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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.