Budget, Finance & Audit Committee Meeting Record DRAFT

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3 Budget, Finance & Audit Committee Meeting Record DRAFT Meeting Date: Convened: 1:01 p.m. Adjourned: 2:08 p.m. Committee Members Present: Jerry R. Allen, Chair Tennell Atkins, Vice Chair Monica Alonzo Ann Margolin Scott Griggs Staff Present: Jeanne Chipperfield, Craig Kinton, Jack Ireland, Edward Scott, Craig Kinton, Jing Xiao, Lance Sehorn, Adelia Gonzalez, Mark Duebner, Corrine Steeger, Anna Holmes, Sarah Hasib, Nick Fehrenbach AGENDA: 1. Approval of the April 16, 2012 minutes Presenter(s): Information Only: Action Taken/Committee Recommendation(s): A motion was made to approve the April 16, 2012 minutes. Motion passed unanimously. Motion made by: Atkins Motion seconded by: Margolin 2. Data Supporting Enriched Housing for Adults Living with Intellectual and Developmental Disabilities Presenter(s): Robin LeoGrande, President, Community for Permanent Supported Housing Information Only: X Action Taken/Committee Recommendation(s): N/A 3. Designation of Rental Car Center and Hyatt Place Hotel as Approved Airport Projects Presenter(s): Chris Poinsatte, Chief Financial Officer, Dallas/Fort Worth International Airport Information Only: Action Taken/Committee Recommendation(s): A motion was made to forward the agenda item to the full Council with a recommendation to approve the DFW Rental Car Center (the RAC ) and the proposed Southgate Hyatt Place Hotel as Public Facilities and as Approved Airport Projects of DFW s Public Facility Improvement Corporation ( PFIC ) and to approve the assignment and transfer by the DFW Facility Improvement Corporation ( FIC ) of all assets, rights, duties and obligations relating to the RAC and bus fleet to the PFIC. Motion made by: Atkins Motion seconded by: Griggs

4 Budget, Finance & Audit Committee Meeting Record DRAFT FYI: 4. Resolution of Love Field Airport Modernization Corporation with respect to the issuance of bonds for the implementation of elements of the Love Field Modernization Program Presenter(s): Mark Duebner Information Only: Action Taken/Committee Recommendation(s): The item, to be presented to the Council on the May 23, 2012 agenda, allows for the issuance of a second tranche of special facilities revenue bonds to support the Love Field Airport Modernization Program (LFMP). Additionally, the resolution would authorize the City Manager, with the approval of the City attorney as to form, to amend the Revenue Credit Agreement in order to permit grant funds to be used to pay both projects costs or principal on the LFAMC bonds and thus limit the borrowing necessary to implement the LFMP at the $500 million limit. A motion was made to recommend approval by the full City Council at the May 23, 2012 agenda meeting. Motion made by: Atkins Motion seconded by: Alonzo 5. Atmos Energy Dallas Annual Rate Review Presenter(s): Nick Fehrenbach Information Only: X Action Taken/Committee Recommendation(s): The May 23, 2012 agenda includes an item to adopt an Ordinance setting rates to be charged by Atmos Energy Corporation (Atmos) pursuant to Atmos Dallas Annual Rate Review Filing. A motion was made to recommend approval by the full City Council at the May 23, 2012 agenda meeting. Motion made by: Atkins Motion seconded by: Alonzo 6. Quarterly Investment Report, 2 nd Quarter 2012 Presenter(s): Corrine Steeger Information Only: X Action Taken/Committee Recommendation(s): N/A 7. Financial Forecast Report, March 2012 Presenter(s): Jack Ireland Information Only: X Action Taken/Committee Recommendation(s): N/A Jerry R. Allen, Chair Budget, Finance & Audit Committee

5 Memorandum CITY OF DALLAS DATE: May 31, 2012 TO: Honorable Members of the Budget, Finance & Audit Committee Jerry R. Allen, Chair; Tennell Atkins, Vice-Chair; Monica Alonzo; Scott Griggs; Ann Margolin SUBJECT: Presentation to the Budget, Finance & Audit Committee: Nomination and Appointment of the City Auditor I will provide a briefing to the members of the Budget, Finance & Audit Committee on Monday, June 4, 2012 regarding: Nomination and Appointment of the City Auditor My current term as the City Auditor expires on September 5, Section of the Dallas City Code allows the Budget, Finance & Audit Committee to nominate (for consideration of the full City Council) the incumbent City Auditor for an additional two year term. If the Committee motions to act as the nominating committee for the re-appointment of the City Auditor, the Council Agenda item (scheduled for August 22, 2012) will allow for full City Council approval. Sincerely, Craig D. Kinton City Auditor Attachment "Dallas, The City That Works: Diverse, Vibrant, and Progressive."

6 Presentation to Budget, Finance & Audit Committee Nomination and Appointment of the City Auditor City of Dallas Office of the City Auditor June 4, 2012

7 Nomination and Appointment of the City Auditor The current term of the City Auditor, Craig D. Kinton, CPA will expire on September 5, The purpose of this presentation is to brief the Budget, Finance & Audit Committee on the process for reappointment of Mr. Kinton or the requirements for nomination of a new City Auditor. 2

8 City Charter Chapter IX. City Auditor Chapter IX of the City Charter creates the Office of City Auditor. The chapter includes four sections: Section 1 Selection of City Auditor Section 2 Assistants and Employees Section 3 Duties of the City Auditor Section 4 Special Audit 3

9 CITY CHARTER CHAPTER IX. CITY AUDITOR SEC.1 SELECTION OF CITY AUDITOR Section 1: Creates Office of City Auditor Establishes Two-Year Term (and until a successor is chosen and qualifies) Defines Qualifications: Knowledgeable in public administration, public financial and fiscal theory, municipal accounting, and auditing Licensed CPA Resident of City of Dallas (or move into the city within time period required by the City Council) Stipulates Appointment by City Council (after being nominated in accordance with a nominating procedure established by ordinance) 4

10 City Code Chapter 2 Administration Sec Selection of City Auditor; Nominating Commission The nominating procedure established by ordinance is codified in the City Code in Chapter 2, Section

11 City Code Chapter 2 Administration Sec Selection of City Auditor; Nominating Commission Section stipulates that: City Council shall appoint a nominating commission before the end of each term of the City Auditor The finance and audit committee may act as a nominating commission to nominate incumbent City Auditor for reappointment by full City Council (requires majority vote) If majority of finance and audit committee does not vote to nominate the incumbent City Auditor (or a majority of the Council does not vote to reappoint) the Council must follow the process outlined in Sec subsections (a) through (e) 6

12 City Code Chapter 2 Administration Sec Selection of City Auditor; Nominating Commission Section (a) requires the city council to appoint a five member nominating commission meeting the following qualifications: One member selected by Dallas Chapter / TXCPA board of directors One member who is the regional director of USGAO (or highest ranking member of Dallas division) Three members meeting one of following qualifications: Managing partner in multi-national public accounting firm with office in Dallas CEO/CFO/CAE - publicly-traded company headquartered in Dallas County ($1 billion annual revenue) Former Dallas Mayor or Council Member Current or former Dallas City Auditor 7

13 City Code Chapter 2 Administration Sec Selection of City Auditor; Nominating Commission Additional requirements pertaining to the nominating committee include: Meet within 15 days of appointment Nominate one or more candidates to City Council within 180 days of first meeting Serve until the City Council accepts a candidate 8

14 City Code Chapter 2 Administration Sec Selection of City Auditor; Nominating Commission Additional requirements pertaining to the city council include: Accept one candidate or reject all within 30 days of receipt of nomination Immediately notify commission if candidates are rejected 9

15 Nomination and Appointment of the City Auditor Questions? 10

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17 SURPLUS PROPERTY AUCTION Budget, Finance and Audit Committee, June 4, 2012

18 PURPOSE To propose a list of surplus properties for sale by auction To establish a reserve for certain properties to be sold 2

19 BACKGROUND June 13, Budget, Finance and Audit Committee briefed on proposal to sell properties by auction Previously sold by sealed bid Success rate has been low in recent years Staff looked for creative ideas to boost sales and increase revenues June 22 City Council authorized a 3-year contract with Hudson & Marshall Selected through competitive bid process Extensive experience with auctions for City of Houston, other government/non-government agencies 3

20 CONTRACT PROVISIONS Single ballroom auction event Widely targeted marketing Aerial photographs taken and due diligence performed and posted on H&M website; marketing brochures prepared Auction sign on each property Ads in local and regional newspapers, on City of Dallas, commercial and residential real estate websites, targeted billboards Online/Internet advertising and targeted and mailing campaigns 4

21 CONTRACT continued Open house for improved properties Call center available 24/7 to answer questions Day of Auction Conducted by auctioneer, bid assistants High Bid deposits taken Purchase and Sales Agreements drafted Affidavits signed by bidders, verified by staff 5

22 CONTRACT continued Post-auction Unsold properties will be marketed for online sale by auction firm Unsold properties will be also be placed into another auction H&M will continue to aggressively market these properties Staff verifies that only eligible persons are awarded the properties No back taxes or liens owed No code violations 6

23 CONTRACT continued Winning bidders must close on the property within a specified timeframe (generally 45 days) H&M will not charge City upfront fees H&M will charge buyer s premium 8% for $300,000 or less 7% between $301,000 and $600,000 5% for greater than $600,000 Buyer s premium will reduce amount of revenue City receives for sold properties 7

24 CONTRACT continued H&M will absorb marketing and expenses associated with the auction Marketing expenses ~ $109K +/- Commissions paid to Buyer s Agents City will ensure statutory ads properly placed If City pulls a property from the auction after list provided to H&M, City is responsible for reimbursing H&M for any marketing costs that were expended on that property Reimbursement not to exceed $10,000 per property will be paid from revenues received on other auctioned properties 8

25 SURPLUS PROPERTIES 26 properties currently available for auction 6 improved with buildings 1 downtown parking lot 19 unimproved 9 properties previously advertised for sale between 1 and 9 times 17 properties not advertised for sale previously 9

26 NOTE: Some locations so close together, dots overlap; 26 properties represented 10

27 PROPERTY LIST IMPROVED PROPERTIES 5221 S. Westmoreland (shell-only building acquired for district offices, deed restricted against SOB s) 3303 W. Jefferson (former fire station) 1735 S. Ewing (former fire station) 3636 Almazan (former library) 1125 Buckner (former library) Ferguson (former library) 11

28 PROPERTY LIST continued DOWNTOWN PARKING LOT 2100 Commerce Month-to-month lease $4,200 annual revenue 12

29 PROPERTY LIST continued UNIMPROVED PROPERTY 6700 JJ Lemmon (with & Julius Schepps) 6701 Westmoreland 2317 Lowery 7001 Wheatland 6501 Greenville (billboard lease) 2911 Mike 2127 and 2203 Wycliff 1229 Dalview 7 SF lots in the 500 block of W. Laureland 400, 404 and 512 N. Lancaster 13

30 TOTAL ASSESSED VALUE 2012 DCAD Assessed Value: approx. $3.3M Revenue assumed in FY forecast Some properties may sell for less, others more than assessed value On average over past 10 years, surplus properties have sold for 80% of originally appraised value Returning properties to tax rolls = approx. $26,000 annually, plus opportunity for higher revenues if developed with productive uses 14

31 POTENTIAL AUCTION REVENUE City of Houston realized an average return of 85% of value for properties sold at auction by H&M in 2009 Assuming 85% average return on value, potential revenue could be approx. $2.8M 15

32 COST BENEFIT Approx. Annual Maintenance: $21,000 Approx. Salary and Marketing: $47,000 Approx. Annual Savings: $68,000 16

33 SALES AUTHORIZATION Local Government Code Section (b) states: The appraisal or public auction price is conclusive of the fair market value of the land or interest, regardless of any contrary provision of a homerule charter Dallas City Code Sec states: After tabulation of bids or after reaching agreement for a negotiated sale, the City Manager shall make a recommendation to City Council. City Council may act to award or reject the sale. 17

34 Proposed Code Revisions In order to sell properties at a public action, Code revisions are required to be made to Sec (b) Staff determination made whether highest qualifying bid equals or exceeds the reserve amount established by Council If sold absolute or the reserve amount is met or exceeded, City Manager may, without further council action, execute a purchase and sales agreement with successful bidder 18

35 Proposed Code Revisions If less than the reserve, the City Manager may make a recommendation to City Council, who may accept or reject the sale. Upon approval by the City Council, the City Attorney will prepare, and the City Manager execute, an appropriate instrument of conveyance. If City Council does not approve of a sale less than the reserve, the property will continue to be advertised for sale 19

36 Recommendations Staff recommends that Council adopt the proposed Code revisions Staff recommends that Council: Declare the properties unwanted and uneeded; Authorize their sale at public auction; and Establish reserves on certain properties, the minimum bids acceptable for sale of each property (Executive Session) 20

37 RECOMMENDATIONS Authorize sale of listed unwanted and unneeded surplus properties by auction Authorize City Manager or designee to accept or reject bids based on highest qualified bid for absolute properties or reserves established by City Council No additional Council action required Authorize use of Purchase and Sales Agreements for high bidders that meet minimum bids 21

38 ESTIMATED SCHEDULE June Authorization of properties for sale by auction and use of Purchase and Sales Agreement June Provide approved list of properties with reserves to Hudson & Marshall August Auction conducted October Properties close 22

39 APPENDIX List of Properties

40 CITY-OWNED PROPERTY MAPSCO COUNCIL DISTRICT SQ FT OR ACREAGE SALE ATTEMPTS ZONING DCAD 2012 ASSESSED VALUE EST. PROPERTY TAX REVENUE IMPROVED PROPERTIES (INCLUDES STRUCTURE) 5221 S. WESTMORELAND (building shell, deed restricted) 63J IM $880, $7, W. JEFFERSON (former fire station) 53D PD 532 $93, $ S. EWING (former fire station) 55S CR $150, $1, ALMAZAN (aka 9495 Marsh) (former library) 23Z NO $104, $ S. BUCKNER (former library), with 1124 Gardenview (additional parking) 58Q PD366 $142, $1, FERGUSON ROAD (former library) 38R D(A) $138, $1, DOWNTOWN PARKING LOT (month-to-month lease) 2100 COMMERCE (leased, paved parking lot - approx 15 spaces; annual income $4,200) 45L PD 357 $104, $ UNIMPROVED LAND 6700 J.J. LEMMON, JULIUS (northwest corner of I-20 / I-45) 67STX R-5(A) $776, $6, WESTMORELAND 63J R-10(A) $223, $1, LOWERY 56G PD R-5(A) $4, $ WHEATLAND (aka 7080 Wheatland) 71B-F NS(A) $230, $1, GREENVILLE 26X MU-3 $190, $1, MIKE 42P R-5(A) $19, $ WYCLIFF 43Z TH-3 $60, $ WYCLIFF 34Z TH-3 $45, $ DALVIEW 55L R-7.5(A) $6, $ LAURELAND 65N R-7.5(A) $12, $ LAURELAND 65N R-7.5(A) $12, $ LAURELAND 65N R-7.5(A) $12, $ LAURELAND 65N R-7.5(A) $12, $ LAURELAND 65N R-7.5(A) $12, $ LAURELAND 65N R-7.5(A) $12, $ LAURELAND 65N R-7.5(A) $12, $ N. LANCASTER 55A PD 468 $27, $ N. LANCASTER 55A PD 468 $13, $ N. LANCASTER 55A PD 468 $13, $95.64 TOTAL ASSESSED VALUE $3,307, $26,343.65