HomeMy WebLinkAbout2008-01-07 Finance Committee Minutes
FINANCE COMMITTEE
January 7, 2008
Minutes
Councilor Attendance: Palmer, Blanchette, Hawes, D’Errico, Farrington,
Gratwick, Stone
Staff Attendance: Barrett, Cyr, Cammack, Higgins, Caruso, Dawes,
Birch, Heitmann
Others: Max Higgins
The meeting was opened by Max Higgins, who introduced each Council Member
in attendance.
1. Consent Agenda
a. Resolve, Accepting & Appropriating $135,000 in Department of
Homeland Security Assistance to Firefighters Grant Funds
A motion was made and seconded to approve the Consent Agenda by
a vote of 7-0. Palmer did ask the Fire Chief to address this item.
Cammack said the monies will be used to replace self contained
breathing apparatus. Capt. Higgins said the Homeland program has
been very successful for the department. The units offer numerous
new safety features. Blanchette asked Higgins to bring one of the units
to the Committee for a demonstration and to make the Council aware
of the importance of the equipment.
Responding to Stone, Cammack said it was bi-directional amplifiers
which allow radios to work more effectively in places such as EMMC,
Bangor Mall and the racino. All businesses have come forward to work
with the Department for installation. Higgins has been working with
the City Solicitor to develop language for the City Codes to make this
mandatory.
2. Bids/Purchasing
a. Portable Radios – Airport – Whitten’s 2-Way - $11,055
Cyr said the City issued a RFP to replace 30 at the Airport. Seven bids
were received. Staff recommendation is Whitten’s 2-Way Service in
Brewer. A motion was made and seconded to approve staff
recommendation. The vote was 7-0.
b. Police Vehicles – Quirk Ford (State Contract) - $42,660
Cyr said the City recently accepted the grant money from the federal
government for the canine program at BIA which will provide three
dogs and three officers. Vehicles are required for these officers. Staff
recommends that two vehicles be purchased off a state contract at
$21,330/each. Both will be funded 100% by the federal grant. Palmer
asked how much quicker these vehicles will depreciate due to the
canine. Dawes wants to try to get at least five years out of these
vehicles. There is a stainless steel insert in the backseat for the
canine. Once removed, other than the odor, there is no difference
between vehicles. The vehicle would then go to auction. Gratwick
said he has grave reservations about this program. In essence, the
City will be accepting $750,000 in federal monies, which is actually our
tax dollars, for three dogs. Blanchette said that one dog is equivalent
to two police officers. Palmer agreed with Gratwick regarding the
costs of the program. Responding to Stone, Barrett said that at the
end of the five-year grant period Council would have the option of how
to proceed if the grant is not renewed. Barrett said the actual cost
would be closer to $10,000/per dog/per year. The funds then not only
help cover the costs of the canine and the equipment but also picking
up some of the officer’s time devoted to the airport. Barrett said the
grant has already been accepted with three officers in Texas being
trained. If not approved, the City would then need to pick up the
expenses incurred to date. A motion was made and seconded to
approve staff recommendation. The vote was 6 – 1. Gratwick voted
in opposition. He questioned previous action and discussion of this
item. Barrett said there were two actions involved. The first was to
accept the grant, which was approved by the City Council. Secondly,
is accepting and appropriating the funds requiring a first and second
reading. Gratwick asked that the minutes from the previous meetings
at which this was discussed be reviewed.
3. Option Agreement to Purchase Property - Brewer Land Trust
Heitmann explained that the City of Bangor is owner of a parcel of land
in Brewer located on the Brewer side of the former Bangor Dam. The
Brewer Land Trust has expressed an interest in acquiring the land from
the City for use for trails, conservation, recreation and educational
purposes. The purchase price will be the assessed value, $65,000.
The deed will contain restrictions and covenants limiting the use of the
property to trail, conservation, non-commercial recreation, and
educational purposes. This Order will authorize the execution of the
Option Agreement between the City and the Brewer Land Trust.
Responding to Gratwick about the guarantor, Heitmann said the City is
the guarantor in many areas. It’s not an unusual event. Also
responding to Gratwick, Barrett said there are two layers of protection.
First it is going to a land trust which has certain stipulations. Second,
the City has the ability to enforce restrictions. Heitmann said the
ultimate watchdog is the public. Gratwick said he was not familiar with
the City’s jurisdiction outside of the City limits. Gratwick said this needs
to be an ironclad agreement. Heitmann cited previously approved
easements between the City and the Town of Hampden and the City of
Orono. In response to Palmer, Barrett said given the history of efforts
to put a dam, both the City’s efforts through Swift River and then the
Bangor Hydro efforts, it would be highly unlikely that the situation
would allow hydro electric dams to be installed. A motion was made
and seconded to approve staff recommendation by a vote of 4-1. The
item will be forwarded to the full Council.
4. Assessor’s Update
Birch referred to a packet of information which was distributed to
Committee members. The Assessor’s memo is self-explanatory and he
reviewed it briefly. He then turned to personal property and updated
information on the Maine Revenue Services website. Birch also
discussed the upcoming exemption on personal property taxes. This is
a new state law. Barrett said this is concerning the exemption on
st
personal property taxes to go into effect on April 1 of this year. There
are some exceptions and exclusions to that that are not necessarily
self-evident. During the first year there will most likely be confusion
on the part of the business owner as well as some instances whereby
the City will need to make some judgments about what it believes is
exempted from personal property tax and what may not be exempted.
It would be reviewed by the state at that point. Under the Business
Equipment Business Reimbursement Program, Birch said it was the
responsibility of the taxpayer to file the reimbursement request. Under
the new exemption program, it is passed down to the local assessor
which means the Assessing Department has to independently review
every line item on each account and everything purchased after April
1, 2007 may be eligible for exemption. There are 368 accounts
presently that could possibly be eligible for the exemption and make
application for reimbursement. The Assessor still has to evaluate and
tax the personal property, and collect it. Then on a new form for next
year under the reimbursement program the Assessor will have to
declare, along with the Finance Director, to the state the loss of
revenue because of the new exemption and asking the state for
reimbursement. If the state doesn’t reimburse the City would have to
implement the supplemental tax billing process which becomes an
administrative nightmare.
Birch said personal property makes up for 15% of revenues generating
$5M. LD 20 is a phase down of the business tax reimbursement
program which was established in 1995 and will be extended an
additional five years.
To alert business taxpayers in the City, the Assessing Department has
prepared information for the taxpayers drawing their attention to the
new program. Any appeals are subject to the Bangor’s Board of
Assessment Review.
Responding to Gratwick, Birch said some information is provided
electronically. On any reports verifying the exemptions, the City prints
out an assessment review. When the field auditor comes to City Hall,
that individual sometimes spends two days. It is a thorough review
and audit. Barrett said that Birch’s system is highly automated with a
couple of exceptions which includes photographs and sketches.
Gratwick asked about the scale and Birch said excellent is the highest
rating.
When all declaration forms are printed, Birch will provide copies to the
Committee. He also spoke about the change in the veteran’s
exemption amount.
5. Taxpayer Request
Cyr said this involves a taxpayer with property assessment concerns.
The Assessing Department did inspect the property and issued an
abatement for the 2008 taxes. The property has been listed and
assessed as a 12-unit building when it was only 8 units. There were
other concerns in that the property was assessed with nine-foot
ceilings when there were only two or three rooms with that room
height. The owner also cited square footages discrepancies. Heitmann
said that by Statute the Assessor can only abate one year back. The
City Council can go back for a total of three years. The Council can
abate in the case of irregularity, error or illegality of the assessment.
Historically, Cyr said the last one she recalls is an adjustment made for
the Odlin Road movie theater. There is no precedent but based on
each situation. Responding to Palmer, Birch said he would not
recommend any further abatement. Heitmann said that over-
evaluation is not a cause for abatement. The one year abatement
criteria were value factoring components of a structure and when an
adjustment is made that is the full relief that the owner is entitled to.
Palmer said the owner should have known he had challenges over the
past three years. Palmer moved staff recommendation for the one
year abatement only. Blanchette seconded the motion. Councilor
Farrington questioned the error on the assessment and the logic of
how it can be overlooked. He feels it is a wrong that needs to be
righted. Birch cited a State Statute regarding jurisdictional issues that
an owner has to meet when filing for an abatement. It needs to be
filed 185 days of a commitment date. The subject owner did so. The
burden of proof is on the taxpayer when receiving their tax bill.
Valuations are adjusted, recommitted and revalued on an annual basis.
The owner did not challenge the evaluation in the prior three years.
He did question the valuation in September of 2007 when the
abatement was granted. Cyr pointed out that an error differs from an
overvaluation. Responding to D’Errico, Heitmann said the Statute was
most likely put in place to maintain fiscal responsibility. Farrington
said he can accept the laws in place but the heart of his concern is
with the fairness of the regulation. Birch said the law is in effect to
prevent him from coming before the Council with continuous
applications for abatement and showing favoritism for an individual
property owner. Blanchette said in defense of the fairness of the law,
for someone to pay taxes for what they didn’t own, it isn’t fair
although it is legal. Property owners are given 185 days to question
their assessment or valuation. This particular owner did not question
three years of back taxes. Responding to D’Errico, Birch said that the
owner has owned the specific property for more than ten years.
Gratwick shares Farrington’s reservations but agrees with Blanchette’s
approach to the situation. The City has to act within structural laws in
place. The motion was approved by a vote of 5-1 with Farrington in
opposition. Farrington asked if the 185 day contract between the City
and the taxpayer is in writing. Birch said it is printed on the tax bill
annually.
6. Order, Amendment to Designated and Undesignated Fund
Balance Policy
Cyr said the policy is slightly outdated and refers to a Maine State
Retirement Reserve. When the MSRS moved to a consolidated plan,
the rates dramatically dropped so money was set aside at that time.
The rates did not increase so over time the reserve has been turned
into a benefit reserve. Staff would like to formally terminate the Maine
State Retirement Reserve and create a Benefit Reserve. It would be
used as a means to save money in years where health insurance costs
are less than anticipated and use it when health insurance costs are
more than anticipated. If approved, staff most likely will return to ask
for approval to move this year’s health savings dollars into the Benefit
Reserve. CIGNA, the City’s new health insurance is on a calendar year
plan rather than a fiscal year plan so staff will need to anticipate rates
six months out. Health insurance would be the primary purpose of the
Benefit Reserve. Farrington said it makes sense and moved staff
recommendation. It was seconded. The item will be forwarded to full
Council. Blanchette asked if there are currently designated fund
balances within the City. Cyr said they are normally set up with an
intended purposes. At any time, the Council can take money from a
designated fund balance for whatever it chooses. Would the Council
be prudent to set a dollar amount on this Benefit Fund, Blanchette
inquired. Cyr said no limitations have been proposed at this time but
in general the City has been very fiscally responsible and does not
have out of control balances in designated fund balance accounts. If a
limitation is set on this, Cyr suggested it should be an amount tied to
the premium cost, not a dollar figure. Stone had recommended that
the fund never exceed 84% of the value of that current year’s health
insurance premium. Farrington asked that this be part of the annual
budget process. Responding to Gratwick, Cyr said that most funds do
not have limitations in place. The largest one is the Workers’ Comp
Fund Balance. Gratwick agreed with Blanchette’s concerns.
Blanchette asked that staff return with different options for limitations
and asked that it be provided for the Council’s full discussion. Cyr will
provide various calculations. The motion received a vote of 5-0.
Committee adjourned at 6:30 p.m.