SUMMARY OF A BUDGET WORK SESSION HELD BY THE MAYOR AND COUNCIL

OF THE TOWN OF CHAPEL HILL, WEDNESDAY, MARCH 19, 1997 AT 6:00 P.M.

Mayor pro tem Joyce Brown called the meeting to order at 6:05 p.m. Council Members in attendance were Joe Capowski, Mark Chilton (arrived at 7:10 p.m.), Pat Evans, Richard Franck (arrived at 6:45 p.m.), Lee Pavao and Edith Wiggins. Mayor Rosemary Waldorf and Council Member Julie Andresen were unable to attend the work session. Also in attendance were Town Manager Cal Horton, Assistant Town Managers Sonna Loewenthal and Florentine Miller and Finance Director James Baker.

PROPOSED 1997-98 TOWN BUDGET

Mr. Horton reported that for the present year the Town had received $135,000 less in tax revenues and about $60,000 less in Powell Bill funds from the State of North Carolina, some of which was offset by an increase in the Town’s property tax base. Noting that he was also concerned about the loss of funds from the discontinuation of hotel/motel taxes at the Carolina Inn, Mr. Horton said he believed that these losses could be offset by the careful control of expenditures. Mr. Horton said he anticipated that the amount of State revenues would continue to decline during the next fiscal year. Mr. Horton stated that his preliminary recommendation was to reduce the General Fund tax rate from 54.3 cents to 50.8 cents per $100 of valuation and the Transportation Fund tax rate from 5.3 cents to 4.5 cents, with the overall projected impact, after property tax revaluation, being an effective tax rate increase of 4.2 cents per $100 of valuation. He briefly reviewed a number of expenses including landfill tipping fees (projected increase of $50,000), addition of an Assistant Fire Marshal position (projected first year cost: $72,000), addition of a Zoning Enforcement Officer position (projected first year cost: $63,000)

and pay plan adjustments totalling an estimated $500,000 in the General Fund. Mr. Horton also presented brief summaries of the Transportation Fund, Landfill Fund, Capital Improvements Program, the proposed Community Development plan, the HOME program and the Comprehensive Grant program.

QUESTIONS AND COMMENTS BY THE MAYOR AND COUNCIL MEMBERS

Council Member Capowski requested additional information about the projected 0.8 cent tax rating savings from delaying the sale of bonds by about six months. Mr. Horton said after examining the proposed project schedules, staff felt that no funds from the recently approved bonds would be needed prior to January 1, 1998. Council Member Capowski inquired about the basis for Powell Bill funding allocation. Finance Director James Baker said that the formula was based 75% on population and 25% on street mileage. Council Member Evans inquired whether students in dorms at the University were included in the population estimates. Mr. Baker said this was correct. Stating that Hurricane Fran debris had resulted in a fiscal windfall for the Landfill Fund, Council Member Capowski inquired why a $2 per ton increase in the landfill tipping fee was being proposed. Mr. Horton said this projected increase would cover the cost of constructing a new landfill cell, purchasing new equipment at the landfill and the rebidding of some recycling services. He also noted that the higher proposed tipping fee reflected the fact that the University was no longer disposing of ash at the Orange Regional Landfill facility.

Council Member Capowski inquired whether or not the Town had sufficient construction activity to keep one staff member occupied for a full forty-hour work week. Mr. Horton said that one position would be entirely adequate to handle construction management activities. Council Member Evans inquired about the possibility of contracting out the position. Mr. Horton said this could be done at a considerably higher cost than the Town employing an individual on a permanent or contract basis. Council Member Wiggins inquired whether or not the proposed construction manager could assist with the Knolls housing program. Noting that staff had not considered this possibility, Mr. Horton said he would be glad to think this over and report back to the Council. Council Member Capowski said he concurred with Council Member Wiggins’ suggestion about possibility using some of the construction manager’s time to assist with programs such as the Knolls housing program.

Council Member Capowski inquired about the possibility of Orange County contributing $47,000 in funds being sought for the Chapel Hill-Carrboro School District’s middle school after schools program. Mr. Horton said that efforts to date to accomplish this objective had been unsuccessful. He added that the Chapel Hill-Carrboro Schools provided the transportation and facilities for the program.

Council Member Capowski said he was concerned that the apparent cost to bury waste was about $35 per ton compared to about $83 per ton to recycle. Mr. Horton noted that the cost of collection was not included in these figures. He stated that staff would be pleased to provide further analysis to the Council on this matter. Council Member Capowski requested additional detailed cost information comparison of all costs for recycling versus burying trash. Council Member Brown asked staff to review the applicable percentages for landfill and recycling in the Town’s current year budget, excluding collection costs. Finance Director James Baker said curbside collection was 9%, recycling 17%, operations expenses 51% and the reserve contribution was 23%. Council Member Brown reiterated that collection was not factored into these figures.

Noting that the contracted provider of recycling services, rather than the Town made income from recycling, Council Member Evans stated that the costs of garbage collection were continuing to increase in the public and private sectors. Council Member Evans commended members of the recycling division of the Solid Waste Department for their good public information and education articles about recycling.

Council Member Evans inquired what would happen if the University chose to take none of its trash to the Orange Regional Landfill. Mr. Horton said that such an action would significantly extend the life of the present landfill.

Council Member Evans said it was important to continue the streetscape project in the downtown area.

Referencing pages nine and ten of the materials before the Council this evening, Council Member Wiggins inquired which general revenue expenses might be proposed for decreases or changes in services. Noting that there had been relatively limited guidance from the Council at this point, Mr. Horton stated that page seventeen of the document listed some items for the Council’s consideration. Mr. Horton said he could come back with some additional options in the future.

Stating that projected farebox revenues were about $100,000 less than anticipated, Council Member Evans suggested that the Council look at how transit services were being provided. Noting that some transit routes or segments had been eliminated in recent years, Mr. Horton said factors contributing to the decline in revenues included lower ridership for events at the Smith Center and the fact that the Triangle Transit Authority (TTA) was now providing certain services which had formerly been provided by the Town on a contract basis to Triangle Transit Authority. Council Member Evans noted that she continued to strongly support the Chapel Hill Transit System.

Council Member Capowski asked whether or not Orange County had projected its estimated tax rate for 1997-98. Mr. Horton said a projected tax rate would likely be known in late May or early June. Council Member Capowski said he favored delaying the sale of bonds by six months in order to save 0.8 cents on the Town’s projected tax rate. Mr. Horton said this would be offered as a formal proposal in the budget document.

Noting that last year and two years ago the Council had strongly supported not cutting bus routes, Council Member Franck said he was not personally willing to greatly reduce any existing bus services.

Council Member Brown said that the provision of recycling programs was a vital part of having a sustainable community. She inquired about the possibility of staff providing long-term projections for the solid waste budget. Stating that landfill staff already had quite a heavy workload, Mr. Horton said staff would attempt to put such a paper together sometime in the near term. Noting that it was hard to separate one component from the entire system, Council Member Brown suggested the possibility of having the Town or County provide recycling services, rather than contracting with a private firm.

Council Member Wiggins asked whether any new positions were proposed for administration of the community development program. Mr. Horton said that no new positions were proposed. Council Member Wiggins asked how expenditures for neighborhood revitalization would address community development. Mr. Horton said he hoped that the Council would authorize staff to continue discussions with the Pine Knolls Development Association about revitalization efforts. Council Member Wiggins inquired whether or not funding for community development programs could change. Mr. Horton said that funding could change based on Council direction.

Council Member Capowski inquired about the status of funds originally earmarked for purchase of the Mason Motel. Mr. Horton said that there would be an item on a near-term Council agenda asking how the Council wished to use this $70,000 of funding. Noting that he was receiving mixed messages, Council Member Capowski inquired about the Manager’s professional opinion of the Knolls Development Association. Mr. Horton said his basic opinion was offered in the program assessment which was earlier distributed to the Council. He stated that a key question which the Council needed to decide was what to do about houses already in the Knolls program.

Council Member Evans inquired about the possibility of using some federal funds to convert some existing rental public housing units at Airport Gardens in to owner-occupied units. Mr. Horton said that the two practical obstacles were the absence of available funds and the fact that any units converted under such a program would need to be replaced on a unit for unit basis. Council Member Wiggins inquired why Airport Gardens was proposed for such a possible program. Mr. Horton said a consultant felt that these units would be most potentially marketable.

COUNCIL MEMBER FRANCK MOVED, SECONDED BY COUNCIL MEMBER PAVAO, TO ADOPT RESOLUTION 0.1.

Council Member Evans inquired whether this included streetscape. Noting that no funds were included for this purpose, Mr. Horton noted that he had made a note of Council Member Evans’ earlier comment.

THE MOTION WAS ADOPTED UNANIMOUSLY (7-0).

A RESOLUTION REFERRING THE PRELIMINARY REPORT ON THE 1997-2002 CAPITAL IMPROVEMENTS PROGRAM TO TOWN ADVISORY BOARDS FOR REVIEW AND COMMENT (97-3-19/R-0.1)

WHEREAS, the Capital Improvements Program is developed annually to provide funding for capital and infrastructure projects for the Town; and

WHEREAS, this Preliminary Report is the initial stage in the process to develop a Capital Improvements Program for fiscal years 1997-2002; and

WHEREAS, the Council annually invites Town advisory boards to provide comments and recommendations on the Capital Improvements Program for the upcoming five-year program period;

NOW, THEREFORE, BE IT RESOLVED by the Council of the Town of Chapel Hill that the Council refers the Preliminary Report on the 1997-2002 Capital Improvements Program to the following Town advisory boards: Planning Board, Transportation Board, Parks and Recreation Commission, Greenways Commission, Appearance Commission, and the Housing and Community Development Advisory Board. Advisory board comments would be included in the April 28 memorandum to the Council on the Manager’s Recommended 1997-2002 Capital Improvements Program.

This, the 19^th day of March, 1997.

PROPOSED BOND SCHEDULE

Assistant Town Manager Sonna Loewenthal presented an overview of the proposed bond schedule, noting that the Northern Community Park project was almost ready to go out to bid. She also said that staff was proposing having a construction management function to help make sure that construction management documents were precisely worded and that there were quick resolutions to any construction-related disputes.

Council Member Brown requested additional information regarding the schedule for the sale of bonds and the construction of projects. Mr. Horton presented an overview of options for the issuance of debt, noting that this matter was purely a Council policy decision. He noted that the sale of the first year of bonds could be postponed until January 1, 1998.

Council Member Pavao inquired about the use of $1.5 million for the Northern Community Park in the first phase of bond funding. Ms. Loewenthal said that the project architect was estimating that it would cost about $1.5 million to complete the fields at the Northern Community Park. Noting that staff would have to look at how the bids were actually constructed, Ms. Loewenthal said this amount could possibly be higher.

Council Member Capowski inquired about the staff’s logic for not proposing funding for the Community Center and Southern Fire Station in Phase Two. Ms. Loewenthal said that such an approach would leave no funds to do other projects. Expressing concern that the Community Center kept getting pushed back, Council Member Capowski asked whether there was any other reason that both could not be done in phase two. Mr. Horton said that the Council had expressed a desire to have a fairly even increment of bond sales over the years. Council Member Capowski asked whether staff had financial data about whether there would be a net fiscal loss or gain associated with possible annexation of the southern part of the Town (Southern Village area). Mr. Horton said if the same sewer policy were in place, it would be hard to break even. He said if the sewer policy were changed, it might be possible to just about break even.

Council Member Pavao asked whether any items could be juggled to the second or third phase in order to accommodate funding of the community center in the first phase. Ms. Loewenthal said one possibility would be to push back the use of funds for open space and greenways acquisition.

Council Member Franck said that it made sense to pace out construction of the Community Center to a later date.

COUNCIL MEMBER FRANCK MOVED, SECONDED BY COUNCIL MEMBER CAPOWSKI, TO ADOPT RESOLUTION 1. THE MOTION WAS ADOPTED UNANIMOUSLY (7-0).

A RESOLUTION AUTHORIZING THE MANAGER TO PROCEED TO IMPLEMENT CAPITAL PROJECTS FUNDED BY THE PROCEEDS OF 1996 BONDS (97-3-19/R-1)

WHEREAS, the voters of Chapel Hill have approved five bond issues, totaling $13,500,000, and

WHEREAS, the Council of the Town of Chapel Hill determines that three approximately equal bond sales over a period of five years would be advantageous,

NOW, THEREFORE, BE IT RESOLVED, by the Council of the Town of Chapel Hill that the Manager is hereby authorized to proceed with preparation of bond sales and to begin implementation of the capital projects according to the schedule known below:

Project	1997-98 & 1998-99 Funding Phase I	1999-2000 & 2000-01 Funding Phase II	2001-02 & 2002-03 Funding Phase III	TOTAL
Streetscape	$ 400,000	400,000	200,000	1,000,000
Drainage Projects	210,000	170,000	20,000	400,000
Drainage Assistance	40,000	40,000	20,000	100,000
Curbs	100,000	100,000	100,000	300,000
Sidewalks/Bikeway	200,000	200,000	100,000	500,000
No. Community Park	1,500,000			1,500,000
Community Center			3,500,000	3,500,000
Police Improvement	700,000			700,000
Fire Station/Truck	120,000	1,180,000		1,300,000
Bridge Replacement	180,000	250,000	270,000	700,000
PW Improvements	290,000	210,000		500,000
Open Space/G’ways	760,000	1,950,000	290,000	3,000,000
TOTALS	$4,500,000	$4 ,500,000	$4,500,000	$13,500,000

This the 19^th day of March, 1997.

COUNCIL MEMBER PAVAO MOVED, SECONDED BY COUNCIL MEMBER EVANS, TO ADOPT RESOLUTION 2. THE MOTION WAS ADOPTED UNANIMOUSLY (7-0).

A RESOLUTION REFERRING THE PROPOSED BOND PROJECT SCHEDULE TO ADVISORY BOARDS (97-3-19/R-2)

WHEREAS, the voters of the Town of Chapel Hill have approved the sale of $13,500,000 in general obligation bonds, and

WHREAS, the Council of the Town of Chapel Hill wishes to schedule the expenditure of the proceeds of these bonds so as to best absorb the costs of debt service and operations of the new facilities; and to identify, design and build the projects, while still continuing to provide regular Town services,

NOW, THEREFORE, BE IT RESOLVED by the Council of the Town of Chapel Hill that the proposed bond projects schedule presented to the Council this date and attached hereto be referred to the Parks and Recreation Commission, Greenways Commission and Planning Board with a request for their comments.

This the 19th day of March, 1997.

COUNCIL MEMBER CHILTON MOVED, SECONDED BY COUNCIL MEMBER CAPOWSKI, TO ADOPT RESOLUTION 3. THE MOTION WAS ADOPTED UNANIMOUSLY (7-0).

A RESOLUTION REFERRING TO THE PARKS AND RECREATION COMMISSION THE ISSUE OF HOW TO ADJUST BOND FUNDING FOR THE NORTHERN COMMUNITY PARK (97-3-19/R-3)

WHEREAS, the Council of the Town of Chapel Hill has expressed its intent to use the $5,000,000 issue of 1996 Parks and Recreation Bonds to complete the gymnasium at the Hargraves Center, to build the northern Community Park and the Community Center, and

WHEREAS, the Council has allocated $425,000 for the completion of the Hargraves gymnasium and had not reallocated the remaining $4,575,000 between the Northern Community Park and the Community Center projects,

NOW, THEREFORE, BE IT RESOLVED by the Council of the Town of Chapel Hill that the Council refers this question to the Parks and Recreation Commission and requests its recommendation.

This the 19th day of March, 1997.

Council Member Franck said he favored moving with all due speed on the matter of a construction manager. Mr. Horton said he would welcome further Council instruction on this matter. Council Member Brown said she would prefer to have the full Council discuss the matter as the budget process proceeded. Council Member Pavao suggested that the staff bring this matter back to the Council as soon as possible.

COUNCIL MEMBER FRANCK MOVED, SECONDED BY COUNCIL MEMBER PAVAO, TO ADJOURN THE MEETING. THE MOTION WAS ADOPTED UNANIMOUSLY (7-0).

The meeting stood adjourned at 7:39 p.m.