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PBSD MSTBU Minutes 03/18/2011 B RECEIVED MAY - 9 2011 Board of County Commissione:f$ BUDGET COMMITTEE OF THE PELICAN BAY SERVICES IJIVISION BOARD MEETING MINUTES MARCH 18,2011 LET IT BE REMEMBERED, that the Budget Committee of the Pelican Bay Services Division Board met on Friday, March 18,2011 at 2:00 p.m. at the Community Center at Pelican Bay, 8960 Hammock Oak Drive, Naples, Florida, with the following members present: Pelican Bay Services Division Staff W. Neil Dorrill Kyle Lukasz Fiala ,....-// Geoffrey S. Gibson (excuoed ab.\encel-iiller /' John Ialzzo H . ennlng Coyle ~ Coletta . ~ Budget Committee Members Michael Levy, Chairman John Chandler Keith J. Dallas Mary McCaughtry Lisa Resnick AGENDA I. Roll Call 2. Approval of February 8, 201 I Meeting Minutes 3. Audience Participation 4. Review afTentative FY 2012 Budget 5. Discussion of Low Water Demand Landscape and Irrigation Improvements Project (1. Chandler) 6. Discussion Concerning the Impact of Reduced Taxable Values Upon Proposed Street Lighting Reserve (J Chandler) 7. Discussion of Community Improvement Plan (CIP) non-ad valorem and ad valorem Cash Flow Spreadsheets (K. Dallas) 8. Audience Comments 9. Adjourn ROLL CALL All Committee members were present with the exception of Mr. Gibson, excused. APPROVAL OF FEBRUARY 8,2011 MEETING MINUTES Mr. Chandler made a motion, second by Mr. Dallas to approve the February 8, 2011 Budget Committee meetin minutes as resented. The Committee t'oted unanimousl in avor, assin the motion. AUDIENCE PARTICIPATION Mr. Joe Doyle referred to comments he made at the February 8 Budget Committee meeting regarding funding some Community Improvement Plan (CIP) projects by utilizing an ad valorem method. He acknowledged that although funds have already been collected for Phase I CIP projects on a non-ad valorem basis, "there is no reason why those Phase I projects could not be funded on an ad valorem basis with this year's budgeting." Chairman Levy said the funds they have were collected using a combination of non-ad valorem and ad valorem methods. Mr. Doyle said they should delineate non-ad valorem from ad valorem collected funds and use ad valorem funds for Phase I crosswalks, roadway landscape and irrigation, and Myra Janco Daniels pathways. He suggested they not ask current residents to fund long-term CIP Phase II projects that they may not be around to enjoy, but to utilize other financing methods, such as bonds, or by raising millage. shifted the burden from the "richer households to the poorer households." In his opinion, the current uniform assessment methodology Mise Corres: 1115 uate.u.\.k<i:aD-.L_._. Item #lli~\.Bh -z... Budget Committee of the Pelicau Bay Services Division Board Meeting Minutes March 18,2011 Mr. Dorrill said historically, the only millage-based funding have been for street lighting, and until approximately six years ago, security. Chairman Levy said the Services Division undertaking pathway and crosswalk projects is unprecedented. Previously the County was responsible for these projects. Because they are new projects, he suggested the Committee discuss considering ad valorem and non-ad valorem funding methods. Mr. Dorrill said they are discussing how to fund capital improvements, not maintenance. Historically, the County has not used ad valorem taxes for maintenance; they have used a combination of gas and sales tax. The tentative budget is predicated on no change in assessment method. The capital improvement budget for next year is primarily assessment- based with carry forward cash that is on-hand. To Mr. Levy's point, it would be appropriate to adopt a separate five-year capital improvement schedule as part of next year's budget and ask the full Board whether they want to use the assessment method or millage-based method to fund any shortfalls over the five-year theoretical capital improvement plan. There needs to be a "rational nexus" between the money that is paid and the benefit received. In theory, increasing millage and applying it to commercial interests, i.e., Waterside Shops, Naples Grande, and Ritz Carlton, to pay for benefits that are primarily residential, is "really pushing the envelope". The current uniform assessment method, assigning Equivalent Residential Units (ERU) to commercial and institutional interests is a fair method. Mr. Chandler made a motion, second by Mr. Dallas to recommend to the Board to not expand the use of ad valorem taxes beyond their present U!~e. The Committee voted 2 for (Meur.\', Chandler and Dallas) - 2 against (Chairman Lev and Mr. laizzo and no action was taken. Consensus was to discuss ad valorem and non-ad valorem funding methods at the April 6 Regular Session. REVIEW OF TENTATIVE FY 2012 BUDGET Staff presented the tentative FY 2012 budget. Due ta an increase of $1 ,400 per person, or about 12% for health insurance, but offset by new hires in two-entry-Ievel positions, net Personal Services costs increased by $5,100. The cost for fuel (gasoline) increased by about 50% or from $3.l5/gallon to $4.65/gallon. For the fourth year in a row, salaries and wages will not increase. Keeping 2&1/2 months operating reserve, $302,000 carry forwarded from funds 109 and 778 and transferred into the Capital Projects fund 322 for hardscape renovations or CIP projects, which increases the amount available for CIP projects from $2.4 million to $2.7 million. $85,000 was set aside for lake bank improvement projects. $50,000 was set aside for traffic sign renovations. $118,000 will carry forward from Clam Bay fund 320 reserves to total $154,300 for the South Berm project. Chairman Levy acknowledged there are no reserves in the Clam Bay fund 320. Assuming the Services Division matches the amount it receives from fund Ill, which last year was $35,000, they would not have sufficient funds for Clam Bay projects and would need an additional $126,000. Mr. Lukasz said last year they transferred $65,000 from Clam Bay reserves to Capital Projects, leaving $128,000 and for FY 2012 they are transferring $ I 18,000 forthe south benn project. Mr. Dorrill said as a tentative budget strategy, they could ask the County to match the Services Division "dollar for dollar" or $80,000 from fund 111. The Budget Committee agreed with that course of action. Mr. Lukasz said staff has not yet received indirect costs from the County, so they assumed last year's numbers. Some indirect costs are service driven, so there may be a reduction. 1116 Budget Committee of the Pelican Bay Services Division Board Meeting Minutes March 18,2011 Mr. Dallas said the assessment remained the same and asked if that is because they are assuming valuation will remain the same. Mr. Lukasz said the County expects total valuation to decrease 3% countywide, although Pelican Bay is generally less, so they assumed the same valuation in millage for street lighting. They would obtain the certified tax roll from the Property Appraiser in May. The millage rate has dropped, but irneeded, they could increase it. Mr. Dallas suggested increasing the millage rate to start saving for future street lighting projects reserves. In his opinion, the street lighting fund is not a capital improvement but a replacement reserve. Chairman Levy said in the past, excess street lighting funds have been transferred to capital. Mr. Dallas said if they are going to set up a reserve fund for street lighting, then they should set up a separate account and Mr. Lukasz said they could set up a separate account in capital fund 322 designated for future street lighting reserves. The Budget Committee agreed with that course of action. Mr. Lukasz said there was a $4,200 or about $25% increase in Information Technology (IT) charges and the total IT charges are $19,400. The IT department fees are based upon the number of workstations and services calls. similar to the County's indirect cost methodology. Mr. Dorrill said the only change in IT service he recalls is that they purchased a laptop that IT does not support, and asked what services they receive for almost $5,000 per workstation. Mr. Lukasz said IT provides the intranet network, and other County system software, i.e., SAP and Govmax software. Mr. Dorrill said he would research the IT cost increase and report. Mr. Lukasz said there is a new line item to repair the Oakmont lake bank bike path of$6,000. Due to the new permit, there was an increase in Clam Bay costs, which includes the new Turrell Hall & Associates contract for engineering and consultant fees. Water testing falls under the water management budget. Maintenance facility renovations previously budgeted under capital are mostly complete, therefore only $5,100 was budgeted under operations, building repairs and maintenance vs. $40,000 that had been budgeted last year. Mulching requirement costs decreased by $14,000 by using alternative materia] on the U.S. 41 berm. Tree trimming costs increased by $27,700 for contracting out Sabal palms, but offset by reductions in temparary labor ($ 14,400) equipment rental ($3,000) and garbage hauling ($10,500). Staff made changes or additions to account codes to better clarify expenditures. Landscape incidentals code, i.e., tools and accessories added offsetting $2,500 of Other Operating Supplies. Flood Control Replanting Program was changed to Landscape Materia]s, i.e., "annuals" and other replacement plants. Road and Bike Path Repairs and Maintenance code added to track Oakmont Lake Bank pathways. Building Maintenance and Repair code added under operations. Mulch requirement added to track pine straw, which was previously budgeted under Landscape Materials. White Goods code, previously used for public relations was removed and renamed as Emergency Maintenance and Repairs, i.e., contingency. Photo processing code, previously Other Contractual Services in Clam Bay added to track aerial photography of Clam Bay. To keep the Equivalent Residential Unit (ERU) assessment rate the same as last year ($370.63) they budgeted $7,300 into capital projects. This amount will increase based upon how much is received from fund Ill. Ms. McCaughtry said she expects receipt of FY 20 II fund III money in the amount $35,000 to post to the system by March 21. 1117 Budget Committee of the Pelican Bay Services Division Board Meeting Minutes March 18,2011 Mr. Dallas referred to page 4 of the Operating Budget and asked staff where the Fund Balance October 1, 2010 (Actual) of$340,860 is documented. Ms. McCaughtry said the actual number is received post-audit from the County's Budget department. Chairman Levy said the FY 20 II budget book contains projections because actuals are "after the fact." Mr. Dallas asked staff to resend the actuals for FY 201 I. Mr. Lukasz said staff will set aside two-and-one-halfmonths operating reserve of$152,512 and capital equipment replacement of $32,725 in FY 2012 budget in operating fund 109 under water management. Mr. Dallas asked staff to add the actuals column to page 11. Mr. Dallas referred to the negative net income of$276,643 in Clam Bay fund 320 on page 12. Mr. Lukasz explained that the $276,643 is carry lorward from FY 2010 and is being used to fund the FY 201 I budget, including the $118,000 budget amendment to do the south berm project. Mr. Dallas referred to page 15, and there are no projected funds available. Mr. Lukasz explained that in capital projects, money not spent carries forward. He referred to page 14. Other Contractual Services Funding Requirements are $45,000 and $45,000 is available in the FY 20 I I budget and will carry forward, so projected funds required are zero because no additional funds are required. Photo processing is a new line item in FY 2012 budget, so there are no net funds available to carry forward in the FY 2011 budget and net funds required are $7,500. Mr. Lukasz said staff kept the Equivalent Residential Unit (ERU) rate the same in FY 2012 as it was in FY 2011. Chairman Levy referred to page I at the top and said to keep the ERU rate the same in FY 2012 as it was in FY 2011, the total Assessment or Ad valorem Tax Levy needs to total $3,097,700 across all funds. Mr. Dallas confirmed with Mr. Lukasz that once the Commissioners approve the budget, they can spend funds in capital on CIP projects. Mr. Dorrill said about $100,000 is available for vehicle replacement budgeted under community beautification operating capital. Mr. Lukasz added that the vehicle replacement reserve is not quite at 25% of replacement value. DISCUSSION OF LOW WATER DEMAND LANDSCAPE AND IRRIGA nON IMPROVEMENT PROJECTS Mr. Chandler referred to Mr. Dallas' cash flow spreadsheets where he noticed that the largest Phase II CIP expense was for low water demand landscape and irrigation improvement projects. He cited Wilson Miller project D4-B at a cost of$ 1.6 million on Pelican Bay Boulevard and $382,000 on Gulf Park Drive. Mr. Lukasz recommended replacing the subsurface irrigation heads with low volume heads. Mr. Dallas said most of the cost is for the landscaping, not the irrigation improvements. Yes, there would be water savings over time, but his understanding of the intent of this project was for aesthetics and for safer line of sight, not as a cost-benefit situation. They could save funds over time and implement the project in phases. Mr. Chandler summarized that they could save a significant amount of money and the benefits would be that they would have better looking landscaping with some color. Mr. Dorrill said compared to the U.S. 41 medians, the shade canopy affects the medians in Pelican Bay and plants are fighting for sunlight. They are engaging the services of Ell in Goetz, a landscape architect to work on some design concepts with color for these projects. 1118 Budget Committee of the Pelican Bay Services Division Board Meeting Minutes March 18,2011 Consensus was that it would become more desirable to make pathways improvements on both the east and west sides of Pelican Bay Boulevard, as well as Gulf Park Drive. Mr. Lukasz said in some cases, such as to meet ADA elevation standard, crosswalk installation could require pathway modifications. Mr. Dorrill said staff would need Board direction to proceed with the selection ofa civil engineer for pathways projects. Chairman Levy said they should discuss the status ofCIP projects at the April 6 meeting. Mr. Dorrill said he would have crosswalk construction plans to show the Board and prepare to advertise for sealed bids. DISCUSSION CONCERNING THE IMPACT OF REDUCED TAXABLE VALUES UPON PROPOSED STREET LIGHTING RESERVE Mr. Chandler said he understood that the assessed property valuation in Collier County would decline significantly countywide and if this affects Pelican Bay, they should bear in mind they could consider a higher ad valorem millage rate. DISCUSSION OF COMMUNITY IMPROVEMENT PLAN KIP) NON-AD V ALOREM AND AD VALOREM CASH FLOW SPREADSHEETS Mr. Dallas reviewed the CIP non-ad valorem cash flows over five years additional contribution to capital is $26.50 or 7.1 % of the current rate of $3 70.63. The second sheet showed CI P non-ad valorem cash flows over five years additional contribution to capital is $50 or 13.5 % of the current rate of$370.63. The third sheet shows CIP ad valorem cash flows over 15 years that proposes increasing the millage rate to 0.0292 or 55% of the current rate of 0.0531, which is about $4 I . Chairman Levy said that when they make a recommendation to the Board to approve the FY 2012 budget, they should include a recommendation to approve an additional non-ad valorem contribution to capital and a millage increase. Consensus was to recommend an additional non-ad valorem contribution 01'$26.50. AUDIENCE COMMENTS None ADJOURNMENT Mr. DorriIl said the Budget Committee's next meeting is scheduled for April 5, the day prior to the April 6 Regular Session. The Committee decided to cancel this meeting and reschedule for Monday, April II at 2 p.m. Mr. laizzo made a motion, second by Mr. Chandler to adjourn and the Committee voted unanimousl.. to ad'ourn at 4: II .m. '}.1~~.) ~ - Michael Levy, Chairman . ", .. Minutes by Lisa Resnick \4/7/20113:24:05 PM 1119