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HomeMy WebLinkAboutMinutes 04-09-2024 - Budget Work Session-CIP1 APPROVED 6/4/24 MINUTES ORANGE COUNTY BOARD OF COMMISSIONERS BUDGET WORK SESSION-CIP April 9, 2024 7:00 p.m. The Orange County Board of Commissioners met for a CIP Budget Work Session on Tuesday, April 9, 2024, at 7:00 p.m. at the Southern Human Services Center in Chapel Hill, NC. COUNTY COMMISSIONERS PRESENT: Chair Jamezetta Bedford and Commissioners Amy Fowler, Jean Hamilton, Earl McKee, Phyllis Portie-Ascott, and Anna Richards COUNTY COMMISSIONERS ABSENT: Vice-Chair Greene COUNTY ATTORNEYS PRESENT: None COUNTY STAFF PRESENT: County Manager Bonnie Hammersley, Deputy County Manager Travis Myren, and Clerk to the Board Laura Jensen. (All other staff members will be identified appropriately below) Chair Bedford called the Board of County Commissioners meeting to order at 7:01 p.m. All Commissioners were present, except Vice-Chair Greene. 1. Discussion of Manager’s Recommended FY 2024-34 Capital Investment Plan (CIP) BACKGROUND: Each year, the County produces a Capital Investment Plan (CIP) that establishes a budget planning guide related to capital needs for the County and Schools. The 10- Year CIP is evaluated annually to include year-to-year changes in priorities, needs, and available resources. Approval of the CIP commits the County to the first-year funding only of the capital projects; all other years are used as a planning tool and serves as a financial plan. Capital Investment Plan – Overview The FY 2024-34 CIP includes County Projects, School Projects, and Proprietary Projects. The School Projects include Chapel Hill-Carrboro City Schools, Orange County Schools, and Durham Technical Community College – Orange County Campus projects. The Proprietary Projects include Water and Sewer, Solid Waste Enterprise Fund, and Sportsplex projects. The CIP has been prepared anticipating moderate economic growth of approximately 2% in property tax growth and 4% in sales tax growth annually over the next ten years. The CIP will rely substantially on debt financing to fund the projects and these required debt amounts are fully integrated in the County’s Long-Term Debt Model (page 40 provides a bar chart of the ten-year funding plan). The meeting discussion will focus on County and Proprietary CIP projects. Note: Page numbers are referenced below as they appear in the CIP document. See Attachment A for the Overall CIP Summary (page 36), County CIP Projects Summary (page 48), and the Proprietary CIP Summaries (page 123). Discussion of the Schools CIP projects is scheduled for the May 16, 2024 Budget Work Session. Discussion at this meeting will also be directed to the Debt Service and Debt Capacity – General Fund (page 171), the Water and Sewer Debt Service requirements paid with Article 46 Quarter Cent Sales Tax proceeds (page 172), and Debt Service requirements for Solid Waste (page 173) and Sportsplex (page 174). 2 Travis Myren, Deputy County Manager, made the following presentation: Slide #1 Slide #2 3 Slide #3 Travis Myren indicated that items in the CIP that align with various county plans will be identified by the colors on slide #3. Slide #4 4 Slide #5 Slide #6 Travis Myren said it’s important to ensure that remaining supplemental deferred maintenance funding goes toward the high priority projects identified in the Woolpert Study. 5 Slide #7 Commissioner Richards asked if the plan will be reconciled with the Woolpert Plan Recommendations. Travis Myren said the goal is to get to a plan that everyone agrees with that they can move forward with. Chair Bedford said that they will be reviewing policies and powers so they can be educated on school projects and budgeting before they make the decisions. Commissioner Richards said that there is a goal and there is a requirement. She said that she recommends that they say it is a requirement to reconcile. Travis Myren said that would be a policy decision that the Board will make. Commissioner Portie-Ascott asked for clarification on the meaning of project-based funding and how the two different school districts will be funded. She asked if there would be a formula. Travis Myren said that based on the Woolpert option C that they reviewed, it is about the same using the project-based formula as the ADM allocation. He said that it would be a move from the ADM allocation to the project-based allocation and in reality, the numbers are not much different. Chair Bedford said that once the project-based allocation is set, if the project goes over, the county does not amend the allocation to accommodate that. She said it would need to be the school district amending their budget. She said that she wants to be very clear about this so that the public and the school districts understand. Travis Myren said if the Board chooses to distribute bond money on a project basis, the money will follow the project and have a not-to-exceed amount identified. Commissioner Portie-Ascott asked for information on proprietary funds. Travis Myren said those funds are essentially self-sustaining and don’t get any general fund tax money. He discussed the Solid Waste and Sportsplex Enterprise Funds as examples. Chair Bedford said that the funds are usually represented as enterprise funds and if the terms proprietary and enterprise funds are interchangeable. Travis Myren said that proprietary is a statutory term and enterprise is what they typically call it. Commissioner Portie-Ascott asked if appropriations should be equal to revenue. 6 Kirk Vaughn said there is a debt service appendix for each proprietary fund and it shows how each fund pays for the debt service caused by the projects in the capital plan for each of them. Slide #8 Commissioner Fowler asked if there will be any potential to use Medicaid reimbursements. Travis Myren said the $3 million is net of what they can bill Medicaid for. Chair Bedford said that for timing purposes, they have an option on the land, and asked if they have a site plan. Travis Myren said slide #9 has the timing detail. Slide #9 7 Chair Bedford asked if the Board can advance capital dollars while they await the borrowing. She said this could be bigger because of the operating piece. Travis Myren said they can advance construction costs incurred before the spring borrowing and can then be reimbursed. He said they did this with the library and this is pretty typical. Slide #10 Slide #11 8 Chair Bedford asked if the Cedar Grove Community Center was reduced from two wings to one wing. Travis Myren said it was reduced from two to one for programmatic reasons and to also be mindful of the total cost. Chair Bedford said that the Sheriff is reluctant to store evidence that far away so they will get more into that. Travis Myren said the wing would primarily be used for storage materials that are currently in the environmental and ag center and those documents are long-term or permanent for retention requirements. He said that is a building that could be raised for affordable housing or other county needs and that storage has to be placed somewhere. Slide #12 9 Slide #13 Travis Myren said this would complete the courtroom upgrades. Slide #14 Commissioner Hamilton asked about the cost of enclosing just 360 square feet. Alan Dorman said even with the structure already having a roof and floor, adding electricity, walls, windows, etc. adds up. Commissioner Portie-Ascott asked about the impervious surface. 10 Travis Myren said the site is currently at its maximum level of impervious surface allowed. Commissioner Portie-Ascott asked if local or state rules are guiding that. Cy Stober, Planning and Inspections Director, said these are local rules regarding impervious surface. He said the Upper Eno Watershed could be 30% under state regulations, but local regulation is 15%. Slide #15 Chair Bedford asked if items were left in year one even if they are still an unknown. Travis Myren said once a path is determined for the justice facilities, any redundant projects will be taken out of the plan. Slide #16 11 Chair Bedford asked about $6,000 for security cameras on Blackwood Farm on page 66. She said that it is in year three but they have already had vandalism. She asked if a commissioner could make a budget amendment to advance that. Travis Myren said Chair Bedford can suggest a budget amendment for that. Slide #17 Slide #18 12 Slide #19 Slide #20 13 Slide #21 Slide #22 14 Slide #23 Commissioner Richards asked what the average payback period is for this kind of project. Travis Myren said there aren’t many of this size. He said Bonnie B. Davis may be close and he can provide information on that payback period. Commissioner Richards said it would be good to have a policy or formula on the payback period for a project. She said it would be good to choose projects that don’t have other upfits required for renewal energy additions. Travis Myren said the feasibility study is meant to identify county facilities that are most appropriate for solar installations. Slide #24 15 Commissioner Richards asked how much it costs to install one charging station. Travis Myren said the $50,000 was meant to serve as a match. Amy Eckberg, Sustainability Manager, said it varies based on the existing electrical infrastructure at the site and can vary from $5,000 to $25,000.She said that the $50,000 is intended to be utilized as a grant match. She said she has applied for a fueling and infrastructure grant and she will be applying for another round of grant funding for charging stations at 10 locations. Commissioner Hamilton asked what the total $225,000 gets the county. Amy Eckberg said the average comes out to about $12,500 per station. Alan Dorman reiterated that it is really variable how much it costs to install a station. He said the difference is the amount of conduit that needs to be run. Commissioner Hamilton said she is concerned the infrastructure will be built before the electric vehicles are in place. Travis Myren said all of the locations listed on the slide above will receive electric vehicles and will need charging stations. Commissioner Hamilton said she wants to caution them about investing and then finding out it does not work. She said she would like to not go faster than the evidence coming in to show it is working for them. Travis Myren said staff works to ensure the vehicles will work programmatically in every aspect and by the time they make it in the plan, they know it will work. Commissioner Portie-Ascott asked about the charging station match. Amy Eckberg said it could be for both state and federal grants. She said there is usually a match that local governments are required to put in and they want to be ready to do that. Slide #25 16 Slide #26 Commissioner Richards asked about the costs for emergency service administrative vehicles. Kirby Saunders, Emergency Services Director, said the price for the vehicles includes the base price and also the required upfits so they can be response vehicles. Slide #27 17 Slide #28 Slide #29 18 Slide #30 Travis Myren said they will be upgrading to a more resilient platform and can be accessed from anywhere. He said that it also has person-level tracking by radio and live-stream video from the CAD. Slide #31 19 Slide #32 Slide #33 Travis Myren said this is what the old image looks like. 20 Slide #34 Travis Myren said this is what the new image will look like. Slide #35 Travis Myren said that there will also be cost share from the cities and towns on this project because it is a shared service. 21 Slide #36 Slide #37 22 Slide #38 Commissioner Portie-Ascott asked about the Fairview Park mitigation. David Stancil said the bulk is a preregulatory landfill and has to be mitigated in some fashion. He said they have been doing studies and working with the state for four years and the short version is the state wants to do one more round of testing before they make a recommendation. He said this is all paid for by the state. He said that they anticipate a recommendation in the fall and hopefully they can utilize some of it for park purposes. He said that it is unlikely that any structures will be built on the former landfill site but that the adjoining county-owned land could be where some new facilities are going. Travis Myren said there are funding projects funded in this year at Fairview Park. David Stancil said tennis and pickleball courts will be built there. Commissioner Richards asked if Soccer.com is proprietary. Travis Myren said there is general fund support allocated for Soccer.com. Chair Bedford asked if the third party pays 1/3 for the Mill House Road park, then what do they get in exchange. David Stancil said this is why there needs to be an MOA and a master plan. He said it is the NCFC and they have said it is ok if that was shared. He said he’s sure they will want to be involved in scheduling and have a say in maintenance and management of the facility. Chair Bedford said she is questioning the timing of this project in year 2 or 3 because she isn’t sure the county and town are in a position to do this project. David Stancil said the third party would like to expedite the project and have more soccer fields as soon as possible. Chair Bedford said she has a lot of doubts about this project in years two and three because it is sucking up some potential tax increase that might not be needed. She said that she does not want to be in a SportsPlex travel versus recreation issue again. She said she doesn’t think the county has the funding to be able to do more, but if the third party has the funds, maybe they can. She said because they are asking for a school bond with a 9 cent tax increase, she does not think they can afford it. 23 David Stancil said the county handles scheduling for Soccer.com. but they have naming rights. He said that would need to be worked out. Commissioner Richards said that is why she was asking about the proprietary name of Soccer.com. David Stancil said Soccer.com is facilitated by the county and costs are partially offset by revenue from soccer tournaments. Chair Bedford said she would like to see the payback time and whether or not Orange County residents are the primary users. Commissioner McKee said he would also like to see what the facility contributes to the Orange County economy. David Stancil said he will provide that information. Slide #39 24 Slide #40 Commissioner McKee asked about the cost of the lawnmower. David Stancil said this is $39,000. Commissioner McKee asked how the cost compares to a conventional mower. David Stancil said it is a zero-turn radius mower used for athletic fields. He said that conventional could be $20,000 to $60,000, depending on the size of the deck. Commissioner McKee said he just got a commercial-grade, 60” deck for about $13,000. David Stancil said they have purchased a few in the last years and the last one was $60,000. Commissioner McKee said he is all for going electric as long as it makes sense. Commissioner Portie-Ascott asked what the life expectancy is for the electric lawnmower. David Stancil said he will have to check. Chair Bedford said it seems there is a large amount of money collected for Lands Legacy and conservation easements. She asked who sets the rules of use and if they are allowed to use any of it to help. David Stancil said that part of the CIP is the 3rd phase in 2028-2029 and that would be the third installment for the stretch from Seven Mile Creek to Cane Creek Reservoir and will be the most intricate part of all. He explained some of the costs associated with trail work including privacy fences for adjoining landowners and signals, all items added to make the trail safe to hike on. 25 Slide #41 Slide #42 26 Slide #43 Commissioner Portie-Ascott asked if there are specific threats the county is preparing for in IT. Robert Reynolds, Chief Information Officer, said there are some gaps, maybe not weak points, but constant vulnerabilities and he wants to improve their strategy for a more resilient network. He would like to close those security gaps as soon as they can. Slide #44 27 Slide #45 Travis Myren said the Emergency Services Headquarters could be advanced, but would put additional pressure on the tax rate. Commissioner Fowler asked if there is any inflation accounted for the SHSC project. Travis Myren said will continue to receive Medicaid maximization revenue so they will add to the balance. Chair Bedford asked if funds were needed for plans to figure out which to do first. Travis Myren said the first stakeholder meeting is scheduled for April 25th and will give a better sense of if planning money is needed next year. Chair Bedford asked about the dam on page 78. She said she was a brand new commissioner when they first discovered that and it has gone through extensive repairs to make it safe. She asked if it is safe to wait 3 years on this project. Cy Stober said the current project includes a survey of the property and replacement of the intake tower. He said that the NC dam safety program reviews it every year and they have continued to maintain an adequate rating from that agency. He said that they will be eligible for some grant funds and they will be sought. Chair Bedford said it would be valuable to put $300,000 forward now for Emergency Services to get started. She said that could be her number 1 project. She said on page 82 there is a roof mentioned and she asked if it could be delayed. Angel Barnes, Capital Projects Manager, said it is currently at end of life and they have pushed it out and it is time to do it. Commissioner Fowler asked why there were no years one or two on that page. Travis Myren said there are just no projects scheduled for the first two years of the CIP. Chair Bedford said on page 88 the Rogers Road Community Center is listed and she hopes the towns will agree to a cost-sharing agreement for the center. Commissioner Richards said that it was originally built with a cost-sharing agreement. Bonnie Hammersley said there was a cost-sharing agreement in place to build it. 28 Slide #46 Slide #47 Commissioner Portie-Ascott asked how the $5 million in affordable housing projects will be funded. Travis Myren said this would be county debt funding. Commissioner Portie-Ascott referenced 7 and 8 for Housing for All performance measures and asked if that was coming from the $5 million. 29 Commissioner Richards said that is part of the reason the sub-team is looking at performance measures. She said they are reviewing them. She said the $5 million funds the competitive project for affordable housing. Bonnie Hammersley said the money for that is in the operating budget and not in the capital budget and it is for renovation to maintain the current inventory of affordable housing. Slide #48 Slide #49 30 Slide #50 Slide #51 Travis Myren said this is a projection based on where the county is today. He said it may change because it’s based on estimated project timing, property revaluations, etc. Commissioner McKee said it’s concerning that in 10 years the county will have nearly $80 million in debt service. He said he is aware that the school projects are not options. He said that equates to a third of their current budget. He said it is not a one-time tax rate, it is 8.8 cents for 31 every year going forward just for these. He said he does not see it as optional but he wants everyone to keep that in mind. Chair Bedford asked what kind of interest rate assumptions were made in calculations. Travis Myren said 5% for 20 years. Commissioner Hamilton said with project-based funding, the timing of them may have an impact on borrowing costs. She said but it is a one-time increase. She asked if the costs are less, will they decrease the tax rate or vice-versa. Travis Myren said over the term of the 10-year schedule, they will check in periodically. He said they know what the totals will be. He said in some cases they will generate more tax revenue than needed in that particular year but will need it in year 6. He said if there are lower borrowing costs because of timing, they will need to check in to see what the actual transfer needs to be. He said that it could be a tax increase or decrease. He said that would have a ripple effect on the operating budget. Slide #52 32 Slide #53 Chair Bedford asked for guidance on the Active Capital Project Summary on page 165. Kirk Vaughn said each project has a capital funding ordinance and makes the funding available for the life of the project. He said the sheet provides transparency of what the balance is for each of those projects. He said that some amounts have been spent or encumbered and what is leftover is available. He said it is organized by fund and more broadly, by purpose. He said that a project is closed when there is no more activity. Commissioner Fowler asked where the money goes if there is leftover and the project is complete. Kirk Vaughn said if it’s cash it can go to other projects, and if it is borrowed then they will not borrow. Commissioner Richards said that is important because you don’t borrow the money until it is needed. Kirk Vaughn said any project authorized is included in the debt model and they keep track of all of them. Bonnie Hammersley said LGC requires bids in hand to borrow. Chair Bedford said that they had a budget amendment for Lands Legacy and she does not recall exactly how they changed it. She said it seems to be more continual. Kirk Vaughn said the budget amendment for that was pre-planned for a grant match. He said when you see the available balance, that represents the county’s authority to spend. He said those funds do not get spent until they have the project and they will do a budget amendment when the grant is received. Commissioner Fowler asked how projects with negative funding are covered. Kirk Vaughn said if the project is overspent, it will have a budget amendment or if it is closed out, the balance is absorbed. Chair Bedford thanked staff for their work on the CIP. 33 A motion was made by Commissioner Fowler, seconded by Commissioner Hamilton, to adjourn the meeting at 9:00 p.m. VOTE: UNANIMOUS Jamezetta Bedford, Chair Recorded by Tara May, Deputy Clerk to the Board Submitted for approval by Laura Jensen, Clerk to the Board