City Council

CITY OF FREDERICKSBURG, VIRGINIA HON. MARY KATHERINE GREENLAW, MAYOR HON. BRADFORD C. ELLIS, VICE -MAYOR, WARD ONE CITY COUNCIL HON. KERRY P. DEVINE, AT-LARGE HON. MATTHEW J. KELLY, AT-LARGE HON. GEORGE C. SOLLEY, WARD TWO HON. FREDERIC N. HOWE, III, WARD THREE Council Chambers, 715 Princess Anne Street HON. BEATRICE R. PAOLUCCI, WARD FOUR Fredericksburg, Virginia 22401 Council Work Session November 13, 2012 Planning Commission Interviews Presentation of 5-Year Financial Forecast Presentation and Discussion of Staff’s Analysis of BPOL Tax The Council of the City of Fredericksburg, Virginia held a work session on Tuesday, November 13, 2012, beginning at 5:00 p.m. in City Hall Conference Room. Council Present. Mayor Mary Katherine Greenlaw, Presiding. Vice-Mayor Bradford C. Ellis. Councilors Kerry P. Devine, Frederic N. Howe, III, Matthew J. Kelly, Beatrice R. Paolucci, and George C. Solley. Also Present. City Manager Beverly R. Cameron, Assistant City Manager Mark Whitley, City Attorney Kathleen Dooley, Budget Manager Amanda Lickey, Clerk of Council Tonya B. Lacey. Planning Commission Interviews. Council interviewed two applicants: Reina Kelly – when asked what her relevant experience and background was Ms. Kelly said that she was a certified paralegal, she had attending the Planning Commissioners training as required when she served on the board previously, and she said she had a lot of experience with disabilities. Ms. Kelly was asked what she thought of the current Comprehensive Plan and she said it was well done. Council asked what she thought the role of the Planning Commission was and she said they are to serve and make the best recommendation to City Council. She said she had served on the Planning Commission two times before and she worked on one of the Comp Plans. She is motivated to serve because she is a freeholder within the City. She was asked if she felt she could vote down a by-right use she said it would have to be something extraordinary for her to vote against a by-right use. Ms. Kelly was also asked if she was familiar with the new UDO and she said she had not been following it. 1 Jim Beavers – Mr. Beavers was asked if he was familiar with the new UDO and he said he was familiar with it. When asked if he could vote down a by-right use he said by-right doesn’t always mean that for him, he said he has written to Planning Commission to vote against projects because of the names of the streets. Council asked why he came off the Planning Commission before and he said his wife was sick and passed, it was the end of his term and he received a promotion and did not have the time to commit again but he is now retired and have plenty of time on his hands. When asked what he thought the role of the Planning Commission was he said it was an advisory board to serve as City Council’s advisors. He said the Comp Plan was very thorough and professionally prepared. He thought it was geared towards getting more affordable housing in the City. Mr. Beavers stated that he had gone to the Planning Commission training about 12 years ago and he said he worked for the Planning Department in the 70’s. 5-Year Financial Forecast. Mr. Whitley explained that in the 5-year projection he looked at the general fund based on expenditures and revenue growth on the current baseline. He did not assume any base revenue or any major program eliminations or additions. He did not assume any additional debt issuances. There are several things that may change but he was still waiting on the full results of the organizational study and any changes the legislation may make. He said there were key assumptions that may increase salaries by three percent and they include one percent for VRS and two percent for COLA or merit adjustments. There will also be a large increase in the health insurance based on several large claims and an addition of positions. Mr. Whitley noted the attrition savings was at $300,000 and it increases every year. The years of 2013 and 2014 will be higher growth years and the years 2016 – 2018 the growth will be moderate. He said they would know a little better in March how thing are progressing for the current year’s budget. Council briefly discussed and asked questions regarding the financial forecast. Business License Tax (BPOL). Mr. Cameron explained that the business license tax is a very important revenue source to the City. This tax produces $5.3 million dollars in annual tax revenue about 7% of the general fund revenue. Cities tend to rely more heavily on the BPOL tax because it helps to lessen the cost of real estate tax. He also noted that cites tend to pay more than the counties and he gave the example of the local composite index which the City receives about $1,550 per pupil annually in state aid for public education, in Stafford that share was $3,589 and in Spotsylvania that cost is $3,538. The BPOL rate structure is 2 complicated with three tax tiers and numerous classifications. Mr. Cameron stated that they developed seven options for Council to consider, but options 6 and 7 were the best candidates for consideration. They have moderate fiscal impact and provide the greatest tax relive to a number of small businesses. Those options are also very simple to administer. He also warned that there may be statutory restraints on how it can be changed. Mr. Cameron explained the threshold concept, which is the tax amount below the threshold is limited to a $25 licensing fee unless the threshold is exceeded. The current threshold is $50,000 in gross receipts. Option 6 increases the threshold to $200,000 in annual gross receipts and Option 7 increases the threshold to $500,000. If the gross receipt threshold is exceed the business pays tax on all gross receipts. Option 6 would establish 2 tax tiers and the threshold would be $200,000. There would be a reduction in business license revenue to the City of $100,000 annually and 19% of businesses would receive relief under this plan. Option 7 would establish 2 tiers of tax and the threshold increases to $500,000 annually. There would be a reduction in business license revenue to the City of $459,000 annually and provide tax relief to 28% of the businesses in the City. (See attachment) Councilor Paolucci asked if the license fee could be increased from $25 to $35 or $40. Mr. Whitley said it could be increased to $50. She also asked if the license fee could be tiered based on the threshold. Councilor Howe explained that he BPOL tax is regressive and it’s levied on businesses and you could lose money and owe more money in fees. He said this can be levied many times. He would like to lower the cost to get more businesses to come to the City. After some discussion Councilors Ellis, Howe, Paolucci like to see Option 7 put into effect and try phasing out the BPOL. Councilor Devine said she would not like to do either option. Councilor Solley said he could do a graduated rate on the fee. Adjournment. There being no further business to come before the Council at this time, Mayor Greenlaw declared the work session officially adjourned at 7:00 p.m. Tonya B. Lacey Tonya B. Lacey Clerk of Council City of Fredericksburg 3