FINAL-Comm Budget Workshop Minutes 8-3-10 MINUTES OF THE BUDGET WORKSHOP OF ATLANTIC BEACH CITY COMMISSION
HELD IN COMMISSION CHAMBER, ON AUGUST 3, 2010 AT 5:00 PM.
City Commission Members present:
Mike Borno, Mayor
John
Fletcher, Mayor Pro Tem
Jonathan Daugherty, Commissioner
Paul Parsons, Commissioner
Carolyn Woods, Commissioner
Staff present:
Jim Hanson, City Manager
David Thompson, Assistant City
Manager
Nelson VanLiere, Finance Director
Donna Kaluzniak, Public Utilities Director
Rick Carper, Public Works Director
Keith Randich, IT Manager
Donna L. Bartle, City Clerk
The meeting,
which was held for the purpose of discussing the following items, was called to order at 5:01 p.m. by Mayor Borno. Mayor Borno explained the agenda items to discuss and the process.
Budget
Overview (Handouts: Budget Workshop (Attachment A) and List of Items that Have Been Reduced or Excluded from FY 10 Proposed Budget (Attachement B)
City Manager Hanson gave an overview
of the budget and explained the budget was cut dramatically last year and to some extent this year so this is really something the Commission needs to look at as a multi-year basis to
really understand the situation that we are in.
He explained the “Global Economy” indicating that property taxes, sales taxes, interest rates, and other revenues are down. Hundreds
of thousands of public employees have been laid off across this country and are being laid off right now. Service levels are cut in quite a number of cities. Atlantic Beach is in quite
a bit better shape than the other cities and counties for a lot of reasons and we will try to explain those reasons as we go through. One of them is that we budget very conservatively.
We have multi-year plans for water, sewer and storm water systems. We have some long-term plans for park systems; and we pretty well follow them. We move some of the items out. We
will show you those, but generally they provide a road map for improving the systems. There has been dramatic improvements in the water, sewer and storm water systems conditions in
the last several years which leaves us in good shape. The funds we’ve had available when economic times were much better, property taxes were up, sales taxes were up, a lot of good
times were happening budget wise. We invested that money into the projects that we had showing in the Master Plans. So we stuck to the plans rather than reduced the tax rate. The maintenance
work has been done. Many of our systems were not all that well maintained a number of years ago. Since we’ve done a lot of these projects the cost of running them is less. Mr. Hanson
gave examples of maintenance projects and explained that they have been paid for with cash and that there has been no new borrowing in this city since 1996. We have issued bonds, but
those were refunding bonds, basically bonds for trying to reduce the interest rates. The city’s utility and storm water systems are overall in very good shape. We do need to continue
maintaining them, not just drop things entirely, but we have a plan to do that. It is certainly easier to cut back on capital projects now that we have spent this much money in recent
years. When the recession hits it is a lot easier not to put cash into new projects and also we’re left with a capacity to borrow money.
Mr. Hanson distributed a handout titled List
of Items that have been reduced or excluded from FY 10 proposed budget for reference as he explained that the same items plus even more are cut from this proposed budget.
He gave
a general overview of the following items from the list: Sidewalk and manhole repairs, police motorcycle, overtime and training, employee raises, employee bonus program, document imaging,
street light upgrades, fence replacements, city hall parking lot lights, and ball field lighting. He added that during last years’ budget we cut the lifeguard hours. He reported that
in total there was better than $1.6 million that was taken out of the budget last year. This year, we are continuing those and are not adding them back, but there are some other projects
that are not on the list that will be discussed later.
He reported that expenses are rising and explained that these are ones that are essentially out of our control. Fleet Maintenance
contract $7,438 (3%), Fire Contract $27,601 (3%), Power costs $89,331 (11%), Pension costs $184,646 (16%) and Group Health Insurance $221,659 (32%).
He reported that revenues are declining
over 3 years and explained the amounts of decline for each. Property taxes $298,000 (from 3 years ago), State Revenue Sharing $49,000 (from 2 years ago), Half Cent Sales Tax $123,000
(from 3 years ago), Local Option Gas Tax $11,000 (from 2 years ago), Better Jacksonville Sales Tax $29,000 (from 2 years ago), and Interest earnings $475,000 (from 4 years).
He explained
that what you have in the draft is a “Bare Bones” budget. He explained that most of the service levels are maintained; only the necessary capital projects are included; the only revenue
increase is a 6% water/sewer rate increase; no employee pay raises combined with reduced health benefits equate to employees getting a pay cut.
Water and Sewer System (Handout: Public
Utilities Budget FY2011 (Attachment C)
Ms. Kaluzniak reported on the current FY project status for Ocean Blvd. Water Main- complete, Well 2R- construction underway, Tank Rehab WP 1
& 4- construction underway, Salt Air Sewer Rehab- construction underway, Improvements at Various Lift Stations- construction underway, Donner Subdivision Sewer Rehab- Awaiting finalization
of grant paperwork for City of Jacksonville, TMDL Force Main- design complete, DEP permit received, prequalifying contractors, and TMDL WWTP Upgrade Design- 60% design, constructability
review complete.
Ms. Kaluzniak explained the last Water Master Plan was done in 2001 and that some recommended projects have been delayed due to reduced funding, but progress is still
being made. Since the 2001 Plan we have interconnected the Buccaneer & Atlantic Beach Water Systems, added a 300,000 gallon elevated storage tank at Water Plant #2, replaced old cast
iron water mains with new PVC mains in several areas of the City, and updated the Water Distribution System Model in 2007.
She explained that for FY11, we are proposing the replacement
of old water mains on 11th from East Coast to Beach Ave. - $120,000, rehabilitation of Well #1 at Water Plant #1 - $50,000, and Water Plant Tank Rehabilitation - $55,000.
She reported that water loss is one of the issues we’ve talked about at some of the commission meetings. She explained that water loss is the difference between the gallons of water
produced and the gallons of water billed. There are two types of water loss. Real Loss is when you are actually losing water that’s from a water line break, leaks in the joints or
fittings, background leakage, treatment plant operation/maintenance, and authorized unmetered water use from fire fighting, hydrant flushing, water main disinfection, etc. Apparent
Losses is when there are meter inaccuracies, billing data errors or unauthorized water uses from theft.
She reported that the average water loss declined from a high of 20% in 1999
to a low of about 10% in 2006 but has been climbing since then. She explained some of the action steps to reduce water loss are 1) replacement of aging water mains that are leaking,
2) professional leak detection on a portion of the system annually, 3) annual testing and repair of all large meters (3” and up), and 4) replacement of old residential meters. She explained
that meters slow down and read low as they get older. She explained the meter replacement program and explained that they are increasing the amount of meters to replace in 2011 and
have added another $32,000 to the budget to get an additional 340 meters (562 total). Discussion ensued regarding water sales and water loss.
Ms. Kaluzniak reported on the status of
the Sewer Master Plan. She explained that we have a Sewer Rehabilitation program that was recommended in the Master Plan. The funding is once again less than recommended, but we have
still accomplished Royal Palms and Seaspray Subdivisions and the grant funding is allowing us to do Salt Air area which is currently underway and the Donner Subdivision. We do plan
to resume sewer rehabilitation in FY12. She showed the 2006 Sewer Master Plan Map and explained the progress.
She explained the TMDL – WWTP Improvements which includes phasing out
Buccaneer and upgrading WWTP #1. She reported that the force main design is complete, the WWTP #1 upgrade is at 60% design and the constructability review is complete, the equipment
pre-selection is complete and the energy study is underway as well as the odor control study and the sludge study. She explained the sludge processing study. Treated sludge is the
byproduct of the wastewater treatment process. Our current treatment consists of stabilization (aeration), dewatering on drying beds, disposal at Trail Ridge Landfill, hauling performed
by City staff and no tipping fees per Interlocal Agreement with COJ. She showed photos of the sludge drying beds at WWTP #1.
She explained the Preliminary Sludge Study Results so
far. She reported that modifications to the City’s sludge handling process are recommended. She explained some issues: the current system is antiquated, labor intensive, weather dependent
and odor producing; the new process for nitrogen removal will increase sludge production, putting the current system at maximum capacity; if COJ enacts tipping fees, additional costs
will be ˜ $131,000 (more with increased sludge volume); mechanical dewatering will reduce tonnage and tipping costs; consolidation of aeration blowers could lower electrical costs.
Mr. Hanson elaborated on the issues.
Commissioner Woods distributed a handout on TMDL titled Alternative Comparison (Attachment D). She reported there are four issues as follows:
1.
Capitol Cost Decommissioning WWTP#2 does not include $2.6m impairment loss for closing plant in year 3 instead of anticipated 15 years of use; 2. Cost savings and life cycle analysis
cost
estimates assume operating at full capacity, when in reality this will probably never be realized; a. Need to justify need to design so far beyond need; b. Final TMDL report of March
2009 details in table 3.2 WW flow not to reach 2002 levels until well after 2027, section 3.5 attributes declining WW rates to sewer rehabilitation which continues and is expected to
reduce flows by approximately 30-40%, (this figure is not even included in the already reduced flow projections). c. Maximum capacity design standard was derived from the Comp Plan
which is in strict contradiction to all empirical data given in all of the reports; 3. Revenue projections used in this report were based on which flow assumptions?; and 4. $1 m reduction
for sale of property in Alternative 1 is not valid, same $ amount should be shown for Alternative 3 because the asset is maintained by the city so the value is still present. This results
in the actual dollar Capitol Cost for Alternative 1 at $13,550,000 and for Alternative 3 $8,950,000. This is a $5m savings. The additional operating cost of $115,848 per year would
take 43 years to add up to $5 million.
Mr. Fletcher asked Commissioner Woods a question but Mayor Borno explained we are getting off on a side issue and that it has no bearing on
what we are here to do tonight and that we need to concentrate on the purpose we are here for so that we can get it done. He offered for it to be addressed at another time. Commissioner
Woods disagreed by saying this is what we are discussing.
Mr. Hanson suggested that we get the engineers to address Commissioner Woods’ questions and could discuss it during a future
workshop or commission meeting. Commissioner Woods agreed with Mr. Hanson’s suggestion. Commissioner Daugherty indicated he would be satisfied with a written report. Mr. Hanson said
he would work with the engineers.
Mr. Hanson referred to his handout and explained the following: Water/Sewer Sales adding that the blue bar = water sales and the red bar = sewer sales,
Water Sales Vol 99-00 to 09-10, and Sewer Sales Volume FY 2000-FY 2010. He further explained the Water and Wastewater Financing, the Transfers to General Fund vs Surcharge adding the
blue bar = the dollars transferred to the General Fund and the green bar = how much the surcharge is, Public Utilities which indicates the amounts for Personal Services, Debt Services,
Operating Expenses, Transfers, Capital Outlay and Revenue. The Commission asked questions and Mr. Hanson and Mr. VanLiere responded to the questions. Discussion ensued and they referred
to pages 115 and 103 of the proposed budget for some of the answers.
General Fund Revenues and Expenses (Handout: Revenue and Tax Information (Attachment E)
Mr. VanLiere referred
to his handout while he explained and answered questions on the Total 2011 General Fund Revenues broken down by Taxes, Licenses and Permits, Intergovernmental, Interfund Transfers, Fines
and Forfeitures, Charges for Services, Miscellaneous, and Ad Valorem Taxes. Mr. VanLiere explained and answered questions on the General Fund Total Revenues by Type and Total Expenses,
State Shared Revenues, Ad Valorem Assessment Rolls, Atlantic Beach Taxable Property Values, Total Value and Taxable Value, Property Tax by Value, 2% Sample Analysis (AB GIS July 2010;
Change in Assessed Value (09/10), Ten Year Millage Comparison with 2010 Proposed Operating Millages, and 2010 Proposed Millage. Mr. Hanson explained some of the options available such
as take rolled up tax rate, transfer more money from utilities to the general fund, and/or rate increases and explained the impact. Mr. VanLiere
gave an overview of the General Fund as he referred to the proposed budget pages 4 and 5, Summary of General Fund Revenues.
General Fund 10- year Plan
Mr. Hanson referred to the
Total Revenues and Expenditures (page 106) and the General Fund Long Term Financial Plan Projection Summary (page 105) as he explained Personal Services, Operating Expenses, Capital
Outlay, Transfers Out and Revenues. Discussion ensued.
Convention Development Tax Fund
Mr. Hanson explained how the Convention Development Tax Fund can be used and referred to page
30 of the proposed budget as he explained the Revenues and Expenditures. He answered questions from the Commission. Commissioner Parsons commented that the Public Art is misleading
explaining that it is actually a three year budget that was taken out of 07, 08 & 09, but was put in 03, 04 and 05.
Agency Funding Requests for FY 11 (Handout: Agency Funding Requests
for FY11 (Attachment F)
Mr. Hanson distributed a list titled Agency Funding Requests for FY11. He explained that in past budget years we invited the various agencies to come in and
make a presentation, but since it takes a lot of time and there is little monies involved, he has summarized what is currently in the budget, what the request is for next year and what
is in the draft budget. He explained that if needed, we could invite the agencies to a later budget meeting. Mr. Hanson went through each item on the list. He asked the Commission
if they wanted any changes made to the amounts listed.
It was the Consensus of the Commission to Add $2,000 back in for the Teen Council.
Rick Carper explained the Services provided
by the Beaches Resource Center.
It was the Consensus of the Commission to Change Beaches Resource Center to $2,000 instead of $1,000.
There being no further discussion by the City
Commission, the Mayor declared the meeting adjourned at 8:38 p.m.
___________________________________
Donna L. Bartle, CMC
City Clerk