City Council

CITY OF FREDERICKSBURG, VIRGINIA HON. MARY KATHERINE GREENLAW, MAYOR HON. CHARLIE L. FRYE, JR., VICE -MAYOR, WARD FOUR CITY COUNCIL HON. KERRY P. DEVINE, AT-LARGE HON. MATTHEW J. KELLY, AT-LARGE HON. JASON N. GRAHAM, WARD ONE HON. WILLIAM C. WITHERS, JR., WARD TWO HON. TIMOTHY P. DUFFY, PH.D., WARD THREE Council Chambers, 715 Princess Anne Street Fredericksburg, Virginia 22401 Special Council Work Session December 11, 2020 Budget and Financial The Council of the City of Fredericksburg, Virginia held a work session on Tuesday, December 11, 2020, beginning at 8:30 p.m. using electronic communication through GoToMeeting pursuant to and in compliance with the City Council Ordinance 20-05, an ordinance to address Continuity of City Government during the pendency of a pandemic disaster. Council Present. Mayor Mary Katherine Greenlaw, Presiding. Vice-Mayor Charlie L. Frye, Jr. Councilors Kerry P. Devine, Timothy P. Duffy, Jason N. Graham, Matthew J. Kelly and William C. Withers, Jr. Also Present. City Manager Timothy J. Baroody, Assistant City Manager Mark Whitley, City Attorney Kathleen Dooley, Assistant City Manager Doug Fawcett, City Attorney Kathleen Dooley, Public Works Director Diane Beyer, Environmental Programs Manager Scott Rae, Assistant Director of Public Works Utilities Tim Slaydon, Assistant Director of Public Works Utilities Milas Smith, School Superintendent Marci Catlett, Deputy Superintendent Matthew Eberhardt, Economist at Chmura Economics & Analytics Dr. Chris Chmura, Senior Engineer from Whitman Requardt Associate Daniel Seli and Clerk of Council Tonya B. Lacey. Mayor Greenlaw took a moment to express gratitude for all the changes due to the pandemic. She noted that the International Coalition of Sites of Conscience (ICSC) had completed its work on the Racial Equity Study and in the coming weeks Police Executive Research Forum (PERF) would be completing its work and the report would be shared with the community. The Mayor thanked the community, institutional partners, boards, authorities and commissions, and the City leadership for taking the time to participate in the important information gathering session and interviews on racial equity. Mayor Greenlaw thanked the entire City administration for pursuing excellence even through adversity and for striving for an inclusive Fredericksburg through greater consideration in 1 their decision making as the equity plan was being developed. She noted that the City had always lead responsibly and although there was a pandemic the City had never taken its eyes off the issues and the responsibilities that were essential for the community’s success. Update on Current Initiatives (Final Report on Three Year Priorities Offered). City Manager Baroody presented the Final Report on the Progress and Action on City Council Priorities. He reported that 60 percent of the Council priorities were completed in phase one and phase two had begun. See Attachment I for more information. Mr. Baroody presented a video with the priorities woven into a story. Councilor Devine gave kudos to staff on the video she stated that it looked towards the future. Budget Update Fiscal Year 2020 and 2021. Mr. Whitley presented a PowerPoint presentation. He began with an introduction and he took a look back at Fiscal Year (FY) 2020, reviewed the FY 2021 Budget Process, FY 2020 Operating Results for Meals and Sales Taxes, Overall General Fund Sources, Water and Sewer Fees, Update on FY 2021 Budget, FY 2021 Budget Update-Coronavirus Relief Fund, FY 2022 Budget Look-Ahead, Conclusion and Next Steps. See Attachment II for more information). Councilor Withers noted that he heard and wanted to know if the proposed environmental position would pay for itself. He thanked staff for keeping the city financially stable. Councilor Devine thanked everyone for all the work that went into the budget. She stated that with grant writing the environmental position could pay for itself. She asked about the $690,000 left in the COVID Relief Fund and Mr. Whitley explained that they were planning to use the money for unemployment insurance and public safety salaries and that would get the funding to $0. Councilor Kelly asked several questions understanding they would be answered throughout the next couple days. He wanted to know the current delinquency on taxes, how many new businesses were still open and how many have shut down in the last year, status on projects already approved, impacts on economic development, water and sewer cost coming forward and how it would be financed and what funding does the City expect from the State, what can the city expect for the School budget and debt service indications. Councilor Graham also asked for the rate of increase on the general fund sources from 2016-2019. Mr. Whitley noted that 25 businesses had closed since March and of those seven were restaurants and one of those closed due to a death of an owner and another closed due to change of ownership. He noted that this turnover rate was historical. 2  Councilor Duffy asked if the twenty-five percent held back was going to be restored universally or would staff pick and choose where it would be restored. Mr. Whitley stated that his intentions would be to ask Council to take it off universally because the City was meeting most of its revenue targets. Brief on Economy. Dr. Chmura nationally known on the economic trends offered perspective on the City’s economics. Dr. Chmura presented a PowerPoint presentation and she started with and overview on the national economy and the economy of the City of Fredericksburg, COVID-19: Short Term Growth, Post COVID-19: Longer Term Growth, Remote Working. See Attachment III for more information. Dr. Chmura answered several questions presented to her and she noted that manufacturing jobs were coming back and it would be good for the economy. She said on the labor front the City would be growing at a slower rate and that it was because of the mix of industries. The City has a large number of food services, tourism and retail and they were all growing slower and retail was proposed to decline slightly. She said if there were high tech firms in the City that prediction would greatly change. Ms. Chmura explained that the healthcare employment in the region declined by 66 and there were about 6,000 jobs and the forecast was one percent growth year over year. She also noted that the jury was still out on teleworking. She explained whenever that was a recession trends accelerated and one of the trends was more online shopping but she did not see the boxed stores going away. She said it would be hard to get a sense of that until a year out. Dr. Chmura stated that if the City could bring in more jobs with higher wages and more opportunities the residents would stay in the area. She noted that even if they were working up north but telecommuting they would likely be spending money in Fredericksburg. Dr. Chmura was asked about a forecast on inflation but she had no forecast, but she said there has been no real issues on inflation but there had been a slight uptick in automobile prices. Inflation has been fairly stable and interest rates should stay low for some time. Dr. Chmura stated that as soon as people start to get their vaccine things would change and by the second half of the year businesses that hung on through the pandemic would see big growth. It was asked if firm consolidation was a concern over the short term and she said she has not seen much on this and she believes the payroll protection program had helped many of the small businesses. She said one of the trends she was seeing was the ability to work from home and how this would change many of the super cities. Dr. Chmura said the City had reason to be optimistic about its economy. 3  Dr. Chmura was asked what the likelihood of the City becoming a retirement community and she said it was hard to say but it would be good to keep the retirees because they have more spendable income than the younger generations. She said you would need investors to develop the type of housing needed to attract retirees. Council asked as the City positions itself on the forefront of sustainability would it be of interest for the City to market itself as sustainable and would it benefit the economic future. Ms. Chmura said there were about 820 occupations that VLS had identified and they marketed 134 as green jobs. Councilor Graham asked where the City was with high speed rail and Councilor Kelly said no money had been put forward for high speed rail and the focus was on the long bridge project and expanding passenger and commuter rail service. Councilor Withers said he would like to discuss some of the things Dr. Chmura discussed once the budget was completed. Councilor Duffy stated the City must find a way to support development in the City so that it would allow the City to thrive on a regional economy. He also noted that the City must create a diverse economy. Councilor Devine agreed and most of the City’s economy was based on meals and entertainment but having more people would help support the economy. She said the City needed to take advantage of everything in the region to bring more to Fredericksburg. Councilor Graham said he would like to work with Economic Development and bring more augmented reality to the City. Mr. Baroody stated that he would like to do an Economic Strategic Plan in the next year and the Council seemed to be in support of that. Draft CIP Review. Mr. Whitley presented a PowerPoint presentation and in his presentation he gave an overview of the Debt Service – Baseline, Debt Service-General, Debt Service – Enterprise, Policy Debt Capacity Calculations – Estimate, Balance Sheet Summary – Water & Sewer, Draft CIP Project list, Draft CIP Project List – Fire & Police, Draft CIP Project List – Public Works & Facilities, Draft CIP Project List – Planning & Parks, Draft CIP Project List – IT, Draft CIP Project List – Transportation, Draft CIP Project List – Schools, Draft CIP Project List – Water, Draft CIP Project List – Wastewater, Draft CIP Project List – Wastewater Treatment Plant, Future Project Summary – School, Future Project Summary – Pond D, Future Projects – New, Future Revenue Summary and Future Operational Needs. See Attachment IV for more information. 4  Councilor Withers expressed his concerns regarding the debt ratio and the City’s bond rating. He wanted to be sure the City was not taking on too much debt and maintaining its bond rating. Councilor Kelly stated that he did not think Public Works, Public Facilities and Public Safety funds should be combined. He did however state that it made sense for Public Works and Public Facilities to be combined but Public safety should remain separate. Mr. Whitley explained that they would not lose the ability to track individual projects by combining the funds. Each of the departments would still be in the General fund and each project expenditure would be trackable. Councilor Kelly said he would like the capital costs tied to the operational cost because maintaining it was important and it was important that council understood the operational cost on the capital projects. Mr. Whitley noted that the project sheets have operational costs included. Councilor Graham asked about the Gateway Boulevard project and he noticed it was moved out to 2025 and he wanted to know how firm that was. Mr. Baroody explained that even though the City did not get the VA Clinic they thought they would stay the course and playout the VDOT Smartscale process to understand if there was a favorable look at the project. He said this does not mean the Council was committed to spending the money. School Capacity. Dr. Marci Catlett thanked Mr. Baroody. Mr. Whitley and Ms. Erford for meeting with them on their budget. Ms. Catlett reviewed enrollment numbers. See Attachment XII. Dr. Matt Eberhardt reported that the Capacity Taskforce met twice and they discussed and agreed on five areas that were options: eliminating single stream and reallocating grades to different schools, hybrid or year around model, constructing a new school, adding capacity by purchasing the old hospital and expanding existing schools. They also agreed that they were lacking expertise and they needed an architectural/engineering firm to help guide them forward. They sent out an RFP and it included providing support for all of their meetings and coming up with some decision at the six-month mark. They would look at enrollment numbers and update them accordingly. The Committee agreed there was a need for pros/cons on the five options. They wanted a high level cost analysis for each of the options. The firm would review the Walker-Grant Annex as well. They had two companies that expressed interest. Council and School Superintendent discussed the effects of the pandemic on the schools and on the students mentally and physically. There were also discussions on distance learning and how many students would come back. Dr. Duffy explained the reasons that some do not want to 5 come back was that some had serious health concerns, safety of the schools, kids working and doing school off hours and the main reason was an overall concern about the virus. Mayor Greenlaw expressed appreciation for the schools working so closely with the City management. Water Sewer Update. Assistant City Manager Fawcett presented a PowerPoint presentation and he gave a brief history, showed the location of the systems interceptor sewers, Wastewater Collection and Treatment Fiscal Year 2021 budget, Wastewater Collection and Treatment – Current staffing, Why Invest in Upgrade Wastewater Treatment Facilities, Estimated City Capital Costs for the Preferred Option, Wastewater Treatment – Update, Wastewater Collection and Treatment Current User Rates and Wastewater Collection and Treatment – Future Rates Needed,. See Attachment VI for more information. Councilor Kelly asked what the needed water/sewer capacity was for build out of the City and Mr. Fawcett said it was 6 million gallons which the City currently has, 4.5 million gallons in the current plant, 1.5 million reserved capacities in the FMC plant. Under the two options the first option would require the City to retain some capacity in the proposed Massaponax Plant or reduce the estimate. It was explained that the City would not bear any costs with Spotsylvania if it went with its own plant and maintained a 6-million-gallon capacity. Mr. Fawcett explained that if the City went with the 4.5-million-gallon capacity option it would serve the City for several more years and with a Phase II expansion of 1.5 million additional gallon capacity 8-10 years from now. Mr. Slaydon reiterated a reason to do the 6-million-gallon plant now was that it would provide economic development opportunities that the City would not have if the 1.5 million gallons were deferred. Councilor Duffy asked if there would be a decrease in the quality of life for those living in the area of the wastewater treatment plant if it were expanded. Mr. Fawcett explained that there would not be an addition foot print the expansion would occur within the current facility. Stormwater. Mr. Ray presented a PowerPoint presentation and in his presentation he discussed the Virginia River-to-Bay Watersheds, Municipal Separate Storm Sewer System (MS4) Permits, Chesapeake Bay TMDL Plan, Chesapeake Bay TMDL City Permit Pollutant Reduction Obligations, Large Projects that provide meaningful pollutant reductions, Dixon Park BMP #1 – Wet Pond, additional measures that may achieve incremental pollutant reductions, Chesapeake Bay TMDL Pollutant Reductions, Pond D Retrofit Concept Plan, Alum Springs Stream Elevation 6 Project, Idlewild Stream Segment Under consideration for restoration to address bank erosion and scour, estimated cost for Chesapeake Bay TDML Compliance, Potential Funding Mechanisms, Pond D – High Hazard Dam, Smith Run Pond D Dam Drainage Area Map, Smith Run Pond D Dam Failure and Alternative Analysis and City Canal. See Attachment VII for more information. Adjournment. There being no further business to come before the Council at this time. Mayor Greenlaw declared the session officially adjourned at 4:15 p.m. ______________________ Tonya B. Lacey Clerk of Council City of Fredericksburg 7