Res 64-04 RESOLUTION 64-04
A RESOLUTION OF THE CITY COMMISSION OF THE
CITY OF DELRAY BEACH, PALM BEACH COUNTY,
FLORIDA, SUPPORTING A NOVEMBER 2, 2004
REFERENDUM FOR THE LEVY OF A DISCRETIONARY
HALF CENT SALES TAX BY THE SCHOOL DISTRICT TO
CONSTRUCT AND RENOVATE PUBLIC SCHOOLS IN
PALM BEACH COUNTY ACCORDING TO A
COMPREHENSIVE PLAN
WHEREAS, the City recognizes an attractive, viable public school system is vital for
providing quality education and learning environments, for attracting and retaining businesses within
Palm Beach County, and helping sustain a meaningful quality of life for all county residents; and
WHEREAS, the School Concurrency Interlocal Agreement was approved in January, 2001
which establishes a Countywide public school concurrency process to limit public school
overcrowding; and
WHEREAS, the lack of funding within the School District for the costs of construction,
rephcement, expansion, and modernization of new and existing public school facilities, upgrades to
the newest technology, and acquisition of land, has become acute; and
WHEREAS, the School District requires a new funding source to complete the planned
construction projects; and
WHEREAS, the School Board has determined that there is a need for 15 new schools and
27 rephcement schools within the next five years that requires an additional funding source; and
WHEREAS, the School Board adopted a plan, consistent with the provisions of hw, for use
of the proceeds from the levy and collection of a surtax for this purpose; and
WHEREAS, the School Board thoroughly examined alternative funding options and
concluded that a half-cent sales tax would save approximately $300 milh'on in debt service cost
associated with a property tax; and
WHEREAS, numerous independent citizens review committees have scrutinized the sale tax
proposal and endorsed the phn; and
WHEREAS, the sales tax will not only benefit children in our schools but will also benefit
our communities by providing quality facilities for after-hours community learning centers, adult
education programs, and emergency storm centers; and
WHEREAS, adequate safeguards have been included in the plan to assure the funds are
dedicated to capital outlays, the tax sunsets at the end of six years and the approved comprehensive
countywide phn creates an independent citizens oversight committee to ensure the School District
fulfills its phn for school construction and renovations using the sales tax revenue.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COMMISSION OF THE
CITY OF Dg.I~RAY BEACH, FLORIDA:
Section 1. That the City of Delray Beach, Florida, endorses the referendum for a surtax of
1/2 cent per dollar for the purpose of financing the Comprehensive Phn for construction,
replacement, expansion, and modernization of public schools countywide.
PASSED AND ADOPTED THIS THE ~ DAY OF ~~g~._, 2004.
ATTEST:
Acting City Clerk
d LegaL,~ciency
City Attorney · (./
2 RES. NO. 64-04
MEMORANDUM
TO: MAYOR AND CITY COMMISSIONERS
FROM: CITY MANAGER ~P~I
SUBJECT: AGENDA ITEM # ~ ~ - REGULAR MEETING OF SEPTEMBER ?. 2004
RESOLUTION NO. 64-04
DATE: SEPTEMBER 3, 2004
This is before the Commission to approve a resolution supporting a referendum to be held on
November 2, 2004 for the levy of a half-cent sales tax by the School Board of Palm Beach County for
the purpose of financing a comprehensive plan to construct and renovate public schools countywide.
Resolution No. 64-04 has more supporting information and replaces Resolution No. 52-04 which was
passed and adopted on July 6, 2004.
Recommend approval of Resolution No. 64-04.
S:\C~ty Clerk\agenda uzmo$\P.e:~lu6on 64-04.PBC Half Cent Sales Tax.09.07.04
RESOLUTION 64-04
A RESOLUTION OF THE GITY GOMMISSION OF THE
CITY OF DELRAY BEAGH, PAI.M BEACH COUNTY,
FLORIDA, SUPPORTING A NOVEMBER 2, 2004
REFERENDUM FOR THE LEVY OF A DISGRETIONARY
HALF GENT SALES TAX BY THE SGHOOL DISTRICT TO
CONSTRUCT AND RENOVATE PUBLIG SCHOOLS IN
PA!.M BEACH COUNTY ACCORDING TO A
COMPREHENSIVE PLAN
WHEREAS, the C~ty recognizes an attractive, viable public school system is vital for
providing quality education and learning environments, for attracting and retaining businesses within
Palm Beach County, and helping sustain a meaningful quality of life for all county residents; and
WHEREAS, the School Concurrency Interlocal Agreement was approved in January, 2001
which establishes a Countywide public school concurrency process to limit public school
overcrowding; and
WHEREAS, the lack of funding within the School District for the costs of construction,
replacement, expansion, and modernization of new and existing public school facilities, upgrades to
the newest technology, and acquisition of land, has become acute; and
WHEREAS, the School District requires a new funding source to complete the planned
construction projects; and
WHEREAS, the School Board has determined that there is a need for 15 new schools and
27 replacement schools within the next five years that requires an additional funding source; and
WHEREAS, the School Board adopted a plan, consistent with the provisions of law, for use
of the proceeds from the levy and collection of a surtax for this purpose; and
WHEREAS, the School Board thoroughly examined alternative funding options and
concluded that a half-cent sales tax would save approximately $300 million in debt service cost
associated with a property tax; and
WHEREAS, numerous independent citizens review committees have scrutinized the sale tax
proposal and endorsed the plan; and
WHEREAS, the sales tax will not only benefit children in our schools but will also benefit
our communities by providing quality facilities for after-hours community learning centers, adult
education programs, and emergency storm centers; and
WHEREAS, adequate safeguards have been included in the plan to assure the funds are
dedicated to capital outlays, the tax sunsets at the end of six yea~s and the approved comprehensive
countywide plan creates an independent citizens oversight committee to ensure the School District
fulfills its plan for school construction and renovations us'rog the sales tax revenue.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COMMISSION OF THE
CITY OF DFJ.RAY BEACH, FLORIDA:
Section 1. That the City of DeLay Beach, Florida, endorses the referendum for a surtax of
I/2 cent per dollar for the purpose of financing the Comprehensive Plan for construction,
replacement, expansion, and modermzation of public schools countywide.
PASSED AND ADOPTED THIS THE __ DAY OF ,2004.
MAYOR
AI'I'~ST:
Acting City Clerk
Approved as to Form and Legal Suffidency
City Attorney
2 RES. NO. 64-04
PALM BEACH COUNTY BUSINESS FORUM
REFERENDUM EVALUATION TASK FORCE REPORT
Analysis of the Half-Cent Sales Tax Proposal for School Construction and Renovations
Published: July 6, 2004
Chairman: Dr. Robert "Budd" Kneip
Section One: Overview
Thc Palm Beach County Business Forum, an unincorporated association of 21 business,
professional and trade groups, was asked by thc Palm Beach County School District to support
the half-cent sales tax proposal for school construction and renovations. Thc issue will be before
voters in the November 2004 election.
Prior to taking any position on the issue, members of the Business Forum recruited an
independent Task Force of business, community and education leaders throughout Palm Beach
County to volunteer their time and expertise to review and evaluate the District's proposal and
then report their findings back to the Business Forum.
Section Two: Purpose of the Task Force
The objectives of the "Referendum Evaluation Task Force" were:
To review the assumptions upon which the Palm Beach County School District built
its proposal and to test the process by which these assumptions were derived;
· To review the methodology, sources (both internal and external) and the financial
procedures the District used to develop their numbers. The Task Force sought to
determine whether they were fair, logical and consistent, tied to other financial
documents and projections, footed internally, and were generated using sound
accounting methodologies;
· And, to test the efficacy of the measures the District has put in place to assure the
proper application and oversight of funds raised, should the effort be successful.
The Task Force conducted its examination in a rigorous and intellectually honest manner. The
Task Force members were informed from the start that this group was not created, nor ever
meant to serve, as an advocacy group for or against the sales tax. Its purpose was to review the
School District's proposal and assure ourselves that the District had taken every step, and asked
every question, that a reasonable person could have expected.
It was also stated and understood by the Task Force that the School District's plan could not take
into account dynamic events, which are uncontrollable or impossible to predict, that may change
the future of Palm Beach County in a dramatic way. These include the impacts of acts of nature,
like hurricanes, extraordinary changes in growth patterns or economic conditions, or the
demographic shifts that may be occasioned by the still evolving Scripps project. In addition,
there is a reasonable expectation that the State of Florida will fund the Class Size Amendment, as
required. These factors are outside the scope of consideration for the District's planning process
and were therefore acknowledged by the Task Force.
Referendum Evaluation Task Force Report
Page 2 of 10
Section Three: Referendum Evaluation Task Force Members
The Business Forum wanted to ensure that the Task Force consisted of a broad-based group of
leaders from various areas in Palm Beach County who would bring a wide range of insight to the
review process. The Task Force was recruited to consist of members with expertise in fields
such as finance, banking, accounting, construction, law, education, management, insurance,
engineering, real estate, development and utilities.
The Task Force was chaired by Dr. Robert "Budd" Kneip who is the founder, and Chairman of
the Board, of a highly successful business process outsourcing company in Palm Beach County.
He also currently serves as an Adjunct Professor at Palm Beach Atlantic University, teaching
both Business Ethics and Business Strategy and Policy.
All members of the Referendum Evaluation Task Force (listed below) have at least one business
located in Palm Beach County, are familiar with the areas in which they operate, are active
participants in civic, community or governmental life, and do not have any real, material or
financial conflicts of interest due to direct business ties with the school district. Companies like
FPL and BellSouth provide a unique service to the School District but the success or failure of
neither company can be said to hinge upon contracts with the District or the onset ora major
school construction program. Every effort was made to ensure the members were independent
and unbiased. Each member represented they were motivated to serve out of civic duty and
pride, and not because of financial gain - either now or in the furore.
The members of the Task Force were:
· Dr. Robert "Budd" C. Kneip - Chairman of the Board of Directors: Oasis Group
(West Palm Beach)
· Dr. Greg Aloia - Dean, College of Education: Florida Atlantic University
(Boca Raton)
· Robert B. Banting - President: Anderson & Carr, Inc. (West Palm Beach)
· Anthony K.G. Barbar - President: Barbar Investment Group (Boca Raton)
· J. Scott Benyon - Vice President, Environment/Government Affairs: Rinker
Materials (West Palm Beach)
· Michael J. Bracci- President: Northern Trust Bank (North Palm Beach)
· Donna Clayton - Vice President & Counsel: Pratt & Whitney, Space Propulsion
Operations (West Palm Beach)
· George T. Elmore - President: Hardrives, Inc. (Delray Beach)
· Dr. Dennis P. Gallon - President: Palm Beach Community College (Lake Worth)
· Afredo T. Guerra - Chief Financial Officer: NCCI Holdings, Inc. (Boca Raton)
· Dale R. Hedrick - President: Hedrick Brothers Construction Co. (West Palm Beach)
· William L. Kramer - Senior Vice President/General Manager: Sugar Cane Growers
Cooperative of Florida (Belle Glade)
· Larry Levine - Corporate Vice President Operations: BrandsMart USA (Hollywood)
· Rod Macon - Regional Manager: Florida Power & Light (Juno Beach)
Referendum Evaluation Task Force Report
Page 3 of 10
Steven E. McCraney - President: McCraney Property Company (West Palm Beach)
Cathy L. McKenzie - Area Director, Regulatory & External Affairs: BellSouth
(West Palm Beach)
Jo Moskowitz, Senior Manager, Public Affairs, Citrix Systems, Inc. (Fort
Lauderdale)
Dr. Kristen Murtaugh - Vice President: Florida Atlantic University, John D.
MacArthur Campus (Jupiter)
· Robert E. Rabenecker - General Manager: Jupiter Stadium (Jupiter)
· Jonathan R. Satter - Principal: Compass Realty Advisors Inc. (West Palm Beach)
· Michael Sexton - President: Sexton Engineering Associates, Inc. (Wellington)
· Jeff Spear - President: The Spear Group (Ft. Lauderdale)
· Roxanna Trinka - President/CEO: Baseline Engineering & Land Surveying, Inc:
(Boca Raton)
· Leon Weekes - Chairman: Weekes & Callaway, Inc. (Delray Beach)
· ' Mike Jones - President & CEO: Economic Council of Palm Beach County, Inc.
(West Palm Beach) served as staff to the Task Force.
Section Four: Task Force Process
Members of the Task Force were asked to volunteer their time over a six week period stafdng in
mid May, 2004 through late June, 2004. The Task Force held three formal meetings, conducted
numerous telephonic and online exchanges, and received frequent and detailed correspondence
between meetIngs. Most of the task force members attended at least two, if not all three,
meetings. Following each meeting, Task Force members who were unable to attend were sent
all information presented. Everyone was sent any follow-up material that may have been
provided in response to questions the Task Force raised, so they could stay up-to-date on all new
data points collected.
The Task Force members understood at the beginning of the process that they were not there to
re-do all the work that had been done by the School District in developing the Five Year Plan
and budget for construction. The members were there to bring a depth of experience to the
process, evaluate the District's work and ask questions about alternatives, finances, oversight and
future needs which any reasonable business person would want to know. Members agreed to
strive for consensus in the decision making process, keep an open mind and diligently seek
sufficient information to make a compelling case either for or against the proposed sales tax
increase for school construction. The members further agreed that their focus would be on issues
that rose to the level ofmateriality, and not exert needless energy or effort attempting to resolve
matters of de minimis impact.
At the first meeting, on Wednesday, May 26, 2004, members reviewed the mission and
objectives of the Task Force, heard a presentation from the School District staff about the need,
business case and alternatives related to the sales tax, and potential consequences if the tax were
not successful. Members asked questions of the School Superintendent and his staffand had a
discussion about the information furnished to them. Significant follow-up questions and data
requests, necessary to further analyze the proposal, were generated and forwarded to District
personnel.
Referendum Evaluation Task Force Report
Page 4 of 10
In the second meeting, held on Monday, June 7, 2004, Task Force members heard from a
principal of Public Financial Management, Inc., an outside advisory company to the School
District and nationally recognized finn with expertise in financial matters including access to the
capital markets. The expert endorsed the District's management of financial leverage and
supported the District's rationale for keeping the millage required to make Certificates of
Participation (known as COPs) payments at or below 1 mill. Task Force members were told this
is a prudent approach that helps maintain a sustainable and balanced capital budget. The
members also heard presentations by the Chairperson or representative of three existing,
independent oversight committees in place within the School District that had previously
reviewed the proposed plan.
The three committees were:
· Construction Oversight Review Committee (CORC) - This committee consists of
fourteen volunteer citizen members appointed by the School Board to provide
oversight and recommendations concerning the work of Facilities Management to
build quality schools on time and under budget.
· Technical Advisory Group (TAG) - This committee consists of five citizen
volunteers with special knowledge and experience to review the implementation of
concurrency, which requires school construction to keep pace with growth.
· Finance Committee - This committee is composed of seven community volunteers,
with substantial experience in the financial services industry, along with six ex-officio
members representing the Board and District employees. This committee is an
advisory group that reviews the School District's investment portfolio and short-term
or long-term debt obligations.
Each independent standing committee reviewed the process it went through before deciding to
support the District's plan and took questions from Task Force members. The responses of these
three committees to the District's proposal were positive, and are presented in greater detail in
the following Section Five of this report.
At the second meeting, Task force members also reviewed answers to questions from the prior
meeting and held a preliminary discussion of what conclusions the members could draw based
on everything they had received.
At the third and final meeting, on Monday, June 21, 2004, the Task Force discussed responses to
new questions fi.om the second review meeting. Members then had an in-depth discussion of
their observations and delivered the recommendations and conclusions that are stated below in
this report.
Referendum Evaluation Task Force Report
Page 5 of 10
Section Five: Overview of the School District's Rationale for the Half-Cent
Sales Tax Proposal
Note: The information below is based on the presentations made by the school district staff to the
Task Force members, with a majority of the information from a PowerPoint titled: "School
Construction Referendum: ~4 Synopsis" dated May 26, 2004.
· The School District of Palm Beach County is the 11th largest school district in the
nation, with a current student population of over 160,000 students.
· The School District has some of the most successful academic, construction and
finance programs in the nation, and has been recognized for its accomplishments in
several areas.
· Since the last voter-approved bond for public schools in 1986, almost 18 years ago,
the School District has doubled in size.
· In August, 2004 the District will open an additional 7 new schools, adding 12,313
new seats for students in Palm Beach County.
The Five Year Plan for 2004 through 2008 shows that there is a need for new schools,
replacements and renovations to provide adequate, functional space for an additional
16,271 new students that will be entering the school system during that timeframe.
· The schools will be built in areas where they are needed to keep up with high growth
based on the latest demographic information and enrollment projections.
· The 2004 Five Year Plan is to spend $977 million to build 15 new schools, replace 27
existing schools which would not be cost effective to repair, expand 9 current schools
and construct 4 career academies.
· The staff identified a shortfall of $560 million to fund the plan for school construction
and renovations.
· The District has exhausted all possible funding sources and has issued the maximum
allowable amount of Certificates of Participation.
· The District's bond rating (which is among the highest in the state) would be
jeopardized unless a new source of revenue is identified.
· A proposed half-cent sales tax would fund the $560 million gap so the school
construction and renovations plan can be completed properly.
· The tax would apply only to the first $5,000 of the sales price of tangible personal
property. Many goods and services such as medications, baby food, and certain
groceries would remain exempt from the sales tax.
· If approved by voters in November, the half-penny sales tax would be in existence for
six years, beginning January 2005 and ending December 2010.
· The proceeds of the sales tax would be dedicated for specific school capital projects
only, as outlined in the 2004 Five Year Plan.
· The capital plan is required by law to be updated annually by the School District staff
and Board.
· An independent oversight committee will be established to oversee and review the
use of the sales tax proceeds.
· Any funds collected beyond the $560 million will be used to pay down future debts.
Referendum Evaluation Task Force Report
Page 6 of 10
· The five year plan for new construction has been reviewed and approved by the three
independent oversight committees: CORC, TAG and Finance.
Two committees, TAG and Finance, also supported the half-cent sales tax as a
mechanism for funding the $560 million shortfall. CORC supported the plan but did
not take a position on the funding mechanism since it's not part of their mission.
However, CORC unanimously agreed that additional funding is needed for the
District to execute the Plan.
· Without the half-cent sales tax revenue the school district would have to eliminate
and/or reprioritize future school construction projects and renovations that are part of
the current plan, deal with accelerated building deterioration and consider
implementation of year-round schools and double-sessions.
· The half-cent sales tax revenue of $560 million is expected to fund the gap in
construction through 2008 and will put the District's construction program back on
track financially. Moreover, the School District expects to have sufficient revenue
fi.om normal funding sources to keep pace with planned school construction projects
and does not reasonably foresee any need for additional future funding based on these
current projections.
.Section Six: Analysis and Recommendations from the Referendum Evaluation
Task Force
Note: The following are observations and recommendations made by the members of the Task
Force about the District and the Sales Tax Proposal.
~ The School District:
· The Palm Beach County School District has done a good job on school construction
projects by building 25 new schools, 20 replacement schools and remodeling 3
schools to add 35,000 new seats since 1998.
· The District has managed construction expenditures of $1 billion between FY98 and
FY03 and managed school construction and renovation projects on time and, with
very few exceptions, under budget.
· They have kept down costs in construction by using the same design concepts and
economizing from one school to the next.
· The School District has been recognized because its school construction costs have
been equal to or less than state averages.
· In the last few years the District's student projections have been impressively
accurate (variation of 547 students in 2003 and only 41 students in 2004 out ora
population of 160,290 students enrolled in SY2003-04).
· The Construction Oversight Review Committee (CORC) provides credibility and
strength to the work done by Facilities Management.
Referendum Evaluation Task Force Report
Page 7 of 10
The 2004 Five Year Plan.
· Thc District has done a thorough job of evaluating future needs and coming up with
an adequate plan and budget for new schools in their 2004 Five Year Plan.
· The five year plan and the sales tax proposal have had sufficient review by all three
standing committees (CORC, Finance, TAG), based on each committee's scope of
work.
· The endorSement by each of the three committees enhances confidence in the
construction plan and in the sales tax as a proper finance mechanism to fund the $560
million shortfall.
· While this Task Force did not scrutinize each school listed in the five year plan, it did
evaluate the process by which the District made its decisions. We are satisfied that
the School District applied demographic information and other relevant data from a
variety of different, independent sources to develop the list of school projects that are
in need of new construction, replacement or modernization.
Condition of Schools
· Many of Palm Beach County's older schools need modernization, better
technological access, and higher safety standards.
· Older schools in the county need to be brought up to the same level of standard as
new schools that are being built so children are provided an equal learning
environment.
· The District has done a thorough and fair job evaluating and ranking schools that
need to be repaired, modernized or replaced using outside professional experts and
construction project teams to calculate each school's Facility Condition Index (FCI)
and Educational Adequacy Index (EAI). Both of these indices are well established,
independently derived mechanisms for evaluating repair and modernization
requ'xrements.
~' Dedicated Funding Provision:
· The Task Force strongly approves of the District's intention to dedicate all proceeds
fi.om the sales tax to school construction, renovations and expansions only.
· We are satisfied that in the 2004 Five Year Plan the District has clearly listed all new
schools, replacements, and modernizations that will take place with the $560 million
generated fi.om the half-cent sales tax.
~ Sunset Provision:
· The Task Force supports the guarantee that, by law, thc sales tax expires at the end of
six years (December 31, 2010) and can not be extended without voter approval.
· It is our understanding that if the $560 million from the sales tax is collected sooner
than five years, then the tax must expire at thc cad of the year in which thc total
amount is collected. The Task Force supports the plan to use any revenue collected
Referendum Evaluation Task Force Report
Page 8 of 10
over the $560 million, if any overage should occur during the final year the tax is
collected, to pay down any debts the District has already incurred by the issuance of
Certificates of Participation.
Oversight Committee Provision:
· The Task Force supports the creation of an Oversight Committee to ensure the
District fulfills their plan for school construction and renovations using the sales tax
revenue.
· It is our recommendation that a panel of independent community leaders, including
business, finance and construction expe~ts, who are volunteers with no financial ties
to the District, serve on the Oversight Committee. Their task should be to oversee the
$977 million of expenditures in the 2004 Five Year Plan, including the $560 million
portion that will be generated by the half-cent sales tax.
· It is the Task Force's suggestion that the Oversight Committee should consist of
seven volunteer citizen members who are residents of Palm Beach County: One
representative each from these current standing committees: CORC, Finance and
TAG; one representative appointed by the Economic Council; one representative
appointed by the Education Commission; and two representatives appointed by the
Business Forum.
· The committee should adopt roles and proceedings regarding governance, length of
service, select a Chairperson, and serve in the Sunshine per state and local law.
· The Oversight Committee should be in place until all projects fxom the 2004 Five
Year Plan have been funded and scheduled for construction.
· We suggest the representatives on the Oversight Committee work closely with the
CORC, TAG and Finance committees, District staff and School Board members to
ensure the plans and budgets for each project will allow all projects and facilities to
be completed as promised.
Collecting a Sales Tax vs. Property Tax:
· The Task Force affirms the findings of TAG and the Finance Committee that the sales
tax is a proper funding mechanism to generate the $560 million needed.
· The sales tax is a more equitable source of funding then a property tax because it
spreads out the cost of the tax to include tourists and renters.
· The sales tax is only paid on the first $5,000 of the sales price of tangible personal
property.
· Members of the Task Force appreciate the fact that the sales tax lasts only six years,
as opposed to a property tax that would require at least 20 years to generate needed
revenue and an additional $302 million of interest to retire.
Referendum Evaluation Task Force Report
Page 9 of 10
Section Seven: Conclusion
Palm Beach County schools need to be updated with adequate facilities, including better access
to technology. The sales tax will not only benefit children in our schools but will also benefit
our communities by providing quality facilities for after-hours community learning centers, adult
education programs and emergency storm centers. An attractive, viable public school system is
vital for attracting and retaining businesses within Palm Beach County, and helps sustain a
meaningful quality of life for all county residents.
Having reviewed the School District's plan for school construction and renovations, we the
members of the Referendum Evaluation Task Force unanimously support the School
District's proposal for the half-cent sales tax. We believe the S¢hool Distr~ct has exhausted all
other funding sources, and the half-cent sales tax to raise $$60 million is the best and mos1
reasonable solution to fund school construction, renovations and expansion, which in mm will
reduce school overcrowding.
Referendum Evaluation Task Force Report
Page 10 of 10