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PBSD Budget Committee Minutes 10/12/2020 BUDGET COMMITTEE PELICAN BAY SERVICES DIVISION OCTOBER 12,2020 The Budget Committee of the Pelican Bay Services Division met on Monday, October 12 at 1:00 p.m. at the Board of County Commissioners Chambers, third floor, Collier County Government Center, 3299 Tamiami Trail East,Naples, Florida 34112. In attendance were: Budget Committee Nick Fabregas Michael Fogg, Chairman Denise McLaughlin Joe Chicurel Scott Streckenbein (by telephone) Pelican Bay Services Division Staff Karin Hellmann, Operations Analyst Neil Dorrill, Administrator Lisa Jacob, Project Manager Chad Coleman, Operations Manager Barbara Shea, Administrative Assistant Darren Duprey,Assoc. Project Mgr. Also Present Susan O'Brien, PBSD Board Mark Isackson, County OMB Division Rick Swider, PBSD Board APPROVED AGENDA (AS PRESENTED) 1. Pledge of Allegiance 2. Roll call 3. Agenda approval 4. Approval of 02/25/2020 meeting minutes 5. Audience Comments 6. Role of the Budget Committee 7. Review of September 30th financial statements 8. Carryover projects and expenditures, and impacts on FY2021 budget 9. FY2022 budget issues 10. Review of major projects and funding options 11. Assessment Methodology—need for change? 12. Other Committee Comments 13. Adjourn ROLL CALL All members were present and a quorum was established. The committee recognized Mr. Streckenbein to participate by telephone. 1 Pelican Bay Services Division Budget Committee Meeting October 12, 2020 AGENDA APPROVAL IBy consensus, the committee approved the agenda as presented. I APPROVAL OF 02/25/2020 MEETING MINUTES Dr. Chicurel motioned, Ms. McLaughlin seconded to approve the 02/25/2020 meeting minutes as presented. The motion carried unanimously. AUDIENCE COMMENTS None ROLE OF THE BUDGET COMMITTEE Mr. Fogg provided a list and brief discussion of the responsibilities of this committee as he understands it. Mr. Fabregas suggested that the committee consider performing a periodic review of large project expenditures. After committee discussion,it was agreed that the committee's roles would continue as is. FINANCING OPTIONS FOR MAJOR PROJECTS Mr. Fogg commented that the PBSD is looking to obtain approximately$10 million to fund our sidewalk ($5 million) and lake bank remediation ($5 million) projects, to be available sometime in the first quarter of 2021, and be paid back over 15 years. Mr. Mark Isackson, County Director of Corp. Finance & Management Services, commented that the PBSD needs to solidify the amount of funding required and the timing of the funding requirements. He provided the following three recommended financing options. 1. A commercial paper instrument obtained through the local Finance Commission. Characteristics include, (1)variable rate (currently at 1.33%), (2)typically a 5-year rolling program to draw down funds, (3) similar to a line of credit, (4) low fees, and (5) funds would be available within 45 days. 2. A taxable fixed rate note. (A tax-exempt note is not advised, as the IRS requires the funds to be spent within three years to avoid IRS penalties.) Characteristics include, (1) locking in a fixed rate (currently below 2%), (2) the entire $10 million loan would be taken down immediately, and (3)this instrument would most likely be a competitive bank loan. 3. An increase in the PBSD assessment over several years, possibly supplemented with existing excess PBSD reserves. REVIEW OF SEPT. 30 FINANCIAL STATEMENTS Year-end financial statements for our four PBSD funds were provided in the agenda packet. Mr. Fogg provided an analysis of our budgeted carryforward vs. actual carryforward amounts for each of our funds. CARRYOVER PROJECTS AND EXPENDITURES AND IMPACTS ON FY2021 AND FY2022 BUDGETS Mr. Fogg and the committee discussed large projects and expenditures impacting the FY2021 and FY2022 budgets. The following issues were discussed. 2 Pelican Bay Services Division Budget Committee Meeting October 12, 2020 • Ms. Jacob reported that she estimates $500,000 is required to complete the replacement of those PB signs which were not replaced as a result of Hurricane Irma. • Mr. Fogg commented that we have approximately $1 million in reserves for beach renourishment projects. Ms. O'Brien commented, (1) there will be a County truck haul beach renourishment program in FY2022, (2) a possible beach resiliency project is estimated to cost $1 - $2 million, and (3) the PBF is not responsible to contribute any funding for PB beach renourishment (confirmed by Mr. Dorrill). The committee agreed that annual additions to beach renourishment reserves must continue each year. Ms. McLaughlin commented that unpredictable weather events will determine when and if beach renourishment is needed. • Mr. Fogg commented that we have $354,000 for IRMA expenses available in our FY2021 budget. Mr. Coleman commented that this entire amount will not be needed, but that he cannot estimate the amount left over at this time. • Mr. Fogg commented that the FY2021 budget includes a carryforward from the prior year of approximately$1 million,which was utilized to partially fund our operating budget. He estimated that the FY2022 may only have the benefit of a carryforward of less than half that amount. In FY2022, the amount of funding required for capital projects may be reduced as a result of long-term financing in place, and therefore additional budget funds may be available to fund our operating budget. • Mr. Fogg commented that after we determine the expected remaining life of our streetlight poles, we will make a determination of at what point we need to start replenishing Fund 778 with reserves for streetlight pole replacement. REVIEW OF MAJOR PROJECTS AND FUNDING OPTIONS Mr. Fogg provided a list of our major projects with respective expected funding sources, time frames, and comments. He also provided a summary of financing options with varying loan amounts,payback timeframes, and resulting effects on the future level of the assessment per ERU. Ms. McLaughlin expressed concern over our low rate of project implementation, and therefore suggested that choosing a financing option which would allow us to draw down funds over time would be beneficial. Ms. Jacob commented that the permitting phase of a lake bank project takes 6-9 months,which is followed by the procurement process. She provided a summary of the estimated project budget of$117,500 for surveying, engineering, design, and permitting of Lake 4-1,which was added to the record. By committee consensus, it was agreed that staff should move forward with this phase of the Lake 4-1 project. Mr. Fogg reported that Lake 4-1 may have some drainage issues, which may need to be addressed and funded as part of the Lake 4-1 project. Ms. McLaughlin provided and discussed an informational document on Geoweb, a material which may be used for lake bank remediation, which was added to the record. ASSESSMENT METHODOLOGY—NEED FOR CHANGE? Mr. Fogg commented that prior PBSD boards have considered proposals to change PBSD assessment methodology. He noted that the two issues to be considered are (1) possible benefits (if any) to changing to ad valorem taxation, and (2) possible benefits to changing the ERU calculation methodology. Mr. Fogg provided his thoughts on these issues in a document, which was added to the record. He noted that the existing assessment methodology has been in effect for over 25 years. Mr. Fabregas commented that his recent research showed that PBSD boards in 3 Pelican Bay Services Division Budget Committee Meeting October 12, 2020 1999, 2003, and 2010 looked at this issue, and chose not to make any changes. Mr. Streckenbein commented that he believes an approval by referendum is required to change over to ad valorem taxation. By consensus, the committee was not in favor of changing to ad valorem taxation. Mr. Fogg reviewed the existing methodology of ERU allocations for commercial entities, residences, and unimproved land. He commented that he has had no success in obtaining any documentation on the origination of the methodology. Mr. Fogg commented that the PB Golf Course is an integral part of the Pelican Bay plan; it offsets the high density of the residential units and functions as part of the water management system of Pelican Bay. Mr. Dorrill commented that he would like to review the documentation of the ERU allocation methodology originating during the time that the PB Improvement District existed. Mr. Fabregas commented that at a past Budget Committee meeting, Mr. Dorrill had presented information on the ERU allocation methodology of communities similar to Pelican Bay, which showed these communities using similar methods of taxation. By consensus, the committee agreed not to pursue making any changes to the ERU allocation methodology at this time. The issue may be discussed again in the future. OTHER COMMITTEE COMMENTS Ms.McLaughlin suggested that an article be written to be included in the PB Post regarding the replacement of the PBSD maintenance facility. Mr. Fogg responded that he would prepare an article for the PB Post. Mr. Dorrill commented that Clam Pass is being closely monitored as sand from a previous County beach renourishment truck haul project south of Clam Pass appears to be travelling northward as a result of recent tropical events. Additional information and discussion will be provided at the Oct. 14 PBSD Board meeting. ADJOURNMENT The meeting was adjourned at 2:57 p.m. M. ael Fogg, Cha' Minutes approved a presented OR F 1 as amended ON [ O 1 02 /c2n o2/ 1 date 4