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HomeMy WebLinkAboutMinutes - 20070320APPROVED 4/24/2007 MINUTES ORANGE COUNTY BOARD OF COMMISSIONERS WORK SESSION March 20, 2007 7:30 p.m. The Orange County Board of Commissioners met for a Budget CIP Work Session on Tuesday, March 2Q, 2007 at 7:30 p.m. at the Southern Human Services Center in Chapel Hill, North Carolina. COUNTY COMMISSIONERS PRESENT: Chair Moses Carey, Jr., and Commissioners Valerie P. Foushee, Alice Gordon, and Mike Nelson COUNTY COMMISSIONERS ABSENT: Barry Jacobs COUNTY ATTORNEYS PRESENT: Geoffrey Gledhill COUNTY STAFF PRESENT: County Manager Laura Blackmon and Assistant County Manager Gwen Harvey, and Clerk to the Board Donna Baker (All other staff members will be identified appropriately below}. Chair Carey announced that Commissioner Jacobs was ill and could not attend the meeting. 1. Capital Funding and Budget Update Laura Blackmon said that this is the first budget work session, and she will review loose ends and projections for the future. She said that she asked both superintendents to come tonight to give the Board of County Commissioners an update of the schools' capital needs for the next 5-10 years. She said that the County Commissioners also wanted to discuss the draft capital funding policy. There is also a spreadsheet that will look at CIP projections and distribution of funds. The departmental budgets were due yesterday. Chapel Hill-Carrboro City School Capital Investment Plan CHCCS Assistant Superintendent Steve Scroggs made a PowerPoint presentation. Capital Investment Plan Board of County Commissioners March 20, 2007 Capital Needs far 2007-17 Capita! Needs for CHCCS ^ Facilities for Student Growth ^ Maintenance and Support for Older Facilities ^ Support for Technology Elementary Growth -chart (Elementary # 10 wilt be open in 2008, but Elementary # 11 might be needed in 20 ~ 0J Middle School Growth -chart (another middle school could be needed in 2073-74 -the site is at Twin Creeks Park) Nigh Schaal Growth -chart (Carrbaro High School opening in August 2007, but wit! need an addition in 2014- ~ 5) Arts Center and First School . Arts Center and the District would jointly create an Arts School ^ It would be an unconventional urban design The grade level is undetermined, but if it were high school, it could reduce the need for expansion at Carrboro High First School is a joint project with FPG ^ Would include three and four year olds in a school setting The proposal far a new facility at Seawell will ga to the Board of Education April 12 Would mean that elementary #12 is needed sooner First School -chart Other Facilities ^ Renovate Lincoln Center and return it to student use. ^ To allow Lincoln Center to be converted, central office would have to be relocated. Facilities Needed UNFUNDED PROJECTS: ^ Elementary School #10 open 2008-09 ^ Elementary School #11 opens 2010-11 ^ New Central Office opens 2010-11 Lincoln Center to Educational Facility 2011-12 ^ Middle School #5 opens 2013-14 ^ High School Addition opens 2014-15 $23,936,100 $24,024,090 $10,615,536 $12,320.959 $34,834,408 $30,663,714 TOTAL FUNDING NEEDED $736,394,808 Maintenance and Support for Older Facilities ^ Appreciate past support ^ Overall, facilities are in fairly good condition ^ Dedication of Pay As You Go funding can be handled for two years ^ Deferred maintenance past that point will be mare expensive ^ Five Year Needs ...$14,434,774 Safety and Security -chart Technology ^ Substantial Growth in Applications ^ Flat Funding ^ Aging Computers ^ Refresh Plan ^ Budget Requests The World is Changing ^ The Flattening of the World ^ Global infrastructure is in place ^ Great demand for information skills ^ Cheaper labor overseas ^ RESULT: 21ST Century jabs outsourced to India, China, & Russia ^ NEED: Prepare our students to compete in a 2951 Century economy Current State Despite substantial growfh in the fleet supported -table Currenf State The fleet continues to grow- table Over 501 of Instructional Computers are > 5 Years Old -graph Global Problem: February 6, 2007 BOCC Agenda Background -Since the late 1990x, Orange County's Information Technology Department has performed annual replacements of aging computers within the County departments. The original plan to replace the oldest 25% of County desktop computers every 4 years has been followed, with the exception of two years, which were missed in the replacement cycle. Currently, the oldest 25% of Orange County computers are finishing their sixth year of service. As might be expected given the rapid evolution of technology, these machines are increasingly unable to support contemporary software, as their reasonable lifespan has been extended as far as possible. Sample 5-Year Refresh Plan -table 2007-08 Budget Request Priorities based on TAC and School Input Refresh aging computers (875K) Increase in infrastructure support costs (977K) Increased network storage space for teachers GOOK) Installation of wireless access in schools Cost Per School: ES 26K, MS 35K, HS 43K Replacement of telephones in schools 2-3 schools per year (70K for 5 years) 5-Year Lease (all at once) (92K} Installation of classroom data projectors 182 Existing HS Classrooms {418K} 118 Existing MS Classrooms (271 K} 277 Existing ES Classrooms (637K} Installation of emergency generator for LG (SOK) Installation of video distribution system (40K) Revenues Impact Fees -graph {there was a spike, and now it is going down) Pay As You Go -graph Alternative Financing -graph Recurring Capital -graph Capital Revenue Summary -graph Steve Scroggs said that he did not want to present a doom and gloom picture, but only the reality of capital funding in the 5-10-year period far CHCCS. Commissioner Gordon asked about estimated costs for the new schools and how the land casts were ascertained. She verified that there was already a middle school site and an elementary school site at Twin Creeks. There is also a "future educational site" at Twin Creeks. Commissioner Gordon said that CHCCS should look at this third site as a possibility for a school. She said that there was discussion about using a Scroggs footprint far this site. Commissioner Gordon made reference to the First School and asked if there were going to be two. Steve Scroggs said that the First School in Carrbara will be in an existing facility. It will not have the size ar scope that the one attached to Seawell Elementary School will have. Seawell Elementary is designed to have seven pre-K to 3`d grade classrooms, with the capacity for 100 children. The Board of Education has not approved this First School yet. The presentation will be on April 12t". This First School would pull Elementary School #`12 closer because there would not be as much elementary Schaal capacity with the First School in place. Commissioner Gordon asked what was worked out with Carolina North and Steve Scroggs said that First School was the first step in the conversations with Carolina North, and developers of Carolina North have said that there would be another school site in the Carolina North property. It would most likely be an elementary school. Commissioner Gordon said that she would like to see what CHCCS could do with the Twin Creeks property and the Carolina North property, since they would not have to pay for land costs at these sites. Commissioner Foushee asked if, in discussions with Carolina North about the First School, did CHCCS talk about UNC paying some of the costs and Steve Scroggs said yes. This information will be presented to the Board of Education on April 12t". He said that UNC has committed to pay for a substantial piece of this building. Also, because it will have pre-K, Head Start is willing to fund 25°~ of the capital costs for the areas that serve 3- and 4-year olds. Commissioner Foushee made reference to the estimated costs for the Central Office and asked if this includes construction and land costs and Steve Scroggs said that it only includes construction costs. He said that there is land across from Chapel Hill High School and land that Commissioner Gordan referred to earlier (Twin Creeks). Chair Carey asked about the acreage of the lots and Steve Scroggs said that the site across from the high school is 11 acres. Chair Carey asked about the ArtsCenter school and the construction costs and Steve Scroggs said that the ArtsCenter is going to expand and they want to build something that is attractive to kids and students. Steve Scroggs said that there have only been preliminary discussions. He thinks that it would be a good move financially. Chair Carey asked about the timeline and Steve Scroggs said that within a year they would like to begin serious discussions. Commissioner Nelson made reference to the Lincoln Center and the costs of renovations versus new construction. Steve Scroggs said that the Lincoln Center is, to him, a historical building that should be preserved. There have been discussions about preserving the front, retrofitting the inside and adding an additional building on the back. There is already a gymnasium and fields. He does not feel that it would be appropriate to remove the building because of the historical nature of it. This is his opinion only, but he thinks that the Board of Education feels the same way. Commissioner Nelson asked about the status of the HUAC systems in the older facilities. Steve Scroggs listed the schools that have had complete HUAC replacements. The oldest systems have been replaced. The Lincoln Center still has same parts from the original HUAC system. He said that they are not in bad shape in the HUAC systems and the roofs. Commissioner Gordon made reference to the science labs at Culbreth and asked what would be done with these. Steve Scroggs said that this is outside the five-year window for the base CIP. He said that they are dedicating monies now for the new schools and some of the retrofitting is being pushed further out. Chair Carey made reference to technology needs, and asked about the need far over $800,000 and Steve Scroggs said that this is in addition to the $1 million allocation. This is strictly for hardware costs. Orange County Schools' Capital Invesment Plan OCS Superintendent Shirley Carraway made this PowerPoint presentation. CIP Process 10-Year Projection Assessments Based on Unconstrained Resources Inputs o Superintendent & Associate Superintendent o Principals o Maintenance Director o Strategic Plan Age of School Facilities SCHOOL YEAR OPENED CPES 1956 CES 1952 ECES 1952 GABES 1974 HES 1952 NHES 1991 PES 2000 ALSMS 1995 CWS M S 1968 GHMS 2006 CRHS 2002 OHS 1962 PAAS 2007 Aae of Ancillary Facilities FACILITY YEAR OPENED Board of Education 1971 Maintenance Office 1940 Transportation Office 1971 2006-07 Fundina Received CIP Recurring Capital $1, 630, 655 $941, 520 School By School List ofNeeds -tables Superintendent Carraway said that the Board of Education, at its meeting last night, approved moving forward with the First School concept, partnering with Frank Porter Graham. The plan is to site the First School at Central Elementary. There is nothing in the CIP information about this, because the needs are unknown at this time. She said that OCS is in the middle of a space study for the staff, and until this study is completed, the needs for additional office space at the Central Office are unknown. The hope is to have this information very soon. At this time, there is staff scattered throughout different school buildings. Critical Capital Needs • HES o Fire Alarm Upgrade • CWSMS o Air Handler Replacement o Interior Lighting Upgrade o Ceiling Grid and Tile Replacement o Intercom System Replacement • OHS o Bathroom Renovations o Track Renovation o Tennis Court Renovation o Moisture Barrier Installation o Baseball Field Lighting Replacement Commissioner Nelson asked about the acreage of the Central office site and it was answered about two acres. Commissioner Nelson asked about the total Central office staff and Shirley Carraway said that there are about 30-35 people that are spread out in other buildings. The Central office staff consists of the Superintendent's immediate staff, the Payroll Department, and the Personnel Department. Commissioner Nelson asked for clarification on the HVAC needs at Cameron Park and Superintendent Carraway answered that this is for the gym because the units have been falling off the wall. Regarding the rest of the HVAC at Cameron Park, the cooling towers have been replaced. Commissioner Foushee made reference to OHS and asked if there is a problem with air quality in that school as well as the moisture problems. Shirley Carraway said that they continue to have air quality assessments in all of the schools, and OHS has some air quality issues. Commissioner Foushee asked if the CIP would include requests for funding to move towards mitigation of these issues. Shirley Carraway said that they try to deal with this in part of the recurring capital. Commissioner Foushee asked if there were any needs for technology and Shirley Carraway said that they have tried to use the money available and divide it up. She said that the school board usually commits about $6QQ,000 of the CIP toward upgrading technology. This was not done last year because the money was used for Gravelly Hill. Commissioner Gordon made reference to the Mebane area and asked if it was included in the SAPFO reports. Commissioner Gordon said that Mebane should be part of the SAPFO reports. Superintendent Carraway said that Mebane has agreed to share information with County staff about projects, but it is not as good as being involved in the SAPFO (Schools Adequate Public Facilities Ordinance). Commissioner Gordon said that she would like the same age of facilities breakdown of schools from CHCCS that OCS has done. Chair Carey agreed with Commissioner Gordon about the information per schoal. He said that he would like some indication of priority on the list of projects for each school. Chair Carey asked about the replacement plan for technology and Superintendent Carraway said that there is a plan for replacement on a rotating basis. Superintendent Carraway pointed out that the "Total" page was missing, and it is about $11 million. The total for the critical needs is $1,974,QQQ. Chair Carey asked how much of the $1.6 million was used for startup of Gravelly and Superintendent Carraway said $8QQ,QQQ. Chair Carey asked about the proposal to merge Hillsborough Elementary and Central Elementary. Superintendent Carraway said that this is not a merger, but the Board of Education approved "exploring" the possibility of combining the two schools. A committee was approved that would look at the next steps to this exploration. There has not been any approval to combine the schools, but just to explore the possibility. One of the scenarios for combining the schools might be to make Central apre-K to 3`d grade, and Hillsborough would be a 3-5 school. She said that the free and reduced lunch rate at Central is the highest in the schoal district and at Hillsborough it is the lowest. The demographics are quite different between each school, and the board is simply exploring if it might be feasible and if the students would benefit by combining the schools. Commissioner Gordon asked about the First School at Central Elementary and if they are going forward regardless of the possible combining and Superintendent Carraway said yes. Budget Director Donna Coffey said that the student projection numbers are based on historical growth. It is expected that once the historical numbers start reflecting the Mebane growth, there will be a rise in student projections. Commissioner Gordon asked about Mebane and the SAPFO and Geof Gledhill said that the legality of SAPFO is at risk when CAPS are not going to be issued in the OCS and Mebane is not included. Mebane has not signed the MOU for SAPFO but students in Mebane's jurisdiction are included in the SAPFO reports. 2. Capital Funding and Budget Update Laura Blackmon made reference to the historical information at the Commissioners' places (with pie chart) entitled, "Orange County Long-Range Capital Funding Since 1988 Totals $488.1 million." This chart shows how much in capital funding has gone to school projects versus County projects. Laura Blackman made reference to the Capital Funding Policy and that there was a discussion at a work session in January, and the Board requested to look at the draft policy. Chair Carey verified that the Board never adopted the language, but adopted the plan and the practice, and the plan was implemented. Budget Director Donna Coffey said that the County has been practicing the policy to a certain extent. The Board has agreed to allocate four cents of the tax rate to recurring capital. Three cents would be far school capital and one cent would be far County recurring capital. To date, only two cents have been allocated to the school recurring capital, and the County recurring capital has not been allocated. Donna Coffey gave background on the Capital Funding Policy. Since 1996, the County has had one in place. In November 2004, the Board adapted a policy of practice that said that it would allocate 60% of pay-as-you-go capital funding to schools and 40% to the County projects. Fallowing the adoption of this policy, in May 2005 the Board chose an option on haw to allocate school construction impact fees, etc. Donna Coffey went over the highlights of the policy, which is incorporated by reference. Regarding lottery proceeds, last year the state said that Orange County could expect $2.7 million in lottery proceeds this current fiscal year. The County budgeted $2.4 million to offset debt service, which was the equivalent of two cents. The first quarter deposit in October was promising. The second quarter proceeds were dawn significantly. Based on the numbers from DPI, the County will be about $300,000 short an lottery proceeds collections. One of the recommendations is to budget lottery proceeds in arrears -not include them in the current revenue stream, but once it is collected, then it can be budgeted. Commissioner Nelson asked if there has been feedback from the school boards an haw to divide up the lottery proceeds and it was answered no. Laura Blackmon said that the collections of lottery proceeds are very unstable as far as the collections. There are bills being introduced that may change the distribution of the proceeds. Donna Coffey said that attachment 3 shows all of the bills introduced related to the lottery. Commissioner Nelson said that it would be helpful to have input from the school boards about the spending of the lottery proceeds, as early in the budget process as possible. Chair Carey said that mast of the bills seek to allocate funds based on average daily membership. He asked if this was in the County's favor. Donna Coffey said that it is allocated now an average daily membership, but a lot of the counties want to see the effective tax rate come out of this. Commissioner Gordon asked about budgeting in arrears. Donna Coffey said that in the 2007-08 year, no lottery funds would be budgeted. In 2008-09, the County would budget the amount that was collected in 2007-08. Commissioner Gordon suggested acknowledging this practice in the capital funding policy of budgeting lottery proceeds in arrears. Chair Carey agreed. Commissioner Gordon asked about the four cents on the ad valorem tax rate and asked haw the County would be able to handle this. She said that by the time the upcoming debt is issued, there will be no room to implement this policy for several years. She suggested restating the policy somehow to say that the equivalent of revenue equal to four cents is the targeted rate, however, it might be awhile before it can be done. She suggested having a bigger footnote (attachment 1, fourth bullet}. Laura Blackmon suggested some language as follows: "The equivalent of the revenue estimated to be produced each fiscal year, not to exceed four cents on the Countywide ad valorem tax rate, so that there could be adjustments depending upon the fiscal nature of the upcoming year." Chair Carey said that Commissioner Gordon is probably right and they are not going to be able to do four cents in the next few years. However, he likes the affirmative statement that there is a need for this. He said that this is probably the most flexible part. He suggested stating it in the affirmative. Commissioner Foushee said that if the Board is going to adopt this policy, there should be a footnote that would indicate that when the County is bound fiscally, that it couldn't implement it as written. She would like for there to be an allowance to move away from the policy as stated. Donna Coffey said that one of the unique pieces is that the debt service is paid right at the top. Anything left over is allocated between the schools and the County 60140. The 60% far the schools is divided out based on the November 15t" membership numbers. Donna Coffey pointed out the Construction Management Function and said that the Board put this policy into practice, and in 2005-06, $100,000 was appropriated from the school and the County pay-as-you-go funding stream to fund a construction management function. There has been success with Jeff Thompson in this function. Laura Blackmon made reference to the spreadsheet and said that she would like to introduce this as a prototype of haw she would like to present some of the funding information in the future -capital and operating budget. The spreadsheet is divided into two parts -debt service and allocation for pay-as-you-go funding. She reviewed this spreadsheet. The total debt service for 2007-08 will be $19.3 million for the schools, $6.6 million for the County, with a total of $25.9 million. The remaining debt service to be used to pay for sales tax revenues is $2.7 million. The projected sales tax revenue is $9.5 million, which leaves $6.7 million net sales tax funding available for school and County capital projects. Donna Coffey and Laura Blackmon answered several clarifying questions of the County Commissioners. Laura Blackmon continued explaining the spreadsheet. The total pay-as-you-go funding based on current practice is $6.5 million for the schools, $2.7 million for the County, with a total of $9.3 million. Commissioner Gordon asked about the allocation for construction management in future years and Donna Coffey said that this was a pilot program and was only allocated through 2007-08. If the Board wishes to extend this function, then the $100,000 would be taken out every year. Chair Carey said that he likes this spreadsheet and it is a visual way to understand the policy that is in writing. Donna Coffey indicated that the additional debt service for next year is interest only. Laura Blackmon said that the staff will be bringing to the Board aten-year Capital Improvement Plan and they will use revenue projections in order to balance each year. Commissioner Gordon said that she likes this spreadsheet format. She would like to see this specified for at least five years. She would also like to see a real ten-year CIP which includes all th projects that the Commissioners intend to fund in the 10-year period, to the extent that is possible. She said that there was a time when the budget schedule was started sooner and the CIP was adopted in June. She would like to do this again. Laura Blackmon said that this year it will be a short time frame and next year they plan to start earlier with the budget process. Chair Carey asked when the staff would bring this policy back for adoption and Laura Blackmon said on April 12t" with revisions. Laura Blackmon asked Finance Director Ken Chavious to come forward. Ken Chavious said that he wanted to update the Board on the proposed $50 million financing that the Board authorized him to pursue in February. There was an RFP process far underwriters, and proposals came back from five investment-banking companies. Sun Trust Bank proposed a private placement for $50 million in the form of a conventional installment purchase. Sun Trust has offered a 20-year term at a non-bank qualified interest rate of 4.1 %. He said that he has never seen anything like this in 25 years. This proposal saves the County about $300,000-$400,000 in issuance costs. He said that an April 10`" the staff will ask the Board to take actions necessary to proceed with this type of financing. Commissioner Foushee pointed out that April 12t" is a work session and she asked if the funding policy would come back on April 10t" or April 12t". Laura Blackmon said that it could come back on the 10t" or the 24t". Chair Carey said that the 10t" is preferable. With no further items to address, the meeting was adjourned at 9:~5 PM. Moses Carey, Jr., Chair Donna S. Baker Clerk to the Board