Budget & Finance Advisory Committee

Budget and Finance Committee Meeting Minutes Monday, October 5th at 4:30pm (Virtual Meeting) Meeting called to order at 4:30 pm by Chair. All members present. Motion for approval of September 2020 minutes by Fitterer, second by Wurth. Motion passes 3-0. 1. Fiscal Year 2019-2020 update – Tonya Travis In the financial summary sent earlier this afternoon, look at the Northfield revenue seems a little high, this is the transfer that we do once a year to pay the debt payment for Northfield. We recognize that revenue early in the year when the debt payments due in August, so we do that transfer. Impact fees are running high and in adequate facilities also, because of amount changes so people were trying to get those permit fees in. For everything else on the expense side, we're running right on track. Sanitation it's a little bit high that is due to the purchase of the knuckleboom truck that we made out of sanitation fund it was $140,000 purchase. We also had some repairs out at Rippavilla that were made, everything else looks good. We're trending very well on our revenues and expenses. We have not received the property taxes for Maury County yet so those have not been billed out but we do have Williamson County property taxes but we're waiting to send those all out at one time. Fitterer asked about the extra cost around recycling and going to a different facility and now auditing cans before pick up ,is that going to hit the sanitation fund? Travis, yes Sir it will and those expenses have not been recognized yet. 2. Update on July 2020 sales tax receipts – Victor Lay Travis, we're still trending above where we were prior year from last month to this month. Fitterer stated we've been watching this now for four or five months and we've consistently seen things come in higher than our projections do we do we feel comfortable with the data or is there a need to continue to have this as a follow? Both Wurth and Nieves agreed there was no need to keep this item on the agenda going forward. 3. Discussion on first reading of Ordinance 20-19, FY21 Budget Amendment – Tonya Travis This is the second amendment to the budget for fiscal year 2021. Looking at the staff memo that was sent out in the BOMA work session there is a 1.5 million dollar increase in revenues. Some of this was due to the bond refunding that we did for the fire truck and we also sold those bonds at a premium for the new pumper truck so almost 1.2 million dollars of this revenue is due to refunding the ladder truck that we purchased in last fiscal year. When we 1  refunded that ladder truck note, we have to recognize the revenue that we brought in and then we have to show the expense that was spent out so these are offsetting. 1,398.000 is where we paid off the prior debt and we recognize 1.1 million in the refunding and $357,000 and the premiums that we sold on the bond between the new ladder truck and the pumper truck. We also are recognizing $9,700 of revenue for Petra Commons this is the warrant signal study over at Petra Commons entrance. The developer had put a deposit on this signal study we still have some more of his deposit out there but in Resolution 20-142 being presented to you tonight, so if you approve that resolution it's included in the budget amendment to recognize the revenue from the developer and also recognize the expense that we will be spending out so those have offsetting revenue and expenses. Last month the BOMA approved Resolution 20-125 for the ABC grant for the recreation, so this budget amendment incudes a revenue of $3170 of revenue an expense of $6340. There is one unfunded expense in this budget amendment for a project management certification program for staff. Tyler Scroggins and Missy will be asking to go and take a certified project management program and exam. It's $4000 is the budget amendment it's 2000 and registration for each individual. Fitterer asked if the BFAC wished to make a recommendation on this. Recommendation passed 3 to 0. 4. Discussion on Cares Act monies – Tonya Travis We were notified probably late August that the state was providing cares act money and this money was being designated to any coronavirus expenses that this city has incurred. Salaries for first responders will be covered under the cares act but in the meantime we had also sent out a request to all the department heads to ask what their needs were to help mitigate the coronavirus spread we have checked with most of the departments and they have eligible expenses through the cares act. In your BOMA packet you'll notice we still have a couple of items that were waiting on amounts, like my online property tax software, but we're up to about $380,000 now. We were notified last week that we had to have 30% of our expense in by the end of this this week, October the 9th. We have $620,000 eligible, so we have pulled payroll for the Police Department to equal 30% of the funds and we're going to try to submit to make sure we don't lose any of the money. Fitterer asked to confirm the funds were capped at $620,00 Travis confirmed. Fitterer stated the list in the packet showed a couple of vehicles identified and he asked if they were be recognized as full cost including maintenance and upkeep, fuel? He stated he would like to see a complete number around the vehicles rather than just the acquisition cost. Travis, our plan was to fill the remainder with first responder salaries so that we don't lose out on any of the money so if something came off the list or there was a price change or something we would just fill the difference with first responder salary. These expenses have to be between March the 1st and we have to have everything spent by December 31st of this year. Fitterer stated. we would need a series of BOMA resolutions in upcoming meetings to expend this list. Wurth stated my only question is if there are enough laptops because it sounds like a lot of departments are asking for laptops and or iPads given if there's another home mandate. Travis will check with all the departments to make sure that all their employees have the laptops. 5. Discussion on potential land acquisition funding – Tonya Travis and Cumberland Securities Fitterer I had asked for this to be on given the letter of intent it is on the agenda with Resolution 21-51 later this evening, wanted an early discussion and ensure Tonya and staff are engaged with Cumberland and the other financial folks that if BOMA chooses to go ahead with potential land acquisition we have some funding strategies that have been vetted by our financial advisors and we're comfortable around it. Travis, we reached out to Chris and Scott 2  last week and they are prepared to give us some options on the funding sources if we wanted to go the bond route whichever way we would like to go. When I spoke with Scott last week, if we look at maybe wanting to sell off a piece of the land, he discussed not taking tax exempt issues. Cumberland stated, so as Tonya mentioned she had spoken with Scott last week and we have all kind of brainstormed on this and gone over it and a couple of things I guess we just wanted to make sure to put out there anytime you look at daily and taxes financing on property like this it can create some IRS issues if you decide to sell the property later and it's financed with tax exempt debt. State law also says that can't buy land for development with debt unless you acquire a certificate of public necessity on the front end. If you decide to go that route the city already has the Northfield property that it's looking to sell and the debt service that is linked to that property currently is about $750,000 a year. If you were to finance about 9 1/2 million on this 500 acre property, that means you could get that in the market you could be under $650,000 on that so if you sell the Northfield property and it’s now off your books, whatever you're using to pay for that you can turn around and use to pay for this property. The Northfield property cost of funding on significantly higher than where the rates are right now. Rates are as you've seen in the market are very low, they're very compressed right now so even if you did choose to go taxable that's still something we could discuss and run those schedules for you as well. Fitterer said it would be helpful but I have that taxable schedule now because if he understood, tax exempt presents two potential challenges to the city # 1 it be harder to divest the property later on and we decided it was surplus and #2 we would need a certificate of public necessity which we don't have. Cumberland stated the certificate is an extensive process both costly process and lengthy process. The other thing to consider as we discussed, is whether or not you have the option to purchase an option on the land to buy you some time as you to go through due diligence. Lay stated the way it's set up is that if we committed to it we would be committing to $50,000 escrow of money that we would have up to March 22nd. Cumberland asked, what’s the status on the Northfield property is that still on track to sell in December? Fitterer responded the diligence period was pushed about 30 days and it’s still on track to close by December 31. Wurth asked, if Northfield does not sell what would this scenario look like because that definitely plays into the purchase on this property. Cumberland stated, if Northfield doesn't sell the City is a great credit, you are not lacking for access to the market and for potential bidders. Really your concern would be from a credit perspective and trying to protect the city's credit rating AA from S&P and to do that you would really just want to make sure that you have if you're going to incur the additional expense of the debt service to finance the property you just want to make sure that you've got matching revenues so that's a tax increase or if it's if it's a shift into pennies around however you would need to do that you just want to make sure that you have on offsetting revenue. Wurth stated, that's my concern is making sure that we have the funds to pay those debts off. Cumberland stated, without moving things around or having a tax increase it would be quite a task for the city be able to continue to pay their debt without the additional revenue or the shifting of funds around. Fitterer stated, I think the land acquisition will be a non-starter if we had to make a decision before we've cleared on Northfield. 6. Discussion and recommendation on usage of surplus Capital Outlay note – Terry Hood and Don Brite Fitterer stated, just background for everybody we had $850,000 note on a pumper truck. The truck itself came in less than that. Chief Hood and Brite are going to make the case s to use the surplus funds towards the mobile command unit that we committed to partially funding through the state funds grant earlier this year. Chief Hood stated, I was out last week at the factory and we got a price on a demo they had. The vehicle which is about $80,000 less than 3  brand new, it has 6000 miles on it. If we were to purchase it they would refurbish it basically go through the whole thing. We talked about putting our funds together to get a decent instant command unit. Chief Brite stated we are budgeted $75,000 for this year which would basically give us a pull behind trailer and outfitted. This vehicle is pretty well fully equipped the only thing we need to add would be a radio. It’s not the top of line of any type of mobile command vehicle but it's one that will definitely meet our needs. Fitterer asked if we had budgeted $75,000 out of the covid money from the state? Brite responded yes. Fitterer asked, and we have the funds remaining from the pumper truck note $145,915 so that puts us right at the cost of this vehicle. Wurth stated, the pictures are great looks, you’re saying it's a really good deal but without bidding it out I would be hesitant until we know the true cost and what else is out there. Hood responded they both have been looking, most are out of our price range, this being a demo it becomes a vehicle we can afford. Fitterer asked what the cost was on a 2020 model through source well? Hood, that unit brand new was $299,000 a year ago. Hood stated this $299, 000 unit included the source well discount. Lay asked, if the unit they are wanting included the source well discount, Hood was not sure but would check and get that info back the next day. Hood, the drone was an extra $40,000. Fitterer stated since this is time sensitive, we would want to move on this and potentially have a resolution in two weeks. Nieves stated, I commend the chief’s for coming up with a really great solution working together on this. 7. Follow up on discussion on Saturn Parkway Change Orders – Victor Lay Lay stated he reached out to Paul Degges he said he would check into it and let me know but has not heard from him. Fitterer proposed to drop this from follow up for next month. Both Wurth and Nieves agreed there was no need to keep this item on the agenda going forward. 8. Follow up on discussion on Wastewater Treatment Permit, potential financial ramifications – Victor Lay Had conversations with Travis about this and he’s not seeing anything official but in his casual conversations with the permit inspectors that he deals with he's not expecting there to be any ramifications simply because we've already corrected the issue. The treatment process that we utilize as allowance for ammonia is 1.1 and it's been averaging 0.1 since we've installed. Fitterer stated he will leave this off the November agenda. 9. Update on delinquent utility accounts – Tonya Travis Patty sent me a report this afternoon on what she's done on collecting inactive accounts on utilities so on 9/20 we had 7726 inactive accounts that Patty's been working. Out of that balance she's collected $3257 herself and she feels like we can get another thousand out before we send those to collection. At this point we have not been sending a lot to collections because they haven't been working these cases because of the coronavirus. When we started out we had $69,000 of the balance that was over 2 months and now we're about $54,000 so we're steadily collecting. 10. Update on Water and Wastewater Board – Chuck Downham Nothing new to report since the filing of our latest semi-annual report. We probably will follow up with them to see how this is tracking, probably March will be the next reporting period for us. Our hope would be that we're showing good solid financial performance and at that point they will move at that point toward removing this from the list. a. Update on potential revenue bond issuance for FY20-21 The utility rate adjustments have certainly pointed our financial performance in a very 4  positive direction. So one of the things that we will need to do is give strong consideration to moving forward with another rate analysis just to determine if we need to make any additional adjustments in rates based on current financial performance. We will be taking up that conversation after the first year. 11. Items from the Floor Victor Lay item on your agenda tonight it's #4 Resolution 20-143, award to contract for annual manhole rehabilitation services. Just a clarification, when we went out to bid were thinking that we had a roughly around $300-$350,000 in our budget and this came in at $230,000 something. Looking at our budget we didn't realize at the time that $300,000 of that was actually to OHM. We really only have $39,000 in this year's budget associated for those expenses but that's okay because as of right now we only have a handful of manholes that are identified and we can probably put together a package of about 15 and will spend that $39,000 with that package separate from that particular resolution. Separate from that resolution but connected to it, back in the late spring we also had sent a letter to the state revolving fund asking to be put on their priority list for I & I and we had said that in the grand scheme of things we probably had probably 2.5 million dollars worth of work to do and that would cover something like 200 to 400 manholes. We got a letter back saying that we were shortlisted to be approved that's not grant money that's loan money and today I had a conversation with OHM who had put that grant to our potential request letter in for us. The numbers if we ended up going that route and borrowing, making the SRF application for a 20 year note 2.5 million, we would get at .82% and that is based on our ability to pay. That number has the potential to get even like another quarter percent of credit dropped off not saying that we will but that’s a potential. I had a conversation with John Warner earlier today about does it make sense to go SRF if we were to borrow the money or do a conventional loan. With SRF they have lots of legal stuff you have to go through environmental work things like that to get lots of hoops where you wouldn't have it would just borrowed it straight out you could wrap the money in with another loan. In my discussion with them I don't think that's going to be the best route for us to go because once again on the SRF all we have been proposing to them is we would have the allocation almost like a heloc where you have a cap and says that they will loan us up to 2.5 million but we could then borrow that as we find issues and repair them and then if up to two years from now we haven't spent the 2.5 million then that's all we've borrowed. If we want to go this route and make application to borrow the money then the SRF is the is the way to go if we want to do that the request has to be in by December 31st. 12. Adjourn at 5:19 pm ________________________________ _________________________________ Matt Fitterer, Chairman Tonya Travis, Finance Director 5