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HomeMy WebLinkAbout07/10/1984 Meeting M I NUT E S e Eugene City Councll McNutt Room, City Hall July 10, 1984 5:30 p.m. COUNCILORS PRESENT: Brian Obie, John Ball, Freeman Holmer, Emily Schue, Dick Hansen, Debra Ehrman, and Ruth Bascom (Councilor-elect). ABSENT: Mayor Keller, Cynthia Wooten, and Betty Smith. Revenue work session of the City Council of the City of Eugene, Oregon, was called to order by Councilor Obie in the absence of His Honor Mayor Gus Keller. I. CONTINUED DISCUSSION CONCERNING REVENUES (background material dis- tributed) City Manager Micheal Gleason introduced the agenda item. This meeting was called to review and discuss more data in order to make a decision on the capital budget, timing issues, and projects that can be done within the operating framework. Mr. Wong reviewed the exhibits as distributed. Exhibit A, High Priority e Schedule, describes Capital Improvement Needs versus Available Resources, from FY86 through FY 95, for a total cumulative deficit of $30,395,000. This list does not include all the projects to be done within the next three years, Capital Improvement Program, but rather is a prioritized list of those most urgently required. The departments of Public Works, Parks and Recreation, and Facilities Development used that CIP as a basis to add the projects required to maintain existing assets. The revenues shown are from Federal Revenue Sharing funds. Exhibit B illustrates capital needs listed by department; Exhibit C lists departmental project descriptions. Exhibit Band C do not include "big ticket" items such as a new library, Public Safety, or City Hall buildings, which would be funded by bond issues. Exhibit 0 includes all capital projects. Exhibit E shows all capital requirements, funded by general obligation bonds. The Ferry Street bridge project is not included in any exhibit, as it would likely be funded from federal highway funds. Mr. Hansen wondered what the difference was between a capital project and operating project--or, how is it determined which budget street overlays and seals should be listed in. Mr. Wong said that any expenditure over $5,000 that will extend the useful life of an asset or modify the kinds of services provided is defined as a capital expense. The definition is not always an absolute one. Mr. Hansen questioned why relocation of a fire station in the Coburg road area appeared as a high-priority item when an existing station there was closed. e MINUTES--Eugene City Council July 10, 1984 Page 1 . Mr. Gleason explained that a shift from the traditional fire response system to a "rapid attack systemll was started several years ago. This means that e some stations need to be replaced with smaller class B pumpers that require less staff but are located closer to various zones. Firefighting costs can be reduced 20 percent by being closer to the fire and operating with the new system. A plan to phase into the more economic mode with a switch from A to B fire stations would take about three years, including land purchase, etc. Without beginning to switch to the new system, an inappropriate response pattern could result. A Fire Master Plan is in process to clarify this. A recent fire evaluation barely ranked Eugene's Fire Department as a IIclass 3.11 A lower rating could result in larger commercial structure rate increases. Mr. Gleason spoke of the importance of funds being available for the capital budget process. Even though some projects may be income-producing eventually, there is no start-up money. It usually takes from 24 to 36 months to build up a cash flow. Several opportunities may come up, but if there are no capital funds available for start-up work, these may be lost. In response to Ms. Ehrman's question, Mr. Gleason explained that the 6th/7th Avenue Widening project will be a federally-funded project, but the City has spent funds for the required planning. More preliminary work on an arterial system is required before this project can be completed. Mr. Hansen asked what the cost to the property owner would be if a $30 million bond measure was proposed for repayment over a ten-year period. The debt service rate will be going down over the next three-year period by 20 to 30 cents per $1,000 as certain bond measures will be expiring. Mr. Wong sugges- e ted putting together a bond package for approval and scheduling it out over a five to ten year period, but issuing bonds only as funds are needed. In re- sponse to Mr. Obie's suggestion for a serial levy, Mr. Wong said he thought that there was a limit to the time these funds could be used. Mr. Holmer pursued the question of maintaining the current taxing level by issuing some new bonds to replace those expiring. This would raise $800,000 or $900,000 in a year. Mr. Obie felt Mr. Holmer's suggestion to fill the gap was most interesting. Mr. Wong said that approximately $.60 of the general obligation bond property tax levy goes to civic center bond repayment, while the remainder goes to smaller issues. The smaller issues will be paid off over the next ten years. The current tax rate for debt services is about $1.36 per $1,000. In response to Ms. Bascom's question on the effect of IISon of 311 passing, Mr. Wong said that all prior debt and any approved at that election would not be affected, but any new debt would come in under the 1-1/2 limitation. Ms. Bascom expressed interest in a bond issue being placed on the ballot. In response to Ms. Schue's question on the necessity to vote on a bond issue, Mr. Wong said that according to the City Attorney, a vote on a general obliga- tion bond issue is not required. However, Bond Counsel will not give a "clean" opinion because this issue has not been tested in court. Mr. Gleason clarified that authority to levy comes through the tax base or through bond capacity. Traditionally, the City of Eugene has gone to the public on general e MINUTES--Eugene City Council July 10, 1984 Page 2 obligation bond debt, even though it is not required by state or city charter. Because Bond Counsel would not give their approval, there may be a problem in e selling the bonds, unless court action were taken. Mr. Gleason recommended bond issues be used for specific capital needs rather than a "shopping list" of needs. Pursuing Mr. Holmer's suggestion, Mr. Hansen questioned what amount of bonds the City could sell at this time to have funds available for capital projects as they arise. These could earn interest in the interval and generate funds for the City. Mr. Gleason said that the City could be liable for arbitrage (IRS penalty) unless there was an actual project in process when bonds were sold. Mr. Gleason explained that he felt strongly about the concept that capital obligation involve a stream of projects supported by the amount of capital owned (public assets supported by fees). The result of non-support is worn-out facilities with no option for repair or replacement. While general obligation bonds are a way to provide this income stream, they would involve higher property taxes which the council has been reluctant to raise. However, there is a heavy commitment of capital assets with no replacement prospects. A higher operating budget will result from a poor capital system. The swimming pools are a good example of the problem. He would like support from the council to deal with this problem, and to start informing the publiC of the serious capital needs. Mr. Holmer returned to Mr. Hansen's question on the fire department expend- itures, and questioned whether the Ci~ was getting "overcapitalized." Mr. Gleason said that it was his opinion that if the City invested signifi- e cantly on the capital side of the Fire Department and operated it at maximum efficiency, firefighting costs over the next ten years could be reduced from 15 to 20 percent. There could be a net benefit to the community from this type of capital expenditure in other departments over a number of years. The Library is an example of a more efficient operation as the result of capital expenditures. Mr. Holmer suggested that this message be conveyed to the public. He suggested a cost/benefit analysis be presented to the public to get their support. Mr. Hansen leaned toward conSidering the public works needs, which do not involve new facilities, but rather repair expenses, as a funding priority over the next several years. However, in doing this he suggested that when capital assets are acquired in the future that a commitment be made to the citizens to support operating costs at the same time. Ms. Schue said that a major decision has to be made on what projects to support. The City of Eugene has grown significantly in the last ten years, and there is a need to catch up on this growth and resultant capital needs. As the discussion turned to revenue sources, the gas tax issue came up. Some councilors felt that this might be a workable method for Eugene, but there was some question about support from Springfield and Lane County. Mr. Ball suggested that a unified front be presented to the public should this idea be pursued. There was a general feeling that the voters would accept a gas tax e MINUTES--Eugene City Council July la, 1984 Page 3 for public works needs more readily than additional property taxes, as histor- ~ ically this has been the case. New funds from a gas tax may make it possible l e' to release other funds for the other capital needs. Mr. Ball agreed with the idea that the council has the responsibility to make it known to the citizens that large unfunded liabilities, in streets and roads especially, are accruing, and that not taking care of these capital assets could be seen as poor financial management. Ms. Schue also voiced a concern that the council needed to make the public aware of the capital asset problems. Returning to the discussion of the "Son of 3" ballot measure, Mr. Obie expres- sed a concern about council responsibility to the citizens should this pass. There was the question of whether or not something should be put on a ballot should revenue-raising options be reduced. Mr. Wong clarified that should this measure pass, a majority vote of 50 percent of the voters would be required to approve any new taxes. There are two opportunities to do this-- in August or September. Mr. Holmer did not feel it would be wise to put a funding measure on the ballot with the "Son of 3" measure. Ms. Schue suggested that a mail-in ballot be prepared for September. This would ensure a good response. Councilors gave a positive response to this suggestion. Ms. Ehrman felt that doing it this way would give the council another chance to act in November should the first measure fail. Discussing a potential amount for the gas tax, it was generally agreed that three cents would be a suitable amount. This amount of taxation should ,~ generate approximately $1.5 million in revenue. (_ To determine what revenue sources to implement, there was general consensus that the following action take place: Mr. Holmer will check with the State regarding the mail-in ballot. Ms. Schue, Mr. Hansen, and Mr. Gleason will meet with the City of Springfield to explore working together on the gas tax issue. With regard to the content of the mail-in ballot, it was clarified that, if done, it would be in a format of informing the citizens of the poor street conditions, and asking them if they agreed with the Council's suggestions to alleviate the situation. Mr. Ball suggested that consideration be given to involving Lane County in the gas tax issue, and that perhaps a metropolitan area tax be considered. The meeting was adjourned at 7:12 p.m. Respectfully submitte~, ~~~ ,. ..~;;.'{;.;y; . - Mic eal D. Gle on, City Manager .~ (Recorded by Sybil Peters) (e SP:cj/CM7bI6 MINUTES--Eugene City Council July 10, 1984 Page 4