MINUTES OF A BUDGET WORK SESSION HELD BY THE MAYOR AND COUNCIL OF THE TOWN OF CHAPEL HILL, WEDNESDAY, MAY 8, 1991 AT 5:30 P.M.

Mayor Howes called the meeting to order.

Council Members in attendance were Julie Andresen, Joyce Brown, Joe Herzenberg, Nancy Preston, James C. Wallace, Arthur Werner and Roosevelt Wilkerson. Council Member Alan Rimer was absent excused. Also in attendance were Assistant to the Mayor Lisa Price, Town Manager Cal Horton, Assistant Town Managers Sonna Loewenthal and Florentine Miller, Finance Director James Baker, Personnel Director Pat Crotts, Engineering Director George Small, Fire Chief Dan Jones, Parks and Recreation Director Michael Loveman, Police Chief Arnold Gold, Public Works Director Bruce Heflin, Assistant to the Attorney Richard Sharpless and Town Attorney Ralph Karpinos.

Town Manager Horton briefly reviewed the current budget situation, noting that State Legislative action would have a direct impact on local revenues. He noted that another work session was proposed on May 15th and budget adoption or a resolution of intent to adopt a budget was scheduled for May 28th. Mr. Horton suggested that the Council could possibly hold a special meeting on July 1st to adopt an interim budget, specifying appropriations for continuation of ordinary expenses.

Mayor Howes noted that Council Member Brown, Town Manager Horton and himself had met with State Representative Joe Hackney on April 30th. He stated that the Manager's suggestion of a resolution of intent was a good one. Council Members Andresen, Herzenberg and Werner expressed their concurrence with this approach. Town Manager Horton noted his willingness to respond to any questions by the Council.

Council Members Herzenberg, Preston and Werner expressed their support for maintaining a contribution of $150,000 for affordable housing programs. Council Member Andresen said she hoped that the Council would define affordable housing objectives in detail in the future. She stressed the importance of moving individuals out of shelters and public housing and into affordable housing alternatives. Council Member Herzenberg expressed his general concurrence with Council Member Andresen's remarks. He noted that the Orange Community Housing Corporation had recently initiated planning of its first affordable housing program. Council Member Werner noted that the Council had previously debated and agreed to support the Culbreth Park housing development. Council Member Preston requested a review of affordable housing program requests received to date. Mr. Horton said that funding requests totalled approximately $225,000. He noted that Housing Loan Trust Fund funds could possibly be used for program financing. Council Member Preston expressed her concurrence with Council Member Andresen's remarks. Council Member Preston suggested that acquisition of existing low-cost housing units could be explored as an alternative. Council Member Brown expressed her concurrence with this concept.

Playing Fields

Mayor Howes noted that he would meet with school district officials on May 10th to discuss shared use of school athletic facilities and fields. Town Manager Horton noted that work was underway on a proposal for use of the fields at Glen Lennox. He said that the new fields could possibly be ready for play in about one year. Mr. Horton noted that the University had its own long-term recreational needs to consider. Council Member Werner said the matter was in the public eye. He stressed the importance of continuing to work with University officials in this matter. Council Member Brown said the proposal to use the Glen Lenox fields was an appealing one. She noted the need to know the University's long-range plans for the fields. Town Manager Horton stressed the importance of also continuing to work with school officials on the shared use of recreational facilities. Mayor Howes noted that the Council generally appeared to support the concept of additional playing fields. Town Manager Horton noted that staff time and minimal fiscal resources would be used to pursue additional playing fields.

Public Safety Officers

Council Member Andresen expressed her general support for the hiring of eight additional public safety officers. She also noted that Orange County could do more in terms of providing law enforcement. Council Members Herzenberg and Preston expressed their concurrence with the Manager's recommendation of hiring eight additional public safety officers. Council Member Wilkerson suggested that the Council consider the hiring of two new police officers and six firemen, transfering six public safety officers out of the public safety system. Council Member Werner emphasized the need to have a thorough evaluation of the overall public safety system. He expressed disappointment that the system evaluation had not been undertaken earlier. Town Manager Horton stated that a report evaluating the system would be presented to the Council in early September.

Council Member Werner asked whether the Council could make a decision on the need for additional public safety officers in September. Mr. Horton said yes, noting that the Council might wish to hold a public hearing on the matter of a public safety system. Mayor Howes said he could only support suggestions such as Council Member Wilkerson's after completion of a study of the public safety system. Council Member Andresen inquired about the amount of time required for public safety officer training. Mr. Horton said approximately six months, excluding field training. Council Member Herzenberg said that two previous Councils had considered the viability of the Town's public safety system. Council Member Wilkerson stated that Fire Chief Jones had expressed the need for six additional personnel at an earlier budget work session. Mr. Horton said that this was correct. He added that the Police Department also needed eight additional personnel. He noted that it was not possible to fund all these positions. Noting that the Town had expended approximately $170,000 in overtime for public safety officers during the current budget year, Council Member Wilkerson said his proposal was a creative way to provide for community Police and Fire needs. Council Member Brown expressed her support for adding the eight public safety positions without increasing the current property tax rate. Mayor Howes said that there appeared to be general support for the addition of the public safety officer positions.

Closed-Loop Traffic Signal System

Town Engineer George Small said that the North Carolina Department of Transportation would fund system costs of approximately $1,200,000, while the Town would be responsible for funding about ten percent of system costs such as design and construction. Council Member Andresen inquired about personnel requirements of the Department of Transportation funding. Mr. Small said that the Town would be required to have a full-time traffic engineer and adequate technical support staff. Council Member Andresen inquired how many support positions would be needed. Public Works Director Bruce Heflin said that two technicians and one maintenance person would be needed. Council Member Andresen inquired whether the positions would be needed in the future. Mr. Heflin said yes. Council Member Werner asked whether a total of four positions were involved. Mr. Heflin said yes. Council Member Wilkerson expressed concern about the total number of positions required for the program's ongoing operation. He inquired about the source of workmen's compensation funding for the positions. Finance Director James Baker said the funds were set aside in non-departmental accounts of the General Fund.

Council Member Brown inquired how the closed-loop system would fit into the Town's transportation system. Mr. Horton responded that the system played a critical role in operating existing roads at maximum efficiency. He added that the consistent movement of vehicles would be linked to reducing levels of air pollution. Council Member Andresen expressed concern that the Department of Transportation program funding was tied to four positions. Council Member Werner noted that the Town would likely save money in the long run by not having to built or widen some roadways. Town Manager Horton expressed his commitment to outlining cost implications of proposed new programs. He expressed hope of reducing the total number of positions required for the closed-loop system once the system was fully operational. Mayor Howes stated that the Council appeared to support the system in concept.

Mayor Howes said that funding for the Triangle Transit Authority, by means of a car rental tax, had received initial approval by the State Legislature. Council Member Brown asked when the closed-loop system would be fully operational. Mr. Small responded that a timeframe of two years was anticipated. Council Member Brown asked whether staff needs for the system would be assessed over time. Mr. Small said yes, noting that the system's principal objective was to obtain the maximum for the Town's investment.

Refuse Collection Alternatives

Mayor Howes said that little further discussion was needed on the matter this evening. Mr. Horton said that the staff would present a report on the proposed pilot rollcart program at the Council's May 28th regular meeting.

Merit Pay Increases

Council Member Preston requested an overview of merit increase proposals. Mr. Horton provided a brief overview, noting that he recommended a minimum average of 4 1/2 percent merit to maintain a good merit pay system. Mayor Howes inquired about the average merit percentage associated with a merit pool of $300,000. Mr. Horton said 3.5% to 3.7%. Council Member Wilkerson said he would not vote in favor of a merit pool in excess of $300,000. Council Member Andresen inquired about the Manager's response to a lower level merit program. Mr. Horton said a major consideration was competitive employers in other local communities. Council Member Wilkerson expressed concern about increasing tax burdens on local property owners. Council Member Wallace suggested that merit be rewarded by means of a one-time bonus, rather than an addition to base pay. Mayor Howes inquired whether it was possible to reduce pay of individuals in the Town's compensation system. Ms. Crotts said this was only possible through a demotion process. Council Member Wallace expressed his support for a program with a maximum merit percentage of three percent.

Council Member Werner inquired whether recent merit pools had averaged about seven percent. Ms. Crotts said that increases for merit and market adjustment averaged between 7.58 and 8.13 percent during the most recent budget year. Council Member Werner expressed his support for an average merit increase of approximately 4.5 percent. Council Member Wilkerson noted that the Town's merit system was a radical modification of the City of Greensboro's system. He suggested that the Town's overall pay plan be evaluated. Council Member Andresen said she did not favor an all new pay plan. She suggested that an examination of existing Town fringe benefits packages be undertaken as soon as possible. Council Member Wilkerson said he had significant concerns about the pay plan and the entire benefits package. Mr. Horton noted that he had outlined a range of merit pool options. He said that a merit pool averaging 4.5 percent would total approximately $370,000. Council Member Wallace inquired about the median merit percentage. Ms. Crotts responded that the median percentage was 4.5%. Council Member Brown asked whether a change in the Personnel Ordinance would be needed to change from a merit to bonus pay system. Mayor Howes said such an amendment would be needed. Council Member Werner expressed his support for continuation of a merit system employing a limited pool of fiscal resources.

Council Member Werner inquired about the Town's involvement in the State retirement system and 401-K compensation plans. Mr. Horton responded that individual communities had the option of not belonging to the State Retirement System, although all municipalities chose to do so. He added that the 401-K system was offered to all employees on the basis of equitability. Ms. Crotts briefly reviewed the percentage of contributions by local government employers. Noting the expense of the 401-K benefit, Mayor Howes stressed the importance of offering fair and equitable benefits to all employees. Mr. Horton noted that the 401-K component was considered along with salary when examining the local employment market. Council Member Wilkerson said it was not a good idea to compare the Town to other local municipalities since they did not have similar revenue flows. He noted that it would not be possible to continue to provide five percent 401-K contributions for all Town employees, without benefit of a more diversified tax base. Council Member Andresen noted that the Town provided many non-basic services. Town Manager Horton noted the importance of providing a good employee benefits and compensation package to attract and maintain quality employees.

Council Member Brown inquired when the 401-K plan had been implemented for all Town employees. Ms. Crotts responded that the program was initiated in 1986 at a two percent contribution, with an increase to five percent being made in 1987. Council Member Brown inquired about the Town's employee turnover rate. Ms. Crotts responded that this was approximately ten percent. Town Manager Horton noted that the absence of a 401-K program might impact the Town's ability to attract and maintain quality employees.

Mayor Howes emphasized the long-range importance of a competitive benefits package. Council Member Preston said it was clear that the Council wished to modify the existing merit pay pool. She requested that the Council be provided detailed examples of merit pay impacts. Council Member Preston also noted that none of the Members of the Council appeared to have a problem with reducing the allocation for street resurfacing. Council Member Preston asked whether it would be possible to reduce the fund balance from $1.25 million to $1.2 million. Town Manager Horton said that reducing fund balance by $50,000 would have a negligible impact. Council Member Wilkerson asked whether the $50,000 reduction would be in addition to the proposed $200,000 interfund transfer. Mr. Horton said yes. Council Member Andresen said that the fund balance should be used minimally to meet shortfalls. Mayor Howes noted that the Senate had passed a bill authorizing an increase of the Town's automobile registration fee. He noted that the House would consider the matter in the near future.

Mayor Howes requested an analysis of potential impacts related to not repaving the Cedar Falls Park parking lot. Parks and Recreation Director Mike Loveman said the lot had deteriorated badly due to bus traffic and adverse weather conditions. He emphasized the need for additional parking spaces and a bus turnaround facility at the lot.

Council Member Preston inquired whether there was any way to demarcate parking spaces without repaving the lot. Mr. Loveman said that existing methods would be ineffective in the long run. Mayor Howes inquired about the possible use of mat and seal treatment. Council Member Brown suggested that liners and other alternative methods could be used on a gravel parking facility at Cedar Falls Park. She noted that a gravel lot worked well at the Botanical Garden. Mr. Loveman said that vehicles traveling over loose gravel created dust clouds, which in turn caused visibility problems for other drivers and users of the Cedar Falls athletic facilities. He stated that paving of the lot would help to maximize efficiency of facilities.

Mr. Horton noted that requiring the Town to pave the lot would be consistent with the Development Ordinance. Mayor Howes requested that the staff provide additional information about the proposed paving of the Cedar Falls lot. Mr. Horton said that this information would be provided to the Council. Mr. Small noted that a mat and seal surface would only be effective for a short time period in a heavily trafficed parking lot. Council Member Andresen inquired about the estimated costs for parking lot improvements. Mr. Loveman said these varied between $100,000 for in-house crews to $140,000 for a private contractor. Council Member Preston inquired about the Little Creek Park proposal. Council Member Brown noted that there was a fair amount of interest in maintaining the area as a wetlands facility.

Council Member Wilkerson requested information about the decrease in licensing and permitting fees and fines and forfeitures during the current fiscal year. Mr. Horton said that additional information on these matters would be provided to the Council.