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Town Council Minutes - 06/23/2020 Workshop TOWN OF TROPHY CLUB TOWN COUNCILWORKSHOP SESSION MINUTES TUESDAY,JUNE 23,2020,S:30 PM The Trophy Club Town Council met in a Workshop Session on Tuesday,June 23, 2020. The meeting was held at Town Hall,1 Trophy Wood Drive in the Training/EOC Room. TOWN COUNCILMEMBERS PRESENT: C.Nick Sanders Mayor PhilipShoffner Mayor Pro Tem Sean Bone Council Member,Place 3 Karl Monger Council Member,Place 4 Michael Geraci Council Member,Place STAFF PRESENT: Steve Norwood Town Manager WadeCarroll Assistant Town Manager LeticiaVacek Town Secretary/RMO David Dodd Town Attorn ey PatrickArata Police Chief Jack Taylor Fire Chief Tommy Uzee Director Community Development TonyJaramillo Director of Parks and Recreation Mike Erwin Finance Manager Jill Lind Communications and Marketing Manager Mike Pastor Information Services Manager ALSO PRESENT: Ryland Rowe Planning&Zoning Board Member CALL TO ORDER Mayor Sanders called the meeting to order at 6pm and noted a quorum with Mayor Pro Tern Shoff ner, Council Members Bone,and Geraci. Council Member Monger indicated he would be arriving late. Discussion regarding the Town of Trophy Club Overview of Budget(S.Norwood). Town Manager Norwood reported the Town's Budget remains in good shape in light of COVIDI9. He mentioned that many cities have had to make severe cuts this year and the overview will update the Council with preliminary numbers forecasted. Mr.Erwin stated at the closure of Town Hall on March 20,2020,Mr.Norwood instructed Finance to track all estimated revenues and expenditures which is now an ongoing project. He pointed out that revenues and expenditures should break even as the last estimate of revenues is$11,213,000 while expenditures are estimated at $11,276,000. He reported that the General Fund Balance at$5.2 Million remains flat without dipping into the fund balance. Mr.Erwin stated that sales tax is budgeted at$978,000 and staff is projecting$950,000 at year-end. He mentioned the Town of Trophy Club has weathered the effects of FY20 Covid-19 well thus far. Mr.Norwood reported that the General Fund Balance at 47%was very healthy as 45%was budgeted. He added that a yearly budget reflects what is forecast to be spent and an audit reveals what the budget was actually spent on. He added that Tom Thumb's sales were off the chart in March;whereas their April sales declined. He reported that K-5 also reported increased sales. Mr.Norwood stated that it is tough to predict uncertainty but overall,are still doing well. Council Member Geraci noted transformation occurring in our economy with the number of businesses that now provide online ordering with scheduled pickup. Mr.Norwood added that our area was fortunate to have Amazon due to their staggering sales during this time. Mr.Erwin stated that 75%of the Town's Revenue is derived from property tax,of which most has been collected. Town Council Minutes June 23,2020 Page 1 of 4 He mentioned that departments have worked to curtail expenses by identifying cuts and savings to help cycle through the remainder of the budget year. He mentioned that staff is reviewing capital items that can be done next year that were scheduled this year. It was reported that no property tax rate increase was proposed but that a decrease in building permits is expected for FY21. Mr. Erwin mentioned the constraint of working within the new revenue cap of 3.5%(which previously was at 8%)and that 35%of property tax was currently under protest. He noted that before moving forward with what can be some growth in our property tax roll;staff will need to see what occurs with the tax protest. Lastly,he mentioned to keep in mind that staff was waiting for the State Comptroller to finalize the Truth in Taxation to see that outcome. Therefore,staff will leave the Sales Tax flat at$980,000 which reflects last year's budgeted amount. Mr. Erwin said that staff hopes to see the Parks Revenue return to normal with day camps,pools,and other activities and services. He added that one benefit this year is that$60 Million in new construction hit the property tax roll. Mayor Sanders mentioned that was due to PD-30;and should see another increase on the property tax roll next year. Mr. Norwood replied that was correct as a snapshot is taken on January 1. Regarding Expenditures;staff recommended staying at the FY2020 budgeted number with some increases in contract services, IT annual contracts,dispatch services,and salary differences for some departments. Mr. Norwood mentioned the placeholder of Parkland Dedication Funds in which he has made Council aware. He added that the funds could be used for pickleball courts,trails,repair of play structures;anything park related since it is a dedicated fund that does not impact the general fund or tax rate. Mayor Sanders mentioned the parkland dedication amount from PD-30 in which 1/3 is due after completion. He did not recall if"completion"was defined. Mr.Dodd replied that completion was at the issuance of the certificate of occupancy for multi-family;which is the final phase. Mr.Dodd stated that it sounded as if all properties within PD-30 were contributing to an escrowed account. Council Member Geraci asked of the completion date for PD-30. Mr. Norwood replied completion would be within the next couple of months. Council Member Geraci also asked staff to take into consideration the line of kids waiting to play basketball and tennis in the evenings. Mr.Norwood stated that Council would be informed on these items throughout the budget discussions. Mayor Pro Tern Shoff ner mentioned the internal discussion of being too conservative or not conservative enough. He stated that last budget; PD-30 revenue was not taken into account. Mr. Norwood replied that with Covid;he did not know if some of these businesses were going to open;thus,choosing to be conservative so that Trophy Club is not in a situation as other cities during this time. Mayor Sanders noted that online sales are increasing while others are decreasing;for a net zero. Mr.Norwood added that in McAllen or Brownsville;they are looking at 55%decreases in sales tax while in Trophy Club most all property tax has been collected being the bulk of the Town's Revenue. Councilmember Geraci mentioned that if we are taking said approach on property tax;we should take into account property tax and an average of taxes collected from Amazon;anything above that amount could be used for projects that need to get done. Mr.Norwood stated that Trophy Club is budgeting every position at 100%being conservation since we do not want to be in a position where we are cutting back services,or laying off people. He referenced the positive plan in place and referenced the next slide showing the healthy General Fund's fund balance at 47%. Mr. Norwood recommended three pockets with the following percentages that would be utilized to pay cash for projects instead of drawing monies out of the fund balance. 1) IT at 25%;2)Capital(Parks,PD, EMS)at 25%;3)Capital Projects (Streets)at 50%. He explained that Council may change the percentages as they see fit. He recommended funds above the 35%threshold be placed in the three recommended pockets and be used to pay cash(pay as you go)instead of drawing down the fund balance which is being done artificially now or worrying about incurring debt. Mayor Sanders asked if$300,000 had been allocated from the fund balance for capital projects. Mayor Pro Tern Shoff ner mentioned that it was a Capital Replacement Fund (CRF)that was initiated,and did not know why not take the overage (above 35%)and place it in that fund. Mr.Erwin stated that was correct as$326,000 was budgeted in that line item. Mr. Norwood clarified that our financial policy requires 30%be kept in the fund balance. He added that by going above that percentage and keeping 35%in the fund balance is still greater than what is required. He mentioned that every year,it is known that funds for IT;and Capital Items must be allocated, but the funds will not be restricted. Mayor Sanders asked if the funds in the Capital Replacement Fund(CRF)were available. Mr.Erwin reported that two transfers are to be made in order to cover capital items and get through the fiscal year while not taking those funds from the Fund Balance. Town Council Minutes June 23,2020 Page 2 of 4 Mayor Sanders stated that he did not believe that was the intent of the Capital Replacement Fund,as Council should decide when to use the funds. Mayor Pro Tem Shoffner stated that the intent was to place funds into the CRF and when the time comes,Council authorizes the funds;as the fund was started from scratch. Mayor Sanders agreed as that was the intent and if there is a year there is no excess,funds are not added. Mayor Sanders asked staff to change the title of the recommended pockets to"Capital Replacement Fund". Additionally,he asked that towards the end of the fiscal year; Council will make a decision as to the amount and projects to fund. Mr.Erwin stated he was not aware of the manner in which Council wanted to handle it and would make the appropriate adjustments to do so. Mayor Sanders clarified if there were two more transfers to make. Mr.Erwin replied that was correct. Mayor Sanders stated that Council should make a decision to utilize the CRF for the transfer and as to the percentage of funding being recommended from 47%to 35%to fund projects. Mr.Norwood emphasized that all pots of funds could go back into the fund balance should there be an emergency;and in the end,staff and Council are saying the same thing as far as funding capital projects. Mayor Pro Tem Shoffner mentioned there was a list of capital replacement items somewhere as this made it easy for Council and staff to ensure there were funds to pay for capital purchases which prevents staff from vying for funding amongst one another. Mayor Sanders stated that he wanted the CRF more detailed than just placing funds into it;using the example of funding"X"amount of cars this year. Councilmember Geraci agreed and mentioned a life-cycle analysis of replacement of cars and roads going forward. Mr. Norwood mentioned that it will be built in such a manner but it may not fully fund some capital costs. Mr.Erwin reported that on the Capital Projects;there are between$2M and$2.SM of unspent bond proceeds from the 2017 Issuance. He stated that our financial advisor will be present tonight to recommend the refunding of the 2010 Bonds. He reported that staff's approach is to take care of the bond proceeds we have now before incurring new debt. Mr.Carroll referenced the 2017 Projects list. He noted the projects have been re-evaluated and prioritized. Mr.Carroll clarified that none of the streets denoted were full replacements;but some showed sections that are needed. Mayor Pro Tem Shoffner stated that by replacing two street panels on Edgemere would take care of that street for 20 years;same with a replacement panel on Creekmere. He requested a prioritization of the heavily used streets(major thoroughfares) which were his concern. He noted that it was a shame that Meadowbrook Drive was not completely finished. Mayor Sanders added that Trophy Club Drive is a high second. Mayor Pro Tem Shoffner asked staff to take into account the construction occurring throughout and coordinate same. Mr.Carroll agreed,and stated that staff would coordinate said construction projects. He closed by stating that the rest of streets on the list included small panel replacements that would be done in-house. Mayor Sanders thanked staff for the great job on Indian Creek Drive and Trophy Club Drive. Mr. Norwood made mention of staffs conference call with local hoteliers about travel. He indicated that they did not provide any direction or suggestions. Councilmember Bone asked if they had any recommendations to offer. Mr. Norwood stated that until businesses get going,they just do not know what to do. Mayor Sanders mentioned that they would not get the Deloitte University revenue as Deloitte built four more buildings around the world. He added that they were not certain they would fill those as people have learned to work remotely. Councilmember Geraci referenced the cost of office space at$300 sgft to build,lease,and operate. Councilmember Monger entered the meeting at this time. Mayor Pro Tem Shoffner noted his drive to downtown Dallas of 31 miles being 31 minutes,no traffic and many in the white-collar sectors still work remotely. Mr. Norwood stated that in asking their sense of when travel would resume;they replied 2022. Mayor Sanders noted that the WoodSprings Suites had a number of cars parked there. Councilmember Geraci recalled when with the Youth Sports;they had 49 teams and the weekend after,they had 62 teams there. ADJOURNMENT Mayor Sanders adjourned the meeting at 6:50 pm. ATTEST: W Le cia TRMC/CMC/M C.Nick Sanders,Mayor own Secretary/RMO Town Council Minutes June 23,2020 Page 3 of 4