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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.