HomeMy WebLinkAbout2007-11-05 Finance Committee Minutes
FINANCE COMMITTEE
November 5, 2007
Minutes
Council Attendance: Stone, Farrington, D’Errico, Hawes, Greene
Staff Attendance: Birch, Ryan, Farrar, Wardwell, McKay, Cyr
Others: Nelson Durgin, Clif Eames, Phil Bennett, Ken Huhn
Committee Chair Stone indicated that the agenda items would be taken out of
order. Item 3 will be discussed after the Consent Agenda.
1. Consent Agenda
Councilor Hawes made a motion to move the Consent Agenda items with the
exception of Item b. The motion was seconded. Item b. was tabled.
a. Quitclaim Deed – Carusi – 996 State Street
b. Quitclaim Deed – Gray – 45 Merrimac Street
c. Quitclaim Deed – Brown – 110 Pearl Street
d. Resolve 07-334, Appropriating Grant for District Tobacco Specialist
e. Resolve 07-335, Appropriating Shelter Plus Care Grant
3. BNRC – Update and Bond Order
Cyr referred to the memo provided with the committee’s agenda. She also
noted that she serves as a Board member on the Bangor Nursing and
Rehabilitation Center. As background, she noted that the City previously
owned the Nursing Facility. At times it required a significant City subsidy to
keep the facility running and in 2000 the Council determined it was best not
to continue operating the facility under a municipality. It was spun off into a
501C3 non-profit beginning January 1, 2001. Part of the transition included a
Master Transaction Agreement that defined the rights and responsibilities of
both parties. Part of that agreement was the City’s responsibility to provide
$2,250,000 funding for capital issues relating to the physical plant. The City
was well aware that the building had not had any maintenance and update
for a number of years. A study was performed by Carpenter and Associates
to identify all of the areas needing attention. She noted that it has been over
a year since BNRC has provided an operational update to the Council. She
introduced the Facility’s new administrator, Phil Bennett, who was hired in
May of this year. BNRC struggles with keeping an administrator as a
standalone 61 bed facility. She spoke about the complexities of the
Medicare/Medicaid reimbursement issues. It was too much for one person.
To that end, BNRC met with consultants and entered into an agreement with
North Country Associates in February of 2007 to provide back office support.
North Country is a leader in healthcare management. The combination of
the new administrator and North Country has proven beneficial to BRNC.
Nelson Durgin is the present President of BNRC, as well as Ken Huhn and Clif
Eames, past presidents were in attendance. Durgin said that in 2001 the
BNRC Board was faced with not only maintenance of the level of care but
attempting to turn around the financial end. The rehabilitation portion of the
facility has been expanded and it is funded through the Medicare program
and has provided a stable base. There are 30-35 long-term care beds for
primarily clients who are served by the Medicaid. The current Medicaid rate
set by the state is approximately $28/day under the cost of delivering that
care. In order to break even, the facility needs to do more in the
rehabilitation field. A number of medical practices in the community are
sending patients to BNRC. The City Hospital opened in the mid-60’s and the
City acquired the property in 1970-71 and moved to Texas Avenue at that
time from Main Street. Durgin indicated that the following projects have
been undertaken: the heating system, the ventilation system, a sprinkler
system. All will bring the facility in compliance with state code. He spoke
about current roof problems. Deterioration is widespread. The Board has
worked with various consultants and roofing companies regarding the needed
repairs. He mentioned that discontinuation of rumors that the facility will
close have ceased and has provided good news for the facility. The fiscal
quarter ending in September is the first quarter since BNRC’s take over that
there has been a black bottom line. It’s beginning to come back financially.
Cyr said that under the Master Transaction Agreement the City does have a
responsibility to provide money for needed repairs to the facility and will
require a bond order of $600,000, she estimates. It would appear for first
reading on the upcoming City Council meeting with a vote at the second
meeting in November. The Board has used the competitive bid process for
this work. Part of the roofing will be done this fall and in the spring the
portion over the Health and Welfare section of the building will be addressed.
The bonds will not be issued until the needs arise. Thus far, the City has
contributed about $850,000 to the facility’s physical plant improvements.
Farrington asked if the roof is a surprise. Durgin said not totally but it was the
serious deterioration that caused the surprise. Responding to Farrington,
Huhn talked about the boiler replacement and at that time another step was
found that needed to be done with asbestos abatement and then the roof.
The Carpenter report indicated that all of these items needed to be taken
care of regardless. The roof is 40 years old. Cyr said the roof would have
lasted throughout the winter but roofers are not busy at this time of the year
and it seemed prudent to take care of it now. It is good to take advantage of
market conditions at this point in time. Farrington asked what the dollars in
the black will be used for. Durgin said it could be used to replace more of the
equipment that is in need of replacement; i.e. beds, interior work, painting,
etc. Bennett recently provided a capital outlay list for the Board’s
consideration. Huhn said there are three or four major items expected every
30-40 years. Otherwise, the building is from the military and it was well
constructed. He doesn’t foresee further surprises for years to come. D’Errico
said the building was transferred to the City at no cost.
Stone said if the City still owned the building it would have to expend the
money regardless. Responding to Stone, Cyr said in her opinion the City is
saving money by turning the facility over to the BNRC. She didn’t feel the
City would be suited to run a facility that is industry-specific.
A motion was made and seconded to approve staff’s recommendation to the
full Council.
2. Bids/Purchasing
a. Sweeper Brooms – Fleet Maintenance/Airport – United Rotary
Brush - $26,164
Cyr said this is an estimated annual quantity purchase in the amount
of $26,164. There were 5 respondents to the bid request. United
Rotary Brush is the current vendor. A motion was made and seconded
to approve staff recommendation. Stone asked about shipping costs
involved. Cyr said she will check into it but she thinks it is part of
Dawes’ normal practice to look at a total cost basis.
b. Photocopier – Central Services – Ikon - $113,190
Cyr said the City operates its own print shop. There are currently two
copies in the Central Services Division and both contracts are up for
renewal. One is a color copier and the other a black/white one. The
City bid for one photocopier to replace the two units. The equipment is
heavily used. The bid requested a lease rate as well as a lease/
purchase rate. 13 responses were received. Walter Ryan of Central
Services reviewed all to see if the bids met specifications. There were
only 4 that did so. Over a five-year life period, it became apparent
that it was prudent to lease the equipment. Based upon last year’s
number of color and black/white copies made, an estimated five-year
cost of $113,000 for the Ikon machine. A motion was made and
seconded to approve staff’s recommendation to full Council. Greene
asked about a specific printing unit but Ryan indicated it would be too
small for the City’s needs. Responding to D’Errico, Cyr said it will be
included in each budget year. Stone asked about minimizing
photocopying. Barrett said internally the City has gone more to
e-mailing documents rather than photocopying. All departments are
charged for their printing. Responding to Stone, Ryan does question
requests for color copies. Barrett said there are times that extra
copies are provided. The City staff sends out much more information
by e-mail to City Councilors as well. Stone questioned prices provided
by Transco. Ryan explained that there was a lease price included but
it also required that the machine be purchased in the end.
c. Uniforms – Fleet Main/BAT/Bass Park – Unifirst - $10,043
Cyr said the uniforms are rented. A motion was made and seconded
to approve staff recommendation.
d. Metal Castings – Public Works/WWTP – Gagne Precast - $36,162
This item was tabled.
e. Catchbasin Concrete Components – Public Works/WWTP – Gagne
Precast - $39,198
Based on the annual quantity needed, staff recommended Gagne
Precast. These are project-specific items for sewer and street work.
Wardwell said the majority used by Public Works are funded under the
street paving program. A motion was made and seconded to approve
staff recommendation.
4. Assessor’s Update
Birch provided historical information from a year ago August with the current
information. In August 2006, depreciation for the City was 9.777% and this
year it is 3.2%. The overall valuations for Bangor are appreciating at a
slower rate. Using the Office of the Federal Housing Price Index Oversight
as a resource for the past five years, he provided the latest information which
previously provided to the Committee. Maine’s overall depreciation is 3.54%
for the past year. Portland and South Portland’s is at 2.47%. Lewiston-
Auburn is at 4.41%. Each year, the Assessor comes to the Council with
information showing how much Bangor has slipped from the 100%. Last
year it was 84%, Assessing came to the Council adjustments trending up to
93%. Looking at a new period of study, Assessing staff came up with a new
report indicating starting overall ratios is 91%. Birch said it could possibly
mean a 5% increase for next year. He referred to materials from the
National Association of Home Builders website. It provides an overview of
what is happening in the industry. Bangor hasn’t seen the drastic upswings
and downswings as in the past. In general, Bangor and Maine are not
suffering declines as in other parts of the nation. He referred to information
which was a current inventory of condo and new homes with location and
price range. He provided copies of information with current sales of homes in
Bangor. They are actual recent sales as of October 3, 2007. He also
provided a handout with current listing of properties which indicates that
assessments are 15% out of line when comparing the listing price to the
assessment value. Responding Stone, Barrett said generally speaking what
happens in Bangor lags behind what happens in Southern Maine. The
housing market has started to slow down and could potentially see more for
the next 10-12 months. There is a cushion because Bangor is 93% of full
market value. In terms of how this affects the City’s budget, Barrett
explained that the City has to operate under LD 1, which limits the tax rate
assessment to an increased based on (1) new property added to the tax rolls
and new construction and (2) the statewide 10 year average growth in real
income and that is adjusted for inflation. It has been running at 2.5%
approximately. Assuming all other revenue sources remain the same, the tax
assessment could be increased by the same percentage as we added new
property value and have no effect on the tax rate. If the City increased by
new property plus the 2.5% for income growth, that 2.5% would then be an
increase in property taxes which could exceed the growth in the value of the
property. The other factor involved is what is happening in the commercial
real estate market detailing with retail and industrial properties. If these
grow faster in value than residential, then there will be a shift so that the
industrial commercial retail sector will pick up a percentage of the tax rate.
Barrett about the personal property tax repeal which will be implemented
next year whereby new personal property purchased between April 1 of 2007
and April 1 of 2008 for many businesses will no longer be taxable. The City
will lose the tax base in that area. Generally speaking, if all other revenue
sources remain the same the property tax assessment can be increased equal
to the amount of growth in new taxable value without impacting the average
property tax payment made by an individual. Stone talked with Birch about
the neighborhood meetings. Birch said one was conducted at Willow Brook
Run, a condominium project. The three attendees were appreciative of the
City’s time and effort and have a good understanding of how the process
works. Even though property has not been updated or improved the City is
making annual adjustments to keep pace with the market. Sales activity in
the neighborhood raises the assessment.
5. Executive Session – Hardship Abatement – 36 MRSA Section
841(2)
A motion was made and seconded to move into executive session.
6. Open Session – Hardship Abatement Decision
A motion was made and seconded to approve staff recommendation.