Budget & Finance Committee

Summary

Meeting Overview

The Budget & Finance Committee met on August 26, 2014, at 1:00 p.m., with Ellinger presiding. The committee addressed five agenda items during the session, taking seven votes and hearing one public comment. The committee approved the Monthly Financial Report and the Rupp Arena Renovation Expenses, received an informational presentation on the March 18 Committee Summary, deferred action on the AOC Courthouse Reimbursement Policy, and removed Items Referred to Committee from consideration.

Attendance

The following individuals were present at the meeting on August 26, 2014:

• Ellinger
• Stinnett
• Gorton
• Kay
• Ford
• Beard
• Farmer
• Scutchfield
• Mossotti
• Henson

No absences or late arrivals were recorded.

Votes and Decisions

Approve expenditures for Division of Police, Division of Fire and Emergency Services, and Community Corrections 9:07

Motion by Farmer, seconded by Beard. This motion passed unanimously with all nine members voting in favor: Ellinger, Stinnett, Gorton, Kay, Ford, Farmer, Scutchfield, Mossotti, and Henson.

Adopt recommendation of $3.5 million for affordable housing 16:40

Motion by Ford, seconded by Gorton. This motion passed by roll call vote with 9 ayes and 1 nay. Voting in favor were Ellinger, Stinnett, Gorton, Kay, Ford, Farmer, Scutchfield, Mossotti, and Henson. Beard voted against the motion.

Amend motion to require plan approval before spending funds for affordable housing 16:40

Motion by Kay, seconded by Gorton. This amendment passed by roll call vote with 9 ayes and 1 nay. Voting in favor were Ellinger, Stinnett, Gorton, Kay, Ford, Farmer, Scutchfield, Mossotti, and Henson. Beard voted against the amendment. The condition attached to this motion specifies that no funds shall be spent until the plan is approved by Council.

Bring affordable housing recommendation forward to work session 16:40

Motion by Gorton, seconded by Mossotti. This motion passed unanimously with all nine members voting in favor.

Proceed with wellness center concept and extend current lease for one year 16:40

Motion by Stinnett, seconded by Farmer. This motion passed unanimously with all nine members voting in favor.

Remove wellness center item from committee agenda 16:40

Motion by Stinnett, seconded by Gorton. This motion passed unanimously with all nine members voting in favor.

Remove urban service property taxes from committee agenda 16:40

Motion by Stinnett, seconded by Gorton. This motion passed unanimously with all nine members voting in favor.

Budget and Financial Actions

The meeting addressed a reallocation of $10,000,000 in current year budget dollars to fund critical needs and sound investments.

Division of Police: $2,983,750 was allocated for the purchase of police body armor, tactical body armor, tasers, mobile data centers, recruit equipment, and 65 replacement vehicles.

Division of Fire and Emergency Services: $2,981,500 was allocated for the purchase of fire air cylinders, protective clothing, hazardous materials communications equipment, thermal imaging equipment, confined space rescue equipment, building repairs, and fire vehicles.

Division of Community Corrections: $535,000 was allocated to upgrade plumbing, boiler, water softener, and radios.

Affordable Housing and Homeless Services: $3,500,000 was allocated to establish an affordable housing fund ($3,000,000) and a homeless services fund ($500,000).

Public Comment

52:00

Mark Fallon, a developer involved in downtown Lexington projects, addressed the meeting regarding Rupp Arena and Convention Center redevelopment. Fallon expressed strong support for moving forward with both projects, emphasizing the economic benefits that would result from their development. He stressed the importance of continued investment in the city's future as part of his remarks.

Contested Items

Rupp Arena Project Funding and Repayment Obligation

Council members engaged in heated discussion regarding the city's financial obligation related to the Rupp Arena project. The primary concern centered on a $2.5 million state grant and the city's potential liability to repay these funds if the project does not proceed. Council members raised objections about the lack of full disclosure in the original agreement and expressed uncertainty created by the governor's veto regarding the specific terms and conditions of repayment. This disagreement highlighted tensions between the city's commitment to the project and the financial risks associated with the grant's conditions.

AOC Reimbursement Cap

A proposed $4 per square foot cap on reimbursement for the Architectural and Organizational Consultant (AOC) generated significant debate among council members. The discussion centered on questions of fairness in the reimbursement structure, the financial implications of the proposed cap, and the broader tension between maintaining service quality and adhering to budget constraints. Council members were divided on how to respond to the proposal, with the split vote indicating substantive disagreement about whether the cap struck an appropriate balance between controlling costs and ensuring adequate compensation for services rendered.

March 18 Committee Summary

9:07

The committee reviewed the March 18, 2014 summary, which had been previously approved at a work session. Ellinger presented this item to the committee.

This was an informational item that did not require a vote. The summary had already received approval during an earlier work session, and the presentation to the full committee served to inform members of the previously discussed content.

Monthly Financial Report

Commissioner O'Mara presented the July 2014 financial report to the board 9:37. The presentation highlighted several positive financial developments for the period.

Key Financial Highlights

The report showed favorable revenue variances and reported a year-to-date surplus of $4.4 million as of July 2014.

Budget Reallocation Recommendation

Commissioner O'Mara recommended reallocating $10 million in budget funds to address immediate capital needs. The proposed reallocation would distribute funds across three departments: police, fire, and community corrections.

Speakers and Outcome

The agenda item involved discussion among Commissioner O'Mara, Cook, and Lueker. The board approved the monthly financial report and the associated budget reallocation recommendation.

Rupp Arena Renovation Expenses

Council Member Stinnett led a discussion on Rupp Arena renovation expenses 16:40. The presentation reviewed the financial status of the renovation project, which included $4.65 million in expenditures matched by $4.65 million in revenue.

Key participants in the discussion included Stinnett, Butler, Schoeniger, and Flood.

The project was closed out with $625,000 remaining uncommitted. The discussion addressed several financial components of the project, including a $2.5 million state grant and the impact of the governor's line item veto on project funding.

The outcome of the agenda item was approved.

AOC Courthouse Reimbursement Policy

54:42

Commissioner Reed presented concerns regarding a proposed $4 per square foot cap on state reimbursement for courthouse operations. Under this proposed policy, Lexington's reimbursement would be reduced by $135,000.

The committee discussed potential cost-cutting measures in response to the reduced reimbursement. The discussion involved multiple committee members, including Lane, Henson, Clark, and Akers, who engaged with Reed on the implications of the policy change.

Key concerns raised during the discussion centered on the financial impact to the courthouse operations budget and the need to identify ways to offset the proposed reduction in state funding.

The committee emphasized the importance of future coordination with the Administrative Office of the Courts (AOC) to address the reimbursement policy and explore potential solutions.

Outcome: The item was deferred, indicating that further discussion and action on this matter would occur at a future meeting.

Items Referred to Committee

23:28

The committee reviewed several items referred to committee and voted to remove them from the agenda. The speakers involved in this discussion included Stinnett, Schoeniger, Farmer, Gorton, Lane, and Scutchfield.

The items removed from the agenda included:

• Affordable housing report
• Downtown Arts Center pilot
• Rupp Arena expenditures
• Urban service property tax refunding

The outcome of the committee's review was the removal of these items from consideration at this meeting.