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03/13/2007 CITY COUNCIL WORKSESSION MINUTES CITY OF CLEARWATER March 13, 2007 Present: Frank Hibbard Mayor Carlen Petersen Vice-Mayor William C. Jonson Councilmember J.B. Johnson Councilmember John Doran Councilmember Also present: William B. Horne II City Manager Garry Brumback Assistant City Manager Rod Irwin Assistant City Manager Pamela K. Akin City Attorney Cynthia E. Goudeau City Clerk Brenda Moses Board Reporter The Mayor called the meeting to order at 1:30 p.m. at City Hall. To provide continuity for research, items are in agenda order although not necessarily discussed in that order. Presentations Service Awards Six service awards were presented to City employees. The Bi-Monthly Team Award for March/April 2007 was presented to Board Reporters Brenda Moses and Patricia Sullivan in the Official Records and Legislative Records Department. The meeting recessed from 1:44 p.m. to 1:45 p.m. to meet as the Pension Trustees. Office of Management and Budget Amend the City's fiscal year 2006/07 Operating and Capital Improvement Budgets at First Quarter and pass Ordinances 7790-07 and 7791-07 on first reading. The FY 2006/07 Operating and Capital Improvement Budgets were adopted in September 2006 by Ordinances 7674-06 and 7675-06. Section 2.521 of the City's Code of Ordinances requires the City Manager prepare a quarterly report detailing income, expenditure estimates, collections, the explanation of significant variances, as well as the financial status of all capital improvement projects. The First Quarter Budget Review, in accordance with the City Code of Ordinances, is based on three months of activity (October 2006 through December 2006) in this fiscal year. The report comments on major variances, as well as documents all proposed amendments. Significant Fund amendments: 1) General Fund - General Fund revenues and expenditure amendments reflect a net increase of $2,586,905. Major reasons for the overall Council 2007-03-13 1 General Fund expenditure increase includes the appropriation of General Fund retained earnings of $1.2 million for the Fleet Maintenance facility expansion, $157,200 to the Gas Mains Extension project, and $8,750 for the new City Hall project supporting the City/County joint use facility. All of these amendments were previously approved by the City Council. In addition, the amendment reflects an additional transfer of almost $677,000 to the Gas Mains Extension project which is funded by an offsetting increase in dividends from the Gas Fund, and the Beach Guard program reflects an increase of $452,310 transferring the entire Beach Guard program to the General Fund, of which one-half will be supported by the Parking Fund, and the offsetting revenue is also recognized in these amendments. Again, these amendments have also been previously approved by the City Council and 2) General Fund Reserves – In order to ensure adequate reserves, the City Council’s policy reflects that General Fund unappropriated retained earnings of 8.5% of the City’s budgeted General Fund expenditures must be maintained as a reserve to guard against future emergencies. With the closing of the year-end 2006 books, and the allocation of reserves noted above, estimated General Fund reserves at first quarter are approximately $20.5 million, or 16.8% of the current year’s General Fund budget, exceeding the City’s reserve policy by just over $10 million. Significant amendments to other City Operating Funds: 1) Stormwater Fund - At first quarter, the Stormwater Budget reflects an increase of $587,090. This supports increased funding for Stormwater capital projects, and was approved by the City Council on January 18, 2007 as part of the Stormwater bond restructuring; 2) Gas Fund - Budget amendments to the Gas Fund reflect an increase of almost $1.1 million to provide an additional dividend to the General Fund, and $298,000 to the Capital Improvement Fund to provide support to the Gas Inventory Work Management System. Both of these amendments have been previously approved by the City Council; 3) Solid Waste Fund - At first quarter, the Solid Waste Fund revenues reflect the return of $2.4 million from the Beach Walk project. This amendment was approved by the City Council at the December 14, 2006 meeting; 4) Marine and Aviation Fund - At first quarter, Marine and Aviation Fund revenues reflect a net increase of approximately $110,000. The primary amendment recognizes the return of funding from capital improvement projects to improve the cash reserves in this fund; 5) Parking Fund - Budgeted expenditures in the Parking Fund at first quarter reflect a proposed increase of $125,510. The first of two amendments resulting in this increase recognizes the $62,000 needed to fund the operations and other related expenditures of the temporary lot approved by the City Council on February 15, 2007. The second amendment corrects an error in the adopted budget, recognizing the budget transfer to reimburse the Stormwater Fund for sweeping beach parking lots. This budgeted expenditure was overlooked in the construction of the adopted budget; 6) Central Insurance Fund - At first quarter, the Central Insurance Fund revenues reflect the return of $2.4 million from the Downtown Streetscape and Beach Walk projects. These amendments were approved by the City Council at September and December 2006 meetings; 7) Capital Improvement Fund - First quarter amendments to the Capital Improvement Fund reflect a decrease of $2,074,863, primarily due to the return of more than $4.4 million to the Solid Waste and Central Insurance Funds from the Beach Walk project. A list of capital improvement project budget increases that have been previously approved by the City Council were included on page 22 of the report. Project budget increases not previously approved by the Council reflect an increase of approximately $1.2 million, and were also summarized on page 22. The largest of these proposed increases is an increase of almost $454,000 to the Bio Solids Treatment project recognizing funds received from Safety Harbor supporting the project. Other projects reflect increases from the receipt of interest earnings or an increase to a project as the result of merging two projects with similar scopes; and 8) Special Program Fund - The Special Program Fund reflects a net budget increase of $2,070,003 at first quarter. Amendments include the recognition of more than $926,000 in grants proceeds supporting programs for Americorps, red Council 2007-03-13 2 light running, human trafficking, recycling, and Juvenile Welfare grants supporting neighborhood recreation programs. Other significant amendments reflect more than $397,000 for the Special Events programs in the last six months, $335,000 from police fines and court proceeds to support public safety programs and $229,000 in revenues for police outside duty contractual services. In response to questions, Budget Director Tina Wilson said the road millage policy was amended to include funding for sidewalks. The traffic calming transfer between the Police and Parks & Recreation departments was related to personnel requirements at BrightHouse Field during events. In response to a suggestion that some General Fund reserves be used next year for stormwater projects, Assistant City Manager Garry Brumback recommended delaying any commitment of reserves until after the Florida Legislature acts on property tax issues. Financial Services Approve the purchase of property insurance from April 1, 2007 through April 1, 2008, at the level of insurance provided for in this agenda item, at amount not to exceed $3,250,000. The Risk Management Division of the Finance Department has requested Arthur J. Gallagher & Co. - (Florida) to obtain quotes for the property insurance program expiring April 1, 2007. Several options were reviewed prior to our recommendation of coverage levels. Risk Management requested quotes for a separate policy for public utilities structures as well as a separate policy for the automobile/physical damage portion of the program. To date, the most cost-effective quote received was to continue to combine City property risks under one policy. If significant savings develop between now and April 1, Risk Management will place separate policies for these separate exposures. In addition to plan design, Risk Management reviewed different levels of insurance. The City’s expiring insurance program insured to the City’s total insured value. This is no longer possible, both from a capacity and from a pricing perspective. Should the City opt for All Other Perils coverage only (excluding coverage for all wind, flood and earthquake), premium indications are as follows: ??$600,000 for $35 Million, ??$680,000 for $75 Million, and ??$730,000 for $100 Million Proposals for more comprehensive coverage ranged from $1,618,000 in premium to $3,021,000. Proposals ranged from offering $20M of wind coverage to offering $55M of wind coverage. Additionally, the City is able to procure coverage over $35M for All Other Perils (AOP) to $75M. The proposals meriting further review are as follows: ??Wind & AOP coverage to $20M at an approximate cost of $1,618,000. ??Wind coverage to $35M & AOP to $75M at an approximate cost of $2,430,000. ($2,350,000 + $80,000). ??Wind & AOP coverage to $50M at an approximate cost of $2,882,000. Council 2007-03-13 3 ??Wind coverage to $50M & AOP to $75M at an approximate cost of $2,932,000 ($2,882,000 + $50,000). ??Wind & AOP coverage to $55M at an approximate cost of $3,021,000. To assist in decision-making, a Catastrophe Analysis Summary using City values and projecting future storms was completed for this renewal. According to this study, every 100 years one storm would cause approximately $34M of damage to City-owned properties. The City Administration, through its Risk Management Division, recommends that the City purchase property insurance coverage as follows: Wind & AOP coverage to $50M at an approximate cost of $2,882,000. Given today’s market, Risk Management believes that this is a reasonable level of insurance. The agenda item requests authorization to $3,250,000 to cover any changes in property values during the term of this policy. The City budgeted $4,332,910 for property insurance premiums in FY 2007. Of this amount, $2 million was funded from reserves. To date, a not to exceed amount of $690,000 was approved by the Council for the purchase the 6-month gap of $10 million in coverage for the period October 1, 2006 to March 31, 2007. Approximately $620,000 of this was needed, leaving an available balance of approximately $3,712,910 ($4,332,910 - $620,000). Any funds not needed for insurance premiums, will roll back to reserves at the end of the year. In response to questions, Risk Manager Sharon Walton said the City’s total value of buildings is $545 million. An additional $137,000 would purchase $5 million more in coverage. Finance Director Margie Simmons said $2 million of the request will come from Central Insurance Fund Reserves. In response to a concern, she said the City would not have enough coverage to rebuild all City facilities. While hardening buildings may result in a very minor reduction in insurance premiums, it may help preserve facilities during a catastrophic event. Paul Erickson of Arthur J. Gallagher said the market softened this year but expects that insurance rates to increase again should another severe hurricane season occur. Public Utilities Amend Chapter 32 as related to watering restriction changes under a drought directive from the Southwest Florida Water Management District and pass ordinance 7802-07 on first reading. Due to the declaration of a severe water shortage by the Southwest Florida Water Management District (SWFWMD) issued January 9, 2007, heightened watering restrictions began January 16th and will end July 31st (unless rescinded sooner by SWFWMD). A provision is added to address future declarations by regulatory agencies during water shortages. Clearwater has already declared the new hours to be in effect and is requesting required Council approval. There are no costs associated with this item. This Ordinance shall take effect immediately upon adoption. In response to questions, Interim Utilities Director Tracy Mercer said proposed amendments will allow the City Manager to declare droughts. Watering restrictions apply to wells, ponds, and lakes. None of these restrictions applies to reclaimed water. Staff directed to correct language redundancies. Council 2007-03-13 4 Adopt Resolution 07-09, expressing the City’s opposition to consideration by the Pinellas County Board of County Commissioners to change the water and sewer system flow of funds from a closed to an open flow of funds system. The BOCC (Pinellas County Board of County Commissioners) has discussed changing the County’s water and sewer system flow of funds from a closed flow of funds to an open flow of funds, and has requested the City’s comments with respect to this change. According to City staff, it is in the best interest of the citizens of the City of Clearwater, who are also ratepayers for both Pinellas County Water and Sewer utilities, to retain the “closed” flow of utility funds and assets. Further, the utility funds and properties should be preserved for the benefit of the utility ratepayers. Requested via this Resolution of the City Council is opposed to any consideration by the Pinellas County Board of County Commissioners to change the water and sewer system flow of funds from a closed to an open flow of funds, and the resolution will be provided to the Pinellas County Board of County Commissioners and the Pinellas County Administrator. There are no costs associated with this item. This Resolution shall take effect immediately upon adoption. In response to questions, Ms. Mercer said under a closed flow of funds, a utility system retains all excess revenues. An open system requires the transfer of excess revenues or equity outside the utility system. The County wants to transfer some properties purchased with utility funds to the general fund. Pinellas County water and sewer service charges will increase. Engineering Manager Rob Fahey said a few Clearwater residents are hooked up to the County sewage system. Engineering Approve the applicant's request to vacate the 60-foot right-of-way of Florida Avenue lying south of and adjacent to the south right-of-way line of Gulf-to-Bay Boulevard (State Road 60, a 100 foot right-of-way), and north of the 30 foot westerly extension of the south line of said Lot 8, Block “A” and the 30 foot easterly extension of the south line of said Lot 7, Block “B”; Suburb Beautiful as more particularly described in the ordinance attached and vacate the 2-foot utility easements lying along the rear of Lots 2, 3, 4, 5, 6 and 8, Block “A,” and the rear of Lots 1, 2, 5 and 7, Block “B” of Suburb Beautiful, (A.K.A. 1771 Gulf-to-Bay Boulevard), subject to the applicant relocating all existing utilities in the areas to be vacated at the applicant’s sole expense and to the satisfaction of the owners of said utilities prior to the effective date of the ordinance, and pass Ordinance 7801-07 on first reading. The applicant proposes to consolidate the vacated street portion of Florida Avenue together with adjoining properties to develop a new CVS pharmacy/store. Knology, Verizon and Progress Energy have facilities in the areas to be vacated and have no objection to the vacation request provided that the applicant bears cost of relocation of their facilities. The City of Clearwater has water, sanitary sewer and natural gas utilities in the areas to be vacated. In addition to bearing the cost of relocation of the facilities, the applicant also will need to grant new utility easements for relocated utilities. Public Works Administration has no objections to the vacation request provided that the request is granted subject to the relocation of all utilities at the applicant's sole cost and to the satisfaction of the owners of the utilities. Council 2007-03-13 5 In response to questions, Assistant Engineering Director Scott Rice said people to the south have expressed support for the project. Staff will confirm if rezoning requests have been made. City Manager Verbal Reports – None. Other Council Action Councilmembers reported on events in which they recently participated and reviewed upcoming events. Councilmember Jonson reviewed legislative issues and requested the Legal Department present for City Council consideration on March 15, 2007, a resolution regarding non conforming signs damaged during hurricanes. He said minutes from last week’s Budget Task Force Committee contained no bold initiatives but some suggestions were worthy of consideration. He appreciated all their work. Adjourn The meeting adjourned at 3:05 p.m. Council 2007-03-13 6