BUDGET WORKSHOP MINUTES March 27, 6:00pm 32 WEST AVENUE OCEAN VIEW, DELAWARE 19970

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1 BUDGET WORKSHOP MINUTES March 27, 6:00pm 32 WEST AVENUE OCEAN VIEW, DELAWARE CALL TO ORDER Mayor Curran called the meeting to order at 6:00pm with the Pledge of Allegiance. Present: Mayor Curran, Council Members Carol Bodine, Tom Maly, Frank Twardzik and Bill Olsen; Town Manager Dianne Vogel, Finance Director Sandra Peck, Police Chief McLaughlin, Town Solicitor Dennis Schrader, and Town Clerk Donna Schwartz. Town Administrative Official Charles McMullen was not present. 2. ADOPTION OF AGENDA A motion was made by Council Member Bodine, seconded by Council Member Maly, to approve the agenda as presented. The motion carried unanimously 5/0. 3. NEW BUSINESS A. Review and Discussion of Draft #3 Proposed FY19 General Fund Operating Budget and 5-Year Capital Improvements Program. Mayor Curran opened the meeting with the following statement to the multitude of property owners in the room. He said, Most of the sitting Town Council members attended the Candidates Night last night, and we all listened carefully to the questions being asked. The moderator last night, Steve Cobb, did an excellent job and even though he cannot be here tonight he has turned in several budget-related questions from last night s attendees. We will answer those budget questions tonight. In order to move the meeting along, I will start with a statement that I hope will answer some of the budget related questions before being asked, but before I start, I would like to remind everyone that we have a scheduled agenda. On the agenda is a Citizens Privilege segment. That is when you will have the opportunity to ask your questions. Unlike a regular Town Council meeting where there are two Citizens Privilege segments, one for agenda items and one for all-purpose items relating to the town, tonight s Citizens Privilege segment is limited to Budget Issues. You will be accorded the time necessary to address your questions, however, please don t be redundant. If someone else has already asked the question, please don t repeat it. TIMING OF THE PROPOSED TAX INCREASE Why were the drainage projects postponed for years? Keep in mind that, to my knowledge, no one on previous Councils nor anyone on this current Council ever said, Let s ignore the problem for ten years and

2 see what happens. Every year, the issues that came before the Council were piecemeal, nibbling at the edges of the problem. Each year it was easier and cheaper to postpone the projects than fight the necessary battles with the citizens on getting the easements required. Eminent domain proceedings take time and money. On the topic of getting easements, that is a problem but not the only problem. The Town has been offered free sidewalks by DELDOT, extending from Route 26 up Central to the Town Line at the bridge over the canal. It was a feel-good project. We couldn t complete that project because a few of the residents on Central would not agree to easements. When the Town offered to go for Eminent Domain, DELDOT refused saying they didn t want to force anyone into accepting free sidewalks. The irony of this is that many of those same people that are refusing to grant easements for the drainage projects are the loudest and most consistent complainers when it rains, and parts of their property are under water. Four years ago, recognizing the pending issues, the Council started to set aside a portion of the Transfer Tax to be used for Capital Projects. It was a beginning, but it started too late and given the magnitude of the drainage projects, wasn t enough money. This is where we stand today. COMMUNICATIONS A few questions about communications and public notices were asked. This is not the first time this topic has arisen. The Town of Ocean View has excellent communications. We have the website, which lists everything that is going on in Town. We post every notice that is required by the Town Charter and state government, pertaining to every meeting, whether it is the Town Council meeting or one of the Committees. It was stated on more than one occasion last night that there needs to be more input from the public on every issue. Sounds perfectly rational. But, what everyone here needs to understand is that this is a Town, not a HOA or a neighborhood gathering. We have a charter and rules that we must follow. If you are interested in knowing what is going on in the Town, then read the newspapers for the notices, or go on the Town website and find out when and where the various meetings are being held. That is your obligation as a citizen. If you think that doesn t work then ask yourself, How did everyone find out about last nights candidate night? How did they find out about tonight s meeting? Look at how many of you were here last night and tonight. The notification process was exactly the same as it is for every meeting. If you really want to know what is happening, and I hope 2

3 that you do, then take the time and effort to find out when the meetings occur and show up and voice your opinion. You are always welcome to the meetings. Many, many, many years ago, in college, I learned an important lesson from my Naval Science instructor. Communications is a two-way street. The end of the street that is listening is the better communicator. We as a Council have been listening. There were other issues raised, questions of the reliability of our engineering company, accuracy of the bids for work and questions of how the town staff interacts with contractors and the general public. All of these items are being addressed internally and where a real problem exists, it will be rectified. Mayor Curran also noted that no vote would be taken tonight; the vote is scheduled for April 10, Ms. Sandra Peck took the microphone and read her memo to the Council. She noted the changes that had been made in Draft #3 from Draft #2. She said the Woodland Avenue street repair was added to the SRRT fund. Ms. Peck commented that some changes that will be forth coming in the next draft. She named the following: the Tidewater Water Service agreement, the numbers included in the previous draft will stand as is; $10,000 discretionary fund for Town Manager, currently in capital, will move to operating budget; condemnation fees are roughly estimated to be $35,000 to $40,000 for 13 properties; health premiums will remain the same at least to January 1, Mayor Curran made the following comments on Council Member Olsen s memo in the Council packet. He said, Mr. Olsen (Bill) assumes that his interpretation is correct. He has argued this point at two different meetings and discussed it at length with Sandra more than once. Bill s interpretation is just that, HIS interpretation. I believe he errs in a few places in his interpretation. 1) He states that the concept of Salary Midpoint replaced the salary increase system. It does not. The entire Hendricks System replaced the old salary increase system. Salary Midpoint is only one component of the Hendricks System. 2) He questions the origin of the proposed CPI increase of 0.822%. In fact, the CPI we use is the Mid-Atlantic CPI. It includes PA-DE-MD-WV-VA and DC and is the same CPI we have used in the past years. 3) Bill is correct in that we deviated from the Hendricks s System last year but that is due solely to the fact that the system had not been followed accurately in previous years. 4) Bill s main point seems to be how to adjust the midpoint of the salary range. Should it be by the annual CPI and merit increase OR by doing a salary survey of comparable communities? Last year we did a survey of comparable communities and upgraded the midpoints from that survey. Again, that was due to the fact 3

4 that the Hendricks System had NOT been followed accurately in previous years. There is no need to do a salary survey every year. The Council had previously voted to do a salary survey every two years. I personally think that every third year is adequate for informational purposes but the entire Council decides that issue. 5) Bill also focuses on the length of time it should take for an employee to go form the Minimum salary to Midpoint and then to the Maximum salary. He treats it as a set-in-stone time period of six years when, in fact, it is a guideline, an average time factor. Each employee will advance at different paces depending on their individual performances on the job and evaluation by their department heads. 6) Bill questions the consistency of the system in the context of what the employees may think. He states that if we deviate from the System we are telling our employees that their future salary is solely dependent on the whims of the Town Council. Yet Bill is the one who wishes to deviate from the system. In his memo he states, This is my interpretation of the study and if not correct I propose that my interpretation should be adopted by the Council for future compensation for the Town. This Council has been wrestling with the Hendricks Study for two years. The Town Manager Dianne, and Finance Director Sandra, the two people directly involved in the administration of this system, have disagreed with Bill s interpretation on more than one occasion. I think it is evident from my comments that I too, respectfully disagree with Bill s interpretation and I agree with Dianne and Sandra. It is time to bring this matter to a close. Bill has proposed that his interpretation be brought before the Council and adopted as the official compensation policy. Does Bill still wish to pursue this avenue? If so, make your proposal and we will vote on it. Council Member Olsen offered his thoughts on the Hendricks s system and explained his method of implementation to the Council. He said the midpoint is what the other communities are paying their employees. Midpoint is the average. It takes six years on Hendricks s chart to get from minimum to midpoint. If an employee is doing his job right, he will be rated for a merit factor of one and adjusted for CPI yearly. Mr. Olsen disagrees with this system, saying it short-changes the employee. Grade increases and promotions are at 8.1% in Hendricks s study. Town Manager Vogel clarified that the intergrade differential of 8.1% is not an automatic adjustment, as Mr. Olsen believes. She explained to the Council that the 8.1% is the adjustment between grades in the study. Mr. Olsen said he believes when an employee gets a promotion, as in the police department, they should move up a grade and get more money. 4

5 Mayor Curran called the question of using Mr. Olsen s method of compensation. Council Member Bodine seconded his motion. Council Member Olsen voted yay. Mayor Curran and Council Members Maly, Bodine, and Twardzik voted nay. The motion failed 4/1. Council Member Twardzik apologized to the citizens of Ocean View for not keeping them informed about the Council s intentions of weaning off transfer taxes. He thanked Maria Counts for the very accurate article in the Coastal Point. Mr. Twardzik said the sticking point with the proposed tax increase are the drainage projects of 4.6 million. He would like to take a fresh look at the projects and reconsider who is responsible for the drainage. He proposed a time limit on getting easements, saying that a property owner who does not participate in the process with the Town would be sent to the condemnation quicker. Council Member Bodine questioned Mr. Schrader about adding a sunsetting clause to the tax increase. Mr. Schrader replied that annually the Council has the opportunity to reset the tax rate with the setting of the budget. The problem he said that there might be emergencies that occur during the year that change the thinking of a sunset clause. Council Member Maly noted that he lives in a development that maintains their own drainage. He feels that some kind of ordinance is needed about drainage in the Town. Many of the problems in Town have been caused by the property owners filling in swales or planting trees in the wrong areas. He said, once these projects are done any problems going forward could be shared projects with property owners or HOA maintained. Mayor Curran commented that he is totally against sunsetting clauses. The Town needs to be more diligent going forward, however that does not help today s problem. An ordinance will help to prevent drainage problems from getting worse in the future. We will be having discussions on how to stay on schedule. The Council will change in a year or two, new members will come, and things will change. Mayor Curran proposed a 50% increase for 2019 and 2020, and suggested the Council at that time will have to reassess the situation to see if another tax increase will be needed after that. A more accurate assessment in two years will be necessary. He said there is no easy solution. Ms. Peck said $490,000 is less than two months operating budget if the projects stay on track. She stated page 5C shows the financial impact to the town at a 50% tax increase. 5

6 Council Member Bodine asked Mr. Schrader how fast we could get easements on Woodland Road. Mr. Schrader estimated he could have the land acquired by July or August Council Member Twardzik stated he wants to revisit all the capital projects and see who is responsible for them. He said he agrees with Mayor Curran the tax increase should be somewhere between 31% and 50%. Council Member Olsen stated there would be a shortfall below 50%. Council Member Maly stated he agreed with the 50% Mayor Curran proposed. Mayor Curran stated they would stop kicking the can down the road and passing the problem to another Council. He said he believes by fast tracking the projects they will get done; but it would still cost money. Council Member Bodine asked why the list of projects should be reviewed if they already proved as needed. Mayor Curran replied the majority are the Town s problem; however, there are some fringe projects that may not be the Town s problem. Mayor Curran read and answered the leftover questions from the Candidate s night. 1. When does Council vote on the tax increase? At the Council Meeting April 10, What are you basing the lack of transfer tax on? The Town will be out of buildable land and eventually transfer tax will decrease. Historically resales are less than 50% of the total transfer tax amount. Figures based on using zip code are inaccurate, as unincorporated properties are included on that list. 3. What is the highest line item in the budget? Employee compensation. 4. Can you solve budget problem without a tax increase? We cannot. 5. How do you plan to handle the 100% increase? This was answered through Council discussion tonight. 6. Why start collecting money for the eight projects now if you cannot start the projects now? We are not building excess as fast, and each succeeding year would move faster. 7. Why start all the projects at one time, work on them one at a time without a 100% tax increase? We are working on them one at a time. We have prioritized them. 8. Can you start the projects before the easements are obtained? How long will it take to get the easements? No, that would be foolish because you must go on the property to do the work. 9. If you do not have the easements why collect the money in advance? That has been answered already tonight. 6

7 4. CITIZEN S PRIVILEDGE John Merryman, Cottages, asked Council what was done with the $1.6 million that was budgeted between Ms. Peck replied that many of the projects were budgeted but not funded. No money was spent. Mr. Merryman also spoke to Council on the high, low, and mean-tides of White s Creek and Indian River. He said it floods here when it rains. He feels the property owners should be responsible for fixing the drainage on their property. Mr. Merryman suggested that the Council is not familiar enough with elevation or the tides to be making these decisions. Mayor Curran replied that is the reason we have to pay engineers. Mr. Merryman said contractors have a problem with code enforcement in Ocean View. He asked if Ocean View has a code. Mayor Curran replied yes. Mr. Merryman questioned who approves new developments. Mayor Curran replied that ultimately the Council has final approval. Mr. Schrader said there is a review process and all developments are reviewed by the engineer, 26 state agencies, a State PLUS review and the Town Planning & Zoning Commission, before ultimate approval by Council. John Reddington, Bear Trap, suggested the reason the Town does not maintain Bear Trap s sidewalks is because the Town did not have the money, and now they are asking for money to fix other sidewalks. Mayor Curran replied that the Town did not say they did not have the money, the Town told Bear Trap that Freeman built the development differently and changed the right-a-ways. The right of way in Bear Trap only extends to the curb, and does not include the sidewalks. Mr. Reddington commented he believes the neighborhoods should be responsible for their own drainage. Mr. Reddington also questioned rental tax receipts, and asked what the Town does to collect from property owners who try to avoid the tax. He suggested the Town under counted the yearly receipts, and should look again at this issue. Mayor Curran replied the Town does everything it can to collect these fees from property owners. Ted Scoleri, Wade-Winn, asked Council to take a ride with him and show him the water. He said this is Sussex County and it is flat. After two back-to-back storms there is no water sitting on Ocean View streets. In his opinion is there is not a drainage problem in Ocean View. Kitty Rehrig, Wade-Winn, said she said she ed Council Members last week and received no reply. She told Council they need to look closer at budget cuts. Ms. Rehrig also commented about the fact there is no published timeline on these projects. Mayor Curran replied that they are still working on a timeline; however, Woodland Avenue is first on the list. Tricia Supik, William Avenue, noted that she had the read minutes from previous meetings and questioned whether the selling of bonds was for capital projects. Mayor Curran replied we hired a financial advisor to refinance the current water debt the Town holds to save money. Ms. Supik stated the citizens are listening now and happy to offer feedback. 7

8 Bob Thornton, Colt Lane, he stated he is not in favor of the increase, and asked in the event of a sizeable increase Council consider allowing taxes to be billed and paid in a payment plan. Ann Powell, Daisey Avenue, stated she was a realtor and disputed Council s statement regarding the eventual loss of transfer tax. She said she has no problem paying more taxes; however, she demands stable financial stewardship. Bert Reynolds, Fairway Village, asked for clarification on the 50% tax increase; he asked if it was one increase or two increases. Mayor Curran replied it was one increase for two years. He advised the Council to start talking about the 2020 budget now. Mr. Reynolds compared the costs for engineering to hiring a staff engineer. He also questioned the employee health insurance and what percentage the Town pays. Ms. Peck explained the cost factors of the health insurance to Mr. Reynolds. Hugh MacRea, Caroline Street, said to him capital improvements are something nice to do; but not something, that needs doing. It seems a lot of money is being spent that we do not have. He stated the Council should cut some salaries and benefits. Jim Reichert, Country Village, asked if all easements were in hand or some are still needed. Mr. Schrader explained the process of condemnation to Mr. Reichert, and said he hoped to have the easements for Woodland Avenue and Woodland Park complete by August Mr. Reichert suggested doing the projects as the money becomes available whether it takes longer or not. Rachel Quillen, Calgary Avenue, stated not everyone is retired and rich, some are young families with kids like her and asked Council to reconsider the large tax increase. Dan Verona, Briarcliff, suggested the Council do something like Proposition 13 in California and set a tax policy. He said the police are a luxury we cannot afford. Dave Rogerson, Woodland Park, asked Council how they are going to reduce costs. Gene Mueller, Cottages, said he has not heard anything about reducing the budget. Cindy Hall, Cottages, she told the Council they represent the property owners. She complained about the expense of this Town building being empty all the time. Ms. Hall also complained about the number of holidays employees get. She mentioned how difficult it was to find the tax rate on the website. Tom Kent, Wedgefield, thanked Council Member Twardzik for his apology. He asked if it is legal to raise taxes 50%. Mr. Schrader replied it is. 8

9 Luis Lopez, Cottages, he stated he works with the State of Delaware and he has had no raise in three years. He told Council they have no respect for the property owners. Ray Wockley, Edisto Court, spoke to Council regarding eminent domain and how long the process can take, and how much it can cost the Town. Carl Priemon, Sunrise Ct, told Council they are not listening to the people with a proposed 100% increase. 5. EXECUTIVE SESSION A motion was made by Mayor Curran, seconded by Council Member Maly, to go into Executive Session at 8:35pm. The motion carried unanimously 5/0. A motion was made by Mayor Curran, seconded by Council Member Bodine, to end the Executive Session at 9:26pm. The motion carried unanimously 5/0. Mr. Schrader noted the Members of Council, Dianne Vogel, and himself, were present at the executive session, which dealt with a personnel matter and no votes were taken. 6. ADJOURNMENT A motion was made by Council Member Bodine, seconded by Council Member Twardzik, to adjourn the meeting at 9:30pm. The motion carried unanimously 5/0. Respectfully submitted, Donna M. Schwartz, CMC 9