WILLIAMSBURG CITY COUNCIL BUDGET RETREAT JANUARY 27, 2018

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1 WILLIAMSBURG CITY COUNCIL BUDGET RETREAT JANUARY 27, 2018 The Williamsburg City Council held a Budget Retreat on Saturday, at 9:00 a.m. in the Council Work Room in the Stryker Center, 412 N. Boundary Street, Williamsburg, Virginia. CALL TO ORDER Mayor Paul T. Freiling called the meeting to order. ATTENDANCE Present in addition to Mayor Freiling were Vice Mayor D. Scott Foster Jr. and Council Members Douglas G. Pons, Barbara L. Ramsey, and Benming Zhang. Also present were Assistant City Manager Andrew Trivette, City Attorney Christina Shelton, and City Manager Marvin Collins. Department Heads Attending: Parks & Recreation Director Robbi Hutton, Fire Chief Pat Dent, Planning and Codes Compliance Director Carolyn Murphy, Police Chief Sean Dunn, Human Services Director Peter Walentisch and Information Technology Director Mark Barham, Public Works and Utilities Director Dan Clayton and Interim Finance Director Vickie Herrick. FINANCIAL OUTLOOK Mr. Collins introduced the agenda and provided a presentation on the financial trends of the City. Revenues Trends and Forecasts The revenues of the city start with the entry into the recession and a slight recovery before turning toward flat in recent years. The same trends apply to a look at general revenues or specific revenue lines. Property tax is flattening. What is being observed at this point in the assessment is that residential real estate has a slight increase but the commercial real estate has a slight decline. This can be attributed to the change in several large pieces of commercial real estate including the demolition of THE Super 8 and the College s acquisition of the Days Inn on Richmond Road. It should be anticipated to have a delay in redevelopment as large properties are transitioned from one use to another or as redevelopment occurs. Permit revenues are starting to come in for some of the redevelopment activity and that will continue into next year. Meals taxes are slightly down so far this fiscal year and room taxes are trending with the budget estimate at the moment. The property tax assessment forecast highlights a -.4% for the current assessment which is at only about 50% of total properties having been reviewed. Last fiscal year this number was a.8% that transitioned to 1.6% growth when

2 100% of the assessment was completed. It is expected that the property valuation will be flight or a slight increase this year. Mr. Pons clarified that the City completes assessments annually but the assessor is constantly reviewing assessment to sales ratios to verify accuracy. Mr. Collins agreed and offered that the sales to assessment ratio should be close. He said that the ratio now is very close at 97-98%. He remarked that this did not account for any new construction to date. Mr. Collins continued by saying he had forecasted a -2% position for meals, lodging and sales taxes in each of the remaining months of the fiscal year. He offered that this is to be conservative in the revenue forecasts and is consistent with the trends for the first few months of the fiscal year. If this forecast holds true for the remainder of the fiscal year it will produce lodging tax revenues of $3.3 million which would be approximate to the budget estimate. Meals tax would close at less than $100,000 below the budget estimate. Sales tax would also close below budget. Expenditures Trends and Forecasts Mr. Collins next topic was expenditures. He said the largest cost to the City the personnel lines. The trends for expenditures are trending up with all other being the only exception. This is largely attributable to cost of living and inflation. Salaries are trending up which includes the implementation of the compensation and classification study. Operating costs remain flat. Mr. Collins then showed a graph depicting the trend for the operating costs, revenues received and the operating budget. He explained that revenues historically exceeded the actual expenses which resulted in a health surplus that has been deposited into reserves. However, he anticipates that the gap between the operating costs and revenues will decrease and even reverse in future years. The next topic was the Williamsburg/James City County School System costs. Mr. Collins reviewed the contractual requirement of the City to pay 1.14% of the actual cost per student. He noted that as of September 30 the City had realized an increase of 15 students while the County has seen a decrease of one pupil. He observed that the joint school district is one of the few in Hampton Roads that is currently experiencing growth. He opined this would continue to apply pressure to the budgets of both localities. The contract calls for a 9.53% share of both operating and capital expenses. This is derived by multiplying 8.38 percent of total students as City students with the 1.14% share of costs. The result is then Page 2 of 19

3 averaged over the current and previous two years for the total City share of costs. Considering last year s school system budget, adding a fourth middle school, would add $167,414 to the City s budget over this fiscal year. Mr. Collins said that due to this analysis a 2% increase in school costs is assumed. The capital costs, borne by the sales tax funds, would increase this assumption to 3.2%. This results in an increase from the current non-sales tax fund costs of $8 million to $8.2 million. This increase of $167,414 is equivalent to $0.9 of an increase to the real property tax. Should the schools budget include the costs of the fourth middle school and an increase in the operating budget the equivalent real property tax could be $1.79 to $3.57 which would represent a 2% to 6% increase in school division costs. Mr. Pons asked if the location of the fourth middle school required the City to pay a higher cost. Mr. Collins responded that the costs to the City are governed by the contract and the location of assets does not have an impact. FY19 General Fund Budget Outlook Mr. Collins then presented the baseline budget based on an estimate of costs for the completion of FY18. This projection includes an anticipated FY18 operating surplus of $233,830. This is approximate to the estimated surplus shown to the Council during the Budget Retreat last year. However, the actual surplus for FY17 was $1.8 million. This year it will be impossible for that to be achieved. The FY18 surplus will be less than the 10-year average of $1.4 million. Mr. Collins presented two budget options for FY19. The first is a baseline budget that simply considers known uncontrolled increases and controlled costs to be flat to the current fiscal year. Looking at the baseline budget assumptions, the forecast includes: (1) Level general property taxes (2) Other local taxes include a 1.4% decrease for meals tax, a 2.8% increase in business licenses, and a decreased utility tax of 4.7% (3) Licenses and permits include an increase due to increased construction activity (4) Use of money and property includes a slight increase in rent that is due (5) Charges for services are expected to be level (6) Miscellaneous revenues are expected to be level (7) Intergovernmental is showing a slight increase These assumptions produce a revenue estimate that is an increase of 0.5% over last year. That is not keeping up with the consumer price index which is two percent. Page 3 of 19

4 Mr. Collins then reviewed the expenditure side of the baseline budget. These assumptions include: (1) Personnel costs are increasing two percent which reflects an increase in health care costs of 9.2%, a 2.5% decrease in the Virginia Retirement System costs and increased overtime of 15% to cover special neighborhood patrols and EMS staffing needs (2) Non-personnel costs are flat with last fiscal year (3) Education reflects an increase of two percent (4) Outside agency costs are expected to be the same (5) All other which includes the jail and the library costs are expected to rise 1.4% These expenditure assumptions produce a base line expenditure budget that is 1.9% above this fiscal year. In total the baseline budget forecasts produces a revenue shortfall of $543,778. Mr. Collins presented the second option which is a baseline budget with other increases shown which are controllable by the City Council but may be desired. The assumptions for this budget include: (1) Revenues match the baseline projections (2) Personnel adds a two percent salary increase for employees to the baseline expense (3) Non-personnel remains the same with baseline (4) Education adds a two percent operating budget increase in addition to the baseline assumptions (5) Outside agencies increase two percent (6) All other remains the same as baseline The baseline plus budget assumptions produces a funding gap of $1,025,368 or 3.2% over the FY18 budget. Mr. Collins cautioned the Council that the gaps are larger than in past years and asked that they be mindful that revenue is not performing as well and may have reached the economic capacity. He said the City could look at additional revenues, consider reducing services, or contribute less to outside agencies. Mr. Pons said that the Council has been aware of this as a trend. Just like household expenses climb and revenues remain the same. What he sees is a natural projection of what they have been aware of and thwarting against. He offered that the City has to consider ways to grow revenue and gave the example of the Tourism Development Fund. Ms. Ramsey said the City is just at the beginning stages of the Midtown Row project which will capture an increase in Page 4 of 19

5 commercial real estate value. Mayor Freiling reminded the Council that the second largest line item (school costs) was an uncontrolled expense because of contractual obligations. Ms. Ramsey said the same is true with Health care costs. Mr. Collins said that the City participates in the Local Choice system which offers a large pool of local governments. The pool s average increase is only 6.6% and that is a good rate. Vice-Mayor Foster observed that last year our costs for health care did not increase. Mayor Freiling pointed out that the larger share of school costs was borne by James City County and their decisions on what to fund would impact our budget greatly. Ms. Ramsey commented that the school budget includes mandated increases. Mr. Collins agreed and reflected on the budget of need presented at last year s joint meeting with the school board and that it roughly matched the state shortfall in funding support, He said that local governments were being expected to solve that funding gap. Discussion Mr. Collins turned the conversation and presentation toward discussion of current projects and future departmental needs. He highlighted that the topics would include some position changes and staffing needs. He said that Mr. Barham would be talking about changes to the GIS position, creating a new Deputy Director of Community Services and Social Work positon to be filled by internal staff, and a new parks manager position. He also discussed the changes in staffing in the constitutional offices. He concluded his introduction by reviewing the challenge of maintaining existing core service levels within the existing funding levels. Department Budget Initiatives Mr. Barham presented on Information Technology Department initiatives. He said that the department had reduced the telecommunications costs by 9% by negotiating with Cox Communications. He indicated that the operating budget included increases for the first year of the new website maintenance, new software costs for Citibot and PublicInput.com and maintenance costs for two finance systems. He continued his review with an explanation of status for the Enterprise Resource Planning (ERP) software change over. The departments are preparing to start phase three which includes the utility billing and codes compliance functions. The final phase will be revenues. He also said that the budget includes funding for replacement of virtual infrastructure which will save space and energy costs. Mr. Braham reviewed the current GIS services contract in which the departments are billed for use of the employee s time. The current Page 5 of 19

6 contractor will retire in June. This will provide the opportunity to add a permanent FTE position to do GIS work which may reduce overall costs as much as $5,000 or $10,000. Mr. Collins agreed and pointed out that the Comprehensive Plan Update would require a lot of mapping work. GIO Budget Initiatives Mr. Collins said that most GIO s are completed through the Capital Improvement Plan or the Utility Fund. He said others require direct staff time and operating expenses to accomplish. The themes for projects include place-making product, public safety expenses, housing initiates, redevelopment activity, Capital Trail Connectivity, leisure activity spaces in Parks and Recreation and other bicycle friendly characteristics. Capital Projects Mr. Trivette presented the proposed Capital Improvement Plan (CIP). He said that the Planning Commission had reviewed the plan and had received two memos on the plan. The first is a review of what has been accomplished in the current fiscal year and the second looks at what is planned for the future fiscal year. He highlighted the Ironbound Road project which consists of three phases and will be completed in coordination with the construction of the school. He offered that the utility relocation is underway. This project is expected to complete in FY19. The second project discussed was the Monticello Avenue Multiuse Path. This project is also underway and is currently in design with completion expected in FY19. Second Street underground wiring will be completed by the end of the current fiscal year. He concluded review of the current project list by reminding Council that their action late last year combined a telephone equipment project and the parking garage equipment project into the parking study implementation project totaling $260,000. He said that the project was in the first phase with staff reviewing procurement needs. Mr. Collins said that the replacement of equipment in the garage would result in an operational savings. Mr. Trivette then turned his remarks to the planned FY19 CIP budget. The budget includes nine departments that submitted 35 projects. Only one of those is a new project. The FY19 budget consists of approximately $5 million in project requests, $11 million in FY18 carryover funding and $2.8 million in contingency and debt service funding for a total budget of $19,163,017. State revenues and grant reimbursements will total approximately $7.4 million which represents 39% of the planned expense. The first project that he highlighted was the Fire Station replacement. The plan Page 6 of 19

7 demonstrates how the project is arranged by the site selection, design and construction needs through the division of planned expenses over the scope of three fiscal years. The Police Chief and the Fire Chief met with Mr. Trivette to plan the project timelines. FY19 will see an expense of $1.2 million in bonded funds toward site acquisition if that is required. The bulk of the construction will begin in FY20 as $6.9 million is budgeted. The project will be completed in FY21 with a final installment of $2.7 million. This budget plan is dependent on the bid/rfp process that is still to occur. The Police Station renovation follows a similar budget plan. This project will begin in FY20 with completion expected in FY21 which will allow time for the Fire Station project costs to be finalized and adjustments to the available funding for both projects can be made. Mr. Collins asked if there were any questions concerning the public safety projects. He said that the two expenses totaling about $15.5 million planned for these projects were the largest capital projects in the plan. He anticipates that the professionals involved can advise how to proceed with these two projects from a timing perspective. Mr. Zhang inquired about the location of the grant and state revenues shown on the plan sheet Mr. Trivette provided. Mr. Trivette answered that the top of the sheet now shows revenues into the plan including grants, state taxes received by the City and VDOT funds. Mr. Pons asked what the procurement method would be for the Fire Station project. Mr. Collins answered that the City was considering a Construction Manager at Risk (CMAR) process. He offered that the Council would need to adopt an ordinance to allow use of this process. He explained that the CMAR uses a set budget to negotiate a project cost and then hires the necessary subcontractors to meet that budget at their risk if they do not. He said that with our bond amount and the timing sensitivity of public safety the City could benefit from this type of project procurement. He said that the City may further benefit from bundling the Police and Fire projects because of efficiencies and cost savings. Mr. Pons said that moving the Fire Station would open property in downtown that would need to be evaluated holistically with all of the planned improvements for the downtown area. Vice-Mayor Foster said that a strong communications plan was needed for these projects. He related that as the Stryker Center was being planned he asked if there was also a need for public safety buildings and was assured that those Page 7 of 19

8 buildings were acceptable. He went on to say that clearly that was not the case and wants the public to be aware of the needs that require the expense. Mr. Zhang asked if the updated Comprehensive Plan would address the needs for the projects. Mr. Collins answered no, by the time the plan is being drafted these projects will be underway. Mr. Pons also reminded the Council that a needs assessment was completed for both structures and that the Council supported the effort. He agreed that communication is required. Mr. Collins offered that the needs assessment was completed and the data supporting the projects has been provided. He illustrated that there are functional needs, structural needs, and health requirements driving this process. He said that the staff would work on a communications plan for the projects. He concluded his remarks by saying that there is not a lot of flexibility in moving these pieces around unless the Council wants to provide more funding. He said that the Fire Station s location was paramount to the response times. He also said that the Police Station location was certain given the budget that has been provided through the bonding. He said that the City is currently in the procurement stage; the money is in the bank, the bondholders want us to spend it, we have to get started. He said the next community conversation could be what it looks like. Mayor Freiling said that the need for a communications plan was not singular to these two projects. He said that the City should build a communication element to each new project that is undertaken. He said the City should be asking how they are explaining to the community what is being done and why. Mr. Trivette discussed the current status of the Monticello Avenue Redesign. The City has received a Public Private Transportation Act proposal for the project which is currently being offered for competitive bids pursuant to the Code of Virginia. The competitive process closes in April with hopes it will reduce the expected budget from the $5 million that is planned. The final project Mr. Trivette reviewed is the Capital Landing Streetscape. The timeline for this project shifted following the need to fund the Monticello Avenue project given the work at Midtown. A planning and design charrette is planned for the spring and final design work in FY19. Construction and completion is expected in FY20. Mayor Freiling said considering the other fiscal pressures including employee salaries, increasing costs of doing business, funding education, the necessity of the other capital projects, and the flat to declining revenues should the Council consider if this project is something that has to happen now. Mr. Collins Page 8 of 19

9 answered, yes. He explained that the City s purchase of property along the street could not be redeveloped until the streetscape is completed. He said that the public investment would spur the private sector interest in redevelopment. He explained that the timing of the road was critical to the success of the strategy because he did not want to tear up the road after new businesses were open. He also said that a lot of other steps had been taken to set this project in motion including new tourism districts and underground wiring. He said these were needed steps to return this to a high performing commercial corridor. Mayor Freiling responded that there is no guarantee that this would happen. He elaborated that with the other projects such as Ironbound Road and Monticello Avenue streetscape a private investment was already occurring. He said he is optimistic about the strategy but it is still unknown. He asked what would be the impact if the project waited a few years which would allow the CIP to get past the predicted 36% of reserve which he feels is perilously close to the policy requirement. Mr. Collins offered that the difference with this project is that it includes state funding that offsets the local contribution. Vice-Mayor Foster illustrated that the state funding equaled $1.9 million of a total $6 million. Mr. Pons pointed out that there was pending revenue sharing grant which made the state total $2.4 million. Mayor Freiling clarified that grant has not yet been approved. Mr. Collins said that the City was now at the point of initial design and seeking public input on those elements. He said that in FY19 design would be started in earnest and that the construction would lag behind that work. He offered that the redevelopment of the City owned parcels would be waiting, without producing tax revenues, until the project is completed. He said he feels if the City can find a developer to develop those properties that there is a tangible return on the project. Mr. Pons agreed and said that the City s investments to date and future efforts to direct traffic this way would improve revenues. Vice-Mayor Foster gave the example of Prince George Street improvements. He said that Capital Landing Road has always been a we will get to it later project and he is hesitant to continue looking at it that way. Mayor Freiling said that at some point there is a limit to the projects that can be undertaken. He asked what would happen if the revenue sharing grant was not approved. Mr. Collins said that the staff would recommend delaying the project and that would be announced in May. Mr. Pons asked about VDOT Smart Scale funds. Mr. Collins said that the Smart Scale funds were being used for improvement to the intersection of Capitol Landing Road and Bypass Road. Mr. Foster asked about the planned $1.8 million project in FY23 for the improvement of Lafayette Street. Mr. Collins said that was an initial estimate Page 9 of 19

10 based on the Council request to consider improvements to that street that included bike lines, sidewalks and underground utilities. He said that the two year strategic GIO s included this project. He went on to say that the two year plan did not require that every project on the list be completed but that the initiatives need to be planned for over the five year horizon of the CIP. Mr. Trivette returned to the review of the planned FY19 CIP. He pointed out the school system CIP budget contribution and noted that the school plan has not been vetted through the James City County Board of Supervisors. He hopes that the number will decrease which will improve the overall budget for the year. He then directed attention toward the bottom of the sheet where a new fund balance and reserve calculation is shown to demonstrate compliance with the City Council reserve balance policy of 35%. He also highlighted that in FY21 the predicted balance is 36% which controls what can be added in any preceding years. Mr. Pons pointed out that the estimate is based on the sales tax revenues remaining flat and that some growth could be expected. Mayor Freiling asked what the downside is to the CMAR process for the Fire Station. He suspected that it would hamper the competitive bidding process. Mr. Collins said that they have to deliver what is in the contract. He said that if something comes in over bid then it is at the construction manager s risk. The Mayor said that would be in our favor and wanted to know what would not. Mr. Collins said that the overall cost could be higher but that that would be offset by fewer change orders throughout the process. Mayor Freiling restated his question; is the downside of CMAR that the City does not get as good a price as from a competitive bidding process. Mr. Collins, said yes. The upfront cost would be higher than the competitive bidding process but the savings would be realized through fewer change orders. Mr. Collins said that the CMAR is incentivized to bring the project in under budget because that is how they get paid. He offered that how to split those savings is one of the negotiating points in the contracts. Mayor Freiling asked if someone would be working for the City to make sure that the work is up to the proper standards. Mr. Collins said the department would be supervising the work and that the CMAR would serve as the City s agent supervising the work. Mayor Freiling asked if that would not be a conflict of interest. Mr. Collins said that the CMAR would want to make their money on the project. He offered that if our staff did not have expertise in this type of construction we would need to hire someone who does. Mayor Freiling clarified that this was his question; have those costs been built into the project. Mr. Pons said that the City inspectors would be reviewing for code compliance. Vice-Mayor Foster suggested that the process is similar to the Stryker construction where the Page 10 of 19

11 City employed a Master of the Works. Mr. Clayton said it was similar but not the same. He explained that the process pursued was a Public-Private Education and Infrastructure Act project. He also made the point that a bid process resulted in the lowest bidder being selected which may result in a good contractor or it may not. He opined that the CMAR process provided for the CMAR to hire the best contractor because they would be responsible for doing it again if it was not done right. Mayor Freiling asked if one of the challenges with the PPTA or PPEA is that it is harder to pin down who is responsible when something is not satisfactory. Mr. Clayton suggested that hiring as a team helps resolve that. Mr. Trivette concluded his CIP presentation. Secretary s note the Council took a 10 minute recess. Utility Fund Mr. Collins said that the utility fund was estimated to be fairly flat to previous years. He did show the comparison of Williamsburg s rates to the other regional utilities. The City does not have a separate sanitary sewer fee like many of the other localities. The City s rate of $5.30 is lower than the other jurisdictions which range from $6.23 to $12.12 per 1,000 gallons of use. Mayor Freiling asked if the James City County rates shown of 0-15 and were in thousands of gallons or some other measure. Mr. Clayton confirmed that he was correct. Mayor Freiling observed that 15,000 gallons was a lot of water. Mr. Clayton said that was normal for a typical family. Mayor Freiling asked when we would need to make a decision about purchasing additional water rights from Newport News Water Works. Mr. Clayton said that the decision was due in 2024 and that consumption trends were flat and perhaps even down some. He said that the department is watching it closely. Mr. Pons inquired how the new planned development would impact usage. Mr. Clayton said that low flow fixtures help limit the demands but he would expect it at least to stay the same. Mayor Freiling pointed out that the cost to the City in the arrangement with Newport News is in the right to purchase additional water but the cost of the actual water is passed on to the consumer. Mr. Clayton agreed that the cost is part of the rate. Vice-Mayor Foster asked if the City had ever acted on the agreement. Mr. Clayton said in the early 90 s and again in the early 2000 s. Mr. Collins said that the James City County actions in the water arena would impact this decision moving forward. Page 11 of 19

12 Vice-Mayor Foster asked if the service areas in the County represented enough growth potential to impact demand. Mr. Clayton did not think that enough area could be developed adjacent to our service lines for that to be a concern. Mr. Collins said that in a system this size we should be concerned with aged replacement and that those costs are in the capital budget. He explained that large costs come from tank replacements and that recently the fund paid for a tank roof replacement and nothing further is planned for the near future. He said that the extent to which the system is profitable determines the taxable nature of the system inside York County. A lot of the support for the Utility Fund is provided through the General Fund and part of the budget exercise has been transferring from Utility Fund those costs. Mr. Collins reviewed the water and sewer rate history for the system. He said that the sewer rate is a arte set by Hampton Roads Sewer District (HRSD). Mayor Freiling asked if the sewer rate is included in what we are collecting. He asked if the $5.30 Williamsburg rate included the HRSD rate. Mr. Clayton explained no it does not. Every other locality has a water rate and a local sewer rate. To that they add a provider rate from HRSD. The City has elected not to collect a local sewer rate but we do add the HRSD rate to our water rate for a total bill to the consumer. Mayor Freiling asked if a York County resident using Williamsburg water is also paying a York County sewer fee. Mr. Clayton said yes they are. He explained that some localities have HRSD collect their rate so the customer receives two bills. The City collects both rates and pays HRSD so the customer does not have two bills. Tourism Fund Mr. Collins presented an update on the Tourism Development Fund (TDF). The fund is as it was adopted in 2018 and is expected to generate $3,850,000. One person would be hired to work on developing the program and the position is expected to be advertised in July. A consultant would be used to review the current plans for implementation. The cost for these two expenses is expected to be 3-5% which is well within the approved 10% allowed for administrative costs. The application process will be developed in FY19 and the remainder of the taxes collected would be held in reserve for FY20. Additional positions may be needed to provide construction management. If the program is amended by legislative action the budget would be adjusted to reflect those changes. Mr. Zhang asked if the reserve for TDF is the same reserve as the general fund. Mr. Collins explained that it was a separate account. Page 12 of 19

13 Mr. Zhang asked if a timeline had been developed for the execution of the TDF. Mr. Collins reminded the Council that a timeline had been presented during the adoption process. Mr. Zhang asked if there was a timeline for the creation for the review committee. Mr. Collins said that the committee was needed for August and September of Mayor Freiling asked what the timeline would be for the work of the consultant. Mr. Trivette said that the consultant would only be looking at two aspects of the process. The first is the creation of the criteria for selecting the projects and the second is development of the application. Mayor Freiling asked if that would mean 2-3 months. Mr. Collins answered yes. Mayor Freiling asked if enough time is provided to meet the first application process. Mr. Collins said that in August the public would be informed what is needed to apply for an October- November review. Mayor Freiling asked if there would be a process in place by August. Mr. Trivette said yes. He explained that the reason is because the work has already started to hire the staff member and the consultant. Future Priorities Mr. Collins said that staff wanted to inform the Council about future needs from the organization for planning purposes. Fire Chief Dent addressed the Council concerning the staffing of the Fire Department. The department currently operates with minimum staffing of eight per shift to operate five pieces of equipment. If fewer than eight are on shift overtime is used to meet the minimum. This includes the recently approved three ALS personnel which are strictly EMS focused. The equipment includes a battalion vehicle for the supervisor which is staffed with one, the engine or squad is staffed with three, the tower is staffed with two and one medic unit with two. A second medic unit is staffed with the ALS personnel. During the week only one person is allowed leave and the weekends allow for two. With this staffing model if two EMS calls come in at the same time the tower is unstaffed while those operators use the second medic unit to respond. During those times York and James City Counties provide support and occasionally Camp Perry as they are available. They would also provide a medic unit if the tower were deployed with an additional medic call arrived. Chief Dent would like to add nine positions (3 to each shift) which would provide Page 13 of 19

14 total shift staffing of 11. However, only six require additional funding. While this would not eliminate the need for overtime or mutual aid it would allow for all units to be staffed all the time. Mayor Freiling asked how the volunteers are utilized. Chief Dent said that the department has been looking at ways to increase usage of the volunteer staff. He explained that minimum training is often an issue and that makes it difficult. He also said that often volunteers who receive training then migrate to a full time position. Mayor Freiling asked what the critical timeframe is for the new staff. Chief Dent answered that as the Midtown Row with five story construction is completed would require the Tower to be staffed full time. Mr. Collins said that he would need time to look at how to generate the revenue needed to offset the expense. He mentioned that a conversation with the Counties about mutual aid costs needs to be conducted. He also talked about using scholarships with mandatory service periods post-graduation to fill some staffing. Mayor Freiling asked his question another way and said he felt that this information was not presented just for fun. Mr. Collins said that the Chief wanted three positions in FY19 and were not included in the presented budget. He went on to say that he wanted to make the Council aware of a staffing issue that the community may want to address. Ms. Ramsey said that the Midtown Row project would be completed in calendar year 19 which would mean a need in FY20. Mayor Freiling asked what the lag time is between creating a position and having a trained professional in the role. Chief Dent said qualified people are hard to find and that it takes 18 months to train and employ a new position. He said while he would love the additional staff now he understands the budget constraints which may delay implementation. Vice-Mayor Foster asked if our partners were keeping up their end of the deal. He clarified his question by saying is everyone paying for the mutual aid they are receiving either through actual payments or returned service. Mr. Collins answered that the City responds frequently to the College for fire calls and medical calls are driven by the growth of the Counties. He said the staff would need to meet with those partners to discuss the provision of services and the costs associated. Mayor Freiling clarified that if the Council provided the resources in FY20 s budget which would allow for hiring on July 1, 2019 that person would not be ready to deploy until the end of calendar year He asked if the new positions could be accommodated in the current station. Chief Dent said yes. The current station Page 14 of 19

15 still has an area that is used as a second break room which could be converted to additional bunk space. The new station will accommodate future growth to 16 staff members on shift. Mr. Collins offered that the Emergency Operations Center function of the station requires additional facilities for those staff needs when they occur. Mr. Pons said he was unsure how the Council did not provide for those staff members. Chief Sean Dunn addressed the Council concerning the Police Department staffing needs. Each new officer includes a cost of $75,000. If a new officer were approved, it would require 12 months to train and deploy that person. The department is participating in the Tri-Rivers Drug Task Force. This is a force multiplier. Participation allows the department to draw on members of the task force to help local investigations and operations. However, it also requires our one officer who staffs that group to respond outside of Williamsburg when called. He is working to establish an internal change that would create a second narcotics officer. However, there is a need for two additional narcotics investigators and two additional patrol officers who would be assigned to bike units in the neighborhoods. Another issue is the competitive nature of police work. Neighboring jurisdictions provide take-home vehicles. The City does not provide that benefit because so many of the officers live outside of the City limits. However, an allowance could be provided to offset the difference. Mayor Freiling asked what is the advantage of a take-home vehicle. Chief Dunn said that the real benefit is personalizing the space inside the vehicle which is really the office for the officer. It also allows for savings in fuel and insurance costs. Mr. Collins said that there is a time savings if officers are not moving equipment to and from a vehicle that is shared. He also pointed out that having a pool versus personalized is more efficient and cost saving. Mayor Freiling said that an allowance would not provide the benefits to the City of a personalized vehicle. Chief Dunn said that the department is trying to make it so that only two officers share a vehicle. Ms. Ramsey asked how it operates currently. Chief Dunn answered that a lot of officers are waiting on vehicles which equates to a lot of lost time. Mr. Pons asked how many officers were on patrol duty. Chief Dunn answered that 22 are currently approved with 12 vehicles. Mr. Collins pointed out that the costs for fleet operations extends into multiple budgets. He opined if the issue being resolved is a benefit difference then providing a vehicle allowance should correct it. Page 15 of 19

16 Ms. Ramsey asked how the task force operated. Chief Dunn said the officer s. report to their normal places of work and then report as needed to task force activity. Ms. Ramsey asked for data on increased drug activity in the area. Chief Dunn said he would provide it. He went on to say that opioid issues were not yet prevalent in Williamsburg but is an emerging issue. He felt the task force has revealed issues that have gone unaddressed in past years. Mr. Collins reminded the Council of previous staffing increases for school resource officers in last year s budget. Mr. Zhang asked when the positions were being requested for inclusion in the budget. Chief Dunn said while he would love to have them in this year s budget he wanted to just make the Council aware of the need. Mr. Collins pointed out that two officers are equivalent to $.2 in tax increase and that he is currently predicting a $500,000 funding gap with a baseline budget. He said he wanted feedback from Council over the next few months on the priorities so that the Manager s budget could reflect those. Vice-Mayor Foster said that Fire, Police and Education were very easy to advocate for in terms of a tax increase. He said that being safe is a hallmark of Williamsburg and he would work so that did not change. He said he would support staffing and allowances as needed and recommended. Mr. Pons said he thought that the dynamics of housing mixes in Williamsburg requires the best from our staff. He asked if the bike patrols had helped. Chief Dunn said that it had been a great thing but that the capability is limited by staffing. He acknowledged that is something that should be continued. If the staffing plan were approved the bike patrols would be supplied during the highest tourism times and during college party hours. Mr. Zhang asked how the staffing at William and Mary impacted the department s needs. Chief Dunn said that it did not. Mayor Freiling asked for clarity on the number of staff needed by both the Fire and Police Departments. Chief Dunn said that he needed the two narcotics most critically. Vice-Mayor Foster said he would want our payment and benefit plan to not just meet our competitors but exceed them so that Williamsburg is an employer of choice in the region. Mr. Collins asked if that was a request for the staff to research over the coming year. Vice-Mayor Foster said to do the research over the year. Mayor Freiling said he did not want to create an employment race. Page 16 of 19

17 Chief Dunn went on to say he wants to increase focus on equipment and training so that the officers are able to perform the best that they can. This includes replacing uniforms and adding training on community engagement. He also highlighted the desire for e-ticketing which allows the officer to port driver s license information to court records and tickets. This could be funded through an additional fee on each citation. Lastly, he discussed the need to replace portable radios that were purchased in the early 2000 s. They are now at the end of their life as are the mobile data terminals. He said that planning was required to avoid failure in the future. Vice-Mayor Foster asked if the scale down of Colonial Williamsburg s police force was impacting the department. Chief Dunn said that while it had not been measured he felt that there was an impact and that over the next year that would be more evident. Mr. Collins reviewed other priorities impacting the budget. They included: 1. Parks & Recreation Master Plan Implementation 2. Downtown Vibrancy, Design, & Marketing Implementation 3. Public Assistance Local Contribution Trend 4. Increasing Outside Agency Request Trend 5. Health Insurance Claims Experience (58% to 71% claims experience) 6. Maintaining Investment in Employees 7. Alternative Tourism Fund Revenue Legislation 8. Increased Valuation from Redevelopment He highlighted the local contribution to the public assistance fund (human services). He illustrated how the trend has been underspending which allowed the City to contribute to a reserve for this department s needs. However, now that trend is reversing. He intends to draw on the reserve in the next few years but that in the future additional contributions to the fund would be required. Mr. Collins said that health insurance costs are rising and Williamsburg is in a unique position in that if one additional position is added to the insurance the City will be subjected to a higher percentage of claims experience being placed on the rate that is payed per employee. Vice-Mayor Foster asked for an explanation of claims experience. Mr. Collins said that claims experience is the number and value of claims filed in a year. He went on to say that having a low claims experience counts more in the calculation of the rate would be beneficial and having a high claims experience count would increase the rate. Mr. Collins said Page 17 of 19

18 unfortunately the City s workforce was older and generating a higher claims experience. Mayor Freiling said he did not understand the answer and asked for more information on how claims experience drives the cost of insurance. Mr. Collins explained that the pool helps lower the cost because claims experience is shared across the pool participants. Mayor Freiling asked how the 58% or 78% were reflected in the rate that the City pays. Mr. Collins said that if one more person joined the insurance that the City provides 78% of the claims experience would be used to calculate the rate. Mayor Freiling asked what the implication of this change is on the budget in actual values. Mr. Collins said it varied from year to year but he wanted to illustrate the risk that this imposed toward the budget in future years. Mr. Collins said that the increased construction in the City would result in high property values in the City which would be a positive influence on the revenues from general property taxes. Mr. Collins concluded his presentation by reviewing the FY19 budget schedule. He highlighted that the deadline for advertising new tax rates is March 10. Mayor Freiling asked when the results of the assessment would be known. Mr. Collins said that the assessment would be about 75% by that point. Mayor Freiling asked if there was a threshold for increased valuation that required advertisement. Mr. Collins said that if the value was increased 1% it required advertising. However, that is not expected. Mr. Pons said that there are lots of needs with short revenues. He said he did not think anyone wanted to pay more taxes but he expected the City Manager to bring an option forward that included a tax increase. Ms. Ramsey agreed and said that the school costs were going to continue increasing. Mayor Freiling said that just considering the Police and Fire staffing the increase would be 5 or 6 pennies. Vice-Mayor Foster suggested that the City Manager could also present some options for reducing expenses to provide the costs needed. Mr. Pons said that perhaps outside agency funding should also be a consideration. Mayor Freiling said 6 cents provides the public safety positions and 3 cents provides for the initial $5 million gap. Those total an increase of 9 cents on the property tax which is 20% increase in property tax rates. That needs to be thought about. Mr. Collins said that staff needed to look at options and consider ways to mitigate some of the costs particularly in the school division. Ms. Ramsey said she thinks people will accept an increase for schools and public safety given the publicity of issues surrounding those services. Vice-Mayor Foster said a frank conversation was needed with the College regarding fire responses and cost. Mr. Collins said that a Page 18 of 19

19 memo had previously been written explaining the cost to the City for providing that service. Mayor Freiling asked if that memo could be updated and presented for the College to review. Mr. Collins pointed out that guidance would be needed for the tax increase scenarios because the City Manager s budget is due after the tax advertisement deadline. Mr. Pons said he did not see areas where reductions are possible. Mr. Collins agreed and gave several examples of how reducing staff impacted services. Vice-Mayor Foster pointed out that the last property tax increase occurred in Mayor Freiling said that while a 6 cent increase to the taxes may keep the City s rate lower than our neighboring jurisdictions the impact on the less wealthy residents should be considered. Mr. Pons said that no decisions were being made and that hopefully the discussion was putting the community on notice and that the Council will hear from them on their preferred option for tax increase or reduction in services. He pointed out that the City s historic tax rate was $.77 and were lowered and that the current rate has not even caught up to that rate. COUNCIL ANNOUNCEMENTS Vice-Mayor Foster informed the Council that he had attended a meeting with Brian Smalls, Chair of the local NAACP, and Mayor Freiling to consider the progression of plans to construct a Martin Luther King Memorial. He said the next steps would be to have a committee look at the logistics and planning. ADJOURNMENT At 12:27 p.m., there being no additional business before Council, the City Council Budget Retreat of was adjourned. Vice-Mayor Foster made the motion and it was seconded by Ms. Ramsey. The vote was unanimous. Recorded vote on the motion: Aye: Zhang, Pons, Freiling, Foster, Ramsey Nay: None Abstain: None Absent: None Approved: February 8, 2018 Andrew O. Trivette, City Council Clerk Paul T. Freiling, Mayor Page 19 of 19