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HomeMy WebLinkAbout2004-12-06 Finance Committee Minutes ! ' Finance Committee December 6, 2004 � Minutes � Councilor Attendance: Cashwell, Stone, Gratwick, Hawes, Farrington, Tremble, Allen Staff Attendance: Cyr, Barrett, Little, Birch, Hupp, Pellegrino ' Others: Dawn Gagnon 1. Consent Agenda , � a. Workout Agreement— Lot 33 Prayer's Trailer Park—Jenkins/Higgins b. Write-off Personal Property Taxes —Taste of India � c. Write-off Personal Properly Taxes—Assessed in Error—Don Dickel A motion was and seconded to approve the Consent Agenda items. � 2. Bids/Purchasing a. Engineering Agreement-Airport-Edwards & Kelcey - $139,400. � This contract with Edwards and Kelcey is for design services related to the construction of a de-icing wastewater collection and disposal system at the airport. This system is designed to capture the de-icing fluid used on � aircraft and to hold it in an underground tank for subsequent metered release to the City's Wastewater Treatment Plant. By controlling the rate � of release, the City is taking a necessary step to protect the treatment process at our Treatment Plant. The total amount of the contract is $139,400 with the City's providing a 5% match to state and federal grant � funds. Edwards & Kelcey has previously been selected as the engineering firm for all capital projects being funded through our Airport Improvement � Program. A motion was made and seconded to recommend approval. � The item will appear on the upcoming Council agenda for final approval. b. Cold Weather Gear-Airport-West Uniforms-$11,110.20. � These are parkas and bib overalls for ramp attendants. The material is anti-static. A motion was made and seconded to approve staff's recommendation. � 3. Request for Support — Bangor Band At the last Council meeting, Mr. Miller asked the City to waive the $1,000 , rental fee associated with the Civic Center for the use of the Bangor Band's annual holiday concert. Last year, the $1,000 was provided by a donor. Prior to � that the concert had been held at the Cohen School but access was an issue. Cyr spoke with Dyer at Bass Park, who had suggested that the Bangor Band be allowed to use the Civic Center for the holiday concert in return for their � � � performance at the Bangor State Fair for a specific number of times. The ' performance schedule will be worked out between Dyer and Mr. Miller. A motion was made and seconded to approve staff's recommendation. Gratwick � commented on the process of these rypes of requests. Barrett anticipated that future requests would be going through the newly formed Cultural Commission. In the upcoming budget, there will be a lump sum allocation for arts and cultural � events. Interested organizations will complete an application form to access the funds. Barrett cautioned that some groups may not apply in July or August and ' will come forward at other times. Cyr pointed out that there was $5,000 in the current Council's budget for Bass Park related charges. There is approximately $600 remaining wiCh most of it given to the Bangor Symphony. Bangor Band � receives $1,500 annually from the City for their summer concerts through the Parks and Recreation program and they also receive rent gratis at Parks and Recreation as well. Allen asked if the approved arrangement could be made a � permanent part of the City's annual budget. Cyr said she can add it to the list. It is up to the Council to decide if they want to specifically identify groups to fund. � 4. Assessor's Update Birch briefed the Council on the assessment process for the upcoming tax � year and reviewed the materials that he had previously provided to the Committee with their agenda packet. There is a ratio starting point to begin � with. He is waiting for the State turn-around document, which documents the transactions that have occurred through 2003 and part of 2004. The report is approximately 6 weeks behind schedule. The Assessing Department has already � electronically completed the work because of the available sales data. Assessing will then provide the State with the names, the map, the lot number so that the State can reconfigure the State valuation process for the upcoming year. In � 1989, the Council passed a Resolve asking the Assessor to strive for 100% ratios. Last year's ending ratios: single family homes were at 95%; mobile homes were at 95%; all condos were at 102%. There is a statutory requirement that an � assessor has to be at a minimum assessing standard of 70% and quality rating of 20%. The Bureau of Revenue's reports show that Bangor has met those criteria for the past year. In response to Gratwick, Barrett said the assessment , ratio is the percentage of assessed values at which properties sold. The quality rating is the measure of dispersion looking at the standard deviation. As an example, if all of Bangor's properties were at 100%, the rating would be 1. Allen , asked why condos are at 102%. Birch said that adjustments are made to some of the building components that are value contributory as far as quality, � condition and story height. As adjustments are made predicated from the market information on those categories, it is difficult to get all of the components to be at S00%. The legal assessment allows assessors to have a range between 90 � and 110%. Residential properties will see an adjustment of approximately 12%; condos may be adjusted as well as the business properties. Business commercial � � � , properties are normally made toward the land assessments predicated on the market conditions. Commercial properties are broken down into five commercial � neighborhoods. Birch referred to the state valuation figure that is used by the County for their disbursement of taxes and is used by the state to return municipality's revenue funds. Birch had received this figure in October and was � $21,100,000 higher due to the commercial ratio being 93%. In order to obtain equalization of 100%, the State factored the $449M, multipiied it by 1.07 to reach 100% ratio. The City Assessing Department challenged it because there is � an agreement in place and it has a very aggressive property assessment process. The City has an annual mailing of a declaration request for all business owners to file their personal property listings. Because the City does this, the Bureau of � Revenue allows Bangor to assess personal property as a separate class of property and use the certified ratio of S00%. The overall personal property � value was reduced by $21,100,000, which should result in additional revenue to the City of approximately $180,000. � Birch mentioned the tax reform proposals currently before the legislature. He stressed that the current assessing rules and procedures will be the norm until the legislation changes. In order to update the two newest Council members, ■ Birch reviewed a memo he had prepared outlining the property assessment t administration and procedures. � Barrett mentioned that in recent years as the City has seen escalating residential properties the City has tried to lag its assessments behind the rate of ' increase due to the uncertainty of how long that rapid increase will continue. The declarations are mailed out the first Friday of each year. This year, � Assessing will work with Central Services on a mail merge. Central Services will do all of the collating and folding. It will save $200 in the Assessing Department's operating budget. � In response to Farrington, Barrett said that Birch is required to meet the requirements of State Law and the State Constitution and to do his best to live � up to what the State Tax Assessor would like to see. He is also evaluated in terms of his day to day performance by the City Council, who appoints him. Birch said that in fulfilling that obligation his department works with the City � Manager and the Ciry Finance Director. He stressed it is a team effort. 5. Governor's Proposal Tax Reform Legislation � Barrett provided the Committee with his summary of the proposal. The Maine State Chamber proposai on limiting local tax revenues which is � basically the same proposal that the Governor has adopted in his legislation. There would be a limit on the amount a municipality could raise in property taxes, in the next year that limit would be adjusted based on the 10-year � ' � average of rate of real income growth in the state (which currently is 2.58%), i plus any additional taxes on new value, new construction or new value created by renovations, additions or improvements. The ten-year history for � Bangor would make the limit at 3.5% on average. In the event of acts of natural disasters, war, terrorism, the municipal o�cers could exceed the levy limit. It would also be exceeded through a municipal election where the � voters decide. It would be placed on a ballot by majority vote of the City Council and then would need to be approved by a majority of those who vote, at a special or regular election. If the City were to collect properly � taxes in excess of the tax levy limit, it would have to go into a fund to be used in future years to reduce the levy limit. There is also a proposed adjustment for new state funding. If the City were to receive new state � funding (education funding, for example), it would have to be deducted from the City's levy limit. 80% of the proposed bill deals with education. As he ' understands it, Barrett said that the bill first adopts an EPS funding system for transportation and special education. It requires a four-year phase in for the 55% state funding level. In the first two years, municipalities receive up � to 50% and the second two years 55%. It establishes two limitations on education funding. The first is a statewide limit and it would be last year's state and local allocation for education adjusted by the average real rate of ' personal income growth. The individual limit at the local level effectively is the EPS system. Bangor would be limited to 100% of EPS costs. The State will tell Bangor how much it can spend on local education with the exception � of a referendum election to exceed that limit. The early information � indicates that Bangor should do fairly well under the EPS model. Barrett has t asked the School Department to review the proposal and should be receiving information back from them. There are State spending limitations but those are statutory. Any limitations adopted by State Statute would be binding on � its subsidiary units of government—schools, county, city. The state statutorily cannot restrict itself. State general fund spending would be limited to the prior year adjusted by the real personal income growth rate. It would � be applied to the budget submitted by each State department and agency. It can be exceeded under special circumstances. The limit would apply to State agencies receiving funding from the Highway Fund but not to the basic � part of the Highway Fund. It creates a budget stabilization fund into which monies in excess of the state's spending limit would be deposited up to 12% of total prior year's expenditures. It would expand the Circuit Breaker � program eligibility. There is a proposal for a tax deferral program which is in effect a revere mortgage program. If properly taxes were over 6% of a family's income, that family would qualify for that program. The state would � pay the taxes and the individual would reimburse the state with interest at the time the property is one. A tax burden commission would be established that would monitor and report on progress. The overall goal of the legislation � is to move Maine to the national average on tax burden by 2015. Barrett said � , � � the largest unknown is how this will affect the Bangor Schooi Department. There seems to be growing support for the local tax levy in the municipal -' communities. The State is estimating that with the limitations on education funding that is included in the proposed legislation that 90% of any additional state school aid to municipalities would go back to property tax relief. Barrett � felt the City should discuss the proposed property tax levy and the City's position. He said it is a fairly reasonable and achievable goal. The Constitutional Amendment would allow municipalities to limit the rate of � increase in assessed value on homestead property (land value) to the rate of inflation. Homestead property represents 20°/a of Bangor's tax base. Tremble � , said he thinks the City should get into position and work with the Service Center Coalition rather than MMA. � 6. Executive Session-Hardship Batement-36 MRSA Section 841 (2) � A motion was made and seconded to go into Executive Session. 7. Open Session — Hardship Abatement Decision � A motion was made and seconded to approve the hardship abatement request. r � � t � � � � � �