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Approved Minutes - 03-20-2014 C)4-r6 CITY OF LAKE OSWEGO V o Budget Committee Minutes GREGG''' March 20, 2014 Proposed FY 2014-15 Budget Members present: Kent Studebaker, Mayor David Berg, Chair Karen Bowerman Charles Collins, Co-Vice Chair Jeff Gudman Jackie Manz, Co-Vice Chair Jon Gustafson David Beckett Lauren Hughes Gerry Good Donna Jordan Craig Prosser Skip O'Neill Kathleen Taylor Members excused: None Staff Present: Scott Lazenby, City Manager Ursula Euler, Finance Director Shawn Cross, Assistant Finance Director Jordan Wheeler, Assistant to the City Manager Kam Frederickson, Budget Analyst David Powell, City Attorney Don Johnson, Police Chief Ed Wilson, Fire Chief Scot Siegel, Planning Director Ivan Anderholm, Parks & Recreation Director Erica Rooney, Assistant Public Works Director Anthony Hooper, Support Services Supervisor Call to Order/ Roll Call Chair Berg called the meeting to order at 6:00 p.m. in the Council Chambers of City Hall. He noted that the committee worked very well together. He said he had heard nothing but superlatives from the community about last year's session. He clarified that the purpose of this meeting was to provide staff and the executive team with guidance in developing their budget proposal. Approval of Minutes Gudman moved to approve the Minutes of October 8, 2013. Manz seconded the motion and it passed by unanimous vote. Review Ground Rules, Role, Expectations and Agendas Chair Berg observed consensus to abide by the following ground rules. Meetings were to begin at 6:00 p.m. and they would try to end them by 9:00 p.m. There would be opportunities for public comment of three minutes each at the beginning and the end of each meeting and before and after deliberations. Written comments could be submitted in writing before the meetings. Informal comments could also be submitted online. Those would not have the same weight as the other methods of commenting, but he said he thought in the past the citizen members of the Committee had City of Lake Oswego Budget Committee Meeting Minutes of March 20, 2014 Page 1 of 11 looked at the online comments before each meeting. The Vice Chairs were to handle public comment periods. Members were to try to give all the other members an opportunity to speak and they would treat each other with respect. A majority (8 members) was required to pass a motion. There were to be no deliberations outside of the Committee meetings. He asked them to focus on the big picture. The diminimus level of discussion was $10,000. Committee members were to submit their questions to staff by 5:00 p.m. on Monday so the staff could provide written answers to the entire Committee. During the meetings suggested additions and deletions ("puts and takes") would be recorded and set aside for deliberations. Public Comment— Input Opportunities There was no initial public comment. 2014 City Council Goals and Policies City Manager Lazenby asked Committee members to review and be familiar with the City Council Goals (which were available online). He related the Council policy that if they considered any new fee it was to be targeted to a specific area. • Review Council Service Survey Results Lazenby related that prior to setting their goals the City Council had looked at input that included the citizens' survey; the round table discussion; online suggestions; and feedback from city boards and commissions. He noted some of the goals had budget implications. Chair Berg asked Committee members for their thoughts on which items in the goals were most important and might have the most impact on the budget. He listed streets. Jordan added planning and strategizing how to pay for future projects that they knew were out there, including the maintenance department facility, City Hall, and a fire truck. Studebaker related they had already started LED light replacement and could not turn back now. The good news was it was coming in on budget. Others listed PERS and the WEB. Studebaker clarified for Prosser that part of the money for street lights came from the street maintenance funds. Chair Berg recalled that at their October meeting they had discussed that in the current year they were not expending as much as they thought they were going to on streets. Lazenby advised that they would see a lot of work done this summer. Beckett said he had heard repeatedly that operations needed more FTEs to be able to do the streets, but he had not heard whether they would be able to trade off with other city departments instead of adding more FTEs. Budget Assumptions Lazenby related his interest and experience with budgeting and that he had worked with budgets and budget committees of a number of cities for some time. He advised it was important to understand where the Budget Committee had a statutory responsibility and where it had more of an advisory role. The Budget Committee had a role in deciding the budget in total. Beyond that there were a number of areas where the Committee, especially the appointed members, could be a source of advice to the City Council on a number of things that were not necessarily addressed in the state statute which described the role of a budget committee. He noted they had met in October to talk about utility rates. They could offer advice and input to the Council on the debt policy Finance Director Euler was working on. Like other advisory boards, which items they would provide advice about was at the City Council's direction. They were all on the same team. They were trying to operate more efficiently and effectively all of the time. Lazenby explained the management team was not presenting a budget that night, but seeking some initial policy direction because budget assumptions were absolutely key to how the budget was going City of Lake Oswego Budget Committee Meeting Minutes of March 20, 2014 Page 2 of 11 to look when they proposed one to the Committee next month. At this meeting they would focus on the General Fund because a lot of priority decisions they would be making were typically related to the General Fund. Jordan suggested in the future they should get citizen input earlier in the process. They could hold an October meeting to give citizens an opportunity to come forward with their puts and takes. The City Council would then have an opportunity to consider it at the first of the year during goal setting and the City Manager and Finance staff would have time to look at it. The way the existing process was structured by the time they heard what the public thought they needed to do the budget had already been put together. Chair Berg said he supported Lazenby's suggestion. Finance Director Euler talked about the budget assumptions and the 5-Year Forecast, focusing on the General Fund. Property tax was the General Fund's largest revenue source. The tax rate was based on $1,000 of assessed value. Slide: How are we doing with property taxes? [A graph comparing the statutory increase with the growth in assessed value 2006 to 2019.] The graph represented actual values 2006 - 2013 and then assumptions for 2014 - 2019. The statutory increase was shown at 3%. The graph showed quite a bit of growth in some years, especially in 2009, but 2013 was a little short at 2.9%. In the year they were in now they had budgeted for a 2.9% increase, but it would actually be in the neighborhood of 3.1% so there might be $150,000 to $200,000 more in property tax revenue than they had budgeted for. They were a little optimistic going forward that they would get a half percent of growth, based on plans and permits being issues Slide: General Fund- How does it tie in with other revenue? [A graph of the amounts and relationships between property taxes, internal service fees and all other revenue (including franchise fees, hotel motel taxes, liquor and cigarette taxes, and sales and servicing fees) between 2005 and 2019. Euler pointed out the steep, upward, line depicting growth in property taxes. The other types of revenue had remained fairly stable, with small spikes during the 12-month period that franchise fees had been increased and in 2009 when the approach to internal service fees was changed. Slide: How are we doing with Benefit Expenditures? Benefit Percent of Salaries [2011 — 2019]. This graphic showed the percentage of benefits the City paid for every dollar it paid out in salaries. In 2014 the City would pay close to 60 cents in benefits. The largest benefits were PERS and Health Insurance. There were annual increases in the cost of personnel services due to labor contacts and cost of living increases and benefits. Slide: PERS • `Cruising'Altitude to be at 23% + 6% IAP by 2017, system-wide • LO is usually a little under that • Depends on funding status • Every percent of PR is about$205,000 in the General Fund • Unfunded Liability$24.4 million (Dec 2013) Euler related the PERS board was telling them that by July 2017 the `cruising altitude' was going to be 23% of payroll, system-wide. That did not include the 6% employer contribution, which brought the percentage up to 29% of payroll. Every percent payroll went up would require another$205,000 for City of Lake Oswego Budget Committee Meeting Minutes of March 20, 2014 Page 3 of 11 PERS from the General Fund. Euler advised that there would be new rules the City would have to follow in another year and a half when unfunded liability had to be reported on city-wide financial statements. She assured them that the rating agencies had known about this for a long time and they had incorporated the liability into their analysis even when it was not on the balance sheet. Slide: General Fund: How does it tie in with All Other Expenditures? [This graph showed Wages/Salaries and Benefits; Materials & Services; and Capital Outlay/Debt Service/All Other for the years 2005 - 2019.] Euler pointed out that wages, salaries and benefits made up about 70% of the City's expenditures. Materials & Services had remained fairly level. She advised that Capital Outlay for special projects could be kept more level and predictable by using set-asides. Slide: Leads us to Budget and Five-Year Forecast Assumptions in the General Fund. Slide:Assumptions. [A spreadsheet showing 2014 to 2019 assumptions.] Euler discussed each of the following assumptions, as follows: • AV Increase: Going forward they wanted to increase assessed value by the statutory rate. • AV Growth: Going forward they anticipated .5% growth in assessed value. • Other Rev. Growth: They assumed this would stay level at 1.00% • COLA: They assumed 2.3% (2014) and 2.5% (2015) based on the Portland Metropolitan Consumer Price Index. After that they assumed 3%. • PERS % points: They used 21.01% for 2014 and 2015 and then gradually increased it to 24% (2016 - 2017) and 28% (2018 —2019). This was what the PERS board was forecasting. She confirmed PERS assumed the legislation passed by the legislature would stand and they assumed these rates were collared (meaning they had some limits to fluxuation). She said if investment returns again became very favorable it was not unheard of that the rates could actually decrease. • Health Ins. Increase: in regard to which expenditure changes had the largest dollar impact, health insurance changes only had a minor effect. COLAs and PERS had the largest impact. • M&S inflation: The City Manager had asked the budget preparers to keep this stable and not increase it except for certain things they did not have control over, such as utilities. • Budget: Act.Nar. in $M: The Forecast assumed that revenues would exceed expenditures so there would be savings. It assumed savings of about $1.8 million in 2015, which was the average underspending of the budgeted numbers in the past three years. Euler said they made a distinction between on-going and one-time items. That meant on-going revenue should pay for on-going expenditures and one-time revenue should not pay for ongoing expenditures. She advised that made for a strong structure. Slide: Ongoing GF Revenues and Services 2013— 2019 Euler pointed out that with the forecasted budget savings for 2014 they had a healthy gap and that they were forecasting savings in the future. The graph showed the gap closing in 2018 and 2019 to under$50,000. Slide: How Much Money Does the City Have in the General Fund? [Graph] Euler pointed out this graph showed the minimum requirement of 30% of operating expenditures that was to be left as a core fund balance. She confirmed for Prosser that Other restricted and committed amounts included funds the City Council had dedicated, including the PERS set-aside They intended to pay for certain equipment from the General Fund so that was why they saw a decline in 2015 City of Lake Oswego Budget Committee Meeting Minutes of March 20, 2014 Page 4 of 11 Chair Berg summarized that this showed they had a reserve of about$3 million out of a $45 - $48 million dollar budget to work with when the Budget Committee made decisions. Euler cautioned that it was based on assumptions that money would be saved. Slide: And... • Continue to make principal payment on the WEB • Set-asides—powerful tool • Plan so that one-time resources cannot pay for ongoing operations—strong structure • Debt is always as risky as the revenues from which it is paid Euler said they had made principal payments on the WEB of$850,000 and the Forecast assumed that would continue. She advised that set-asides demonstrated financial responsibility. She advocated having a plan for using one-time resources so that they were not used to pay for ongoing operations expenditures. Questions of the Finance Director Euler confirmed for O'Neill and Chair Berg that the unfunded liability of$24 million was the City's portion of PERS' system-wide unfunded liability. It was based on actuarial estimates. It varied greatly, depending on how investments performed. The year before it was $36 million. Beckett asked how the Budget Committee got involved with the fact that the debt service paid by the citizens through utility bills was leaping up. Euler advised utility rates and debt were really driven by aging infrastructure. Federal grants were no longer available. Chair Berg recalled that last year the City Council had approved the process that the Budget Committee would look at water rates over time and make recommendations to the Council. Lazenby advised that he would give the Committee the broad view of the whole financial picture in the budget presentations. They would look at debt of the organization as a whole and then discuss different components and what they were expecting it to be next fiscal year. He related that the administration wanted to propose a debt policy. He noted the City Council had set self-imposed limits that were more stringent than the statutes required. Budget Assumptions Lazenby asked the Budget Committee to offer their perspectives on the proposed budget assumptions now so the administration could prepare the budget for presentation next month. • Property tax rate Lazenby said the proposed budget would assume there would be no increase in property tax rate. The current rate was $4.97. It was under the statutory limit by 6.5 cents. Later, if the Budget Committee wanted to add something, there would be room to do it and they could make the decision to change the policy regarding the rate at that point. Chair Berg recalled that last year they had assumed that they would not take the rate increase for initial budgeting and they would base the budget on that. Then they had looked at the roads and decided they would take that money to use for roads. Studebaker said he agreed with the assumption that they were not going to increase the rate. Gudman recalled that he had proposed to reduce the property tax rate last year to offset the 3% increase in assessed value. However it had become clear that if they wanted to do anything about roads that was not a viable assumption. • Franchise fees Lazenby advised the proposed budget would show no changes in franchise fees. Franchise rates were under either the legal limits or the norms. Again, this would leave the Budget Committee with City of Lake Oswego Budget Committee Meeting Minutes of March 20, 2014 Page 5 of 11 flexibility to change that if they chose to have a targeted item to use the funds for. Bowerman indicated she concurred with keeping franchise fees at the current rate. • Expenditures Lazenby advised the City was in the process of labor contract negotiations and they would present that information at the meeting next month. • General Fund — Fund Balance Lazenby advised that the General Fund balance was one area where there was flexibility. They would bring proposals to the Budget Committee. He clarified that at this meeting they were asking for direction in regard to priorities. • Other Fund Balances Lazenby advised that these were dedicated funds and there was not as much priority setting to be done with them as with the General Fund. Direction on one-time investments and other budget items The management team distributed the document entitled, "Direction on One-Time Items and Funding Priorities.' It showed amounts of the General Fund/Capital Reserve Fund balance that were committed or assigned to Fire Truck and Library set-asides and the PERS reserve. It showed the amount uncommitted or available for one-time expenditures as $5,764,000. The document went on to discuss each of the items below individually and in more detail. • Fire Truck Purchase • Regional CAD System Replacement • Annual Street Maintenance • PERS Set-Aside • Funding a New Operations Facility • City Hall Set-Aside • West End Building • Boones Ferry Road Lazenby characterized the fund balance as a healthy number, but not enough to meet all of the needs listed above. He asked for some direction on that. He added that the reserve policy was probably why the City had an AAA bond rating. The set-asides for Fire Truck replacement and the Library had been established by previous policy decisions and the PERS amount was captured in the reserve because of the PERS legislation. Gudman noted that there was also a PERS reserve in the Utilities funds. Jordan and Gudman recalled the City had decided to set money aside for a new Library because the Library felt they lost the money the City got from Clackamas County after the bond measure passed. Discussion: Fire Truck Purchase Lazenby pointed out the ladder truck was scheduled for replacement. They had already accumulated $700,000 in the Fire Truck set-aside by setting aside $50,000 per year. However, they would need some extra funds to close the gap. City of Lake Oswego Budget Committee Meeting Minutes of March 20, 2014 Page 6 of 11 Discussion: Regional CAD System Replacement Lazenby related that the City Council had just saved the City a lot of money by deciding to partner with the other major dispatch centers in the region and do a joint upgrade. It would probably save half the cost the City had been facing in upgrading a 20 year old dispatch center. They were looking at ways to fund a good portion of it just through savings in the Police Department's budget, but it would probably not be enough. They were looking at a cost of around $600,000. Discussion:Annual Street Maintenance Lazenby pointed out the document laid out issues and options in regard to funding street maintenance. It was a City Council goal that, if funding permitted, they would get to a pavement condition index of 70. Options included raising franchise fees (which he advised could be raised quite a bit); a local gas tax; and increasing the current maintenance fee. He noted the County was discussing a county-wide approach to road funding. He related that the Assistant City Engineer had advised that she needed to know well in advance how much she had to work with to keep the pavement management program going. He related that informal discussions with Councilors indicated they wanted management to count on the $800,000 going forward. The CIP made that assumption. He said he thought it would be possible to increase the amount to $1 million in the proposed budget. He related they had been working on a better way to handle multi-year capital programs because fiscal years and construction seasons did not always reconcile. They would use the five-year CIP as a budget. Lazenby advised that few cities had a transfer to the Street Fund of the magnitude that Lake Oswego did. Most cities took the full franchise fees and kept them in the General Fund, typically for Police and Fire. Discussion: PERS Set-Aside Chair Berg suggested they discuss a basic assumption of maintaining or increasing the current contribution of about$800,000. Lazenby said the policy question in regard to the PERS set-aside was at what point did they release it? There was a cloud over it due to legislation. He was putting the onus on departments to manage their own budgets. He advised that the state would not come after the $800,000 they had in reserves— it would increase PERS rates for next year. He noted the City's policy was to balance ongoing revenues with ongoing expenditures and not use one-time money to bail the City out. Chair Berg recalled last year the Budget Committee knew the liability was out there so they had decided to set the money aside in advance so they did not have to come up with it in one year's budget. Lazenby advised the risk was that there could be an effect on future PERS rates. Studebaker indicated to be consistent they would also have to set aside a similar reserve for this year. Lazenby advised the legislation affected the liability of the PERS fund by affecting benefits. PERS had reduced the liability on the actuarial side and that allowed them to set rates long term to meet the lower liability. If the court said they were wrong and their liability was higher, they would adjust rates, but they would not tell the City it had to pay them back. Euler said they only initially had the higher rate for one year which was this year. The budget and the 5-Year Forecast did not assume the higher rate, so in order to add to the reserve they would have to find another$886,000 somewhere in continuing revenues. Chair Berg observed that if they wanted to be consistent they would have to find it in this year's budget. Gudman advised at PERS meetings they had a graph projecting out for several years showing what the percentage rate of payroll system-wide would be. If the assumption was the PERS legislation would stand, the rate went up about a percentage and stayed at that rate for several years. If the legislation was overturned by the courts the entire line over multiple years shifted upward. Last year, based on the information they had, the Committee assumed it would not stand and they had created the $886,000 set-aside. He indicated that until they knew what the court decision was they should set City of Lake Oswego Budget Committee Meeting Minutes of March 20, 2014 Page 7 of 11 aside a comparable amount for this year and double the amount in reserve going forward. Gudman clarified that his position was that if they had to have $886,000 to cover just one year last year they should set aside the same amount again this year so the reserve totaled $1.6 million until they got the final numbers. Then they could adjust accordingly. Lazenby said he was hearing that the Committee wanted to keep the reserve. He noted the current amount would at least get them through a year's impact in regard to the difference in rates. He advised they could not use one-time money forever to close that gap. Gudman related if the courts decided to let the PERS legislation stand, and they had added another year's set-aside to it, then they could simply change what those dollars were designated for. He advocated using it for the operations and maintenance center. Setting the funds aside now gave them the ability to have that future debate on how to use them They would have much more difficult alternatives, all of which he believed would involve going to the citizens for more money. He said he really did not want to have to do that. Prosser related that he did not support releasing the reserve funds at this time because of the uncertainty. He agreed with Lazenby that they could not count on one-time money in perpetuity to solve the problem should the rates go up. However, this gave them the opportunity to adjust gradually over time and avoid the City hitting a wall because of it. Having a healthy set-aside was perfectly appropriate. He clarified, however, that he was not ready to add another$886,000 to it. Gudman moved that the $886.000 currently set aside in the PERS reserve not be released from that reserve as of July 1, 2014. Jordan seconded the motion and it passed 14:0. Discussion: Funding a New Operations Center Lazenby related that the City Council had set some priorities for use of unreserved fund balances earlier this year. They supported finding a way to fund a set-aside for upgrading the operations center. He noted it was in serious need of an upgrade. After they received a very high estimate of $18 million Public Works had scaled the project down and looked for ways to accomplish it for less through a major upgrade at its current location. He advised there were a variety of ways to fund it, but what they would propose was equivalent rent from the General, Water, Wastewater, Surface Water and Street Funds. The issues paper showed the respective amounts. The problem was that the rents did not raise enough funds the first year to do it. The funds would have to accumulate over a period of years. He suggested the Budget Committee could use some of the available fund balance to accelerate this program so they could begin designing the project next year. He advised a new operations center was a priority; it was long overdue; and it was a fairly expensive project. It would be presented to the Budget Committee in a decision package. Discussion: City Hall Set-Aside Lazenby related that there had been studies, including a study of full replacement of City Hall. However, he had also seen the reports regarding the terrible problem of leaky skin and mold in the walls and other issues. This was a major asset and it would be irresponsible for the City to allow that condition to continue. He suggested one option would be to do the most important repairs and at least stop that from occurring. It would essentially involve replacing the skin. He said they did not have a cost estimate, but he had talked to people who felt it would be substantially less than the cost of tearing it down and starting over. He anticipated that even at less cost they would have to work that into the budget over time. He thought they could do it with the available fund balance if it fit the Budget Committee priorities. They needed to have some plan and strategy for doing it at some point. Jordan indicated she understood they would need to address more than just the skin of the building. She recalled when they talked about facilities a few years ago a major issue came to light that the HVAC system was in the basement and the only way to get it out was through the roof. It was aging and getting closer to needing to be replaced. She suggested they needed to look at all of the costs City of Lake Oswego Budget Committee Meeting Minutes of March 20, 2014 Page 8 of 11 before they decided how to move forward. Lazenby related he was trying to think of ways to save the basic building because there were a lot of good parts to it. Discussion: West End Building Lazenby advised they would prepare next year's budget assuming the WEB expense was still there. The City Council had just received a status report on the WEB. They were hoping that liability would go away. If it did they would have the expense of finding another location for the staff and activities happening at the WEB. Discussion: Boones Ferry Road Lazenby explained that some gap funding would be necessary for the Boones Ferry Road project because they would have a cash flow problem until they started accumulating urban renewal revenue. He clarified the amount was closer to $1 million. He said it would be a policy option to use General Funds. The General Fund could be repaid by the urban renewal district but they could not technically call it a "loan." He confirmed for Chair Berg that they could use a general obligation bond for that. He said it was uncertain exactly what the project costs were; when they would hit; and how quickly the tax increment would build from new development in that area. Gudman related the City Council had received an update from Redevelopment Director Brant Williams in December that indicated the range was $600,000 to $1.4 million. Jordan asked if the Laurel Street and Boones Ferry Road projects factored into the overall anticipated pavement condition index and if it would still be at 66 even after those major projects were done. Lazenby confirmed that. He indicated that there were a couple of major pavement improvement projects in the CIP, such as Kerr Parkway, that were very expensive, but they had to be done. They would help the index rating in a very incremental way, but at least it was progress. Priorities Ranking Exercise Committee members participated in a pair-wise comparison exercise to help rank priorities. Staff collected the comparison sheets and ranked the projects. Wheeler announced the results. He noted that both the Councilors and the citizen members had the same rankings: 1. Street maintenance 2. Operations facility 3. Regional CAD system 4. Boones Ferry Road 5. New ladder truck 6. City Hall repairs set-aside Chair Berg indicated that after talking about the operations facility and the Lake Grove Village Center Plan for so many years it would be nice if the Budget Committee made the decision this year to go forward with them. Studebaker noted they were City goals. Jordan cautioned that although the Committee members were familiar with the need for a new operations center, citizens might question spending money on it. She suggested that things that involved their safety, such as the CAD system, the fire truck and street maintenance, would resonate more with the citizenry. Chair Berg related that he connected the operations facility with public safety. The public might need to be made aware of that. The recent snow storm was proof of it. Maintenance staff had done a great job. Beckett related he had toured the facility a couple of months ago and found it to be an antique from A to Z. Examples were that men's and women's locker rooms were the same room, and they had a shower that was worse that the most minimal shower in an RV park. City of Lake Oswego Budget Committee Meeting Minutes of March 20, 2014 Page 9 of 11 Areas of focus for budget/service level policy decisions Chair Berg clarified that the Committee was not going to get the detailed budget books - they would get an electronic summary. Beckett related that he and Taylor had looked at the question of how priorities were established including the prioritization process related to the Capital Improvement Plan. They had looked at what other cities were doing; put together a possible methodology; and met with David Donaldson, Guy Graham, Erica Rooney, and Anthony Hooper to ask how they were doing it. What they heard convinced him that the staff really did have good rationale, but it was not explained in the CIP. Beckett distributed a document suggesting guidance to department heads from the Committee in regard to capital projects... because of the impact of capital equipment improvement plans on the budget and possible new debt we would appreciate a formal presentation each year with an opportunity to discuss important topics such as trends, choice of projects, deferred projects, etc. It would give better visibility as to how the priorities were ranked by the various departments so that the City Council and everyone else could make a more informed decision. Lazenby indicated that he would not recommend spending a lot of time on priorities of unfunded projects. Chair Berg said he agreed. He said he thought they spent a lot of time talking about the unfunded projects when there were no real opportunities to fund them. Gudman concurred and Bowerman agreed. Taylor indicated there might be projects on the unfunded project list that might be critical and things the City might be forced to do by the DEQ or for some other reason. All they were asking to know was if there was a known driver. They were not asking for a lot of work, just insight. Gudman indicated that it would be helpful to have the components that looked at the City as a whole and the capital projects in hard copy. The department budgets could be entirely online. Chair Berg summarized that the Committee had given direction to Lazenby and the executive staff to build the budget without taking the maximum allowed property tax rate. Then, they would have the opportunity for the additional money if they found later that they needed it. There would be no increase in franchise fees, at least in the core budget. They would keep the PERS reserve at least for this year. They had the survey results in regard to priorities. Lazenby confirmed for Gudman that there would be decision packages potentially adding people and services (and reducing elsewhere) including adding a volunteer coordinator for Parks, which was a Council goal. He acknowledged that he did not know how to fit in a request from the 50+ group for funding of an elder playground. He noted Jordan's point that they needed to have a place for that kind of input that earlier in the process so they could get some policy direction on it. Public Comment John Surrett, 1685 Edaecliff Terr., asked for clarification as to whether the City paid the employee contribution to PERS as well as the employer contribution to PERS. The Budget Committee confirmed they did and the percentage was 6%. Surrett said that needed to be looked into because a lot of municipalities were not that generous and because of the current times. He noted City Hall repairs had received a ranking of 6. He advised the 12 Budget Committee members who were interested in that that the City had paid quite a bit of money to SERA Associates Architects in 2007 to do a complete study of its condition. He recalled the bottom line was they thought it was pretty structurally sound and the mold was associated in particular with the flashing of the corner windows. He said he thought it was pretty innovative to try to at least start to cash flow the operations facility project and allocate a certain amount to different users who would set aside a certain amount in their budgets. Then, to also relate what they would otherwise be spending in principal and interest on a 20-year bond. He indicated if the citizenry knew that kind of approach was being looked at it was pretty saleable and not a bad approach. He asked if he understood correctly that the projections for City of Lake Oswego Budget Committee Meeting Minutes of March 20, 2014 Page 10 of 11 property taxes were based on the existing inventory. Chair Berg said it was based on that and projected growth. Surrett asked if that related to the population forecast or housing stock increases. Euler indicated that the City relied on Clackamas County. Every year the County conducted a study and then provided the City with an increase that was the statutory increase plus some growth. They had forecasted between 3.5% and 4% for the City. Nick Berardi, 16911 Crestview Dr., a member of the Natural Resources Advisory Board, reported that the NRAB thought it would be good to take a look at updating the State of the Urban Forest report since there had been a lot of talk about the tree code. Updating the report would provide the citizenry with information on that hot topic. Mr. Berardi said it could be kind of expensive to update the report, but it would be pretty valuable in the long run. He asked if the Committee had a date for considering individual items like that. Chair Berg advised that the Committee would receive the proposed budget at the next meeting and then they would have subsequent meetings when they discussed individual items. If this one was not included in the Parks budget Mr. Berardi could come and recommend it. He clarified for Gustafson that if an individual or group in the community wanted to suggest something specific for the puts and takes list the Committee would take the request at any meeting. Then they would go through their standard process, which was that one of the Budget Committee members sponsored it with an estimated dollar amount. Manz suggested they should follow up with people who asked more open ended questions and send them an email telling them who they should contact at the City who could advise them how to participate in the process. Jordan related that PRAB and the Parks director had done a great job over the last year and a half really drilling down on Parks budgeting. She wondered if there was a different way to itemize items such as the concerts and Farmers' Market, which were in the Parks budget, but were events that served a dual purpose in that they created economic activity and brought people to town. Since they looked like big expenses with little return of revenue that did a disservice to Parks. Chair Berg suggested they ask Bill Gordon to come and talk to the Committee about that. Beckett asked if Lazenby could provide the cost of simply redoing the exterior of City Hall and addressing the mold problems at a subsequent Committee meeting. Lazenby anticipated it would be a very crude estimate to use to try to prioritize it. He indicated he had not anticipated they would be able to do it next year but they might create a set-aside for it. Studebaker noted it was not high on the priority ranking exercise list. Chair Berg asked if they should take it off the list. Bowerman did not want to take it off the list because they might want to create a reserve for it. Adjournment Due to a conflict with another meeting on April 24 the consensus was to change the next meeting date to Tuesday, April 22 and then meet on Thursdays May 1 and 8. At approximately 8:20 p.m. Gudman moved to adjourn. Good seconded and the motion passed by unanimous vote. Respectfully submitted, Kam Frederickson /s/ Kam Frederickson Budget & Financial Analyst APPROVED BY THE BUDGET COMMITTEE: April 22, 2014 City of Lake Oswego Budget Committee Meeting Minutes of March 20, 2014 Page 11 of 11