City Council Special Call Meeting- 2 Day Budget Workshop/Retreat

BUDGET WORKSHOP/RETREAT FEBRUARY 25, & 26, 2021 VOLUME 25 PAGE 40 MINUTES February 25, 2021 and February 26, 2021 SPECIAL CALL MEETING OF THE CITY COUNCIL 2-DAY BUDGET WORKSHOP / RETREAT CITY COUNCIL CHAMBERS – 2 FLOOR, CITY HALL | 160 SIXTH AVE. E. 6:00 p.m. ND Present: Mayor Barbara G. Volk, Mayor Pro-Tem Jerry Smith, and Council Members: Jeff Miller Dr. Jennifer Hensley, and Lyndsey Simpson Staff Present: City Manager John F. Connet, Assistant City Assistant Manager Pahle, City Attorney Angela Beeker, City Clerk Angela Reece, Communications Manager Allison Justus, and others Facilitator: Warren Miller, Fountainworks Facilitation Management Consulting 1. CALL TO ORDER Mayor Volk called the meeting to order at 5:45 p.m. and welcomed those in attendance. A quorum was established with all members in attendance. 2. PRESENTATIONS City Manager John Connet reviewed events over the last year and thanked Council for their support. A. Financial Condition of the City - John F. Connet, City Manager & Brian Pahle, Assistant City Manager, and Adam Murr, Budget Analyst Assistant City Manager, Brian Pahle presented the financial condition of the City using an interactive software which may be accessed through the City’s website. The Budget Dashboard may be found at: https://www.hendersonvillenc.gov/budget. The City's budget dashboard provides an overview of City Council accomplishments and goals and the City's budget process and financial data. This software pulls data from the City’s financial system to allow public inspection to promote transparency surrounding the local government budgeting process and how public dollars are spent. Mr. Pahle reviewed City Council main focus areas and goals as listed below. Focus Areas: • Economic Vitality o $8M Business investments in MSD o City Council supplements 50% of employee dependent medical insurance coverage o 7th Avenue Revitalization moving forward since 2016 o Property revaluation = increase of 18% Goals: •Attainable Housing •Downtown Master Plan •Expand Main St. Infrastructure •Support Economic Development with Utility Infrastructure •Lower Unhoused Population •Higher Density •Two Large ED Projects (ex. Sierra Nevada) •Low Tax Rate • Financial Sustainability o $8M Business investments in MSD o City Council supplements 50% of employee dependent medical insurance coverage o 7th Avenue Revitalization moving forward since 2016 o Property revaluation = increase of 18% Goals •Other Revenue Options •Strong Fund Balance •City Facilities Sustainability Plan •Stormwater Rates •Solid Waste Sustainability Plan • Great public Service o New Equipment – Sullivan Park BUDGET WORKSHOP/RETREAT FEBRUARY 25, & 26, 2021 VOLUME 25 PAGE 41 o 72 new wayfinding signs placed o New finance staff customer service policy o SROs – all schools in city limits o HFD SAFER grant to hire 12 firefighters o City Council commits to build dedicated Police HQ o Farmers Market at Historic Depot o Streetsweeper wrapped to raise stormwater program awareness o Council Conversations with the community Goals •Competitive Employee Benefits (Pay & Class; 401k Match) •Fire Protection •Increased Police Presence •Sustainability (Less Plastic; Recycling; Solar; Composting; No Styrofoam) •Customer Service Renovations •Transparent Development Regulations •Safety •High Levels of Service • Numerous Amenities o Downtown Holiday Decorations o Whitmire/Tom's Park Improvements o Greenway Extension Phase 3 o Wayfinding Signage o Sullivan Park Playground o Downtown Restrooms o Farmer's Market Goals •Park Improvements (Berkeley Park Playground) •Splash Pad •Tree Canopy •7th Avenue Phases II & III •Ecusta Trail Expansion •Greenway Parking •Whitmire Building Improvements • Sound Infrastructure o Bradley Creek dredging o North Main Sidewalk Project o Etowah Area Water System Improvement Project o 4th Avenue Streetscape – more pedestrian friendly o Multi-area streambank restoration project o New subdivision ordinance – updated from 1970 o Water and wastewater treatment plant equipment upgrades o Fiber installed Goals • Sound Public Transportation •Walkability (sidewalks throughout) •Zero Sanitary Sewer Overflows (SSOs) •Stormwater Improvements •Expand Greenway System •Excellent Water Quality •Fire Station #3 •Main St. Avenues •Parking Solutions •Solar Panels on City Facilities •Urban Revitalization Area (URA) •Fiber • Strong Partnerships o Housing Assistance Corporation Partnership (HAC) additional workforce housing o Grey Hosiery Mill renovated into apartments o Water Sewer Advisory Council Reformed o HPD Mobile App Launched o Downtown Organizational Model o OSHA Review o Pavement Condition Survey BUDGET WORKSHOP/RETREAT FEBRUARY 25, & 26, 2021 VOLUME 25 PAGE 42 Goals • Development Assistance • Unified Water & Sewer Rates • Partnerships with County • Increased Community Participation (communicate, engage, diversity) • Hand's On! Museum • ETJ Discussions • Homelessness Assistance • HWY 64 Maintenance/Beautification • Local Gov. Internships (BRCC; local universities; HCPS) • Zero Hungry Children • Cohesive Council General Fund Final revenue totals will be revised in the final budget amount concluding the fiscal year on June 30th. Assistant Assistant Manager Pahle reviewed the City of Hendersonville Financial Summary Tables indicating that total revenues for Fiscal Year 2019-2020 were $17,311,603, expenditures were $16,488,923 which includes Debt Service of $1,017,602, Capital Projects totaling $922,435, Operating costs of $4,428,274, and Personnel/Benefits costs of $10,110,612. Assistant Manager Pahle stated personnel is the largest expenditure in the fund due to state mandated retirement contributions which were 8.95% and 9.70%, and health insurance, which costs $9,537 per employee annually. The Fund Balance is $8,525,951, which increased by $1,153,425. The General Fund revenues and expenditures are depicted below: BUDGET WORKSHOP/RETREAT FEBRUARY 25, & 26, 2021 VOLUME 25 PAGE 43 MSD Funds In addition to the property tax levy, the City levies two municipal service district rates of $0.26 (Main St. MSD) and $0.17(7thAve. MSD). Assistant Manager Pahle discussed total revenues and expenditures of both funds stating they are in good standing but reminded everyone they are subject to the elasticity of sales tax revenues. Assistant Manager Pahle stated the Main Street MSD Fund Balance is $77,492, and 7th Avenue MSD Fund Balance is $109,996. Mayor Volk clarified that the MSD Funds are separate funds due to the difference in district makeup and taxing rates. City Manager Connet further clarified the funds could be combined but said the tax rate would need to be equalized if that option were to be pursued. Water Sewer Fund Assistant Manager Pahle discussed total revenues and expenditures of the Water Sewer Fund stating revenues were lower this fiscal year possibly due to decreased water consumption for businesses and schools due to the COVID-19 Pandemic. He stated the Fund Balance is $8,169,197, which represents a -17.06% change over the last fiscal year. Enterprise Financials/Projects Update NCGS requires local governments to have a fund for each enterprise owned or operated by the unit. Enterprise Funds operate like a business and are funded by user fees other than taxes. Adam Murr, Senior Budget and Management Analyst reviewed the financials of the City Enterprise Funds and discussed water and sewer rates and statistics. City Manager John Connet stated water loss has been reduced by almost half since 2017-18 and is now at around 12% while sewer inflow/infiltration has also been reduced by 4%. City Manager Connet stated 10% water loss is considered excellent in most systems but said staff are exploring ways to further reduce the loss. Mr. Murr stated the City averages 256 to 348 new customers each year and said in FY19-20 there has been 300 new water taps and 86 new sewer taps. City Manager Connet stated he expects the number to continue to rise with increasing development. Water & Sewer Revenue Bonds Mr. Murr discussed bond issuance and stated in December 2019, the City issued the Revenue Bond (RB) – December 2019 for $12,897,000 and incurred bond issuance costs of approximately $118,000. He stated the bond was used to refinance existing debt in the AMI and to fund the Etowah water project. Mr. Murr discussed bond covenant requirements and said the city exceeded these requirements by $2.1M. Assistant Manager Pahle stated although the city met the requirements the key takeaway is to continue to set rates to meet future operating and debt service costs. Water & Sewer Capital Projects Mr. Murr discussed current and future capital projects in the Water & Sewer Fund stating there are many NCDOT projects as well as the Etowah and said project timelines are continuously shifting due to NCDOT project delays. City Manager Connet stated this gives the city financial capacity to reach the INI goal of the City Council. Assistant Manager Pahle Brian stated many projects will shift around on the timeline based on the Wastewater Master Plan. Environmental Services Fund Mr. Murr discussed financial trends of the Fund noting costs of brush and leaf grinding came in at $30,000, tree removal $11,000, land fill tipping fees $210,000, and debt service for waste disposal trucks was $71,792. Mr. Murr advised fund balance appropriations were less this fiscal year due to staff reviewing the fund for sustainability and decreases in expenditures. Mr. Murr stated prior practice was to utilize fund balance to sustain operations and said this is no longer a finically sustainable practice and advised rate increases would be necessary. Mr. Murr stated there is an ongoing growing demand for services due to development and said other rate drivers include increases in tipping/disposal fees, increasing operating and maintenance cost on equipment, and deb services on waste vehicles/equipment. He stated staff are investigating measures to reduce costs such as implementing route efficiency studies and safety measures. Mr. Murr discussed anticipated housing projects and customer base stating growth is anticipated in coming fiscal years and will drive the need for additional crews and equipment. City Manager Connet stated staff are currently looking at routs for efficiency to reduce costs before the addition of new trucks and personnel are considered and said future needs will be based on master plan data for consideration by City Council. Mr. Murr stated in the last fiscal year there was a total of 5,588 customer bins served. Council and staff discussed residential, and recycling pick up rates/fees and options. BUDGET WORKSHOP/RETREAT FEBRUARY 25, & 26, 2021 VOLUME 25 PAGE 44 Property Tax The City currently levies a tax rate of $0.49 per $100 of assessed value. Assistant Manager Pahle discussed Hendersonville Property Tax and the stability of the rates and the importance of revaluation years. Assistant Manager Pahle Discussed taxing rates and values over the last several years stating real and personal property increases are positive and future growth will aid in offsetting costs of future expenditures for retirement and health insurance. Sales Tax Assistant Manager Pahle provided a brief history of sales tax revenues and reviewed the process for sales tax methods for redistribution and said FY19-20 sales tax initially decreased 5% over the prior year due to COVID-19 but later rebounded and ultimately increased by 19% as of June 2019. Assistant Manager Pahle discussed the two different distribution methods of the State which are per capita and point-of-sale and said the latter is generating more revenue back to the City than the per capita method of redistribution. Fund Balance Assistant Manager Pahle discussed the City’s Fund Balance stating the total end-of-year General Fund balance is $8,714,603. Assistant Manager Pahle reminded everyone the NC Local Government Commission (LGC) requires a minimum of 8% available fund balance to meet operating needs, cash- flow shortfalls, and unforeseen needs as well as to take advantage of unexpected opportunities. Personnel and Benefits Assistant Manager Pahle discussed state mandated increases in retirement contribution rates stating it is one of the main expenses along with health insurance premiums. Assistant Manager Pahle stated the City’s health insurance is claims driven but said it has stabilized over the last fiscal year and staff does not expect an increase for this budget cycle. BUDGET WORKSHOP/RETREAT FEBRUARY 25, & 26, 2021 VOLUME 25 PAGE 45 Capital Improvement Assistant Manager Pahle discussed various capital improvement projects and highlighted specific projects such as the City Hall encapsulation, customer service updates, Patton Pool renovations, and growing equipment and vehicle needs. The Capital Improvement Plan (CIP) is outlined below. Debt Service Assistant Manager Pahle discussed debt service and estimates and said he has inserted place holders for CIP projects as well as Fire Engine 3, Police Department Headquarters, 7th Avenue Streetscape, City Hall/Ops Renovations, Fire Ladder 1 and Fire Station. Assistant Manager Pahle stated the estimates are conservative but cautioned in the year 2024 the City’s operating and expenditures to debt service ratio would exceed the 15% threshold and said an informal benchmark of 15% is a target to stay below for the City. Assistant Manager Pahle stated a 3-cent tax increase this fiscal year and the following year would allow service and operating levels to remain stable but said City Council must consider a balance between future capital projects, operating and personnel costs, debt service and tax level. City Manager John Connet recalled prior recommendations to Council regarding a tax increase and said although projects have been delayed and revenues are doing well, City Council must consider a balance between future capital projects, operating and personnel costs and debt service in the coming years. City Manager Connet stated the level of service demands are increasing due to growth and stress on staff is increasing as well as expectations of service delivery from the community and advised staff will continue to work diligently to give accurate data projections for City Council. 3. RECESS There being no further discussion, the meeting was recessed at 8:17 p.m. on February 25, 2021 upon unanimous assent of the Council and scheduled to reconvene on Friday, February 26, 2021 at 8:30 a.m. by electronic Zoom software using the same access information as advertised for this meeting. February 26, 2020 [ELECTRONIC] 8:30 A.M. RECONVENED SPECIAL MEETING OF THE CITY COUNCIL Participating Electronically: Mayor Barbara G. Volk, Mayor Pro Tem Jerry Smith, and Council Members: Jeff Miller, Dr. Jennifer Hensley, and Lyndsey Simpson Staff Participating Electronically: City Manager John F. Connet, City Attorney Angela S. Beeker, Assistant City Assistant Manager Pahle, City Clerk Angela Reece, Communications Manager Allison Justus and others. Facilitator: Warren Miller, Fountainworks Facilitation Management Consulting 4. RECONVENE & CALL TO ORDER Mayor Barbara G. Volk reconvened the meeting at 8:33 a.m. and welcomed those in attendance. A quorum was established with all members in attendance participating remotely via Zoom electronic software. City Manager Connet discussed literature about building a restorative community and healing our woundedness, fragmentation and stability from events over the last year. Manager Connet stated he hopes to work with citizens to restore our community and said instead of focusing on problems and self-interests we must shift our focus possibilities, relatedness and belonging in order to see the great possibilities for our community and our team. City Manager Connet posed the question, “What can we create together?” BUDGET WORKSHOP/RETREAT FEBRUARY 25, & 26, 2021 VOLUME 25 PAGE 46 Mr. Warren Miller, Fountainworks Facilitator stated the purpose of the second portion of this meeting is for Council members to discuss City Council goals & priorities. Below is the summary report by Fountainworks: The retreat was professionally facilitated by Fountainworks and included the opportunity for participants to interact in open conversation as well as to share and build on each other’s ideas. Comments were captured as the conversation flowed and do not reflect any priority unless otherwise noted. The subsequent sections of the report summarize the retreat’s agenda and the participants’ input. Objectives o Get guidance from Council on values that will drive policy and planning decisions for the city. o Get high level guidance from Council around specific projects and ideas they are interested in pursuing. The retreat began with context for the convening as well as the intended outcomes for the conversations. 5. ESTABLISHING ORGANIZATION CORE VALUES EXERCISE Warren Miller, facilitator with Fountainworks led the core values discussion and exercise with City Council. The first segment of the retreat provided the Council with an opportunity to articulate a set of values that could guide their future decision-making. Council members were asked to brainstorm one thing that they value about the Council and one thing that they value about living in Hendersonville. Barbara Volk o Council focuses on what is best for community, not what is best for an individual. o Community is caring and Most people are welcoming. BUDGET WORKSHOP/RETREAT FEBRUARY 25, & 26, 2021 VOLUME 25 PAGE 47 Jeff Miller o Working in city that I was born in, shaping its sustainable future. o Four seasons, lack of natural disasters other areas have to deal with o Diversity of the people and warm feel of the south o Can get to everywhere from here but then you come home and settle back into the best place there is. Jerry Smith o City Council - Open and available to residents o Community: Real hometown in which people are attached emotionally to the well-being of everyone Jennifer Hensley o Learn as much as I can to contribute strengths as far as business, compassion. o Love my home and am rooted deeply here as a mom and family to Hendersonville. Lyndsey Simpson o Council: Teamwork and lasting changes to improve the community o Community: Connectedness. Feels like home. Values describe what we believe in; they guide our everyday decision-making and how we treat each other and our residents and customers. Community values guide the community’s vision, mission, and strategic plan as well as its goals, objectives, activities, capital projects, budgets, and service levels. Goals, on the other hand, define what you want to achieve. In this way, when the Council considers its goals and the decisions that need to be made in order to achieve them, the Council can reference its values to guide such decision-making. BUDGET WORKSHOP/RETREAT FEBRUARY 25, & 26, 2021 VOLUME 25 PAGE 48 Goals The Council reviewed its list of goals for the City of Hendersonville: o Economic Vitality o Financial Sustainability o Great Public Services o Numerous Amenities o Sound Infrastructure o Strong Partnerships Council members were asked to brainstorm a set of values that could guide them in their decision- making as they strive to achieve those goals. Supporting employees ● Provide growth opportunities to employees and education tools ● Respecting and paying employees fairly ● Support employees so they can provide services to the community Delivering services at a very high level ● Deliver services at a very high level to make people feel their taxes are being used effectively ○ Also encourages others to live within city limits Valuing our citizens through promoting diversity and equity ● Every citizen should feel cared for and valued by their community by promoting diversity and equity ○ E.g. policies around diversity and inclusion City government is non-partisan ● Political affiliations are not productive to solving problems of local government ● Setting example of how we meet with people who we maybe disagree with ● Leading by example, recognizing recent trends (local, state, etc.) BUDGET WORKSHOP/RETREAT FEBRUARY 25, & 26, 2021 VOLUME 25 PAGE 49 Improving our citizens' lives and protecting them through collective action ● Our goal is to make the lives of all residents better through collective action ● Sanctity of each person's life ● Safety and protection to support our residents ● Be open to change as circumstances change Environmental sustainability ● Environmental sustainability woven into everything we do ○ While maintaining solid relationship with residential and business development ● Protect all of our natural resources such as water and the environment Providing opportunity and pursuing responsible growth ● Thriving economic opportunity to encourage and help grow small business and entrepreneurship. ● Educate our community to give opportunity. ● Responsible growth to give success to all our residents. ○ Developing all segments of the community ○ E.g. housing and cost of living Open, transparent communication and trust with community and each other ● Openly communicating with the public and each other ○ Information about city and how it works available to all. ● Build trust through ethical and transparent leadership and policies. ○ Sharing information and soliciting feedback to achieve our goals. ● Openness: Residents should be able to easily speak to leaders within city government to address concerns without fear of retribution/embarrassment 6. BIG AUDACIOUS IDEAS EXERCISE The Council then discussed its “Big Ideas'' for the City of Hendersonville. The council members discussed how they want to see the city grow and how they will work through competing interests and values around specific projects and decisions they will have to make. Through this discussion, the Council members were able to prioritize their Big Ideas before adjourning the retreat. Council Members Hensley and Miller lost internet connection at 10:30 a.m. but reconnected at 10:31 a.m. Big Ideas Narrowing of King Street to enhance sidewalks, slow down traffic and provide additional landscaping ● Enhance downtown and connectivity to east side ● Opportunity for parkway look, would slow down traffic ● Currently preventing sidewalk connection ● Would require significant investment, coordination with DOT Improve appearance, signage, and cleanliness of US 64 ● Removing litter, brush cleanup, etc. ● Gateway to community ● Opportunity for partnerships Encourage reinvestment of Blue Ridge Mall property ● Opportunity for commercial development, high-density housing BUDGET WORKSHOP/RETREAT FEBRUARY 25, & 26, 2021 VOLUME 25 PAGE 50 Affordable housing and unhoused population ● Expanding accessible resources, including those related to addiction/mental health services. ● Changing narrative to root causes, helping people ● Seek out development opportunities for affordable housing. ● Researching and mirroring other successful programs (e.g. church partnerships, VA) ● Restart Committee ○ Building community partnerships, identifying solutions ○ Bigger picture beyond shelter: stability, employment ● DSS's role vs. ours? City Council Member safety: What is a threat versus free speech? ● Currently developing guidance City Council Member safety: Meeting security ● Currently developing guidance Improve water quality of Mud Creek ● Issue to lead by example on ● Utilizing outside organizations (e.g., Mountain True) ● Upstream issues outside of city limits ○ What can we do? Proceed with 2021 special events ● Operating safely, adapting to "new normal" if necessary ● Downtown Committee: Rhythm and Brews in June/July ● Art Walk in May, with online streaming option ● Farmer’s market and holiday markets Improve employee pay and benefits to ensure no one is eligible for governmental subsidies ● Retaining employees, providing high enough salary to support family. Discussion regarding adding mental health professionals to HPD staff. ● Either adding staff or partnering with organizations ● Building trust with community ● Taking some burden off officers' shoulders ● Potentially separate discussion: making mental health professionals available to all Hendersonville staff. Single-use plastics and Styrofoam: Reduction in the use of single-use non-compostable plastics and Styrofoam in Hendersonville ● Important to sustainability efforts ● Questions around process, enforceability Partner with nonprofit to provide free credit counseling to citizens of Hendersonville ● Contributes to vibrant local economy. ● On the horizon for high school students City elections: Even or odd years? ● 1971: odd years to separate from state/federal elections (since they are non-partisan) ● Opportunity to increase voter turnout. ○ More voices heard. ● COVID's complication of census data (not available until September) ○ Possibility municipal elections won't be held until 2022. ● If switched to even years, long ballots, more challenging for local candidates. ○ Potentially challenging to be heard, especially in presidential election years? ○ Potential for increased partisanship? BUDGET WORKSHOP/RETREAT FEBRUARY 25, & 26, 2021 VOLUME 25 PAGE 51 ● Practical concerns related to precinct alignment. Broadband ● We actively advocate for a change in current NCGS laws that prevent municipalities from expanding broadband, or we search for a workaround that would improve broadband in Hendersonville ● Opportunity to attract remote workers to live in Hendersonville. ● Convening community broadband advocacy committee (involving businesses, providers, etc.) ● Charging Business Advisory Committee with an advocacy role? ● Identifying political roadblocks (bringing in state reps?) Park development ● Establishing Parks Department ○ Running programs (or partnering with others) ○ Land considerations? Adding Parks Advocate? ● Downtown Park ● Dogwood Parking Lot ○ Opportunity to convert to Hendersonville version of Central Park ○ High priority ● Berkeley Park Build Out ● Edwards Park ● Ecusta Trail Connectivity to 4th Avenue ● Aquatics Center (Free swim lessons) ○ Preventing accidental drownings, recognizing disproportionate impact on minority community ○ Value: Everyone learning to swim ● Park bond to fund park projects ○ Previously lost by small margin with little advocacy Prioritization of Big Ideas BUDGET WORKSHOP/RETREAT FEBRUARY 25, & 26, 2021 VOLUME 25 PAGE 52 Priority ● Narrowing of King Street to enhance sidewalks, slow down traffic and provide additional landscaping. ● Broadband: We actively advocate for a change in current NCGS laws that prevent municipalities from expanding broadband, or we search for a work around that would improve broadband in Hendersonville ● Improve Employee Pay and Benefits to ensure no one is eligible for governmental subsidies. ● City Council Member Safety ○ Guidance on what is a threat versus what is free speech. ○ Meeting security ● Parks development ○ Establishing Parks Department ○ Downtown Park ○ Dogwood Parking Lot To Do If Possible ● Improve water quality of Mud Creek. ● Single Use Plastics and Styrofoam: Reduction in the use of single-use non-compostable plastics and Styrofoam in Hendersonville City Council Members thanked the City Manager for arranging the workshop and were appreciative of each other’s ideas. 7. ADJOURN There being no further discussion, the meeting was adjourned at 12:15 p.m. on February 26, 2021 upon unanimous assent of the Council. __________________________ Barbara G. Volk, Mayor ATTEST: __________________________ Angela L. Reece, City Clerk