HomeMy WebLinkAbout2008-12-01 Finance Committee Minutes
FINANCE COMMITTEE
December 1, 2008
Minutes
Councilors: Stone, Gratwick, D’Errico, Bronson, Nealley, Wheeler,
Hawes, Palmer
Staff: Cyr, Barrett, Ring, Birch
1. Bids/Purchasing
a. Birch Stream Water Management Plan – James Sewall - $40,000
Cyr noted that there are a number of stormwater regulations implemented by
the EPA. Birch Stream runs through airport property, Airport Mall and Maine
Air National Guard and empties into the Kenduskeag Stream. The
Department of Environmental Protection has identified Birch Street as an
impaired watershed. The City has started water quality studies looking at the
current conditions of the stream. The City is also required to do a watershed
management plan. There is a DEP grant in the amount of $40,000 to
conduct this plan. The City issued a RFP and received 6 responses. A
selection committee reviewed all of the submitted proposals. The selection
committee was made up of the Assistant City Engineer, Environmental
Coordinator, BIA Environmental Officer, a DEP official, folks from Maine Air
National Guard as well as stakeholders. All unanimously chose Sewall as
having the best plan in place for Birch Street. In response to Gratwick, Ring
said the goal of the plan is to come up with a number of steps and a process
to implement those steps with the objective of obtaining the designated
water quality standard. The City has 5 impaired streams. A plan is already
being put together for the Penjajawoc Stream.
A motion was made and seconded to approve staff’s recommendation.
2. Assessor’s Update
Birch noted that Council Chair Palmer had requested an update on the City’s
valuation. In preparation, he had provided a memo with attached information
in the Committee’s agenda packet. He referred to the Office of the Federal
Housing Enterprise Oversight, a website he uses to provide statistical
indicators of how the housing trends are changing nationally. In March 2008,
the Federal Housing Enterprise Oversight began tracking on a monthly basis
home price valuations. He noted that since the City’s April 1st assessment
date, the data shows a flow of downtward trends. He had also provided
news releases that documented the trends. The City set its valuations and
has heard from Bangor taxpayers questioning their valuations. Three
individuals have met with the Assessing Office. Referencing the bar graph
information, Wheeler asked if each increase represent an increase over the
previous year or is there a base. Birch indicated there is a base. The
tracking is done on a 12-month basis and also the previous quarter. Birch
reviewed information on New England States and an overview of where
Maine stands nationally: Maine is at 2.2%; New Hampshire is 2.1%; Vermont
is 1.8%, Massachusetts 2.9%, Rhode Island is a minus 4.8%, and
Connecticut 1.9%. New England census information ending in June shows
that it is down 1.97%. How well does Bangor fit in with other areas of
Maine? He provided information indicating that Portland, South Portland and
rd
Biddeford area is rated nationally 123 and are seeing a .96% appreciation
with a negative 1.74%. Bangor is 4.61% appreciation for the first six months
of 2008. Lewiston is 1.19%. In October 2008, Maine Real Estate Information
Systems indicated that 928 changed hands during the month of September
2008 compared to September 2007 of 1,028. A national medium sales price
of $190,000 was reported, an 8.6% decline over the past twelve years.
Birch is concerned with Penobscot County and reviewed information
indicating that in 2007 there were 400 transactions and in 2008 there were
317. He has spoken with several realtors and they are aware of the
downward turn in activity but they are satisfied that the medium sales price is
only down 2.76%. The volume is down but the overall numbers are not as
drastically off as what individuals might think.
Maine Revenue Services performs state valuations annually. It is a mandate
by property tax law. It is a report card essentially. Bangor was rated very
well on its record keeping of all administrative tasks. Dealing with report of
assessment review, gives a three year comparison of state valuations and
shows 2007-2009. In 2009 the state valuation is $2,377,800. He noted that
a combined sales ratio of 91% is important – an indication that for next year
Bangor can probably get by without making adjustments on residential or
commercial property citywide. By holding valuations, all of the exemptions
will still be entitled to the full face value of those exemptions without making
other alterations of adjustments. If the combined sales ratio was less than
90%, Birch would be forced to make annual adjustments.
Birch has asked Phil Drew of his staff to extend Bangor’s sales ratio to the
current date and by doing so it provides an indication that Bangor is at 93%.
Tracking all transaction to most recent date the valuations are at 93% of
market value. No adjustments will be necessary on single family residential,
mobile homes and condo units. The commercial property ratio gives an
indication that Bangor is a bit high at 102%. There might be some downtown
adjustments. He would need to extract all of the multi-family units of five or
more to provide a better median ratio.
Birch noted that the impact of foreclosures and tightening credit conditions
weighted heavily on home prices in the third period. It is a national indicator
and not so relevant for New England. Bangor is at 2.3% appreciation.
Lewiston-Auburn is 3.43%.
Talking about foreclosures, Birch noted that foreclosures in Maine rose from
166 in total to 177 from the prior quarter out of 86,666 mortgages.
Birch said that Bangor Gas has filed for an abatement of their FY09 taxes.
Their assessment is $7.8M. He will keep the Council updated on the status.
Responding to Stone, Barrett said although the real estate market has slowed
down there is still some residential construction in progress as well as newly
approved subdivisions. Palmer suggested that media packages be put
together after the holidays so that taxpayers locally can start thinking about
the process. Birch mentioned that State’s subsidy for Bangor Schools is
decreasing which equates to approximately $27M in valuation. The racino
will generate the most new valuation. The City has not yet picked up the
hospitality’s personal property or the racino’s personal property equipment.
st
On April 1, there was roughly $78M in valuation for that property. Stone
spoke about new federal rules to encourage banks to deal with homeowners
rather than foreclosure. He asked if Bangor should have a meeting at the
Civic Center with local banks explaining the rules and options for local
homeowners. Barrett said that Bangor doesn’t see as large a problem in
Maine with foreclosures. He said it is difficult to quantify a number and who
homeowners have as their mortgagee. Barrett said he would anticipate
something from the new administration in January that would specifically
address the mortgage crisis. Stone suggested that the idea be revisited in
April of 2009. Following up on this thought, Wheeler asked if it would be
possible to send a letter to Bangor taxpayers with pertinent information. Birch
said there are approximately 5,000 tax accounts. Gratwick talked about the
Homestead Exemptions. Barrett said that constitutionally the state is
required to reimburse municipalities for 50% of any revenues lost due to
state exemptions. The state is frequently late in payments. Responding to
Gratwick, Birch said that by statutory provisions, assessors have legal
assessments in a range of 90% to 110%. Bangor tries to be the same ratio
for all classes of property. Nealley asked if it would be possible before
budget session to have Birch return to the Committee regarding the
Hollywood Slots valuation. Cyr said she has the real estate information but
until the company files its declarations the City will not have the personal
property piece.
3. Current Year Revenue Status
Barrett said that through October the City had collected 67.2% of its property
tax levy for the year compared to 68.5% last year. Over the last several
years, the City has annually collected over 100% of the tax levy. A certain
percentage of the current taxes are collected plus delinquent taxes in any
given year. That percentage has been declining a bit over the past two or
three years and last year it was at 101%. For the coming year at the end of
June, he anticipates a collection rate that starts with 99 instead of 101. When
that takes place, there are two options. If there is an overlay leftover, under
collection gets covered by the overlay. If overlay has been used, it goes
against fund balance just as an increase goes to fund balance.
The City’s auto excise is up 6.3% for the first four months of the fiscal year.
It is somewhat misleading. There are a number of rental cars registered in
Bangor. It is a requirement of their operating concessions at BIA. Last year,
there were not as many. If rental cars are taken out of the equation, the
auto excise still had a 2% growth for the first four months. Although new car
sales are down, the value of the new cars being purchased is up. There has
been an absolute increase in the number of vehicles being registered. The
Census Bureau reports that Bangor’s population last year increased by about
700. The trend will most likely, however, not continue.
If sufficient signatures are received, on next November’s ballot there will be a
referendum question pertaining to reduce auto excise taxes by approximately
40%. If adopted by the voters, it could go into effect during that fiscal year.
It would affect Bangor by approximately $2M.
Barrett discussed revenue sharing indicating that Bangor is up by about 6%
this year. Part of the reason is that Bangor’s percentage of the revenue
sharing increased from 3.2% last year to 3.3% this year. Cyr noted that the
State’s estimates are significantly higher than what Bangor budgets. Revenue
sharing I is the original basic revenue sharing formula, and there is revenue
sharing II, which goes to high mil rate communities. It is a separate pot of
money in the revenue sharing formula. The state projected that Bangor will
receive $1.5M in revenue sharing II this year. Looking at next year as state
income and sales taxes come down, the formula protects revenue sharing I.
Any reductions in revenue sharing are likely to come out of revenue sharing
II. State Aid to Education has lost $531,000 for this year and there is
concern that next year’s amount will be significantly higher. In the past 4-5
years, there has been significant growth in Aid to Education which has helped
bring down the mil rate for schools. That support is not likely to be in place
next year.
So far, other revenue sources look like they are doing okay with the
exception of recycling. The bottom is falling out of the recycling market to
the point where some communities are paying for processing of some
commodities. Glass and tin actually have a negative value. Anticipated
revenues for the coming year have been cut back for Bangor because it was
anticipated that Pine Tree would be setting up a recycling operation in Old
Town, which has not yet taken place. There should be a sufficient cushion
for this year.
Barrett stated that next year’s budget will be difficult.
Nealley asked about the amount of monies accumulated for the arena and
what monies from that project are not dedicated. Cyr said it is all part of the
Downtown TIF District and are dedicated to projects within that District. In
response to Nealley, Barrett said that the TIF for the downtown would allow
for using some of the TIF revenues for the arena; however, there are a lot of
demands on those funds. For example, it’s being used for major maintenance
on the Pickering Square Parking garage, replacing the Columbia Street Deck,
waterfront, and has also been looked at for a portion of replacing the barns
at the racetrack. Some of what it is being used would otherwise have to be
paid for by the general fund. Nealley asked for an update regarding the
racino fund at the upcoming Finance Committee meeting. Cyr said she would
e-mail Councilors a spreadsheet with the information. Wheeler asked if the
retails sales at this period of the year be used as a bell weather for projected
retail sales over the remainder of the year. Cyr didn’t think so with the
already low cost sales at retail outlets. Palmer suggested that Government
Operations Committee discuss safety issues and crowd crush at big box
stores in light of the recent facility in another state. Stone asked about fuel
budgeting for City vehicles. Cyr said the money is still sitting in those
budgeted line items. It has not been spent nor redirected. She suggested
getting through December, January and February and then look at the
calculation of savings.
4. Fixed Price Contract for Electrical Supply at the Police Station
Cyr noted that this item was not on the original agenda. At the last
committee meeting, a discussion of a fixed price contract took place for
electrical supply at the new Police Station. The committee authorized staff to
go ahead with the fixed price. At the same time, Cyr asked the provider if
there was anyway for the City to extend the contracts currently in place,
specifically on its medium service accounts. All medium service accounts
have a contract that runs through December of 2009 at a rate of 9.72 cents
per kilowatt hour. She asked about a fixed price through 2011 and was told
that it is possible. She received the actual pricing this afternoon. There is an
option of entering into a contract for one year which would go from 2009-
2010 at 9.35 cents per kilowatt hour or going for two years through 2011 at
9.04 cents. Staff recommended the contract going through 2011. A motion
was made and seconded to approve staff’s recommendation.