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JUNE 4, 2013 MINUTES -1- rS�7"'' F''q Hl t , A -moi VIRGINIA BEACH CITY COUNCIL Virginia Beach, Virginia June 4, 2013 Mayor William D. Sessoms, Jr., called to order the JOINT CITY COUNCIL/SCHOOL BOARD BRIEFING, in Building 19, Tuesday,June 4, 2013, at 3:00 P.M. Council Members Present: Glenn R. Davis, William R. "Bill" DeSteph, Harry E. Diezel, Robert Al Dyer, Barbara M. Henley, Vice Mayor Louis R. Jones, John D. Moss, Mayor William D. Sessoms, Jr., John E. Uhrin, Rosemary Wilson and James L. Wood Council Members Absent: None School Board Members Present. Beverly M. Anderson, Vice Chairman William J. Brunke, IV, Emma L. "Em" Davis, Chairman Daniel D. Edwards, Joel A. McDonald, Bobby Melatti, Sam Reid, Elizabeth K Taylor, Leonard C. Tengco and Carolyn D. Weems School Board Members Absent: Dorothy Al. Holtz June 4, 2013 -2- JOINT CITY COUNCIL/SCHOOL BOARD BRIEFING FY2014 HEALTH CARE RATES 3:00 P.M. Mayor Sessoms welcomed Cindy Curtis, Deputy City Manager. Ms. Curtis expressed her appreciation to City Council and School Board Members for their continued support, as well as the hard work of the Benefit Executive Committee. Ms. Curtis distributed a copy of today's presentation, along with the Verbatim Transcript, which is attached hereto and made a part of this record. Ms. Curtis introduced Ken Jeffries with Mercer who provided the presentation. The meeting adjourned at 3:55 P.M. June 4, 2013 H Z Z Z LAI Z L Z liJ NJ U.1 Yr,' W Z W Z =nQ • Z ¢0 2O w cc Lucc \ _ a ' w QJ V, • `V H. 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Henley Princess Anne - District 7 John D. Moss At-Large Amelia Ross-Hammond Kempsville - District 2 John E . Uhrin Beach - District 6 Rosemary Wilson At-Large James L. Wood Lynnhaven - District 5 CITY MANAGER: James K. Spore CITY ATTORNEY: Mark D. Stiles CITY ASSESSOR: Jerald Banagan CITY AUDITOR: Lyndon S . Remiss CITY CLERK: Ruth Hodges Fraser, MMC SARAH DEAL JENKINS, CMC DEPUTY CITY CLERK, II 2 MAYOR SESSOMS: I ' ll call the meeting to order. Dan let it be known that he ' s going to be a few minutes late . He ' s finishing up some things . And we have a presentation on the Fiscal Year 2014 Health Care Rates, and, Cindy, I guess we ' re going to let you start this off. We certainly do welcome you. It ' s always good to have the School Board and the Council together, and we look forward to a productive meeting. CINDY CURTIS : Yes, we do, Mayor . Thank you. MAYOR SESSOMS : Thank you very much. CINDY CURTIS : Welcome, everyone . We appreciate you being here with us to discuss some recommendations related to the plan design and rates for 2014 Health Care Plan for the combined City and Schools . The Benefits Executive Committee has spent hours and hours and hours reviewing previous performance of the plan, the fund balance of the plan, and the health of our financing to support the plan, taking a look at new options that are becoming present in terms of health care initiatives that can help us if not stop the rising cost of health care, hopefully bending the curve and slowing its rate of growth. And thanks to our work with Mercer, a lot of best practices have been evaluated and looked at and considered, and today we are fortunate to once again have Ken Jeffries here from Mercer to walk us through all of the work that we have done in the last several months since we met with you in March . As you remember, at that time we shared with you our strategic plan for health care . You all felt comfortable with that plan, that we were doing the due diligence necessary by which to develop a plan that would provide opportunities for robust health care for our employees while also sharing the expense between the City, itself, and the employees . So, with that, I look forward to turning this over to Ken Jeffries, and at the end we look forward to hearing your dialogue in the hopes that you can provide us some direction on how best to move forward. MAYOR SESSOMS: Ken, we welcome you. KEN JEFFRIES: Thank you . It ' s good to be with you again. Let me just hit the agenda real fast . Today, we ' re going to cover 2013 Experience Update, just to give you a projection of where we think 2013 is headed, 2014 Cost Projection and Health Care Reform Impact, look at some 2014 Plan Design Considerations that the Benefits 3 Executive Committee has considered, there ' s a few Plan Enhancements they are recommending, I ' ll show you the Recommended Rates and Contributions for the employees for 2014, and then just a summary of the Benefits Executive Committee Recommendations for ' 14 . First, the 2013 Experience . When I was here in March and went over this with you and we were showing a deficit of $2 . 8 million for 2013, that ' s changed by about $100, 000, we' re looking at projections with data through March of this year, so we ' re projecting most of the year, nine months of the year. We ' re using an estimated trend of 8% , and we ' re keeping membership consistent from what it was in March . So, we ' re looking at a $2 . 9 million deficit projected. There' s still a lot of the year to unfold, so we will continue to track this for the remaining nine months and report back to you. The last bullet talks about the Health Fund Balance . Working with your Accounting Department locally, we have projected the Health Fund Balance at December of this year to be a $4 . 2 million balance, and that ' s after factoring in this projected $2 . 9 million deficit . Looking at 2014 Cost Projections and Health Care Reform Impacts, we projected 2014 based on enrollment and claims data through March of this year. Some of our assumptions, 9% combined medical and pharmacy trend, no changes in administrative fees that Optima charges you to administer their plan . We did an RFP not too long ago. We were able to negotiate a 0% increase in the administrative fees, so it is 0% increase for 2013 . We are assuming $4 million of GASB funding required that we ' re putting in the plan for contribution strategy. We ' re for the status quo projection, at least, assuming constant enrollment based on 2013 enrollment in March . So, looking at Health Care Reform Impact for 2014, we have a few issues . First is the Affordable Care Act has mandated that anybody working on average thirty or more hours per week be offered full-time health plan benefits . We ' ll show you the impact of that in a moment . The Affordable Care Act also has an individual mandated component which says that every individual must obtain health insurance or pay a tax when they file their income tax . That ' s going to drive more people into health plans than ever before . Let me show you the impact of that, as well . There ' s fees, taxes . There ' s a temporary reinsurance fee of $63 per member in 2014 . Now, that ' s not per employee . That ' s per employee plus dependents, spouse, everybody, $63, and we send that off to the Federal government . I ' ll tell you the impact of that, 4 as well . Also, a smaller fee called the Comparative Effectiveness Fee, that ' s $2, again, based on members, not employees . The Affordable Care Act also had a component in it that allowed states to decide if they want to expand Medicaid eligibility. If they did that, it could allow some employees to qualify for Medicaid and possibly come off your plan. So, that would be a potential positive issue for you. Virginia has not made a decision on expanding Medicaid, so we have not made any assumption on your plan projections, good or bad, as it relates to Medicaid expansion. Finally, there ' s a shared responsibility provision in 2014, and we do not expect you to have any penalty issues with regard to that, which means your plan is affordable . You have an affordable plan for your employees . The Act states you have to offer at least affordable coverage to employees only, the employee only coverage, and you qualify for that . Also, the plan says that you have to have a plan that meets a minimum actuarial value, and your plans meet that, as well . So, we don ' t anticipate any penalties related to shared responsibility for 2014 . So, using those assumptions for 2014 projecting status quo, we ' re projecting gross costs to be $143 . 6 million for 2014, and additional costs of $9 . 3 million as a result of health care reform, and that breaks down as follows . The thirty-hour eligibility rule I mentioned, we ' re anticipating, the staff walked through this study, they identified about 450 individuals, I believe it was 250 in the City and 200 in Schools, who could potentially qualify for benefits in 2014 as a result of this thirty-hour rule . We ' re estimating that to be a potential impact of $3 million in 2014 . The individual mandate, again, we looked at those employees who currently waive coverage today. When I was here reporting to you in March, that number I reported was an $8 . 8 million impact . We revised that . Your staff did a survey of employees who currently waive coverage . The results show that a lot of employees who waive coverage have coverage elsewhere through a spouse or some other method . That allowed us to revise our estimate down to approximately 25% , so we ' re saying now that possibly 25% of those who waive coverage today may come back into your plan as a result of the Affordable Care Act and the individual mandate . That would equate to an additional $4 . 3 million in cost . The fees I mentioned to you, the reinsurance fees and the comparative effectiveness fees, combined they' re going to generate a cost of another $2 million to your plan. Going to the bottom bullet, taking those factors into consideration, 5 your 2014 gross costs including health care reform are estimated to be $152 . 9 million. If we did nothing, no plan design changes, and set our rates based on that, your rates would have to go up 12 . 2% from 2013, but we ' re considering plan design changes and that ' s what we ' re going to cover next. As Cindy mentioned, the Benefits Executive Committee has been working hard over the last several months evaluating many, many, changes, many more than appear on this list . They narrowed it down to these possibilities . On the left-hand side is a description of the health plan change . The center column talks about the estimated savings as a bracketed number, and if it ' s a cost it ' s un-bracketed. And on the right, it ' s the Benefits Executive Committee ' s recommendation of yes for 2014 , or no . If it ' s no, it ' s not just no forever . It ' s kind of still in consideration. I think all of these are still in play for subsequent years . So, looking at the first two, increasing the Point of Service deductible, today the deductible in the health plan is $100 for an individual and $200 for a family. The Benefits Committee looked at increasing that to $200 for an individual and $400 for a family or to $300 for an individual and $600 for a family. They landed on a recommendation of moving forward with the recommendation of $200 and $400 . If you were to adopt that it would save the plan $1 . 4 million in 2014 . The third bullet down talks about removing the Point of Service deductible from office visits and urgent care . Right now, the way your plan is structured, if somebody wants to go to a primary care physician, they have got to meet the deductible first . They have got to pay that $100 first before they get into the co-pay structure, the $20 co-pay for a PCP . That ' s not really standard when we look at other plans, and you want to remove barriers for employees, financial barriers, specifically, for them to get basic types of care that they need. So, the Committee is recommending removing the deductible from those services and having them pay a straight co-pay. That ' s adding somewhat of a cost, $800, 000 to the plan in 2014 . The next two bullets they considered were hospital co-pays . Right now, your plan has a co-pay of $250 if you have an inpatient stay. So, the way that works, if you ' re admitted to the hospital, if you've met your $100 deductible, then you pay a $250 co-pay for inpatient stay, then it ' s covered 100% after that . The group is considering two options . They ' re considering changing the $250 to $350 or to $500 . The Benefits Executive 6 Committee recommendation was to change it to $350 for 2014 , again, considering the other options for a subsequent plan year . Savings on that is a little less than $100, 000 . Below that is outpatient surgery co-pays . The current outpatient surgery co-pay is $100 . They considered a $200 co-pay and a $250 co-pay, again, landing at the $200 level as a recommendation. If that ' s adopted, it ' s approximately a $700, 000 savings to the plan in 2014 . The next is pharmacy. The first one talks about pharmacy co-pays, and I ' ll show you what those co-pays are . But adjusting the co-pays, I 'm going to show you on the next page because I don ' t remember the numbers . I think it ' s 10/25, it ' s going to 15/35 . Adopting the new pharmacy co-pays would save the plan $1 . 1 million -- I ' m sorry, $900, 000 . The next two items were considerations about limiting the pharmacy network or having a preferred pharmacy network. Limiting the pharmacy network would have actually eliminated pharmacies from use from your employees . Some employees would not be able to continue to use pharmacies they use today. I think that ' s why the Committee said let ' s not go that drastic this first year . They considered a preferred pharmacy network. The way the preferred pharmacy network is going to work is it ' s a smaller network of pharmacies that are lower cost, and the incentive is if you use those pharmacies you pay the current pharmacy co-pays . You don ' t have to pay the increased pharmacy co-pay, so there ' s a little bit of incentive for employees to utilize lower cost pharmacy solutions . Going to the preferred pharmacy solution saves the plan approximately $600, 000 . The next to the last item here is the global maternity office visit . Currently, it ' s a $50 global maternity payment, and it ' s being increased or recommended to increase to $200 . That ' s very consistent with what we see in the local market and nationally, as far as maternity global co-pay. That saves a little under $100, 000, as well . Finally, with the Affordable Care Act and the individual mandate and the influx of new people into the system and for employers covering health care, a lot of employers are trying to figure out ways to keep people off their plans, honestly. And we ' re hearing a lot of talk about spousal surcharges . So, the way that would work is if the spouse has coverage available to them elsewhere through their own employer and they would decide to go on your plan, and if you adopted the spousal surcharge, they would have to pay an additional premium. For this calculation, we use $50 a month or $600 per year of the spousal surcharge . 7 Now, if they didn ' t have coverage at all available to them elsewhere, there is no charge . They would just come under your plan . The idea is if they have coverage with their own employer, why should you as an employer take the risk of their health care when their employer could certainly take that risk? The Benefits Executive Committee looked at this and evaluated it and thought let ' s table this for this year and just watch it . That ' s a potential $800, 000 savings to the plan if you do that . So, the total of these "yes ' s" on the right-hand column total $2 . 8 million . These numbers are all rounded, so you might not get exactly $2 . 8 million . Let me just show you what some look like compared to our current plan design . So, on the left-hand side is the way the current plan design is configured. On the right-hand side is our recommendations put in place, so you ' ll see the deductible . On the left-hand side for 2013, it ' s $100 and $200 . On the right-hand side, it ' s $200/$400, which is the recommendation of the Benefits Committee. If you go down the line, I just wanted to point out to look at the PCP . It has a $20 co-pay. It says AD, that ' s after deductible . So, today they' ve got to meet that $100 deductible before they get into the co-pay. In 2014, we ' re remembering they not have to meet that deductible, that they just pay the $20 co-pay and go to the doctor. Going to the bottom just to look at the preferred, the drug listing, there ' s four tiers in your drug plan: Preferred; Standard; Premium; and Premium Plus . We ' re proposing going from $10 Preferred to $15 . And, again, the asterisk is there that says if you use the Preferred Network for pharmacies, you wouldn' t have to pay the additional co-pay. It would go back to the original co-pay of $10 . So, all of these again are up to $2 . 38 million worth of savings . That would reduce your required increase from 12 . 2% down to 10 . 1% for 2014 . In addition to the plan design options I just discussed, the group is considering some plan enhancements to roll out in 2014, as well . The first one is Telemedicine, MD Live, through Optima Health plans . Telemedicine provides employees with 24/7 on-demand access to physicians, Board Certified physicians, real time via video or phone , This is not necessarily a new thing . It ' s been out there, but technology has caught up and technology has made this a real thing for employers . We ' re seeing a lot more employers adopting this for 2014 . It could be used for employees instead of going to the Emergency Room or Urgent Care . It ' s a much cheaper service, so we anticipate some savings from this by avoiding 8 the Emergency Room visits and Urgent Care visits and even really unnecessary doctor' s office visits for really minor issues and non-acute type of issues for employees . The next item is Accordant Rare Disease Management . This is a disease management fund. It specializes in managing members with rare chronic diseases . If an employee qualifies for this, their disease qualifies for this, there will be no cost to them. They would be managed by this company to help them become more compliant with their regiment of care and stay compliant with their drugs . I can tell you as an example, a compliant diabetic, somebody who goes and sees their doctor, gets proper testing, stays on their drugs, cost about a third of a non-compliant diabetic because they ' re going to avoid that hospital admission or that ER stay, things of that nature . This company specializes in keeping people compliant with their care . Finally, as a plan enhancement, we ' re looking at something called Sentara Quality Care Network, also known as SQCN. You might have heard of patient center medical homes . This is a patient center continuum of care delivery. There ' s 2000 SQCN physicians in the Hampton Roads area right now . SQCN will apply population health management strategies to your employees . They will get baseline data on all of your employees that are attributed to their practices . That will become their starting point for measuring how they ' ve affected and changed their care going forward . The goal here is to reduce hospital admissions and readmissions, facilitation of followup after hospital stay, reduce unnecessary emergency department visits and utilization, really closing the gaps in care and having people stay compliant with their care . Now, each of these three enhancements, we believe, have favorable return on investment. However, for the 2014 plan design, we ' ve assumed a one-to-one return on investment . We ' re not assuming major savings from these in Year One, just to be conservative . So, here ' s a look at the rates . So, if we were to adopt these plan changes and have a 10 . 1% increase in 2014, there ' s two boxes . The box on the upper section is if the employee is compliant or participates in the Wellness for Life initiative and incentive, you may recall that was put in place last year, employees that are in the program receive a $500 premium credit . So, if they are in the program for Wellness for Life and compliant, an employee only will pay $49 . 40 per month next year, which is a $4 . 54 increase over what he ' s paying this year . You can read down the line . Employee plus child would increase $11 . 64 and a family would increases almost $54 in 9 2014 . The box on the bottom section is the rates for those who choose not to participate in the Wellness for Life program and have to pay that additional $500 . That individual would pay $91 instead of paying $49. 40 . This contribution strategy is consistent with your strategy in the past . It ' s paying 90% of employee only cost, and it ends up in total about an 80/20 split . The employer is picking up about 80% of the total cost, and the employees are picking up about 20% of the cost . That ' s been consistent over the last several years . So, in summary, these are the recommendations of the Benefits Executive Committee for 2014 . For the Point of Service Plan, to increase the deductible from $100/$200 today to $200/$400 in 2014, remove the deductible from office visits/urgent care services, increase hospital co-pay from $250 to $350, increase outpatient surgery co-pay from $100 to $200, and increase the global maternity from $50 to $200 . Now, for the Point of Service and High Deductible Health Plans there ' s two impacts . One is increasing the pharmacy co-pays, as we described earlier, and offering the preferred pharmacy network to reduce pharmacy co-pay. Plan enhancements, we discussed, Telemedicine, Accordant Rare Disease Management Program, and Sentara Quality Care Network, and adopting all of these would result in a 10 . 1% increase for 2014 . With that, can I answer any questions? MAYOR SESSOMS: Questions? BOARD MEMBER ANDERSON: In regards to the global maternity office visit co-pay, are you saying that every single time a pregnant lady goes to the obstetrician they will have to pay a co-pay of $200? KEN JEFFRIES: No . That ' s for the duration of the pregnancy. So, they pay that $200 . That will take care of their office visits for the duration of the pregnancy . BOARD MEMBER ANDERSON: That ' s what I needed to know. Thank you . KEN JEFFRIES : You ' re welcome . MAYOR SESSOMS: Jim? COUNCILMAN WOOD: Could you explain this pharmacy thing 10 a little bit more, the limited versus preferred? KEN JEFFRIES : Yes . The limited pharmacy network would have a list of pharmacies that right now, let ' s throw out a number, say that there ' s fifty pharmacies in your network today that could be used by your employees . A limited pharmacy network may knock that down to thirty, for example, and eliminate certain pharmacies from use for your employees . COUNCILMAN WOOD: When you say fifty or thirty pharmacies, are you saying like -- KEN JEFFRIES: You might knock out CVS, for example. They would not be allowed to use a CVS Pharmacy if it was not part of the limited network. COUNCILMAN WOOD: But it would also include pharmacies that have multiple locations, because they pretty much all have multiple locations now? KEN JEFFRIES : Yes . COUNCILMAN WOOD: Because that just seems like it ' s a fairly significant savings that we ' re passing on there if there are, in fact, plenty of pharmacies out there that people could go to. KEN JEFFRIES : The limited pharmacy down to the two, I think the Optima Limited Pharmacy Program would bring it down to Walgreens and Walmart, and everyone else would be excluded . That ' s how we attain that savings . The Benefits Executive Committee thought that was too drastic of a cut, at least for this round . MAYOR SESSOMS: Bill? COUNCILMAN DESTEPN: On Page 5, can you tell me, I don ' t quite understand the justification or the driver for the temporary reinsurance fees, comparative effectiveness fees . I 've tried to do research on this, and I 'm just not getting it . KEN JEFFRIES: I think the way to explain temporary reinsurance fees is that State exchanges are opening up, and this is a way to help fund catastrophic events and those types of situations . So, they' re building up a reserve fund in these State-run agencies, and they' re collecting it from all employers across the country. 11 COUNCILMAN DESTEPH: So, is it State directed or Federal directed? KEN JEFFRIES: Well, it goes to Federal . It ' s Federal directed . COUNCILMAN DESTEPH: So, then are the funds passed, from a catastrophic standpoint, I thought that was handled today by the outside insurance companies; is that now going to be handled by the State or the Federal Government? I guess, explain that a little further . KEN JEFFRIES : For our plan, for example, we have an outside stop-loss insurance company that 's specific to our plan . The way the State agencies are going to run is I think the Federal Government is going to be funding the risk for these catastrophic claims across the board. COUNCILMAN DESTEPH: So, then do we no longer pay for our outside stop? KEN JEFFRIES: No, we do, because we ' re not part of the State exchange . We ' re still our own self-funded plan. COUNCILMAN DESTEPH: Then why are we paying it? KEN JEFFRIES: Because it ' s part of the Accountable Care Act and it ' s mandated as part of the law. It ' s essentially a tax. COUNCILMAN DESTEPH: A tax we don ' t benefit from. KEN JEFFRIES : You do not benefit from it . COUNCILMAN DESTEPH: Or would never have a benefit from, whatsoever . Okay. I 'm very familiar with that . Page 6, under the individual mandate, you don' t have to do it here, but you went through a couple of things that provided the breakdown of that . Can you provide me a full breakdown of what that $4 . 2 million is, please? You don ' t have to do it here . You can do it separately, but that would be great . KEN JEFFRIES : Glad, because I can ' t do it right here, but I will . COUNCILMAN DESTEPH: Thank you. 12 KEN JEFFRIES: Sure . MAYOR SESSOMS: Other questions? John? COUNCILMAN MOSS: Going to Page 5, could you provide at a later date a decomposition of what part of that percentage growth is pharmacy relative to medical? I know the National trend forecast for ' 13 was 6 . 4% for pharmacy. That ' s a National wide average for pharmacy growth. And also the National average for medical care was around 6. 3, somewhere in that range, 6, but I ' ve seen different indexes, so I 'm just interested how we got to 9 . KEN JEFFRIES: Yes . I can tell you real quickly, the 6% you ' re looking at on the National is after plan design changes . So, before plan design changes, the National average for health care trend is about 8 1/2% . After plan design changes, which are things like we 've talked about here, reduces it down to that 6% range. COUNCILMAN MOSS: Right, but this, I 'm talking about there is a medical component . KEN JEFFRIES : I understand . COUNCILMAN MOSS : And these two are less than average, and I 'm just curious as to the logic behind that to understand that . Now, do we understand, do we know when we look at out-of-pocket, when we say an average family or an average enrollee, because on a National basis an average family of four out-of-pocket including premiums and co-pays and everything, is around $20, 000? That ' s the National average of a family of four . That ' s Milliman Index . You ' re probably familiar with it . Do we know what the average experience rate is for our enrollees relative to the National average? KEN JEFFRIES: We can get that . We have that data . COUNCILMAN MOSS: I think that would be -- because one of the things I ' ve seen in a product your company did for a larger oil company had a lot more robust comparative statistics in the report . I think that would be good for us to know where we stand, in terms of utilization performance relative to other parts of the industry and the government, so I would like to see that . I think that would be helpful . You mentioned later about linked incentives to results when 13 you went back and talked about the incentives for participation. What are the results and the metrics that people have to meet to be compliant? That was your word, "compliant" . KEN JEFFRIES: In which section? COUNCILMAN MOSS: Well, you said it in several places . You talked about incentives, and then in the back you talked about the chart and talked about their eligibility to receive the $500 credit, you said, as long as they are compliant . So, I 'm trying to understand what the operational meaning of compliant is . KEN JEFFRIES: I follow you now . The Wellness for Life plan starts off with an employee taking a health assessment, filling out a form, based on their health status, with biometrics . So, that means they get actual blood drawn . They get statistics by clinicians to fill in that data . So, that ' s the first step. If they complete that and they have no health risks, they qualify for $500 . That ' s step one . If they complete that and they show two or more health risks, they need to engage with a clinician, a health coach from the health plan, to get the $500 . So, you want people to first identify issues in these individuals . Some people come to these tests not knowing what they have, walking away from these tests finding out "I 'm pre-diabetic" or "I have hypertension", or something else, and then they engage with a health coach . So, it ' s helping people understand their numbers and engage the help to correct that . COUNCILMAN MOSS: I guess, what I 'm asking, I am familiar with consumer-driven designed health plans which actually set actual metrics people have to achieve and continue to achieve and receive a credit so it ' s prorated over the pay periods that they receive it, is this plan of that kind of nature where there are prescribed numerical things they have to achieve to continue to receive the credit? KEN JEFFRIES: It ' s not . You ' re talking about outcomes, measures, I think? COUNCILMAN MOSS : Yes . That ' s what the consumer -- industry standard . KEN JEFFRIES : Outcomes are becoming more popular. I wouldn ' t call it an industry standard, at least with my clients or locally, but it is 14 something we ' re considering . It ' s on the table and something I think for another iteration. COUNCILMAN MOSS : Just lastly, if you look at that 9% that ' s on Page 5, I don ' t know, I realize you don ' t predict too far in the future, but 9% per year growth or even 10% per year growth rate, that ' s a doubling factor every seven to eight years of cost . KEN JEFFRIES : That ' s right on. COUNCILMAN MOSS : I think to all of us around here, that ' s got to be the most alarm signal of "danger, danger, Will Robinson"; that ' s just not sustainable . So, we ' ve got to figure out how to make this health performance or these consumer-driven design plans work to drive down costs . And lastly, I know Chesapeake has gone into the business, they ' re operating two pharmacies or something. They've got some kind of plan where it ' s a City-operated pharmacy where people go to get drugs . I don' t know, but I would like to hear more at a later date how that ' s working for them and how that ' s helping them drive down costs . And that might be maybe a regional partnership thing about how does that work to make pharmacy drugs more appropriate. KEN JEFFRIES: That ' s for their School System only and it ' s for their upcoming plan year, so there ' s no experience on that yet, but you can see what the logic is . We could provide that . COUNCILMAN MOSS: That would be great. Thank you . MAYOR SESSOMS: Glenn? COUNCILMAN DAVIS : Ken, two questions for you . When you started, you talked about the Health Care Reform Act and the $9 . 3 million in cost associated with that . Do you have kind of a ballpark of what the rate increase would have been without having to account for that $9. 3 million in the change in assumptions that came with it? Would it be constant? Would it be 1% or 2% increase? KEN JEFFRIES: It would be 2% or 3% less . COUNCILMAN DAVIS: So, about 7% from the 9 . 3? KEN JEFFRIES : You start from the 12 . 2 and knock it down by 3; probably 9 1/2 or 10 . COUNCILMAN DAVIS : I 've got you . Second question, so I 15 guess there was a decision to forego the surcharge for spouses with the available employer coverage . We 've seen a lot of large employers actually go that route and actually not allow for what y ' all looked at, which was to have a small fee to keep them on the plan. What concerns did y ' all have to forego that, because obviously there ' s significant cost to the employees by doing so? Obviously, we could have not increased the pharmacy co-pays had we done that . We could not have increase some of the deductibles and the other co-pays had we done that . What was the concern that y' all did not want to look at that option? KEN JEFFRIES : Farrell is dying to answer this question. FARRELL NANZAKER: We had to look at this as a comprehensive whole health care program and not just looking at cost but looking at future trends . As Ken has pointed out, the impact of the Affordable Health Care Act, even considering what our employees have experienced over the last few years in terms of raises or no raises, also looking forward in future years that we had to get a handle on these costs, but we ' re still going to have increased costs in the future. We didn ' t want to do everything in one year . We wanted to step it up as years go along to try to minimize as much as we can, although we can' t -- a 10% increase is a 10% increase to employees, in terms of the rate increases, but we didn ' t want to do everything at one time . We wanted to try to step it up . COUNCILMAN DAVIS : And I understand the step-up scenario, but I 'm looking more of a step-down scenario. When it comes to John ' s point, if we ' re going to continue to see increases in cost per person in our plan, the solution would be those that don ' t have to be inside the plan to motivate them to use other options they have . So, by doing that, I think we actually decrease or scale back our trend line a little bit with regards to future costs . And if we ' re concerned about out-of-pocket cost by our employees, if some of them are on prescription drugs, they don ' t have the choice to take the drug or not take the drug. And if we ' re going to increase their co-pay on them, it ' s going to be felt in the wallet . If just by offsetting that by having spouses who have other options take those options, we cannot increase that cost, it just seems like it makes complete sense . And absent the "we don ' t want to do it this year", I just don ' t know any reason that we ' re not . FARRELL HANZARER: It was the Benefits Executive 16 Committee recommendation . What you ' re seeing is recommendations and what you ' re doing is giving feedback. We need to perhaps change what we 've recommended. That ' s exactly what the purpose of today is, is to hear these kinds of things that we should consider . COUNCILMAN DAVIS : I appreciate it . FARRELL HANZARER: Thank you . MAYOR SESSOMS : We have Bill Brunke, then Jim Wood, then Bobby Dyer . VICE-CHAIRMAN BRUNKE: Two quick unrelated questions . One, it may be somewhat academic because there ' s been no estimate provided for potential savings associated with the expansion of Medicaid, but is the idea here that Medicaid would expand in such a way that being covered under Medicaid would be more attractive than being covered under our own plan? KEN JEFFRIES : Medicaid expansion would mean that it would increase the income level of somebody who could then qualify for Medicaid, so more people would qualify for Medicaid. And if they ' re qualified for Medicaid, they would at least have the option to consider Medicaid coverage instead of your coverage . Now, whether or not they would take that as good, I don ' t know. Medicaid coverage is good. Part of the issue with Medicaid coverage is access to physicians and getting into a physician ' s office . Whether or not that would actually make an impact, when we do our studies on this, we do some small estimate of migration of people off of an employer ' s plan going to Medicaid, but it ' s not really a significant driver. VICE-CHAIRMAN BRUNKE; Second question revolves around the fact that we do come in here year after year and tweak and tweak and tweak and find ourselves every year with unsustainable increase that just goes on year after year and not nearly as consistent as what the compensation adjustments have been. What consideration has been given to moving away from tweaking and drastically changing the plan, maybe moving to some form of high deductible plan as the benchmark where individuals are more accountable for managing the cost of their care, as opposed to $20 out-of-pocket; while it may be a lot of money, it ' s a little different than managing the real cost of your care? KEN JEFFRIES : That ' s a good question, and the Benefits Committee has looked at 17 that . We looked at what does a full replacement high deductible health plan look like, and is that something we ' re ready to embark upon today. And the answer was no, but it ' s still one of the considerations for future years . Things that I think are really going to change the dynamics of health care are things like Wellness for Life . Wellness for Life is only one year old, but you ' ve got 80% of your employees who now know their numbers . They ' re engaged with health coaches . That ' s going to provide benefits into the future . That ' s the thing that is going to drive your trend in a different direction than this unsustainable 8% or 9% we ' re seeing today. It ' s that kind of thing, along with the SQCN Network, this Patient Center Medical Home, the way care is being delivered is changing in our country. It ' s issues like that that are actually going to help, I think, bend the trend versus just cost shifting to employees and doing little changes here and there . So, I think your staff has done a great job identifying the issues and considering them. Like I said, nothing is off the table . But I think Wellness for Life was a great step in the right direction to actually doing something that might actually bend your health care trend over time . VICE-CHAIRMAN BRUNKE: Thank you. MAYOR SESSOMS: Jim? COUNCILMAN WOOD: Going back to John ' s comments on the in-house pharmacy in Chesapeake, I know there ' s some large private-sector corporations that actually have in-house clinics, as well, for their employees . And I would imagine the cost of medical staff to handle the average cold/flu type thing would probably save us some money. I keep going back to that page that has the yes/no columns on there, and if I do my math right I see about $2 . 44 million roughly in additional savings that you could achieve there, realizing that you can ' t just take the "no' s" . You have to add the "yes ' s" back in . Then I go to Page 12 and I see for an average family they' re going to increase $650 a year, which probably corresponds to just about what we gave them in a pay increase this year after we take out the VRS thing, and that ' s just not the way we need to go . I understand we want to do things in the best possible way, but in the same respect we need to make sure our plan is adequate but doesn ' t cost an arm and a leg. I would imagine there ' s probably a lot of stuff in there we don ' t necessarily need. 18 Again, when I see this additional $2 . 5 million that could come out of it, maybe some of these things aren ' t as Draconian as we think they are, particularly in light of the fact how much it ' s going to cost the actual employees with the family. That ' s always been my concern, because it just continues to go up, up, and up . And I was just pulling up online on my health care, and with an extraordinarily small group where I work, my plan is a lot less for my family than what the City is, and it doesn' t cover as much stuff here. So, that ' s why I think we really need to look at that, anything outside the box . MAYOR SESSOMS: Bobby? COUNCILMAN DYER: Yes, thank you. I work part time for a health care provider, and I can tell you that they' re bracing for some incredibly tough times in the future . The hospitals, the whole health care industry over the next couple of years is going through a major and I think painful transformation as we go forward with this . And once again, in your crystal ball, in terms of your strategic foresight, we ' re going to have millions more people, in general, not just what ' s going on here, but just what ' s going on, in general, with the mandate affecting the risk of pre-existing conditions, all kinds of plethora of changes that are going to be out there . And from what I understand, they ' re also projecting significant physician shortages in the future, also nurse shortages in the future, so they ' re probably going to have more ancillary people providing health care, nurse clinicians, physicians ' assistants . But the scary part, I think, that ' s going to impact the City, I remember a couple of years ago when Speaker Howell was speaking with a group, and he said if there was a dramatic increase in Medicaid which there probably will be in the Commonwealth, that ' s going to affect other core services, like Public Safety and Education, because Medicaid is, in fact, a State-run type of program. So, if I could just get your comments about what it ' s going to look like in the future? I agree with Bill . Here we sit another year looking at stuff . What ' s the future going to look like? It could be worse . KEN JEFFRIES : We ' ve worked with a good number of possible systems, and they are, like you said, bracing for the future, making many changes on their own. I think your comment about physician shortages, whether or not we have shortages or just inability to get in to see physicians because of the influx of new insured members into the system, I think that ' s why things like Telemedicine are 19 coming out and becoming more popular as options for employers . Things are going to change dramatically in the next couple of years . Physician extender use, patient center medical homes, you get to see the physician. You get to get into the physician pretty quickly in these situations, but a lot of times you ' re being managed by a nurse manager, which is fine . That ' s probably very adequate care with the oversight of the physician. So, your comments are on track and on target . I wish I had a crystal ball to predict the future . We only go out one or two years at a time . Our actuaries don ' t let us talk much further than that . COUNCILMAN DYER: Thank you . MAYOR SESSOMS: Other questions or comments to pass on? Amelia? COUNCIL ROSS-HAMMOND: I just wanted to ask, Page 10, with Telemedicine, I just want to ask how much consideration to service have you done to see if people technically adapt for this new program of Telemedicine and are prepared to move into this? What training is going to go through for the employers? I would like to know a little bit more about that, because people are still in the habit of going to see the doctor . So, how are you going to get them up to speed for that, and what ' s it going to cost the City? KEN JEFFRIES : Well, the vendor is going to do with your Benefits team a lot of communication around this and telling people about it, telling them what it is, how to access it, when to use it . So, there ' s going to be a lot of communication on that . As far as the quality, you said something about the quality; is it the physicians you ' re asking me about, the quality of the providers on the other end of the phone? COUNCIL ROSS-HAMMOND: There will be questions around because this will be new, so you have to get the employers up to understanding the whole technical savvy, the video, and so forth. There ' s a lot behind it than it looks . KEN JEFFRIES: There is going to be a learning curve, and there is going to be a lot of communication, but we found that it ' s pretty intuitive . We see people with Smartphones, and depending on the age of the person they might be more apt to use the Tele-doc than they would to go to the doctor . So, depending on your demographic, you may get more or less utilization and acceptance of that, as well . It ' s something that we ' re seeing become much more 20 widespread. Where it ' s been implemented, I have not heard any negative feedback. I ' ve heard all positive feedback on this . They' re all Board Certified physicians taking these calls . We can get some more information, but there' s going to be a lot more communication yet to come on this, if we ' re allowed to adopt this . COUNCIL ROSS-HAMMOND: Thank you . MAYOR SESSOMS: Dan? CHAIRMAN EDWARDS : Are there any mail order pharmacy options that were explored? KEN JEFFRIES : Yes . CHAIRMAN EDWARDS: I know some of the National plans sort of drive you there with huge incentives, but did we look at those? KEN JEFFRIES: We did, and you have in your plan a mail order options today. So, individuals who are chronic and get meds every month, have recurring prescriptions, they could get mail order . It ' s cheaper. It ' s really easier. It ' s getting people to adopt that practice . Usually, once they do it they stay with it . It ' s just getting them to do it the first time . So, you have that option today. CHAIRMAN EDWARDS : Is it cheaper than -- KEN JEFFRIES: It is cheaper . It ' s not highly utilized though . It ' s 4% or 5%, 7%? It ' s cheaper for the employee, that ' s true . It ' s not necessarily cheaper for the employer . It ' s cheaper for the employee, because if you go get a prescription today and you pay your co-pay of $10, if you go three times you pay $30 . On mail order, you can get three months worth and pay two co-pays, so you save a little bit on the co-pay. MAYOR SESSOMS : Any other questions or comments? John? COUNCILMAN MOSS : I ' d like to know, are there any private citizens or business professionals who operate large corporations like Stihl or any other places that serve on our Executive Committee? CINDY CURTIS: No, sir . It ' s all City employees . We did meet with representatives from 21 Towne Bank who assist them in the design of their plan. And understanding what we were working with, they left saying that we were turning over all of the rocks that we needed to look under to try to ascertain what the best way was to move forward. I would like to just share that there ' s a couple of issues that have held us back from maybe pushing forward as robustly as you might have wanted us to. The first is the Federal networks that are getting ready to become available . Until we understand how they work and how well they work, we felt it inappropriate to force employees into those or their spouses into those . We felt that that could negatively impact recruitment and retention of employees . So, we see that as an opportunity, but there is so little known about them because they are not yet operating. That constrained us from taking some of those more forward steps that you all have mentioned, which is why we wanted to show you the consideration was there, but we just were reticent to do it until we knew more about it . In terms of Telemedicine, it is being utilized successfully. We had them show us it . It is not to be used for any type of significant care . This is for poison ivy, viral infections, sore throats . I ' ll give an example . I had what I thought was just significant sore throat coming from probably allergies . I waited too long to go in because I did haven ' t time to wait in a doctor ' s office. This would allow me to schedule a distinct time . I could have talked to a doc, told him my symptoms . I probably would have gotten what I needed . I would have done it immediately. It ' s very simple . You don ' t have to necessarily have a visual contact . You can do it over the phone . It ' s quick and simple . Everybody wins . Doctors can see more patients and employees don' t spend that amount of time away from the office, so we really think it could be a win. COUNCILMAN MOSS: If I can follow up, I think we would be well-advised to expand the membership of the Executive Committee and include people from, like, Dominion Resources and some other large employers to get insight; not to drive, but to bring a different perspective to the table . I also think it ' s important on Slide 12 that we would add another column to actually show the increased employer contribution in ' 14 over ' 13, because I don ' t think tax payers are getting credit, but they ' re also paying more . That ' s not mentioned on that slide . CINDY CURTIS : In communication, you ' re right . That would be very important for us to 22 share . COUNCILMAN MOSS : I think it ' s an important distinction, because I think words matter . "Employer" just sounds like some unique abstract kind of thing. That should say "tax payer" ; that ' s us . I realize employees are tax payers, too, but it ' s not an abstract entity that ' s paying that cost . CINDY CURTIS: Good point . COUNCILMAN MOSS: I think that might be helpful to remind people where that money comes from. CINDY CURTIS: I 've heard quite a few things that individuals would like to get some additional information on, and we ' ll be happy to provide that . I do need to let you know we need to attempt, if at all possible, to come to a decision point before the end of July because we then have to advertise, create all the collateral materials, and meet with staff to let them know what is coming next year . So, I just want to let you know, we are under somewhat of a time crunch, in terms of making sure we move forward in some reasonable manner to get this done . The other thing that we have come to realize in discussions with the City Manager and the Benefits Executive Committee is that at times this is a little awkward to be doing outside of the budget cycle so you could have a full understanding of employee compensation, in total . So, we will be working to be back to you next March with a recommendation for the 2015 Plan Year so it could be part of the total compensation discussion during the budget season, because this is awkward . MAYOR SESSOMS: Louis? VICE-MAYOR JONES : Cindy, it seems to me like a couple of years ago our reserve was $30 million? CINDY CURTIS : Yes, Sir . VICE-MAYOR JONES : We ' re now down to $4 . 2 million? CINDY CURTIS : Yes, Sir . We made that tactical decision during the recession . We held employees harmless for health care increases for five years . 23 VICE-MAYOR JONES : I guess, the point I 'm trying to make is, with a 10% increase next year and with only $4 . 2 million in our reserve, it ' s unsustainable to continue to do what we ' re doing. It ' s so obvious that we ' re going to have to make some significant changes in this plan next year . CINDY CURTIS : Yes, Sir . We agree that there are changes, further changes that need to occur. We see real hope with some of the new programs that are coming out from the Federal Government, but until we understand what they are, we felt it would be inappropriate for us to force the use of that in the first year of existence . I think we would have real issues associated with recruitment of staff and potentially even retention of some . But I hear what you ' re saying, and you ' re not wrong. We can not continue . Employees, if we had a message to send to employees, there would be several . The first is, fully participate in Wellness for Life . You are driving these costs . We need to look at each other and say, "Why aren' t you getting up and moving more? Why are you doing some of these life decisions that you are doing, because you are costing all of us and the tax payers more money?" That ' s why we rolled out Wellness for Life and were excited by what we believe will be there. The other is that there needs to be, I 'm hearing from you strongly, continued expectations for the employees to pick up a greater share of this load. We ' re doing that slowly here . We can do it more quickly, if you give us direction to do that . MAYOR SESSOMS : Other questions? I 'm going to follow up on what Louis said, but I want to make sure everyone is done . John hit it . And let me say to you, I appreciate what has been presented here today, and I 'm sure we ' ll probably move forward with something very close, but at the same time, and I heard you talking about coming in March with the 2015, but reality is what it is . And if you look at these numbers, your biggest savings gets into the deductible, if you sit back and see the big change there. And, please, understand, I don ' t pretend to know what I 'm talking about here, but I believe there ' s a new approach about companies putting $1 million or $2 million into a pot of money to help with deductibles . If the deductible got increased to a $1, 000 or $1, 500, it ' s pretty standard, or higher, the ones that I look at in the private side, and the employees that perhaps have lower salaries, that pot of money can be used to help, if they have the need for the money; in 24 other words, they have the illness and they need some help. But I would sit back and say to you, the reality is, we ' re not going to be able to keep even $300 and $600 type deductibles, if you want me to give you my personal opinion. And I don ' t think the employees -- we 've got to be honest, the employees see that, too. It ' s clear as day. You go out and look at what is being paid. I think my deductible is $2, 500 and $5, 000 for the family. I don ' t know what you all ' s are, but it is what it is . But, again, it gets down to total compensation, which I come back and say this is not a way -- please, don ' t anyone think I 'm trying to take something away from the employee . We want to be fair, but at the same time, let me say, you heard Towne Bank had come in. We had been offered to bid on it . We have a benefits company. We did not bid and we ' re not going to bid. But I said to them we ' ll be glad to come in and review it, and we have a rich plan here . That ' s the first thing that came to me . That is reality, and savings can be done, as was mentioned by Jim. Some of these claims do not have to be in the plan, and that will have less of an impact on the employee and on the tax payer . But I think we ' re on the right track here in the interim, but I think it ' s time to be communicating there are going to be some very different opportunities to be used in addressing our health care program within the City in the years to come, and it ' s not going to just be us . CINDY CURTIS : I hear you, Sir. MAYOR SESSOMS: I welcome input from other private sectors, large companies, and so forth. Anyway, I thank you for the presentation. Very informative . Reality needs to set in, and I think it is, and we ' ll deal with it, but we will be fair . That ' s the key thing we have to do, is be fair to the tax payer, to the employee, and I know we have a history of doing that and we will . CINDY CURTIS: Unless I hear otherwise, and feel free to give me that otherwise, we will answer the questions that have been asked. And if you are comfortable with this, and tell me if you are not, we could bring forward an ordinance on the 25th for you all to vote on, or we can wait and come back to you again in July with any changes you want, or on the previous, so the 18th, and you could give us more feedback in terms of what changes you would like to have. 25 MAYOR SESSOMS: I think what I ' d recommend is you bring something to us as a result of the questions that have been raised. CINDY CURTIS : Yes, Sir . MAYOR SESSOMS: And get that to us as soon as you can so we can put it on the table to talk about. CINDY CURTIS: We will do that . MAYOR SESSOMS : Then we ' ll act on it as soon as we can . CINDY CURTIS : All right . Thank you, Sir . MAYOR SESSOMS : All right . School Board and Council Members, thanks for all being here today, and I appreciate you all taking the time on this very important subject . We ' ll adjourn. (Whereupon, the Joint Meeting was adjourned. ) -3- pG\NIA tio, {O 2 u 5.. VIRGINIA BEACH CITY COUNCIL Virginia Beach, Virginia June 4, 2013 Mayor William D. Sessoms, Jr., called to order the City Council's Briefings for the HUMAN RIGHTS COMMISSION ANNUAL REPORT in the City Council Conference Room, Tuesday, June 4, 2013, at 4.'06 P.M. Council Members Present: Glenn R. Davis, William R. "Bill" DeSteph, Harry E. Diezel, Robert M. Dyer, Barbara M. Henley, Vice Mayor Louis R. Jones, John D. Moss, Mayor William D. Sessoms, Jr., John E Uhrin, Rosemary Wilson and James L. Wood Council Members Absent: None June 4, 2013 -4- CITY COUNCIL'S BRIEFINGS HUMAN RIGHTS COMMISSION ANNUAL REPORT 4:06 P.M. Mayor Sessoms welcomed James E. Parke, Chairman — Human Rights Commission. Mr. Parke expressed his appreciation to City Council for their continued support of the Human Rights Commission; and,particularly, Councilmen Davis and Dyer for serving as City Council Liaisons: CITY OF VIRGINIA BEACH HUMAN RIGHTS COMMISSION Jur,i0:.. 20 3 14.) 1/_.�� The Human Rights Commission is comprised of fifteen (15) person representatives of the diversity of residents in the City. They are appointed by City Council and represent a diverse cross-section of the community;age, race,gender, ethnicity and religious affiliations: Membership �mr Jomes E.Porke,Choirman Cliff Rice,Vice-Chair Geraldine King Hunt,2'0 Vice-Chair Beatriz Amberrnan Vivian E.Bloize Rev.E.Roy Cox,Sr. Gene J.Hou L.W."Doff"Kliewer,Jr. Agnes Moon Luis Rivera,MA Ed. Elaine Scholl•Igelica,LSCW Teresa Stanley Sylvia Nery-Strickland Rabbi Israel Zoberman I June 4, 2013 -5- • CITY COUNCIL'S BRIEFINGS HUMAN RIGHTS COMMISSION ANNUAL REPORT (Continued) The Universal Declaration of Human Nom R lc ht/s HUMAN V► 'ItEINCS I)I:CI,AKArnON �`- sVVI; A 1-E c.RN FREE AN, �1 EOU►IL IN DIGNITY Rights �THEtl RIGHTS. ARE EN/•WEA WIT REASON AN, CONS(IENC .«.r.w.../r..«.•. ^N► Si UL► ACT ..�r.. . .I.r...b..&4 WO*oft/omminvefol, #0.1.•••1 r.r..- TOWAR►S •NE AN•TH .......,.4...._.r....._....._._ • ., ••••••••••ILLI• ......, IN Srl�IT ..�.,... � .►.+—.ter .4\V.�....lK1. y.:�....Y_.4♦4.-.I F 10THERHr/%) •-- . .....1 M •••••• ...w4 I..•.". 4 Leib.. •.w ........•_.N..—.r......... .....\.../_LL.._.rFrr7...IJ...\_.rL.S01-1 .414..4.44 ......_..•••••1 .«_ 4....44..,A.L..«.... • ...-. rte_..-...Ir.-,-I ....4 M._.4.4 .•rw.r. «y...,_.4. 5.-4.b. o•p..w..w.r.w . ../.T.. .4..1...1 I....4...-I.w..../. . ...-_I ..........d r........w..4.J y/...... I-...f..+—..J 4.._..s4.....••••••• 4 u—.L r.f.4 r........ Below is the Vision and Mission of the Commission: Vision/Mission tip _...._ o All Virginia Beach citizens and visitors deserve to be understood, respected and included o To showcase and celebrate the many cultures and diversities we have in our great City and to learn (moot each other's gifts of diversity o To continually meet with our diverse citizens to gain a better understanding of their needs and concerns in regards to human relations issues in our City June 4, 2013 -6- CITY COUNCIL'S BRIEFINGS HUMAN RIGHTS COMMISSION ANNUAL REPORT (Continued) The Commission incorporates the City's Organizational Values in the work performed: City's Organizational Values { o Quality Customer Service o Team Work o Leadership and Learning o Integrity o Commitment o Openness and Respect o Quality Work Life o Inclusion and Diversity The People We Serve —k C. . Religion Race'Eth'. Values&Ethnics June 4, 2013 -7- CITY COUNCIL'S BRIEFINGS HUMAN RIGHTS COMMISSION ANNUAL REPORT (Continued) The Challenge for the HRC After 20+ years, citizens are still largely unaware that the HRC exists as a resource to our citizens and visitors The Commission is continually seeking to understand the needs of the Citizens, especially the populations that do not always have a voice. The Commission continues to work on the 2011-2013 Work Plan which was created after the "Building Bridges of Understanding"Series with citizens: The Strategy n We provide big-picture advocacy and have a clear understanding of the scope of the human relations issues our City needs to address Ll Bring together the agencies, organizations, and community stakeholders best qualified to serve our citizens regarding human relation issues n Develop and promote new programs to reflect the current population and align with the Envision 2040 population information o Proudly promote racial equality June 4, 2013 -8- CITY COUNCIL'S BRIEFINGS HUMAN RIGHTS COMMISSION ANNUAL REPORT (Continued) HRC Duties o i, Monthly Public Meetings u Citizen Recognition PAM ro IF A f i Educational Programs *MAN c Community Outreach r Discussion Forums RICH I L; Observations DEFENDER u Human Relations Studies u Referral Assistance to Citizens The Commission hosted these events: HRC Signature Events me u International Human Rights Day u Annual Awards Program u Cultural Festival WORLD HUMAN RI HTS DAY Ali -4*IA . y A! June 4, 2013 -9- CITY COUNCIL'S BRIEFINGS HUMAN RIGHTS COMMISSION ANNUAL REPORT (Continued) Other Activities NM E Legislative Agenda Submittal to City Council n Many members serve on numerous committees throughout the City n Serve as board members on many special interest advocacy groups J Attend 'special' community events H Continual learning by attending "free"workshops and forums Virginia Association for Human Rights Conference Partnerships I Virginia Beach Police Department Virginia Center for Inclusive Communities n Virginia Beach City Public Schools n Virginia Beach Sheriff's Office n Virginia Beach Police Citizen Advisory Committee n Department of Housing and Neighborhood Preservation n Department of Human Services • June 4, 2013 -10- CITY COUNCIL'S BRIEFINGS HUMAN RIGHTS COMMISSION ANNUAL REPORT (Continued) The Commission is currently discussing these "Hot Topics": Hot Topics immin Human Trafficking ri J1 Visa Students Medicaid Expansion Act Citizens Rights The Commission is currently working on these "New Initiatives": New Initiatives r; Cultural Festival Youth Representation ti Memorial Scholarship u Enhancements to Website Human Rights June 4, 2013 -11- CITY COUNCIL'S BRIEFINGS HUMAN RIGHTS COMMISSION ANNUAL REPORT (Continued) Top Ten Reasons Why Our HRC Works ,o We are focused on outreach efforts instead of investigating individual cases 9. Our energies are spent on projects affecting many people 8 Through collaboration we network with many organizations and agencies 7 We are able to access the "pulse" of the City through contact e. We provide a valuable link between City Council and the citizens Top Ten Reasons Why Our HRC Works lii111111 We recognize the citizens' desire to be involved We educate and are educated by contact with citizens We monitor "trouble spots and hot topics" 2 We are dedicated to our citizens,government and human rights 1 Our work provides City Council ONE LESS area of concern June 4, 2013 -12- CITY COUNCIL'S BRIEFINGS HUMAN RIGHTS COMMISSION ANNUAL REPORT (Continued) The Commission has established their "Future Plans": Future Plans No. n Sustain our commitment to promoting racial justice and equality in our great City [I Continue to dialogue with community leaders to gain an understanding of their issues and concerns in their community gnity BEGINS AT HOME Mayor Sessoms thanked Mr. Parke, Councilmen Davis and Dyer for their leadership as well as the entire Commission for addressing these important issues in the City. June 4, 2013 -13- CITY COUNCIL'S BRIEFINGS PRINCESS ANNE ROAD/UPTON DRIVE SANDBRIDGE ROAD INTERSECTION 4:30 P.M. Mayor Sessoms welcomed Phil Davenport, Interim Director- Public Works. Mr. Davenport expressed his appreciation to City Council for their continued support and distributed a copy of today's presentation, along with the Verbatim Transcript, which is attached hereto and made a part of this record. June 4, 2013 -... — 4-) > I._ o _ a CD ,. ., ... e.,i,., -,Ti c ul lit ' 4001t--, .• - ' ;'IN Q.) Ca , -it, , . • 1, - . ....---,--i. -,-,-+-1-0.-- j ..._ __.'1"--- ll'. ••5 / .-..'..1. , (13 '...... 'c \\ •' ; ) V, '.- • IP' ',....." '-' . 1', .,,t 0 '-•-r ,.,.....,.. 7 ''...4114-', . , CL ••• -',.,— • ' ' c\- . ••••::"7't :7,.471.:*.A •— U — •— 13 °.II VI •s* • , ' Ca 0 rml 111-7'*, ...I'4,. :, '• ___,,v• ,.....,..4 .. • I. , -••••,.. 4 14,140..".- • ••• 't >ft. 0 'I1 (m) " 4 Irtie ' .°'-.el, - •— a) a) ., . , --Iv u *.1 dor•-• " • 11' Se At''''''''.. 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A ' I ''Zi.N1 0 , ,� a� Ce F �� a) +-+ O co cin O • N 0 O_ —0 N E c O M 4t N `+- co N > >. O v >' .51 p 1/). co cc }' c .N L c ai"i - (13 L D cn CZ m = v -0 L- 0 C i tl° N Z � U CD U UI— misimm 1 VIRGINIA BEACH CITY COUNCIL June 4 , 2013 4 :30 p.m. WORKSHOP SESSION CITY COUNCIL BRIEFING PRINCESS ANNE ROAD/UPTON DRIVE/SANDBRIDGE ROAD INTERSECTION VERBATIM CITY COUNCIL William D. Sessoms, Jr. , Mayor At-Large Louis R. Jones, Vice-Mayor Bayside - District 4 Glenn R. Davis Rose Hall - District 3 William R. DeSteph At-Large Robert M. Dyer Centerville - District 1 Barbara M. Henley Princess Anne - District 7 John D. Moss At-Large Amelia Ross-Hammond Kempsville - District 2 John E. Uhrin Beach - District 6 Rosemary Wilson At-Large James L. Wood Lynnhaven - District 5 CITY MANAGER: James K. Spore CITY ATTORNEY: Mark D. Stiles CITY ASSESSOR: Jerald Banagan CITY AUDITOR: Lyndon S. Remiss CITY CLERK: Ruth Hodges Fraser, MMC SARAH DEAL JENKINS, CMC DEPUTY CITY CLERK, II 2 MAYOR SESSOMS: Barbara Henley asked that we bring up the Princess Anne Road/Upton Drive/Sandbridge Road Intersection for discussion. Barbara, I was going to let you make the introduction here, if you so desire . COUNCIL LADY HENLEY: If you remember, last week when we deferred the Armada Hoffler Rezoning Application on one of these corners, I mentioned that one of the chief concerns is the traffic situation. Looking at that development generating almost 11 , 000 vehicle trips per day, which means 11, 000 turns in and out of that property, and looking at the analyses that we had on the traffic, particularly for the left turns, at one turn the exit being 6 . 7 minutes per vehicle, and at another turn, left turn, potential 9 .4 minutes out of there, that 's not going to happen. But this situation at this corner is really tough now, and when we ' re looking at additional development in that area we really need to be aware of the situation out there . And we have some potential road projects, one of them being Princess Anne Road Phase VII. And, actually, I think this road was in the CIP to have been built in 2007 or ' 08 or something, but that was at the time we lost the funding and this was going to be a City of Virginia Beach project . So, that money got put in the other buckets to let Princess Anne and Nimmo happen. So, this project is designed largely and a lot of the acquisition has been made, but it 's still not funded for development . And I think it ' s kind of interesting that one of those great, big, tall LED safety signs happens to be at this intersection, which kind of tells you it ' s an intersection that has congestion problems and so forth. So, I just want y'all to be aware of this situation and this road project which would help it somewhat; not going to cure it, but help it somewhat. So, that ' s sort of the impetus when I asked him for this briefing today. MAYOR SESSOMS: Jack, glad to have you. JACK WHITNEY: A pleasure . I ' ll lead it off . Mayor, Members of Council , for fifty years the intersection of Sandbridge Road and Princess Anne has attracted development, as has its environs . Small scale development, rural in nature, to larger scale, much more suburban in nature, like we have today, over the past decade there' s been really a tremendous increase in interest for particularly non-residential development clustered around the intersection. 3 As you' re all aware, in each individual instance, issues having to do with aesthetics, architecture, storm water management, and so forth, have arrived. And paramount and overarching among all of them is the issue of traffic impact circulation, getting in and out of that area with respect to the existing infrastructure and that which is planned. And those are worthy concerns and are not uncommon throughout the city, but in this particular case lately has been the focus of a great deal of interest with individual rezoning applications . You have seen the latest of which you will see on your agenda next week, known as Armada Hoffler, sometimes more colloquially known as the Harris Teeter Project. So, what we 'd like to do today is give you an update on the status of the major Infrastructure Improvement Planned Improvement that will service this area and attempt to address to some degree, at least, the traffic impacts that we ' re all facing in that part of the city. So, what I 'd like to do at this pointisturn it over to Phil Davenport in Public Works to give you the very latest on where that project stands in advance and hopefully help you to be a little bit more informed before you take up the issue of rezoning on your agenda next Tuesday. MAYOR SESSOMS; Thank you, Jack. Phil, we welcome you. PHIL DAVENPORT: Thank you. My briefing is just going to be information. I 'm not asking you for anything. So, all I 'm going to do is update you on where we are with this project today. So, the first thing, this project has been around for a while . It first showed up in the CIP in 2003 , and it ' s a planned four-lane divided highway from General Booth Boulevard to the intersection with Sandbridge and Upton. We have three pretty good sized intersections, two that are really major intersections at General Booth and at Sandbridge Road. We have a third at Elson Green, which is kind of at the midpoint of the project. To just give you a little bit of a different orientation, all the way down here to the West is General Booth Boulevard. This is the first major intersection that we have . We have Elson Green, again, about halfway, and then we have Upton and Sandbridge . And actually, the project goes a little beyond that, so it goesabout to the Catholic Church, which is at the far Eastern end there . The total project length is about one mile. Elson Green is about half way. So, we' ll talk about 4 phasing it, the possibilities of phasing, because Mrs . Henley had asked us to do that, but I ' ll get to that in just a minute. But this is just kind of a little orientation for what the overall project is . The total project cost is about $23 million. Between what we have in the bank today and what Council has appropriated for FY14, we have about $10 million of that . We' re short about $13 million. So, we really have money for Design, which is about 90% complete, Site Acquisition, which is about 75% complete . We have 16 more parcels to go. We have Private Utility Relocations and Adjustments, which we have not begun yet. We have money for those three items . We do not have money for construction yet. When we get construction money, we still need about two years to get through the Design, Site Acquisition, and Utility Adjustment period. We could start as early sa FY16 , if we had money, but as I said, right now the CIP does not have Construction money in it, so we ' re short $13 million there . The two major intersections that we have, Princess Anne and General Booth, neither one of them from a crash perspective is ranked real high. However, as far as a level of service for congestion at Princess Anne and General Booth, we are already over capacity; volume to capacity ratio 1. 28 . So, we 're already overburdened at that location. We are almost there at Sandbridge and Upton, not quite, but with additional development we probably will be. We're at about a Service Level D at Sandbridge, and with development it will go to about an E . And then we provided a list of the Top Ten projects that are not fully funded. And just to give you an idea of where Princess Anne Road Phase VII falls on the list, it ' s the third highest rank. And this is our staff ranking. This is not your ranking. This is our staff ranking as we see things . So, obviously, some of that changes as we develop CIPs in the future . In the back of the presentation that we 've given you we have all of the individual project sheets for each of those ten projects, and if you would like to discuss any of those we can certainly pull those up and talk about them. The District Council Member did ask us to consider looking at two different things; one is phasing Princess Anne Road Phase VII, and the other is increasing the project scope to go beyond the intersection of Sandbridge and Upton and carry Princess Anne Road down. to Indian River Road.. So, we' ll talk about each of those . 5 On Phasing, if you did a Phasing Plan, and, candidly, I 'm not going to recommend that you do that, but if you did, you could break it up into a Western phase and an Eastern Phase, again, Elson Green is kind of right in the middle. Whether you did the Western Phase first or the Eastern Phase first, they're such a short distance that we believe you would have to include the Elson Green intersection in whichever phase you did first . You just don' t gain that much by doing half of the project here . And, in fact, what you do is you cause some increased costs because you've got to have two different contracts, two different contractors, you spread the time out, you have to have additional administration time, and, quite frankly, we think by doing all of that and having two sets of contractors working at different times you' re going to create some public frustration that doesn't exist, doesn' t have to exist . We believe when you get ready to fund the whole project, you just fund the whole thing and we do the whole thing at once, and that ' s the right way to proceed. Increasing the scope to Indian River Road, Council did include a project in the CIP in FY14 with limited funding of about $300, 000, and this is to create some safety improvements on Princess Anne Road from the intersection at Sandbridge down to Indian River Road. It does not include additional through lanes . It does include a little bit of widening where we can, but understand that the ditches, we've got pretty big ditches on the sides there, we 've got limited right-of-way, and what we can do there is pretty limited. But we ' re going to spend the first year using the $300, 000 that City Council has appropriated to do some preliminary engineering so we can develop a good scope and cost estimate that we can try to include in next year' s CIP. So, that ' s kind of where we are with that. MAYOR SESSOMS: And we thank you very much for that great presentation. Bill DeSteph had a question. COUNCILMAN DESTEPH: I just have one quick question. Where does the Princess Anne Road Improvement we're talking here, where does that rank in the 2011 technical rankings of congested intersections of the 60 that were ranked? I don' t see that anywhere in here, but I see it for almost all of the other projects . PHIL DAVENPORT: Okay. Which one, though? General Booth or the other one? You' re talking about the intersection? 6 COUNCILMAN DESTEPH: Yes . PHIL DAVENPORT: The General Booth intersection is ranked Number 11 . COUNCILMAN DESTEPH: Okay. Well, Newtown Road/Baker Road is ranked Number 11 . PHIL DAVENPORT: This is the 2012 . COUNCILMAN DESTEPH: Okay. So, all of these are different, because these are all based on 2011 . PHIL DAVENPORT: Yes . Those were based on the 2011, which we developed when we developed the CIP. COUNCILMAN DESTEPH: If you could just send me the updated one? PHIL DAVENPORT: We can. We just recently got the 2012 rated. MAYOR SESSOMS: Other questions? Barbara? COUNCIL LADY HENLEY: Well, I know that this is the dilemma we' re in. We have a lot of -- a long list of unfunded projects all around the City that have great need, and it 's going to be very difficult for us to divide the limited amount of money that we have over the next few years and determine which of the projects are going to get them. And I really would be very interested in hearing the insight that you have, you folks have, about these issues, particularly when we ' re looking at a land use issue and in one of these areas that has a tremendous need. And to me, the primary concern is safety, and particularly when you're looking at problems with turning and turning safely in these situations, I just think it ' s a paramount issue and has to have a lot of consideration when we are making these decisions . This particular area we saw just a few months ago the approval of the Sentara facility joining this particular project that we 're going to be looking at next Tuesday in this same corridor . That one was on Princess Anne and Elson Green. And then we see on the other, across the road from the one we ' re going to be seeing next week, development occurring now, 7 which is going to be coming online to add to what is already there, too. And so, we really have to, I think, be cognizant of the issues on the ground when we ' re making these decisions, but if we' re going to continue, and if we do continue to add need, I think we really have to be aware of what our responsibility is going to be to provide the safety and the infrastructure that will help that safety issue. And I wanted you all to see this and see it in relation to the other needs and kind of come to grips with how are we going to try to address this situation. So, I really would like to have your insight. MAYOR SESSOMS: I ' ll be bold. First of all, we 've got to start seeing some development starting to occur so we can expand our tax base . I think that ' s absolutely critical . Do you know what the size of this Armada Hoffler deal is, Barbara, as far as cost? COUNCIL LADY HENLEY: I don' t. MAYOR SESSOMS: And how much was that Sentara? I wouldn't know what that investment was, either, but it seems to me if we 're getting substantial investment in areas and it does cause traffic, obviously the City has to step up and adjust priorities and whatever. It seems to me that having opportunities like this, I thought the safety issue which you raised, Barbara, which you and I have talked about before, but as far as that intersection, it ' s a low safety issue, as far as actual accidents . That was just reported, unless I misheard something. PHIL DAVENPORT: Low safety, a little bit high on congestion. COUNCIL LADY HENLEY: This particular project addressing the fact that the entrance and exit to this particular project will not have lights and even with this project still won' t , because it ' s too close to the intersection. So, the left turns out of these projects are going to be the ones that are going to create the safety issues, particularly if people have to wait a long time to turn out, then they tend to take chances that they shouldn't. And I think we can very definitely see our crash numbers increase at that level, or we could see a situation where people don't utilize the shopping center because it ' s hard to get in and out, and we don' t want to create that situation. So, it ' s one thing to talk about something generating a certain number of vehicle trips per day in the area, but when . you have to think that the issue is going to be turning in and out, two of the turns are going to be right in and right out 8 only. And then two of the other exits and entrances will have the left turns, and so that 's where the problems are going to come. MAYOR SESSOMS: We 've got another comment from John? COUNCILMAN UHRIN: Well, I think that ' s what we 've had to continue to wrestle with, is the Transportation money has been slow coming and how do we actually get stuff built. And, certainly, I 'm taking a look at Staff 's Recommendations for this year listing this as the third Top Priority, and that ' s without the advantage of the knowledge that there ' s potentially other development coming on there to increase the traffic count. Once you throw that into the mix, I think it will be bizarre to see that staff would actually put that up at Number Two or Number One . I think it ' s our duty as a Council to react to the new information and relate things and take another look at them. So, to that end, I certainly would be open to changing the priority of that. If we need to start building something, let ' s build it . MAYOR SESSOMS: John? COUNCILMAN MOSS: I 'm going to pick up on your comment, because I think, like you, I 've lived here all my life. Barbara, I remember when congestion was a much bigger issue then than it is today. Hard to believe, but it ' s true. But I do think that bias has to be a means for creating jobs. We have to take risks and assume some lag. In this economy, when people are looking for work, I think that has to get further biased, I think, in that direction. But I think we need to make sure so that we don' t end up everybody lobbying us about what projects are the highest priority based on what criteria. I think it' s important that we continue to rely upon an algorithmic criteria against all the things how we might want to weight them. I do think weighting criteria is something they should do, but then we should let the science tell us where the priority is, because I 'm sure there' s people that we will be moving around. They weight and people want to know that it ' s being based upon something that is not development driven but is need driven, where is the greatest need. So, I think we need to be careful as we adjust priorities that they' re adjusted based on data and on reason and not on the moment what is perceived to be the need. I think that ' s why we go through this methodical process . So, I 'm all in favor of re-looking, but I think when we do we ought to be looking holistically, making sure however we adjust our algorithms to 9 get to that point that we look at all of the projects, even the ones that are funded that might need to be unfunded to possibly make this happen. But I think we need to have a very objective reason-based way of analyzing the priorities. MAYOR SESSOMS: Glenn? COUNCILMAN DAVIS: And I tend to agree with John. I 'm just looking on the map here, because I live right around this area, and I can definitely see that we' re going to have an issue on Princess Anne. There' s redundant paths, and we have Upton down there and you can take Upton to Nimmo and Nimmo down to General Booth. So, there is some chance for redundancy, obviously, with this new development . We may have to look at it . I agree with John, we may want to wait to see what the real metrics are, as opposed to building based upon expectation. I don't mind the way John Uhrin said look at a re-prioritization. I would caution replacing Number One, Rosemont Road from Lynnhaven Parkway to Dam Neck. I drive that area as much as I drive this area, and that ' s a lot worse. And with the development and everything going on over there, we do have a problem there. But I think we've density there now, and we just need to see what the real numbers are and then address it at that point . MAYOR SESSOMS: Other questions or comments? I would just reinforce what John said, John Uhrin. Barbara, anything else? COUNCIL LADY HENLEY: No, that ' s fine. MAYOR SESSOMS: Thank you very much. (Whereupon, the discussion of this matter was concluded. ) -14- CITY MANAGER'S BRIEFING UNSOLICITED PPEA PROPOSAL TO EXTEND LIGHT RAIL 4:53 P.M. Mayor Sessoms welcomed James K. Spore, City Manager. City Manager Spore expressed his appreciation to City Council for their continued support and distributed a copy of today's presentation, along with the Verbatim Transcript, which is attached hereto and made a part of this record. June 4, 2013 1- ,) F I R a �� I' j L 1/ , N a,......... FEcu . o r 4f4 0 _., __ ,-......1aai,Ka(, C F o 0 • �. , lit CO C X C 0 Wtn . _ 0 (/) ' I co a--) m ToCt it 1011.111. V5 III .1 lb a) > W _. V N I..L LU • • CO cL Nemml• Ov) C CI a--' 0 • eVIL n 0 0_ , . . 0 at +-) pp_ V) a_ r= ,4 V V a) tr4 . cc a FIFV) V -0 CI) E . +a co4_, o .,,,,,, 0_ M (1) CU -e)ctiQ cts Qd • • • t i f 1` Ii',v M i '51 cli •d E >.. ft, c , i cu co 0 0 E - �IV 0 , c . , U ,, c . .. : . 4_,.=4 0 . 4,1„. 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Wood Lynnhaven - District 5 CITY MANAGER: James K. Spore CITY ATTORNEY: Mark D . Stiles CITY ASSESSOR: Jerald Banagan CITY AUDITOR: Lyndon S . Remias CITY CLERK : Ruth Hodges Fraser, MMC SARAH DEAL JENKINS, CMC DEPUTY CITY CLERK, II 2 MAYOR SESSOMS : The next thing would be the Unsolicited PPEA Proposal to Extend Light Rail . Jim, do you want to go to the PPEA Proposal , please? CITY MANAGER: Good afternoon . We want a report on where we are on the Light Rail Extension Proposal , which is the Unsolicited Proposal that you all are familiar with that we received back on April 2nd. That , in fact , is the background. We did receive the proposal . We have reviewed it , and it is consistent with all of the PPEA requirements that you and the State have outlined for us to review these kinds of proposals with . So, really, the decision point that we ' re at is do we accept the proposal for further review or not , and that ' s really what Council needs to do here in the near future . The project team submitted just in terms of background, and we had given you a previous presentation on this and won' t go into as much detail , but it is a consortium based on the Phillip A. Shucet Company, SKANSKA, which is basically the constructor of the project , JACOBS, which is the lead designer, TRULAND, which is an electrical systems and mechanical systems company that ' s had lots of experience in Light Rail systems , and AECOM, which would also be involved in the construction and the equity piece on this project . These companies , needless to say, have substantial experience in building systems like this and are very qualified to do this work. The proposal is to design, build, finance , and maintain . It ' s a four-part proposal . The Light Rail segment that we ' re discussing is Newtown Road to Rosemont , which is a distance of about 5 . 2 miles . The estimate , and this is not the not-to-exceed figure, but this is the estimate , $235 million, which is about $45 million per mile . There would be stations at Witchduck and Independence and Rosemont Roads . The Rosemont Station is actually closer to Lynn Shores Drive, but for the purposes of this work we 've considered it to be to Rosemont . The two stations at Witchduck and Independence are proposed to be elevated . There ' s a Twenty-Five-Year System Maintenance Proposal component to the plan, and that ' s not just for the 5 . 2-mile extension . That ' s for the existing system, as well . So, they' re proposing to maintain the entire 12 . 5-mile system. HRT would continue to operate the system as they do today. In terms of the Review Process , we ' re guided by the Public/Private Education Facilities and Infrastructure Act of 3 2002 . This was adopted by the General Assembly. It ' s generally considered to be one of the most flexible and comprehensive of the PPEA Acts around the country. Council adopted our policy to implement the Act in June of 2003 and re-adopted that in 2009 . It ' s a twenty-two page set of procedures and guidelines that are pretty specific, in terms of what we ' re looking for in these proposals and what the content of them must be . The Summary of the Process , within the Receipt of the Proposal , you have a sixty-day period for other jurisdictions that might be impacted to comment . That period was up on June 2 . We have received comments from HRT, and very comprehensive comments and I think perhaps even more detailed than you would expect at the Conceptual Phase that we ' re in . It ' s a Five-Step Evaluation Process that , again, is outlined in your guidelines . One is acceptance of the Unsolicited Proposal at the Conceptual Stage, which is where we are . If we do accept the proposal , you ' re required, we ' re required, to post notice of the acceptance of the Unsolicited Proposal and allow other proposers that might he interested to submit . They have to have at least a sixty-day period of time to do that . We ' re going to talk about that in a minute here in the Recommendation. You have to post all of the conceptual proposals that you receive so that the public can review those , and then we need to determine whether to select one or more of the conceptual proposals for further consideration . You ' re not obligated to accept any of those . You can accept one. You can accept more than one . So, you go into the next phase of the analysis , which is the more detailed stage of the analysis . Following that , you develop an Interim and Comprehensive Agreement . The Interim Agreement is an Optional Stage . It really allows the private entity to perform certain compensable activities; things , such as , survey work, environmental analysis, design work, engineering work, and so on and so forth . The proposal that we received proposes to negotiate the Interim Agreement and have that work ready to go by the end of the year . The next phase is the Comprehensive Agreement , itself . This is review and approval of plans and specs , terms and conditions for the payment of the project . This is really the critical phase, and the proposal that we receive proposes to do that by the end of 2014 . So, that ' s a little more lengthy process . Prior to entering into an Interim or Comprehensive Agreement , you have to publish the Public Notice indicating that you ' re about to do that and hold a Public Hearing on 4 those agreements . So, where are we in the process? We ' re at the stage the Unsolicited Proposal has been received. It meets all of the requirements for Conceptual submission. So, we are at the point where we need to make a decision to Accept the Proposal for Further Review. We talked about some goals, in terms of moving forward, and identified eight of those here for you . One , is to identify and explore all approaches to realize the extension for Light Rail . I think that ' s consistent with the referendum question, if you recall the question, it talked about exploring all possible reasonable opportunities for extending and financing and developing Light Rail into virginia Beach. This will allow us to do that . Introduce Competition into the process ; accepting this proposal and entertaining additional proposals certainly would introduce the fact of competition into the process . Very important is the transfer of risk to the private sector. One of the things you can do with a PPEA is you can really develop that fixed-price contract . You can transfer a lot of that risk from the public sector over to the private sector . You want to follow the NEPA process . We want to make sure we have full public participation. We want to assure that all factors are considered in the ultimate decision. We think in order to do that we need to obtain some necessary consulting expertise , particularly legal and engineering assistance . We don' t want to do anything certainly at this stage of the game to limit our ability to obtain State or Federal funding later, and there are certain very specific requirements that we need to be careful of . Some of these goals , by the way, are contradictory with each other . Timeliness , we want to get the project constructed as soon as is practical . There ' s some real issues there with the Federal process . And eight and finally, we want to deliver the project with the lowest possible cost to considering things such as the cost of capital , fastest delivery schedule , time value of money, interest rates, other sources of funding , such as State participation, so on and so forth. So, we want to maximize other sources of funding, if possible . Those are our eight general sort of goals . The Recommended Approach to Council would be to accept the Conceptual Stage Unsolicited Proposal that we have received . Once you do that , we need to post the Notice of the Acceptance . we ' re suggesting we provide ninety days for other 5 interested parties to submit competing proposals that may be out there . A third point would be, and this is, I think, an important one, in terms of our ability to compare the proposals that we get , if we get more than one; that is , that the proposal should at a minimum include the construction of a Light Rail segment from Newtown Road to Rosemont Road. If other proposals have alternatives where they might want to extend farther or might want to build, let ' s say, to Town Center. They at least need to propose what the cost would be if they were to construct a similar segment from Newtown Road to Rosemont . That will help, I think, tremendously in the comparison of multiple proposals . And then, finally, would be to establish a Review Task Force . This would be an inner agency kind of task force that would review all of the proposals received and make a recommendation to Council . I think we ' d want to have representatives from HRT on there . I think we 'd want to have representatives of the TOP and so on and so forth. The Rationale for the Recommendation is that we want to encourage competitive approaches and creative options . I think that ' s consistent with the Referendum Question; again, trying to explore every creative and possible way to extend Light rail .as quickly as possible and as cost effectively as possible . I think we ' ll learn a lot . We ' ll gain some knowledge from alternative submissions , if we get those . That ' s been the case around the country when similar approaches have been used. If you grant a ninety-day time frame for the proposers to submit , we ' ll be in the middle of September, and at that time we ' ll have the revised ridership estimates from our consultants and HRT . We ' ll also have the consultants ' assessment or ranking of our project . This is going to be a critical piece of information, in terms of how our projects stack up against other similar projects around the country . I think we ' re going to need to know that when you make the decision do we go ahead with Federal funding or do we wait and try and obtain Federal funding. So that ' s going to be a key piece of information that you will have by the middle of September . It also allows work on the Transit Extension Study, the EIS Study, to proceed . Right now, the current schedule is by the middle of November that work will be completed . It allows us time, both Mark and the other folks on the staff , to 6 competitively obtain required professional services to help us with the project if we go forward beyond the LPA process . Importantly, it allows full public participation in the Federal/NEPA process and any other components that we want to develop on our own. Typically, the City of Virginia Beach exceeds the requirements necessary for public participation. I think we would certainly want to do that on a project like this . We don ' t want to do anything to jeopardize future State or Federal funding. We do not want to do anything that prejudges the results of the Transit Extension Study, itself . We want to assure a Comparable Extension Segment, that ' s Newtown to Rosemont , while allowing other alternatives to be submitted. We want to create a Multi-Disciplinary/Agency Task Force to review the proposals that we hopefully will receive . And finally, it ' s important to recognize that accepting the proposal that we have received does not do anything to obligate the City in any way to approve that proposal or any other proposal that we might receive . Next Steps would be to authorize the preparation of a resolution to accept the Unsolicited PPEA Proposal . We ' re suggesting that could be as soon as the June 11th meeting, your next meeting, if you are comfortable with the recommendation . We then post the notice inviting interested parties to submit competing proposals . Again, they would have until the middle of September to do that . We would direct the staff to begin the selection process for engineering and legal services ; not only the selection process, but the budget . This is not going to be a cheap exercise, believe me . Then we create that Review Task Force . You 'd have about three months to think about the composition of the Review Task Force to hopefully be needed. With that , the recommendation is to accept this proposal we have received . It is a very comprehensive proposal with very, very qualified proposers , and to get on with the process . MAYOR SESSOMS : Jim, thank you very much for your presentation . We have some questions, if we could . Rosemary? COUNCIL LADY WILSON: Obviously, the voters spoke in November that this is exactly what they want us to do. I support moving forward; however, as Mr. Spore said, this is a very comprehensive proposal , and I think in all fairness with competition to be able to compete 7 with that other people would need the time to submit something as comprehensive . I don' t think that ninety days is long enough. I think it should be at least a hundred twenty days . CITY MANAGER: I mean, that ' s fine . You can set it at any point that you want . MAYOR SESSOMS : Let me see a nod of heads . A hundred twenty okay? COUNCILMAN WOOD: That was my question. MAYOR SESSOMS : Pop a hundred twenty in there, please . Bill? COUNCILMAN DESTEPH: That was my first one . I was going to recommend a hundred eighty, but if everybody is good with a hundred twenty, that ' s fine. CITY MANAGER: I would just tell you that the two other entities that we have met with have indicated that they are comfortable with the ninety days , but you can make it any time you want . MAYOR SESSOMS : We ' ll go with a hundred twenty . COUNCILMAN DESTEPH : Why would we have HRT on the Evaluation Team? I believe it wouldn ' t be appropriate . It would kind of be like a conflict of interest . I read the comments that they provided to the newspaper on the last one , and I thought really it just wasn ' t appropriate for them to even comment in . Then when I looked at their comments , I thought they were really relatively petty in taking an approach that I didn ' t think was appropriate . So, I don ' t believe we should have them on the team for evaluation. I can see an outside firm doing it , but I would recommend against HRT on this . MAYOR SESSOMS : Thank you for your comment . Hobby? COUNCILMAN DYER: Yes . Thank you very much . Without question, I think we should accept the proposal , but I think this is going to be one of the biggest decisions Council will make , right up there with Lake Gaston and forming Princess Anne as Virginia Beach. And saying that , I think with a project of this magnitude we have to go forward with guarded optimism and healthy skepticism, like any other major projects . We 've got a lot of things to weight out with what ' s going on with the economy. 8 And one of the things we had talked about here used the term, Mr. Spore, the "ultimate decision" ; ultimately, what it comes down to when we ' re going to have to vote on this thing sometime in the future, I think we owe it to the public to make sure that we have a lot of information out there . That ' s why I 'm glad that we have the hundred twenty days so we get the EIS Study, because we have to prove to the public that Light Rail is practical . It ' s feasible . We have to clearly demonstrate how this thing is going to be paid for, how much it is going to cost the tax payer, how much the City is going to be incurring . But also I would like to see two other things . I would like to see how this is going to impact all the other businesses throughout the rest of the city. I think there ' s some fear out in Centerville and everything that everybody is going to be drawn toward this, and we ' re going to wind up Swiss cheesing some of the business throughout . And the other thing I ' d really like to see , too, in our evaluation, is identify what the barriers to success are and what we ' re going to do about them and to make sure it ' s a very coherent list of "okay, what are the thingsTM . We 've got to make sure that there ' s going to be ridership on this, that it ' s going to be financially feasible . How are we going to get people to the Light Rail? Once again, I always bring up that we ' re not really on a grid system . Are people going to be willing to drive to a park and ride to jump on the train and then come back and things of that nature . And then once again, if we ' re taking people out of their cars, are they going to be stopping at the cleaners on the way home and all the other places that they stop? How about the single parents, the parents in schools , when they get a call , their kid is sick, and they ' ve got to go get them? I think if we know about them up front , deal with them up front , we ' ll be serving the public well . MAYOR SESSOMS: Thank you, Bobby. Jim? COUNCILMAN WOOD: Actually, my question was on the hundred twenty days . MAYOR SESSOMS : I would ask you and John have been part of this , do you go along with the recommendation? COUNCILMAN WOOD ; Yes . I think it ' s absolutely what we need to do. Jim did an excellent job by highlighting those guidelines , and while a lot of them seem to be contradictory there is a great benefit to competition 9 and transferred risk, I think, if we can work this out . And, frankly, if we take a look at what ' s going on with the whole FTA New Starts Program, which is now called something different . It changes a lot . There ' s a lot of projects in the pipeline . They' re not necessarily ahead of us, in terms of ranking, but they' re in the pipeline because they got there first . Now, we have under the new guidelines quite a bit going for us, in terms of the AAA Bond Rating, defined planning with SGA Areas and a number of other things that , frankly, other localities , other cities across the country, just don ' t have . So, I think we ' ll be competitive, but I think probably one of the biggest things that Jim said and we need to focus on is we can do absolutely nothing that will jeopardize State and Federal funding with this process . So, as long as we keep that in mind while we ' re moving forward, then I think we absolutely should accept this as broadly as possible to get as many of these different ideas as possible . MAYOR SESSOMS : John? COUNCILMAN UHRIN: Well , just to kind of jump onto that , and Mr . Spore mentioned and I think it deserves highlighting, is that we are going to need some outside help, in terms of doing this analysis . MAYOR SESSOMS: That ' s an understatement . COUNCILMAN UHRIN: It ' s important to make sure we ' re not doing anything that ' s going to upset the Federal process . So, that ' s going to be a key part of it . We need to recognize we need to do that regardless of whether we ' re looking at an independent party or we ' re going to just go through the standard process for Federal funding . So, I think that any of the information we can glean from those other folks is going to serve us well , regardless of what path we take , in terms of finally bringing it to the Beach. And the last thing I 'd like to add, Mr. Mayor, if I could, is that we make sure that when we send this out with the acceptance that we do itin a broad enough fashion that folks that want to do more than just bring it to Rosemont Road can do that . Or if there ' s other alternatives - - MAYOR SESSOMS : That ' s the way it ' s been presented, the way I read it . They can take it farther, if they want . I welcome that . I think I remember who had that idea . Bobby? IO COUNCILMAN DYER: I ' d just like to speak to Bill ' s comment on HRT being included . And I can see his point , so I ' d like to also make another point . Light Rail is just one mode of transportation, and the thing is, correct me if I ' m wrong, Mr . Spore , the bus theater system really is included as part of this proposal , correct, getting the bus routes and everything? CITY MANAGER: Well , that ' s a good point . It ' s not part of this proposal , but it is part of the EIS, in terms of restructuring our bus system to try and ease getting to the Light Rail line . That would be a big part of that total program. COUNCILMAN DYER: Right . It ' s just my thought that since I guess HRT does have some play into more in Norfolk are similarly saying that perhaps they should be brought to the table , because I think one of the barriers to success was getting people to the Light Rail . MAYOR SESSOMS: Bobby, my thought is we ' re not making our decision on that here today . I appreciate both comments , and I think the Council will decide when that Committee is put together to include HRT. COUNCILMAN DYER: Not a problem. MAYOR SESSOMS : Great point . John Moss? COUNCILMAN MOSS : My point is on the proposal , itself . As I understand it , Will , the person, once we can allow this normalization of costs, which is the most difficult thing when you have competitors , now will each, since we said people can bid just to build, people can build, say they want to build just a standard segment , the minimum segment you' re talking about , they can bid to operate, as well as build the minimum segment . So, they have lots of different options, as long as the core part of their option includes construction. Will that then mean that all of the bids will have, people who come in with their refined cost estimates will have, to say what if we ' ll only build this piece? Because if someone lowers one price for construction because of how they work their maintenance fee, not that that ' s even been done before , so, therefore, to get the real true value of cost , you' re really going to have that segmentation to know what the differential was if they only built the piece . So, this will be like Legos . You will be able to - - each component piece will have to stand alone , normalize cost structure that will 11 allow the average person to understand the difference . CITY MANAGER: Yes . We ' re hoping to have the minimum constructible or operable segment . Then we ' re also hoping to break that out , in terms of what does it cost to design it , build it, and maintain it and so on, so that hopefully you 've got at least for that segment a comparable package of - - COUNCILMAN MOSS: Right , but here they kind of integrated that all into one kind of price tag . They didn ' t really have that like you can - - they just want to build it . If they built it and operate it , it was an integral piece, but this will have the segmentation if we just want them just to build it . CITY MANAGER: During the Detail Phase, you can bet we ' re going to rip that apart, in terms of trying to segment out what all of those costs are from the various aspects . COUNCILMAN MOSS : I know how hard it is to normalize cost of projects . And part of that goes into then, because we get that from the other part, adding in the feeder bus . And the point I had a discussion with the City Manager before, I would hope that we would look at, because I knew Fairfax has done this, Arlington has a connector bus system which is not operated by Metro . They have their own franchise agreement to get out from under the high labor and Union cost agreements of the Metro System. So, I hope that as we look at all of this that privatization, I ' m a big fan of privatization, as you know, that we expand that to all pieces of transportation network and as much as pcssible, and hopefully people will even bid to operate it , as well , I would hope, because I think that ' s where we get the best value . MAYOR SESSOMS : Thank you, John. Jim? COUNCILMAN WOOD: And I don' t want to necessarily bet against myself, here, but I don' t think I necessarily disagree with Bill ' s comment about HRT being involved. I need to think about that a little bit more, because when we take a look at this , the proposal as is, that ' s probably okay for them to be involved, but depending upon what other entities want to do it may be something that we want to keep a little bit closer to the vest until we get through the evaluation process . But what I will tell you, in terms of HRT, HRT has to be 12 involved with this because they' re going to operate the system. That ' s the way it is . All Federal funds are going to come through HRT. They' re not going to come directly to the City. And keep in mind, HRT has just started the Naval Station Transit Extension Study, and they' re advertising now to get folks to come up with their preferred route to the Naval Station . So, it ' s going to be interesting to figure out who we should have on this committee, but I think we certainly should move forward . MAYOR SESSOMS : Very good. With that being said, Council , I 'm going to say let ' s bring it back next week and we ' ll vete on it . CITY MANAGER: Yes , Sir . Thank you. MAYOR SESSOMS : Great presentation, Mr. Spore . (Whereupon, the discussion of this matter was concluded . ) -15- ADD ON City Manager Spore advised the City received the Draft FY2014-2019 Six Year Improvement Program (SYIP). Staff has reviewed the 600+page document and has some major concerns with the proposed program and the lack of funding provided to the Hampton Roads District; and, more particularly, to the City of Virginia Beach. City Manager Spore advised Staff has prepared a `Draf" letter to Mr. Utterback, Hampton Roads District Administrator, VDOT,for his signature, a copy of which is attached hereto and made a part of this record. Should City Council not have any objection, City Manager Spore will endorse the letter and forward same to Mr. Utterback. June 4, 2013 $N 'BCC.; ♦�GU' Cy F z. City of Virzi_ xia Beach „al qyz e qrr e� Of Co. Nok ei VBgr v.cwn OFFICE OF THE CITY MANAGER MUNICIPAL CENTER (757)3854242 BULLING I.ROOM 234 FAX 1511427-5626 1401 COURTHOUSE DRIVE VIRGINIA BEACH.VIPSINIA 234569001 DRAFT June 4, 2013 Mr. James S. Utterback Hampton Roads District Administrator Virginia Department of Transportation 1700 North Main Street Suffolk, Virginia 23434 Subject: Fiscal Year 2014-2019 Six Year Improvement Program (SYIP) Dear Mr. Utterback: It was good to meet you last week and I sincerely appreciate your reinstating our quarterly staff meetings which abruptly ended over a year ago. We have reviewed the Draft FY 14-19 SYIP and have major concerns with the proposed program and specifically the lack of funding provided to the Hampton Roads District and more specifically, to the City of Virginia Beach. We offer the following comments: Over the past several years, at VDOT's request during the annual SYIP development phase. we have provided VDOT our funding priorities, recognizing at the same time, the State's transportation funding limitations. Indeed, since 2009, when the urban funds were eliminated, the City has been an excellent partner with VDOT by providing over $130M of local funding to keep the urban and other State construction projects in the City of Virginia Beach, moving forward. Included among those were VDOT administered projects such as Princess Anne Road — Phase IV, Nimmo Parkway — Phase V, Lynnhavcn Parkway—Phase XI, Holland Road—Phase VI and Laskin Road—Phase I. With the passage of the new transportation legislation, House Bill (HB 2313) and the funding that is being generated by the higher taxes being paid by the citizens of the City of Virginia Beach, we were anticipating that some amount of the statewide transportation funding would now be allocated to City of Virginia Beach construction projects. However, to our complete dismay, our review of the Draft FY 14-19 SYIP indicates that not only is the City of Virginia Beach,(and the Hampton Roads District), not a beneficiary of the new statewide funding, but funding has actually decreased! At the same time it is noted that six of the nine VDOT districts are slated to receive increases in funding, most receiving significantly more than last year. This is hardly equitable. Of most concern, based on our initial review, is that the Draft FY 14-19 SYIP provides only $106M of funding (6-year total) for City of Virginia Beach projects, as compared to $138M in last year's SYIP. This represents a decrease of 22%. The City of Virginia Beach is the largest City in the Commonwealth of Virginia. and the fact that we are receiving 22% less funding than last year, is incomprehensible. The citizens of Virginia Beach, despite paying higher taxes, will not be directly benefiting from the new transportation funding. As the largest City in the Commonwealth, the City of Virginia Beach has an extensive roadway system and an equitable level of state funding is necessary to maintain a viable f Mr. James S. Utterback Fiscal Year 2014-2019 SYIP June 4, 2013 Page 2 roadway network for our citizens. Decreasing our funding, especially in a climate where the General Assembly approved additional funding, puts this region and our City at a real disadvantage and severely hinders our ability to create a viable roadway network. Rather than identify every state project in the City of Virginia Beach that is not fully funded, our top five funding priorities are discussed below: r Lesner Bridge Replacement Project, C1P 2-168 UPC 97737 The Lesner Bridge Replacement Project is one of our highest priority projects and, thanks to the FY13 Governor's Transportation Plan; we are currently in a position to advertise for construction within the next 60 days. The Draft FY 14-19 SYIP proposes funding allocation changes to this project such that we will require additional documentation from VDOT to assure program funding will be available so that we will be able to advertise the project for construction this summer in accordance with our current schedule. We anticipate awarding the contract this fall and issuing an NTP to commence construction in January of 2014. Our anticipated completion date for this bridge replacement project is spring of 2017. The current FYI3 SYIP provides 100% funding allocations through FY14. However, the Draft FY 14-19 SYIP modifies the funding allocations such that the project receives allocations of$13M in FY17 and $14M in FY I8. This new SYIP funding plan will require VDOT to bring forward those two years funding so as to ensure sufficiency of funds as part of compliance with awarding contracts. Our analysis indicates this project was funded with $84M of 2011 Governor's Transportation Plan (GTP) funding, one of four City of Virginia Beach projects to receive GTP funding. In the Draft FY 14-19 SYIP, approximately $41.3M of the 2011 GTP funds, has been removed and replaced with CTB Formula Bridge and NHPP funds. If VDOT has sufficient funding from other sources to replace $41.3M in 2011 GTP funding, we request it be put on one of the other three (3) City of Virginia Beach GTP projects, or another critical project in our locality, such as the 1-64/1-264 Interstate Project. Y 1-64/1-264 Interstate Project, UPC 57048 The 1-64/1-264 Project is critical to the City of Virginia Beach. This project will relieve congestion on both sections of interstate tremendously improving the 1-64 westbound travel to eastbound 1-264. This is a major project for the region, not just the City of Virginia Beach. In fact, this project ranks second in the region, in the "Highway Interchange" category of the TPO's Project Prioritization. The Draft FY 14-19 SYIP does not provide any additional funding for this project. That is extremely disappointing and incomprehensible knowing its importance and ranking in the region. For several years, we have recommended VDOT adopt a phased project delivery approach. We continue to advocate that Phase I (Greenwich Flyover) complete all engineering tasks and be funded through construction. 7 Elbow Road Extended—Phase 11 Project, OP 2-152 UPC 15828 The Elbow Road Project is one of our major urban projects that is not fully funded for construction. To date, the City has programmed approximately $18.3M on this project, well above our required share. Preliminary Engineering was authorized in 1996. Following FHWA's "20-year rule", there would be a payback requirement if construction is not begun by 2016. The Draft FY 14-19 SYIP does not provide any additional funding for this project. This is a major concern to us. As VDOT has indicated to us numerous times, it is critical that the 2016 construction start date be met. However, it appears that VDOT is not willing to provide funding for this project. Mr. James S. Utterback Fiscal Year 2014-2019 SYIP June 4, 2013 Page 3 i Indian River Road—Phase VII Project, CIP 2-256 UPC 15829 The Indian River Road Project is another major urban project up against the 20-year rule. To date, the City has funded approximately $3.3M on this project. Preliminary Engineering was authorized in 1996. The Draft FY 14-19 SYIP does not provide any additional funding for this project. Again, this is a major concern to us. Laskin Road—Phase I Project, CLP 2.156 UPC 12546 The Laskin Road project is a major urban project, administered by VDOT, and is also up against the 20- year rule. To date, the City has programmed approximately$5.1M on this project. We've been in recent discussions with VDOT staff and informed that VDOT was accelerating this project for a Fall 2014 construction advertisement. However, the Draft FY 14-19 SYIP does not provide the necessary construction finding for this project. We would like to know what VDOTs plan is to complete this project on the reported schedule. In conclusion, we have major concerns with V DOI's Draft FY 14-19 SYIP, as we've presented above. It is imperative that VDOT re-consider their funding strategies to provide a more equitable distribution of transportation funding prior to submitting the FY 14-19 SYIP to the CTB for final approval. Feel free to contact me or DCM Dave Hansen if you have any questions or comments regarding this information. Sincerely. James K. Spore City Manager JKS/PDP/DLH/s Attachment c: The Honorable Mayor William D. Sessoms,Jr. and Members of City Council Commonwealth Transportation Board Member Aubrey Lane Commonwealth Transportation Board Member Hollis Ellis Dwight Fanner, Executive Director, HRTPO David L. Hansen, Deputy City Manager Phillip A. Davenport, Interim Director of Public Works -16- ADJOURNMENT Mayor William D. Sessoms,Jr., DECLARED the City Council Meeting ADJOURNED at 5:36 P.M. Amanda Finley-Barnes, MC Chief Deputy City Clerk th Hodges Fraser, MMC City Clerk June 4, 2013