AGENDA #1
MEMORANDUM
TO: Mayor and Town Council
FROM: W. Calvin Horton, Town Manager
SUBJECT: Public Forum on the Status Report on Developing the 2005-2006 Budget, Preliminary Capital Improvements Program, Preliminary Grant Proposals, and Other Budget Related Items
DATE: March 23, 2005
INTRODUCTION
The purpose of this memorandum is to provide background information for the Council’s public forum and hearing tonight.
We recommend that the Council receive comments tonight in a combined forum format in which citizens may make comments regarding any one or more of the forum topics.
OVERVIEW OF THE BUDGET PROCESS
Through the Town's annual budget process, the Council makes decisions on the level and types of services provided to citizens. The Town’s service year begins on July 1 in accordance with State law.
Adoption of a budget determines in many respects the level of resources to be available for Town services over the coming budget year. Normally, there are limited options for adding to the budget after it is adopted.
The budget process is both one of the most important responsibilities of the Council and a key opportunity for citizens' participation in Town government.
BRIEF BACKGROUND
Process for Participation by Citizens
In addition to the public forum tonight, an initial budget forum was held on January 26, 2005. A public hearing on the Town Manager’s recommended budget and capital improvements program will be held at 7:00 p.m. on May 18, 2005.
Citizens may also make comments to the Mayor and Council or the Town Manager by letter or fax at any time in the budget process at the following address and fax number:
306 North Columbia Street
Chapel Hill, North Carolina 27516
FAX: 919-967-8406
Comments are also welcome by electronic mail to: [email protected] or [email protected].
Agenda items and budget information are also posted on the Town’s website at: www.townofchapelhill.org.
Notices of the budget public forum and hearing were published in the Chapel Hill News on Sunday, March 6. Letters inviting citizens to attend and speak at the forum were e-mailed last week to about 200 community organizations and citizens. A copy of the notice is attached.
Copies of the status report on the development of the budget, capital program and plans for using grants are available for citizens to read at Town Hall, the Chapel Hill Public Library at the reference desk, and posted on the Town’s website.
Special Budget Review Committee Process
In addition to its normal deliberations, the Council has appointed a special Budget Review Advisory Committee that has been working with the Council to review all Town budgets and recommendations for the Council’s consideration. The Council has also engaged a management consultant to review the Town’s major operations and recommend changes that could produce cost reductions or increased non-tax revenues. Both the Committee and the consultant will present their reports to the Council on April 11, 2005.
The Council has also requested that all Town advisory boards consider the budget and recommend cost reductions or revenue enhancements for the Council’s consideration. Each board has been requested to have a representative report to the Council this evening.
TOPICS FOR THE PUBLIC FORUM AND HEARING
Information summarizing each topic for the forum tonight is provided below.
Page Topic
3 A. Status report on development of the 2005-2006 budget.
4 B. Preliminary report on the 2005-2020 Capital Improvements Program.
5 C. Proposed Community Development Plan for 2005-2006.
6 D. Proposed 2005-2006 HOME Program for housing and community development programs in Chapel Hill and Orange County.
8 E. Proposed 2005-2006 Housing Capital Grant Program for public housing renovation and resident services.
8 F. Proposed Use of Transportation Grants in 2005-2006.
9 G. Use of Downtown Service District tax funds for 2005-2006.
MANAGER’S RECOMMENDATION
We recommend that the Council refer comments and questions to the Town Manager for consideration in the budget development process.
A. Status Report on Development of the 2005-2006 Budget
Purpose
This forum provides an opportunity for citizens to comment on the Town Manager’s status report on development of the 2005-2006 budget and on any aspect of the Town's budget, including services which should be reduced, added, eliminated, or changed (see Agenda Item #1a).
Annual Budget
The annual budget includes operating costs for police and fire protection, street maintenance, refuse collection, various other public works services, parks and recreation, public transit, the public library, planning, building inspections, housing, engineering, legal, and administrative services.
The annual budget includes funding plans for capital projects such as sidewalks, greenways, street paving, renovation of Town buildings and other projects.
In addition to setting Town service levels and property tax rates, the Council makes decisions on whether to adjust or adopt service fees for refuse collection, transit, development review, inspections, recreation services, and other Town services as part of the budget.
Current 2004-2005 Budget
Copies of the current 2004-2005 budget, which includes key service objectives for each Town department, are available for reading and copying at the Library Reference Desk and at the Clerk's Office in Town Hall, and are available on the Town’s website.
Quarterly and annual reports, which also are available at the Library, Town Hall, and on the website, provide additional background information on Town services.
Next Steps
On May 9, 2005, we will submit to the Council a recommended 2005-2006 budget.
The Council has scheduled a public hearing for Wednesday, May 18, 2005.
Budget work sessions are scheduled for April 6 and April 27, 2005 and additional sessions may be scheduled by the Council as needed.
Under State law, a budget or interim budget must be adopted by June 30. The property tax rate must normally be established by June 30.
B. Preliminary 2005-2020 Capital Improvements Program
Purpose
The purpose of this forum is to receive citizens' suggestions and comments regarding capital projects proposed to be carried out or paid for in the next 15 years (see Agenda Item #1b).
Capital Improvements Program
A capital improvements program is a plan for major projects and purchases including:
Construction, renovation, expansion and improvement of Town buildings,
Buying land for parks, open space or other Town services,
Sidewalks,
Bikeways,
Greenways, and
Infrastructure and park improvements.
The Capital Improvements Program includes a list of capital projects with cost estimates, a potential schedule and priorities, and existing or potential future funding methods for each project.
Funding sources may include current general revenues, money previously reserved for capital projects, installment financing contracts, grants and bond issues.
Projects in the first year of a capital improvements program are normally funded as part of the annual budget.
Projects in the second through 15 years are normally not funded, although some may be financed through past bond issues, lease-purchase or installment plans. Funding for projects in the second through 15 years is considered in future annual budget processes.
Current Capital Improvements Program for 2004-2019
The current Capital Improvements Program has been incorporated in the 2004-2005 Town Budget document; copies of the Budget are available for citizens to read in the Clerk’s Office at Town Hall and at the Chapel Hill Public Library at 100 Library Drive.
2005-2006 Funding
We have submitted a preliminary plan for 2005-2020, with specific funding for the projects in the 2005-2006 fiscal year and in future years for projects involving installment financing. We propose a capital program budget of $1,745,000 for the 2005-2006 fiscal year.
Next Steps
We will submit a recommended Capital Improvements Program on May 9, 2005, for a public hearing on May 18, 2004.
The Council generally adopts a capital improvements program in June as part of overall decisions on the budget.
C. Proposed Community Development Plan for 2005-2006
Purpose
The purpose of this hearing is to receive citizens' comments on a proposed plan for use of 2005-2006 Community Development grant funds (see Agenda #1c).
All citizens' comments received in writing and at public hearings will be compiled and addressed in a consolidated plan to be submitted to the Department of Housing and Urban Development in May.
Community Development Grants
The Town receives a federal grant each year to benefit low to moderate income households through activities such as:
Community services,
Housing repairs,
Property acquisition,
Neighborhood revitalization,
Economic development, and
Capital improvements.
Current 2004-2005 Program
During the 2004-2005 program year we received $711,000 of Community Development funds.
On April 26, 2004, the Council adopted a plan for using 2004-2005 Community Development Funds. The 2004-2005 Plan focuses on public housing rehabilitation, neighborhood revitalization, housing rehabilitation, and community service activities.
Estimated 2005-2006 Funding
The U.S. Department of Housing and Urban Development has informed us that the Town will receive approximately $666,400 of Community Development funds in fiscal year 2005-2006. Our preliminary recommendations are to use Community Development funds for public housing renovations (at the Airport Gardens and North Columbia Street communities), homeownership assistance, site development, development of public facilities, community service activities, and program administration.
Consolidated Plan with Orange County
On May 13, 2005, the Orange County HOME Consortium consisting of the Town, Orange County, Carrboro and Hillsborough will submit a new five-year Consolidated Plan. The purpose of the Plan is to identify and prioritize the housing and community development needs for Chapel Hill and Orange County. The Plan also suggests how the Town and the County will address the needs over program years 2005-2006 through 2009-2010.
The Consolidated Plan will also include an annual plan for spending Community Development and HOME Program funds. The Plan for use of Community Development funds is approved by the Council and the HOME Program Plan is approved by the Council, the Orange County and Hillsborough Commissioners, and Carrboro Board of Aldermen.
This year’s update to the Consolidated Plan will include the 2005-2006 Community Development and HOME Program Plans as well as updates on housing and community development initiatives and programs in Orange County. We will prepare a draft Consolidated Plan for the Council’s consideration on May 9, 2005.
Next Steps
On May 9, 2005, we plan to recommend that the Council consider a Community Development plan for 2004-2005. We also plan to recommend an update to the consolidated plan to the Council. The Consolidated Plan is due to the U.S. Department of Housing and Urban Development by May 13, 2005.
D. Proposed 2005-2006 HOME Program
Purpose
Tonight’s hearing provides an opportunity for citizens to comment on a proposed plan for use of HOME program funds in 2005-2006 in Chapel Hill and Orange County (see Agenda #1d).
The HOME Program
The HOME program was established to fund various types of housing programs to benefit low and moderate income families. HOME Program funding is in addition to Community Development grants, federal rental assistance, and grants for public housing operations and improvements currently received by the Town and Orange County. Normally, there is a local match requirement for each of the partners participating in this program.
2005-06 Funding
The U.S. Department of Housing and Urban Development has awarded the Orange County HOME Consortium approximately $708,000 for fiscal year 2005-2006. In addition, the participating municipalities are required to contribute a 25% match of the grant funds after subtracting administration costs of about $70,800. The total match requirement is approximately $159,300. The Town’s contribution to the matching funds is 41% or about $65,300. A contribution from the Housing Loan Trust Fund will provide the funding for the Town’s local match. Orange County, Carrboro, and Hillsborough will contribute approximately $63,700, $22,300, and $8,000 respectively. Therefore, including program administration (allocated to the Orange County Department of Housing and Community Development), and residual funds of approximately $111,700, the Consortium will be planning activities for a total of about $979,000.
The preliminary plan for using the 2005-2006 HOME Program funds is attached. The plan proposes using funds for property acquisition, rehabilitation, second mortgage assistance and administration.
Orange County HOME Consortium
In 1992, the governing boards of Carrboro, Hillsborough, Chapel Hill and Orange County formed a Consortium to receive federal HOME Program funds. Orange County is the lead agency, and administers HOME program activities.
Current 2004-2005 HOME Program Funding
In 2004-2005, funds were budgeted for property acquisition, down payment assistance, land acquisition, tenant based rental assistance, new construction, second mortgage assistance, and administration.
Next Steps
On May 9, 2005, we will ask the Council to consider a plan for using the 2005-2006 HOME Program grant.
Approval by the governing boards of government in the Orange County Consortium is necessary to submit a joint plan to the U.S. Department of Housing and Urban Development for use of the HOME Program grant.
As the lead agency, Orange County would compile material from each government to submit a joint Consolidated Plan to the U.S. Department of Housing and Urban Development by May 13, 2005.
E. Proposed 2005-2006 Housing Capital Grant Program
Purpose
The purpose of this forum is to receive citizens' comments on using the 2005-2006 Housing Capital Grant (see Agenda Item #1e).
Housing Capital Grant
The Town may use annual Housing Capital Grant funds for renovating and otherwise improving public housing neighborhoods, and for services to public housing residents. A portion of the funds have also been set aside and are proposed to be set aside in 2005-2006 to pay for work on the Town Operations Center, since we are planning to use a portion of the facility for Public Housing maintenance. About $167,000 has been set aside from a combination of the 2003-2004 and 2004-2005 housing capital grants for debt payments for the Housing Department portion of the Town Operations Center and $74,000 in 2005-2006 funds.
Federal rules give priority to work needed to meet requirements such as:
Testing for and removing or otherwise controlling lead-based paint,
Testing for and removing or otherwise controlling asbestos, and
Renovations to meet the needs of disabled citizens.
Estimated Grant for 2005-2006
We have not received notice of the amount for the coming year. However, a preliminary proposal for 2005-2006 has been prepared based on last year’s funding amount of $530,600. Funding would be used for renovations in the Airport Gardens neighborhood, and administration and professional service fees. We will recommend a 2005-2006 Housing Capital Grant Program for the Council’s consideration on May 9, 2005.
F. Proposed Use of Transportation Grants in 2005-2006
2005-2006 Funding
The purpose of this forum is to receive citizen comments on the proposed use of State and federal transportation grants for 2005-2006. Preliminary recommendations are as follows.
Operating Assistance:
These funds would support services of the public transit system in the Chapel Hill/Carrboro area, which currently operates twenty-two weekday routes, one week night route, seven weekend routes and three safe-ride routes. In addition, the transit system provides demand responsive shared ride service and service for elderly and mobility impaired people.
The estimated amount of federal operating assistance to be requested for 2005-2006 is about $1,116,000 and State operating assistance is estimated to total $2,500,000. Combined, these comprise about 29% of the operating cost of the transit system.
Capital Projects:
Approximately $12,817,000 of federal funds would be requested, including $5.7 million for the construction of the new transit facility. State grant funds of up to 10% would be requested to help cover matching costs.
Proposed uses of grants:
Construct a new transit operations facility. During 2004-2005 the Town received $6.8 million in federal funds for the new facility.
Replace twenty 1995 buses.
Use technology funds for mobile data computers for the mobility impaired services.
Purchase associated capital maintenance items, including air conditioning air conditioning compressors, bus tires, and engine/transmission rebuilds.
Continue efforts to locate land for the 15-501 North park and ride lot project, to include engineering and design work.
We will also pursue funds to purchase additional buses and vans as needed for expansion and seek funding for a multi-modal center as downtown development plans continue for Parking Lots 2 and 5.
Planning:
About $550,000 of federal funds would be requested for short-range transit planning projects. These funds will be used to allow the Town to participate in coordination with the Durham-Chapel Hill-Carrboro Metropolitan Planning Organization in various projects such as:
Transportation Planning – to support ongoing operational planning and long-range planning for the Chapel Hill Transit system and general transportation planning for the Town
Mobility Report Card – to allow Chapel Hill and Carrboro to prepare the 2005 update to the Mobility Report Card, and
Regional Planning Projects – to participate in projects such as data collection for the 2040 Regional Transportation Plan, modifications and improvements to the regional transportation model and the development of a roads plan for southwest Durham County and eastern Chapel Hill.
For more information regarding funding for the transit capital planning projects, see Attachment 1f.
G. Use of Downtown Service District Funds
Purpose
The purpose of this forum is to receive comments and suggestions from downtown business operators, property owners and other interested citizens regarding the use of Downtown Service District taxes in 2005-2006 (see Agenda Item #1g).
Downtown Service District
In 1989, the Council established a Downtown Service District in response to requests from downtown business and property owners. State law allows the Council to establish a service district and to apply a supplemental property tax to promote the economic vitality of downtown and enhance Town services in the downtown district.
2004-2005 Downtown District Services
In the current service year, downtown district funds are allocated entirely to the Downtown Economic Development Corporation. The Chapel Hill Downtown Economic Development Corporation brings the resources of the Town, University and downtown community together to maintain, enhance and promote downtown as the social, cultural and spiritual center of Chapel Hill through economic development. The nonprofit corporation, a seven-member board appointed by both Town and University leaders, came into existence in July 2004. It is funded with an initial annual budget of $210,000 provided by the Town of Chapel Hill and UNC-Chapel Hill. The University allocated $70,000, while the Town Council allocated $70,000 in general tax funds and another $70,000 from the special tax on downtown property.
Highlights from 2004-2005 include:
Organization of Corporation – filing of formation documents, hiring a temporary executive director, establishment of board procedures and location of office space
Establishment of partnerships with other Downtown stakeholders
Development of a list of comments and questions regarding the proposed development of Town parking lots 2 and 5
Sponsorship of the 2004 Holiday events
Action on vacant facilities to encourage active and productive use
Researching of the feasibility for providing wireless Internet access throughout Downtown
Estimated Funding in 2005-2006
We estimate funding to continue at $70,000 for the Downtown Service District in 2005-2006 as in 2004-2005. Because Orange County revalued all County properties to adjust real property for changes in market values as of January 1, 2005, the County would use the new values as the basis for assessing property taxes for fiscal year 2005-2006.
We estimate that real property values have increased about 22% over previous values, based on information now available. The present downtown district tax rate is 6.2 cents per $100 of value.
This rate generates about $70,000 of revenue. To maintain the current amount of revenue, the needed tax rate is estimated to be 5.1 cents. Below we show an estimated equalization rate that would allow the Council to raise the same amount in revenues as would have been raised without the revaluation.
ATTACHMENTS
(Note: Copies of the attachments are available in the Clerk’s Office in Town Hall, the reference desk of the Chapel Hill Public Library, and posted on the Town’s website, www.townofchapelhill.org).
1a. Status Report on Development of the 2005-2006 Budget.
1b. Preliminary Report on the 2005-2020 Capital Improvements Program.
1c. Proposed Community Development Plan for 2005-2006.
1d. Proposed 2005-2006 HOME Program Funding.
1f. Proposed Use of Transportation Grants for 2005-2006.