HomeMy WebLinkAbout2010-06-07 Finance Committee Minutes
FINANCE COMMITTEE
June 7, 2010
Minutes
Councilors: Stone, Weston, Nealley, Wheeler
Staff: Cyr, Caruso, Yardley, Jim Martin, Joe Perry
Others: E Russell, Peter Ramsey, Adam Goode
1. Consent Agenda
a. Workout Agreement – 21 Bragg Street
b. Quitclaim Deed – 109 Cedar Falls
c. Quitclaim Deed – 204 Cedar Falls
d. Quitclaim Deed – 257 Cedar Falls
e. Quitclaim Deed – 26-28 Davis Street
f. Quitclaim Deed – 29 Nash Street
g. Resolve 10-198, Appropriating $464,194 in Maine DHHS for the Purpose of
Addressing Tobacco, Substance Abuse, Chronic Disease, Nutrition and
Physical Health through Prevention Strategies
A motion was made and seconded to approve the Consent Agenda.
2. Bids/Purchasing
a. Tank Repairs – WWTP – G.S. Bolton - $42,500
Cyr pointed out that this is year 2 of year 3 for a project dealing with repairs to the
primary tanks. This will repair tank #3 and involves draining the tanks, resurfacing and
assuring there are no pits, and putting metal pieces into the tanks. The
recommendation is to award the low bid to GS Bolton of Rochester, NH in the amount
of $42,500. A motion was made and seconded. This has unanimous passage.
b. Rain Gutter Replacement – Airport – GR Roofing - $37,930
Caruso discussed the request to replace the rain gutters on the four large dock hangers
known as dock 10, 11, 12 and 13 that are used as a maintenance hangar and transient
aircraft storage. He provided updated photos to committee members. Staff
recommends awarding this to the low bidder GR Roofing for $37,930. Nealley said he
was glad it went to a Bangor company and moved staff recommendation. Weston
seconded the motion. Stone asked about the difference in the amount of gauge and
wondered if the higher gauge would have a longer life expectancy. Caruso said he was
unsure and would ask the Building Supervisor. This has passage.
c. Update on Pending Bids
Cyr reminded the Committee of when the installation was done for underground tanks
to gather and collect deicing fluid off the runway pads. The fluid is piped directly to the
Wastewater Treatment Plant for treatment. The tank system that was put in place is
similar to the CSO holding tanks. These are sectioned concrete tanks that are put
together to create one big tank. Staff has found that 10 of the seams in the deicing
tanks are leaking. The request is to go out to bid to repair the seams. There are a
total of 43 seams in the tanks and the recommendation is to go out to bid for a 3 year
basis to do routine maintenance and crack sealing it as issues come up.
3. Discussion of a Payment in Lieu of Taxes (PILOT) Program
Weston spoke of the number of budget discussions over the past few months pointing
out that there have been a number of municipalities and other governments that have
looked at some options. About 40% of Bangor’s assessed value is non-profit owned.
Weston had invited Senator Perry, Representatives Martin and Goode to attend the
meeting as well as Peter Ramsey to explore options and to look at successes of other
municipalities to engage those who do not have an obligation to pay property taxes to
the City in some sort of a fee for service. One option is the Payment in Lieu of Taxes
(PILOT) Program. Adam Goode, State Representative, stated that there is nothing
preventing the City from doing the PILOT program with anyone. He gave examples of
groups in the past such as land trusts, hospitals, and universities that have gone into
PILOT programs. Orono has a similar agreement with the University. Perry stated that
in his experience PILOT programs occur between communities and non-profits. He
stated that he believes that when Blue Cross Blue Shield was a non-profit they
contributed a fair amount of money to the City of South Portland. He said that every
two years, the State takes up legislation to consider some sort of service fee for non-
profits. This year it was brought up through the budget negotiations and the budget
process knowing that the State budget was going to be passing on a lot of cuts to local
municipalities that could end up on property taxes. These take every shape and form
from a fee for the size of the water lines for the hydrants to the public safety portion of
the budget. Perry said the issue then is whether or not to force churches and other
small non-profit organization to be involved. Once the base is narrowed down, the
decision might then be to look at the non-education side of the property tax, which is
substantial to anyone that hasn’t paid in the past. He has always been a proponent of
something like this and, if this was to move forward, he believes that everyone should
be included. He feels it should be phased in over 10 years. For example, 2.5% of the
total property tax bill per year for 10 years. This way when one reaches .25% of the
property tax, it doesn’t hit anyone too hard in one given year. If this comes up, he
believes that Maine Municipal Association will be there representing cities and town all
over the State and will make a very strong argument why it is only fair and right in
most cases. Non-profits would also be represented and not pleased with the process.
Perry thinks that what is being discussed here tonight is starting an education process,
and it is necessary to place what the City provides to non-profits on the table, costs that
are involved, and how this has shifted on to all of the property taxes. Weston agreed
that this is just an education session and is not recommending the City to jump into
anything without the proper history.
Peter Ramsey spoke about different states and municipalities that have done different
things with Philadelphia being the most aggressive. Some do a percentage and others
only hit non-profits that have an administrator or anyone in the non-profit that makes
more than $99,000 per year. Some do it on square footage, which helps out a great
deal. Maybe they exempt the first 5,000 square foot of a church, for example. In this
market, he believes that a lot of the non-profits do not own the building they are in.
He spoke of Tacoma, Washington which saw a very nice piece of property off the
Interstate sit for 10 years as “future home of XYZ church”. Ten years and 2 months
later they sold that piece of property to a restaurant consortium for a massive amount
of money, and the Town Solicitor successfully decided to go after them for 10 years
worth of back taxes. He pointed out that there are a lot of non-profits that purchase
property, are willed property or somehow obtain property only to sit on it. In Ramsey’s
opinion, the percentage program that was mentioned earlier is fine, except that the cost
is not static and will go up and down. Some municipalities start at 1-2% and increases
on a quarterly or .5 point basis every year to a maximum. He said that this PILOT
program is not a new thing and the Federal Government pays it. The Bureau of Land
Management pays PILOT to the different states. The Department of Transportation
pays PILOT. Bangor has negotiated with the former Theological Seminary to pay a tax
that’s never previously been paid.
Responding to Nealley, Cyr stated that the City has two signed payment lieu of tax
agreements. One is with the Maine Affordable Housing Trust, which are the apartments
on Husson Aveue. In that particular agreement, they pay based on the full value of
that property at 50% of the tax rate, which is roughly 50% of the non-education
portion of the tax bill. The City also has payment in lieu of tax agreements with Bangor
Housing Authority and that is an annual calculation based on HUD regulations. The City
also sees an annual amount from the VFW, but that is not official and there are no
signed documents. They also make a substantial donation to a cause usually within the
Police Department. She does not believe there is a specific ordinance or policy, and she
is not sure if the City would be able to enforce under State Statue because a payment
in lieu of taxes has to be agreed to by both parties.
Nealley suggest the City should look at different communities that have been successful
in implementing a program after the budget sessions. He agrees that it should be a
volunteer type situation; however, when it comes to new projects, the City should have
a set of policies and procedures. He also suggested sending out letter asking others to
voluntarily participate.
Perry thinks, as the number of participants grew through new agreements, that it would
put some pressure on the existing non-profits to get with the program. He would have
to look into whether or not it is constitutional to tax one just because they are new
versus ones that have been here.
Weston asked the Delegation to recommend to the committee their thoughts about
what should be done now; i.e., continue to talk amongst ourselves and do some
homework, or does it make sense to try to get conversation going again in Augusta on
a specific angle. Six or eight years, Perry put in a bill on behalf of Bangor which was a
small fee for water lines and hydrants. Perry said it is not going to be easy to bring this
to Augusta. He stated that a true PILOT program is voluntary and handled outside the
State. Some of these non-profits are small and are struggling and are serving the
needs of the communities vs. the largest employer in the region. Perry said the PILOT
was explored this year but it was shifted toward a local option tax. Maine Municipal
wasn’t anxious for a local option. If he is fortunate to return to Augusta, Perry said he
would be willing to put in a bill on behalf of the City. It would require a well thought
out plan and a lot of representation from service centers working with the Delegation.
Wheeler spoke about his dismay regarding MMA’s opposition to a local option sales tax.
Perry clarified that he was speaking about a local option property tax on non-profits,
not sales tax.
Ramsey spoke about Hawaii which is considering cancelling the tax exemption on sales
tax. He said it is something that Maine could conceivably do. It is a simple process and
it affects a small percentage of individuals. It does increase costs to the non-profits by
8-10% depending on the sales tax. Martin asked if the programs have been voluntary
in other states. Ramsey said it is mandatory in Philadelphia. Springfield, Massachusetts
is purely voluntary.
Nealley thought it made sense for Bangor to work on a volunteer program starting with
a letter of explanation to taxpayers in terms of what the City is looking for by way of
participation.
Weston thanked all for attending and participating. Stone encouraged Weston to move
forward with the process. Cyr said that the City is a member of the Maine Service
Center Coalition tying into Perry’s comments that this kind of action would need to be
put forth by the Service Center communities. Cyr said that staff could obtain
background information from MMA. Weston suggested inviting community members as
well.
4. Review Results of General Fund Buildings Energy Audit
In 2006, the City issued a RFP for technical energy auditing services and the contract
was awarded to Honeywell, which audited all City facilities and utility usage for a year.
From those audits, Honeywell came forth with recommendations for general fund
buildings, airport facilities, sewer plant facilities and school facilities. Based on the list
of projects, the City agreed to move forward with those projects that in general terms
had a 10-year or less payback. Work was started in 2008 and was completed in 2009.
In total, the City invested in just under $1.2M in a number of energy conservation
measures. Based on the selected projects, there was an estimated cost savings for
year one of $127,733 which produced an average payback of 9.34 years. Part of the
Honeywell agreement was that the City would have an audit done one year later to
insure that the City was achieving the savings which Honeywell had projected. Part of
the contract stated that if level of savings were not achieved as guaranteed by
Honeywell that they would pay the difference. Year one was finished in February 2010,
and Honeywell has combined the data for all facilities in a final report. The projects
undertaken enabled the City to avoid just over $196,000 in utility costs for the year that
ended February 2010. It drops the payback period down to about 6 years. When
doing an energy audit, there is a baseline reading comparing it to actual results.
Utilities in Maine are highly priced and billing period sensitive so there is a formula
derived in the Federal Energy Management Program that details the type of
adjustments made to the base year to make sure the comparisons are comparable.
Cyr referred to a summary provided in the agenda packet outlining where costs were
avoided which were mainly in the heating and electric costs. The largest avoided usage
is in kilowatt hours – approximately 329,000 kilowatt hours.
Short of the windows, Nealley asked if City Hall has derived all that it is going to in
terms of energy efficiencies. He spoke about Efficiency of Maine dollars and
Department of Energy Grant monies.
Wheeler asked if cost avoidance is the same as cost savings. Cyr said it could be
considered the same definition if you did not make the investments. By making the
investments, you saved having to spend $196,000 that normally would have spent. Cyr
noted that during individual budget reviews for FY certain areas have a continuing
decrease in utility costs. It is good anecdotal evidence of the fact that the investment
made has paid off within the general fund facilities. At the Airport, certain projects
were undertaken that may not have had as good a payback but from an operational
standpoint it made more sense. Other areas included the Treatment Plant where a list
of projects were brought forward but the crew at WWTP are very mechanically inclined
and very efficient in that there were really no savings to be achieved at WWTP. The
School Department under took $7-9M worth of energy saving projects with significant
benefits resulting.
5. Transfer of Trust Funds to Successor Organization
At a recent Board meeting of the Bangor Nursing & Rehabilitation Center, it came to
Cyr’s attention that the organization was created in the mid 70s through the merger of
the Home for Aged Women and the Home for Aged Men. The City has a number of
bequests that has been on its books for 100 plus years. One of the categories is the
Home for Aged Women. In Cyr’s 18 years, she has not been contacted about the
organization. Historically, it was not uncommon for individuals to leave funds to their
local government to serve as trustee for a specific purpose. The request came forward
from Cyr and from Nelson Durgin, director of the Phillips-Strickland House, is that the
principal and unexpended interest related to the Home for Aged Women be transferred
to the Phillip-Strickland House which has an endowment fund with similar types of
bequests and restrictions. It is actually managed and they insure compliance with the
donor’s wishes. Cyr asked Durgin to send a request to release those funds, and it is
staff’s recommendation that the funds be transferred as long as the City Solicitor
ensures that it complies with all legal provisions. The City needs to make sure it is not
become crosswise with any probate statutes. There are six individuals with individual
bequests to the City on behalf of the Home for Aged Women. A motion was made and
seconded to move staff’s recommendation to the full Council.
Adjournment: 6:45 pm.