# Budget and Finance Committee - February 25, 2014 > Auto-transcribed civic record · February 25, 2014 - **Permalink**: https://meetings.lexingtonky.news/meeting/3261 - **Source video**: https://lfucg.granicus.com/player/clip/3261?view_id=14&redirect=true - **Date**: 2014-02-25 - **Last revised**: July 15, 2026 - **Length**: 13,063 words > ⚠️ **Auto-generated content.** Audio from the official Granicus video was auto-transcribed with OpenAI's open-source Whisper large-v3-turbo model, run locally by The Lexington Times. Structured facts were extracted with GPT-4o; the narrative summary was written by Anthropic Claude. Verbatim wording may contain errors. See [methodology](https://meetings.lexingtonky.news/about/methodology) or [report a correction](mailto:editor@lexingtonky.news). --- ## Meeting Overview The Budget & Finance Committee met on February 25, 2014, at 1:00 p.m., with Ellinger presiding. The committee addressed seven agenda items, including approval of the previous meeting's summary, review of the monthly financial report, and consideration of several fiscal matters. The committee took 11 votes during the meeting and heard 21 public comments. Five of the seven agenda items were approved, including the January 28, 2014 Committee Summary, Refunding Urban Services Ad Valorem Taxes, TIF Roles & Responsibilities, FY 15 Links, and Items Referred to Committee. Two items were presented for informational purposes: the Monthly Financial Report and the Police & Fire Pension Update. ## Attendance **Present:** Ellinger, Stinnett, Gorton, Kay, Ford, Beard, Farmer, Scutchfield, Henson **Absent:** Mossotti **Late:** None ## Votes and Decisions **December 10, 2013 Committee Summary** [timestamp: 0:01:00] Motion by Beard, seconded by Gorton, to approve the December 10, 2013 committee summary. Passed unanimously. **Police and Fire Pension Update Postponement** [timestamp: 0:01:00] Motion by Stinnett, seconded by Scutchfield, to postpone item #4 (Police and Fire Pension Update) to the next meeting due to lack of information. Passed unanimously. **Parking Fines Agenda Reordering** [timestamp: 0:01:00] Motion by Kay, seconded by Gorton, to move item #5 (Parking Fines in Handicap Zones) to the top of the agenda for public comment. Passed unanimously. **Handicap Parking Violation Fine Range** [timestamp: 0:04:00] Motion by Henson, seconded by Scutchfield, to set the fine for handicap parking violations at a minimum of $150 up to $250. Passed unanimously. **Amendment to Handicap Parking Fine** [timestamp: 0:04:00] Motion by Gorton, seconded by Beard, to amend the handicap parking violation fine to $250. Passed by roll call vote, 8-1. Voting in favor: Ellinger, Stinnett, Gorton, Kay, Ford, Beard, Scutchfield, and Henson. Voting against: Farmer. **Signage Approval** [timestamp: 0:04:00] Motion by Farmer, seconded by Gorton, to approve signage as submitted in the presentation. Passed unanimously. **Removal of Parking Fines from Committee Referral List** [timestamp: 0:04:00] Motion by Gorton, seconded by Scutchfield, to remove the parking fines issue from the committee referral list. Passed unanimously. **Agenda Item Removals** [timestamps: 1:19:42, 1:20:14, 1:20:45] Motion by Kay to remove the TIF roles and responsibilities item from the agenda. Passed unanimously. Motion by Stinnett to remove the debt management policy review from the agenda. Passed unanimously. Motion to remove the increased parking fees or fines item from the agenda. Passed unanimously. **Adjournment** [timestamp: 0:04:00] Motion by Gorton, seconded by Farmer, to adjourn. Passed unanimously. ## Budget and Financial Actions The meeting included approval of two grant allocations totaling $20,000 to LexPark for handicap parking compliance and infrastructure improvements. **Handicap Parking Signage Compliance Grant** A grant of $10,000 was approved to provide funding for businesses to comply with new handicap parking signage requirements and associated fines. This funding was directed to LexPark. **Handicap Zone Striping and Signage Installation** An additional grant of $10,000 was approved for the installation of blue striping and signage for handicap parking zones. This funding was also allocated to LexPark. Both grants support the implementation of handicap parking standards and improvements to accessibility infrastructure. ## Public Comment **Handicap Parking Violations and Fines** Kristy Stambaugh presented recommendations from the Commission for Citizens with Disabilities [0:01:30], proposing enhanced signage stating "no parking anytime" in wheelchair loading zones, blue striping, and increased fines from $15 to $150 or more. She noted that a $10,000 grant from LexPark would assist businesses with compliance. Donnie Wittler supported the proposal [0:01:30], emphasizing the need for better signage and education to inform out-of-town drivers of penalties. Gary Means clarified [0:04:00] that state traffic violations carry a $250 fine while city parking violations are currently $15, noting the proposed increase would align with state levels. He suggested allowing towing for repeat offenders. Clarke questioned [0:04:00] why fine amounts were not posted on signs, arguing out-of-town drivers need visible penalty information. Stambaugh responded that the state citation of $250 is already public. Myers suggested [0:04:00] raising fines to $250 or $300 and raised concerns about illegally parked cars blocking fire trucks. Farmer questioned [0:04:00] the pricing structure and expressed concern about Council's limited control over increases, though he supported handicap violation increases. Henson supported [0:04:00] increasing fines for more frequent violations and requested clarification on differences between fine categories. Scutchfield raised concerns [0:04:00] about new citations being issued without prior notice and emphasized better communication with affected parties. Gorton asked [0:04:00] whether fines could be set at $250 without a range and whether towing signage could apply to handicap zones. Ellinger suggested [0:04:00] adding the fine amount to sign bottoms for improved visibility. **Other Topics** Charlie Martin explained [0:18:50] a policy to cease adding streetlight taxes until lights are installed, with a backlog of 470 fixtures to be cleared by 2015 through proactive coordination with KU. Council Members Ford, Stinnett, Clark, and Scutchfield asked clarifying questions [0:23:51–0:35:49] regarding streetlight installation timelines, backlog prioritization, and KU coordination processes. Henson questioned [0:45:09] street sweeping schedules in established neighborhoods and debris accumulation concerns. Kay and Stinnett inquired [1:00:22–1:03:06] about Police and Fire Pension Reform financial impacts and audit frequency. Henson asked [1:15:56] about TIF caps and state-imposed limits. Gorton inquired [1:18:05] about standardized templates for committee reports. Benji indicated [1:22:59] that Wellness Center lease options are under evaluation with a presentation planned for the next meeting. ## Contested Items **Refunding Urban Services Ad Valorem Taxes** Council members engaged in a heated discussion regarding delays in installing streetlights in new developments. The primary frustration centered on the extended timeline for these installations, which created a need to refund urban services ad valorem taxes to affected parties. Council members emphasized the necessity for improved coordination with KU and called for greater accountability in the process. The discussion highlighted systemic issues with project execution and the financial implications of service delivery delays. **Parking Fines for Handicap Zones** The council considered a proposal to establish a $250 fine for parking violations in handicap zones. While the committee unanimously approved the motion, Councilmember Farmer dissented from the broader council vote. Farmer's opposition centered on two key concerns: the council's limited control over the pricing structure and worries about potential disproportionate impact on businesses. Despite the committee's unanimous support, Farmer's objection reflected broader concerns about the authority and fairness of the fine structure. ## January 28, 2014 Committee Summary [timestamp: 00:01:00] The committee reviewed and approved the summary from the January 28, 2014 meeting. Key speakers during this discussion included Beard, Stinnett, Kay, and Gorton. The summary covered three main actions from the prior meeting: - **Approval of prior meeting minutes** — The committee moved to approve the minutes from the previous session. - **Police and Fire Pension Update postponement** — The committee voted to postpone the Police and Fire Pension Update due to insufficient information being available at that time. - **Parking fines agenda adjustment** — The committee moved the parking fines issue to the top of the agenda for prioritized discussion. The January 28, 2014 Committee Summary was approved by the committee. ## Monthly Financial Report Commissioner O'Mara and staff presented the monthly financial update covering the first seven months of FY 2014. [timestamp: 00:02:01] **Presentation Highlights** The report highlighted several positive financial trends, including improvements in unemployment and revenue growth. The presentation noted an $8.6 million net variance for the period reviewed. **Council Concerns** Council members, including Lueker and Cook, raised concerns during the discussion. Specifically, they expressed worry about the size of the fund balance and the extent of deferred maintenance issues facing the organization. Council members urged the committee to consider using available funds to address critical maintenance needs in the present rather than deferring these expenditures further. **Outcome** This agenda item was presented for informational purposes. ## Refunding Urban Services Ad Valorem Taxes The committee discussed a new policy approach to address refunds related to urban services ad valorem taxes, specifically regarding streetlight installation and taxation [timestamp: 0:18:50]. **Policy Change** The committee proposed stopping the addition of streetlight taxes until the lights are actually installed. This policy shift aims to eliminate future refunds by ensuring residents are not charged for services not yet provided. **Current Backlog** A significant backlog of 470 streetlight fixtures was identified as needing installation. The committee set a goal to clear this backlog by 2015. **Key Discussion Points** Council members Martin, Stinnett, Ford, Clark, and Scutchfield participated in the discussion. Key concerns included: - The need for proactive coordination with KU (Kansas City Power & Light or similar utility) to ensure timely installation of fixtures - The importance of transparency with residents regarding when taxes would be assessed and when services would be provided - The necessity of addressing the existing backlog efficiently **Outcome** The proposal was approved by the committee. The new policy represents a shift toward aligning tax collection with actual service delivery, intended to prevent the accumulation of refund obligations in the future while addressing the current installation backlog. ## Police & Fire Pension Update Scott from Cavanaugh and McDonald's presented an update on police and fire pension reform [timestamp: 00:47:39]. The presentation highlighted significant progress in reducing the plan's unfunded liability, which decreased from $296 million to $161 million. **Key Findings** The presenter outlined projected annual required contributions ranging between $21.5 and $22.5 million for the next 30 years. This projection takes into account various factors affecting the pension plan's financial health. **Discussion Topics** Council members Kay and Stinnett participated in the discussion, which focused on several factors influencing the pension plan: - Impact of payroll growth on contributions and liabilities - Effect of retirements on the plan's financial position - Influence of market movements on unfunded liability **Outcome** This agenda item was informational in nature, providing the council with an update on the status and financial projections of the police and fire pension plan. ## TIF Roles & Responsibilities Council Member Kay initiated a discussion regarding the process for modifying or withdrawing Tax Increment Financing (TIF) agreements. [timestamp: 1:07:02] Mr. Atkins provided an explanation of the respective roles and responsibilities of the administration, the state, and developers in TIF decisions. During the discussion, a memo was presented that clarified the extent of council authority in later-stage TIF decisions, indicating that council powers are limited once TIFs reach certain stages of development. Council Member Barbary also participated in the discussion. Following the presentation and discussion of these roles and responsibilities, the committee agreed to remove this item from the agenda. The agenda item was approved. ## FY 15 Links [timestamp: 1:16:58] The committee reviewed the proposed FY 15 committee links during this agenda item. Key speakers in the discussion included Paul, Gorton, and Henson. The review focused on two primary areas: chair continuity and the implementation of a standardized reporting template for the coming fiscal year. The committee examined the proposed structure for maintaining leadership roles and discussed how a uniform reporting approach could improve consistency across committee operations. No changes were made to the proposed FY 15 links structure. The committee determined that the current framework was appropriate and agreed to proceed with the existing arrangement for the fiscal year ahead. The outcome of this discussion was approval, allowing the committee to move forward with the FY 15 links as presented. ## Items Referred to Committee [timestamp: 1:19:11] The committee reviewed its referral list during this agenda item, with Kay, Stinnett, and Gorton participating in the discussion. **Items Removed from Referral List** The committee removed several items from the referral list: * Parking fines issue * Debt management policy review * Increased parking fees **Items Confirmed for Future Review** The committee confirmed that two items would be revisited at the next meeting: * Wellness Center lease * LexArcs financial support **Outcome** The referral list review was approved. --- ## Decisions - **Motion** — passed: Motion to approve the December 10, 2013 committee summary - **Motion** — passed: Motion to postpone item #4 (Police and Fire Pension Update) to the next meeting due to lack of information - **Motion** — passed: Motion to move item #5 (Parking Fines in Handicap Zones) to the top of the agenda for public comment - **Motion** — passed: Motion to set the fine for handicap parking violations at a minimum of $150 up to $250 - **Motion** — passed (8-1): Motion to amend the setting of the fine for handicap parking violations to $250 - **Motion** — passed: Motion to approve signage as submitted in the presentation - **Motion** — passed: Motion to remove parking fines issue from the committee referral list - **Motion** — passed: Motion to adjourn - **Motion** — passed: Motion to remove the TIF roles and responsibilities item from the agenda - **Motion** — passed: Motion to remove the debt management policy review from the agenda - **Motion** — passed: Motion to remove the increased parking fees or fines item from the agenda --- ## Full transcript Music Thank you. Thank you. It's 1 o'clock. We do have a quorum, so we'll go ahead and begin for the February 25th Budget and Fines Committee. The first item on the agenda is the January 28, 2014 Committee Summary. Do I have a motion to approve? We have a motion by Council Member Beard and a second by Council Member Myers. Any discussion? All those in favor say aye. All those opposed? That passes. The next item on the agenda is the monthly financial report. Commissioner, welcome. Thank you, Chair. I think we'll have it ready in just a moment. Here we go. We have our financial update for the seven months ending January 31, 2014. The presentation follows the same that we've done in the past. The first is comparative unemployment, and there is comparative good news all across. As you can see, all the indicators, Kentucky, the U.S., the local community, as well as Fayette County, are all trending down. As a point of reference, Kentucky in December was 8% unemployment, and that compares to 8.2% in November. The U.S. economy for December came in at 6.7% unemployment compared to 7.0 in November. And our local metropolitan area was at 5.8% compared to 6.3 the previous month. And Fayette County now hit below 6%. We're at 5.6% for December compared to 6.1 in November of the year. So all those are trending in the right direction, and we hope that is a trend. The next slide shows a three-month moving average. Again, it shows that there is a downward trend for all four. And then the selected economic indicators. If you look at the third one, the Fayette County permits issued, that is the only one that we have mixed results. We actually have a slight decrease same time last year. This year we had 1,157 permits issued in January last year. At the same time it was 1,169. And that is trending a little down from December where we had 1,359. So I think that pretty much mirrors what we've heard nationally, that there was some slowdown in the housing starts, maybe because of industry, but probably a lot has to do with weather. Our other economic indicators are all trending in the positive. We have an increase year over year for the last three months in business license issued. We have an increase over the last three months in home sales. And we have a decrease in the last three months in foreclosures. So we do want that one to keep going down as well. Any questions on the economic indicators? If not, I'll turn this over to Rusty, who will take over the top four revenues. Thank you, Commissioner. As we've done in previous months, I will go over the top four revenues compared to budget as well as the prior year. On the first slide, as you can see for the month of January, we are $2.6 million below the budget. I would note that that is mostly due to timing differences, and I will go over the timing differences in a little more detail on our year-to-date numbers versus budget. I will mention that our employee withholding and franchise fees were the two highest that are below budget this time, and it is due to the timing. when looking at the january year to date compared to the budget you'll see we are down 3.5 million versus budget three of the four categories are below the plan employee withholdings down 1.3 million and that is due to the timing differences i mentioned before and what happens on that in the month of january which is the month following a quarter point the returns are not due until the end of the month. So businesses will hold those returns, mailing them late month, and we will receive them at the first of the next month, and we record the revenue when the cash comes in. Net profit is a little bit of a different reason. As mentioned at the last meeting, we are up in our refunds for net profit returns this fiscal year, and through the first seven months of the fiscal year, we are $650,000 ahead of the prior year. So if you add those refunds back in, which are for maybe last year or the year before on estimates paid by businesses would actually be almost at our plan for the net profit. Franchise fees is down $1.2 million versus the budget year to date, and that is due to one utility payment that was received on February the 3rd that was budgeted in the month of January. That was sent out on the 31st of the month, and we did not get it until the following Monday. Before I move to look at the versus prior year period, are there any questions? How big was that payment for the that received on February 3rd? 1.2 million. 1.2. Thank you. On this slide, you'll see a comparison of the current year month date versus prior year month to date, and we are up $600,000 versus prior year, which is good to see. Employee withholding, which is our top revenue category, is up $430,000, which shows strong growth year over year at 5%. The franchise fees here does show a $285,000 increase. What that is is included in franchise fee was an additional payment in the month of January for $200,000. That's actually should have been received back in December. January year-to-date compared to the same period prior year-to-date, we're year-over-year up $4.1 million. All four categories are up over prior year, which is good to see. Our employee withholding is up $1.6 million, showing strong growth year-over-year despite the timing differences. Net profit is up $587,000, even though we had the increase in refunds year over year, which is up $650,000 in refunds. So if you add that back into the 587, the variance would actually take us up $1 million over prior year. Insurance is up $1.2 million year over year, and franchise fees is up $759,000. And as I mentioned, we're missing a payment. But when you try to compare to prior year, what can look a little bit odd is prior year was received on a quarterly basis, whereas of this fiscal year we receive our payments each month. So looking at franchise fees year over year is better to really look at in the second, third month of a quarter as opposed to the first month of a quarter. Are there any questions on the last two slides? The last slide I have today is in package for a request of the committee. It's for information purposes only. It's our nuisance, abatement, and lien collection slide. And with that, I'll turn it over to Melissa, and she'll go over the other revenues as well as the expenses through January. Thank you. Okay. Good afternoon. Rusty's already talked about the big four, so I will move on down the list to other licenses and permits. That is up a million dollars year to date, and that is primarily due to bank franchise fee and the deed tax fee. As Bill mentioned, home sales are up over the prior year, so it makes sense that our deed tax fee would also be up. Ad valorem, we've got about a $600,000 variance. That is due to realty taxes, so our property taxes. Services, you see once again, this is a $3.2 million variance year to date. This is due primarily to detention center fees, building permit fees, and other various service fees that we have. The rest through there are basically at budget until you come down to other income, and that's due to penalties and interest being up and miscellaneous revenue. So move to the expense side. On the expense side, you will see with personnel, we are $841,000 ahead of budget. We're within 1% of budget with our personnel through the month of January. Operating, we've got a variance of $4.8 million year-to-date there. That is due to various accounts, professional services, utilities, supplies and equipment, vehicle fuel and maintenance, grant match. And we know that several of those will be moving around toward the end of the year, and so we'll see some of that variance going away with things booked as the year goes on. The partner agencies, that's just the timing, that $371, just whenever a payment was made versus when we had it budgeted. And also the operating capital expenditures, that's just the timing. We don't know when people are purchasing their capital. So that's, you know, nothing to worry about there. Again, with the transfers, just the timing of when the transfers were made versus when we had them in the budget. Overall, our expenses have a net change in budget of 4.8, and our variance with expenses and revenue to date is 8.6 million. This slide shows the current year to the prior year. This is revenues and you can see our revenues are about seven point seven million dollars ahead of where they were last year Which is in line with the budget because we have a higher budget for FY 14 than we did for FY 13 On the expenses current year to prior year If you'll see at the bottom there the January 14 We're tracking closer to our budget this year than we were at the same time last year 4.8 versus 13.4 difference there. So are there any questions? Council members have any questions? Vice Mayor? Thank you, Mr. Chair. Thank you, Melissa. So on personnel, I know during the past year we've had more than one discussion about vacant positions and getting those filled. So is that reflected in here? It is. It looks like it might be, but I don't know. Yeah, and every month we meet with the divisions for their monthly review, and we ask them where they are in filling vacancies. And every month people are, well, this is on the docket, or we've advertised, or we're interviewing. So there are the vacancies being filled. Do you know how much of an inroad we've made on that list of vacant positions? I do not. I would have to look it up, but I can get you the number of how many positions we have vacant at the beginning of the year and how many we have now. Okay, I appreciate it. Thank you very much. Thank you, Mr. Chair. Thank you. Council Member of Senate. Thank you, Chair. Thank you, Melissa and Bill and company. Everybody else is going to chime in here in a second when I ask this question. The variance or the overall net position around $8 million, I guess my concern is, and I said this last year during the fund balance discussions, and in the year with big fund balances. I'm not sure that accomplishes what our goal is when we do a budget. And I think I have some concerns about some of the deferred maintenance that's happening or not happening right now. Some of the other things in government that are waiting for funding, and we come in here and show a big net position and a positive, like $8 million. I have some concerns about how we're going to do the budget differently because there are things that need to be funded. Can we use it now? Are there needs that we can go ahead and fund today rather than wait until November to worry about that we can save money and time on? Mr. O'Meara, do you want to address any of that? We're going to have a discussion today, for instance, about affordable housing. I mean, that money would go a long way towards getting that type of program started. So I'm just concerned about building up these big fund balances like we had the last couple years. And where do we learn from that when we budget? and can we use that money today versus waiting six or eight months before an audit before we know exactly how much we ended at? So is this a too-good-to-be-true picture, Bill? Well, Council Member, I really appreciate you asking me that question today. I come from more of a conservative approach to budgeting. One of the great examples is that we had a favorable variance in landlines, and we wiped that out in order to cover expenses for SALT. We know that we have favorable variances in professional services, but we also have a $1.5 million favorable variance in utilities, and we have utility bills for two of the coldest months still to come. We expect some of that variance to erode. Do we expect all of it to erode? No, sir, we do not. So we do feel that at this point year to date, we are trending ahead of budget in total, identifying which pocket exactly to the line item is more challenging in order to reallocate to a specific purpose. We certainly can look at that and report back next month, if you would like, on some of the areas where we are projecting variances, but we're also going to spend the whole month of March focusing on next year's budget. So there's a timing challenge for us to do the analysis for the current year as well as to build an accurate as possible budget for next year. I don't necessarily want to give you extra homework, but I think this is valuable in preparing extra's budget as to where we're missing the mark in terms of budgeting. And we're, because we all know we cut things at the end or we don't consider some things because we're trying to balance the budget when we pass it. And so are there any critical needs that need to be filled today is one question that we've put off, put off like the salt. We filled that need because that was critical. Is there anything else out there that we can fund today with this surplus that we're running year to date through seven months? And I know it's just seven months. Obviously, the last five could paint a different picture. But it looks like we're turning ahead. And are there any personnel positions that need to be funded immediately that have been put off that are critical in those two categories? Do you know of anything that we should consider? And if you do, I'd like to have this committee consider it and go ahead and funding them today rather, again, waiting until November with a huge surplus, then divvy it up. That's my concern. I appreciate it, and I think they're valid. I would point out that we're within 1% in the payroll budget, which is different from the place that we found ourselves this time last year or the year before. I will also say that when we're building our budget in the month of March, we are looking at year-to-date variances and having the directors address those in our budget hearings. So there are steps made in order to close the gap, but I have to be honest with you, I'd rather have extra money than have a shortage and having to dip into funds at the end of the year. So I don't want a $10 million variance, but I love $2 million to $3 million at the end of the year. I think that's a comfortable $297 million budget. I would feel a lot comfortable with a little margin and no margin at all. As would I. As would I. But when we get to $8.6 million, it starts making me wonder what opportunities are out there that we can fix, especially with deferred maintenance. We've all furnaces, roofs, we all have those lists. What can we fund today? instead of putting off six more months. And if you could, maybe if there's an idea coming back in March, if there's not too much extra homework, I know you're preparing the budget, but that would be useful to know. We'll have a discussion and continue it in March. Thank you, sir. Thank you, Chair. Thank you. Any other council members have questions? Seeing none, we will move on to the next item on the agenda, which is the refunding urban services ad valerian taxes. Council Member Stenet, you put this one in. Do you want to start the discussion? Do you want to go ahead and start the discussion, just kind of lay the groundwork and see Mr. Martin up here? Charlie, thank you. This is about streetlights and our practice of refunding the streetlight tax that is placed on homeowners to fund part of our streetlight program now as it stands, as well as the other taxes that we're also either not refunding and charging for and getting our policy consistent across the board between streetlights, the garbage, and street cleaning. Because I know there are times when a road is put down, the final surface hasn't yet been applied, and we're not cleaning that street, but the tax is being paid. So that's what the premises is coming from. The streetlights mainly is the issue. And Charlie, if you can touch on maybe the garbage and the street cleaning, if we are charging for those but not doing it, But usually I think we're charging for garbage and picking it up at the same time. So I'm sure that one's not as big an issue as the other two might be. Let me take it in the order of streetlights, waste collection, and then street cleaning. And then what our policy is going to be consistently going forward. Are we going to continue the refunding program, or are we going to hold off putting people on our tax rolls until we get the service in there? The only thing that we do the refunds on in the past has been streetlights. And as I alluded to, and what I was going to start out as far as my part of it, it's, you know, I tried to do a packet material that was responsive to a lot of the questions that I felt like I heard when we were back here in November. I was talking with Paul beforehand. Obviously, he and I probably need to talk more frequently afterwards because when I read the packet, it's like, well, I think I missed some of those. And so I apologize if I didn't communicate the message as clear. Number one is that we are not going to add people to the ad valorem tax rolls for streetlights before those streetlights have been installed. We're not going to do that anymore. It's a very easy thing to do. We've spent a lot of time here. This is the second committee meeting that we've discussed the issues about a $34,000 refund. We've probably spent more than that talking about it. I think that it's a pretty easy process in which to be able to deal with. My absolute certainty of it is that right now the person who used to do that, which is Kevin Wente, he had left. The department is now with planning. He left in January. So I can assure you it's not being done because nobody's there to do it right now. I'm working on filling his position. Hopefully we'll have it in place by April. That being said, on the record, no more additions to the ad valorem tax rolls without having streetlights installed. Okay, what do we do about the folks that we have right now? As you see in the packet, there is a list of backlog that is roughly 468, 470 fixtures. Didn't break it down into the number of addresses. It felt like that it was not necessarily productive to get into the number of addresses. It was more about what does KU need to install. And we met with them in January. It was kind of hard for us all to get together because, as you recall, what the weather was in January. They had their fair share of drama, much like we did, as far as the increased demand. But when we did, we presented them with this list, and I said, what can you get done? And an email response came back to me in February that said that they believe that they can get 400 fixtures installed in calendar year 2014. So that tells me we're not going to penetrate fully into the backlog. They said 400 fixtures, and they did have some caveats, weather, equipment, materials, those kind of things like that. But I met with traffic this morning and made it clear to them is that we have got to be very proactive in working to get this backlog list down. If we can get the 400 of them, then we've reduced it by 85% from what it is today. And that's the plan, is the focus is to get the backlog list off. We would not be adding any new candidates to the ad valorem tax this year. The whole backlog list would be cleared out in 2015, and then we would be moving forward from that point moving forward. Should I move on to refuse, or do you have any questions regarding the streetlights? Any questions on streetlights? And Councilman Ford? Thank you, Mr. Chair. Thank you, Charlie. Just trying to understand, the issue prior to has been we've added folks, we've added the service of streetlights. I guess by bringing neighborhoods, primarily new subdivisions, into the urban services area. And at the time that we did that, those residents would be taxed. They would be accessed and levy the tax. However, there's been a gap between the time they were taxed and the time the streetlights were installed. And in some cases, we're still waiting for streetlights to be installed. So what you're saying to us this afternoon, Charlie, is that going forward, per the policy that you're endorsing and bringing forward to us, that will occur no more. We won't have a need for refunds for streetlights because folks won't be taxed until they're serviced. For streetlights, that's correct. Yes, is that we will not be asking for that portion of the full urban services because the streetlights are not in place. what happens is that people you know the neighborhoods build out slowly and especially in this recession we still have they were showing me one today that the streets have been in place for 10 years but still half of the lots are not there you know economic conditions other factors and stuff and so we along with KU don't want to go in and install street lights where there's still the sidewalks and all the other things are not done yet you know on my sanitary sewer hat I can attest to all the damage that can potentially occur while the building phase goes on. I have manholes that get filled with rocks and all these other kind of things. So the last thing we want to do is put poles and lights out there and then have somebody come in and tear them up and not be able to find somebody responsible. So we try to go at a 90% once it's built out 90%. What's happened was is that when we added to the tax rolls, it was when the PLAT was certified. Well, the time the plat gets certified to the time we get to 90 percent was a huge amount of time and highly variable because of the economic conditions. And so in the past, we were issuing refunds. And I don't think it was a big issue until this year that we also sent out a notice along with that refund that said you had to fill out a tax form because it's reportable to the IRS. I think that's the thing that got everybody's attention because it was real easy to take the check and cash it. But then when you had to do a notification of a refund, then it got difficult. So thanks, Charlie, for that recap to help me personally understand in the frame of the issue. However you're talking, what you've just explained per policy will be on the financial side of the fence, so to speak. folks won't be taxed until their service. The next question perhaps that this committee will have is, it's far too long for folks to go an extended period of time from buying their property to having the whole subdivision built out to having the streetlights. But for the purpose of this discussion in budget and finance, we're only talking about tax and refunds. We're not talking about operationally getting, working with KU to get on site to get the streetlights installed. We're talking about tax right now as far as that they will not get added to the ad valorem tax rolls for streetlights when they don't have them in place. But the duration from the time the first person buys the first house in the subdivision by the time that subdivision is ready for installation of streetlights is really out of the control of urban county government. A lot of its market forces and the developer or whatever organization is doing that is that it could be a very short time because it's a popular area as opposed to it can be a very long drawn out period because of like what we saw in the recession is that some lots just sat vacant until they came up with a different marketing plan or a different business plan to be able to get things moving. you know if you're familiar with the Brandon Crossing area any at all down in Jesmond County I mean they put all that stuff in there and it's still it just it's piles of rubble in some areas and stuff like that because there's just too many areas that are developed in order to be able to turn those out there's a house here and there but it's um it would be very difficult and it wouldn't be something I would recommend is that we move forward with authorizing the installation of the street lights because then we're somewhat on the hook associated with the operation and maintenance. I mean, granted, we're paying KU, but if you're going to have brick trucks and cement trucks and all the other things that go on with a major building phase and you've got infrastructure sitting there waiting to be run into by somebody, it sounds like it will not be a plan I would recommend. I agree. Charlie, thanks for your response. It sounds fair enough to me. I'm satisfied that the tax roll is in our control. Thank you, Mr. Chair. Thank you. Council Member Stinnett. Thank you, Chair. Charlie, what is the exact order of the list that we're giving KU? Is that in our packet, or is it? It is still not ordered yet. They basically gave me a commitment to 400, but as I alluded to earlier, it was really hard to get their attention in January and early February. You know, with all those sub-zero days, they were so busy, worried about being able to generate power. And I'll have to admit, I probably didn't help a lot with it because I was worried about making sure we had enough salt. So, you know, the impact that you'll see is that I have told Traffic Engineering is that we are to have quarterly meetings with KU. I talked with Bill DiOrio on Monday and reminded him of that. So there's still some ordering that needs to go on in this list in order to be able to make it a live and living document. But the point to traffic engineering and public works is that you need to be aggressive and persistent about getting this list done and putting the onus on KU as far as delivering the product. But the order is still to be determined. How soon do you think we can get that? because we've already committed to some homeowners an order that was put out last year, and we haven't exactly made good on those commitments. I'm just trying to see are we going to change that order up again. I would not be an advocate of that is that on that list, we're on pages 27 and 28, that you see a couple of them over in the status area that are marked in August of last year, which I asked that question about that, is how do we have something that's marked in August of last year and we still don't have them in? I can't say that I got a great answer, but I did ask about it. If those are already marked, theirs should be first on the line if they're already marked. And that's assuming that the markings are still there today. Well, I'm sure you'll update us when we have a more coherent list, but please do so we can keep our residents informed. Like I said, reducing this down to where we don't do refunds anymore is paramount. And so I will continue to be aggressive about making sure this list gets taken care of, whether it's in whatever order that it is, that I hope to stand here by December of this year and tell you it's done, that we exceeded expectations. I look forward to that day. Thank you. Okay. Thank you. Council Member Clark. Thank you, Chair. As a non-member of the committee, I have a quick question, Charlie. What is the trigger that KU uses to say, okay, now it's time for us to install streetlights? Is this dependent on us? Are you saying, okay, making a phone call, say, okay, now it's time? Or is there a different trigger that KU can use without our prompting? In the past, it's been an authorization letter from Traffic Engineering, and I want to take that authorization letter and turn it more into a direct communication with them through this quarterly meeting. is that if we send them a letter and says, you know, this one's ready to go, but yet we still maybe haven't completed some of the things because we play a role in the marking, is that I want to identify when a place is billed out and we sit down with them, come up with a schedule when it's going to get marked, when the stuff's going to get ordered, develop an overall schedule instead of, hey, I just gave it to them and I think they're working on it. It's got to be an active and proactive role in helping drive the completion of the installation. Okay, thank you. One other quick question. If in a new development, the infrastructure is complete, everything's there, sewer, sidewalks, all the infrastructure is complete, Is the same problem still there by not putting up street lights, even though we don't see any possibility of there being any further destruction of the infrastructure that's already in place, except the building of the houses or the apartment buildings or whatever it might be? Well, you know, typically you won't see, you know, curb cuts and all these other kind of things, sidewalks and those kind of things have a tendency to change a lot during the home building phase. And especially if it's, you know, when you've got tight lots and stuff like that is that whatever sidewalks there usually isn't there by the time they're done because they had to back all the trucks over top of it and it broke it. And so you don't, you very, very rarely see that. You might see it more in a commercial application to where the lots are larger and the means of building in the lot as far as ingress and egress is more defined. The traffic, what they're using is a whole different, a couple of different approaches. You know, they're using building permits. They're using field level inspections. They're trying to use some judgment to say, you know, based on our past experience, because the folks that are doing this have been doing it for a while, is that we think this one's about ready to go. And some of it may be, you know, questions that come from our constituents as well, is that we think it's ready, and our folks will go out there and look at it and say, yeah, we think it's safe enough to go ahead and authorize. But once we authorize that to KU through this quarterly meeting or an authorization letter, is that there's got to be that immediate follow-up about getting the thing marked So materials are ordered and that there is a timely approach to do that. If we get into the end of the year and we're looking at that and you sit down with KU in that last quarterly meeting and they say, oh, now there's 25 of them and the delivery time is six weeks. We won't get that one done before the end of this calendar year. It doesn't get put on tax rolls. It gets put on next year. In result, some folks may get, you know, some actually free streetlights for an extended period of time. But I think that's better we come out ahead than going through all this refund process. I like the plan, as you've described. I think that's a great improvement. Thank you, Chair. Thank you, Charlie. Thank you. Council Member Scutchfield. Thank you, Chair. Thank you for all your work, as always. Charlie, I don't know what we'd do without you working on getting these things done. One of the biggest things I think we need to do looking forward is, one, if you can keep us informed, if we start falling behind, if KU, you know, obviously looking at some of these that got marked in August of last year, we need to be vigilant as far as getting this done and keeping communication together with KU and with your department for getting the lights up. But I appreciate all your hard work. I know there's, you know, I'm in one of those districts that has lots of new developments. And the streetlights, we don't want to pay for them until we have them, but we want them because it makes our community safer. So thank you. Thank you, Chair. Thank you. I don't see any other council members on this topic, so we'll move on to the other ones. Okay. Waste. I did not put as much effort into looking into the waste situation. It's a little bit more complicated, but I did move one of the waste folks into the commissioner's office. He's actually in Kevin Wente's old seat right now since I had a vacant office. And one of the things that he's working on, because I kept hearing this in November, is compactors. Essentially, he's doing an evaluation of the privately serviced compactors. compactors, because I need to get a better handle on what it is that we're, what's out there, what we're dealing with. The conversation I understood here from last November was, is that there are compactors out there that are being serviced by private haulers, and we are not, but we're collecting a tax. I think that's what you wanted to get to, is that what is it that somebody's paying for that they're not receiving? And that seemed like the primary focus. we don't know how many there are and so it's going to be a little bit of a timely effort in order to be able to get to the bottom of that i still maintain as i did the when i was here on in november though is that in the residential areas you know we're collecting those you know And so I think that by adding that tax immediately when the home building phase starts, we're there. Now, if there's some of the lots that are not being built, we're still there if somebody wants to be there to set it out. So in my definition, we are, in fact, providing the service. Whether there's a house or there or not is not the issue. It's whether or not we're providing the service, and it is available for their use when they're ready to use it. that's really about all I had to say on the waste management aspect. I don't see any questions on that one. Oh, Councilman Sinnott. Thank you, Chair. So, Charlie, are you going to compile this on the commercial side as to who's paying the tax and getting compactor service only, or are you looking at who's paying the tax and not getting service, period? I'm really worried about the compactor issue right now. I figured that, you know, is it if I wanted to start with compactors. I just felt like that that was probably the most readily identifiable aspect. He started on that on January 27th, if my memory is correct. He's supposed to have it finished up by April, and we meet on a weekly basis every Monday morning to see where he is status-wise. Very good, especially when we so-called purchased a truck just to do that service. I'd like to know the answer. Do we still have that truck? And is that why we were told this committee that's why we purchased that truck years ago, a couple years ago actually at this point, to pick up compactors and that we could start providing the service. But as my understanding, I think you found out we're not doing it yet. So if we can look into that too and see exactly how big the issue is. And I understand the position legally that if we offer the service, then whether or not they choose to take it or not, it's up to the property owner. But it doesn't make it right charging for a service that you're not getting and paying for it. So that's just my opinion, and I'm sure it differs from the law opinion, but that's okay. That's why we're a democracy, and we can make decisions based on the majority. And I'd like to find those answers out before we have a real serious discussion about how we deal with those people who are paying a tax and not getting a service. Well, I appreciate that, Councilmember Stenner. That was kind of my takeaway from last November was let's get the data together, try to figure out what it is we're talking about, because that would then put that discussion in a better context because we're talking about it from data. Very good. Thank you. Thank you. Council Member Ford. Thank you, Mr. Chair. Charlie, thank you for being responsive to the committee's request that we analyze that data about the private compactors. I think it's important for us to know that. But let me ask this question. And as of right now, is the service for the sites that are utilizing private compactors, is the service available from us to them today? In my understanding, it is. It is available to us. It's not available to them in the flavor that they have chosen to utilize. And I've used the term flavor as being dumpster versus compactor. I'm a little bit hesitant to be too rigid about that, recognizing that some folks may be utilizing a compactor because of space limitations, volume limitations, that, you know, it's not a one-size-fits-all, which is one of the reasons why I'd ask that employee to do the field recon and the tabulation of these compactor areas, because, you know, every site's different. And I could stand here and tell you today, it's like, oh, well, you know, they've chosen to have a compactor. We don't service that. We only provide dumpster. And then find out that there's some of them that because of the way that their properties are configured and the volume of trash that's generated, a dumpster will be out there dumping it every five minutes, and so it's impractical. I'm trying to get a better understanding of it for all parties. So part of that, and I appreciate that, Charlie, so part of the analysis of the sites that utilize the private compactors would be to kind of see perhaps if there is a better way that we can offer service, perhaps. Yes. At the end of the day, however, if said site or commercial outfit chooses not to engage our services, that's their right. I mean, that's, I equate this issue kind of, and I know this is probably not the best timing to make this comparison, but the Fayette County Public Schools. a property owner who has assessed the property tax that a line shares goes to the public schools may or may not have children in the public schools at this time may choose to send their kids to a private school or a school outside of the county but that does not afford them the opportunity of a refund is that a fair comparison as a parent of an 11 year old who goes to lca yes Okay. Very good. Very good. Well, good luck in your studies. Again, the information to have on hand is not a bad idea. Thank you, Mr. Chair. Thank you. I don't see other council members on this particular one. You can move on to the next one. Okay. And then I'll be quick on the street sweeping. You know, I feel the same way about street sweeping. At least my recommendation is the same, is the services available. You know, I think that a sidebar issue of this, and I would need to work with new development folks to get a better handle on it, because it's not something I spent as much time on as I did on the streetlights, is this lack of final surface. We need to get the final surfaces back on there because it helps us in numerous ways, not only from a street cleaning aspect of things, but from a snow removal standpoint, manholes, the whole nine yards. I mean, we've got to find a better way to be able to get this final surface in place because that would eliminate all of the other arguments. We're a strong believer in street sweeping. I want, you know, back with my water quality hat on, it's such a critical component of what we do is that we've got to do a better job with it. But rather than my path moving forward on this is trying to figure out how to shorten that time frame before final surface goes on, because that's the only impediment to street sweeping. But we're not the ones in control about when final surface gets put on and isn't. And so I don't know where that leaves us. I'll have to do a little bit more work on that. But again, my angle is going to be not so much about whether or not we're providing the service. Why can't we provide it sooner? with the cooperation of others Councilmember Henson Thank You chair, thank you Charlie. I Don't get a sense that even Established neighborhoods that have straight with sweeping that we have a consistent schedule Is that something you've looked at? No, I haven't, honestly. You know, is that between snow removal and leaf collection, you know, standardized street sweeping has been primarily on the radio. But I have a feeling, I'm hoping, optimistic that it will be. Because I've asked that question before, and Albert assures me is that they're like clockwork. But I would like to look at that because I've always been concerned that we're not necessarily sweeping streets with the intention of getting up the debris. I know they come down my street every month, but I'm not so sure my street is all that dirty. Right. The street I live on is not in that tax district, but the streets that do get it, I just notice a lot of leaves and things that have collected against the curbs. And I would think that would be something that the street sweepers could get. Well, the absence of some folks not having urban services, and some do, particularly in the street sweeping thing, the stormwater system knows no boundaries of taxing districts. That's right. So it does create some real challenges for us. And as you probably recall, during the water quality management fee, there was a lot of discussion about that. And, you know, after one permit cycle on our MS4 thing, I think we may have to be rethinking that again to utilize it in a way that is beneficial, both from a water quality standpoint and just an overall appearance thing. I'm open to it more so now than I probably was five years ago as I look at the vice mayor. It's also possible that some areas need it more than others, maybe areas that have more of the tree canopies and, you know, the more established areas. But I don't know. I thought that Albert Miller had said that that's something he was looking at. So I would appreciate it if you take a look at that, too, if we need more equipment, whatever, especially being here in the budget. it yeah I will do that thank you I don't see any other questions on this topic is that all Charlie yes thank you very much for that report the next item is number for the police and fire pension update council members tenant you put this one in we'll let you start with it thank you chair and I assume Scott are you okay yeah the reason why I put this in is there was two questions that I asked one One is what our current unfunded liability is, and two, what our annual ongoing payment is projected to be going forward. And the reason I ask those two simple questions is in order for us to manage this fund and to see if what we changed back in March is effective, we need a good starting point. I'll agree on what our starting number is. I think today we can get that answer and then be able to move forward and manage this fund a lot better in the next 30 years than we have in the past. Scott, thank you for being here. Very welcome. Thank you. Thanks for having me. What I want to do today is give just a quick update on the pension reform, where we are now, and then talk about the annual required contribution as well as the unfunded liability. So I want to talk about 2013 and 2014. What you see here are two bars that show pre-reform, what we would have owed, and then post-reform, what we owed after the pension reform went through. So in each case, the bottom bar, around $11 million, that's the debt service on the pension obligation bond, so that doesn't change. The red bar is what you're all familiar with, the annual required contribution. So for FY13, pre-reform, it was $31 million. After reform, it was reduced down to $22 million. So a savings of $9 million. What that $5 million bar is, or rectangle, pre-reform is, that was an estimate given to us by PFM that enables us to do an apples-to-apples comparison here. So pre-reform, we essentially had an interest-only loan that we were paying. We were never going to pay down the unfunded liability. If we were to start paying down the unfunded liability, that would have cost us an extra about $5 million to do that. So post-reform, we are paying down the unfunded liability. So contained within that $22 million is enough to start to pay down the unfunded liability for that year, and that goes for the rest of the 30 years of the amortization period. So if you're doing an apples-to-apples comparison, paying down the unfunded liability, then the savings jumped to $14 million for that year. And then in that year, we also were scheduled to float a $34 million bond to prop up the pension system prior to reform. But post-reform, we did not need to do that, just as a reminder. The reason for the bonds was that we were trying to get ahead on the unfunded liability, but also I think the city was having a tough time paying, reaching the annual required contribution, which is what the actuary says that we need to, tells us what we need to pay to keep the fund healthy. So jumping to the next year, fiscal year 2014, you can see that the pre-reform annual required contribution jumped from $31 million the previous year. It was going to be $37 million if we hadn't done the reform. Post-reform, that number was instead $23 million. So we saved $14 million in that year. And again, if we decided to compare apples to apples as if we were paying down the unfunded liability pre-reform, then those savings jumped to $19 million. I know that can be a little confusing if you have any questions about that. Okay. So now I want to talk about the annual required contributions. So the reform required us to pay down the unfunded liability over 30 years. So we're going to eliminate, we're scheduled to eliminate this unfunded liability, which was $296 million, over 20 years. Sorry, over 30 years. To do that, when the reform took place, the unfunded liability was reduced from $296 million down to $161 million. I'll talk a little bit more about that in a second. When the actuary came to us with the, having run the numbers, they said that it would cost the city $20 million, about $20 million a year for the next 30 years to pay the annual required contribution, which, again, contained within it paying off the unfunded liability. Then, six months later, the actuary did the first evaluation post-reform, and the number came back slightly higher. I'm sure you guys remember, as I do, that for the next 30 years, instead of $20 million, it would be more in the realm of between $21.5 and $22.5 million. So I wanted to talk a little bit about why. So as the actuary tells us, there are three main reasons for this. We're in the last year of recognizing the losses from the 2008 recession. Those are smooth, parsed out over a number of years, and we're recognizing that $24 million loss, the last of the losses this year. Also, when the actuary ran the numbers again six months later, the payroll was higher than they anticipated or than the numbers they had when they did the initial run of the numbers during the negotiations. The third reason is that service and disability retirements rose 148% in the year of reform. That is something that tends to happen when you do a major reform, is that people do retire at a higher rate. So, can we expect other changes? According to the actuary, there are three things that can impact the police and fire pension moving forward. One is if we see a further spike in retirements and early disability retirements. That's not something we expect now, but if that were to happen for some reason that we can't foresee, that would affect the numbers. Major market movements. Now, we do when we have gains in the market or when we have losses. Those are smoothed over five years, so to reduce the volatility in each year's annual required contribution. So if there are major market movements, major correction, that would affect the numbers. Also, if we increase the police and fire payroll, whether through its expansion of personnel or through collective bargaining, that's something that could affect the annual required contribution. But we, during the reforms, we put some things in place that I think would help with budgeting. budgeting. So the actuarial study now that helps set the, that the Pension Board uses to set the rate based on the statute will now be done every year. Before reform, it was every other year. And what finance does is they take that number and they prorate that amount over each payroll so that we are always up to date on our payments. Now, one thing we need to understand is that we don't get the final payroll numbers from the CAFR until we won't get those numbers to be able to set the rate until October. So there may be an adjustment that will need to be made each October. Perhaps we need to pay a little bit more or a little bit less. But we can set the prorated amount based on the prior year's projection from the actuary. And for FY14, the budget number was $22.8 million. Again, we did ask, and it should be in your packet, from the actuary, an understanding of what these payments look like over the next 30 years. And again, in your packet, that does show it should be between about $21.5 and about $22.5 million per year for the next 30 years. So now I'd like to talk about the unfunded liabilities. So when we did the reform, the actuary projected that the unfunded liability would immediately reduce. Again, as the governor signed the legislation, the new structure takes place, and so the unfunded liability was recalculated. Immediately went down from $296 million to $161 million. But then six months later, again, the first post-reform actuarial analysis showed that it had dropped only to $204 million. So instead of a 45% drop, more of a 33% drop. Now, the actuary, during the, when we presented the reform, you can see the green circle there, We always showed a dip in the funding ratio and a rise in the annual required contribution for the first year after reform. So that's something that was not, I'll say it's not intuitive, but it was shown that this would happen when we introduced the reform. It was a bit larger than we anticipated. And again, the reasons for those were the three that I talked about before, the spike in retirement, disability retirements, the payroll being larger than anticipated, and then recognizing that last part of the market loss from the recession. So to sum up where we are on the pension reform, I think together we fixed what was the largest financial issue that was facing Lexington. It's been called a national model for the way we were able to come to this solution through consensus. There was just an article in the New York Times today talking about the 40 states that have undergone pension reform. And the collective, the aggregate, unfunded liability of those states has actually increased since 2009, despite those reforms, from $3.1 trillion to $4 trillion. It's just another article about the New Jersey pension, which went through a reform, and now it looks like they're going to have to do something dramatic again. We're not in that situation. We've saved, depending on how you look at it, either $23 million or $33 million over the last two years. We've reduced the unfunded liability. That says $100 million is more like $90 million. But we still have to manage it closely. Again, we know what the actuary says the payments are likely to be between $21.5 and $22.5 million for the next 30 years. That will be a decreasing percentage of the general funds. But we do have to be vigilant about those three things. Again, disabilities, payroll size, and, of course, the market. So I'd love to take your questions about the reform or the ARC or the unfunded liability. Thank you. Council Member Kay. Thank you, Chair. Thank you, Scott. I had a question. It's on page, well, slide six, page 34 of our packet about increase in police and fire payroll. Well, I guess my impression was that the present reform would account for the growth, what's likely to be the growth in both those areas. That is that the new schedule of benefits and so on means that when people come on, essentially their retirement is being covered. Why would the expansion of our force affect negatively our ability to stay ahead of that curve? Sure. So it does anticipate that we stay at the same authorized strength. If we expand the number of individuals in the pension, we're going to have to pay what's called the normal rate. So it's a little less than 11% that will pay for their pension. So employees pay 12%. We pay 11%. And that amount combined with the 7.5% return over time is what pays for their pension. But if we add, it won't add to the unfunded liability to increase the payroll because we are committed to paying whatever we have to do, whatever we have to pay by state statute to reduce the unfunded liability over 30 years. But the actual number will go up. If we, again, if we expand the payroll, we're going to have to pay the 11% pension cost of a new additional... Okay, so I guess I misunderstood. The unfunded liability does not go up. It simply requires that, as with many other things, government has to pay more as we add. It's part of the benefit package. That's right. Is that correct? But one thing we should all understand is that with a defined benefit plan, the city has all the risk. We're essentially guaranteeing this 7.5% return on the employee contribution and the employer contribution over this amount of time. Again, that's why I was talking about being vigilant about the market. We're guaranteeing that. So while the unfunded liability won't change, the liability increases that we're responsible for that return. Thank you. Thank you, Chair. Thank you. Councilman Stinnett. Thank you, Chair. Scott, how often will we have this type of audit done to see if we're on track? Is it annually? Same company will do it, or do we bid that service out? The same company as Cavanaugh and McDonald's. So they always have our contract, and they'll always be the ones doing it. Is there not something we bid out? It hasn't been. I think that's the responsibility of the Police and Fire Pension Board. Okay. And then will this same firm be able to calculate, I know I've asked this, the impact by hiring one police officer or for every firefighter we hire, what our impact is on the fund itself? So I did ask that question. The present value of one additional public safety officer at the time they retire is $215,000. The way they suggested we look at it, I sent them some spreadsheet, and they did some quick thinking about it. It's not an official answer from them. It's that we should think of their additional liability to the city as $94,000. That's the $215,000 present value of the annuity minus what their contribution is. Personally, I think that misses the totality of the liability because, again, the city is guaranteeing the 7.5% return over time. So I think that would have to be factored into our thinking about what our true liability is. So they won't do that? In fact, they're on an annual basis for every new person that comes into the plan? They'll do that, won't they? That's what I'm trying to get to anyway. Right. Well, again, they maintain it's about $95,000, and that's the way we should be thinking about it. And they're reluctant to calculate our liability on that 7.5% return because there are a number of factors that would affect that. Let's say that inflation goes up and we're more likely to increase salaries and how that might affect the funds. So their point is that there are too many sort of interrelated factors where they will not put a number that defines that 7.5% return. So for budgeting purposes. But they don't feel comfortable doing it. Okay. So $95,000 is what we'll tentatively use for budgeting. Okay. Very good. Thank you. Thank you. I don't see any other council members, so I'm going to ask questions. So when we put together the fiscal year 14 budget, we started, what, with $20 million, and then we came and added another $1.5 million? Is that correct? So for fiscal year 14, it came out to $22.8 million. Say, how much? $22.8. $22.8. As we go forward with each budget then, what will be the number that we're going to be putting in there then? What I would recommend is that you look at the projection from the actuary to get that number. So for 2015, that would be 21.78. Now, again, that may change in October when they do the official analysis, and they can't do it until then because they're waiting on our numbers, on the CAFR. But again, barring those three things, barring expansion of payroll, something unanticipated going on with retirements or major market moves, I think this is a safe number. But our range that we should look at each year going forward is where we initially had said it was going to be $20 million. and now it's going to be 21.5 to 22.5? Is that kind of the, that's what we should look forward to in the future? That's right. Okay. Council members have any other questions? Seeing none, thank you very much. Thank you. And the next item is the TIF roles and responsibilities. Council Member Kay, you put this in the committee, and we'll let you head and start it off. Yes, I ask that we get a conversation about this because there was some question about council authority and council involvement when TIFs were modified or, in one case, pulled. So that was my interest, and I'm glad to see Mr. Atkins here to enlighten us. It's good to be here. Welcome. Thank you. Well, as Council Member Kaye said, there's been some questions about the process we follow as a possible TIF, and a developer brings a possible TIF to us. So we just wanted to walk through that today. And I wanted to start off, this is the TIF project that we currently have under ordinance in Lexington Fayette County. You can see that there are currently six TIFs that are still on our books. The first step, once a developer decides he's going to propose a project to bring to us, it ultimately is their responsibility to do the initial background data gathering that we need, the business questionnaires, the baseline tax data. That's like sales tax, property tax, employment figures, those type of items that the Cabinet for Economic Development is going to take into consideration when they review the application. Once that data is gathered, they typically, the part that's not on here because it's not required, but they typically employ a consultant to help them through the application process. You all have seen John Ferris from Commonwealth Economics here several times. At that stage is the beginning of the application submittal, which is then brought to us. and we consolidate all the information. We get it ready. We bring it to you all for your approval before we submit it. The next step is we then send it to the Kentucky Economic Development Finance Authority, KEDFA, who then employs an independent financial consultant to review the application, determine at what dollar amount the state participation will be based on what, as you can see, the net positive impact of the project is likely determined to be. The next thing that happens is somewhere in between the third step and the fourth step, we will start developing the master development agreement that you all see, and we bring to you all for approval. That agreement dictates the steps moving forward. KEDFA, once the application's approved, everything's ready to go, begins to capture the revenue that has been pledged. They do this in conjunction with the revenue cabinet who has those numbers. At that juncture, once the developer wants to activate the TIF, they will then start giving us reports. We will file those with the state. The state will then release those revenues based on those quarterly reports on the activity. Once we receive those funds based on the master development agreement, we will begin to disperse those funds through finance. to the developer and then you can see the developer receives the funding we also wanted to just walk you through the lifestyle life cycle I'm sorry councilmember case question was basically at any juncture who is watching over or who is responsible for that particular TIF so what we wanted to do is in the this example phase one walk you through each step it basically starts in our office in the mayor's office it will progress as you can see down compliance regulations will be reviewed by law we usually have Jim Parsons come in and help with part of that as well. Financials will be reviewed by finance, and then it makes its way to Commissioner Paulson's shop over in planning because TIFs are not only economic development issues, but if you read the statute, there's a large planning component because they have to adhere to the planning and zoning locally. So what we wanted to do with these next charts is just walk you through almost step by step, show you. You can see in the one category where the developer is basically responsible for supplying us the information to that contact person or contact department. The next phase is the application and the agreement process, which we do along with the state. And then the third phase is where we get into the compliance issue. This is the step where there is a lot of interaction, not that There's not the rest of the way, but as you can see by the contact, it's constant between our office and finance on making sure we're trying to get the reporting done and we have all the information we need. And that information is the responsibility of the developer to get back to us so we have accurate information to get to CADFA. we also had in your packets based on those last three charts a one-page chart that just outlined that all on one page for you as opposed to three different charts so that pretty much quickly walks through the process I hope that answered kind of where you were thinking Councilmember Kay I think that's as helpful as a start. The specific question that came up was once a TIF is in a later stage and complications arise, as they did with the distillery district, does council have any specific role, obligation, responsibility, or is all of that in the hands of the administration, I think developers in the state of that time. I think you have a memo from Mr. Barbary, and I will let him speak to that specific issue. There's a memo that was included in your packet, I think, starting on page 53. 53. But generally speaking, the answer is the way that both the state law and the ordinance have traditionally been drafted, the power largely rests with the administration to make those types of decisions. So if you wanted to change that somehow, you might have to think about, and I think what happened in this particular case, it involved the distillery district, and I think there was a general misunderstanding between the developer and the administration on where this was. And I think that in hindsight, they probably would have taken this to you all if they thought they had enough time to do that, but they felt like they were under pressure from the state to go ahead and make a decision, and that was not brought to you, unfortunately, until after the fact. In my experience, normally they have been taking things to you all, like these master development agreements where, frankly, they already have the ability to enter into those as part of the ordinance already. But, like, for example, on the summit one, the authority was already there to do that, But they wanted to take the administration and wanted you all to have that in front of you and be able to look at it before it got executed and stuff. So I don't know that there's really a need to substantially revamp the existing process unless you all feel otherwise. But that's kind of how the process is right now. Okay, thank you. Thank you, Chair. Thank you. I think Council Member Henson had a question. I'm not sure if it's on this or for Kevin. Councilman Henson. Thank you, Chair. I just quickly, I wanted to know, and I've tried to find in the information, I don't see where it mentioned. Is there a cap on the number of TIFs or the amount that we're allowed to apply for? I think the state will cap us at some point. Kevin can speak to that. But I think, generally speaking, you have to qualify. The area of town has to meet certain qualifications in order to be, from the state's viewpoint, to qualify for the TIF. And I think Kevin could probably speak to an amount. No, Dave's right. And, I mean, the amount, while not capped, the basis is on net new revenue to the Commonwealth. In other words, net new tax revenue. So it can't be jobs, can't be money that came from Georgetown. It has to be from outside the border. So while there's not technically a hard cap, theoretically there is. Okay. Thank you. Thank you. Any other questions, Council Members? Seeing none, we'll move on to the next time item and that is the council links For fiscal year 15 and those are in your packet When we met in the retreat we said that we would bring this up and see if there's any questions that council members had or wanted to add Paul do you know of anything that people have asked for to be included in this? Yeah, like I believe the only thing that I've heard Stacy and Councilmember Henson correct if I'm wrong, but that Councilmember Henson would remain the chair of Was interested in remaining the chair of public safety and I haven't heard anything otherwise that anyone else Was interested in being a chair of any other committees that there wasn't a chair right now Yeah, unless we hear otherwise I asked you all to meet amongst yourselves and and I didn't hear of any so I assume that the people who were chairs will continue to be the chairs. I know they're excited about that, so we'll have to make sure if they do it this time, that if they're still around next year, that the next time they won't have to do it. It is a fun thing to do, though, being the continuing chair here. Vice Mayor Gorton, you had a question? I just have one quick question. In the retreat, we talked about the consistency of the report. And so will you or Paul or someone be putting out the form? I think Stacey probably can answer that. Do you want everybody to follow when we report out? We're actually, all the core staff is going to talk about all this stuff tomorrow, too, after our Wednesday meeting. But in the retreat, it was decided that we would do the template for each link committee, and then they can just fill in the highlights for the respective divisions. So we're going to go over that with everybody. Okay, so they'll all look alike and they'll all have the same types of information. Yes, and it will be the same format that Councilmember Clark's link used last year. Thank you. Thank you, Mr. Chair. Thank you. Any other questions on this item? Seeing none, we'll go to the items in committee. And do we have any that we want to take out? We just, Paul, do you want to go down through these and we can talk about it? Council Member Kay? Yes, I believe we've received the answer we were looking for on the TIF. I would move to take that off our agenda. We have a motion and a second. Any discussion on that? All those in favor say aye. Aye. All those opposed? That passes, so we'll take the overview of the TIF out. The other one, Council Member, and this is my problem. My franchise fees, which is the middle of the page from referred by Gorton, I think had already been. That's right. Yeah, I thought that one had been taken out also, right? Council Member Kaye? Did you have another one? Okay. Council Member Stinnett? Yeah, I move to remove the debt management policy review. We've already passed that. We have a motion. Second. And a second. Any discussion on that? All those in favor, say aye. Aye. All those opposed, we'll remove that one. And is there still a procurement task force? I'm sorry? The procurement task force, is it still allowed? For meeting, actually, I've asked to come on next meeting to go over those three items. Okay, great. We should discuss those in the next meeting, the March meeting. Thank you. Okay, what about the increased parking fees or fines? Was that? I think that was very true. Did we not deal with that one last time? About two-thirds of the way down from you. And I think, I believe that was, should have been removed last month as well. Did we already ask to have that one removed? I can check, but I think, I believe you did. Just in case, let's go ahead and make a motion if somebody would just to make sure. We have a motion and a second. Any discussion? All those in favor say aye. All those opposed, we'll remove that one. The refunding of the urban services property tax, Council Member Stenet, do you want to keep this one in committee or? Okay. And I think we'll be dealing with the Affordable Housing Trust phone and the Homeless Commission today, but we'll keep those in here just in case. And I don't see any others that – Paul, where do we stand on the ones up top? The Waste Management Task Force, I think, is going to start meeting again within the next quarter. As soon as we get a commissioner and a director. Oh. Oh. I'll be gone by then, Vice Mayor, but we'll meet again, I'm sure. Hey, go on. And then the activity-based costing financial. I just have to talk to Councilman Rur Lane, and I think that takes care of. Okay, though, what about the last three there at the bottom? The last three. It's the last two. The last two, I'm sorry. The item from Councilman Raskatchfield, I believe the administration is prepared to at least discuss this. They might look for some direction from the Council about the partner agencies. And then the Wellness Center issue, I think that should be ready. I can go back. The Wellness Center should be ready to come back to the committee next month, I believe. Councilman Raskatchfield, I was saying about the, you were concerned about the reporting of the partner agencies. tentatively I believe the administration is prepared to talk about this next month and probably also look for some direction from you or the committee about reporting good we should be able to knock these out then hopefully next meeting vice mayor I just wanted to ask can you tell me again what is the issue about the wellness center specifically the lease is up and are we going to stay there are we going to look at alternative locations benji came today what our options are this isn't on the agenda um i see benji out there but if you guys want to hear from him he'd be happy to talk i'm sure do you all want to hear from him or you want to all right we'll wait till next meeting do i have any council member k well i my only question is What's the timeline on the lease? And when do we have to make a decision? And what do we need to know? Well, keep in mind, our budget does not run the same time the lease runs. So we need to budget in this upcoming budget the money for a lease. If it changes, goes up, or where we're going to be, we may need to budget. And that's why I like to have a presentation in March before we approve the budget in June. But you think hearing it next month is timely enough? Yes. Okay. That's really only the question I have. It's just the budgeting. That's why. It's not until the end of the year, but if we're going to make a change, we may need to budget some money for it. Thank you. And then I guess the other one I noticed in here was the LexArcs financial support. And I believe, and Vice Mayor Gordon can correct me, but I believe you guys were going to wait until there was a director at LexArcs or there was more information. A new director. A new director. Okay. Seeing all that these are taken care of, do I have a motion to adjourn? We have a motion. We have a second. Any discussion? All those in favor say aye. Aye. All those opposed, we stand adjourned. Thank you. You guys enjoy yourself down here.