Loading...
The URL can be used to link to this page
Your browser does not support the video tag.
Home
My WebLink
About
Minutes - City Council - 09/02/2014
CITY COUNCIL 2 SEPTEMBER 2014 The South Burlington City Council held a regular meeting on Tuesday, 2 September 2014, at 6:30 p.m., in the Conference Room of the South Burlington Police Station, 19 Gregory Drive. MEMBERS PRESENT: P. Mackenzie, Chair; H. Riehle, P. Nowak} C. Shaw, M. Emery ALSO PRESENT: K. Dorn} City Manager; T. Hubbard, Deputy City Manager; J.Rabidoux, Public Works Director; T. Goodwin, Recreation Director; M. Smith} L. Bresee, S. Dooley, B. Nowak, S. Swanson, P. Wagenhofer, N. Jaramillo 1. Agenda Review: Additions, deletions or changes in order of Agenda items: Mr. Dorn asked to delay item #11 until the next meeting as they are still dealing with a technical issue. 2. Comments & Questions from the public, not related to Agenda items: No issues were raised. 3. Announcements and City Manager's Report: Mr. Dorn: Updated members on construction at City Hall. Work will be largely done by 15 September. Painting should be underway in the next 10 days. The Fire Department will hold its annual 9/11 commemoration at 7 p.m. at Overlook Park. Chamberlin neighborhood planning work is progressing. The Underwood Task Force is being advertised in The Other Paper. Interviews could begin at the next Council meeting. Mr. Dorn was guest speaker at the South Burlington Rotary. Ms. Emery said a neighbor had expressed concern with homeless people living in the houses to be demolished by the Airport. Ms. Nowak asked to what houses are involved as they should all be boarded up. Mr. Dorn said he has talked with Gene Richards about this many time. The airport doesn't have all the permits for the houses they own. Their plan is to start at one end with demolition and move to the other end so there is as little disruption as possible, Mr. Rabidoux said that as city Health Officer, he would like to know which houses are involved. He will be working with the consultant to address these issues and create the least impact. Ms. Nowak said the Airport plan is to take out the driveways and reseed those areas and put in curbs where there were none. Council members then reported on meetings and events they had attended. 4. Consent Agenda: a. Sign Disbursement b. Approve Minutes for 18 August and 26 August c. Acceptance of new city streets: Finch Court Portion of O'Brien Drive Ms. Nowak moved to approve the Consent Agenda as presented. Ms. Riehle seconded. Motion passed unanimously. 5. Adoption of Town Road and Bridge Standards: Mr. Rabidoux explained that in a federally declared disaster, there are funds available for communities. As a result, it has been discovered that there are a lot of roads, bridges, etc., that were sub-standard. To address this, standards have been upgraded. South Burlington meets or exceeds all standards; however, the city needs to adopt the new standards which will make the city eligible for reimbursement of $2,000-3,000 for damages over the past few years. Mr. Shaw moved to adopt and sign the Town Road and Bridge Standards as presented. Ms. Nowak seconded. Motion passed unanimously. 6. Unaudited FY14 end of year report as of 6/30/14: Mr. Hubbard said they still don't have the official unaudited report. The city has received two different sets of numbers for the Rooms & Meals Tax. The belief is that the second set is correct, but this still needs to be verified. Mr. Hubbard said it looks like there will be a surplus of $150,000-$200,000. Council members thanked staff for the excellent management of resources. 7. Proposed FV16 Budget Schedule: Mr. Hubbard said the schedule,will be similar to last year with the cycle starting at the next Council meeting. Department heads are being asked for a first budget draft on 24 October. A draft budget will get to the Council by 12 December. The presentation of the FY14 audit will be on 15 December along with an FY16 budget overview. The Saturday budget session will be on 10 January 2015. There is also a planned Saturday session on 8 November for Social Services presentations to the Council. Ms. Mackenzie said it would help if the Council could be given a list of things they have to do. Mr. Hubbard said they won't have contractual numbers as negotiations of contracts are just beginning. There will be numbers for health and property insurances. Mr. Shaw asked about the possibility of a paperless budget book. Mr. Dorn said he is talking about a plan with the School Superintendent. One suggestion is a post card saying budget books are available at the Library and on-line. Ms. Nowak then moved to approve the proposed FY16 Budget Schedule as presented. Ms. Emery seconded. Motion passed unanimously. 8. Capital Plan and Operations Analysis: Mr. Smith said the goal of the analysis is to advance the viability of the CIP. He stressed that he is presenting suggestions, not things that have to be done. He added that South Burlington's CIP is more sophisticated that those of most of Vermont. The first suggestion Mr. Smith presented was that Department Heads need to be more integrated into the CIP planning process, especially with regard to City Center. The current process does a good job with current needs of individual departments, but more work is needed to get a better understanding of financial impacts of future development on the operational and capital needs of departments (e.g., the possible need for another fire truck). Secondly, Mr. Smith said the city needs to move from the planning phase into an “operational phase." This means getting developer agreements in place, having an approved TIF District financial plan, getting political acceptance by the political leadership and the voters, and getting permit approvals. Mr. Smith noted there has been some "ramping up" since he did his research. He also stressed the need to have someone with the capital and the "heft" to make things happen. In succeeding years, Mr. Smith said, a level of sophistication will need to be added to CIP funding and it will need to be more integrated into the budgeting process. Mr. Smith had no qualms with the projections for the TIF District. He did, however, see a need for a 30% contingency. Mr. Smith stressed the need to start adding to the capital reserve fund as this will be needed for City Center. He said the longer the city delays doing this, the bigger “bite" there will be later on. Mr. Smith also stressed the need to update impact fees to better reflect current needs/costs. He cited problems with Recreation Impact fees which he projected will be depleted in 4 years as currently imposed. Mr. Smith suggested the possibility of expanding the TIF District to generate more incremental revenue, but he also cited the risks of doing this. One suggested to reduce the city's risk would be to reprogram the municipal building projects (City Hall, Library, Recreation Center) and to sequence them as revenues come in. Mr. Smith praised the report of the committee that did the study of municipal projects. To insure that contingencies are allotted adequately, Mr. Smith suggested breaking them out so they are visible. Mr. Smith felt that stormwater fees seem adequate. He also noted that federal grants are in place although the revenue source for a pedestrian/bike bridge is a concern. In his review of the FY15 operating budget, Mr. Smith noted that over the last 5 fiscal years the budget has increased on the average 8.46%. Increases are largely driven by public safety, public works, and debt service, and these areas are hard to reduce. Continued property tax increases to fund education will create competition for scarce funds, and the city doesn't have a “rainy day fund" to address this. In doing a trend analysis, Mr. Smith observed that property tax revenue has been growing at a good clip. There is, however, a need to find additional revenues of between $217,000 and $668,000. Without additional revenues, a .73 to 2.21 center property tax increase will be needed to balance the FY16 budget. This does not take into account the impact of City Center on future property tax revenue to fund operating budgets. It also doesn't take into account commitments such as a capital reserve account that need to be funded through property taxes. Mr. Smith noted that City Center will have its greatest impact after the FY17 budget in terms of slowing the increases in new property tax growth revenues that can be used to offset operating budget increases. Mr. Smith suggested that as much as half of new grand list growth will go to City Center, and there will be increased demands on the major cost drivers. Ms. Riehle asked about the adequacy of sewage capacity in City Center. Mr. Smith said added capacity is being considered, and it didn't appear to be unrealistic to serve the need. Ms. Emery asked about purchasing land for the municipal buildings. Mr. Smith said if the city feels it has the money, yes, but he didn't believe that cost was included in the $30,000,000 estimate in the committee's report. Ms. Dooley noted the task force felt the public facilities would be a magnet for potential success in City Center. She also noted that the committee recommended one building for all 3 municipal uses. Mr. Bresee suggested a middle ground where the city would buy all the land and build the facility in sections. 9. Interview Applicants for Boards, Committees and Commissions: The Council interviewed the following candidates for Boards, Committees and Commissions: Sam Swanson --Energy Committee Paul Wagenhofer -Energy Committee Nicolas Jaramillo --Design Review Committee 10. Discussion and possible action on Education Property Tax Resolution: Ms. Mackenzie noted the Resolution is the result of a meeting held in the city with representatives from school boards and governing boards from around the state. The proposed resolution was drafted by this group. Ms. Mackenzie stressed that there is an end to the amount of money that can be taken from communities, and the Legislature needs to understand this. The Resolution recommends that the education property tax rate be capped at the FY2015 level for the next two years to allow the Legislature to make needed funding reforms that will sustain the educational system into the future. Ms. Nowak felt the "capping" language should be in the Resolution language; otherwise it appears too soft. Other members agreed. The following language was suggested: Be it resolved that Vermont Towns and School districts support capping Education Property Tax rates at FY2015 levels for the next 2 years} to allow the Legislature to make the necessary funding reforms that will sustain our Education system into the future. Be it resolved on this day of 2014 (continue as proposed). Ms. Emery moved to approve the Resolution as amended. Ms. Nowak seconded. Motion passed unanimously. 11. Make Appointment to South Burlington Community Library Board of Trustees: Ms. Riehle moved to appoint Martin Kenny to complete the term of the retiring Chair of the Library Board of Trustees. Ms. Emery seconded. Motion passed unanimously. 12. Liquor Control Board: Mr. Shaw moved that the Council convene as Liquor Control Board. Ms. Riehle seconded. Motion passed unanimously. Members considered the following liquor licenses: a. Infinity Brewing Co., LLC - 9 events (September-October) b. Infinity Brewing Co., LLC - (9/11/2014) c. Humane Society - 4 entertainment events (September) d. Zero Gravity (cater for 9/4 Humane society event) Ms. Nowak moved to approve the liquor licenses as presented. Mr. Shaw seconded. Motion passed unanimously. Ms. Riehle asked about the possibility of doing some of these licenses administratively. Mr. Dorn said he would check with the City Attorney. Ms. Nowak moved to reconvene as City Council. Ms. Riehle seconded. Motion passed unanimously. 13. Other Business: No other issues were raised. As there was no further business to come before the City Council, Mr. Shaw moved to adjourn. Ms. Emery seconded. Motion passed unanimously. The meeting was adjourned at 9:25 p.m. as amended Clerk Published by ClerkBase ©2019 by Clerkbase. No Claim to Original Government Works. South Burlington Water Dept. Accounts Payable Check Register Date: 09/03/14 Date Check No. Paid To Memo Amount Paid 9/3/2014 2613 Champlain Water District 160.00 Date Voucher Number Reference Voucher Total Amount Paid 8/19/2014 VI-13457 REIMBURSE POSTAGE 160.00 160.00 9/3/2014 2614 E.J. Prescott, Inc. 108.08 Date Voucher Number Reference Voucher Total Amount Paid 8/1/2014 VI-13455 4834814 60.24 60.24 8/7/2014 VI-13461 4837571 47.84 47.84 9/3/2014 2615 Office Essentials 154.75 Date Voucher Number Reference Voucher Total Amount Paid 8/18/2014 VI-13459 30412 154.75 154.75 9/3/2014 2616 SoVerNet, Inc. 40.92 Date Voucher Number Reference Voucher Total Amount Paid 8/15/2014 VI-13454 3409224 40.92 40.92 9/3/2014 2617 Joyce E. Stutler 191.90 Date Voucher Number Reference Voucher Total Amount Paid 8/18/2014 VI-13460 355183 191.90 191.90 9/3/2014 2618 Ti-Sales Inc. 990.35 Date Voucher Number Reference Voucher Total Amount Paid 8/11/2014 VI-13456 INV0040536 990.35 990.35 9/3/2014 2619 U.S. Postal Service 1,500.00 Date Voucher Number Reference Voucher Total Amount Paid 8/19/2014 VI-13458 PERMIT #706 1,500.00 1,500.00 Total Amount Paid: 3,146.00 SOUTH BURLINGTON CITY COUNCIL _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ _____________________________________________________ Printed: August 28, 2014 Page 1 of 1 CITY COUNCIL 18 AUGUST 2014 The South Burlington City Council held a regular meeting on Monday, 18 August 2014, at 6:30 p.m., in the Conference Room, City Hall, 575 Dorset St. MEMBERS PRESENT: P. Nowak, Acting Chair; C. Shaw, M. Emery ALSO PRESENT: K. Dorn, City Manager; T. Hubbard, Deputy City Manager; P. Conner, Director of Planning & Zoning; J. Barlow, City Attorney; T. Barritt, B. Miller, M. Behr, Development Review Board; J. Louisos, Planning Commission; P. Taylor, Board of Civil Authority; T. Goodwin, Recreation Department; J. Murray, Library Director; C. Sargent, S. Merick, B. Bull, B. Nowak, R. Greco, S. Dooley, S. Loyer 1. Agenda Review: Members agreed to postpone item #8 so that it can be discussed when all members are present as it relates to development of the budget. Ms. Emery moved to delay discussion of Agenda #8 until all Council members are present. Mr. Shaw seconded. Motion passed unanimously. 2. Comments & Questions from the Audience, not related to agenda items: Ms. Greco asked what had happened to the “path to sustainability” that used to be on the city’s website. Mr. Dorn said he would look into that. 3. Announcements and City Manager’s Report: Mr. Dorn: Last Thursday, South Burlington hosted a statewide conference on property tax reform. He thanked Superintendent of Schools David Young for the use of school facilities. Mr. Dorn said 180 municipal leaders from across the state attended. The idea is for them to go back to their communities with ideas for those communities. Attended the Airport Commission meeting to talk about the planning project for the Chamberlin neighborhood. The City is very close to a Memorandum of Understanding with Commons Energy for a plan for energy saving in public buildings. Represented the City of South Burlington at a reception for the President of Senegal. Council members reported on meetings and events they had attended. CITY COUNCIL, 18 AUGUST 2014, PAGE 2 4. Consent Agenda: a. Sign Disbursements b. Minutes of 21 July and 4 August 2014 Ms. Emery moved to approve the Consent Agenda as presented. Mr. Shaw seconded. Motion passed unanimously. 5. Introduction of New Community Library Director Jennifer Murray: Ms. Murray said she has come from North Carolina, from a Library twice the size of South Burlington’s. She chose South Burlington because of the “energy” she felt in the Library. 6. PACT Presentation: Ms. Merick and Mr. Loyer reviewed the mission of PACT, to listen to voices of teens, children and adults and to respond with respect. PACT will hold 9 events this year including their annual Retreat on 14 September and a Community Welcome Dinner on 25 September. There will also be monthly meetings/meals and a celebration on Martin Luther King Day. Mr. Loyer stressed that they are trying to create an environment where meaningful dialog can be led by the city’s teens. Ms. Merick said that this year, Jason Kushner was invited to partner on neighborhood learning opportunities. Data was collected and passed on to Patrick Burke. Ms. Merick said that about 25 teens participate in the Retreat and 50-100 may participate at any dialog night when there is a topic of interest. Monthly dinners usually draw 20-50, more if there is a theme. Dinners are held at the High School. Mr. Loyer drew attention to their balance sheet. 7. Open Meeting Law Training: City Attorney Barlow presented a training session on old and new aspects of the state’s Open Meeting Law. He directed attention to “frequently asked questions” put out by the Vermont League of Cities and Towns. Mr. Barlow stressed that any member of a public body is the government. There is no “small town exception” to the Constitution. The Vermont Open Meeting Law applies to all public bodies, and compliance is an individual responsibility. Boards, cities, or municipalities don’t get penalized for violations. Individuals do. City staff has procedures for compliance in the areas of agendas, meetings, minutes, etc. CITY COUNCIL, 18 AUGUST 2014, PAGE 3 There are 21 public bodies (boards, council, commissions or committees of a board, council or commission) in South Burlington which are subject to the Open Meeting Law. Mr. Barlow reminded people that if a committee is thinking of forming a sub-committee, they should talk to their staff person about compliance. Mr. Barlow then defined a “meeting” as a gathering of a quorum of a public body to discuss the business of that body or to take action. Members need to be in the same location at the same time. You can attend a meeting by telephone, conference or skype if you identify yourself and can be heard. In the case of members attending a meeting in that way, there must be roll call vote. A quorum can participate remotely if there has been a public announcement of a place for public participation, with 24-hour public notice. At least one member of the public body or a staff member must be present. Mr. Barlow issued a caution about the use of e-mail. If a quorum of a body is discussing an issue by e-mail, they are probably violating the Open Meeting Law. Information can, however, be sent out via e-mail. Fewer members than a quorum is OK. The exceptions to this are the use of e-mail to create an agenda or to schedule a meeting. You can also use e-mail when discussing or voting on a quasi-judicial proceeding. That e-mail is, however, a public record. With regard to meeting notice requirements, Mr. Barlow defined 3 types of meetings: regular, special and emergency. Notice of regular meetings requires only the designation of a time and place for regular meetings. For a special meeting, the time, place and purpose must be announced 24 hours before and posted in places designated by the City Council for all meeting notices. An emergency meeting may be held without public announcement, provided some announcement is made as soon as possible, for an unforeseen occurrence that requires immediate attention. Prior to 1 July 2014, there was no requirement for an agenda. Now, an agenda must be posted 48 hours in advance of a regular meeting and 24 hours before a special meeting. Additions and deletions from the Agenda must be the first item on the agenda. To add an item to an agenda requires consideration of the public’s right to know about it. Minutes must be taken at all meetings and must provide a true reflection of the business transacted. Minutes must include the names of all members present and all other participants and the business transacted. All actions must be recorded along with the result of all votes. Minutes must be available 5 days after the meeting. A member of the audience asked if the public can require a roll call vote. Mr. Barlow said they cannot. CITY COUNCIL, 18 AUGUST 2014, PAGE 4 Mr. Barlow then outlined some exceptions to the Open Meeting Law as follows: a. When the public body is conducting a site inspection b. When the public body is performing routine day-to-day administrative matters c. When the public body is conducting deliberations in connection with a quasi-judicial proceeding (e.g., DRB, BCA, employment termination hearing, etc., or deliberating after taking evidence) d. When there is an executive session: Executive sessions can be used for the following: 1. Negotiations regarding a real estate purchase or option 2. Consideration of appointment or employment of an employee (the final decision must be made in a public session) 3. Consideration of disciplinary action against an officer or employee (although the officer or employee can request an open session hearing) 4. When there is clear and immanent peril to the community 5. For consideration of records or documents that are exempt 6. For municipal or school security issues. An executive session must be approved by a majority of members present at the meeting. 7. Contract discussions 8. Labor relations discussion 9. Arbitration 10. Grievances 11. Pending or probable litigation 12. Attorney-client relations Entering executive session should require two motions, one to find that premature general public knowledge would put the municipality or individual at a substantial disadvantage and one to enter executive session. Executive sessions don’t have to be warned, but it would be good to say “executive session anticipated.” Ms. Greco asked if there is any obligation to stick to a time-line. Mr. Barlow said not legally. 8. Liquor Control Board: Mr. Shaw moved that the Council convene as Liquor Control Board. Ms. Emery seconded. Motion passed unanimously. CITY COUNCIL, 18 AUGUST 2014, PAGE 5 Members considered liquor/tobacco licenses for: a. Growler Garage/Bruise Brothers b. Vermont Sports Grill (new owner) Ms. Emery moved to approve the liquor/tobacco licenses for Growler Garage and Vermont Sports Grill as presented. Mr. Shaw seconded. Motion passed unanimously. Mr. Shaw moved to reconvene as City Council. Ms. Emery seconded. Motion passed unanimously. 9. Other Business a. Items held from Consent Agenda: No items were held from the Consent Agenda. b. Other: Ms. Emery asked about the adequacy of the Airport Parkway Sewage Plant with regard to City Center. Mr. Dorn said if all anticipated buildout occurred in the Southeast Quadrant and City Center, there would not be enough capacity; however, this is not anticipated in the near future. Mr. Dorn advised that Paul Conner is preparing a report on this for the Planning Commission. Mr. Shaw drew attention to some issues that have been raised but not placed on an agenda. He noted it has been a year since residents raised the issue of private landscaping of public land. He suggested inviting residents to discuss this. Members also discussed a public recognition of volunteers and suggested adding this to a future agenda. Ms. Emery asked if there was feedback from the Airport Commission regarding the Chamberlin area planning grant. Mr. Dorn said they asked questions about the purpose, the definition of the “Chamberlin neighborhood,” the funding amounts. They would like Mr. Dorn to come back to the Commission when projects start to get off the ground. They also noted a legal document regarding use of the Airport owned land. As there was no further business to come before the Council, Ms. Emery moved to adjourn. Mr. Shaw seconded. Motion passed unanimously, and the meeting was adjourned at 8:35 p.m. __________________________Clerk CITY COUNCIL 26 AUGUST 2014 The South Burlington City Council held a special meeting via telephone on Tuesday, 26 August 2014, at 12:10 PM and coordinated from the Medium Conference Room, City Hall, 575 Dorset Street. MEMBERS PRESENT via telephone: P. Mackenzie, Chair, H Riehle, C. Shaw ALSO PRESENT: K. Dorn, City Manager; 1. Agenda Review. There were no changes made to the agenda 2. Comments and questions from the public not related to the agenda. There were no comments or questions from the public. 3. Resolution authorizing City Manager to execute lease for 19 Gregory Drive. Mr. Dorn explained to the Council that there was a technical issue related to executing the lease that needed to be resolved prior the resolution being passed. The Council agreed to delay action on this item until the technical issue is resolved. 4. Convene as the Liquor Control Board Ms. Riehle moved to convene as the South Burlington Liquor Control Board. Mr. Shaw seconded the motion. The motion passed 3‐0. Mr. Shaw moved to approve the catering permit for Bevo, LLC. Ms. Riehle seconded the motion. The motion passed 3‐0. Mr. Shaw moved to adjourn the Liquor Control Board. Ms. Riehle seconded the motion. The motion passed 3‐0. 5. Other business There was no other business to come before the Council. Ms. Riehle moved to adjourn. Mr. Shaw seconded. The motion passed 3‐0. The meeting was adjourned at 12.15 PM. __________________________, Clerk DRAFT FY16 BUDGET SCHEDULE September 15 City Council provides budget guidance for City Management & Dept. Managers September 17 Memo to Department Managers to begin formulating FY16 Budget October 24 First Draft of FY16 Budget due from Dept. Managers November 5-12 Initial review of Draft Budget with Dept. Managers November 8 Special Saturday Session- Social Services presentations to City Council & approved allocations December 1-5 Final Review of budget with Dept. Managers December 12 Council receives Draft FY16 Budget December 15 Presentation of FY14 Audit FY16 Budget Overview January 10 Saturday Session-Dept. Manager Budget Presentations and possible City Council approval January 12 Special follow-up Budget Meeting if needed & City Council Approval January 12-16 Budget book preparation January 16 Council approved budget sent to Steering Committee January 19-23 Budget book finalized and delivered to printer January 21 Steering Committee Meeting January 30 Budget books available Post Warnings and Public Hearing Notices for March 2 Pre-Town Mtg. & Public Hearing and March 3 Town Meeting February 10 Council approved budget available to voters (min. 20 days before Town Mtg.) March 2 Pre-Town Meeting & Public Hearing on City & School District Budgets March 3 Annual Meeting-Vote on budgets and any other warned articles 1 March 28, 2014 Kevin Dorn, City Manager City of South Burlington 575 Dorset Street South Burlington, Vermont Dear Mr. Dorn: I appreciate the opportunity to provide consulting services to the City of South Burlington. The City’s efforts to plan for the future are exciting and being a part of this effort is a privilege. The City of South Burlington is fortunate to have a dedicated and highly motivated management team guiding the operations of various departments. Their work product, both individually and collectively, is highly professional. They were gracious with their time and tremendously helpful with providing information for this report. Introduction: This report examines the City of South Burlington’s Capital Improvement Plan. The report’s objective is to determine the feasibility of the plan. The report’s goal is to enhance the viability of the plan by making suggestions for its successful implementation. Interviews were conducted with the city manager’s office, finance and planning personnel and some department heads. Material that was publicly available was reviewed and then corroborated with more detailed information gathered through additional requests. At strategic points along the information gathering process meetings were held with the city manager’s office and finance and planning personnel to review initial observations and to gather feedback on these observations. The purpose of these 2 meetings was to ensure that the report did not overlook information or interrupt data incorrectly. The conclusions reached are based on information available at the time this report was written. Changes in future circumstances may alter some of the conclusions. Background In the last two years the City of South Burlington has embarked on an effort to update its Capital improvement Plan (CIP) on a yearly basis and integrate it into its annual budgeting process. Prior to this effort the plan was upgraded only periodically, sometimes by an outside consultant, and was not fully integrated into the budget process. In addition, a major portion of the City’s CIP is the planned development of 106-acres called, City Center. Over a 20-year period there are plans to develop approximately 1.35 million square feet of residential, retail, and office space in multiple parcels within this 106-arces. This area has been designated a Tax Incremental Financing District (TIF) by the State of Vermont. Succinctly, this means that a portion of the school and municipal property taxes generated in the district as a result of new construction can be used to offset debt service needed for approved capital improvements in the district for 20 years. According to the City an increase of approximately $202,354,482 million in incremental assessed valuation over the course of the next 20 years is needed to generate the $75 million in property taxes of which $56 million is available to the City to be used to pay debt service on eligible projects within the tax incentive financing district. In addition, the city will need to divert some future anticipated impact fee revenue, increase existing property taxes to fund a portion of the those projects where TIF money 3 cannot be used, and commit to reprogramming the decrease in annual debt payments on existing capital debt to the CIP Reserve Fund. Observations and Suggestions Observation 1: The Overall Plan There has been significant improvement in the CIP process. In fact, in reviewing the plan in its entirety (with City Center included) the plan is well thought out and includes most of the necessary components to make it successful. City officials obviously take this planning process seriously. The plan is probably more sophisticated than most communities in Vermont and when compared to more fully developed plans elsewhere in the country it has only a few shortcomings. Suggestion: Department heads need to be more integrated into the CIP planning process. The City’s CIP process does a good job at capturing the current needs of individual departments but additional work is needed in gaining a more thorough understanding regarding the financial impacts of future development on departmental capital needs (as well as future operational needs). Currently neither the CIP nor the operating budget account for these costs. For example, will another fire truck be needed to handle additional development? Does that require more personnel? These conversations need to take place to get a clearer picture of the overall cost of the CIP and the impact to the operating budget. Having the department heads fully informed about planned projects, anticipated growth, and estimating the capital needs and operating costs will only enhance the CIP and the City budget process. Conducting departmental meetings with the purpose of going into detail future planned projects and time schedules will surely enhance and strengthen the process. 4 Suggestion: With respect to City Center the City needs to begin moving from a planning phase into an operational phase. Most major construction projects usually have four phases: designing a plan, making the plan operational, financing the plan, and lastly, constructing the project(s). Many entities have designed great plans for projects but never had anything come to fruition with their plans because they never figured out how to operationalize them. The operations phase is perhaps the most difficult of all phases because it is here that the entity reaches a major decision point in determining whether the project moves forward. South Burlington has done an excellent job in the planning phase for the City Center project and has received approval for a TIF (tax incremental financing) district. There has been tremendous effort put into this plan, but ironically for all this effort the next phase will determine whether this project will get off the ground in the manner that it is planned. So what is the operational phase? In 2016 the first phases of the City Center project will begin. In fact, absent an extension, the city is obligated to begin its debt financing for projects within the TIF district by 2017. In order to meet this schedule several significant events need to take place: (1) developer agreements, (2) an approved TIF District Financial Plan, (3) political acceptance (by both the political leadership and the voters) and (4) permit approvals. There are numerous steps and milestones in between each of these events that will take significant time. In order to meet the City’s schedule it must be aggressive in getting out of the planning phase and into the operational phase. Not doing so poses significant risk to City Center’s project plan. The City, in the FY15 draft CIP is projected to be borrowing heavily for the City Center project in the fiscal years 2016, 2017, 2018, 2019, and 2020; and yet there are no development agreements in place and no permit applications submitted for approval. Typically this process of getting developer agreements and then obtaining approvals for permits can take at a minimum of 24 months; but, more typically longer, even if events 5 go smoothly. In the case of other development projects where litigation slowed down the schedule the process lingered for years before the planned project was built. Moving forward on the plan—as it is currently conceived and in the timeframe outlined—carries significant risk to the City in light of the lack of development agreements and/or applications for permits. This is particularly risky because an expensive project (the municipal facilities) are only two to three fiscal years away from when the City proposes in the FY15 draft CIP to initiate construction. Just to pinpoint the risk if the district never generates the projected revenues then the city property taxpayers are liable for the shortfall on the TIF District financed portion of the debt. Any deficit in TIF district revenues falls directly on the property tax base to supplant that shortfall if all projects are built and development does not occur. Total exposure to the city could be over $100 million (with debt service) if the city built the planned infrastructure without the anticipated revenues. Realistically, it is highly unlikely this amount of financial liability would occur because it is unlikely the city would move forward with projects without sufficient revenues. In addition, some costs can be offset by developer contributions. There will be incremental growth in the district and revenues will be generated as a result of this growth. In fact, the district is already seeing growth with stores such as Trader Joe’s and Pier 1 Imports. The question that still remains is how much growth over what timeframe? Both are uncertain and without any answers to these questions the city is assuming a higher degree of risk than is advisable. These questions need to be better fleshed out in this operational phase. Suggestion: To mitigate risk it might be to the benefit of the City to partner with developers and/or landowners that demonstrate the relevant experience, capital resources, and site control that will enable them to move forward within a workable timeframe. The lack of development agreements and permits is a significant risk to the City with regards to the City Center project. There is sufficient evidence to suggest that the city can obtain its target increase in property tax revenue of $75 million as projected in the plan 6 over the course of 20 years if it has the right development partners with the experience and capital to make the investment at the level the City needs and within the appointed time frame. Obviously, this is critical because repayment of debt with these future funds is necessary. Certainly the landowners within the district are sophisticated and successful developers. The question is: are they able to invest at the levels and within the timeframe that the city may need to generate the needed revenue to complete the project as planned? Just as important are they able to sustain development over a period of time that will probably have at least one, possible two, recessions based on historical trends? Suggestion: In succeeding years add levels of sophistication to the City CIP The City has developed a solid foundation for updating and implementing the components of its CIP. It is appropriate for the City to continue what it has been doing for the next one or two years so that the process becomes better integrated into the budgeting process. City departments still need to develop more sophistication in the submittal of costs to the plan and it needs to be uniform in how they project those costs. One way to ensure this uniformity is to issue more specific instructions regarding departmental cost estimates. Within three years the City should start adding degrees of sophistication to the CIP process. One of those tools is the introduction of an objective point value system in evaluating project priorities. This system awards points based on various criteria and sets the project priorities based on the number of points a project has received. Observation 2: Revenues for City Center The City relied on a very reputable firm (Allen & Brooks) in calculating estimates of the TIF district’s revenue generation potential for its City Center project. It is highly likely 7 that the TIF district will experience growth. Whether the needed development will be built in a size and scope to generate the $75 million in new property tax revenues over the planned time period is where more certainty is needed and where development agreements, securing of site control by experienced developers, and the application for permits could provide that certainty. Plans for City Center include additional funding of the Capital Reserve Fund for the payment of the City’s share of debt and some design costs. Currently the reserve is funded at 1 ¼ cents of the tax rate. According to the City anticipated debt would require this to be supplemented with an additional 1 to 1 ¾ cent property tax increase levied against the existing tax base to pay down debt (2 to 3 cents total). Additionally, dollars gained by the reduction of debt service payments need to be diverted to the Capital Reserve Fund. City Center is also funded with property taxes, impact fees, stormwater fees and federal grants. Suggestion: Update impact fee ordinances to better reflect current needs and costs. Currently, if the City went forward with the City Center project and kept the other capital projects that are planned the recreation fund would be in a deficit position within four years because the impact fees are insufficient to fund the planned projects. In addition, in some cases, existing impact fees will need to be revised or a new one developed in order to be used on City Center projects. This has yet to occur. The FY 15 City Center CIP projects that $3.2 million in impact fees will be used to help fund project costs over the next ten years. According to the City an additional $5.8 million will be needed to fund the City share of debt over the course of an additional 24 years. Impact fees used prior to March 2017 (the date TIF debt will be incurred) will cover design costs for projects. After March 2017, the City’s impact fees are slated to be 8 used to defray debt payments on the City share of project costs (costs that are not TIF eligible). Yet, to use the impact fees in the manner anticipated several things need to happen: 1) the impact fee ordinances need to be revised to address current infrastructure expectations; 2) they need to be updated to reflect current costs; and 3) a new impact fee for public facilities will have to be developed. None of these have yet to occur. Suggestion: Explore the possibility of expanding the TIF district to generate more incremental revenue. Admittedly, this is a tricky proposition because VEPC may require the reset of the base assessment rate of the new and expanded district. If the City resets the base of the taxable value in the existing district, it might lose the already credited incremental growth of approximately $4 million. In essence, the City would forfeit the incremental growth credit of $4 million. Obviously this suggestion of expanding the district needs to be calculated very carefully. The City needs to ensure that it has a net gain and this suggestion should only be considered if there is a strong likelihood of incremental growth in the expanded district that surpasses the “money already in the bank” from the base rate of the existing TIF. Another approach is to see if VEPC will allow the existing $4 million in new development to stay in the incremental growth calculation. Lastly, it is likely that by earmarking incremental tax growth in an expanded district only for debt service in that district on approved projects for 20 years the City’s ability to meet future operational needs will be hindered. Suggestion: If the City wishes to stay on schedule with project build out and to smooth out the property tax impact of its future borrowing cost then the City needs to begin funding its CIP reserve fund to appropriate levels. 9 The City is currently funding the CIP Reserve Fund at $335,000 annually or approximately 1¼ cents. The CIP reserve fund will need to be funded at approximately 2 to 3 cents annually in property taxes and then dedicate those funds every year to the CIP Reserve Fund over the life of the debt obligation. In addition, the City plans to reprogram and deposit certain monies into the CIP Reserve Fund that are now going to debt service in the capital budget but will no longer be needed for that particular payment because of the retirement of that debt. This has yet to happen. A substantial reserve fund balance is essential to not only pay the portion of debt service on a project that is not eligible for TIF funding (i.e., mostly the city portion of the planned new City Hall, Library, and Recreation Center, and the Williston Road Streetscape) but more importantly pay during the peak period of the City’s debt obligation payments without requiring a spike in taxes due to City Center. These increased fund deposits as described above were slated to begin in FY 2015 but were not funded in the FY 2015 approved budget. The more these funds are delayed the greater of an increase in property taxes is needed to make up for those years not funded. Observation 3: City Center Expenditures The City has either used standard methodology to best project expenditures for City Center projects or has hired firms to provide these calculations (As is the case for the proposed municipal buildings—City Hall, Library, and Recreation Center). Total projected costs for the City Center project including debt service are projected to be over $100 million. At this point the standard methodology used to calculate estimated expenditures seems appropriate but these costs need to be continually updated and refined as the projects move forward. Suggestion: Reduce the City’s risk by reprograming the municipal building projects (new City Hall, Library, Recreation Center). 10 The total cost of these municipal building projects (a new City Hall, Library, and Recreation Center) is estimated to be approximately $30 million (this price tag does not include the millions needed to finance this project). Construction of these new facilities is slated to begin 2018. The existing property tax base will fund these building projects with 10 to 30% (depending on the building) of the cost picked up by future TIF revenues. Yet the City has not signed a development agreement with a developer nor has a developer applied for permits. This means that if the TIF revenues are not generated in the amount and within the time period projected then the existing taxpayer will pick up the difference. Since these are major expenditures slated to begin at the front end of the project plan it seems prudent to reduce risk by separating the construction of these new buildings into individual projects and reprogram the construction dates to spread out the cost of these buildings. For example, start with the construction of the Library in 2018 and over the course of the next 18 years program in the Recreation and City Hall projects at different intervals to ensure needed revenues are being generated, thereby reducing the City’s risk. Suggestion: Ensure that contingencies allotted are adequate and the fund is easily recognizable. As professional and knowledgeable as City personnel are in calculating project costs there are always surprises. For example, the cost of the municipal buildings came in more than estimated. This is not unusual. Although there are some contingencies built into some of the budgets for City Center they are hard to find and analyze. Specifically, with regard to City Center there should be a contingency fund established and segregated as a line item in the specific project budget or as a separate fund within the CIP. This contingency fund needs to be constantly updated with allocations that are appropriate depending on the phase of the project. In some cases this could be up to 30% in the planning phase of a project that would reduce to 10% as more specific construction plans are approved. The segregated itemization of a contingency fund will make it easier for those reviewing the project to ensure that proper contingencies have been retained. 11 Suggestion: Establish a priority system to reduce risk for funding projects. In the ongoing effort to reduce risk in the absence of a development agreement or permits yet keep the City Center project from floundering the City should concentrate funding on those projects in the following priority: 1) those that have federal or state grant funding sources or available impact fees; 2) those that enhance the likelihood of attracting investment or enhance existing private investment; and 3) those that maximizes TIF funding. Observation 4: Impact of CIP on Operating Budget As mentioned in earlier sections the CIP will have an impact on the City’s operating budget, especially when it comes to future personnel costs. These costs have yet to be calculated, but are unlikely to be absorbed by increases in property valuation alone. In fact, the City has expended surplus funds to fund the 2015 budget on salaries and other inflation items, as necessary expenses surpass the amount of revenue generated by new growth. If sufficient development growth does not occur, the City will have two choices in the near future: cut spending or increase revenues. Suggestion: The City should convene a working session with political leaders and management personnel to discuss the future of the operating budget well before the budget process for 2016 begins. The CIP will likely add to the needed expenditures to operate the city, not reduce them. Those impacts have yet to be calculated. 12 CONCLUSION The City of South Burlington is an exciting and dynamic community with much growth potential ahead. It is apparent that City leaders take their responsibility seriously: to plan for the future with the best interest of its residents at heart. The suggestions presented in this report are to enhance the success of this planning effort. Again, thank you for the opportunity to serve the City of South Burlington. Sincerely, Michael K. Smith 13 Appendix: Non- TIF Revenue Sources for City Center City Center—Stormwater Fees Over the course of the project about $750,000 of stormwater fees are dedicated to the City Center project. This amount seems appropriate and did not require detailed analysis. However, this money is dependent on the City raising stormwater fees to fund these future revenues and ongoing operations. Given that this revenue source is within the realm of past and planned future increases these revenues are considered likely to be available. City Center—Federal Grants The City has obtained federal grants for approximately $5.5 million for the reconstruction of Market Street. This federal money has already been committed to this project. Therefore this revenue source for this particular project is strong. The CIP also proposes future federal money to build a pedestrian/bike bridge. This revenue source is uncertain. City Center—CIP Reserve Fund This fund is used to pay non-impact fee eligible design costs and will be used to pay future debt service. The plan is to supplant any existing money in the fund with additional revenues as a result of a one-time 1 to 1 ¾ cents increase on the property tax and dedicating that particular increase every year to the CIP Reserve Fund and also to dedicate the revenue resulting from the reduction in year over year debt payments. The hope is to generate sufficient revenues to help pay the portion of debt service on projects that are not eligible for TIF funding (i.e, mostly the city portion of the planned new City Hall, Library, and Recreation Center). These funds were slated to begin in 2015 but only 1 ¼ cents is funded in the 2015 budget and the difference due to the reduction in debt payments was not allocated to the CIP Reserve Fund. Because the City has not committed to neither the additional taxes needed nor the reallocation of debt service this funding source is classified as uncertain given the pressures on the operating budget. 14 City Center—Impact Fees Currently, if the City went forward with the City Center project and kept the other capital projects that are planned the recreation fund would be in a deficit position within four years because the impact fees are insufficient to fund the planned projects. In addition, in some cases, existing impact fees will need to be revised or a new one developed in order to be used on City Center projects. This has yet to occur. The FY 15 City Center CIP projects that $3.2 million in impact fees will be used to help fund project costs over the next ten years. According to the City an additional $5.8 million will be needed to fund the City share of debt over the course of an additional 24 years. Impact fees used prior to March 2017 (the date TIF debt will be incurred) will cover design costs for projects. After March 2017, impact fees are projected to be used solely to defray debt payments on the City share of project costs (costs that are not TIF eligible). Yet, to use the impact fees in the manner anticipated several things need to happen: 1) the impact fee ordinances need to be revised to address current infrastructure expectations; 2) they need to be updated to reflect current costs; and 3) a new impact fee for public facilities will have to be developed. Because the City has yet to do any of these steps this funding is listed as uncertain. Review of South Burlington’s Operating Budget8‐18‐14FOR DISCUSSION PURPOSESDRAFT 1 Methodology•Review of financial data•Interview selected department heads•Meet with financial and planning staff to gain perspective•Identify future financial issues•Explore other revenue sourcesDRAFT 2 South Burlington is Facing Operating Budget Challenges•Over the last five fiscal years the South Burlington operating budget has increased on average 8.46%, however in FY 2015 the budget actually decreased 1.5% year over year•The budget increases are largely driven by increases in public safety, public works, and debt service. These areas are difficult to reduce and the pressures to increase funding will likely continue as the City grows•Continued property tax increases to fund schools will put municipal budget in competition for scarce resources•The City does not have a budget stabilization fundDRAFT 3 Projected Impact on Tax Rate with Trend AnalysisLOW LOW/MEDIUM MEDIUM HIGHProjected FY 2016 Budget (4% Growth)$22,096,176(6.0% Growth) $22,521,103(7.5% Growth) $22,839,798(8.46% Growth) $23,043,763Minus projected non‐propertyrevenues(7% Growth) $9,667,340(9% Growth) $9,848,037(10.75% Growth) $10,006,148(12.5% Growth)$10,164.259Estimated to be Raised FromProperty Taxes $12,428,837 $12,673,065.71$12,833,649.87 $12,879,503.89Difference Between FY15 and FY16 $217,3935 $461,622 $622,205 $668,060Tax Rate Increase (in cents)(Based on GL Growth of 4%) .73( based on GL growth of 4%)1.56(Based on GL growth of 5.125%) 2.08(Based on 6.25% growth)2.21DRAFT 4 Trending of traditional operating revenues show a gap•Trending based on 5 years of actual expenditures and budget data shows a need to find additional revenues between $217K and $668K•Without additional revenue a 0.73 to 2.21 cents of property tax revenue may be needed to balance the FY 16 budget.DRAFT 5 Issues with Straight Line Trend Analysis•It doesn’t take into account the impact that City Center will have on future property tax revenue to fund future operating budgets (property tax revenues generated in a TIF can only be used to pay debt on projects in the TIF). It doesn’t take into account future development outside of the TIF and the impacts on the operating budget•It doesn’t take into account commitments made (i.e., capital reserve account, other expenditures) that need to be funded through property taxes•It doesn’t predict future economic eventsDRAFT 6 Other Considerations•City Center will have its greatest impact after the FY 17 budget in terms of slowing the increases in new property tax growth revenues that can be used to offset operating budget increases, but it will have a marginal impact in FY 16. For example: Trader Joes and Pier One are both in the TIF district•If the City wishes to move ahead with City Center then it needs to fund its Capital Reserve fund in FY 16•If growth continues added burdens of public safety and public works will occur•Recreation Impact Fees will be in deficit in four fiscal years with current scheduled projects•The City needs to create a budget stabilization reserveDRAFT 7 Measuring Impacts on Future Budgets•City Center will divert new property tax growth revenues for the next 20 years with the greatest impact after FY 2017. At the same time the City should see increases in non‐property tax revenues especially sales and use taxes. For FY 2016 a ¾ of a percent decrease in GL growth rate is calculated to estimate the impact of growth in City Center not available for General Fund purposes.DRAFT 8 Measuring Impacts (Con’t)•The capital improvement reserve fund needs to be funded with approximately $300K in FY 16 in order to have monies for non‐TIF funded City Center Projects•Public Safety and Public Works will be impacted by growth in the City. This is estimated to have an impact of approximately $125K a year in extra expenditures above the trend beginning in FY 16 •And a budget stabilization reserve fund at 5% of budget fully funded over a 4 year periodDRAFT 9 Total Impact on Tax Rate with GL Reduced ¾ Percent and Added Expenditures for Budget Stabilization Reserve, CIP Reserve, and Increase in Public Safety in Public Works in 2016DRAFT 10ITEM Low Low/Medium Medium HighBudget Stabilization Reserve (funded over 4 years) $276,202 $281,513 $285,4978 $288,047Funding CIP Reserve $300,000 $300,000 $300,000 $300,000Projected Budget Shortfall For FY 2016 $217,393 $461,640 $622,224 $668,078Needed for Public Safety/Works $125,000 $125,000 $125,000 $125,000Total $918,595 $1,168,153 $1,332,721 $1,381,125Projected Property Tax Increase in FY 16(at 3.25 GL Growth) 3.121415797(at 3.25% GL growth) 3.969423806(at 4.375% GL growth) 4.479826412(at 5.50% GL growth) 4.593033048 Expected FY 16 Property Tax Increases•Expect a property tax increase between 3.1 and 4.59 cents in FY 16 without new sources of revenue in order to fund committed and prudent future expenditures.DRAFT 11 After FY 2017 Challenges Will Become Greater•Perhaps as much as half of the GL new growth going to City Center•Increase demands on the three big cost drivers•Upcoming Deficit in Recreation Impact Fees•Continued Increases on the Property Tax from SchoolsDRAFT 12 RESOLUTION FOR SUSTAINABLE EDUCATION FUNDING REFORM IN VERMONT: Education Funding is a Statewide priority and needs to be addressed at the State level. In the past 10 years the Vermont student population has declined by 10,618 (or 10%) In the past 10 years Vermont education spending has increased by $300 million (or 33%) In the past 10 years Vermont per student spending has increased by $6,537 (or 60%) In the past 10 years reliance on education property taxes has increased nearly 7% Nearly 70% of Education spending is funded by property taxes. Vermont has reached its maximum capacity to support education funding through the Statewide Education property tax. Vermont cannot ignore the current trends and the limitations of our property tax base. Without responsible funding system reforms, Vermont schools will be forced to undergo arbitrary and detrimental budget cuts that will affect the quality of education in Vermont. Vermont can achieve a sustainable Education future: Create a more diverse education funding system, sharing the costs equally between all our tax resources (income, sales, rooms & meals, and property taxes) Simplify the education funding system so it can be understood by the average taxpayer. Continued reliance on the education property tax will have a material impact on local government’s ability to provide vital services (police, fire, roads etc.) to residents. Vermont Towns & School Districts support capping Education Property Tax rates at FY2015 levels for the next 2 years, to allow the Legislature to make the necessary funding reforms that will sustain our Education system into the future. (It is not the intent of this resolution to cap overall education spending). Be it resolved on this ______ day of _____________ 2014, that the City/Town/ Village/ School District of ___________________ supports the Vermont legislature as they seek out the necessary reforms to the Education funding system. _______________________________ ______________________________ _______________________________ ______________________________ _______________________________ 84,000 86,000 88,000 90,000 92,000 94,000 96,000 98,000 100,000 102,000 Equalized Pupils Equalized Pupils 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000 Cost per Equalized Pupils Cost per Equalized Pupils 0 200,000,000 400,000,000 600,000,000 800,000,000 1,000,000,000 1,200,000,000 1,400,000,000 FY2005FY2006FY2007FY2008FY2009FY2010FY2011FY2012FY2013FY2014Equalized Education Spending Equalized Education Spending Since FY2005 Vermont has 10,618 less students to educate Since FY2005 Vermont’s per student spending has increased by $6,537 per student Since FY2005 Equalized Education spending has increased by $306,144,8471 1 Per pupil spending by School type, Vermont Dept. of Education: http://education.vermont.gov/data/per-pupil- spending