City Council Finance Committee Meeting

FINANCE COMMITTEE MINUTES August 16, 2018 The City Council Finance Committee of the City of Norman, Cleveland County, State of Oklahoma, met at 8:30 am in the Municipal Building Executive Conference Room on the 16th day of August, 2018, and notice and agenda of the meeting were posted in the Municipal Building at 201 West Gray and the Norman Public Library at 225 North Webster 24 hours prior to the beginning of the meeting. PRESENT: Chair Castleberry, Members Carter and Wilson ABSENT: Member Bierman OTHERS PRESENT: Mayor Lynne Miller Steve Lewis, City Manager Brenda Hall, City Clerk Ken Komiske, Director of Utilities Shawn O’Leary, Director of Public Works Terry Floyd, Development Coordinator Anthony Francisco, Director of Finance Kim Coffman, Budget Manager Jeff Bryant, City Attorney Gala Hicks, Director of Human Resources Tim Powers, Director of Information Technology Keith Humphrey, Chief of Police Travis King, Fire Chief Jud Foster, Director of Parks & Recreation Kathryn Walker, Assistant City Attorney III Ronda Guerrero, Municipal Court Clerk Paul Arcaroli, citizen Lee Ann Peters, citizen Dr. Cynthia Rogers, citizen Andy Sherrer, Co-Chair, Stormwater Citizens Committee Steve Ellis, citizen Item 1, being: DISCUSSION REGARDING POTENTIAL BUDGET REDUCTIONS FOR THE FYE 2019 BUDGET * This item was moved to the end of the meeting per Council Member Castleberry’s request. Chair Castleberry stated that due to the previous talks in this meeting, this item is not as important. Finance Committee Minutes August 16, 2018 Page 2 Item 1, continued: City Manager Lewis stated that we are waiting to hear back from OU about the meeting to discuss CART funding. Many of these proposed cuts are similar to what we did in 2009-2010 during the recession. We are also suggesting some ideas for new revenue potential. Member Wilson stated that some of the proposals make good sense. Mayor Miller stated that these are all possibilities, but with the budget looking upward, she would like to hold off and see how things go before we cut services. Chair Castleberry agrees. Items submitted for the record: 1. General Fund Statement of Revenues and Expenditures FYE 19 ***** Item 2, being: DISCUSSION REGARDING THE CITY’S RESERVE POLICIES. Anthony Francisco stated that the City’s current reserve policy is in the handout. We are required by Code to have three percent (3%) of the General Fund balance in the reserve for operational reserve, an additional 2% budgeted allocation for emergencies, and another 3% in the Rainy Day Fund. We are currently at our targeted reserves, which is a total of 9.5% of General Fund expenditures. There has to be a federally-declared disaster, or some emergency that causes the Emergency Fund to be drawn down, in order to appropriate money from the Rainy Day Fund. Chair Castleberry stated that that the Rainy Day Fund ordinance wording could be changed to only require 1% instead of 2% in the Emergency Reserve account. This will free up about $700,000 per fiscal year. Member Wilson asked what the risk of doing this would be. Castleberry stated that if it was a huge emergency, we would probably get reimbursed by the federal government or the state government. Francisco stated that the risk is really about timing. It sometimes takes a while to get those reimbursements. Mayor Miller stated that she did not see anything wrong with the proposed changes. It will make things a little more flexible. Francisco stated that we can use the 1% for other purposes immediately. Items submitted for the record: 1. Creation of Reserve Funds Sec. 8-103 and 8-104 of the City Code 2. List of Major Weather Events in Norman since January 2007 3. 2% Reserve Analysis ***** Finance Committee Minutes August 16, 2018 Page 3 Item 3, being: DISCUSSION REGARDING LONG TERM STRATEGIC PLANNING. City Manager Lewis stated that the report by Dr. Russell Evans that is in the packet is a very good predictor of future sales tax forecasts for Oklahoma City. We have approached Dr. Evans about doing a similar report for the City of Norman to help us better predict our future sales tax collections. Francisco stated that Dr. Evans’ has already done some preliminary work for us and we could engage him formally for around $30,000. It would be very useful information. Dr. Evans only does a model to predict a year out because the farther out you go, the less reliable the information can be. City Manager Lewis stated that the report will be based solely on sales tax and nothing else. Member Wilson stated that she is ok with this idea because she is always ok with a fresh set of eyes on a problem. Chair Castleberry stated that we should move forward with this. Francisco stated that we can engage Dr. Evans without going to Council, but we will present his report to the Council. Items submitted for the record: 1. Oklahoma Economic Outlook 2018-2019 ***** Item 4, being: DISCUSSION REGARDING REAPPORTIONMENT OF THE UNIVERSITY NORTH PARK TAX INCREMENT FINANCE DISTRICT (UNP TIF) FUNDS. Chair Castleberry stated that changing the formula of apportionment to the UNP TIF down to 5 or 10% instead of the current 60% would still leave $800,000 going into the fund per year. This would just be the sales tax portion, and the property tax portion would continue to go into the fund as usual. If we decided to do 0% sales tax apportionment, it would still pay off in about 9 years. Member Wilson asked if eliminating sales tax was even an option. Francisco stated that it would require a change to the Project Plan, but Council could do that. Chair Castleberry stated that Norman Public Schools does not want to end the UNP TIF and the County would like to see the Lifestyle Center built. Member Wilson stated that she supports these changes. Chair Castleberry stated that there are two ways to do this. We could change the percentage of sales tax apportionment, or we could change the apportionment to a fixed annual amount. Francisco stated that we are liable to whatever the Project Plan Ordinance says, so we would need to change the Ordinance to reflect whatever is decided. Finance Committee Minutes August 16, 2018 Page 4 Item 4, continued: Member Carter stated that he believes the will of the people is to end the UNP TIF completely. He is not in favor of supporting any other plan moving forward. Mayor Miller states that the UNP TIF has had many benefits besides growth that most people are unaware of. It does not hurt anyone to continue the TIF; it is the sales tax apportionment that is a problem right now. We are apportioning way too much money out of the General Fund and that is what we need to fix. Member Carter asked the Mayor and Chair Castleberry if they wanted to extend the TIF in order to get the arena deal going. Chair Castleberry stated that this has nothing to do with the arena deal and he had proposed this very thing over a year ago. Chair Castleberry stated that this proposal would fully fund our General Fund and immediately add an additional $2 million. Member Carter stated that he was not interested in moving forward with this plan. Member Wilson stated that eliminating the City’s sales tax apportionment to the TIF fixes our General Fund problem. The question then is whether or not the City believes we need to build a Cultural Facility or Lifestyle Center. She does not believe we need this. She believes this plan is the best compromise and does not see how this plan could open the door for the arena project down the road. Member Carter states that we need to end the Cultural Center and the Lifestyle Center projects, end the TIF altogether, and fully pay for the School Resource Officers to offset the loss of revenue to the schools. Mayor Miller stated that we need a vote of the City Council to convene the Statutory Committee to approve the proposed changes to the Ordinance. Francisco stated that he understood that the Committee wanted staff to prepare draft recommendations to be presented to the Statutory Review Committee. This can be done by a Council resolution. Chair Castleberry stated that the options are: 1. End the TIF 2. Take out the Lifestyle Center/Cultural Center Project authorizations 3. Sales tax apportionment cut back to 5 or 10% or a fixed amount This can hopefully be presented at a Study Session in September. Items submitted for the record: 1. Email from Anthony Francisco to City Council Member Castleberry dated August 14, 2018 2. UNP TIF Authorizations vs. Expenditures ***** Finance Committee Minutes August 16, 2018 Page 5 Item 5, being: SUBMISSION OF THE REVENUE/EXPENDITURE REPORTS. Francisco stated that the last two months have had some positive sales tax returns. We have had four straight months of positive returns, which is a trend. Chair Castleberry asked about the negative interest income for the UNP TIF. Francisco stated that was due to the over-apportionment that was paid back to the General Fund. The interest that was earned had to be paid back as well. Francisco stated that the franchise fees are down due to a mild summer. Items submitted for the record: 1. Summary of Major Fund Revenue Sources vs. Budget FYE 2019 as of July 31, 2018 2. Summary of Major Fund Expenditures vs. Budget FYE 2019 as of July 31, 2018 3. Appropriations from Fund Balance FY18 4. General Fund Transfers over $50,000 between Expenditure Categories FYE 19 June 2018 5. Norman Forward Sales Tax Financial Reports ***** Item 6, being: SUBMISSION OF THE REPORT ON OPEN POSITIONS Gala Hicks stated that we still have 12 candidates going through the Police Academy. We are still accepting applications for the Animal Welfare Technician, and we are currently interviewing for the Communication Officer. The Shelter Veterinarian position is still open and we have received one application. Chief Humphrey stated that this was normal because we are not a large city. Member Carter stated that using Rose Rock for contractual veterinary services for the animals is a good option while we do not have a full time veterinarian. Items submitted for the record: 1. City of Norman Position Vacancy Report dated 8/8/18 ***** Finance Committee Minutes August 16, 2018 Page 6 Item 7, being: MISCELLANEOUS COMMENTS Member Carter stated that he was disappointed in the role the Norman Economic Development Coalition (NEDC) took in the arena project talks. He was also disappointed in the services provided by Visit Norman in supporting a recent statewide veterinary conference. The meeting adjourned at 9:45 am.