APRIL 15, 2003 BRIEFING MINCITY COUNCIL
M~4 YOR MEYER,4 E OBERNDORF, At-Large
VICE MAYOR LOUIS R JONES, Baystde -Dtstrtct 4
H,4RRY E DIEZ, EL, Kempsvdle -Dtstrtct 2
MARGARET L EURE, Centervtlle -Dtstrtct 1
REBA S McCLANAN, Rose Hall -Dtstrtct 3
R1CHARD A MADDOX, Beach - D~trt$t 6
JIM REEVE, Princess Anne - Dtstr~ct 7
PETER W SCHMIDT, At-Large
RON A VILLANUEVA, At-Large
ROSEMARY WILSON, At-Large
JAMES L WOOD, Lynnhaven -Dtstrtct 5
JAMES K SPORE, Ctty Manager
LESLIE L LILLEE Ctty Attorney
RUTH HODGES SMITH, MMC, Ctty Clerk
CITY OF VIRG1NIA BEACH
"COMMUNITY FOR A LIFETIME"
CITY COUNCIL AGENDA
CITY HALL BUILDING I
2401 COURTHOUSE DRIVE
VIRGINIA BEACH, VIRGINIA 23456-8005
PHONE (757) 427-4303
FAX (75 7) 426-5669
E MAIL Ctycncl~vbgov corn
15 April 2003
I. CITY MANAGER'S BRIEFINGS
- Council Chamber - 2:00 PM
A,
CONVENTION CENTER CONSTRUCTION MANAGEMENT STATUS REPORT
James B. Ricketts, D~rector - Vmitor Bureau
Bo
RESOURCE MANAGEMENT PLAN FISCAL YEAR 2003-2004
City's Proposed Operating Budget - "Commumty For a L~fetime"
Catheryn Whitesell, D~rector - Department of Management Services
Department of Libraries
Marcy S~ms, Director of Libraries
°
Virginia Beach City Public Schools
Timothy R. Jenney, Ph.D., Supenntendent
V~ctoria Lewis, Ch~efFinanmal Officer
o
Compensation
Fagan Stackhouse, Director - Human Resources
MINUTES
VIRGINIA BEACH CITY COUNCIL
Virginia Beach, Virginia
15 Aprtl 2003
Mayor Meyera E Oberndorf called to order the CONVENTION CENTER CONSTRUCTION
MANAGEMENT STATUS REPORT tn the City Council Conference Room, Ctty Hall Bmldtng, on
Tuesday, Aprtl 15, 2003, at 2 O0 P M
Counctl Members Present
Harry E Dtezel, Margaret L Eure, Vtce Mayor Louts R Jones, Reba
S McClanan, Rtchard A Maddox Mayor Meyera E Oberndorf,
Peter IV Schmtdt, Ron A Vtllanueva and James L IVood
Council Members Absent
Jim Reeve
Rosemary IVtlson
[OUT OF THE COUNTRY/
FAMILY VA CA TION]
[ENTERED 2 13 P M]
School Board Members Present
Jane S Brooks, A James DeBelhs, Chatrman Darnel D Edwards,
Vtce Chairman Netl L Rose, Sandra Smtth-Jones, Carolyn D Weems
and Lots S Wtlhams
School Board Members Absent
Emma L Davts, Dan R Lowe, Mtchael W Stewart and Arthur T Tate
-2-
C I T Y MA N A G E R 'S BRIEFING
CONVENTION CENTER CONSTRUCTION MANAGEMENT STATUS REPORT
2:00 P.M.
ITEM # 51049
Mr dames B Rtcketts, Dtrector- Conventton and l/tsttor Development (soon to be Conventtons and Vtsttor's
Bureau), advtsed the purpose of the brtefing ts to provtde a status report re the Convention Center Mr
Rtcketts referenced information distributed concermng the status, next steps for land acquisition,
information relative the Budget (which is balanced); a project schedule and a listing of seven (7)
unfunded items requesting City Council's ranking Satd tnformatton ts hereby made apart of the record
Members of Pubhc Works and dtm Lawson, Real Estate, were tn attendance to respond re land acqutsttton
Mr Rtcketts advised a Pubhc Open House was held at the Pavthon on February 12, 2003, with one hundred
twenty-stx (126) attendees A model of the Conventton Center was dtsplayed The purpose of the model ts
to transport tt to trade shows, etc When not betng utthzed by sales staff, tt wtll be avatlable at the Pavthon
A stmple logo for the Convention Center and Vtrgtnta Beach Conventton and Vtsttors Bureau, ts now a
"work tn progress" A virtual tour of the proposed Conventton Center wtll also be formulated An Event
Planner has been hired to organize the Groundbreakingfor the Convention Center on June 26, 2003, at
3:00 P.M.
Mr Rtcketts tntroduced dack Rogers, Turner Construction Mr Rogers expressed apprectatton on behalf of
Turner Constructton, TechCon and Sussex Development, to Ctty Counctl for allowtng them to be a part of
thts exctttng project Mr Rogers tntroduced Mark Mtranda, Vtce Prestdent and Regtonal Operattons
Manager -Mtd Atlanttc Regton, Turner Construction, Albert Adams, Sentor ProJect Manager - Turner
Construction George Parker, President - TechCon, Inc , who will be provt&ng management staff on the
project wtth the Turner Constructton team, Harry Davts, Prestdent Sussex Development, wtll also be
provtdtng management staff Turner Constructton celebrated tts lOft* anniversary last year as one of the
largest general budders tn the country Last year, Turner's revenue was $6.2-BILLION Over 65% of the
projects were repeat chents Approxtmately 80% of the projects were performed under the Constructton
Management Rtsk Method of ProJect Dehvery The matn office for the regton as well as the Public Assembly
Market Segment group are housed tn Arhngton, Vtrgtnta Mr Rogers dtsplayed power potnt deptcttons of
the various Convention Centers around the Umted States and overseas, whtch have been completed utthztng
the Public Assembly Market Segment E g }Vtlhams ts the stte contractor
Mr Rogers tntroduced Letgh Breslau, Destgn Partner -Sktdmore, Owtngs and Merrtll LLP (SOM), who
described the destgn and &splayed the Convention Center Model
BY CONSENSUS, the staff shall move forward wtth the destgn and schedule
A status report shall befurntshed to Ctty Counctl tn June or July
April 15, 2003
-3-
C I T Y MA N A G E R 'S BRIEFING
RESOURCE MANAGEMENT PLAN FISCAL YEAR 2003- 2004
City's Proposed Operating Budget- "Community for a Lifetime"
ITEM # 51050
3:54 P.M.
Catheryn Whttesell, Dtrector- Management Servtces, advtsed the Quality Education for Lifelong Learning
is comprised of the Departments of Education and Libraries The overwhelming funding goes to the School
system The Bustness Area ts comprtsed of approximately $632-MILLION, approxtmately $39-MILLION tn
debt servtce $5 3-MILLION goes to the Capttal Improvement Plan (CIP) and pay-as-you-go There ts
approxtmately $40-MILLION tn other financmg sources tn the Quahty Educatton for Ltfelong Learnmg
Bustness Area portton of the Capttal Improvement Plan Thts Business Area represents 51 8% of the total
Operating Budget and 23 3% of the total Capttal Budget Thts area mcludes 10,217 FTE's for the School
system and 243 3 FTE's to support the pubhc hbrartes Fundmgfor thts Bustness Area ts a combtnatton of
local, state and federal revenues Relattve the School's Operattng Budget, the Supertntendent's Esttmate
of Need Budget was wtthtn locally avatlable revenue. After the Real Estate Assessor, Jerald Banagan, made
hts assessment report tn February, Resource Management adjusted the level of real estate taxes shghtly and
this adjustment provtded the School System with an addtttonal $381,000 The cost of debt service for both
Ctty and Schools was also adjusted based on the most recent bond sale whtch provtded a lower tnterest rate
than used forplanntngpurposes Thts lowered the School's debt servtce cost by $1 1-MILLIONInformatton
was recetved from the Vtrgtnta Muntctpal League whtch tndtcated the State's sales tax number could be
adjusted upwards based on the State's adopted budget Thts adjustment was approxtmately $1 4-MILLION
These three (3) adjustments provtded Vtrgmia Beach Schools with an additional $2 8-MILLION to be placed
tn an tnstructtonal category Thts tncreased the School's Operattng Budget from the Supertntendent's
Esttmate of Needs of $529 5-MILLION to $532 3-MILLION The proposed budget for educatton includes
$658 4-MILLION tn resources Not tncluded tn the proposed document to Ctty Counctl ts the support for
2 25% teacher's salary tncrease approved by the General Assembly and the Governor (effecttve January
1, 2004) The current estimates reflect this increase would provtde an addtttonal $1,980,000 It ts tmportant
to remember the Ctty has provtded the School system wtth an addtttonal $20 &MILLION wtthout any
commentary relattve tts utthzatton The Ctty ts provtcltng well over the requtred SOQ (Standards of Quahty)
funchng level, (nearly $145-MILLION)
Dr Darnel Edwards, Chairman - Virginia Beach City Pubhc Schools, advised there are real needs whtch
do not fit wtthtn the formula, t e staffing challenges There are alsoprogram requtrements, securtty tssues
and facthty needs whtch requtre addtttonal funds A 6%pay htke has been proposed, effective July Ftrst
The Cafeterta plan would prove expenstve for the Schools and thts has been ehmtnated Student-teacher
rattos are among the htghest tn the Commonwealth ,4 CNN and Money Magaztne poll last year, wtth No
1 being the highest, Vtrgtnta ranked 39 out ofthefifiy (50) states tn tax burdens imposed on tts citizens
Amongfifty-one (51) large ctttes, wtth No I betng the htghest, Vtrgtnta Beach ranked 33 out of the 51 tn the
tax burden tmposed on tts ctttzens Vtrgtnta Beach ranks 9~h out of140 tn per puptl expendttures
Dr Ttmothy R Jenney, Supertntendent- Vtrgtnta Beach Ctty Pubhc Schools, addressed Ctty Counctl's
concerns re the FY 03-04 Operattng Budget
April 15, 2003
-4-
C I T Y MA N A G E R 'S BRIEFING
RESOURCE MANAGEMENT PLAN FISCAL YEAR 2003- 2004
City's Proposed Operating Budget- "Community for a Lifetime"
ITEM # 51050 (Continued)
TIMELINE REGARDING NO TIFICA TION OF ADDITIONAL REVENUES
February 4
February 24
February 28
March 18
March 19
March 28
Supertntendent submtts "Esttmate of Needs" to School Board
Ctty Manager and Management Servtce Dtrector share "Notes on
the Issuance of General Obhgatton Bonds"
School Board ts advtsed about the posstbthty of extra funds
The Vtrgtntan-Pdot contacts school staff for response to Ctty
Manager's letter to Ctty Councd advtstng of addtttonal funds
Chtef Ftnanctal Officer recetves copy of City Manager's letter
Chtef Ftnanctal Officer recetves wrttten vertficatton of revtsed
revenue shartng funds
Difference in School's and City's Projection of Sales Tax
$500,000
$922,500
Governor's sales tax esttmate
General Assembly's sales tax esttmate
Comparative Increases
Admtntstratton Attendance and Health Category - $ 6-MILLION
Technology Commttment to Professional Development
Instructton
$82-MILLION
Comparative Staffing
Ctty COM-IT
School Dtstrtct Technology Media
and Commumcattons positrons
280. 6 positions
114. 6 positions
Aprd 15, 2003
-5-
C l T Y MA N A G E R 'S BRIEFING
RESOURCE MANAGEMENT PLAN FISCAL YEAR 2003 - 2004
City's Proposed Operating Budget - "Community for a Lifetime"
ITEM it 51050 (Continued)
2001-2002 Reversion
Reverston
March 31 ADM
Federal Revenue
Local Revenue
Loss of Sales Tax
$18 80-MILLION
2 08-MILLION
$ 2 8-MILLION
$ 3-MILLION
$ 3 3-MILLION
$ I 88-MILLION
2001-2002 Savings
Personnel and Fringe Benefits
Non-personnel costs
Actual over new revenue
$10 2-MILLION
$ 6 2-MILLION
$ 57-MILLION
*Net Dtfference of new revenue
$1 88-MILLION
Total $1 & 85-MILLION
Dr Jenney hsted expenchtures from Reverston Funds and depicted the evtdences of success Academtes and
Year-Round School program
Vtctorta Lewts, Chtef Ftnanctal Officer -Vtrgtnta Beach Ctty Schools, detatled tnformatton relattve the FY
2003-04 School Board Operattng Budget
Comparison to FY 2002/03
$507,603,409 Operating Budget
Esttmate of Needs Ctty Managers School Board
Total $ 529,499,518 $ 532,367, 761 $ 548,221,228
S tncrease $ 21,896,109 $ 24,764,352 $ 40,617,819
% tncrease 4 31% 5 27% 8 00%
Aprtl 15, 2003
-6-
C I T Y MA N A G E R 'S BRIEFING
RESOURCE MANAGEMENT PLAN FISCAL YEAR 2003 - 2004
City's Proposed Operating Budget -"Com m unity for a Lifetime"
ITEM # 51050 (Continued)
SALES TAX
FY 2002/03 Estimate*
$ 52,225,706
FY 2003/04 Estimates
Governor 12-20-02
$ 52,775,320 1.1% Growth
General Assembly
$ 53,697,320 2.8% Growth
Average annual growth since 00/01
$336,3 77 total over period
.5% growth average per year
*esttmate by State for FY 2002/03 (4/11/03)
School sales tax dependent on State-wtde sales tax recetpts and allocations Allocation ts dependent on the
results of trtenntal census recently completed Census tndtcated a reductton tn the number of school-age
children residing tn Virginia Beach
Mrs Lewts ctted the reducttons from FY2002/03
Elementary Classroom (74 5 FTE's)
Buses, Vehicles and other Capital Outlay
Matertals and Supphers
Transfers and Improvements
$ 3 23-MILLION 1 32-MILLION
1 08-MILLION
0 7-MILLION
Total Reducttons
$ 5 70-MILLION
Other Additions to FY 2002/03
Estimate of Needs
Compensatzon tncrease
Salary and Benefit Overhang
Cafeterta Flex Credtts
Other Purchased Servtces
SECEP Tmtton
$I 1 50-MILLION
8 16-MILLION
5 80-MILLION
1 16-MILLION
98-MILLION
Total Addtttons
$2 7 60-MILLION
Aprtl 15, 2003
_
C I T Y MA N A G E R 'S BRIEFING
RESOURCE MANAGEMENT PLAN FISCAL YEAR 2003 - 2004
City's Proposed Operating Budget- "Community for a Lifetime"
ITEM # 51050 (Continued)
FY 2002/03
Reductions
Additions
$50 7. 60-MILLION
- 5. 70-MILLION
+ 2 7. 69-MILLION
Estimate of Needs Total
$529.50-MILLION
FY2003/04
City Manager's to School Board
Total Ctty Manager's
School Board Addtttons
Total School Board
$532 36-MILLION
15 86-MILLION
$548 22-MILLION
Gretna Smith, Asststant Dtrector of Human Servtces, responded to concerns relattve the htrtng of bus
drtvers and custo&ans John Kalocay, Asststant Superintendent - Department of Admtntstrattve Support
Servtces, responded relattve the tssue wtth Servtce Master concerntng custodtal servtce
Department of Ltbrartes was RESCHEDULED to the Ctty Counctl Workshop of Aprtl 22, 2003
Compensation was RESCHEDULED to the Cay Councd April 29, 2003, Ctty Council Workshop
Aprtl 15, 2003
-8-
CITY COUNCIL INFORMAL DISCUSSION
ITEM # 51051
6:26 P.M.
Vtce Mayor Jones advtsed Ctty Counctl at tts meettng of November 12, 2002, was asked to constder a
proposed ordtnance that would have made stgntficant revtstons to the procedure by whtch the Trustee Taxes
(retail meal lodging and admtsston taxes collected by businesses chrectly from patrons) are admtntstered
In essence, the amendments would have co&fled the extsttng practtce by whtch the Commtsstoner of
Revenue recetves the payments, whtle addtng new language to asstgn the Treasurer the responstbtltty of
collecttng dehnquent accounts The ordtnance dtd not address unresolved tssues regarding the
tmplementatton and coordtnatton of the assessment and collectton functtons
Mayor Oberndorf appotnted Vtce Mayor Jones and Counctl Lady McClanan to serve on a commtttee to meet
wtth the effected parttes, tnvesttgate the tssues and make a report wtth thetr recommendatton to Ctty
Council Vice Mayor Jones and Counctl Lady McClanan revtewed theperttnent sections of the Ctty Charter,
the Ctty Code and the State Code, as well as a prtor optnton on the subject prepared by the Ctty Attorney's
Office To gather the necessary factual background, they also met wtth the followtng
James K. Spore
City Manager
Leslie L. Lilley
City Attorney
Steven T. Thompson
Chief Financial Officer
Patricia A. Phillips
Director of Finance
David Sullivan
Chief Information Officer
Phillip J. Kellam
Commissioner of Revenue
John T. Atkinson
City Treasurer
Lawrence S. Spencer
Associate City Attorney
In thetr revtew of the Ctty Charter, the Ctty Code and the State Code, st seems clear the powers and duties
of the Commissioner of the Revenue relate to the assessment of taxes by the Commissioner, while the
Treasurer's duttes and powers concern the recetpt and collectton of taxes
Aprtl 15, 2003
-9-
CITY COUNCIL INFORMAL DISCUSSION
ITEM # 51051 (Continued)
The ordtnance that the Commtsstoner of the Revenue presented formahzes a practtce that has evolved over
years tn whtch payment of Trustee Taxes ts made &rectly to the Commtsstoner of the Revenue It also
proposes movtng collectton responstbthttes to the Ctty Treasurer Transferrtng the collection process to the
Treasurer ts a step tn the rtght &rectton, but tt serves to htghhght a more fundamental tssue that the tmttal
recetpt of these taxes, under current practtce and as proposed by the ordtnance, ts by an assesstng officer
rather than the officer charged by state law with receiving and collecting local taxes The proposed changes
wouM create a dysfuncttonal collectton system tn whtch the Treasurer would not have adequate knowledge
of what he ts to collect or how much ts betng collected
Wtth regard to Trustee Taxes, the relevant secttons of the Ctty Code provtde that each assessment ts a
certatn percentage of the amount pard for a meal, hotel room or an admtsston Bustnesses make these
assessments each month and forward the assessments and taxpayments to the Commtsstoner of the Revenue
If these reports and remtttances went dtrectly to the Treasurer, he would be able to rely upon the language
of the Ctty Code along wtth a report of monthly sales, to determtne, at least mtttally, whether the taxpayer
has pard the proper amount Once the tax ts pard, the Commtsstoner of the Revenue ts empowered to au&t
the return and determtne tf the correct amount has been reported, and tt ts beheved that audtttng bustnesses,
as well as identifying businesses that should be collecting these taxes, ts the proper role for the
Commtsstoner of the Revenue The proposed ordtnance changes do not solve the problem of collecttng
dehnquent Trustee Taxes tn an efficient manner In fact, the proposed ordmance would co&fy the current
procedure whtch ts not, tn Vtce Mayor Jones' and Counctl Lady McClanan 's optnton, acceptable
Vtce Mayor Jones and Counctl Lady McClanan respect the efforts of the current Commtsstoner of the
Revenue to vtgorously pursue collectton efforts, but ts apparent that the Ctty Treasurer, gtven hts statutory
powers, can accomphsh more wtth less effort Furthermore, wtth a system of the Ctty Treasurer recetvtng
tax payments and the Commtsstoner of the Revenue audtttng the payments, the proper system of checks and
balances wtll be ensured Therefore, tt ts Vtce Mayor dones 'and Counctl Lady McClanan 's optnton that the
current Ctty Code ts suffictent to provtde for the proper collectton of Trustee Taxes It ts the process of
admmtstertng the receipt and collection of Trustee Taxes that needs to conform to the current Code
provtstons
BY CONSENSUS, Ctty Counctl DIRECTED
Ctty Attorney to draft any amendments requtred to the City Code to
provtde for a system tn whtch Trustee Taxes are recetved and collected
by the Ctty Treasurer, wtth the Commtsstoner of the Revenue havtng
the responstbthttes of dtscovertng, regtstertng and audtttng bustnesses
responstble for Trustee Accounts
Directed the Ctty Manager to uttltze the authortty provided by Ctty
Charter 3~ 8 06 and 8 07 to create a worktng relattonshtp between the
Commtsstoner of the Revenue and Ctty Treasurer that ts consistent
wtth the Ctty Code and the findtngs of thts report The end result must
be an effictent, effecttve system that wtll ensure the flow of tnformatton
between the two vttal offices and result tn the prompt collectton of all
taxes due the Ctty
Aprtl 15, 2003
- 10-
Item V-P.
ADJOURNMENT
ITEM # 51052
Mayor Meyera E Oberndorf DECL,4RED the Ctty Counctl Meettng ADJOURNED at 6:57 P.M.
Chief Deputy Ctty Clerk
Ruth Hodges Smtth, MMC
City Clerk
Meyera E Oberndorf
Mayor
Ctty of Vtrgtnta Beach
Vtrgtnta
Aprtl 15, 2003