City Council

Summary/Final Minutes – Work Session – September 19, 2013 Savannah City Government SUMMARY/FINAL MINUTES MAYOR and ALDERMEN WORK SESSION CITY MANAGER’S BRIEFING September 19, 2013 – 10:00 am PRESENT: Mayor Edna B. Jackson, Presiding Alderman Tony Thomas, Chairman of Council Alderman Mary Osborne, Vice-Chairman of Council Aldermen John Hall, Mary Ellen Sprague, Tom Bordeaux Estella Shabazz and Carol Bell (arrived at 10:35 a.m.) City Manager Stephanie S. Cutter City Attorney W. Brooks Stillwell Asst. City Attorney William W. Shearouse ABSENT: Alderman Van R. Johnson, II Mayor Pro-Tem Mayor Jackson called the meeting to order. City Manager Stephanie Cutter introduced Dick Evans, City of Savannah Chief Financial Officer/Acting Assistant City Manager who presented a PowerPoint presentation which provided the Financial Update. Financial Update (Presentation on file) Dick Evans compared the results from August 2012 through August 2013, provided an update for 2013 full year projection and summarized the upcoming financial challenges for 2013. He stated as of August 31st the General Fund 2013 revenues at $3.4M less than in 2012; and 2013 expenditures are $779,000 less than 2012. The main reason 2013 overall revenues are down in comparison to 2012 is the Local Option Sales Tax (LOST) settlement; a decline from last year of about 13%. Alderman Sprague stated in terms of LOST, the public needs to understand that the City was hurt by the LOST negotiations and it affects us in a major way. She believes the focus over the next 10 years should be a larger population and infill housing is very important in an attempt to get a larger portion of funding for the community. She then asked Mr. Evans to explain in further detail the sales tax issues and the offset. He asked her to hold the question because more is involved in the answer and other details are in the next few slides of the presentation. Alderman Bordeaux asked Mr. Evans if he had an idea where the City would stand in terms of property and sales taxes for the LOST negotiations that were lost. Mr. Evans replied yes the sales taxes for the year under the new scheme would have been $45M, which is approximately a $5M difference under the new LOST certificate. Alderman Bordeaux then asked if the change was under a state law. Mr. Evans replied yes. The Budget department took into account the HB 386 (loss of vehicle sales tax) change and made an estimate accordingly. 1  Summary/Final Minutes – Work Session – September 19, 2013 Alderman Shabazz asked Mr. Evans to explain in a little detail HB 386 to the public. Mr. Evans stated he will explain a couple variances that will feed directly into Aldermen Shabazz and Sprague’s questions. One of the variances is property taxes and there are 2 reasons: 1 due to HB 386 was a change in the tax ability for personal property taxes that eliminated the taxes on newly titled vehicles in April 2013 and are no longer subject to the ad valorem tax (personal property tax) which has cost the City approximately $200,000 so far in 2013. The State wanted to eliminate the Personal property taxes on vehicles or the “birthday tax” and put in place a new vehicle title fee. When you purchase a vehicle you will no longer pay sales taxes rather a title fee paid to the County Tax Collector which is then distributed to the State, School Board, County and all municipalities. Alderman Sprague asked what the distribution is based on. Mr. Evans replied first call is on all jurisdictions that levy the personal property tax on vehicles in an amount necessary to make up the difference between what they actually collect and what they would collect in a base year. After that distribution, what’s left is divided into three parts. First to the School Board to make up for the lost in ESPLOST and the balance is divided between the County and municipalities to make up for the sales tax lost. Alderman Shabazz asked with the two scenarios, what percentage caused the $3.6M loss. Mr. Evans responded the overall impact of HB 386 is approximately $2M revenue lost. The impact of the LOST certificate change is approximately $5M; the greater loss is the LOST settlement. HB 386 is made up with the title fee, but there is no funding making up the LOST loss. Alderman Hall asked for clarification on the overtime expenses. Mr. Evans stated overtime has been running higher than average, but has been addressed with department heads to make an attempt to reign them in. Alderman Hall then asked approximately how much overtime an individual can make in a given week and does it equate to hiring another employee. City Manager Cutter stated most overtime is encountered in Public Safety, this year particularly Fire. A large class graduated in February and overtime has significantly gone down. Alderman Hall then asked when he sees City employees working after 7:00 p.m. is that included in the numbers and what is being done to the department heads that are not reigning in overtime hours. City Manager Cutter stated sometimes there are some employees that work a 3:00 p.m. – 11:00 p.m. schedule or 2:00 p.m. – 10:00 p.m. schedule. When performance pay was in place that was a criterion for what the rates would be, the expectation has been given to managers to manage the resources they have. Bureau Chiefs have been asked to pay close attention to department heads that schedule employees. Alderman Shabazz asked for more explanation on Mr. Evans statement about the numbers being driven by vacancies. Mr. Evans explained the City of Savannah has a workforce of 2,500 employees and there is always someone resigning. When that occurs recruitment has to be done in an attempt to refill the vacant position. In a workforce the size of the City’s there will always be vacancies. Several categories contributed to the favorable expenditure results compared to 2012. Vacancies are currently still less than last year, but above the first half of 2013 due to a selective hiring freeze. City Manager Cutter stated currently the organization is being reassessed in an attempt to right size. There were positions that were added where there were not 40 hours of essential functions associated with the position, so rather than fill them and then eliminate them they have remained 2  Summary/Final Minutes – Work Session – September 19, 2013 vacant. These changes will be reflected in the 2014 budget with reorganization to eliminate some of the positions. Alderman Bell asked in what area(s) of service have there been eliminations and who is responsible for making that assessment. City Manager Cutter stated they are shifting people around to fill voids mainly on the Administrative support side. Initially, Bureau Chiefs have been given the task of reassessing the departments within their Bureau; not only the staffing component but the way services are provided and to identify any inefficiency they may see or voids within the department. Alderman Hall asked if the vehicle fleet will be right sized as well. City Manager replied yes that is also a part of it. Alderman Sprague asked about the Capital Improvement Projects and what wasn’t spent that was budgeted. Mr. Evans stated the budget and expenses to date are on top of one another. Melissa Carter, Acting Budget Director reminded Council that the Capital Improvement Projects were prefunded in 2012 that were previously planned for the 2013 year in anticipation for some other projects. Alderman Bell asked if that included maintenance. Mr. Evans stated maintenance of a major issue, yes. City Manager Cutter stated the Building and Electrical Maintenance department stays on top of all maintenance issues for the buildings owned by the City. Year-end projection for 2013 Revenue is $3.8M less than 2013 budget due to the LOST settlement and the year-end projection for 2013 Expenditures is $2.7M less than 2013 Budget due to the cost savings measures. Alderman Thomas asked for a listing of the Capital Improvement Plan projects that have been cut or changed because they are approved by Council. As a whole they should know because the constituents have been told certain things would happen and if they are not happening or haven’t happened, Council needs to be aware first in an attempt to notify the people in the districts. Alderman Osborne asked for an update on the $7M that was allocated for the Baldwin Park drainage project. She requested the monies be left intact because it was stated at the time all of those funds may not be needed and the amount is now at $900,000. City Manager Cutter responded it is currently being worked on. She is unaware what happened and has committed and guaranteed that all changes will be brought back to Council. Alderman Hall stated he finds it very disheartening that members of Council are alluding to the fact they will hold the referendum hostage if they don’t get what they want. He believes it needs to stop because it doesn’t show unity or cohesion among the Council. Mayor Jackson stated she doesn’t advocate for one district over another; her role as Mayor is to listen and then find out ways to move forward. She doesn’t want Council to get into a tug of war. She agrees with Alderman Hall and stated she believes the right thing to do is trust and work with the City Manager and her staff. 3  Summary/Final Minutes – Work Session – September 19, 2013 Mr. Evans stated although projected 2013 expenses are substantially under 2013 Budget, a draw form the Sales Tax Stabilization Fund (STSF) is needed to balance 2013 which is expected due to the LOST settlement. Mayor Jackson asked if the 19% was a good rate. Mr. Evans stated it was the best rate to help the City maintain its good Credit rating. Alderman Sprague asked does the $32M include the Sales Tax Stabilization rate. Mr. Evans stated no if it is included the percentage would then be 21.6%. Alderman Sprague stated her concern is the two legal judgments the City currently has against them. Mr. Evans concluded the presentation stating some challenges for the 2014 budget are: a permanent resolution is needed for the LOST settlement (drawing from the STSF is not a sustainable solution, the annual revenues and expenses must be brought back in balance). Alderman Thomas stated he remains deeply concerned about the employee hiring freeze. He feels an efficiency study needs to be conducted on the entire organization and the hiring freeze needs to be reevaluated because some areas and departments are at stress levels beyond positive (i.e. public works, sanitation). It’s impacting the departments that do a great deal of the work that people tend to take for granted but are essential for governing in Savannah. Mr. Evans stated it is a selective hiring freeze. Police, fire and essential functions are exempt and it is not a permanent solution and from a financial standpoint it is needed. Other challenges are increasing pressure for Capital Project funding; increasing cost for pension and medical benefits; keep wages fair and competitive; funding public safety (police and fire) needs to keep pace with City growth; increased premium for general liability risk; resolving differences with County regarding MPD and Recorder’s Court funding and reduction in Federal CDB and similar grants. Alderman Thomas suggested having a Community Care Summit in the City of Savannah and bringing together the County and surrounding cities to start looking at solutions not only in funding but how to address the needs in the community (i.e. homelessness, housing). Mayor Jackson suggested having a workshop with the Council members to see how the goals can be reached then bringing the information to the City Manager and her staff to address the needs within the community. She also suggested creating a directory of social service agencies and coming up with a database to assist the agencies to prevent a person from going to multiple agencies to receive services which prevents other individuals that need the assistance from receiving it. Tax Allocation (TAD) Legal Issues Brooks Stillwell, City Attorney stated he has been working with City staff particularly Pete Shonka, Assistant City Manager and the Engineering Department and presented a PowerPoint presentation on the biggest economic development the City of Savannah currently has going on which will bring jobs over time. Attorney Stillwell brought to everyone’s attention the yellow 4  Summary/Final Minutes – Work Session – September 19, 2013 area which was the boundaries of a Tax Allocation District set up by the previous Council for the purpose of funding Capital Improvements within the eastern part of downtown Savannah. The East River Street project, which is the existing Georgia Power building will house 2 retail stores, a garage and 2 new hotels and the estimated cost is $105M in construction investment. Groundbreaking will take place in December. When it is fully built it should produce approximately 45% of the total tax increment needed for the entire district. When the Savannah River Landing and Madison Retail projects are added many hundreds of millions of dollars will also be added to the area and create a significant impact. The money will be used for the City for the President Street/General McIntosh Improvement Project which has to be completed before anything else can be done. The latest estimate is 2 years and $29M to build road improvements, which include utility relocations, raising the height of the road, redirecting some of the lanes and will significantly improve safety. Alderman Bell asked with the road improvements to President Street will anything happen in the design from the east going west and will it be merged into the ramp for access to the Truman Parkway. Pete Shonka responded not as a part of this project. There is a future project that will raise President Street and go over the canal and railroad tracks. Attorney Stillwell stated that was in a part of the T-SPLOST that was voted down. Mayor Jackson asked if this money was allocated in SPLOST. Attorney Stillwell stated there is $5M in SPLOST 6 however most of it is being financed with prior SPLOST and Capital Improvement funds. The second project the City is working on is the widening of Bilbo Canal and the cost is $14.5M. The City is currently in the process of acquiring easements from Madison Retail and a family that owns a portion of land near Truman Parkway also in negotiations with Savannah River Landings for a portion of property that is needed. Madison is eager to begin work and they have to raise the level of the dirt in the project. The City will take 2 ½ years to build the President Street project while it is being built they will begin filling the site. When the President Street project is complete approximately 3 years from now, they will be ready to break ground on the shopping center which will generate lots of sales and an increase in property taxes. The River Walk is the third project and will cost approximately $1.6M. It will connect the entire Riverfront across the Marriott’s property. Alderman Thomas inquired about the River Walk that is currently in existence that was paid for with taxpayer’s money. Attorney Stillwell replied the River Walk is built and there was some damage to the floating docks because the weights were too heavy. The City applied to the Coast Guard to get a “No Weight Zone” which is in the process of being approved. Management of the dock area needs to be patrolled. An RFP may be put out but no final decisions have been made at this time. Alderman Thomas asked about the lease that was signed 14 years ago which was supposed to come back after 10 years and he hasn’t seen it yet. Attorney Stillwell referred to Sean Brandon, Management Services Bureau Chief who was unsure of the answer. Attorney Stillwell stated they will research the information and write a memo to Council. Alderman Thomas stated he would like to see the lease agreement as well. Dick Evans stated the property adjacent to the Hyatt is not leased or owned by the City. There is a very small portion east and another portion west of the Hyatt that the City leases. 5  Summary/Final Minutes – Work Session – September 19, 2013 Alderman Sprague asked if the Hitch Village area be used such in the same way as Garden Homes and Fellwood. Mr. Shonka responded there is currently no concept for it yet; the developers asked if the City was willing to do a similar concept as Sustainable Fellwood. Alderman Sprague then asked are property taxes collected on the homes that are sold in Savannah Gardens. Attorney Stillwell stated yes after they are sold because you’re turning something that’s completely publicly owned into something partially privately owned. Alderman Sprague asked are there any other areas that are somewhat developable. Attorney Stillwell stated the other areas are very low. Alderman Sprague asked has the City made any plans for the Depot property. Attorney Stillwell stated the City has been discussing building a parking garage somewhere in the area for several years. Attorney Stillwell concluded the presentation and praised Pete Shonka and the Engineering Department for all their hard work. City Manager Cutter stated she would like to postpone the Savannah Entrepreneurial Center Overview presentation for a later date. Mayor Jackson stated there were a few things she asked the City Attorney to address before Council recesses for lunch. Attorney Stillwell reminded Council a few weeks ago Mayor Jackson received a letter from Paul Hinchey, President of St. Joseph’s Hospital requesting to expedite the process of getting the Hospital Authority Board back up to strength for the reissuance of bonds to clear up some debt. All but 2 (two) terms have expired. The current members have all been on the board for a long time and are doing a great job. 2 (two) people were added about 6 months ago, Irvin Jay Levine and Amy Lee Copeland. Council cannot directly appoint people to the Hospital Authority. Council makes nominations and the Authority then makes the selection. The recommendation of Attorney Stillwell is that Council re-nominates the existing members, he spoke to the members and they have stated they will serve the term. In addition, 2 other names of individuals he knows have been added to the list. He spoke with them and they agreed to serve on the board as a favor to him. Alderman Hall asked Mayor Jackson about a name he submitted that he did not see on the list. She stated it was an oversight and asked Attorney Stillwell if it could be added. He stated it could and to remove either one of the names at the bottom of the list. The name to be added was Bridgett Gordon. Attorney Stillwell said the item needed to be added to the Council meeting Agenda to be voted on. Attorney Stillwell also informed Council another Ethics complaint came in that involves the Mayor. The problem is there are currently no members on the Board of Ethics because in the process of doing appointments during the last quarter the current members either resigned or did not reapply. Attorney Stillwell suggested advertising for the Board of Ethics for two weeks and making appointments at the next Council meeting. Mayor Jackson stated the complaint came from Mr. Perry because she had him sign for documents he requested against a Council member and it was a procedure that should not be used. He informed the Attorney General and is now bringing it up again as an Ethics complaint. Mayor Jackson stated she will recuse herself from the appointments, will not attend the meeting of the Board or be involved in any part of the process. She informed Council she will need them to handle the matter, but did not think 6  Summary/Final Minutes – Work Session – September 19, 2013 Alderman Thomas should be involved. Alderman Thomas agreed that he will not be a part of the process. Council broke for lunch City Manager Stephanie Cutter presented the City Manager’s Briefing of the agenda items for the Council Meeting of September 19, 2013. The agenda is attached and made a part of the permanent record. Mayor Jackson adjourned this meeting. Dyanne C. Reese, MMC, Clerk of Council 7