town Manager to investigate this matter and determine if the contract would allow the Town to delay additional tree replacement until the road project was completed. Town Manager Labadie indicated he would investigate. Commissioner Gossett - Seidman suggested xeriscaping in an effort to reduce labor, water and replanting costs. Mr. Roman stated the Town did xeriscaping in many locations. He noted the flower plantings were nice for a change of color. Town Manager Labadie noted the landscaping costs included mowing, not just replanting costs. Town Commission Special Minutes Page 17 of 33 Date: August 20. 2019 Vice Mayor Babij noted the Budget allowed for six Royal Palms to be replaced. He asked how many Royal Palms were replaced last year. Mr. Roman reported eight trees were replaced last year. Commissioner Donaldson congratulated the Public Works Department for its Second Place Award for Water Quality and Taste. He asked about the expense for the GIS and Consultant. Mr. Roman explained the Public Works Department was in the midst of building the GIS system and funds were needed to complete this project. He explained the GIS system mapped the location of utilities and meters in the Town of Highland Beach. Town Manager Labadie stated the GIS system also included CAD drawings and aerial maps, enabling the Town to keep track of utility locations. He noted this would be of great assistance when the Town was requested to respond to "Call Before You Dig" calls. Commissioner Donaldson commended the Public Works Department for its efforts to modernize and improve public service capabilities. Mayor Zelniker asked Mr. Roman to consider a native flowering shrub to be planted around the Town of Highland Beach sign, rather than the flowers which seemed to die so quickly. Mr. Roman responded in the affirmative; he would consider xeriscaping in this location. Mayor Zelniker noted Mr. Roman had been with the Town of Highland Beach for almost 32 years. She thanked Mr. Roman for his service. Mayor Zelniker asked if there were any Public Comments; hearing none, she called for a motion. MOTION: Commissioner Donaldson moved to accept the Public Works Budget as presented. Commissioner Gossett -Seidman seconded the motion. UPON ROLL CALL: Commissioner Donaldson Yes Commissioner Gossett -Seidman Yes Commissioner David Yes Vice Mayor Babij Yes Mayor Zelniker Yes Motion carried 5 to 0 vote. F. Post Office Town Manager Labadie indicated next was the Post Office Budget which was relatively straightforward. He asked if there were any questions. Commissioner David commented many residents were delighted to have a local Post Office. Commissioner Donaldson stated he wished there were ways to increase the revenue of the local Post Office; however, he understood the Post Office was contractually limited. He noted the Post Office was convenient and pleasant. He asked about the postage meter contract. Finance Director Lalla noted the contract for the postage meter expired in August 2020; however, the options to Town Commission Special Minutes Page 18 of 33 Date: August 20, 2019 replace the postage meter were low enough in cost that this meter could possibly be replaced in May without going over Budget. Commissioner Gossett -Seidman stated the Post Office was an asset to the Town of Highland Beach. Mayor Zelniker noted the residents loved the Post Office, the Fire Department, and the Police Department. She stated she felt the Post Office was worth the expense for the excellent service it provided. She asked if there were any Public Comments. Mr. Hillman stated he loved the Post Office; his comment was regarding Public Works. He noted he made a mistake previously regarding the Water Rate Study he distributed; he explained the Study he distributed was for wastewater, not water. He apologized for his mistake. He noted regarding wastewater, Highland Beach charged a flat rate which was way under market, and should be raised significantly; however, an increase in wastewater rates would not produce as much revenue as an increase in water rates. He reported Highland Beach water rates were average, but could be increased more than 3%; however, his previous recommendation for an increase of 10% was too high. He recommended a 6% increase instead of 10%. He apologized for his misinformation. Mayor Zelniker thanked Mr. Hillman for his clarification. MOTION: Commissioner David moved to accept the Post Office Budget as presented. Vice Mayor Babij seconded the motion. UPON ROLL CALL: Commissioner David Yes Vice Mayor Babij Yes Commissioner Donaldson Yes Commissioner Gossett -Seidman Yes Mayor Zelniker Yes Motion carried 5 to 0 vote. G. Library Department Mayor Zelniker noted the Highland Beach Library was well -loved. Finance Director Lalla stated there was an overall reduction of $42,270 dollars, a portion of which came from the conversion of a full-time library associate position to a part time position. He noted there was also a reduction in operating expenses of $30,000 dollars which was the result of centralization of general maintenance and IT expenses, as well as a decrease in operating supplies to reflect recent experience. He noted there were no capital expenditures expected in Fiscal Year 2020. Town Commission Special Minutes Page 19 of 33 Date: Autiust 20.2019 Vice Mayor Babij stated he had no questions. Commissioner David stated she had no questions. Commissioner Donaldson asked if the audio/visual microphone needed replacement in the Community Room. Ms. Lois Albertson, Library Director, reported some faulty microphones were replaced. She indicated the room was designed to accommodate concerts, and for this it worked very well. She stated she believed when speakers had problems with the microphones it was primarily due to not speaking properly into the microphone. Commissioner Donaldson encouraged residents to visit the Library. Commissioner Gossett -Seidman stated the Library was the crown jewel of Highland Beach. Mayor Zelniker commended Ms. Lois Albertson for her work with the Library. She asked if there were any Public Comments; hearing none, she called for a motion. MOTION: Commissioner David moved to accept the Library Budget as presented. Commissioner Gossett -Seidman seconded the motion. UPON ROLL CALL: Commissioner David Yes Commissioner Gossett -Seidman Yes Commissioner Donaldson Yes Vice Mayor Babij Yes Mayor Zelniker Yes Motion carried 5 to 0 vote. 8. DISCUSSION AND ACCEPTANCE OF THE PROPOSED BUDGETS FOR FISCAL YEAR 2019-2020 FOR THE FOLLOWING NON-OPERATING PORTIONS OF THE GENERAL FUND: A. Legal Expenses Town Manager Labadie noted there was a natural reduction in Legal Expenses as monthly legal bills were lowering. He explained expenditures were more focused on Ordinance development. He discussed the decreases in Legal Expenses equaling 12.5%. He noted labor negotiations would take place in 2020 and the Town was unfamiliar with actual costs for labor negotiations. Commissioner Donaldson stated he had no comments. Commissioner David noted the Torcivia Law Firm had not increased rates and were competitive with other municipality's law firms. Town Commission Special Minutes Date: August 20. 2019 Page 20 of 33 Commissioner Gossett -Seidman noted she hoped to save labor negotiation fees in 2020. Vice Mayor Babij asked how much Mr. Jeff Pheterson charged for the previous collective bargaining agreement negotiations. Town Manager Labadie responded he believed Mr. Peterson charged $48,000 dollars. Vice Mayor Babii noted the previous negotiations were very drawn out and he believed the estimate of $50,000 dollars was fair. Mayor Zelniker stated Torcivia Law Firm had been with the Town of Highland Beach for many years and was familiar with Highland Beach's needs and transitions. She asked if there were any Public Comments; hearing none, she called for a motion. MOTION: Vice Mayor Babij moved to accept the Legal Expenses Budget as presented. Commissioner David seconded the motion. UPON ROLL CALL: Vice Mayor Babij Yes Commissioner David Yes Commissioner Donaldson Yes Commissioner Gossett -Seidman Yes Mayor Zelniker Yes Motion carried 5 to 0 vote. B. Other General Government (OGG) Non -Departmental Expenses Finance Director Lalla reported there was an increase of $52,920 dollars which reflected the Town's recent experience with IT services which were under budgeted last year. He stated there was also an increase in property insurance rates. Vice Mayor Babij asked about the increase in line item 545.000. Finance Director Lalla explained part of this increase was related to higher insurance rates, mostly property insurance rates, but also an additional vehicle which needed to be insured. He reported there were no significant increases in worker compensation costs. Vice Mayor Babii asked about line item 531.000 versus line item 534.000 which both listed IT services. Finance Director Lalla explained this was a result of centralization of IT services. He stated the two line items could be combined. Commissioner Gossett -Seidman stated she had no comments. Commissioner Donaldson stated he had no comments. Commissioner David stated she had no comments. Mayor Zelniker asked if this budget included the ADA required sign language interpreter costs. Finance Director Lalla reported the Town was no longer using sign language interpreters; the Town budgeted for a capital expenditure of approximately $47,000 dollars to purchase an encoder Town Commission Special Minutes Page 21 of 33 Date: August 20, 2019 which displayed closed captioning. Mayor Zelniker asked if the encoder was repaired; she understood there were problems with the subtitles being jumbled and incomprehensible. Town Manager Labadie noted this problem was still being addressed and was improving. Mayor Zelniker asked if there was money in the budget to address this issue. Town Manager Labadie responded in the affirmative. Mayor Zelniker asked if there were any Public Comments; hearing none, she called for a motion. MOTION: Vice Mayor Babij moved to accept the Other General Government Non - Departmental Expenses Budget as presented. Commissioner Donaldson seconded the motion. UPON ROLL CALL: Vice Mayor Babij Yes Commissioner Donaldson Yes Commissioner Gossett -Seidman Yes Commissioner David Yes Mayor Zelniker Yes Motion carried 5 to 0. C. Solid Waste Town Manager Labadie reported Solid Waste was under a contractual arrangement with Waste Management Services for trash disposal in the Town of Highland Beach; therefore, the increase was due to the contractual arrangement increase. He noted there was also an increase of $5,000 dollars for replacement of residential garbage cans and bins as needed. Finance Director Lalla indicated the increase of $5,000 dollars was completely offset by revenues collected through the Utility Billing process. Commissioner David stated she had no questions. Commissioner Donaldson noted he recently became aware of a service which would sanitize garbage bins at regular intervals (two or three times annually). He asked if there was any interest in obtaining this service and possibly bundling it with contract RFPs (Request for Proposal) next year. Town Manager Labadie stated this seemed as if it could be a very labor intensive process. Finance Director Lalla explained the process: a truck came by, lifted the trash carts onto the truck, rinsed the carts, collected the water, and placed the cart back against the curb. Commissioner Donaldson noted this could be discussed at a later date. Commissioner Gossett -Seidman asked when the contract for solid waste was last bid out. Finance Director Lalla stated Highland Beach was in the final year of a five year contract; however, there were three one year renewal options available for the Town. Commissioner Gossett -Seidman commented she understood a neighboring municipality was able to renegotiate a solid waste contract with Waste Management Services at a lower rate as a result of re -bidding the contract. Town Commission Special Minutes Page 22 of 33 Date: AuLyust 20.2019 Town Manager Labadie stated he understood there were some competitors interested in obtaining the Highland Beach contract and agreed sending out RFPs would be beneficial. Vice Mayor Babij stated he had no questions. Mayor Zelniker asked if there were any Public Comments; hearing none, she called for a motion. MOTION: Vice Mayor Babij moved to accept the Solid Waste Budget as presented. Commissioner David seconded the motion. UPON ROLL CALL: Vice Mayor Babij Yes Commissioner David Yes Commissioner Gossett -Seidman Yes Commissioner Donaldson Yes Mayor Zelniker Yes Motion carried 5 to 0 vote. D. Transfers and Contingency Reserves Finance Director Lalla stated the interfund transfers consisted of two components: $52,000 dollars was a transfer to the newly created Building Department Special Revenue Fund to offset the cost of the Town Planner position, and $120,000 dollars was a transfer to fund debt service within the water fund. He stated there was a substantial reduction in the contingency reserves of $122,000 dollars, reducing the funding level to $50,000 dollars versus $172,300 dollars (FY -2019). He noted the overall reduction for these two items was $198,350 dollars. Vice Mayor Babij asked about the contingency reserves reduction. Town Manager Labadie noted while the Town was at $115,000 dollars currently year-to-date, a historic review was conducted and on average the Town only needed around $50,000 dollars to be held in the contingency reserves. He explained when the contingency reserves built up the monies could be transferred into savings for spending on special projects. Commissioner Donaldson stated he agreed with the $50,000 dollar contingency reserve number. Commissioner Gossett -Seidman stated she had no questions. Commissioner Donaldson stated she had no questions. Mayor Zelniker stated she had no questions. She asked if there were any Public Comments; hearing none, she called for a motion. Town Commission Special Minutes Page 23 of 33 Date: August 20, 2019 MOTION: Commissioner Donaldson moved to accept the Transfers and Contingency Reserves as presented. Commissioner Gossett -Seidman seconded the motion. UPON ROLL CALL: Commissioner Donaldson Yes Commissioner Gossett -Seidman Yes Commissioner David Yes Vice Mayor Babij Yes Mayor Zelniker Yes Motion carried 5 to 0 vote. E. Revenues Town Manager Labadie reported this portion of the Budget included all sources of revenue which funded the budget barring water and sewer revenues. Finance Director Lalla reported there was a $25,000 dollar increase in the General Fund portion of investment earnings. He stated there was a bit of an increase in half cent sales tax to reflect recent trends, and a slight increase State Revenue Sharing (funded by taxes by the State). He reported there was no increase in the communication services tax. Commissioner Gossett -Seidman noted Airbnb short-term rentals were discussed this year. She asked if there was any revenue potential in this regard. Finance Director Lalla indicated the County would collect taxes for short term rentals; the Town was not permitted to collect taxes for short term rentals. Town Manager Labadie responded the Building Department would be running the short term rental program; therefore, any fees collected would go to the Building Department as building permit revenue. Vice Mayor Babij asked about the previously mentioned transition of money market funds to a higher yield account. Town Manager Labadie responded this was not completed as of yet; however, it was not expected to produce any significant growth in interest earnings. Commissioner Donaldson asked about line item 335.120, State Revenue Sharing proceeds at $96,000 dollars. Finance Director Lalla stated this number was formula driven by the State and was primarily funded with State level sales tax monies. He stated the State estimated the amount which would be available for the program and split it according to population size amongst Palm Beach County municipalities. Commissioner Donaldson stated he was surprised this number had not gone up further as a result of the improving economy. Commissioner David asked about the reimbursement from Delray Beach. Finance Director Lalla explained this was ambulance reimbursement. Mayor Zelniker noted residents were complaining about paying for parking at Delray Sands Resort. She stated she felt Delray Sands would lose business as a result. She noted residents felt, Town Commission Special Minutes Page 24 of 33 Date: August 20, 2019 as the only business permitted within the Town of Highland Beach, Delray Sands should better accommodate Highland Beach residents. She asked if there were any Public Comments Mr. Hillman stated he lived at Dalton Place. He asked about the possibility of collecting hotel taxes from Delray Sands Resort. Town Manager Labadie explained this was not possible as this type of tax was regulated by Statute and only the County was permitted to collect a hotel bed tax. Discussion ensued regarding the Town Charter and fees listed which could be collected. MOTION: Commissioner David moved to accept the General Fund Revenues as presented. Vice Mayor Babii seconded the motion. UPON ROLL CALL: Commissioner David Yes Vice Mayor Babij Yes Commissioner Donaldson Yes Commissioner Gossett -Seidman Yes Mayor Zelniker Yes Motion carried 5 to 0. 9. DISCUSSION AND ACCEPTANCE OF THE PROPOSED BUDGETS FOR FISCAL YEAR 2019-2020 FOR THE FOLLOWING SPECIAL REVENUE FUNDS: A. Building Department Fund Town Manager Labadie reported this was the first year of an internalized Building Department. He explained the Town Building Department was operating as an internal hybrid type model which included an internal Building Official and an outside consultant to provide trade related services. He explained in order to completely internalize the Building Department the Town would be required to staff a Plumbing Inspector, Electrical Inspector, HVAC Inspector, etc., and this would be very costly. He stated all fees generated by the Building Department went to supply building services and were regulated by State Statute. He reported the Building Department included three service areas: Building Services, Planning Services, and Code Enforcement. Finance Director Lalla reported in 2018 and 2019 the Building Department was part of the General Fund, but was now a stand-alone fund. He noted the FY -2019 numbers would be adjusted upward with a Budget Resolution in the vicinity of $180,000 dollars to cover contractual services costs which were higher than anticipated. He indicated the $180,000 dollars was offset by building permit revenue. He reported personal services increased $155,000 dollars due to the full year cost of the Town Planner position which was not included in the original budget for FY -2019, as well as standard merit increases and FRS rate increases. He reported there was an increase in operating expenses due to the increased cost for inspection and review services. He noted there were two budget supplements associated with the Building Department: one for $3,500 dollars for capital expenses associated with vehicle retrofitting, and $50,000 dollars to pay for the Building Permit module on the town -wide ERP project. Town Commission Special Minutes Date: August 20, 2019 Commissioner David stated she had no questions. Page 25 of 33 Commissioner Gossett -Seidman stated she did not believe there was a revenue source for registering non -building contractors who worked in Highland Beach (pool cleaners, landscapers, etc.). She noted many municipalities charged basic fees to register companies and obtain permits to perform services within a municipality. She asked if this could be entertained as a possible revenue source for the Town. Town Manager Labadie responded in the affirmative. Commissioner Gossett -Seidman made further recommendations regarding various non -building contractors which could be licensed to work within the Town of Highland Beach. Vice Mayor Babij asked about Code Enforcement fees. Finance Director Lalla responded all Code Enforcement fees went into the Building Department Special Revenue Fund. Vice Mayor Babij noted he had heard praise for the Building Department Staff, but complaints about the Code Enforcement Department Staff for being overly aggressive. Commissioner Donaldson stated he felt the internalization of the Building Department was a positive move and was appreciated by Town residents. He asked about line item 540.100, training and development, which was $0. Finance Director Lalla stated training and development was budgeted at $4,270 dollars. Mayor Zelniker stated she fully approved of the new Building Department. She asked if there were any Public Comments; hearing none, she called for a motion. MOTION: Commissioner David moved to accept the Building Department Fund Budget as presented. Commissioner Donaldson seconded the motion. UPON ROLL CALL: Commissioner David Yes Commissioner Donaldson Yes Commissioner Gossett -Seidman Yes Vice Mayor Babij Yes Mayor Zelniker Yes Motion carried 5 to 0 vote. B. Discretionary Sales Surtax Fund Town Manager Labadie noted the Discretionary Sales Surtax budget reflected the funds coming in, carry-over funds, and the projects which would be completed with the Discretionary Sales Surtax Fund. He reviewed several of the projects. Finance Director Lalla reported if the sales tax collection was higher than anticipated there would be a higher carry-over number and potentially an additional project might be considered. Commissioner Gossett -Seidman asked about the replacement of public street signs. She indicated Town Commission Special Minutes Page 26 of 33 Date: August 20, 2019 she worried the newly replaced signs could be damaged when Florida Department of Transportation (FDOT) was working on the future road project or during sewer repair. Finance Director Lalla noted these street signs were primarily located along side streets and he did not expect the signs to be damaged during the FDOT A 1 A project. Town Manager Labadie explained if there was a potential for damage the signs could be removed and reinstalled upon project completion. Commissioner David stated she had no questions. Vice Mayor Babi-j stated he had no questions. Commissioner Donaldson asked if the public street signs and posts replacements included the monument signs. Finance Director Lalla responded in the negative. Town Manager Labadie noted the monument signs would need replacing soon and this subject would come before Town Commission in the coming year. Commissioner Donaldson indicated he felt it was important to have a conversation regarding the embedded crosswalk lights and regarding giving individual condo associations the option to pay directly for embedded crosswalk lights. Commissioner Gossett -Seidman reported the crossing at Delray Sands was very dark and visibility in this location was limited. Mayor Zelniker reported three or four years ago the Town Commission set aside money for crosswalk lighting. She asked if the current budget included funds for crosswalk lighting. Finance Director Lalla responded in the negative. Mayor Zelniker asked Town Clerk Gaskins to research this subject and find the motion which was made by Town Commission in this regard several years ago. She indicated she felt the vote was to separate the funds specifically and set them aside for lighting; she believed the funds should still be available. Town Manager Labadie noted if the funds were never spent for crosswalk lighting then it was possible the funds were moved. Finance Director Lalla explained the funds would have rolled forward and reassigned to another project. Discussion ensued regarding this matter, where the funds would have gone, whether the funds were still available, the funds being spent on a crosswalk project, there being no $300,000 dollar line item for crosswalk lighting, and the $300,000 dollars going into the commingle account. Mr. Hillman stated he lived at Dalton Place. He stated all Highland Beach projects should be cost efficient, but more importantly the needs of the residents of Highland Beach should be of highest priority. He stated the crosswalks with embedded lights were the best and safest crosswalks available, and he felt these were the crosswalks Highland Beach should install. He discussed the issues related to this type of crosswalk installation including high costs and the FDOT project potentially damaging the crosswalks. He discussed possible solutions to these issues, and indicated Highland Beach needed to install the best possible crosswalks for its residents regardless of the potential issues. Vice Mayor Babij stated a referendum was not a bad idea for the crosswalks. He reported he had received feedback both against and for crosswalk lighting. Mayor Zelniker called for a motion. Town Commission Special Minutes Page 27 of 33 Date: August 20, 2019 MOTION: Commissioner Gossett -Seidman moved to accept the Discretionary Sales Surtax Fund as presented. Commissioner David seconded the motion. UPON ROLL CALL: Commissioner Gossett -Seidman Yes Commissioner David Yes Commissioner Donaldson Yes Vice Mayor Babij Yes Mayor Zelniker Yes Motion carried 5 to 0 vote. 10. DISCUSSION AND ACCEPTANCE OF THE PROPOSED BUDGETS FOR FISCAL YEAR 2019-2020 FOR THE FOLLOWING ENTERPRISE FUNDS: A. Water Enterprise Fund Town Manager Labadie reported next year's revenue was projected to increase 3%. He stated the Water Enterprise Fund Budget was straightforward and included plant upgrades, administrative reimbursements, appropriations from reserves, utility services and personal costs. Finance Director Lalla indicated there was $435,000 dollars associated with capital projects related to the water treatment plant. Commissioner Donaldson stated he had no questions. Commissioner Gossett -Seidman stated she had no questions. Vice Mayor Babij asked about the variance report. Finance Director Lalla noted the variance report for the Water Enterprise Fund was discussed earlier. He noted overall there was a decrease of $225,555 dollars for the Water Fund. Commissioner David stated she believed the water rate should be increased by 6% rather than by 3%. Mayor Zelniker stated she agreed with Commissioner David. MOTION: Commissioner David moved to increase the water rates by 6% rather than Commissioner Donaldson seconded the motion. Commissioner David stated she understood increasing the water rates by 6% today would not make the water department completely self-sufficient; however, if the rates were gradually increased at 6% annually the water department would eventually pay for itself. She indicated the Town should not be taking money from the General Fund to subsidize the cost of water. Town Commission Special Minutes Date: August 20. 2019 Page 28 of 33 Commissioner Donaldson noted he hesitated in seconding the motion as he wished to see the current water rate study; however, incrementally he felt a 6% increase was reasonable. He noted once the report was received this number could be adjusted as necessary. Vice Mayor Babij stated he felt this was a good idea, but it was the wrong time for implementation. He stated he felt rate changes could be made in four weeks after the new rate study was received. Commissioner Gossett -Seidman stated she agreed with Vice Mayor Babij. She noted she agreed the water plant should be self-sustaining; however, the Commission should wait until receipt of the new water rate study before making decisions regarding water rate increases. Mayor Zelniker asked if the new water rate study would be completed before finalization of the millage rate. Town Manager Labadie responded in the negative; the completed water rate study would not be available; however, a draft version of the study might be available. Finance Director Lalla stated if the water rates were increased, the debt service millage would be decreased, which would lower the aggregate millage; however, the operating millage for the general fund would not be changed. Mayor Zelniker stated she worried the rate would need to be increased more than 6% and she would rather wait until the water rate study was received before making any rate changes. Commissioner David stated she did not believe the Town would be able to increase water rates enough to make the water plant self-sufficient with one increase; this would take time and multiple increases. Town Manager Labadie stated the Town Commission had two more opportunities to adjust the millage rate. Finance Director Lalla stated in order for the water department to be completely self- sufficient the debt service would need to be added into the water department budget. He noted a 77% rate increase would be required to accommodate all expenses of operation for the water department including debt service. Vice Mayor Babii stated a simple solution would not correct this complicated problem. He recommended more research in this regard. Commissioner Gossett -Seidman asked about the possibility of obtaining the water rate study sooner. Town Manager Labadie explained the start to finish date for this study was estimated at 10 to 12 weeks and it had been about 4 weeks. He stated the Town would have access to some data soon; however, he did not know if the Commission would wish to predicate a significant rate change upon incomplete information. He indicated he was unfamiliar with this specific firm and was unable to make a commitment regarding the timeline. Commissioner David withdrew her motion. Commissioner Gossett -Seidman asked the Town Manager to determine when the Commission could expect to see the new water sewer rate study. Town Manager Labadie explained he did not anticipate the rate study would be delivered to the Town before a decision was made regarding the Town Commission Special Minutes Page 29 of 33 Date: Autiust 20, 2019 water rates for FY -2020. He explained the natural process of study review and noted it would take approximately four to five months. He indicated the Town was still within the limits of the first 5 year rate study plan, and the 3% rate increase was based upon this rate study. Finance Director Lalla noted once the water rate study was received it would prompt excessive discussion which would be time consuming. Commissioner Donaldson stated he understood increasing the water rates could be used as a mechanism to partially fill the budget gap which was necessary with or without receipt of the water rate study. Town Manager Labadie concurred; there was an operating deficit in the general fund which needed to be covered through millage rate increase or through reserve fund pledge, or a combination thereof. He noted an increase in the water rates would help the aggregate millage rate. Finance Director Lalla noted if the water rates were increased by 6%, the budget gap would go from $294,000 dollars to approximately $232,000 dollars. Town Manager Labadie recommended approval of the Water Enterprise Fund as presented. Discussion ensued regarding time running out to make decisions and options for filling the Budget gap. Mayor Zelniker asked if there were any Public Comments. Mr. Hillman stated he lived at Dalton Place. He stated he believed only two pages of the rate study were required for the Town Commission to make an educated decision regarding water rates: the water rate comparison and sewer rate comparison. He stated he felt the Town Manager should be able to call the consultant and request the two pages for reference. He noted Highland Beach rates should be competitive with surrounding municipalities. He stated sewer rates could be increased as well for additional revenues. Dr. Rick Greenwald stated he lived on Tranquility Drive. He stated he approved of the Budget. He agreed with Town Manager Labadie; there was no need to change the water rates until the rate study was reviewed. He stated he felt it would be better to approve what the Town Manager. presented for this Budget rather than arbitrarily approve a 6% or 10% increase. Mayor Zelniker stated Town Commission appreciated the input. MOTION: Vice Mayor Ba. i moved to accept the Water Enterprise Fund Budget as presented. Commissioner Gossett -Seidman seconded the motion. UPON ROLL CALL: Vice Mayor Babij Yes Commissioner Gossett -Seidman Yes Commissioner David Yes Commissioner Donaldson Yes Mayor Zelniker Yes Motion carried 5 to 0 vote. Town Commission Special Minutes Date: August 20, 2019 B. Sewer Enterprise Fund Page 30 of 33 Town Manager Labadie stated similar to the Water Fund, variances for the Sewer Enterprise Fund were presented in the Public Works Budget documents. He stated the Sewer Enterprise Fund budget included revenues and expenses. Finance Director Lalla reported there were sizeable capital expenditures for rehabilitation of lift stations and replacement of a truck. He stated there was a $147,000 dollar expense which reimbursed the Water Fund for expenses made in support of sewer operations. Commissioner Donaldson noted Highland Beach sewage treatment went through the City of Delray Beach. He stated there was a $750,000 allocation for the Budget. He asked if the Town was locked in at this rate. Town Manager Labadie noted the rate was under contract; the $750,000 dollars included the estimated volume of sewage based on past experience. Discussion ensued regarding the contingency funds for this account and the types of contingencies the funds were used for. Town Manager Labadie indicated the sewage rate was acceptable. Vice Mayor Babij stated he had no questions. Commissioner Gossett -Seidman stated she had no questions. Commissioner David stated she had no questions. Mayor Zelniker stated she had no questions. She asked if there was any Public Comment; hearing none, she called for a motion. MOTION: Vice Mayor Babii moved to accept the Sewer Enterprise Fund Budget as presented. Commissioner David seconded the motion. UPON ROLL CALL: Vice Mayor Babij Yes Commissioner David Yes Commissioner Donaldson Yes Commissioner Gossett -Seidman Yes Mayor Zelniker Yes Motion carried 5 to 0. Town Commission Special Minutes Date: Auuust 20, 2019 Page 31 of 33 11. DISCUSSION AND ACCEPTANCE OF FINAL MILLAGE RATE FOR FISCAL YEAR 2019-2020 Town Manager Labadie indicated either the millage rate needed to be raised to cover the budget gap, or the Commission needed to pledge reserves to cover the budget gap. He asked for the Town Commission's guidance. Commissioner Gossett -Seidman stated in a perfect world she would wish not to raise the millage. She asked if there were any other possible budget cuts which could be made in order to lower the necessary millage increase. Town Manager Labadie stated it would be very difficult to cut another couple of hundred thousand dollars; the cuts would have to be made in the general operating fund. He indicated he could cut $10,000 dollars or $15,000 dollars relatively comfortably; however, the FY -2020 Budget had already been trimmed down extensively and there was not much left which could be cut. He stated if the Town chose to commit 1%. he was comfortable saying there was a good possibility the money would not be needed, assuming revenues came in a bit higher than expected and expenditures came in a bit lower than expected. Commissioner Gossett -Seidman stated she was comfortable with 1%. She noted Highland Beach was not having as many difficulties with the Budget as other municipalities. Town Manager Labadie noted the Town was lucky to have a reduction in health care insurance costs this year and it was over -ambitious to believe health care insurance costs would not go up next year. He stated the Town should be prepared for a 10% increase in health care insurance costs and a plateau in property growth. He recommended a slight increase in millage to prevent an unpalatable increase next year. Vice Mayor Babi1 reported he had spent a lot of time thinking about the budget gap for the past month. He congratulated Town Manager Labadie and Finance Director Lalla for bringing the gap down to $294,185 dollars. He indicated he worried if additional funds were cut from the budget, Town services would suffer. He stated there were Budget items which came in annually lower than budgeted. He reported Highland Beach had unassigned reserves of $5.5 million dollars (46% of the budget). He indicated an extremely healthy municipality had reserves of 30% to 40%. He stated he was in favor of taxing for what was needed, but he was not in favor of taxing to add to reserves. He stated there were some "known unknowns" the Town needed to be prepared for, such as the water rate study and the sewer repairs; however, he did not feel the Town should overreact in the current budget. He recommended pledging $100,000 dollars of reserves for the budget gap. He stated it was unreasonable to raise the millage to cover the budget gap of $294,185 dollars knowing full well the Town would not spend the entire $294,185 dollars. He stated he did not feel any more budget cuts should be made. He stated he felt the Town should pledge $100,000 dollars in reserves and raise the millage rate to cover the remaining $194,185 dollars for the budget gap. He noted he disliked the idea of increasing the millage rate, but this was the right thing to do. Commissioner Donaldson stated his inclination was not to commit reserves; however, he agreed with Vice Mayor Babij. He noted the Town was very blessed to have the reserves it had. He reported at the League of Cities he heard time and again stories about unexpected circumstances wiping out a municipality's reserves, for example when Hurricane Michael hit the panhandle several municipalities were required to empty reserve accounts to cover hurricane damage. He Town Commission Special Minutes Page 32 of 33 Date: August 20, 2019 asked if Highland Beach generally had $100,000 dollars which annually rolled over from one budget to the next. Town Manager Labadie responded he was unsure; however, in 2018 there was approximately $160,000 dollars which rolled over. Commissioner Donaldson stated he felt pledging $100,000 dollars from reserves was an acceptable, smart expenditure, especially given it was entirely possible the monies would not be needed. He stated a millage rate increase was unavoidable as the budget had been cut back as far as was reasonable. He noted some municipalities were assessing a flat fee/surcharge for fire services; however, he was not recommending Highland Beach consider this type of fee. Commissioner David stated she did not agree with committing reserve fee funds, especially given Highland Beach's reserve fund was only at $5.5 million dollars due to a one time land sale and Highland Beach did not have any additional property to sell. She stated she was comfortable pledging $100,000 dollars with the understanding the Town most likely would not use these reserves for the budget. She indicated Highland Beach needed to increase the millage rate. She stated the budget could not be cut further; she did not wish to underpay or fire employees, and it was important to continue at the same level of service as previously. She stated the Highland Beach millage rate was low compared to the surrounding municipalities and she did not believe it would be a hardship to raise the Highland Beach millage rates slightly. Mayor Zelniker indicated she agreed with the Commission, especially given the Town had lowered the millage rate in the past. She noted raising the millage a tenth of a point (as requested) would only increase taxes by $25 dollars for those whose property was assessed at $250,000 dollars, $50 dollars for $500,000 dollar properties and $100 dollars for $1 million dollar properties. She stated the millage would have to be raised sooner or later. She indicated it was important to remember Highland Beach, though it was a small town, was connected to the global economy, and changes in the economy would affect Highland Beach. She noted she agreed with Commissioner David; Highland Beach had an excellent reserve account only due to the sale of a water plant in Boca. She stated .if there was a hurricane and the Town was required to use half of the reserves to cover damages, a large increase in the millage rate would be needed to rebuild the reserve account. She stated .Highland Beach had the third lowest millage rate for a small town and had one of the highest per capita income levels in the U.S. She stated she felt the millage rate could go up without committing any reserves without causing the residents of Highland Beach any hardship. She stated she would agree with committing $100,000 dollars of reserve funds if the rest of the Commission preferred, but she did not feel it was necessary. Vice Mayor Babii stated he was only comfortable pledging $100,000 dollars as he believed it would not be needed and would remain in the reserve funds. Mayor Zelniker stated she understood, but this could not be known, it might be needed. She stated it was important to keep reserves for emergencies. Town Manager Labadie stated he and the Finance Director would review the Budget and make any necessary adjustments for presentation to the Town Commission on August 29, 2019. He noted millage rate calculations would be made based upon committing certain amounts of reserves, as well as committing no reserves, for consideration at the August 29, 2019 Meeting. Town Commission Special Minutes Page 33 of 33 Date: August 20, 2019 12. COMMISSION MEETINGS: Mayor Zelniker announced the following meetings: Town Commission Workshop Meeting — August 27, 2019 — 1:30 PM Town Commission Special Budget Meeting — August 29, 2019 — 12:00 PM Town Commission Regular Meeting — September 3, 2019 — 1:30 PM 13. ADJOURNMENT Mayor Zelniker called for a motion to adjourn at 4:56 p.m. MOTION: Commissioner David moved to adjourn. The motion passed unanimously. APPROVED at October 15, 2019 Regular Meeting. ATTEST: L nelda Gaskins, MC, Town Clerk Rho a Zelniker yor Transcribed by TEI/he Date