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HomeMy WebLinkAboutMinutes - 20080207 APPROVED 3/6/2008 MINUTES ORANGE COUNTY BOARD OF COMMISSIONERS BUDGET WORK SESSION February 7, 2008 7:30 p.m. The Orange County Board of Commissioners met for a Budget Work Session on Thursday, February 7, 2008 at 7:30 p.m. at the Southern Human Services Center in Chapel Hill, North Carolina. COUNTY COMMISSIONERS PRESENT: Chair Barry Jacobs and Commissioners Valerie P. Foushee, Alice Gordon, and Mike Nelson COUNTY COMMISSIONERS ABSENT: Moses Carey, Jr., COUNTY ATTORNEYS PRESENT: Geoffrey Gledhill COUNTY STAFF PRESENT: County Manager Laura Blackmon and Assistant County Managers Willie Best and Gwen Harvey, and Clerk to the Board Donna Baker. All other staff members will be identified appropriately below). Commissioner Carey was unable to attend due to illness. 1. Annual Operating Budget— Budget Drivers Laura Blackmon referred to the yellow sheet, which is a Preliminary Fiscal Outlook (yellow handout) Donna Coffey said that tonight there is not much more new information since October and she would like to just review what next year might bring. The current year's budget is about $173.6 million (graph 1). Graph 2 shows the funding history over the past ten years for education. Graph 3 shows that $80 million this year is dedicated to education, which includes current expense. Graph 4 shows the per pupil expenditures over the last ten years. Chair Jacobs said that this is a 50% increase since 1999 and he asked how this compared to other counties. Donna Coffey said that she would research this. Donna Coffey said that, according to graph 5, Orange County has experienced growth every year since 1998-99. The student membership numbers are based on historical data and though the CHCCS grows, OCS have not seen this growth yet, but it is anticipated. Graph 6 shows debt service and how it has continued to increase. She said that in 2008-09, the County will reach its peak debt service. The current debt service is $27 million. Chair Jacobs asked about 60-40 policy and Donna Coffey said that is for capital expenditures. Graph 7 is the anticipated funding needs for County and schools. The current year budget is $173.6 million, and based on historical average increases, next year's budget will be at least $186 million. This number will pale in comparison to what the budget drivers actually look like. Donna Coffey made reference to graph 8 and said that the County has always relied on property taxes. She said that she just left a meeting with the revenue options committee, and this percentage may change with a local revenue option. If nothing else changes, and the County continues to rely on property taxes, the tax rate could go well over $1.00 per hundred- dollar valuation. Graph 9 was ad valorem property tax rate history and graph 10 was tax rate equivalent of appropriated fund balance. Graph 11 shows the projected sales tax revenues and also, because of Medicaid relief/sales tax swap, the sales taxes will start to go down next year. Graph 12 shows the annual sales tax collections by component (Articles 39, 40, 42, and 44). Graph 13 also shows the County's reliance on property taxes. Sixty-nine percent of the total general fund revenues are property taxes. If nothing else changes, if there are no new local revenue options approved and if sales taxes continue the way that they are, in five years, 76% of the total general fund budget will be made up of property taxes. Graph 14 is a comparison of growth in the annual general fund budget and real property valuation. Donna Coffey made reference to the goldenrod sheet, which listed the preliminary budget drivers for 2008-09. Some of the cost projections were not complete. Of those that were complete, they totaled $18.6 million, which is 14.4 cents per $100 valuation. She reviewed each line of the handout. Laura Blackmon asked if the Board had things to add to the list. Commissioner Gordon said to add any operational increases in facilities in the County. Commissioner Foushee said that she would like to get some idea of GASB 45 implications and Donna Coffey said that the staff is looking into that. Commissioner Nelson said that there has been discussion recently about dissolving some properties the County owns and Laura Blackmon said that the staff is compiling a list. She said that some buildings are still occupied, and the only facility that is vacant is the old ABC store on Highway 49. Commissioner Gordon made reference to some county buildings that are vacant or may become vacant, including the Valley Forge site, Northside, Purchasing, and Whitted. She asked for a list of properties that have the potential of being disposed of. She referred to the space study in 2001 that had lists and pictures of all county facilities. She said that it would be helpful to have this list updated and asked staff to provide an updated list of county facilities.. Laura Blackmon said that the list could be ready for the next budget work session, March 12th. Chair Jacobs asked that this be plugged into the budget process. 2. 2008-18 Proposed County and Schools' Capital Investment Plan — Unfunded Needs This was Attachment 4. Laura Blackmon said that on the unfunded needs for the next ten years, there is a shortfall. She wants to talk about the potential for funding these shorttalls. Donna Coffey made reference to the back side of the first page and said that line 21 should read, "Total Unfunded County Projects Costing Less than $5,000,000" and not $500,000. Everywhere this is referenced in the document should have $5,000,000. This was an oversight. Laura Blackmon said that the staff thought it might be a useful exercise to see if pay-as- you-go funds could be used for unfunded projects costing less than $5 million. This is just an exercise for discussion. Commissioner Gordon said that the Board already went through the list of projects and flagged some for consideration for unfunded projects. Laura Blackmon said that the process was very hurried, and she would like to have a more methodical approach. Chair Jacobs asked Laura Blackmon how she envisioned that the previously flagged projects would fit into her scenario. Laura Blackmon listed some of the ones that were flagged: Twin Creeks at $9.6 million, Smith Middle School, Carrboro High School additions at $13 million, Culbreth Middle School science labs at $3.5 million, and Elementary#11 at $30.8 million. Donna Coffey said that there were other comments made by the Board of County Commissioners and the staff would handle those comments, once the Board adopts the CIP, and the changes could be made. Discussion ensued about what was listed on the blue handout ( attachment 4) Laura Blackmon said that the County is holding on longer to the bonds that were issued in 2001 and 1998. She would rather take that money and work on projects that need to be done. She said that the staff is being taxed tremendously to work on 13 capital projects at one time, and also the Revenue Office, Tax Assessor, and Register of Deeds will be moving to the Gateway Building. Chair Jacobs said that when bonds were issued in 2001, the County told voters they would incur taxes to pay for the bonds. He would like to track what has been done and spent. Donna Coffey said that there are still $6.9 million in 2001 voter-approved bonds that have not yet been spent. Commissioner Gordon said that it would be helpful to concentrate on projects that at least one County Commissioner flagged. Commissioner Nelson asked the Manager to continue her presentation. He thinks that there will be plenty of time to go through each project. Laura Blackmon made reference to the second page of attachment 4 ( blue) — Unfunded County Capital Needs —and said that these are projects costing less than $5 million. These are projects that have been listed by staff and spread out into years that staff thought were most important. The Board can change the timelines. She said that if the County Commissioners fully funded the capital funding policy one cent to the County, all of these projects could be funded that were included in the first year. The next page lists unfunded projects that are more than $5 million, and debt would be issued for these. Laura Blackmon said that, even though the Board is doing the ten-year plan, she would like to try and look at issuing debt for projects that would be tackled within the next five years. Another issue is how to pay for the operating costs and staff. She asked the County Commissioners to tell her which projects were most important to them and how to fund the projects, recognizing that the property tax is already at 95 cents. Commissioner Foushee asked about the difference between the Parks Operations Base and the Recreation and Parks Administrative Headquarters. Both projects are in excess of$5 million. Recreation and Parks Director Lori Taft said that the Parks Operation Base is now being leased. Commissioner Foushee asked if these two projects could be combined and cost less than $10 million. Laura Blackmon said that the plan was that they were to be located in two different areas. She personally does not think that they need to be in separate areas. Commissioner Foushee agreed. Chair Jacobs said that there was discussion in the space needs study about using the old 911 center for one of those places. The Board has not discussed this. Also, part of the Whitted Center could be used for the administration part. He agreed with flagging this. Laura Blackmon said that for the operations base, there is space at the New Hope property at Blackwood Farm for that facility. The Administration Headquarters was discussed to be located at the old 911 center, but the County is looking to sell that facility at some future time. Commissioner Gordon made reference to the list of projects and said that $1.85 million is funded for Twin Creeks Park, and more is now needed to get phase 1 going. Chair Jacobs said that an agreement is needed with Carrboro, for running this park and sharing operations. Commissioner Nelson said that this is also an intergovernmental park and the Board of County Commissioners should have had this conversation with Carrboro before this park moved forward rather than now, if the county wanted this to be a Carrboro park. Commissioner Gordon pointed out that Twin Creeks is the Chapel Hill Township District Park. Chair Jacobs said that there is a plan for New Hope Park, but no funding for eight more years. He would like to see this project move up. He is also not sure why there is a rush to expand the Seymour Center, since it is brand new. Chair Jacobs asked about the $600,000 for West Ten and Lori Taft said that it is for the recently approved Phase 2 with tennis courts and a play structure. Chair Jacobs said that there are parts of Fairview Park that are out nine years and Dave Stancil said that the current Phase 1 is already funded and not shown. If there were an interest in expanding this park, this might be a start, but it is a guesstimate. The master plan does not show additional facilities. Chair Jacobs suggested having a harder figure, based on what is known that might be done and then somehow say that it is subject to further discussion or study, if the former landfill portions of the property are able to be reclaimed. Commissioner Gordon made reference to the unfunded projects less than $5 million. She also referenced the expansion at the Seymour Center and said that she thought that the intention was to hold it in the queue for funding as part of the CIP planning process. Laura Blackmon said that this is just a planning document and what is expected now could completely change in three or four years. Commissioner Gordon said that on this list of projects less than $5 million, the Board could start eliminating projects now so it will free up more money. Chair Jacobs asked where the dental clinic fell in all of this and Laura Blackmon said that it is not in here. Chair Jacobs said that the County Commissioners have been talking about the dental clinic for years. Donna Coffey said that there is a reserve fund for human services needs. Chair Jacobs said that this is a higher priority than expanding the wellness center at Seymour, since the County is spending money for rent of dental space in Carrboro. He would like to resolve this before the lease is up this year at Carr Mill Mall. Laura Blackmon said that there is $8.7 million set aside for a 25,000 square foot addition at the Southern Human Services Center. Chair Jacobs said that there is no money set aside for water and sewer in the CIP. He said that the money is short for the Efland sewer project, and there needs to be an indication somewhere about how the County will pay for this because the commitments need to be fulfilled. This project has been on the table for years. Laura Blackmon said that this is the type of information they need from the Board of County Commissioners. Chair Jacobs said that people in Efland wanted to expand the Efland Community Center a few years ago. Donna Coffey said that this is not on the list. Chair Jacobs said that when there were listening sessions, people came from Efland pleading for expansion. Commissioner Foushee asked about the thinking behind the gymnasium. Lori Taft said that with many discussions about gym availability to accommodate children and adults, there is not a place to accommodate them, and she was thinking of a warehouse-type facility. Commissioner Foushee said that there have been discussions about the inability of County residents to access school facilities. She said that this should be considered when thinking about gymnasiums. She said that if the gym is going to be on the list, then money should be put with it, and if not, it should be removed from the list of projects under $5 million. Laura Blackmon moved on to the unfunded capital needs for the schools. Her proposal is that the projects that are more than $5 million would require debt issuance. The projects costing less than $5 million could be funded with the additional penny for school pay-as-you-go. Chair Jacobs asked about the pottery shop conversion, and it was answered that the lease has expired. Laura Blackmon said that the school board has already approved the projects over $5 million for when new schools come online. Commissioner Gordon said that in terms of SAPFO and Elementary#11, that takes a lot of the debt capacity. She asked clarifying questions about Carrboro High School additions. Laura Blackmon said that on Tuesday night, the staff could come back with an idea of what projects will require debt issuance. Chair Jacobs said that the $617,558 for Elementary#11 in 2008-09 does not sound like it is enough for planning. Commissioner Foushee asked Ms. Pittman from the audience from CHCCS about this and Ms. Pittman said that the building will be a prototype and there would not be a full year of costs associated with it. For OCS, there was only one unfunded project over $5 million —the new Central Office. Commissioner Foushee asked if the figure for the Central Office includes the price of land and OCS Board member Ted Triebel said no. Chair Jacobs said that he had a casual conversation with the OCS Superintendent, who said that he was not adverse to the idea of discussing sharing a facility with CHCCS. He said that there is a site designated at Twin Creeks for an educational facility. Ted Triebel said that the $6 million was what was presented to the OCS board by the architect, which has not yet undergone a thorough review by the board. This amount could be reduced. Chair Jacobs asked Ted Triebel if there were any plans to expand Cedar Ridge in the next ten years. Ted Triebel said that the two ideas for Cedar Ridge are an auxiliary gym or sharing one with the County. The expected growth numbers for the next four to five years do not indicate a need to expand. Regarding the Gravelly Hill library, he said that the school board was open to some type of regional library. Chair Jacobs said that one of the recommendations of the Library Services Task Force was to have a library branch in the Cheeks area. Donna Coffey said that a reserve of$2.7 million has been set aside for this. Commissioner Gordon made reference to the Twin Creeks site and said that she does not know if an administrative building could be there because CHCCS might want to build some schools there. She does not want to give this land up that is designated for schools. Chair Jacobs said that he would like this pursued anyway. Commissioner Gordon said that, historically, administrative space has not been at the top of the list. Priority has been given to instructional space for the OCS and CHCCS. If there are any alternatives, then they should be pursued. Chair Jacobs said that the Whitted Center is also an idea for an administration center. Also, the discussion has come up several times about landbanking school sites. If there are projects that come up for more than $5 million, then they should be flagged for landbanking. Laura Blackmon said that Tuesday night there is another work session and there is some space allocated for discussion of the CIP. Commissioner Nelson made reference to the Twin Creeks Park and said that the first phase was scheduled for 2011, but has been moved back. He said that there were statements made to the public about when the first phase was going to be built. Laura Blackmon made reference to the Smith Middle School fields and said that the Board has not made a decision on these. Lori Taft said that there were donation offers to assist and she was asked to draft a letter to Carrboro to waive fees for these groups that donate money, but there has been no resolution yet. Commissioner Gordon said that if Carrboro does not want to waive fees, then maybe turf could be put on some fields at Twin Creeks. Chair Jacobs said that the Board needs an analysis of how buying time relates to buying name rights for these fields. The Board currently has no policy for this. Commissioner Gordon wants to get the four fields at Twin Creeks built soon, turf or not. Commissioner Gordon made reference to the meeting next week and said that she is concerned about timing of the changes with the information the County Commissioners are receiving and would like to receive the information well in advance of the meetings. Chair Jacobs suggested having a key because it was hard to navigate the information. Chair Jacobs said that Tuesday is the only time for the Board to talk about revenue options, and he encouraged the County Commissioners to think about questions they may want to ask. 3. Options for Meeting Current and Future Space Needs for Department of Social Services and Health Department Laura Blackmon made reference to the purple handout, attachment 6, on options for the future space needs for DSS and Health Department and reviewed this. There are three options, and Commissioner Gordon's blue handout has a fourth option. Chair Jacobs said that Commissioner Gordon raised issues at the last meeting and there were responses from staff via email. Commissioner Gordon said that she looked at the staff responses and came up with option D. Commissioner Gordon said she had talked with Commissioner Carey who said option D was worthy of consideration and that they should address the needs of both DSS and Health Departments. Commissioner Gordon said that she would let Commissioner Carey speak for himself. She is not speaking for him. Purchasing and Central Services Director Pam Jones said that the issues that Commissioner Gordon raised are articulated in the document. The purple sheet is the same thing that was handed out to the Board in a different format. Option A includes purchasing the old Wal-Mart site and relocating the offices in Whitted to the Wal-Mart site. This would leave Whitted empty. Option B is to construct a 50,000-square foot new facility at Southern Human Services Center and upfit what was vacated at the Whitted Center. Option C is the new option, which is building a 25,000-square foot addition to the Southern Human Services Center and longer term, more space would be built for DSS. The assumption is that the 25,000 square feet would hold at least for five years, and another facility would have to be built for DSS after that. Commissioner Gordon said that after getting all of the information, she tried to come up with a win-win situation and her option combines some benefits of all three of the previous options. She reviewed her memo, as shown below: MEMORANDUM To: BOCC and Manager From: Alice Gordon Subject: Human Services Space Needs Date: February 6, 2008 In this memo I am sending you a new option (D) to address the human services space needs we will be discussing tomorrow night. I am also asking questions about Option C. Please review these items for tomorrow night. NEW OPTION D I believe Option D combines some of the best features of the three options, and it costs a comparable amount. It also has the advantage of addressing the space needs of both DSS and Health, with no space deficits for Health. Please review the purple sheets in your Feb. 7 meeting materials for the sources of the cost figures (with anticipated reimbursements) OPTION D - Wal Mart Lease in Hillsborough/ SHSC Addition in Chapel Hill Lease amount through Feb. 2012 $1,305,986 Wal Mart upfit for DSS (56,637 sf) 700,000 Whitted upfit for Health (30,000 sf) 6,000,000 TOTAL for needs in Central/North Orange $8,005,986 OR OR TOTAL with sustainable design Add $600,000 $8,605,986 DSS retains space at SHSC (10,000 sf) $ 0 SHSC addition for Health (about 25,000 sf) $8,750,000 Includes 10,000 sf still retained by DSS plus the 8,000 space deficit citied by Health making a total of 18,000 additional sf for Health TOTAL for needs in Southern Orange $8,750,000 GRAND TOTAL for Option D $16,755,986 OR $17,355,986 QUESTIONS ABOUT OPTION C Please verify that the Grand Total of both additions (after anticipated reimbursements) equals this amount: $17,520,713 This total is missing from the chart. Please indicate why the cost of SHSC renovations increased from $200 per sf to $250 per sf for Health Please let me know if you have questions, comments, or changes. Thank you. Commissioner Gordon said that the difference that she is proposing is to lease Wal-Mart and then decide in 2012 whether to purchase it or not, and also build 25,000 square feet at the Southern Human Services Center for the Health Department. She said that this keeps the options open and meets the needs of both departments. Pam Jones said that the cost may be the same, but there is 108,000 square feet plus ten acres of land with Wal-Mart. She said that the landlord has indicated that the County would be unable to carry out sustainable design elements unless there was a commitment to purchase. One possibility is that the sustainable design features could be done after there was a commitment to purchase in 2012. Commissioner Gordon said that she thought the County had to lease it for ten years and Pam Jones said that the term can be negotiated, but if the option to purchase is not exercised in 2012, then the facility would have to be fixed back to the original condition when the County vacated. Commissioner Gordon said that she is okay with that. Commissioner Nelson suggested asking staff to bring back the pros and cons of option D. He has some concerns, but this option is promising. With no further items to discuss, the meeting was adjourned at 10:11 pm. Barry Jacobs, Chair Donna S. Baker, CMC Clerk to the Board