Loading...
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.