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BCC Minutes 01/24/2000 W (Budget Policy Workshop)January 24, 2000 TRANSCRIPT OF THE BUDGET POLICY WORKSHOP BOARD OF COUNTY COMMISSIONERS Vineyards Park Community Center Naples, Florida January 24, 2000 LET IT BE REMEMBERED, that the Board of County Commissioners in and for the County of Collier, and also acting as the Board of Zoning Appeals and as the governing board(s) of such special districts as have been created according to law and having conducted business herein, met on this date at 9:02 a.m. in SPECIAL SESSION at the Vineyards Park Community Center, 6231 Arbor Boulevard, Naples, Florida, with the following members present: CHAIRMAN: Timothy J. Constantine John C. Norris Pamela S. Mac'Kie Barbara B. Berry James C. Carter Page 1 COLLIER COUNTY BOARD OF COUNTY COMMISSIONERS BUDGET POLICY WORKSHOP VINEYARDS PARK COMMUNITY CENTER 6231 ARBOR BLVD. NA,PLES~ FLORIDA AGENDA Monday, January 24, 2000 9~00 a.m. NOTICE~ ANY PERSON WHO DECIDES TO APPEAL A DECISION OF THIS BOARD WILL NEED A RECORD OF THE PROCEEDINGS PERTAINING THERETO, AND THEREFORE MAY NEED TO ENSURE THAT A VERBATIM RECORD OF THE PROCEEDINGS IS MADE, WHICH RECORD INCLUDES THE TESTIMONY AND EVIDENCE UPON WHICH THE APPEAL IS TO BE BASED. BUDGET POLICY ISSUES 1. PLEDGE OF ALLEGIANCE A. Employee Recruitment and Retention 1. Competitiveness a. Current job market. b. Housing costs and other related issues. 2. Health Insurance Benefit Issues. B. Proposed Median Landscaping Improvements Funding Policy 1. Countywide Improvements. a. Gateway Intersections - Funding Gas Tax Fund (313) 2. Regional Improvements: a. Arterial Roadways - Funding from Road MSTD's. 3. Local Improvements: a. Local collector/arterials - Funding from local MSTU's/MSTBU's C. Permit Fee Waivers Policy D. Revenue Diversification 1. Utility Franchise Fee. 2. Potential reduction/elimination of County Revenue Sharing Program. E. Infrastructure/Capital Funding Issues 1. Continued reduction in General Fund dollars allocated to capital. 2. Maximization of Impact Fees as a funding source of capital needs. 3. Local Option Infrastructure Sales Tax. 4. Borrowing/bonding to fund capital projects. a. Funding related to life of asset. b. Future residents benefit and should pay proportionate share of costs. 2. ADJOURN January 24, 2000 CHAIRMAN CONSTANTINE: Good morning. We'll call the Budget Policy Workshop to order. If you would join me in saying the pledge to our flag. (Pledge of Allegiance.} COMMISSIONER MAC'KIE: What could be more fun on a rainy Monday morning? CHAIRMAN CONSTANTINE: Mr. Smykowski has said that we may take less than the full three hours. I need to depart a little before 11:00. So if we're not done and I leave, it's not that I'm mad at whatever we're discussing at that time. MR. McNEES: You may be the last one to leave. CHAIRMAN CONSTANTINE: Fair enough. MR. McNEES: Especially since we were probably all up half the night listening to the same storm. CHAIRMAN CONSTANTINE: I didn't -- was there a storm last night? Item A, Employee Recruitment and Retention. MR. McNEES: I'll give a little bit of maybe overall introduction before we get into all the hearing items. We wanted to do something a little different this time with budget policy. What we've done in the last however many years I can remember is, your first look at your budget policy has been when we bring a twenty to thirty page budget policy document to you on your commission agenda on a Tuesday and ask you to approve those. And every once in a while there are one or two hot budget items on there that we'll talk about a little bit. But there are twenty or thirty or forty more that we don't discuss at all. And we tend to just end up arguing whether or not we can have a three or a 3.5 percent dollar amount for pay raises, and then you can go on. There are a couple issues this year that we felt like it would be a good idea to take a step back as we go into the budget process this summer and look at it from a broader perspective. And probably the most significant of those this morning we're going to talk about is some of our recruitment and retention issues. And we're speaking for really county employees as a whole, not just your agency but also we have had the Sheriff's Page 2 January 24, 2000 budget, and I'm glad to see some of their folks are here this morning to help provide some statistics to you. We probably haven't done a very good job in the past of documenting the pain of our salary policies and showing you what it means if we do certain things. We're not going to ask you this morning for any money. We're not going to ask you to really approve anything in terms of what will be in the budget, but more it's our intent to show you some of the landscape of what we're facing so that as we go further on in the summer with budget development, you'll understand some of the things we're bringing to you. So the good news is, you don't have to approve or deny anything this morning. We're trying to give you information that you can use as we go forward that we will continue to flush out as we go. With that, we'll jump right into the first item. It's -- as you-all know, we're always told people want the county to work more like business. Well, the good news this morning is, there's one area where we are exactly like business right now except that area is -- the labor market is horrible and we can't recruit, we can't retain. It's difficult to retain. It's difficult to find the employees we need, and we are exactly like the private business in that. I attended an EDC meeting the other day on the aerospace industry. Well, guess what? They can't get qualified employees. They can't get machinists, the same -- engineers, same people we're trying to recruit, they can't get either. So what we wanted to do is take a huge step back and tie together the labor market situation, your employee statistics on turnover and that sort of thing, and tie that together with the quality of life for Collier County employees, based on what our pay policies have been and what's happening in the housing market, just so you-all get a broad understanding of what we're trying to face, the overall areas of pay and benefits, so that we can have a little bit more meaningful conversation over some of this. John Dunnuck has spear-headed a committee -- THE COURT REPORTER: Sir, could you please keep your voice up? Page 3 January 24, 2000 MR. McNEES: Sure. They have spear-headed a committee that has looked at basically gathering some statistics and kind of painting a picture for you this morning. They've got a presentation. Please feel agree to ask questions or anything along the way because we want you to understand what we're showing and you-all may have some insight that we haven't brought to it. You're on, John. MR. DUNNUCK: Thanks for the introduction, Mike. Mike painted a pretty good picture. CHAIRMAN CONSTANTINE: For the record, you are? MR. DUNNUCK: For the record, I'm John Dunnuck, Assistant to the County Administrator. The issue we're talking about today is employment recruitment and retention. As Mike stated, part of our mission is to help to get the board to define the board's strategic position and policy for employee recruitment and retention for the next coming year and for future years. One of the goals is so we can compete with both the private and public sector locally, regionally and nationally for more qualified job applicants. It's also to retain quality employees in the organization today and to increase productivity by reducing the amount of time to fill a vacant position. Some of the recruitment issues, the regional, national and especially the local job market are extremely competitive. And we'll touch upon that in just a few seconds. The comparison of cost of living to entry level salary is unfavorable when compared to regional markets. Basically what that's saying is that it costs a lot more to live in Collier County than what our entry level salary's providing, compared to other counties. One of the statistics I want to just briefly touch upon is the unemployment rate in Collier County. From 1992 down to 1998 it's dropped about five percent. It's gone from a little over nine percent to roughly 4.2 percent, which in essence is saying that there is no unemployment in the county, when you put in the plus or minus ratios. MR. McNEES: Just before you get away from that, anyone Page 4 January 24, 2000 who can think back to their economics classes will recall something called the static level of unemployment. There is never less than that. The static is about three to four percent, so effectively we're talking zero unemployment. MR. DUNNUCK: At the same time the population growth in Collier County has steadily increased from 1992 to 1998, which is creating a need for more jobs in the area. As the two come together, you'll see that you have more jobs being created with less of an available work force to work for those jobs. And that's the increased competition, what we're talking about today. And that's just to touch upon -- the pool of available workers has decreased approximately forty percent, if you take those numbers from the nine percent unemployment rate down to four percent unemployment rate, it's basically saying that we've lost forty percent of the pool in the local area to compete for our positions. At the same time the labor and demand has grown seventeen percent over the last five years, or triple the national average. That's just an indicator of what exactly our county is doing as far as growth. As a result there are more jobs being created to compete for fewer available workers in Collier County. One of the main issues is cost of living. The average annual wages for workers in Collier County is a little over $26,000, while the state average is $27,600. At the same time, Collier County ranks as one of the seven highest cost of living counties in the State of Florida. This is a figure that they use for, I believe, the schools, the Florida Department of Education. That's the price level index. So we're well above average, if you look at the sixty-seven counties and you put us in the perspective of where we are in the average salaries. One of the main ones is housing. The cost of housing is the number one burden that challenges the state today. And that's a quote out of the Bureau of Economic and Business Research at the University of Florida. The local housing market. Collier County is currently rated as the seventh highest housing price index in the state. That's when compared to similar houses. They pull numbers from the Department of Revenue and the property appraiser's office, and Page 5 January 24, 2000 they compare it like apples to apples across counties across the state. COMMISSIONER MAC'KIE: I'm surprised they're not higher. MR. McNEES: So were we. COMMISSIONER MAC'KIE: Is that in counties, seventh highest county market or --. MR. DUNNUCK: County. COMMISSIONER BERRY: Was this taken from that school thing too? MR. DUNNUCK: Yes. COMMISSIONER BERRY: From my days on the school board, I remember we always questioned that, too. We thought that it should be higher. COMMISSIONER MAC'KIE: I'm surprised. COMMISSIONER BERRY: Yeah. There was always that question of exactly where did they get their information. Because we felt that it -- MR. DUNNUCK: Well, that's just a variable. They say they are comparing like housing areas but they don't pinpoint that -- COMMISSIONER BERRY: Yes. I can -- MR. McNEES: We actually had the same question and wanted to kind of dig into that a little bit and talk about what exactly makes up that index and we wanted to understand that a little better. COMMISSIONER BERRY: Part of it had to do with the shopping thing too on this other, and we always wondered where they shopped -- MR. McNEES: Right. COMMISSIONER BERRY: -- and got that information because it just didn't seem to add up. CHAIRMAN CONSTANTINE: If everybody could be sure to speak up because there are no microphones, so she can't hear us unless we're crystal clear. MR. McNEES: So I think it's fair to say seventh, at best, and perhaps we might be higher. COMMISSIONER BERRY: Okay. MR. DUNNUCK: One of the real important factors to look at Page 6 January 24, 2000 is where we're going right now in the county. In 1995, there were a little over 1,600 homes sold that were under $80,000, while there were a little over 600 sold that were over $250,000. Over the last four years, you can see that trend has completely changed. It's down to about 800 homes, roughly, for homes that are sold under $80,000 and the number of homes sold over $250,000 has sky-rocketed. In essence, what this is saying is that they are building the bigger homes in Collier County and that's -- the end result is they are creating greater competition for the homes that are already in place that are of your median, average working class citizen. MS. MAC'KIE: The stat looks like it's going up logically on the $250,000 home, but I'm shocked with that huge drop in '97 to '98 in the $80,000 homes. Is that -- anybody have any rationale for that? Is it just the market? COMMISSIONER NORRIS: Well, $80,000 is pretty Iow for today's market. So if you change that and look at $100,000 homes, I think you might see a different graph. COMMISSIONER BERRY: Yes. CHAIRMAN CONSTANTINE: Our impact fees alone make up, what, about eight or nine percent of your $80,000 home, so -- COMMISSIONER MAC'KIE: Is 80,000, though, a price point that could be afforded by a median income, 29,000? MR. DUNNUCK: That's part of a point we're wanting to touch upon today, if we took the average salary of a Collier County employee, about all they can afford is an $80,000 home. COMMISSIONER MAC'KIE: Yeah. That figures that -- MR. McNEES: One thing we want you to get from this graph, and you have to kind of pull it out, is, we've traditionally looked at the average price of a home and said, "Well, you can't count the average in Collier County because that's driven up by the mega homes." Well, what this graph really shows is that's not the only factor anymore, and that, yes, the mega homes do drive up the -- Average but when you look at the number of lower end entry level houses, they are just not there like they used to be. COMMISSIONER BERRY: Right. COMMISSIONER MAC'KIE.' And what can our people afford Page 7 January 24, 2000 to live in, and it ain't there. MR. McNEES: Right. And it used to be, even though the average was high, there still was affordable housing out there being constructed. It's not happening now. MR. DUNNUCK: One of the other things I wanted to touch upon were apartment complexes. A one bedroom, one bath apartment now is starting in the range of approximately $600 a month. At the same time, the average two bedroom, two bath apartment costs roughly $630 a month. This is really comparable to about an $110,000 mortgage. So, you know, that's another indicator of what's driving up the market. Since they're not building the smaller homes, people are moving towards apartments and the market value is pushing up the apartment costs. And this is just kind of an indicator we wanted to show of some typical apartment complexes and what their rates were. We used River Reach, Arbor Walk, Summer Wind, Waverly Place. And then we compared it against the average. So these are an area mixture of, you know, off Airport Road to Pine Ridge Road to Golden Gate. COMMISSIONER MAC'KIE: And a couple of those, at least, are affordable housing subsidized, right? River Reach is, I know. MR. DUNNUCK: That's correct. COMMISSIONER MAC'KIE: And I think Summer Wind. MR. DUNNUCK: The housing trends. Kiplinger's predicts home values in Collier County will increase approximately seventy-five percent in the next ten years. Third in the nation. That was the recent stat we just received. MR. McNEES: Give them your uncle's tip. MR. DUNNUCK: Buy homes now. COMMISSIONER MAC'KIE: We should have bought when Barbara got here. COMMISSIONER BERRY: You got that right. I wish Barbara had bought a lot when she got here. MR. DUNNUCK: Houses being affordable. This graph kind of iljustrates where we've been over the last several years as far as what the typical increase has been for an employee's salary based upon the board approval and what the housing sales Page 8 January 24, 2000 inflation rate has been. It's showing that it's about forty-one percent for the housing, when it's roughly a little under fifteen percent for employee salaries. COMMISSIONER MAC'KIE: So basically, even if there had been housing available, which there -- they are not building it at a rate, even if there had been housing that employees could have afforded, our -- the cost of that housing has not -- has exceeded the rate of raises; is that what this graph says? MR. McNEES: No. This is the real housing that is available. MR. DUNNUCK: This is the real housing. COMMISSIONER MAC'KIE: This is real housing, not $80,000 housing? MR. DUNNUCK: Correct. COMMISSIONER MAC'KIE: Thank you. MR. McNEES: One of the things -- you know, it's easy to say, well, yes, but our existing employees who are facing the rising housing cost, that they already own homes, perhaps. But what we would say is what this shows is, how critical it is for us to retain the people that we have so that we don't face this new employee scenario in a growing -- in the market that we've got. And that that becomes even more critical, that we've got to retain, plus you have existing employees who you want to get into a home who may not have had that opportunity yet. And it gets harder and harder, year in and year out, for people to advance themselves in this kind of market. MR. DUNNUCK: And, in essence, what it's saying is a loss of quality of life. You know, they are losing their disposable income if they want to get a house. And this just touches upon that step. The percentage of salary wages to housing increases diminished by nearly twenty-six percent over the last five years. This results in less disposable income, less opportunity to save for retirement and less opportunity to upgrade standard of living. And then less opportunity to buy a home. What are some of the realities of this? Employee turnover. Over the last three years, eighteen percent of our professionals have left, and this is an annual average. Of the office and Page 9 January 24, 2000 clerical, twenty-one percent. Of the service and maintenance, thirty-two percent. MR. OLLIFF: That's every year. CHAIRMAN CONSTANTINE: That's every year. That's not a total of the three years? MR. DUNNUCK: No. That's every year, that's the average. MR. McNEES: Lest I overstate the obvious, I'll say it again. Thirty-two plus thirty-two plus thirty-two is -- COMMISSIONER BERRY: Is not good. MR. McNEES: -- ninety-six. That means, in a three year period, you've essentially turned over your entire service and maintenance staff. COMMISSIONER MAC'KIE: Wow. MR. McNEES: And we're glad you're gasping. And, now, the easy thing to say is, we all aren't treating those people right, or they would stay. COMMISSIONER MAC'KIE: And wonder why they didn't go to a -- MR. McNEES: And what I would say to you about that is, exactly. We just had a referendum on how are you doing as management, and that would be asking about a union, and that went to that group of people, that core group of service and maintenance people. They voted by a wide margin not to unionize, which says perhaps management isn't as bad as it might be portrayed. So that there are issues out there, other than the way we are treating those people that would cause those -- COMMISSIONER BERRY: So it's not a -- it's not a working condition that's the problem. MR. McNEES: Right. COMMISSIONER BERRY: Okay. MR. McNEES: I can't prove that to you, but -- COMMISSIONER BERRY: But that's what this -- this would indicate that. MR. McNEES: A case could be made for that, yes. CHAIRMAN CONSTANTINE: How do those numbers compare to, say, ten years ago, '87, '88, '89 versus '97, '98, '99; are those Page 10 January 24, 2000 numbers atypical? I would assume yes but I don't know yes. MR. DUNNUCK: Yes. MR. McNEES: Yes. They are atypical. MR. DUNNUCK: One of the things we also wanted to look at was to kind of show an area of where residents, working class people, might have lived in the last ten years or where they are looking for homes now. And we wanted to look at Naples Park and Golden Gate and kind of show the annual market value appreciations in relation to the employee salaries over the last several years. And this is from 1995, I think through 1999. We looked at the property appraiser's office for the value and Golden Gate's gone up roughly twenty percent whereas Naples Park has gone up nearly to thirty percent, which shows a greater ratio. I think Naples Park has caught up, you know, first. It's closer to the water, it's showing a fair market, and I think you'll probably see that trend in Golden Gate City as well. CHAIRMAN CONSTANTINE: What's your source for that? MR. DUNNUCK: This is from the property appraiser's office, which, you know, there are some qualifiers in it. Obviously new construction would go into that value of the percentage. This is the type of home that was affordable in 1994 by a county employee. Rough estimates of the employee's salary, what they could -- you know, if you took it at two and a half times, what they could afford. This is roughly about 1,500 square feet, two-car garage. MR. McNEES: And that's based on the average salary of a county employee in 1994, right? MR. DUNNUCK: Correct. This is what an average employee could apply for today -- COMMISSIONER MAC'KIE: If they could find one. MR. DUNNUCK: -- from the rate. And this is a basic home that's built. It's probably 900 square feet, at tops, and it's a one-car garage. COMMISSIONER BERRY: And where would these be being built? MR. DUNNUCK: This is Golden Gate City. CHAIRMAN CONSTANTINE: Our backyard. Page 11 January 24, 2000 COMMISSIONER BERRY: And in my district as well because they're going east of 951. COMMISSIONER MAC'KIE: As far as they can go. COMMISSIONER BERRY: That's right. COMMISSIONER MAC'KIE: It's the only place they can afford the land. COMMISSIONER BERRY: Absolutely. MR. McNEES: Someone might say that we tried to find some sensational example, but, actually, we tried to make a fair comparison, based on the numbers, what's out there and what's a representative house, and this is what it looks like. So, obviously, we're trying to get you to think about what do you feel about the quality of life of your employees. Is it acceptable that we allow it to continue to erode, based on this housing issue? COMMISSIONER BERRY: Well, I think what's more important, Mike, is, can we afford to continue on this trend when you look at what it costs to re-train or to get a new person in, get them on line and, if you've got a two-year period, I think you have to look at all those kinds of things. MR. McNEES: Amen. MR. DUNNUCK: Well, you know, Tom brought up the great point the other day, you know, you would have a better employee if you could get them into a home as opposed to a mobile work force where they are all renting. MR. OLLIFF: When we've got a thirty percent turnover, the employees that are coming in can't afford to buy that house. They can't come up with that first -- they can't come up with that down payment amount, so they are renting. And renting employees are mobile employees. Those are the ones that will turn over on us. And, frankly, the quality of service that we can provide out of a thirty percent turnover rate is not good. COMMISSIONER BERRY: And I don't really want them all driving in from Lee County, unless that's a real personal choice for whatever reason. COMMISSIONER MAC'KIE: We don't want that to be the only choice. Page12 January 24, 2000 COMMISSIONER BERRY: Right. MR. OLLIFF: Well, it's a personal choice because of this reason. COMMISSIONER CARTER: Somewhere in here, will you show me how we stack up with other employers in the community? I know we're on the curve, but they have to be confronted with the same problems we are and what do we have to do to play catch up? MR. DUNNUCK: We won't necessarily touch upon that today, but that's one of the things we want to bring back for future budget workshops. You know, some of the innovative things that we've seen, though, have been signing bonuses, you know, finding places to live for the people, giving them that down payment for those apartment complexes and security deposits. Creative things like that, which is what we'll be looking for for the future. MR. McNEES: Commissioner, I think what we'll find is, just from our superficial research, we are facing exactly the same market, but we are behind the curve in dealing with it. We are not doing signing bonuses. Some have actually paid bonuses to their people, based on how far away they lived, if they were willing to move to Collier County. They helped them with housing assistance, they did a number of things to actually get them to come here. COMMISSIONER CARTER: We've got the same problem but we're not using the innovative, creative employee hiring retention packages that our competitors here are using. MR. McNEES: Yet. COMMISSIONER NORRIS: Not that it will change the basic premise of what we're talkin9 about here today, but I do want to point out that in our statistics when we say turn over thirty-two percent per year, that doesn't mean that ninety-six percent of our employees have changed in three years. It could be the same thirty-two percent at the bottom, just rotating and the top sixty-eight could be static. I'm sure it's more than that, but it could be that. MR. McNEES: Absolutely. Page 13 January 24, 2000 COMMISSIONER NORRIS: So you can't say we're going to lose ninety-six percent of our employees, because that may not necessarily be the case. I haven't seen anything that really defines -- MR. CARTER: That's true. But every time you spin one, it costs you a hundred percent plus of whatever that employee base and compensation package is to go out and find somebody else. It used to be ninety-three. It's beyond that now. Very expensive proposition every time you spin somebody. MR. OLLIFF: And I'll tell you, there's also a quality issue when you are hiring because just as a county there are certain steps that we have to go to for insurance purposes, whether it be physicals or whether it be background law enforcement checks for certain positions and those kinds of things. If you've got an employee and you're out there trying to compete with the private market and it's going to take us thirty days to bring that employee on, when that employee can go to work for a Boran, Craig & Barber. Tomorrow, you know, they're going to work for Boran, Craig & Barber, and then we're left with who can afford to sit around and wait for thirty days because there's no one else wanting to hire them. So the quality of who we're hiring is not very good either. MR. McNEES: And when they're getting a signing bonus to go to the Barbers and they can put $1,000 in their hands today, that makes a real problem. COMMISSIONER BERRY: Right. CHAIRMAN CONSTANTINE: You said you don't have that for us today, but if there are businesses out there doing that, I would love to see what the real impact is versus the theory. Because I know Naples Dodge, for example, has tried fairly substantial signing bonuses for their maintenance mechanic staff and still aren't doing it. So I want to be sure, whatever we put in place isn't just created in theory but is having some impact. MR. SMYKOWSKI: That's a good idea. MR. McNEES: And we've been hearing their ads on the radio THE COURT REPORTER: Sir, I can't hear you. If you could, Page 14 January 24, 2000 please keep your voice up. MR. McNEES: We have been hearing their ads on the radio and we are very curious to see now, as some time goes by, how effective that's been for them. MR. DUNNUCK: The issue is the county is unable to retain and recruit employees, particularly in specialized areas, due to the marketplace demand and higher salary offerings by competing organizations. Some of these specific positions include real property specialists, planners, engineers and transportation, clerical support staff and Sheriff's deputies. There's advertised vacancies that remain open for long periods of time. We have a Planner 2 position in Comprehensive Planning that was posted in October of 1998 that still remains unfilled, a Senior Planner position in Transportation Planning that was posted March of 1999 and remains unfilled. MR. McNEES: Now, this is not a cutting session. (Laughter.) MR. DUNNUCK: Now, what this really translates into is lost productivity. It means there is a slower response time for Sheriff's deputies to crime activities. One that's near and dear to our hearts, fewer roads designed and planned in the fiscal years. COMMISSIONER BERRY: Yeah. I'm one of those knuckleheads. That's near and dear to my heart, too. MR. DUNNUCK: Less time to acquire rights of way for roads as well as property for future growth and slower levels of service to process something like an accident report from the Sheriff's office. Fiscally speaking, there's going to be a greater strain on the budget to handle overtime accumulations to keep up with work. You know, we have this large pool of people who are having to pick up the slack somewhere, keep things going, keep the wheels turning. More expenses towards costly private sector contractual services. You know, we have to outsource things. And a greater amount of money spent to train employees to handle skilled positions. There is a large cost when we lose those employees, to have that large turnover rate. Maintaining quality of life for county employees. There are Page 15 January 24, 2000 numerous examples of employees who work two and three jobs in order to provide an adequate standard of living for their families. I think in Parks and Rec. we polled some of the maintenance staff and I think it was along the lines of thirty percent of the full-time have a second job. It's reasonable to expect that this condition may impact their performance at the county as a result of fatigue, you know, working two lobs, trying to make ends meet, they will lose quality. COMMISSIONER BERRY: Just stop just a second, John. Can we -- don't go back, but just make a note that we talked several times about outsourcing and Jim's -- we've talked about that, and I know we talked about it back when I was on the school board, but what exactly is the, quote, sometimes increased cost of outsourcing as opposed to having it done inhouse? Because we were always told there's some things you can outsource but -- and one of them happened to be maintenance, in our case maintenance of school buildings, et cetera. And that we always found that that was supposed to be, quote, cheaper. Well, but you had lost some of the quality when you did some of that outsourcing. It became a, quote, job to get done, but some of the little extra things that needed to be done in that process got lost, because there was no pride, there was no, "This is my domain here. I'm representing me, taking care of this and, you know, I do a good job on my job." They didn't have that. They simply came in, mowed the lawn, clipped a few bushes here and there and were gone, because it was time and they had to get to the next ]ob. So do we have any -- MR. McNEES: We do a great deal of outsourcing already and have over the years gone back and forth with some different things. I think what we have found is that the amount of work that we can successfully outsource, at least in this market, has gotten down to just basic menial work, and what -- here's what I would paint for you. Think about all of the grief that Sue Filson and your other people have dealt with just on what time of day they are going to come empty the wastebaskets. You've all tuned into that over the last couple years. COMMISSIONER MAC'KIE: Yes. Page 16 January 24, 2000 MR. McNEES: And how much -- how difficult it's been just to get everybody happy with what time of day they come to empty the trash. COMMISSIONER MAC'KIE: I tell you, that was one of the busiest parts of being chairman last year. MR. McNEES: Well, there you have it. That's -- there you go. That's the problem you're describing. MR. SMYKOWSKI: And at Facilities you have contract people who essentially ride roughshod out of the contract to ensure that the work is done, going around, taking pictures, saying this wasn't done adequately, this wasn't, this wasn't, rectify it. So that's been an additional cost. COMMISSIONER BERRY: But I think this has been a question forever, perhaps, of what is the best -- where do you get the best quality, the best job done. Is it inhouse or going out, you know, with that contract. Of course the biggest argument for going out is, well, then you don't have them on your payroll in terms of the benefit package and all of those kinds of things. But I hope that we can have some numbers somewhere along the line that show that, you know, maybe it's better -- one way or the other. It's better to do it this way, but it may come down to certain jobs, you know. MR. McNEES: I think Leo would say we pretty much -- that's an analysis that we're constantly doing, whenever those contacts come around. MR. OCHS: Absolutely. Even in our trades area, we have a core group of full-time tradespeople, but we supplement those people every day with contract trades people when it makes sense. If we have a mechanical problem in Immokalee, we're going to use a contractor that we have out in that area on a standard contract because it's more cost effective. As I said, as our facilities expand, we haven't grown the full-time work force at the same ratio or percentage, so what we've tried to do is supplement with term contracts with all of the different trades in the area, two or three standing contracts for each of the trades, and that way we get what we think is the best value for the board, without sacrificing that quality, which is important, Page 17 January 24, 2000 particularly when you have mechanical systems, electrical systems in jails, for example, that are very intricate. You don't want contractors that aren't familiar with those facilities rolling through there, because, frankly, we spend most of our time then babysitting the contractors. So it doesn't always make sense to contract out, but where we can do things cheaply and simply with contract help, we certainly do that. MR. DUNNUCK: This next slide is -- this is basically what you're looking at with your average employee, in some instances. This was sent in by Public Works. We didn't pick through to find out the hardest case of any sort. This is your middle income, $25,000 a year person, employee salary with his wife's supplemental income, and it's just showing on the other side the expenses. They are renting, $650 a month. Their day care is out of this world, and then they have their basics, which is, they've got one car paid for and the other car they have a fee on. But their gas and insurance and everything else combined, child expenses, which is basically your diapers and things along those lines. COMMISSIONER NORRIS: This example is not going to be really representative of reality, because the wife is working for $70 a month. That's not going to happen. Either the wife is going to have a job that brings in more income or she's going to stay home. She's not going to work for $70 a month. MR. OLLIFF: That's monthly income, $850 a month. COMMISSIONER CONSTANTINE: I think your point is, it's a wash. COMMISSIONER NORRIS: Take off the day care because she's working and you've got $70. COMMISSIONER BERRY: But, John, unfortunately, there are people that are doing just that. COMMISSIONER MAC'KIE: Exactly. COMMISSIONER NORRIS: Well, that's the dumbest thing I've ever heard of. COMMISSIONER BERRY: I'm not arguing that point. But I'm telling you, it's happening, because they don't sit down and figure out -- Page18 January 24, 2000 CHAIRMAN CONSTANTINE: Moving right along. COMMISSIONER MAC'KIE: Well, and the other thing I wanted to point out there is, unless they are all sleeping in the same bed, that rent is too Iow, because that's a Iow one bedroom apartment. MR. DUNNUCK: That probably might even be a duplex, might be a two bedroom duplex. COMMISSIONER BERRY: Yes. It could be a duplex. COMMISSIONER MAC'KIE: And the other thing I want to plug here for a second is a question of whether or not onsite day care might be, you know -- we see what a big hit that is for our employees. If we could subsidize day care somehow or have some sort of onsite facility. We talked about that years ago, maybe that's something we ought to be looking at. Just a plug. MR. DUNNUCK: Policy decisions. This is kind of an overview of what we've just discussed. Competition with other organizations for a limited pool of qualified applicants. Competitors are offering incentives to attract employees from this pool, and creative incentives to come and work for Collier County. Staff's role in the coming months is going to be to provide the board with innovative solutions to address these issues to meet our mission, to define the board's strategic position and policy toward employee recruitment and retention. Any other questions? COMMISSIONER CARTER: John, I think the last part, you're absolutely right. I need a full package. I would like to know what happened to the organizational study we're doing. That's going to be a feed to this. We can't just look at bits and pieces. We've got to see the whole thing. You are going to have to tell us in a whole package, this is what we can do to be more competitive. What's the cost factors to that? I could not make a decision or even make any input at this point by going piecemeal. Should we do this piece or that piece? That's not going to get us where we need to be. MR. DUNNUCK: You're absolutely correct. That wasn't our intention today. Our intention today was we were attempting to Page 19 January 24, 2000 paint a picture of what we're looking for and then to come back with this comprehensive plan to look at, to give the board options to choose from. COMMISSIONER CARTER: How soon can you come back to us and how will this affect the budget process? MR. McNEES: We'll be bringing to you some budget policies within a month. I think Mike is probably bringing them to you in February, where we will begin to talk about some specific options and we will also have the organizational plan and survey. We actually have it in draft form now and it's being finalized, and we'll compile those things together. And it is absolutely our intention to bring to you some proposed solutions. Just so you don't think that what we're trying to do is soften you up to break the bank over the course of the summer, that's not our intention at all. We understand that there are fiscal limits that you-all are going to put us under, and we've talked about it as a management team. And if it gets to the point where we have to sacrifice certain things to be able to provide what we need to for our employees, then we're prepared to if we have to. So we're not just getting ready to try to get you to open up your wallets or the taxpayers' wallets. We wanted to be effective with this. We're just trying to get you to understand the environment we're working in in a little bit other specific way. The point being to talk about all of these issues in a different way than we have in the past, in a way that's more effective, that actually deals with the problems which we've got. So I appreciate, Commissioner, that you're not ready to make decisions. We're not asking you to. We will bring more to you later. MR. SMYKOWSKI: In addition we will have the joint pay plan studies that's going on, that's currently underway. Those results, we're waiting on those in February, and that would all tie into your budget policy to get a better idea in terms of fiscal impact of whatever it is we might recommend to you. So you would have the benefit of that plus the organizational climate survey, so it will all kind of weed together. COMMISSIONER MAC'KIE: What's the timing on that; is the Page 20 January 24, 2000 organizational climate, that's the FTCU thing? MR. OCHS: First meeting in February. COMMISSIONER MAC'KIE: Oh, it's all coming together. MR. McNEES: The only other thing we want to make sure, we don't want to do this with the Sheriff coming in one day and us coming in the next day and saying what about us? We want to be working with them so that we're all selling the same thing. We've all got the same employee situations. COMMISSIONER MAC'KIE: You said the Sheriff, but I'm sure you mean the Clerk, the -- MR. McNEES: Absolutely. MR. OLLIFF: I think when we got together and talked about it we overall just wanted to make sure that you had a real understanding that, in fact -- I told Mike, I went to a conference the other day and a guy said, "As government, you're not hiring the best of the best any more, you're hiring the best of the desperate." And we're hiring the best of the desperate and then we're not even able to keep hold of those, because they are turning over at a thirty percent rate for us, and the quality of service that we can provide to the community is not what they expect from us and we need some help in that regard. CHAIRMAN CONSTANTINE: I'm sure there are instances where we have that happen, but just so that the newspaper or someone doesn't pick up and indicate that we have 1,200 desperate people working for us, I think we have, in this room alone, an example of some very, very fine employees. MR. OLLIFF: No. I guess the example, though, is like in parts of maintenance. I guarantee you that we probably carry somewhere around fifteen to twenty percent vacancy rate all the time, and so trying to just get the grass cut on a weekly basis is very, very difficult. COMMISSIONER MAC'KIE: Well, and just because I happen to know about it because, not just sitting here, but my brother is working in the Sheriff's office, but he's married to somebody in dispatch now and can't believe how hard it is for them to get people in dispatch. It's amazing. And that's frankly more important than getting the grass cut. And they are all up there Page 21 January 24, 2000 working like two twelve-hour shifts because they can't get people to work. MR. SMYKOWSKI: Interestingly enough, when you were mentioning the people in this room. The people in this room, in large part, are also longer termed employees. Part of our retention challenge is getting beyond that three to five year hurdle where you've made the investment, the employee becomes essentially trained and self-sufficient, proficient in their ]ob, and those are the people we're losing. COMMISSIONER CARTER: I think all of this is important as an educational effort to the community too. We have a lot of issues we're trying to present. And I think it's time that we really do a first class ]ob of getting the community to understand what we're trying to do and that it does cost money to have a first rate quality organization working for you and servicing you. COMMISSIONER MAC'KIE: That's a good point. Is there a plan for disseminating this information you shared with us to the general public? Could we use our public information office, maybe? CHAIRMAN CONSTANTINE: It's probably premature right now, but as we get to the comprehensive study we're talking about, I think that's very important. COMMISSIONER MAC'KIE: Well, defining the problem is something that -- COMMISSIONER BERRY: Unfortunately, it's not popular for government to -- COMMISSIONER MAC'KIE: Whine. COMMISSIONER BERRY: Well, to be competitive in the marketplace. COMMISSIONER MAC'KIE: Good point. MR. McNEES: Our challenge, and David reminds me and says it really well, what we have to inform the public as well as inform you-all is, not necessarily that it costs money to maintain our quality of service but what it costs us to continue the way we are. COMMISSIONER BERRY: Exactly. MR. McNEES-' That that perhaps costs us more than putting Page 22 January 24, 2000 our money in the right places so that we're a little more effective than continuing to have the turnover problems we have and the retention problems, because that costs money too. CHAIRMAN CONSTANTINE: Moving right along. The health insurance benefit issues. We got a handout on that. Leo? MR. OCHS: For the record, Leo Ochs, Support Services Administrator. I have been asked to spend just a couple minutes this morning to talk briefly about the status of our medical benefit program and looking towards fiscal year '01, what are some of the challenges or issues that we need to face. I gave you a one-page summary here of the bar charts that you have in your packet that show trends in the medical plan. And Jeff will go over those in just a second in a little bit of detail, but essentially the issue going to fiscal year '01 is, what is the most appropriate strategy for us to pursue in the face of rising medical benefit plan costs, coupled with this highly competitive labor market that we just discussed? In terms of some of the background data, in fiscal year 1999 our medical and prescription drug costs rose like twenty-four percent. Prescription drug costs remarkably accounted for fully forty-two percent of that overall increase. Going into the current fiscal year, our medical plan costs are expected to increase by about 6 1/2 percent and in fiscal year '01 to increase again by about eight percent. Barring any changes in our benefit levels or any reallocation of our premium dollars, we are projecting at this point about a twenty-five percent premium increase in fiscal year '01. And, again, in terms of the major contributing factors, I mentioned a huge increase in utilization of our prescription drug plan. And Jeff will go into a little detail on that in a minute. The cost of those prescription drugs are rising as well as the utilization. And I should mention that this is not just a Collier County problem or a State of Florida problem. This is truly a national trend, unfortunately. And I point out under contributing factors, number 4. The source there is the Kiplinger report for December of '99 Page 23 January 24, 2000 that sets forth -- excuse me, the year 2000, the industry medical inflation expenses will increase roughly ten to fifteen percent, which is the largest increase since 1992. And then the other major contributing factor, and Jeff will talk again a little more about this in detail is, we had an unusually large number of what we call shock claims in fiscal year '99. Those are individual medical maladies or occurrences that cost $60,000 or more for an individual occurrence. Then, in terms of options -- and we'll talk about these as we go through the budget process this summer -- you have one or some combination of these to consider, reduction of benefit levels, shifting more cost to employees, increasing our investment in what I call wellness or preventative medical programs and services. The Sheriff's agency has done a real good job with this because they have a fitness for duty standard and they are able to send all of their people through a rigorous physical and pre-employment assessment and a wellness assessment. Then, finally, another factor, frankly, given the competitiveness of the labor market, and again the Kiplinger report speaks to this, is that most employers are simply absorbing the cost because of the competitiveness of the labor market right now. The last thing they want to do is drive people out by increasing their costs. COMMISSIONER NORRIS: Let me make a comment on the prescription drug plan. Right now we have a $5.00 deductible, I believe it is, if you use generic drugs, and $10.00 if you use the brand name drug. But the price disparity between the two is tremendous in a lot of cases. Perhaps we could have a $50.00 deductible on brand names and a $5.00 deductible on generic. I would suspect that would encourage a lot of people to go generic and therefore probably could save us considerably. And I have no idea how much, because I don't have any data to back it up, but that's a suggestion we might want to look at. MR. OCHS: It's an excellent one and in fact we're going to be coming to the board in the first meeting in March with some recommendations exactly like that related to our prescription Page 24 January 24, 2000 drug program. And that's probably a good segue to Jeff because he's got a few things to say about that as well. COMMISSIONER BERRY: The only comment I might have, if you start talking about reducing the benefit levels, I think you're going to have -- particularly in the blue collar sector, you're going to have more problems trying to retain people. COMMISSIONER MAC'KIE: I think thirty-two is a big inflation rate. COMMISSIONER CARTER: Well, I don't think I and 2 are really an option for us at this point. COMMISSIONER BERRY: I would tend to agree with you. MR. WALKER: Good morning. My name is Jeff Walker, Risk Management Director. I appreciate the opportunity to speak to you this morning about health insurance claims and claims issues that we're dealing with, particularly as they relate to our overall recruitment and retention. Because this year's going to be -- it's going to be a major factor in that area. Just to give you a little perspective, in terms of the number of health insurance claims incurred -- this is number of claims filed. And you need to think about this in terms of the overall medical plan and then the prescription drug program. Prescription drug is really carved out, it's separate than the medical plan. You go to your doctor, that's one thing, the prescription drug is another thing. So these are really only medical claims, not prescription drugs. As you can see, that held pretty level, between '98 and '99 we had somewhat of a jump, in the years before that it held pretty level. MR. OCHS: Jeff, excuse me. Just one other thing as we go through this, remember that the board's medical benefit plan and prescription drug program includes all of the constitutional offices as well, with the exception of the Sheriff. So it's not just board employees, it's all the other constitutional, with the exception of the Sheriff's agency. MR. WALKER: To put this in perspective, if you look at it on a per employee basis, which really makes it apples to apples, actually our utilization of the plan in terms of the number of Page 25 January 24, 2000 claims filed remained -- actually dropped a little bit and remained level with '96 and '97. So, really, the number of claims being filed on the plan is really not the issue. To give you a picture of annual claims costs, they jumped significantly between '98 and '99, from 4.7 million to 5.9 million. That's a huge jump in one year. And what we're going to look at is there are basically two factors which contributed to that, which we'll talk about in just a second. This is the average cost per health claim that's being filed, it's $309, and that jumped quite a bit there between '98 and '99. This is just a background of the number of enrolled employees in the plan since '95, and you can see we've jumped from almost 1,200 to almost 1,500 during that period of time. COMMISSIONER MAC'KIE: Enrolled employees, do we have stats on the families? MR. WALKER: We have about -- in total, enrolled members in the plan is almost 3,300 people. COMMISSIONER MAC'KIE: 3,300. MR. WALKER: This is the annual claims cost per employee. And you saw a significant jump between '98 and '99, almost $600 per employee, which is a significant amount of money. This is probably one of the major factors, which is prescription drugs. This is the number of prescriptions filled. We had 21,830 in 1998. That jumped to 28,847 prescriptions filled. That's almost -- that's a little over a 7,000 prescription increase in one year. That's a huge number. It's thirty-two percent. There's a lot of things driving that. There's a lot of new drugs coming on the market, direct advertising is a huge factor. You can't turn your television on now without seeing an advertisement for prescription drugs. So that's driving demand. Employees are asking for these prescriptions rather than the doctor prescribing them, and that's a huge factor. The fact that there are a lot of new drugs means that there aren't a lot of generic substitutes available for them, which drives the cost as well. This is a profile on prescription drug costs. They jump significantly, 64.2 percent. Page 26 January 24, 2000 COMMISSIONER MAC'KIE: In one year? MR. WALKER: In one year, from 765,000 to 1.2 million in one year, so that sort of speaks for itself. COMMISSIONER BERRY: Go buy pharmaceutical stock. MR. WALKER: Enrolled in a medical plan, you're talking 4.8 to 5.9, a 1.1 million increase, and 500,000 of that was prescription drugs. COMMISSIONER MAC'KIE: Okay. The lessons of the day, buy housing and buy prescription drug stock. MR. WALKER: That's right. Just to summarize, prescription drug utilization was up thirty-two percent in 1999. Paid claims for prescription drugs were up sixty-four percent in 1999. Drug inflation is running anywhere from fifteen to twenty percent, and prescription drugs comprised forty-two percent of claims costs in 1999, so -- cost increases in 1999. So you can see that's where a large part of the problem lies. The second area that is really driving health plan costs has to do with catastrophic claims. And those are significant claims such as cancers and heart attacks and other types of things. And we've seen a marked increase in those. Right now I know that we have at least six large claims that are outstanding, that are six figure type claims. And that really comprises the second part of that 1.2 million dollars, the largest portion of it, because, as you saw, utilization is really not going up, the number of claims being filed. What's really driving it is this and catastrophic claims. The third area is excess insurance costs are going to be going up significantly in the year 2000. We got a renewal. Originally they wanted a ninety-two percent in our excess insurance cost. That goes back to those catastrophic claims, because that's basically what that insures. We negotiated that as best as we could. Went to market, did all the competitive things that we could and got that back to sixty-four percent. But it's really reflective of our plan and what it's experiencing. Some of the options that we're looking at, as Leo mentioned in response to Commissioner Norris' question, is to increase the copayments on prescription drugs. We have not done that since Page 27 January 24, 2000 1994, and it's time that we did that. We will be coming to the board with an executive summary to change the prescription drug copayment schedule -- COMMISSIONER MAC'KIE: Can I just say that I hope that, if you come to us with that, that it will be a part of the package Mr. Carter was talking about, that you don't just give us that one little piece and say, "We haven't done it since '94 so we should have a copay increase." Maybe we shouldn't if it's how we're going to try to keep our employees, because, you know -- MR. OCHS: The timing on that will be, you'll see the organizational audit survey results in the first meeting in February and you'll see the consultant study report the second meeting in February. So you'll have the benefit of that data along with staff recommendations on turnover and how to reduce our turnover rate. And then in March we'll come forward with this. So you will have had the benefit of that other information. COMMISSIONER MAC'KIE: It seems to me they ought to be all the same package. Because I don't want to talk about pay plan without talking about benefits. Because oftentimes, you know, the salary is not great but they got this great prescription drug plan and they cover the kids for the well baby visits and whatever. I don't want to talk about pay plan without talking about benefits. COMMISSIONER CARTER: Can we bring it all together in one -- MR. OCHS: Yes, we can. We were just to trying to meet the budget policy deadline. COMMISSIONER CARTER: I understand. MR. OCHS: If Mike can push that up or we can get another week or two on that then -- COMMISSIONER CARTER: I really understand that, and I know what Commissioner Mac'Kie is saying. Let's get it all down so we can see the whole picture and then we can be able to discuss it and integrate it so that we can make a reasonable decision instead of piecemeal and not doing the right thing. MR. McNEES: We have actually talked about letting the budget policy slide a little bit in certain portions where there is a Page 28 January 24, 2000 little more ambiguity than perhaps we've built in in past years in February, so we can bring a more comprehensive package, so, understanding that the budget people get really nervous when you talk about ambiguity and dragging that into the summer. But it is really our intention to do it more as a comprehensive package than to try to make you make dollar decisions in February on salaries when some of these other things are still out there. COMMISSIONER BERRY: You need to see it all. MR. WALKER: The other issue with regard to prescription drugs is to institute a formulary. Let me give you a real quick lesson on what a formulary is, if you're not familiar with it. Essentially you identify, in this case, about 500 typically brand name drugs that can be purchased at deep discounts, and you provide incentives to use those through lower copays than a non-formulary drug. What that will mean is if we could go to a three tier copayment system, generic, formulary and then outside the formulary copay system. COMMISSIONER MAC'KIE: That means you order your medicine through the mail, right? MR. WALKER: There would actually be three tiers to that as well. COMMISSIONER MAC'KIE: Everybody's doing that. MR. WALKER: The third thing is to institute cost shifting through plan design, that's higher deductibles and so forth. Let me say this. I think, in light of the statistics, increasing the deductible really isn't going to have as much effect on planning costs as what you might think, simply because what's driving it is prescription drugs and catastrophic claims. So you increase somebody's deductible a hundred dollars, that six figure claim isn't going to be affected too much by that. A lot of those you just have to kind of ride out and then see some correction. The fourth thing, institute cost sharing through payroll contribution increases. That's simply what the employee pays for their health care. The fifth thing is wellness programs. We have included a wellness program in coordination with the Parks and Rec. Page 29 January 24, 2000 Department. They are doing a great job in putting together the parts of that. The first part will roll out in February in terms of the employee health fair which will be held. We encourage all of you to go. I believe that's February the 9th at the supervisor of elections' office. And our goal this year is to get thirty percent of our employees through wellness profiles so we can get a better picture of what the health status of our employees are. One of the other things that I want to institute is doing wellness profiles on all of our new hires so that we develop a database on the health characteristics of the employees that we're hiring so that we can get them started on wellness from day one. So -- and then there are many other components too, which you'll be hearing more about. And then the last option, really, is just to absorb the cost in a tight labor market, and that gets back to our previous discussion. I think that if you talk to our employees, one of the biggest factors that attracted them here is the fact that their health insurance does not cost them very much. We are extremely competitive in that area, and I think that if we saw major increases in payroll contributions or plan design changes, that would have an effect on our ability to compete. So that's a factor we need to think about. Are there any other questions? That's basically my presentation. CHAIRMAN CONSTANTINE: Thank you. MR. McNEES: The next thing I wanted to talk about, as you know, year after year we piecemeal and argue and fight about how we are going to pay for individual road maintenance or median maintenance and road/median beautification projects. It's been actually developed, a plan, last summer that we think now we need to bring forward in a more formal way so that you-all do not have to worry about, if you want to do a particular project, how we're going to fund it but rather that we have this sort of an adopted policy. So, Ed? MR. FINN: Thank you, Mike. COMMISSIONER MAC'KIE: May I ask a question before you Page 30 January 24, 2000 get started? Because Ed and I met before budget last time, and what he described made a lot of sense to me, it sounded like a good idea, and then the people of the community heard about it, freaked out, pointed out to me problems with it. Is this a plan that has been, for example, through the Naplescape board or other community people? I just don't want to adopt something in a vacuum. MR. McNEES: I sat with Rick Buckner and Mike Pruitt on Friday afternoon and they said, "Looks good to us." CHAIRMAN CONSTANTINE: Let's hear what it is. COMMISSIONER CARTER: For the record -- MR. FINN: For the record, Edward Finn, Interim Public Works Administrator. I think all the board members did have an opportunity to be briefed on this program last year and, in terms of formal policy making, the board formally adopted the maintenance funding into what are called the road MSTDs. What we're hoping to do here is get not only the maintenance but the construction funding concept adopted into policy for county-wide improvements. Our planning calls for identifying gateway intersections and consider funding in priority funding order from gas taxes. That's essentially the major gateway intersections. And, in your package, those are specifically identified on B-3 -- actually all of the roadways we are talking about, and on B-5 is general location maps of those intersections. Regional improvements. Identify those arterial roadways and consider funding from the existing road MSTDs and those MSTDs are the local road construction and maintenance funding districts. Those are ad valorem taxes. The maintenance of the landscape medians would be funded from those same MSTDs, and that's consistent with the policy that was adopted last year. Finally, local improvements, these fall into a category that would be funded locally through MSTDUs. Radio Road is an example, Bay Shore, Golden Gate -- MR. SMYKOWSKI: Lely. MR. FINN: -- Lely, are all examples of that. That seems to be a program that works fairly well. A little bit cumbersome perhaps, but it does work. One of the issues there is really Page 31 January 24, 2000 identified on Page B-3, and that is, has staff done a good job of identifying those roads that are local in nature rather than arterial in nature, like Radio Road where there might be some debate. But that one is pretty far down the path of being this kind of an MSTDU. COMMISSIONER MAC'KIE: In other words, they already have one, right? MR. FINN: Yes. That's a local taxing district to support that. MR. SMYKOWSKI: Being taxed for a number of years in anticipation and are accumulating funds for the eventual construction. CHAIRMAN CONSTANTINE: What I hope I don't hear is that we might change the way we address that and then penalize those who have chosen to tax themselves by saying -- THE COURT REPORTER: I'm having trouble hearing him. CHAIRMAN CONSTANTINE: Certain other similar areas that actually have general benefit, so we'll pay for them. If we're going to do that, then we need to relieve those taxing efforts as well, which I'm suggesting. THE COURT REPORTER: I can't hear him. COMMISSIONER MAC'KIE: But it looks like they've been consistent. I see Vanderbilt Beach Road, Seagate Drive, 111th, Golden Gate Boulevard. Those are roads that I would put in the same category as Radio that you might be able to say, those have a local -- CHAIRMAN CONSTANTINE: Agreed. I think, to date, we've been fairly consistent. I just thought I heard you leaning another way there. MR. FINN: Actually, I think what I would like to convey to you, Mr. Chairman, is that, in going through this program, we did consider Radio Road. We did consider its characteristics and generally staff concluded that the way it is being handled is consistent with this policy we are proposing. MR. McNEES: The whole point of having you adopt these things as part of your budget policy is so that we have something that will be consistent year in and year out, so you will be able to Page 32 January 24, 2000 make the same judgment calls on where the variables are. MR. SMYKOWSKI: A year ago in your budget policy you adopted your road MSTDs as the appropriate funding source for the maintenance. The missing link was, though, the new construction projects down the road, and that's probably as important, if not more important than the maintenance. MR. FINN: I have two more points. One point that I brought out when I briefed the board members last budget year, dealing with grants and private contributions, the grants are a great thing when we can get them, but there's no guarantee in those grants. Our approach to this is, if we're going to do a project, we're going to fund it. We're going to presume it's going to be funded with taxes. If grants come in, they would simply offset the taxes in the next year. That would be our approach. In terms of roads that are -- medians that are public and private contribution situations, we are proposing that, until a written agreement is in place, that those essentially are not budgeted or planned for. COMMISSIONER MAC'KIE: The grants, I agree that's the right way to do it. The private, I don't want to ever do something -- I don't want to miss some private money because we've got you eighth on our list, but, you know -- I would like for private money to be available. We can accept private money and it might even move you up on the list, if you're willing to pay for a hundred percent of the capital cost, or eighty percent, or something like that. I don't want to discourage that opportunity by saying, "Nah, you'll stay on the list where you were and we'll just put that into next year's pot of money." MR. FINN: I think -- I don't think I'm saying something that really differs from that, rather our approach is, when private money is used, it typically is used to advance a project that otherwise isn't on the short-term schedule. And, in those cases -- an example is the SR 951 project that the board's going to look at tomorrow. That's one that is 100 percent private funding for construction. And, if that's the case, it's an easy transition for us to bring that to the board as an agreement, allow the private folks to fund it, construct it, turn it over to us for maintenance. Page 33 January 24, 2000 That's essentially what this policy says. MR. McNEES: I think, for us, what we need to do is we need to be flexible. We need to be flexible when these things come forward, and be prepared when there are private funding opportunities, be a little more aggressive in working with the people to get them forward. Sometimes those are outside of our box and we haven't done the best job of getting them forward. So that's going to be on us, really. MR. FINN: Actually, I think flexibility is key here, and while it may not look like it's gone real smooth, I think, when you look around at the number of private efforts in this area, you would be surprised how many there actually have been over the years. MR. McNEES: The other related issue, as you know, you've sent us off to re-define what a typical road section looks like. And the thing that the Naplescape people also like is that you've given us direction, as I understand it, that a road now looks different to us. It also includes a median, and we're not always talking about after the fact and there may be a plug-in of some funding from these sources but that we're talking more about, as we design roads, designing everything that we want in that corridor as opposed to just the road and then worrying about the COMMISSIONER MAC'KIE: So that later we can go out and have to pay to bust up the pavement in the middle of the medians, put in the sprinkler lines after the fact. MR. McNEES: And you'll be seeing that too. COMMISSIONER BERRY: Let me just ask a question. On this list that we have here, this is ranked in order? MR. FINN: If I may? If you look at Page B-4, you'll see the actual funding plan. I would point out that in fiscal year '00 there is a -- quite a large number of projects that are ongoing or are planned to be ongoing. In fiscal year '01, the only project that is currently planned is the other part of East U.S. 41. And that would be the part from Airport to Rattlesnake Hammock, if I'm not mistaken. COMMISSIONER MAC'KIE: That we hope to have a $150,000 grant? Page 34 January 24, 2000 MR. FINN: Yes. And the way I'm proposing to put that budget together would be to fund it completely with tax money, and, if the grant comes in, it would offset those taxes in the next year. COMMISSIONER MAC'KIE: So this year's priorities are this 951, assuming it goes tomorrow, Santa Barbara, the East Trail to Airport. MR. FINN: Right. COMMISSIONER MAC'KIE.' Goodlette, 951 and the North Trail. MR. FINN: Right. COMMISSIONER MAC'KIE: North Trail, doesn't the North Trail have a fifty percent match coming out of Pelican Bay MSTD? MR. FINN: Yes, that's correct. COMMISSIONER CARTER: For that section, yes, from Seagate up to Vanderbilt, that's correct. THE COURT REPORTER: Could everyone please raise their voices? I'm sorry, but I'm having a difficult time hearing you. COMMISSIONER CARTER: Seagate to Vanderbilt is a fifty percent match for Pelican Bay from capital. COMMISSIONER MAC'KIE: But I don't see that shown on here under non-county funding. MR. FINN: It's actually under -- specifically under Pelican Bay, it says, 251,000, the top section of the revenue. COMMISSIONER MAC'KIE: Oh, contributions. Shouldn't that be up here under the non-county funding? MR. FINN: Well, non-county funding, I think the board actually approves the budget and adopts the taxes for that. COMMISSIONER MAC'KIE: I see. MR. McNEES: That's us too. COMMISSIONER MAC'KIE: Gotcha. MR. SMYKOWSKI: It's showing the revenue and expenses. COMMISSIONER MAC'KIE: And then -- but then for next year the only beautification capital project is the second part of the East Trail? MR. FINN: Yes, ma'am. Yes, ma'am. And I think what Mr. Page 35 January 24, 2000 McNees said about being flexible, if someone comes along and they have a pocket full of money that they want to burn up in a road, I think we'll find a way to make that happen. The board, however, needs to realize that after those things happen, this policy essentially commits them to funding the maintenance for those, that is typically running somewhere between 60 and $75,000 a month, per year. COMMISSIONER BERRY: For maintenance? MR. FINN: Yes, ma'am. COMMISSIONER MAC'KIE: Wow. MR. SMYKOWSKI: And you've seen that in your road MSTD millage rates as they escalate, as those projects come on line and we have those maintenance costs. COMMISSIONER BERRY: And sometimes it irritates me more than that, when I'm driving down the road and they're blocking off those lanes. MR. FINN: If there's no other questions -- CHAIRMAN CONSTANTINE: Thank you. MR. McNEES: Thank you. Mr. Cautero, the next item is permit fee waivers on Page C-1 in your booklet. Mr. Cautero will outline the policies there for you. MR. CAUTERO: Thank you. Good morning, commissioners. Vince Cautero, for the record. What prompted my request to place this item on the agenda was a discussion you had several weeks ago with the president for Harvest for Humanity in which he came to you and asked you for a waiver for all the permit fees associated with his residential development. You drew the line at what we like to call in the Community Development Division, the horizontal construction, the site development plan review, all the work that the planners would do, not the work that the Building Department would do, which is what we like to refer to as the vertical construction, and impact fees. Those two categories of fees were not waived by the board. The information in front of you shows from 1995 through 1999, those are calendar year numbers, not fiscal year numbers. The amount of times the Board of County Commissioners has Page 36 January 24, 2000 waived fees, but none of them relate to building construction fees. They are horizontal plan review fees, if you will, temporary uses, carnival and circus permits and other land use petitions that are not an involved part of construction or the impact fees. The number totals ninety-five permit fees or categories of permits since 1995, totalling a little over $16,000. My request, again, for placing this item on the agenda was to have you begin thinking about what type of policy issues this means for you and the county and perhaps think about some criteria that may be developed as we move into the next fiscal year. Of course, this money comes from the -- if I am incorrect I'm sure Mike will correct me -- the unincorporated general fund, Fund 111. We transfer money from that fund to the community development fund, which is where the building permit fees and development review related fees are deposited by applicants every year. It is not an exorbitant amount of money, but at the last meeting, if my memory serves me correctly, you started talking about criteria for these other issues. I predict that you're going to see more and more requests come in for the hard construction costs, as well as impact fees. That is really another issue, the impact fees. When we get into the vertical construction issues, I mean, I think you are going to start seeing more and more requests from applicants, developers, homeowners, et cetera, in that area. And I would like you or I would recommend that you start thinking about what criteria you would like to see associated with those, if at all. You may draw the line and say, "We're not going to entertain those." I placed it on the agenda today for your consideration, to at least discuss it and begin thinking about it. Again, in summary, we've talked about $16,000 in fees that have been accumulated over a five year period and it's been approximately twenty permits per year that applicants have come before you where the fees have been waived. COMMISSIONER MAC'KIE: I have a question as to whether or not it would be legal to -- I mean, we do this often in court fees, for example, if there's a court program you want to see funded, can you add five bucks to the fee for filing? Could we Page 37 January 24, 2000 add ten bucks to a fee for review of an SDP or something that has expensive homes? Those $250,000 plus homes, can we charge them an extra twenty bucks so that we have a fund available for Habitat for Humanity kinds of waivers? MR. CAUTERO: A surcharge, yeah, I think, Commissioner, is what you're referring to. Whether or not that's legal, I'm sure Mr. Weigel could discuss. However, before you ask him that, I would like to say that we have assessed a surcharge -- you've approved it, of course -- that we brought to you, a surcharge for our electronic case scanning program, which we are now in the process of purchasing the equipment for. The Development Services Advisory Committee gladly made that recommendation to you and we charge a few dollars on every permit for new packages that will come in that will have to be scanned from actually 2000 and beyond. We're using reserve money for everything prior to the year 2000. I think that's what you're talking about, a surcharge for those kinds of things, and whether it's legal or not, I don't know. CHAIRMAN CONSTANTINE: Just to your earlier comment, before we spend a whole lot of time on that, I don't have a whole lot of interest -- I don't know about the rest of the board -- in entertaining, can we do waivers for circuses or community events. That's one thing, but waiving the administrative fees that -- the hard costs that go with construction, I don't have any interest in that. COMMISSIONER NORRIS: Nor do I. COMMISSIONER MAC'KIE: Even if it's a Habitat for Humanity project, for example? CHAIRMAN CONSTANTINE: No. COMMISSIONER NORRIS: No. COMMISSIONER CARTER: I guess what you call your horizontal fees is what we've been doing. I don't have a problem with that. When you started getting into the other, I think that's getting on a slope I'm not ready to go to and I don't want to penalize people on one side -- I just don't like the idea. There must be another way to do it. But I'm not going to go that route. COMMISSIONER BERRY: I think holding the line with what Page 38 January 24, 2000 we did, I mean, the other day, I think that's enough. I don't want to go on any other -- COMMISSIONER MAC'KIE: I guess my thought, though, is, even on the things that we did the other day, I wish that we had some kind of a surcharge, a fee, that came out of the developers instead of out of general fund. It would make sense to me if that were a surcharge fee instead of a general fund fee. MR. CAUTERO: That would be a very nominal fee, if the board was interested in doing that. I can bring that information to you very quickly. With an average of a little over $3,000 per year for these types of permit fee waivers, it would be less than a dollar a permit. COMMISSIONER MAC'KIE: And the waivers we're talking about, you're not worried, Vince -- let me just get this straight -- you're not worried, if we continue to do what we did for Harvest (sic) for Humanity, for example, if we waive fees for horizontal permits, you're not worried about that, you're just concerned if we start going further and doing vertical waivers? MR. CAUTERO: That would be correct, yes. COMMISSIONER MAC'KIE: Okay. CHAIRMAN CONSTANTINE: Thank you. MR. CAUTERO: You're welcome. Just in closing, though, applicants may come forward to you in the future. I don't want you to think I'm not going to convey your message. I will certainly tell applicants that it is the policy of the board not to waive those kinds of fees for vertical construction, however, if they come forward -- MR. SMYKOWSKI: Any recommendation is based on the input here. INe'll bring forth a policy that says, the policy is, we don't waive those fees. COMMISSIONER BERRY: For the vertical. CHAIRMAN CONSTANTINE: I trust we won't schedule -- I mean, people can come and ask all they want but we're not going to schedule things on Tuesdays that are directly opposed to what the board's policy is, I assume. Thank you. CHAIRMAN CONSTANTINE: Revenue diversification. MR. SMYKOWSKI: Revenue diversification. For the record, Page 39 January 24, 2000 Michael Smykowski. I'm the county budget director. We've discussed this at various times with the board, reducing reliance on ad valorem taxes as a funding source concerns primarily your general fund. Broadening the general fund, what I call the basket of revenues, which would protect against a downturn in the economy. One thing that the board should be aware of, in the last FAC legislative program in Tallahassee the first phase of a change to the county revenue sharing program was implemented this year, which reduced the revenue from -- county revenue sharing, approximately two million dollars in the general fund. We did have the one time adjustment in the retirement rates, which more than offset that, so you didn't really feel it or see it this year. Long-term, though, this involves the intangible tax and cigarette taxes. This is a program -evaluating economic development in the State of Florida. At the state level they've talked about either further reductions or eliminations of the intangible tax, which obviously would have a major impact on the revenues the county receives. And, just as a side note, there's 6.2 million dollars of general fund revenue this year tied to the county revenue sharing program. That's just an aside to this issue. A big issue is an electric utility franchise fee. We discussed this, again, a number of times with the board. You have an opportunity to implement up to a six percent maximum fee. That would generate our -- the last time we brought this forth to the board, approximately 1.4 million dollars annually per one percent. And the question is -- CHAIRMAN CONSTANTINE: We have brought this forth before and I've been inclined to do it before. It would be a new tax and I don't know that I buy the broadened general fund, the basket of revenues, for a couple reasons. One, we don't rely heavily, we don't have any burdensome ad valorem tax right now. If we were in a community where the ad valorem tax was ballooning up, because we had no other sources that we were drawing from, that might be a valid approach. But we don't have that. We have the lowest ad valorem tax in the state. So I'm not sure. God bless, I hope it continues to go down, but I don't want Page 40 January 24, 2000 to take that down by increasing or creating a new tax elsewhere. Secondly, it's regressive and it's, unfortunately, one of those areas, I mean, your basic electric, I don't want some kid somewhere or some old person somewhere on these nights like this where it's cold, worried about -- and they do. You and I laugh because it's a few dollars. But they worry about every single dollar and I don't want somebody worrying about that six percent fee if they turn their heat on some night when it's thirty-five degrees out or vice versa in the summertime. I don't have any interest in creating a new tax at all. COMMISSIONER MAC'KIE: I can't -- I mean, I've spoken in favor of it every time we've considered it just because it makes good fiscal sense to me to have it available. I can't even -- I just, frankly don't even understand why we wouldn't -- why we wouldn't do it, except for the politics of not wanting to be in favor of a, quote, new tax, you know, George Bush thing or something. But it just broadens, it diversifies the base. I can't understand why we wouldn't do it once -- you know, the reason we never did it -- the reason it was never recommended to us by staff was because it was not readily available to us until about three years ago. Since then, staff's continued to bring it to us, that now counties can do this if you would like to. I wonder how many other counties have since this has been made available to US. CHAIRMAN CONSTANTINE: I guess I just don't agree. It's not just politics, it's, do you create a new tax so you can have it available or do you see there is a specific need, there is a specific shortfall, we absolutely have to have money. The idea of government creating another tax just so we can have money available, government will surely find a way to spend it. COMMISSIONER MAC'KIE: But, Tim -- CHAIRMAN CONSTANTINE: I'm just repeating -- that's what you explained as the reason, right there. COMMISSIONER MAC'KIE: So let me be more clear. I'm not suggesting that we tax people and just keep it in the bank. We've already heard this morning how desperate the need's going to be in employee retention. You already know what they Page 41 January 24, 2000 are going to tell you on the next slide about what our capital funding shortfall is. We've artificially kept the tax millage rate Iow, despite the need. We are undertaxing. We have serious needs. John, I know it's not politically correct to say that. I'm clear COMMISSIONER say next, though. COMMISSIONER COMMISSIONER NORRIS: You don't know what I'm going to MAC'KIE: Well-- CARTER: We're waiting, John. COMMISSIONER MAC'KIE: You'll see what the needs are. So go ahead, John. We're all curious. COMMISSIONER NORRIS: At the risk of causing people to think I have completely lost my mind, I do agree with Commissioner Mac'Kie -- COMMISSIONER MAC'KIE: Oh, my God. COMMISSIONER NORRIS: -- that we should implement this thing, but I've always spoken for it when it came in front of the board and for the simple reason that all taxes are unfair to somebody. No matter what it is. So the more different kinds of tax you're using to fund your operation, the more likely you are to be fairer -- COMMISSIONER MAC'KIE: More fair. COMMISSIONER NORRIS: -- to everyone. COMMISSIONER MAC'KIE: That's valid. COMMISSIONER NORRIS: That's the reason I support it. CHAIRMAN CONSTANTINE: You're right. I do think you've completely lost your mind. COMMISSIONER NORRIS: I knew you would. But ad valorem tax is unfair, obviously, for the obvious reasons, that it taxes the rich and gives to the poor. This one is unfair because it's a regressive tax-- could be looked at as a regressive tax. You made the point that people on very, very tight incomes will see it as a regressive tax. But the point is that, if you have a broad mixture of progressive and regressive taxes, you would more equally, or fairly, I should say, tax your entire citizenry. And that's why I support it. Page 42 January 24, 2000 CHAIRMAN CONSTANTINE: More taxes are more fair. COMMISSIONER MAC'KIE: Bad campaign slogan, bad politics, but more fair. COMMISSIONER NORRIS: But the thing is, what you're missing is, Mr. Chairman, is the same point that Ms. Mac'Kie made. We have a budget number that we'll decide on and, if you add a new tax, as you point out, that it would be a new tax, it will reduce a tax somewhere else to get to that number. CHAIRMAN CONSTANTINE: Theoretically you would. I just don't believe that. COMMISSIONER NORRIS: You have control of it, so -- COMMISSIONER MAC'KIE: But we're government, so let's do it. COMMISSIONER CARTER: We have to look at revenue streams. And I don't care whether you take it from ad valorem, from franchise fees, sales tax, we've got a shortfall and we're going to have to come up with a mix to get to where we need to be. I agree with you, Commissioner Norris, what's more aggressive, franchise fee or sales tax? Have you completely lost your COMMISSIONER NORRIS: mind, too? COMMISSIONER CARTER: got the -- I don't know. All I know is we've COMMISSIONER BERRY: We've got a broadened base. COMMISSIONER CARTER: We've got the shortfall, and we've got to meet it. And I don't know what the mix is, but if it takes franchise fees, if it takes ad valorem increases, if it takes sales tax, whatever it takes to get there, but you have to promise what you're going to deliver. You have to have a laundry list and a commitment of what you're going to do and have some way to then take away or reduce the tax if you've met what you've done and don't need it any more. And I don't have the answers to all of that but I can't sit here and say, well, I won't do this or that when I know the need is going to be on the next page. So I will support any revenue streams necessary to get us to where we need to be. Page 43 January 24, 2000 COMMISSIONER BERRY: Mike, I have a question in regard to -- I think it was pointed out last year that we are getting more into our reserves every year. Did I understand that correctly? In other words, that we're spending -- I don't know how to exactly state this. There was a situation where -- well, I guess it comes down to, we're spending more than -- and we continually are -- MR. SMYKOWSKI: It's a fund balance question, and are we tapping into that. The issue is -- we just looked through that the other day. We are in good shape because the economy is barreling along at breakneck speed and we are -- sales tax and revenue sharing have actually come in at higher than estimated. If we were in a situation where we were only collecting ninety-five percent of budgeted revenues, then we would begin the process of eating into fund balance. We're in a good situation currently where we have, you know -- the collection patterns have been strong and we budget realistically but conservatively. So we're in fairly even keel for the moment. The question is, you know, what happens if and when the economy sours. And I know we've been talking about a potential downturn your in this economy for a long time. And every year we're seeing more building permits and more activity in Collier County, so -- COMMISSIONER BERRY: But, you know, there's some long-term effects that may happen in terms of this economy, particularly in Collier County, some demands that may be placed. And it may come through the Army Corps. of Engineers, kinds of things that they may do to Collier County that may have a great effect in terms of, you know, our building and things like that. I mean, that's obviously been a plus for us. But what happens in -- what was it, five years, I think, we saw that things start to even out and we're not going to be building as fast and yet the demand for services is still going to be very great in Collier County. Then what do we do? Of course, it probably won't be this current board of commissioners that may be sitting there but they're going to be faced with, you know, having to drop the hammer on the citizenry and say, "Guess what. Your ad valorems are not going up slightly this year, there is going to be a major change." Page 44 January 24, 2000 And then they are going to come back to, well, you know, if previous commissions had done this, you know, and kind of eased up things gradually, it might have been different. And it is politics. You know, in some sectors it's politically correct to keep the taxes down, but I'm not sure we're being really realistic. And if this helps to broaden that base, then I think we need to consider it. I don't know that, you know, that at six percent, you know -- I don't know that we need to do that, but perhaps we need to do something. I don't know how much that is. MR. McNEES: Commissioner, you made a key point, which is, this may not be necessary today, but, at that point where the economy is less strong or begins to turn the other way, the more diversified the revenues are, the less dependent we are on any individual source or method for generating revenues, the better off we are when things go the other way. And we learned that in the late eighties when we did have our last recession, and we were so dominantly reliant on state sales tax and revenue sharing that when that money started to dry up we had serious operational problems, and we literally had to, for the only time I can remember, lay people off and cut levels of staff because we didn't have enough money to pay for them. MR. SMYKOWSKI.' We were shutting off the streetlights. COMMISSIONER BERRY: I remember that. MR. SMYKOWSKI: I think you all remember that. COMMISSIONER MAC'KIE: I do. COMMISSIONER BERRY: But I think at the same time we do this, we ought to -- as Jim had stated, we have to have some things clearly stated, that this is what we're going to do with these dollars. So it's not just a matter of, "Hey, we're going to raise this tax and we're going to collect a pot of money and let it sit there or do whatever." I don't think that's right. COMMISSIONER MAC'KIE.' You know, what we would literally be taxing people for is for the right to lay that electric line down the side of the road. And we're about to hear again how deficient we are in the roads. COMMISSIONER BERRY: No kidding. Page 45 January 24, 2000 COMMISSIONER MAC'KIE: I would love to talk about this impact fee for roads construction. CHAIRMAN CONSTANTINE: It's not for the right to lay down the road, it's ongoing, continuing, when you use the electricity. COMMISSIONER MAC'KIE: Right. CHAIRMAN CONSTANTINE: It's not just the right to lay down there, it's, if you don't use it, it's still on the road. COMMISSIONER MAC'KIE: Yes. It's a fee for having laid your cables there and sending electricity through it every day. COMMISSIONER CARTER: But it's a fee that can be passed, put on at the discretion of the Board of County Commissioners. COMMISSIONER MAC'KIE.' It used to be only cities could do it, but rather recently now county can do it. MR. SMYKOWSKI: The City of Naples has it. I believe the City of Marco Island has it as well. COMMISSIONER MAC'KIE: The City has a rather substantial one. COMMISSIONER CARTER: How many? MR. SMYKOWSKI: I thought it was ten. COMMISSIONER MAC'KIE: It's pretty darned high in the City. MR. OLLIFF: There is at least an argument to be made for that if we are spending operating tax dollars to maintain additional right of way for the property that the utility lines are laid in. So there's an argument there, if you wanted to look at the correlating expense that should offset. COMMISSIONER MAC'KIE: Which is why the court said we could do it. COMMISSIONER NORRIS: Well, see, the thing is, most of our tax revenue stream is not elastic. As has been pointed out, we're going through the economy in a larger measure, sales tax, gas tax. A utility franchise fee would be non-elastic. The only thing that really comes out elastic once we make our budget is the ad valorem tax. That's the one that we have direct control of and you use it to make up the gap of everything else. So that I think the more diversified that revenue stream is, the better off everyone is. CHAIRMAN CONSTANTINE: Earlier you had said, if you Page 46 January 24, 2000 created this, you would lower some other tax. What other tax would you anticipate that would be lowered to create the utility? COMMISSIONER NORRIS: The one that's elastic, again, is property taxes. COMMISSIONER MAC'KIE: So that's just -- you guys are looking for direction from the board as to whether or not you could factor that in as you make recommendations to us about budget policy, so. COMMISSIONER CARTER: carl, Well, I count three that say you COMMISSIONER MAC'KIE.' I counted four. CHAIRMAN CONSTANTINE: Next item. MR. SMYKOWSKI: The last item is actually kind of all woven together, a number of topics. Capital infrastructure funding. That slide didn't work out. The margin got cut off, but -- In your packet on Page E-1 it does show the dollars allocated to capital outlay from your general fund. COMMISSIONER MAC'KIE: What would we have to do to get a color printer for the offices that put these packets together? Could that be in the budget somewhere, because these dang MPO maps and disks, you can't tell what this is. Take it to Quick Pic. MR. McNEES: You know, we've been researching that. The cost is $3,000 to get the kind of color printer we would need. COMMISSIONER MAC'KIE: I'd support it in the budget, just put it in. MR. SMYKOWSKI: At one point in the county we had one mill devoted to capital outlay. And in FY '91 we were generating 12.8 million dollars per year. Had the one mill stayed in place today, based on the current property values you're looking at, that would have grown, the current year property values, almost 24 and a half billion dollars, which, with that one mill, generated approximately 25 and a half million dollars. As part of the budgetary trade-offs, the board's made policy decisions reducing the amount of funding devoted to general fund dollars allocated to capital projects. Obviously not only are you seeing things Page 47 January 24, 2000 growing from year to year just in terms of need, you looked at the Sheriff's space, Domestic Animal Services, new facilities there, but you're also looking -- Skip Camp is here and he brings forth a whole host of maintenance-related items. You have a whole set of infrastructure that's in place that is now to the point where it's aging and in need of repair. And Skip has done a good job, I think, of bringing forth those needs to you. But, obviously, as the pot of money has shrunk, you know, we've done our best in terms of prioritizing the dollars that are available, but again, you're looking at an area that certainly could -- we could certainly spend more than 5.8 million dollars a year, easily, on capital projects. COMMISSIONER MAC'KIE: What we need you to tell us, though, because that's a place where I would agree with Commissioner Constantine, and I don't think you really meant what you said, that we could easily spend more than 5.8. We know that. What we want you to tell us is what it's costing us not to spend more than 5.8 a year. Okay? Like, what's deteriorating, what's -- COMMISSIONER BERRY: What aren't we able to do? COMMISSIONER MAC'KIE: Yeah. Like, if you didn't replace this roof this year, it's going to cost how much more next year and here's the leaking damage. Just like home. MR. SMYKOWSKI: In addition I think we've brought you the list of capital projects that were requested but not recommended. And you-all have made some decisions in that regard as well in changing the priorities. But we're trying to -- obviously do the best we can within the available dollars. COMMISSIONER CARTER: I think, Mike, we also -- we really have to get on top of our capital expenditures for government facilities, what are we shelling out in leasing fees versus doing what we need to do? I want to know all of that. And I want to get our arms around that and the total package of roads, capital expenditures for government facilities, stormwater management, so that we really get this thing nailed down and then look at the revenue streams and ask ourselves, how are we going to get there? How are we going to do this? What's the time frame? Page 48 January 24, 2000 Eight, ten, fifteen years, whatever it takes to do. Get this board's decision as to where we think we ought to go, put the mechanisms in place so future boards can determine whether they want to go back and get some of this stuff sunset or not. I think we have to be way out front on this thing so that ten or fifteen years from now boards don't say, "So what were those people doing back in 2000?" Same question as what we're saying, "What were they doing back in 19917" MR. SMYKOWSKI: I don't have an immediate answer, but that is a good point. The leasing fees is not difficult to come up with, and, in the last eighteen months I know there's been a whole host of them, the Sheriff's relocation out of Building A. You're looking at short-term needs in transportation, Department of Revenue, et cetera. The community development staff has grown, obviously there are some other departments that are currently occupying space there that are being pushed out to accommodate the expanding needs within that community development division. COMMISSIONER MAC'KIE: Can I ask you another question, Mike, too? Again, these graphs are very useful in black and black, but the printing up above that talks about since 1996 we have had a separate millage levy for capital outlay. And in '92 that was cut to about a half a mill, or 0.65, two-thirds of a mill. MR. SMYKOWSKI: Right. It was generating just shy of ten million dollars at that point. COMMISSIONER BERRY: Why was it cut? COMMISSIONER MAC'KIE: It was cut because they were having to raise other property taxes, so they cut this one. MR. SMYKOWSKI: Right. What has happened is over time there was a separate millage that questioned -- MR. McNEES: That's how we kept the millage rates level, stable. MR. SMYKOWSKI: That's a budget balancing mechanism. COMMISSIONER MAC'KIE: In other words, because they needed it for operating, they cut it on capital. And my question is, have we kept it there after it had stayed at 0.66? MR. SMYKOWSKI: No. Page 49 January 24, 2000 COMMISSIONER MAC'KIE: So what is it now? MR. SMYKOWSKI.' About six million. It's about a quarter of a mill, in round terms. COMMISSIONER MAC'KIE: So it's about 0.25 mill. MR. SMYKOWSKI: Ballpark, yes. MR. McNEES: At the risk of -- I probably shouldn't say this, but I'm going to. Let me rephrase that. We didn't cut capital because we needed it in operating. We needed it in both, more than one in the budget -- COMMISSIONER BERRY: So you had to cut it somewhere and it came out of the capital? MR. McNEES: Right. MR. SMYKOWSKI: And the question is, that stayed cut for so long and we've continued to use that, you know, we had the comfort zone of that staying Iow, but at what point -- you guys have got to paint a picture for us so that we can understand the cost of having kept that rate Iow for so long. COMMISSIONER BERRY: Well, doesn't part of this come in when you started having the constitutional officers asking you for more office space and -- I mean, that's just one example, but things like that? And what about the acquisition of road right of way, does this come in in this instance, is this part of the capital? MR. SMYKOWSKI: Not out of general fund. COMMISSIONER BERRY: Not out of general fund. MR. SMYKOWSKI: That's out of gas taxes and road impact. COMMISSIONER MAC'KIE: Could -- is this money not available, it's not legal to use it for road acquisition, or just we haven't -- MR. McNEES: The board as a policy has attempted to segregate roads from ad valorem. COMMISSIONER MAC'KIE.' Okay. Important distinction there because, when we're talking about the roads that we cannot -- we know we're behind on roads. We think that you should build as many roads as you can with the impact fees, because that's growth paying for growth and then there's this gap of road construction capital that's necessary so we've got a Page 50 January 24, 2000 fund somewhere. We're talking about sales tax. If the sales tax fails, this would have to be the source. True? MR. McNEES: What else this ties into, Commissioner, more directly, even without a sales tax, is when we talked about sales tax last year, the general consensus from you-all was, "We don't want to talk about sales tax in terms of government buildings." "Well," you said, "go fund them somewhere else." Where is the somewhere else? Here's the somewhere else. COMMISSIONER MAC'KIE: So you don't even want us to start thinking about this as a possibility for roads because you need this -- this is your only somewhere else. MR. OLLIFF: The last time we had this workshop too -- THE COURT REPORTER: Sir, I'm sorry. I can't hear you. MR. OLLIFF: The last time we did talk about this whole issue, you were a little more flexible in terms of talking about bonding some of your gas taxes, too, and that's the other option, I think. And when you start talking about how much the increased land cost is for your right of way, how much your construction costs are increasing or how much it's costing you to build a road and how much we can borrow money for, it's a good thing to look at. COMMISSIONER MAC'KIE: And the reason I'm pointing this out is just because I wanted to make staff, if the board agrees, to make staff aware of the fact that -- let me state it plainly. One of my biggest frustrations with our former county administrator was that, within the box, there were limited possibilities. If it has always been the board's policy that we only do 0.25 in capital and we only use it for A, B and C, that doesn't mean that, if you -- that, if it's professional recommendation, that it should be this rate and it should be used for these purposes, I would like to hear that recommendation from you guys, then we can consider if we want to keep the policy the way it's always been or if things have changed. CHAIRMAN CONSTANTINE: Maximization of impact fees. MR. SMYKOWSKI: Maximization of impact fees. The board recently took that road on the road impact fee issue but, as a formal policy, that is not officially a board policy from previous Page 5t January 24, 2000 budget policy -- CHAIRMAN CONSTANTINE: Any objection from board members to making that an official policy? COMMISSIONER CARTER: No. COMMISSIONER MAC'KIE: No objection, especially if the road impact fee formula where it varies by the size of the house can be applied across the board to impact fees. If it can't, then we have affordable housing concerns. MR. SMYKOWSKI: You have current studies underway -- that's kind of a three-pronged approach. Roads you got early, because of the pressing need there, but there are studies underway in the library area as well as EMS. And, obviously, as the county continues to grow, that's another issue. COMMISSIONER BERRY: Okay. I'm not speaking against this, but, talking about the impact fees, I believe now we have the highest road impact fee in the state. Is that correct? Susan, do you know about -- COMMISSIONER MAC'KIE: I thought Lee was still higher than us. No? COMMISSIONER BERRY: No. I think we have the highest. Our housing costs are the highest. I mean, see, I'm not sure what we're doing. We say this on one hand and then -- and we just had the presentation about our housing costs in Collier County. I'm not objecting to this, because we're getting bombarded, that we've got to do something with impact fees. At what point do you finally say, "We can't do this any more"? I mean, you talk -- we're talking out both sides of our mouths. We talk about affordable housing over here and we talk about maximizing the impact fees. And, Tim, when you get ready to build your house, you're going to see the amount of fees that you're going to plunk down when you build that house. CHAIRMAN CONSTANTINE: I'll tell you why I don't think that's talking out of both sides of our mouths, though, and that's the John Dunnuck slide that shows what are the vast majority of the houses that are going up, and ninety-five percent -- we need to encourage more affordable housing, certainly, but ninety-five Page 52 danuary 24, 2000 percent of those houses that are going up are the folks that are at a high level household. So if it's an extra 1,200 bucks for them, I mean -- I don't want to pay that but if I do, I do. COMMISSIONER BERRY: Well, let me just tell you. There's also a group that's a little less than $250,000 homeowners. And if you think it isn't a burden for them to get the impact fees together, I've got news for you. CHAIRMAN CONSTANTINE: It is a burden. COMMISSIONER MAC'KIE: That is exactly why -- CHAIRMAN CONSTANTINE: It is a burden. Hear what I'm saying. It is a burden, I understand that. And I did the math when they tried to create the Sheriff's impact fee in '94, or whatever that was. And for an extra few hundred dollars you were taking literally twenty-five percent of the mortgages that had been approved at a hundred thousand or less than -- what would now be about 120 -- would have been turned down. That just a few hundred dollars made the difference for one out of four people who wouldn't haue been able to buy or build their homes. COMMISSIONER MAC'KIE: And this is why -- CHAIRMAN CONSTANTINE: Can I finish? COMMISSIONER MAC'KIE: I thought you were. Sorry. CHAIRMAN CONSTANTINE: But, realistically, we can't say well, everybody else on the ad valorem side, or wherever, is going to pick up the difference on the roads and on the various things. We need to -- for those folks that are building, say, 150 and above, tap them. But if we need to create some new incentives on the affordable side, that's great. But I don't want to sacrifice maximizing the impact fees and letting growth pay as much as it reasonably can for growth for the smallest portion of the pot. We need to address that on its own. COMMISSIONER MAC'KIE: Are you done? CHAIRMAN CONSTANTINE: Yes. COMMISSIONER MAC'KIE: I agree with both points, and I do apologize for interrupting you because I agree with your points. That goes back, though, to why I wish that we would talk to Vince about adding a $10.00 fee somewhere to have a pot of money to pay those impact fees for anybody who builds a house Page 53 January 24, 2000 under $80,000. COMMISSIONER NORRIS: But we have impact fee waiver programs in place. We don't need to do that. CHAIRMAN CONSTANTINE: Actually, almost every Tuesday we have waivers for individual -- COMMISSIONER MAC'KIE: Absolutely. But the balancing act here is, we want to maximize impact fees and we don't want to price people out of the housing market. So we could maximize impact fees and have some better program for offsetting the costs for the very Iow cost housing. CHAIRMAN CONSTANTINE: I don't know that a $10.00 surcharge or some sort of surcharge is it, but I agree. MR. OLLIFF: You're talking about an affordable housing impact fee. COMMISSIONER NORRIS: Let me point out another thing about statistics. Commissioner Constantine mentioned that if you had raised a few hundred dollars, the fees on houses, that twenty-five percent of mortgage applications would probably not have been approved. Well, that's because people tend to go to the maximum they possibly can in the first place. If they had bought a thousand dollar cheaper house, that wouldn't have been an issue. So don't get lost in statistics, look at realities as well. COMMISSIONER MAC'KIE: If there were a house for $1,000 cheaper. COMMISSIONER NORRIS: You can always grind on your contractor for that. CHAIRMAN CONSTANTINE: Assuming that we deal with the affordable housing issue, is there any opposition to maximizing impact fees? COMMISSIONER MAC'KIE: No. COMMISSIONER CARTER: I think there's a limit to impact fees. I think we have reached a point where we have done what we can do with impact fees. Now you've got to look at the other revenue streams. COMMISSIONER MAC'KIE: Only as to roads. There's other impact fees out there that aren't maximized, and I think that's what they are asking. Page 54 January 24, 2000 COMMISSIONER BERRY: If you're looking at the libraries and the parks and that kind of thing? CHAIRMAN CONSTANTINE: Much the way we haven't updated roads since '92, there are others that have just been sitting there and are still being collected in 1994 dollars. COMMISSIONER BERRY: What is going to be the total effect, then, of all those impact fees on the cost of a new home? COMMISSIONER MAC'KIE: A lot. COMMISSIONER BERRY: Well, then, I mean, right now you're looking at, what, $8,000; is it that much? COMMISSIONER MAC'KIE: 8450. MR. CAUTERO: It's approximately that number. We haven't included that because our consultants haven't given you the numbers yet on the EMS and the libraries, which you will get, that number. COMMISSIONER BERRY: Okay. So you're fast approaching $10,000 in impact fees. CHAIRMAN CONSTANTINE: But I would rather have that infrastructure paid for than you and me, who have lived here forever -- COMMISSIONER BERRY: Well, honey, you're going to pay for it when you build your new house. Get ready. CHAIRMAN CONSTANTINE: Yeah, I am. And that's an option -- MR. SMYKOWSKI: The EMS impact fee on a single family home is actually very small. That's more heavily weighted on the commercial, industrial uses. It's fifteen, twenty dollars, I believe is the current -- COMMISSIONER BERRY: For what? MR. SMYKOWSKI: For EMS. So if you're talking maximization, you're still talking on a very small base. Libraries, I think is in the neighborhood of $180, or thereabouts. So you have been maximizing there. That's not going to add $1,000, I wouldn't think. Roads, there were significant changes in, but the cost base in libraries is not going to change that drastically. CHAIRMAN CONSTANTINE: I'm going to need to leave in about five minutes. Let's go to the local option infrastructure Page 55 January 24, 2000 sales tax discussion. MR. McNEES: That's me. I'll be brief. What happened to the sales tax recently? And just to remind you-all, here's what happened to the sales tax. That conversation got halted at the point where it became apparent that the road impact fee issue had to be dealt with first before we could really quantify some of our needs. You have done that now. Mr. Smykowski has gone back to work, cranking the numbers on the new road impact fees. Another year of AUIR, which you are going to see on Tuesday, which updates the capital plan, we will be bringing back to you, with also what you said, getting us out of the box in some of our previous ad valorem constraints, with what we see now as your options for different scenarios to meet our capital needs. So you will be seeing that in the next couple of months from us. I wanted you to know where that stood and that we hadn't abandoned that track and things had to happen in order. COMMISSIONER BERRY: Will that include bonding? MR. McNEES: It will. I'm certain it will include some bonding for road construction, bonding of your gas taxes. CHAIRMAN CONSTANTINE: Which transitions actually into E-4, borrowing/bonding. MR. SMYKOWSKI: Correct. Obviously we just wanted the board to consider that as a viable option. In the past we've taken this pay as you go approach almost 100 percent. Obviously, as the county grows, we're going to need to evaluate bonding scenarios relating the asset -- the life of the asset to the funding. In other words, if something is going to last thirty years, why should we pay cash for it on day one when residents who are going to come here thirty years from now are going to benefit from that facility. Obviously, they are going to benefit and should pay a proportionate share of costs. Just as an aside, there's a couple charts. Now, this is general obligation debt. Obviously it would require a referendum. But, if you look over time, the county currently only has one outstanding bond issue for the public parks. You can see we're down to three million dollars principal outstanding. So the board Page 56 January 24, 2000 has been a good steward of the taxpayer's money and uses it sparingly, but, obviously, as the county continues to grow, we're again looking for that appropriate mix of issues. And that will be paid off in 2003, I believe. So we have about three more years and that ad valorem tax will go away. COMMISSIONER MAC'KIE: Does that tax fund require a referendum? MR. SMYKOWSKI: No. Nor a sales tax issue. Obviously that puts pressure on your general fund. And that concludes what we have for you this morning. COMMISSIONER CARTER: Mike, when you come back, when you're doing all of this, I still want to know where a half penny or penny sales tax would fit into this scenario with bonding options. So, I'm always looking for the middle amount that we can do. We've got the franchise fee. It might be cranked in here. When we get this package together, then the big question is, when we have it together, if we have to take a sales tax referendum, when can we do it? MR. McNEES: That will all be part of your discussion. COMMISSIONER MAC'KIE: And, at the same time -- I forgot. There may not be any interest in this, but I've heard people say, why don't you do a general obligation bond instead of a sales tax? I would love to know, because sales tax referenda are so hard to pass, I don't think a GO is going to be any easier, but I would love to know how much money it would make up for. MR. McNEES: That will absolutely be one of your options. CHAIRMAN CONSTANTINE: I think it actually would be easier because of the explanations you just said. You know, people who are moving here twenty years from now are actually paying their portion of that as opposed to all of us paying up front for what they are going to use. So I think it's easier, so -- COMMISSIONER MAC'KIE: Easier than a sales tax? CHAIRMAN CONSTANTINE: Yes. COMMISSIONER MAC'KIE: I don't think so. MR. McNEES: You can actually pass the sales tax under the same conditions, that your intention is to leverage it. COMMISSIONER BERRY: The school system tried to get a Page 57 January 24, 2000 general obligation bond years ago and they packed the room at East Naples Middle School and it went down in a blaze of fire. CHAIRMAN CONSTANTINE: Yes. COMMISSIONER NORRIS: Let me point out one thing. No matter whether you bond your general obligation, or whatever you are going to do with it, you are still saying that only the people who actually live here are going to pay for these roads. So instead of the sales taxes -- COMMISSIONER MAC'KIE: It's true. COMMISSIONER BERRY: Let others pay, that's right. COMMISSIONER MAC'KIE: Absolutely. COMMISSIONER NORRIS: -- thirty-five, forty percent of it. COMMISSIONER CARTER: Thank you, John. That's my argument forever. Thirty percent comes to the folks that come here that use and use and use. ride? COMMISSIONER MAC'KIE: time. COMMISSIONER CARTER: CHAIRMAN CONSTANTINE: And why should they get a free It's right, but it's failed every Maybe we haven't done it right. Thank you. See you tomorrow. There being no further business for the good of the County, the meeting was adjourned at 10:53 a.m. BOARD OF COUNTY COMMISSIONERS · ./ if TIMOI~~ ~HAIRMAN ATTEST: Page 58 January 24, 2000 DWIGHT.E, BROCK, CLERK ' Attest as ~ THESE M .NUTES APPROVED BY THE BCC ON AS PRESENTED ~ OR AS CORRECTED TRANSCRIPT PREPARED ON BEHALF OF GREGORY COURT REPORTING SERVICE BY: ELIZABETH M. BROOKS, RPR Page 59