MINUTES OF A BUDGET WORK SESSION HELD BY THE MAYOR AND COUNCIL OF THE TOWN OF CHAPEL HILL, NORTH CAROLINA, MONDAY, MARCH 2, 1992

Mayor Broun called the work session to order. Council Members in attendance were Julie Andresen, Joyce Brown, Mark Chilton, Joe Herzenberg, Alan Rimer, Arthur Werner and Roosevelt Wilkerson, Jr. Council Member Joe Capowski 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 Jim Baker, Personnel Director Pat Crotts, Transportation Director Bob Godding, Fire Chief Dan Jones, Public Works Director Bruce Heflin, Parks and Recreation Director Mike Loveman and Town Attorney Ralph Karpinos.

Mayor Broun noted that public forums on the proposed community development grant program, 1992-93 Town budget and 1992-1997 proposed Capital Improvements Program would be held on Tuesday, March 17th.

Town Manager Horton noted that this evening's budget and capital improvements program reports were preliminary in nature. He stated that the proposed budget met the Council's stated objective of no property tax increase in fiscal year 1992-1993. Mr. Horton said that revenues for the current fiscal year were approximately $300,000 less than originally anticipated. He noted that total original General Fund budget requests had been reduced by $1,096,000, including a proposed reduction of $400,000 in the Town's capital improvements program. Mr. Horton said that Town employee turnover had decreased dramatically, from an average of eight to ten percent, to a current level of two to three percent.

Mr. Horton stated that he was recommending that some expenditures be deferred or eliminated. He also noted that a number of positions were being held vacant. Council Member Herzenberg inquired whether a chart on page five concerning revenue and expenditure adjustments only referred to the General Fund. Mr. Horton said this was correct. He added that in addition to holding positions open, Town departments were also reducing contractual, equipment, supply and other expenditures. Mr. Horton said that $233,000 in capital improvement projects were being held in limbo as a precautionary measure.

Mr. Horton said that approximately $55,000 of the Town's $740,000 fund balance would be expended during the current fiscal year. He noted that $685,000 would be available in fiscal year 1992-1993, in the event that the Council chose to expend these funds. Mr. Horton noted that it would be desirable to increase the fund balance by almost $100,000 during the next year. He said that the economy and revenue trends were rather flat. Mr. Horton noted that his preliminary budget proposal maintained the Town's current property tax rate. He noted that there was a good deal of uncertainty concerning revenues and expenditures in the Transportation Fund. Mr. Horton stated due to uncertainties about levels of federal operating assistance, the Town would have to rely on goodwill from the University of North Carolina and the Town of Carrboro. He noted that most revenue projections were flat, excepting a slight projected increase in Powell Bill funds and anticipated property tax revenues.

Mr. Horton said he was unable to recommend any merit or market increases in the preliminary budget. He noted that a small amount of money was recommended for increases for probationary employees and correction of egregious position underclassifications. Mr. Horton said he would present a full budget report to the Council in approximately a month. He noted that although worker's compensation and health insurance rates would be higher for the next fiscal year, they could have been much higher. Mr. Horton stated that he was recommending that the 1992-93 budget include funding for low-income housing programs, personnel and equipment to maintain Fordham Boulevard, and new computer equipment and software for a cost accounting system. He also said that the Public Works Department anticipated a reduction in refuse collection crews from eight to seven, due to reduce refuse tonnages from increased citizen participation in recycling programs. Mr. Horton added that a change in the methods for brush collection was also recommended.

Mr. Horton said he was proposing that funding for the Town's street reconstruction program be reduced by $74,000 for the next fiscal year. He noted that there would still be sufficient funds to meet the Town's objective of a twelve-year street resurfacing program Town-wide. Mr. Horton also said that two new grounds maintenance positions were recommended for maintaining landscaping on Fordham Boulevard. Mr. Horton added that he was unable to recommend funding for additional street lighting or a computer network in the Public Works Department. He also said funding was not included in the preliminary budget for two new crisis counselor and two narcotics investigator positions in the Police Department. Mr. Horton stated that regular users of the library's reference services might note some difference in response time to their inquiries due to a reduction in staff. Mr. Horton said his preliminary recommendation was to reduce the hotel-motel allocation to minimum required distribution of ten percent or an estimated $28,000.

Mr. Horton briefly reviewed the components of the Town's debt service, noting that total payments of $1.5 million were included in the preliminary proposed budget. He also recommended that $3.2 million of authorized bonds for streets, the library project and fire equipment be issued in the near future. Mr. Horton briefly reviewed several possibilities for increasing existing fees and establishing new ones.

Mr. Horton noted that federal operating assistance for the Town's transportation system would be reduced in the next fiscal year, due to the inclusion of the City of Durham's system in the service area. Mr. Horton said he expected reasonable cooperation from the Town of Carrboro and the University in continued funding of the transit system. He noted that a fare increase from sixty cents to seventy-five cents would likely result in a decline in ridership of about five percent and an increase in revenue of approximately $168,000. Mr. Horton said that staff and elected officials were lobbying state and federal officials to allocate additional funds for the Town's transit system.

In reviewing the landfill fund, Mr. Horton noted that the landfill owner's group was comprised of the Town, Orange County and the Town of Carrboro. Mr. Horton said he hoped it would be possible to have no change in the existing tip fee. Mr. Horton said the parking fund was a general enterprise fund, portions of which were used to pay for parking operations, debt service, and transfers to the transportation and general funds. Mr. Horton stated that he was recommending that on-street parking meter rates be adjusted from thirty cents to fifty cents per half-hour, to be consistent with off-street rates. He also said the Council could elect to charge for parking on Sundays. Mr. Horton said an estimated $20,000 net revenue per year was projected from implementation of this change.

Council Member Werner asked the Manager to comment on long-term fiscal or financial implications of delaying street restructuring and paving. Mr. Horton noted that streets in one section of the Town were built on poor soils. Mr. Horton said he was unable to quantify overall fiscal impacts of delaying reconstruction of streets. He noted that the Town's resurfacing program was important in protecting the Town's investment in existing streets. Council Member Werner expressed concern about proposed reductions in funding for greenways and sidewalks. Council Member Werner also said he did not support increasing fees for youth recreation programs since some families had difficulty affording current program fees. He suggested that the Council focus on converting to once-weekly rearyard or curbside refuse collection as a means of reducing costs. Council Member Werner also said it was a waste of the Town's energy to collect yard wastes. Council Member Werner noted that he favored maintaining the allocation for low-income housing and no charge for parking downtown on Sundays.

Council Member Chilton thanked the staff for producing a comprehensible preliminary budget report. He expressed concurrence with Council Member Werner's viewpoints on greenways and sidewalks. Council Member Chilton said the estimated $20,000 from Sunday parking meter fees could not be overlooked as a possible revenue source. Council Member Chilton requested a clarification of the Town's fund balance. Mr. Horton noted that the Council had expressed concern that the balance was not as high as it could be.

Referring to the proposed deferral of improvements to the Cedar Falls Park parking lot, Council Member Rimer noted that the lot tended to increasingly deteriorate after heavy rains. He also inquired whether the mosquito control program was a health-related issue. Mr. Horton said the mosquito control program was indeed health-related, serving a small number of people, and therefore it was more appropriate for counties to administer such programs. Council Member Rimer inquired whether it would be possible for Welcome Wagon or another community agency to distribute remaining copies of the Town's leaf collection and snow removal brochures. Mr. Horton said he would investigate this possibility.

Council Member Rimer inquired whether the Town would be able to obtain favorable rates for the issuance of the $3.2 million of bonds for street, library and fire equipment improvements. Mr. Baker said yes.

Council Member Rimer inquired whether a rate study had been conducted to determine whether proposed fee increases would keep the Town competitive in its fee structure. Mr. Horton said that existing development fees could be increased by twenty percent and remain at the high end of the competitive range. He also noted that fire hazard inspection fees were becoming more common. Council Member Rimer inquired about the basis for the proposed increases in monthly parking fees. Mr. Horton said the proposed increase was based on the Transportation Department's assessment of the market for parking.

Council Member Andresen said she felt uneasy about the proposal to reduce greenways programs. She expressed concern about proposed deferral of pavement maintenance and equipment services. Council Member Andresen said that composting of yard waste should be encouraged by the Town. She suggested that the Town investigate the purchase of a chipper, with byproducts possibly being made available for resale to citizens. Council Member Andresen said she opposed an increase in current bus fares. She noted that previous Councils had made conscious decisions not build large, wide roads around the Town. Council Member Andresen said that funding of the crisis counselor and narcotics investigator positions should be made a high priority, possibly superseding funding for other programs. Council Member Andresen requested additional information concerning positions which were proposed to be filled prior to the end of the current fiscal year. Council Member Andresen said she would have preferred for the Town to have hired a crisis counselor in the Police Department instead of a planner in the Planning Department.

Council Member Brown said an emphasis needed to be placed on efficiency, especially regarding collection of solid waste. She requested information concerning the possibility of achieving economic and collection efficiencies in the Town's solid waste programs. Council Member Brown suggested that the staff examine the impact of reductions in solid waste volumes on the Town's solid waste and public works budgets. She also expressed concern that costs of the proposed future landfill had not been examined extensively. Council Member Brown said this expense would have a significant effect on the Town's future budgets. Council Member Brown said she was interested in lobbying state officials concerning funding for the Town's transit system, particularly as related to the recently enacted federal Surface Transportation Act. Council Member Brown said she also interested in examining ways of reusing brush. She also asked for the possibilities for the budget if the economy went down rather than remaining flat.

Council Member Herzenberg said he concurred with prior remarks concerning sidewalks, greenways, youth recreation fees, proposed crisis counselor positions and affordable housing. Council Member Herzenberg said he concurred with Council Member Rimer's approach to the mosquito control program. Noting that the Council had received a thoughtful letter from Mr. Lattimer concerning personnel, Council Member Herzenberg requested a simple statement of the Town's personnel policies. Council Member Herzenberg inquired whether direct users of the Town's transit system had traditionally paid one-third of the service's cost. Mr. Godding said although this was not a formal policy, this had been past practice. Council Member Herzenberg said he was not absolutely opposed to increasing transit fares, given the choice between raising fares or reducing service. He inquired whether other communities were in the same situation as the Town concerning funding of their transit systems. Council Member Herzenberg requested additional information on this item prior to his attendance at the upcoming National League of Cities meeting.

Council Member Herzenberg noted that the Orange County Commissioners had not traditionally provided adequate funding support for the Town's library services. He expressed concern that more County residents would be inclined to use the new library facility with greater frequency, while the County provided the same level of funding. Council Member Herzenberg said he did not have a preference about whether to cut back on the provision of library services to non-county residents. Council Member Herzenberg said it would be useful for the Council to have information on the impact of not accepting library operation funds from Orange County.

Council Member Wilkerson noted that he concurred with many of the observations of other council members. He inquired whether it was realistic to believe that the Town would receive a federal transit operating assistance allocation of $800,000. Council Member Wilkerson said he was also concerned that reductions in transit allocations would be of greater magnitude in the future. He stated that state stormwater regulations needed to be taken into consideration in the development of future Town budgets. Council Member Wilkerson requested information on the costs of the Town's recycling program. He also requested information on the Town's policy for the replacement of vehicles.

Council Member Wilkerson said that an emphasis should be placed on positions such as crisis counselor, rather than adding staff in the Planning Department. Noting the importance of a policy decision concerning solid waste methodology, Council Member Wilkerson said there were advantages to once per week rearyard or rollout refuse collection. Mr. Horton said it was unrealistic to believe that the Town would receive the majority of available federal operating assistance available to the Durham Urbanized Area. He noted that the Town would likely receive the anticipated allocation due to double funding peculiarities of federal funding. Mr. Horton said the future funding picture for the transit system was very uncertain.

Mayor Broun noted that the proposed narcotic investigator and crisis counselor positions were important items for the Council's consideration. Mayor Broun requested additional information about possible increases in fees such as the cable franchise fee. Mayor Broun said he was not interested in raising fees for youth recreation programs or lowering allocations for housing or human services programs. He requested additional analysis of proposed bus fare and parking fee increases. Mayor Broun also urged the Council to carefully examine its travel budget.

Council Member Wilkerson inquired about the impact of the parking ticket amnesty program on the collection of fines. Mr. Godding said the Town hoped to collect approximately $50,000 from the program. Mr. Baker noted that parking fines were included in the parking fund, with some interfund transfers taking place. Council Member Herzenberg noted that he supported the Town's existing affordable housing program. Council Member Brown requested information on the impact of the most recent bus fare increase on ridership levels.

Proposed 1992-1997 Capital Improvements Program

Assistant Town Manager Florentine Miller briefly reviewed the format of the CIP document. She noted that gradual funding was proposed over the next four or five years, due to the relatively

flat financial forecast. Ms. Miller said that two projects, an underground fuel tank monitoring system and traffic signal system, were proposed for funding in 1992-1993. She reviewed individual improvement categories, including the fuel tank monitoring system, emergency generators for fire stations, traffic signal system and the library and parks and open space projects. Ms. Miller noted that an aerial truck for use by the Fire Department would arrive in the fall. Ms. Miller said that a second forum on the proposed budget and capital improvements program would be held on March 17th, to receive comments from citizens and Town advisory boards and commissions.

Council Member Wilkerson requested additional information on item T-8, a Town Center feasibility study, scheduled for 1993-1994, at a cost of $60,000. Mr. Godding said the study was to investigate the feasibility of a Town Center bus transfer facility. He stated that the proposal was a significant project requiring careful study. Council Member Wilkerson emphasized the importance of the staff keeping the Council informed about proposed capital projects.

Council Member Andresen inquired whether a pay-as-you-go program was included in the budget proposal. Mr. Horton said that only two projects, the fuel monitoring system and traffic signal system, were being recommended for funding in fiscal year 1992-1993. Council Member Andresen noted that it had been a long time since the Town had not done a pay-as-you-go capital improvements program. She inquired about future projections for the Town's capital program. Mr. Horton said he believed that there would be modest increases in economic growth in the future. Mr. Horton noted that he would present a five-year financial forecast in the near future.

Council Member Andresen said the Town was fortunate to receive fire protection funds from the state for protection of the University's buildings.

Council Member Rimer noted that Herschel Slater had informed him that sixty-five years ago today, the Town had experienced a snow storm resulting in two feet of snow accumulation. Council Member Rimer inquired about the impact of the Bolin Creek interceptor moratorium on the Town's proposed library project. Mr. Horton said that staff was investigating the scope of the moratorium and its possible impact on the library project. Council Member Rimer suggested that the staff investigate the possibility of obtaining a certificate of occupancy for the library building. Mr. Horton said that staff would investigate this matter.

Council Member Werner inquired about the proposed use of $70,000 for improvements to the Glen Lennox recreational fields. Mr. Horton said the Town was hoping to work out arrangements for general public uses of the facilities. He stated that the funds would be used to level the fields and install an irrigation and well system. Council Member Werner noted that a contingency plan was needed, in the event that the proposal could not be implemented. Council Member Werner also noted that future funding of stormwater management projects could require substantial expenditures. He noted that although the proposed capital improvements program did not enjoy the same publicity as the annual budget review, the items being discussed in the CIP were critical to all Town residents.

Council Member Werner noted the importance of the Council discussing the long-term implications of adequately planning for capital facilities. He also suggested that the Council review and debate the longer-term priorities included in the Capital Improvements Program. Council Member Andresen said it took backbone to accomplish this objective. Mayor Broun said he absolutely agreed with the need to set priorities for capital facilities. Mayor Broun said the Council would have to make some hard decisions on whether to proceed on some projects. Council Member Herzenberg called the Council's attention to table twelve in agenda item number two. He noted that no funds were currently allocated for sidewalks in FY 1992-1993 or 1993-1994. Mr. Horton said he hastened to point out that the capital improvements program and budget were his best preliminary proposals and that he looked forward to future Council input. Mr. Horton also noted two corrections each on tables three and four of the budget item.

The work session adjourned at 9:08 p.m.