OFFICE OF
THE CITY COUNCIL
CHERYL L. BROWN 117 WEST
DUVAL STREET,
DIRECTOR 4TH
FLOOR, CITY HALL
OFFICE (904) 630-1452
FAX (904) 630-2906
E-MAIL: CLBROWN@coj.net
FINANCE COMMITTEE BUDGET HEARING MINUTES
September 7, 2012
8:30 a.m.
Location: City Council Chamber, 1st floor, City
Hall –
In attendance:
Council Members John Crescimbeni (Chair), Greg Anderson, Bill Gulliford , Lori Boyer, Johnny Gaffney Stephen Joost (arr. 8:44) and Clay Yarborough (arr. 9:11)
Also: Council Member Carter (arr. 8:51), Clark (arr. 8:54), Schellenberg (9:04); Kirk Sherman, Janice Billy, Kim Taylor, Phillip Peterson – Council Auditor’s Office; Steve Rohan and Peggy Sidman – Office of General Counsel; Ronnie Belton, Glenn Hansen and Angela Moyer – Finance Department; Jessica Deal – Mayor’s Office; Jessica Stephens – Legislative Services Division; Jeff Clements – City Council Research Division, David Bauerlein and Ron Littlepage – Florida Times-Union; David Chapman – Financial News and Daily Record; Jim Piggot – WJXT
Meeting Convened: 8:35 a.m.
Capital Improvement Plan (2012-434)
Jessica Deal of the Mayor’s Office explained a packet of handout documents including the CIP pages attached to 2012-434, the list of open capital projects not lapsed (projects with remaining balances), proposed new CIP projects for FY13, lists of completed projects from three departments (Fire and Rescue, Public Works, Parks and Recreation) that can be closed out and remaining fund balances swept; and 2 replacement pages for the CIP book for FY13. Chairman Crescimbeni asked the administration to revise Exhibit 2 to include a column showing the date of the last action for each project (expenditure, encumbrance of funds, etc.).
The committee discussed the definition of a project being deemed “complete” and the stages at which funds are appropriated, encumbered, under contract, and expended, along with the process for prioritization of funding among many pending projects on the CIP listing. Chairman Crescimbeni asked that the “pending projects” list be revised to include another column showing the last time that a financial action took place for the project (expenditure, encumbrance, contract, etc.) to determine how long some projects have stayed on the list without any action being taken to expend or re-allocate the remaining funding. The committee discussed possibly adopting the CIP on a tentative or temporary basis until further information on pending projects could be presented (perhaps in several months), at which time the CIP would be finally adopted.
Chief Deputy General Counsel Steve Rohan was directed to draft language to add to the budget ordinance to avoid or waive the necessity of making findings of detriment to the public interest if the Council wishes to amend or revise the CIP in mid-year after the additional staff work and refinement of the CIP project list takes place.
Budget Officer Glenn Hansen stated that the capital budget is very slim for FY13, consisting primarily of projects that are legally or contractually required (i.e. ash site remediation), basic maintenance and repairs of public facilities, and one new fire station. The City is attempting to pay down its outstanding debt before undertaking any major new projects. Mr. Hansen also cautioned that the City must be very careful in how it closes out projects and re-allocates residual project funding so that there are no violations of bond covenants (for projects that were funded from bond proceeds) or violations of IRS regulations.
Motion (Boyer): amend 2012-434 to include Exhibit 3 in today’s handout packet (listing of CIP projects not lapsed) as an attachment pursuant to the requirement of Ordinance Code Secs. 106.309 and 106.312.
Janice Billy cautioned that the Auditor’s Office is unsure if the list just handed out is a complete list of all pending CIP projects and urged the committee to be careful not to accidentally prevent a project from being carried over from FY12 to FY13 by failing to include it on the list of projects not to be lapsed.
Motion (Joost): amend the Boyer motion to add the words “for informational purposes only” to the projects carry-over list, pending completion of a full, definitive project list later in the year – approved.
Steve Rohan was directed to draft a revision of Ordinance Code Sections106.309 and 106.312 to clarify terminology and procedures with regard to project carry-over from one fiscal year to the next and lapsing of funding for projects either completed or not carried-over to the next fiscal year.
Motion (Boyer): require the administration and Council Auditor, on or before the Finance Committee meeting of December 4, 2012, to report to the committee a comprehensive list of all capital projects with remaining funding, showing the project status, how much funding is needed for project completion, how much funding can be released and reallocated from the projects, where reallocated funds could be deployed (based on the source of the original funding), and when the last financial action took place for each project – approved.
Motion (Joost): amend 2012-434 to add language waiving the Ordinance Code requirement that mid-year CIP amendments require a finding of detriment to the public interest and a greater than simple majority vote of Council, for the purpose of allowing the CIP project to be amended in mid-year to adopt a revised project list that may result from the work of the administration and Council Auditor as described above – approved.
In response to a question from Council Member Gulliford about why funds allocated to capital projects in particular Council districts are reallocated to other projects within that district if projects are cancelled or completed with funding left over, Janice Billy said that district-specific bond funds are required to be spent on projects within that district only. Allocations from general purpose bond issues are usually kept within the district where original projects were funded as a traditional means of trying to distribute resources fairly to all council districts.
Motion (Boyer): recommend approval of an amendment to the San Marco Streetscape project to expand the boundaries (but not the budget) of the project and to reduce the project budget by $1 million, with the $1 million to be allocated back to the Banking Fund to pay down debt; also amend the budget ordinance (2012-433) and Banking Fund ordinance (2012-435) to reflect the new project amount in the budget’s CIP listing and the reduction in authorization for new Banking Fund borrowing – approved.
Motion (Bishop): recommend approval of an amendment to the CIP to add a new project entitled New World Avenue Design and Permitting with a funding allocation of $300,000 to be provided by a private developer – approved.
Steve Diebenow representing the developer of the New World Avenue project indicated that his client is prepared to present a check for the $300,000 to the City on the day the ordinance receives final approval.
The committee discussed the line item for street resurfacing, which is $4.4 million this year after being budgeted at $12 million last year. Council Member Boyer stated that Ordinance Code Sec. 122.602 specifically excludes routine street resurfacing from the definition of “capital improvement” and questioned why it is in the proposed CIP. Phillip Peterson reported that the funding source for that line item in the CIP was interest earnings. The committee discussed whether a waiver of that section was warranted. Steve Rohan was asked to include study and potential revision of this section in his other Budget Code revision activities.
Motion (Boyer):
amend 2012-434 to add a waiver of Ordinance Code Sec. 122.602 for FY13, with
the understanding that the street resurfacing in the CIP will be funded with
interest earnings – approved.
Motion (Joost):
revise Schedule A-1to Ordinance 2012-433 (budget ordinance) to incorporate all capital
project-related actions taken by the committee to date – approved.
Motion (Joost):
approve Ordinance 2012-434 as amended – approved.
Proposed budget (2012-433)
Motion (Joost): approve the Council Auditor’s recommended amendments to the Finance substitute 2012-433 to incorporate all CIP amendments – approved.
With regard to the budget, CFO Ronnie Belton answered questions from the committee about the potential budgetary impact of the recently filed lawsuit by Aetna, the City’s carrier for employee health insurance, against the City claiming a violation of the City’s procurement regulations. Mr. Belton indicated that it is too soon to know what impact that suit might have on the $1.56 million in projected insurance premium savings that is incorporated in the pending budget. Steve Rohan noted that the City Council frequently takes action based on the best information at hand at the time, and cannot always account for future potentialities. The recommended course of action is to adopt a budget based on what is known in the present and to deal with changes later if they become real and quantifiable.
Banking Fund (2012-435)
Motion (Boyer):
allocate $1 million from the San Marco Streetscape project to pay down Banking
Fund debt, reducing the allocation for new borrowing from $33 million to $32
million (net $24.1 million in new borrowing authorization) – approved.
Motion (Boyer): delete the vehicle replacement schedule from the ordinance – approved.
Motion: approve 2012-435 as twice amended – approved.
Chairman Crescimbeni thanked Council Member Boyer for her diligence in researching CIP projects and related issues, and thanked the committee as a whole for their tremendous work and willingness to devote long hours to a very difficult budget process. Council Member Boyer thanked Chairman Crescimbeni for his willingness to allow the committee members to ask many and detailed questions throughout the budget process to get the answers that were needed to make intelligent decisions. Council President Bishop echoed the chairman’s thanks for an outstanding job on the most difficult budget in memory. Council Member Gulliford praised the contributions of the Council Auditor’s staff and the many visiting council members who attended and participated actively in many of the budget hearings.
Meeting adjourned: 10:53 a.m.
Minutes: Jeff Clements, Council Research Division
9.7.12 Posted: 5:00 p.m.
Tape: Finance budget hearing 9.7.12
Legislative Services Division
Attachments: Administration handout package 9.7.12