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HomeMy WebLinkAbout2009 03-10 PreMeridian City Council Pre-Council Meeting March 10, 2009 A Pre-Council meeting of the Meridian City Council was called to order at 6:02 p.m., Tuesday, March 10, 2009, by Mayor Tammy de Weerd. Members Present: Mayor Tammy de Weerd, Keith Bird, Charlie Rountree, Brad Hoaglun, and David Zaremba. Others Present: Bill Nary, Tara Green, Stacy Kilchenmann. Item 1: Roll-call Attendance: Roll call. X David Zaremba X Brad Hoaglun X Charlie Rountree X Keith Bird X Mayor Tammy de Weerd Rountree: Okay. I'm going to go ahead and open the pre-Council meeting. It's March 10th, at 6:02. I will start with roll call attendance. Madam Clerk. Item 2: Adoption of the Agenda: Rountree: Very good. Thank you. The next item is the adoption of the agenda. I need a motion. Hoaglun: Move to adopt. Bird: Second. Rountree: It's been moved and seconded to adopt the agenda. All those in favor? Motion passes. MOTION CARRIED: ALL AYES. Item 3: Audit Report with Stacy Kilchenmann and Eide Bailly: Rountree: Next item on the agenda. Stacy. Audit report. Kilchenmann: Good evening. I'd like to introduce Bobby Lawrence. He's our audit -- he's representing Eide Bailly and he will be presenting the audit report. Be sure to ask him searching questions, because I know you read it really thoroughly. Lawrence: Thank you, Mr. President, Members of the Council. Again, Bobby Lawrence representing Eide Bailly on behalf of Kevin Smith here this evening, who couldn't be with you due to some personal reasons, so I just wanted to go over the reports and letters that we have issued and you have had in your packet and if I skip something you Meridian City Council -Pre-Council Meeting March 10, 2009 Page 2 of 11 have a question on, please, interrupt me and we can address it and if you need more detail we can address that as well. You also should have a handout there in front of you that I just brought with me this evening, as well as the bound audit report and two smaller letters. The first thing I will go over is the audit report. That's going to be your big bound copy there. And the most important thing in that packet is on page one and that's the auditor's opinion, and that's what we call an unqualified or a clean opinion, so it's always good to know that there were no -- nothing that we qualified the opinion on, no adjustments that weren't recorded and that kind of thing. The next item that I will draw your attention to, it starts on page three, it's called the Management Discussion Analysis, and this is really just a kind of management story of what's happening with the city and it's a really good read. It's tends to get easy to get lost in the numbers and the footnotes and all of stuff in the pages in the back, but this Management Discussion Analysis really gives that broad picture of what's happening and also that's why I want to bring up this chart here and this goes and compares 2004 to 2008, which 2004 was the first year that you implemented GASB 34, which required you to report all your activities as if you were an enterprise, so to speak, and so this is just a big picture look and this is what the MBNA tries to tell you is over time how is the city doing, is it improving it's financial condition or deteriorating? And so just want to draw your attention to the fact that, you know, all indicators, their net assets are increasing, assets are increasing, liability has increased slightly, expenses and revenues increased slightly as well. So, just kind of at a big picture level things are improving with the city as a whole. On to what we call the Government-wide Financial Statements on pages 20 through 23. This is what takes all your funds and, basically, converts them to enterprise accounting and so on here you have assets, you have debt, and that kind of thing. The one thing I did want to point out is on page 26 at your fund level accounting. The page there it shows capital outlay, which is things purchased of a capital nature and, of course, you had a lot of construction and progress on this -- this asset here and that's what caused your net fund balance to decrease for the year. So, again, nothing surprising there, but just wanted to point that out from a financial standpoint. Moving on to the notes, pages 37 through 39. This is -- in the recent economic environment kind of a critical note here. This is your cash and investment disclosure and, basically, this measures your exposure to risk in your investment cash pool and, you know, there is nothing in there that causes any kind of alarm or anything, but, you know, as a governance body you'll want to focus some attention on that. And the one thing I did want to point out, though, was a page 39, the top paragraph there, it does disclose that there is an amount that's uninsured and uncollateralized on your cash balance. Now, this is not unusual or rare by any means, but in this economic condition where, you know, some banks are struggling, you know, I just want to bring that to your attention that there is some exposure there. So, some companies have decided to do different things. One thing you can do is, you know, make sure either you'd move to an interest -- non-interest bearing account, which would be fully covered by FDIC insurance, at least until the end of 2009, and there is some other collateralization type things you could do and, of course, some entities decide to except that risk, so that's -- that's just to bring to your attention for your information. On page 51, this is the other auditor's report in the packet and this is our report based on government auditing standards, which are a little bit different than the normal auditing standards we are required to follow, and Meridian City Council -Pre-Council Meeting March 10, 2009 Page 3 of 11 there is a finding attached there in more detail on page 53 there, which is also included in your management letter, and if you have any other questions on that we can address that. We can move on to the next item, which is going to be the stapled letter. It starts with we have audited the financial statements and this is just a letter to those charged with governance and, basically, what this is is telling you that we audited the entity in accordance with government auditing standards and if we had any significant findings they would be in here. Now, in your case we don't have any, so this is just communicating that to you. You know, there was no significant adjustments, no disagreements with management. We are not aware that management was opinion shopping with other auditors or anything like that that we would be required to inform you of. There are a couple schedules attached to the back of this letter and this is what we call past adjustments. These are items that we noted during the audit and management has decided not to record these, based on, you know, maybe it's a timing issue, getting the books closed, or whatever, not significant dollar amounts to the financial statements as a whole. But, again, just making you aware of that fact. And, then, the other letter you have there is the management letter and just as an overview, there is three levels of conditions we can report to you on that. The highest level is a material weakness. The next level down is a significant deficiency. And the lower level is other comments or suggestions. We have nothing we are required to report to you as a material weakness or significant deficiency and we have included three comments there that are just things that during the course of the audit we threw out there for improved suggestions for your entity. The last thing I'd like to throw out there for your consideration is, again, due to this economic environment that we are in you really need to take a look at the entity and see where you might have risk in regard to fraud and misuse of assets. There is a last -- the two years there has been a change in auditing standards where we will actually go in and do a little more inquiry as regard to where could there be fraud within the organization and so we plan our audit according to those responses and we also consider the economy and environmental factors and right now with the economy in a down turn, foreclosures up, people losing their jobs, this creates heightened risk, because people now may have motivation they didn't have two years ago and so, you know, as you are setting policy as you're communicating with your department heads, you know, again, just that tone at the top, making sure everybody is aware of the standards they need to uphold. If there are concerns who they can talk to about them and this will just create an environment where something were to try to be perpetrated, it could be addressed sooner rather than later. And that's all I have for you, unless you have questions forme. De Weerd: Counsel, do you have any questions? Bird: Just another nice report. Rountree: Madam Mayor. Yeah, I have a question about the comment that Bobby made and I picked up on when I read the report in terms of our risk as it relates to our cash balance. Lawrence: Uh-huh. Meridian City Council -Pre-Council Meeting March 10, 2009 Page 4 of 11 Rountree: And you alluded to one potential remedy. Was that discussed at all with Stacy -- had you discussed that and are we going to be looking at something there -- because I -- we are not out of this crazy down tum at this point as far as banks go. Kilchenmann: Yes. Actually, we did discuss that and at that particular point in time our cash balance was so high, because we were paying the big bills on this building now kind of at the -- when the big rush came. So, we no longer have that much cash that's uninsured. We keep just a minimum balance. Rountree: Okay. Kilchenmann: So, we -- our check runs have been about a million dollars, so we took -- that's pretty much what we keep in there. A million dollars for check writing and, then, when it's pay day, it goes up. So, most of it's in the -- removed to the pool. The investor is really having a problem finding any -- our agency bonds are being called and our certificates, you know, you don't want to go above the insured limit. The new insured limit runs out I think he said in May. I think it might be in May. So, we would have 10,000 CDs out there. That's the problem Bird: Yeah. Rountree: Are there any other instruments that are becoming available that would be insured or -- Kilchenmann: I can't think of any. Lawrence: There are sweep accounts you can get that are collateralized, you know, and that just -- they'll usually adjust your yield down for that feature, obviously, but some places have gone to that option. Rountree: Keep looking. Zaremba: Madam Mayor? De Weerd: Mr. Zaremba. Zaremba: This is kind of a sideways question, but do we pay attention to the strength of the bank where we keep our funds in? Do we ever inspect their -- Kilchenmann: Actually, we did. We had a meeting with them -- oh, it's been a few months ago and talked about -- they did have a big loss in 2008 and they disclosed that loss and, then, their level of capitalization. So, we have -- we have discussed it with them. Zaremba: And you feel confident about their position? Meridian City Council -Pre-Council Meeting March 10, 2009 Page 5 of 11 Kilchenmann: I wouldn't say I feel confident. I think they could likely been purchased by a larger bank, but I feel confident in the level that we maintain in our checking account. Zaremba: Thank you. Hoaglun: Madam Mayor? De Weerd: Yes, Mr. Hoaglun. Hoaglun: A question. A couple of years ago GASB said that public entities have to look at the level of what their subsidizing their retirees -- OPEB, Other Post Employment Benefits. Is that something you have looked at? Do you we have any exposure there of our retirees. They are under PERSI, which is a state program, but -- Lawrence: But there is some exposure there. Remind me what phase you are, Stacy, on that. For 43? Do you recall? It's either next year or the year after. It follows the same implementation as 34. And so that is a liability that could be coming on and we are still in the process of figuring out what that is. PERSI has gotten some information back to some entities on what they think the number is, but that hasn't necessarily been the right number for other entities, so -- but there is a potential there. Hoaglun: Yes, Madam Mayor and Bobby. It is very complex on Council Members on trying to figure out what that level is, so that's something we do want to pay attention to as we move forward, just so we aren't surprised by a bigger number than we thought we might have. Kilchenmann: Oh, no. Another standard. De Weerd: I'm glad you said that. Rountree: Thank you. De Weerd: Anything else from Council? Bird: No. Just another good report. Rountree: Yeah. Bird: Appreciate it. De Weerd: Okay. Thank you for being with us. Lawrence: As always thank you very much for the opportunity. It's a pleasure doing business with the City of Meridian. Meridian City Council -Pre-Council Meeting March 10, 2009 Page 6 of 11 Zaremba: Madam Mayor? De Weerd: Mr. Zaremba. Zaremba: Is a motion in order to accept the auditor's report? Is that necessary? Bird: Yeah. Nary: Yeah. I believe -- Madam Mayor, I believe that's the normal course. De Weerd: Uh-huh. Zaremba: Madam Mayor, I move that we accept the auditor's report. Rountree: Second. De Weerd: I have a motion and a second to accept the auditor's report. All those in favor say aye. Okay. All ayes. Motion carves. MOTION CARRIED: ALL AYES. Item 4: i4nnual Impact Fee Update. De Weerd: Okay. Our next item. If we could -- it was our annual impact fee update. I would imagine that's Stacy as well. Kilchenmann: Are we ready for the impact fee report? De Weerd: When you are. Kilchenmann: Okay. The impact fee committee met, I believe it was in October of this year, and Iput -- because of the harassment I have suffered for small font, I actually made -- a few of the items in your packet I just wanted to briefly go over and I am putting them in a font that I can actually read. So, the first one on the top is it's the City of Meridian ENR updated fee schedule. This is the only issue that was -- that was on the table when the impact fee committee met, was, basically, whether we would do an ENR increase, which by the -- the average of that was 4.43 percent, so you can just go down that middle column and it shows how much it would have increased, at least $3.77. The fire residential would have been 16.71. And one cent for commercial. And, then, the Parks and Recreation fee would have been $61.36. So, that was -- this is, basically -- again, we reviewed the report and the data and, then, this was the only item on the table. So, if you look at the second page, it's called impact fee history, updated as of August 31, 2008. And the decision of the committee after some discussion was not to change the fee. But pro -- in changing the fee some people had the feeling that we needed to keep up with inflation. We need to make the small increases along the Meridian City Council -Pre-Council Meeting March 10, 2009 Page 7 of 11 way. We don't want to have to go back like we did before and make large increases. And the other side of the table was, the economy is not doing well. This is not a time to do any kind of increase. So, when the committee voted, they made the decision to not change the fee. Then, the third set of paper, just the stapled together, is the report that we give the committee and review with them and that is the history of the fund for each department for the last year. So, if you go to the park one, which is the one on top, their fund balance at the end of 9/30/2008 -- and when I say fund balance, this is really their cash fund balance, was 2.1 million dollars and when we remove everything that has been has -- has been budgeted against that, it's -- we would come to the end of 2009, supposing that they can completed all their projects, being negative 642,000 dollars. This does include abig -- I think it's 1.9 million that is in our land purchase account. So, that's -- that's a big impact to the impact fee fund and it's been carrying through there for awhile, so it's not likely that we would expend that. And the second page for fire -- and to go back a little bit, for the park impact fees, my projection for this current year is that if they make it to 500,000 dollars they would be fortunate. So, we had originally budgeted 770,009, lowering that to $500,000. On the second page, the fire impact fee fund has actually done very well and they are earning -- they actually eam -- will eam more than the park impact fee fund. So, what's happened with their fund is that we made a payment to rural fire to repay our 33 percent in the training tower and so this next year we paid them -- I think we paid them in October and this next year we will start repaying for station five. So, their projected -- their fund balance was a million dollars at the end of 2008 and they're projected to have about a little over five 500,000 at the end of the current year. And, then, finally, police. Police is a much smaller fund, much smaller fee than we -- than the other projects. They're projected to end -- they didn't have anything budgeted and they're projected to end at about 300,000 dollars for the year. So, that's -- that's the essence of the information that we covered at the meeting and the action that was taken. So, are there any questions? De Weerd: Council, any questions? Zaremba: Madam Mayor? De Weerd: Mr. Zaremba. Zaremba: I guess this is more of a philosophical and maybe even a legal question, but the danger in not raising impact fees, at least for inflation, as you said some of the discussion was, then, some years down the line we need to make a big increase. My question is: Could we legally make a small increase this year and, then, waive collection of that difference so that the fee is actually going up, but we are not -- every year we move the fee up a little bit, whether we collect the difference or not? Kilchenmann: I'm not sure I understand. Zaremba: Understand what the question is? Kilchenmann: Yeah. Meridian City Council -Pre-Council Meeting March 10, 2009 Page 8 of 11 Zaremba: I guess what -- sensitive to the times on paper, our fee would go up, but what we actually collect from people would be the same as we are collecting now. Kilchenmann: Oh. You would say, well, this year it should have been 4.43 percent, next year we should have three percent, so we are going to do seven percent? Zaremba: No. Kilchenmann: Okay. Bill looks like he is understanding what you're saying Nary: Madam Mayor, Members of the Council, you can't do that. There is no way for us to track that. What you're saying is is we will raise the fee, but we won't collect additional fee, and there is no way at the building department they are going to be able to keep track of that and, really, you're essentially misleading that public, because you're telling them that it's one fee, in a since you're collecting less. Nobody's harmed, but it really is misleading. And at some point you're going to make up the difference. You know, at some point you're going to say, okay, things are well, we can now charge the fee we actually approved and in the public's eyes, if you were a builder, it went up seven percent or eight percent or nine percent or whatever it is, by the time you actually start collecting it and it's not going to jive. So, I wouldn't recommend you do it. I think it would be incredibly confusing to the public if you did that, so -- Zaremba: Thank you. You did understand the question and I understand the answer. Kilchenmann: You can still vote to increase -- the Council can still vote to increase the fee and I believe Mr. Nary is going to review your options. Nary: Madam Mayor, Members of the Council, basically, the recommendation from the committee was to not add the inflationary amount here, the 4.43 percent. You have the ability to do that. It's already in the ordinance itself, you don't have to hold a public hearing for it if you want to increase it. If you don't want to increase it, then, which ever way you want to move to direct us to do that, we will bring a resolution back to either not increase the fees, so it is memorialized that was your decision, or to increase the fee because that's your decision. You certainly have the ability to hold a public hearing if you wish, you're not obligated to do that, because it's less than five percent and it's already included in ordinance. So, it's really your -- your decision on wanting to do that, but it was the recommendation of the committee not to, so -- Bird: Madam Mayor? De Weerd: Mr. Bird. Bird: And I would go along with the committee on this for this year. We -- while these fees aren't outrageous or four percent increase isn't outrageous, it still -- we need to do everything we can to keep the cost down so our builders and -- can get work and start Meridian City Council -Pre-Council Meeting March 10, 2009 Page 9 of 11 buying and getting permits. Building permits. So I'm not for raising the impact fee this year. Igo along with what the committee recommended. Rountree: Madam Mayor? De Weerd: Yes, Mr. Rountree. Rountree: I don't disagree with what Councilman Bird just said. However, I get concerned that we get further and further behind as it relates to the inflationary ability of these impact fees to do what they are intended. There isn't a date certain that any increase has to be made. I would like to see this item stay in a tickler file, even though I know it shouldn't be optimistic, if, in fact, the economy does turn around slightly that maybe we could look at it a portion of the inflationary increase at some point in time later in the fiscal year. But not just forget about it. Hoaglun: Madam Mayor? De Weerd: Mr. Hoaglun. Hoaglun: I agree with Councilman Bird that we don't want to be putting more fees on people when we are trying to get the economy moving again, but, at the same time, as the Councilman Rountree pointed out, we have got to keep a very close eye on this and not go too far down the road and if things are picking up, then, it looks like this is something that we can do, because, on the other hand, someone will have to pay for it, whether it's -- if it's not going to be the new development, then, it's the folks that have been here and if new development is causing some of these increases that are out there for need for services, then, they need to carry their fair share of that. So, it's something that, yes, I think for the time being we can keep from raising these fees, but we just want to keep a close watch on that. Nary: Madam Mayor? De Weerd: Mr. Nary. Nary: Madam Mayor, Members of the Council. Stacy, isn't it August when they have been meeting? Bird: Yeah. Nary: Or so? Kilchenmann: Well, this year we met early because of the new building. The year before. we met probably -- well, we met several more times that November. But, yeah, we try to do it September, October. Meridian City Council -Pre-Council Meeting March 10, 2009 Page 10 of 11 Nary: So, I guess to answer Council Member Rountree's -- I mean not answer, but -- you certainly are not obligated to impose the fee now. We can certainly not -- we can continue this matter and not take any action at all, if that's your wish, or because they are going to probably be meeting again in, what, four months or so -- four or five months, they may be reviewing this same information and issue again. And, again, still looking at that. So, it's totally your direction, whatever you would like to do. We can certainly hold off on this for a period of time, wait until they reevaluate it, or do something else. De Weerd: Well, I guess I would like to suggest that you reconvene late this summer and see what the market conditions are. But I think in the interim, until then, those capital improvement plans need to be updated with realistic costs tied to it. I think that when they were -- when they were developed a couple of years ago, many of those costs were under -- under estimated. Kilchenmann: I think it's actually been like three years, now. So, we will take a look at that, what is involved in that data. De Weerd: Yeah. Because we saw that even after the first year, we saw how under calculated some of those prices were on those items. Kilchenmann: Uh-huh. De Weerd: And so I think those need to be updated, so that when the committee reconvenes, their dealing with updated and realistic numbers. Kilchenmann: Uh-huh. We can do that. De Weerd: Okay. If there is no further discussion on this item, Council, we are at the end of our pre-Council agenda. I would entertain a motion to adjourn. Zaremba: So moved. Rountree: Second. De Weerd: All those in favor say aye. All ayes. MOTION CARRIED: ALL AYES. MEETING ADJOURNED AT 6:50 P.M. Meridian City Council -Pre-Council Meeting March 10, 2009 Page 11 of 11 (AUDIO RECORDING ON FILE OF THESE PROCEEDINGS) MAYOR TA Y De,;V1/ ERD DATE APPROVED ,; i ~~~~``\``G`~y OPP~Rq ~iq'G'~'~~. ~~~ A~I' ST SEAL JAYCEE L. OLMAN, CITY CLERK -~ ~~ ~ r ~'~~~,,,~®vr~T~r ~ `®,~~~'~ ,,,,