SUMMARY MINUTES OF A WORK SESSION
OF THE CHAPEL HILL TOWN COUNCIL
WEDNESDAY, MARCH 6, 2002, AT 4:00 P.M.
Mayor Kevin Foy called the meeting to order at 4:00 p.m.
Council members present were Flicka Bateman, Pat Evans, Mark Kleinschmidt, Bill Strom, Jim Ward and Edith Wiggins.
Council Member Dorothy Verkerk was absent, excused. Council Member Ed Harrison arrived at 4:05 p.m.
Staff members present were Town Manager Cal Horton, Assistant Town Managers Sonna Loewenthal and Florentine Miller, Town Attorney Ralph Karpinos, Assistant to the Manager Bill Stockard, Finance Director Jim Baker, Planning Director Roger Waldon, Senior Long Range Planning Coordinator Chris Berndt, Public Works Director Bruce Heflin, Public Works Field Operations Superintendent Richard Terrell, Planner Than Austin, Human Services Coordinator Karen Rose, and Acting Town Clerk Sandy Cook.
Item 1 - Chapel Hill Downtown Commission
Board Chair Margaret Skinner presented the Commission's program of work for 2002, and introduced other Commission members present at today’s meeting. She explained that they would continue to provide the same services as in 2001, but would address some new issues and organize themselves in a different manner. Ms. Skinner thanked Council members for supporting the Commission in the past, noting that the Town had contributed $45,000 of the 56,000 that the Commission received last year. She explained that they have successfully leveraged those funds and pointed out the list of contributors printed on the back of the annual report.
Ms. Skinner displayed and read the Commission's mission statement: "to develop and encourage the vitality and growth of the downtown business district of Chapel Hill as an economic, cultural, recreational, entertainment and historic center." She explained that Commission members had formed a new structure and divided themselves into four committees: Services to Business, Networking and Membership, Community Service, and Events and Promotions.
Ms. Skinner stated that the Services to Business Committee would use the opening of nearby Southpoint Mall as an opportunity to create strategic partnerships and bring people to Chapel Hill. They will utilize promotional opportunities in the mall, she said, and invite people to come to "the real street" in downtown Chapel Hill.
Ms. Skinner stated that the Commission would continue its advertising efforts to attract people to the Downtown area and will educate consumers on available parking. Getting better signage would help in this effort, she said, as would freeing up valuable space by finding solutions for employee parking. Ms. Skinner said that the Commission would focus on recruiting new businesses and maintaining a complimentary business mix. She said they would listen to expert counsel and conduct open dialogue with business owners. They will maintain a close relationship with Town officials, she said, and actively participate in changes to regulations and ordinances that affect the Downtown.
Ms. Skinner explained that the Networking and Membership Committee would address weekly networking lunches and forums where Downtown businesses could interact and share ideas. She said that the Community Service Committee would reach out to the larger community, maintain beautification projects (murals, streetscape projects, plantings, clean-up efforts), and work in partnership with the Historical Society to expand information about the history of downtown. The Community Service Committee also hopes to improve lighting and explore solutions to safety issues that deter visitors and residents from coming downtown, she said.
Ms. Skinner said that the Commission plans to spread the "Welcome Center" out by asking local businesses to display brochures on their countertops and to hand them out to visitors. They will also have "Welcome Ambassadors" on the street at certain times of the year to provide information about the Town, she said.
Ms. Skinner noted that former Commission Chair Kathleen Lord had worked with the Interfaith Council (IFC) and that the Commission would continue to maintain a strong involvement with the IFC to help foster positive changes there. She said they also plan to expand their Cultural Arts Program and would continue to promote Commission-sponsored events, such as the Christmas parade and tree lighting, concerts, and movies on the plaza. Ms. Skinner explained that they planned to create new family-friendly events as well that will address the changing demographics Downtown.
Council Member Strom praised the plan to work through Southpoint to make Chapel Hill a destination point in the area. He asked Commission members to comment on the idea of a playground downtown and what form and scope it might take. Downtown Commission Director Robert Humphreys replied that he would explore the playground idea, but he expressed some safety concerns involving after-hour loitering.
Council Member Strom inquired about downtown restrooms. Mr. Humphreys said that any effort the Town made to improve and/or add restrooms would be appreciated, but noted the security problems and vandalism at those associated with the parking deck. He pointed out that the Town had recently employed a security monitor to walk the downtown alley at night, commenting that the Commission was hopeful that the restrooms could be left open longer than they are now.
Board Member Missy Julian Fox pointed out that many that work and live downtown use the UNC campus as their playground. She said that her children had learned to ride their bikes there and that the family uses the park to roller-skate.
Council Member Bateman commented that adding a playground had been Mayor pro tem Evans' idea. Council Member Evans said she was no longer sure it was worth exploring. Council Member Bateman ascertained that the Community Ambassadors would probably be retirees. She commented, though, that high school kids who must do community service work might be a good source for of volunteers.
Council Member Ward asked about possibly using the upper level of the parking deck as a playground area. Dana McMahan, owner of The Laughing Turtle, said that since downtown business owners had noticed a marked increase in young children the idea of providing play space is a good one. The problem is a matter of logistics, she said. Mr. Humphreys added that the Plaza had been considered for various activities, including skateboarding and basketball.
Mayor Foy inquired about the "Adopt a Planter" program, noting that some plantings have flourished and others seemed neglected. Mr. Humphreys replied that watering is a problem since the Town has only one watering truck and it can guarantee only one watering per week in the summer months. Those who have adopted the planters have tried hauling water to them, he said. Mayor Foy encourage the Town to find a way to work together to make this work out.
Mayor pro tem Evans suggested that the Town give the Commission a list of plants that are drought tolerant. Mr. Humphreys said that they had received such a list, but noted that it would not hurt to update it.
Council Member Kleinschmidt inquired about efforts toward diversification downtown. Ms. McMahan replied that they had created a model of what would be ideal. She noted that the Downtown had three distinct constituencies—students, visitors and residents—all with different needs. She pointed out that the downtown buildings are individually owned and that nobody had absolute control over what goes in there. Ms. McMahan explained that the Commission had engaged expert counsel for help in deciding what a good business mix might be. They had planned a meeting to look at all areas and decide how to create a happy medium and a balance between independently owned businesses and chain stores, she said.
Council Member Harrison asked if the Downtown Commission was committed to doing a study of parking utilization. Ms. Skinner replied that they were not committing to a study but would be happy to work with anyone who would like to use them to facilitate one. She said that the Commission was committed to letting people know where the parking spaces were, noting that those are not clearly indicated on maps of the Downtown area. Ms. Skinner added that this effort would include working with the Town on improved signage.
Council Member Ward asked if the Commission would be in favor of a maximum parking limit of two hours, and if they would like to explore different parking meter options. Mr. Humphreys replied that merchants on the street would disagree about how long people need to park. But all would generally agree that the meters on the street are for short-term parking of two hours maximum, he said, and that those who park longer than that should park in the lots.
Mayor Foy asked what "charter fees" mean in the Summary of Revenues, Mr. Humphreys explained that they were fees for chartering out the trolleys and Town buses for special occasions. He said that the Town charged them an hourly rate for this, which they marked up and passed on to the consumer. He pointed off that the chartering fees and revenues were off about $6,000 because the trolleys are no longer available.
Mayor Foy asked if the Commission would be recommending an increase in the district tax rate. Mr. Humphreys replied that they had no intention of asking for an increase this year.
Item 2 - Chapel Hill-Orange County Visitors Bureau
Kreston [ ? ] explained that the Visitors Bureau began in 1994 with a $30,000 grant from the Town's portion of the hotel occupancy tax receipts. He said that it grew each year to a present total of $94,545. Mr. ? explained the Bureau's mission: to develop and coordinate visitor services in Orange County and to implement marketing programs that will enhance the economic activity and quality of life in the community. He then listed the Commission's purposes:
· Work with partners to achieve a coordinated marketing program.
· Serve as a leader in developing strategies for providing quality visitor services.
· Identify unmet needs of visitors and develop ways to meet the needs.
· Encourage longer stays of visitors, and increased spending and repeat visitors.
· Position the area as a desirable meeting or travel destination.
He listed the benefits to the community:
· Brings new dollars
· Brings more jobs
· More income for businesses
· More tax revenue for local government thereby reducing some of the burden on citizens.
Mr. ? then introduced Executive Director Joe Blake to give a program overview. Mr. Blake explained that the Town reached a critical mass of more than 15,000 visitors per month, and was now competing with the world at large. Five years ago, he pointed out, Chapel Hill was only competing with other U.S. destinations.
Mr. Blake noted that the Bureau had added seasonal campaigns over the last several years, such as "Wonderful Whimsical Winter" and "Great Summer Getaways.” Mr. Blake said the Bureau has also produced publications, including the visitors guide, visitor map, promotional brochure, calendar of events, and others that are reproduced as needed. He noted that more than 225,000 publications were distributed through various sources last year.
Mr. Blake explained that the Visitors Bureau promotes the area as an option for small to medium size meetings and conferences with no more than 450 attendees. He said that the Bureau initiates programs that result in media exposure for the area, and it provides assistance to visitor industry partners to promote their events and businesses. Mr. Blake added that the Bureau conducts numerous hospitality training programs and maintains lodging during high demand periods.
Regarding the Bureau's economic impact on the community, Mr. Blake reported $108.04 million in domestic travel expenses in 2000, which was a 7% increase over the prior year. However, he pointed out the travel industry as a whole has experience the worst decline in written history since the September 11 terrorist attacks. He noted the declines in lodging for November and December, which historically had been high lodging months. Mr. Blake said that lodging owners reported a combined loss of $500,000 as a direct result of the World Trade Center attacks. The Bureau experienced a decline of almost 11% in income from tax receipts for the first half of the current fiscal year through December 31, 2001, he said, adding that the preliminary estimate is that occupancy tax receipts will be down this year by about 8%.
Mr. Blake explained that they and the Bureau had decided to cut sales and marketing last. They have achieved this by delaying recruitment of a vacant administrative position, he said, and by consolidating some of their overhead costs. He noted their participation in cooperative marketing programs with the NC Association of Convention and Visitors Bureaus, and the NC Division of Tourism, Film and Sports Development. Mr. Blake stated that the Visitors Bureau has further leveraged its resources through industry partners, the Chapel Hill-Carrboro Chamber of Commerce, the Alliance for Historic Hillsborough, the Downtown Commission, and the UNC Visitor's Center.
Mr. ? explained that the Board had decided to expand the Bureau's presence in the community and to incorporate an official Visitors Center on a street front on West Franklin Street. He described this as a "major effort" for fiscal year 2002-03. Mr. ? thanked Council members for their support over the years, and asked that they continue to do so through this difficult time resulting from the events of September 11.
Council Member Ward asked if the Downtown Commission or Visitors Bureau had been in contact with WCHL radio, which is attempting to have a presence in Chapel Hill. Mr. Humphreys replied four different locations would like to have WCHL there. Council Member Ward asked about sharing space with the Bureau, but Mr. Blake explained that the Bureau already had space but were moving up to the front of it.
Mayor Foy asked Mr. ? and Mr. Blake to explain for the viewing audience how the Visitors Bureau gets money from the Town. Mr. ? explained that it comes directly from a 5% occupancy tax. The Bureau gets 15% of the Town's 3%, he said, adding that the remaining 2% goes to Orange County. Mayor Foy stressed that the Town does not use any of the property tax to fund the Bureau.
Council Member Bateman asked if the Bureau had done any outreach with visitors to UNC hospitals. Mr. Blake said that they had, noting that it is one of the distribution centers for visitor information. Council Member Bateman asked if the two would speak about some of their unmet needs. Mr. Blake replied that the major one was the Visitors Center, and that trying to attract people in the winter and summer months was another.
Council Member Evans praised the Visitors Bureau's program, which trained service providers throughout the County on how to respond to visitors and make them aware of the large variety of opportunities in the County.
Budget Update
Mayor Foy explained that Mr. Horton wanted to discuss something before moving on. Mr. Horton updated the Council on where the Town was with regard to considering proposed expenditures. He handed out a table and a schedule, which he described as a "rough estimate of General Fund revenues and expenditures." Emphasizing that these figures were not even preliminary yet, Mr. Horton pointed out that the numbers were disturbing. He wanted to bring them to the Council right away, he said, so that they could have a clearer sense of the predicament that the Town seems to be in.
Mr. Horton stated that the economy is improving a little but has a long way to go. He said that the Town will have to further reduce its estimate of what is likely to come in sales tax next year and that the State might decide to keep the intangibles tax and the inventory and exemptions tax reimbursement, for a total of $672,000 withheld. He commented that this would be a better case, however, than the one the Town actually seems to be facing. He warned that it is probable that the State will keep not only those reimbursements next year but the beer and wine tax payment and the franchise tax payment as well. Altogether, Mr. Horton said, that would total $3,125,000.
Mr. Horton indicted the list of department head proposals in comparison to the 2001-02 budget. With those adjustments, he said, the total base budget would be less than 1% higher than this past year. The comparison of these rough estimates, he pointed out, shows that revenue could be as little as $34 million and expenditures could be as little as $37 million, leaving about a $3 million gap. And this gap does not include $80,000 that the staff thinks is needed for technology improvements or make allowance for pay adjustments, he said.
Mr. Horton described the financial picture as "pretty sad." He encouraged the Council to do what they can to influence the State legislature and the Governor to release the money that the Town ordinarily would receive. Otherwise, Mr. Horton said, services may be seriously reduced, the CIP program will be at the bare minimum, there will be no pay increases for employees, and taxes will increase significantly. Mr. Horton explained that he had felt compelled to present this rough estimate and give a sense of where the Town stands. He said he would do his best to reduce expenditures and to present options, such as getting out of the commercial refuse collection business. He suggested that the Council consider having no street resurfacing and reconstruction program for a year. Describing these as "drastic actions," Mr. Horton stated that he would look at the revenue picture and point out positive changes well.
Mr. Horton reviewed the Council's scheduled work sessions, and explained that he and Finance Director Jim Baker probably would start presenting options to the Council on April 3rd and then present the recommended budget on April 24th. He noted that the present schedule has the Council considering adopting a budget on June 10th, and advised them to delay adoption to June 24th to allow more time. He pointed out that the State's budget picture might get clearer in May or June, and noted that most communities do budget deliberations later in the year than Chapel Hill. Mr. Horton recommended that the Council plan on having budget works sessions on June 12th and June 19th and then schedule consideration of action on a budget on June 24th.
Mayor Foy noted that the additional work sessions could be cancelled if the Council wished to do that. He and Mr. Horton discussed possibly foregoing some of the earlier meetings, but keeping the one on April 3rd.
Council Member Strom commented that he had recently learned that local sales tax levels were up a couple of percentage points over the last year’s. Mr. Baker explained that the quarter in which the sales tax refund reports are filed determines how much the Town gets net each quarter. He said that this makes some quarters more or less than expected and makes it difficult to determine exactly what the sales tax refund is for each quarter.
Mayor Foy asked Mr. Horton if he was preparing a budget with base line revenue of $34 million. Mr. Horton replied that this is what he would say if he had to say what the budget will be. He added that the difficult part will be to determine what costs are bearable and what options the Council should consider. Mr. Horton noted that he will also determine what the expenditures should be if the State does not keep the money. He would recommend a portion of it for employee compensation, he said, and another portion to replenish the CIP. Mr. Horton pointed out that the Council will choose how to apply those funds if any come back. He said that the legislative delegation had offered some hope of that, but he recommended budgeting for the worst case scenario because "you can't take hope to the bank."
Mayor Foy pointed out that a release of some escrowed funds this year would impact next year's budget. Mr. Horton replied that it would, specifically for one-time expenditures. He added that the CIP would be a logical case for that.
Council Member Wiggins asked if the Manager was planning to bring back a budget that reflected the no tax increase that the Council had requested a couple of months ago. Mr. Horton replied that he could not do that in good faith, adding that no one knew the situation the Town would be in when he agreed to attempt that.
Council Member Ward clarified that a $3 million shortfall would mean that the Town would not pursue any new technology or increase employee compensation and that there would be a 7.5-cent tax increase. Mr. Horton agreed, and pointed out that if pay increases and technology were included the tax increase would be 9 or 10 cents. He asked that the Council understand that these figures were not specific, but added that he thought these rough estimates gave a sense of the magnitude of the problem.
Council Member Bateman asked how much cutting commercial refuge collection would save. Mr. Horton replied that it would be in the range of $500,000-800,000.
Mayor Foy asked of cutting commercial refuse collection would not entail lay-offs. Mr. Horton replied that it would not, adding that lay-offs were tragic for individuals, their families, and also for the organization "because they create a sense of distrust that lasts forever." He added that he thought this was a temporary problem, created by the legislature and the Governor, and that it can be cured. It would be sad to dismantle a good organization because of a temporary problem, Mr. Horton said.
Council Member Strom asked what the Town's posture was on hiring. Mr. Horton replied that, except for the short list that he had previously given the Council, the Town is freezing everything for the moment.
Item 3 - Planning Department
a. Report on Other Municipalities' Uses of Grants for Sidewalks.
b. Report on Possible Grants for Pedestrian Issues and Information.
Mayor Foy noted that there was no recommended action as a result of either of these reports.
Council Member Harrison commented that the Bicycle and Pedestrian person in Asheville is MPO-funded. He wondered if this might be done in Chapel Hill. Mr. Horton commented that the Town has never pursued as much MPO support as might be available to it. Council Member Harrison suggested increasing staff involvement in the MPO.
Council Member Ward noted that these materials should be forwarded to the Bicycle and Pedestrian Advisory Board.
Item 4 - Public Works Department
a. Report on Town Charges for Sidewalk Construction Elements.
Mayor Foy explained that this specifically addressed an issue that was raised about using sidewalk funds for curb and gutter. He noted that the report states that that's the only source of funds for curb and gutter, which is considered part of a sidewalk. Mr. Horton added that it was normal business practice for local governments. Mayor Foy noted that this does not mean that Chapel Hill has to do it.
Council Member Ward wondered if the staff might do it a different way. Mr. Horton replied that unless they have money they can only rebuild sidewalks that are experiencing problems.
Council Member Harrison praised the engineering work that has gone into Chapel Hill's sidewalks. Mr. Horton remarked that the Town has very skilled people doing the work.
Item 5 - Police Department
a. Report on Human Service Areas and Agencies Funded or Recommended in the Past.
Mayor Foy suggested giving the Manager some feedback on this as he goes about cutting the budget.
Council Member Kleinschmidt asked why some line items had either N/A or zeros straight across. Human Service Coordinator Karen Rose explained that N/A meant they did not apply and zero meant they were not recommended for funding. She added that agencies do not come for funding every year. She had included those who had applied any time during that five year period whether they received funding or not, Ms. Rose said.
Council Member Strom suggested trying to maintain this level of support for these agencies. Mr. Horton noted that the base budget would do that.
Council Member Evans clarified that the funds could be allocated to different organizations, however.
Council Member Kleinschmidt asked why the amounts had increased in previous years. Mr. Horton replied that the Council had done so based on pleas from the Human Services Advisory Board and the assessed needs in the community.
Mayor Foy noted that the goal had been a zero tax increase.
Council Member Bateman praised the Commission for saying no when they had to.
Item 6 - Finance Department
a. Report on Potential Town/Community Bonds regarding Pedestrian Issues.
Mr. Horton explained that this question had been raised prior to the Governor's action. The staff tried here to give an estimate of what costs might be involved if a relatively low level, $5 million in obligation bonds were issued, he said.
Mayor Foy noted that the Council had wanted to know how far in advance the Council would need to make a decision. Mr. Horton replied that they would have to decide in June of this year if they wanted to do something in November. Mr. Baker added that the Council would need to begin to take action at the last meeting in August in order to be ready for a referendum in November. Mayor Foy noted that they would not do it this year but they should initiate it during the budget process beginning in June if they do it next year.
Mayor pro tem Evans asked if participation bonds could be issued to construct parking downtown. She also asked how the Town had funded the old parking deck. Mr. Horton replied that there were several different ways to fund bonds and that the Town has used a couple of them. General obligation bonds require a vote of the people and produce the lowest cost and interest rate, he said. Mr. Horton added that revenue bonds can work in some circumstances and have to get revenues from a system that must be predictably able to pay back more than the amount of the debt over the period of the debt. He said that Certificates of Participation are another way to do this, explaining that these are a pledge of any income that the Town has available and is willing to use. Mr. Horton noted that one cannot predict that a parking structure would pay for itself. The Town would have to subsidize the debt payment through the General Fund, he said.
Mayor pro tem Evans asked if the Town had subsidized construction of the Rosemary Street parking deck. Mr. Horton replied that the Town had to pledge the revenue stream from most of the system to pay for it, including parking lot #2. Mr. Baker added that this was true initially and that it was a Park and Revenue Bond that restricts those revenues for parking purposes only. In 1993, he said, the Town replaced those bonds with Certificates of Participation which only require a general pledge of the Town to pay the debt from whatever revenues are available.
The meeting adjourned at 5:46 p.m.