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HomeMy WebLinkAboutMinutes - 20020218APPROVED 6118102 MINUTES ORANGE COUNTY BOARD OF COMMISSIONERS WORK SESSION FEBRUARY 18, 2002 The Orange County Board of Commissioners met for a Work Session on Monday, February 18, 2002 at 7:30 p.m. at the Southern Human Services Center in Chapel Hill, North Carolina. COUNTY COMMISSIONERS PRESENT: Chair Barry Jacobs and Commissioners Margaret W. Brawn, Moses Carey, Jr., Alice M. Gordon, and Stephen Halkiotis COUNTY ATTORNEYS PRESENT: Geoffrey Gledhill and S. Sean Borhanian COUNTY STAFF PRESENT: County Manager Jahn M. Link, Jr., Assistant County Manager Rod Visser and Clerk to the Board Beverly A. Blythe (all other staff members will be identified appropriately below} NOTE: ALL DOCUMENTS REFERRED TO IN THESE MINUTES ARE IN THE PERMANENT AGENDA FILE IN THE CLERK'S OFFICE. ALL RECORDINGS OF THE MEETING WILL BE KEPT FOR 5 YEARS. OPENING COMMENTS Chair Jacobs opened the meeting. Commissioner Gordon said that a hearing was held on the Transportation Improvement Program for the regional priority list. She will give a full report on the meeting tomorrow. In the hearing, approximately a dozen people spoke and half of those spoke on the Elizabeth Brady Road extension, including Mayor Joe Phelps, Hillsborough Tawn Commissioner Ken Chavious, and former Hillsborough Town Commissioner Brian Lowen. According to Ken Chavious, the EDD work group, from Hillsborough's paint of view, was not supposed to be addressing transportation. Hillsborough considers the EDD transportation work group as something that was not sanctioned. The thrust of the comments was that Hillsborough wants the original alignment of Elizabeth Brady Road. One speaker was against the road crossing the Eno River. She said that she told everyone at the hearing that the Board of County Commissioners had sanctioned the work group and that the Commissioners did it in good faith. The Elizabeth Brady Road extension is still on the regional priority list, #9. 1. State Budget Shortfall Impacts on Orange County John Link said that this update would give the County Commissioners an overview of how the sequestering of revenues by the Governor that are earmarked for local governments will impact Orange County. He emphasized, especially to the press, that the ideas expressed tonight by the staff are only potential ways to address the proposal. Budget Director Donna Dean said that on February 5, 2002, Governor Easley declared a fiscal state of emergency and took action to balance the State budget. The Governor estimated that the state was going to have a $900 million budget shortfall. The Governor's proposal is to withhold $209 million from the local governments. Ninety-five million dollars of that is from inventory tax reimbursements to local governments, $26 million is from local beer and wine taxes, $7.9 million is from the ElderlylDisabled Property Tax Exemptions, and $80 million is from city utility franchise taxes {cities only}. For Orange County, the anticipated loss is about $712,000. This is made up of inventory and intangibles tax reimbursements of $454,000, beer and wine taxes of $195,000, and Homestead reimbursements of $62,000. One cent of the tax rate at 100°fo collection rate is $907,000, and the tax rate equivalent is .78 cents. Alamance County stands to lase about $1.6 million, and the tax rate equivalent is 1.78 cents. Caswell County stands to lase about $234,000, and the tax rate equivalent is a little over two cents. Chatham County's tax rate equivalent is 1.34 cents. Durham County stands to lase about $3.5 million dollars, which is not quite two cents. Person County stands to lose about $350,000 and Wake County stands to lose about $4.2 million. Regarding the towns in Orange County, Carrboro will lose about $298,000, Chapel Hill will lose about $1 million, Hillsborough will lose about $159,000, and Mebane will lose about $311,000. Donna Dean said that she will get the tax rate information on the municipalities at a later date. Donna Dean made reference to the chart on the orange sheet. In reference to lapsed salaries, a savings is expected of between $560,000 to $625,000. It is also expected that there will be some under spending in County operations of between $250,000 to $375,000. All in all on the spending side, we think that we will have some savings between $850,000 to $900,000 to offset the loss from the state. The other good news is that the Register of Deeds has seen an increase in workload. It is projected that the revenues will come in $300,000 to $400,000 over budget this year. Other fees are also coming in aver budget between $100,000 to $200,000. Regarding revenues, investment earnings have dropped between $900,000 to $1 million. The second quarter sales tax was received last week and it was not quite as healthy as the first quarter. There was a significant decrease from last year at this time. Preliminary estimates are that we will be under budget between $350,000 to $650,000. The net of all these changes is a deficit of between $712,000 to $862,000. The good news is that the fund balance is $13.5 million. The fund balance is there for such unforeseen emergencies. The budget staff is looking weekly at expenditures and revenues and will be bringing in periodic updates. Commissioner Gordon asked about the reasons for maintaining the fund balance at its current level. John Link said that in the 1930's, the General Assembly enacted the Fiscal Control Act for the counties, cities, and towns because over 60 counties in the state went bankrupt in The Depression. The General Assembly should have enacted the same Fiscal Control Act on themselves in the 30's. Since the 1930'x, counties, cities, and towns have been very fiscally responsible and there have been no other financial crises in local government in North Carolina. In 1988-1991 when the discussion about inventory and intangible tax was brewing in the state, the Governor at that time promised that there would be no loss of revenue to the counties, towns, and cities. He thinks that there is a moral, ethical, and legal responsibility on the state to respond and let us have the money due us. Commissioner Carey said that there is also a responsibility of the state to take care of the operating needs of the school systems, which has been transferred to counties over the last 25-40 years. Commissioner Halkiotis said that he does not feel that we are responsible for the pain that everybody is being asked to share in. He said that he would not be surprised if the state asked Orange County for some of its fund balance. Chair Jacobs made reference to the draft letter to Governor Easley, which was distributed. This will be finalized for signatures by all County Commissioners. He said that one of the statements in the letter that bears repeating is that it is time for the state government to unshackle local governments and give us more flexibility in adopting revenue-generating alternatives. He said that rather than continue along the same course of being dependent on the state government for monies which are owed us and which it may or may not choose to reimburse, we ought to change to a system where we have more control at the local level of our own destiny and to tailor what we do as local governments to what the citizens in our locality want us to do. Commissioner Brown suggested asking the Governor to support these things and make sure that what we are asking for is very clear. Commissianer Halkiotis made reference to the orange sheet and asked how under spending in County operations could result in savings of $250,000 to $375,000. Jahn Link said that it was not a specific line item, but the anticipation that we will spend 98°~ of the budget instead of 100%. Donna Dean confirmed this and said that it was based on the historical spending patterns. It is very unlikely that we will spend 100% of our total budget. Commissianer Halkiotis asked John Link if he expected Orange County to have hiring freezes, freezing of travel and conference monies, and abandoning of temporary positions. Jahn Link said that he did not foresee this for the rest of this year. He said that he was concerned about sales tax revenues for the rest of the year. John Link listed items, which could be postponed or reduced to continue on in these areas with the fewest negative consequences. The items are as follows: • Postpone the contribution to the affordable housing fund • postpone the contribution to the school/park reserve fund • postpone remaining purchases of computer equipment, and • not send the recurring capital allotment to each school system for one month These four items could generate $885,000 cumulatively. Chair Jacobs asked about the '/ cent sales tax and confirmed what would happen if it were enacted. It would take effect in July 2003. It would generate approximately $500,000 mare for Orange County than we were getting for inventory and intangible tax funds. Commissioner Brown asked about the replacement schedule for personal computers and Rod Visser said that we are in the fourth year of replacing personal computers. Commissioner Brown questioned the $250,000 contribution to the Affordable Housing fund, which is an the list of potential ways to offset further deficits. Commissioner Brown said that it was not right that the State is not willing to tax citizens for the services it provides, but that it expects the counties to da so. Chair Jacobs asked that John Link give the County Commissioners a list of the positions that the County Commissioners have talked about adding far this next year. Jahn Link made reference to the handout, which lists those items that may be reduced for next year to help offset the potential loss of state revenues for FY 2002-2003. He read the items and the maximum amount that could be achieved by reducing the items. This is an the blue sheet in the agenda packet, which is incorporated herein by reference. Commissioner Brown asked if Jahn Link has had any discussion with the two school systems on the seriousness of this potential lass of State money and John Link said that he plans to meet with them next week and let them know of the impacts of this potential loss. Commissioner Gordon agreed that recurring capital is vitally important to bath school systems. She feels it is important to bring bath school systems into the discussion sa they are aware of the impact. Chair Jacobs said that it would be important to include a cover memo to the school systems reiterating that the impact an the schools is much less than the impact an County operations. Commissioner Carey said that when John Link shares this with the school systems, he should ask if they have recommendations on where the cuts should came from instead of the Board dictating where cuts are made. Commissioner Halkiotis encouraged John Link to consider bringing in positions from the various departments under one umbrella in the IT (Information Technology} department. Commissioner Brown would like to have included in the letter to Governor Easley some comments an Mental Health and the impacts of that restructuring at the State level an the County. Commissioner Gordon asked that for every new position recommended that the space requirements for that position be listed. Chair Jacobs said that it has been suggested to him by several elected officials that the Governor's proposal be presented at a meeting of the Assembly of Governments in April. It would be helpful if the municipalities could find a common cause. Commissioner Gordon said that the mayors have met with the Governor and the League of Municipalities is developing a strategy. There are groups meeting to see if there are other ways to raise revenues and she thinks we should do whatever necessary to be supportive of this effort. Chair Halkiotis suggested inviting the school boards to the Assembly of Governments meeting. 2. Assessment of Proposed Carol Woods Payment-in-Lieu of Taxes John Link made reference to the information in the agenda. Pat Sprigg, Executive Director of Carol Woods, wrote a letter December 3, 2001 to the County Commissioners outlining their plan and the rationale for pursuing the property tax exemption far Carol Woods. He said that Carol Woods has been an excellent corporate citizen of Orange County and the individual citizens who live there have been excellent citizens. Rod Visser said that the letter outlined the intention of Carol Woods to apply for property tax exemption for 2002. This was based on Carol Woods' view that the lion's share of their facilities is financed by medical commission bands. Their view is that it is part of their fiduciary responsibilities to apply for property tax exemption because the statutes provide for this. This exemption would have a revenue reduction impact of $525,000, with $280,000 for the County's. Coral Woods' intent is to contribute back to the community and make this a revenue neutral situation for the County this year. Commissioner Brown asked for an explanation of the medical care bonds. Pat Sprigg said that a commission was appointed to distribute statewide funding for not-for-profit organizations that are health care related and serve all segments of the population. It is a tax exempt bond issue that must be paid back. This is for capital, equipment, and startup cost. She reiterated to the County that Carol Woods would pay their taxes for this year and work with the County to be sure that the services do not suffer under this exemption. It is very important for them to go on record and say that Carol Woods has some wealthy people and people of lesser means. This is not just a community of wealthy people. However, they are also well aware that this County has many people that would never be able to afford Carol Woods. Their mission is to reach out to these people and help this County meet the gerontological boom that is going to hit over the next several years. They would like to be a proactive leader in helping the County address these needs. Commissioner Carey asked how Carol Woods plans to address the issue of wealthy people and also how they plan to address the not-so-wealthy people. Pat Sprigg said that she could understand why the County Commissioners would want to know the future of Carol Woods when things change. She will came back with a plan. It is very important that this not be called a payment-in-lieu. In terms of how they are going to address people of lesser means, they are already subsidizing rent for some individuals. They feel that community outreach or partnering with others is very important. She made reference to the mobile dental unit that serves the elderly who are not welcomed or able to go to a traditional dental office because of confusion or incontinence. They are trying to move forward with a dental mobile unit to serve the house bound or institutional bound elderly. The priorities will change from year to year. She does know that the County will face a huge challenge with meeting the needs of the elderly. She painted out that Carol Woods does not deal with Medicaid. She said that if residents spend down their assets, Carol Woods clicks in the Mission Development Fund. Commissioner Halkiotis said that this is something that Carol Woods does not have to do - returning the tax exemption money to the County. He feels that Carol Woods is entitled to this exemption and he thanked them for committing to returning it. Commissioner Gordon thanked Carol Woods for what they do in the community. She asked about the bonds or notes and noted that there would be an exemption only until the medical bonds are paid off. Pat Sprigg confirmed this statement. The exemption would last less than 20 years. She said that there are two statutes an the books, which allows them to pursue property tax exemption. The 105-278.6A statute is based solely on community benefit, charitbility, and social accountability. John Smith, Director of the Tax Assessor's office, said that under statute 105-278.6A, if a health care facility is providing unreimbursed care up to 5% or above, they would qualify for a total exemption. His expectation is that, with any contributions that Carol Woods would make this year, that they would exceed 5% and would likely continue to be exempt under statute 105-278.6A in future years. Commissioner Gordon asked if the certified amount of medical deduction would be the same each year and Pat Sprigg said that this varies from year to year. This is an estimated number in terms of how much of each of the residents', living independently as well as in the health centers, fees goes to supporting health care. Commissioner Brown asked about the tax exemption after twenty years and Pat Sprigg said that statute 105-278.6A must be filed every year and is not a done deal. Commissioner Brown asked Pat Sprigg if she had talked to the Chapel HilUCarrboro Schools and Pat Sprigg said yes. She said that Superintendent Neil Pedersen said that a gift to the County would hopefully be split between the County and the school systems. She has not met with Orange County Schools. Pat Sprigg said that the goal is to take the tax bill for 2001, use it as a working document, take the amount out to pay for taxes, make up the rest with a charitable gift to all three entities, and take a year to work out with all three entities the best way to do it for 2003-2004. Chair Jacobs expressed his appreciation to Pat Sprigg for the commitment of Carol Woods to the community. He asked if the $530,000 constitutes part of the 5% that they would be required to contribute for statute 105-278.6A. Pat Sprigg said that if they chase to go that route, then the $535,000 would contribute to the 5%. They would not qualify for the 105 statute without the $535,aoo. Chair Jacobs asked about the possibility of a long-term agreement with Carol Woods and Pat Sprigg said that after they get the property tax exemption, she would talk with her board about this. She said that her board feels that it would not be financially prudent to commit to a formula that commits future boards. Chair Jacobs said that it seems like one of the attractive options to Carol Woods may be to earmark funds for certain services or to be more proactive and bring in more diverse economic capabilities into Carol Woods and count it for social responsibility. Pat Sprigg said that she does not fully understand what the needs are in the County to address the needs of older citizens. They would like to come out of this with awin-win situation. Chair Jacobs asked for a copy of the mission statement of Carol Woods. In answer to a question from Commissioner Brown, Tax Assessor John Smith read the requirements of social responsibility in the application for the 105 statute. 3. Planning Process for Parks, Recreation, and Open Space Projects Environment and Resource Conservation Director David 5tancil summarized the planning process for parks, recreation and open space projects. He said that where we are now is that the County's draft policy statement was sent to the towns for comment last December. The County Commissioners referred the draft policy statement to the Intergovernmental Parks Work Group for its review and recommendations. That Work Group discussed the draft policy on January 31St and is scheduled to again discuss this policy on February 27t". The Work Group developed concepts for each project as listed below: • Avoid overlap and delays in completing projects • Need appropriate level of County oversight, overview of projects • Address both 2001 bond projects and standing permanent policy for future joint projects The IP Work Group recommended that there be "conditional approval" for all future projects. The towns would be expected to bring new projects to the Board of County Commissioners. The Board of County Commissioners would refer the project to the IP Work Group for a recommendation. The Board of County Commissioners would make a decision on whether to pursue. This would be for jointly funded parkslopen space projects. The IP Work Group recommended that joint projects should be consistent with the adopted County criteria. They noted that the 2001 bond projects are exempt from "conditional approval" process and that all jointly funded projects be available for use by all County residents. They will address joint park decisions on a case-by-case basis. David Stancil summarized the proposed process that was followed in developing the 2001 bond projects. He outlined the proposed process for future projects and the makeup of the project work group. The parks project work group would develop recommendations on the following: • "Lead" jurisdiction • Park design and construction (including consultants) • Park operation once project completed • Stewardship and maintenance • Potential for leasingtexclusive usetscheduling of facilities by private/non-profits Donna Dean listed the current County/Town joint parks and open space projects and the proposed funding timetables -Homestead Park Aquatics Center with Chapel Hill, Fairview Park with Hillsborough, Smith Middle School Park with Carrboro, Greenways/Joint Open Space with Carrboro and Chapel Hill, and Southern Community Park with Chapel Hill. She then outlined the funding timetables. It is very similar to what was discussed in December, but there is a change to shift the issuance of the first and second rounds of the band and alternative financing by six months. This results in some savings in interest. Donna Dean said that the staff has solicited information from the towns about their priorities and this information should be available soon. Donna Dean then outlined the County's Capital Investment Plan Timeframe. The presentation of the Manager's recommended CIP will be March 18, 2002. On March 25, 2002 there will be a joint meeting with the school boards. The public hearing for the CIP is April 2, 2002. There is a work session on April 22, 2002 for the CIP and hopefully the CIP will be approved in May. The County Commissioners discussed the timeframe for selling bonds. Commissioner Gordon said that she feels that the list of proposed projects needs to be reviewed before making a firm commitment far any project. John Link said that these projects will be worked into the County's Capital Investment Plan (CIP} and at that time the commitment to specific projects will be considered before approving the CIP. The CIP proposals from the schools will be included in the presentation on the CIP on March 1 S`". Commissioner Brawn made reference to the Draft policy statement and said that it was clear at the IP committee meeting that the towns had no difficulty with setting up this project committee. They also agreed with either a town or the County handling each project. She said that there was no argument about who would handle the different projects. Commissioner Halkiotis asked for a specific example of economy of savings when several entities are involved and Commissioner Brown said that looking at all the projects and bidding out similar parts of the various projects might provide the County with the least expensive way of doing these projects. This provides flexibility and an economy of savings. Commissioner Carey asked about conditional approval and David Stancil said that conditional approval means that a project is being considered and a recommendation will be received from the IP Work Group. At that time, the Board would decide whether ar not to pursue the project. The IP Work Group will meet next week and take into consideration the comments made tonight and bring back a recommendation to the Board of County Commissioners. Commissioner Carey said that he feels that it will be confusing to the public if we have different processes for different projects. David Stancil said that there would be some principles that would apply to every project. Commissioner Carey specifically mentioned the projects at school facilities and whether they would be open to everyone in the County. Chair Jacobs said that having the facilities open for everyone is a topic to discuss with the schools at joint meeting between the County Commissioners and the two school boards next month. Commissioner Brown said that having one entity take care of all the soccer fields might achieve same economy of scale and also enable better use and scheduling of these types of facilities. Commissioner Gordon said that it would really help if the IP Work Group came back with suggested language for the policy. She said that the IP Work Group was charged with developing the memo of understanding. This is very important because there may be some assumptions about ownership and who is going to pay for construction and operation of these facilities. Chair Jacobs asked if the public is included at any point in the process. Commissioner Brown said that the citizens have been involved in the concept and planning stage. Chair Jacobs would like to have the public included in the process. John Link said that if public participation has not been received, the County should ask for public input through a public hearing or other effective means. Chair Jacobs said that there has been some questions about when we start the projects and if we can have projects simultaneously. He sees several groups meeting at the same time on different projects. Commissioner Brown said that if you take specific projects and look at which ones already have concept plans, then there might be a place for building four soccer fields at the same time, etc. Chair Jacobs said that it makes sense to do them all simultaneously. David Stancil said that the County Commissioners have approved the staff to do the design work in-house with the Open Space Design Specialist. He has been trying to think about how to stagger the concept plans. He has been leaning towards staggering them so that several are going on at the same time, but they would be in different stages. Chair Jacobs asked if the County Commissioners agree with 5-6 groups working on refining different facilities. Also, are some facilities going to be left behind and are these going to be those in which the County is the only participant? We need to be sure that the County projects do not came in last. Commissioner Gordon said that the County Commissioners or the IP Work Group needs a report on the status of projects. The meeting process was driven by the projects for which there were concept plans and for which Chapel Hill and Carrboro were afraid there would be a delay. Chair Jacobs said that if the concept plans are for projects which are located in the southern end of the County, he feels this needs to be balanced with other projects. He wants to make sure that we do not have an unintended consequence occur because of the projects being concentrated in one area of the County. Commissioner Gordon made reference to those projects that are listed for the first year. She said that there has not been preference toward the southern end of the County. Chair Jacobs wants to be sure that there is a sense of balance because we are trying to serve the County in a comprehensive way. He is especially concerned about Fairview Park. Commissioner Gordon made reference to the proposed list of projects and the funding timeline. She said that if the County Commissioners fallow the list, there is no need to worry about balance. John Link asked that the Board consider that the final chart adopted is going to be the Capital Improvement Plan. This can be used as a motivating factor for the various interest groups that are looking for funding. 4. Payment-in-Lieu Status Report This item was postponed and addressed on February 19, 2002. 5. Board of Commissioners Board and Commission Appointments This item was postponed and addressed on February 19, 2002. 6. Adjournment A motion was made by Commissioner Carey, seconded by Commissioner Halkiotis to adjourn the meeting at 10:30 p.m. VOTE: UNANIMOUS The next Board of County Commissioners meeting is scheduled for Tuesday, February 19, 2002 at 7:30 p.m. at the Southern Human Services Center in Chapel Hill, North Carolina. Barry Jacobs, Chair Beverly A. Blythe, CMC