Work Session Minutes of the Town of Cary, NC

June 24, 2008

5:30 p.m.

Room 10035, 316 N. Academy St., Cary, NC

Subject: Fiscal Year 2009 proposed budget

Present: Mayor Harold Weinbrecht, Mayor Pro Tem Julie Robison, Council Members Don Frantz, and Jack Smith; Council Members Ervin Portman and Jennifer Robinson arrived late, and their arrival times are noted in the minutes

Absent: Council Member Gale Adcock; however, she participated in a portion of the meeting by phone (as outlined in the minutes)

The meeting began at 7:01 a.m.

Mrs. Adcock participated in the meeting by phone but did not vote on any motions.

Refer to Exhibit A attached to and incorporated herein for materials that were distributed at the work session.

Mr. Coleman stated it is difficult to say we can maintain any tax rate for a four to five year period. He stated spreadsheets give a big picture of financial scenario based on a certain set of assumptions. He is comfortable saying a 38 cent tax rate could potentially be maintained for four years, but he stated there are no guarantees.

Mr. Portman arrived at 7:04 a.m.

Mrs. Robinson arrived at 7:07 a.m.

Budget Director Fogleman outlined Exhibit A, which includes answers to the questions posed by council members at prior work sessions and in subsequent e-mails.

Mrs. Robison stated 90% of the streetscape design has been completed, and the design has a shelf life of two to three years. She asked if the design investment would be valid if council delays the project a year or so. Engineering Director Tim Bailey concurred that the design investment would still be valid. 

Mr. Coleman stated the town center area plan build-out is over a fairly long period of time. He stated over that period of time the Town will undergo additional revaluations, and the property value will increase significantly. He stated staff has presented a snapshot with lots of future assumptions; he added it is impossible to accurately predict the future.

Mr. Coleman summarized that in Exhibit A the staff tried to show the major differences in broad terms with a 33 cent vs. 37 cent tax rate. He stated with a 33 cent rate the Town can fund the proposed operating budget and the proposed capital budget with the changes made by council regarding Chapel Hill Road and Harrison Avenue. He added that the staff believes the council can also delay Walker Street.

Mr. Bailey stated several factors impact Walker Street, including the Town’s federal grant, the timing of any regional rail along the corridor, and the timing of the permits to cross the rail corridor. With regard to the federal grant, he stated staff does not yet have an agreement with the NC Department of Transportation (NCDOT), and the Federal Highway Administration money comes through NCDOT. He thinks it will be quite some time before an agreement is finalized. The Town is continuing the design work, and it will take some time to work with the railroad for tunneling under the railroad tracks and track shifting. He stated there will continue to be a delay in regional rail. He stated the STAC Committee will soon have recommendations on regional rail, but it will be three to four years before there is anything to build. He stated it is important the project track with the regional rail issue, because it will save the Town about $3 million in track diversion as a result of this coordination. He stated the council can delay Walker Street funding with no significant impact on the funding schedule. He stated 2014 is the timeline.

Mrs. Robison asked about any negative impact that delay may have on the federal grant. Mr. Bailey stated we can request a long-term build commitment when the staff negotiates the agreement with NCDOT.

Mrs. Robison asked if we have confirmed that the federal money will not be in jeopardy with a delay. Mr. Coleman stated staff does not believe the funds will be in jeopardy.

Mr. Coleman stated delaying Walker Street would allow the Town to fund the Cary Parkway improvements. He stated staff recommends taking the cash from the projects delayed (Chapel Hill Road widening, Reedy Creek Road design, O’Kelly Chapel Road widening, and Green Level to Durham Road) and moving it to the Cary Parkway project so that work can be done in one year instead of two years.

Mr. Bailey stated the Cary Parkway project includes resurfacing. He stated if we wait until next year to get funding for Cary Parkway, then we may not get it completed in the next calendar year. He stated if we expedite the Cary Parkway project, then all the repaving can more than likely be completed no later than next summer. He stated these improvements include all of the portions maintained by Cary that have a low pavement condition rating, which is about 75% of Cary’s portions of the roadway.

Mr. Weinbrecht asked what Cary can do about the poor conditions of the state-maintained sections of Cary Parkway. Mr. Bailey stated staff continues to talk to the state about these sections, and based on council’s earlier request the staff will do a pavement condition rating survey on the state portions of Cary Parkway.

Mrs. Robinson asked the status of the projects mentioned by Mr. Coleman in a preceding paragraph that might be delayed (O’Kelly Chapel Road widening, Green Level to Durham Road project, etc.). Mr. Fogleman stated all these projects are existing appropriations that could be delayed, and staff would close the projects to free up cash for the Cary Parkway project.

Mrs. Robinson asked for more information on the delays. Mr. Bailey stated O’Kelly Chapel Road widening and the Green Level to Durham Road project were both previously funded in 2011 and 2012, and the future funding was placed in 2014 and 2015. He stated this was done to maintain the debt below the 15% ceiling.

Mrs. Robinson wants to ensure that the proposal to delay some road improvements does not neglect the road projects needed in western Cary. Mr. Bailey stated he does not think these delays will make a significant difference. He stated the Town is doing the southern portion of Green Level to Durham Road; there will be a gap in the middle, but several developments have occurred that have taken care of most of the gap. He stated the Town will continue to work with NCDOT to maintain the paving condition along the unimproved section.

Mrs. Robinson stated Carpenter Fire Station Road will not be widened until after 2014, and she thinks is a problem. Mr. Bailey stated McCrimmon Parkway has relieved traffic on this road somewhat.

Mr. Coleman stated a 33 cent tax rate will allow funding the first phase of Bartley Park, the first phase of Mills Park, and the Black Creek Greenway. He stated there is no funding for aquatics or additional community centers. He stated with the scenario explained herein, the Town will meet the 15% debt ceiling at this time.

Mr. Frantz asked the amount of debt capacity freed with delaying Walker Street. Mr. Coleman replied about $14 million. Mr. Fogleman stated this equates to about $1.4 million of debt service in the first year once all of it has been borrowed.

Mayor Weinbrecht worries that any flexibility earned with delaying Walker Street will be used for cost overruns. Mr. Portman suggested working with bidders on the town center project and other projects to trim the scope if there are overruns.

Mr. Coleman stated with a 37 cent tax rate the council funds the same projects that are funded with the 33 cent rate and it generates an additional $12 million that could be used for other capital priorities and would likely result in a healthier fund balanced. He stated neither scenario results in more debt capacity.

Mr. Weinbrecht asked the fund balance with a 33 cent tax rate. Mr. Fogleman projected to have about $7 million more than the four month reserve target at the end of 2009. He stated the goal is to maintain that $7 million every year forward.

ACTION: Mr. Frantz moved to move forward with approval of sending the budget forward with a 33 cent tax rate and with the removals of Highway 54 widening from Maynard to Maynard, the Harrison Avenue extension, Walker Street, and the changes made to allow for the Cary Parkway improvements.

Mr. Weinbrecht asked the intent of the motion regarding the delay of the Walker Street improvements.

ACTION: Mr. Frantz included an indefinite delay of the Walker Street improvements (until needed).

Mr. Bailey stated the capital plan would show the Walker Street improvements in 2014.

ACTION: Mrs. Robinson provided the second.

Mrs. Robison asked the real purpose in the additional debt capacity gained by delaying Walker Street. Mr. Coleman stated the Walker Street delay would allow council to fund a more compelling road project if needed.

Mr. Portman is more comfortable with a motion to delay Walker Street and then go through the remainder of the budget before proceeding with the rest of the motion. He stated the council is not taking action on the budget until the next council meeting.

Mr. Portman asked if the public art money for the Walker Street project is delayed. Parks, Recreation and Cultural Resources Director Mary Henderson stated the public art design would move in the 2009 budget, but the $200,000 originally proposed in 2010 will be delayed to track with the project.  

Mrs. Adcock ended her phone participation in the meeting at 7:56 p.m.

Mr. Portman suggested a limit on operating expense growth to 4% with staff reviewing where cuts can be made. Mr. Coleman stated staff will review this, and it would equate to about $4 million out of the operating budget. Mr. Coleman stated he will not propose a reduction in the pay plan but will review everything else.

Mr. Portman asked about rent charged to Cary EMS ($5,000), because he would prefer we not charge this rent. Mr. Coleman stated it is an equity issue. He added the EMS also charges the Town a fixed cost for certain services (i.e., on-duty ambulances at Town events, etc.). Fire Chief Cain stated the Town has a cost share co-location agreement with EMS, and it is the very same as the Morrisville co-location cost-share agreement at Fire Station 7. He clarified that the Town does not charge the EMS rent; rather there is a cost share for operating expenses, and it covers the expenses associated with operating and functioning within the Town facility. He stated the EMS is allowed to use their revenues (over their expenses) for operating costs. He stated EMS has money in their budget according to EMS Chief Cohen to cover these operating costs. He stated Cary’s co-location practices are common to other municipalities as well.

Mr. Frantz stated he is open to staff reporting back to council at the council meeting about any cuts that can be made in the operating budget. He does not want to amend his motion.  

Mr. Coleman will review the operating budget and will send council a list of potential reductions for the council to discuss at the council meeting.

There was debate among council about what the motion accomplishes. Mr. Frantz stated the motion clarifies the various changes the council has made to the budget.

ACTION: Mr. Frantz amended his motion to move the budget forward for action at the Thursday council meeting with the removal of the Walker Street extension and with the adjustments made to the Cary Parkway project. Mrs. Robinson amended her second. Mr. Smith and Mr. Portman voted “no”; all others voted “aye”. The motion carried by majority vote.

The meeting adjourned at 8:31 a.m.