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HomeMy WebLinkAbout2007-10-04 Finance Committee Minutes FINANCE COMMITTEE Thursday, October 4, 2007 Minutes Councilor Attendance: Stone, Blanchette, D’Errico, Farrington (voting) Staff Attendance: Cyr, Dawes, Moore, Heitmann, Hupp, Masters, Little, Wardwell, McKay, Ervin Others: Councilor Palmer, Cedar Homes, Nick Bearce 1. Consent Agenda A motion was made and seconded to approve the Consent Agenda. The vote was 4-0. a. Purchase of Used Vehicles 2. Bids/Purchasing a. Sodium Chloride – Public Works – International Salt - $292,550 Last year, Cyr said the City started working with PVCOG and their cooperative purchasing program. PVCOG went out to bid for rock salt and received a quote of $58.51/ton. Staff recommended that the City piggyback on the PVCOG bid and award the contract to International Salt for the upcoming year. Cyr pointed out that staff at first felt the price per ton was high and then bid it out on their own. The prices received by the City were higher. Blanchette questioned why the prices have risen. In speaking with International Salt, Wardwell was told the price is affected by the cost of shipping/freight. There is a shortage of container ships that haul this type of material. He noted that the price of salt has been fairly stable. Responding to Stone, Cyr said the entire amount is not purchased all at one time. The $292,500 is the estimated price for the upcoming year. A motion was made and seconded to recommend approval to the full City Council. The vote was 4-0. b. ¾ Ton Pickup Truck – WWTP – Darling’s Ford - $26,562 Cyr noted that this purchase is part of the budget process. It will replace an approximately 10 year old truck with significant mileage. It is used to plow the WWTP yard and all of the pump stations as well as to carry equipment to and from the stations. The price includes adding the necessary plow unit. The vehicle has an odd tailgate needed to transport equipment and, therefore, the City did not look for a used vehicle. A motion was made and seconded to approve staff recommendation by a 4-0 vote. c. Front End Loader – Motor Pool – Nortrax - $165,400 Cyr noted that this item is part of the annual Fleet Maintenance Replacement Program. The current loader has been used by the City for 5 years. It is part of the life cycling costing. The City purchases the equipment and the vendor agrees to buy it back in five years if the City chooses to turn it in for a set price. Also the vendor is required to provide a maximum cost of repairs during the five year period. The five year period is up on the current equipment and the staff is looking to purchase a new loader. Nortrax is the low responsive bidder. There were other lower dollar cost bidders but they did not meet bid specifications. Nortrax has guaranteed that maximum repair costs will not exceed $1,500 in the five-year period and Nortrax will buy the equipment back at the end of five years at the price of $70,500. Responding to Farrington, Dawes said the city will be keeping the current loader as a back-up unit. A motion was made and seconded to approve staff recommendation to full Council. The vote was 4-0. d. Aircraft Air Start Unit – Airport – TLD America - $163,347 As part of the budget process, Airport staff identified the need to replace one of its deicing trucks. $290,000 was budgeted. In talking with GSE staff, it became apparent that what they really needed was an air start unit. The current unit is 30 plus years old. Bids were issued and two received. Hupp detailed the workings of an air start unit. She noted that the Airport did purchase one deicing truck last year and they have two older trucks. In answer to Farrington, Hupp said the $163,347 includes shipping. Blanchette asked if the airlines are charged to use this unit. Hupp said yes, on an hourly rate. She said the unit is required in order for airlines to use BIA. She said she could check back to see how many times it is used during a year’s time and the prices charged. Blanchette questioned the payback. Hupp said it is a long payback as the equipment is kept for 30 plus years. Stone asked if there are a limited number of vendors and Hupp said yes as it is a highly specialized piece of equipment. A motion was made and seconded to approve staff recommendation to full Council. The vote was 4-0. e. Marketing & Advertising Services – Airport – Paradise Back in 1999-2000, Hupp said that the Airport did a request for proposals for an advertising agency. That contract has now expired and the Airport has been on a month to month contract for some time. One of the new Marketing Manager’s tasks was to issue a RFP for a new advertising and marketing agency. A committee was put in place to review the proposals, and it consisted of Councilor D’Errico, Finance Director Deb Cyr, Assistant Airport Director Tony Caruso, Marketing Manager Risteen Masters, and Community & Economic Director Rod McKay. It was a lengthy, three phase process. There were 14 responses received and the top 6 proposers were invited for interviews to do presentations and then it was narrowed down to three for work sessions and then the final two were requested to do financial planning. The Committee recommended Paradise as they were the most qualified and the best priced. Cedar Hames, president and owner of Paradise, was introduced. Hames said that Parardise is a specialist in tourism, destination marketing, economic development and especially airport marketing. He listed several airports with which his company currently works. His company does public relations marketing in print, by television, by website, etc. Masters said the agency has 18 fulltime employees, 4 part-time and billings are currently around $15M. She spoke of the airport and destination marketing qualifications of Paradise. They are also very research oriented. She noted that each committee member did an independent ranking of the proposals and then those rankings were turned in for a cumulative ranking. Blanchette asked what Hames perceives to be BIA’s weak points and strengths in advertising and promotion. Hames said there are many different areas to focus on and some more profitable. General Aviation is a small percentage but very lucrative. Nothing brings fast results but GA should be stimulated fairly quickly. Paradise has partnerships with airlines and he feels that will be beneficial to Bangor. Hames indicated that his company has been able to facilitate low cost airlines for some of their other airport clients. Farrington asked about Paradise’s clientele being mainly in Florida. He noted that he is very interested in the destination clients and how Paradise can sell the destination of coming to Bangor. Hames said he handles several Florida airports as well as Bermuda. Paradise needs to move outside of the state of Florida, said Hames. BIA has a wonderful product in place and more individuals need to be made aware of it. Farrington asked if Hames has contacted the American Cruise Line, which ports in Bangor. Hames said it has been discussed and Paradise has cruise ship experience and would like to pursue this opportunity. Paradise will become a big part of the community, if chosen. The company also gives back to the community. D’Errico said he was impressed from day one with the airport experience of Paradise. Paradise knows the business and can see where BIA fits in the world of aviation. He stated that he is looking for more than pictures and newspaper ads from an advertising firm. Stone spoke how Paradise will get beyond the fact of ‘being from away’ and asked for a definition of partnerships. At the end of the contract period, if Paradise is successful, Stone asked Hames how he would measure the success. Hames said he ran for a state office, and Paradise works with four different counties, and all would provide references. All things being equal, the local business should be used but things are not equal. He again spoke about the company’s community involvement. Regarding partnerships, there are several different ways. He provided an example of working with the St. Petersburg International Airport. Paradise worked with the local convention and visitor bureau and also worked with some of the airlines and an attraction. The bottom line is that the airport was receiving a 600% return on their investment. He also spoke of their success in attracting Jet Blue to Bermuda. With most clients being governmental agencies, they are very accountable. Paradise looks at independent research each month, at the inquiries and responses from marketing, look at reports routinely and the final analysis is the BED Tax – either they came or they didn’t. Headcount would be a specific measurement. Paradise has the knowledge and experience to put together a program that will ultimately make a difference. Stone asked Hupp to come back to the Committee in the 4-6 weeks with what her matrix will be for measured results. Hupp agreed and said that some of the information will be forthcoming at the Special Airport Strategic Issues th Committee meeting on October 30. A motion was made and seconded to nd approve staff’s recommendation to the full Council at its October 22 meeting by a 4-0 vote. 3. Appropriating Funds to Garland St Reserve Ervin said he would like the Council, on behalf of the Bangor School Department, transfer $200,000 to a reserve fund for the Garland Street Field. It is for renovation purposes. The Field receives heavy use, the condition of the field and the stands themselves require attention. Bearce, a citizen of Bangor, addressed the Committee. He spoke about his attendance at the School Board meeting where this item was originally presented. Bearce questioned the alternative uses of this money. Bearce suggested that the Council send this item back to the School Committee to look at alternatives. Ervin said it was his recommendation to the School Committee that this money be put in a reserve because of the circumstance involving the Field. The School Committee discussed, deliberated and approved it. The School Committee does not necessarily approve an action just because the Superintendent has recommended it. D’Errico asked if there is a budget for the Garland Street Field for certain levels of maintenance. Ervin replied yes. The overall budget for the Garland Street Field is $92,500. It is an aging and deteriorating facility. Responding to D’Errico, Ervin said there are three sources of funds: Medicare reimbursement ($60,000); Financial Impact Aid Money ($30,000); unanticipated additional high school tuition $110,000). Responding to Farrington, additional funds fall to the respective bottom line whether it is the school or the city. The school has a fund balance just like the City’s. Farrington asked how many reserves are set up within the school budget. Cyr said that state law does not allow schools to have reserve accounts. They have fund balance period. That’s why the City is being requested to hold this money in a reserve as municipalities are allowed reserves. In response to Farrington, Cyr explained that reserves are not part of the operating budget process but are part of the capital budget process. Farrington asked if the Garland Street Fund could be tapped for other sources within the School Department. Cyr said yes. Farrington agreed with the reserve concept. Ervin said he would like to reiterate that these monies are being designated for a specific purpose that is anticipated. Bearce said he understands the reserve situation but again asked for alternatives. Given that, he assumes that no other place in the school system is in need of repair. Ervin said he didn’t think this was an appropriate venue for the discussion. In the annual budget preparation, an exhaustive maintenance analysis is completed. Blanchette asked at what point in time did Ervin realize there was $110,000 in unanticipated revenue. Ervin said when budgeting is put together for the first week in April for the Council, they are looking at revenues up to that point and estimating what might be available. High school revenues are not budgeted to be exact and he budgets conservatively at 165-175 tuition students. Some of that money will be put towards the next year’s budget. It is $7,300/student. Ervin said the projection was made in April. Blanchette asked the rate paid by John Bapst to use the Garland Street Field. Ervin said it is approximately $9,000/each year. Blanchette asked if that was the going rate. Ervin said he wasn’t certain but that the Bangor School Department wants to be good neighbors. Blanchette said she couldn’t afford to be good neighbors with private schools. Ervin said the rate has increased over time. He thinks it is adjusted annually. Responding to Blanchette, Cyr said the Garland Street Reserve is over $100,000. She didn’t have the exact amount. Blanchette asked why it hasn’t been used. Cyr said that historically reserves are usually in place for capital purposes, and not for annual maintenance. Blanchette said it is never cheaper to delay maintenance repairs in order to keep the bottom budget line down. She said she wanted to look at the $100,000 balance. Ervin said he appreciated Blanchette’s comments. He wanted to assure the Council that the field has been taken care of and is in good shape. They have spent $18,000 to work on the wood seats, they spend $60,000 annually to maintain the field, and each fall there is plumbing work that is taken care of. It is an old facility, however, eventually, it will have to be taken care of. He stressed that the money is a capital reserve, not a maintenance account. Blanchette said she understands Ervin’s comments but she still has a problem with the $200,000 reserve when the School Committee came before the Council asking for additional money to meet the Essential Services Program mandates. She spoke about the idea of abolishing Garland Street Field and using the Union Street complex or the University of Maine’s. If this money was not placed in a reserve, Stone asked what impact it would have on the school budget. Ervin said it goes into an undesignated balance. Cyr said the School Department could chose to use it otherwise. To transfer the money into a reserve will require Council action. D’Errico asked if a plan with a budget is in place for the future of the Field. Ervin said no, at this point, but there are several things under consideration. Assuming the reserve is set up and then next year the School Department asks for additional funds, can the Council say no but agree to take it out of this reserve. In general, Cyr said yes but she wasn’t certain of the order for the process. Blanchette said she would be more comfortable with this if there was a plan on the table. Putting $200,000 of taxpayer dollars into a reserve that is funding a pig in a poke causes her concern. The School Committee has the capability and the responsibility to provide a plan with an approximate dollar figure to the City, she said. A motion was made and seconded to approve setting up the Garland Street Reserve by a 3-1 vote. Councilor Blanchette opposed. The motion included a nd recommendation to move the item to the October 22 Council meeting. Ervin was asked to return to the next Finance Committee to provide further insight into the long term plans. Ervin said he could provide the information now but he was not certain he would reach the level which the Committee wants at this time. There are three areas: field, lights, stands. He stressed it was very difficult to place a monetary value on the Field. Artificial turf would approximate $400,000. Farrington said he is bothered by whether the Council should be involved with the nitty-gritty detail of the school projects. The Council does not have a line item veto due to State laws. He does support the reserve. Cyr clarified that it was the Committee’s intention to th move this item to the next Council meeting (October 10). 4. Request for Use of City Vehicle This item was at the request of Councilor Palmer. Heitmann spoke about this issue as it relates to the City’s Ethics ordinance and to Councilor Palmer as a Councilor and as an employee representing third parties interest’s agencies. The rule is that this individual does not come before a board if the individual is a City Councilor or employee. The ordinance states that nothing shall prohibit any City employee appearing as a witness when called by a party (committee) to answer questions. Heitmann said it was appropriate for Palmer to be in attendance to answer questions about the request and proposed use of City equipment and personnel. Palmer, 718 Hammond Street, addressed the Committee representing the Al Brady Gang event. It is a large event to help remember Bangor’s history and a fundraiser for Northeast CONTACT. After 70 years, the events of 1937 will be re-enacted. There are three parts to the event: a parade down Main Street, a re- enactment on Central Street, and a bluegrass festival as well as swing dance on Central Street. Walter R. Walsh was an FBI agent in 1937 involved with the Brady event and he will be attending the upcoming commemorative events. Mr. Walsh is now 100 years of age and wishes to speak on Sunday. Palmer needs transportation to accommodate the Walsh family (10-12 individuals). He requested use of the Airport’s van. He noted that the same van had been used a week prior by a City Councilor’s wife and other activists involved with the environment. Since the City will be welcoming and recognizing Mr. Walsh, Palmer thought it would be appropriate to have the City van for this purpose. It is not to benefit him personally. Stone asked Heitmann for the City’s perspective. Heitmann referred to Cyr. She said that when the City first heard of the request that staff looked to see what type of policies were in place for such a request. The City does provide a number of services for any number of non-profit organizations and/or events occurring in our City. Various City departments have played a role in this upcoming event. To her knowledge, Cyr said she has no knowledge of a previous request for use of City equipment in this manner. This request does fall under support of a non-profit. When the City supports non-profits, it does it through the dedication of staff time, through the non-profit funding policy, and as part of the budget process. So this request was outside of any previously set up process. She expressed concern about bringing in City employees to work for the purpose of non-City related business, concerns regarding insurance coverage. The City’s insurance company indicated that if this request was granted that there needed to be a contractual agreement between the City and Northeast CONTACT as well as the entity taking on all liability. She also cited the Ethics Ordinance which Heitmann has previously mentioned. Cyr stated that staff’s goal is to provide all of the information to the Committee for their final recommendation. Palmer stated that he would stay at the meeting to answer question and would then recuse himself while the Committee makes its decision. He did ask about the event he cited whereby a Councilors wife was using a City vehicle. This event led him to believe that there might be a possibility of his use for the Brady re- enactment. He stressed that this event does cross into more than a private, non-profit organization. The event welcomes and honors an individual to Bangor. Blanchette also asked for an explanation of the vehicles use by a Councilor’s wife. Heitmann said that city staff, Jeremy Martin, Wendy Warren, citizens involvement with the Penjajawoc Watershed and working with the DEP and the City walked around the area for about 3 hours so it was a combination of City staff and stakeholders. Heitmann did state that a Councilor’s wife was part of the tour as she is part of the Penjajawoc stakeholder’s group. Farrington expressed concern about making an exception for this event especially since it involves a City Council member. Palmer stated that this event is really City business. He also asked the Committee to closely consider his event/request as opposed to what he saw on Sunday with the use of a city vehicle. Had he not seen that, he frankly wouldn’t have issued his request. He stated that Walsh is a bonafide American hero. D’Errico asked if there are other options. Palmer said he is resourceful and he will find a way at low or no cost. Heitmann said this is the first in his twelve years of employment with the City of a request for City equipment as opposed to using City property. When someone uses City property, land or building, the City requires an agreement which includes indemnification and insurance. Use of Airport equipment would need to be aeronautical related and this is a requirement by the FAA. Heitmann said there is not a separate policy on this issue but there is an Ethics Ordinance. He pointed out the Ethics Ordinance states that the City employees, Councilors, Commissions, Board members shall not be using City property unless it is used in compliance with some policy. NE Contact is an organization that has an employee who is a City employee/City Councilor. He noted that there is a distinction that this Committee could make if it wanted to look at it in this manner. This is an unusual situation, Heitmann said. Blanchette mentioned former Mayor John Rohman’s involvement with the first Folk Festival in Bangor and City buses, equipment were used for that Festival and still are continuing. Heitmann said when the first Festival was in Bangor there was a three or four-way agreement approved by the Council and the City was one of the agreed participants in the Festival with certain obligations on the part of each signing onto the agreement. Blanchette asked how the Airport is reimbursed for the use of their van by the Penjajawoc Stream group. Heitmann said he didn’t know. Blanchette said she would like to have an answer. Hupp said the Penjajawoc tour is very similar because it is an impaired waterway defined by the DEP and is very similar to the process with Birch Stream. She felt that was the connection. Penjajawoc and Birch Stream stakeholders are working together. The City’s Environmental Compliance Officer’s salary is reimbursed from the Airport for her work in connection with Birch Stream. Hupp said she did not have specific information about the use of the van reimbursement. Blanchette said it is a stretch. Heitmann said if Airport equipment is being used for non-aeronautical use the City needs to take a serious look at compensating the Airport for that time. Blanchette asked who was driving the van last Sunday. Hupp didn’t know. She knows it was one of the Airport employees but doesn’t know if it was the employee’s regular work day. Heitmann said last Sunday’s use of the van was an actual City activity. The Marsh/Mall Group was formed by the City even though it involves non-City personnel. Farrington asked if last Sunday’s event was covered under the City’s liability policy. Heitmann said the vehicle would be covered by the City, city employees and Board members would be covered by workers’ comp. Responding to Farrington, Heitmann said he is concerned about liability regarding last Sunday’s event as well as the Brady event in terms of the City van use. Farrington clarified that use of the City’s van for the Brady event would not be covered under the City’s liability. Cyr said the Committee needs to decide whether or not to allow this. If the City approves the use, she suggested that the agreement be signed by NE Contact. She is concerned about future requests coming forth if this one event is allowed use of the van. It could potentially affect the City’s insurance policy rates. Cyr said she understands Councilor Palmer’s request but she struggles with reconciling it with the policy. Blanchette said she wants to see an even playing field across the line. She is very concerned about who was driving the van last Sunday. She thinks the City needs to tighten up its policy and serious look at this issue. Stone said there is a difference between the Penjajawoc group and the Brady event. He agreed that Heitmann should use this opportunity to review the standards, tighten up the policy and return to the committee. A motion was made and seconded to deny the request by a 3-1 vote, Councilor Blanchette in opposition. 5. Outstanding Taxes – 33 Penn Plaza Heitmann said this involves Mr. Kimbler, who is in foreclosure. The outstanding real estates taxes of just over $25,000 was paid by the mortgage holder. They did not pay the personal property tax on the dental equipment of $21,000. The real estate taxes went to lien and had matured. They required a quitclaim deed from the City. The City’s practice is to require payment and then the property is released back. The bank’s attorney is concerned that the bank will be taking a loss. The land and building is assessed at $185,600. It is a condo so there is joint ownership in the parking th lot at $7,830. The outstanding mortgage as of July 16 was $238,000. The bank’s attorney asked if the City would consider a division of the net proceeds of the sale of the personal property at a 25% City and 75% bank. Heitmann noted that if the committee wishes to negotiate this that it needs to go into Executive Session. A motion was made and seconded to move into Executive Session. Heitmann stated it would be MRSA 1 Section 406 (B) – Legal Advice from Counsel. The Committee voted to accept payment of principal in full and to waive the interest on the personal property taxes by a 3-1 votes. Councilor Blanchette in opposition. 6. Excise Tax Policy This item was tabled. 7. Executive Session – Hardship Abatement – 36 MRSA §841(2) A motion was made and seconded to go into Executive Session. 8. Open Session – Hardship Abatement Decision A motion was made and seconded to approve staff’s recommendation.