AGENDA #1

MEMORANDUM

TO:                  Mayor and Town Council

FROM:             W. Calvin Horton, Town Manager

SUBJECT:       Initial Public Forum and Hearing on the Annual Budget, Capital Program, Use of Grants and Related Items

DATE:             January 23, 2001

INTRODUCTION

The purpose of this memorandum is to provide background information for the Council’s public forum tonight.

We suggest that the Council receive comments tonight in a combined forum format in which citizens may make comments regarding any of the forum topics.

OVERVIEW OF THE BUDGET PROCESS

Through the Town's annual budget process, the Town Council makes decisions on the level and types of services provided to citizens with local, State and federal funds.

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 functions and responsibilities of the Council and a key opportunity for citizens' participation in Town government.

BRIEF BACKGROUND

Process for Participation by Citizens

Additional public forums and hearings on the budget and related items will be held at 7:00 p.m. on:

March 28 - Status report on development of budget, preliminary capital program and proposed grant applications related to housing and community development.

May 9 - Recommended budget for the service year beginning on July 1, 2001; use of transit grants; recommended five-year capital program; potential Downtown Service District program.

Citizens may also make comments to the Mayor and Council by letter, fax, or e-mail at any time in the budget process.

Notices of the budget forum and hearing were published in the Chapel Hill News on January 17 and 21. We mailed notices to community groups on January 16.  An ad regarding Community Development funds was published in the January 11 edition of the Chapel Hill Herald.

TOPICS FOR THE PUBLIC FORUM AND HEARING

Information on each topic for the forums tonight is provided below.

MANAGER’S RECOMMENDATION

That the Council refer comments and questions to boards and commissions and to the Manager for consideration and recommendations in the budget process.

A. 2001-2002 Annual Budget

This forum provides an opportunity for citizens to comment on any aspect of the Town's budget and budget documents, including services which should be added, eliminated or changed. The Town's 2001-2002 budget and service year will begin on July 1, 2001 in accord with State law.

In addition, we invite citizens' comments on the preliminary budget outlook for 2001-2002, which is attached.

Purpose

The annual budget includes primarily operating costs for police and fire protection, street maintenance, refuse collection, various other public works services, recycling, parks and recreation, public transit, the public library, planning, building inspection, engineering, legal, and administrative services.

The annual budget includes one year's funding for cash-financed small capital projects such as sidewalks, greenways, street paving, etc.

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, recreation programs, transit, development review, inspections, etc. as part of the budget.

Current 2000-2001 Budget

Copies of the current 2000-2001 budget, which includes key service objectives for each Town department, are available for reading and copying at the Town Library Reference Desk and at the Clerk's Office in Town Hall.

Quarterly and annual reports, which are also available at the Library and Town Hall, provide additional background information on Town services.

Next Steps

On March 26^th, we will submit to the Council a status report on preparing the 2001-2002 budget. This report will include preliminary costs and revenue estimates for services in 2001-2002.

The Council has scheduled a public forum for March 28^th.

On April 23^th, we will submit a recommended budget for the Council's consideration and comments by citizens in a public hearing on May 9th. The Council's adopted budget process includes consideration of adopting a budget on June 11th.

B.  2001-2016 Capital Program

The purpose of this forum is to receive citizens' suggestions and comments regarding capital projects in the next fifteen years.

Purpose

A capital improvements program is a plan for major projects and purchases including:

buying land for parks, open space or other Town services;

sidewalks;

streetscape;

bikeways;

greenways;

park improvements;

construction, renovation, expansion and improvement of Town buildings; and

road, bridge and related improvements.

In the past, Chapel Hill's capital programs have normally included a list of capital projects with cost estimates, a potential schedule and priorities for five years, and existing or potential future funding methods for each project.  This year, we continue efforts begun last year to develop a fifteen year program.

Funding sources may include current general revenues, money previously reserved for capital projects, grants, gifts and bond issues.

Projects in the first year of the capital program are funded normally  as part of the annual budget. Projects in the second through fifteenth years are normally not funded, although some may be financed through past bond issues, lease-purchase agreements and other sources. Funding for most projects in the second through fifteenth years is considered in future annual processes.

Planning Process

Each year, the Town Council, citizens, boards and commissions, and staff consider the Town's capital project needs and possible funding sources for needed projects.

This process results in decisions by the Town Council regarding capital improvements that the Town may undertake as funding becomes available and is appropriated.

2001-2002 Funding

As indicated in the initial 2001-2002 budget outlook, we have assumed in our financial projections that about $1,023,000 may be allocated for small capital projects.

2000-2005 Capital Program

A summary of the current capital program and long-range projections as adopted by the Council is attached as background information.

Next Steps

On March 26^th, we will submit a preliminary capital program for fifteen years to the Council. The Council normally refers the preliminary capital program to various Town boards for review and comment.

A public forum to receive citizens' comments on the preliminary capital program is scheduled for March 28^th.

Various boards and commissions will make recommendations to the Council regarding capital projects.  We will submit a recommended capital program on April 23^th for a public hearing on May 9th.

The Council normally adopts a Capital Improvements program in June as part of overall decisions on the budget.  However, normally the Council appropriates funds only for the first year of the capital improvements program and for projects funded with bonds.

C.  2001-2002 Community Development Grant

The purpose of this hearing is to receive citizens' comments on how the Town should use federal Community Development grant funds in 2001-2002.

All citizens' comments received in writing and at public hearings will be compiled and addressed in a Community Development plan to be submitted to the Department of Housing and Urban Development in May.

Purpose

The Town receives a federal grant each year to benefit low- to moderate-income families through projects such as:

housing repairs;

property acquisition;

neighborhood revitalization;

capital improvements; and

afterschool programs.

Attachment 4 provides a summary of the ways in which Community Development grants can be used under federal legislation.

Estimated 2001-2002 Funding

We have received notice that the 2001-2002 grant will be $442,000.

The 2000-2001 grant was $426,000. In addition, the Town budgeted $40,000 of community development program income for community development activities.

 Current 2000-2001 Program

On April 24, 2000, the Council adopted a plan for using the 2000-2001 Community Development grant. The 2000-2001 plan focuses on public housing rehabilitation and neighborhood revitalization in the Northside and Pine Knolls neighborhoods.

 Please see the attached summary of the Town’s 2000-2001 Community Development activities (Attachment 5).

2000-2005 Consolidated Plan with Orange County

In May 2000, the Town and Orange County will submit to the U.S. Department of Housing and Urban Development a 5-year consolidated plan addressing the housing and community development needs of Chapel Hill and Orange County, and prioritize these needs for use of Community Development and HOME funds.  A 1-year Community Development plan was also included.  The purpose of the consolidated plan is to enhance coordination of community development and affordable housing programs between the Town and County.

On May 15, 2001, we will submit the 2001-2002 Community Development program approved by the Town Council, and the 2001-2002 HOME program approved by the Town Council, the Orange County Commissioners, and the Hillsborough and Carrboro Boards of Aldermen.  As part of the 5-year consolidated plan, we also developed a 5-year spending plan for use of community development funds.  (Please see Attachment 5.)

Next Steps

On March 26^th, we will submit to the Council a proposed 2001-2002 Community Development Plan.  Citizens will have an opportunity to comment on the proposed plan at the public hearing scheduled for March 28^th.

We will also ask the Housing and Community Development Advisory Board to develop recommendations to the Council.

On April 23^rd, we plan to recommend that the Council consider a 2001-2002 Community Development Plan. The Consolidated Plan is due to the Department of Housing and Urban Development by May 15, 2001.

D.  2001-2002 Housing Capital Fund Program

The purpose of this forum is to receive citizens’ comments on using the 2001-2002 Housing Capital Fund.

Purpose

The Town may use annual Housing Capital Fund Grants for renovating and otherwise improving public housing neighborhoods, and for services to public housing residents.

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 2001-2002

The 2000-2001 grant was $599,512. We have not received notice of the amount for the coming year.

Adoption of Plan for Using Housing Capital Grants

In April, 1998, the Council adopted a five-year plan for public housing improvements. This year, renovation of 9 units in the Lindsay Street neighborhood is expected to be completed.

The grant also has funded public housing residents’ initiatives including staffing the Residents Council’s office, training residents in community organizing and providing office supplies.

Next Steps

We will submit an updated five-year plan for public housing improvements and a proposed plan for using the 2001-2002 Capital Fund Grant for citizens’ comments at the public hearing on March 28, 2001.

The Housing and Community Development Advisory Board and other interested boards will develop recommendations to the Council. We plan to recommend that the Council on April 23, 2001 consider a 2001-2002 plan for using these funds. A plan is due to the Department of Housing and Urban Development by June 1.

E.  HOME Program

The forum tonight provides an opportunity for citizens to comment on how to use 2001-2002 federal HOME program funds in Chapel Hill and Orange County.

Purpose

Congress established the HOME program in 1992 to fund various housing and community development services to benefit low-income families. HOME funding is in addition to Community Development grants, federal rental assistance, and grants for public housing operations and improvements.

2001-2002 Funding

We have received notice that the 2001-2002 federal grant will be $484,000. There will be a local match requirement for these funds.  As in past years, we will propose to use funds from the Housing Loan Trust Fund for the Town’ portion of local match.  We estimate that the Towns share of the match will be approximately $44,650.

Orange County Local Governments' Consortium

In 1992, the governing boards of Carrboro, Hillsborough, Chapel Hill and Orange County formed a consortium to receive HOME funds. Orange County is the lead agency in carrying out the HOME program.

Current 2000-2001 HOME Program and Funding

In 2000-2001, the HOME program in Orange County totaled $536,550, including local matching funds.

In accord with an agreement in 1993, the local matching funds are shared as follows:

Locality Share

·        Orange County 42%

·        Chapel Hill 41%

·        Carrboro 12%

·        Hillsborough 5%

This year these funds have been used primarily for housing rehabilitation, property acquisition, and new construction projects. Please see Attachment 7 for more detailed information.

Next Steps

The recently formed HOME Program Review Committee that consists of elected officials and staff representatives from Orange County, Chapel Hill, Carrboro and Hillsborough will prepare a proposed plan for using HOME funds. The Council will hold a public hearing on the proposal on March 28^th.  On February 6, the County Commissioners will also hold a hearing to receive citizen comment on the proposed plan.

We will ask the Housing and Community Development Advisory Board to make recommendations to the Council.

On April 23^rd, we will ask the Council to consider a plan for use of this grant.

Approval by the governing boards of each locality in the Orange County consortium would be necessary to submit a joint plan to the U.S. Department of Housing and Urban Development for use of the HOME funds.

Consolidated Plan with Orange County

As the lead agency of the consortium, Orange County would compile material and citizen comments from each locality, and submit the annual update to the 2000-2005 Consolidated Plan for Orange County to the U.S. Department of Housing and Urban Development.  The Consolidated Plan will include an update to the 5-year plan for addressing housing and community development needs in Orange County established last year, and a 1-year spending plan for the use of HOME and Community Development funds.  The plan will be submitted to HUD on May 15, 2001.

F. 2001-2002 Public Transportation Grants

The forum tonight is an opportunity for citizens to comment on transit services and projects in 2000-2001 including the use of federal and State grants for transit operations, capital projects and transportation planning.

Purpose

Transportation services, projects and planning activities are intended to provide alternatives to the use of single-occupant vehicles, reduce traffic congestion, reduce air pollution and assist people with disabilities affecting their mobility.

Estimated Funding

For 2001-2002, federal funding for transit services is estimated to be about $735,000, and State funding is estimated to be about $1,000,000.

Sharing of Local Costs

The University and Towns of Carrboro and Chapel Hill have agreed to share the local cost for transit services. The cost-sharing formulas are set forth in a new two-year memorandum of understanding adopted in 1997.

2001-2002 Services

Chapel Hill Transit provides:

• bus services on routes;
• E-Z Rider service for citizens with mobility impairments;
• shared ride service on evening and Sundays to complement bus service;
• feeder service to transport citizens between bus routes and areas which do not have enough demand to justify bus routes; and
• Tar Heel Express service between various parking lots in the community and events such as games and concerts on the UNC campus.

G.  Downtown Service District

The purpose of this forum is to receive comments and suggestions from downtown business people, property owners and other interested citizens regarding:

·        the use of Downtown Service District taxes in 2001-2002;

·        the scope of projects and programs in the service plan for the Downtown District.

Purpose

In 1989, the Council established a Downtown Service District in response to requests from several downtown businesses and property owners.

State law allows the Council to establish this service district and to apply a supplemental property tax to promote the economic vitality of downtown, enhance Town services in the downtown district, etc.

Most of the property in the Town Center-1 and -2 zones is in the district. Several properties used only for residential purposes are not in the service district.

Estimated Funding in 2001-2002

The present downtown district tax rate is 6.2 cents per $100 of value. This rate generates about $46,000.  Based on the preliminary revaluation information, we estimate the equalization tax for the district would be 4 cents per $100.

2000-2001 Downtown District Services

In the current service year, downtown district funds are allocated for marketing and promotion of downtown, operation of a Welcome Center, supplemental sidewalk cleaning, assistance and communication to downtown businesses.

The non-profit Chapel Hill Downtown Commission, Inc. is responsible for providing these services through a performance agreement with the Town.

Next Steps

We will develop recommendations for use of the downtown district funds and for any changes in the service plan and district boundary as part of the budget process this spring.

The Council will hold an additional forum on March 28th and a public hearing on May 9th.

The Council normally adopts the downtown district tax rate in early June with the overall budget and makes decisions concerning services and the district boundary during June.

H. Potential Legislative Requests

Tonight’s forum is also an opportunity for citizens to speak on any potential legislation requested in the upcoming 2001 legislative session of the North Carolina General Assembly.

ATTACHMENTS

Budget

1.              Notice of January 23^rd forums (p.12)

2.               Updated financial forecast and budget outlook dated January 19, 2001 (begin new page 1)

Capital Program

3.               Summary of 2001-2005 capital program (p.24).

Community Development

4.         National objectives of Community Development legislation and related list of services and projects which can be funded (p. 26).

5.               Summary of 2000-2001 Community Development activities (p. 27).

HOME Program

6.             Summary of 2000-2001 HOME program (p. 30).

  ATTACHMENT 1

You are invited to express your views at a public forum by the Mayor and Town Council of Chapel Hill at 7 p.m. on Tuesday, January 23^th, regarding:

• Town services and projects through the budget for July 1, 2001 through June 30, 2002;

• Capital improvement needs for 2001-2016;

• How to use the 2001-2002 Community Development grant to address housing and other community needs of lower income households and areas;

• How to use the 2001-2002 federal Housing Capital Fund grant for improvements, renovations and related items in public housing neighborhoods;

• How to use the 2001-2002 federal HOME grant in Orange County to address housing needs of lower income households;

• How to use the 2001-2002 federal and State transit grants for capital projects, operating costs, and transportation planning; and

• The Downtown Service District boundary and services in the year beginning on July 1, 2001

• Potential Legislative requests to 2001 session of North Carolina General Assembly.

The forum on January 23 is an initial step in the Mayor and Council's process for developing the 2001-2002 budget and related items listed above.

An initial report by the Town Manager regarding the financial forecast for the 2001-2002 budget is available for citizens to review in the Town Manager's and Clerk's Offices in Town Hall and at the reference desk at the Chapel Hill Public Library.

Additional hearings and forums will be held on:

March 28 (Status report on development of budget; preliminary 15-year capital program; use of Community Development, HOME and Comprehensive grants, etc.); and

May 9  (recommended budget and capital program).

If you would like to express your views in writing at any time, please feel free to send a letter to:

Mayor and Town Council

Town of Chapel Hill

306 North Columbia Street

Chapel Hill, NC 27516

You may also send a letter by fax to the Town at 919-967-8406 or by electronic mail to Cal [email protected]. Town staff will copy and distribute your letter to the Mayor and each Council Member.

If you would like to have additional information, please feel free to visit the Town Manager's Office at Town Hall, send a fax or e-mail as indicated above, or  write to:

W. Calvin Horton, Town Manager

306 North Columbia Street

Chapel Hill, NC 27516

By phone: