OCTOBER 12, 1999 MINUTES (2)
City e>f Virgi1ìia Beach
"COMMUNITY FOR A LIFETIME"
CITY COUNCIL
MAYOR MEYERA E. OBERNDORF. AI-Larg,'
VICE MAYOR WILUAM D. SESSOMS. JR" AI-Lmge
LINWOOD 0- BRANCH J/J. DII/ricl ~-Beach
MARGARET L EURE. Di.rIricl I -Cenlerv¡//c
WILLIAM W HARRISON. JR"Dluricl 5 I.ynuhaven
HAROLD HEISCHOBER. AI-Large
BARBARA M. HENLEY. Di.Hricl 7-PrincesI Anne
LOUIS R. JONES. DIIlrid 4-Bay.'¡dc
REBA S. McCLANAN. Di.rInCI3-RoIc Hall
NANCY K- PARKER. AI-Large
A_M- (DON) WEEKS. Diwicl2-Kemp.wille
CITY HALL BUILDING I
2401 COURTHOUSE DRIVE
VIRGINIA BEACH. VIRGINIA 2345~-9(}()5
PHONE: (757)427-4303
FAX: (757) 42~-5M9
EMAIL: CTYCNCL@ClTY.VIRGINIA-BEACII.VA.lIS
JAMES K. SPORE. Cily ManaKer
LESLIE L LILLEY. Cily AI/orney
RUTH HODGES SMITH. CMC/AAE. Oly Clerk
CITY COUNCIL AGENDA
October 12, 1999
I.
CITY MANAGER'S BRIEFINGS
- Conference Room -
11:00 AM
A.
EMPLOYEE HEALTH CARE BENEFITS [30 min.]
Lynn Sachs, Benefits Coordinator
B.
LASKIN ROAD DESIGN [30 min.]
E. Dean Block, Director, Department of Public Works
II.
REVIEW OF AGENDA ITEMS
III.
CITY COUNCIL COMMENTS
IV.
INFORMAL SESSION
- Conference Room -
1:00 PM
A.
CALL TO ORDER - Mayor Meyera E. Obemdorf
B.
ROLL CALL OF CITY COUNCIL
C.
RECESS TO CLOSED SESSION
V.
FORMAL SESSION
- Council Chamber -
2:00 PM
A.
CALL TO ORDER - Mayor Meyera E. Obemdorf
B.
Reverend Jack Austin
Diamond Springs Christian Church
INVOCATION:
C.
PLEDGE OF ALLEGIANCE TO THE FLAG OF THE UNITED STATES OF AMERICA
D.
ELECTRONIC ROLL CALL OF CITY COUNCIL
E.
CERTIFICATION OF CLOSED SESSION
F.
MINUTES
1.
INFORMAL & FORMAL SESSIONS
October 5, 1999
G.
AGENDA FOR FORMAL SESSION
The Consent Agenda will be determined during the Agenda Review Session and considered in the
ordinary course of business by City Council to be enacted by one motion.
H.
RESOLUTION/ORDINANCE
1.
Resolution to confinn appointment of Beverley Kay Wilson to the position of Assistant City
Attorney effective November I, 1999.
2.
Ordinance to ACCEPT and APPRO PRIA TE $42,000 from the Commonwealth of Virginia
to the FY 1999-2000 Operating Budget of the Community Services Board to serve
emotionally disturbed and mentally challenged children.
I.
PLANNING
1.
Application of RADDD, LLC, a Virginia Limited Liability Company to Modify the Proffers
approved March 24, 1998, for a Chanl!e ofZoninl! District Classification from 0-2 Office District
to Conditional B-1 A Limited Community Business District in behalf of Ferrell Parkway Associates,
Inc., on property West of General Booth Boulevard, 150 feet more or less North of Ferrell Parkway,
containing 1.4 acres (PRINCESS ANNE - DISTRICT 7)
Recommendation:
APPROVAL
2.
Application of SPIRIT HOUSE INc., to Modify the Green Run Land Use Plan to allow a grQ!!Q
home on the East side of Pecan Court, South of Primrose Lane (1435 Pecan Court), containing 9,120
square feet more or less (PRINCESS ANNE - DISTRICT 7).
Recommendation:
APPROVAL
3.
Application of THE CITY OF REFUGE CHRISTIAN CHURCH OF VIRGINIA for a
Conditional Use Permit for a church on the East side of Princess Anne Road, 745 feet more or less
South of Gum Bridge Road (1344 Princess Anne Road), containing 15.67 acres (PRINCESS ANNE -
DISTRICT 7).
Staff Recommendation:
Planning Comm. Recommendation:
INDEFINITE DEFERRAL
APPROVAL
4.
Application of THE POTTER'S HOUSE CHRISTIAN CHURCH for a Conditional Use Permit
for a church at the Southeast comer of Holland Road and Diana Lee Drive (3452 Holland Road),
containing 3.119 acres (ROSE HALL - DISTRICT 3).
Recommendation:
APPROVAL
J.
APPOINTMENTS
HISTORICAL REVIEW BOARD
PARKS AND RECREATION COMMISSION
K.
UNFINISHED BUSINESS
L.
NEW BUSINESS
1.
ABSTRACT OF CIVIL CASES RESOLVED - SEPTEMBER 1999
M.
ADJOURNMENT
**********
If you are physically disabled or visually impaired
and need assistance at this meeting,
please call the CITY CLERK'S OFFICE at 427-4303
Hearing impaired, call: TDD only 427-4305
(TDD - Telephonic Device for the Deaf)
**********
10/08/99AP
AGENDA\10-12-99.
www. virginia-beach. va. us
CITY OF VIRGINIA BEACH
SUMMARYOFCOUNC~ACnONS
H
E 0
H I M B
A S C E S
DATE: October 12, 1999 B R C H C R P E
PAGE: 1 R R H E J L N A S W
A E I 0 N 0 A D R S E
N U S B L N N 0 K 0 E
AGENDA C R 0 E E E A R E M K
ITEM # SUBJECT MOTION VOTE H E N R Y S N F R S S
I/A BRIEFINGS: Lynn Sachs,
Benefits
EMPLOYEE HEALTH CARE BENEFITS Coordinator
B LASKIN ROAD DESIGN E. Dean Block,
Dir, Public
Works
II/ BEACH EVENTS CONTRACT City Manager
ADD explained
ON purpose of RFP
and defined
staff/committee
recommendation
ADD SCHOOLS PARADE ON CITY STREETS City Manager
ON explained his
review and
overtum of staff
decision with
direction to
develop
reasonable
standards of
safety
III/IV/ CERTIFICATION OF CLOSED SESSION CERTIFIED 11-0 Y Y Y Y Y Y Y Y Y Y Y
VIE
F MINUTES - October 5,1999 APPROVED 11-0 Y Y Y Y Y Y Y Y Y Y Y
G/H/ Resolution to confirm appointment of ADOPTED BY 11-0 Y Y Y Y Y Y Y Y Y Y Y
1 Bevertey Kay Wilson as Assistant City CONSENT
Attomev effective November 1, 1999
2 Ordinance to ACCEPT/APPROPRIATE ADOPTED BY 10-1 Y Y Y Y Y Y Y Y N Y Y
$42,000 re C S B re emotionally CONSENT
disturbed/mentallv challenaed children
1/1 RADDD, LLC re approved March 24, MODIFIED THE 11-0 Y Y Y Y Y Y Y Y Y Y Y
1998, for COZ in behalf of Ferrell Parkway PROFFERS BY
Associates at General Booth Boulevard/ CONSENT
Ferrell Parkway (PRINCESS ANNE -
DISTRICT 7)
2 SPIRIT HOUSE, INC. re Green Run Land MODIFIED the 11-0 Y Y Y Y Y Y Y Y Y Y Y
Use Plan at 1435 Pecan Court Land Use Plan
(PRINCESS ANNE - DISTRICT 7) to allow Group
Home, subject
to conditions BY
CONSENT
3 CITY OF REFUGE CHRISTIAN CHURCH DEFERRED 11-0 Y Y Y Y Y Y Y Y Y Y Y
OF VIRGINIA CUP: Church on 1344 INDEFINITELY
Princess Anne Road (PRINCESS ANNE - BY CONSENT
DISTRICT 7)
4 POTTER'S HOUSE CHRISTIAN APPROVED/ 11-0 Y Y Y Y Y Y Y Y Y Y Y
CHURCH CUP: Church at 3452 Holland CONDITIONED
Road (ROSE HALL - DISTRICT 3) BY CONSENT
J APPOINTMENTS:
HISTORICAL REVIEW BOARD Rescheduled B Y C 0 N S E N S U S
PARKS & RECREATION COMMISSION
KIU1 ABSTRACT OF CIVIL CASES RECORDED BY 11-0 Y Y Y Y Y Y Y Y Y Y Y
RESOLVED - SEPTEMBER 1999 CONSENT
M ADJOURNMENT: 2:23 PM
MINUTES
VIRGINIA BEACH CITY COUNCIL
Virginia Beach, Virginia
October 12, 1999
Mayor Meyera E. Oberndorf called to order the CITY MANAGER'S BRIEFING re EMPLOYEE
HEALTH CARE BENEFITS in the Council Conference Room, City Hall Building, on Tuesday, October
12, 1999, at 11 :00 A.M.
Council Members Present:
Linwood O. Branch, IlL Margaret L. Eure, Harold Heischober,
Barbara M. Henley, Reba S. McClanan, Mayor Meyera E. Oberndorf,
Nancy K. Parker, and A. M. "Don" Weeks
Council Members Absent:
Vice Mayor William D. Sessoms, Jr.
{ENTERED: 12:40 P.M.]
{ENTERED: 11:55 A.M.]
William W. Harrison, Jr.
Louis R. Jones
{ENTERED: 12:12 {P.M]
- 2-
CITY MANAGER'S BRIEFING
EMPLOYEE HEALTH CARE BENEFITS
ll:OOA. M.
ITEM # 45533
Lynn Sachs, Benefits Coordinator, introduced staff and special guests: Shana Tuthill- Benefits Staff(power
point presentation), Jonnette Cool - Benefits Staff, Victoria Lewis - Chief Financial Officer for School
System, Shawn Strom and Cynthia Weidner- WilliamM Mercer Consulting Firmfor Health Care RFP. Lynn
advised she has had the privilege of serving the City of Virginia Beachfor the past ten years. For the last
five of those years, she has worked with the consolidated benefits office, which has significantly kept cost
rates for health care at or below regional averages for similarly sized employers. However, the overall
trends are not favorable for continuing to keep these rates at the historically low level. A Request for
Proposalfor Health Insurance was released on March 22, 1999. The consultingfirm ofWilliamM Mercer
assisted with the RFP, reexamined funding options and assisted in premium rate development. Health care
proposals were received on April 26, 1999, and again on September 20, 1999. A Health Insurance RFP
Committee was appointed, consisting of the City Manager, Superintendent of Schools, five School staff and
two City staff Health Care Proposals were received from the following six companies:
Ameriflex
MAMSI
Sentra/OPTIMA
TrigonlPriority
United Health Care (self insured only)
Vlcare (self insured only)
The Health Care RFP requested pricing from vendors regarding: Sole Source (One vendor providing all
the health care services), Dual Option (Two providers would provide all the health care services), Self
Funded (City and Schools control all the funds and bear the risk) and Fully Insured (Health Care Vendor
controls the health insurance plan and bears the risk). The funding of the plan is comprised of Employer
Health Subsidy (Operating Budget) and Employee Premium Contributions. Approximately $5-MILLION
of Employer Premium Subsidy would be paid out under the Operating Budget beginning January 1, 2000
and ending June 30, 2000 for the Fiscal Year 1999/2000 and then an additional $5-MILLION after June
30, 2000, for the remaining 6 months of the plan year. $2,280 per person has been budgeted for each
employee participating in City Health Care. There are many network issues to be considered. Physician
reimbursement rates have been an issue. Physicians, nationwide, have become dissatisfied with HMO
reimbursement rates. Physician unions have been forming in other parts of the country. It is possible there
may be network disruption in our programs over the next six months. Physicians are renegotiating contracts
with HMO's and there have been some speciality groups that have given notice that they will terminate their
relationships effective January 1, 2000.
NETWORK CONSIDERATIONS
HEALTHKEEPERS
Three Specialist Groups have terminated from the HealthKeepers Network
(Two Effective October 1999)
Three Specialist Groups have announced their intent to terminate from the
Network.
OPTIMA
By October 31, 1999, all physicians need to be recontracted.
COlvflvfITTEE RECOlvfMENDATlONS
Self Funded Dual Option
Priority HMO and Trigon PPO
OPTlM4 HMO
From a financial perspective, it is advantageous to select Trigon as the Sole
Carrier for the HMO and the PPO.
However, Network disruptions in HealthKeepers led the Committee to consider
the effect of the reduction in the network on employee choice.
In order to provide employees with the option to choose their physicians,
rather than limit their physician choices to those remaining in the
HealthKeepers Network, the Committee recommended HMO Dual Option
with the Trigon PPO
Self funded arrangements we~'e also recommended.
October 12, 1999
-3-
CITY MANA GER 'S BRIEFING
EMPLOYEE HEALTH CARE BENEFITS
ITEM # 45533 (Continued)
Beginning January 1, 2000, the City and Schools have agreed to pay $2,280 per health care participant per
year.
ADVANTAGES AND DISADVANTAGES OF SELF INSURANCE
ADVANTAGES DISADVANTAGES
Claims are paid on a "pay as you go" basis City and Schools assume a certain amount of
risk.
Flexibility in setting budget rates The plan will require more active management by
internal staff than in a fully insured environment
It is not a requirement to offer state mandated Costs can be variable
benefits
Overall costs will be lower due to the elimination There may be future fluctuations in Federal
of risk charge legislation that include self funded plans.
If actual claims are lower than expected, the If the actual claims are higher than expected,
difference is retained by the City and schools not City and Schools must come up with the
the vendor. difference out of premium reserves and interest
earned
Avoid payment of state premium taxes
City and Schools have more control over benefits
and monetary funds
Claims data is owned by the City and Schools.
RFP FINAL RECOMMENDA TIONS
Trigon PPO
HealthKeepers HMO
OPTIMA HMO
Self Funding
COMPARISON OF HMO BENEFIT CHANGES 199912000
Benefit 1999 2000
OPTIMA Health Plan
Primary Care Physician Visits $10 $15
After Hours PCP Visit $10 $15
Specialist Visits $15 $20
Prescription Drugs $10 $10/$20/$35 for generic. multi-source
genericllow cost brand names, and
high cost brand name drugs.
HealthKeepers by Priority Health Care, Inc.
Primary Care Physician Visits $10 '$15
Specialist Visits $15 $20
Urgent Care Center Visit $15 $25
Prescription Drugs $10/$20, generic, brand $10/$20/$35 for generic, multi-source
generic/low cost brand names, and
high cost brand name drugs
Vision Benefits Once every 24 months Once every 12 months
October 12, 1999
-4-
CITY MANA GER is BRIEFING
EMPLOYEE HEALTH CARE BENEFITS
ITEM # 45533 (Continued)
TRIGON KEYCARE PPO COMPARISON 1999-2000
Benefit 1999 2000
Office Visit Copay $20 $25
AI£ýorAledicalDeducnbk $300 individual, $900 family $400 individual, $1,200 family
Coinsurance 80% 70%
Prescription Drugs 80% after deductible $10/$20/$35 for generic, multi source
generic/low cost brand names and
high cost brand name drugs.
The Consolidated Benefits Office will handle day-to-day administration. Health Insurance companies will
act as the third party administrator. Specific stop loss insurance will be purchased to defer claims expenses
which exceed $100,000 per member. Third Party administrator will be paid an administrative fee. The City
and Schools shall work closely with the following offices: Treasurer's Office, City Finance Department,
School Office of Business Services, Consolidated Benefits Office, employees, insurance companies and
Human Resources. The City Attorney's office shall review all pertinent contracts and documents for legal
sufficiency and provide consultation as necessary. A Health Care Internal Service Fund shall be
established to receive employer and employee contributions and pay claims. Funds will accrue interest and
maintain (or make progress toward) a fully funded, actuarially computed equity balance. City and School
experience will be accounted for separately.
Overall Increase
Priority HMO
OPTIMA HMO
10.7%
22.9%
Trigon PPO
27.7%
2000 HEALTH CARE AGGREGATE PREMIUMS CITY AND SCHOOLS COMPARISON
2000 Health Benefit Contribution Totals for City & Schools
City HAlOs City PPO HAlOs PPO TOTALS
City School System 10,376,280 171 ,000 17,583,360 1,399,920 29,530,560
Contribution
City/Schools System 4,483,454 188,070 7,904,110 1,002,817 13,578,451
Employee
Contribution
TOTAL 14,859,734 359,070' 25,487,470 2,402,737 43,109,011
The City of Virginia Beach is the second largest employer next to Newport News Shipbuilding.
OPTIMA vs PRIORITY FINANCIAL CONSIDERATIONS
CITY OF VIRGINIA BEACH AND VIRGINIA BEACH CITY PUBLIC SCHOOLS
OPTIMA HEALTHKEEPERS TRIGON TOTAL
2000 Annual Cost 16,385,114 23,962,091 2,761,807 43,109,013
1999 Annual Cost 13,332,069 21,645,971 2,162,731 37,140,771
Cost Difference 3,053,045 2,316,120 599,076 5,968,242
Percentage Increase 22.90% 10.70% 27.70% 16.10%
COST CONSIDERATIONS
October 12, 1999
-5-
CITY MANA GER 'S BRIEFING
EMPLOYEE HEALTH CARE BENEFITS
ITEM # 45533 (Continued))
Victoria Lewis advised the administrative fees are based on enrollment and each carrier has a different
administrative fee, which they charge. The administrative fee encompasses approximately $30.00 per
employee per month.
If the 2% reserve is in tack, the City has the flexibility of accumulating the reserve or applying it toward a
subsequent premium.
The employee can have it documented that a particular drug must be taken and can not be generic. This will
be specifically explained during the open enrollment.
There will be a Gatekeeper if the employee is participating in the HMO, but not ppo. A committee will be
established to review the claims appeals. They will endeavor to have a medical professional on the
committee. The insurance companies have advised the actual claims have exceeded expected claims to the
point where they have dipped into their reserves and some of their profit margins. An actuarial study was
performed as part of this analysis to determine what the expected claims probably are. The City is
comfortable there is little difference between what the companies perceived the expected claims would be
under the fully insured and the self insured.
$5-MILLION represents the total amount budgeted per employee ($2,280 per employee). 1/10 of the total
is derived from the Schools and 1/12 from the City. For a fully insured arrangement, the risk charge goes
to the insurance company. With a self-insured arrangement, the City retains the risk charge to build up a
reserve and accumulate interest. The risk charge is 2.1% of the total program. All figures fluctuate
depending upon the enrollment. October 31, 1999, is the deadline for physicians' contracts.
This item will be SCHEDULED for a Formal Vote during the City Council Session of October 26, 1999.
Mayor Obemdorf advised she will be unable to attend this meeting as she will be in Miyazaki, Japan,
heading the VIRGINIA BEACH DELEGATION to the INTERNATIONAL VOLUNTEER SUMMIT.
October 12, 1999
-6-
C I T Y MANA G E R 'S B R I E FIN G
LASKIN ROAD DESIGN
12:03 P.M.
ITEM # 45534
Dean Block, Director of Public Works, advised Laskin Road Phase I is a $19-MILLION Virginia
Department of Transportation (VDOT) funded project. The project has been included in the Capital
Improvement Program for several years and has been an 8-lane section for part of its distance, particularly
through the high volume commercial district with 6 lanes further east. The project is currently on time and
within budget. The purpose of the presentation is to provide an update on the design and status and outline
the context and need for the particular 8-lane portion through the heavy commercial district and also
outlining expectations regarding plans to enhance the landscaping and the aesthetics throughout the
roadway design of this important project. Council Lady Parker had requested this briefing.
John Herzke, City Engineer, advised a memo was previously provided to City Council outlining some of the
designfeatures of the Laskin Road design. Mr. Herzke advised this is not viewed as capacity and road size
versus aesthetics. There is a blend of both, which is the common goal to which the City is striving. Mr.
Herzke advised the 8-lanes would be utilized primarily in the Hilltop area in this heavy commercial area
comparable in size to Pembroke Mall. The 8-lanes would be the eastern end of this commercial activity,
transitioning to 6-lanes out to the oceanfront. Currently, there are 41,000 cars per day on Laskin Road and
this is estimated to be approximately 50,000 cars per day by the year 2015. By 2004, the construction of
this project is expected to be completed.
LEVEL OF SERVICE
4 lanes/service roads
6 lanes
8 lanes
2004
F
D
C
2015
F
E
C
Basically, there is about a 35-foot median with 2 lanes in each direction, a two 2-lane service roads, main
line, and utility strips on the outside of about 11 to 15 feet. From the service road to the service road, there
is basically 147 feet of roadway. When this is improved to the proposed 8 lanes and develop the four lanes
in each direction, approximately one foot will be gained in the median. The median stays at about 36 feet.
There are now outside areas from behind the curb of about 18 to 24 % feet. Therefore, greater landscape
opportunities have been built in, not only in the median, but on these outside areas and there is a total
roadway footprint of 134 feet. Therefore, the roadway footprint has been reduced by 13 feet. The
opportunities have been created for additional landscaping. Relative the corridor study, the Planning
Department has developed concept plans which are illustrating various treatments that are being proposed
along the outside, on the business fronts and along the median. As an example, in the mediam at the main
intersection of First Colonial and Laskin Roads, rather than just a solid concrete median, something on
the order of a brick paver will be installed on both sides. There will be extensive landscaping in the middle
and outside, The details will be developed. Once this landscape plan is presented and they have gone
through the process in November, the City will confer with Kimberly Horne - VDOT consultant, plus City
staff and develop the refined final product. The City is working to have an aggressive and extensive
landscaping plan both on the outside to soften the shoulders as well as in the median in terms of raised
flower beds. The heavily wooded property opposite the old Linkhorn Park Elementary School, has been
reviewed. As the City cannot find any good development use for this property, the staffis planning to include
this as a "take" to be a part of the Laskin Road project for which the City will have to bear the cost. For the
sake of purchasing this, a beautiful buffer would be maintained utilizing this heavily wooded area. There are
opportunities for some of the parcels at the corner of Laskin and First Colonial Roads where there will be
quite a bit of "taking" on the west side of First Colonial Road. There are opportunities for further
enhancement of the landscaping and aesthetics. There are three major (east/west) roadways in close
proximity to each other. 1-264 is carrying approximately 58,000 vehicles and will rise to almost 88,700.
Virginia Beach Boulevard is at 34,800 and is increasing to 45,600. Therefore, the City is not overbuilding
in this highly commercialized area. There is not excess capacity. The roads are all full. Virginia Beach
Boulevard is not in the CIP, but is in the Master Transportation Plan for improvement and will probably
be a 6-lane road. Therefore, this road cannot be considered for additional capacity. On the south side of
the road is proposed to be a lO-foot bike path and on the north side a 5-foot wide sidewalk. Therefore,
there is good pedestrian access.
October 12, 1999
- 7-
CITY MANA GER 'S BRIEFING
LASKIN ROAD DESIGN
ITEM # 45534 (Continued)
Mr. Block advised there is continuing development of a commercial nature in this area. The whole project
is approximately 1-% miles at a cost of approximately $19-MILLION. This encompasses a major bridge
replacement.
Robert J. Scott, Director of Planning, advised there are two factors which increase the number of vehicles
on the roadway. People are just driving more. There are changes in land use occurring in this area.
Probably, the most significant is this entire corridor, some of which will probably be redeveloped.
Approximately 80% of the geographic area will be replaced by afairly intensive commercial center. There
will be other redevelopment and upgrades in this area. The Planning Commission said the Hilltop area is
not oriented at all toward pedestrians. Mr. Scott does not see this road project as changing this aspect. A
lot of people do not cross these streets now and it is not going to happen in the future.
Mr. Herzke advised the walkovers work well on interstate facilities, but on urban roadways they have
marginal benefits. Mr. Block advised to a large extent highway demand follows land use. There is a
responsibility to move people in a reasonable manner. There will be a PUBLIC HEARING with the
corridor consultant in early November. The project is 50 to 55% designed.
Council Lady McClanan referenced these wide roads create the concept of dividing the community. An 8-
lane road between business or home does not unite, it divides. Mr. Scott advised the Public Hearing is
interactive.
MayorOberndorfadvised a number of the residents are active garden club members and this will be a rather
major infringement on their lives.
Council Lady Parker believed the City needs to understand that these expanded lanes do create division.
Council Lady Parker has many reservations.
October 12, 1999
-8-
AGENDA REVIEW SESSION
12:40 A.M.
ITEM # 45535
BY CONSENSUS, the following items shall compose the CONSENT AGENDA..
RESOLUTIONS
HI Resolution re issuance by the Virginia Beach Development
Authority of Revenue Bonds not to exceed $85,000,000 for
Westminster-Canterbury of Hampton Roads, Inc. re
construction, renovation and equipping of a new 14-story
residential wing, covered parking, expanded wellness center and
enlarged auditorium at 3100 Shore Drive (LYNNHAVEN -
DISTRICT 5).
H2 Ordinance to ACCEPT and APPROPRIA TE $42,000 from the
Commonwealth of Virginia to the FY 1999-2000 Operating
Budget of the Community Services Board to serve emotionally
disturbed and mentally challenged children.
ITEM # 45536
[1 Application of RADDD, LLC, a Virginia Limited Liability
Company to Modify the Proffers approved March 24, 1998,for
a ChanfJe of Zoninfl District Classification from 0-2 Office
District to Conditional B-1 A Limited Community Business
District in behalf of Ferrell Parkway Associates, Inc., on
property West of General Booth Boulevard, 150 feet more or less
North of Ferrell Parkway, containing 1.4 acres (PRINCESS
ANNE - DISTRICT 7)
Council Lady Henley expressed concern; however, since it has been designed and the neighbors believe it
acceptable to them, she will vote in favor of the application.
Council Lady Parker will vote a VERBAL NA Y on this item.
ITEM # 45537
[3. Application of THE CITY OF REFUGE CHRISTIAN
CHURCH OF VIRGINIA for a Conditional Use Permit for a
church on the East side of Princess Anne Road, 745 feet more or
less South of Gum Bridge Road (J 344 Princess Anne Road),
containing 15.67 acres (PRINCESS ANNE - DISTRICT 7).
Council Lady Henley believed the staff review did not give consideration to the fact that this application was
directly across Princess Anne Road from the airstrip. Council Lady Henley would have major problems
creating a 1,000 seat sanctuary and a 400 person school across from the airstrip. This issue should be
investigated. Now, the staff has recommended Indefinite Deferral.
Karen Laslie, Planning, will confer with the applicant prior to the Formal Session.
October 12, 1999
-9-
A GENDA REVIEW SESSION
ITEM # 45538
BY CONSENSUS, thefollowing items shall compose the PLANNING BY CONSENT AGENDA:
/.1. Application of RADDD, LLC, a Virginia Limited Liability
Company to Modify the Proffers approved March 24, 1998,for
a Chaní!e of Zonin~ District Classification from 0-2 Office
District to Conditional B-1 A Limited Communitv Business
District in behalf of Ferrell Parkway Associates, Inc., on
property West of General Booth Boulevard, 150 feet more or less
North of Ferrell Parkway, containing 1.4 acres (PRINCESS
ANNE - DISTRICT 7)
/.2. Application of SPIRIT HOUSE INc., to Modify the Green Run
Land Use Plan to allow ß ~roup home on the East side of Pecan
Court, South of Primrose Lane (J 435 Pecan Court), containing
9,120 square feet more or less (PRINCESS ANNE - DISTRICT
7).
/.3. Application of THE CITY OF REFUGE CHRISTIAN
CHURCH OF VIRGINIA for a Conditional Use Permit for a
church on the East side of Princess Anne Road, 745 feet more or
less South of Gum Bridge Road (J 344 Princess Anne Road),
containing 15.67 acres (PRINCESS ANNE - DISTRICT 7).
/.4. Application of THE POTTER'S HOUSE CHRISTIAN
CHURCH for a Conditional Use Permit for a church at the
Southeast corner of Holland Road and Diana Lee Drive (3452
Holland Road), containing 3.119 acres (ROSE HALL -
DISTRICT 3).
Council Lady Parker will vote a VERBAL NA Y on Item /.1.
Item /.3. will be DEFERRED INDEFINITELY, BY CONSENT.
October 12, 1999
-10 -
BEACH EVENTS CONTRACT
ITEM # 45539
ADD-ON
12:50 P.M.
The City Manager explained the purpose of the RFP for the Beach Events contract and defined the staff
and committee recommendation. Patricia Phillips, Director of Finance, distributed graphs relative Cash
Sponsorship History and City Appropriation! Administrative Fee Ratio. The goal of the City staff is to
establish a procurement review as objective as is possible. Of all the thousands of purchasing contracts,
there are very few complaints relative the fairness and professionalism of the process.
Henry Ruiz, CVD/Resort Management Office, during the City Council Session of October 5, 1999, introduced
his fellow members of the Evaluation Committee who evaluated, ranked and short-listed the proposals.
Elizabeth 0 'Malley
CVD/Resort Management Office
Rick Rowe
Parks and Recreation
Lt. Tommy Baum
Police Department
John McConnell
DF/Purchasing
The City Manager stood by the qualifications and professionalism of these members. These individuals are
primarily involved in the program. They offer their insights through actual experience in the field. The City
selected a competitive negotiation for non professional services, which is the category defined in State law.
FINAL RANKING
(After Negotiations)
OFFERORS
Evaluation Factors Cellar Door Rising Tide Downie Productions
Experience 25 15 20
Capability & Skill 25 15 10
Scope of Services 25 20 15
Financial 16 25 17
Considerations
TOTAL 91 75 62
Cellar Door has 36 years of experience in providing live entertainment events. The firm has 5 years of
direct/contractual experience with the City's program. It is a large corporation with formalized business
structures. The parent company (SFX) is one of the largest diversified promoter, producer and venue
operators of live entertainment events. The scope of services includes the general entertainment portion of
the program, Beach Events and major events i. e. American Music Festival. The RFP was structured in a
way that the City would provide a budget for the contract renewal of the General Entertainment and Major
Events Program of approximately $l.B-MILLION annually. This amount would be expended on any of
the proposals submitted. The quality and support levels of the program might vary; however, the cost of the
program would not other than as it relates to sponsorships. Cellar Door proposedfour full time and three
part time individuals. Rising Tide proposed six part time individuals (20% to 25% of their time each which
equates to 1-~ FTE) and indicated they would also hire two additionalfull time. Relative the Administrative
Fee, there was approximately $160,000 difference in the two proposals. $110,000 can be explained by
examining the salary difference related to the staffing component. The events require sufficient staff. The
Beach Events program is much more complex than years ago. Cellar Door has a greater capacity in overall
resources andfinancial strength. Due to the inclement weather on Labor Day, Cellar Door was able to call
upon the Amphitheater (a Cellar Door resource) to provide additional staffing to assist.
October 12, 1999
-11 -
BEACH EVENTS CONTRACT
ITEM # 45539 (Continued)
ADD-ON
When the City had to cancel the Randy Travis event, rather than that costing $75,000, Cellar Door was able
to negotiate this down to $7,500, because Cellar Door had national contracts with this particular individual.
The City benefitted from this long standing business relationship. Cellar Door was the only firm which
addressed thoroughly, and in a comprehensive manner, all the components requested in the RFP as the
entertainment and programming aspects, sponsorship plan, program marketing and the use ofvolunteers.
Rising Tide had proposed 31 events and Cellar Door 25. The Rising Tide RFP response changed the mix
fairly dramatically, a number of which had previously been reviewed and rejected i.e. the Balloon Festival
and Whale Watching. Some of the events proposed as new events, the City believed were at the expense of
very successful events already existing, such as the proposed reduction in fundingfor the Beach Street USA
program from $405,000 to $125,000. This would be a major cut in a fairly successful and well supported
program in order to fund newer initiatives which mayor may not have merit. This is a major concern. The
marketing proposal of Cellar Door was 2 inches thick while the Rising Tide submittal consisted of samples
of three events that had been produced. Cellar Door has tripled their sponsorships in the last three years
and has produced a 5-year plan to further expand sponsorships. The average sponsorship yield from their
proposal over a 5-year period was $240,000 per year. Rising Tide indicated sponsorship in this market was
"tapped out" and proposed $125,000 per year was hopeful during the course of the negotiations, this could
be increased to $175,000. These sponsorships assists in offsetting administrative fees.
The City Manager advised if the City Council does not wish to concur with the Evaluation Committee and
staff recommendation, the RFP can be resolicited and the City Council can be the Review Committee. The
City Manager recommends that City Council does not do this. The City Manager advised Councilman Weeks,
that should the City Council, choose not to fund this program at $1.8-MILLION, the proposers in the RPF
were requested to recompute their fee structure and how they would adapt to that loss of funding. Cellar
Door was the only entity to respond to this question.
RickBerry, Purchasing Agent, advised the majority of the proposals and one of the most popular approaches
is to establish a level of service which the City is attempting to achieve and have the best offer provided,
saving the taxpayers money. Cellar Door has evidenced an increased quality of service.
James B. Ricketts, Director - Convention and Visitor Development, advised Council Lady McClanan, the
budget for the American Music Festival is $750,000. Council Lady McClanan had understood from
discussions at the Retreat, the City was going to re-evaluate the amount of funding being expended on the
major weekend events. Council Lady McClanan wishes these major weekend events reexamined.
The City Manager advised the RFP was issued prior to the Retreat; therefore, was based on an extension
of the previous years. On the City Council Pending Items List, the Beach Events program is an item to return
to City Council in February 2000, if the City Council desires to adjust the program.
Councilman Branch advised these issues will be discussed at the Events Retreat. To expand the events
program, the Hotel Association came forward with a 1/2% tax increase, expiring June 30, 2000. The
sponsorship funding also equates to over $700,000. The beach had encompassed a 90 to 100 day season
with monthly rental signs appearing on marques. Now, the Beach receives over one-half of their revenue
during the off season months. The Events Program, a 'year round program, is a major contributor to this.
Councilman Branch cited letters of endorsement for Cellar Door.
The City Manager referenced allegations regarding a law suit against Cellar Door concerning
discrimination and an issue of a criminal record of an employee of the company. Assistant City Attorney
Randy Blow distributed correspondence from Cellar Door's Associate General Counsel Michael Galor in
response to the allegations.
Vice Mayor Sessoms complimented the Purchasing Department, headed by Rick Berry, and noted their
honesty and expertise.
Mayor Oberndorf expressed appreciation to the City Manager for his response and advised this is not the
first contested awarding of a contract, as the City has been through same with lifeguard services many years
ago and the last event contract when changes in providers of service were made.
BY CONSENSUS, the City Manager shall sign the Beach Events Contract with Cellar Door.
October 12, 1999
-12 -
CITY COUNCIL COMMENTS
ITEM # 45540
1:20 P.M.
ADD-ON
Mayor Oberndorf advised it was her understanding, based on the letter faxed to the Principals of
Kempsville High School, that the Homecoming Parade would be granted a permit, allowing them to line
up in the street. On Good Morning Hampton Roads this morning, every five minutes, they state Kempsville
High School would not be allowed to do same.
The City Manger reviewed the situation and advised a 'year and 'half ago notice was given to all the High
Schools that parades on public streets were not going to be permitted. The City Manager overturned the
staff's decision and gave direction to develop reasonable standards of safety. All ten High Schools have been
contacted.
Council Lady McClanan said this is only once a year and don't the employees making these decisions have
children?
Vice Mayor Sessoms referenced the Home Coming Parade in the Stadium at First Colonial and a child being
crushed. Vice Mayor Sessoms expand full support of the City Manager's decision.
October 12, 1999
-13 -
ITEM # 45541
Mayor Meyera E. Oberndorf called to order the INFORMAL SESSION of the VIRGINIA BEACH CITY
COUNCIL in the City Council Conference Room, City Hall Building, on Tuesday, October 12, 1999, at 1 :25
P.M
Council Members Present:
Linwood O. Branch, III, Margaret L. Eure, William W. Harrison, Jr.,
Harold Heischober, Barbara M. Henley, Louis R. Jones, Reba S.
McClanan, Mayor Meyera E. Oberndorf, Nancy K. Parker, Vice
Mayor William D. Sessoms, Jr. and A. M "Don" Weeks
Council Members Absent:
None
October 12, 1999
-14 -
ITEM # 45542
Mayor Meyera E. Oberndorf, entertained a motion to permit City Council to conduct its CLOSED
SESSION, pursuant to Section 2.1-344(A), Code of Virginia, as amended, for the following purpose:
PERSONNEL MATTERS: Discussion, consideration or interviews of
prospective candidates for employment, assignment, appointment,
promotion, performance, demotion, salaries, disciplining, or resignation
of specific public officers, appointees, or employees pursuant to Section
2.1-344 (A) (1).
To Wit:
Boards and Commissions:
Historical Review Board
Parks and Recreation Commission
Assistant City Attorney
PUBLICLY-HELD PROPERTY: Discussion or consideration of the
condition, acquisition, or use of real property for public purpose, or of the
disposition of publicly-held real property, for discussion in an open
meeting which would adversely affect the bargaining position or
negotiating strategy of the public body pursuant to Section 2.1-344(A)(3).
To- Wit:
Acquisition/Disposition of Real Property -
Central Business District
LEGAL MATTERS: Consultation with legal counselor briefings by staff
members, consultants, or attorneys pertaining to actual or probable
litigation, where such consultation or briefing in open meetings would
adversely affect the negotiating or litigatingposition of the public body and
consultation with legal counsel employed or retained by a public body
regarding specific matters requiring the provision of legal advice by such
counsel pursuant to Section 2.1-344(A)(7).
To-Wit:
Contractual Negotiation - Central Business District
Legal Briefing - FERC Relicensing
Upon motion by Vice Mayor Sessoms, seconded by Councilman Branch, City Council voted to proceed into
CLOSED SESSION.
Voting:
11-0
Council Members Voting Aye:
Linwood 0. Branch, IlL Margaret L. Eure, William W. Harrison, Jr.,
Harold Heischober, Barbara M. Henley, Louis R. Jones, Reba S.
McClanan, Mayor Meyera E. Oberndorf Nancy K. Parker, Vice Mayor
William D. Sessoms, Jr. and A. M. "Don" Weeks
Council Members Voting Nay:
None
Council Members Absent:
None
October 12, 1999
-15 -
FORMAL SESSION
VIRGINIA BEACH CITY COUNCIL
October 12,1999
2:10 P.M.
Mayor Meyera E. Oberndorf called to order the FORMAL SESSION of the VIRGINIA BEACH CITY
COUNCIL in the Council Chamber, City Hall Building, on Tuesday, October 12, 1999, at 2:10 P.M.
Council Members Present:
Linwood O. Branch, IlL Margaret L. Eure, William W. Harrison, Jr.,
Harold Heischober, Barbara M. Henley, Louis R. Jones, Reba S.
McClanan, Mayor Meyera E. Oberndorf, Nancy K. Parker, Vice
Mayor William D. Sessoms, Jr. and A. M "Don" Weeks
Council Members Absent:
None
INVOCA TION:
Reverend Jack Austin
Diamond Springs Christian Church
PLEDGE OF ALLEGIANCE TO THE FLAG QF THE UNITED STATES OF AMERICA
Vice Mayor Sessoms, being a Corporate Officer ofWachovia Bank, disclosed there were no matters on the
agenda in which he has a "personal interest", as defined in the Act, either individually or in his capacity as
an officer ofWachovia Bank. The Vice Mayor regularly makes this Disclosure as he may not know of the
Bank's interest in any application that may come before City Council. Vice Mayor Sessoms' letter of January
4, 1999, is hereby made a part of the record.
October 12, 1999
-16 -
Item V-E.
CERTIFICATION OF
CLOSED SESSION
ITEM # 45543
Upon motion by Vice Mayor Sessoms, second ed by Councilman Branch, City Council CERTIFIED THE
CLOSED SESSION TO BE IN ACCORDANCE WITH THE MOTION TO RECESS.
Only public business matters lawfully exempted from Open Meeting
requirements by Virginia law were discussed in Closed Session to which
this certification resolution applies;
AND,
Only such public business matters as were identified in the motion
convening the Closed Session were heard, discussed or considered by
Virginia Beach City Council.
Voting:
11-0
Council Members Voting Aye:
Linwood 0. Branch, III, Margaret L. Eure, William W Harrison, Jr.,
Harold Heischober, Barbara M Henley, Louis R. Jones, Reba S.
McClanan, Mayor Meyera E. Oberndorf, Nancy K. Parker, Vice Mayor
William D. Sessoms, Jr. and A. M. "Don" Weeks
Council Members Voting Nay:
None
Council Members Absent:
None
October 12, 1999
fRtønluttnu
CERTIFICATION OF CLOSED SESSION
VIRGINIA BEACH CITY COUNCIL
WHEREAS: The Virginia Beach City Council convened into CLOSED SESSION,
pursuant to the affinnative vote recorded in ITEM #45542 Page 14, and in accordance with the
provisions of The Virginia Freedom of Information Act; and,
WHEREAS: Section 2.1-344. of the Code of Virginia requires a certification by the
governing body that such Closed Session was conducted in confonnity with Virginia law.
NOW, THEREFORE, BE IT RESOLVED: That the Virginia Beach City Council hereby
certifies that, to the best of each member's knowledge, (a) only public business matters lawfully
exempted from Open Meeting requirements by Virginia law were discussed in Closed Session to
which this certification resolution applies; and, (b) only such public business matters as were
identified in the motion convening this Closed Session were heard, discussed or considered by
Virginia Beach City Council.
~~~
Ruth Hodges Smith, CMC/ AAE
City Clerk
October 12, 1999
-17 -
Item V-F.1
MINUTES
ITEM # 45544
Upon motion by Vice Mayor Sessoms, seconded by Councilman Harrison, City Council APPROVED the
Minutes of the INFORMAL AND FORMAL SESSIONS of October 5,1999.
Voting:
11-0
Council Members Voting Aye:
Linwood 0. Branch, III, Margaret L. Eure, William W. Harrison, Jr.,
Harold Heischober, Barbara M. Henley, Louis R. Jones, Reba S.
McClanan, Mayor Meyera E. Oberndorf, Nancy K. Parker, Vice Mayor
Willia.m D. Sessoms, Jr. and A. M. "Don" Weeks
Council Members Voting Nay:
None
Council Members Absent:
None
October 12, 1999
Item V-G.I.
ADOPTAGENDA
FOR FORMAL SESSION
BY CONSENSUS, City Council ADOPTED:
-18 -
ITEM # 45545
AGENDA FOR THE FORMAL SESSION
October 12, 1999
- 19-
Item V-H.
RESOLUTION/ORDINANCE
ITEM # 45546
Upon motion by Vice Mayor Sessoms, seconded by Councilman Jones, City Council APPROVED IN ONE
MOTION, Resolution 1 and Ordinance 2 of the CONSENT AGENDA.
Voting:
11-0
Council Members Voting Aye:
Linwood O. Branch, IlL Margaret L. Eure, William W. Harrison, Jr.,
Harold Heischober, Barbara M Henley, Louis R. Jones, Reba S.
McClanan, Mayor Meyera E. Oberndorf, Nancy K. Parker, Vice Mayor
William D. Sessoms, Jr. and A. M. "Don" Weeks
Council Members Voting Nay:
None
Council Members Absent:
None
October 12, 1999
- 20-
Item V-H.i.
RESOLUTION
ITEM # 45547
Upon motion by Vice Mayor Sessoms, seconded by Councilman Jones, City Council ADOPTED:
Resolution to confirm the appointment of Beverley Kay Wilson to the
position of Assistant City Attorney effective November 1, 1999.
Voting:
11-0 (By Consent)
Council Members Voting Aye:
Linwood 0. Branch, IlL Margaret L. Eure, William W Harrison, Jr.
Harold Heischober, Barbara M Henley, Louis R. Jones, Reba S.
McClanan, Mayor Meyera E. Oberndorf, Nancy K. Parker, Vice Mayor
William D. Sessoms, Jr. and A. M. "Don" Weeks
Council Members Voting Nay:
None
Council Members Absent:
None
October 12, 1999
10
11
12
13
14
15
16
17
18
19
1
2
3
A RESOLUTION APPOINTING BEVERLEY KAY
WILSON TO THE POSITION OF ASSISTANT
CITY ATTORNEY
4
BE IT RESOLVED BY THE COUNCIL OF THE CITY OF VIRGINIA
5
BEACH, VIRGINIA:
6
That pursuant to § 2-166 of the Code of the City of
7
Virginia Beach, Virginia, Beverley Kay Wilson is hereby appointed
8
to the position of Assistant City Attorney, effective November I,
9
1999.
Adopted by the Council of the City of Virginia Beach,
Virginial on the
12 + d f
ay 0
October
, 1999.
CA-7503
ORDIN/NONCODE/Wilson.Res
October I, 1999
R-l
APPROVED AS TO LEGAL
¡;;¡¡;; N. Md'
City Attorney
- 21 -
Item V-H.2.
ORDINANCE
ITEM # 45548
Upon motion by Vice Mayor Sessoms, seconded by Councilman Jones, City Council ADOPTED:
Ordinance to ACCEPT and APPROPRIATE $42,000 from the
Commonwealth of Virginia to the FY 1999-2000 Operating Budget of the
Community Services Board to serve emotionally disturbed and mentally
challenged children.
Voting:
11-0 (By Consent)
Council Members Voting Aye:
Linwood O. Branch, IlL Margaret L. Eure, William W. Harrison, Jr.
Harold Heischober, Barbara M. Henley, Louis R. Jones, Reba S.
McClanan, Mayor Meyera E. Oberndorf, Nancy K. Parker, Vice Mayor
William D. Sessoms, Jr. and A. M "Don" Weeks
Council Members Voting Nay:
None
Council Members Absent:
None
October 12, 1999
1
2
3
4
5
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
AN ORDINANCE ACCEPTING AND
APPROPRIATING $42,000 FROM THE
COMMONWEALTH OF VIRGINIA TO THE FY
1999-00 OPERATING BUDGET OF THE
COMMUNITY SERVICES BOARD
6
WHEREAS,
the
Community
Services
Board
( "CSB" )
has
7
received $42,000 in funding from the Commonwealth of Virginia that
8
the CSB recommends be accepted and appropriated by City Council to
9
provide various services set forth below:
(a) $17,000 to provide flexible individualized services
to children with mental retardation who live at home, and
(b) $25,000 to establish a special project incorporated
into the Performance Contract with the State to provide additional
mental health services for children; and
WHEREAS, an additional 0.5 full-time equivalent clerical
position must be created to provide the additional services made
possible by the additional revenue.
NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY
OF VIRGINIA BEACH, VIRGINIA:
1.
That
funds
in the amount of
$42,000
are hereby
accepted from the Commonwealth of Virginia and appropriated to the
FY 1999-00 Operating Budget of the CSB,
to be expended for the
purposes set forth below:
(a) $17,000 to provide flexible individualized services
to children with mental retardation who live at home, and
(b) $25,000 to establish a special project incorporated
into the Performance Contract with the State to provide additional
mental health services for children.
2.
That an additional 0.5 full-time equivalent clerical
position
is hereby added to the CSB's FY 1999-00 Operating Budget.
31
3.
That funding for the services and programs described
32
in this ordinance is contingent upon continued state funding, and
33
if this funding is reduced or eliminatedl
then the programs or
34
services,
as well as the position.
established to provide the
35
programs or services, may be reduced accordingly.
36
4.
That estimated revenue in the CSB's 1999-00 Operating
37
Budget is hereby adjusted to reflect $42,000 in additional revenue
38
from the Commonwealth of Virginia.
39
Adopted by the Council of the City of Virginia
40
Beach, Virginia, on the 12th day of October, 1999.
41
Requires an affirmative vote by a majority of members of
42
City Council.
43
44
APPROVED AS TO CONTENT:
APPROVED AS TO LEGAL
SUFFICIENCY:
s
46 Management serviC; , . .
47 CA-7501
48 ORDIN\NONCODE\CSB $42000.0RD
49 OCTOBER 6, 1999
50 R3
ity Attor
2
- 22-
Item V-I
ITEM # 45549
PLANNING
1. RADDD, LLC, a Virginia Limited Liability Company
MODIFY PROFFERS
COZ FERRELL P ARKW A Y
ASSOCIA TES
(APPROVED: 3/24/98)
2.SPIRIT HOUSE, INc.
MODIFY GREEN RUN
LAND USE PLAN
3. THE CITY OF REFUGE CHRISTIAN
CHURCH OF VIRGINIA
CONDITIONAL USE PERMIT
4. THE POTTER'S HOUSE OF CHRISTIAN CHURCH
CONDITIONAL USE PERMIT
October 12, 1999
- 23-
Item V-L
PLANNING
ITEM # 45550
Upon motion by Vice Mayor Sessoms, seconded by Councilman Jones, City Council APPROVED IN ONE
MOTION Items 1, 2, 3 (DEFERRED INDEFINITELY) and 4 of the PLANNING BY CONSENT
AGENDA.
Item 1.3 was DEFERRED INDEFINITELY, BY CONSENT.
Voting:
11-0 (By Consent)
Council Members Voting Aye:
Linwood O. Branch, IlL Margaret L. Eure, William W. Harrison, Jr.,
Harold Heischober, Barbara M. Henley, Louis R. Jones, Reba S.
McClanan, Mayor Meyera E. Oberndorf, Nancy K. Parker, Vice Mayor
William D. Sessoms, Jr. and A. M "Don" Weeks
Council Members Voting Nay:
None
Council Members Absent:
None
Council Lady Parker voted a VERBAL NA Y on Item 1.1.
October 12, 1999
Item V-LJ.
PLANNING
- 24-
ITEM # 45551
Upon motion by Vice Mayor Sessoms, seconded by Councilman Jones, City Council APPROVED
Application ofRADDD, LLC, a Virginia LimitedLiability Company to Modify the Proffers approved March
24, 1998, for a ChanJle of ZoninJl District Classification from 0-2 Office District to Conditional B-1A
Limited Communitv Business District in behalf of Ferrell Parkway Associates, Inc..
Ordinance upon Application of RADDD, LLC, a Virginia Limited
Liability Company to Modify the Proffers approved March 24, 1998,
for a Change of Zoning District Classification from 0-2 Office
District to Conditional B-1 A Limited Community Business District in
behalf of Ferrell Parkway Associates, Inc., on property West of
General Booth Boulevard, 150 feet more or less North of Ferrell
Parkway (GPIN#2414-05-5571), containing 1.4 acres (PRINCESS
ANNE - DISTRICT)
The proffers shall be modified as follows:
1.
When the property is developed, it shall be developed
substantially as shown on the exhibit entitled "CONCEPT PLAN
FRIENDLY'S RESTAURANT AT STRAWBRIDGE, dated June
8, 1999, " Rev. August 23, 1999, prepared by Gallup Surveyors
& Engineers, Ltd., which has been exhibited to the Virginia
Beach City Council and is on file with the Virginia Beach
Department of Planning (hereinafter "Site Plan ").
2.
When the Property is developed, it shall be landscaped
substantially as depicted on the exhibit entitled "Landscape Plan
Friendly's Restaurant at Strawbridge, " dated June 8, 1999, Rev.
August 23, 1999, prepared by Gallup Surveyor's & Engineers,
Ltd. and Patsy Kerry, which has been exhibited to the Virginia
Beach City Council and is on file with the Virginia Beach
Department of Planning (hereinafter "Site Plan ").
3.
The restaurant depicted on the Site Plan shall have the
architectural design, and appearance as depicted on the
elevations titled "Friendly's Restaurants Strawbridge Center -
PROPOSED RIGHT-SIDE AND REAR EXTERIOR
ELEVATIONS" and "Friendly's Restaurants Strawbridge Center
- PROPOSED LEFT-SIDE AND FRONT EXTERIOR
ELEVATIONS," DATED 8/23/99 prepared by Doshi Tavaras
Architects, PLLC, which have been exhibited to the Virginia
Beach City Council and is on file with the Virginia Beach
Department of Planning (hereinafter "Elevations ").
4.
The building materials used to construct the visible exterior
surfaces of the restaurant will be those depicted and designated
on the Elevations with the primary surface material being a
colonial reddish brown brick.
5.
The freestanding sign identified on the Site Plan shall be a low
level sign between brick columns as depicted on the elevation
titled "Pilon Sign (40 S.F.), August 23, 1999, Strawbridge,"
which has been exhibited to the Virginia Beach City Council and
is on file with the Virginia Beach Department of Planning. This
sign shall only be externally illuminated from ground level.
October 12, 1999
Item V-L1.
PLANNING
Voting:
- 25-
ITEM # 45551 (Continued)
6.
The only internal illumination permitted on building-mounted
signs shall be individual lettering of the words on the signs. No
background lighting shall be permitted on any building mounted
signage. No neon lighting visible from General Booth Boulevard,
McComas Way, or adjoining property shall be permitted to be
placed on the property.
7.
The parking lot lighting shall be "colonial style" utilizing
"Unique Solutions type RSL-350, Black Traditional Residential
Postop Fixture" (or an equivalent fIXture approved by the
Planning Director prior to the issuance of an Occupancy
Permit), on black tapered aluminum poles no greater than
fourteen feet (14J in height. All outdoor lighting shall be
shielded, deflected, shaded and focused to direct light onto the
premises and away from adjoining property.
8.
The outdoor dining plaza depicted on the Site Plan shall have
appropriate metal outdoor furnishings in earth tone colors.
9.
The only uses which will be permitted in place of a Friendly's
Restaurant in the building depicted on the Site Plan and
Rendering are: (a) another eating and drinking establishment
without drive-through windows as permitted within the B-1 A
Limited Community Business District; or (b) those permitted
within the 0-2 Office Zoning District and not prohibited within
the B-1 A Limited Community Business District.
10. As to the property described herein, the Covenants, Restrictions
and Conditions set forth herein supersede, in their entirety, those
Covenants, Restrictions and Conditions set forth in that certain
Agreement duly recorded in the Clerk's office of the Circuit
Court of the City of Virginia Beach, Virginia, in Deed Book
3869, at Page 0152.
11. No change.
10-1 (By Consent)
Council Members Voting Aye:
Linwood O. Branch, III, Margaret L. Eure, William W. Harrison, Jr.,
Harold Heischober, Barbara M Henley, Louis R. Jones, Reba S.
McClanan, MayorMeyeraE. Oberndorf, Vice Mayor WilliamD. Sessoms,
Jr. and A. M "Don" Weeks
Council Members Voting Nay:
Nancy K. Parker
Council Members Absent:
None
October 12, 1999
---- ----------..------------------.----.---.
'ûHM "Iv. ,~.~. ¡"
City of' Virgir1ia. Beach.
INTER-OFFICE CORRESPONVENCE
In Reply Refer To Our File No. DF-4976
DATE: September 27, 1999
TO:
FROM:
Leslie L. Lilley
William M. Macali UJ.M
DEPT: City Attorney
DEPT: City Attorney
RE:
Conditional Zoning Application
Ferrell Parkway Associates, Inc. and RADDD, Inc.
The above-referenced conditional zoning application is scheduled to be heard by the
City Council on October 12, 1999. I have reviewed the subject proffer agreement, dated June
15, 1999, and have determined it to be legally sufficient and in proper legal form. A copy of
the agreement is attached.
Please feel free to call me if you have any questions or wish to discuss this matter
further.
WMM
Enclosure
PREPARED BY:
3YKES.CARNES.80URDON
& AHERN. PC-
ATTORNEYS AT LAW
'I
FERRELL PARKWAY ASSOCIATES, INC., a Virginia corporation
and
RADDD, LLC, a Virginia limited liability company
I
II
II
I
I
i
TO (PROFFERED COVENANTS, RESTRICTIONS AND CONDITIONS) 1\
CITY OF VIRGINIA BEACH, a municipal corporation of the Commonwealth of I
V irginia I
¡
I
THIS AGREEMENT, made this 15th day of June, 1999, by and between
FERRELL PARKWAY ASSOCIATES, INC., a Virginia corporation, Property Owner,
and RADDD, LLC, a Virginia limited liability company, Contract Purchaser, herein
collectively referred to as Grantors; and THE CITY OF VIRGINIA BEACH, a i
municipal corporation of the Commonwealth of Virginia, Grantee, party of the I
second part.
W!INEââEIH.;.
WHEREAS, Property Owner is the owner of a certain parcel of property
located in the Princess Anne Borough of the City of Virginia Beach, containing
approximately one and four-tenths of an acre (1.40) and described in Exhibit "A"
attached hereto and incorporated
herein by this reference, said property
hereinafter referred to as the "Property"; and
WHEREAS, the Grantors have initiated a conditional amendment to the,
!
Zoning Map of the City of Virginia Beach, Virginia, by petition addressed to the I
Grantee so as to modify, in its entirety, the previously proffered covenants,l
Restrictions and Conditions governing development of the Property; and I
WHEREAS, the Grantors have requested Grantee to permit this modification
of the previously proffered Covenants, Restrictions and Conditions dated
September 30, 1997 to reflect the amendments applicable to the land use plan on
the Property; and
WHEREAS, the Grantee's policy is to provide only for the orderly
development of land for various purposes through zoning and other land i
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development legislation; and I
1
PREPARED BY:
SYKES. CARNES. BOURDON
& AHERN. P_C
ATTORNEYS AT LAW
II
WHEREAS, the Grantors acknowledge that the competing and sometimes:
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incompatible development of various types of uses conflict and that in order to
permit differing types of uses on and in the area of the Property and at the same
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time to recognizes the effects of change that will be created by the Grantors'
proposed rezoning, certain reasonable conditions governing the use of the Property
for the protection of the community that are not generally applicable to land
similarly zoned are needed to resolve the situation to which the Grantors' rezoning
application gives rise; and
WHEREAS, the Grantors have voluntarily proffered, in writing, in advance of
and prior to the public hearing before the Grantee, as a part of the proposed
amendment to the Zoning Map with respect to the Property, the following I
reasonable conditions related to the physical development, operation, and use of
the Property to be adOpted as a part of said amendment to the Zoning Map relative
and applicable to the Property, which has a reasonable relation to the rezoning
and the need for which is generated by the rezoning.
NOW, THEREFORE, the Grantors, their successors, personal
I
representatives, assigns, Grantees, and other successors in title or interest, I
voluntarily and without any requirement by or exaction from the Grantee or its
governing body and without any element of compulsion or Quid pro QUO for zoning, I
I
rezoning, site plan, building permit, or subdivision approval, hereby makes the I
following declaration of conditions and restrictions which shall restrict and govern
the physical development, operation, and use of the Property and hereby
covenants and agrees that this declaration shall constitute covenants running with
the Property, which shall be binding upon the Property and upon all parties and I
persons claiming under or through the Grantors, their successors, personal
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When the Property is developed, it shall be developed substantially as I
shown on the exhibit entitled "CONCEPT PLAN FRIENDLY'S RESTAURANT AT I
STRAWBRIDGE, dated June 8, 1999," Rev. August 23, 1999, prepared by Gallup I
Surveyors & Engineers, Ltd., which has been exhibited to the Virginia Beach City I
representatives, assigns, Grantees, and other successors in interest or title:
1.
2
PREPARED BY:
¡YKES. CARNES, BOURDON
& AHERN. PC,
ATTORNEYS AT LAW
Council and is on file with the Virginia Beach Department of Planning (hereinafter I
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"Site Plan"). ¡
2.
When the Property is developed, it shall be landscaped substantially
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as depicted on the exhibit entitled "Landscape Plan Friendly's Restaurant at !
Strawbridge, dated June 8, 1999", Rev. August 23, 1999, prepared by Gallup ¡
Surveyors & Engineers, Ltd. and Patsy Kerr, which has been exhibited to the i
!
Virginia Beach City Council and is on file with the Virginia Beach Department of i
Planning (hereinafter "Site Plan").
3.
The restaurant depicted on the Site Plan shall have the architectural
design, and appearance as depicted on the elevations titled "Friendly's Restaurants
Strawbridge
EXTERIOR
PROPOSED
RIGHT-SIDE
AND
REAR
Center
ELEVATIONS" and "Friendly's Restaurants Strawbridge Center - PROPOSED
LEFf-SIDE AND FRONT EXTERIOR ELEVATIONS", dated 8/23/99 prepared by
Doshi Tavaras Architects, PLLC, which have been exhibited to the Virginia Beach
City Council and is on file with the Virginia Beach Department of Planning
(hereinafter "Elevations").
4.
The building materials used to construct visible exterior surfaces of
the restaurant will be those depicted and designated on the Elevations with the
primary surface material being a colonial reddish brown brick.
5.
The freestanding sign identified on the Site Plan shall be a low level
sIgn between brick columns as depicted on the elevation titled "Pilon Sign (40
S.F.), August 23, 1999, Strawbridge", which has been, exhibited to the Virginia
Beach City Council and is on file with the Virginia Beach Department of Planning.
This sign shall only be externally illuminated from ground level.
6.
The only internal illumination permitted on building-mounted signs
shall be the individual lettering of the words on the signs. No background lighting
shall be permitted on any building mounted signage. No neon lighting visible from
General Booth Boulevard, McComas Way, or adjoining property shall be permitted
to be placed on the Property.
3
PREPARED BY:
SYKES, CARNES. BOURDON
& AHERN, PC.
ATTORNEYS AT LAW
II
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7.
The parking lot lighting shall be "colonial style" utilizing "Unique
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Solutions type RSL-350, Black Traditional Residential Po stop Fixture" (or an
equivalent fIXture approved by the Planning Director prior to the issuance of an
Occupancy Permit), on black tapered aluminum poles no greater than fourteen feet
(141 in height.
All outdoor lighting shall be shielded, deflected, shaded and
focused to direct light onto the premises and away from adjoining property.
8.
The outdoor dining plaza depicted on the Site Plan shall have
appropriate metal outdoor furnishings in earth tone colors.
9.
The only uses which will be permitted in place of a Friendly's
Restaurant in the building depicted on the Site Plan and Rendering are a) another
eating and drinking establishment without drive-through windows as permitted I
or b) those permitted ¡
within the 0-2 Office Zoning District and not prohibited within the B-IA Limited I
¡
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within the B-IA Limited Community Business District;
Community Business District.
10.
As to the Property described herein, the Covenants, Restrictions and
Conditions set forth herein supersede, in their entirety, those Covenants,
Restrictions and Conditions set forth in that certain Agreement duly recorded in ¡
the Clerk's Office of the Circuit Court of the City of Virginia Beach, Virginia, in I
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Further conditions may be required by the Grantee during detailed!
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Site Plan review and administration" of applicable City codes by all cognizant City I
Deed Book 3869, at Page 0152.
11.
agencies and departments to meet all applicable City code requirements.
All references hereinabove to B-IA and 0-2 Districts and to the
requirements and regulations applicable thereto refer to the Comprehensive I
Zoning Ordinance and Subdivision Ordinance of the City of Virginia Beach, I
Virginia, in force as of the date of approval of this Agreement by City Council, I
which are by this reference incorporated herein.
The above conditions, having been proffered by the Grantors and allowed
,
I
and accepted by the Grantee as part of the amendment to the Zoning Ordinance, I
shall continue in full force and effect until a subsequent amendment changes the \
4
PREPARED BY
SYKES. CARNES. BOURDON
& AHERN. PC
ATTORNEYS AT LAW
.
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zoning of the Property and specifically repeals such conditions. Such conditions I
shall continue despite a subsequent amendment to the Zoning Ordinance even if
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the subsequent amendmentis part of a comprehensive implementation of a new or
substantially revised Zoning Ordinance until specifically repealed. The conditions,
however, may be repealed, amended, or varied by written instrument recorded in
the Clerk's Office of the Circuit Court of the City of Virginia Beach, Virginia, and
!
executed by the record owner of the Property at the time of recordation of such ¡
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instrument, provided that said instrument is consented to by the Grantee in I
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writing as evidenced by a certified copy of an ordinance or a resolution adopted by 'I
the governing body of the Grantee, after a public hearing before the Grantee which
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was advertised pursuant to the provisions of Section 15.2-2204 of the Code of i
Virginia, 1950, as amended. Said ordinance or resolution shall be recorded along I
!
with said instrument as conclusive evidence of such consent, and if not so I
recorded, said instrument shall be void. '
t
The Grantors covenant and agree that: - I
(1) The Zoning Administrator of the City of Virginia Beach, Virginia, shall I
be vested with all necessary authority, on behalf of the governing body of the City,
of Virginia Beach, Virginia, to administer and enforce the foregoing conditions and I
restrictions,
including the
authority
(a)
order,
writing,
that
to
any i
In
noncompliance with such conditions be remedied, and (b) to bring legal action or
suit to insure compliance with such conditions, including mandatory or
prohibitory injunction, abatement, damages, or other appropriate action, suit, or
proceeding;
(2)
The failure to meet all conditions and restrictions shall constitute
cause to deny the issuance of any of the required building or occupancy permits as
may be appropriate;
(3)
If aggrieved by any decision of the Zoning Administrator, made
pursuant to these provisions, the Grantor shall petition the governing body for the
review thereof prior to instituting proceedings in court; and
5
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PREPARED BY:
3YKES.CARNES. BOURDON
& AHERN. PC
ATTORNEYS AT LAW
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The Zoning Map may show by an appropriate symbol on the map the!
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existence of conditions attaching to the zoning of the Property, and the ordinances I
and the conditions may be made readily available and accessible for public i
inspection in the office of the Zoning Administrator and in the Planning I
Department, and they shall be recorded in the Clerk's Office of the Circuit Court of i
¡
the City of Virginia Beach, Virginia, and indexed in the names of the Grantors and I'
the Grantee. I
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(4)
6
PREPARED BY:
SYKES. CARNES. BOURDON
& AHERN. PC-
ATTORNEYS AT LAW
WITNESS the following signature and seal:
GRANTOR:
FERRELL PARKWAY ASSOCIATES, INC.,
a Virginia corporation
i' --~
, '~~
BY! j¿1Ant~. (SEAL)
Thomas C. Broyles, resIdent
STATE OF VIRGINIA
CITY OF VIRGINIA BEACH, to wit:
The foregoing instrument was acknowledged before me this 16th day of
June, 1999, by Thomas C. Broyles, President of Ferrell Parkway Associates, Inc., a
Virginia corporation, on behalf of said corporation.
J,,/:I /ll 1]17 ~ t7íf-Ø/
Notary Public
My Commission Expires:
August 31, 2002
7
PREPARED BY:
SYKES, CARNES. BOURDON
& AHERN. PC.
ATTORNEYS AT LAW
WITNESS the following signature and seal:
GRANTOR:
RADDD, LLC, a Virginia limited liability
company
B
(SEAL)
STATE 0 F VIRGINIA
CITY OF VIRGINIA BEACH, to wit:
The foregoing instrument was acknowledged before me this] 5th day of
June, 1999, by Deanna S. Lloyd, Member of RADDD, LLC, a VJrg~nis limited
liability company, on behalf of said company.
L&' tJl 'í'( /, /r-
- ¡ it, ,,/. \,)/}l( t'+b.:..GL
Notary Public
My Commission Expires: August 31, 2002
8
PREPARED BY:
SYKES. GARNES. BOURDON
& AHERN. P.G.
ATTORNEYS AT LAW
EXHIBIT "A"
Beginning at the south-eastern Corner of Parcel A-3 as shown by the TAF Group
titled "Subdivision of Parcel A-I of Ferrell Parkway Associates, Inc.", recorded in
Map Book 240 at page 22, in the Clerk's Office of the City of Virginia Beach, said
point falling along the Northernly line of General Booth Boulevard, thence curving
to the right a radius of 2,619.82, a distance of 56.78' to a point, thence S 08 00'
08" E a distance of 14.28' to a point thence continuing along said right of way
along a curve to the right a radius of 418.00 a length of 75.00' to a point, thence
continuing along said right of way curve to the left a radius of 462.00' a distance of
101.23' to a point, thence continuing along said right of way a curve to the left of
the radius of 1,622.17' to a point, a length of 90.00' to a point, thence departing
from said right of way along a bearing of N33 44' 53" W a distance of 292.02' to a
point, thence along a length of 48.94' to a point, thence N28 20' 00" W a distance
of 9.78' to a point, thence N59 42' 47" E a distance of 207.70' to a point, thence
S42 02' 45" E a distance of 178.58" to the point of beginning, containing
approximately 1.4 acres.
CONDREZN/FRIENDLY /PROFFERI
9
-26 -
Item V-L2.
PLANNING
ITEM # 45552
Upon motion by Vice Mayor Sessoms, seconded by Councilman Jones, City Council ADOPTED an
Ordinance upon Application of SPIRIT HOUSE INc., to Modifv the Green Run Land Use Plan to allow
a f!rOUD home:
ORDINANCE UPON APPLICATION OF SPIRIT HOUSE, INC, FOR A
MODIFICATION TO THE GREEN RUN LAND USE PLAN TO ALLOW A
GROUP HOME Z01091 146
BE IT HEREBY ORDAINED BY THE COUNCIL OF THE CITY OF VIRGINIA BEACH, VIRGINIA
Ordinance upon application of Spirit House Inc.,for a modification to the
Green Run Land Use Plan to allow a group home on certain property
located on the east side of Pecan Court, south of Primrose Lane (GPIN
#1485-77-5378). Said parcel is located at 1435 Pecan Court and contains
9,120 square feet more or less. DISTRICT 7 - PRINCESS ANNE.
The following conditions shall be required:
1.
Use of the property shall consist of an Adult Care Residence to
include residential accommodations and counseling and related
services for residents.
2.
There shall be no more than four (4) residents living in the home
and one (1) live-in administrator.
3.
There shall be no exterior evidence that the facility is used in any
way other than as a single-family dwelling, except for a sign on
a mailbox or a 1 -foot by 1 -foot sign on the house.
4.
Any vehicle larger than a standard automobile, such as a van or
a bus, which is used to transport residents to and from the
residence shall access the residence from the adjacent parking
lot of Holy Spirit Catholic Church rather thanfromPecan Court.
This Ordinance shall be effective in accordance with Section 107 (f) of the Zoning Ordinance.
Adopted by the Council of the City of Virginia Beach, Virginia, on the Twelfth of October. Nineteen Hundred
and Ninetv-Nine
Voting:
11-0 (By Consent)
Council Members Voting Aye:
Linwood O. Branch, III, Margaret L. Eure, William W Harrison, Jr.,
Harold Heischober, Barbara M. Henley, Louis R. Jones, Reba S.
McClanan, Mayor Meyera E. Oberndorf, Nancy K. Parker, Vice Mayor
William D. Sessoms, Jr. and A. M "Don" Weeks
Council Members Voting Nay:
None
Council Members Absent:
None
October 12, 1999
- 27-
Item V-L3.
PLANNING
ITEM # 45553
Upon motion by Vice Mayor Sessoms, seconded by Councilman Jones, City Council DEFERRED
INDEFINITELY, an Ordinance upon application of THE CITY OF REFUGE CHRISTIAN CHURCH
OF VIRGINIA for a Conditional Use Permit for a church:
ORDINANCE UPON APPLICATION OF THE CITY OF REFUGE
CHRISTIAN CHURCH OF VIRGINIA FOR A CONDITIONAL USE
PERMIT FOR A CHURCH ROJO993000
Ordinance upon application of The City of Refuge Christian Church of
Virginia for a Conditional Use Permit for a church on certain property
located on the east side of Princess Anne Road 745 feet more or less south
of Gum Bridge Road (GPIN#2401-95-5408). Said parcel is located at 1344
Princess Anne Road and contains 15.67 acres. PRINCESS ANNE.
Voting:
11-0 (By Consent)
Council Members Voting Aye:
Linwood O. Branch, III, Margaret L. Eure, William W. Harrison, Jr.,
Harold Heischober, Barbara M Henley, Louis R. Jones, Reba S.
McClanan, Mayor Meyera E. Oberndorf, Nancy K. Parker, Vice Mayor
William D. Sessoms, Jr. and A. M. "Don" Weeks
Council Members Voting Nay:
None
Council Members Absent:
None
October 12, 1999
- 28-
Item V-L4.
PLANNING
ITEM # 45554
Upon motion by Vice Mayor Sessoms, seconded by Councilman Jones, City Council ADOPTED an
Ordinance upon application of THE POTTER'S HOUSE CHRISTIAN CHURCH for a Conditional Use
Permit for a church:
ORDINANCE UPON APPLICATION OF THE POTTER'S HOUSE
CHRISTIAN CHURCH FOR A CONDITIONAL USE PERMIT FOR A
CHURCH
BE IT HEREBY ORDAINED BY THE COUNCIL OF THE CITY OF VIRGINIA BEACH, VIRGINIA
Ordinance upon application of The Potter's House Christian Church for
a Conditional Use Permit for a church at the southeast corner of Holland
Road and Diana Lee Drive (GPIN#1486-73-7I86). Said parcel is located
at 3452 Holland Road and contains 3.119 acres. DISTRICT 3 - ROSE
HALL.
The following conditions shall be required:
1.
The unit shall be used for gatherings only during the evenings
between 6:30 and 10:00 pm and all day Sunday.
2.
No more than seventy-five (75) people can attend meetings or
gatherings at anyone time.
This Ordinance shall be effective in accordance with Section 107 (j) of the Zoning Ordinance.
Adopted by the Council of the City of Virginia Beach, Virginia, on the Twelfth of October. Nineteen Hundred
and Ninetv-Nine
Voting:
11-0 (By Consent)
Council Members Voting Aye:
Linwood O. Branch, IlL Margaret L. Eure, William W. Harrison, Jr.,
Harold Heischober, Barbara M. Henley, Louis R. Jones, Reba S.
McClanan, Mayor Meyera E. Oberndorf, Nancy K. Parker, Vice Mayor
William D. Sessoms, Jr. and A. M "Don" Weeks
Council Members Voting Nay:
None
Council Members Absent:
None
October 12, 1999
- 29-
Item V-J.
APPOINTMENTS
ITEM # 45555
BY CONSENSUS, City Council RESCHEDULED the following APPOINTMENTS:
HISTORICAL REVIEW BOARD
PARKS AND RECREATION COMMISSION
October 12, 1999
- 30-
Item V-Ll.
NEW BUSINESS
ITEM # 45556
BY CONSENSUS, City Council ACCEPTED, FOR RECORDATION:
ABSTRACT OF CIVIL CASES RESOLVED - SEPTEMBER 1999
October 12, 1999
- 31 -
Item V-M.
ADJOURNMENT
ITEM # 45557
Mayor Meyera E. Oberndorf DECLARED the City Council Meeting ADJOURNED at 2:23 P.M.
f4~ /_--Ç2:_Z!i~{~
~'ð:.HOOks, CMC/AAE
Chief Deputy City Clerk
~~f!t~
City Clerk
--- --------- ------ -- - - -- - - -- - -- --
Meyera E. Oberndorf
Mayor
City of Virginia Beach
Virginia
October 12, 1999
"
VIRGINIA
BE.~CH
October 22, 1999
Benefits Office
2512 George Mason Drive
Virginia Beach. V A 23456-0038
(757) 427-8536
FAX (757) 563-1050
Mrs. Reba S. McClanan
3224 Burnt Mill Road
Virginia Beach, Virginia 23452
Dear Mrs. McClanan:
This letter is in response to your questions, which were raised prior to the Council
Meeting on Tuesday, October 12. In addition to providing responses to these questions,
some additional questions and concerns that were discussed in the Infonnal Session on
Tuesday are also addressed.
The following questions have been raised:
1. Please provide a copy of the Mercer Study and how much it costs?
Attachment 1 dated September 28, 1999 is material provided by Mercer for a meeting
with the RFP Committee. The analysis in the correspondence indicates that in the long
run self-funding is expected to save money, savings would be minimal, however in the
first year. Self-insurance was discussed extensively at this September 29 meeting and the
City Manager and the Superintendent were actively involved in the self-insurance
recommendation.
Additional material received by Mercer, a report entitled "Self-insured vs. Fully insured"
dated October 1999 was included in your October 8, 1999 council packet. The
presentation distributed at the October 12 informal session should provide more specifics
on the self-insurance recommendation.
The consulting fee charged by William M. Mercer was $40,000. The City paid $20,000
and the School's paid $20,000.
2. What is the cost of setting up the self-insurance program?
The cost of setting up a self-insurance program includes plan documents and other filings
that must be made on the behalf of the employer. Costs will always fluctuate depending
on enrollment in the plans. A self-insurance plan funds for claims, reinsurance costs,
retention costs, and reserves.
An actuarial study will be performed on the plan prior to the end of the plan year to
detennine what our funding needs will be for the following year and insure that the plan
is adequately funded.
3. Provide overall budget
The overall budget is the direct result ofthe number of employees who enroll in the plan,
the plan selected and the category of coverage. The total budget is currently projected to
be approximately $43.3 million based upon the current enrollment and the distribution of
that enrollment across the plans and the tiers. See Attachment 2.
4. Provide a breakdown of projected employer cost and the projected employee
cost. Additionally, provide a breakdown of the various projected costs included
in the budget rates.
The total cost of the plan for City and Schools is currently projected to be $43.3 million
using the total City and School current enrollment of 13,045 participants. Of this
amount, $29.7 million would be funded through the City and School employer subsidy of
$2,280 and the balance ofthe $13.6 million would be funded via the employee
contribution rates.
The City and Schools would be responsible to fund the difference between the actual
claims and the projected claims should actual claims exceed the projected claims.
Expected claims costs have been developed using a blended rate from the insurance
companies and Mercer. Based upon the actuarial study performed by Mercer, the
expected claims costs used to develop the premium rates is actuarially sustainable.
Attachment 3 details the breakdown of current projected costs by plan and the projected
costs split out by employer and employee.
Attachment 2 provides a breakdown of the various cost components to be funded in the
budget rates.
The estimate of claims and administrative expenses includes the actual claims payments
and all costs for the administration and reinsurance associated with the plan. The
projected claims expense is the largest cost item.
Reinsurance costs are included in the administrative expenses as well as specific and/or
aggregate insurance, either or both of which may be purchased. Generally both specific
and aggregate stop loss insurance are not needed. City and Schools have set their stop
loss insurance attachment point at $100,000. This means that once the total claims
expenses for anyone individual exceeds $100,000, the Stop Loss Carrier would
reimburse costs to the City and Schools. Aggregate stop loss coverage is usually set at
120-125% of total aggregate claims and provides reimbursements once aggregate claims
reach 125% of the expected cost for the entire plan for the year. The actuaries have
advised us that it is essential for the City and the Schools to purchase specific stop loss.
However, they advise that the purchase of aggregate stop loss insurance may be an
unnecessary expense since we would be unlikely to exceed our cost projections in the by
120-125%.
2
Administrative expenses also include retention costs such as network access fees,
utilization management fees, and conversion charges.
The recommended margin for a group such as ours is 2-5% of projected claims. City and
Schools premium rates will be funding 2.1 % ofprojected claims providing between
$800,000 and $1,000,000 by the end of2000 (this does not account for interest earned on
the cash balance). Depending on the claims experience the margin mayor may not need
to continue to be funded after the first year at the same 2.1 % ofprojected claims.
The premium rates include this 2.1 % margin and an amount to fund incurred but not yet
reported claims (IBNR). IBNR funds are included to pay for the plan expenses incurred
prior to the end of the plan year, but not paid until after the end of the plan year. Funding
for IBNR is not required, but it is fiscally prudent. Usually plans fund for 1 Y2 months of
claims for the HMO and 2 months of claims on the PPO. City and Schools will fund
approximately $6 million for IBNR
Another component in the reserves is the interest that will accrue in the internal service
fund.
5. Describe the three-tier drug program in greater detail.
The three-tier drug program gives employees access to most brand name and generic
drugs within the confines of the plan's prescription drug benefit design. (i.e.,open
fonnulary) Unlike the current closed fonnulary that restricts access to individual drugs,
the three-tier plan excludes only non-covered classes of drugs, such as weight loss and
smoking cessation drugs. Under the three-tier plan, all covered drugs are categorized into
three specific tiers.
There are many program benefits in a three-tier prescription drug plan such as:
. The program is designed to elicit greater involvement by the member in prescription
drug purchasing decisions
. Patients will be able to take a more active role in their health care by discussing drug
alternatives with their physician
. Changing to the open fonnulary benefit allows more brand name and generic drugs to
be available to employees eliminating the need to submit a non-formulary request
. The program applies to prescriptions purchased both at the retail pharmacy and
through mail service
During open enrollment employees will receive a list of the drugs and the particular tier
in which they have been placed. .
OPTIMA
Tier 1 - Preferred List
The preferred list includes drugs recognized by the FDA as generic equivalents to brand
name drugs that have been proven to be safe and effective. These drugs are commonly
3
referred to as generic drugs. This list may also include drugs which the Phannacy and
Therapeutics Committee recognizes as showing documented long- tenn decreases in
illness and death. Large published peer-review clinical trials are used to make this
detennination. These drugs would be available with a $10 co-pay.
Tier 2- Standard List
The standard list also includes drugs approved by the FDA, but are not available as FDA-
approved generic equivalents. Upon review by the Phannacy and Therapeutics
Committee, these drugs are preferred to be used for reasons of increased safety, efficacy,
and cost effectiveness over other available FDA approved drugs. These drugs would be
available for a $20 co-pay.
Tier 3 - Premium Drugs
Premium drugs are those that do not fall into one of the above categories and require a
$35 co-pay.
See Attached OPTIMA brochure for the list of three tier drugs.
There are 20 additional high cost drugs that require pre-authorization. Physicians
wishing to prescribe these medications must fax in a form requesting an authorization and
state why the medication is necessary. This list is reviewed monthly by the Pharmacy
and Therapeutics Committee and is subject to change. Please see the attached list.
Trigon/Priority
Tier 1
Low-cost medications, typically generic drugs
Tier 2
Moderate-cost drugs, typically multi-source brand-name drugs that have generic
equivalents
Tier 3
High-cost drugs, typically single-source brand-name drugs without generic equivalents
See the attached brochure from Trigon/Priority, which details the three tier drugs.
6. Provide details on the different reports and data in a self insured vs. fully
insured plan.
The reports that we will receive from OPTIMA for a self-insured plan are not
substantially different from the reports we are receiving currently. However, we will be
receiving reports on a quarterly basis and we will be receiving weekly funding requests
and monthly cash disbursement reports allowing us to more closely monitor our claims
patterns.
4
The reports that we will receive from TrigonJPriority will be similar to what we have
received in the past. In 2000, Trigon will provide us with on-line access to much of our
group data through their Customer Information System. In addition to numerous
standard reports that can be run, our claims data is available to be customized in any way
that we desire. Additionally, under the self-funded arrangement we will receive monthly
accounting statements that summarize claims and expenses each month. In support of the
claims paid on the monthly statements, we will receive detailed claims listing which
includes all claims paid for that month.
7. How would the claims appeal process be handled in a self-insured arrangement?
The vendors have established an efficient and equitable claims appeal process. Both
TrigonJPriority and OPTIMA recommend that in a self-funded arrangement City and
Schools continue using the same procedure in place for the fully insured arrangements.
i.e., OPTIMA and Trigon will be handling the claims appeal process.
If you have any further questions or concerns, please do not hesitate to call me at 427-
8536 or Vicki Lewis at 427-4993
Sincerely,
12 J#v I- ~;S
( 5,f1C)
Victoria L. Lewis
Chief Financial Officer
I~ß)~
Lynn G. Sachs
Benefits Coordinator
Attachment
cc:
City Council
Mr. James K. Spore
School Board
Dr. Timothy R. Jenney
5
City of VirginIa Beach and Virginia tSeach CIty Public Schools
Estimated PEPM Claims Cost
\~\ p \1: '
TriGon PPO Trigon HMO OptIma HMO CamblnGd
Average 1998 PEPM Medical Claims Paid. $141.96 194.55
Average 1998 PEPM Drug ClaIms Paid" $38.53 12.65
Average 1998 PEPM Total Claims PaId" $262.58 $180.49 $201.21
Adjustment to Incurred $4.13 $0.84 $3.32
Estimated 1998 PEPM Incurred ClaIms $267.31 $181.33 $210.53
Annual Trend 12% 9% 8%
Mercer Projec1ed 2000 PEPM ClaIms at Current
Benefit Level" $335.31 $215.44 $248.73 $216.24
Enrollment 689 7.495 4.168 12.952
Relative Value 0.7263 1 .0000 1.0265 0.9566
Assume Enrollment Moves to Proposed POS Plan Propos9d HMO Plan proposed HMO Plan Proposed HMO Plan
. Relaüve Value of proposed Plan 0.8975 1.0265 1.02.65 0.9719
t:.sltmatea .....vv -. .. vast 01 proposed Plan $414.35 $22.1.15 $248.13 $219.54
Mercer Estimated S.L. Claims"..
EsUmated ClaIms net of S.L.
7.72
$406.63
7.12
$21;\.43
7.72
$241.Q1
1.72
$211.82
. Based on monthly claims paid for 1198.12198 for Trigon HMO and PPO. Basoo on monthly claims paId 1/98.10198 for Optima HMO.
.. Note that projected claim costs are best estimates without explictt margIn. An explicit margin should be added for
purposes of setting budget and accrual rates. . -
... Based on Mercer's proprietary database of large group claims experIence.
9128/99
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Exhil
Claim Costs Net of $100.000 Specific S.L.
IDlli~W~
Trtgon OpUm8 Vicars
POS HMO Combined pas HMO CombIned pas HMO Combined
Carner Estimated ClaIms Cost $268.401 $220.661 $223.20 $214.551 $262.911 $260.40 $246.63\ $301.981 $299.04
Mercer Estimated Claims Cost $408.631 $213.431 $223.71 $459.161 $241.01 \ $252.61 I 1
SerMunded (sole ca"ler) . Fees are PEPM
COnclusions:
1. Both Trigon and Optima's claim esttmates seem reasonable 10 total.
2. It Is difficult to devetop an estimate for Optima b8C8UM we have little Information about theIr dlscoUT'lts. However, the quotes
rank Vlcare as the most costty. The RFP conta!ned some limIted CPT and ORG payment Informa1Jon. That seems to conflnn
that Trigon has (he lowest reImbursements, followed by OptIma then Vlcare.
3. Not' that Mercer's numbers represent best-eslfmates wi1hout margin.
4. Optima pes cost assumes Optima and Trigon', pas plans' discounts have the same relatIonship as \heIr HMO's.
summary. xIs
9128199
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Exhk .1
First Year Admin Costs
IDœ~W\\
Trigon OpUml Vlcare
PaS HMO Combined pas HMO CombIned POS HMO CombIned
AdmIn $32.~6 $28.39 $28.61 $21.65 $25.65 $25.63 $24.99 $24.61 $24.63
Specific S.L. $16.05 $5.49 $6.05 $8.85 $8.85 $8.85 $6.62 $7.95 $7.88
Aggregate S.l. $0.04 $0.04 $0.04 $1.37 $1.37 $1.37 $1.50 $1.50 $1.50
Total FIxed Cost Per Ee $48.65T $33.92 I $34.70 $31~87 $36.07 $35.85 $33.11 $34.061 $34.01
S.'f-fund,d (sole cIrri,") . Fees are PEPM
Notes:
1. Trigon told Vic1d thallhe "current PPO" and "current HMO" plans are In fact the propo~ed benefits. I have trouble believing this.
2. Vlcam c¡uoted 1200/. aggregate s.l. cap.
3. Tcfgon footnotes their retention as IncludIng $5.00 for HMO wanness, but It does not appear to be Includoo.
4. Opnms and VItam quoted 12(15 specific slop loss. It appears !tIst Trfgon quoted 12/12. but It Is not clear.
S. Under a dual carrier approach, It may be more efficient to purchase stop loss from a third party covårfng tho entIre group.
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Exhib
Mature Year Adm'" Costs
~~~w~
Trigon Optima Vlcare
p~s HMO Combined pas HMO CombIned POS HMO Combined
AdmIn $36.23 $28.85 $29.24 $21.65 $25.85 $25.63 $25.37 $25.07 $25.09
Specific S.l. $19.58 $6.72 $7.40 S8.85 $8.85 $8.85 $7.01 $8.42 $6.34
Aggregate S.L. SO.05 $0.04 $0.04 $1.37 $1.37 $1.37 $1.59 $1.59 $1.59
Total Fixed Cost Per Ee $55.861 $35.61 $36.69 $31.87 I $36.071 $35.85 $33.91 I $35.08 $35.02
StJlf.funded (sale CI"ler) . Fees ,~ PEPM
Notes:
1. Trigon told Vickllhat the .current PPO" and "current HMO. plans are In fact the propo~ed benefits. I have trouble believIng this.
2. Vlcare quoted 120% aggregate 5.1. cap.
3. Trigon footnotes Iheir retentIon as Including $5.00 for HMO wanness, but it dOBS not appea r to be Included.
4. Optima and VIcars quoted 12(15 specific stop loss. It app&ars that Trigon quoted 12/12, hut It Is not clear.
5. Under a dual carner approach, It may be more etflcienl to purchase stop Io,s from 8 thIrd party cov~rfng too entire gro\lp.
-'
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Dual Carrier. Trigon/Optima
City of Virginia Beach and VirginIa Beach City Public Schools ID ill ~ ~ ~
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Trigon Optima. Grand
pes HMO Tol81 POS HMO Tots I Total
Assumed Enrol1ment 689 7.495T 8,184 4,766 4,768 12,952
Self - Fund (carner esUmated cost) $321.09 $260.02 $26,040,971 $262.97 $15,046,263 $41,087,234
Self. Fund (Mercer estimated cost)" $459.32 $252.79 $26,533.510 . $277.08 $15.653.363 $42.386,873
Ave of Mercer/Carner derived costs $390.20 $256.40 $26.287.241 $270.03 $15,449,813 $41.731.053
Fully Insured $356.06 $260.27 $26,368,780 $284.21 t $16,261,163 $42,629,943
Es!imated Fully Insured Risk Premium
EsUmated Risk Charge %
. Optima dId not quote dual carrier self - fundÐd fees, which wllll1kely be slightly higher than the numbers shown here.
II Mercer's estimate does not Include an e)(pllcit margin whIch should be Included for purposes of establishing budgets.
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2.1%
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City of Virginia Beach and Virginia Beach City Public Schools Health Care Plans 2000
(In millions)
Premiums**
Best Estimate of Claims and Administrative Expenses Paid in 2000
Estimated Claims and Reserve (IBNR) 12/31/2000
Margin (2.1%)
Total Premium
**Based on the current enrollment
Attachment 2
$ 36.30 Expected Claim & Admin. Expenses
$6.10 IBNR
$0.90 Margin
$43.30
Attachment 3
()O Employer Contribution
r¡ Schools
Total
2000 Employee Contribution
City Schools Total
6,954,000.00
10,248,600.00117,202,600.0012,808,968.00 4,142,244.00r 6,951,212.00
)00 Employer Contribution
ity Schools
Total
2000 Employee Contribution
City Schools Total
3,388,080.00
7,592,400.00110,980,480.0011,647,737.00 3,756,897.001 5,404,634.00
.000 Employer Contribution
;ity Schools
Total
2000 Employee Contribution
City Schools Total
175,560.00
1,383,960.001 1,559,520.001 183,510.00 1,018,777.001 1,202,287.00
10,517,640.00
19,224,960.00129,742,600.0014,640,215.00 8,917,918.00113,558,133.001
68.69%
31.31%
OPTIMA HEALTH PLAN
$10/$20/$35 Prescription Drug Benefit
As part of your O£tima Health
Plan coveraRe, you have a benefit
for prescripfion drugs purchased
at selecteá pharmacIes In the
Plan's servIce area.
Benefits
The Pian uses a list of preferred
and standard drugs that
physicians use to prescribe
generic equivalents of medi-
cations and specific brand name
drugs that have no generic
equIvalent. Drugs not listed on
these lists are covered at the
premium benefit level. *
When your physician prescribes
preferred d!Ugs an.d you have
your pres~~Ipti~n filled at a
Plan-particIpating 2harmacy,
you pay omy' y_our '$10
copayment. When a standard
dI:ûg is prescribed, a $20 copay
will apply.
If, however, y.ou or your
2hysician insist on a brand name
arug when a generic equivalent
is available, you are responsible
for the difference in cost
between the generic and the
brand name drug, plus your
brand name copayment.
All drugs you receive when you
are hospitálized are covered
100% by your health plan.
How to receive services
You can have your prescription
filled at any Plan-participating
pharmacy, by" showing your
membersmp I.D. card and
paying either the applicable
copaym,e!1t or the cost of the
prescrIption.
Certain maintenance dru~s can
be filled throuRh the Plan s Mail
Order Prescriplion Drug Pro-
g¡:am. Members may purchase
a 90-day supply unless limited
by ~anUfacmrer' s packaging, of
maIntenance drugs for tWo
prescriptiçm drug çopaYffi.ents.
For more information, please
call 1-800-346-9113.
Some drugs require precerti-
fication from tlie Plan in order to
be covered. Your physician is
respÇ>nsible for ob1aíning pre-
certification by calling Meilical
Care Mangement at
757-552-7540 or 1-800-229-5522.
Covered drugs include those
which are desi~ted by Federal
and State laws 10 be dispensed
by prescription only.
Prescriptions written by out-of-
plan pnysicians are not covered
ûnIess they are pre-authorized
by the Plan's medical director.
Allprescrip?9ns ~ust be filled
at Plan-:partiqpating pharma-
cies. A list of Plan-participating
pharmacies is included in the
provider directory.
Additional Infonnation
If you're a curren~ member and
have questions about your
benefits, please call the member
services number on the front of
your ID card.
If you are considering enrolling
for the first time and nave
guestions, please contact your
Benefits Administrator.
We also have a telecommuni-
cations device for the deaf.
(TDD). Those numbers are
757-552-7120 or 1-800-225-7784.
PRESCRIPTION DRUG RIDER
According to the tenns of your Plan, you pay' $10 pref~ed/$15 standard copayment per
fonnulary prescription or refilL Quantities lor initial prescriptions or refiUs Jor each
copayment may lie limited £0 manufacturers packaging and are limited fo:
. 34-day supply of pills or iablets; or
. One rescue inhaler; or
. Two maintenance/steroidal inhalers; or
. 8-fluid ounces of liquid; or
. Two vials of insulin; or
. 34-day supply of insulin syringes, insulin needles, or disposable insulin
syringes wItIi needles (max: 100); or
. One cycle supply of oral contraceptives; or
. One diaphragm; or
. One tube ointment/cream; or
. One Norplant kit.
.. You pay $35 per premium prescription or refill.
OHP.I0/15RX.7.99
.
Pres cription Drug -- N orp Ian t
Members are also eligible for Nor-
plant (levonorgestral implants). The
member is covered for one insertion
and one removal in five years.
Exceptions may be made if medi-
cally necessary.
The member must have the
prescription filled at a pharmacy
(not the physician's office) and the
member is responsible for the
prescription drug copayment at the
pharmacy.
How to receive benefits
First visit your physician to discuss
whether the drug is appropriate for
you. Remember, you pay your
usual copayment for this visit.
Second, if appropriate, your
personal physician or OB/GYN
will write you a prescription for
Norplant, and you can schedule an
appointment for insertion. [Note:
Norplant must be inserted by a
physician certified in the
procedure.]
Third, take your prescription to a
Plan-participating pharmacy to be
filled.
Fourth, when you pick up the
Norplant kit, you pay the pharmacy
the prescription drug copayment.
Do not break the sterile seal of the
package; if you do, you will be
charged an additional drug copay
for a replacement kit.
Fifth, keep your scheduled appoint-
ment for insertion of the Norplant.
(No additional cost for this visit.)
Exclusions and Limitations
EXCLUSIONS: All other drugs
and over-the-counter medications,
even if written on a prescription
blank, are excluded from coverage.
Non-durable disposable medical
supplies and items such as
bandages, cotton swabs, diabetic
supplies (other than those listed as
covered), hypodermic needles, and
durable medical equipment, etc.,
are also not covered benefits under
this prescription drug rider.
Exclusions to this outpatient
prescription drug rider include,
but are not limited to:
. Appetite suppressants.
. Compound prescription medi-
cations with ingredients not
requiring a physician's author-
ization by state or federal law.
. Diabetic supplies or disposable
medical supplies (except for.
insulin needles, insulin syringes
and disposable insulin syringes
with needles).
. Growth hormones.
. Immunization agents, biological
sera, blood or blood products.
OHP /PC6/PPO /CIOA RX.E&L.7. 99
. Infertility drugs.
. Injectables (other than those self-
administered and insulin).
. Medication which is to be taken
or administered to the member
in the physician's office.
. Medication taken or
administered in whole or in part,
while he/ she is a patient in a
licensed hospital, rest home,
sanatorium, extended care facili-
ty, convalescent hospital, nursing
home, or similar institution.
. Investigational or experimental
medications.
. Medications for cosmetic pur-
poses only (e.g., Retin-A for
aging).
. Medications for smoking
cessation (e.g., Nicorette gum,
nicotine patches and nicotine
spray).
. Medications for experimental
indications and/ or dosage
regimens determined by the Plan
to be experimental.
. Medications with no approved
FDA indications (e.g.,
Yohimbine)..
. Over-the-counter (OTe) medi-
cations that do not require a
physician's authorization by state
or federal law and any prescrip-
tion that is available as an OTC
medication.
. Replacement prescriptions
resulting from loss, theft or
breakage.
. Therapeutic devices or
appliances, including but not
limited to support stockings and
other medical/ non-medical items
or substances, regardless of their
intended use.
. Drug charges exceeding the cost
for the same drug in a
conventional packaging (i.e.,
convenience packages, unit
doses, blister packs, etc.) are not
covered.
. Prescription medications
prescribed by non-participating
physicians are not covered,
unless ordered in conjunction
with a service authorized by a
Plan physician.
-
,
Optima/Sentara Family Care Drugs Requiring Preauthorization
Pharmacy Benefit
The following drugs require preauthorization To obtain these drugs, specific medical criteria must be met.
Your physician should submit the appropriate information to the plan.
Actonel
Araya
Ceftin tablets
Celebrex
Clozaril
Cognex
Coreg
Desoxyn
Differin (> age 29)
Enbrel
Epogen
Eyista
Fosamax
Growth Hormone*
Hismanal
Imitrex injections
~ipitor
Meyacor-
N eupogen
Pentasa
Procrit
Renagel
Retin-A (>age 29)
Sporanox
Stadol Nasal Spray
Stimate
Synarel
Vioxx
Zyrtec
*Not all plans coyer growth hormone
July 1999
1 5Er .28 1888
.,~
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8:06 AM FR W.M. MERCER-RICHMOND 27 2428 TO 817574278737
P.02
'1'
WILLIAM M
MERCER
... Attachment 1
September 28, 1999
Ms. Vicki Lewis
Chief Financial Officer
Virginia Beach City Public Schools
Dept. of Budget & Finance
P.O. Box 6038
Virginia Beach, VA 23456
~~~\?~
Dear Vicki:
Below is a discussion regarding vendor selection for your plan. I have also attached
several draft exbibits. Please note that these are still subject to Mercer's peer review
process and should not be regarded as final.
)
The purpose of the analysis that we have done is to compare and rank vendors and
funding methods. Additional calculations would need to be completed to set budget rates
iryou were to self-fund your plan. Budget rates would need consider the effects of
employee selection among the new plans, employee contributions, and "explicit rating
margin.
As we discussed previously, there are 5 primary considerations in selecting the
vendorlvendors for your health plan:
. Expected claim costs
. Administrative costs
. Stop loss fees
. Access to providers (hospitals & physicians)
. Fully insured or self-funding
Of these, expected claim costS is the most significant criterion.
Exoected Qainr Costs
'.J
Mercer looked at your claims history under Trigon and Optima and developed projected
costs to 2000. We then adjusted for the proposed benefit plan changes. These
calculations are shown in Exhibit 1. Note that these claim costs are best estimates and do
not contain margin, which should be added when setting budget rates.
Exhibit ß compares Mercer developed claim costs to those that the carriers developed for
self-funding full replacement. In total, the caniers' claim costs seem reasonable. Both our
analysis and the carriers' quotes seem to indicate that Trigon reimburses providers at
William M. Mercer. Incorøorated
M8fCOr PIIZI
~ Coli Road. Suite 400
Gle/\ Allen. VA 23060
Mtlnng ICS<ltesS:
P.O. 80x 21606
Richmond. VA. 23261
Phone 80~ 747 0276
Fax 804 62' 24Z~
SEP ,29 1 99~
9:06 AM FR W.M. M~~CER-RICHMONV ¿( ¿4¿~ 10 ~l (~(4¿(~(~(
1-'.03
WILLIAM M
MERCER
'-
.--.-"---'" --
Ms. Vicki Lewis
September 28, 1999
Page 2
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lower rates than Optima. 11ús is further confirmed by our experience with other clients as
well as some CPT -4 and DRG reimbursement infonnation that was included in the RFP.
The only infonnation that we have to detennine the cost under Vicare is the quote itself
and the CPT -4 and DRG reimbursement information in the RFP. While they only
included their pro reimbursements in the proposal, the quote and the pro reimbursement
seem to indicate that Vicare would result in the 1ùghest claim cost.
Note that there are differences in the drug benefits that the carriers have quoted. We do
not feel that these differences are of a large enough magnitude as to affect the carner
rankings on a c1aim coSt basis. Also, Trigon has indicated that their revised exhibits
labeled "current PPO" and "current HMO" are, in fact the proposed plan designs. We
have assumed this to be correct. .
Conclusion -It appears that Trigon would produce the lowest claim cost, followed
by Optima, and then Vicare.
Administrative Costs
Exhibit ill compares the administrative costs for the self-funded sole carrier quotes for the
first year basis. Exhibit IV is a similar comparison yet on a mature year basis, recognizing
administrative costs may be greater on a mature year basis.
Clearly Trigon's administrative fees are the lùghest, but the difference is more than
compensated for by their lower claims cost. Optima and Vicare have similar
administrative expenses.
Conclusion - Trigon's administrative fees are higher, but are not high enough to
drive tbe carrier decision in light of the claim costs.
Stop Loss Fees
As shown on Exhibits m and IV, the differences in stop loss fees are minor relative to the
differences in claim costs. We believe that Trigon has quoted their stop loss on a 12/12/
basis, which justifies a lower premium than a 12/15 basis that the other earners quoted.
An alternative would be to place the stop loss coverage with a third party vendor.
5 E P, .29 1 99:3
9:01 HM FR W.M. M~~CER-RICHMONU ¿I 2428 TO :317~14¿7~(~I
P.04
WilLIAM M
MERCER
---. ..-..- u_-- --
Ms. Vicki Lewis -
September 28, 1999
Page 3
~..:.
........, \7'.~ E\ \ ~
\ "\¿)':": " .. '" ~ ~. \ -.:-
'-' ... I.~-
~ Ow'" ~.
Rather than focusing on the stop loss premiums provided, it may be more appropriate to
detennine what level of stop loss protection is desirable.
Conclusion - The magnitude of the difference in stop loss premiums is not so much
as to influence the vendor decision.
Access
Based on our previous discussions, Trigon's netWork is not adequate enough to use as a
sale vendor.
Conclusion - Best vendor decision is to utIlize Trigon because it is the lowest cost
vendor in a dual carrier environment. Optima would be the best choice as the other
carrier on a cost basis.
Fullv insured or self - funded
The above conclusions point to a Trigon/Optima offering. The only question remaining is
whether to remain fully insured or to self-fund. Exhibit V compares the average of the
Carrier estimated self-funding cost and the Mercer self-funding cost to the fully insured
premiums.
Note that we have only shown Optima with an HMO offering. In the dual offering,
Optima only quoted premium rates for their HMO. Offering an additional P~S option
with Optima would probably draw minimal enrollment (at a higher cost than Trigon's
POS), so the plans shown are reasonable.
Be aware that the self-funded costs shown on our exhibits include a relatively high degree
of risk protection via the specific stop loss. Although the stop loss premiums appear
competitive, additional savings may be achievable by selecting another level of stop loss
coverage.
It appears that the risk fee in the fully insured premiums is about 2.1 %; Note that the
Mercer claim cost is a best estimate and does not include a margin. Based on our prior
conversations regarding your budget constraintS, we would likely add a margin of at least
2.1 % for purposes of setting budget rates.
SEf-',¿~ l::¡::¡::¡
::¡:I:: ( HI"] t-r< W.l't. 1'lt::r<L.t::t'(-t'(1L.HI'IUNLJ':'( ':"<':'0 IV ;;¡!rJI,<c:.ror-..)1
,.1::);:)
WILLIAM M.
MERCER
.--"'-- .,. -_.-
Ms. Vicki Lewis
September 28, 1999
Page 4
r
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This margin, however, may not be needed every year. A5 we discussed on the phone, you
may opt to set up a rate stabilization fund that essentially banks positive experience. The
level of margin would vary according to the balance oftWs fund. Additionally, tills fund
would earn interest.
Another positive aspect of self-funding that we have not accounted for is interest on your
mNR reserve if you choose to fund it. This fund could contribute towards your rate
stabilization account or act as an offset to expenses.
The emphasis here is on expected costs. In reality a very small deviation between actual
and expected trends could result in several million dollars in savings or additional costs
under self-funding.
Conclusion - Over the long roD we would expect self-funding to save money, but we
would Dot expect much savings in the next year if our assumptions are realized.
SummarJ'-
Note that the benefits for the proposed P~S are significantly richer than the current PPO
plan. lfthe people who are currently in the PPO choose the POS, then their cost will
increase. Likewise, according to our calculations, the proposed HMO benefits represent a
benefit increase over the current Trigon HMO. Are these benefit increases consistent with
your budget goals?
Lastly, you may want to consider setting employee contribution rates in a manner which
would encourage employees to select the most cost effective plan.
Sincerely, ':' .:~~-' ~..
../" I -..""...r -- -- ..,--
,ø:;- --- '77 ---------
./
Sean B. Strohm, ASA, MAAA
cc:
Barb Bailey
Enclosures
Mineralocorticoids
Florinef...................................$.80
Androgens
Androdenn ...........................$3.00
Android .................................$1.99
Danocrine ..............................$1.13-5.65
Halotestin ..............................$2.18-4.41
Testoderm..............................$2.36-3.29
Hypoglycemics
Amaryl...................................$.20-.38
glipizide .................................$.12-.24
Glucophage ...........................$1.36-1.88
Glucotrol XL .........................$.41-.90
glyburide, micro...................$.23-1.12
Humalog................................$1.74
Humulin insulins, vial........$1.O9-1.60
lletin insuIins, vial...............$1.3'J-2.77
Miscellaneous
Actonel (PA)..........................$12.88
Cytadren................................$4.68
DDAVP ..................................$1.37-22.95
Didronel.................................$3.03
Dostinex.................................$8.17
Evista (PA).............................$1.68
Fosamax (PA)........................$1.62-4.08
Glucagon ...............................$2.79-8.11
Miacalcin Nasal Spray ........$2.38
Miacalcin injectable .............$3.76
Stimate (PA) ..........................$48.01
Thyroid Medications
levothyroxine........................$.03-.11
propylthiouracil...................$.26
Tapazole.................................$.88
1
Diarrhea Medications
LomotiL..................................$1.53-1.82
GI Motility Drugs
Anaspaz.................................$.17-2.04
bethanecoJ .............................$.16-.48
dicyclomine... ......" "".$.65-.77
Donnatal................................$.29-.83
Levsin.....................................$1.23-1.62
Levsinex.................................$1.40
Librax .....................................$2.62
metoclopramide ...................$.06-.35
propantheline .......................$.57
PropuJsid ...............................$1.24-3.13
Ulcer/GERD Medications
cimetidine..............................$.36-1.53
Cytotec ...................................$1.27-1.84
Prilosec...................................$3.63-5.36
ranitidine ...............................$.68-1.41
sucralfate ...............................$1.90
DA- nrinr "'lIthnri.""tin... r........¡r...'"
Miscellaneous GI Drugs
Actigal....................................$4.57
Anusol-HC cream, Stipp. ...$2.25-3.53
Asacol.....................................$3.19
Colyte, Golytely ...................$3.80-5.75
Cortenema.............................$17.00
Cortifoam ..............................$6.58
Dipentum ..............................$2.64
lactulose .................................$.52-.96
Pancrease...............................$1.77-15.44
Pentasa (PA)..........................$4.42
Proctocream-HC ..................$1.81-2.20
Rowasa...................................$5.78-8.38
sulfasalazine .........................$.67
:UIII:t:_:IIJtfll
Actimmune ...........................$12.72
Alferon N...............................$16.70
Avonex ...................................$30.77
Betaseron ...............................$30.74
Copaxone ..............................$27.05
Epogcn, Procrit (PA)............$32.21
Neupogen (PA).....................$46.84
Neutropin* (PA) ...................$32.88-109.59
Proleukin* (PA) ....................$33.50-111.79
Protropin* (PA) .....................$33-110.60
*not all plans cover growth hormone
Gout Drugs
allopurinol.............................$.05-.07
colchicine ...............................$.24-.62
probenecid ............................$.18
suJfinpyrazone .....................$.18-1.18
Salicylates
salsalatc..................................$.54-.75
Trilisate...................................$2.02-3.O3
ZORprin ................................$1.36-2.38
NSAIDS
Celebrex (PA) ........................$2.86-4.84
diclofenac ......._......................$.78-2.46
etodolac..................................$1.25-2.30
ibuprofen...............................$.13-.16
indomethacin, SR.................$.1O-.83
ketoprofen, SR ......................$2.01-2.30
ketoroJac tabs (qty=20)........$3.34
meclofenamate .....................$.46-1.07
naproxen sodium.................$.37-.51
naproxen................................$.27-.51
piroxicam...............................$.08-.10
sulindac..................................$.34-.47
tolmetin..................................$.79-2.13
Vioxx (PA) .............................$2.42-4.84
Arthritis Drugs
Arava......................................$6.94-7.60
Cuprimine, Depen...............$6.72
Enbrel (PA)............................$32.62
1"\+..- .... .~...+;+.. 1;_;+
Plaquenil................................$1.87
Ridaura ..................................$2.22
Skeletal Muscle Relaxants
baclofen..................................$.22-.64
carisoprodol..........................$.22
chlorzoxazone ......................$.31
cylcobenzaprine ...................$.19
Dantrium ...............................$4.30-5.17
diazepam...............................$.05-.88
methocarbamol....................$.25-.96
methocarbamol/ aspirin .....$.96
Skelaxin..................................$2.32
¡--
Vitamins Affecting Coagulation
Mephyton..............................$.99
Potassium Supplements
K-Dur 20 mEq.......................$.62
K-lor........................................$1.05
K-Jyte, /CL, /DS..................$.22-1.76
KClliquid..............................$.08-.35
Klor-Con, Slow-K.................$.11-.25
Micro-K ..................................$.38-.49
potassium glue Iiq................$.27
Potassium-Removing Resins
Kayexalate .............................$5.09
Phosphorous Reducer
Renagel (PA) .........................$2.82
Miscellaneous
MuJtivitamins are not included since
OTC products are available.
Calderol.................................$.99-2.49
ergocalciferol... ...... ................$.02-.06
fluoride vitamins A,D,C .....$.10-.28
fluoride/ polyvitamins. ..... ..$.1 0- .28
folic acid.................................$.Ol
Hytakerol...............................$2.46
Luride Drops, tablets ..........$.05-.11
Nephro-Vite Rx ....................$.63
NephroCaps..........................$.18
Niferex-150 Forte.... ""......$.39
Rolcaltrol...............................$1.20-2.17
II :f{"T.~I~1 a IJ [.~11. [I
Estrogens
esterified estrogens ..............$.27-.36
estradiol.................................$.22-.43
estropipate.............................$.34-.45
Premarin (P)..........................$.42-2.O9
Climara ..................................$.73-.78
Estrogen! Androgen Combinations
Estratest, HS..........................$.71-.90
Estrogen!Progrestin Combinations
Premphase.............................(P) $.61
Prempro (P)...........................$.66
~_~II "'--- 1 _U_------'---_..I
Oral Contraceptives
Alesse .....................................$.84
EstroStep................................$.88
Lo/Ovral...............................$.90-1.20
Loestrin, Fe............................$.87
Modicon.................................$.92
Nordette.................................$.86
Ortho Tri-Cyclen ..................$.84
Ortho-Cept............................$.83
Ortho-Cyclen ........................$.83
Ortho-Novum ......................$.83-1.11
Ovcon.....................................$.91
Ovral......................................$1.47
Preven ....................................$13.30
Triphasil.................................$.84
Oxytocics
Methergine ............................$1.77
Prenatal Vitamins
Prenatal 1/1..........................$.08-.17
Prenatal w /Zinc...................$.O9
Prenatal w /FA & iron .........$.17
Progestins
Aygestin.................................$1.06
medroxyprogesterone. ........$.25-.32
Micronor ................................$.96
Ovrette ...................................$.90
progesterone inj....................$3.46
OB/GYN Topical Anitinfective Drugs
Cleocin vaginaL..................$3.90
MetroGel Vaginal.................$4.23
sulfanilamide........................$2.78
triple suJfa .............................$.65
Miscellaneous
Profasi ....................................$24.30
ritodrine.................................$147.52
Synarel (PA) ..........................$23.30
Bricanyl, Brethine.................$1.00-1.49
II W:..: r~1I~11 [.~ UJ IJ [.~11. [I
ANTIGLAUCOMA DRUGS
Oral
acetazolamide.......................$.66
Diamox Sequel.....................$1.68
Neptazane .............................$.99
Osmoglyn..............................$24.79
Cardioselective Beta-Blockers
Betoptic, -S.............................$1.73-2.75
Non-Selective Beta-Blockers
Betagan ..................................$1.55-1.96
timolol....................................$.67-.89
Timoptic-XE ..........................$1.36-1.61
Miscellaneous Topical
Cosopt....................................$2.95
dipiverin ................................$.95
11______-- ...,-_& 1 _u_- _&_-..1-..-'
Epifrin ....................................$1.15
Epinal.....................................$.55-1.05
lopidine..................................$3.31
IsoptoCarbachol...................$.80-1.39
P1E1,P2E2..............................$.63-.64
Phospholine ..........................$1.36-2.31
pilocarpine ............................$.20-.66
Pilopine HS Gel....................$5.14
TruSopt ..................................$1.68
Xalatan ...................................$2.21
Anti - infecti vest C orti cos teroi ds
Blephamide...........................$2.O9-2.50
Cetapred oint. .......................$2.03
dex/neo/poly......................$.69
Isopto Cetapred....................$2.33
Metimyd .................."............$1.21-1.52
Poly-Pred...............................$1.51
TobraDex ...............................$3.27-3.54
Vasocidin oint. -.....................$1.10
Anti-Infectives
Bacitracin...............................$.43
chloramphenicol..................$.27-.41
Ciloxan...................................$2.56-3.64
erythromycin ........................$.46
gentamicin.............................$.73
Isopto Cetamide...................$1.90
neo/baci/poly......................$.60
Ocuflox ..................................2.30
Polysporin oint. ....................$3.06
Polytrim.................................$1.93
sulfacetamide........................$.13-.83
tobramycin ............................$.46
Antivirals
Vira-A.....................................$2.89
Viroptic ..................................$7.32
Miscellaneous
Acular.....................................$2.65
Alomide.................................$2.34
Cyclogyl.................................$1.36-2.34
Isopto Atropine ....................$.36
Isopto Homatropine............$1.09-1.43
Mydriacyl..............................$.14-.28
Neo-Synephrine ...................$.09
Voltaren..................................$2.86
Topical Corticosteroids
dexamethasone ....................$.34
Econopred, -Plus..................$.38-.71
Flarex......................................$2.34
FML, Forte.............................$1.36-2.07
HMS .......................................$1.38
Inflamase, Forte....................$1.65
Fred Forte..............................$2.22
Fred Mild...............................$.66
.... ---'-----'
OPTIMA Preferred and Standard Drugs July 1999
Dear Doctor: Please refer to this list when prescribing for your patient. Your patient will have lower drug costs if you
prescribe generic drugs and allow brand substitution for dual branded products. Cost per day represents actual prescribing
of Optima physicians. The costs do not take into account the length of therapy.
lidocaine ................................$.46-1.19
dyclonine ...............................$2.77
3rt
All Dosage Fonns
amoxicillin.............................$.19-.92
ampicillin...............................$.32-.49
Augmentin............................$2.40-7.68
Biaxin .....................................$2.38-5.53
Ceftin (tabs FA) ....................$2.77-11.72
cephalexin .............................$.43-.76
cephradine ............................$.64-2.63
clindamycin ..........................$3.81
dicloxacillin ...........................$1.51-1.96
EES..........................................$.27-.68
Ery Ped...................................$.07-1.40
erythro/sulfa ........................$1.06
Gantrisin................................$.49
rninocvcline...........................$.82-1.40
peniciÍlin VK.........................$.I4-.36
SMX/TMP.............................$.08-.32
Supra x ....................................$3.77-6.07
tetracycline ............................$.10-.13
Zithromax..............................$4.69-6.80
Suspensions/Liquids Only
Cefzil......................................$2.48-4.60
Furadantin.............................$1.72
Lorabid ..................................$3.04-3.52
CapsulesfTablets Only
Amoxil875 mg ...................._$1.72
Cipro.......................................$4.23-6.64
Eryc.........................................$1.30
EryTab ....................................$.70-.87
Erythrocin..............................$.42-.58
erythromycin base ...............$.46-.58
Levaquin................................$6.05-5.57
Macrobid ...............................$2.17
nitrofurantoin .......................$.61-1.46
Noroxin..................................$3.98
PCE.........................................$2.98-3.35
trimethoprim ........................$.28
SPECIALIZED INDICATIONS
Aralen ....................................$1.59
dapsone .................................$.15-.28
Daraprim ...............................$.37
Fansidar .................................$3.46
Furoxone................................$5.07
Humatin ................................$2.33
isoniazid ................................$.04-.72
Lamprene ..............................$.32
Lariam....................................$I.84
Mepron ..................................$17.88
Pd- nrinr "",thnri..",tinn r..n"ir..~
metronidazole.......................$.23-.37
Mintezol.................................$1.18
Myambutol...........................$4.82
Mycobutin.............................~'3.98
Nebupent, Pentam...............$2.76
Neomycin..............................$.59
Plaquenil................................$1.87
Primaquine............................$.72-1.21
Pyrazinamide .......................$2.39
Rifadin ...................................$3.59
Vancocin ................................$18.29
Vermox...................................$1.36
Yodoxin..................................$.26-.58
ANTIFUNGALS-ORAL
Diflucan .................................$3.07-10.93
Grifulvin V............................$1.36-2.09
Gris Peg .................................$1.47-1.73
Mycelex Troche ...................$4.03
Nizoral...................................$2.66
nystatin ..................................$.56-.96
Sporanox (PA) ......................$10.60
ANTIVlRALS-ORAL
All HN drugs in this category are
covered. Examples are listed.
acyclovir ................................$1.11-3.18
amantadine ...........................$.38
Combivir ...............................$15.08
Crixivan .................................$3.19-12.77
Cytovene ...............................$2.72-13.59
Epivir......................................$6.76
Fortovase ...............................$7.61
Hivid ......................................$6.01
Invirase ..................................$11.66
Norvir ....................................$11.65c13.43
Rescriptor ..............................$6.29
Retrovir ..................................$2.35-8.12
Sustiva....................................$15.53
Valtrex ....................................$4.35-5.31
Videx ......................................$5.23-5.93
Viracept..................................$18.15
Viramune...............................$6.81
Zerit ........................................$7,,14-7.111
Ziagen ....................................$4.87-4.96
TOPICAL ANTIBACTERIALS
Aldara ....................................$6.04
Bactroban...............................$1.98-2.49
gentarnicin.............................$.33-.49
neo/baci/poly /HC.............$1.93
silver sulfadiazine................$.64
TOPICAL ANTIVIRALS
Zovirax...................................$3.84
nt,,- n"",ntit" limit
ANTIFUNGALS- OTHER
Diflucan 150 mg (qty=I).....$9.80
Exelderm ...............................$1.22-1.79
Lamisil (tabs not covered)..$3.33-6.12
Loprox....................................$.69-2.08
Lotrisone................................$2.54
Naftin .....................................$2.87-3.12
Nizoral...................................$.95-1.82
nystatin ..................................$.19-.22
Oxistat ....................................$1.51-1.75
Spectazole..............................$1.52
Terazol....................................$3.O3-7.72
t)~(.t) ItI"'. I) tUrK
All agents in this category are covered,
including these examples:
Alkylating Agents
AJkeran ..................................$12.74
CeeNu....................................$46.16
Cytoxan..................................$2.44-6.81
Leukeran................................$5.84
Myleran .................................$3.16
Antimetabolites
methotrexate .........................$.38-1.75
Purinethol..............................$3.75
Androgen
Halotestin ..............................$2.18-4.41
Progestins
Lupron ...................................$31.13
megestrol.. .......... .............$.70-1.67
Antiandrogens
Eulexin ...................................$6.73
Antiestrogen
Nolvadex ...............................$2.88-3.36
Miscellaneous Antineoplastics
Emcyt .....................................$3.50
Ergamisol..............................$5.72
Hydrea ...................................$2.91
leucovorin .............................$4.32
Matulane ...............................$2.37
Sandostatin ...........................$4.70-138.62
VePesid...................................$42.27
MM. 1¡¡:1I1!I."JWWtta..,"",'Y4
CellCept .................................$14.22-22.07
Imuran ...................................$3.16
Neoral....................................$6.18-14.37
Prograf ...................................$14.66-22.70
Sandimmune ........................$6.88-20.84
C::m",11 ("""".. I ..tt..~"'-n~..f..~~..,.¡
1111"
ANTIARRHYTHMICS
Class la
disopyramide .......................$.81-2.06
Norpace CR...........................$1.93-2.60
procainamide, SR.................$.37-1.49
Quinadex...............................$3.28
quinidine gluconate ............$1.00
quinidine sulfate ..................$.44-1.68
Class Ib
Dilantin ..................................$.40-2.34
Mexitil....................................$2.71
Tonocard................................$1.46
Class Ie
Rythmol.................................$2.57-5.99
Tambocor...............................$2.14-4.00
Class III
Betapace.................................$3.82-5.00
Cordarone .............................$5.58
ANTIHYPERTENSIVES
Vasodilators
Cardura..................................$.82-1.1O
hydralazine ...........................$.06-.21
Hytrin.....................................$1.53-2.13
minoxidil...............................$.27-.28
prazosin .................................$.17-.35
Centrally-Acting
Catapres- TIS ........................$1.04-2.51
clonidine ................................$.05-.06
guanfacine .............................$1.19-1.21
methyldopa...........................$.I6-.30
ACE Inhibitors
Accupril (P) ...........................$.86-.95
captopril.................................$.08-.44
Prinivil (P) .............................$.47-1.22
Vasotec ...................................$.92-1.68
Angiotensin II Receptor Antagonists
Atacand .................................$1.02
Cozaar ....................................$1.26-1.34
Drugs for Pheochromocytoma
Dibenzyline...........................$1.42
Combination Antihypertensives
Capozide ...............................$.75-2.58
clonidine/ chorthal..............$.34
hydral/HCTZ.......................$.08-.12
Hyzaar ...................................$1.24
methyldopa/HCTZ ............$.26
Ilnn..~,..""".. I:i~",t I ..tt..~-",t"'n"¡",~"¡
.
Optima ea
Prinzide..................................$.85-1.O4
propranolol/HCTZ .............$.06-.09
Vaseretic.................................$.94-1.13
Ziac .........................................$.93-.97
CHOLESTEROL LOWERING DRUGS
cholestyramine .....................$1.56-1.90
gemfibrozil............................$.35
Lipitor (PA) ...........................$.62-3.23
Mevacor (PA)........................$1.12-3.77
Niaspan..................................$.75
Questran Light .....................$2.01-4.61
Zocor (P) ................................$1.82-3.17
BETA BLOCKERS
Cardioselective
acebutolol..............................$.94-1.11
atenolol ..................................$.04-.06
metoprolol.............................$.09-.83
Toprol XL...............................$.47-1.59
Non-Cardioselective
nadolol...................................$.48-2.98
pindolol.................................$.24
propranolol, SR ...................$.03-.90
timolol....................................$.37-.51
Alpha-Beta Antagonists
Coreg (PA).............................$2.77-3.25
Normodyne, Trandate ........$.93-1.95
Calcium Channel Blockers
Adalat CC............................$.94-1.91
Card ene, SR...........................$.92-1.21
diltiazem, SR.........................$.20-2.46
DynaCirc ...............................$1.10-1.81
nifedipine ..............................$.26-.64
Nimotop ................................$15.95
Norvasc..................................$1.17-1.92
Plendil....................................$.83-1.47
lìazac .....................................$.78-1.75
verapamil, SR .......................$.14-.79
Verelan, PM...........................$1.46-2.25
DIURETICS
Potassium-Sparing Diuretics
Aldactazide 50/50 ...............$.97
arniloride/HCTZ .................$.07
Dyazide..................................$.43
spirinolactone .......................$.21
spirono/HCTZ.....................$.44
triamterene /HCTZ.... ...... ....$.05- .23
Thiazide Diuretics
dùorothiazide.......................$.05-.06
chlorthalidone ......................$.03-.05
D-n~..f..~~..,.¡
hydrochlorotlúazide. ...... .....$.01- .02
indapamide...........................$.22-.39
methychlotlúazide...............$.16
Zaroxolyn ..............................$.38-.66
Loop Diuretics
burnetanide ...........................$.15-.35
furosemide ............................$.03-.19
Cardiac Glycosides
Lanoxin..................................$.14-1.59
Other Cardiac
pentoxifylline........................$1.37
Proamatine............................$1.68
VASODILATING DRUGS
Nitrates
lmdur .....................................$1.09-1.22
isosorbide dinitrate..............$.05-.24
Nitrostat SL ...........................$.31-.68
ntg oint...................................$.43
ntg patches ............................$1.11-1.58
Antiplatelet Drugs
dipyridamole........................$.08-.17
Plavix......................................$2.46
sulfinpyrazone .....................$.14-.16
TIclid.......................................$3.27
Anticoagulants
Coumadin .............................$.70-1.16
Lovenox .................................$37.49
Hemostatics
Amicar ...................................$3.44-27.52
I
Anxiolytics
alprazolam ............................$.13-.43
BuSpar....................................$1.43-2.78
chlordiazepoxide .................$.07-.09
clorazepate ............................$1.44-2.98
diazepam...............................$.05-.88
lorazepam..............................$1.22-2.16
oxazepam ..............................$.26-.37
Sedativeniypnotics
chloral hydrate .....................$.16
diphenhydramine 50 mg....$.04
flurazepam ............................$.07
hydroxyzine HCL................$.07-.12
hydroxyzine pam.................$.23-.90
temazepam............................$.27-.85
triazolam................................$.49-.63
Anticonvulsants
Carbatrol................................$.47-1.66
Celontin .................................$.84-3.36
clonazepam...........................$.84-1.59
Depakene...............................$3.34
PA= prior authorization required
Depakote ...............................$.74-3.46
Dilantin ..................................$.30-2.34
Felbatol..................................$5.49
Gabitril...................................$6.38
Lamictal.................................$3.59-8.20
Mebaral..................................$.65
Mesantoin..............................$.33-2.64
Mysoline ................................$.32-.90
Neurontin..............................$1.28-4.50
Peganone ...............................$.83-1.66
phenobarbital.......................$.O3-.lO
Tegreto!, XR...........................$.47-1.74
Topamax ................................$5.46-8.18
Zarontin .................................$.72-1.87
Antidepressants
amitriptyline .........................$.04-.12
amitriptyline / perphenazine .$.05-.40
amoxapine.............................$1.62
Anafranil...............................$2.20
Celexa.....................................$.86-1.75
desipramine ..........................$.14-1.86
doxepin..................................$.09-.44
Effexor, XR.............................$1.90-2.78
imipramine............................$.06-.53
maprotiline............................$.77-.90
Nardil.....................................$l.34
nortriptyline ... .......... ........... ..$.16-.31
Pamate...................................$.88
Paxil........................................$2.01-2.14
protriptyline..........................$1.47
Prozac.....................................$2.40-2.89
Remeron ................................$2.42-2.65
Serzone...................................$1.84-2.21
Surmontil...............................$2.22
trazodone ..............................$.10-.56
Wellbutrin, SR.......................$1.71-2.40
Zoloft......................................$2.15-2.38
Antipsychotics
chlorpromazine ....................$.29-1.05
Clozaril (PA) .........................$14.97
fluphenazine .........................$1.06-2.10
haloperidol............................$.03-3.19
Loxapine................................$3.19-3.65
Moban....................................$1.53
perphenazine........................$.21-.82
Risperdal...............................$3.07-11.76
Serentil...................................$1.89-4.72
tlúoridazine...........................$.26-.85
thiothixene ............................$.72-.68
trifluoperazine ......................$.51-1.94
Drugs for Parkinsonism
Akineton................................$.30-2.40
amantadine ...........................$.38
benztropine ...........................$.05-.08
bromocriptine .......................$3.11
carbidopa/levodopa ...........$.66-.98
Mirapex..................................$1.56-4.88
Permax ...................................$1.90-3.01
Oty= quantity limit
ReQuip...................................$2.40-2.60
selegiline................................$1.66-3.92
Sinemet CR.~..........................$1.16-2.92
Tasmar....................................$4.73-5.15
trihexyphenidyl................ ....$.44-.64
Drugs for Mania
litlúum, all forms .................$.07-.74
Drugs for VertigolEmesis
Kytril (qty=l) ........................$69.80
meclizine 50 mg ...................$.14
Phcnergan supp ...................$5.98-13.18
prochlorperazine ..... ...... ...... .$1.72-6.75
promethazine........................$.13-.20
Torecan...................h......... ....$1.77
Transderm-Scop ...................$1.36
trimethobenazmide .............$1.44-2.24
Zofran (qty=9) ......................$34.65-59.35
CNS Stimulants
Use for appetite suppressants not covered
AdderalI.................................$.55-1.16
Cylert......................................$1.45-2.83
Desoxyn (PA)........................$4.l0
Dexedrine..............................$.68-1.22
methylphenidate, SR...........$.98-1.44
Miscellaneous CNS Drugs
Weight loss medications are not covered
Antabuse ...............................$.71-.92
Cognex (PA)..........................$3.57-5.95
Mestinon................................$1.39-2.26
Prostigmin.............................$.85
ReVia ......................................$3.93
Headache Drugs
Amerge (qty=9) ....................$22.10
aFar /butalbital/ caffeine ...$.26
asa/butalbitalj caffeine.......$.21
Bellergal S..............................$1.58
Cafergot, Wigraine...............$7.16
Esgic Plus ..............................$3.65
Fioricet w / codeine ..............$5.02
Fiorinal w / codeine..............$5.14
Imitrex
(injection FA), tabs qty=9 ...$7.37-23.29
Midrin ....................................$1.98
Migranol................................$8.94
Phrenilin, Forte.....................$.97-1.11
Sansert....................................$5.73
Stadol NS
(PA, 2 bottles/34 days) .......$7.34
NARCOTICS
Class II
codeine...................................$1.71
Dilaudid.................................$1.26-4.71
Dolophine..............................$.17-.44
Duragesic...............................$3.49-14.29
Small Case Letters=preferred
meperidine ............................$3.43-5.88
MS Contin .............................$.74-6.86
MSIR.......................................$1.41-2.41
oxycodone/ asa.....................$.85
oxycodone/ aFar .................$.51
Class III
aFar/codeine #2,3,4..........$.46
asa/ codeine #2,3,4 ...............$.16-.97
hydrocodone/ apap, ES ......$.25-1.99
Class IV
propoxyphene cmpd...........$.67
propoxyphene/ apap...........$.29
Wygesic..................................$.63
.]lt4~u.~1I1')I['
Acne Drugs
Prescription benzoyl peroxide drugs
are not covered, multiple formulations
are available OTC
Accutane................................$7.16-10.56
Benzamycin...........................$2.18
clindamycin ..........................$.56
Differin (PA>age 29)............$2.12-2.30
Emge!, Erygel.......................$1.46
Erycette, T-Stat......................$.58-.75
erythromycin soln................$.06
MetroGel................................$1.89
Retin-A, micro (PA >age 29) .$2.05-2.52
Sulfacet-R ..............................$1.32
Sulfoxyl..................................$1.19
Drugs for Psoriasis and Eczema
Capitrol shampoo ................$.86
Dovonex ................................$3.41-4.98
Drithocreme, HP ..................$1.68
methotrexate .........................$.38-1.75
Sebizon lotion.......................$2.45
Keratolytics
Condylox ...............................$5.80-7.42
Miscellaneous
Actinex...................................$.92
Aquasol-A .............................$1.32
Drysol.....................................$.27
Efudex....................................$5.28
Eldoquin Forte......................$1.83
Lac-Hydrin............................$1.11-1.81
Oxsoralen (oral only) ..........$16.73
Solaquin Forte ......................$1.85-2.12
Trisoralen...............................$2.08-2.44
Scabicides
Elimite....................................$2.65
Eurax ......................................$.77-2.28
lindane ...................................$1.ü4-1.55
Corticosteroids
Aclovate.................................$1.15-1.37
Uppercase First Letter=standard
betamethasone dip ..............$.25-1.62
Cloderm.................................$.78
Cordran..................................$1.67-3.27
Cutivate .................................$1.41-1.55
Cyclocort ...............................$1.12-2.25
DermAtop .............................$1.16
Diprolene, -AF ......................$2.56-3.37
Elocon.....................................$1.85-1.98
fluocinolone ..........................$.23-.33
fluocinonide -E .....................$.40-1.53
Halog......................................$2.38-4.50
hydrocortisone 2.5%............$.48-2.12
Locoid ....................................$1.42-9.91
Psorcon ..................................$3.53-4.07
Synalar-HP ............................$2.55
Temovate ...............................$1.86-3.06
Topicort, LP...........................$1.35-3.41
triamcinolone........................$.10-.53
Tridesilon...............................$.5o-1.06
Ultravate ................................$3.03-3.47
Westcort .................................$1.64-1.74
Other Corticosteroid Products
Derma-Smoothe/FS............$1.02
FS Shampoo ..........................$.88
triamcin/nystatin ................$.23
I~...
Drugs for the Ear
acetic acid ..............................$.21
benzocaine/antipyrine .......$.21
Cerumenex............................$2.20
Chloromycetin Otic .............$2.21
Domeboro Otic .....................$2.62
fico/polymyxin/he .............$.84-1.03
Pediotic ..................................$3.24
Voso!, HC Otic ......................$2.27
Nasal Corticosteroids
Beconase, Vancenase, AQ...$1.67-4.10
Flonase ...................................$1.81
Nasacort, AQ ........................$1.58-1.91
Nasalide.................................$1.66
Nasarel...................................$1.41
Nasonex.................................$1.97
Rhinocort...............................$1.62
Throat/Mouth Medications
lidocaine viscous..................$.46
Peridex ...................................$.27
Salagen...................................$3.51
triamcinolone in Orabase ...$.52
III
I
Corticosteroids
Cortef, Hydrocortone..........$.46-.67
dexamethasone ....................$.17-1.49
methylprednisolone ............$1.39
Pediapred ..............................$1.63
prednisone ............................$.07-.60
Prelone syrup........................$1.23-2.21
P=preferred
I
I
Antihistamines
Allegra ...................................$1.45
Claritin...................................$1.40-2.11
clemastine syrup ..................$1.13
cyproheptadine ....................$.04-.10
diphenydramine 50 mg ......$.04
hydroxyzine HCL..............$.07-.l2
hydroxyzine pamoate .........$.24-.90
FEZ, -SR.................................$.20-.61
Polaramine ............................$1.36-1.75
Poly-Histine Elixir ...............$58
promethazinp--------_-----------.$.13-.21
Zyrtec (PA) --.------...................$1.16-2.14
Antihistamine/
Decongestant Combinations
Allegra-D...............................$1.66
Claritin-D ..............................$2.02-2.07
Extendryl SR.........................$.30
Kronofed-AJR ......................$.85
Naldecon ...............................$1.31-2.21
Nolamine...............................$1.12
promethazine Vc.................$.19
Poly-His tine D......................$58-1.83
Rondec, TR............................$1.14
Rynatan, Ped.........................$1.17-2.40
Antitussives, Expectorants
Narcotic-Containing
Ambenyl................................$.60
guaifenesin AC....._...............$1.20
guaifenesin DAC .................$.83
Histussin HC ........................$2.ül
Hycodan syrup ....................$.63
Hycomine ..............................$1.61
Novahistine Expect .............$3.24
I
Novahistine DH...................$.24
Poly-His tine CS....................$1.49
promethazine w / codeine ..$ .31
promethazine VC w / cod ...$.27
Tussionex Suspension.........$150
Non-Narcotic Containing
Deconsalll.............................$l.84
Entex LA................................$1.62
Humibid, DM.......................$1.37-1.91
Poly-Histine DM..................$.86
promethazine DM ...............$.23
Rondec DM...........................$1.47-2.43
Zephrex LA...........................1.28
Beta-2 Agonists
albuteroL...............................$.08-1.l2
Bricanyl, Brethine.................$1.00-1.49
Maxair ....................................$1.33-1.38
metaproterenol...... ..... ..........$.23-3.73
Proventil Repetabs...............$1.32
Serevent .................................$2.04-259
Ventolin Rotacaps ................$1.28
Methylxanthines
aminophylline ......................$.09-.40
Sio Phyllin 80........................$53
Slo-Bid....................................$.65-1.08
T-Phyl.....................................$.32
theophylline, SR...................$.12-.61
UniphyL...............................$.91-1.11
Corticosteroids
Aerobid, -M...........................$3.06-3.23
Azmacort...............................$2.32
Beclovent, Vanceri................$1.41-2.11
Flovent ...................................$1.15-4.08
Pulmicort...............................$1.87
Generic Drug Policy
Drugs which have FDA and Virginia Voluntary Formulary approved generic
equivalents are covered at a generic reimbursement level (maximum allowable
cost, or MAC). If a member insists on the brand name product when an approved
generic is available, the member must pay the cost difference betvveen the brand
name drug and the MAC amount (an ancillary charge) in addition to the copay.
Prior Authorization Requests
To promote the most appropriate utilization, selected medications require prior
authorization by the plan to be eligible for coverage. Prior authorization criteria
have been established by the Pharmacy and Therapeutics Committee with input
from plan physicians and consideration of the current medical literature. The
physician must caU or write the plan and provide patient clinical information.
For Prior Authorization Requests:
Optima Health Plan
Attention:Pharmacy /MCM
4417 Corporation Lane
Virginia Beach, VA 23462
Telephone: 757-552-7540, 1-800-229-5522
Fax: 757-552-7516, 1-800-750-9692
July 1999
PA= prior authorization required
Oty= quantity limit
Miscellaneous
Atrovent.................................$1.73
Epipen, Anakit, Adrenalin
(2/copay).............................$5.89
lntal.........................................$2.16-2.80
TIlade......................................$159
Combivent.............................$1.79
Mucomyst .............................$2.49-4.20
Pulmozyme...........................$39.65
Accolate .................................$1.69
Singulair ................................$1.90
IU{IJ..I
Anticholinergici An tispasmodi cs
Detrol.....................................$2.04
Levsin .....................................$1.23-1.62
Levsinex.................................$1.40
oxybutinin .............................$.33-.45
Urispas...................................$2.45
Cholinergic Stimulants
bethanecol.............................$.16-.48
Anesthetics
phenazopyridine .... ...... ..... ...$.34-.78
Miscellaneous
Cardura..................................$.82-1.10
Caverject ................................$9.21-1 0.01
Flomax ...................................$1.34
Hytrin.....................................$153-2.13
Muse.......................................$6.06-13.97
Polycitra.................................$53-1.02
Proscar ...................................$1.84
Renacidin...............................$6.69-13.38
Rimso-50................................$8.32
Urised.....................................$1.32
Viagra (qty=4 tabs/mo)......$1.52-2.08
. .'~..IIIIJ
Chemet...................................$7.88-59.10
---¡
Biotech Drugs
lntron-A .................................$12.45-49.48
Roferon-A..............................$33.94
Rebetron ................................$25.30-4257
Small Case Letters=preferred
I
r
GENERIC PRODUCTS MUST BE USED
WHERE AVAILABLE. A prescription is
required for OTC products to be covered
by the plan. Prescriptions may be written
or phoned to the pharmacy.
PLEASE NOTE QUANTITY LIMITS
PER DISPENSING.
IT FORMULATION
ANALGESiCS & ANTlFLAMMATORJES
ACETAMINOPHEN
100 CAPSULES: 500 MG
100 TABLETS: 325 MG
402 ELIXIR: 160 MG/5 ML
1/202 DROPS: 100 MG/ML
ASPIRIN
100 TABLETS: 325 MG
IBUPROFEN
100 TABLETS: 200 MG
402 SUSPENSION: 100 MG/5ML
GASTROINTESTJNALS
AL & MG HYDROXIDE
1202 SUSPENSION
AL & MG HYDROXIDE SIMETH
1202 SUSPENSION
LOPERAMIDE
24 CAPLETS: 2 MG
402 LIQUID1MG/5ML
BISACODYL
12 TABLETS: 5 MG
4 SUPPOSITORIES: 4 MG
DOCUSATE CALCIUM
60 TABLETS: 240 MG
DOCUSATE SODIUM
60 CAPSULES: 100 MG
DOCUSATE SODIUM/CASANTRANOL
100 CAPSULES
PSYLLIUM
210 POWDER
CIMETIDINE
64 TABLETS: 100 MG
RANITIDINE
20 TABLETS: 75 MG
COUGH AND COLD
CHLORPHENIRAMINE
100 TABLETS: 4 MG
DIPHENHYDRAMINE
4 CAPSULES: 25 MG
402 ELIXIR: 125 MG/5 ML
PSEUDOEPHEDRINE
100 TABLETS: 30 MG'S
402 LIQUID30MG/5ML
BRO MPIPHENYLPR 0 PAN 0 LAMINE
24 SR TABLETS
4 02 ELIXIR
TRIPRO UPS EUDO EPH ED RINE
24 TABLETS
GUAIFENESIN
402 SYRUP
Uppercase First Letter=standard
GUAIFENESIN DM
402 SYRUP
TOPJCALS
BACITRACIN
1 02 OINTMENT
BA CITRA CININEO MYCINIPO L Y
1 02 OINTMENT
CLOTRIMAZOLE
45 GM CREAM 1 %
lOML SOLUTION: 1%
MICONAZOLE
102 CREAM: 2%
HYDROCORTISONE
102 CREAM: 1%,OTNìMENT: 1%
DIAPER RASH MEDICATION
2 02 OINTMENT
VITAMIN A & D OINTMENT
2 02 OINTMENT
CLOTRIMAZOLE
45GM VAGINAL CREAM: 1 %
MYCELEX-G
7 VAGINAL TABS: 100 MG
MICONAZOLE
45GM VAGINALCREAM:2%
7 VAGINAL SUPP: 100 MG
VITAMINS, MINERALS, RELATED DRUGS
NIACIN
100 TABS.: 250 OR 500 MG
FERROUS SULFATE
1602 ELIXIR
100 TABLETS: 325 MG
ERGOCALCIFEROL
202. DROPS
NIFEREX-l50
31 TABLETS
31 CAPSULES
6 02. ELIXIR
PRENATAL VITAMINS
100 TABLETS
CALCIUM CARBONATE
100 TABLETS:500 MG
MAGNESIUM
100 TABLETS:400 MG
PHOSHORUS
100 CAPSULES
FAMiLY PLANNING
NONOXYNOL 9
18 SUPPOSITORIES: 100 MG
12 VAGINAL FILM: 28%
lOGM VAGINAL FOAM 8%
126GM VAGINALJELLY3%
10 VAGINAL GEL: 4%
CONDOMS
36
PEDiCULOCIDES/SCABiCiD ES
PERMETHRIN
60ML LIQUID
PYRETHRIN
60ML Sfù\MPOO
MiSCELLANEOUS
SODIUM CHLORIDE
100 3 ML VIALS
P=preferred