SUMMARY OF A RETREAT HELD BY THE MAYOR AND COUNCIL OF THE TOWN

OF CHAPEL HILL, SATURDAY, JANUARY 12, 1991 AT 8:30 A.M.

Mayor Howes called the proceedings to order.

Council Members in attendance were Julie Andresen, Joyce Brown, Joe Herzenberg, Nancy Preston, Alan Rimer, James C. Wallace, Arthur Werner and Roosevelt Wilkerson, Jr.

Also in attendance were Town Manager Cal Horton, Assistant Town Managers Florentine Miller and Sonna Loewenthal, Assistant to the Manager Greg Feller, Finance Director Jim Baker, Personnel Director Pat Crotts, Town Attorney Ralph Karpinos, Town Clerk Peter Richardson and Retreat Facilitator Jake Wicker.

Mayor Howes noted that the Council was undertaking this morning's session during difficult worldwide conditions. Mayor Howes stated that Mr. Wicker was well qualified to serve as facilitator given his knowledge of the Town and its operation. Mayor Howes called upon Town Manager Horton for introductory remarks. Mr. Horton said that the day's agenda was based on his recent conversations with individual members of the Council. He stated that Finance Director Jim Baker was present to address any Council questions concerning the budget process, service levels and related questions. Mr. Horton added that Ms. Crotts was also present to make a brief presentation concerning the Town's performance based compensation system.

Mr. Wicker noted that he had drafted a tentative one‑page agenda for the Council's consideration. Council Member Andresen expressed a desire to discuss all items on the proposed agenda. She suggested that the Council primarily focus its energies on examining the budget, capital spending and service levels. She also expressed a desire to maintain the Council's discussion focus as broadly as possible. Council Member Rimer expressed his concurrence with the need for broad discussion. He noted the importance of having all Council Members express their ideas and the need for prioritizing an overall structural framework for the future.

Mayor Howes expressed his agreement with Mr. Wicker's suggested topic listing. He suggested that the Council put forth as many ideas as possible in lieu of extended remarks on a limited number of topics.

Council Member Werner noted that the Council could easily get bogged down in a discussion of the Town's performance based compensation system. He added that it was not necessary for the Council to deal with the system in detail. Council Member Werner suggested that the Council's proper role was to provide policy guidance in this area. Council Member Andresen expressed her agreement. Mayor Howes said the compensation system was an important item which would not require a long discussion this morning.

Budget Update

Town Manager Horton presented an overview of the Town's current financial standing, noting that revenues were being received at a slower than anticipated rate. He added that petroleum expenses to date were higher than expected. Mr. Horton also noted that individual positions were being reviewed as vacancies arose. He also noted that the purchase of some capital items was being postponed. Mr. Horton said that some carryover balance from the current year operations was anticipated. Given the level of uncertainty of State funding, he stressed the importance of the Town supporting the North Carolina League of Municipalities program concerning funding of local programs.

Mayor Howes inquired which State revenue sources were most vulnerable. Mr. Horton stated that sources tied to tax replacement, inventory and beer and wine taxes were in greatest jeopardy. Mayor Howes inquired about the status of University fire protection funding advanced by the State. Mr. Horton responded that this source was fairly stable. He suggested that the Council consider raising the Town's vehicle registration tax from $5 to $10 per year per vehicle. Council Member Werner inquired about the perceived State Legislature's willingness to authorize additional local funding sources. Mr. Horton responded that new leadership in the legislature might result in slightly more favorable conditions for local governments.

Mr. Horton said that the new fiscal year would present uniquely difficult economic challenges to the Town and University. He noted that some level of property tax increase, perhaps as high as six cents, would be quite likely. He added that slightly higher levels of funding for transit service might be available. council Member Andresen inquired about the likelihood of municipalities receiving additional revenue from a higher State sales tax. Mr. Horton responded that the League of Municipalities and some municipalities were interested in pursuing this option.

Mayor Howes noted that no one wanted to raise taxes. He added that it would be unlikely that significant new State revenue sources would be available for fiscal year 1991‑92. Council Member Wallace stated that the General Assembly had historically objected to shifts in tax rates. Council Member Andresen inquired when the next property valuation by the County would occur. Mr. Horton responded that this would take place in 1993.

Mayor Howes requested that the Town Manager prepare a budget based on no property tax increase. He said that this approach would serve as a good basis for comparing service levels. Council Member Preston said she favored the Mayor's suggestion. She said that this approach would permit the Council to see how service levels could be adjusted by various taxation levels. Council Member Rimer requested clarification of the Manager's role in preparing a zero property tax increase budget. Council Member Brown stressed the importance of the Council's role in the overall budget process.

Council Member Preston suggested that the Council examine departments on an individual basis. Council Member Werner suggested that a menu of three or four options be laid out for the Council. Council Member Herzenberg observed that either of these approaches would require a considerable time investment by the Council. Mayor Howes said that economic conditions justified this investment of the Council's time. Council Member Andresen suggested that the Council concentrate its efforts on programs rather than individual departments.

Council Member Wallace said he liked the concept of department participation. He added that a zero property tax increase budget would serve as a good basis for comparison of service levels and programs. Council Member Wilkerson stated that it was not proper to assume that items would have to be cut in the budget. He noted that there might be better ways to accomplish the same objective at the same or less cost. Town Manager Horton said that he would present the Council with a menu of possible cuts and other options. Mayor Howes emphasized the importance of receiving the Manger's best professional recommendations concerning budget options.

Council Member Wallace noted that it is much easier to add programs and departments, than it is to subtract them. Council Member Rimer said there was an underlying implicit assumption that everything was being done correctly in the Town. He stressed the importance of examining efficiency levels in Town departments. Council Member Werner noted the importance of beginning budget discussions at a non‑arbitrary base line, such as the current year budget. Council Member Andresen concurred, noting that the budget document was based on established Council policies.

Council Member Preston noted the importance of establishing human service funding needs early in the budget process. Mayor Howes also noted the importance of hearing from citizens early in the budget process. Council Member Andresen stressed the need to examine all Town programs in some level of detail. She also requested that the Town Manager provide the Council with an array of service level options.

Mayor Howes suggested that the Council use the retreat discussion to get a sense of broad issues. He added that discussions of budget priorities could begin at the public hearing scheduled for Monday, February 4th. Council Member Werner observed that historically, few citizens had addressed the Council at the first public forum on the budget. Mayor Howes said that the hearing might have a somewhat different character and tone this year.

Council Member Rimer stated that it would be necessary to invest a considerable amount of time in this year's budget process. He emphasized the importance of the Council receiving a menu of options, including a zero property tax increase budget, along with suggestions for possible program additions and deletions. Council Member Rimer also suggested that the media could assist in emphasizing the importance of the public's role in the budget process. Council Member Werner reiterated the importance of receiving early public involvement in budget discussions. Council Member Rimer noted that the first major public forum was scheduled to occur on March l9th.

Council Member Wallace noted that the State Legislature had consistently managed to prepare balanced budgets by use of a two budget proposal system. He noted that this system was successfully used to determine priorities for overall State budget goals.

Council Member Preston inquired when an initial budget overview would be available to the Council. Mr. Horton said that he would be able to provide a preliminary four to five page overview of the proposed budget to the Council in early February.

Council Member Rimer suggested that the Council could possibly schedule a work session for March 19th, as a follow‑up to the public forum on March 18th. He also suggested that the Council hold another goals and objectives work session in the near future; as a follow‑up to the Council's retreat.

Council Member Rimer requested clarification of the human services needs process. Mayor Howes said that the Human Services Advisory Board seeks direction from the Council concerning the need for human service programs. Town Manager Horton suggested that the Council consider establishing a separate process for determining the allocation of human service funding. Council Member Andresen said that this was a very good suggestion. Council Member Herzenberg emphasized the need for the Town to diplomatically explain any changes in this process to affected agencies.

Council Member Andresen noted that the Human Services Advisory Board would outline broad goals in the February 11th report to the Council. Mr. Horton said that the Council could choose to determine overall hotel/motel and human service allocations early in the budget process, and consider these matters in greater detail following adoption of the overall budget. Council Member Rimer inquired whether the Human Services Advisory Board would make

a specific appropriation recommendation to the Council. Council Member Preston said yes.

Council Member Rimer inquired what would occur if identified needs exceeded available appropriations for human service needs. Council Member Preston responded that County governments were primarily responsible for meeting human service needs. Council Member Wilkerson noted that the Human Services Advisory Board had a good sense of balance between the community's needs and available resources. Council Member Preston added that a contingency fund had been available historically to address emergency needs. Council Member Andresen inquired when the human service allocation could be determined. Mr. Horton said that a figure could be included in his preliminary budget recommendation to the Council.

Mr. Wicker solicited Council comment on the proposed budget process. Mayor Howes suggested that the Council could possibly have six to eight work sessions devoted to examination of individual departments and programs. He suggested that the sessions could occur after the proposed goals and objectives session on March l9th. Council Member Andresen suggested that the Council hold sessions to discuss the public safety, planning, transportation, public works, library and parks and recreation budgets. Council Member Rimer suggested that the Council limit the length of each session to ninety minutes, including a staff presentation of approximately ten minutes. Council Member Andresen emphasized the importance of covering only broad topic areas. Council Member Preston suggested that the Council could discuss budget topics and goals and objectives concurrently. Mayor Howes noted that the Council could possibly hold two of the sessions on Monday, April 1st and 29th.

Finance Director Jim Baker noted that the Manager's preliminary budget recommendation would be distributed to the Council on April 17th. Mr. Horton said it would be most desirable to hold the proposed sessions during March and April. Council Member Wilkerson suggested holding the sessions in early April, with possible changes being incorporated following the presentation of the preliminary budget recommendation in mid‑April.

Council Member Rimer inquired when the meetings could possibly be scheduled. Mayor Howes suggested that the Council brainstorm on the best dates and times for holding the work sessions. Council Members Andresen and Preston expressed a preference for holding the sessions during the late afternoon. Council Member Wilkerson suggested holding the sessions during lunch time on Mondays. Town Manager Horton said he would schedule the meetings based on the needs of all Council Members. He stated that if early evening meetings were chosen, food could be available at 5:00 p.m., with the meetings starting at 5:30 p.m. Council Member Wilkerson noted that he would be unable to attend meetings which commenced at 5:30 P‑m. Council Member Preston suggested holding some lunch and supper time work sessions.

Council Member Preston suggested that chairpersons of the Town's advisory boards and commissions be invited to attend the presentation of the Manager's recommended preliminary budget on April 17th. Council Member Andresen said that this was a good idea. Mr. Wicker suggested that the Council shift its focus to a presentation of the Town's compensation system.

Overview of Compensation System

Personnel Director Pat Crotts briefly reviewed the goals and objectives of the Town's compensation system. Ms. Crotts also compared the Town's compensation practices to other area public and private employers. She stressed the importance of assuring that the Town's compensation package was competitive with other area employers. Ms. Crotts also noted that the Town's compensation was more comparable to private industry than a traditional public sector employer, since the system rewards employees performing at higher levels.

Council Member Rimer inquired about the viability of a merit program wherein the Council would provide a percent guideline for distribution among Town departments. Mr. Horton responded that the system could be scaled at the Council's pleasure. Ms. Crotts suggested that the market salary component be examined regularly, to assure its continued competitiveness in the area. Council Member Brown observed that the employment market in the triangle area was in transition. She added that the State had recently implemented a hiring freeze. Council Member Andresen added that some municipalities in the State had initiated hiring freezes. Ms. Crotts noted that a lower level of market increase was anticipated during the next fiscal year.

Council Member Wilkerson inquired whether the Town's merit and market increases were higher than other employers. Ms. Crotts said no, noting that the Town's hiring rates were slightly below market levels. She added that merit and market increases were slightly below the average for Triangle governments. Council Member Preston stated that some of the information in the Manager's report to the Council appeared to indicate that Town compensation levels appeared to be ahead of other governments. Ms. Crotts noted that the Town was approximately one percent below the average market hiring rate. Council Member Preston said she realized that the Town was trying to remain competitive in the Triangle employment market. She added that the compensation system report was excellent and very clear.

Council Member Preston inquired about proposed market adjustments by other area governments. Ms. Crotts responded that most governments would likely adjust salary levels by three to four percent. Council Member Preston inquired about a graph depicting recent performance review levels of Town employees, rather than s bell‑shaped curve, it showed a preponderance of excellent and outstanding ratings. Mr. Horton stated that a major objective of the Town was to develop and maintain excellent and outstanding employees, rather than poor and mediocre performers. Mr. Horton said he hoped to continue this track record in the future. Council Member Wilkerson expressed concern about higher percentage salary adjustments than awarded in private industry.

Ms. Crotts added that the Town offered average vacation, sick leave and insurance benefits, when compared with other employers. council Member Herzenberg emphasized the importance of the Council having a good understanding of the compensation system. He noted that the overall system was complex and difficult to comprehend.

Mr. Horton noted that the compensation system overview report presented to the Council was a major undertaking which would have quite costly if it had been produced by non‑Town staff. Council Member Brown stressed the importance of maintaining adequate objectivity in the compensation system. Ms. Crotts observed that a recent survey had found that eighty percent of people think that they perform above average.

Council Member Wilkerson said he sensed that the Town organization was administratively top heavy. He expressed a desire to reduce upper level positions where possible. Council Member Rimer said he was not sure whether it was necessary to reduce current administrative staffing. He noted that the Town's department heads were competent. Council Member Andresen requested that the Town Manager explore the possibility of initiating a hiring freeze. Mr. Horton said that the Town would initiate freezes judiciously, taking into account service levels.

Operating Budget

Council Member Preston expressed her support for an entertainment tax. She noted that the University had not historically supported such a local revenue source. Mr. Horton suggested that the Council support the North Carolina League of Municipalities program concerning local revenue sources. Council Member Wallace noted that the University's current administrators were not necessarily opposed to the initiation of an entertainment tax. Elsie Pickett inquired whether it was possible for the entertainment tax to fund a portion of transit system costs. Mayor Howes responded that any revenues which offset the property tax are helpful. Council Member Andresen noted the importance of the Council's enthusiastic support of the League of Municipalities position on the entertainment tax and other revenues.

Council Member Brown expressed her support for a Town entertainment tax. She inquired whether there was additional information available concerning where proceeds would be expended. Mr. Horton responded that proposed revenue authorizations were for local governments only. Council Member Herzenberg suggested that the Council might benefit from reviewing the report of the State Legislature study commission on revenues. He noted that all council Members appeared to support new non‑property tax funding sources. Council Member Preston inquired about the timing of new revenue sources. Mr. Horton noted that there was no guarantee of the availability of new revenue sources in 1991‑92. Council Member Preston requested amplification of the Council's role in requesting new revenue sources. Mayor Howes said that the Council was well advised to express its broad support for the League's program relative to new local revenue sources. He also suggested that the Council receive copies of the Legislative Committee study report on new revenues.

Council Member Brown inquired whether the Council should meet with local State legislative representatives. Mayor Howes said these meetings could be complemented by a Council resolution supporting the implementation of new local revenues approved by the Legislature.

Council Member Herzenberg observed that events at the State Legislature were occurring very quickly. Mayor Howes noted that the Legislative Study Committee was very closely divided in its recent report on revenue sources.

Council Member Andresen inquired about the status of the Town's street lighting program. Ms. Loewenthal briefly reviewed the status of the program, noting that no additional incremental funding was currently devoted to this category. Council Member Rimer stated that the retrofitting of high sodium vapor lights could result in significant energy savings for the Town. Council Member Preston inquired about the proposed Capital Improvement Program review calendar. Mr. Horton responded that this process would closely parallel the budget review schedule. Council Member Preston inquired about available funding for the Southern Community Park facility. Mr. Horton responded that very little funding was available under current Council guidelines. Council Member Rimer noted that in his role as a taxpayer, he had thought he was voting on funding for the entire Southern Community Park proJect.

Council Member Preston inquired how much would be available for other community organizations, in light of the $20,000 earmarked for the 1991 Junior Olympics, and possible allocation of $30,000 to $50,000 to the tourism and visitor's bureau. Mr. Horton responded that the County‑wide one percent hotel‑motel tax would probably yield approximately $125,000. He said was uncertain whether it was appropriate for the Town to fund a County program.

Mayor Howes noted that the visitor's bureau proposal was in its infancy. He added that the proposal had been referred to the Town staff and would be back in the Council's hands in the near future. Council Member Wallace inquired about the possible location of the visitor's bureau. Mr. Horton responded that the proposed County sponsored agency would likely be located in Orange County offices in Hillsborough. Council Member Andresen noted that the Town would contribute an estimated eighty‑six percent of program revenues. Mayor Howes noted that to date the Council had only made a 1991-92 funding commitment to the Junior Olympics. Mr. Horton noted that the Orange County Commissioners would hold a public hearing on the proposed visitor's bureau on January 31st. Mayor Howes observed that the likely deadline for new State legislation was late March. Council Member Preston noted that visitor's bureau proposal was in its conceptual stage. Council Member Rimer noted that the recent meeting between Town and Durham officials was a missed opportunity for the discussion of matters other than the Laurel Hill Parkway.

Council Member Andresen expressed a desire for the development of better intergovernmental communications. She inquired how the joint Town/Durham meeting had been arranged. Council Member Preston responded that the work group and Town Council played roles in coordinating the meeting.

Council Member Andresen emphasized the need for better communication between the Council and advisory boards and commissions. Mr. Horton observed that the Council would be asked to consider a resolution setting a joint meeting with the Orange Water and Sewer Authority on February 6th. Council Member Andresen stressed the importance of maintaining the Town's current water and sewer‑related revenue sources.

Council Member Wilkerson inquired about the status of the Orange Water and Sewer Authority's policy of providing service to existing neighborhoods. Council Member Andresen noted that the OWASA Board had recently discussed this topic. She requested that Mr. Feller present an encapsulation of their discussion. Mr. Feller noted that the Board had taken no formal action on this matter. He added that the board and staff consensus was to leave the Authority's current policy unchanged. Mayor Howes suggested that this matter could be further discussed with OWASA officials in the future. Council Member Wilkerson observed that the cost of service to his home would closely parallel the cost of his home. Mayor Howes noted that the Town had received a request from Durham County, requesting an outline of the Town's proposed legislative program. Mr. Karpinos noted that the Durham County program overview included an overview of legislative program requests from other municipalities and counties.

Council Member Andresen stressed the importance of informing residents of the role of the Town, by means of annual reports or other tools. Mayor Howes noted that the Town currently produced quarterly and annual reports of services provided.

Other Areas of Council Interest

Mayor Howes suggested that the Council consider designating nonsmoking areas in places of public accommodation. He noted that Town residents would be likely to respond positively to this concept. Mayor Howes emphasized the importance of consulting with local restaurants and other interested parties in the drafting of the proposed ordinance. Council Member Brown said she wholeheartedly supported the Mayor's proposal. Council Member wallace noted that some local restaurants had already set aside non‑smoking areas in their establishments.

Transportation‑Related Issues

Council Member Andresen suggested that the Council place greater emphasis on provision of bicycle lanes as an alternate means of commuting. Council Member Preston observed that only four or five major roadways currently had bicycle lanes. Council Member Andresen said that greater pedestrian planning programs were also needed. Council Member Brown inquired about the level of specialty required for good bicycle planning. Mr. Horton responded that the State of North Carolina has staff dedicated to bicycle planning, while local government planners perform bicycle planning in concert with other duties.

Mayor Howes observed that the Town had recently made significant pedestrian and bicycle lane improvements. He noted that the Town's bicycle lanes and sidewalks were well used. He noted that future planning should focus on areas of difficult pedestrian and bicycle access. Mr. Horton added that construction issues, rather than planning matters, were more difficult to resolve. Council Member Andresen stated that the Carrboro's bicycle and pedestrian programs were somewhat more vigorous than the Town's.

Council Member Brown requested that the staff further explore the issue of traffic reduction. Council Member Andresen asked whether Council Member Brown had any specific improvement suggestions. Council Member Brown said a report on existing programs would be a good starting point for brainstorming of new ideas. Mr. Horton stated that the Transportation Board would be a good resource for further exploring this matter. Council Member Andresen said this was a good idea. Council Member Rimer also expressed concurrence. He noted that the Town's Comprehensive Plan included a large number of long‑range planning objectives which would require significant review by boards and commissions in the context of small area plans and individual project planning.

Mayor Howes stated that Jim Ritchey, recently appointed General Manager of the Triangle Regional Transit Authority, would be introduced to the Council at their January 14th meeting. He noted that Mr. Ritchey would make some general remarks concerning mass transportation in the Triangle area. Council Member Herzenberg inquired about the impact of the recent Durham transit takeover funding for Town transit operations. Mr. Horton responded that there was no clear idea of the impact of this transition. He added that it was likely that the Town would have to pick up a higher percentage of operating costs. Council Member Brown observed that the United States Congress would consider reauthorization of the Surface Transportation Act in its upcoming session. She inquired about the possible impact of having local representation on the Congressional appropriation committee. Mr. Horton said that the impact of local representation would be offset by consideration of the existing national debt.

Council Member Andresen requested that the staff provide the Council with copies of the study concerning traffic safety on Strowd Hill. Mr. Horton stated that the report would be recirculated to the Council.

Task Force on Violent Crime and Illegal Drug Use

Council Member Wilkerson stated that a recommendation on the establishment of a violent crime and illegal drug use task force would be discussed at the Council's January 14th meeting. Council Member Andresen noted that the Town and public housing projects were impacted by drug problems. She also noted the need for more vigorous efforts in moving people out of public housing and into their own homes. Council Member Wilkerson noted that the Town's drug problems were not limited to public housing. He expressed his hope that the task force would not limit its discussions to drug problems. Mayor Howes stressed the importance of the group not losing its focus on violence associated with illegal drug use.

Council Member Andresen inquired about proposed watershed protection plans for Cane Creek. Council Member Wallace responded that the Orange Water and Sewer Authority had recently clarified its plans in this regard. He noted that this matter could be further discussed at the joint meeting between the Council and OWASA officials on February 6th. Council Member Wilkerson stressed the importance of not stalling discussions, since significant watershed protection legislation was pending.

Other Programs

Mayor Howes noted that the Town was spending considerable amounts of money for recycling programs. He stressed the importance of monitoring the effectiveness of these programs. Council Member Wilkerson said he favored an examination of whether the recycling program should be handled by Town staff, rather than a private contractor. Council Member Rimer noted that the Public Works had been charged with examining this option in detail. Council Member Andresen emphasized the need for weighing costs of recycling with the essential social need for such programs. Council Member Preston noted that the State of North Carolina had outlined very vigorous guidelines for municipalities. council Member Rimer noted that the State had relatively few recycling programs targeted for its own agencies.

Mayor Howes noted that the Town Hall building program was nearing formal completion. He requested that the Council Members pass along any building‑related suggestions to Council Member Preston. Mr. Horton expressed the Town staff's gratitude for the new facilities. Mayor Howes said that the credit for the new building ultimately belonged to the Town's residents, who had passed the bond referendum.

Council Member Brown inquired about the viability of acquiring home‑rule status, to minimize the future need for special State legislation. Mayor Howes observed that the State Legislature had historically reacted negatively to home‑rule proposals.

Closing Remarks

Mayor Howes observed that the world and Town officials were facing a serious array of problems and issues, which would require careful judgement and extensive community support. He stated that the Town was a great place to live. Mayor Howes emphasized the importance of maintaining and enhancing the Town's unique character. Council Member Wallace noted the Town's ability to maintain separateness while existing among others. Council Member Preston said that the Council"s retreat session had been beneficial. She said that the Council had covered a lot of ground and made a good start on the new year. Council Member Brown requested that the Town staff explore the viability of a local returnable bottle bill.

Council Member Andresen noted the importance of continuing to receive a percentage of taxes for water and sewer capital needs. She requested that the Town Manager explore the possibility of adding a staff position to serve as a liaison for new business development. She requested that the position be provided on at least a half‑time basis.

Town Manager Horton expressed his gratitude for Mr. Wicker's time and guidance in the conduct of the Council's retreat. Mr. Horton also expressed his thanks to the Council for their time. Mayor Howes extended his thanks to the staff for their involvement in the retreat. Mr. Wicker said he was delighted to be involved in the Council's retreat and planning process. Mayor Howes reiterated his thanks to the staff and Mr. Wicker.

The retreat concluded at 2:00 p.m.