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HomeMy WebLinkAbout2009-12-07 Finance Committee Minutes FINANCE COMMITTEE December 7, 2009 Council Attendees: Bronson, Stone, Blanchette, Nealley, Palmer, Weston, Gratwick, Wheeler Staff Attendees: Cyr, Birch, Little, Hupp, Dawes, Heitmann, Barrett, Masters, Gastia, Patterson, Farrar Others: Peter Ramsey, Erik Russell, Dennis Marble, Bob Carlson, Ken Huhn, Cindy Sturgeon 1. Consent Agenda A motion was made and seconded to approve Consent Agenda items. a. Quitclaim Deed – 427 Essex Street b. Quitclaim Deed – 79 Fern Street c. Quitclaim Deed - 385 Fern Street d. Quitclaim Deed – 57 Walter Street e. Workout Agreement – 110 Pearl Street f. Write Off of Taxes – Prays Park Lot 22 2. Bids/Purchasing a. Update on Pending Bids It has been the Council’s practice over the last year to have pending bids reviewed by the Finance Committee with an overview of the item in case of any issues or concerns. Cyr started with firearms replacement for the Police Department, which had been discussed during the budget process and specifically reviewed by the Government Operations Committee in light of replacing twelve-year old weapons. They are 40 caliber Berettas, which can no longer be purchased, and they are in need of repair on a fairly regular basis. Approximately $140,000 was received through a Department of Justice grant and staff identified this as a program to be funded in order to replace all of the weapons and initial restocking related to ammunition as well as accessories. The cost estimate is $75,000. While the weapons are no longer a viable option for day to day service of the police officers, many of them would still have use in proper situations. Upon replacement, the Police Department would look at selling off its surplus weaponry. Gastia said that firearms have a life expectancy of 8-10 years in police work. Responding to Bronson and Nealley, Gastia said that firearms are typically auctioned to licensed firearms dealers, who perform background checks before reselling the items. The estimated dollar value from the sale of the weapons is between $15,000 and $20,000. The second item is a pick up chassis for the Animal Control vehicle, which recently failed State Inspection mainly because the truck frame is rusted and separated. The Motor Pool indicates there is a significant safety issue with the vehicle and it cannot be repaired. The current vehicle is a 1999 Chevrolet 1500 series truck with 150,000 miles with a specialized body for animal cages. During the budget process, staff and Council discussed the fact that there are a number of pickups that could possibly be used another year or two before replacement depending on individual conditions. Based on the fact that this vehicle travels only about 15,000/year and the specialty truck body can be reused, Dawes recommended replacing the chassis itself. He suggested looking at both new and used options. Gratwick asked if Animal Control works with other communities. Gastia said it is currently for the City of Bangor only. Bangor has been approached by various communities over the past two years asking if the City would be receptive to providing animal control for some of the smaller communities. Bangor is open to the idea but it appears that it would require an increase in manpower. It also appears that it would not be cost effective for other communities. Gratwick said he would follow-up with Farrar, who has more detailed information. Cyr noted that to date the Cultural Commission has conducted a cultural survey which assesses Bangor’s cultural needs and has also developed a comprehensive cultural plan and strategies to meet each of these needs and to preserve existing assets. Last fall, the Council authorized the City applying for and accepting a $10,000 capacity building grant from the Maine Arts Commission, which required a $10,000 local match. Those matching funds have been set aside from prior year Cultural Commission appropriations. The first strategy that the Commission wishes to move forward with is to develop a logo, marketing plan, brochure, way-finding signage and a web portal for Bangor Arts. The total estimated budget is approximately $6,000. Half will be provided through the grant funds and the matching portion would be provided by past years’ appropriations set aside for this purpose. The next item dealt with Airport Service Development. The City has had a contract with the Boyd Group since December of 2003. It has been automatically renewed once since then and BIA wants to move forward with an RFP looking for proposers to demonstrate their capabilities in the areas of air service development for airports of a similar size to BGR, data analysis and report capabilities, forecast route market analysis and proposal preparation along with the cost for those tasks. On average, there are two to three proposals per year for air development service and also will have one or two items on an ad hoc basis depending on opportunities in the market place. As part of that contract, semi-annual reports are requested outlining route performance analysis and data analysis that can be used for route development. The costs vary but it is included within the Airport’s normal operating budget. Under the current agreement, the average cost of each air service development is about $1,500/each. BIA would like to complete an updated leakage study. The last one was performed in 2003. The industry and BIA has significantly changed. The study would determine BIA’s traffic generation from the primary catchment areas as well as secondary catchment areas, identify leakages to other airports, likely causes and the distribution of origination and destination traffic loss. It would look at any traffic that could potentially be recaptured. The Airport has $45,000 available within its budget for this purpose. In response to Stone, Hupp said Mike Boyd did a presentation to the community about air service. He has met with the Council on several occasions. Weston asked about the general purpose of the leakage study. Hupp said it would be used internally to identify certain opportunities and would be used to court airlines. 3. Request from BNRC Regarding Repayment of Line of Credit Cyr pointed out that the City appoints two representatives to the Bangor Nursing and Rehab Center Board of Directors, and she has served in one of those seats for several years. She introduced Board Members Ken Huhn and Andy Sturgeon. Weston disclosed that he had served on the Board of Directors for the past three years but resigned upon being elected to the City Council. Cyr noted that the City, as part of the Master Transaction Agreement with BNRC, appropriated $400,000 to fund a line of credit to assist BNRC’s operation. Since then, this line was partially reduced and now stands at $367,575, an amount which is currently fully drawn down. The Master Transaction Agreement also requires the City to provide $2.25M in capital contributions to be used by BNRC to improve their facility. To date, the City has fulfilled slightly more than $1M of this commitment. Given the financial restraints that the City is operating under, BNRC has proposed repaying a significant portion of the current outstanding line of credit ahead of schedule and has requested that the amount of any repayment be appropriated by the City as a capital contribution to BNRC under the terms of the existing Agreement. BNRC is interested in completing roof replacement work at the facility. This proposal will allow the City to meet its obligations under the agreement without the need to appropriate these funds in future years either as a direct appropriation or through the issuance of general obligation bonds. Huhn said that in 1998 when the board was originally put together the facility was formed into a private not-for-profit entity. After a great deal of struggle and over 10 years of operation, the facility is now seeing a profit. Gratwick clarified that the city will have spent $1.4M of the promised $2.2M. Barrett said on a very conservative basis the citizens of Bangor have saved around $3M+ over the last nine years by avoiding annual operating subsidies. Cyr said that part of the Master Transaction Agreement is that if the entity should cease operations that the property automatically reverts to the City of Bangor. Weston and Nealley both expressed appreciation to the Board of Directors. A motion was made and seconded to recommend approval to the full City Council. The action will appropriate a repayment from the Bangor Nursing and Rehabilitation Center’s line of credit for the purpose of funding capital improvements to their facility. The Board of Directors includes Nelson Durgin, Patrick Kelley, Gerry Palmer, Luanne Ballesteros, Debbie Cyr, Clif Eames, Frank McGarry, Claire Hudson Payne, Judy Young, Nichi Farnham, Rev. Carlson, Garrett Martin, Jim Tyler, Andy Sturgeon and Ken Huhn. 4. City Assessor Update Birch reviewed news releases which were provided separately to the Committee. The Assessing st Department is beginning its work to establish the valuations for April 1. Birch utilizes information from the Office of Federal Housing Price Index in Washington DC that provides quarterly updates. Since 2008, this agency has provided monthly updates. In the information provided separately to the Committee, Birch included seven of those updates. The Federal Housing Financing Agency is a valuable resource for local assessors. The November report rd begins with house price increases slightly in 3 quarter, the first increase since 2007 indicating that the housing problems have bottomed out and are moving in a positive direction. He quoted “continued high levels of delinquency, foreclosures and the longer term view remains uncertain.” Going forward, Birch said the City has 1,800 plus commercial properties and he addressed the problem with income approach because the cap rates have increased. He noted a half point increase in cap rates. He provided two illustrations. Roughly 38% of the City’s total valuation is comprised from commercial investment type property. Due to the recession, values are coming down. He felt it wise to alert the Committee that should the trend continue to April 1, 2010 the City will have a slight reduction in its commercial tax base of roughly 5%. The 5% loss of valuation is about a $.33 cent increase in the tax rate. The spending and valuation st process needs to be closely monitored between now and April 1. If the cap rate continues to rise an extra half point, there could be a possible increase of mill rate/tax rate nearing the $.75 cent mark without having effect other than the loss of valuation. Birch and his department will closely monitor it. He referenced materials provided from the Maine Real Estate statistics. It is a housing report as th of October 2009. Positively, for the 5 consecutive month, sales of single family existing homes increased dramatically in activity. However, in the activity the median home sales price is 6% below what it was a year ago. Bangor’s median value residential home according to most recent statistical data is $155,000. He talked about Bangor’s in-house statistical report which is used to help his department grasp how far the valuations have slipped from the prior year. The Council adopted a Resolve in 1988 that the Assessing Department should strive for 100% market values and it has been done since that time. Utilizing sales from July 2008 to June 2009, the report breaks out the information into property types. The commercial industrial apartment buildings combined is at about 99% looking back to June 08 to July 09. The condominiums are at 92% and the single family homes are at 95%. With the info provided from the Office of Federal Price Oversight and their tracking, it seems to be in line with Bangor’s statistics. For the upcoming year, Birch feels that the City is good for residential properties but additional analysis and review will be needed for commercial properties. The update will occur most likely in February of 2010. During November, Assessing provides information dealing with personal property. The staff has next year’s declaration forms ready. Birch provided copies for informational purposes. Last year, the City had $257M in personal property which represented 11.2% of the total taxable valuations, 2,770 declarations were mailed out and 1,776 were returned to the City. With the economy, he felt there would be an even lesser return. He referred to a document entitled The Property Types Perspective from Core Paths in particularly Chapter 4. It provides an overview of several classes of property, what they foresee happening in 2009, as well as addressing cap rates. There are different cap rates for varying types of properties. Gratwick and Birch discussed the calculation method used to set the cap rates. Nealley and Birch spoke about the hospitality business. Based on the information, Wheeler said there appears to be a trend towards the shift of the property tax burden more and more toward the residential property owner. He asked if 384 sales is an adequate standard by which to evaluate the entire City of Bangor in terms of residential property values. Birch said yes because it is the process that the Maine Revenue Service has had in place since 1820. The City is statutorily compliant to the State’s rules and regulations. Responding to Stone, Birch noted that Code Enforcement issues a foreclosure monthly report with information going back to 2007. The last report noted 71 actual foreclosures for 2009. Stone talked about Birch’s statement that several mall area business had reported lower earnings. Weston asked about the BETR form. Birch said the annual filing of this form allows the businesses to update their account, replace the equipment that may have been obsolete or broken down, or to alert the City of the fact that a piece of equipment is no longer in service. The City then updates its list and the valuation is updated. Cyr said when the forms are received the Assessing Department compares them to the Trio System used for assessing. Responding to Weston, Birch said that electronic filing is available. In response to Nealley, Birch said that the electronic filing notice is provided in a letter of instruction for the individuals. Bronson asked about the 65% vacant land. Birch said this is a topic that he and the City Manager discuss each year. Vacant land sales are land with no improvements. Sales of property that have improvements increase the land value about 20%. Bronson asked about lack of reporting/collection rate with personal property. In 1996, Birch said there was a 38% return rate. After a Citywide valuation of personal property, it has been about 64%. If individuals do not file, the City makes a quality adjustment on their account. Assessing utilizes the City’s Certificate of Occupancy permit system through Code Enforcement and individual appraisers are out in the field daily. Other than hiring additional personnel, Birch said his department is adequately assuring the fact that personal property is being administered according to rules established by Maine Revenue Services. Bronson said that while the value of the commercial real estate has decreased but asked if annual adjustments are being made to the value as applied to the business’s annual tax bill. Birch said that annual adjustments are made using the Marshall and Swift cost services to adjust by individual occupancy. There are 25 different occupancy codes that are adjusted annual predicated on cost approach. Responding to Stone and Wheeler, Barrett talked about the City’s upcoming budget year. Weston suggested a more efficient way for the electronic filing of personal property documentation, and asked if it could be redrafted. Birch said he would address it tomorrow. 5. Review of RFP for Executive Search Services for the Recruitment of a City Manager Farrar noted that at the last Committee meeting he made a presentation regarding this topic, and the Committee authorized staff to prepare a RFP and to return it in draft form to this Committee meeting for review. He specifically asked them to review the Scope of Services which is the detailed work plan for the consultants. Stone noted that during a recent Workshop session to refine the City’s vision statement and qualifications for a new city manager. He asked if the draft RFP was a boiler plate from another organization. Farrar said he found a number of RFP’s from other communities by searching the internet and combined them into the draft. Stone felt the refined vision statement and traits to be sought in a new manager should be included in the RFP. Farrar said that information would be needed by the end of January. Stone said it would be available well before that date. Responding to Gratwick, Farrar again noted that items 1-9 under Scope of Services are the key points. They are not particularly germane to Bangor but common services that many other communities have used in their search for a new city manager. Weston stated that at the prior Committee meeting it was estimated to cost in the range of $15,000 to $50,000. He has does some homework and he felt that the $50,000 was high and that Bangor would not come anywhere near that amount. He wanted to expel that rumor. Farrar clarified that the $50,000 also included the potential cost for travel should the committee need to have individuals come from distances and also if there was a desire to have the selected firm visit the community of a potential candidate(s) for further in-depth background investigations. To date, Farrar noted that approximately 39 firms have been identified to receive the RFP electronically including 19 within Maine. He said that he is seeking the Committee’s approval of the draft RFP presented this evening and that staff be directed to send it out forthwith with bids th to be opened on December 30. In the interim, staff will need to speak with the Committee about a selection committee potentially made up of Councilors and/or staff to review the firms, hold interviews and make a final recommendation. Weston asked if the work of the vision statement, mission statement, and qualifications of the candidates should be sent to the firm before they are selected. Farrar felt it would be provided to the selected firm to include the information in their recruitment profile. Wheeler asked for clarification of the last paragraph in Section 2 as well as how the conclusion was reached that Bangor was the regional hub of eight counties. Farrar said that he took the information from one of the City’s recent bond prospectuses. He said it could be reworked or reworded. A motion was made and seconded to accept the RFP as written and authorize the Assistant City Manager to move forward to electronically send out proposals. Bronson noted that anything that can be done to speed along the process would be much appreciated. 6. Finance Committee Resolution Approving the Details of Phase II ARRA SRF General Obligation Bond Issue Cyr said that earlier in the year the City was awarded just over $2.85M in stimulus funding through the EPA for stormwater improvements. Going through the bid process, there were a number of bids that were far more than what was available for funding. In contacting the State, there were additional monies available. In the end, the City was granted the highest level under this program at $3M. The City has to issue bonds through the State Revolving Loan Fund through Maine Municipal Bond Bank. 50.9% of the total debt of the $3M is totally forgiven, no principal, no interest repayment. The remaining percentage is principal repayment only, no interest. The City to date has issued about $1.9M of the bond through the stimulus package. Tonight’s agenda item is Phase II, the completion. The City is basically doing a loan for $1.40M and $526,240 is being forgiven and the $513,760 will be principal only. It is the Committee’s purview to approve the details of the City’s bond issue of $513,760 which is the amount the City will be required to pay back over the next 20 years. Responding to Weston, Cyr said the stormwater improvements included the Birch Stream watershed at almost $1.7M, Penjajawoc Stream watershed of just under $880,000; a new street sweeper and in-stream monitoring; windmills at BIA; central canal systems at BIA; the Taft Street bio-retention; pavement removal and infiltration; Godfrey Blvd. bio-retention system; Birch Stream water pollution abatement; repairion and in stream improvements in the Penjajawoc; bio-filtration, green infrastructure at the Mid Maine Mall; auto part pollutant removal treatment system. The City is required to do this work due to stormwater regulations. Barrett said there is documentation on the City’s website with detailed studies that show the actual design of all the projects. He also spoke of a potential for a drainage utility which would separately fund these kinds of projects. Responding to Gratwick, Barrett said that if the improvements are not made that the City would potentially be told that no more development could occur within the watersheds. It would shut off areas of the City for growth. If the City doesn’t do the work cooperatively with property owners, the State and EPA have the authority to require individual permits of each property owner in an impaired watershed which would be potentially very expensive and that would do very little to improve the water. A motion was made and seconded to move staff’s recommendations. The meeting was adjourned at 6:30 pm.