Finance Committee

TOWN OF MOUNT PLEASANT, SOUTH CAROLINA FINANCE COMMITTEE Monday, December 3, 2018 Municipal Complex, Committee Meeting Room, 3rd Floor 100 Ann Edwards Lane, Mount Pleasant, SC 29464 MINUTES PRESENT: Tom O’Rourke, Chair; Joe Bustos, Kathy Landing, Gary Santos STAFF PRESENT: Eric DeMoura, Town Administrator and Marcy Cotov, Chief Financial Officer ALSO PRESENT: Emily Sobczak, Partner, Greene, Finney & Horton, LLP Mr. O’Rourke called the Meeting called to order at 10:12 a.m. 1. Approval of Minutes from the November 5, 2018 meeting and the November 13, 2018 special meeting Mr. Santos moved for approval; seconded by Mr. Bustos. All present voted in favor. 2. Public Comments Pat Sullivan, 1002 Plantation Court. Ms. Sullivan stated that this is related to personal finances. It is something she found out from Charleston County, and it is for people who have trouble paying their taxes all at once. The County announced a tax installment plan. It allows people to pay their taxes four times a year (quarterly). This will make it a lot easier than having one huge bill at the end of the year. It comes out of the Treasurer’s Department for the County and she would like the Town to send out the information to all the neighborhoods. She stated it is a wonderful program because she has heard people complain about this for a long time.  Finance Committee December 3, 2018 Page 2 of 31 Mr. O’Rourke stated this is the first we heard of this. He asked for the copy of the announcement and said he will see what we can do. Mr. Bustos asked if they were going to be charged interest. Ms. Sullivan responded that there is no interest if paid when due.  Finance Committee December 3, 2018 Page 3 of 31 3. Review of Economic Indicators Ms. Cotov stated that the Committee has received the Town’s first formalization of some of the economic indicators that staff monitor. This report will be updated quarterly; however, staff included October since the data was available and used for revenue projections. Staff focus on six main areas with various data in each group. We look at building and construction data, along with home sales data to help form a picture of is occurring. Ms. Cotov continued, staff monitor accommodations and hospitality tax as well as retail sales which helps frame impacts of tourism and changes in the economy. Business License tax is monitored as it is a large component of the operating budget. Staff also monitor trends for the region and nation. She said she would touch on a few of the indicators that are included in the report.  Finance Committee December 3, 2018 Page 4 of 31 Ms. Cotov stated that overall the number of total building permits issued in the first four months is down from FY 2018, but similar to FY 2017. The last two months of FY 2018, particularly June, were high in number of permits. This could be due to the increase in impact fees that was going into effect July 1st. For new commercial permits issued, the last two months have not seen any issued; but conversely, there has been an increase in commercial repairs, additions and renovation permits. The number of new single-family building permits for FY 2019 was below both FY 2017 and FY 2018. It was 180 permits to 223 and 194 respectively; however, the October permits of 74 brought it slightly above last fiscal year, but still below FY 2017. The total number of single family permits issued during FY 2018 was 695.  Finance Committee December 3, 2018 Page 5 of 31 Ms. Cotov stated that accommodations tax, hospitality tax and sales tax revenues continue to show growth; however, not at the same rates as seen in the past. Shown here is Town Accommodations tax on a monthly basis. Receipt of these funds run 2 months in arears. As of the end of August the revenues were similar to the first two months of FY 2018 and 26% above FY 2017. For that same time period local sales tax is up 1% and Hospitality is up 3.3%. Business license tax is a major component of the Town’s operating revenues. It is important to monitor the classes of businesses, the number of business and the gross income of those businesses, as all of those can impact revenue to the Town. The revenue from Business licenses through September is up 12%. Ms. Cotov said these were some highlights. She asked if anyone had any questions. Ms. Landing asked that if on the single-family permit issued that were 254 less than 2 years ago and more than last year, was the 695 for the whole year. Ms. Cotov replied in the affirmative and staff looks at all permits on a fiscal year. For fiscal year 2018, the total single-family dwelling permits was 695. Ms. Landing stated that the only thing that was not included were apartments, but the Town has a moratorium on that. She asked if the proposed building permit allocation program is not going to slow things down because it was already trending lower.  Finance Committee December 3, 2018 Page 6 of 31 Mr. DeMoura stated the program as proposed does not artificially restrict to a severe degree, but what it does do is put a ceiling. If things start to heat up quickly, it places that cap. Ms. Landing stated that she has heard feedback from the public asking why we are doing it this way. One, it is what the people wanted when they voted in the last election, but the other thing is that it does not restrict or punish the market. Mr. Bustos asked if we can tell what the impact the storms had on the accommodation taxes or hospitality taxes. Ms. Cotov stated that we can go back because we track month by month and on a cyclical basis, but what we will see is that the storms for the last four years have all hit in the same timeframe. She would have to go five or six years back. Mr. Bustos said do not go back, but from your experience would you say that there is a quick recovery after the storms. Ms. Cotov replied in the affirmative that the recovery is quick after a storm. Staff monitor hotel room nights sold as one of the indicators, and one can observe the dip. Going into December it seemed to rise again. It was not too impactful for bringing tourists in for hospitality and accommodations. Mr. DeMoura stated that we can see the importance of monitoring those indicators. He stated that as we will see with audit presentation that things are strong, but we are cautious. Mr. O’Rourke stated that he sees the Mayor in the second row. As he builds a retreat agenda, all this information is important for our future decisions. 4. Presentation of the Town of Mount Pleasant fiscal year 2018 independent audit Ms. Cotov stated that we have one of the partners from Greene Finney, LLP, Emily Sobczak to present the external independent audit. Ms. Sobczak stated that she has been working with the Town several  Finance Committee December 3, 2018 Page 7 of 31 years and was happy to present the results from the fiscal 2018 audit. The Committee should have a copy of annual financial report. She stated that she would hit on highlights. She stated there is good information in report but can be challenging to work through finding the important information if starting on page one and she would summarize the highlights. Ms. Sobczak stated that when preparing the report, it is important to keep in mind that most of the hard work that goes into getting the report to a final copy is done by Town staff. The Town Finance group is responsible for maintaining accurate information throughout the year so that you are receiving good financial information to be able to make the best strategic decisions for the Town. To have reliable financial information, one important aspect is having good internal controls in place, such as: having good segregation of duties, making sure there are different individuals assigned to different tasks, and good reviews in place. That is part of what they look at during the audit process. The Town has done a great job of implementing strong controls and, they  Finance Committee December 3, 2018 Page 8 of 31 need to be reviewed and reassessed annually so that you are making sure your processes and procedures are changing as the risks the Town is facing are also changing. Ms. Sobczak stated that their job as auditor is to audit information provided. They then issue an Opinion based on the audit. She stated that you will notice in the Opinion they included two emphasis of matter paragraphs. These highlight significant changes that occurred during the year. One is implementation of GASB #75. That is a new accounting standard that changes the way that retiree health care benefits are reported. The second big change was the creation of the Capital Asset Fund.  Finance Committee December 3, 2018 Page 9 of 31 Ms. Sobczak stated that the General Fund had a total fund balance increase of $3.7 million bringing fund balance to $44.5 million as of June 30, 2018. Included in that balance is $2 million that has been committed by the Town for disaster recovery. There is also $4.6 million assigned for fiscal 2019 budget appropriations. Ms. Sobczak stated that leaves an unassigned fund balance of $37.9 million. This represents 44% of fiscal 2019 budget expenditures. That follows the Town’s minimum requirement of 25% of operating expenditures.  Finance Committee December 3, 2018 Page 10 of 31 Ms. Sobczak stated that there are several other reasons that should be considered when looking at fund balance and determining if it is at an appropriate level for the Town. One reason is cash flow purposes. The most significant revenue source, the property tax revenues, do not start coming in until January. It is important to have a healthy fund balance to get through the last six months of the calendar year. Mr. O’Rourke asked that if money is taken from fund balance to have a capital asset for the town, for example a piece of property. If the piece of property had a value, is that still part of a fund balance. Ms. Sobczak replied in the negative. It is a difference in reporting, so in fund level reporting, you are using a current financial resources measurement focus, which means that you are reporting current assets and liabilities primarily. When you are acquiring capital assets or if you are purchasing property, that is shown as an expenditure at the fund level. It is reported at the government wide level where we are reporting the long-term assets and obligations. That property would be reported as an asset in the government wide level, but not on the  Finance Committee December 3, 2018 Page 11 of 31 fund level. Ms. Sobczak stated that in looking at the General Fund activity for the year, there were revenues of $77.4 million. That was a 6% increase from 2017, and a big part of that is related to an increase of property tax revenues. The TIF district did expire in the prior year and that resulted in an increase in revenues that were allocated to the General Fund. Business licenses revenue increased about $758,000. The Town’s revenues were better compared to budget by about 8%.  Finance Committee December 3, 2018 Page 12 of 31 Ms. Sobczak stated that on the expenditure side, the Town had $63.6 million for 2018 which is consistent with prior year and close to 10% below budget. Personnel cost were below budget by about $1.6 million and generally conservative spending across all departments. Ms. Landing stated that the General Fund revenues of $5.6 million or 8% is better than budget. She asked if that part of that $5.6 million could be put toward the Capital Improvement Plan, rather than staying in the General Fund. Ms. Sobczak stated that it is important to look more at the change in fund balance versus the increase in revenues. Some of that increase has already been allocated, based on your infrastructure management policy. It would not truly be $5.6 million that would be available. Ms. Landing stated that if we are bringing in more business revenue, better than budget, that we have more to work with to help pay maintenance of things like drainage.  Finance Committee December 3, 2018 Page 13 of 31 Mr. DeMoura stated it is exactly right. What we typically do is wait until the end of the year to make sure we do not have any surprises, and we still had a good year. By Council policy, we split that available money towards capital. Ms. Sobczak stated that the Capital Asset Fund was new for fiscal 2018 and that combines several smaller funds into one fund that can track capital projects. That fund reported an increase in fund balance of $8.5 million and that was based on budgeted transfers into the fund to prepare for future capital needs. The General Obligation (GO) Bond Capital Projects Fund and Tax Incremental Financing (TIF) Bond Capital Projects funds are reporting revenue sources from prior years that are being used for capital projects. As expected, both funds decreased in fund balance.  Finance Committee December 3, 2018 Page 14 of 31 Ms. Sobczak stated that the Internal Service Funds are different from other funds. The Health Service Fund and the Insurance Management Fund are used to help smooth the impact of claims, premiums, and deductibles related to the different insurance plans. The goal is to help build reserves to lessen impact of risks. The point is to take the fluxuation out of the General Fund and put them into these funds to better track those costs.  Finance Committee December 3, 2018 Page 15 of 31 Ms. Sobczak stated that the governmental funds report the current assets and liabilities. On the government-wide statements, they are adding on your long-term assets and obligations. The Town has total capital assets of $531 million as of June 30, 2018 which includes additions of $30 million and included in those additions are devoted to infrastructure of about $14.5 million. An important thing to note is that in the capital assets, and particularly in your construction in progress, that assets related to state-owned assets are not included. The Coleman Boulevard project, or in prior years when you have done work on Highway 17, amounts are expensed because when the project is complete, it is not the Town’s asset. In looking at Town owned assets, there are significant projects ongoing at June 30, 2018, including the new Town Hall Gym, as well as Waterfront Park. The long-term obligations outstanding at year end are of $42.7 million, which is a decrease from the prior year, because of the principal payment of $4.3 million exceeding the new debt, a new lease for $725,000. The balance does include the infrastructure credit liability of $7.1 million outstanding at June 30, 2018.  Finance Committee December 3, 2018 Page 16 of 31 Ms. Sobczak stated that the accounting for the pension plan is similar to the new standard accounting for the Retiree Health Care Plan. The change was effective in fiscal 2015 and the Town reports a net pension liability related to the participation in the State Retirement System. It is the Town’s allocated portion of the total unfunded liability of the State Plan. The Town is reporting a pension liability of $60.2 million which increased from the prior year. These are actuarial calculations, so it is not a liability similar to an accounts payable where one receives an invoice. These are estimated long-term liabilities. Retirement contribution rates has a direct impact to cash flow, whereas this net pension liability is mostly non-cash fluctuations. A couple of years ago the state approved a plan to continue increasing the Town’s contribution rates annually for the next several years. The rates in fiscal 2018, which were 13.5% and 16.2% for the South Carolina Retirement System and Police Officers Retirement System. Those rates will continue to increase by 1% per year for the next five years, bringing them to 18.5% and 21.2% in fiscal 2023.  Finance Committee December 3, 2018 Page 17 of 31 Mr. DeMoura stated that this equates to several hundred thousand dollars a year. Ms. Sobczak agreed and added it is a significant impact every year, and in fiscal 2023, the rates are not going to come back down. When it comes to budgeting, these numbers are very important, and Marcy has a good handle on that and put in good processes to budget beyond one year. We encourage our clients to do this, because the known increases in fringe benefits will have a significant impact on your operating budget. It is important to plan for that, for the next several years. Ms. Sobczak stated that the way the pension is reported is similar to how the Retiree Health Care Plan beginning of fiscal 2018 is being reported. In previous years, the Town would only report a liability on the government-wide financial statements if the actuary calculated contribution for the year exceeded the amount that the Town contributed. If one would think of this as a mortgage, instead of reporting your total mortgage balance outstanding, you will report only  Finance Committee December 3, 2018 Page 18 of 31 if you paid less in your annual premium than they told you to. The new accounting guidelines say you must report the full unfunded balance. Mr. O’Rourke asked if we must fully fund this liability. Ms. Sobczak stated that there are no rules about funding it. The Town can fund it however if it would like. This is something Council approves every year in the budget. This is the great benefit of having your own Retiree Healthcare Plan versus being in the State Retirement System, where they tell you what you must pay. Many of their clients do a pay- as-you-go and pay the premiums each year and they do not do any advanced funding, which may not be the best long-term strategy. Mr. DeMoura stated that we are in excess of $1 million. Ms. Cotov stated that the Town funds $1.1 million and we directly contribute for retirees which runs about $900,000. This equates to about $2 million a year. Mr. O’Rourke asked if the money was in a trust or in a fund. Ms. Cotov stated that it is in our Internal Services Health Insurance Fund, and it is sent to an irrevocable trust to manage. Ms. Sobczak stated that the Town is at a great level as far as funding goes, compared to many other local governments.  Finance Committee December 3, 2018 Page 19 of 31 Ms. Sobczak stated that new accounting standards that are coming down the line are not as significant as the changes that occurred with the pension and retiree health care accounting over the past several years. One she did want to mention was GASB #87, which provides new guidance for accounting for leases. This will not be implemented for another couple years, as it goes into effect fiscal 2021. It will do away with the current accounting for operating leases. Currently, we classify leases as capital or operating, and it changes significantly how each are reported. When the Town implements GASB #87 everything will be reported how capital leases are currently reported. The Town will report a long-term asset and a long-term obligation for any leases. Ms. Sobczak stated that any year that Federal expenditures exceed $750,000, the Town is required by the Federal government to have a single audit. This is an additional compliance audit that specifically focuses on Federal awards. The Federal government provides guidance on which programs are required to be tested under that single audit. This year two Federal programs were tested. One was a FEMA grant relating to Hurricane Matthew and the Highway Planning and  Finance Committee December 3, 2018 Page 20 of 31 Construction program which provided funding for Coleman Boulevard. Ms. Sobczak did not have any findings, significant deficiencies, or material weaknesses on these programs. For governments that do not routinely deal with a lot of Federal money, that is very impressive of staff. These grants come with a lot of strings attached. There are a lot of compliance requirements related specifically to Federal grants that are different than accounting for your normal local funding. She commended the hard work of staff. Mr. O’Rourke stated that he would like to reiterate that it is rare for a government to get a management letter with no recommendations or comments. When the management letter is good, the rest will probably be good. He congratulated Ms. Cotov, staff, and Mr. DeMoura. Ms. Landing also congratulated Ms. Cotov and staff. Things like this come into play when looking at our credit rating, and our AAA rating is important to the Committee. Ms. Sobczak said it reflects on the hard work that staff are putting in throughout the year, not just when it comes to Federal awards, but for property tax dollars. That is another important thing to note, while there are no findings in the Federal Award Audit, there were also no findings related to the Financial Statement Audit, and not even any written management comments. Bravo and thank you.  Finance Committee December 3, 2018 Page 21 of 31 Mr. O’Rourke thanked Ms. Sobczak. Ms. Cotov stated that Peggy Conkel, Jonathan Edwards, and Lisa Eysen run a great Finance Division, and they are the reason we have been successful. 5. Presentation of fiscal year 2018 impact fees Ms. Cotov stated that with the adoption of the updated impact fees last fiscal year, along came the requirement for annual reporting of those fees. The updated fees began July 1, 2017 but were discounted by 50% of the maximum allowable. January 1, 2018, they were only discounted  Finance Committee December 3, 2018 Page 22 of 31 35%. It should be noted that beginning this past July 1st for FY 2019, they are now discounted only 20% of the maximum allowable. These numbers are the audited amount. Ms. Cotov stated that the Town has four categories of development impact fees. The amount that the Fire Protection impact fee generated in FY 2018 was $597,262 and was used towards debt service equipment and towards the public safety training facility. Municipal Facilities and Equipment impact fees were budgeted for a new financial enterprise resource planning system and debt service on GO bonds. She stated the Recreation development impact fees are only generated from residential development and not commercial. FY 2018 revenue was $522,190 and was identified for Carolina Park Phase III and debt  Finance Committee December 3, 2018 Page 23 of 31 service on GO bonds. Ms. Cotov stated that the fourth development impact fee is the Transportation Development Impact Fee that generated $4,953,771. This funding was ear-marked for the projects as shown on the screen. Ms. Landing asked if in the three areas that are both commercial and residential, is there a percentage of that is business versus residential. Ms. Cotov stated that is not something we typically review as the Town is seen as a whole system; so it can be used any way, not necessarily how it is generated. Ms. Cotov stated she would be glad to look at that. Ms. Landing asked if she thought there was a big difference in the balance. Ms. Cotov stated that there is some difference. When we looked at Recreation we anticipated it to be higher than it was. Our financial advisors helped staff develop a new modelling system for projecting revenue from impact fees. The other three exceeded their projection and that was based on what staff thought would be commercial and residential. Recreation was the only one that did not come in at budget due to it is only residential and due to some of the developer agreements with the Town.  Finance Committee December 3, 2018 Page 24 of 31 Ms. Landing asked that now that the Long Point Road extension project is put on hold will the $1.8 million be put aside and saved for the future. Ms. Cotov responded that there are 2 projects, the Long Point Extension and the Realignment. The Extension is not fully funded, and the realignment that was put on hold had no funding at this point. 6. Continued discussion of funding options for the Stormwater Improvement Program Ms. Cotov stated that we talked about the Stormwater Improvement Program in prior meetings and on the screen is a summary page with funding consideration/recommendation to fund this program. It is recommended that Stormwater fees be increased from $60 to $100 next year and that a consumer price index (CPI) escalation factor be included, like what the City of Charleston does. Annually the SC Revenue and Fiscal Affairs Office sends the amount of the increase in the average of the 12 monthly CPIs from the preceding calendar year to the Town as required by State Code to calculate the municipal millage rate percent increase limitation. (10-year average 1.73; range 0 in FY11 to 3.84 in FY10.) This escalation would be capped when it reached a total fee of $120 or $10 per month.  Finance Committee December 3, 2018 Page 25 of 31 Ms. Cotov stated that we have reached out to the County and it expires July 2, 2019 and because they operate as an enterprise fund, they track the cost of collecting our fees. So, County staff should be able to do that instead of making it a blanket percentage. They are to provide that cost to us, so staff believe it is feasible. Mr. O’Rourke asked how possible it is to work with them. Ms. Cotov stated staff would look to reduce future cost when the collection agreement is updated, which expires this year. Instead of 2% of total revenues to change it to a flat amount with, potentially, an escalation factor. These changes would provide sufficient revenue so that it would not fall below the revenue to debt ratio over the next 40 years and would not deplete the fund balance. This provides the Town four Stormwater projects: Snee Farm, which is in place, $10 million for Old Village and $10 million for two additional projects. Mr. O’Rourke stated that the purpose of that is to make sure the Town is looking far out for the drainage problems that are going to happen, so we do not have to do this again. Ms. Cotov replied in the affirmative and stated monies available during the next five years that we could not use debt service for because it would exceed our ratio. The Town still has about $2.8 million in cash for cash projects besides the money we spend on pipe repair and rehabilitation. Mr. O’Rourke stated that at some point the entire Council, not just this Committee will have to get some type of indicator where Council is on this issue because if Council makes this decision at budget time and not fund this program he is not sure what the next step would be as this is a difficult issue. You can call it fees, but it is a tax increase and do not think we can ignore it. We must address it. We have our studies done. We know what the costs are going to be, and we have taken it so far out that we take this hit right now and then we have our  Finance Committee December 3, 2018 Page 26 of 31 problem solved. This Committee needs to get a feel for where Council is on this issue. Ms. Landing stated that the second bullet point on the slide, was to reduce existing expenditures and coming up with a way to re- negotiate that contract. It was your opinion that it was worthy to tell us this is something that can save the Town money. She said she greatly appreciates that and hopes it works out. Anywhere we can cut costs, will mean a lot to our citizens if it allows us not to have to raise fees or taxes. She asked what the required revenue to debt ratio is used in the proposed funding. Ms. Cotov stated that the model builds from the current $60, which generates about $2.6 million, and then took it to $100, and used an escalation factor of 1.7% until it capped out at $120 per year. For instance, current year the Town collects $2.6 million and at $100, the Town would collect about $4.4 million. That would be used to make the Snee Farm payment and the first payment on Old Village, and the pipe repair and rehabilitation and the staffing. About 14.5 FTE’s staff our Stormwater projects. Ms. Landing stated that going back to the financial audit, for easy reference, last year we had $5.6 million, or 8% better than budget on property and sales taxes; $3.6 million better on licenses and permits, which are businesses; and $1.5 million better than budget. She asked if we could have more growth of what our businesses are generating, that we could use some of that to support what we must spend in other areas. Mr. DeMoura stated that it is possible, but this is an immediate problem. What may come in through successful economic development may help in the future, but it is important that we use that money that may come in, which is strictly in the General Fund, to support operating pressures that are coming. We talk about them in every Committee every month. That money will help lower the tax burden on citizens, should stay in the General Fund to support future needs which are being requested.  Finance Committee December 3, 2018 Page 27 of 31 Ms. Landing responded that Mr. DeMoura is talking about lowering tax. She stated she was not talking about lowering anything; we are talking about potentially easing them. Mr. DeMoura stated that he is talking about what would be a future increase, at the rate of growth that we feel is coming in the General Fund. Ms. Landing stated that we have heard in a few different places in the recent audit, that in general we are doing better than projected in terms of bringing in money. If we do not do this today, we cannot do the Old Village drainage? Mr. DeMoura replied in the affirmative and said he is saying a lot of things we are talking about are small dollars. What we are looking at in Stormwater is a current program that can barely meet the Snee Farm project which also includes all the operating which includes the employees digging the ditches and keeping the program going every day. It has been staff’s belief over the last several months that Council’s desire is to have an aggressive Stormwater program. We need to go after project by project in the neediest parts of town. That is the program we provided to Council. It has already begun with the design of the two basins in the Old Village. Where we are right now, is the direction to have an aggressive program. We have monies spent on design for two basins in the Old Village, and yet those designs are nearing completion, and we do not have a funding source. Going to $100 only addresses a couple projects going forward. This does not address the next 20 years. It does not address Project 4 or Project 5 or Project 6, whatever those are determined to be. The option is we go to $100 or we pay as you go, as we are now. That would mean perhaps we can reach one of the basins in the Old Village in the next couple years and put the other plans on hold. There is no opportunity to shake loose revenue from the General Fund to support Stormwater expenditures. The amount of growth we are going to be seeing, including 25 fire fighters in the Fire Department’s Strategic Plan. The amount of growth, and the amount of money that is going to be  Finance Committee December 3, 2018 Page 28 of 31 needed to support the level of services that he believes has in the General Fund is going to require every bit of that money. Mr. O’Rourke added that all we have in our hand right now is what we got a little while ago. At our retreat would it not be great if we had every department’s needs in the future, so we can think even more global to how are we going to solve all of it. If these little savings go into Stormwater, we are not going to get anything else for all the other departments, and they all have future needs. He welcomes comments if we talk about this at the retreat. It is bigger than this. The problem with this one is it is right here now. Ms. Landing stated, that we do have to have a more macro discussion, and the retreat is perfect for that. She summarized two things. First, once you increase something, it is not going to get decreased down the road. It will be the increases of another increase later. Secondly, is that we have residents that have been paying Stormwater fees all along and did not have what they felt was good management of Stormwater issues, such as the Old Village residents. Now we come back and say, if you will give us two and a half times what you have been giving us, then we will fix the problem. She stated that this is a town that has a lot of growth, a lot of potential for revenue, and we need to figure out as much as we can how not to burden our residents. Mr. Bustos stated that when Snee Farm is done, we need $10 million. He asked if there are any other alternative or another bill payer. Mr. DeMoura responded that it would have to be general taxation. Raising a mil in taxes every year would be able to accomplish this. One mil generates about $900,000, so that could pay debt service for 20 years, or $20 million for 20 years which would address the two basins in Old Village and one or two other projects. Mr. O’Rourke stated that he talked to Mr. DeMoura about the answer to that question, and one of the things that he said that Mr. O’Rourke was not aware of, was that if $900,000 gets put on the table, it is not  Finance Committee December 3, 2018 Page 29 of 31 all going to Stormwater. It will be sent to several other places. You cannot dedicate 1 mil to something unless we do it. That does not mean that the next people elected will do something else. There are passionate people in each of the Committees about needs that they have. That is why he keeps going macro on this discussion. That is an option, but with every other option there are issues that we will have to deal with. Mr. Bustos stated that his concern is the long-term viability of an entire section of town. Without drainage, at some point that is going to affect land values. People will lose value if their property does not drain. He stated that the studies done where there was $10 million recommended that we need to fix two basins. How many basins were there in the Old Village? Mr. DeMoura replied there were 27 basins. Mr. Bustos stated that this is going to be an ongoing thing. Once part of it gets fixed we are going to have to keep fixing things. That will roll up to Park West. By the time we finish this, there are going to be infrastructure issues there, as the Town ages, and we will be starting this all over. Mr. DeMoura stated these are excellent questions and points. Sitting in every meeting, it is the mounting expenditure pressure from every angle. We saw it with the review of the audit, about just the cost of employing people. The fringe cost, not just health insurance, but employment taxes and retirement contributions. He stated that even with a $100 bill annually, it probably addresses only a portion of the true Stormwater situation throughout Town over the next several years. Mr. O’Rourke stated this is a discussion that needs to go to full Council. We need to find out what the temperature is. If the temperature is cold, we need to move on to finding other solutions.  Finance Committee December 3, 2018 Page 30 of 31 Mr. Bustos made a motion to put on the Council agenda for next week for a beginning discussion of where we are in storm drain improvement and how it is being funded. Ms. Landing stated that the point of having it go to the retreat is that we will have a lot more of the information in front of us, and a lot more time to think about it. If we vote next week for Council to raise the Stormwater fee because people say we must do this, we have not spent the time we need on this. Mr. O’Rourke stated that we are not looking for a vote. We need to bring it up to find out the temperature of other Councilmembers. If we have seven people saying they will not do this, we need to figure out what we are going to do, because we must do something. Mr. Bustos stated that his intention was not to force a vote next Tuesday. The motion is to take this to full Council and start the discussion, as an item on the agenda. Mr. Santos seconded the Motion. Ms. Landing opposed the Motion; all others voted in favor. Mr. O’Rourke stated the aye’s have it three to one. Ms. Landing stated that her reason for opposing is because we need to discuss more, and we need the whole Council to be involved. She stated that we often send things to Council and take up a lot of the public and Council’s time on things that we need to do more homework on. The retreat is a great place for that. Mr. Santos stated that whatever comes out of the Council meeting will be sent to the retreat. It gives us a good opportunity to discuss in public, so people know what is going on. When we send it to the retreat those who are concerned, will come to the retreat  Finance Committee December 3, 2018 Page 31 of 31 7. Adjourn There being no other business, meeting was adjourned at 11:08 a.m. Respectfully submitted, Gina Artrip December 5, 2018