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HomeMy WebLinkAbout06-06-2017 Retreat workshop City Council of Peachtree City Retreat Workshop Minutes June 6, 2017 The Mayor and Council of Peachtree City met in Retreat workshop session on Tuesday, June 6, 2017. Mayor Vanessa Fleisch opened the workshop immediately following the adjournment of the Special Called Meeting held prior to the workshop. Council Members attending: Mike King, Kim Learnard, and Phil Prebor. Terry Ernst was out of town. The topic for the workshop was PTC Economics. City Manager Jon Rorie noted this was the second of two Retreat workshops held as a prelude to the FY 2018 budget process. The first budget workshop was scheduled Monday, June 26, at 6:30 p.m. Rorie noted that several additional staff members were attending the workshop, which would give those supervisors and crew leaders an understanding of the dynamics faced during budget preparation. Rorie explained that staff was not really asking for more money, but to meet the demands of the public. Each year, Council's challenge was to balance the scarcity of means (revenues) against the ends those revenues could achieve (the services requested by and provided to residents). "It depends" was the answer to the question of how much it cost to maintain and operate Peachtree City, according to Rorie. In FY 2017, the answer to that question was$33.5 million ($985 per resident). He reviewed the City's Budget Policy, pointing out the two key factors in the policy were to decide on the baseline and to identify funding sources for new or increased revenues. Budget Policy The City's primary objective is to provide a standard of budgetary performance that both staff and Council have endorsed and to provide budgetary decision making with greater continuity, reinforcing the City's core financial values and preserving them for successive staff and council. • Baseline and Service Level Funding The City's top program priority is to maintain existing service levels in all divisions and departments. A baseline should be set and serve as an agreed upon point of departure for subsequent budget discussions ie: a new facility or service. Any additional services above the baseline shall be fully funded at the time of the adoption of the annual budget and ongoing funding sources shall be clearly identified. Such ongoing funding sources must be either new or increased revenues or clearly identified expense reductions. Financial Services Director Paul Salvatore discussed where the revenues came from for FY 2017's $33,482,210 budget. The City's revenue sources included licenses and permits, fines and forfeitures, franchise taxes, other taxes, and other revenues. However, the two primary sources of revenue were Ad Valorem, or property taxes (39%,) and Local Option Sales Tax (20.5%), which cumulatively made up 60% of the total revenues. Salvatore noted that Peachtree City's 2016 gross digest (real and personal property) was 8.2% over the pre-recession values in 2009. Sales tax revenues had dropped even earlier, declining after 2007, and reaching pre-recession levels for the first time in FY 2016. This demonstrated the volatile nature of the two largest revenue streams. City Council Minutes June 6,2017, Workshop Page 2 Salvatore discussed the changes in the tax digest,which had a 10.1% decrease from 2010-2012, then had an 18.72% increase from 2013 - 2016. The changes averaged out to 1% annually between 2009 -2016. There had been an overall 8.02% net increase in the property digest from 2009 to 2016; however,the tax digest had dropped significantly between those years. Ad valorem tax revenue was approximately $11,500,000 in 2011, and it was just under $13,500,000 in FY 2017. Rorie said the City usually received the tax digest in August, and it was expected to be worth approximately$2 billion. Other Taxes included the Transportation Ad Valorem Tax (TAVT), real estate transfer taxes, recording intangible tax, alcoholic beverage taxes, occupational tax (business license), and financial institution taxes. While the collection of Other Taxes had increased from FY 2011 to FY 2017, there had been a decline in TAVT, Salvatore said. In FY 2015, $1,251,965 in TAVT taxes had been collected, and the estimate in FY 2017 was $843,300. Prebor asked if the TAVT was distributed like the LOST. Rorie said it was not, and the distribution was based on state law. The TAVT was very unpredictable,and the Georgia Municipal Association (GMA) and the Atlanta Regional Commission (ARC) were fighting for a change in the distribution, Salvatore added. Rorie briefly discussed the City's fee schedule, saying the question was whether the City should subsidize the fees or charge a fee for service. A review of the fee schedule was required every three years, and the fees for the Fire, Planning & Zoning, Engineering, and Building Departments were under review this year. Rorie then reviewed many of the service levels Peachtree City maintained that were not comparable with other communities. These included 100 miles of multi-use paths with 35 bridges, 29 tunnels, and 177 at-grade crossings (valued at $20 million), which all required maintenance in addition to the 179 miles of streets (valued at $83 million). Peachtree City also had about 3,700 acres of greenbelts and parks, including 416 active park acres,which was huge for a city this size, Rorie said. Finally, the City had 40 buildings that ranged in size from City Hall, the Library, and the Police Station to picnic shelters and restroom facilities in some of the parks. These buildings were valued at $45 million, and the City maintained another $1.4 million in miscellaneous items such as bleachers, field lighting, playground equipment, etc. Rorie stressed that the City had not budgeted funds for building repairs and maintenance for many years, and this issue had compounded during the recession. The FY 2017 budget included approximately$325,000 under the "Building Repair and Maintenance" category, but these funds were dedicated to expenses such as HVAC maintenance, fire and security systems, generator maintenance, dumpster service, filters, doors, etc. The City had not been reinvesting in the repair and maintenance of its facilities, and the problem had been there long before the recession, Rorie said. Soon or later, the price had to be paid. To address the deterioration of buildings and facilities, the City had issued a $3 million Facilities Bond in 2011 to make repairs and upgrades. Another $3 million Facilities Bond was issued in 2014 to continue these repairs. To avoid another $6 million in Facilities Bonds, the City would have to constantly maintain its assets, he added. Rorie pointed out that 1% in Tourism Product Development funds from the Hotel/Motel Tax was used to fund maintenance and repairs for tourism conduits, including the Tennis Center and Amphitheater. City Council Minutes June 6,2017, Workshop Page 3 Fire/EMS, Police, and Public Works were the "Big 3" in terms of how much money was spent, Rorie noted. In FY 2017, Fire/EMS had a $6.9 million budget, the Police budget was $6.7 million, and Public Works was at $6 million. The City's number one asset was personnel, and Personnel costs were $19,112,000 (9.65 mils) or 57% of the budget. Rorie said the City did a very good job with limited staff. In order to get cash flow to start on some of the projects from the Special Purpose Local Option Sales Tax (SPLOST) approved by voters in March, the City had applied for financing from the Georgia Environmental Finance Authority (GEFA) to begin construction on the Lake Peachtree Dam/Spillway and the Georgia Transportation Infrastructure Bank (GTIB) to finance construction costs for intersection improvements at SR 54/Planterra Way and SR 54/MacDuff Parkway. Both loans would be repaid with the City's share of proceeds from the SPLOST. Salvatore then reviewed the City's current debt level, explaining that the City had a total of$9.24 million in outstanding principal and paid$2.1 million per year in debt service. The City also carried approximately $2.3 million in revolving debt in the form of five-year equipment loans. Salvatore noted that Peachtree City's legal limit for debt was based on the digest,which meant the current debt limit for the City was about $200 million. Salvatore then outlined when the current debt components would expire. While the equipment loans would continue to revolve, several bonds would end over the next few years, including the bond used to acquire property for a golf cart bridge on SR 54 West. The last payment would be made this month. The Series 2003 General Obligation (GO) Bonds would expire in January 2018, reducing debt service payments by an amount equivalent to 0.103 mils of the City's property tax rate. The 2011 GO Bonds would expire in January 2019, dropping the debt service payments by another 0.206 mil equivalent. Additional bonds would be retired in 2022, 2023, and 2024, leaving only the revolving equipment loans. The reduction in debt service payments over that time would be equivalent to 1.35 mils. Rorie said debt service would be one of the options discussed during budget development when Council needed to make decisions regarding a new fire station. The City was collecting impact fees for a station on the west side (MacDuff Parkway) as those homes were being constructed. A fire station with the associated fire engine and ambulance would cost roughly $2.9 million (equivalent of approximately $350,000 per year in debt service if funded in that manner). The development in that area would generate about $775,000 once all of the homes were built, but a station would probably need to be constructed before all homes were completed. The homes in the area would also generate an estimated $1.4 to $1.7 million in property taxes each year to help fund the estimated $948,000 in annual operating costs for the station. Rorie added that the West Village station was currently a lower priority than one at the southern end of the City. However,what that southern station ultimately housed would be a consideration -a satellite location primarily dedicated to Emergency Medical Services would be a different issue than a full Fire Station. This was one of the issues that would be brought forward during the FY 2018 Budget discussions. Rorie noted that the funding that would become available as the City retired long-term debt could be dedicated to regular maintenance needs,such as painting,fountain or pool resurfacing, bathroom fixtures, flooring, etc., so that Facilities Bonds would not be required in the future. Rorie reminded Council and those in attendance of the Budget meeting schedule: • Monday, June 26-6:30 p.m.-First Budget Workshop, City Council Minutes June 6,2017, Workshop Page 4 • Tuesday, June 27-6:30 p.m.-Tentative Workshop if needed following June 26, and • Tuesday, July 11 -6:30 p.m. -Tentative Workshop if follow up needed after June workshop(s). The budget public hearing and adoption would be held later in July or in August and would be well advertised. The workshop concluded at 8:16 p.m. :etsy yler, Ci y erk Vanessa Fleisch, Mayor 4/Vjli./A) Pamela Dufresne, Dep City Clerk