OFFICE OF THE CITY COUNCIL

 

117 WEST DUVAL STREET, SUITE 425

4TH FLOOR, CITY HALL

. JACKSONVILLE, FLORIDA  32202

 

Finance Committee Budget Hearing #5 Minutes

August 26, 2015

9:00 a.m.

 

Location:  City Council Chamber, 1st floor, City Hall – St. James Building; 117 West Duval Street

 

In attendance:  Council Members Bill Gulliford (Chair), Anna Lopez-Brosche, Danny Becton, Aaron Bowman, Lori Boyer, John Crescimbeni, Reggie Gaffney

 

Also: Council Members Matt Schellenberg, Scott Wilson (arr. 9:07), Garrett Dennis (arr. 9:10), Doyle Carter (arr. 9:29), Greg Anderson (arr. 9:45), Tommy Hazouri (arr. 10:35), Samuel Newby (arr. 1:25); Kirk Sherman, Kim Taylor, Phillip Peterson – Council Auditor’s Office; Jessica Morales – Legislative Services Division; Peggy Sidman and Paige Johnston – Office of General Counsel; Jeff Clements – Council Research Division;  Sam Mousa and Ali Korman Shelton – Mayor’s Office; Mike Weinstein, Angela Moyer, Cal Ray, Joey Greive – Finance Department

 

Meeting Convened: 9:00 a.m.

 

Chairman Gulliford convened the meeting with a quorum present and the members announced themselves for the record.

 

Page references from this point refer to Council Auditor’s Meeting #5 handout – August 26, 2015.

 

Capital Improvement Program

Phillip Peterson of the Council Auditor’s Office reviewed the proposed CIP 1-year and 5-year programs and at the request of Council Member Crescimbeni compared the FY15-16 amounts to the original FY14-15 proposal by the Brown administration. This year’s CIP proposal is considerably smaller and contains far less proposed borrowing and more pay-as-you-go allocations.

 

Council Member Brosche questioned the classification of several items such as roadway resurfacing and roof replacement as capital improvements when they should more appropriately be considered as ordinary recurring maintenance that should not be capitalized, particularly when the Ordinance Code specifically prohibits that classification. She also questioned why the projected future operating costs of new capital projects are not included in the CIP when the Code specifically requires it to be included. Council Member Boyer confirmed that the City Council has for many years waived those provisions because there is typically too little annual revenue to pay for annual operating needs and capitalizing the expenses and paying for them with borrowing paid off over time was simply the practical solution to a revenue problem.

 

In response to a question from Council Member Becton, City Treasurer Joey Greive explained the City’s policy regarding matching asset life to the borrowing instrument that pays for that asset and described the amortization structuring. He noted that detailed bond amortization tables are available in the City’s annual financial report. Mr. Becton requested information that matches the amortization of individual bonds to the specific projects funded by that borrowing. Chairman Gulliford lamented that the City has allocated 5 cents of the 6 cent local option gas tax to the JTA instead of keeping a larger amount for the City’s road maintenance needs. Ms. Boyer stated that the Special CIP Committee has asked the administration to present an updated debt affordability model at the beginning of the budget process that updates the previous year’s affordability data that is 10 months old when the Finance Committee begins its budget hearings. In response to a question from Chairman Gulliford, Tera Meeks of the Parks, Recreation and Community Services Department described the RFP currently open for an operator for the Jacksonville Beach Pier. Budget Officer-designate requested that the CIP project listing on p. 41a include a footnote and annotation of which projects are subject to an Art in Public Places allocation so that the Budget Division can easily identify those projects every year. Ms. Boyer offered to amend one of the Special CIP Committee bills currently pending before City Council to establish a permanent policy requiring such an annotation in the CIP listing each year.

 

Motion: on p. 44, approve Council Auditor’s recommendation #1 to adjust project names and account numbers as necessary for continuity purposes –

 

Motion (Boyer): amend the Auditor’s recommendation #1 to change the name of the “Sidewalk/Curb Construction – New” project by deleting the word “Curb” – approved unanimously.

 

Motion: on p. 44, approve Council Auditor’s recommendation #2 to appropriate available revenues and unused contingency balances to clean up negative revenues or appearance of revenues due to cash balances in various listed subfunds - approved unanimously.

 

Motion: on p. 44, approve Council Auditor’s recommendation #3 to appropriate available revenues and adjust transfers from fund balances for listed projects as necessary - approved unanimously.

 

Motion: on p. 45, approve Council Auditor’s recommendation #4 to  place City match for FIND projects in a City Council reserve project fund until grant funds are received and remove the projects from the CIP until funds are received and their use approved - approved unanimously.

 

Motion: on p. 45, approve Council Auditor’s recommendation #5 to appropriate revenue of $35,052 in subfund 322 for Jax Beach Pier lease and pace in reserves - approved unanimously.

 

Motion: on p. 45, approve Council Auditor’s recommendation #6 to change amounts appropriated as Miscellaneous Revenue within a list of subfunds to Transfers from Fund Balance - approved unanimously.

 

Motion: on p. 45, approve Council Auditor’s recommendation #7 to adjust the Drainage System Rehab Pay-go amount to $3,578,358 and decrease Interest Earnings and Revenue Appropriations to $2,421,642 - approved unanimously.

 

Motion: on p. 45, approve Council Auditor’s recommendation #8 to adjust Solid Waste – Landfill Expansion Pay-go amount to $3,207,601 and decrease Interest Earnings and Revenue Appropriations to $6,204,254 - approved unanimously.

 

Motion: on p. 45, approve Council Auditor’s recommendation #9 to change funding amounts for listed projects on pp. 45-47 - approved unanimously.

 

Motion (Boyer): substitute a Revised Tab 2 CIP project listing prepared by the Budget Office for the original Tab 2; the Revised Tab 2 includes the original Tab 4 list of departmental requested but unfunded projects - approved unanimously.

 

Council President Anderson advocated for amendment of the CIP to revise the Liberty Street/Coastline Drive/parking deck project and introduced CAO Sam Mousa to describe the project. The revised project would replace sections of Liberty Street and Coastline Drive and demolish and abandon the old courthouse parking lot and the portion of Coastline Drive between that parking lot and the river. $32 million of the cost would be paid with borrowing, and $5 million in pay-as-you-go funding originally planned for repairs would be allocated to demolition and new construction. Mr. Weinstein explained that the proposal would borrow $12 million in FY15-16 and $20 million in FY16-17 to accelerate the project construction over the schedule proposed in the original CIP document and would reduce the total project cost from $65 million to $32 million. Mr. Mousa stated that the City will be reimbursed $7 million by the Florida Department of Transportation for demolition of the structures, but not until 2021. Council Member Crescimbeni suggested exploring the option of disposing of the demolished concrete as material for artificial reef construction. He also suggested that the possibility of creating a kayak launch and possibly a small floating dock in the area where the old courthouse parking deck is removed. Ms. Boyer asked that the project description make clear that the public art in the area (1901 fire memorial and the River Runner statutes) will be returned to nearby appropriate locations.

 

References from this point refer to the administration handout FY2016-2020 Capital Improvement Program – General Capital Improvement Projects

 

Motion (Anderson): on p. 2 of the new Tab 2 CIP project listing, amend the Liberty Street/Coastline Drive/parking deck projects from $65 million over 5 years to $$37 million over 2 years as described in the administration’s handout describing the revised project - approved unanimously.

 

Motion (Boyer): substitute and include all project sheets associated with the projects listed on the Revised Tab 2 list, including the revised Liberty Street/Coastline Drive/parking deck project just approved - approved unanimously.

 

Motion (Boyer): attach a revised exhibit showing the CRA capital projects - approved unanimously.

 

Motion (Boyer): delete the following projects unfunded in the first 5 years of the CIP:

Motion approved unanimously.

 

Motion (Boyer on behalf of Chairman Gulliford): on p. 4, delete Jacksonville Landing public infrastructure ($11.8 million) – fails 0-7.

 

Motion (Boyer): allocate the City’s local option gas tax revenue amount of $396,784 to Sidewalks/New ($274,284) and Roadway Safety/pedestrian crossings ($122,500) - approved unanimously

 

Motion (Boyer): change the name of the Sidewalk and Curb Construction/New account to Sidewalk Construction New (deleting “and curb”) - approved unanimously

 

Motion (Boyer at the request of the Public Works Department): split the $6 million Stormwater DSR account into two accounts – 70% to right-of-way and stormwater capital maintenance and 30% to stormwater capital improvements - approved unanimously.

 

Motion (Becton): on p. 5, delete the $1 million shown as Previous Funding for 9A Baymeadows – baseball, which is a duplication of a $1 million line item shown for the 9A Baymeadows – regional park improvements shown listed earlier on the page - approved unanimously.

 

Council Member Crescimbeni posed questions to Tera Meeks of the Parks, Recreation and Community Services Department about the Pottsburg Creek FIND dredging project, specifically about the Council amendment to 2015-38 that he believes prohibited the department from submitting a FIND application for that project until the City had a guarantee from the project engineer. Council Member Crescimbeni requested research from the Office of General Counsel on that amendment. Council Member Bowman, a previous member of the FIND Commission, stated that the project was ranked very low by the Commission, which concentrates its efforts on allocating funding to projects that benefit water access on the Intracoastal Waterway, not interior waterways.

 

Council Member Crescimbeni noted the need for a CIP project listing for FY15-16 for the St. Johns River Ferry to

 

Motion (Crescimbeni): on p. 4, delete the St. Johns River Ferry project with a total cost of $8,085,600 and insert a St. Johns River Ferry project with an amount of $1,250,000 programmed for FY15-16 – withdrawn.

 

Mr. Crescimbeni asked the administration to examine the need for a project listing for the ferry for FY15-16 to show the City’s commitment to match future grants.

 

Mr. Crescimbeni posed questions to Public Works Director Jim Robinson about the budgeting for the purchase of garbage and recycling collection carts for Advanced Waste Service to institute automated collection and single-stream recycling. A CIP project listing would be needed if the City decides to purchase the carts itself rather than paying AWS to purchase the carts, which he believes will be the less expensive means of acquiring the carts. Robert Campbell of the Council Auditor’s Office reported that the cost of the carts will be $3.7 in each of two years for the garbage carts and the recycling carts.

 

Page references from this point refer to Council Auditor’s Meeting #5 handout – August 26, 2015.

 

Banking Fund

 

Motion: on p. 49, approve Auditor’s recommendation #1 to reduce long term debt issued revenue and loan expense by $2,422 – approved unanimously.

 

Motion: on p. 49, approve Auditor’s recommendation #2 to revise Schedule B4 and Section 1.7 of the Budget Ordinance to properly reflect deauthorized borrowing from FY14-15 and the all years’ Banking Fund budget - approved unanimously.

 

Motion: on p. 49, approve Auditor’s recommendation #3 to change Schedule B4c to change a vehicle replacement number and correct an error - approved unanimously

 

Motion: on p. 49, approve Auditor’s recommendation #4 to allow the Auditor’s Office and General Counsel in coordination with the Budget Office to make necessary changes to the budget ordinance and its schedules, the Banking Fund ordinance and the CIP ordinance to reflect the Finance Committee’s actions - approved unanimously.

 

Motion (Boyer): on p. 53, allocate $4.5 million of fund balance carryover to the Vehicle Replacement Fund and reduce Banking Fund borrowing for vehicles by that amount - approved unanimously.

 

The committee was in recess from 12:01 to 1:00 p.m.

 

Courts

Motion: on p. 2, approve the department’s request for an additional $6,028 for repair and maintenance of wheelchairs, defibrillators and oxygen tanks - approved unanimously.

 

Motion: on p. 2, approve the department’s request for an additional $15,690 for leasing costs for copy machines - approved unanimously.

 

Motion:  on p. 8, approve auditor’s recommendation to move $86,521 in court innovation/judicial support miscellaneous services and charges to cash carryover – approved unanimously.

 

Motion:  on p. 11, approve auditor’s recommendation to increase building cost allocation for courts by $50,000 from court costs – courthouse trust and decrease the General Fund/GSD allocation by a similar amount – approved unanimously.

 

Chief Judge Mark Mahon invited any interested council member to contact him for a tour of the county courthouse.

 

Regulatory Compliance Department

Kim Scott, Director of the Regulatory Compliance Department, answered questions from Council Members Brosche and Boyer about salary increases given to department employees during the current fiscal year. Ms. Boyer asked for information on the number of employees who received end-of-probation and promotional raises and the amount of the increases. In response to a question from Ms. Boyer about the increase in the vacant property registry fee and whether that increase revenue is included in the budget, Kim Taylor reported that she understands that the department’s plan is to wait until the new fee revenue is collected and an exact amount can be appropriated at a later date. Angela Moyer reported that the property registry fee will be discussed in the Friday budget wrap-up session and further information will be provided at that time. Robert Campbell of the Council Auditor’s office reported that there is currently $1.6 million in the fund and the estimate of new revenue from the fee increase is $3 million to $3.6 million, depending on how accurate the number of properties on the registry turns out to be after the re-registration requirement becomes effective.

 

Kim Scott and Melissa Long of the department answered questions from Council Member Boyer about when the City receives the annual EPA pollution control grant and when it can be reimbursed from the grant for expenditures made prior to receipt of the grant sometime in the spring of 2016. The City has received this grant annually for 30 years. Council members sought a mechanism to make the grant self-appropriated after receipt of the grant and to limit the City’s liability in the event the grant is not received.

 

Motion: on p. 27, approve Auditor’s recommendation #1 to require the department to submit a revised budget for the Air Pollution EPA subfund 127 to appropriately include indirect costs – approved unanimously.

 

Motion: on p. 27, approve Auditor’s recommendation #2 to add a waiver to the budget ordinance to ensure compliance with the Code section requiring that an award letter be received prior to appropriation - approved unanimously.

 

Motion: on p. 30, approve Auditor’s recommendation #1 to make the following changes: reduce over-estimated hazardous waste fee revenue by $53,733; add an expenditure of $35,974 for supervision allocation to accommodate ½ of one employee’s salary from Gas Storage Tank Inspection; move $26,000 from mobile equipment to fleet vehicle replacement and add a pickup truck to the vehicle replacement schedule B4-C; reduce over-budgeted miscellaneous services and charges by $15,047; and offset these changes with an increase of $74,660 by transfer from fund balance - approved unanimously.

 

Motion: on p. 40, approve Auditor’s recommendation to reduce the proposed appropriation of demolition assessment revenue by $7,630 and offset by increased in the proposed appropriation of nuisance abatement revenue by the same amount - approved unanimously.

 

Returning to the CIP, in response to a question from Council Member Gaffney, Council Member Boyer reported that state law provides that a project that is listed in the CIP cannot receive CRA tax increment funding until is has been removed from the CIP for at least 3 years.

 

Debt affordability study

Treasurer Joey Greive made a presentation on the City’s debt affordability study for the fiscal year ending September 30, 2014. He noted that the ratio of debt to full market property value has been under pressure in recent years because of the decline in assessed value, but the trend is beginning to turn around as property values have grown over the past 2 years. The ratio of debt to General Fund expenditures has also been problematic in recent years but should improve in the next several years as the City increases its 10 year principal pay-down rate over the next 4 years. The goal is to pay down at least 50% of outstanding bond principal over each rolling 10-year period.

 

Ms. Boyer suggested that in future editions the study should omit the paragraph on the bottom of page 12 stating that Jacksonville’s millage rate is substantially below that of other Florida cities; that may have been true before the millage increases in the last 2 years but Jacksonville is no longer substantially lower. Ms. Boyer called the attention of the committee to the footnote on page 17 to the rates assumptions table which notes that the JEA annual contribution agreement expires in 2016, which will have a substantial impact on the City’s available revenues. Ms. Boyer asked for clarification from Mr. Greive about the spike in the BJP bonds retirement in FY17 followed by a large decrease in FY18. Ms. Boyer noted that the chart on page 18 of the Debt Affordability Study is an example of the data in the study (effective September 30, 2014) being outdated by the time the Finance Committee looks at the study in conjunction with the budget preparation process for the next fiscal year in August of the following year (11 months after the study closing date). She believes the committee needs updated information in the form of a “true-up” of new debt issued, debt paid off, and debt authorized but not yet issued during the fiscal year as of budget hearing time.

 

Regarding stormwater utility debt service, Ms. Boyer stated that the stormwater utility is paying debt service on bonds issues before the creation of the stormwater utility and the implementation of the stormwater fee, paying General Fund obligations with enterprise funds. Mr. Weinstein agreed that the use of utility funds to supplant General Fund debt service is inappropriate, but that is how the City has handled the transaction for the last 6 years and a method needs to be found to unwind that transaction and shift to a more appropriate funding mechanism. Ms. Boyer suggested that she may offer an amendment at the Friday meeting to create an IOU mechanism to create a future repayment obligation. Ms. Boyer and Mr. Mousa debated whether General Fund dollars have been used to subsidize Better Jacksonville Plan project spending. Mr. Mousa said that no BJP debt has ever been paid off by General fund dollars, although General Fund cash has been used to pay BJP vendors, and an IOU exists for future BJP revenues to reimburse the General Fund for its cash infusions to pay short term expenses. Mr. Crescimbeni suggested that the City might be incurring legal liability for misuse of the stormwater utility fee by spending it on a purpose for which it was intended (paying debt service on bonds issued before its creation). Mr. Mousa noted that all stormwater fee revenues are being used for stormwater purposes. Mr. Gulliford requested information on the millage rate comparison table on page 12 of the debt affordability with regard to the percentage of each of the listed jurisdictions’ millage levy that is required to pay that city’s debt service. Council Member Becton pointed out that another important point of comparison would be expenditures per square mile of area; Jacksonville must provide services over 840 square miles and those expenditures (fire stations, road miles, etc.) will differ greatly from jurisdictions that only cover 10% or 20% of Jacksonville’s land mass.

 

Food and beverage expenditures

Kirk Sherman distributed a table showing a comparison of the approved FY14-15 budget for food and beverage expenses with the Mayor’s proposed FY15-16 budget and also with a tabulation of food and beverage amounts from the departmental budget details. The Mayor’s proposed budget for food and beverage expenses totals $196,658; the departmental details amount to $161,130. Additional research needs to be done to reconcile why some items in the overall budget don’t appear in the departmental details and vice versa.

 

Special Council Contingency status:  $1,198,289 to the positive.

 

Pending action items

·        Council Member Crescimbeni requested research from the Office of General Counsel on an amendment to 2015-38 that prohibited the administration from submitting a FIND grant application for the Pottsburg Creek dredging project until the project engineer could guarantee at least a 7 year expected lifespan for the dredging.

·        Council Member Crescimbeni requested detailed information on the vacant property registry fee – how many properties on the list, how long they’ve been on the list, historical trends of fee collections, projected new revenue from the fee increase, etc.

·        Reconciliation of food and beverage expense amounts between the Mayor’s proposed budget and the Auditor’s departmental detail tabulation.

 

Public comment

Joe Strasser discussed vehicle replacement schedules and urged a fixed budget allocation for that purpose each year to always have a ready source of funds for that purpose and avoid borrowing for vehicles.

 

Connie Benham thanked Council Member Boyer for her in-depth knowledge of the CIP program and project expenditures. She referenced the importance of the City’s 2030 Comprehensive Plan that is supposed to be the blueprint for the City’s future. She spoke in favor of converting downtown streets back to two-way traffic and urged the committee to support and promote that objective. She expressed her agreement with the committee’s action earlier in the morning to approve the Liberty Street/Coastline Drive replacement project.

 

Chairman Gulliford thanked Mr. Mousa, Mr. Weinstein and Ms. Moyer for their cooperative spirit and collaborative efforts during the budget hearings, which is a refreshing change from recent years.

 

Meeting Adjourned: 3:16 p.m.

 

Minutes:  Jeff Clements, Council Research Division

               8.27.15   Posted 6:00 p.m.

Tapes:     Finance Committee Budget Hearing #5 – LSD

                8.26.15

Materials: Budget handouts

    8.26.15