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MAY 4, 2012 WORKSHOP MINUTES1 MINUTES VIRGINIA BEACH CITY COUNCIL Virginia Beach, Virginia WORKSHOP SESSION RESOURCE MANAGEMENT PLAN BUDGET RECONCILIATION WORKSHOP May 4, 2010 Mayor William D. Sessoms, Jr., called to order the FY 2010-2011 OPERATIONS BUDGET RECONCILLATION WORKSHOP FY 2010-2011 CAPITAL BUDGET with consideration of the Six (6) Year Capital Improvement Program (CIP), on Tuesday, May 4, 2010, at 4:00 P.M. Council Members Present: Rita S. Bellitto, Glenn R. Davis, William R. "Bill" DeSteph, Harry E. Diezel, Robert M. Dyer, Barbara M. Henley, Vice Mayor Louis R. Jones, Mayor William D. Sessoms, Jr., John E. Uhrin, Rosemary Wilson, and James L. Wood. Council Members Absent: None May 4, 2010 2 Resource Management Plan Budget Reconciliation Workshop Mayor Sessoms read into the record, which is also made a part of the proceedings, a letter of Reconciliation for the FY 2010-I1 Operating Budget and Capital Improvement Program, signed by the Mayor and Vice Mayor. Recommended, effective with this FY 2010-2011 Budget, will be the allocation of SPSA's $18.1 Million repayment to Virginia Beach due to the sale of the Waste to Energy Plant re $6.2- Million toward building the Animal Care and Adoption Center; $5.4-Million to the fund balance to ensure the FY 2011-12 Target for next year's revenues; $S.1-Million to eliminate one (1) cent of the proposed real estate tax increase; and $1.4-Million to restore services to the community. Vice-Mayor Jones expressed his appreciation for input received by Members of Council and Staff in addressing the desires and issues that Council brought forward in this Reconciliation. Councilman DeSteph referenced the Animal Control facility :s proposed $6.2-Million funding and rec°ommended the project be put out for bid, citing the possibility of better cost estimates. He disagreed with taking $8.8-Million in School Reversion Funds stating that "one, the Schools have operated in a fiscally conservative method and saved money for next year; and two, there are other places to get the $8.8-Million ". Councilman DeSteph asked Catheryn Whitesell, Director -Management Services, what the fund balance for last year was, percentage-wise. There was discussion re correct the fund balance for last year. Councilman DeSteph further referenced the Agriculture Reserve Program (ARP) re a two year Moratorium and recommended deference of the Open Space Various Site Acquisition Phase II re $1.4 - Million.. He addressed the thirteen (13) Police Officer positions being reinstated and suggested the remaining ten (10) Police positions be filled re the Agricultural Reserve Program's $2-Million or the $1.436-Million available from the deference of Various Site Acquisitions. Council Lady Henley inquired about the restoration of $8, 000 to the Storm Water Conservation District. She questioned the source of the $1.436-Million mentioned by Councilman DeSteph re the Open Space Program. Councilman DeSteph replied that he was referring to the Various Site Acquisitions Phase II. Council Member Davis commended Mayor Sessoms and Vice-Mayor Jones on the information presented to Council Members and inquired if "the Reversiou Funds were a surplus of the budget that is already in place from last year and how would they not have an impact on the Budget that was being presented. " Mayor Sessoms advised it was for the upcoming year and noted that "the School Board would work with the $8.8-Million not going back to them and advised that the City would respect how the School Board dealt with the loss of the Reversion Funds ". Mayor Sessoms noted that there was $16-Million in Reserves to offset the $8.8-Million. May 4, 2010 Resource Management Plan Budget Reconciliation Workshop Councilman DeSteph advised he was not in support of an increase in Animal Adoption fees and suggested the monies left when Human Resources Director Fagan Stackhouse left employment with the City, re approximately $160,000, be awarded to the Commissioner of Revenue to help collect revenue owed to the City. Cotmcil Lady Bellitto questioned the proposed actions of bringing the fund balance back up to 10% and stated that it looked like the City was asking to take $8.8-Million of School Reversion Funds. Mayor Sessoms advised that some of the revenue would be used and $6.7-Million would go into the City's Fund Balance. City Manager Spore advised that all Cities in Virginia are supposed to have one Fund Balance which is "community" money. Council Lady Bellitto offered her support, stating it would help to maintain the City's bond rating of between 8% and 12%. City Manager Spore added in the event of a hurricane or other natural disaster, those funds would be available for Council's use, if needed. Council Lady Bellitto proposed "instead of bringing the fund Balance up to 10%, keep it at the City Manager's proposal of 9.35%, re $6.7-Million that the City would not have to take out of the School's Reserves. " Council Lady Wilson inquired what the Reversion money would be at the end of 2012 and how it would be used. Mayor Sessoms replied that the School Superintendent, or the Finance Director, would have that information. Councilman Davis commented on the interactions of the Schools and the Recreation Centers and stated that he believed the money should be in the City's Reserve Fund. Councilman Davis added the best lifestyle and opportunity for the City's children was what everyone strived to provide. There was concerning the creation of the School's accumulation of their Fund Balance. Councilman DeSteph commented that a Moratorium on purchasing any property should be considered as well as a true hiring freeze, with the exception of Public Safety. Council Lady Wilson suggested City Council and the School Board work to improve communication and review the Funding Formula, which has been in place since 1998, to see if it is still working as envisioned and then consider holding another joint Retreat to discuss this in depth. May 4, 2010 4 Resource Management Plan Budget Reconciliation Workshop Mayor Sessoms commented that he felt that the City Council and the School Board had worked well together. He advised that the City had done the same thing last year with the Reversion Funds and had used the funds wisely. He also said he would be happy to move forward towards a Retreat. Councilman Dyer noted his support for Council Lady Wilson's suggestions and the complexity of the Budget process. He commented on the success of the restoration of the Police Off cers, Public Safety issues and the importance of the Animal Care and Adoption Shelter. Council Lady Bellitto explained that the School Board's Reserve Balance was not "surplus ", but funds that were banked because the School Board made a conscious decision to delay the purchase of school buses, computers and other items thinking it was more important to keep the money to protect the classrooms during the tough years ahead. Councilman Davis complimented the School Board on their fiscally conservative budget actions and reiterated that all City funds would be used in the most efficient way to benefit the citizens and schools, cumulatively. Councilman DeSteph commented on the proposed increase of the Public Utilities tax and expressed his opposition to the increase, citing the use of the year-end salary surplus to offset the increase. Mayor Sessoms advised there would be a meeting between himself, Vice Mayor Jones, City Manager Spore and the School Board Chair and Co-Chair prior to the vote on the proposed Budget changes. Council Lady Henley asked for an update on Nimmo Parkway. Mayor Sessoms asked Deputy City Manager Hansen to reply. Deputy City Manager Hansen advised that $13.6-Million in the FY'll Budget and $13.8-Million in the FY'12's Budget was designated for the Nimmo V Project. He added that any savings realized from that project would be forwarded to the next Capital Improvement Project. Mr. Hansen advised that no reduction in scope was linked to the $1.9-Million dollars requested for the building of a much needed large vehicle maintenance shop. Council Lady Henley opined that she understood the importance of trying to get into the current market for the Animal Control facility, the Recreation Center and Kellam High School. She inquired if the bid for Kellam High School would be in 2011 or 2012. Council Lady Henley further commented that the figures currently available for the large projects would be less than originally discussed. Council Lady Bellitto replied that the project would be split into two sections; an early section to start on-site work to be bid in the Fall of 2011 and the building phase would be bid in the Spring of 2012. City Manager Spore stated the Recreation Center figures had been adjusted downward, based on the design plans and a more accurate assessment allowing the construction costs to drop approximately $3.5- Million dollars. May 4, 2010 Resource Management Plan Budget Reconciliation Workshop Councilman DeSteph added it was his belief that fair and open competition would drive down the costs substantially due to the current market. Mayor Sessoms recognized Deputy City Manager Hansen. Deputy City Manager Hansen advised the City followed the Virginia Procurement Act (VPA) and the Public Private Education Act (PPEA), established by the General Assembly, adopted and modified by the City and the current bids accepted by City Council at the end of January were accurately reflecting the current environment. There was further discussion between on the previous estimated costs of the Animal Shelter and the Recreation Center. Deputy City Manager Hansen directed attention to the City Portion of the Operating Budget "in the column FY'11 Animal Care Adoption Center $9.811-Million, which equates to Chart 10 in my Buildings Presentation and accurately reflects the $11.081-Million bid by Armada Hoffler plus $7S0 Thousand that were added for the peripherals, such as the water and sewer taps, the Wetlands delineation, and some other assorted things to get the project off the ground. Add that to the $2-Million that was remaining from the original two year appropriation after the K-9 and the other Leroy Drive were taken out, that accurately reflects what it is going to take to make the construction this Summer. " Mr. Hansen further advised that the City is committed to a fully funded project with the balance of the current government estimate funded through debt in the FY'12 CIP and reiterated the bid was already reduced from the original $30-Million cost estimate. Council Lady Henley asked Councilman DeSteph if he would provide a written list of his proposals to fellow Council Members for review, Councilman DeSteph agreed he would provide his suggestions to Council Members via a-mail. Mayor Sessoms corrected a previous statement advising if there was a meeting with the Chairman of the School Board and the Superintendent, Vice Mayor Jones and City Manager Spore would be in attendance as he would be out of town. May 4, 2010 6 ADJOURNMENT Mayor William D. Sessoms, Jr. DECLARED the City Council Meeting ADJOURNED at 4: SO P.M. Sandy Madiso , CMC Deputy City Clerk II Ruth Hodges Fraser, MMC City Clerk Mpy 4, 2010