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Charter08-27-13Min City of Longwood 2013 Charter Advisory Committee Longwood City Commission Chambers 175 West Warren Avenue Longwood, Florida MINUTES August 27, 2013 7:00 P.M. Present: Chair Ben Paris Member Becky Huse Member Alesia Carringer Member Andrea Elukovich Dan Langley, City Attorney Jon C. Williams, Recording Secretary Absent: Vice Chair Logan Cody 1. CALL TO ORDER. Chair Paris called the meeting to order at 7:02 p.m. 2. APPROVAL OF MINUTES- June 25, 2013 Chair Paris moved to approve minutes of June 25, 2013 motion was carried unanimously. 3. PUBLIC PARTICIPATION. None. 4. REVIEW OF CHARTER. A. ARTICLE VI. Financial Procedures. Chair Paris called for discussion on Article 6.09 and 6.10. He said it is his understanding that the City cannot hold debt for longer than one year, cannot take on loans and cannot sell bonds. He thinks it is something they would want to look, do they want to allow the City to take on debt and what are the limitations and the procedures for doing so. Do they want to add a super - majority to take on debt, should they make it strictly for capital projects, or put a debt limit, such as: The City cannot take a debt up to a percentage of its income budget. Member Carringer said currently if they are not taking on any debt for anything, aren't they sort of cutting off their nose to spite their face in some aspects? Chair Paris said some people would say that, yes. Charter 08 -27 -13/1 Member Carringer said she thinks it should be within reason and not everything should be long tern. She expressed her thoughts on feeling like the City is a little behind and not able to extend themselves. Member Huse said she also thinks they are limiting themselves because sometimes they have to pay part of a funded program in order to get the other part whether they are dealing with the Feds or dealing with the State. Chair Paris said he thinks roads will need to be repaved soon and that is going to be a major issue if they cannot take on debt for road paving. Member Carringer said they would not want to open up the floodgates for every single thing. She thought they could be told what has been hampered or not been able to be moved forward because they were not able to acquire the funds because of this limitation. Mr. Williams said he thinks as they consider proposing an amendment to the amount of debt one would secure is really relevant to the project that is needed. He said he thinks Chairman Paris indicated roads. He said they have an application out there for a little over $4 Million dollars worth of grant proceeds, which would dictate the City needing to fund that $4 Million dollars up front and then they would get a reimbursement. Therefore, the obligation at the end of that grant period would be $850,000. He said when they start talking about and start wanting to limit the City's ability; it is going to really be dictated by the project. He said they have one road that they know has to be constructed to the tune of $1.1 million dollars. He also mentioned a park that has a second and third phase and no cost estimates have been put together. Member Carringer asked if it is Reiter Parker Park where thousands of dollars have already been spent of the taxpayer's money. Mr. Williams said Reiter Park is what he is referring to in terms of the second or third phases. Member Carringer asked if she was correct in that some of the meetings she has been to, thousands of dollars have been spent on looking at this and equipment. Charter 08 -27 -13/2 Mr. Williams said there has been a long history of different plans and infrastructure that has been put in place for the storm water. He said the amount of debt one would need is dictated by the project. Member Carringer asked if they were to extend some kind of change in this particular statute, would the taxpayers be required to come up with this money if the City could not. Mr. Williams said right now he thinks the interest rate environment for financing large projects is probably more conducive towards a bank - qualified loan. He said if they are getting into a $30 million dollar acquisition of a Utility then the bonding environment might be a better environment to pursue. He explained some of the areas that the bond counsel and financial advisors would look at. Member Carringer asked how City vehicles are handled. Mr. Williams replied they are purchased through a lease. Member Carringer asked if they are paid off in a year. Mr. Williams replied no. Member Carringer said is there some long -term debt. Mr. Williams said it is a three -year capital lease. Member Carringer asked if typically this statute is for larger projects that have the one -year cap on it. Mr. Williams replied that it is for every expenditure. Mr. Langley said it might be helpful if he did a summery of what the law statutes permit cities to do versus what their Charter does. Member Carringer said it probably would be a good idea. Mr. Langley went over if there was not a Charter provision. He said it allows the cities flexibility in doing more than one project over a span of many years. He talked about if they do not have the ability to raise money and pay back longer than a fiscal year they are constrained on what they can do and have to set priorities to do one project at a time. He discussed their Charter provision and it is not actually one year; it is beyond a fiscal year. He explained the fiscal year runs from October 1st to September Charter 08 -27 -13/3 30 He said if the City wanted to start a project today, and borrow money today to start the project, and had to pledge to pay back the loan through the end of this year, under the current Charter it is problematic. He explained it would extend beyond this fiscal year. They would have to wait until the next fiscal year to start the project and then they would only be able to pay it during that fiscal year. Mr. Williams said if they started road construction today they would either have to pay it by September 30 or wait until October 1S He said they are paying for a project that is not completed and they don't know what the final condition is going to be. Mr. Langley said with this Charter provision they are highly restricted on borrowing money and even spending the money borrowed beyond the fiscal year. Member Carringer asked what kind of things have they come across in the past that may have gone unaddressed because of this issue that really needed to be addressed. Mr. Williams said he is not familiar with anything that may have gone unaddressed but described the construction of the Public Works facility. He explained it took the span of a couple of fiscal years to complete and did not pay for that project up front. Member Carringer asked if there was a better bid would have this been cheaper. Mr. Williams explained there were very tight time -frames and a number of circumstances that led to that constraint. He said it is possible but there were so many other factors. Member Carringer said she is for somewhat of a give on this matter without giving cart blanch to every single thing. Member Huse said she is also. Chair Paris said would it just be a wording change, instead of a fiscal year they can take on debt for a chronological year. He asked if they would be staying within the State law. Mr. Langley asked for clarification and if what he is saying is change it to whatever is necessary to fund the project. Chair Paris replied yes. Charter 08 -27 -13/4 Mr. Langley said there would not be a limit on the time -frame for the debt repayment. Chair Paris asked if it would be within a year from the time the project started instead of a fiscal year would that be acceptable. Member Carringer said isn't that basically the same thing. Mr. Langley said they could basically designate a project to go for five years even though it wouldn't technically take that long. They could say they are going to complete ninety -nine (99 %) percent of it and they will keep one percent open so they can pay it over the next ten years. Member Carringer asked if they could extend a certain dollar amount project and how long most projects took. Mr. Langley said a project could take from six months to eighteen months but it is not necessarily the length of time of the project it is the ability to pay back the debt over a length of time. Member Carringer asked if they gave three years and it was paid off in two years wouldn't they be more apt to do that or purposely string it out for three years. Mr. Langley said it depends on the financing terms the City could get. Sometimes they can get a better deal depending on the terms. He said some banks would not want to get a faster repay because they like the interest. Member Carringer asked if it is better to give a two -year or three year deal. Mr. Langley referred this question to Mr. Williams. Member Carringer said it just makes sense to her that in order for the City to do some of the things that need to be done to extend out for two or three years on some of the larger projects to get a better deal. Chair Paris asked if they are going to expand financing over the next couple of years do they want to put a road restriction on that. He asked do they want the Commission to be able to take on the debt; do they need a super - majority of four (4) votes to pass that. Charter 08 -27 -13/5 Mr. Langley said that is something that could be in the Charter if it is voted on and passes. Member Carringer said if it exceeds a certain dollar amount it probably still should be put to the voters. She said there might be some things voters don't have to vote on but some they do. She asked if they still want that depending on the project. Chair Paris asked a question of Mr. Williams on how long in his opinion would they want to finance projects. Mr. Williams said it is something that is very tough. They have to look again at the amount of money they are trying to finance. Member Carringer said she is assuming they are not trying to finance $20,000 for three years and she is assuming the projects they are trying to do are larger in dollar amounts so in your past experiences would the City get a better rate on two years, three years or four years? Mr. Williams said they would not finance a project for $20,000. He said they would not want to limit themselves to a term of financing for three years and figure out how they are going to finance and pay back a $10 million dollar loan over a three -year period. If it is outside ad valorem taxes that they are pledging, the revenue stream they are pledging is going to be what the institution to determine the amount of money that they can borrow uses. They may need the flexibility to go farther in time. Member Carringer said if they were to take on a $10 million dollar debt, like with a road project, the State wants them to pay $4 million up front, but they pay them back all but $850,000. Mr. Williams said that is correct. Member Carringer asked what do they do in a situation like that. Mr. Williams explained what would happen in that particular case. He said they would have to comply with the terms of the grant that was given. Member Carringer asked if this particular Charter be staggered for projects under a certain amount of money and paid off in a certain amount of time and anything larger can go to a five -year term. She asked is there a way to split the Charter into two different sections of expenditures. Charter 08 -27 -13/6 Mr. Williams said he thinks their best course of direction may be to look at dollar amounts. He said anything under $2 million dollars needs to stay the way it is and anything from $3 to $5 million needs to be put before the voters or require a super - majority vote of the City Commission. Anything greater than $10 million dollars has to come before the voters. He feels they are better off putting dollar amounts as opposed to limiting themselves to terms. Chair Paris said he thinks that is a good idea. Member Carringer said she agrees because they are giving the City what they need but they are not giving them too much that the taxpayers may not agree with. Chair Paris said the best part is it is all going to a referendum anyway. He said first it goes to the Commission, who will say yes or no, and then it goes to a referendum. He said he hopes it will be worded more clearly than the last time. He said it was worded terribly and people came to him all day long asking him what it meant. Member Carringer said if they write it normal people will understand. She said if you start playing with the words they will vote no because they do not understand it. Member Huse said let's face it people see what happens when they give government money. She said it has to be so stringent on the dollar amount that people will say okay. Member Carringer said people understand they cannot get anywhere without financing things. Member Huse said she thinks they need leeway, not a lot, but it is needed. Mr. Langley said the provision would read if the City desires to take out a debt obligation for a specific project in an amount that exceeds (fill in the blank), then the City is required to get approval at a referendum. Member Carringer likes what Mr. Langley just said. She said she thinks most people understand things cost in the millions and they understand, especially in these times, not even people in Heathrow could fork out $4 million dollars to do something. She thinks there Charter 08 -27 -13/7 should be some leeway and if it is too extravagant the voters have a right to vote on it. Mr. Langley asked if there was a recommendation for a dollar amount limit to put on it so he can draft some language. Member Huse said she thinks the experts in the field should word it. Mr. Williams said he thinks probably $3 million and under should be the first, then $3.1 million to $6 million should be their second and everything over $6 million goes to the voters. Mr. Langley said the vote would be four out of five for $3 to $6 million. Chair Paris said that should cover quite a bit for the City of Longwood. He said that is almost a quarter of the yearly budget and would be a very large project to require $6 million dollars. He thinks if they cannot get four Commissioners to get on board with it, they do not really need it. Member Carringer said, exactly, and in the past, their Commissioners have been pretty good in that department, but they are also trying to make some changes. She also added some of the new blood may not be as diligent or as frugal as what they have had before, so they have to take that into consideration as new blood comes on board. Mr. Williams said he thinks a super majority would give them a very good level of protection with that second tier. Chair Paris said that leaves Section 6. 10, Sub - Section B to discuss. He asked Mr. Langley to check to make sure what they did does not contradict anything else in the Charter later on. Mr. Williams said the only other item, which is not a great concern, is when they look at 6.01, 6.02, 6.03, 6.04, and 6.06. He said it is really dictated by State Statute 166.241 on what is required of municipalities in the adoptions of their budgets. He said he is not totally concerned with anything he sees there but if the committee wanted to make a recommendation he thinks they could probably reference that by the State Statute to some extent. Charter 08 -27 -13/8 Chair Paris said he would like to table that and read it before he makes any decision. He asked other than tabling the first part of Section 6, are we good with Article 6. Mr. Langley said if someone would make a motion and a second on that change of 6. 10, Sub - Section B that they talked about. Member Carringer made a motion to recommend a change to 6. 10, SubSection B to provide that under $3 million dollars of debt would require a majority vote of the Commission and between $3 and $6 million dollars of debt would require a 4/5 vote of the Commission to approve it and anything over $6 million would require a referendum of the voters. That is project specific for each project. Seconded by Member Huse and carried by a unanimous voice vote. B. ARTICLE VII. Land Planning Agency. Chair Paris said he saw nothing in Land Planning and everyone unanimously agreed. 5. OLD BUSINESS. There was none. 6. AGENDA ITEMS FOR THE NEXT MEETING. Chair Paris said the homework for the next meeting is to read Article 6 of the Charter, Financial Procedures and the City Administrator is going to pull up a State Statute to look at. Chair Paris said at the next meeting they will cover Article 8 and 9. The next meeting will be on September 24, 2013 at 7:00 P.M. 7. ADJOURN. Chair Paris adjourned the meeting at 7:32 p.m. B aris, Chair ATTEST: Jon C. Williams, RecortYing Secretary Charter 08 -27 -13/9