SUMMARY MINUTES OF A WORK SESSION

OF THE CHAPEL HILL TOWN COUNCIL

TUESDAY, MARCH 30, 2004 AT 4:00 P.M.

Mayor Kevin Foy called the meeting to order at 4:00 p.m.

Council members present were Sally Greene, Ed Harrison, Cam Hill, Mark Kleinschmidt, Bill Strom, Dorothy Verkerk, Jim Ward, and Edith Wiggins.

Council Member Cam Hill arrived at 4:14 p.m. Council Member Sally Greene arrived at 5:45 p.m.

Staff members present were Town Manager Cal Horton, Deputy Town Manager Florentine Miller, Assistant Town Manager Bruce Heflin, Town Attorney Ralph Karpinos, Interim Finance Director Kay Johnson, Interim Public Works Director Harv Howard, Assistant Parks and Recreation Director Bill Webster, Senior Long Range Development Coordinator Chris Berndt, Planning Director Roger Waldon, Senior Planner Phil Hervey, Human Resources Director Pam Eastwood, Housing Director Tina Vaughn, Field Operations Superintendent Richard Terrell, Police Chief Gregg Jarvies, Fire Chief Dan Jones, and Town Clerk Joyce Smith.

Item 1 - Chapel Hill Downtown Commission

Charles House, Chair of the Downtown Commission, related the difficulty of presenting a specific program of work this year.  Commission members were interested in putting together an entity that would work with the University, Downtown community, and Town in developing support for funding the new entity, he said.  Mr. House explained that the Commission had taken positive steps that would allow the creation of this new entity but that their efforts would depend upon support from the Council. He noted that the Downtown Commission had historically received funding from the Town through the Service District Tax.

Mr. House presented three scenarios for the Council's consideration: 

1. All funding would go to the new entity.

2. The Downtown commission would receive funding left over from the Service District Tax after each of entity has contributed its $70,000.

3. No Service District Tax funds would be allocated to the new entity and the $70,000 would go to the Downtown Commission as it had in the past.  

Mr. House explained the Commission's mission to develop and encourage the vitality and growth of the Downtown as an economic, cultural, recreational, entertainment and historic center.  This mission would be the same in all three of the above scenarios, he explained.  Mr. House stated that the Commission would do as much as they could based upon funding.  If they receive no funding then they will raise as much as they can and continue to be an advocacy group for Downtown business and property owners.

Mayor Foy thanked Mr. House and the Downtown Commission for all their work to help the Town, University, and Downtown business community reach an agreement.  He pointed out that the Commission was in the difficult position of not knowing what the Town was going to do and was, therefore, having to develop alternative scenarios.

Council Member Strom asked Mr. House if the Commission's fund balance was significant at this point.  Mr. House replied that they had not totally exhausted their $60,000 allocation.  This gives them some flexibility until their fiscal year ends on July 1, 2004, Mr. House said.

Mayor pro tem Wiggins asked if there was any one scenario that the group preferred.  Mr. House replied that they would prefer to continue doing ancillary projects on a contract basis with the Town.

Mayor pro tem Wiggins asked if a Council decision would be made during the current budget cycle.

Mayor Foy mentioned the difficulty of not being able to inform the Commission until the Council has the Manager's recommendation regarding the Downtown entity.  Mr. Horton stated that he had received a report from the Downtown Steering Committee that day and that he would submit a report to the Council this week.  The staff's recommendation would be the same as Mr. House's, Mr. Horton explained.  That is, about $70,000 of the Downtown District Tax would be allocated to the new organization, $70,000 would be allocated from general funds, and about $70,000 would be expected from UNC.

Mr. Horton told the Council that the Town Attorney had begun exploring a formal organization to receive those funds.  The notion was that the organization could be effective by July 1, 2004, he said.  Mr. Horton noted that UNC had indicated in the past that they would be willing to put forward a staff person to lead the agency for the first year.  And the dean of the Business School had once indicated that the person might come from the Kenan Private Enterprise Institute or one of the other institutions associated with the Business School, he said.  Mr. Horton pointed out that there had been no firm commitment from UNC on that, however.

Council Member Harrison thanked Mr. House for communicating with the Council via email and for framing the issues so well.  Mr. House replied that it was in the interest of the entire community to improve the Downtown.  How the Commission puts together its next year program of work will depend on the Council, he said.

Item 2 - Chapel Hill-Orange County Visitors Bureau

Board Chair Lawrence Walters gave a brief history of the relationship between the Bureau and the Town. He outlined the Bureau's mission and listed the benefits that it brings to the community.  Mr. Walters discussed the Bureau's seasonal promotions, reviewed its major publications, and presented figures showing the impact that it has on the community.  He discussed occupancy and daily room rates, and told Council members about the Bureau's efforts to stretch its dollars.  The new Visitors Center opened in October 2002, Mr. Walters said.  He provided statistics regarding the tourism industry in Chapel Hill.  Mr. Walters thanked Council members for their past support and asked them to continue that partnership with a 15% grant in 2004-2005 from the Hotel Occupancy Tax.

Mayor Foy asked Mr. Horton to provide background information on how the funding works.  Mr. Horton explained that the 15% amount had varied over time and had gone down slightly after the 9/11 event impacted the hotel industry.  He anticipated that next year's 15% would be somewhere between $85,000 and $90,000, Mr. Horton said, adding that he hoped it would be greater since everyone would benefit by that.

Council Member Ward asked if the NC High School Athletic Association had approached the Bureau and what Bureau members thought about supporting them.  Mr. Walters replied that it was very important that the Association stay in Chapel Hill.  It provides interest in and exposure to the community when people come to see their children play in the tournaments, he said.  But, although Bureau members are strong advocates of the Association and wish to continue supporting it, those events benefit the hospitality community more, Mr. Walters pointed out.  People who come to Athletic Association events patronize restaurants and businesses more than hotels, he said, and they tend to find lodging outside Chapel Hill.

Council Member Kleinschmidt asked why that was so.  Mr. Walters explained that it was generally an economic decision since Chapel Hill's hotels are more expensive.

Council Member Kleinschmidt asked how it happens that occupancy rates can increase while occupancy tax receipts are decreasing.  Mr. Horton replied that rates can increase while room value is decreasing.  Mr. Walters explained that the average daily rate for hotel rooms in Orange County in 2002 was $102.58 per night.  It decreased to $99.18 per night in 2003, he said.

Council Member Strom verified that the Council was obligated to spend a certain percentage of overall receipts from the Hotel/Motel Tax on Visitors Services but had discretion within that.  Mr. Horton explained that the statute requires the Council to spend 10% of total receipts on visitor and cultural services.  The Council had substantially exceeded the 10% level from the very beginning, Mr. Horton pointed out.  Council Member Strom verified that the funds must be spent on something that contributes to occupancy in hotels and motels by logical extension.

Mr. Horton commented on the Town's cooperative relationship with the Visitors Bureau.  The Bureau had occasionally provided some direct services to the staff, including preparation of maps and other valuable services, he said.     

Item 3 - Orange Community Housing and Land Trust

Chair Chris Moses gave a brief history of the organization.  He said that Orange Community Housing and Land Trust (OCHLT) members believed they had a model relationship with the Town.  Mr. Moses explained the policy by which the Town asks all developers to include 15% of homes in the Land Trust had resulted in 59 approved affordable homes in the past three years.  He noted that all of those were located in new neighborhoods that would not normally include affordable housing.  OCHLT hopes that many more affordable homes will be built by private sector developers throughout Chapel Hill and Orange County, Mr. Moses said.

Mr. Moses told the Council that there were 71 homes in the Land Trust and that there should be about 100 by the end of the 2004-05 fiscal year.  This growth had made great demands on OCH's five-member staff, he said, but stressed that the Board was committed to retaining key personnel. Most of OCH's revenue comes from local governments, said Mr. Moses.  He explained that the current fiscal year's revenues of $222,300 were less than its personnel costs of 232,000.  And these personnel costs will increase to about $250,000 next year, he said. 

Mr. Moses explained that the need for fee income would increase to unsustainable levels several years from now if there are no increases in core government funds.  The Board was considering fund-raising strategies as part of it strategic planning process, he said.  Mr. Moses expressed appreciation for the Council's strong support and expressed hope that the Town would find funds to help build a strong, sustainable organization. The Board had envisioned Chapel Hill becoming a model for other municipalities and Community Land Trusts throughout the country, he said.  Mr. Moses pointed out that few, if any, similar organizations have the relationship with their town or political support that Chapel Hill's does.

Council Member Ward requested a fuller explanation of why the fees were not sustainable. Executive Director Robert Dowling explained that OCHLT tries to earn a fee on every transaction it undertakes to supplement what it receives in funding.  They need to raise funds through fees, and through fund-raising, and they hope that the local governments will appreciate their work and increase their funding, he said.  If they can do all three things, then they will be a sustainable organization, Mr. Dowling explained.

Council Member Ward asked if the other similar organizations to which Mr. Moses had referred were raising money through fund-raising.  Mr. Moses replied that many of them did not have the stock of homes that OCHLT does.  Some had been in businesses for years and were still struggling to get their first home, he said.  Mr. Moses pointed out that Chapel Hill stood way above the others, largely because of the Council's support and the business the Town had sent their way.

Council Member Kleinschmidt related a discussion that he'd had with people from other communities who were excited about starting a Land Trust.  Chapel Hill was in a "parallel universe" to them, he said, adding that he had been able to tell them about the importance of having a continuing commitment from a local government.

Council Member Verkerk noted that Carrboro was not contributing a proportionate amount.  She inquired about Carrboro's rationale for not doing so.  Mr. Moses replied that OCHLT would appreciate any influence the Council might have on Carrboro.  Mr. Dowling added that Carrboro had had a public hearing two weeks before the OCHLT Board's retreat.  He had gone to the hearing and asked for the same amount as last year, he said, explaining that his Board had then told him that OCHLT needed more.  Mr. Dowling told Council members that he had unofficially gone back to Carrboro and asked for an increase, but Carrboro had not yet decided on that.  Council Member Verkerk remarked that Chapel Hill's increase would be half of Carrboro's total contribution.  She verified that OCHLT had restructured its sales and marketing manager's position and what looked like a pay raise actually was not.

Council Member Harrison asked why there were no HOME funds shown for next year.  Mr. Dowling stated that no one had ever used HOME funds for operating costs until OCHLT asked for that last year.  But OCHLT had not been able to demonstrate that they have earned those funds, he said.  Mr. Horton explained that HUD administrators are accustomed to seeing HOME funds for operating expenses associated with projects that put housing on the ground in some fashion.  OCHLT was experiencing an administrative and bureaucratic challenge with HUD, he said.

Mayor Foy asked if OCHLT was willing to try it again.  Mr. Dowling explained that they would if they could figure out how to make it work.  Mr. Horton remarked that OCHLT would have to find the right person at HUD to advise them on how to do this.

Council Member Strom expressed appreciation for the level of detail in OCHLT's budget, adding that this probably was why the Council was asking so many questions.

Council Member Harrison described the investment in OCHLT as well-spent money for the Town.  OCHLT deserves as much help as they can get, he said, and he agreed that Carrboro was not paying its fair share.

Council Member Ward asked if this year's HOME funds had been spent.  Mr. Dowling replied that the problem was that OCHLT does not know how to get them. "They will have to be reimbursed and he hasn't figured out a reimbursement that will be acceptable," Mr. Horton explained.  Council Member Ward asked about some line items, and Mr. Dowling stated that he tried to stay very close to the budget.  But legal expenses related to putting condos in the Land Trust, and an audit, were substantially more than he had budgeted for.  Mr. Dowling added that one position had been vacant for six months.  So that had helped and OCHLT probably would be close to budget by year's end, he said.

Council Member Ward asked for a sense of how having more properties to manage affects the budget and how OCHLT wanted to address that.  Mr. Dowling noted that 70% of the homes are home ownership properties that OCHLT does not manage.  But the Board was in the midst of a strategic planning session, he said, and they were discussing expanding the rental component.  Mr. Dowling pointed out that this would require greater resources and staff capacity.

Council Member Verkerk stated, "I really think that the Town of Chapel Hill, in the spirit of neighborly competition, should say 'we'll pony up our $10,000 but Carrboro should pony up their $10,000.'"   Mayor Foy described that as a "challenge grant."

Mayor Foy pointed out the irony in OCHLT having to pay office rent.  He asked if they had given any thought to stabilizing that cost by having one of the local governments provide space or by buying space somewhere.  He did not necessarily want an answer tonight, Mayor Foy said, but just wanted to point that out.  Mayor Foy ascertained that OCHLT was using about 900 square feet of office space.

Mayor pro tem Wiggins noted that this is a non-profit organization that is mindful of its budget and tries not to spend money.  As a Council representative to that Board, she said, she had encouraged Mr. Dowling to ask the Town for more funding.  Mayor pro tem Wiggins pointed out that the Council talks about it's commitment to affordable housing and gives OCHLT a lot of work.  The Council should not shy away form increases when they are needed, she said.  Mayor pro tem Wiggins noted how challenging it is to educate people about the advantages of Land Trust housing.  The OCHLT staff reaches out in a humble and unassuming way, she said, adding that their salaries reflect that attitude.  Mayor pro tem Wiggins told Council members that there had been years when Mr. Dowling had declined salary increases.  She encouraged OCHLT to be more aggressive in seeking support and expressed support for Council Member Verkerk challenge to Carrboro to increase its funding.

Council Member Kleinschmidt noted that Carrboro had recently moved toward making commitments such as the 15% to affordable housing.  He agreed that they should also commit to contributing more to OCHLT's operating expenses.  Council Member Kleinschmidt suggested asking Carrboro for a 50% increase in their contribution, since it should be the same percentage as Chapel Hill's at the very least.

Mayor pro tem Wiggins suggested that Mayor Foy write a letter to Carrboro.

Mr. Dowling pointed out that 68 of the Land Trust's homes were in Chapel Hill and that the Town Council had driven that.  He also noted that this had not been planned and that OCHLT was determining how to do it everyday.  Mr. Dowling stressed that the five staff people seated behind him were the ones who were figuring it out.  He did not want to lose any of them, he said, because it would take a while before anyone else would understand such a complicated endeavor.  Mr. Dowling stated that OCHLT had been getting calls for advice from other parts of the country.

Item 4 - Consideration of Schedule for Issuance of Bonds

Assistant Town Manager Bruce Heflin explained that the staff report before Council included options for the $29.36 million in bonds that had been authorized by voters in November 2003. Bond projects include Sidewalks and Streets, Library Facilities, Parks and Recreational Facilities (Greenways), Open Space and Areas, and Public Buildings, (Energy Efficiency), he said.  Mr. Heflin recommended issuing $4 million worth of those bonds.  These recommendations were based on identified needs, the staff's understanding of the Council's priorities, and the effects upon the Town's overall debt service obligations, he said.

One possible scenario for issuance included $600,000 for Sidewalks and Street Construction, $100,000 for Pedestrian Amenities, $300,000 for Neighborhood Traffic Calming and Pedestrian and Bicycle Safety Improvement, $500,000 for Downtown Streetscape Improvements, $500,000 for Library Facilities, $300,000 for Greenways, $1.2 million for Open Space, and $500,000 Energy Efficiency projects in Public buildings, he said.  Mr. Heflin noted that the Council could, of course, come up with a different mix of projects and a different mix of bonds.  He said that the Town Council had previously approved approximately $700,000 in Open Space acquisitions.  So the staff was recommending that part of the $1.2 million be used to reimburse the General Fund for those acquisitions, Mr. Heflin explained.

Mayor Foy pointed out that the impact of a $4 million bond issuance in this fiscal year would be about $200,000.  But that is peculiar to this year, he said, noting that it would generally be a $400,000 impact.

Interim Finance Director Kay Johnson agreed that the first year would be a half-year payment.  Also, the Local Government Commission requires that it be paid with even principal amounts, she said, explaining that this means payments would go down in each succeeding year.  The principal would stay the same for the entire term, but the interest would go down by about $15,000 to $20,000 per year, Ms. Johnson said.

Mayor Foy verified that it still would be roughly $400,000 for the second, third and fourth years, however.  He had merely wanted to note that it might look deceptively low in the first year, he said.

Council Member Strom pointed out that creating this draft had been a difficult challenge.  He was comfortable proceeding in the way that the staff had suggested, he said.  Council Member Strom expressed appreciation for the "great job" that the staff had done.

Council Member Harrison asked why there was so much in Open Space to pay back.  Ms. Johnson replied that it was due to a land purchase in December.

Council Member Harrison asked which of the three options in the staff's preliminary overview most closely matched what "had been outlined up front."   Mr. Heflin replied that none was an exact match but that they had moved the Library toward the end of the period.  It was probably closest to Illustration 4 in terms of impact on the Library, he said.  Ms. Johnson agreed that Illustration 4 was closest in terms of where the Library was.  But Illustration 2 is the closest when matching on dollar numbers, she said, adding that to build the Library in a continuous manner the third and fourth installments in the proposal before the Council today are one year apart rather than two.  Mr. Horton explained that it was impractical and expensive to make a small issue.

Council Member Harrison indicated the bottom of the table on page 2, where the smallest issuance would be $4 million.  He asked if the Council, as a Committee of the Whole, would grapple with the choices proposed.  Mr. Horton replied that this was the staff's recommendation and that it had taken the Council's discussion into account.  But this is the Council's money to direct as they see best for the community, Mr. Horton said.

Mayor Foy proposed that the Council decide what to do this year (because it has a budget impact this year) and what are they going to do in future years (because some order needs to be created so that people can plan).  This will give taxpayers two forms of assurance, he said, since the Council would be doing what they said they would do and being responsible in handling the debt.  Mayor Foy recommended making a decision today and taking formal action at a later business meeting based on the conclusions they reach today.

Mr. Horton stated that, based on the Council's guidance, the staff would bring back a resolution for adoption.  This would then become the guide that all would use in understanding what the Council had decided to do, he said.

Council Member Verkerk asked why Sidewalk Construction had increase on the chart to $900,000 the second year.  Mr. Heflin explained that it was due to the funding stream.  The challenge with sidewalks will be to spend the money because it requires a fair amount of planning, engineering, and actual bidding for construction, he said.

With regard to Open Space, Mayor Foy noted that the Town had already spent $700,00 so there was only $500,000 left.  He asked Mr. Horton if the Town would be better off issuing bond money and holding it in reserve or fronting it from General Revenues and repaying the Town when the debt is issued.  If Open Space is important, said Mr. Horton, then the Town should reduce Sidewalk Construction or some other area.  The Town is at a stage where it cannot carry a great deal of debt, such as $700,000, Mr. Horton said.  He explained that the total supply of money was down, interest earnings that the Town can make were less than they once were, and there was a large debt coming on line. Mr. Horton recommended that the Council reduce the amount in some other category if they want to increase Open Space funding.

Ms. Johnson commented that there were two issues.  One has to do with the amount of debt the Town can carry, she said, and the other has to do with the interest rate on the debt itself and the Town's ability to be "bank eligible" by maintaining debt of $10 million or less.

Council Member Harrison expressed a preference for keeping the Town's priority for Open Space within the Town limits or Urban Services Boundary.

Council Member Hill inquired about selling the bonds and using the cash to invest in companies that sell stoplights and walk/don't walk signs.  "Then we'd have lots of extra money," he quipped, asking why those things were so expensive.  Mr. Horton speculated that there is limited money for manufacturers of those things and that the process requires complex machinery.

Mr. Horton recommended that if the Town Council wanted to allot more money to Open Space then they should take it from Sidewalks and Open Space Area.  It could come from the other areas as well, he said.  Mr. Horton noted that the Council had indicated the amount they wanted to spend but had not specified how much to spend in any one issue.  So it would be reasonable to shave off some from any of those categories, he said.

Council Member Strom determined that the Town had spent a little less than $250,000 per year on Streetscape projects.  Mr. Horton recommended issuing bonds for the $400,000 on additional street lighting.  After much negotiation and difficulty, Duke Power finally will have streetlights ready in April, he said.

Mayor Foy inquired about Greenways projects.  Mr. Heflin noted the details on pages 21 and 22, with specifics laid out for expenditures and sources of funds.  He indicated the combination of bond funding, matching to grants, and funds from other sources including Orange County.  The Project Planning Committee would be meeting in April to discuss the allocation of bonds from the County in addition to the Town's bonds, he said. Mr. Heflin remarked that the expectation was that Town bond funds would be spent first.  But that meeting had not been held yet, he pointed out.

Mayor Foy remarked that there was a significant amount of money from the County to build the Bolin Creek portion.  He wanted to be sure that the Town coordinates its bond sales with that, he said.  Mayor Foy added, though, that the Town might not need all of the money for the Bolin Creek construction and might use some of it for purchase of open space as part of the Greenways master plan.  Mr. Horton stated that he believed the amount was $1 million.  The County was ready to issue those bonds and the Town should be able to get payment relatively soon, he said.

Council Member Strom, noting he is on the Project Coordinating Committee, stated that the County's Land Legacy Program had been putting together a small area master plan for Bolin Creek.  He thought it would be the topic of this week's Committee meeting, he said. 

Mayor Foy advised the Council to be prepared to move forward and use the money when it becomes available. He verified with Mr. Horton that the Council could shift the Greenways money for parks and recreation around.  Mr. Heflin pointed out that the schedule had been conceived as a process where the Council could make adjustments based on changes in circumstances.  The Bolin Creek Trail estimate, in particular, was a guess, Mr. Heflin explained.

Council Member Kleinschmidt, verifying that the County bond had been passed in 2001, asked how much had been issued from those bonds for Greenways.  Council Member Strom explained that the Project Coordinating Committee would coordinate the pace of that project.  Everybody wants those Greenways as soon as possible, he said, adding that, for government work, the Town was moving ahead at a nice clip now.  Council Member Kleinschmidt replied that he was pleased that the Council had a plan and could talk with people with some confidence about when these projects will happen.

Mayor Foy agreed with Council Member Strom that Orange County had worked hard with the Town to get Southern Park and the Aquatics Center built.  And they did build the Meadowmont School, he pointed out.  Mayor Foy agreed with Council Member Kleinschmidt that some things were taking longer.  But they were actually coming to fruition, he said.

Council Member Ward determined that the tax rate implication of $4 million is 5/10 cent in the first year and 9/10 cent the second year due to the full year payment.  Mayor Foy noted that it changes as the tax rate generation changes.  So it could be different in 6-8 years, he pointed out.

Mayor Foy asked Mr. Horton if he had enough information from the Council.  Mr. Horton replied that it appeared that the general proposal as outlined tonight was an acceptable beginning plan.  He proposed bringing back a resolution for the Council's consideration at a subsequent Council meeting.

Mayor Foy determined that the consensus on the Council was to proceed with the plan on page 2. 

Item 5 - Budget Working Papers

a. How $800,000 Rollover was Identified for the Current Year; Where It Has Been Identified for Coming Year.

b. Report on History of $800,000 Rollover and How to Move Away from Budgeting it as a Revenue Source.

c. History of Turnover Rates, by Department.

d. Questions regarding use of Bond Funds.

e. Consideration of Historic District Commission Review of Minor Subdivisions and Setback Requirements.

f. Demolition by Neglect Order.

g. Report on Snow Removal for Sidewalks.

h. Report on Proposed Extension of Operating Hours for Parking Lots 3 and 5.

i. Report on Using Credit Cards to Accept Town Payments.

j. Report on Police Department Handgun Replacement Cycle.

k. Possibility of Using Active Living By Design Funds for Sidewalks in Northside.

l. Report on Potential Increase in Commercial Collection Fees.

m. Use of Bio-diesel Fuel for Chapel Hill/Carrboro School Buses.

n. Report on Transportation Board’s Request for Restriping When Resurfacing Streets.

o. Planning Issues:  Fees Charged to UNC for Development Permits; Overtime; and LUMO Work Requirements.

p. Report on Comparison of 2,000 Square Feet vs. 5,000 Square Feet in LUMO – Consequences.

q. Report on Use of Energy Efficient Appliances in Public Housing Units.

r. Report on Use of Public Housing Program Fund Balance.

Mayor Foy asked Council members to indicate which items they wanted to discuss.

Council Member Harrison indicated items g, h, l and p.  Council Member Kleinschmidt indicated items b, e, and f.  Council Member Verkerk indicated item m, and Council Member Hill indicated item o.

5b. Report on History of $800,000 Rollover and How to Move Away from Budgeting it as a Revenue Source.

Council Member Kleinschmidt asked how it can lead to a tax increase if it is contemplated that this be absorbed back into the regular budget.  Ms. Johnson replied that the appropriated fund balance is an alternative revenue source to such things as sales and taxes.  So, if you chose to use less of the appropriated fund balance, for example, you must have more revenue from another source or you must spend less, she said.

Mayor Foy stated that if the Town does not put those dollars on the revenue side then they have to lower expenses or put dollars there from somewhere else.

"But why would it cost you anything in the first year?" asked Council Member Kleinschmidt.  Ms. Johnson explained that to have a balanced budget you have to have five dollars in revenue if you plan to spend five dollars.  If you've only got four dollars then you can take one from savings and spend five.  But if you don't want to use that dollar from savings then you only have five dollars, so you have to reduce your expenditures or bring in other revenue, she said.

Mayor Foy suggested just leaving the $800,000 alone, and everyone laughed.  "Sounds like a good plan," Council Member Kleinschmidt remarked.

5e. Consideration of Historic District Commission Review of Minor Subdivisions and Setback Requirements.

Council Member Kleinschmidt asked if this meant that the Council did not have to worry about changing anything because it was already in place.  Planning Director Roger Waldon replied that the Council had already made a change in response to this request. With regard to adjusting the setbacks, Mr. Waldon said, there already were several provisions for relief from setbacks, especially in older areas.  So going beyond that would be a change in the ordinance, Mr. Waldon explained.

Council Member Kleinschmidt wondered why the historic districts had asked for this.  There seemed to be provisions in the Code that allow for almost any reasonable possibility to be adjusted for, he remarked.

Mayor Foy agreed, acknowledging that he did not understand that either.  The issue did not seem like an issue, he said.

Council Member Greene pointed out that the historic districts had also asked to build new structures that would violate the setbacks.  And this response tells them they cannot do that, she said, adding that she thought that was an appropriate and helpful response.

Mayor Foy stated that he thought it said that it could be done.

Council Member Greene asked for clarification, and Mr. Waldon explained that the staff had intended to communicate that there are a number of provisions which, in very limited circumstances, can allow a structure to be closer to the property line than the setbacks normally allow. The staff's preliminary recommendation was that those are good, he said.  Mr. Waldon stated that the staff would not recommend going any further because it could have a negative impact on the adjacent property owner.

Council Member Hill noted that there were circumstances in historic districts where people have or want garages and there already are garages there.  Some had talked to him about making provisions for allowing expansion of existing structures, he said, adding that there probably would be a petition to that effect coming before the Council fairly soon.  Mr. Waldon remarked that "opening that box" would have a lot of implications for a lot of properties.  But if the Town Council wants to do that the staff will help, he said.

5f.  Demolition by Neglect Order.

Council Member Kleinschmidt noted that the report was a good idea and asked what should be done next.  Mr. Karpinos replied that the Council could adopt a resolution and refer this to the Planning Board and the Historic District Commission for a recommendation.  He agreed to bring that forward.

5g.  Report on Snow Removal for Sidewalks.

Council Member Harrison expressed support for identifying specific high priority sidewalks, such as Sage Road.

Council Member Verkerk agreed and asked if it was possible to coordinate this with bus routes.

Mayor Foy suggested referring the item to the Bicycle and Pedestrian Advisory Board for a report on what they would do with various levels of funding.  Council members agreed by consensus.

5h.  Report on Proposed Extension of Operating Hours for Parking Lots 3 and 5.

Council Member Harrison expressed reluctance to support this for the same reasons he had not done so two years ago.  The Council had heard objections from businesses and from the Co-Chair of the Public Arts Commission, he said.  He recommended that the Council discuss a long term parking plan before pursuing this approach.

Mayor Foy clarified that there was no objection to converting Lot 3 to a pay station.

Council Member Kleinschmidt argued that there was some benefit to having off-street parking consistent between the lots.  Timing on both lots should be the same, he said, whether they both go to midnight or until 8:00 p.m.

Council Member Ward expressed concern about the potential negative impact on some businesses, but agreed that ending both at 8:00 would not be as disruptive.

Council Member Kleinschmidt said that providing an incentive to turn parking spaces over earlier in the evening would help provide more customers. But, Council Member Ward replied, that this is not what the Council had been hearing from the Downtown businesses.

Mayor Foy thanked the Finance Department for their cost/benefit analysis of parking.

Council Member Ward commented that there were implications for revitalizing the Downtown in addition to Town revenues.  He did not want this to be “the straw that broke the camel's back,” he said.

Council Member Kleinschmidt remarked that some businesses had told him they wanted free parking all the time.  He had explained that allowing that would lead to people leaving cars and going to campus all day, he said. Council Member Kleinschmidt pointed out that paying for parking would provide an incentive for people to move their cars.

Council Member Ward noted that the Town could chalk tires and monitor how long people park.  Council Member Kleinschmidt replied that you could build that into a pay station as well.

Mayor Foy pointed out that the Council was considering investing up to $1 million this year in the Downtown area.  So the argument that the Council is not sensitive to Downtown or to parking is not supportable by the evidence, he said.

Council Member Verkerk agreed with Council Member Kleinschmidt that the pay station would provide an incentive to get people out and make room for another customer.

Council Member Harrison said that having excess parking space at the Rosemary Street lot had no implication at all for late night service on West Franklin Street, which is where the complaints to Council had been coming from.  New customers have a hard time finding parking spaces in that part of Downtown Chapel Hill, he pointed out.

Council Member Strom agreed with Council Member Kleinschmidt and Mayor Foy that this Council had provided much support to the Downtown area and that they understood how important it was.

Council Member Ward agreed with those comments, but proposed that part of the reason The Gap had left was because parking was difficult.  Parking is an issue, he said, and the Town needs to do a variety of things about it.

Council Member Verkerk remarked that she thought there were economic reasons why The Gap had left the Downtown.

Council Member Hill said that part of the problem was that people prefer malls.   He verified that the Council unanimously agreed to standardize the hours to 8:00 a.m. to 8:00 p.m. and to include the second pay station.  And, he added, he liked the idea of chalking tires.

Mayor pro tem Wiggins left at 6:20 p.m.

5l.  Report on Potential Increase in Commercial Collection Fees.

Council Member Harrison explained that Colony Lake and other neighborhoods do not like being lumped together with commercial development.

Mayor Foy stated that this item was a response to a question.  He determined that there was no support of the Council for doing this.

5m.  Use of Bio-diesel Fuel for Chapel Hill/Carrboro School Buses.

Council Member Verkerk asked Interim Public Works Director Bill Terry if Robert Miller had explained why he could not fill his trucks at the Town's bio-diesel fuel station.  Mr. Terry replied that the Town was set up to receive large bulk fuel.  The Town 's dispensers are not capable of transferring fuel into a tanker, he said.

5o. Planning Issues:  Fees Charged to UNC for Development Permits; Overtime; and LUMO Work Requirements.

Council Member Hill withdrew his request to discuss 5o.  The Manager was bringing back a recommendation and the Council could talk about it then, he said.

5p. Report on Comparison of 2,000 Square Feet vs. 5,000 Square Feet in LUMO – Consequences.

Council Member Harrison pointed out that item 5o relates to item 5p.  He suggested that the Council think about how to change the 2,000 square foot threshold, since that hits the middle class who do not have money to spend on an engineer.  He mentioned a proposal to have a skillful planner do it at that level.  That would increase the staff's workload, but it would remove the burden from the individual homeowners, he said.

Council Member Strom replied that he had supported the 2,000 square foot threshold when LUMO was working its way through the Council.  He pointed out that the Planning Department had said it would only have affected 50 properties this year.  Compared to the benefit, that's not a significant number of houses, Council Member Strom noted.  He urged the Council to at least send the report to the Planning Board, and possibly the Historic Commission, for comment.  Council Member Strom pointed out that adding a garage to a property could significantly change stormwater patterns.

Council Member Strom proposed that 5,000 square feet was too large.  Council Member Greene replied that 3,500 square feet might be the right number.  She agreed that having the Planning Board discuss it more would be beneficial.

Mayor Foy also thought the Planning Board should see it.

Council Member Ward inquired about the difficulty of determining how much disturbance the 53 properties that fell between 2,000 square feet and 5,000 square feet had done.  The Planning Board could see if there was an actual breaking point that the Council could consider, he said.  Mr. Waldon agreed to provide that information.

The meeting adjourned at 6:40 p.m.