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BCC Minutes 09/04/2014 B (Budget) BCC BUDGET MEETING MINUTES September 4, 2014 September 4, 2014 TRANSCRIPT OF THE MEETING OF THE 5:05 BUDGET MEETING BOARD OF COUNTY COMMISSIONERS Naples, Florida, September 4, 2014 LET IT BE REMEMBERED, that the Collier County Commissioners, in and for the County of Collier, having conducted business herein, met on this date at 5:05 p.m. in BUDGET SESSION in Building "F" of the Government Complex, East Naples, Florida, with the following members present: CHAIRMAN: Tom Henning Fred Coyle (Absent) Donna Fiala Georgia Hiller Tim Nance ALSO PRESENT: Leo E. Ochs, Jr., County Manager Jeffrey Klatzkow, County Attorney Mark Isackson, Corporate and Business Financial Services Troy Miller, Communications &Customer Relations Page 1 COLLIER COUNTY Board of County Commissioners Community Redevelopment Agency Board (CRAB) Airport Authority //4.• (4t AGENDA Board of County Commission Chambers Collier County Government Center 3299 Tamiami Trail East, 3rd Floor Naples, FL 34112 BUDGET SESSION September 4, 2014 5:05 PM Commissioner Tom Henning, District 3 - BCC Chair Commissioner Tim Nance, District 5 - BCC Vice-Chair; TDC Chair Commissioner Donna Fiala, District 1 - CRAB Chair Commissioner Georgia Hiller, District 2 - Community & Economic Dev. Chair Commissioner Fred W. Coyle, District 4 - CRAB Vice-Chair NOTICE: ALL PERSONS WISHING TO SPEAK ON AGENDA ITEMS MUST REGISTER PRIOR TO SPEAKING. ANY PERSON WHO DECIDES TO APPEAL A DECISION OF THIS BOARD WILL NEED A RECORD OF THE PROCEEDING PERTAINING THERETO, AND THEREFORE MAY NEED TO ENSURE THAT A VERBATIM RECORD OF THE PROCEEDING IS MADE, WHICH RECORD INCLUDES TESTIMONY AND EVIDENCE UPON WHICH THE APPEAL IS TO BE BASED. ALL REGISTERED SPEAKERS WILL BE LIMITED TO THREE (3) MINUTES UNLESS THE TIME IS ADJUSTED BY THE CHAIRMAN. Page 1 September 4, 2014 IF YOU ARE A PERSON WITH A DISABILITY WHO NEEDS ANY ACCOMMODATION IN ORDER TO PARTICIPATE IN THIS PROCEEDING, YOU ARE ENTITLED, AT NO COST TO YOU, THE PROVISION OF CERTAIN ASSISTANCE. PLEASE CONTACT THE COLLIER COUNTY FACILITIES MANAGEMENT DEPARTMENT LOCATED AT 3335 EAST TAMIAMI TRAIL, SUITE 1, NAPLES, FLORIDA, 34112-5356, (239) 252-8380; ASSISTED LISTENING DEVICES FOR THE HEARING IMPAIRED ARE AVAILABLE IN THE COUNTY COMMISSIONERS' OFFICE. 1. ADVERTISED PUBLIC HEARING - BCC - Fiscal Year 2015 Tentative Budget A. Discussion of Tentative Millage Rates and Increases Over the Rolled Back Millage Rates B. Review and Discussion of Changes to the Tentative Budget C. Public Comments and Questions D. Announcement of Tentative Millage Rates and Percentage Changes in Property Tax Rates E. Resolution to Adopt the Tentative Millage Rates F. Resolution to Adopt the Amended Tentative Budget G. Announcement of Final Public Hearing as Follows: Final Public Hearing on the FY 2014-15 Collier County Budget Thursday, September 18, 2014 5:05 PM Collier County Government Center W. Harmon Turner Building (F) Third Floor, Boardroom Naples, Florida 2. ADJOURN Page 2 September 4, 2014 COLLIER COUNTY BOARD OF COUNTY COMMISSIOENRS AGENDA Thursday, September 4, 2014, 5:05 PM NOTICE: ALL PERSONS WISHING TO SPEAK ON AGENDA ITEMS MUST REGISTER PRIOR TO SPEAKING. ANY PERSON WHO DECIDES TO APPEAL A DECISION OF THIS BOARD WILL NEED A RECORD OF THE PROCEEDING PERTAINING THERETO, AND THEREFORE MAY NEED TO ENSURE THAT A VERBATIM RECORD OF THE PROCEEDING IS MADE, WHICH RECORD INCLUDES TESTIMONY AND EVIDENCE UPON WHICH THE APPEAL IS TO BE BASED. ALL REGISTERED PUBLIC SPEAKERS WILL BE LIMITED TO THREE (3) MINUTES UNLESS PERMISSION FOR ADDITIONAL TIME IS GRANTED BY THE CHAIRMAN. 1. PLEDGE OF ALLEGIANCE 2. ADVERTISED PUBLIC HEARING — Pelican Bay Services Division Budget Hearing: A. Executive Summary — Fiscal Year 2015 Pelican Bay Services Division Budget B. Public Comment C. Resolution Approving the Special Assessment Roll and Levying the Special Assessment against the Benefited Properties within the Pelican Bay Municipal Service Taxing and Benefit Unit. 3. ADJOURN Page 1 September 4, 2014 September 4, 2014 CHAIRMAN HENNING: Welcome to the Board of County Commissioners' budget hearing. Would you all rise for the pledge of allegiance, please. (Pledge of Allegiance was recited in unison.) CHAIRMAN HENNING: I'm assuming that our budget director's going to lead this meeting, Mr. County Manager? MR. OCHS: That would be correct, Mr. Chairman. We'll turn this right to Mr. Isackson to begin the agenda this evening -- CHAIRMAN HENNING: Thank you. MR. OCHS: -- with the Board's permission. MR. ISACKSON: Thank you, County Manager. Board members, welcome back. The first matter on your agenda is the Pelican Bay Services Division budget hearing. And I'll ask Mr. Dorrill to come up and address the Board regarding their particular budget. CHAIRMAN HENNING: Commissioner Hiller? COMMISSIONER HILLER: Yeah, Mr. Dorrill, welcome back after the summer. I hope it was productive for you. We have a couple of constituents from Pelican Bay that have sent some questions, and I would really appreciate it if you have the opportunity after you do your presentation, if you could maybe answer some of them, if you've had time to review that email. And if you haven't, if you could coordinate with those constituents to get with them to provide the answers necessary. I've explained that the budget is a fluid document, and any changes that are not made at this meeting, if the decision is for this Board to explore those questions further that this budget can be amended at any time in the future. And we regularly amend our budget because we are responsive to changes throughout the year. MR. DORRILL: You're correct. And I can do both. And Dr. Doyle has appeared in each of the last four years that I have been here. Page 2 September 4, 2014 I think as a courtesy to him I'll give you a brief overview, then perhaps let him express the specific concerns that he has, and then I'll offer what I hope is an appropriate reply. COMMISSIONER HILLER: Thank you. Item #2A (On the Pelican Bay Services Division Budget Agenda) EXECUTIVE SUMMARY — FISCAL YEAR 2015 PELICAN BAY SERVICES DIVISION BUDGET MR. DORRILL: The budget this year in the associated resolution that we're requesting you to adopt is in several different parts, and I'll explain those briefly. Just briefly, because you've also work shopped this earlier this summer. The total assessments identified within the roll are $2,794,422,000 for the associated maintenance and operating assessment. And there are 7,614 assessable units. Most people do not understand that that also includes the Board of County Commissioners. You are paying your fair share of contribution for the park site that you own. In addition, the Archdiocese of Venice pays for the Catholic Church, as does the Philharmonic and all the commercial properties. But that's the total number of assessable units. In addition there is a capital assessment that is identified for the coming year that is $59.76. That is to fund the capital program that has a slight increase this year. The board has -- the advisory board has adopted this budget following a series of four public workshops from a budget and finance committee that they have appointed. And then in addition, and as part of the final county budget adoption, you also levied an ad valorem millage for the street lighting program and cost center that are there. And that's consistent with board policy for the past 35 years where the County Commission first Page 3 September 4, 2014 created the Collier County street lighting district and programs in the original Lely community to fund street lighting that is not otherwise owned by a master homeowners association. And with that, I think I'll wait and give Dr. Doyle the courtesy of an opportunity to speak, in addition to other members of the public, and then come back and answer the questions that you might have. CHAIRMAN HENNING: Okay, let's take the speakers on the Pelican Bay Service District. Item #2B (On the Pelican Bay Services Division Budget Agenda) PUBLIC COMMENT MR. MILLER: We have one speaker and it's Dr. Doyle, and he's been ceded three additional minutes from Mrs. Doyle for a total of six minutes. DR. DOYLE: Good evening, Commissioners. I'm here, Dr. Joseph Doyle, representing my mother, Sandra Doyle, Folio 54525002160, Laurel Oaks, Pelican Bay. As you know, I'm here to discuss the proposed non ad valorem assessment for fiscal year 2015 for Pelican Bay MSTBU. And I'm here to say that we formally object to the computation. And we have not received any response or acknowledgment to our questions regarding the proposed budget in our June 30th email regarding the June 26th budget workshop that we sent to Mr. Ochs. And none of the footnotes that we were concerned about at that time actually have been expanded or even addressed. The budget packet that you have right now is actually in a nice condition. But when we had the budget workshop, my concern was that everything was spread out over several pages. You had to hunt from -- for instance, from page -- let's see here. You had to go from Page 4 September 4, 2014 Page 540 to 541 and 542, 543, 544 and 545, then skip down to 573 and 574 for the capital, and then end up down on 575 and 576. You know, I had all my questions in there. The budget workshop did not talk about the different increases or decreases as far as percentages. I had to figure that all out myself. So it was very difficult to follow. And I can't see how you could have followed it until even today. So that's one of my problems. The assessment that's being proposed right now, $426.76, is a 7.2 percent increase. And the thing is, is that for the last several years we have had double the CPI increases, including this year. And I think that, you know, the CPI is 2.1 percent. I think that really we should look at trying to keep that increase to just the 2.1 percent. And one of the things I'm concerned about that was in the capital budget is that there was an amendment to the fiscal year 2014 capital budget of$2.48 million for hard scape upgrades, but there was no explanation for that. And we really need an accounting for these monies prior to having any increase in the current assessment. As far as the operations and maintenance, I would like to see it held to the 2.1 percent increase. So I'd like to see the budget just held to 2.746 million, which would be 360.65 per ERU. As far as the capital reserve funds go, it's not just a little increase. The $59.76 increase really a 33 percent increase over last year. And some of that -- or actually most of that is due to the new reserve that they want to have, $200,000 a year for the beach renourishment. And I'm actually fine with that. I'm just upset because of the budget amendment last year of 2.48 million. We had $2.5 million in reserves, yet there's no explanation as to what happened to 2.48 million of that. So, you know, I don't see that we should be adding to the capital reserve for anything else other than the beach renourishment this year. So that would be at $26.27. So I'm saying that instead of the $426 that you want to assess per Page 5 September 4, 2014 ERU in Pelican Bay, it really should be $386.92, and send the Pelican Bay Advisory Board back to the drawing board to keep that CPI to 2.1 percent for operations and maintenance and to just take capital just for the beach renourishment. And as far as the beach lighting goes, and I know that's actually going to be more in the next hearing because that's Fund 778, and that's for the millage, that's ad valorem. The assessment we just discussed was not ad valorem. That was a 59 percent increase in 2012. This year you're asking for another 3.5 percent increase because of the rolled-back rates. However, this fund has actually been accumulating money -- it's not going to be spent probably until about 2018 or 2021 for new lights and poles. And it's actually accumulating money faster than anticipated. So I really don't think that we should be increasing the millage on that. So in sum I'd just like to really see an accounting, especially for that capital money, that $2.48 million that magically appeared without actually a public hearing. It may have been on a consent agenda, I don't know. But I haven't gotten a complete accounting. And the thing is, is I saw a nice presentation yesterday from the Naples Airport budget director, and she went over every capital project for the runways repaving and ramp repaving and stormwater drainage, and you could follow the flow. I don't see where this $2.48 million went. So I really don't think we should be adding more to the capital until we can account for that. So like I said, we really need to account to the citizens of Pelican Bay and also to control and reduce our expenses. Thank you. COMMISSIONER HILLER: Would you like to respond, Neil? MR. DORRILL: Couple of just brief responses. The hard scape number that Dr. Doyle eluded to that shows up in your amended column, and I'll ask Mr. Isackson to correct me if I Page 6 September 4, 2014 misstate this, all county departments are using a unified financial management budgeting and purchasing software, and there's an acronym for it, I believe it's SAP. And the reason that this shows in our amended budget column is that is how we account for multi-year encumbered capital improvement projects. And so we adjust the number based on showing a net available as opposed to what the full amount might be, because some of our projects do go from one fiscal year to the next. And in particular, within that amount -- and I won't make apologies for the summary budget format that you and senior county staff are used to. I'm quite sure it is confusing to the average member of the public. We have a very popular website at PBSD, and my suggestion is perhaps that, you know, we could meet with the Doyles and reformat that so that it could be citizen friendly. Because I do hear this a lot. COMMISSIONER HILLER: And it is absolutely true. I mean, even I who I'm very comfortable with reading budgets, when I first got our county's budget years ago and looked at it the way it was written up, it's definitely hard to read. It's hard for citizens. MR. DORRILL: I agree. But just by way of response, of that amount that was shown as the amended "hard scape" capital improvement budget, in the past year we spent $483,000 for last winter's beach renourishment project, we spent $320,000 for six new brick pedestrian crossways, we spent $132,000 on renovations to the median landscaping, and $60,000 in associated civil engineering for a total of almost $993,000. But again, the detail behind some of these summary pages is worth the while to try and invest and understand them. And then on the maintenance assessment side, the increase in the maintenance assessment this year is primarily attributable to three things: We have a $1 .1 million payroll. And about 34,000 of that is Page 7 September 4, 2014 attributed to a three percent general wage adjustment that was given to all county employees. About a year ago our board became, to my understanding, the first community on the west coast of Florida to stop the use of copper sulfate for the treatment of algae in the lakes. And frankly, the results thus far have been very stressful and disappointing to the residents, and expensive. And so next year's budget has $76,000 in increased operating contracted -- or chemical costs associated with that particular initiative. And then finally there was a $12,000 increase associated with some of the beautification work and some retrofitting of our irrigation system. We're trying to retrofit to go to a next generation pop-up sprinkler to save water within our medians. And so again, I think there are some good reasons. And we do have a very dedicated budget and finance committee. And in that regard, we actually reproduce every month for your advisory board a, what I would call standard financial statement presentation. We actually give them every month a balance sheet with assets and liabilities and equity provisions, and then we also now generate an income statement, primarily because our board all came from the private sector and they're used to balance sheets and income statements as opposed to standard governmental, you know, budget printouts. And so in that regard I'd be more than happy to meet with Dr. Doyle and anyone for that matter with our budget chairman to see if we can't reformat this in a little more understandable presentation and also upload it to the website for the reasons that I said. COMMISSIONER HILLER: Can I make one comment? CHAIRMAN HENNING: Sure. COMMISSIONER HILLER: Thank you so much for those comments, and I appreciate your willingness to simplify and clarify for the benefit of the residents. Page 8 September 4, 2014 If you could at the same time look at the reserve and make sure that the level of reserves that you're maintaining are supported by a specific objective that your budget committee will recommend to you so that we don't have unnecessary reserves. I mean, it's clearly important to have reserves, but I would like the committee to evaluate what you've got versus what you may really need. I'm not sure if you've got too much or too little, and their input would be invaluable to us. MR. DORRILL: I will. And in fact the gentleman who has been the chairman of the budget committee for the past seven years just indicated to me yesterday that he thinks he's done. And so this March he'll rotate off the board and so I will be in search of a new budget chairman for that committee for the coming year. COMMISSIONER HILLER: Got it. Thank you. MR. DORRILL: Thank you again. COMMISSIONER FIALA: I was going to ask, as you were telling us what these different changes were, which all made a lot of sense, obviously when you're dealing with some of these things that didn't work out very well and so you had to upgrade them or whatever, is that on line too for your residents to see? MR. DORRILL: You know, that's a great question. About five years ago we undertook -- we, Pelican Bay Services -- undertook a multi-year community improvement plan process that ended up being about 300 pages thick. It does have an executive summary to it. I don't know if it is a portal on our website, but if it's not, I can take care of that tomorrow. And we are accumulating cash so that they can spend cash and not incur any debt to replace their streetlights that are now about 35 years old in the original phase from Westinghouse. And to have cash on hand to renourish the beach is one of our expanded service responsibilities that we assumed this past year. Page 9 September 4, 2014 COMMISSIONER FIALA: Thank you. CHAIRMAN HENNING: Okay. Thank you. MR. ISACKSON: Commissioners — Item #2C (On the Pelican Bay Services Division Budget Agenda) A RESOLUTION APPROVING THE SPECIAL ASSESSMENT ROLL AND LEVYING THE SPECIAL ASSESSMENT AGAINST THE BENEFITED PROPERTIES WITHIN THE PELICAN BAY MUNICIPAL SERVICE TAXING AND BENEFIT UNIT — MOTION TO CONTINUE TO THE NEXT BUDGET MEETING - APPRO VED CHAIRMAN HENNING: Like Commissioner Hiller has said, this is the first of a second hearing. We're going to have two public hearings on this. So hopefully we can have some resolution prior to that last public hearing. Go ahead. MR. ISACKSON: Commissioners, the Item C is a Resolution Approving the Special Assessment Role and Levying the Special Assessment against the benefiting properties. We typically do that at this meeting. CHAIRMAN HENNING: Well, but are you saying if we do it now it's final, there's no changes can be made? MR. ISACKSON: That's correct. CHAIRMAN HENNING: Well, we have unanswered questions. Can it wait 'til the last hearing? COMMISSIONER HILLER: Can I make a suggestion, Commissioner Henning? CHAIRMAN HENNING: Sure. COMMISSIONER HILLER: I think, and I spoke to the Doyles Page 10 September 4, 2014 about this, and I believe there will likely be other issues that might come in the course of this meeting that might need subsequent amendment. If we approve this and it turns out that there is something that needs adjustment, we can do it by amendment to the budget at a regular board meeting. CHAIRMAN HENNING: Yeah, but the assessment is -- is codification of the action. COMMISSIONER HILLER: You're talking about the Pelican Bay assessment. CHAIRMAN HENNING: Right. COMMISSIONER HILLER: Oh, I was -- are you doing the Pelican Bay assessment now? MR. ISACKSON: Yes. COMMISSIONER HILLER: Oh, my mistake. I misun-- I thought we were talking about the general assessment. Oh, we're doing the Pelican Bay assessment at this meeting? DR. DOYLE: The ordinance actually stipulates that you will on this evening at 5:05 annually consider and adopt the maintenance and operation and capital assessment for that portion that is assessment driven. And in this particular case, it comes to you on the unanimous vote and recommendation of both the budget and finance committee, as well as the 10-member board that voted on this in May. CHAIRMAN HENNING: Okay. So I must ask, what is the -- can we wait until the second meeting? MR. ISACKSON: Commissioner, I defer to Jeff, but I don't know why you couldn't just continue the hearing until the -- continue this hearing until the 18th, but that would be a question for Jeff. MR. KLATZKOW: You can continue it. It's within your prerogative. CHAIRMAN HENNING: Well, there must be a reason why it's Page 11 September 4, 2014 -- it has historically been done in the first hearing versus the second hearing when we finalize all the other resolutions. MR. ISACKSON: Well, I think as Neil said, I think it's just the way the resolution was crafted in terms of when the discussion was going to take place, et cetera, et cetera. As the County Attorney says, I'm not so sure that you just can't continue it to the 18th and deal with it at that time. COMMISSIONER HILLER: And we should probably also look at amending that ordinance because we -- no? MR. KLATZKOW: I mean, you don't have to -- if you want to continue this, continue this. That's fine. COMMISSIONER HILLER: Okay. But I was just thinking, I mean, in the future you probably want to have the opportunity to hear these issues twice, just like we do with everything else. I mean, I'm not sure why they should only have one bite at the apple and everyone else can come back two times. CHAIRMAN HENNING: Without hearing any explanation, I'll entertain a motion to -- COMMISSIONER HILLER: Motion to continue. CHAIRMAN HENNING: -- continue the -- COMMISSIONER NANCE: Second. CHAIRMAN HENNING: -- Pelican Bay Services District Hearing and Resolution. Motion by Commissioner Hiller, second by Commissioner Nance. Any opposed to the motion? (No response.) CHAIRMAN HENNING: Show the motion carries unanimously. MR. DORRILL: Just a point of clarification. As I stand before you this evening, I don't know that I'm inclined to want to come back and suggest any specific budget cuts in order to effectuate a reduction Page 12 September 4, 2014 in the assessment, primarily because the increases are attributable to future beach renourishment, general wage adjustments and increased costs of operation for algae control within the surface water lakes and drainage system that is there. Essentially that's where the increases are. COMMISSIONER HILLER: And if you can just show that to the Doyles. I mean, they're proposing significant savings. So if you can show them that their savings doesn't contemplate expenditures that we necessarily have to incur, then I think the matter is resolved and you can bring it back to the Board and we'll vote accordingly. MR. DORRILL: That's not a problem. CHAIRMAN HENNING: Okay, thank you. Public comment on other budgetary items. MR. MILLER: I have Phil Brougham who wishes to speak about the Isles of Capri Fire MSTU. CHAIRMAN HENNING: Okay. Any other speakers? MR. MILLER: Yes, we also -- he'll be followed by Beau Middlebrook and then Jorge Lara. MR. ISACKSON: Commissioner, if I might, we have a public comment section on the county's portion of the hearing, if I can. CHAIRMAN HENNING: Oh, I thought that we were into it. MR. ISACKSON: If we can, there's some specific sequence of events that have to occur -- CHAIRMAN HENNING: Okay. MR. ISACKSON: If you don't mind, let me -- COMMIS SIONER NANCE: We're going to close the public hearing on Pelican Bay? COMMISSIONER FIALA: Second. MR. OCHS: We continued it. CHAIRMAN HENNING: We continued it. COMMISSIONER NANCE: Okay, sorry. COMMISSIONER FIALA: Oh, so you can't close it now. Okay, Page 13 September 4, 2014 thank you. CHAIRMAN HENNING: Okay. Then I thought we were on B, which is public comment. MR. ISACKSON: And that was specific to Pelican Bay, sir. So now if-- CHAIRMAN HENNING: I see. Item #1 (On the Board of County Commissioners Budget Agenda) BCC FY2015 TENTATIVE BUDGET PRESENTATION MR. ISACKSON: -- we can transition into the county's portion of the public hearing regarding the county's budget, that would be great. CHAIRMAN HENNING: Okay. MR. ISACKSON: Thank you, sir. Let me just start out by welcoming us to the first of two public hearings on the Collier County government fiscal year 2015 budget which begins October 1, 2014 and runs through September 30, 2015. The public budget hearings in September must follow a specific format pursuant to Truth in Millage guidelines. Your agenda contains the specific sequence of agenda items to be covered. Pursuant to statute, this hearing was advertised as part of the TRIM Notice mailed to all Collier County property owners. The final budget hearing is two weeks from tonight, or September 18th, 2014. This hearing will be noticed as part of the statutory advertising requirements contained in the Truth in Millage statutes. The notice of proposed tax increase ad will appear in the Naples Daily News on September 15th, 2014. This type of ad, which the county has not filed in several years, is Page 14 September 4, 2014 necessary since the county's tentatively adopted millage rate is greater than the current year aggregate rolled-back rate. Final tax rate and budget decisions will be made at this final hearing on September 18th, 2014. Agenda and speaker slips are available in the hallway. Anyone interested in addressing the Board of County Commissioners regarding the county budget must complete a speaker slip. Mr. Troy Murray (sic) will collect the speaker slips. Following some introductory remarks regarding tax rates and changes to the tentative budget released in mid July, there will be an opportunity, which is under agenda Item 1 .C, for public comments. And speakers will be called by name. As a public service announcement, the individual property owner TRIM Notices contained information pertaining to market value and the point of contact at the Property Appraiser's Office through which questions could be addressed. In addition, there was a notation indicating that a petition for adjustment of market value is available through the Property Appraiser's Office, and this petition must be filed with the Property Appraiser by close of business Monday, September 8th, 2014. Finally, the County Manager's cover memo to this hearing provided follow-up to the matters raised by the Board at the June workshop. Item #1A (On the Board of County Commissioners Budget Agenda) DISCUSSION OF TENTATIVE MILLAGE RATES AND INCREASES OVER THE ROLLED BACK MILLAGE RATES — DISCUSSED MR. ISACKSON: Commissioners, under Item 1.A there's a Page 15 September 4, 2014 discussion of the tentative millage rates and increases over the rolled-back millage rates. State law requires that the first substantive issues to be discussed are, number one: The percentage increase in millage over the rolled-back rate needed to fund the budget; and two: The reason the ad valorem taxes above the rolled-back rate, as calculated on the state's DR 420 forms, are being increased. Rolled-back rate is defined at that tax rate necessary to generate prior year tax revenues, and this tax rate is calculated not including taxable values associated with new construction, additions, deletions and rehabilitative improvements. The Board's adopted budget guidance for FY 2015 included a millage neutral position. The same tax rate as last year and for that matter since FY 2010 for the general fund and the unincorporated area general fund which together represent over 96 percent of the total aggregate taxes levied across all Collier County taxing authorities for the 2015 fiscal year. The FY 2015 fiscal year tentative general fund and unincorporated area general fund budgets as presented are based upon Board adopted budget policy calling for a millage neutral tax rate. Both the general fund and the unincorporated area general fund tax rates are higher than the rolled-back rate. Collier County taxable value has increased steadily over the past three fiscal years and the increase for 2015 is 6.55 and 6.56 respectively within the general fund and the unincorporated area general fund. Within an increasing taxable value environment under millage neutral policy guidance, the rolled-back rate will be lower than millage neutral. This event occurs in 2015. With the exception of FY 2014 and 2015, each year beginning in FY 2008 the adopted millage rate was lower than the rolled-back rate. Had the county levied the rolled-back rate or higher millage rate as the adopted millage rate in fiscal years 2008 through 2013, an additional $89.7 million in ad Page 16 September 4, 2014 valorem revenue could have been realized. A millage neutral tax rate in FY 2014 and again as proposed in 2015 under the Board adopted budget guidance realizes an additional $15.6 million over the rolled-back rate for the two-year period combined. Collier County recorded its highest countywide taxable value in FY 2008 at 82.5 billion. While taxable value has recovered nicely over the past three fiscal years, the tax base still has eroded some $17.9 billion since FY 2008. As a pure factor of tax base loss, lost levy potential based upon the current millage rate is approximately $64 million. Likewise, during that same period, since FY 2008 within the unincorporated general fund, $10 million in lost levy potential occurred by levying the adopted rate as opposed to the rolled-back rate. Recovery of those dollars to fund continued backlog asset and infrastructure replacement/maintenance, while offering continued exemplary service to residents and visitors, will represent one of the most important policy decisions faced by future boards. A substantial measure of tax relief under a millage neutral philosophy has been afforded to countywide property owners by the Board since 2008. Each year tax policy is visited by the sitting board and budget decisions are crafted around the enacted policy. Referring to Exhibit 1.A, millage rates for each Collier County taxing authority have been established pursuant to budget guidance. This guidance provided that millage neutral tax positions would be established within the general fund and unincorporated area general fund. Further, MSTU tax rates would be set between tax neutral and millage neutral based upon their respected advisory board recommendations. MSTU tax rates where no advisory boards exist will be established at millage neutral or below. Page 17 September 4, 2014 The roster of tax rates adopted by the Board on July 8th, 2014 represent the maximum property tax rates that can be levied. The Collier County Lighting District MSTU millage rate is .2 per $1,000 of taxable value, which is an increase of 29 percent above the rolled-back rate. Out of an abundance of caution it is recommended that this rate be voted on separately under agenda Item 1 .E, as it will require unanimous vote of the Board. The Isles of Capri millage rate which is currently set at 2 mills per thousand dollars of taxable values, while a policy decision of the Board, this rate cannot be increased, only lowered. The cumulative aggregate rolled-back rate for all Collier County taxing authorities, exclusive of debt service, totals 3.9667 per thousand dollars of taxable value. The proposed aggregate tax rate for all Collier County taxing authorities, exclusive of debt service, totals 4.1505 per thousand dollars of taxable value. This represents an increase of 4.63 percent over the aggregate rolled-back rate and necessitates a notice of proposed tax increase ad for TRIM purposes and not simply a budget summary ad, which has been the custom over the past several years. Final millage rates will be adopted by the Board on September 18th, 2014. Item #1B (On the Board of County Commissioners Budget Agenda) REVIEW AND DISCUSSION OF CHANGES TO TENTATIVE BUDGET — PRESENTED MR. ISACKSON: Commissioners, Item 1 .B is a review and discussion of changes to the tentative budget. For tonight's hearing, changes from the FY 2015 July tentative budget as noted within Exhibit 1.B pertain exclusively to receipt of the Tax Collector's budget, Page 18 September 4, 2014 as well as minor fund level adjustments that are necessary as a matter of normal operations or stemming from previous Board action. These budgetary changes are filed in Exhibit 1.B, pages 3 through 10. A summary of these actions are described within Exhibit 1 .B are on pages 1 through 2. The most noteworthy is the customary submittal of the Tax Collector's budget to the Department of Revenue on August 1st and inclusion within this budget as part of the first public hearing. According to the Tax Collector's statement of commissions and expenditures, their FY 2015 budget totals $17,668,500 and is offset by service commissions. The Tax Collector is a fee based operation. This year's Tax Collector budget represents an increase of 1 .4 percent from FY 2014. Turnback from the Tax Collector, as well as all Constitutional officers is significant each year and represents excess commissions over actual expenses to run the operations. Year ending turnback by Tax Collector to the general fund for the past two fiscal years, FY '12 and FY '13, has totaled $5,324,804 and $5,176,168 respectively. Turnback from all Constitutional officers to the general fund for the same period totals $10,460,892 and $7,434,910 respectively. Cumulative changes from the July, 2015 tentative budget, as contained within the enabling resolutions, total $19,366,900, of which $17,668,500 is attributed to the Tax Collector's budget submittal. Minor fund level adjustments in the amount of $1,698,400 that are necessary as a matter of normal operations or stemming from previous Board action are also included. Mr. Chair, that concludes my introductory remarks, and we are on Item 1.C, which is public comments and questions. CHAIRMAN HENNING: Okay, great. Item #1C (On the Board of County Commissioners Budget Agenda) Page 19 September 4, 2014 PUBLIC COMMENTS AND QUESTIONS MR. MILLER: Mr. Chairman, your first public comment is Phil Brougham. He will be followed by Beau Middlebrook. COMMISSIONER BROUGHAM: Good evening, Commissioners. My name is Phil Brougham. I reside in Fiddler's Creek in East Naples. Excuse my cold. I have written out my comments, so I'll read them. We're all aware that the ballot question to join Isles of Capri Fire with East Naples Fire failed by a vote of 51 percent to 49 percent. It was unfortunate that the turnout was so light, probably due to a primary election held in mid summer. During this final discussion, which I understand is not totally final discussion of the current budget, you should consider the implications for this coming fiscal year, as well as the next. 280 property owners in Fiddler's Creek who have been trying for two and a half years to leave the Isles of Capri and join East Naples Fire Department, along with the rest of Fiddler's Creek. In June, 2012 we sponsored a written ballot of the 280 property owners and we had a 60 percent response and a 97 percent vote to join the East Naples Fire District. In early 2014 the county conducted a straw vote and 95 percent of Fiddler's Creek respondents voted to join the East Naples Fire District. The August 26th primary resulted in a 94.5 percent of Fiddler's Creek ballots opting to join the East Naples Fire District. We have been patient and worked with all concerned and within the system to attain our objective. Last year we in conjunction with the East Naples Fire District had a separate local bill ready to go to the state legislature to be annexed by the East Naples Fire District. But we were advised it would be better to present one unified bill for the entire Isles of Capri Fire District. Page 20 September 4, 2014 We would like this resolved. And in all fairness, we do not want to be a divided community in Fiddler's Creek, served by two district at two different tax rates. We intend to again pursue a new local bill in conjunction with East Naples Fire District to join that district, and if successful it would have a significant effect on the Isles of Capri budget. It is something you should seriously consider today. However, until Fiddler's Creek is formally annexed into the East Naples Fire District, I would request that the county enter into an interlocal agreement with the East Naples Fire District and provide fire and rescue service to us in Fiddler's Creek at a rate of 1 .5 mills. Or perhaps there's another viable legal alternative to accelerate this process. And I really would appreciate your support in helping us attain our objective after all this long time. Thank you. CHAIRMAN HENNING: Thank you. I think that was going to take effect in 2016, not 2015. However, are you going to seek codification into the East Naples Fire District, the -- our delegation would like to hear from the Board of Commissioners, and I would imagine we're going to have a workshop in October, Nov-- probably October with the delegation, Leo? MR. OCHS: Sir, I don't know if we'll have a workshop. We haven't in the last couple of years. But we do present you with the staff recommended legislative agenda for the state, which then goes to the delegation before they have their formal delegation hearing in November. You could incorporate, you know, the desire of the Board with respect to Fiddler's Creek in that legislative agenda. CHAIRMAN HENNING: Okay. Now, I just want to ask the Board, start with Commissioner Fiala, do you want an official public petition from Fiddler's Creek residents, or -- knowing that this was an action of the past. Does this suffice what we're hearing today? COMMISSIONER FIALA: Yes, I think that Fiddler's Creek Page 21 September 4, 2014 divided by fire districts would like to all be one district. And I can't blame them at all for saying that their millage rate would be less. And I feel that we as a County Commission should support their efforts and send our recommendation to our legislative delegation that we support Fiddler's Creek, the 280 homes, to join East Naples Fire Department and leave the Isles of Capri Fire Department. CHAIRMAN HENNING: And so I guess you want to give direction to staff to make this a part of our legislation delegation priorities? COMMISSIONER FIALA: Yes. CHAIRMAN HENNING: And I can support that. COMMISSIONER FIALA: Good. CHAIRMAN HENNING: Commissioner Hiller, can you support the request'? COMMISSIONER HILLER: You know, this is a little bit fast for me. I know you're involved because it's part of your districts, and I know you understand these issues because of fire. I would like to hear a little bit further, you know, what's going to be discussed with respect to this. Because we did have a referendum. And I think we have to hear both sides of the story in light of the fact that there was a referendum that said, you know, I guess no to annexation. So if you've got one citizen standing before us saying we still would like to proceed but a referendum, notwithstanding that it was close, it's still a majority that says no, we don't, I think it's important that we allow everyone the opportunity to discuss this matter. Because, I mean, normally if there's a referendum our position is to respect the referendum. It's a difficult situation for sure, but I'd like to hear a little bit more about it before I -- COMMISSIONER BROUGHAM: If I might comment on that, Page 22 September 4, 2014 Commissioner. And I respect the vote also is 51 to 49 percent across the entire MSTU of all of the Isles of Capri. Notwithstanding that vote, we have consistently voted for the affected property owners in Fiddler's Creek, well over 90 percent, that we would like to join East Naples. I mean, that's my point. COMMISSIONER HILLER: No, I understand. And that's a very important point as well. I think one of the things that I would like to see considered by the county is a consolidation of the dependent districts. I mean, if we're really committed to consolidation, I think we should put our money where our mouths are and we have -- as a Board we don't need to deal with all this other stuff that's going on beyond our boundaries. But if we could maybe evaluate consolidating the three dependent districts as a start, we would more likely than not achieve savings that could be passed on to the taxpayer. And it's something I would love to have some information on. And again, it's not anything I know anything about. I see some people nodding. It's just an idea. I mean, it's not based on that it's a good one or a bad one, it's just a thought that I think we need to explore as we look to consolidation as the, you know, solution to promoting better lifesaving approaches and techniques and financial savings at the same time. I'm open minded. I'm waiting to hear. CHAIRMAN HENNING: Okay, Commissioner Nance, are you supportive of Commissioner Fiala's direction? COMMISSIONER NANCE: Yes. I think it's very much an interim step. I think this is like passing a kidney stone. But, you know, I guess we have to leave two people in Isles of Capri that want to have their own fire department. At some point we're going to have to make a hard decision. CHAIRMAN HENNING: Right. Okay, Leo, you got that direction? Page 23 September 4, 2014 MR. OCHS: Yes, sir. COMMISSIONER BROUGHAM: Thank you very much. MR. MILLER: Your next public speaker is Beau Middlebrook. He'll be followed by Jorge Lara. MR. MIDDLEBROOK: Good afternoon, Commissioners. Beau Middlebrook. I live in Isles of Capri; you all know who I am. I just beg for you, especially after you put us to an official vote where we did have a majority. Even with Fiddler's Creek out of it, you had 70 percent of the residents did not want to join East Naples Fire Department. And it's only been a week after that vote. I beg you to give us time and don't give us away yet. Please explore other options or let us explore other options of merging with the other districts that are going with Ochopee or going with EMS. Who knows, there are multiple things we could do. But I beg you to honor what the people chose for and to stay away from East Naples Fire Department for this time. Give us a year. We have enough money in reserves for this year anyways, wait 'til next year and we can do studies in the meantime. That's all I have to say. CHAIRMAN HENNING: Thank you. Commissioner Fiala? COMMISSIONER FIALA: Yes, I don't think we're trying to say we're stopping them. I think what we're saying is we want to give the approval for Fiddler's Creek who has requested. It's not normal that we tell anybody, any taxpayer you have to pay more because they don't want you to leave and because it's going to cost them more money if you leave. I hate to tell a community, well, you can't have a lower tax rate because they need your money here in order to carry on their operation. MR. MIDDLEBROOK: But you'd also be telling 70 percent people who said we'd be willing to pay higher taxes in order to keep our -- Page 24 September 4, 2014 CHAIRMAN HENNING: No, they did not. They did not say that. Let's go through some history. First of all, Fiddler's Creek petitioned East Naples and the Board of Commissioners to annex into East Naples. Second thing is the Board of Commissioners, it was the desire to merge the Isles of Capri Fire District with East Naples. Third, it was not the Board of Commissioners that asked for a vote of Isles of Capri, it was the East Naples Fire District, okay? People have a right to petition their government. And Fiddler's Creek is doing that again. So, you know, my opinion is people -- well, the Board says consolidate. You all don't want to consolidate? Well, that's fine, we'll figure out something else. But that isn't the whole district. So -- and they didn't say that we wanted a higher tax. Did not say that through a referendum. All right? MR. MIDDLEBROOK: Okay. But they -- CHAIRMAN HENNING: I agree, they said they didn't want to merge into East Naples Fire District. They didn't say -- MR. MIDDLEBROOK: -- paying a higher tax. CHAIRMAN HENNING: They did not say paying a higher tax. They did not say that. MR. MIDDLEBROOK: What about the interlocal agreement that we need to be managed by someone else now that Fiddler's Creek's requesting. CHAIRMAN HENNING: That's something that we need to figure out at a different time. Nobody's talking about doing anything right now. I think it's something that we need to discuss and further refine in future meetings. There's something that needs to be done. However, you're going to lose some of your valuation. You're dipping in reserves. Year after year you can't -- that's not sustainable. So, I mean, until you've got a majority of people say I want to pay more Page 25 September 4, 2014 taxes for the same service, I think that what we need to do is keep the ordinance the way it is at two mills. However, your budget needs to -- your budget reserves need to be -- we need to stop depleting that. MR. MIDDLEBROOK: So will we remain under Collier County for this next year then? You will not give the management up to someone else? CHAIRMAN HENNING: I have no idea. That's a discussion that we're not going to have in the budget hearing though. MR. MIDDLEBROOK: Okay. CHAIRMAN HENNING: That's something that needs to be done at future meetings. But my direction is going to be stop bleeding the reserves, start shoring up the reserves and -- until your assessments come up. You're going to have to cut some kind of services. Now, I understand that some of your -- the firefighters over there have applied to the Ochopee Fire District. MR. MIDDLEBROOK: That is because they're having no guaranty that they will be open or that we will stay open as Collier County either. They've had no idea what their future is going to be. It's been pretty uncertain. CHAIRMAN HENNING: No guaranty of? MR. MIDDLEBROOK: As to their jobs. CHAIRMAN HENNING: Okay. Right, I understand that. So again, you know, it's going to be my wishes and we're going to have to have this dialogue, is do we prepare for the future or we just wait for the future to blindside us. And I say let's prepare for the future. But I just wanted to correct that it wasn't the Board of Commissioners desire for a referendum. And the Isles of Capri people or the district did not say they want to raise their taxes, okay? MR. MIDDLEBROOK: Fair enough, thank you. Page 26 September 4, 2014 CHAIRMAN HENNING: Thank you. Good to see you again. MR. MILLER: Your final registered public speaker is Jorge Lara. MR. LARA: Good evening, Commissioners. Jorge Lara with Local 4719 Professional Firefighters of Everglades City -- or Isles of Capri Fire Rescue. I'm getting ahead of myself. Maybe I already have a job over there. I hear that the -- I heard you mention, Commissioner Henning, that we're going to be operating on reserves. CHAIRMAN HENNING: You are. MR. LARA: Okay. And do you also understand that East Naples is operating on their reserves approximately at the tune of 250,000 this year -- CHAIRMAN HENNING: It's none of my business what they do. MR. LARA: Oh, it is. This is your business. Because you're looking to go into business -- CHAIRMAN HENNING: It's not voted on. MR. LARA: You're giving them our business. So how can you give somebody who's not financially stable themselves another business that you guys run very well? CHAIRMAN HENNING: And we're being petitioned by -- and have in the past, which started this whole thing, about annexing in the East Naples. MR. LARA: We understand that. The other thing is, you know, you all are elected officials. Your constituents have spoken. Whatever the margin was in the vote, they voted to keep their fire service as it is. If I recall correctly, the great majority of you committed to honoring their vote. So am I -- if what I'm hearing correctly is, are we not honoring the democratic process here? Are we looking to circumvent it in some way? Page 27 September 4, 2014 CHAIRMAN HENNING: Yeah, you're not hearing right. COMMISSIONER FIALA: All we're doing is saying yes, we believe that Fiddler's Creek should be able to become a part of East Naples. We're not telling you -- MR. LARA: They have every right to do that. COMMISSIONER FIALA: We're not honoring telling you we're not honoring. Pardon me? MR. LARA: They have every right to do that. COMMISSIONER FIALA: Right. Then I don't know what you're talking about. MR. LARA: Well, I'm talking about this whole management agreement that keeps coming up. The one we tabled, remember? The one that said you would give management to East Naples of everything except the employees, they would all have to reapply and be laid off? It was a couple of years ago. No? I'm the only one who saw it? CHAIRMAN HENNING: It's not a discussion on our agenda. MR. LARA: Okay. With that said, I'd like to ask you a question, Commissioner Henning. And this will be my last question. Have you had private door meetings with any of the East Naples Commissioners or any of their staff in regard to this merger? CHAIRMAN HENNING: Absolutely. MR. LARA: Have you had it with two or more? CHAIRMAN HENNING: No. MR. LARA: Okay, thank you. That's all. CHAIRMAN HENNING: Are you looking for a Sunshine Law violation'? Obviously. Don't you want a meeting with me? MR. LARA: I don't, sir. CHAIRMAN HENNING: Okay. Okay, so any other public comment? MR. MILLER: No, sir, that's all the registered public speakers Page 28 September 4, 2014 we have. CHAIRMAN HENNING: We'll go to our millage resolutions. MR. ISACKSON: Commissioner, that would bring you to agenda Item 1 .D, which is certainly my favorite time of the proceedings. Commissioners, please refer to tab 1 .E, where you will find the resolution providing the tentative FY 2015 millage rates. Florida TRI_M Statutes require that the rolled-back millage rates, tentative rates CHAIRMAN HENNING: Hang on. Before you leave and everybody leaves from Isles of Capri, at a certain point we need to deal with the district. Leo, do you want to come back with recommendations, or do you want, you know, somebody to put something on the agenda to talk about it at a future meeting? MR. OCHS: I'd be happy to bring back a report with recommendations for the Board to consider. I think we should probably wait until after the November elections are over and then bring that back for consideration later in the year. CHAIRMAN HENNING: Okay. MR. OCHS: If that's acceptable to the -- CHAIRMAN HENNING: Yeah, I just didn't want everybody to assume that we're addressing that -- I thought they should have somewhat of a notice of it. MR. OCHS: Yes, sir. CHAIRMAN HENNING: So sometime November, December time frame we'll have something on the Isles -- MR. OCHS: I think it would be December at the earliest, Commissioner, if the Board sticks to their current schedule of only one board meeting in November and December. We'd have election in November and December would probably be the earliest that I think Page 29 September 4, 2014 we'd be ready to bring anything forward. CHAIRMAN HENNING: Okay, Commissioner Hiller? COMMISSIONER HILLER: What I really would like to see is what savings could be achieved by consolidating the three dependent districts. CHAIRMAN HENNING: Well, we don't -- COMMISSIONER HILLER: I think that would be a very important question to answer. Because if there is the possibility to achieve cost savings, because the argument for merger or consolidation always is that there will be cost savings, then obviously that would directly affect the millage and could potentially reduce the millage on a consolidated basis. So I'd like to see, you know, what impact -- what the financial impact is of consolidation of our dependent districts. CHAIRMAN HENNING: You're talking about District 1, Ochopee and Isles of Capri? MR. OCHS: Yes. COMMISSIONER HILLER: Yes. District 1 is -- MR. OCHS: District 1 is unmanned. It's -- COMMISSIONER HILLER: Yeah. MR. OCHS: -- land that isn't serviced by any other dependent or independent district. COMMISSIONER HILLER: Consolidation of any dependent district under the Board. COMMISSIONER FIALA: And while we're at it, we're going to be hearing -- I guess on Tuesday we're going to be hearing from someone from Isles of Capri saying that they need a new chief. They don't want to share a chief, they want to have their very own chief. And I don't know quite how they're going to be paying for that if they're already digging into reserves. So that's something else that's going to be brought up. So we'll want to include that in our discussion. COMMISSIONER HILLER: And lastly, what I wanted to say is, Page 30 September 4, 2014 you know, Fiddler's Creek certainly has the right to petition this board to join East Naples. That's a matter of right. CHAIRMAN HENNING: Yeah. And they have. They have. It was the Board of Commissioners that wanted Fiddler's Creek and East Naples to hold off and see if we can, you know, merge those two fire districts. So anyways, we're going to continue. Just to keep you apprised of what's going to happen in the future. Okay, Mark, I apologize. MR. ISACKSON: Thank you, sir. Again Item 1.D is an announcement of the tentative millage rates and percent changes in property tax rates. Commissioners, please refer to tab 1 .E where you will find the resolution providing for the tentative FY 2015 millage rates. The Florida TRIM Statutes require that the rolled-back millage rates, tentative millage rates and percent changes from the rolled-back rate be read into the record at this time prior to adoption of the tentative millage rates under agenda Item 1.E. COMMISSIONER HILLER: Mark? MR. ISACKSON: Yes, ma'am. COMMISSIONER HILLER: Commissioner Henning, can I ask Mark a quick question? CHAIRMAN HENNING: Yeah, please do. COMMISSIONER HILLER: In terms of this discussion, there were a couple budgetary issues that I wanted to address. I had some concerns. I came across information I was not aware of in the past, and there could be a potential fiscal impact. I'm not sure how large it would be because I think the matter has to be evaluated and we could address it at the second hearing. But would it be appropriate for me to raise now? I mean, there's no real section for me to address it in up to this point and I wasn't sure, you know, what you would like to Page 31 September 4, 2014 recommend as to where -- CHAIRMAN HENNING: Ask the question. COMMISSIONER HILLER: I've got to find out if he's going to MR. ISACKSON: No, no, no, please. COMMISSIONER HILLER: Is that okay? Well, here's what concerns me. You know, we do support our Constitutionals in part. And I was not aware that we had an interlocal agreement with the Clerk of Courts. And it appears that we have, you know, very clearly defined that the budget of the Clerk is subject to the terms of this interlocal agreement, and that interlocal agreement has to be formally modified if the Clerk's budget deviates. It's not just as a matter of, you know, following budget guidance and, you know, raising expenditures willy-nilly. I mean, we actually have a contract that has to be modified. Now, I came across this contract. And quite frankly, I'm remiss because had I known about this last year as I do now, I would have raised it then. And it's my bad that I didn't. The budget that's being proposed for the internal audit division is out of line with what I am reading as the terms of the contract. In fact, it's double. And quite frankly I don't understand why the internal audit budget has been consistently escalating. There's no need for it. And there's a reason. Our staff has done an excellent job of bringing in professional accountants to work with the management of the various divisions. And so a lot of the work papers that might have been prepared by an internal audit staff under the Clerk in the past are now being prepared and should be prepared by us. And so I feel very strongly that there's an unnecessary amount of funding in the internal audit division on the Clerk's side, given that our staff can most certainly provide a great deal of information that internal audit staff would test and review as opposed to compile. And Page 32 September 4, 2014 so I don't see the need for, you know, 542,000 in payroll when, you know, what was proposed by contract was one-half of that. For example, in fiscal year '13, you know, you're looking with -- let's see, with, you know, the -- let me just take the regular salary. You know, the regular salary in fiscal year '13 was 225,000. Now all of a sudden the proposed budget is 389,000 or basically 400,000. We're looking at, you know, almost double payroll. Doesn't make any sense to me whatsoever. I don't believe that there's any need for it. I think what we need to do when we look at the budget of the Constitutionals is where there are -- you know, where we can use our staff to save monies and cut costs, we should do so. I mean, that actually goes to legal services as well. And I think we should take a look at that in the context of the Clerk's budget also. CHAIRMAN HENNING: Are you saying that we should audit ourselves? COMMISSIONER HILLER: No, absolutely not. That's not how it works. The way it works, and the external auditor works the same way, for example, when the external auditor comes in the external auditor will rely on the work of the internal auditor, will test the work of the internal auditor, will work with the divisions of the county, will have the divisions prepare the work papers, compile the backup material, and then they will do the actual testing. And they do that intentionally because it reduces the cost to the county. That's just how auditing is done. We don't audit ourselves, we -- you know, if the internal auditor or the external auditor wants a schedule of fixed assets, we will compile that information. If they want, you know, the invoices and the supporting expenditure behind that schedule of fixed assets, we will pull it, provide it. They will run tests. That is what is they are supposed to do. So there is -- and what my point is, is that given that we have the accounting staffing that we do, which is very solid staffing. In fact, Page 33 September 4, 2014 some of the staff came from the Clerk's Office so they're very, very well versed in the Clerk's needs. I really don't see the need for the internal audit being -- the internal budget audit being this high. I don't see the need for double the salaries than what existed in the past. So I'd like to have you, Leo, evaluate, you know, what's being proposed here. And you might want to have a discussion with the Clerk and find out more as to what's going on here. Because quite frankly I can't support it. And of all people I know, because I used to be an auditor, and I understand how this business is done. CHAIRMAN HENNING: You said you had something else also? COMMISSIONER HILLER: Well, that was -- CHAIRMAN HENNING: That was it? COMMISSIONER HILLER: Yeah, that was -- I mean, like I said, I was not aware that we had an interlocal agreement. So, I mean, the budget as it exists is in violation of the interlocal agreement. And again, I don't see it as justified from a cost basis. MR. OCHS: One point of clarification. In that agreement, I forget the original date of the agreement -- COMMISSIONER HILLER: Yeah, it was like 2010. MR. OCHS: Yeah, it says that on the 1st of May every succeeding year, and the contract continues. Unless either party terminates it under the termination provisions, the Clerk submits a budget to the Board on May 1 of every year. So you can't compare the amounts that were in the initial year of the contract to current year '14 or, excuse me, FY 15 budget requests -- COMMISSIONER HILLER: Well, we need to -- MR. OCHS: -- because they will obviously be higher. COMMISSIONER HILLER: Well, you need to go -- I need reconciliation. I need an explanation. I want to know what these people are doing and how they're doing it. And I would like -- I'm not Page 34 September 4, 2014 going to have that discussion here and now, I'm going to have that discussion and have all my questions answered through you, Leo. Because again, I am not sure in light of how we as the county are currently staffing and operating, which is very different from when I started and is the appropriate way for us to do business, which is why the quality of our business is so much better than it was when I started, that there is a need to fund internal audit in the manner in which it's being funded. It's just not appropriate. So I'd like to see, you know, what was done in the past, what we are doing internally, and I'd like to have some explanation, you know, from the Clerk as to, you know, why, you know, a half a million dollars is needed to staff internal audit, given the support that we can provide. CHAIRMAN HENNING: Well, these people are here, if you want to hear from these people. COMMISSIONER HILLER: No, I don't. I want to have this discussion -- you know, I'd like to have it prepared, vetted and then it will be brought back at the next hearing. CHAIRMAN HENNING: Do you recognize that the Clerk of the Court is the auditor for the county? COMMISSIONER HILLER: He is the Clerk's internal auditor. He's not the auditor, he's the internal auditor. We also have an external auditor. We have two auditors. CHAIRMAN HENNING: Okay. All right. I just didn't know if we were going to go down that road again. COMMISSIONER HILLER: No. No, we're not. And again, let me make something very clear, I am a CPA and I was an external auditor and audited governments. So I understand exactly how the Clerk's internal audit division should function, and I also understand the supporting role that the county's accounting staff should provide. And I'd be more than happy to share all my experiences with you if Page 35 September 4, 2014 you're really interested in hearing them. So much fun. CHAIRMAN HENNING: But I don't have time right now. COMMISSIONER HILLER: You certainly don't. No one does. Nor do I have the desire to share it actually. But anyway, that's my point. And, you know, I -- you know, if it's justified, if it's fair, if it's reasonable, I'll be the first to support it. Based on my preliminary review, I don't think it is. MR. OCHS: Commissioner, I can give you a report on the County Manager's agency's staff resources devoted to internal review and accounting in the manner that you described. I'm really not in a position to defend the Clerk's budget or speak with authority about it. COMMISSIONER HILLER: Well, they can provide that information to you and then you can communicate that to me. Now there's another thing I'd like to suggest and that is I believe that the manner in which -- and we have gone through this, this is in fact an open question from last year which I wanted addressed and didn't come back, the Clerk did not come back to us with an answer -- and that is that I feel that the audits have not been executed with efficiency and effectiveness, and that we have to have an understanding of what the process is, and that it should be a formalized process so everybody understands how audits will be conducted. Because obviously if we have a process and, you know, it will be easy to figure out how much it cost to conduct an audit. And really, what the Clerk should be doing is running his audit division exactly the same way as an external auditor. You know, he should have a time budget, he should allocate costs and, you know, he should come up with a cost estimate for doing these type of engagements. I mean, you know, there's a points of diminishing returns in audits and, you know, you audit to materiality. You know, obviously if there's fraud then you audit to, you know, specific procedures related to fraud. But you just don't keep going and going or, Page 36 September 4, 2014 you know, shotgun this or shotgun that. The process has to be professionally managed. We asked the Clerk to come back to us with a process last year, and he was nonresponsive. We've asked the same question again. The Clerk presented a letter to us that said, you know, tell us what you'd like to see done differently. And quite frankly, this is an issue. And it goes directly to the budget. So, you know, in fairness, I don't believe in putting anyone on the spot. I'm not going to entertain any comments from the Clerk's Office at this time, because I want to have all the details and a fully vetted discussion and then this matter brought forward in a fairly resolved way at the next hearing. And the resolution may be, you know, the budget is no good and it needs to be cut or it may be that the budget is fine and should be supported. Either way, you know, we have to look into what's going on and streamline the process, both in terms of execution, as well as funding. CHAIRMAN HENNING: Would you object if any of the other commissioners want to hear from the Clerk of the Courts tonight? COMMISSIONER HILLER: Oh, I think everybody should be involved in this process. And I think, you know, the Commissioners absolutely have every right to talk to whomever they'd like. You could talk to the external auditors, you can talk to the Clerk. You know, you should talk to outside, you know, professionals. I mean, this is a collective decision. But there's no question that there's a problem. There's really a big problem. And I speak as a professional to that. CHAIRMAN HENNING: Crystal? MS. KINZEL: Commissioner Henning, thank you for the opportunity to speak. Commissioner Hiller, we'll be glad to work with the County Page 37 September 4, 2014 Manager. We do provide justification for each position that's provided. If you'll recall that we're a little behind the eight ball in that we were precluded from auditing certain divisions in areas for many, many years. We are playing a bit of a catch-up. And we do have an audit plan, we do have audit hours assigned, we have policies and procedures, and I'll be glad to go over it with you in great detail. Which we felt we had done in the budget book. We tried to provide you the audit references. I think you will see that we've done numerous audits over the last couple of years, that we have been reengaged as an internal audit department. And we believe that we are very efficient and effective. We are working to rebuild something that was not available in its entirety for several years. So I'd be glad to explain that. COMMISSIONER HILLER: Crystal, I'm sorry, I have to disagree with you. Because you're not auditing the past. You're not auditing what you didn't audit over those seven years. MS. KINZEL: No, Commissioner, but we -- COMMISSIONER HILLER: You're auditing -- MS. KINZEL: -- have are more departments that have not been routinely audited. So you will have more opportunity that should be reviewed on an audit basis -- COMMISSIONER HILLER: That's not how -- MS. KINZEL: -- in totality. COMMISSIONER HILLER: -- it works. No, no -- MS. KINZEL: You do. You do assess the risk, you assess what has gone on in departments, you look at volumes and dollars and risk factors. COMMISSIONER HILLER: We do -- MS. KINZEL: That is what we assess the audit on. We also have reported fraud -- Page 38 September 4, 2014 CHAIRMAN HENNING: Hang on. Nobody interrupted you so let -- COMMISSIONER HILLER: That's fine. MS. KINZEL: And we have several cash audits, things that we have been doing on a routine basis that are important on the overall operation of the county. We have more to do. But I'll be glad to go over all the positions, all the time and all the hours and the audit plan with you in greater detail. But I didn't want to leave it on the record as though we just haphazardly calculate positions. We've brought to the Board every position. The Clerk's interlocal agreement, as Leo stated, is updated with a budget that we present to you in May. We didn't realize there were any questions. We did go through a workshop. But I'll be glad to sit down with you and go over the rest of those positions. COMMISSIONER HILLER: And I'd like to state that your comments that you've got this additional work is completely incorrect. Because as a matter of practice every single year when we conduct the external audit we do a full review of our internal controls, and have been notwithstanding, you know, when you were not conducting your internal audits. So the risk assessments and the degree to which we have internal controls that we can rely on have been evaluated and have been updated every single year. It's not like there's a backlog in any sort of risk assessment. We wouldn't be able to conduct our external audits properly if we didn't have the necessary risk assessments in place annually. So -- CHAIRMAN HENNING: Let's -- MS. KINZEL: Commissioner Hiller, the external audit -- CHAIRMAN HENNING: That's funny that the Board members are given a report by the internal auditor of any particular department, and there are some recommendations, and you know, quite frankly, our Page 39 September 4, 2014 staff has agreed with those recommendations. I don't know of any of their recommendations they didn't agree on. So, you know, it's the taxpayers money, it's the taxpayers assets. Don't you want the checks and balances there? COMMISSIONER HILLER: Oh, we want checks and balances. That's not the issue. CHAIRMAN HENNING: Well, no, the issue -- COMMISSIONER HILLER: We're not talking about eliminating internal audit. We are talking about conducting internal audit just like we require all the divisions in our county to operate, which is efficiently and effectively to a proper end. I mean, of course, you know, they might agree, but the question is some of the audits really made no sense. When I saw an internal auditor standing in front of our Board holding up a photograph of a cash jar, a cash jar at a little gift shop in some museum, you know, talking about how they audited this cash jar when we have, you know, multi-million dollar transactions that should be focused on, you know, I put into question what kind -- you know, how are we using the tax dollars and, you know, is this really the way internal audit should be conducted? Now, they can choose to do cash drawer audits or cash jar audits as much as they like and they can choose to have a materiality threshold that is at ground zero. That costs a lot of money. I want to know basically what is their approach when we're dealing with our external auditor, our external auditor tells us exactly what the approach is. What is the materiality threshold that, you know, we're dealing with? Where is the focus of their testing? They asked us to produce, you know, documents and to produce schedules to allow them to test where it makes sense. Again, it's very simple. I want an explanation. I will make a determination based on the explanation provided. It may be just fine. Page 40 September 4, 2014 But based on the numbers that I see, it seems high. Based on the staff support that our county provides at this time it seems high. And so I have a concern about what's going on. And it's as simple as that. MS. KINZEL: And Commissioner Hiller, as you do well know, the levels of thresholds and audit between an external auditor's environment and the internal auditor's environment is significantly different. We look for different things. We do look at fraud detection, we monitor the fraud hotline. We look at items that are reported as potential fraud. Your external auditors are a very high level of materiality and the thresholds are entirely different. COMMISSIONER HILLER: Crystal. MS. KINZEL: We look at those controls across our department. COMMISSIONER HILLER: I don't need an education from you on what you know I know. MS. KINZEL: Well, and I started out by saying Commissioner, I know you are aware. So it is a totally different operation, for the audience that's listening at home, and we'll be glad to go over our methodology. We've been consistent. And we'll work with you and staff so that you're happier with the approach. COMMISSIONER HILLER: I would appreciate that. Because as of right now I'm not convinced that the internal audit budget is where it should be. Thank you. MS. KINZEL: Thank you. CHAIRMAN HENNING: Please continue. Item #1 D (On the Board of County Commissioners Budget Agenda) ANNOUNCEMENT OF TENTATIVE MILLAGE RATES AND PRECENTAGE CHANGES IN PROPERTY TAX RATES Page 41 September 4, 2014 MR. ISACKSON: Thank you, Commissioners. I will continue with the announcement of the millage rates. The General Fund, Fund 001, proposed millage rate 3.5645, the rolled-back millage rate, 3.4031; the percent change from the rolled-back rate of 4.74 percent. Water Pollution Control Fund 114. Proposed millage rate, .0293. Rolled-back millage rate, .0280. Percent changed from the rolled back rate, 4.64 percent. The Unincorporated Area General Fund, Fund 111 . Proposed millage rate, .7161. The rolled-back millage rate, .6858. Percent change from the rolled-back rate, 4.42 percent. The Golden Gate Community Center, Fund 130. Proposed millage rate, .1862. The rolled-back millage rate, .1790. Percent change from the rolled-back rate, 4.02 percent. Victoria Park Drainage, Fund 134. Proposed millage rate, .0443. Rolled-back millage rate, .0443. No change from the rolled-back rate. Naples Park Drainage, Fund 139. The proposed millage rate, .0079. Rolled-back millage rate, .0079. No change from the rolled-back rate. Vanderbilt Beach MSTU, Fund 143. The proposed millage rate, .5000. The rolled-back millage rate, .4770. Percent change from the rolled-back rate, 4.82 percent. The isles of Capri Fire, Fund 144. Proposed millage rate, 2.0000. The rolled-back millage rate, 1 .9163. Percent change from the rolled-back rate, 4.37 percent. Ochopee Fire Control, Fund 146. Proposed millage rate, 4.0000. The rolled-back millage rate, 3.9693. Percent change from the rolled-back rate, .77 percent. Collier County Fire, Fund 148. Proposed millage rate, 2.0000. Rolled-back millage rate, 1 .9281 . Percent change from the rolled-back Page 42 September 4, 2014 rate, 3.73 percent. The Goodland/Horr's Island Fire MSTU, Fund 149, proposed millage rate, 1 .2760. The rolled-back millage rate, 1 .2355. Percent change from the rolled-back rate, 3.28 percent. Sabal Palm Road, Fund 151, proposed millage rate, . 1000. Rolled-back millage rate, .0784. Percent change from the rolled-back rate, 27.55 percent. Golden Gate Parkway Beautification, Fund 153, proposed millage rate, .4280. The rolled-back millage rate, .4280. No change from the rolled-back rate. Lely Golf Estates Beautification, Fund 152. Proposed millage rate, 2.0000. Rolled-back millage rate, 1.9242. Percent change from the rolled-back rate, 3.94 percent. The Hawks Ridge Stormwater Pumping MSTU, Fund 154. Proposed millage rate, .0458. The rolled-back millage rate, .0458. Percent change from the rolled-back rate, zero. Radio Road Beautification, Fund 158. The proposed millage rate, .3096. The rolled-back millage rate, .3096. No change from the rolled-back rate. Forest Lakes Roadway and Drainage, Fund 159. Proposed millage rate, 1 . 1022. The rolled-back millage rate, 1 .0774. Percent changed from the rolled-back rate, 2.3 percent. Immokalee Beautification MSTU, Fund 162. Proposed millage rate, .9172. The rolled-back millage rate, .9172. No change from the rolled-back rate. The Bayshore Avalon Beautification, Fund 163. The proposed millage rate, 2.3604. The rolled-back rate, 2.3005. Percent change from the rolled-back rate, 2.6 percent. Haldeman Creek Dredging, Fund 164. The proposed millage rate, .7348. The rolled-back millage rate, .7071 . That's a 3.92 percent increase over the rolled-back rate. Page 43 September 4, 2014 Rock Road, Fund 165. Proposed millage rate, 3.0000. The rolled-back millage rate, 2.9440. Percent change from the rolled-back rate, 1.90 percent. The Radio Road East MSTU, Fund 166. Proposed millage rate, .2401 . The rolled-back millage rate, .2151 . It's an 11.62 percent increase over the rolled-back rate. Forest Lakes Debt Service, Fund 259. Proposed millage rate, 2.8978. The rolled-back millage rate, 2.6345. It's a 9.99 percent increase over the rolled-back rate. Radio Road East Debt Service, Fund 266. Proposed millage rate, .2408. The rolled-back millage rate, .2046. Percent change from the rolled-back rate, 17.69 percent. Collier County Lighting, Fund 760. Proposed millage rate, .2000. The rolled-back rate, .1552. Percent change from the rolled-back rate, 28.87 percent. Pelican Bay MSTBU, Fund 778. The proposed millage rate, .0857. The rolled-back millage rate, .0828. Percent change from the rolled-back rate, 3.5 percent. Finally, Commissioners, the Aggregate Millage Rate. Proposed millage rate, 4.1505. The rolled-back millage rate, 3.9667. The percentage change from the rolled-back rate of 4.63 percent. Item #1E (On the Board of County Commissioners Budget Agenda) RESOLUTION 2014-158: A RESOLUTION ADOPTING THE TENTATIVE MILLAGE RATES — ADOPTED CI-IAIRMAN I=IENNING: Entertain a motion to adopt the resolution for the tentative millage rate for 2014-2015 by Commissioners Hiller, seconded by. COMMISSIONER FIALA: Me. Page 44 September 4, 2014 CHAIRMAN HENNING: Commissioner Fiala. All in favor of the motion -- COMMISSIONER NANCE: Mr. Chairman, are we passing this including the Pelican Bay MSTBU, or are we withholding that one? CHAIRMAN HENNING: We're continuing that one. COMMISSIONER NANCE: Okay. MR. OCHS: These are all tentative millage rates. COMMISSIONER NANCE: Okay. MR. OCHS: It won't get final until the second hearing. COMMISSIONER NANCE: Fine. CHAIRMAN HENNING: All in favor of the motion, signify by saying aye. COMMISSIONER FIALA: Aye. CHAIRMAN HENNING: Aye. COMMISSIONER HILLER: Aye. COMMISSIONER NANCE: Aye. CHAIRMAN HENNING: Any opposed? (No response.) CHAIRMAN HENNING: Motion carries unanimously. And we have the — Item #11; (On the Board of County Commissioners Budget Agenda) RESOLUTION 2014-159: A RESOLUTION ADOPTING THE AMENDED TENTATIVE BUDGET — ADOPTED MR. ISACKSON: Commissioners, Item l.F. CHAIRMAN HENNING: 1.F, yes. MR. ISACKSON: Your resolution to adopt the amended tentative budget. CHAIRMAN HENNING: Entertain a motion to adopt the Page 45 September 4, 2014 resolution for the tentative budget for 2014-2015 moved by Commissioner Hiller. Seconded by? COMMISSIONER FIALA: Second. CHAIRMAN HENNING: Commissioner Fiala. All in favor of the motion, signify by saying aye. COMMISSIONER FIALA: Aye. CHAIRMAN HENNING: Aye. COMMISSIONER HILLER: Aye. COMMISSIONER NANCE: Aye. CHAIRMAN HENNING: Motion carries. MR. ISACKSON: Finally, Commissioners, the announcement of the final public hearing. Final public hearing on the FY 2014/15 Collier County budget is Thursday, September 18th, 2014 at 5:05 p.m. in these chambers. CHAIRMAN HENNING: And I want to thank the staff, and especially the public for their participation in this proceedings. We are adjourned. Page 46 September 4, 2014 ***** There being no further business for the good of the County, the meeting was adjourned by order of the Chair at 6:24 p.m. BOARD OF COUNTY COMMISSIONERS BOARD OF ZONING APPEALS/EX OFFICIO GOVERNING BOARD(S) OF SPECIAL DISTRICTS UNDER ITS CONTROL TOM HENNING, CHAIRMAN ATTEST: DWIGHT E, CLERK y Ch?;rman°$ signature only. These minutes approved by the Board on I I 1 i`1 , as presented or as corrected Transcript prepared on behalf of Gregory Court Reporting, Incorporated by Cherie' R. Nottingham, CSR. Page 47