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HomeMy WebLinkAbout2005-06-09 CIP workshop City Commission meeting minutes MINUTES OF CIP WORKSHOP DANIA BEACH CITY COMMISSION THURSDAY, JUNE 9, 2005 - 4:00 P.M. 1. Call to Order Mayor Castro called the Workshop to order at 4:04 p.m. 2. Roll Call Present: Mayor: Anne Castro Vice-Mayor: Patricia Flury Commissioners: Bob Anton John Bertino Commissioner: C.K. McElyea City Manager: Ivan Pato City Attorney: Thomas Ansbro City Clerk: Louise Stilson 3. Discussion of 5-Year CIP Plan City Manager Pato indicated this is the third year the City prepares the 5-Year Capital Improvement Plan. The Plan is updated every year and is subject to change on an as-needed basis. In his opinion, all the items in the Plan are necessary and many are overdue. Patricia Varney, Finance Director, commented the Plan is not definite until it is put in the Operating Budget. The Plan gives the Commission an idea of what capital improvements are needed over the next five years. She advised a capitol improvement is any fixed asset and infrastructure improvement which costs more than $25,000, or on-going replacement programs, such as vehicle replacement or street resurfacing. Funding sources for the CIP are: General Obligation Bonds, Gas Tax, Recreation Impact Fees, Fire Reserves, Existing Loan Balance, Grants, General Fund, State Revolving Fund, Water Impact Fees, User Fees, and other financing sources. Under the CIP, the General Fund Budget for FY 2006 is $10.3M; if you net out the General Obligation Bond it would be $5.2M. The $10.3M does not include the Library or Parking Structure. The Enterprise Fund Budget for FY 2006 is $8.3M, if you net out the State Revolving Fund Loan the funding needed is $808,000. Ms. Varney indicated we would have to use part of our millage rate to fund some of the Capitol projects. For FY 2006 we will require $267,289, which equates to .119 mill. She is trying to allocate the same millage rate that we will be using to fund our Capitol projects. She noted City Hall, Outreach Center and Public Works Facilities are not included in the General Obligation Bond and she has used a ten year loan program for the financing. She indicated we need to borrow $2,993,500 in FY 2006, our Debt Service is $418,621; in FY 2007 we need to borrow another $1,407,740, and our Debt Service would be $675,126. The total millage impact for FY 2006 is .309 mill. Ms. Varney explained one of the measurements to see how debt compares to other cities, is Debt Payment over Property Tax Revenue. Currently our figures are very high; she thinks 2005 is the first year we did not issue any debt. Nationally, high is anything over 2.5%; we will be going to 12.21% for FY 2006; this is the payment of our Debt Service over what we collect from Property Taxes. Long Term Debt over Population is our total debt; if we excluded the General Obligation Bond in FY 2006 it would be $347; if the General Obligation Bond is included it is $701. In Florida, the benchmark is $478. Debt Service over Total Expenditure excludes the General Obligation Bond; FY 2006 is .78 mill; FY 2005 is .66 mill, a difference of$269,000. Some ways to address these issues is by raising taxes or implementing new Impact Fees to pay for financing for the expansion of City Hall and the Public Services Compound; the Commission can set a maximum millage rate; or the Commission can eliminate, delay or reduce funding of projects. Vice-Mayor Flury commented the $1.3M to be spent in FY 2006 will not happen. There is no way to have anything ready in 2006. City Manager Pato responded we are only looking to start the project, not complete it. Ms. Varney explained we need to borrow all the money at the same time for the project. She explained we cannot make more than 3%, or we would be subject to arbitrage. If we do have interest income we cannot use it; we borrow the money and make interest on it, however, the interest can only be used for the project or to pay down the principal amount of the loan; it cannot be used to offset the millage rate. Mayor Castro remarked she does not see City Hall as happening in FY 2006 because it is in conjunction with the Library. She asked if the Library would be started in 2006. City Manager Pato responded it depends what we do with City Hall, because the timing for the Library is the timing for City Hall. The Library process will not begin until the Commission decides what to do with City Hall. To move forward with uncertainty will alarm the County and they will not make a commitment. He noted the County has signaled that they will commit up to $200 per square foot for a twelve thousand square foot building. Vice-Mayor Flury remarked nobody wants to see the millage rate increase; so, how do we bring it back to 6.6. Ms. Varney responded by not funding any projects. Vice-Mayor Flury remarked we have two choices: you work on the other side to reduce whatever needs to be reduced so the millage rate comes to at least what it is, because with increased Minutes of CIP Workshop 2 Dania Beach City Commission Thursday, June 9,2005—4:00 p.m. property values, we would look foolish to raise taxes and the millage rate. The other choice is to split these up and not borrow all the money right now, so next year we would pay as much as 1% more, but over the years you will always pay more. She indicated this was a trade-off, we pay more in interest rates, or we do not do the projects; the City Manager and Finance Director are not being very flexible. Ms. Varney explained she could probably split up the air conditioning unit, or some of the equipment out of the City Hall project. However, you cannot split up construction costs. City Manager Pato remarked he knows how uncomfortable raising taxes makes everyone feel, however, this is a very challenging time for this City and the Commission either makes an investment in it now, as opposed to next year when they will be facing an election. This is the time to make strong decisions. Ms. Varney advised one mill generates $2.2M; so to drop the Debt Service back to 6.6 mill, $269,000 in Debt Service would need to be cut. She would need to convert this to the principal amount of the project. Mayor Castro recessed the Workshop at 5:05 p.m. Mayor Castro reconvened the Workshop at 5:16 p.m. Ms. Varney advised we could only borrow $793,000, not $2.2M if we want to keep the Debt Service at today's rate. Vice-Mayor Flury questioned if the money could come out of the Operating Budget. City Manager Pato responded he would find it for her; he will find the $269,000 in the General Budget. Vice-Mayor Flury does not want the total millage to increase. Mayor Castro questioned if the total Debt Service millage rate (.66) would stay the same if the City Manager found $269,000 elsewhere. City Manager Pato responded he thought the Vice-Mayor was talking about our general millage rate; however, the answer is yes it would stay the way it is. Ms. Varney pointed out that last year we used $1.4M from Fund Balance to balance the Budget, which means we actually came in short $1.4M. She indicated we do not know the increase for Personnel costs. She noted she has cut the department Operating Budgets for 2006, and this year we do not have that much surplus because of the revenue problems that we encountered. Mayor Castro commented she finds it hard to give direction on the Capital Improvement Projects without knowing the other half of the equation with the Operating Budget. • Minutes of CIP Workshop 3 Dania Beach City Commission Thursday,June 9,2005—4:00 p.m. City Manager Pato remarked without direction we cannot show the other half. Ms. Varney noted the main hit on the .309 mill is mainly the Debt Service to pay for the $2.9M we have to borrow in 2006, and also for the $269,000 in the General Fund that we use to fund the other projects. City Attorney Ansbro commented we are looking at creating two new Impact Fees; one for the Administration Building and one for the Public Services Compound; and then increase Police, Fire, and Recreation Impact Fees. He noted we also discussed the possibility of a Road Impact Fee. City Manager Pato commented he can find the $269,000 to help with the millage on the loan side of the issue. Vice-Mayor Flury remarked the real comfort is you don't come in with a total that exceeds this year's millage, and you said you couldn't do that. She suggested moving some of the smaller projects to 2007, and borrow what we need to get to .66 this year. Commissioner Bertino commented he is worried because the City borrowed $1.4M to balance last year's Budget. He questioned if we do not have the money to borrow this year, do we have $1.4M to bring forward to balance next year's Budget. Ms. Varney responded probably not because we do have a lot of revenue problems this year. • Commissioner Bertino remarked he does not see any way out of a tax increase. He thinks we should just let the projects sit and see what kind of figures we will have next year. Everything needs to be put on hold until we have the certified tax roll and then come up with a tax increase in order to run the City. Commissioner Anton commented there are a lot of cost increases this year even though we received a substantial increase in our tax base. We still have issues we need to deal with; we are facing several years of lean times. He indicated the Library needs to be tied in with the City Hall expansion. Architectural fees are around $250,000, which is under the $269,000 we are talking about saving; if we put that project on hold until 2007 and pay for those costs ourselves we would not incur debt, it no longer becomes an issue, we can still borrow the money in 2007 to move forward with the project. City Manager Pato clarified the Commission was here today to choose the projects to put in the Budget process; they have the option of taking them out as we progress in the Budget process. Mayor Castro remarked plug them all in and when we see the whole Budget we will tell you what to take out. Ms. Varney commented we still need to prioritize the projects for Parks and Recreation on page 29. • Minutes of CIP Workshop 4 Dania Beach City Commission Thursday,June 9,2005—4:00 p.m. City Manager Pato commented the Marina Park was not discussed during the Bond process. He noted we placed it under the General Obligation Bond because it is a park, so legitimately it fits in the category, but it is the Commission's call if they want to find other ways to make improvements to the Marina. Commissioner Anton remarked the public is not going to buy the Marina as being a park. Commissioner Bertino remarked the Marina is a profit center and should stand on its own. Commissioner Anton commented it is a revenue generating property and should not be listed as a park; it should be paying for itself. He noted there were more important items to spend money on in the Parks and Recreation Budget. City Manager Pato remarked the Marina has been decaying for a while and needs considerable repairs. The current lease expires in 2012; we have an agreement with FAU that it comes back to the City in 2012. City Attorney Ansbro remarked it is not a done deal. City Manager Pato remarked we are replacing Aragon on the lease with SeaTech. Commissioner Bertino asked what kind of money would come to the City next year from the Marina. ® City Manager Pato responded there probably would not be any because we have to honor the balance of the lease. The Marina generates almost $80,000 in clear profits operating on a part- time basis; 20% goes to FAU. We could find a profit if we improved the Marina and raised the rates because we are only obligated to give Aragon what they are getting today; anything above that we get to keep. He would not recommend that we run the Marina; we will look at how other cities run theirs. Commissioner Bertino commented it would be worth investing in because eventually we would make a profit. Ms. Varney asked if the Marina was in or out of the General Obligation Bond. Commissioner Bertino responded plug it in until we determine what we can get back. If it is cost productive, then we go ahead with it; if it is not cost productive, we shouldn't. City Manager Pato commented we need to determine the future of the Aragon employees. He indicated the Finance Director and City Attorney would begin to work on the details. Ms. Varney pointed out the City would have to issue the General Obligation Bond before the Budget Hearings in September. She does not have the staff or time to underwrite the Bond herself, and recommended the Florida League of Cities program. She will present a Resolution Minutes of CIP Workshop 5 Dania Beach City Commission Thursday,June 9,2005—4:00 p.m. ® at the June 281h Commission meeting. The Bond Counsel advised her it was best not to issue the Bond for the Library until we know what will happen with the County. City Manager Pato asked the Commission to review the items in the proposed CIP because they are not all related to the General Obligation Bond. Commissioner Bertino questioned the Stormwater improvements on page 78. Fred Bloetscher commented the City does not have anything funded in 2005; there is $600,000 in the Stormwater Project; and we should start seeing Work Orders for design and we have SRF money for those. He noted we met with FDOT and they will try to work with us to help get water through the southeast section with piping and money. We will tie into the Linear Park concept for treatment swales and ultimately take it to either the 7rh Street Pump Station or a Stormwater Injection Well. He will be meeting with FDOT to discuss the median and traffic issues on Federal Highway. Vice-Mayor Flury left at 6:07 p.m. City Manager Pato asked for direction on the replacement of his car. He indicated the Finance Director is not comfortable with a lease because the IRS will require him to maintain a daily log. He wants to know if he should trade-in his vehicle as opposed to moving it into the fleet. He commented the City did not purchase an extended warranty and it would become costly to keep. He stated he could receive $8,000 on a trade-in at the Lincoln Mercury dealer; the replacement vehicle would be $20,000,plus the trade-in of the Crown Victoria. The City Commission directed the City Manager to purchase the Mercury for a cost not to exceed $20,000. Ms. Varney advised she would bring a Resolution forward to move the funds from Contingency. 4. Adjournment Mayor Castro adjourned the Workshop at 6:20 p.m. CITY OF DANIA BEACH ATTE=ST: ANNE CASTRO MAYOR-COMMISSIONER LOUISE STILSON CITY CLERK Approved: June 28, 2005 • Minutes of CIP Workshop 6 Dania Beach City Commission Thursday,June 9,2005—4:00 p.m.