Music Thank you. Thank you. guitar solo guitar solo Good afternoon. Good afternoon. It's 1 o'clock. We'll go ahead and begin the Budget and Finance Committee for March 18th. We have a quorum. Our first item on the agenda is the February 25th, 2014, community summary. Do I have a motion? I have a motion. We have a motion by Councilmember Beard and a second by Councilmember Scutchfield. Any discussion? All those in favor say aye. Aye. All those opposed? That passes. The next item on the agenda is the monthly financial report. Councilmember O'Mara, or Commissioner O'Mara. Sorry to downgrade you there. I appreciate any introduction. Thank you very much. Okay, this is the budget and finance financial update. It is to show where we are at the end of February 2014. And the first thing to show is a comparison of unemployment rates. And even though there is an uptick in the green line, which is the USA, we have downward pressures on all three of the Fayette County, the MSA, and Kentucky. Just to give you points of reference, in December, Kentucky was at 7.9%, and in January, they went to 7.7%. On the USA, we were in December 6.7, and January is reported at 6.6. We still do not have January results. They will come out probably first of next week. So the most recent information we have locally is the Lexington MSA. December is 5.8, and for Lexington is 5.6. So to get under that 6% range is a win for this part of our recovery. The next one shows that three-month moving average. It kind of trends it out for you. And then the third slide is some of the economic indicators. And we have favorable indications year over year for each of the categories. We have a lower unemployment rate this December over last year. We have more building permits by actually quite a bit, 1,359 this December versus 870 last December. New businesses are slightly up, 164 this year over 132 last year. And home sales are 618 in December versus last year of 605. And then the one that's going down, which we like to see go down, is foreclosures. We had 45 reported in December, and that matches to 72 last December. Do you have any questions on the economic indicators? If not, I'll turn it over to Director Cook, and he'll talk about the revenues. Thanks, Commissioner. Good afternoon, everyone. As we've done in prior months, I'll start out with our actual month of date versus the budget. As you can see, for the month of February, we were $4.4 million above our budget. And if you recall, back in January, we were below budget due to some timing differences. So this is the timing catching up. We did have some growth in the employee withholding, which is our top pickup at $2.9 million. And franchise fees is up $1.1 million due to two utility payments from one of our utilities. There is also a utility bill missing here that's budgeted at $600,000 that we received the first part of March. Looking at a year-to-date perspective, which gives us a good update where we are to date, we're $945,000 ahead of our budget. That is in employee withholding at $1.6 million, so that shows some growth there. Net profit is $630,000 below budget. And as I mentioned before, we have an increase in refunds through the first eight months of the year, which is about $600,000. And in franchise fees, you notice we are $109,000 below budget. But as I said, there is an additional payment that we budgeted in the month of February that received the first part of March, and that was $600,000. Otherwise, we would have been even more above there. Now we'll look at our February month of day compared to prior year. you'll see we are up year-over-year on that $2.3 million over the same period prior year. And from a year-to-date perspective, we're up $6.5 million, showing growth year-over-year that we included in our budget. I'll pause before I go to the last slide to see if we have any questions today. And the last slide's included in the package for information purpose only. It's the nuisance abatement and lien collections updated through February. I now turn over to Melissa and she will go over the other revenue categories as well as expenses Rusty's already talked about the top four so we'll move on to the other categories of revenue other licenses and permits you see a favorable variance of six hundred and seventy five thousand dollars year to date that is due to de-tax fee and bank franchise fees um ad valorem is also up 670,000 year to date that's um realty taxes the services category you see once again is our biggest um variance and that is due mainly to detention center fees bed fees and detention center other um intergovernmental it's coming federal payments are coming in and then the other income that 800 a 9 000 that is due to penalties and interest and miscellaneous income so go to the expense side on the expense side we are basically at budget with personnel you see with operating we are 4.7 almost 4.8 million dollars ahead of budget there this is due to several different categories professional services utilities supplies and equipment and and grant match and you'll see the partner agencies were a hundred a million and four ahead of budget there that's a timing issue we are one month behind on the library payments so that will likely go away possibly even next month you won't see a variance here the operating capital expenditures of six hundred and twelve thousand that is due to people are just purchasing their operating capital sooner in the year than we we had expected but that's also a timing issue if you look down at the bottom we are if you take in our revenues and our expenses we are 13 million dollars positive variance year to date okay then the next two slides are just the calendar year current year over the prior year obviously we're a little bit ahead but we also have a higher budget this year than we did last year and you'll see the same thing on the expense side are there any questions there are no questions i'll give it back to um commissioner o'meara i don't see any questions but this leads me to your next you contacted me this morning and wanted to talk about our surplus or money that we're headed and i guess could you tell us where we stand right now and if there's not any further questions we'll go into your other relocate reallocation presentation all right thank you we have been putting together the request and reviewing things and working on the fy15 budget and this weekend we were looking at where we were when we talked to you today and saw that we had favorable budget variances. We coupled that with our consulting with the University of Kentucky School of Economics. They have been helping us with forecasting revenues. And the forecast for the revenues is that things are starting to turn around, that we're getting some wind in our sails. That's not to say that it's not a slow slog, but we're going in the right direction. And the indicators right now is that that fourth quarter will show some improvement, as well as some of that improvement will be throughout FY15. We already see that we have favorable variances in other revenue categories, and then we have favorable variances on the spend side. So the idea was to ask for council to indulge us to make a proposal. It's not something that we would do lightly, but it's something that we thought would merit conversation today. And that is to propose a reallocation of the current year budget dollars to alleviate some of the needs that we see building up in the FY15 budget. We have some forecasted revenue increases. We have some forecasted savings on the spending side. So we approach this looking at what would be the critical needs, what would be sound investments, and just as importantly, the last two items, what could we quickly have a collective agreement on for quick implementation. We have this week and next week to put the budget together, and we're kind of wanting to gauge Council's reaction to consider this approach to pre-fund some of the FY15 needs with dollars in the fourth quarter of FY14. I'm ready to show you what plan we would propose, if that's okay with Council. I think before you go there, we have some questions. Sure. Council Member Farmer. Well, you just said you wanted to gauge our thoughts or something. Isn't that what you said? Yes. All right. So before you get into the potential opportunity here, how different would this be from what we've done in budgeting the last couple of years in relation to money during the year before we get to the end of the year or have an audit or any of those things? This would be using those dollars earlier in the process. The fourth quarter of our fiscal year, April, May, and June, are very, very high quarters, both in the revenue side. If you think about 60% of your net profits coming in in April and May. And so waiting to see what that unknown revenue is, our standard practice has been to wait and see how it is. Right. The last two years, the fourth quarter of our fiscal year, has shown momentum in the withholding as well. And so in that fourth quarter, we have gained some revenues than what we didn't know whether they were going to occur or not. We're at that same boat again this year, except all of our indicators are showing that it is going to be a good fourth quarter. We're looking at indicators such as the national norm and what is going on. The University of Kentucky has done an algorithmic equation that says that Lexington doesn't follow the Kentucky economy. It follows the ups and downs and weaving of the national economy with a little bit of an echo. But if you look at the forecast for the national and then parlay that down to our region, it says that employment should pick up, that businesses do have profits, and we're seeing confirmation of that both in our results in February and March, as well as those businesses that aren't on a calendar year and actually file their taxes earlier than that. We have higher estimated payments coming into us saying that they think they're going to make more money next year. We have higher returns that might have been due in November, December, and January because of their fiscal year end that are higher than the same period last year. So we're testing this with seeing what kind of anecdotal data we're getting in on the revenue side. Sure. On the expense side, we looked, and if you look at what we have budgeted for March, April, May, and June, our budget is about a million dollars, three out of four of those months, than what we actually spent last year. And we already have favorable variances as of today. So the idea that we're going to spend all that money doesn't seem to be what I would forecast right now. So then the question comes is, do we wait until October? We wait until after the budget is approved. We see what needs did not get funded. and we have a discussion on how to approach that. I actually didn't enjoy that process this year. It was very stressful. It's still stressful from my immediate past. I hear it in your voice. So I thought, hmm. Let's consider doing the opposite. Instead of taking what is a projected fund balance and see what's left over, let's look at what our priorities are and fund those first and get a head start on meeting those needs. About a five-month head start, because if you'll see what we've asked, we could go forward now very quickly and not wait until August or September to get an RFP or a purchase order approved through the system. So we're looking at it differently. We know that it's a different way of looking at it and just wanted to have the conversation with council to see if it's something that you might want to consider. Really good background. I get the feeling that we may have done this before at this time, and I'm just wondering how long it's been. Well, it's been before 2008. That's exactly what I was thinking. Several years ago, budgeting would come forward and raise revenue budgets and then come with budget adjustments in order to spend those increased revenue projections. There are always budget adjustments to say take it out of this pocket and move it to that pocket. Sure. This is a little more aggressive in that side of the equation on the reallocating of the expense side. But you're still comfortable giving, given the new reality that we are, the post-08. Well, my challenge was to budget better and more accurately. I don't know that my crystal ball is any better, but I'm trying to do better. And right now we're expecting to have a surplus at the end of the year. So the question is, when should we entertain the discussion to spend some of it, not all of it? I just think there's a, I mean, we all want to be very, or continue to be very judicious with these types of decisions. But we also don't want to forego opportunity. And I just think that things will never go back, in my opinion, to the way that they may have been well in the past. But that doesn't stop us from making some decisions now, potentially, on your selections here today. But thank you very much for that. Thank you. Council Member Beard. Thank you, Mr. Chair. Bill, two or three things. The list for community corrections, fire, and police would be the by part now as opposed to next fiscal year, correct? Correct. Does this mean that these are struck off of the budget that you've got for 2015? Could I go through the presentation to address that issue? Yeah. Okay. Sure. I think we have one more question from Council Members if it's not related to the presentation. We've got one more question over here. Okay. I'm sorry. Council Member Beer. The other thing involves the, and maybe it's in this other presentation, concerning the homeless and. It is. It's in there. It is in that other one. Okay. Well, then I'll be glad to wait for them. Councilman Lane. And then jump. Yes, my question is if we are taking the additional revenue and the savings and operating expenses and we go ahead and spend them, what does that do for the money that we're supposed to allocate out of surplus into the rainy day fund? Well, the larger the June 30 balance, the larger the allocation would be to the economic contingency fund. So approximately how much surplus do you think we will have for the end of the year? With, you know, a ballpark number, I know you can't get it. I was trying to limit my crystal ball prognostications. I believe we will have $4 million to $5 million or more. Now, I may be looking for a job August 1st, but that's my projection. $4 million or $5 million? Is that what you said? Yes. Oh, more. Okay, I'm with you. So if you're looking at, are you at $10 million or $13 million, $5 million right now, plus $4.5 million? We currently have a $13.5 million favorable variance to budget. Okay. We're going to ask for council to consider allocating $10 million of that, and I feel that we will have four to five or more as a fund balance at June 30. And I really wasn't prepared to say that today, but I just did. Okay. So would the formula be that we would figure out whatever the surplus is going to be at the end of the year, and we would use that formula? Yes. That's the June 30th. This would be on the total surplus of $20 million, so as a 25% goes in, so $5 million would go into Rainy Day Fund? We would have a, under this scenario, so let's just say it's a scenario. If we had $4 million worth of fund balance, then 25% of $4 million would be added to the economic contingency. And that's in addition to the $50,000 per month that is embedded in our budget each year. All right, that's the only question I've got right now. I may have another one after you finish your presentation. Thank you. Vice Mayor Gordon. I wasn't going to speak, but because you brought it up. So I was thinking about the fund balance, and I think all of us need to realize and remember that the ordinance mandates us to put 25% of any fund balance into the economic contingency fund. So just the fact, if we take this $10 million and spend it, that would have been $2.5 million to the economic contingency fund, and I think that's correct. If we let it lapse into the fund. If you lapse past June 30, it would be part of that calculation. Yes, thank you. Thank you. Thank you. Council Member Farmer. I was just going to follow up on a word that the Vice Mayor used. I think there's a difference between spending and allocating, and I think today is an opportunity to allocate so we can make decisions rather than to go ahead and spend it. Just commentary. I see no further questions, so why don't you continue with your presentation. Thank you, Chair. So the proposal is we went through this scenario and decided to put these under consideration. $10 million for reallocation. $5 million of it would be from an increase in budgeted revenue. $5 million would be a reallocation of existing budget and personnel and operating. And where would we put it? Well, we would recommend considering Division of Police have these needs. There are requests, and there are things that we could purchase now, body armor, tactical armor, tasers, their mobile data centers, equipment for their police recruitment class. Those dollars have been from other funds the last couple years. We need to embed those into our general fund. vehicles at 2 million 496 and a specific traffic uh uh control truck at 55 that's a a total of 2 million 983 thousand then we would go to the division of fire and emergency services they have other recurring needs but the things that we could purchase now fire air cylinders commissioner i hate to interrupt you but we have some council members that want to talk about what you okay I think we're gonna take this one at a time it looks like absolutely councilmember Farmer in the 2.496 what kind of vehicles and how many those are replacement vehicles for for the officers yes we have averages of a hundred hundred and fifty thousand on those vehicles and the projected number is 65 these are the new this is a it's a Taurus now I think it's it's a smaller force yeah it is I know it has it has four-wheel drive I know I assume it's pretty fast you're way ahead of me all right I just want to see how many thank you okay council members didn't thank you chair I was going to ask about the same thing commissioner so you're recommending a better approach to pay cash for these vehicles versus our policy in the past and going down to fire too has been to bond it that's correct we're trying to use cash uh for limited capital needs and those things that have a shorter shelf life than buildings and and structure um things of 10 years or less even though the interest rates right now are incredibly low it still makes sense financially have we done the model? Well, because it's a depreciating asset. We know we lose value in them based on what we pay for them. I'm just trying to figure out, is there a better need for cash today somewhere else, like a maintenance item that increases 8% a year versus bonding at 3% or 4%? Well, where we were this weekend, so from our perspective, in the general fund alone, we have more than $60 million of capital requests. we can't we can't afford all 60 million so we've got to make we feel that we cannot council may disagree but but we feel that that we have to prioritize those and that the better use of bonded money is for long longer term assets than shorter term assets and you're cutting it at 10 years. Thank you chair. Thank you I see no further questions please continue. Thank you. So the next was Division of Fire. Somewhat similar story we have air cylinders that must be replaced, protective clothing, they have a request for hazmat communications, thermal imaging, confined space rescue and then And their buildings are aging and have lots of need for repairs. Those don't necessarily qualify for capitalization, but just repairs. Some of them may, some of them may not, at 200,000. And then vehicles at 2.5 million, which brings their total to 2,981,000. I guess we had the same question on the vehicles. The fire vehicles would be spent one ladder truck, two engines, one EC unit, and a couple of smaller SUVs. could you repeat that again commissioner i'm sorry one ladder two engines the ladders are about 925 000 the engines are about 600 000 a piece an ec unit is about 300 and then there would be some leftover they could use for a couple of their smaller fleet suvs a newer replacement ec replacement council members didn't and is this so this is in addition to what we just did november for the two ec units and remember what else we did november was it two was a ladder and engine or two engines or three engines and two ecs in the fall yes okay and have they been ordered yet they have been okay so all right so if we order do we get a cost savings if we order these in conjunction with those or we do yes the design cost and then by paying for them up front there's typically with these manufacturers a three to five percent discount for cash purchase versus waiting until november and doing this process in november correct okay thank you council member acres thank you chair the same um question or the latter is that a new truck or replacement truck on the engines are those new or replacements they're all they're replacements everything is replacements so nothing new yes from what we did for out of the fund balance last year right okay thanks council member myers thank you mr chair commissioner so if we buy these all these replacement trucks what happens to the old ones that we are replacing depending on the status the shape that they are in they could be used as backups they could be used as training vehicles and then we just roll the worst ones off and sell them at surplus do you have a preference or you're waiting to look at have you evaluated the vehicles yet to see what kind of shape they're in by the time these all get in and and get put online so the units that you sell what will the money be used for once you sell those you know what it goes to general fund it's typically pretty small amount i mean sometimes i think these fire trucks have been used so much they only bring in five or ten thousand dollars when a small volunteer department somewhere buys them okay thank you thank you i see no further questions if you would continue please all right so we looked at police we looked at fire we then looked at community corrections they have a boiler replacement that is needed and they also have a major remodel and replacement in their plumbing and the uh i can't speak to this in much detail but a water softener system is going to mitigate the the damage and the build up within the pipes as well as 94 000 a year to replace plumbing so this is to do the water softening system that would be ongoing and the first year of updated plumbing and then they need to be uh upgraded on their radios we did police this year, we're trying to do corrections and fire next year, and that's 56,000 for a total of 535,000. All right. And then finally, we're proposing to establish a fund, pre-funded with these dollars into FY15, that allows the funding when programmatic guidelines are approved by council to go toward affordable housing and homeless services. Our suggestion is $3 million to affordable housing and $1.5 million to homeless services. And this would establish the fund. This would go ahead and earmark those dollars now so that when the programmatic guidelines are vetted and are approved, then the funding would be there and be ready to be used. It still does not address future funding. It's establishing the fund now. The dialogue for those two issues of both future funding and the programmatic guidelines would be still to be decided by council. This one raised a few questions. So Council Member Farmer. I should probably wait. I was going to make a motion on the previous three pages. Let's wait for motions until after we go through the whole presentation. Council Member Masati. Thank you, Chair. As far as the guidelines, do we have any idea when those guidelines are going to be put into place? I certainly have a concern about having some type of plan before we go ahead and allocate the $3.5 million. I think Commissioner Polson is coming to address that question. We have a presentation at the Planning and Public Works Committee in a few weeks, and we hope to have much more in terms of the guidelines and how this would work at that point. Because I know that there was a question about this being recurring money, and that was what was suggested by the several task force that presented their information to us. and as I said I'm hesitant to do anything until I know specifically what kind of guidelines that we have what we're going to use this $3.5 million for so you said in two weeks I think it's a little bit more than two weeks but would it be when the mayor presents his budget April 8th I believe the presentation is after the budget okay thank you Councilmember Farmer okay Okay, Councilmember Henson. Thank you, Chair. Bill, I had the $500,000 for homeless services would be to fund. I'm proposing a funding mechanism, not the program itself. Here comes Shea, Rabel. So I would have to defer to others to talk about the program. Well, I just wanted to comment on, you know, we just had our partner agencies funding, and we didn't fund emergency housing for the Hope Center. So I would just be curious to what this $500,000 would cover. I think we would have to agree on what the money would be spent on together. The original idea was to use the funding to support new and innovative programs that were suggested as part of the Homeless Commission report, one specifically being Housing First. As it pertains to the emergency shelter, that wasn't originally envisioned for this pot of money, but that can certainly be considered. Thank you, Mayor. Thank you. Councilmember Myers. Thank you. Shay, while you're up here, well, I don't know. You may not be the person to answer this question. Let me ask the first question, and that is this 3.5 for affordable housing, is that the number the mayor is going to put? Will there be an additional number in the budget for affordable housing, or is this going to be it? We're proposing that this is the pre-funding for FY15. Okay. And so is the proposal to set up a dedicated fund so that if this money is not spent in that fiscal year, it rolls over? Okay. Yes, we're talking about creating a fund so the dollars would roll from year to year if not spent. It would not be in general fund where they would have to be encumbered in order to be used into the next year. Okay. Maybe Commissioner Paulson for the next one. Do you have a good start on your presentation that we're going to get in a few weeks? We do, and we're trying to work with some different groups as well, and I think that's part of it is how we get some input, and what we'll do is provide more of an outline of how we move forward with sort of a stakeholders group to really flesh out how this whole project will work, how the whole program will work. Okay, I have a couple of questions you may be able to answer or may not. is it intended for this to be a public-private partnership where the private sector builds the housing if there's housing being built? I think that's our plan is to work. I think in terms of building housing units, there are quite a few different models that are out there. I think what our preference would be is to work with a stakeholders group to determine which ones are best for the city of Lexington, whether it's rehabilitation of units, whether it's new unit creation, and kind of having those out there to determine which ones, again, work best for us. But the idea being much more private side, yes. Okay. Have you guys thought far enough down the road to look at whether or not we can incorporate into that census public dollars apprenticeship programs or any opportunities for folks that don't have jobs now to start in the construction business? But I think those are all great ideas. So how will the council, how does that part play into this in terms of? How does which part play into it? I'm sorry, the apprenticeship? Yeah, yeah. An opportunity to look at how we can help some of the folks that are going to be living in this housing actually build it and acquire some skill sets so that they can get a job and then it becomes us efficient. Right. You know, again, I think where we are is kind of surveying the various different programs that other cities use in terms of creation of units, in terms of rehabilitation of units, working with those groups, that stakeholder group, to try to determine which ones work well for us. And I think that might be one of those that we would push forward in terms of looking at funding would be one that would also not just provide rehabilitation to houses or new units, but also provide apprenticeship or training assistance in there as well. Again, we haven't gotten that far, and I think that's a discussion that comes with that stakeholders group. I think that's an important part of it. Okay, so you guys see that as an important part of it, and so that will be a part of it? Well, I think an important part is to work with the stakeholders to come up with that, but yes, I think that's, you know, the way I view it is all options are on the table, and I think what's most important is working with a group to determine which ones are best for Lexington. There are a lot of programs out there, some of which would not work very well in Lexington. Others would, and I think that's something that we really need to look at with, you know, again, with a good group of stakeholders that know the affordable housing issues here in Lexington, have experience with construction of them and construction in general, financing all those various aspects. Okay. And how will the council have a role in that, or will it just be at the end, you guys, contracts for it? I'd like, you know, I think they would be on that stakeholder. I think that that's an important part of it is, and that may be our main contribution, is how we get people into the funnel for training and employment. Um, also, you know, when the housing authority did their housing, um, the hope six housing, almost all their contractors came from out of state. So all the jobs are out of state, all the money went out of state. Can we, are there some things we can do to make sure that we don't do the same thing? I'm sure we could. Okay. And again, those are all, I think a lot of those, and those are very specific details. Um, I think at this point we're at a much higher level, but those are specific details that can be, uh, developed as we go forward. Okay. Thank you. Thank you, Mr. Chairman. Thank you, Mr. Chairman. Mr. O'Meara, Commissioner O'Meara, excuse me, I didn't mean to demote you there. You know, I have a little bit of angst about this idea because we haven't seen the mayor's budget yet, so we can't look at the total budget and look at the expenditure in relation to that. and of course we're set up to do links committees to meet with the different departments of government to discuss their budgetary requirements we haven't done that yet nor has the council actually gone into a more thorough you know budget review where we look at the budget in detail so I was wondering if you could give us some guidance on whether you think we could go ahead and approve this right away are you thinking about approving it in a month or I mean What's your guideline on that? Sure. That's my next slide. So what we need now is to know whether council gives us a go-ahead to go for either all or part of this, and then we would immediately go in to execute the spending. If there's no action, if it warrants more discussion and more thought, we have to go ahead and build the budget. So we will just go forward and know that this is an October discussion with Fund Balance, and we'll build our budget with all the competing needs that we have. We tried to pick out the critical needs and things that we thought would have a collective agreement by council and that we could quickly implement. Things like body armor, like air cylinders, those are what we call operating capital. Those are things that have to be replaced on an ongoing basis, but they're not large structures, that type of thing. And then, of course, the fleet we've put on hold for several years and is in dire need of upgrading. Again, that was under that 10-year guideline. So we gave it our best guess, but we were looking at things that we felt would need to be addressed and discussed in the budget. and put that before council. Well, some of the savings that we have in this year's budget are personnel-related, and we do have a lot of top, you know, management of the government where it's open positions, which they get paid very well. So that's one of the reasons we may have a little bit of a surplus. Are you worried about once we hire all these new people, they're going to go into next year's budget? And that's one of the kind of questions that I would have. Is that going to mesh together okay and it will be all right as far as that goes? Well, our modeling for the FY15 budget is showing all of the currently approved positions going forward into next year's budget. We will have some sort of assumption that if they're open now that it will not be filled by July 1. It will take a few months or more in order to be filled. And then, of course, we have new positions being asked for, which we have to take into consideration and decide whether they're incorporated in the recommended mayor's budget or not. But all positions that are currently approved will be funded in the FY15 budget. Okay. And we'll have funding in there also for IT to upgrade our accounting system and all that. That's going to be in the budget for next year. We have a lot of competing needs and a lot of ask. The ask are much more than what we feel our total revenue is going to be, and that's what we have to do the rest of this week, this weekend, and next week, is come up with those priorities and put what we think is the best proposal in front of council on April 8th. Right. Well, in the final analysis, it is the prerogative of the council to approve the budgets and review all the numbers. And that's one of the reasons I'm seeing more information rather than just selective recommendations, I think would be more valuable to the council. But I would like to thank, I mean, I think you've done a nice job on your presentation, and I'm glad we have a surplus. It's been so long since we've had a surplus. You know, it's not like having the snow. It snowed every day almost. So maybe that's it. We somehow know that the snow lowered our operating expenses. We had to buy that salt. I have a hard time. Okay. Thank you very much, Bill. I appreciate it. Yes, sir. Thank you. Council Member Kay. Thank you, Chair. A couple questions, Bill. First, it seems to me that there's a distinction to be made between three of the proposals and the last one. And that is that on the first three, essentially we know where the money would go. You could execute that spending immediately. On affordable housing and homelessness, the intention would be to allocate those funds, but not to begin spending them until there is a plan put before council that explains how those funds would be spent. Is that correct? That is correct. I would put a caveat on that, although, is that, you know, these were the approaches and quick implementation. The thought was that if we went ahead and pre-funded and dedicated these funds now, that the conversation of how the programmatic guidelines would be accelerated and be decided quicker, rather than starting that conversation July 1 after a budget is approved and you know what kind of funding you have for FY15. So again, it is different in that you don't pick up and make an order for fire trucks. You don't make an order for affordable housing. But we did feel that it would accelerate the decisions and the use of those funds. Okay. Second question. And there's been quite a bit of conversation about ensuring that there is ongoing funding if a fund is set up. I'm assuming, and I want to check this out, that this would not preclude council from taking further measures to indicate a particular source on an ongoing basis in subsequent fiscal years. So a proposal has been made to essentially generate around $4 million from the fees generated by the fee on insurance. So can council, regardless of this action, does council still have the option of indicating a particular funding source and that source as a source of funds in subsequent years? Yes, sir. The council would be in total control of what future funding source would be. We're trying to commit today's dollars for the FY15 budget only. Okay, and then I just comment, and that is that I think everyone on council is aware that affordable housing was first priority at our retreat for the use of capital funds. And I believe there's sufficient support on council for allocating this level, if not a higher level of funding. So I would urge that we include this as part of the overall package. Thank you. Thank you, Chair. Thank you. Council Member Stinnett. Thank you, Chair. Bill, thank you for bringing us this list. I asked for this list because I thought it was an opportunity to save us money, become more efficient, and take care of some of our critical needs today. So I think this is what that accomplishes and also saves us money in the long run. Working backwards on the affordable housing of homeless, I think most of us up here agree we need to fund it. I'm just curious about the timing of why you would put this on there today when you all don't have a plan, when the budget's in three weeks. You could just announce it in the budget. Same thing, because even if we agree to it today, nothing happens until we get a plan or until there's a budget to approve. So why are we doing this today versus the other things on the list? We can actually execute and spend today before a budget. It's cash demands in the FY15 budget. And so how could we relieve the cash demands in FY15? We felt that this was one place instead of a list of many that we could put before council and was one that everyone had showed interest in. But still an answer, three weeks, you prepare a budget. In that budget, you estimate what our fund balance will be starting the budget year and what it will be ending. You could have done the exact same thing in three weeks. I'm just concerned this gives some false pretenses out there that, hey, we funded it today. Well, no, you haven't because it can't be funded until next fiscal year anyway, until July 1 to begin spending it. And, two, we don't have a plan. Until we have a plan, I'm sure most of the colleagues don't want to spend a dime because that obviously wouldn't be prudent financially. So I'm just curious about the timing of this today versus three weeks from now when the mayor gives his budget address. Well, I tried to address that at the very beginning. So I try to clarify. We're building the budget now. We saw all these competing needs this weekend, and we also looked at what the forecasts were for the current year and the presentation today. So we had the idea to pre-spend instead of wait and do everything April 8th. We thought we would float this balloon, tried to get things that we thought that there would be a consensus on, and that if council did say that's a good idea, we know that we've already got those taken care of. We're going to put our efforts into the other competing demands when we build the FY15 budget. That was kind of the flow of the logic. Well, let me ask you this. in preparation of this list today, prior to the budget year-end fund balance, does this supersede our emergency contingency fund, our rainy day allocation? So if we take this money out, there's less money we'll go into the rainy day fund based on the ordinance. The larger the fund balance at the end of the year, the larger the calculation will be for the economic contingency. That's a true statement. The message I heard, though, so I'm kind of getting conflicting messages now, is that we didn't like a large fund balance at the end of the year. We would rather go ahead and commit it during the year so that there was a full discussion of priorities and not have a very large fund balance. If Council's wish is to have a large fund balance so that a large chunk can go into economic contingency, we can take that approach. That's kind of where we're looking for guidance today. No, I mean, what I asked was specifically, it gives you a less percentage going into the rainy day fund if we approve this. That's all I was asking. Yes, sir. Not condoning it, not supporting it, just saying if that's what we approve today, we'll have less money going into the rainy day. It's the same thing as if we overspent in payroll or we weren't able to cover a million-dollar additional spend for SALT. Sure. I just want my colleagues to understand that this will reduce the year-end fund balance. Yes, sir. I'm pre-spending it. The last thing on here is there's a large payroll number of $5 million of fund balance. What department is that in? Do we know the top? That's operating. Personnel is about $700,000 off. I thought I saw two numbers, five and five on here. I proposed to use $5 million in increased revenues and $5 million in reallocation of expenses. So it's all under one? Yes, sir. Okay, so where's the $700,000 in? It's all over government. Okay, so there's not one department that's top-heavy on that list? We have an estimate. We talked about what is going to be your spend for the rest of the year in each one of our budget presentations, and some divisions were able to identify, I'm not going to spend this money. Others were saying, I might need it. Others said, I've already spent it since you ran this report. So we got a gamut. But if you will look, when I looked at where the variances are, lots of operating expenses are under budget at this point in time. And I also know that the budget for the rest of the year is greater than what we spent the same time last year. That gave me some comfort that we weren't going to be able to spend all this budget by June 30, hence the consideration of this reallocation. And my last question, I'm out of time, but on the list that we were provided, what, a month ago or two months ago by the CAO, when we had a meeting on the pre-budget meeting, it was $35 million list. Today you said $60 million now is the ask. I'm trying to figure out how it grew from $35 million to $60 million and then what items on that list can come off there that we're funding here and reduce that down. Because we had a meeting behind the chambers, it was about $35 million in capital request. How much of that list is on this pre-funding? This pre-funding has at least the vehicles would come off that $60 million. Was it $60 million or $35 million back in March or February? I'm the one that came up with the $60 million from a list of everything that was submitted in the budget. Okay. Okay. So that list, you didn't have that list when we had our meeting. Okay. All right. So there's some new items out there we haven't heard about. So look forward to that. Yeah. Thank you. Thank you, Chair. Thank you. Council Member Beer. Thank you, Chair. Bill, are there any bonds by any chance that could be retired with higher rates? Yes, sir. Actually, we're very busy in that regard. Last November, council passed ordinances that authorized us that when refundings were favorable that we could go ahead and do it. I got off the phone at 1130 this morning talking to both bond council and financial advisors, And the market is very favorable right now. We're talking about doing a refunding a $60 million GEO Build America bond, the ones that keep getting the haircut, and we don't know what our true interest rate is going to be with the sequestration. And then we're also looking at refunding some of the sewer bonds in order to get out of some very restricted bond covenants and put us in a better place for when we have to really go to the market and borrow a lot of money for the spend that Charlie and his group have, that we will be in better stead with the bond covenants. Well, that's great. I had this on my list of questions for you. I, too, don't feel very comfortable about allocating $3.5 million now, tomorrow, next week. maybe even next month. When we get a little bit further down, hopefully a plan is developed that we all like the looks of, it might be a different story, but right now we don't have that. And the other thing is that if we do allocations and we started out with a 1% increase in the insurance fee, tax, whatever you want to call it. You know, recessions come and recessions go, and we may reach a point where we aren't going to be ongoing, be able to allocate. and it would be a bad time to go to the public with a tax increase. So I've got to kind of think through that a little bit more, but that worries me somewhat. The only other thing, which is kind of tongue-in-cheek, but $200,000 for water softening, I can see the constituency out there say water softening. Ho, ho, ho. It's actually a corrosion remediation. Well, I know what it is. But if it comes out in newspapers, water softening, it's water softening. Well. Culligan. We can see if we get an amendment to call corrosion remediation. That would be nice if we could get that printed. That would be great. Thank you. Thank you. Thank you, Chair. Thank you. Council Member Akers. Thank you, Chair. I just want to talk about the affordable housing part of this proposal and how happy I was to hear that this was coming to us today. I think that we have, in our budget meeting, budget retreat, and in discussions recently, I think that we all agree that there is a homelessness problem and that the city needs to address it, that we have a responsibility in solving the issue or working to solve it. Two commissions and consultants have spent countless hours telling us how we need to provide affordable housing, how we don't have enough affordable housing. Council Member Kay brought forth an ordinance a couple weeks ago and a plan to address affordable housing and how it would be funded. And so I'm not sure I understand why now we're sort of, it seems like we're starting from scratch again and trying to decide a plan or how we might spend the funds. So can somebody explain to me, I guess Commissioner Paulson, who's involved with your group? I mean, we have Council Member Kaye's report, recommendations. So what is it you're doing that's different than what has already been done? Well, I think we're actually talking about how, because I don't think the report actually laid out the actual specifics of, okay, do we create a board? Who's on the board? How is that money spent in a competitive application process on a yearly basis? What sorts of funds does it go to? Does it go to just one source? Are there multiple sources for that competitive application process? That's where we're talking about, the building of that program. Who manages the board? Who manages the funds? Who decides what those applications, how they're reviewed, which gets selected? And his ordinance did lay out a board representation and who would be on the board and all of that, right? And, again, we're not starting from scratch. It's just that's where our program, that's where the presentation will talk about who's on the board and how those decisions. And, again, I think when it comes to the creation of units, there are, again, we've surveyed quite a few. There are a lot of choices, and I think the decisions that need to be made by kind of that stakeholder slash board group is which ones are best for our city. Again, there's a lot to look at. I was looking at one this morning from Minneapolis that is just, it must be 37 pages long, of various different programs. Some work better for them. Others work better, may work better for us. And I think that's where we need that input on those very specific allocations of dollars, particularly not just that, but then how much for each of those different sources. You know, how do we fund it? And I think those discussions about when it comes to those competitive application processes, how much do we need in each one? How much do we allocate? And again, those are the things that we're talking about when it comes to that. It's actually building out the program rather than starting from scratch. I would not characterize it as starting from scratch. I think it's really building on and really fleshing it out more. Then I would also maybe propose revising this allocation from $3 million for the fund and $500,000 for homeless services. And maybe until we flesh out the program a little bit more, just put $3.5 million in there and then let the board decide or let you all or somehow flesh that out. I don't know that we need to designate $500,000 separately right now. I'm not sure that that is necessary. I think it seems like we could just allocate the $3.5 million and then let the board or whomever decide how the funds should best be spent, I guess, for the city. my only recommendation. So I hope that there is a motion to approve this, but I'll wait until everybody else weighs in. Thank you. Thank you. Vice Mayor Gorton. Thank you, Mr. Chair. Thank you for bringing this forward. There are a lot of things that I'm thinking about this right now, And one of the things that we all hear all the time is government's so slow to do anything. And I am realizing right now that this might be an opportunity for us to move ahead on some things that we would move ahead on in the budget. So we might be able to jumpstart some of these public safety needs, and that would be a good thing. And it wouldn't delay them. In terms of the affordable housing, I know, Bill, you and I have had a discussion about the use of the word trust, and I see that you took it out, and it's not a trust fund because there won't be any interest generated. Is that correct or not correct? Or the interest won't be what's used for the fund? Correct, yes. We will park this in interest-bearing. It will be very safe and, therefore, very low interest-bearing. So it will accrue interest before it is assessed. But in my world, a trust means you put a principal amount in that and just live off of the interest earned. You never touch the principal. So from my world, an affordable housing trust fund, you'd put the 3.5 in there, and the only thing you would have to spend is what interest it earns. So I am suggesting that a more descriptive term is an affordable housing fund, and then we talk about the funding mechanism for that fund on an ongoing basis. Okay. One of the things that I think we should do, Commissioner Paulson, that I know from what you just said at the podium you're working on, is to do something like the PDR model. Before the PDR plan went into effect, a group of stakeholders met and crafted the rules. I think they were called the bank group. And there were citizens from many areas in Fayette County who helped craft that model, which the PDR and the Rural Land Management Board has followed ever since 2000 when we passed it. And I get the sense that's what you're talking about. It is. I think it needs to be official so that our community knows that the rules and the policies for using this money have had input from stakeholders across the community. I mean, you're shaking your head. Yes, ma'am. That is my intention. Okay. And at the presentation, we'll have, that's really what our plan is at the presentation, to talk about that stakeholder group that will then flesh out. Right. Well, the PDR model has been very successful, and they've followed it all these years. They've gone over 50% of their goal. They had a goal in mind, and it's been a really good model. It doesn't bother me at all today to vote on allocating the $3 million to the Affordable Housing Fund and the $500 to the homeless services. if we do that based on approving a plan forward. And we did that just recently with the jobs fund. We exactly did that. We approved the money, but it had to wait until we set into place the policies. And then we had to pass those. So it's really no different from that. And I think this is a really good way to seed that fund. It does nothing to railroad any other action we would take in April or May in terms of dedicated funding. It just says, here's some seed money, let's get going. And I don't think we need to wait for the budget, personally speaking. That just delays it even more. and we could maybe have the plan forward, I don't know, in a couple months or something. That is our hope. Again, we'll present to you kind of the next steps that will put together the plan and to try to get it moving as quickly as possible. And then as far as I know Councilmember Henson had mentioned the partner agency request for emergency shelter, I would hope that we would not be looking at this $500,000 for homeless services and pick something off the partner agency list. I think we shouldn't corrupt that process. This should maybe be separate. So thank you, Mr. Chair. Thank you. Council Member Clark. Thank you, Chair. the first thing i want to say i think this is uh this is a i've used the i've used the term a brilliant way to to do this and i i won't use brilliant today but i think it's pretty smart uh one of the reasons i think it is is because i have But, against my better judgment, I spent a good bit of time in budget hearings the last two weeks, just for fun. I was welcomed to this group. I promised just to keep my mouth shut. But, folks, this is what I saw. I saw a very concerned group of people interviewing division heads, commissioners, and asked some really hard questions. Can you spend all this money? I mean, they were pretty adamant about it. And I saw a process that said, let's spend our money intelligently. Let's be sure that we're doing that and we're representing our constituents. And so I saw that process. And so having done that, I have a little different view of what we're suggesting here today. In the first place, if we do this, this frees up a great deal of funding for our 2015 budget. It just simply takes some of the things we were probably going to have to fund. We really weren't going to have much choice but to fund fire and police and a good bit of what they wanted, what they needed. So by doing this, that's going to give us some opportunities to do some other things that we couldn't possibly have done in the new budget. So in a sense, this frees up our 2015 budget. It also avoids the fund balance, which I think is imperative. please I would also like to say regarding the plan for for affordable housing and homelessness I have said loudly to several of you and Councilman Kaye and to others that it would be hard for me to vote on a four million dollar package for for homelessness or affordable housing without a plan and i've said that i've said that to my constituents i'm going to take that back because i think this this idea is so good that if we can put the money there i'm willing to wait on the plan if we can do it this way And so I just need to say that. I would also like to say that some of the things we're proposing now, if we don't do this, then some of these things may not be in the 2015 budget because we have so many other requests. Part of what I heard in the budget hearings are people asking for things they really need, on and on and on and on and on, and knowing that we couldn't get close to some of this. But this is going to allow us to do some of those things. So anyway, I just wanted to make those comments because I think we're on the right track here, and I think we ought to approve this if we possibly can. Thank you, Chair. Thank you. Council Member Farmer. Mr. Chair, I'm still thirsty for action if there's an opportunity at this time. Well, we still have quite a few people who want to speak, so if you want to get their comments before we come to motion. I'm willing to do that. Well, I'm just wanting to take, I mean, our conversation. Well, you're up, so you can make whatever motion you'd like. The conversation surrounding the reallocation of current year budget dollars is something that seems to settle well with the council so far. In looking at the items on pages 4, 5, and 6, those being of like kind and nature with very specific dollar amounts attached to them, I would like to make a motion to approve for the Division of Police the $2,983,750, for the Divisions of Fire and Emergency Services the $2,981,500, and for the Division of Community Corrections $535,000. So moved. We have a motion by Council Member Farming and a second by Council Member Beard, the committee to my left and we now we're up for discussion and i think since we have a long list here if you have discussion on this motion just go ahead and raise your hand vice mayor yes i just wanted to confirm with commissioner o'mara this vote would be stating that we we intend to allocate these monies but each of them would come back to us as a budget amendment is that correct that's correct this this endorses the intent but each and every one of these would be a budget amendment that we would bring back for authorization to actually make the spin for a vote yes okay thank you thank you mr. chair thank you councilmember stand up and I would say before that this is just a committee meeting has to be reported out at work session for the whole council to vote on so we still got of ways to go before we can get to the bottom of the list. So, Mr. O'Meara, so we're going to pull these out of the budget, so I assume there still will be other capital funding for fire, police, and corrections in the budget planned. This is not saying they're not going to get anything in the budget. I just want to be clear out there. Absolutely. I mean, we still have a fire tire. Fire station discussions, all of those things. Okay, very good. Thank you for this list once again. This is what we asked for, and this is what will help move us forward. Thank you. Thank you. Any other discussion on this motion? Council Member Farmer, would you restate the motion, please? It's to approve the items on pages 4 through 6 of the supplement that was handed out here, including expenditures for the Division of Police, the Division of Fire and Emergency Services, and the Division of Community Corrections. Thank you. Any further discussion? all those in favor please vote on your screen is yay and all those opposed vote no that passes 10-0 thank you council member farmer do you have any further i think there is there are other people signed up i think we want to make a motion on this third but it has to do with the trigger mechanism for when those funds would be expended under what circumstances, but I'll await the wisdom of the council. Thank you. Council Member Massani. Thank you, Chair. Bill, thank you for your hard work. And, Sally, I know that you all have been working hard, and Harry attests to that. And based on what Council Member Clark said, there were other competing needs that several departments came to. And immediately that comes to my mind is HR and parks. And, of course, we've got pensions that we've got to deal with. How did those fall in the hierarchy of things? Because those are also, in a lot of people's minds, critical needs. And we're not saying that any of those are not critical needs. We were trying to figure out what might be of collective agreement and quick implementation. And so that's how come these came to the top of the list. Not to say those other things aren't critical and important. How do we address those then? How do you plan to? Are they going to be in the mayor's budget, or do you have some sense of how this is going to happen? My phrase right now is we're trying to put a 32-inch belt around a 36-inch waist, and that's our sign between now and April 8th. And we know that some things we'll have to pass on, but our hard job right now is to weigh all those competing needs and come up with a recommendation to council. Well, I hope we can meet that 32-inch waste and get some of that, because there are some, and each department, I'm sure, has specific critical needs that they believe are very, very important. I'm just wondering, I was just curious as far as how we determined this hierarchy. That's all. I understand. Okay. Thank you. Thank you. Thank you. Councilman Ford? Thank you, Mr. Chair. I want to thank Bill and I want to thank Sally for bringing this to us. I think it's a good way to move forward. I'm very excited and appreciative of the step that we just took to address the capital needs and public safety. I think that was a no-brainer to a certain extent. I want to speak to the issue of affordable housing and homelessness, the remaining $3.5 million. We were here in this chamber three weeks ago, I believe, when we had the discussion about the report, housing strategy report and the trust fund issue. And we were anticipating on waiting until April 8th, which I think is three weeks from now, I think, to hear it. So this response at this time I think is appropriate and from where I see it I think is welcome. In conjunction with the public safety needs to move us forward and to help the administration kind of finish the drill they'll have to do in the next couple of weeks. I support it. I think everybody on the council kind of knows where I stand so I won't belabor. I have a lot of the same talking points that I had three weeks ago so I won't repeat those. But I want to be crystal clear, if I can, about what's before us right now. It's an opportunity that in my six years, in our community six years in following this issue, we have not had before. This is a really big deal. I'll put this in a sports analogy, which I've been known from time to time to use. if we're talking about a football field and if we're starting on the 20-yard line going forward, we've been able to move the chains from time to time. We've had, and so we've made good progress, council members. We've been able to have a study here, an economic impact study there, that has kind of moved the issue down the field. But where we are right now is we're kind of stuck at midfield. And if the council, and I say if, if the council chose to endorse this plan right now, it would be a big play. It would almost get us in the red zone, so to speak. We would not be where we need to be in regards to establishing the dedicated fund. Hence, we still have some work to do with the programmatic guidelines and the politically agreeable revenue source to move us across the gold line. But I want us to be clear that this would be the big play that housing advocates and folks who need affordable housing need. And so I applaud the administration, Mayor Gray and C.A.O. Hamilton, Bill, as our finance leader, in bringing this forward. And I would so move that we adopt the recommendation for the 3.5 that's listed on the slide to pre-fund. So move. We have a motion by Council Member Ford and a second by Council Member Akers. I will go ahead and have, if you would, raise your hand. Council Member Kay. Thank you, Chair, and thank you, Council Member Ford, for making the motion. I simply want to suggest that reflecting the conversation around the horn today, that it be amended to say that there be no funds spent prior to approval of a plan by council, if that's acceptable. Second. We have an amendment and a second. And the first motion was not by Councilman Rakers. It was by Vice Mayor because she's not part of the committee. We have a motion and a second on the amendment. Do we have Councilman Rakers in it? I appreciate the amendment and the discussion. Part of my rationale for asking why now, why put this money today when, one, it won't be approved by when the budget comes out officially. So I always worry about promising the community stuff until we take official action. And so we won't be able to take official action on this until probably mid-April anyway. But can we guarantee, based on Councilman Roque's amendment, that we'll have a plan before this council goes on summer recess? Can we commit to that today without amending this motion, Commissioner Paulson? But I'd like to have a plan, and since we're allocating this money, let's get the plan before we go on summer recess in July. We can commit to doing that? Yes. Thank you, sir. Thank you, Chair. Any other further questions on the amendment? Council Member Myers? Well, not on the amendment. I just wait until then. Seeing no further discussion on the amendment, could you restate the amendment, Councilmember Cade, please? Yes. It is that there are no funds to be spent prior to approval of a plan by Council. Councilmember Myers. Thank you, Mr. Chair. Commissioner, could you come back up again? Paulson, please. For me, it's not just that we have a plan, but I want to know at least some of what this plan entails. And here's my concern, and I don't know if you can answer this, but does the plan for the new affordable housing, whatever it is, whenever it is, is it going to be owned by the government or is it going to be more like what UK is doing and what the housing authority is doing in their developments? If you're saying are we going to own the properties? Yes. That is not. I think that is not my plan at this point. I think a lot of that is to be discussed, again, by those stakeholders. But I think what we're talking about at this point is, again, looking at what has been done around the country. There's a lot of different models for those, again, competitive application programs. And they are incentivizing private development to build and rehab affordable housing. Okay. So when I talked about the public-private partnership, that's the direction you're going. Okay. That's my biggest concern. We don't need to be another housing authority. And if we're going to own the property, I don't want any part of it. So the rehab is going to be the same way, right? Correct. Again, I think what I would say we will be doing, what the stakeholder group will be doing, is looking at all the different types of programs there are for rehabilitation, for construction of new units, different ways to fund it, different things that you fund, and coming back with, again, a palette of programs that are best suited for Lexington, as well as, again, allocating that money and determining a long-term funding source based on what we think is needed for each one of those programs. Okay. Okay. In your research, there's a group in Georgetown, I believe it is, and I still have it taped on my DVR, and it's just a group of people who went out and bought some housing, rehabbed it, and put it out there for affordable housing. They didn't need any government program to do that. They didn't need any help from the taxpayers. They just did it. And so I will get you their names and see if you can bring them in as a stakeholder group, part of that conversation. Thank you. Thank you. Any other discussion on the amendment? Council Member Beard. I have to go ahead and support what Council Member Stenet said. I don't understand what the rush is. I can understand what a rush might be on fire engines or police vehicles or things like that, but we aren't halfway there on putting together this affordable housing and homeless. process that we're developing. And to go ahead and allocate the money on the front end is ludicrous, in my opinion. If, in fact, we're going to do this at some point, and we feel like we're going to do this at some point, then I don't know why we have to do it this afternoon or at the next council meeting. So I would not support anything other than what I just said. Thank you. Thank you. Any other further discussion on this amendment? Vice Mayor? Well, I'm very supportive. I think we have, to Councilmember Kay's credit, we have discussed affordable housing a long time. And so I think the seed money does get us a jump start. And what we want is the plan to say this is how it can be accessed. And so if we wait, that means we also wait for the plan. And it just gets delayed even longer. So I'm very supportive of your amendment. Any further discussion? All those in favor of the amendment, please vote yay. All those posting no. and you need to be make sure you're a member here it passes nine to one and now we will vote on the motion as amended any discussion councilmember Kaye yes thank you chair two things one I want to reemphasize what's been said by a few people and and in the last word from a councilmember Clark our choice is to take three and a half million dollars and allocate it now or leave it in to be included in the FY15 budget which would put three hundred three million and a half dollars more pressure on every other single thing we want to fund in my mind that's the reason to do it now so take the pressure off we can't we can't put we can't have a budget out of balance and we cannot and we cannot allocate fund balance to the FY15 funds so this is our choice choice. This is a way to do it. I think it's a very good mechanism. Now, there is one piece of information that I think is not correct in the discussion so far. It's the first time I've ever heard about it, and I want to get it clarified. In my mind, a trust fund is not, the word trust does not mean that you can only use the income off of the principal. It's not used that way anyplace else in the country. Trust fund, the way we've been using it for five years, means that money is dedicated and it can be carried over from year to year, comparable to the parks acquisition fund. That money goes in, it can be spent. It's not the interest, and I'd like Mr. Barberi, if he's here, to come forward and essentially, I think, corroborate what I'm saying. We have never talked about only using the income. If you are talking about what was presented in your ordinance, you're correct. It does not have the same definition that Mr. O'Mara was alluding to. So that should not be a problem from a legal standpoint. As long as you all are clear on what it's going to do, I don't think it really matters much what you call it. I think Bill was just letting you know that in the finance industry, that's oftentimes how a trust is defined. And we normally as a government, just so you all are aware, I'm not going to say we've never done it, but I'm not aware of us using the term trust when we've created one of these funds before. And if I understand correctly, the proposal does not, I need the wording back up. If the wording, if trust creates a difficulty, then let's delete the word trust and have it be a fund with the understanding that it will be a dedicated stream. I think, yes, I think that the finance department proposed just calling it the affordable housing fund. Fair enough. I just want to make sure everybody understands that. It would make a big difference in implementation. So having said that, of course, I'm in support, and I hope my colleagues will be in support as well. Thank you. Thank you, Chair. Any further discussion on the motion as amended? All those in favor, vote aye. I'll vote no. They're opposed. We have one more person that should be voting. I think okay that passes nine to one mr. O'Mara we do have some other Council members that are here on the list council member Kay did you want to speak any further? Thank you for the opportunity. I just want to add I guess I'm Very pleased that this council has taken the first step. It still needs to go to the full council I hope everybody understands that. But I believe what's been done here today is extremely important for our community. It's something we've been asking for. It's something we've been waiting for. And I applaud my colleagues for their support. Thank you very much. Thank you. Council Member Stinnett. Thank you, Chair. Mr. O'Mara, thank you for listening to the Council on CAO Hamilton. We asked you last meeting to come back with a list of critical items and needs, and I think you all have done that. And this is what good government does working together on this. I know there's already a press release out, but I appreciate the mayor listening as well to the council, and thank you for working with us. How soon will you bring the budget amendments? We would foresee the first budget amendments being about April 15th. Okay, very good. Thank you, Chair. Thank you. Council Member Myers? Council Vice Mayor Gordon? Thank you, Mr. Chair. What I would propose is that next week and the following week, the council is on break, and these folks have to put together a budget. So I would just move that we ask our chairman, Ellinger, to bring this forward today. I've already asked Mr. Schoeniger to make motions that I could bring forward today at the work session. So moved. Second. We have a motion and a second by Council Member Massani. Any discussion on that? All those in favor say aye. Aye. All those opposed? So I'll bring that forward when we do this. I've got to do the summary from the last meeting, and I'll just add that to this and put the motions that were brought forward today. Council Member Clark. I just want to say thanks to Sally and Bill and others who devised this plan. It's great. Thank you. I think that is the end of that discussion, and we'll move on to. The next item on the agenda which is the procurement task force. Thank you Commissioner and staff And I'll ask Todd Slayton to come forward if he would And I'll give a little background Commissioner I think councilmember stent it put this in and And I led a task force that met many times on issues and I think if you want to just give a background to new council members on what we did in that task force and then we were trying to in the in meeting with that there were some other issues that were brought up by council members after what the actually task force was put together so we tried to reconfigure that task force but weren't really able to get together so I've asked you if you would just give us some background on the issues that were addressed and see where we can go from there. There were basically three issues that we discussed that we wanted to try to take up here. Right. The task force, I think, was created as a result of the state auditor's audit, and Council Member Ellinger was on that committee with my predecessor and some outside parties that were experienced in the field of procurement, and they addressed some of the issues in our procurement regulations, brought them up to speed. We modified the most most of the concerns had to deal with professional personal services. And we modified the regulations to adopt some of the recommendations from the state auditors group and also the procurement task force. Some of the other issues that were, I guess, on the agenda at the time were things like revising our dollar thresholds for spend and vendor preferences, which would be minority and women-owned business vendor preferences and local vendor preferences. And the task force examined those. I think the initial assessment was that our minority and women-owned business preference that we have established through an ordinance is effective, and we've managed to meet those goals in the past couple of years and we're actually improving that that number as well the the local vendor preference is something that's kind of always been a gray area there have been some uh some municipalities that have attempted to to institute those policies and in my research there's there's benefits and and there's also disadvantages to doing that in a lot of respects it eliminates competition. It may work short term, but in the long term it will eliminate competition because you don't get people coming in from outside. I ran some numbers for Council Member Ellinger just recently, and we spent typically 49% of our dollars in 2010 with local businesses, and in 2013 it was 52%. So it kind of runs right around the 50% range, which I think is indicative of the type of work that we're asking folks to do and the type of items that you buy. There's certain things that you're just not going to get from a local vendor. I think probably more of the local spend is in the areas of professional services where we've got a lot of engineers and architects that are doing a lot of our work. But when you look at expensive capital items like a fire truck, there's just nobody local that can build us a pumper truck or a ladder truck. One of the other things that we're looking at, this is kind of moving forward. In lieu of the procurement task force getting involved, we've kind of taken upon ourselves to revise our procurement regulations. The regulations that are in effect now were created in 1983, and they were officially revised in 2003. so they definitely need to be brought up to speed. I think we still have some mention of submitting a bid via telegraph in the regulations, which, of course, that's really not happening anymore. So we're working on revising those regulations to bring them up to speed with current spending levels and hope to present something to council and to this committee, I would say, prior to the break and then hopefully get it approved sometime after the break. That's kind of where we are now. Any questions? Are there any questions for Mr. Slayton? I guess the three issues that we addressed were the local vendor, the minority women business, and then the purchasing. Vice Mayor Gordon. Thank you, Mr. Chair. Thank you very much, Todd, for your report back to us. I had a question on page 22 of the packet. Uh-huh. That first paragraph up there, there is a question on the third line, and this is the portion about local vendors' preference, which I was very interested in. And this question says, are total payroll taxes paid factored into the equation? I thought that was a curious question. question, does that mean that we pay more attention to companies that pay more in taxes? Well, I think that's one of the questions that you have to consider. There are some real basic, like the state has a very generic local preference law in that it's what's known as a reciprocal law. And if someone from Indiana bids on a contract and they're up against a Kentucky company, basically nothing happens because Indiana has the same wording as Kentucky does in that it's a reciprocal law. I think there's only a few states that are not even in our region that are out. They're in the West Coast that have some sort of local preference from a statewide basis. So that doesn't really come into play in our arena. When you're looking at local preferences, if you're just looking at Fayette County, I think the questions that you have to answer is, do you give this preference whether it's a percentage amount off their bid? There's things you need to look at there, but more importantly, how do you define who's local? Is it somebody that just has an address in Lexington? Do they have to have been here for a certain amount of time? Do they have to have paid a certain amount in taxes to be considered a local vendor? You may want to remind her that we have a local component a lot of times on the grading. Right. And Dave just reminded me, when we do an RFP selection, one of the criteria is degree of local employment. So we do consider that when we're looking at professional and personal service. And so that would be the one point where we do give some extra credit in the— For being— I've been in those— Yeah, right. —and seen that grid. It does seem that other cities, though, and you mentioned one in the report, have defined what a local business is. And my thinking when I asked this to be studied was that we have all this emphasis on local jobs, And so why wouldn't we encourage local businesses and give them some kind of a preference? So I'm comfortable with the bid process and the way it does highlight in one portion whether it's a local business or not. I just had a comment on the last sentence. it says it's our opinion that a free and open marketplace results in lowest cost procurement. I would agree with that. I would also say we already give preferences. Right, exactly. So it would not be unusual to give a local preference to companies. But I'm comfortable as long as we're keeping in the points in the rating system for local businesses. I think it's important that we get as many local businesses bidding on projects as possible because that's our people. Oh, yeah, exactly. And that's our jobs. So I think it is very important. Thank you. Thank you. Councilman Stinnett. So, Todd, you don't have a definition of local that you all use within the department? It varies by RFP. When we've done some of the water quality RFPs, we've actually used Lexington as well as surrounding counties to be considered local. When we do other divisions, RFPs, we may just look at Fayette County, that you've got to have a company in Fayette County to be considered and get the full maximum points. It's always a gray area. It is. So when you define a company, you just have to have a business license and file a business tax return or net profits. Correct. So you don't have to have employees. You don't really have to have just a presence. Because we're starting to see more of this, especially on the sanitary sewer projects. Right. In design, people are just setting up a shell office to call themselves local and get the 5%. Well, and again, it's strictly going to be engineers and architects, those types of jobs. It's not going to be construction at this phase. But it's always difficult in how you assess that. And fortunately, the way that we have it written in our basic criteria is degree of local employment, and it gives everybody on the committee an opportunity to sit down and decide how you would distribute, who gets the max and who gets the least. But there's no clear-cut definition on how to do that. And I think that's where the difficulty comes in doing that. Okay. Thank you. Thank you, Chair. Any other further questions for Mr. Slayton? I think we'll keep this in committee. And if you have anything that you're going to bring forward, because I think you're working on some regulations and anything that you think that we need to address on this, then bring those forward. Okay. Anything else? Seeing none, we go to the last item. Thank you. Is the Wellness Center, Council Member Stenich, you put this in? the wellness center i think you put this one in do you have any remarks before i do uh the rationale behind this is our lease is up this year for our wellness center which we as a body created three years ago and opened and has been very successful well that lease is up and i think it's time to have a true decision long term about where it's going to be located and what type of resources around it that we want to include or not include or it may just be humming along just fine. So the administration had an opportunity to review it and give us some recommendations, I believe, today as to how to proceed forward. Given the short time frame, our lease is up, I believe, in September. There may have to be some different action or deferred action until next year. But I think the process of communicating to the council and to the employees about what our thoughts are behind where it's going to be located long term is a good discussion to have today rather than wait until September. i think our ceo is going to probably lead this discussion um as kelson member senate said our lease um is up the first the first part of our lease is up on december 1st and then we have two options to renew for three years um a piece on those well what what was brought to us and i think sort of generated our conversation is Benji had been talking to us about the concept of a wellness center that incorporated our health clinic and our pharmacy. And we had had those discussions preliminarily, and then the Y came to us with a proposal that perhaps they could do something, build a new building, like a 7,000-square-foot building on the front of their North Y over on Loudon, and we could occupy that with our health clinic and our pharmacy and incorporate an entire wellness center in here, meaning exercise potentials. Well, what that brought up to us is that we had that conversation and thought that conversation had needed to be pursued. Now, we also told the Y at the time that we needed to come back to the council and see if they were interested in this wellness center concept, not talking about where it would be placed, but more the concept. If the council were interested in this concept of a wellness center, meaning we're not talking about a big building. We're talking about we've got 7,000 feet now, and what we would do is we would have 7,000 feet wherever we went, and that would have exercise in there. We wouldn't be doing it. We would partner with somebody to do it. So the question becomes, if we're interested in pursuing something like that, pursuing that idea of a wellness center, which I would have to flesh out a lot for you all, then we need to just enter into a lease for another year. And then bring a, rather than a three-year lease, then bring a concept back to you of what a wellness center would look like. When we had our conversations with our attorneys, anything that we would do for a wellness center, we would have to do an RFP for. We cannot go to just one single source. So we would get ideas out there of that and then compare that to the rent we're paying. If that's not something that the council wishes us to pursue, then we would go on and do our lease. Council members, do we have any questions? Council Member Monsonig? Oh, I'm sorry. Here came the list. Council Member Stinnett. Thank you, Chair, and thank you, CEO Hamilton. I appreciate that, the question that you posed to Council on following up with us. So will we have to re-bid out the lease for the current location, or is that something we don't have to bid out going forward? We have two options right now on the Dental Life lease. We have two options to renew that lease for three years. But if we were to move it somewhere else, outside of that lease agreement, you'd have to bid on any new location? Yes, that's correct. Not just for the wellness piece, but for the pharmacy and the doctor's piece. That's correct, and I'm sorry if I misled there. So you have to bid on all of it. And so I think the concept of having it all a one-stop shop with the wellness included was talked about when we first started down this path three years ago. I think it's still a concept that makes a lot of sense. And then bringing the Y into those discussions because, what, 500 employees use the Y every day? We already have membership there. I think that has to be part of the discussion, too. And then the location, obviously, it doesn't really matter where we locate the medical and the pharmacy because when you go to the doctor, you're not going while you're at work. You're going when you're sick or from home or your family is going from home. So it really just needs to be centrally located. And Lexington has good road access to all parts of our city. And so that's critical. But I would be in favor and support continuing down that path of the wellness discussion and seeing what those costs are and extend our current spot for a year and then trying to make a decision between now and next December about what ultimately will end up and what it'll look like. And that would be our, we would agree with you. We think if the council saw to it like that, we would like to pursue this, to just be able to bring you back some good information and pursue this idea. Yeah, I'd be inclined and be in favor of that. Thank you, Chair. Thank you. Council Member Cade. Thank you, Chair. Council Member Stinnett has pretty much said what I wanted to say, but I'll just kind of reinforce that. Both of us were involved at the very beginning of the RFP process for all of this and have seen it kind of roll out over the years, and the original intention was to have it be more comprehensive and to have a wellness program that was quite a bit more robust than what we have now. the CHIP's reward program is a part of that and I had hoped that it would be more robust by now I expect that if there were an integrated facility that they'd be able to do more monitoring and more rewarding of the kind of health inducing behaviors that we're interested in so I'm very much in favor of it I think this would be great for our city government so thank you for bringing it forward thank you chair thank you council member Sadi thank you Chair Sally, just a couple of quick questions. You said the current center has 7,000 square feet, correct? Yes. And then you want to incorporate a wellness center, and you said for exercise. I just don't know if you'd be able to. I think that's too small. What we would do, and I'm sorry, I did not make that clear. Like, if we went with the Y, they would do 7,000 square feet for us in the wellness center, as the wellness center, as a, for our pharmacy and health clinic. And then we would use their facility. Okay. Now I understand. We won't go that direction where we're recreating a recreation that's already there. Okay. But thanks for the clarification. I appreciate it. Thanks. Council Member Beard. Thank you, Chair. I have at one time or the other in the past 35, 40 years belonged to every wellness center, workout place, whatever you want to call it. People start January 2nd. I'm going to do it. I'm going to do it. I'm going to do it. They're dead in the water sometime in April, just as soon as the sun starts shining. And one of the big issues for people is location. And if we're going to pin all our hopes on one location on Loudoun Avenue, you're going to lose people. lose opportunities. It would be better to go out. There's at least 20 now gyms here in Lexington is to go out and talk to those folks and see what they might be able to do for us as an entity to bring business to them at a discount and not try to push everything into one little spot that is not going to work well for us and for the various and sundry employees. Now, I don't know whether, I know we've done this before and it's worked with a while, but I don't know whether we've ever done it with any other gyms or such in the past. but you know it doesn't hurt to ask it doesn't hurt to ask and i think we would have to go out and talk to other people well again you know people if we say you got you can pick and choose from these five different places and we're going to subsidize twelve dollars a month for you and And because it's more expensive elsewhere, the numbers might change. But at the same time, we want to keep the people working and doing what they like to do where they like to do it. Thank you. Thank you, sir. Thank you. Council Member Myers. Thank you, Mr. Chair. I will say that I really appreciate the Y for their partnership that we have. And it's not that we're necessarily subsidizing our employees. It's just that they gave us a break on the cost. And so I really appreciate and understand the value of that and glad that you're staying in that program and hope you stay in it. I just have a follow-up on the CHIPS program. And I remember a couple years ago, somebody from Marathon stood at that microphone and told me, just give me a year and you'll be very pleased. and it's been more than two and we still don't have a very robust wellness program. So how are we going to ramp this up? That's a great question, which is what the CHIPS program is. Sorry. And is there anything that we can do from our side to help you? Is it something we're not doing that's prohibiting you from moving forward? No, I think the CHIPS program rolled out in open enrollment this past year, which rolled out at the same time as open enrollment. There are a lot of new benefits added. And HR right now is doing a great job of focusing on chips and building out programs. I know Mary Lyle's got a specific emphasis on the way she's going to approach that and emphasize it and promote it month over month. And I think Marathon will tell you that they've seen an increase in utilization at their facilities. So it's been a small launch. And I think we're going to focus on relaunching and re-communicating that process. But as we're talking about something like this, integrating with fitness and having that all, it really makes a lot of sense from a planning perspective and back to our original vision of having all those facilities right there in one. Because what Marathon is doing is not just sick care. We think of it as sick care, but really what they want to be doing is well care and disease state reversal. And I think this gives them access to implement some more programs that they have in place that we want to reward through CHIPS. like weight loss and tobacco cessation and just health improvement in general? Okay. I guess I'd say that there's been enough companies across the country that have been doing this for enough years that it's really simple to do. With what we're doing with the why, we don't want to change that because now people have all the different whys they can go to. They're already used to doing that. They've got the system in place so I can go in, and when I put my ID underneath the light, it records everything. We just need you guys to plug into that and ramp this thing up. Correct. And it's ready to go. And we've had that discussion quite a bit with it. They've got the software in place to connect the chips. Yeah, their end's been done. Their end's been done. They've been done for years. So I guess can somebody come in and do a presentation on this and show us what we're doing and what the plan is to ramp this up and where is the cheerleading team to get the employees involved. Okay, so I move that you guys come back and do a presentation. Sure, specifically on the chips and the engagement. What time frame? How much time do you need to get a good presentation together that talks about what we're doing and where you want to go and how we're going to blow this thing up? Sure, I think within the next three to four weeks. Okay, so our next meeting. So the next meeting then? When is the next meeting scheduled? It's going to be about a month. It'd be April 22nd. Is that going to be a cow? After the budget drops. Also might mention too that I think marathons, scheduling a presentation are in that process. We might. Yeah, let's try to see if we can integrate that and probably do it during a work session. Yeah, that'd be good. So Vice Mayor, can we do that? Can we add that on as a presentation during work session and parlay this one? Which date again? I don't know when Marathon's going to have theirs done. May 6th or 13th is when Marathon is looking at scheduling their presentation. Okay. So, Stacey will look at both those dates, and I imagine there's space. I don't think we need a motion for that. We'll just ask them to put that on. Okay. Thank you very much. Thank you, Mr. Chair. Thank you. Councilman Stenet. Thank you, Chair. I'll end our discussion since there's no one else signed up and make a motion that we proceed with the wellness center concept and extend our lease at a current location for one year and do the necessary steps to bid out those pieces and see what we come back with. So moved. We have a motion. My council member sent a second. My council member Farmer, any discussion on this? Seeing none, all those in favor say aye. Aye. All those opposed? That passes. that ends our items in the uh in the committee except the items referred to committee uh do you want to take out make motion to take out the wellness center since we'll be doing that one on the list in the back is that a motion we have a motion and a second to take out the wellness center and lease all those in favor say aye all those opposed we'll take that out and then also you um have the refunding urban services property property tax councilman extended i think we've dealt with that one. I'm going to be reading that out today. Do we need anything left in that one? Okay, do I have a motion to take that one out? The refunding urban services property tax. Okay, we have a motion by Council Member Senate. That's seconded by Vice Mayor. All those in favor say aye. Aye. All those opposed will take that out. And the rest of them will keep in the committee. Do I have a motion to adjourn? So moved. By Council Member Versade. Second by Councilman Kay. All those in favor say aye. All those opposed. We stand adjourned.