SUMMARY MINUTES OF A BUDGET WORK SESSION
OF THE CHAPEL HILL TOWN COUNCIL
WEDNESDAY, JUNE 7, 2006, AT 4:00 P.M.

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

Council members present were Laurin Easthom, Sally Greene, Ed Harrison, Cam Hill, Mark Kleinschmidt, Bill Strom, Bill Thorpe, and Jim Ward.

Staff members present were Town Manager Cal Horton, Deputy Town Manager Florentine Miller, Assistant Town Manager Bruce Heflin, Town Attorney Ralph Karpinos, Town Information Officer Catherine Lazorko, Finance Director Kay Johnson, Information Technology Director Bob Avery, Planning Director J. B. Culpepper, Public Works Director Bill Letteri, Transportation Director Steve Spade, Human Resources Director Pam Eastwood, Parks and Recreation Director Kathryn Spatz, Assistant Parks and Recreation Director Bill Webster, Senior Transportation Planner David Bonk, Development Coordinator Gene Poveromo, and Town Clerk Sabrina Oliver.

Item 1 – Economic Development

a.   Mayor’s Committee Report on Economic Development Professional.

Consultant Chris Berndt reviewed the proposed goals of the economic development professional and the funding for this position.  She said the Committee’s report summarized the results of their investigations and discussions, and recommendations were noted on page 3 of the memorandum.  Ms. Berndt stated the eight recommendations fell into two categories: welcoming and communication functions, and redevelopment/area planning functions.  She said the Committee proposed that about 25 percent of the position’s time be devoted to welcoming and communication functions with businesses, and about 75 percent of the position’s time be devoted to redevelopment and area planning functions.

Ms. Berndt said the Committee had recommended that the Council consider creating an economic development officer position in the Town Manager’s Office, with the position working closely with the Town Manager.  She said the report also proposed that the Manager work with a Council Committee of up to four members to develop an annual plan for this position, with that plan to be approved by the full Council and the Council receiving quarterly updates on that annual plan.

b.   Information on Cost Estimates for Establishing New Position of Economic Development Officer.

Ms. Berndt noted that the estimated 12-month cost of establishing this new senior level position would be about $96,000, including all benefits and start-up costs, as well as a Town vehicle.  If the Council chose to fund the position for three-quarters of the year, the cost would be approximately $72,000.  Ms. Berndt said the Committee had discussed starting the position in January 2007, in which case the cost would be approximately $48,000.

Council Member Kleinschmidt thanked Ms. Berndt, Planning staff, and the Manager for the time and effort that had gone into this process.

Council Member Kleinschmidt said he was undecided about the position at first.  He noted the Committee had met several times, taking a deliberate approach to the question of whether they should have an economic development officer, and that process had convinced him of its need.  Council Member Kleinschmidt said he was in full support of adding this position, noting the process the Committee had gone through to reach that recommendation.  He noted they had also considered a request from Orange County to merge the County’s work with the Town’s, but the Committee had felt that the issues faced in Town were peculiar to Chapel Hill and required someone on the Town staff to be focused on those issues.  Council Member Kleinschmidt said they had also received a request from the County to have a Council member join the County’s economic development board, and that was a request the Committee was in favor of and recommended that the Council approve that request.

Council Member Kleinschmidt said if the Council approved this position, it would benefit the entire community.

Council Member Harrison said he had been skeptical as first, but the deliberate process the Committee had used had convinced him of the need for this position.  He said one important part of the proposal was the reporting considerations, in that a Council committee be formed to work with the staff person and the Town Manager.  Council Member Harrison said he strongly recommended that proposal.

Council Member Ward said he, too, had been skeptical, and he had wanted to participate on the Committee to make sure that he could fully support it, and he did.  He said the Committee had been able to identify a number of shortfalls in areas of economic development not currently being addressed by other agencies, and they were not tasks that the Town could easily asked those agencies to do.

Council Member Ward said the process was comprehensive, and as a result he was confident that the new position would be able to show economic development that was equal to or greater than the costs recommended for this position.

Council Member Kleinschmidt sent a special thanks to the staff of the Chamber of Commerce for their participation in this process.  He said they were instrumental in identifying other constituencies and stakeholders that the Town may have overlooked.

Mayor pro tem Strom said one of the key pieces of information that the Committee had identified was the fact that Section 6 of the Comprehensive Plan had several statements and policy objectives for economic development that the Town had not been proactively pursuing.  He said he believed the justification for this position was already in the Comprehensive Plan.  Mayor pro tem Strom said he believed the position could be clearly focused on the Comprehensive Plan goals, and with proper oversight could be every effective.

Mayor pro tem Strom said practically speaking, he believed the new Town Manager should hire this new position, and did not believe that would happen as soon as he or she came on board.  He suggested that the position be funded for half of the year at the lower end of the salary range, beginning in January 2007, as a placeholder in the budget.

Mr. Horton recommended that the placeholder be at the mid-point of the salary range.

Mayor Foy said he had also been on the skeptical side, but the recommendations of the Committee had changed his opinion.  He said he was impressed with the idea to keep close tabs on what actually happened through quarterly reports and the formation of a Council committee.

Council Member Greene agreed, noting she particularly liked having the Comprehensive Plan language in front of them.  She said she believed that language did support this position. Council Member Greene said, at the bottom of page 43 of the Comprehensive Plan, it stated, “Thus economic development initiatives should be measured not only by how much they increase employment opportunities or the tax base, but also by the extent to which they help fulfill other objectives of the Comprehensive Plan…such as mixed use environments, increasing housing choice, and promoting alternatives to use of the private automobile.”  Council Member Greene asked how the Committee felt that this one individual would be able to address all of that.

Council Member Greene said at the end of that same section of the Comprehensive Plan it talked about University-related business development, and stated that the policy goal was to work with the University.  She wondered if the Committee had talked about that in terms of Carolina North and other development.

Mayor pro tem Strom said this was one position with a huge mission, and they wanted to keep it focused.  He said the Committee had talked about these issues, and that was one reason why he believed that this position would not necessarily pay for itself.  Mayor pro tem Strom said, but, if they could assemble large areas for redevelopment they believed that many of the goals could be pushed ahead in a significant way that would not ordinarily happen if just the private sector were involved.  Mayor pro tem Strom said one of the roles this position could fill would be to bring private landowners together and talk about what could be.

Council Member Kleinschmidt said they had not talked directly about the role of this position in terms of Carolina North, but he suspected that this person could fill a very valuable role in that respect.  He stated it would allow the Town to think more comprehensively about any large development, including Carolina North.

Council Member Ward said that 10 percent of the cost of this position was for a vehicle and office setup.  He challenged the Manager to work with staff involved with fleet management to identify an existing vehicle for this position.  Council Member Ward said he would like that not to be a part of this decision.  He commented that $8,000 seemed excessive for a desk and a computer.  Mr. Horton said the cost of creating the office space was a part of that expense, noting they would have to either divide or convert existing space.  Council Member Ward said he believed those two items could be done for less than $8,000, and he challenged the Manager to find a way to do it for less.

Council Member Thorpe said he was pleased that the Council Committee had made this recommendation, noting he had advocated for it during the recent election for Council.

Mayor Foy determined by a straw vote that the Council was in favor of funding this position for six months beginning in January 2007, and that it be budgeted at the mid-point in the pay range.

Item 2 – Parking Facilities and Fees

Mayor Foy said he was a member of the Downtown Partnership, noting that businesses had first proposed the suggested changes to the Partnership.  He said the Council had initiated a parking study, and while some specific changes to the current parking practices were being recommended, in most instances it was recommended that the requests be referred to the recently formed Parking Committee for further examination.

Mayor Foy said one of his concerns was that there were options other than on-street free parking on Saturdays, and he believed they needed to look at those options comprehensively.  He said that was what the Parking Committee would do.  Mayor Foy said he was concerned that if the Council were to say yes to free on-street parking on Saturdays, the Committee might come back with five recommendations that would be useful to address the parking issues downtown and number five was the free on-street parking on Saturdays but there were four of higher value. He said he did not want the Council to then redistribute the resources to the first one or two recommendations and abandoned free on-street parking on Saturdays.  Mayor Foy said the public would come to expect the free parking and be annoyed if it were changed.

Mayor Foy said he preferred that the Council set aside funds in the coming year’s budget to implement some changes to parking based on the Parking Committee’s recommendations expected around January or February of 2007.  He said if not, then funds could be set aside in the budget for next year beginning July 1, 2007 and any changes in parking could be implemented at that point.

Mayor Foy recommended that the Council increase the Downtown District Tax Rate and that the additional funds be set aside to address downtown parking issues based on the Parking Committee’s recommendations.

Finance Director Kay Johnson stated the Downtown tax rate was 5.3 cents.  She said if the Council approved the position for the downtown groundskeeper, the total tax rate would move to 6.5 cents.  Ms. Johnson said the Town could set aside various amounts, for instance 10 cents would result in approximately $50,000 available for parking changes.

Mayor Foy asked what was one cent on that tax rate.  Ms. Johnson replied $14,500.  Mayor Foy said the on-street free parking amounted to $40,000.  Ms. Johnson said there were two components to that.  She said the on-street parking component amounted to $40,000, and the lost ticket revenue amounted to an additional $24,500.  She said the other issue to take into consideration was the suggestion to implement this mid-year, meaning you would only need half of that.  Ms. Johnson said the sum of the two components for half a year was $60,000.  She noted that a two cent increase in the tax rate would amount to about $30,000 for the half year.

Mayor Foy suggested that the Council consider a 2.5 cents increase.

Council Member Easthom asked about the increased hours for Parking Lot #3 from 6:00 to 8:00 p.m., noting she did not understand why that had been done in the first place and wanted to see it go back to 6:00 p.m.  Mr. Horton said the primary reason for the change was so that the two lots operating with pay stations would all be operating at the same hours and on the same terms to reduce confusion.   He said if the Council decided to amend the hours for Lot #3, he would recommend doing it for the other lots as well to avoid confusion by users.

Council Member Easthom said the on-street parking near Lot #3 ended at 6:00 p.m., and just across the street in Lot #3 it ended at 8:00 p.m., and it was confusing.  She said she was not happy about the 8:00 p.m. time on Parking Lot #3, and was in favor of changing it back to 6:00 p.m. as well as changing Parking Lot #5 as well.

Council Member Hill said this was exactly the type of thing the Parking Committee would study, and she would like that Committee to have an opportunity to look at the whole picture and make recommendations on this issue and others like it.

Mayor Foy agreed, noting that was why he was advocating not acting on the free on-street parking recommendation now but waiting and lettting the Parking Committee study it.  He said there were other issues, such as what types of credit cards the machines accepted, so to address one issue and not all the rest would not advance anything but could create more problems.  Mayor Foy agreed with Council Member Hill to leave things as they were but be prepared to make changes based on the recommendations of the Parking Committee.  He said the Town also needed to have the money set aside to make those changes.

COUNCIL MEMBER WARD MOVED TO SUPPORT THE MAYOR’S SUGGESTION TO ADD 2.5 CENTS TO THE DOWNTOWN DISTRICT TAX, TO BE SET ASIDE TO ASSIST DOWNTOWN PARKING ISSUES, AND TO SOLICIT RECOMMENDATIONS FROM THE PARKING COMMITTEE.  MAYOR PRO TEM STROM SECONDED THE MOTION.

Council Member Kleinschmidt said he was in favor of the motion, but did not want the charge to the Parking Committee to be that the Town has a certain amount of money and they should decide how to spend it.  He said there were many reasons why the Town would want to continue parking through 8:00 p.m., for instance there would be zero parking available because everyone would park in the free spaces.  Council Member Kleinschmidt said turnover during peak times in a restricted area was a legitimate concern, and it had to be considered.

Council Member Kleinschmidt said he frequently went downtown, and it appeared to him that people did not realize that parking was free after 8:00 p.m.  He asked if there was a way to communicate that more clearly.  Mr. Horton said it was possible that the machine could flash a sign that would alert the users, and the Town could also provide better signage in the area to make it clearer.

Mayor Foy stated it was important to note that the Council would make the decisions, and that the Committee would only be making recommendations.

Council Member Ward supported Council Member Kleinschmidt’s remarks, adding that 2.5 cents on the tax rate would amount to about $70,000 for about a full year.  He said he did not want to fund something at $35,000 for the last half of the fiscal year only to realize that they would need to find $70,000 for the full year next year. Council Member Ward said the Town needed to be prudent and cautious about the process and about how those funds were used.

THE MOTION WAS ADOPTED UNANIMOUSLY (9-0).

Item 3 – Façade Program and Fees

Mayor Foy said that the Downtown Partnership had generated this as well.  He stated that the Partnership had requested a development fee waiver for property owners in the Downtown Service District who undertake façade improvements on their buildings.  Mayor Foy suggested doing this on a trial basis for one year.  He said they did not know how much that would cost, but he trusted that the Partnership would keep excellent records so that they know what the benefit was, if any came from this.

Council Member Kleinschmidt said they were talking about the Partnership providing a $1,000 grant, with the business owner providing a matching $1,000, which was much more than a fee.  He said it seemed to him like the Town was saying it wanted a business owner to make his business look better.  Council Member Kleinschmidt said he approved of the Partnership encouraging businesses to have a better appearance, but $1,000 was not enough incentive to convince them to do that.

Council Member Kleinschmidt said the fees were anywhere from $150 to $350, and he believed the Partnership grant should cover the fee, noting they were only using 15 percent of the grant to pay for the fee.  He asked why the Town had to increase the grant by 15 percent to 35 percent by waiving a fee.

Mayor Foy said that was the point. If 35 percent of the grant was used up by the fee, then the grant was really for $650 rather than $1,000, he said.

Council Member Kleinschmidt said then it fundamentally came down to whether or not $1,000 would convince someone to make façade improvements.

Mayor Foy said that was the purpose of the one-year trial, noting if there were no results then it would not have cost the Town anything.  He said, if the results were excellent, then they could learn from that.  Mayor Foy said they could also tell the Partnership to increase the grant to $2,500 and pay the fees.  He said, in any case, it was a one year deal and then the Town would reassess.

Council Member Ward said he agreed to the one-year trial, but preferred to do it the way the Manager recommended, and see how it worked with the fees in place.  He said those fees were in place because they reflected the cost of doing business within the Town departments.  Council Member Ward said he would be interested in discovering what the grant did in terms of encouraging businesses downtown to make improvements at the level of funding identified by the Downtown Partnership. He said he was in favor of keeping the Town’s processes in tact during this initial phase and learning from that.

Council Member Hill pointed out that of the examples noted in the memorandum of façade improvements, only two would require a permit.  He said waiving the fees would be a token gesture at best.

Mayor pro tem Strom said the Council had made the downtown a priority, and that they have to trust that the Partnership believed there was some value in this.  He said he was in favor of the one-year trial period suggested by the Mayor and waiving the fees.

Council Member Harrison agreed with the Mayor’s suggestion, noting the Council had made the downtown a priority and that this type of inexpensive trial was not a problem for him.

Council Member Ward commented that people who owned businesses in the downtown were likely among the Town’s more affluent citizens.  He said he did not know if owners of the business or owners of the property would pay for improvements, but if it was owners of the property, then the Town did not need to be subsidizing that segment of the community. Council Member Ward said those resources should be placed elsewhere.  He added that businesses should be asked to pay for the cost of doing business.

Council Member Greene said she had considered all of the arguments on both sides.  She said she believed it was appropriate to waive fees for 100 percent affordable housing projects, which was a policy decision.  Council Member Greene said this would be a policy decision as well, and she was concerned about making such exceptions because they could lead to other exceptions later on.  She said they had made the downtown a priority, and they were trying to create incentives to revitalize downtown.  Council Member Greene said perhaps this was a small step that they could take.

Mayor Foy agreed about the policy exceptions, and that was why he was encouraging the one-year trial period.  He said then they could investigate whether or not to make changes based on experience.

COUNCIL MEMBER HILL MOVED TO WAIVE THE FEES ON A TRIAL BASIS FOR A PERIOD OF ONE YEAR, SECONDED BY MAYOR PRO TEM STROM.  THE MOTION WAS ADOPTED 8-1, WITH COUNCIL MEMBER WARD VOTING NAY.

Item 4 – Response to Request for Additional Transportation Services

Mayor Foy said he believed the key issue was that the Town’s timing was wrong.  He said the Manager was recommending that the Transportation Board reorder how things were done.  Mayor Foy said this was a matter for the Town’s transit partners as well.

Transportation Director Steve Spade said one of the problems was that the suggested changes in services came late in the budget process.  He said part of the recommendation being made was that instead of holding public forums in January or February and then coming back with service recommendations in May, they hold forums in September or October, evaluate options during November and December, and then make recommendations for service improvements to the Council as early as January or February.

Mr. Spade said the Transportation Board had also recommended conducting a study of the entire transit system to determine where it was productive and where it was not, and what the Town might do to improve the system as a whole.  He said they believed it was important to conduct that study prior to implementing any other service improvements.  Mr. Spade said the results of that study could then be combined with suggestions from the public forum and allow staff to present a comprehensive set of recommendations for service changes or improvements.

Council Member Ward agreed with Mr. Spade’s comments, noting it was frustrating to hear good suggestions from the public but not being able to respond quickly to them.  He said the suggestion by the Transportation Board to conduct a study of the entire system was definitely the way to proceed prior to making any more changes.  Council Member Ward encouraged the Council to initiate the earlier process outlined by Mr. Spade beginning with September public forums and ending with recommendations forwarded to the Council in early January.

Council Member Harrison, said as liaison to the Transportation Board he had sat in on many such discussions, as well as the discussion in a Partners Committee meeting two week ago.  He commented that one thing omitted from the report was a significant plan put together by Mr. Spade’s staff for bus purchases of almost $8 million over the next 18 months to two years.  Council Member Harrison said right now they did not have the equipment necessary for extension of services, but progress was being made.

Council Member Harrison said he believed the Transportation Board had a forum planned for October 5, moving the process up by four months.  He said past participation in these public forums had resulted in this ambitious agenda, and over the next two years he believed things would begin to fall into place.  Mr. Spade stated that the Council would receive within the next two weeks information on bus purchases and fleet analysis.

Council Member Thorpe noted that citizens had been asking for increased services, and the Transportation Board was now proposing a comprehensive study.  He said that Town buses were free, and his point was that they had already received requests for service changes and now they were going to delay action on that while undertaking a study. Council Member Thorpe said that would mean changes would not be made for a year or more.  He asked Mr. Spade to do whatever was necessary to speed up the study and the process to get changes in place as quickly as possible.

Council Member Easthom said they had recently annexed Larkspur, and there were many Orange Community Housing and Land Trust homes in the geographic area.  She said the closest bus stop to this area was on Martin Luther King, Jr. Boulevard, which in many instances was beyond the one-quarter mile range.  Council Member Easthom said there was another bus stop on Homestead Road which to date did not have adequate sidewalks to allow people in that area to get to the bus stops.

Council Member Easthom said she had served on the Transportation Board in the past and supported the idea of a holistic study, but it was really a long way from where these people lived to the nearest bus stop, and it was not the safest route.

Mr. Spade clarified the recommendation, noting the primary reason for the delay was that this was coming so late in the budget process, making it difficult to deal with.  He said their recommendation was that if this was something that did not fit in this year’s budget, that as the Town prepares for next year’s budget that it gets the study done, conducts the public forum earlier in the process, and brings back comprehensive recommendations.  Mr. Spade noted that conducting the study would not slow down what the Town was doing for next year.

Council Member Easthom asked Mr. Spade to help her understand how this particular study would either advance the cause of a bus on Weaver Dairy Extension, or not.  Mr. Spade said the study would provide them with additional information about how the system was performing, and allow them to take a look at areas that might be weak or strong, and at parts of the community that they were not serving.  Mr. Spade stated they would also then be able to look at the types of requests that were received.  He said the study would allow them to look at routes that might need to be modified, or at parts of the system that were not being utilized adequately and could be reallocated.

Council Member Easthom asked if the route was expanded to serve the Weaver Dairy Road Extension, would it involve an $80,000 cost or could it be that it would not cause any cost.  Mr. Spade said the current estimate was that that route would require two additional rush hour vehicles, with an annual cost of about $80,000 to operate that service.

Mr. Horton said one difficulty was that the Town continued to have service areas identified by advisory boards and others that they would like to serve, and at the same time they believe that there are possibly segments in the route system that were so weak or had such low ridership that if they could reconfigure the system they might be able to serve better the whole population and be more efficient at the same time.  Mr. Horton said they would not know that until Mr. Spade had an opportunity to get this work.

Mr. Horton said the timing issue was that they had passed the point where the Council could unilaterally decide what to do with the system, based on the agreements made with the Town’s transit partners.  He said anything that the Council did with the limited resources available now affected the ability to meet the objectives that the partners might have.  Mr. Horton said it was unlikely that the Council could make these types of changes since it would involve discussions with the partners, and that was time they did not have this late in the budget process.

Council Member Easthom said a petition for this bus service had been received, so the response to that petition would be that subsequent to the transit study they would consider the request.  Mr. Horton said that was correct, noting that all petitions for service changes had been referred to the Transportation Board.  He said the challenge now would be how to work with the partners to figure out the changes they might want to make, as well as the ones the Council might want to make, and how to pay for that and provide the necessary equipment.

Mr. Spade said they had a fleet of 83 buses, with very few spares.  He said, with an aging fleet it was difficult to maintain service levels, noting daily issues with meeting current service demands.  Mr. Spade said the purchase over the next two years of approximately 20 buses would take a huge step in modernizing the fleet.  He said until those new buses were put into service they would be stretched to provide any significant growth in service.

Mayor Foy said the basic question was could this route be served in the next fiscal year.  He asked, if the study were conducted and the Town knew in December that this route should be included, was there a way that in January that route could begin?  Mr. Spade said if they knew as soon as October, and had time to plan the service, it would be possible, but the key would be finding available funding as well as the vehicles through reallocation.

Mayor Foy asked when they would expect to have an analysis.  Mr. Spade said you would want to begin that analysis in the fall when ridership was at its peak, so they probably would not start until September, and then analyze the numbers in October.  He said the idea was to have those numbers available when they held the public forum in October.

Mayor Foy asked if they were to add this particular route, would they be obligated to pay 100 percent of the cost?  Mr. Horton said under the terms of the present agreement with the transit partners, they would be responsible for 100 percent of the costs unless they could convince the partners to share that cost.  He said if they were doing a major restructuring throughout the system, it was more likely that the partners would pay their share since they would be reshuffling resources throughout the system.  Mr. Horton said he did not believe they had enough equipment to add any routes at this time, and he believed it would entail reorganization of the route structure in order to achieve additional service. He said the Council would have to decide if it wanted to increase the efficiency of routes and perhaps assign more resources to routes with heavy usage and reduce service to others, or maintain services to routes that may not be as productive but serve a broader population.

Mr. Horton said it was a complex decision, and was not just a matter of adding a route segment, which they did not have equipment to do.  He said they would have to reduce service in one area in order to reallocate equipment in another.

Mayor Foy said the Council needed to know whether they need to identify some funds in the upcoming budget in case they decide to do something.  Mr. Horton said he did not believe there was any choice but to set aside a larger portion of Transportation Fund money.  He said he did not believe the Town could ask the partners to participate this late in the process, noting that Carrboro had already adopted its budget.  Mr. Horton said the University had complained for years that they needed figures earlier in the budget process.  He said he believed if the Council needed more money, they would have to raise the Transportation tax rate.

Council Member Kleinschmidt said, when the Town annexed Southern Village the V-line was in place and ready to go.  He said Larkspur and Vineyard Square were annexed a year ago, and still had no service.  Mr. Horton said it was a matter of scope, noting that the Southern Village annexation was so large that it required significant new resources in almost every department, and significant growth was experienced in Meadowmont at about the same time.

Council Member Kleinschmidt said that was understandable considering the large number of people involved.  He said the area in question was interesting because much of it fell outside of the walking range they normally consider.  Council Member Kleinschmidt said it was disappointing that so many people did not have access to one of the things that made living in Chapel Hill so nice, which was bus service.  He said it was even more disappointing that it could be another 18 months before that could happen.

Council Member Kleinschmidt suggested trying to find some funding in the meantime so that bus service could be provided to that area prior to September or later of next year.  Mr. Horton said the issue was that they did not have the buses to provide significant route service to any new areas.  He said he understood the concern and believed it was reasonable, and he believed if they go through the study as suggested that the Council may be able to reorganize resources to provide quicker service.  Mr. Horton said the future was not bleak, but it was still the future.

Mayor Foy asked when the 20 new buses would be added to the fleet, and if they would replace existing buses or add to the total number of buses.  Mr. Spade responded that there would be a combination, in that some would be used for fleet expansion and older buses may be moved to back-up status.   He said it may be possible by late September to have a bid before the Council for approval, and it would then take 12 to 18 months before they could expect delivery of the first buses.

Item 5 – Response to Request for $87,000 for Library Books
and a Half-Time Book Processor

Mr. Horton said there had been a misunderstanding by some that by eliminating the Apple Chill Street Fair from the Town’s calendar of events that it would create a windfall of $87,000.  In fact, he stated, the funds used to pay for Police services for the Apple Chill Street Fair were budgeted in the overtime salaries and agency payment accounts, amounting to $27,000.  The remaining $60,000, Mr. Horton said, was funded from salary savings.  He stated that the recommended budget for the coming year budgeted $97,000 for the cost of Police services for all street events, including Halloween and basketball victory celebrations and the like.  Mr. Horton said they believed that those funds should be reserved for Police services based on past experience and the Town’s best projection for next year. He said that all of the budgeted funds would be needed, and that some of salary savings would again be necessary.

Item 6 – Response to Request for $15,000 for Public Bike Loan Program

Mr. Horton said they recommend that the Council refer this request to the Bicycle and Pedestrian Advisory Board for consideration and a recommendation to the Council.  He said this program deserved more consideration than they had been able to give it in the short time allowed.  Mr. Horton said the issue was not money, but whether or not the program would be worthwhile to the community.  He said there was funding available in the Council’s contingency fund should they decide later on to grant the request.

COUNCIL MEMBER HILL MOVED, SECONDED BY COUNCIL MEMBER WARD, TO REFER THIS REQUEST TO THE BICYCLE AND PEDESTRIAN ADVISORY BOARD FOR CONSIDERATION AND A RECOMMENDATION TO THE COUNCIL.  THE MOTION WAS ADOPTED UNANIMOUSLY (9-0).

Item 7 – Response to Request for 15 Percent Allocation of
Hotel-Motel Taxes to Visitors Bureau

Mr. Horton noted that this issue would be a policy judgment for the Council to decide.  He remarked that the last time the Council considered an increase in the allocation they had decided to stay with a limited dollar amount rather than a percentage, and the budget had been prepared with that in mind.  Mr. Horton commented that in past years the Council had chosen to use a percentage rather than a dollar amount.

Mr. Horton said the memorandum spelled out the differences, noting it would be the difference in the budget between $69,000 and $105,000.  He noted that actual Hotel-Motel receipts could be more or less than the actual budgeted amount.

Council Member Ward noted he was the liaison to the Visitors Bureau, and was very aware of what they were poised to do with the additional funding should it be granted.  He said the Bureau had recently hired a consultant to conduct market research, and they were now more aware of how to focus their efforts and make their funds reap maximum benefits.

Council Member Ward said if the additional funding were granted, which he encouraged the Council to approve, they would implement advertising and a campaign based on the research.  He asked the Council to give the Bureau the funding to achieve that.  Council Member Ward said this funding would also provide for visitors’ guides for sports fans who were in Town for longer than just a day, an area of need pinpointed by the research.  It would provide for a brochure, he said, that contained coupons and other incentives for local hotels and restaurants, a product that had long been requested by area hotel managers.

Council Member Ward said lastly, the market research had identified mid-week, mid-sized pharmaceutical and technical conferences that were looking for homes that are of a size that would fit the meeting space available in Chapel Hill.  He said the additional funding would help the Bureau meet these needs.  Council Member Ward asked the Council to support an increase from $69,000 to $85,000 for the Visitors Bureau.

Mayor pro tem Strom asked if Carrboro or Orange County had increased their funding to the Visitors Bureau for the coming year.  Council Member Ward said he did not know the answer to that.

Laurei Paolicelli, Executive Director of the Orange County Visitors Bureau, stated that currently the County contributed all of the 2 percent occupancy tax collected.  She explained their program and how the increased funding would benefit the Visitors Bureau.  Ms. Paolicelli said the brochures produced would be distributed throughout the Triangle.  She said their research was promising, and they wanted the opportunity to act on it.

Council Member Kleinschmidt asked if the target groups were people in Town for meetings or conventions, or was it travelers who might be in Town for a short time and were curious about their surroundings.  Ms. Paolicelli noted that one of the things the research had brought out was that many people used the Internet to find out about a Town or area they would be traveling through or to.  She said the inclusion of a search engine optimization program would provide consistent information on Town hotels, restaurants, and other amenities through such search engines as Travelocity.com, Expedia.com, and Cheaptickets.com.

Responding to a comment from Council Member Kleinschmidt, who said he had never picked up information from a visitors bureau anywhere, Ms. Paolicelli said on a typical Saturday, they experience about 80 visitors.  She said about half were in Town on University-related business, and the other half were in Town for weddings, fraternal or other social meetings, and family.  Ms. Paolicelli said those people look to the Bureau for information on where to go and what to do.

Council Member Kleinschmidt said the increase request came from a limited source of funding.  He asked the Manager if this request were granted, would other agencies suffer.  Mr. Horton responded that the funding came from the General Fund, and if the Council were to make this adjustment the staff’s challenge would be to run through their revenue figures and estimated expenditures and make sure that the budget remained balanced with no tax increase.  He said it might be possible to find a small amount of money after that final run through.

Council Member Greene asked if the Bureau’s staff was all full-time.  Ms. Paolicelli stated her staff numbered five and they were all full time.  Council Member Greene said that one of her staff was their Webmaster, and asked how this additional funding would affect that position.  Ms. Paolicelli replied that it would not change that position dramatically.  She said what this marketing expenditure would do was provide an on-line interactive campaign that would hook up with the four websites to put Chapel Hill in the list of options.  Ms. Paolicelli stated that these websites, such as travelocity and others, charged a fee to provide Chapel Hill as an option, so part of the funding would be dedicated to that marketing aspect.

Council Member Easthom said that when one goes on the Internet and searched for Chapel Hill or any other place, typically you would be offered a drop-down menu that said “Hotels Nearby” or “Restaurants Nearby.”  She asked how this new interactive campaign would be different from what was already offered to a web browser.  Ms. Paolicelli responded that it would not be that different, but that what the browser did not see was how much had been paid to be placed in that drop-down menu.

Ms. Paolicelli stated that typically Durham and Raleigh paid about $150,000 annually to travel websites to have a prominent place on those sites.  She said they planned to start at around $20,000 annually to ensure that Chapel Hill restaurants and hotels were prominently displayed in that menu.

Ms. Paolicelli reminded the Council that about $17,000 was planned to be spent to produce a $500 value booklet that would be distributed at RDU airport, the Chamber of Commerce, families visiting the hospital, sports fans in Town for events, and others.

Mayor pro tem Strom said he appreciated the insight into the market research, noting it was interesting and encouraging.  He observed that the Bureau’s budget of $611,000 was a big budget, and the Council was not familiar with their budget.  Mayor pro tem Strom asked about the possibility of shifting some existing funds to pay for the search engine optimization program.  He mentioned that the market research just completed was an expense that would reoccur.  Mayor pro tem Strom said Ms. Paolicelli had said that $20,000 of the $35,000 requested increase would go towards the web marketing, and he did not believe it was fair to ask Chapel Hill to pay the full amount, which was why he had asked the original question about what Carrboro and the County contributed.

Mayor pro tem Strom said he would be supportive of offering a one-time grant of $10,000, or some other amount if Orange County matched the grant, for web advertising.  He said given the Council’s goal of having a zero tax increase, and in that the Town had just made an investment in economic development by approving a new position, he was insistent that Carrboro and the County get on board.  Ms. Paolicelli said the majority of what they did benefited Chapel Hill, and that Carrboro was naturally included in that.  She said they were asking that the Council allow them to be more competitive.

Council Member Ward said the Council was committed to having a balanced budget, but the Visitors Bureau served this community well and had done its homework.  He said the shelf life of the market research was limited, and they should take advantage of it. Council Member Ward said he understood Mayor pro tem Strom’s point regarding Carrboro and the County, and suggested granting the increase to $85,000, and providing a one-time grant of $10,000 only if it was matched by Orange County and/or Carrboro, which would provide the additional $20,000 the Bureau was seeking.

Mayor Foy said he believed the Visitor’s Bureau had shown the Council how they could do a better job and what the identifiable factors were.  He said the Council was putting a large amount of money into economic development issues for the next year, so they were already doing quite a bit.  Mayor Foy commented that he believed the Council should grant an increase to $85,000 and allow the Bureau to seek additional funding elsewhere.

COUNCIL MEMBER WARD MOVED TO INCREASE THE FUNDING TO THE VISITORS BUREAU TO $85,000, SECONDED BY MAYOR PRO TEM STROM.  THE MOTION WAS ADOPTED UNANIMOUSLY (9-0).

Item 8 – Home Occupation Fees

Council Member Easthom said that last year the Council had increased the Home Occupation Application Fee from $50.00 to $100.00.  She said she did not believe that was consistent with Town policy of rewarding people to work at home and stay off the streets, reducing air pollution.  Council Member Easthom said she did not agree that the Town should double what it would cost for someone to stay and work at home, and the cost of the review did not justify the fee.

Council Member Easthom asked if the revenue figure of $2,500 was with the $100 fee.  Ms. Johnson responded that it was.  Council Member Easthom said then they were talking about half of that, or $1,250, and as a policy decision she believed they should reward people for working at home and staying off the streets.  She noted that she felt strongly about that.

Council Member Greene said when they had talked about this last year it was with the understanding that Carrboro’s fee was annual.  Mr. Horton remarked that at the time they had thought so, but it was a one-time fee.

Mayor pro tem Strom asked Mr. Horton to explain the philosophy that the staff was given by the Council in order to ascertain this fee.  Mr. Horton replied that a couple of years ago the Council had asked the staff to be assertive in setting fees that would be at a level sufficient to recover the cost of administering programs.  He said they had tried to make sure that the fees were within reason when considered in an ordinary way.  Mr. Horton said in this case, they believed the fee was reasonable.  He explained how the application program worked and where the staff incurred expenses, noting that in many cases a periodic review would determine if the fees were appropriate.

Council Member Easthom said a periodic review was more amenable to her, because a home occupation could grow.

Mayor Foy said then perhaps the Council should ask the Manager to conduct a periodic review, not as part of the budget since the number did not have a large effect, but to provide an annual report of the associated cost of the home occupation application program.  He suggested leaving the fee as it was now.  Mr. Horton said it cost the Town about $30 to issue a fee, and reissuing in the next year would have a lower cost.  He suggested setting the fee at $25 annually, and having the holder of the permit re-certify each year that they understand the rules, would have value.

Council Member Kleinschmidt noted that when the privilege license fee was changed it caused a lot of concern and comment by the public, and adding a new annual fee, even such a small one, may elicit the same type of response.

Council Member Easthom said with the growing trend in people working from home and the increase in air pollution, we should reward people who are able to work from home.  She said she did not see how doubling the fee accomplished anything.

Council Member Ward agreed that we should reward people not to use their cars daily, but did not believe that would be accomplished by reducing the fee or establishing an annual fee.  He said he would rather pay the one-time fee of $100 and be done with it, noting the annual fee would be onerous for everyone.  Council Member Ward said the Town was adding too much red tape to the process, and he was in favor of staying with a one-time fee.

COUNCIL MEMBER EASTHOM MOVED TO REDUCE THE FEE TO $50.  THE MOTION FAILED FOR LACK OF A SECOND.

Mayor Foy noted the fee would remain at $100.

Item 9 – Additional Position Changes Proposed for 2006-2007 Budget

Mr. Horton said there were two additional positions being proposed, one of which was a reclassification.  He said, in the case of the Transportation Department position, they were recommending abolishment of the half-time marketing coordinator position.  Mr. Horton said they believe they had identified Active Living by Design funds that could be used to transfer this half-time position to the Planning Department as a community education coordinator, to work in conjunction with the Town Information Officer to meet grant requirements of the Active Living By Design program.

The Council agreed by consensus to approve the Manager’s recommendations regarding these two positions.

Item 10 – Discussion of Other Matters of Interest to the Council

Mayor Foy asked for other budget items to be discussed.  The Council had no further discussion.  Mayor Foy stated that he did not believe the Council would have need of additional budget work sessions.  Mr. Horton agreed.

MAYOR PRO TEM STROM MOVED, SECONDED BY COUNCIL MEMBER GREENE, TO MOVE INTO CLOSED SESSION TO DISCUSS PERTINENT PERSONNEL ISSUES PURSUANT TO THE APPROPRIATE GENERAL STATUTE.  THE MOTION WAS ADOPTED UNANIMOUSLY (9-0).

The meeting was adjourned at 6:08 p.m.