LEGISLATIVE, FINANCE, AND ADMINISTRATION COMMITTEE
The Legislative, Finance, and Administration Committee meeting was held on March 10, 2008 at 5:01 p.m. with Chairman Slavin presiding. Members present were Mr. McGlumphy, Mr. Salters, Dr. Jones, and Mr. Shevock. Other members of Council present were Mr. Leary (arrived at 5:49 p.m.), Mr. McGiffin, Mr. Ruane, Council President Williams, and Mayor Carey (arrived at 5:40 p.m.).
AGENDA ADDITIONS/DELETIONS
Mr. Salters moved for approval of the agenda, seconded by Mr. Shevock and unanimously carried.
Proposed Fee Increases and New Fees
Mr. DePrima, City Manager, reviewed the presentation of proposed fee increases and new fees. In accordance with the Revenue Manual, he reminded members that staff is directed to review fees; however, he stated that this review does not necessarily equate to an increase. Mr. DePrima advised members that, as a result of meetings with the business community, the proposed fees have been decreased from staff’s initial presentation. Members were also provided ordinance amendments representing the proposed new fees and increases for consideration.
Staff recommended approval of the new fees and fee increases and adoption of applicable ordinance amendments.
Responding to Dr. Jones, Mr. DePrima stated that the goal is for the fees to cover 100% of the costs of providing services for Planning and Inspections, which allows the department to be self-supporting and eliminates any need for funding to be provided through taxes.
Mr. Ruane expressed his support for user fees and explained that the idea represents costs to the user rather than all residents. It was his opinion that there should be a link between the fees charged and the actual costs for providing the service, rather than the overall costs of the department. Responding, Mr. DePrima stated that staff has not developed a detailed methodology to assess the actual costs for providing the service; however, he assured members that an evaluation of staff’s time to provide a service was conducted and that there has been some analysis conducted to provide such service. Mr. Ruane suggested that staff research other municipalities (Paso Robles, California) that have developed a detailed methodology in this regard for possible implementation, rather than using comparisons and percentages.
Mr. Slavin relayed concern with part of the City paying for itself through fees, particularly if Council becomes more aggressive in a certain area which could serve as an escalator to higher fees without a control. He stated that this would be representative of a generally funded government and a specially funded government. He explained that when certain parts of a government are specially funded, there are inequities. He noted that there is a completely different fabric for services provided by police, fire, library, recreation, etc., when that staff is given the same instructions of providing a service that is not paid for through fees.
Although he felt it beneficial for members to conduct a thorough discussion regarding the proposed fee increases and new fees, Mr. Slavin noted that the budget team provided members of Council a presentation of revenue projections for fiscal year 2008 (Council Workshop held on March 3, 2008) and suggested that the consideration of any increase in fees or new fees would take place during the budget review by members of Council.
Responding, Mr. DePrima requested direction from Council prior to the presentation of the Budget. He noted that all proposed fee increases and new fees are proposed for next fiscal year, to become effective July 1, 2008.
Mr. Phil McGinnis, McGinnis Real Estate Company, urged members to deny the request for the fee increases and new fees. He noted that in the consideration of the planning and inspection costs associated with a new business, staff did not take into account the transfer tax or property tax revenues, as well as other benefits, that would be generated as a result of such projects. It was his opinion that the City runs a monopoly with regards to inspections since there is no other service provider for the real estate community to acquire inspections and, therefore, is obligated to pay the fees established by the City. He stated that although there may never be a good time to consider fee increases, due to the current economy, increases now would create an additional hardship.
Ms. Judy Diogo, Central Delaware Chamber of Commerce, relayed concern with regards to increasing fees at this time, feeling that it would discourage business from staying, as well as discourage businesses from coming to the community. With regards to the business license fees, she stated that businesses are also feeling the rise in their costs of doing business, explaining that these businesses have also realized an increase in their utility bills and other required expenses. Ms. Diogo advised members that small businesses are struggling during these times and encouraged members to deny the increase in fees. She also suggested that members review the duplication of services (services provided by other jurisdictions).
Mr. Todd Stonesifer, Representative of Kent County Association of Realtors, addressed members in opposition to the proposed fee increases and distributed a letter (Attachment #1).
Mr. Frank Tenusak, Schoolhouse Lane, advised members that as a result of his past business experience as an entrepreneur, consultant, banker, commercial realtor, etc., he discovered that the cost and ease of doing business are the matters of concern for businesses. He stated that profits for businesses are decreasing while expenses are increasing. He also stated that there are costs involved for businesses for the time necessary to file for the various licenses and permits required by the State and local governments. Mr. Tenusak suggested that there be a consolidation of services with the State and/or County to disseminate the costs and minimize the paperwork for each jurisdiction.
Mr. McGlumphy felt that it would be beneficial for both the business community and the Mayor, Council, and City staff to meet on a regular basis. Although it is not a preferred idea for any member of Council, it was his opinion that a tax increase is probable, noting that the current tax rate for the City is low.
Mr. Salters suggested that action regarding this matter should be deferred until there is a better idea of the City’s expenses for the next fiscal year, as well as the projected income.
Concurring, Mr. McGlumphy felt that staff could prepare the proposed budget without consideration of the revenues that would be generated as a result of the proposed fee increases and new fees. He encouraged the budget team to utilize the revenue projections provided during the Mid-Year Review.
Mr. Leary advised members that a report by Standard & Poor indicated that the February payroll amounts declined by 63,000 jobs, which represents the second consecutive month for a decline. The report indicated that this information confirms that the economy is in recession. Based on this information, he also questioned if this would be the best time to consider increasing fees or instituting new fees.
Mr. Ruane reiterated his opinion that the fees are justified, as well as their increases, if they can be substantiated. It was his feeling that staff could improve substantiating the need for the fee increases and new fees. He noted that other jurisdictions have shown the linkage between the cost of government services and the necessity of increasing the cost of the service. Mr. Ruane suggested that the methodology provided by staff is not persuasive; however, it was his feeling that it could be if staff conducted further research.
Mr. Slavin advised members that a constituent who owned a rental property indicated to him that he was charged a rental fee by the City simply because the City could charge such a fee. Based on this comment, it was his feeling that this indicated that the constituent did not understand the fee nor did he think it was fair. He suggested that if the City assesses fees, members should assure that they are fair and understood. From the perspective of a small business owner, Mr. Slavin stated that fees charged to businesses are passed onto the customer. He questioned what would happen if the customer decided that they were not going to pay a certain amount for a product or service. Although members may not know what this amount may be, he suggested that all the various small increases push the consumer to that price that they are no longer willing to pay.
Mr. Salters moved to recommend that the proposed fee increases and new fees be tabled, seconded by Mr. McGlumphy and unanimously carried.
Proposed Ordinance Amendment - Code Changes to Support Public Services Reorganization
Members were reminded that in March 2006, the City began a reorganization of the Department of Public Works and the Department of Planning and Inspections into the Public Services Group. Under this reorganization, Mrs. Townshend, Director of Planning and Inspections, advised members that the building construction inspections and licensing and permitting functions report to the Public Services Manager, not the City Planner (Director of Planning and Inspections). Members were provided proposed ordinance amendments that will codify the new reporting structure and allow for the City Planner and Building Inspector to be two (2) different people without losing the City Planner’s responsibility for the zoning ordinance.
Staff recommended adoption of the proposed ordinance amendments.
Mr. McGlumphy moved to recommend approval of staff’s recommendation (Attachments #2 and #3), seconded by Mr. Shevock and unanimously carried.
Results and Recommendations from Request for Proposals - Pay for Performance Consultant
During their meeting of January 28, 2008, committee members tabled the request to hire Management Advisory Group, at a cost of $34,965, to conduct a Review and Evaluation of the PFP Evaluation System until the Mid-Year Review.
Mr. McGlumphy moved to remove the matter from the table, seconded by Mr. Salters and unanimously carried.
Mr. DePrima advised members that the cost to hire Management Advisory Group was included in the Mid-Year Review of the City’s Budget.
Mr. McGlumphy moved to recommend approval of the request to hire Management Advisory Group, at a cost of $34,965, to conduct a Review and Evaluation of the PFP Evaluation System. The motion was seconded by Mr. Salters and unanimously carried.
Worker’s Compensation Fund - Excess Carry Forward Balance
Mrs. Mitchell, Finance Director/Treasurer, reminded members that the City of Dover is self-insured for Workers Compensation and has established a separate fund to account for these activities. She stated that the City’s actuary recommended maintaining a budget balance of approximately $800,000. The last actuarial analysis was conducted in 2005 and will be updated this fiscal year. She advised members that the budget balance as of June 30, 2007 was $1,403,393, which is $603,393 more than the recommended balance.
Staff recommended that the budget balance be reduced by $400,000 and that the excess be committed to be set aside for a possible stipend for the City’s current retirees ($100,000) and the remainder be transferred to the Civilian Pension Fund towards the unfunded liability, which is currently only 40% funded. Mrs. Mitchell explained that this action would, in effect, allow for excess funds in one employee benefit to cover a shortfall in another employee benefit.
Mr. Salters moved to recommend approval of staff’s recommendation, seconded by Mr. McGlumphy and unanimously carried.
Mr. Salters moved for adjournment, seconded by Mr. McGlumphy and unanimously carried.
Meeting Adjourned at 6:37 P.M.
Respectfully submitted,
Timothy A. Slavin
Chairman
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Attachments
Attachment #1 - Letter Dated March 10, 2008 from Mr. Stonesifer, Kent County Association of Realtors
Attachment #2 - Proposed Ordinance Amendments - Chapters 22 and 26 and Appendix A
Attachment #3 - Proposed Ordinance Amendments - Appendix B