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HomeMy WebLinkAbout2006-05-15 Finance Committee Minutes , � FINANCE COMMITTEE May 15, 2006 Minutes ' Councilor Attendance:Stone, Farrington, D'Errico, Greene, Palmer, Allen Staff Attendance: Cyr, Barrett, Birch, Olson, Pellegrino, Cammack, � Wardwell, Farrar, Hupp, Assistant Chief Cyr Others: Wayne Mallar, Jim Macleod � i. Bids/Purchasing Stone recognized the upcoming retirement of Dave Pellegrino, the City's Purchasing Agent. Stone applauded Pellegrino for his refreshing integrity. He � stated that Pellegrino has done a super job for the City. a. Signs and Sign Materials— Public Works — 3M Company, Vu►can Signs and � Hall Signs—Three Year Contract A motion was made and seconded to approve staff recommendation. 1 b. Discussion of Fre Department Pick-up As part of last year's budget process, Cyr indicated the Fire Departrnent was granted approval of$35,000 to replace a pick up truck which was 10 plus years � old. Mallar had recenUy noticed the new truck with extra accessories. He questioned the necessity of the extras. He has a problem with appropriating $35,000 for a vehicle and spending only $25,000-27,000. He felt the bidding � process should be more accurate. He asked where the leftover money gces at that point. Cyr explained how capital projects are budgeted. Excess funds are returned to the appropriate reserve account and used to fund future capital ' projects. Mallar questioned the purchase of an e�ra set of tires and of wheels. He indicated that the tires were purchased after the vehicle had been in service for two months. The bid spec cited steel wheels. The wheels purchased � secondhand from Silver's were magnesium. Steel wheels were available from Silver's for $75/each, chrome plated at $90/each and $200/each for magnesium. The Motor Pool has the capability to change tires. Mallar asked why the tires � can't be changed and placed on the rims originally specked for the vehicle. When an extra set of wheels are removed, it creates a storage function. In response to Mallars questions, Cammack referred to his memo when the ' department budgets for equipment is anticipates the item will not come turn-key for service; i.e., radios, striping. Staff estimates a bid price for the basic truck. Cammack said that today is the first time he has been made aware that Silvers has anything available other than what was purchased. When calling Quirk's for � rims, the quote was $235/rim. Silver's was $200/each. More aggressive tread is needed for the truck in the wintertime due to plowing requirements. Cammack said that most vehicles have two sets of wheels for those with studded snow � tires, which are changed in the fall at the station. Palmer confirmed that the amount is $3,000 above the low bid in terms of add-ons. He dcesn't recall this issue ever coming to committee. He asked about the reserve account policy and ■ suggested it might need to be revisited. Barrett said it is almost the normal l� practice when a vehicle is purchased through the bid process that there will be , � � additional expenses associated with fitting out the vehicle for the Ciry's use. For ,' example, if lettering and striping were provided through the dealer, it would be more costly. Barrett said the issues in this situation are basically some amount on the rims and on the snow tires. Palmer said that it is not the only issue. � Barrett said the City's intent on any capital project is to bring it in as far below budget as possible. Palmer appreciated that, however, when an additional expense is expected, it would be nice for the Finance Committee to know that � there might be an additional amount needed. In her opinion, Cyr said the subject $3,000 is an oddity. Bids usually received for vehicle add-ons are for radios and lights. Palmer asked if it translates to other departments. Cyr said it � does apply to construction projects, for example. Barrett said there is usually a contingency built into projects to deal with these issues. Sometimes a project comes in under budget, purchases come in under budget as the City is � estimating costs in January for the budget going into effect in ]uly for products that may not be purchased until the following January. Allen said $35,000 was originally budgeted and it came in below that amount and there are funds � returned to the reserve. While the tires seem to be unique in this situation, she said the tires seem to be a standard feature and asked if this is carried on through other vehicle purchases. Cyr said the Fre and Police Department are � the only departments that woutd require two sets of tires. In the Motor Pool's supply budget, Barrett said there is an annual allowance for tire replacement which would cover worn out tires and also purchasing tires needed for new ' vehicles. The Fre Department carries a budget line item for tire replacement for existing vehicles as they wear out. Allen suggested a notation for future purchases indicating that special tires may be purchased. It would save ' confusion for the Committee. Farrington thanked Mallar for opening the topic. It is a good test of the City's process, which he thinks works very well. He is comfortable with the staf�s handling of the smaller details. Greene also thanked � Mallar and questioned snow tires on magnesium wheels. Palmer agreed with the current process but thinks it needs to allude to possible additional expenses. He would like to know this type of information in a general sense. Palmer wants the ' Committee to be made aware of this information in advance. Cyr said she understands but points out the fad that the City puts out for bids and has everyday expenditures and purchases beyond the bids of which the Committee is , not aware. She agreed that this particular item is different. She doesn't recall such a situation in the past. Mallar referenced the Purchasing guidelines for the purchase of items between $500 and $2,000, which require three phone bids to � be recorded. He asked if this was done for the tires and the wheels. He asked if the Ciry has a blanket purchase of tires. Cammack said the current contract is with Freightliner for tires. Regarding phone quotes for wheels, Cammack is not � certain that a third quote was received but he will check. Mallar pointed out that the two phone bids were for two different items. Responding to Stone, Mallar said he looked at the purchase order from Freightliner and at the specs ordered � for the vehicle and the tire sizes and types are identical. He still asked why the tire had to be purchased. Cammack said he did not have the information before him but he understood from the mechanic that the tires purchased have a more � aggressive tread for winter. Stone asked Cammack to provide a follow up to Cyr who will follow up with Mallar and the Council. Allen said she has no problem � � ! � with the process but suggested a description noting additional items would have been appropriate. Barrett said it is possible. Palmer said it is important that the Fre Department have what they need to allow the department to efficiently � operate. Stone and Palmer were pleased that staff used Silvers used parts. c. Request to Waive Bid Process — Flre— Extrication Equipment � Cammack said this is part of the Homeland Security funding and is part of the package he previously presented to the Committee. He asked that the bid process be waived to allow staff to purchase the equipment from the lowest � bidder. The equipment was the departmenYs hands on favorite. A motion was made and seconded to approve staff recommendation. ' d. Request to Waive Bid Process — Fire— Rust and Corrosion Repair to Fre Engines Cammack provided photos of the equipment in need of repair. Forrest � Auto Body is recommended by staff to do the repairs on Engines 2, 5, and 6. Some of the work on Engine 2 is still covered under warranty and will be taken care of by Pierce. Responding to Farrington, Cammack said some of the � equipment needs immediate repair, especially Engine 5. He said there is still money available with in the Fire DepartmenYs reserve account. Cyr said there is approximately $110,000 that will be requested for that fund during the upcoming ' budget. In response to Greene, Cammack said the area round the doors is the first to corrode. Greene asked if staff had explored preventive maintenance. Cammack said it is usually not the inside that has problems until the outside is in � need. Once a week, the equipment is removed from engine, wiped down and cleaned. Each vehicle is washed daily, and waxed bi-annually. Everything is rust- proofed. It is usually a 10-year period before major work is required on the � equipment. Palmer asked about new technology in the area of preventive maintenance. Cammack is not aware of anything on the market and indicated that rust and corrosion is a similar problem among departments. A motion was ' made and seconded to approve staff recommendation. Prior to the next item, Stone excused Pellegrino from the remaining portion of the � meeting again thanking him for the many years of service. Palmer said that Pellegrino is one of the top municipal Purchasing AgenYs in the state of Maine. Responding to Palmer, Pellegrino spoke about the integrity of the purchasing process. Pellegrino , thanked the Committee for its support of his efforts and that of the Purchasing Department. ' 2. Review Proposed Revised BIA Investment Policy Cyr provided a brief background on this item. On the fixed income side, staff is recommending a change to allow for corporate equities. On the equity side, staff � is suggesting a change the allowable percentage breakdown of the asset classes and to add exchange traded funds, which are similar to mutual funds. Farrington asked if the proportions are checked on a monthly basis by staff or by the Finance Committee. He also asked if quarterly reports are provided. Cyr � said the City relies on the banks to check. Monthly statements are received. Olson meets quarterly with the MacLeod bank, which works under the � � ' investment policy rules. Responding to Farrington, MacLeod said the bank would � make changes on the spot unless any discussion based upon the policy in place. When the policy was drafted regarding stocks, MacLeod said it was relatively conservative. The proposed revisions reflect a more mature policy. D'Errico � asked the amount of money being managed. MacCleod responded $13.9M in fixed income and $800,000 in equity. Stone expressed concern with all of the money being with one company. Cyr said part of the policy aiso states that no � more than 5% of the total equity allocation can be invested in single security. Cyr said that staff will look at Stone's suggestion of having all money with one company during the next bid process. Cyr said it is much more common to have ' , one company managing funds. Farrington said tlie investment policy remains the same whether being managed by one or three companies. Allen said she has no problem with one company. Palmer said he is comfortable with one , vendor. The Committee recommended that the policy be forwarded to the full Council with its recommendation. 3. Update from City Assessor ' Birch reviewed a memo he had previously supplied to the Committee. The City has a favorable rating again this year from the Maine Revenue Service. In � September 2005, the Office of the Federel Housing enterprise oversight agency forecast an appreciation rate of 13.29%for Bangor. Birch said his staff has revised their initial forecast. He pointed out a map with various areas designated , by color. The orange area will have a zero to no more than 4% adjustment which is a portion of Church Road, all of the area in Bangor identified as the rural agricultural area, and a strip along Ohio Street, and beyond Eastem Maine � Medical Center along the river corridor. The yellow area will see an adjustment between 5-10%. The pink area will see an i1-16% adjustment. The purple area is Main to Third Street, on the west side of the City, parts of the area along � Hancock Street, tlie Capehart area and some of the new subdivisions with few numbers than eight sales. He said that for the very first time the City is seeing lesser valued properties being more affordable and the actual bargaining of � valuation placed on the table. There is a combined ratio City wide of all residential neighborhoods around 84%. The City is broken down into 73 different ratio neighborhoods and he is recommending individuai adjustments for � those 73 neighborhoods. Birch will come back to the Committee at the end of May/first of June with final numbers. Responding to Greene, Birch said any area outside of a colored area will be zero to 4%. Birch indicated this for residential , properties. The commercial properties have been updated using the Marshall Smith Cost Service. AIIen asked about condominiums. Birch said the majority are going to see an 8% increase. Franklin Street and Pleasant Street condos will � Iikely not change due to a fewer number of sales. In general, condo sales are on the rise. There are five condo projects: Cortland Circle, Orchard Hilis, Morning Side, Cynthia Circle which are in close proximity to Husson Avenue. Each are � unique in themselves and are separated as a ratio study by themselves. A majority will see an increase from 88 to 95%. There is a scarcity of condominiums. Birch referred to the Marshall and Swift study which is used for � commercial. Greene asked about residential study information. Birch said it is the interactivity between a buyer and a seller is his predominant source for � � � � making adjustments. Responding to Greene, Birch said most individuals who own their homes for more than 10 years will see a significant increase in valuation of their homes. Allen asked if the Homestead Exemption and Circuit � Breaker programs still available. Birch said both are still available. The Assessing Department provides media announcements regarding both of these in February and March as well as to new property owners. Last year the � Legislature increased the threshold amount to $13,000 of the exemption amount placing a burden on the municipality. � Regarding personal property, Birch said there are 2,931 personal property accounts to which declarations were mailed in ]anuary. Last year 1,928 were retumed with a net new value gain of$16M. This year the Department has received 1,879 returned and the � new valuation added to the tax role is $26,571,200. Personal property depreciates more rapidly so the overall net value could be less. The new growth on the real estate side is $47,961,000 providing a new growth number of$74,183,890. � Birch spoke about several appeals in process. Dead River is looking for an abatement of $57,601. The Board of Assessment Review issued a reduction of valuation of$983,600 � which equates to an abatement of$20,000. He reviewed various aspects of the appeal process. Responding to Farrington, Birch said that if the improvements are completed by Dead River by April 1 of next year, the va�uation returns to its original status. Birch ' explained the details of the upcoming Coca-Cola appeal scheduled for May 25'". He also spoke of the Bangor Historic Track request for abatement. It has been continued indefinitely. Birch and the City Solicitor are working with BHT. Allen asked if the BHT ' appeal impacts current City agreements. Barrett said no. Allen mentioned there is no State of Maine flat at the race track. Barrett said he will bring it to BHT's attention. Regarding EMMC's solar turbine unit, Birch said it has been inspected. He will render a � decision whether or not it is taxable or exempt. MMA's assessors handbook allows for certain circumstances covered under�incidental income' category. EMMC provided a list of those who will be utilizing the electrical breakdown. They will be providing electrical � services for agencies other than the hospital; i.e. the MRI unit, Riverside Inn. 14% of the total generated power is not used for the hospital. Birch's initial position is that it will be taxed. r4. Executive Session— 36 MRSA Section 841 (2)— Hardship Abatement (A) � 5. Executive Session— 36 MRSA Section 841 (2)— Hardship Abatement �B) t6. Open Session — Decision on Hardship Abatements (A), (B) � Moved and seconded to approve staff's recommendations. ' � � �