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08-13-96 Workshop CITY OF DELRAY BEACH, FLORIDA - CITY COMMISSION WORKSHOP MEETING - AUGUST 13, 1996 - 6:00 P.M. FIRST FLOOR CONFERENCE ROOM The City will furnish appropriate auxiliary aids and services to afford an individual with a disability an opportunity to participate in and enjoy the benefits of a service, program or activity conducted by the City. Contact Doug Randolph at 243-7127 (voice) or 243-7199 (TDD), 24 hours prior to the event in order for the City to accommodate your request. Adaptive listening devices are available for meetings in the Commission Chambers. AGENDA (1) Budget workshop. (2) Commission Comments. Please be advised that if a person decides to appeal any decision made by the City Commission with respect to any matter considered at this meeting, such person will need to ensure that a verbatim record includes the testimony and evidence upon which the appeal is based. The City neither provides nor prepares such record. MEMORANDUM TO: MAYOR AND CITY COMMISSIONERS FROM: ~/ASSISTANT CITY MANAGER SUBJECT: BUDGET WORKSHOP MEETING OF AUGUST 13, 1996 DATE: AUGUST 9, 1996 Other materials may be delivered Monday, upon the City Manager's return. [lTV DF I]ELRI:IV BE;I£H DELRAY BEACH ~ 100 f.;,W, !s;AVENUE · DELRA¥ BEACH, --L.C:[D,~ 33444 · 407/243-7000 llI-AmericaCity Bob Bar¢inski ~ Lula Butler Diane Dominguez ] 993 Bill Greenwood August 12, 1996 ~ed ~usty Al&son MacGregor Barry Chief Overman Chief Rehr Susan Ruby Honorable Mayor and City Commission Jo~ Safford City of Delray Beach, Florida Joe ~eldon From City Manager Dear Mayor and City Commission Members: In accordance with Article IV, Section 4.05 of the City Charter, I respectfully submit the Operating Budget and Capital Improvement Budget for the City of Delray Beach for the fiscal year beginning October 1, 1996 and ending September 30, 1997. This budget presents a proposed financial plan to guide the City through fiscal year 1997. This budget continues to follow a zero-based budget format whereby the expenditure of funds is evaluated for each program by objectives at several levels of service. This serves to evaluate the priority of services provided by the City to determine the ideal level of service given the available revenues for the fiscal year. We have presented the costs of providing services to the residents of Delray Beach for all General Fund and Enterprise operations. Over the years the City has made significant efforts to improve the amenities and public facilities throughout the City. For the most part, through increases in the City's fax base we have been able to maintain these new facilities without any increase in the millage. Efforts have also been taken to make operations generating revenues reach a break-even point to lessen the dependence on tax dollars. We are fortunate our revenues remain strong as this, in part, allows the City to meet the matching portion of sought after grants. This in turn reduces the City costs of allowing departments to expand services and set a higher level of objectives to attain, as is the case in the Police Department to add neighborhoods under the Adopt-A-Neighborhood concept. The increased manpower is the result of two grants which provide $675,000 over a three year period to add nine Police Officers. Although we have been able to provide the matching portion of the salaries through a reduction in overtime, we also absorb the supplemental cost of providing police cars which totals over $73,000 for FY 97. THE EFFORT ALWAYS MATTERS Program Enhancernenfs The following items identify new items included in the budget this year that consist primarily of enhancements to the City's existing programs: Staff Assistant in the Fire Department ($26,280) - Funding for this position will assist in the collection of revenue generated by the transport program. In December of 1994 the City received its cedificafion to provide Advanced Life Support (ALS) patient transpodation. This service began operation in March 1995. Fiscal year 1997 Transport Fees represents the second full year of its $1,000,0o0 operation, se00,000 $800,000 Currently there is an outstanding balance $700,000 from fiscal year ending 1995 in the $600,000 amount of $231,700. At the end of June $50o,000 $4oo,ooo 1996, the aged receivables for accounts $3oo,ooo over 30 days past due totaled $42,780, $200,o00 over 60 days $38,813, over 90 days $1oo,ooo $33,672 and $114,735 in accounts over $o 1994 1995 1996 1997 120 days past due, excluding the Projected outstanding balance from FY 95. The Fire m Revenues Collected :' Past Due Department anticipates that approximately 15% of the outstanding balance from FY 95 can be collected and our current collection rate increased from 68% to 75% by increasing the follow-up effort. Applicant Tracking Software ($15,000) - The HTE software used by all the city's other departments provide a software package that tracks the applicant process from job opening through employee selection. This would provide the Human Resources department with rankings by ability, notification to candidates, etc., as well as eliminate the need for a three part manual card system currently used since al~ information is maintained on-line. Administrative Assistant in the Finance Depadment ($33,130) - This position will provide clerical support to the department relieving the Administrative Manager of routine duties to perform more complex responsibilities such as pension administration. Office Automation Analyst in the Management Information Systems Department ($31,450) - This position will handle the numerous support calls resulting from the implementation of more complex applications and maintain the MIS Work Schedule. This will relieve senior staff members to concentrate on more involved communications scenarios, and update tasks still requiring automation. Economic Incentive Grant Program for ABC Carpet, Inc. ($100,950)- This pilot program will provide the City with valuable information to determine whether it will be advantageous to establish a formal Economic Incentive Grant Program to attract other new businesses to the City based on similar business characteristics, property enhancement and job creation. This program is expected to create 35 to 50 new jobs with no less than 20% of the employees being residents of the City. The terms of the agreement provide that the City will pay one dollar per square foot to offset the rehabilitation costs of the building, $100 and $50 per month for full-time and part-time employees respectively for the first 24 months of the lease term and 50% of the sales tax and municipal utility tax on electric service for the first five years. Provisions are also included for ad valorem tax rebates on any increased property value that will be payable beginning in fiscal year 1998. Journeyman Electrician Public Works Division(S33,170) -This position is included to meet the various electrical service calls that are requested of the Building Maintenance division. Presently, all requests are prioritized by the Utilities department with lengthy delays in routine and Iow priority work. The Public Works Division anticipates reduced labar costs for electrical work presently contracted out and an improved response time of two days. Street Maintenance Worker Public Works Division ($23,770) - At present, the Streets division has several miles of backlogged sidewalk repairs and installations. This position will assist the 2-man crew to meet more of the requests. Hansen Software ($35,010) - The Hansen software provides a work order system for scheduling maintenance work orders. It provides computer generated work orders; tracks preventive maintenance inspections; monitors labor, material and equipment costs and generates reports with historical data. The total encompasses the purchase of the Street module, the Plant module for Facility Maintenance and the Stormwater module to be purchased from Stormwater funds ($11,670 per module). Lease purchase of equipment for Community Improvement and Planning & Zoning ($16,000) - This is the estimated first year cost of a five year lease for three pieces of equipment totaling $67,460. The first, Direct Talk, provides contractor's with the ability to schedule, cancel and obtain results of inspections from a touch-tone phone. Inspector's are also able to enter results through the telephone. The impact on services is also increased by the 24 hours per day accessibility of the information. A contractor currently must adhere to our normal operating hours of 8 AM to 5 PM. The second, a microfilm/fische reader/printer will replace the existing obsolete equipment. This machine is used on a daily basis to provide copies of all permit and code enforcement documents requested. According to the Department, paper and toner are no longer available for the existing 14 year old machine. The third item, a Document Imaging System will be shared by Community Improvement and Planning & Zoning. It will create an automated storage and retrieval system for project file documents and plans. Each document would be digitally scanned and stored on a CD-Rom. The benefits include accessibility and quick reference and search functions. In addition, the amount of space necessary to store the information is substantially reduced as one disc can store approximately 13,000 sheets of paper, that of a 4-drawer file cabinet. General Fund Revenues Revenues for the 1997 Budget total approximately $45 million or $1,300,000 above fiscal year 1996, less prior year surplus and prior year encumbrances brought forward. The use of carryover from prior year's unappropriated fund balances is minimal for the 1997 Budget. Ad Valorem Tax Revenue The 3.66% increase in the City's taxable assessed valuation is a sign that the local economy is rebounding. This continues a steady increase in the City's tax base over the past two years as compared to previous years where there were decreases as much as $48 million in 1993 and $35 million in 1994. The current increase is approximately $93 million over last years final assessed valuation. Of this increase, approximately $34.9 million is attributable to new construction and $7.1 million to annexations less deletions of $1.5 million for a net new value of 40.5 million. The total increase will provide for additional tax revenues estimated at $698,000 based on the proposed millage and a 95% collection rate. Property Tax Millage and Valuations: 1995 1996 1997 % Change Property Tax, Millage Actual Actual. Proposed FY 96 to 97 Operating Millage $6.88 $6.87 $7.00 Debt Service Millage 1.07 1.03 .90 Total Millage .~7.95 .~7.90 .~7.9© 0% Assessed Valuation (000) $2,468,533 $2,541,583 $2,634,640 3.66% Revenues Generated ~18,837,457 ,~19,301,947 919,772,980 2.44% * The Revenues Generated represent a 96% collection rate f~ the year. The increase in the assessed valuation results in a 4.07% increase over the rolled-back millage rate of $7.04. The rolled-back rate is the operating millage rate that will provide the same ad valorem tax revenue as was levied during the prior year, exclusive of new construction, additions to structures, deletions and property added due to geographic boundary changes. The assessed valuation of property located in the Community Redevelopment Agency's (CRA) district increased by $8,420,825 which accounts for 9% of the City's growth. This results in an increase Jn the CRA's distribution of approximately $45,000. Other Taxes The Other Taxes category consists of the Optional Gas Taxes, Utility Taxes, and Franchise Taxes. The combined increase totals 3.8% or $345,900 over FY96 which is attributable primarily to growth. Ucenses and Permit Fees Revenues derived from licenses and permits have increased by approximately $32,360 or 1.8% over the current year. This increase is mainly due to the requirement of a pre- inspection for new businesses applying for an occupational license. This new program is estimated to generate $25,000. Intergovern mental The overall intergovernmental revenue is projected fo increase by 1.7%. This is due to slight increases in the two largest sources, State Revenue Sharing and Sales Tax Collection. Grants, which are the secondary source of funds in this category, decreased. The decrease results from one time grants awarded for the purchase of equipment and from other agencies such as the FEMA Mutual Aid for disaster relief. The majority of the grants budgeted for FY 97 involve funding of police services. This includes the second year of a three year COPS FAST Federal grant which partially funds four police officers and the first year of a three year COPS Universal Hiring grant that will fund five police officers. Both agreements provide a maximum of $25,000 per officer per year. The City will also receive the second year of funding from the School Board for a School Resource Officer assigned to the Delray Full Service Center totaling $2,250 per month. Charges for Services Charges for Services are projected to increase by approximately $259,090. This is primarily due to increased revenues on existing programs such as the Highland Beach contract, transport fees, our After School and Day Camp Programs and revised tennis revenues. Fire related services include a $99,200 increase in the Highland Beach contract due to the reassignment of personnel during the year that may increase or decrease the charges in any year. Transport fees are projected to increase $55,000 based on the current level of activity and a conservative estimate for the collection of outstanding debt. Revenues relative to recreation activities conducted by the Parks department are also projected to increase. This includes a new program fee for after school participants which will generate an estimated $61,000 to compensate for the reduced funding from the Children's Services Council. This will allow for an additional 100 participants, returning the program back to the level served prior to the grant reduction in fiscal year 1996. The $10,740 increase day camp fees also reflects an increase in the level of participation. Revenues derived from the operation of the Tennis center are expected to increase as a whole based on the premise of the following operating policies: The Tennis Pro Shop will be reorganized to bring in merchandise on a consignment basis. The City will not invest any money and will receive 15% of the gross revenue. Players will be allowed to coil in and reserve courts three days in advance versus the current one day. · Six month memberships will be eliminated and oil renewals due October 1 of each year. · Revised daily court fees will be implemented including lower rates for afternoon play and the entire off season. · Institute three tier rates; members, county residents and all others. fines and Forfeitures Revenues generated from fines are up $7,800 or 2% due mainly to an increase in the general fines line item of $20,000. This is a result of a more proactive stance in the Police Department's collection of outstanding fines. The increase in general fines is offset, however, by a decrease in false alarm fees. The original false alarm fees, implemented in January 1995, were based on a graduated fee schedule. This was later rescinded in October 1995 due to the excessiveness in charges causing among other problems, a deterioration of relations with the community. The FY 97 projections are based upon a fiat fee of $25.00 per false alarm responded to in excess of three. Miscellaneous Revenue The total for the Miscellaneous Revenue category, $2,883,750, remains at approximately the same amount as the current year. We are however, accounting for a $30,000 decrease in investment interest and decreased recovery of administrative costs from the Sanitation Fund of $77,000. The latter is caused by the reduced cost of the waste collection contract for which the calculation is based. The offsetting increase is attributable to the first year of principal and interest due on the repayment of a $3,840,000 Urban Development Action Grant (U.D.A.G.) loaned in 1989 to Auburn Trace for the construction of Iow and moderate income housing. Their repayment is amortized over 50 years, but payable in 25 years at a 3% interest rate with all proceeds to be used for Iow to moderate income housing improvements. These monies are transferred to the Community Development Fund and used in the rehabilitation of housing in the target area. Inferfund Transfers Interfund Transfers total $2,219,680, a $2,030 increase over FY 1996. The in-lieu of tax transfers are adjusted annually, as necessary, using the proposed millage rate and the current asset totals for each enterprise fund. General Fund Expenditures Most currently provided services are funded at Level III which allows up to a three percent {3%) increase over the program's 1996 budgets. At Level II revenues exceed the expenditures by approximately $1.5 million, at Level III $591,710 and at Level IV expenses exceed revenues by over $2.2 million. The total general fund expenditures in the Manager's Recommended totals $45,033,520. Of this, 65% is budgeted for personal services, 16% for operating expenses, 10% for debt service including utility tax transfers and 9% for the combined capital, grant and transfer expenditures. Personal Services A total of ten new positions will be authorized in the General Fund, however, the net increase totals five due to the elimination of ~,vo frozen positions in the Community Improvement department and the termination of the three positions at the Tennis Center. Five of the new positions are the Police Officers funded pdmadly by the COPS Universal federal grant. A detailed summary is provided in the Synopsis section indicating the changes in the authorized positions and staffing levels over the past five years. The following graph depicts the changes over the past several years which centers on hiring more personnel who directly serve the public while relying less on support staff. Due to the downsizing depadments experienced in previous years, there have been cases where they demonstrated the need for additional support staff to complement a new program, such as General Fund Employees the case with the collection of transport fees. 700 The largest increase in authorized staff is 600 Total concentrated in the Police Department. This is due largely to the partial grant funding of five 5oo positions. These five positions obtained 4oo through the COPS Universal Hiring grant will 300 work primarily in the Carver Estates area. The department had previously maintained 200 personnel at this location on an overtime basis with the costs partially reimbursed by the 90 91 92 93 94 95 96 97 Fiscal Years Housing Authority. The reduction in the overtime expense will fund the matching portion of the grant which totals 35% of the first year personal services costs. Therefore, the grant provides not only the opportunity fo serve the location more efficiently but also increases the police presence and positively impacts an area that consists largely of densely populated government subsidized residences that are easily victimized by crime. Affecting the full-time equivalent (FTE) count is the increase in part-time salaries for Recreation Leaders in the After School Program. The additional revenue for the salades will be generated through a $150 fee for the 10 month After School Program. Under the existing ratio of 15 participants to one Recreation Leader, the program will maintain its current standards and restore the level of participation from 300 children back to 400. As you may recall from last year, the grant funding from the Children's Services Council (CSC) was reduced by $61,200 for this program, causing af one time a waiting list of 118 children. Because of this, the department anticipates enrollment will remain at 100% despite the fee, required in part by the CSC as a condition of the granl award to help defray the cost of the program. Merit Increases Medt increases for FY 96-97 are proposed on a zero to five percent range (0%-5%) with three percent (3%) budgeted for increases in each department. There ore no merit increases budgeted for employees earning the maximum amount within their salary range. The additional funding required is pending the recommendafion.~ from the independent consulting group performing the classification and compensation study. Other Personnel Benefits The employer contributions for both the Police and Fire Pension and the General Employee Pension have risen slightly this year. The funding requirements for each plan are derived from the Actuarial Valuation Report prepared for each. The contribution for the Police and Fire Pension increased from $1,302,028 to $1,323,366 or 1.6%. The contribution for the General Employee Pension increased from $767,595 to $771,671 or .,5%. Fiscal year 1997 is the City's foudh year of providing health insurance through an insured plan. The original contract awarded to Anthem in 1994 was at an employee unit cost of $167.75 per month and $229.79 for dependent coverage. We estimate the fourth year cost of the contract to increase to $210.42 (employee) and $288.19 (dependent) on February 1, 1997. This represents a 25% increase for each over fha four year period. Since the contract year does not coincide with our fiscal year the budget reflects a blended rate of $207.67 and $275.55 for the employee and dependent rote respectively to account for the assumption of a seven percent increase as of February 1, 1997. For worker's compensation coverage the City has a self-insured $150,000 deductible per claim. Claims over $150,000 up to the statutory limits are insured. The rates necessary to generate the funds for the estimated claims and premium payments increased by approximately 12%. The increase is due pdmadly to the estimated claims increasing by 10.8% from $600,000 to $664,900 as well as the increased reserve requirement for the ultimate payment of outstanding claims as provided in the Ernst & Young actuarial study. The increase in rates for life insurance are associated with the increased face values in the new policy which took effect this year. The life insurance benefit now provides for approximately one times the annual salary. At present, funding is proposed for a three percent maximum ICMA match to department heads, assistant department heads and division heads interested in participating in the defined contribution plan. The estimate to fund this proposal is approximately $97,000 annually, with a first year cost of $77,000. Operating Expenses Overall the total operating expenses of the general fund have decreased approximately $1.1 million, but have remained at 16% of the total budget. Excluding settlement charges incurred in FY 96, the operating expenses increase by 1.1%. The increase is due in pad to the total general liability expense absorbed by departments in the general fund increasing $103,480 or 12.7% over the FY 96 amount. I anticipate this amount to decrease once the reduction in the projected property claims is factored in from that which was originally used. Contrib~ions During the year the City receives numerous requests for funding from non-profit organizations. What appears in this document is the maximum contribution of one percent of the ad valorem tax revenue ($170,030) as is defined in the City's policies and procedures for Charitable and Benevolent Requests. As a means of allocation, a similar committee to that formed last year will review the requests totaling $316,490 and recommend a list of agencies to receive funding. It should also be noted that the Application form for Charitable and Benevolent Contributions was revised last year to include a status repod in an effort to determine the specific results received from the donated funds. The response to this requirement will also be taken into consideration upon receipt of the final report due October 9, 1996. The allocation for the Delray Beach Library is funded at $618,390, 10% above the FY 96 budget of $561,860 for their normal operating hours. Funding in the amount of $14,870 will be added to provide weekend library services on 35 Sunday afternoons during the October - May season. Funding was provided for 24 Sundays in FY 96. Other grants include a contribution to Old School Square for $122,500 to supplement their annual operating expenses as well as the final installment J$30,000} of the three year loan (90,000 in total) to the Pineapple Grove Mainstreet Program. It should be noted, to date the City has been reimbursed $5,720 by the CRA from the increased Tax Increment Financing funds (T.I.F.) generated from within the Mainstreet area. Transfers The transfer to the Beautification Trust Fund amounts to one percent of the projected collection of electric, telephone and gas utility taxes. The monies are used to maintain the beautified areas and to repay debt service incurred for beautification projects. The transfer is up by 2.8% from the previous year. The transfer to the General Construction Fund is $111,000. This represents a 15% increase over the amount that was initially budgeted for transfer in FY 96. This transfer will primarily fund renewal and replacement programs to maintain the condition of buildings, equipment and infrastructure as outlined in the Capital Improvement Plan. Specific amounts are set aside for Streets, Traffic & Alleyways, Beautification and the renewal and replacement of buildings and equipment. Despite the increase, several requests still remain unfunded. The General Fund monies transferred to the Community Development Fund go toward extedor improvements to commercial and residential units. Funding for this program totaled $171,870 in FY 96. The decrease in FY 97 is 23% or $39,540 with minimal funding also being provided to maintain the administrative costs at less than ten percent as required by the grantor. These administrative cost will provide for an additional staff person to oversee the State Housing Initiatives (SHIP) grant. Other Funds Water and Sewer Fund Currently the Water & Sewer Fund is batanced with a three percent rate increase and minimal use of pdor year funds. Most of the division's requests were funded at Level II. The Water Distribution division includes funding for two transferred positions as well the purchase of a 3/4 ton pick-up truck equipped for fire hydrant maintenance. An audit of the City's 2,300+ fire hydrants (to be performed by an outside contractor) will enable the division to begin a comprehensive monitoring and maintenance program. Also included in this division are funds for the installation of 3" and 4" high accuracy water meters which are expected to increase water revenues. The funding for the construction and implementation of a reclaimed water irrigation system is also included. Funding will be provided through connection fees ($2,000,000) and long term financing ($1,800,000) City Marina Fund Operating expenses at the City's marina are budgeted to decrease by 14% or $6,750. The decrease is due to consulting services incurred in FY 96 to evaluate the seawall condition and decreased projections for the marina's utilities. Beautification Trust Fund The Beautification Trust Fund is used to account for the maintenance of beautification projects and debt repayment on capital improvements to public rights-of-way. Revenue is derived from a one percent transfer on utility taxes levied by the city as a public service tax. This totals $604,800 a 2.8% increase over FY 96. Expenses consists of 59% maintenance and 41% debt repayment which will not be retired until the year 2007. Funding for fiscal year 97 can be met with the current one percent transfer and padial use of the remaining fund balance, however, an alternate source of funds may be required in the near future. Reserves continue to be depleted as new areas such as Lake Ida Road and the 1-95 barrier wall are completed. Storrnwater Utility Fund The stormwater assessments will fund projects outlined in the Capital Improvement Plan on a pay-as-you-go basis as opposed to the Note Repayment that was previously anticipated for the current year. Operating expenses to oversee the maintenance of the drainage system and administration of the assessment are projected to decrease from $415,130 to the proposed $410,080. The proposed level of spending presently generates an estimated surplus of $119,670, however, as the CIP becomes finalized we expect these funds to diminish. Golf Course Fund The Municipal Golf Course is budgeted to generate an operating surplus of $82,140 as presented herein. Operating revenues for the new year are projected to increase by 5.9% over the FY 96 budget due to an increase in the golf related fees and increased usage of the clubhouse resulting from the expansion of the current facilities. The Lakeview Course reflects a net operating surplus of $25,960. The fiscal year 97 budget is reduced by approximately 15% from the fiscal year 1996 budget which was the first year the City owned the course. The budgets for both golf courses are based on the rates approved at the August 6 meeting, however, minor changes remain to be made on the proposed expenditures originally presented in this document. Sanitation Fund The charges for residential, commercial and multi-family garbage collection will decrease by 45% or $1,004,580. This is the result of the competitive bidding procedures the City began nearly a year ago. The revised specifications allow for the majority of neighborhoods to receive curbside/cad pick-up to accommodate an automated collection system. This method of collection represents savings to the contractor both in time saved from rear door pick-up and the reduced potential for worker's compensation claims which are typically high for this industry due to the constant lifting. Both benefits generate savings which were factored into the rate and passed on to the residents. The cost of providing the carts will be front-ended by the City with a reimbursement built into the rates over a five year pedod. We will again be using some of the earnings of the Sanitation Fund to fund the Beach Cleaning contract for ,$70,850 and the scheduled litter pick-up along West Atlanfic Avenue estimated at $I 1,300. These are reflected in the Transfer to the General Fund and the transfer to the Beautification Trust Fund respectively. Also in the Sanitation Fund is the Community Improvement Director's request to continue funding an Anti-Litter program totaling $41,960. What began as a pilot program this year will continue efforts to eliminate litter along major roadways in neighborhoods located within the CDBG target area and the NE and SE part of the city. The City has also been notified by the Solid Waste Authority that it will be discontinuing its grant funding of municipal recycling programs until fiscal year 1999. The funds will be applied towards purchasing bins necessary to accommodate the expansion of recyclable materials. The City will, however, continue the recycling program estimated at $43,800 for FY 1997 from the Sanitation fund operating revenues. Conclusion The budget, as proposed, provides for a total millage rate of 7.90 mills per $1,000 of assessed value. A .05 reduction in millage amounts to approximately $125,150 in revenue. This would mean the elimination of some proposed enhancements mentioned eadier, which I believe deserve to be funded. I may also recommend deletion of some of these enhancements in order to free up funds which may be required for implementation of pay plan changes recommended by Hay Management Consultants. Any possible concerns you may have can be addressed prior to the adoption of the budget in September. Sincerely, David I. Harden City Manager