City of Bandon

CITY COUNCIL AGENDA DOCUMENTATION DATE: February 3, 2020

SUBJECT: Budget Committee Meeting Minutes ITEM NO: 6.2.3

BACKGROUND:

Meeting Minutes of the Budget Committee as submitted by Richard Taylor, Minutes Clerk and Denise Russell, City Recorder

• April 15, 2019-Meeting

• April 22, 2019 - Meeting

• April 29, 2019 - Meeting

• May 2, 2019 - Meeting

• May 13, 2019 - Meeting

FISCAL IMPACT:

None

RECOMMENDATION:

For information only.

SUBMITTED BY:

Denise Russell, City Recorder

2019-2020 BUDGET COMMITTEE MEETING BANDON CITY HALL

COMMITTEE: 0 Mary Schamehom, Mayor of Bandon 0 Chris Powell, City Councilor 0 Brian Vick, City Councilor 0 Geri Procetto, City Councilor 0 Madeline Seymour, City Councilor 0 Claudine Hundhausen, City Councilor • Peter Braun, City Councilor

STAFF:

April 15, 2019

0 Matt Winkel 0 Sheryl Bremmer 0 Michael O'Neill 0 Ruth Keith 0 Linda Frick 0 Blythe Tiffany • Doug Spencer

0 Robert Mawson, Budget Officer 0 Denise Russell, City Recorder

1. CALL TO ORDER

A. Roll Call: The meeting was called to order at 7:00 p.m. by Chair Mary Schamehom. Roll call was taken with those present shown above.

2. ELECTION OF OFFICERS

Mayor Schamehom called for the election of officers:

A. Vick nominated Mayor Schamehom as the Committee Chairperson with a second by Procetto. Election was unanimous by the committee persons in attendance.

B. Procetto nominated Madeline Seymour as Committee Vice-Chair with a second by Tiffany. The nomination was seconded by Vick. Election was unanimous by the committee persons in attendance.

Ruth Keith was introduced to the Budget Committee as the replacement for Wayne Jeffers seat.

3. PRESENTATION AND DISCUSSION OF THE BUDGET

A. PRESENTATION Schamehom turned the meeting over to Bandon' s Budget Officer, Robert Mawson, for the Budget presentation. Attached is the proposed Budget Summary.

Additional discussion and items of note in the presentation are as follows:

Mawson highlighted that this proposed budget is about four-percent higher ($913,960) than last year's budget primarily because of carryovers in some funds and some uptick in State Shared Revenues. The Budget is broken down into Fund sections:

• General: These are unrestricted funds for the City (property taxes, major portion of transient occupancy taxes (TOT), state revenue sharing taxes that include liquor, cigarette and marijuana taxes, permit fees, etc.) These funds are used for administration, finance, police, fire, and planning departments. They also help support the Community Center (Barn) and Sprague Theater.

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• Special Revenue: These are restricted funds that must be used for a particular purpose for such things as library, state street tax, state revenue sharing, and block grant. The state revenue sharing fund (260) fund grants payments to organizations. The Maximum contribution to an organization is $3,500. The block grant fund is used for capital improvements, materials and services, the trolley program and loans to small businesses with a maximum of $30,000 per loan.

• Enterprise: These are the City's utility companies that are a fee-for-service basis. The general fund covers any expenditure shortfalls and the excess revenue can be used to fund services, cover unexpected or foreseen infrastructure expenses, or combination of the two.

• Capital: These are set aside for the purchase of capital or fixed assets. • Debt Service: These are funds used for the payment of principle and interest payments on loans.

The Budget Committee was provided an explanation of how the State Revenue Sharing fund is funded through the OLCC. The formula for how the State Revenue Sharing funds are derived by a formula that is based on population and tax rates done as a comparison to other cities in the State of Oregon. The statutory regulation does not give the complete formula, so how much is received is not easily determined.

There are two changes in personnel in the proposed budget: an additional half-time police officer to provide flexibility in schedules and provide additional traffic enforcement on holidays, etc.; and an additional planner in the Planning Department to help keep up with the additional work load from increased development in the community. The City has been unable to pursue municipal planning for things like ordinance review and planned housing development to be proactive rather than reactive. This addition would also help facilitate a transition plan for the department. Neither one of these positions require a lot of additional funding in those departments.

The Police Department's Collective Bargaining Agreement will be negotiated in May. All other employee wages have been budgeted according to their agreements.

Health benefits for vision and dental are the same as last year with a six percent increase in the medical insurance. The City will continue to pay ten percent of the health insurance premiums.

The retirement plans did have an increase this year. The City will continue to pay the six percent employee contribution share to PERS.

Mawson confirmed for Bremmer that the half-time code compliance officer was still in the budget for the FY 2019-2020; for Powell that there was nothing in the budget for a Finance Director at this time; and for Vick that there is currently not a position for an engineer that is funded in this budget.

The Planning Department is expected to have $20,500 in permits and fees for the proposed budget. If the fee increase had been instituted as proposed last year, the City would have brought in approximately $125,000 to $130,000 in additional revenue. Powell noted and Mawson agreed that there were challenges last year to raising fees because of the timeliness of services, which has been substantially corrected.

Generally, there are things that could be addressed to improve the cost recovery of the services and amenities that the City provides. For instance, the Community Center only recovers approximately thirty percent of the cost of operation and the Sprague Theater only recovers fifty percent of its cost of operation, all of which comes from the General Fund. These numbers in the budget are not large numbers, but the City does not spend a lot on either, and if the capital improvements that need to be done are considered, neither facility brings in near enough to be self-sufficient. Hundhausen agreed that perhaps a rate increase could be considered because the North Bend Community Center fees are considerably higher ($700 for two nights) and not nearly as nice as Bandon's facilities.

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Schamehom suggested that perhaps there could be some new Transient Occupancy Taxes (TOT) that could be used to support the Community Center and Theater rather than raising fees by using seventy percent of the new fees for something tourist related to those facilities. The remaining thirty percent would go to the general fund. Other cities also have a gas tax. This would capture additional revenues from tourists who currently only pay a six-percent TOT when traveling through Bandon, plus the State TOT 1.8 percent for a total of 7 .8 percent.

Mawson agreed that strategies could be developed that would help bolster the general fund that would not require a vote of the constituents. The cost of operations continues to increase, and the slight increases in revenues are not keeping up with the expenses. The general fund is not always in shape to compensate for the things that need to be done.

Schamehom noted that the thirty-six housing starts and developments generated $495,000 in System Development Charges (SDCs), which doesn't include the new revenues generated through utility services. That is what Bandon does; the unenviable position is that while other funds show substantial monies, those funds are allocated and restricted for specific uses; where the City doesn't have money is the water and wastewater utilities. Both enterprises need to be able to pay their own way rather than being subsidized through the general fund.

Mawson explained that the electric department balances with a few minor adjustments to line items. The electric department generates a lot of revenue, but it takes a considerable amount to provide for operation and maintenance of the enterprise. The carryover budget has been diminishing over several years like the other utilities. The City is looking at approximately $111,000 in generation and transmission billings from Bonneville Power Administration (BPA), which can be passed on to the customer for cost recovery. October 1st, the budget includes a rate increase to accommodate the new generation and transmission charges and spillage charges for 2018. There will be no spill charge for the 2019 year. The next notification will be in July for the following year when BPA determines what if any spill charge will be assessed.

In the water department, the revenue has been divided between the 940 and 941 funds to track the base rate increase and going forward will be transferred on a monthly basis to accurately track generated revenues. Anticipated utility sales are about $800,000 this coming year. The proposed budget has a transfer back from the 941 fund to 940 to cover the operations and maintenance expected shortfall. Bremmer noted that the money in the 941 fund was earmarked and sold to the constituents that they will be used only for certain capital improvement projects, which means the $200,000, must remain in the 941 fund to keep our promise to the voters.

Mawson noted that the capital improvements to be made in the coming fiscal year have not been determined yet, but there is still money in the 941 fund to complete capital projects. He will be asking for input from the Utilities Commission at the next meeting to determine priority order for those capital improvements.

Winkel responded to Schamehom's question of how he would balance the budget without the funds from the base rate increase, that he would take it from the General Fund as in years past by laying people off, by cutting a police officer.

It is going to be painful,to try and address the capital improvements and the maintenance needs of the water and wastewater systems, and it is an issue that the Utilities Commission is working on. The wastewater plant was built in 1970 with a major renovation done in 1994, and it is getting past its life so there is a lot of stuff needing improvement. The l&I study alone identifies eleven needs/improvements the system needs. Winkel noted it is not just Mawson's problem but a citizen problem. Schamehom noted that the City has gone back for increases or rate setting authority nine times, and the Utilities Commission is the only one that has really been able to pass anything. Winkel noted that the Utilities Commission and the Budget Committee have bto figure out how to provide the funds for the City to balance their budget. While it needs to come from someplace, the City is trying to increase the police force and planning.

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Bremmer noted that community development will be hampered if the wastewater plant doesn't work. The rate payers need to know the truth, and we have been giving them the truth and education of the infrastructure needs. As an example, the influent pump has been fixed approximately three times this year at $20,000 per repair for a band aid. The machining for the repairs on the pump is getting almost impossible to do. Replacement costs will just continue to increase, so there needs to be an inflation factor included with the costs of the items identified in the study. A lesson the City experienced with the Chlorine Generator at the water plant. If the system fails it will be much more expensive, the State may step in, and the City will not have any control over where the rates get set.

Mawson circled back on to the General Fund and the fact it does have an anticipated contingency, which was not assumed to be used in the wastewater department of $232,000 that can be used for that purpose. There is not enough there to offset both the wastewater and water plant systems. O'Neill contributed, we need to get ahead of this issue because when the infrastructure is at the end of life, it will break, just not knowing which piece at what time. Mawson said that we do understand the concept, but how do we get there without rate setting authority.

Schamehorn requested to know what the average bill for water, wastewater and electric is in all of the cities around Bandon. She believes that it will prove to be higher than Bandon's utility rates. Powell noted that it was done four years ago, and only fifteen people showed up for the meeting. We have to come up with an effective way to communicate it to the citizens.

Winkel stated that the budget itself should show a transfer in or a loan if it is borrowed from the 941 fund, and interest should be paid on that. Perhaps a surcharge (flat rate) would be the way to go rather than the percentage increase. O'Neill wondered if the City should seek an increase in the property taxes. Schamehorn noted that unless it is a GO Bond, Bandon's property taxes are cast in stone by State Statue by ballot measures 5, 50, and 47. O'Neill believes that property taxes are where the efforts should be focused because ifthere is not clean water and a waste system that works effectively, there will be a lot ofreally nice homes that are devalued and worth nothing, not to mention killing the tourist industry.

Schamehorn indicated that education is key because whether you repair old or new infrastructure where little to no maintenance was required, it is the industrial waste like wipes, etc. that is hard on those pieces of infrastructure. The system needs to be designed to handle the requirements of today. Bremmer noted another difficulty facing improvement to the waste plant is its small footprint, which translates into more expensive costs.

The budget committee discussed rate setting authority versus a GO bond. The consensus was that a GO bond is the way to go because rate setting authority, while it will provide enough income to cover the maintenance and operation requirements, will not raise the kind of capital needed to cover the infrastructure improvements that need to be made. Rough figures assuming $2.5M at 5% interest for 20 years would work out to about $0.45 per 1000.

Mawson responded that the $232,000 that is contingency currently in the general fund can be put toward the $200,000 deficit in the budget, instead of cutting a police officer and planner or other staff, which are considered essential City services. Perhaps there are other non-essential services like parks, Sprague Theater or the Barn. One of the members wondered if the police department, as an example, could be contracted for, which in the City she worked for really saved money. Schamehorn noted that is what Bandon does for the Fire department. She would rather concentrate on revenue creation from additional TOTs or raising fees within the limited ability the City can do so without going to the voters. People coming into the area to build expect fees; O'Neill noted that they also expect services. A member suggested a public safety fee be implemented but any new tax or fee must go to the voters.

The charter amendment in 1994 was passed by the voters to not allow rate increases but in a limited capacity and locked into the $0.46 per 1,000 tax rate, which is why we are where we are. Both of these items are why the City cannot get loans because there is no way to raise rates or increase revenue.

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Vick noted that even though the State is bringing in record revenues, they are looking at raising gasoline tax and cigarette taxes. The only place the local voters have control is the local government, when they decide they have had enough.

Winkel noted that the constituents vote for a GO bond faster than a revenue bond because it is based on property tax, which includes out of city property owners who use City infrastructure. Perhaps time should be given to educate the voters. Seymour noted that voters understood what was happening at the water plant with the last base rate increase, now they need to understand what is happening at the wastewater plant. She suggested opening the plant up for a tour.

Hundhausen noted that the cost of living is not proportional to the quality of life, and you cannot get blood out of a turnip. Procetto said that every time people turn around everything is going up. Schamehom suggested, as part of the education, that a comparison of services in the county and how their base rates have increased while Bandon has remained flat.

Mawson asked the Committee how to balance both the capital and the maintenance and operation shortfall. The GO bond takes care of the capital needs, but a base rate increase is needed in order to address the maintenance and operation needs. Winkel agreed but that the General Fund contingency could be used in the water and wastewater to help cover the maintenance and operations piece for fixing things. Approaching the Infrastructure finance people with the capital improvements and what is needed in terms of a loan or grant. The wastewater is the department that needs immediate help. This is something the Utilities Commission can grab on to and educate the voters on. Just ignoring it won't work because it is not going to go away.

O'Neill stated that the capital projects will pay for themselves in lower maintenance and operations cost by putting in new equipment that is more efficient and better suited to the type of work to be done or in a better layout.

Powell's experience is that voters will not vote for carte blanche but will vote for a clearly defined use of funds and a fixed amount of increase.

Bremmer agreed that the GO bond is the way to go because a rate increase to implement even the top three improvements to the wastewater plant would be astronomical. Even though a bipartisan subcommittee in the federal government is working to fix aging wastewater infrastructure but we cannot wait for that funding to start. The City is obligated to provide the water, electric and sewer services and they must be safe and efficient. The impact to commercial business, tourism and recreation will be impacted if there should be a spill into the river.

Mawson noted that this is a multiheaded problem here with some contingency and he wanted to bring it to the committee for direction on the use of the funds. Do we want to use it for bond purchase, capital improvements, or interfund loans and ask for the Committee's input?

Seymour noted that the City crews are the best she's ever seen. They can fix anything anytime, but it is approaching the level that cannot be fixed anymore. While the band-aid is currently $20,000 a year it will just go on and increase in cost. The City cannot continue like that.

The City needs to look for other sources of revenue, if it means increase the TOT two cents will not affect the local people. The hotels are not going to complain.

Mawson wrapped up saying that the enterprise funds are where the issues are in this budget. There is a contingency in the General Fund and the other funds are in decent shape. The capital improvement projects have not been scheduled for water and wastewater because there is not extra money there. Mawson recommends bringing the enterprise funds to the Utilities Commission and let them discuss it at their next meeting. Winkel asked if Mawson could get some numbers from the infrastructure funding

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source at the State level prior to the meeting. Mawson rejoined that at the last meeting with the State on the reservoir project the City is not eligible for either a bond, loan or grant because we do not have rate setting authority. Mawson agreed to call them.

Winkel said SDC funds can be used for some of the capital improvements for the systems. Schamehom suggested that the $ l .2M in the water SDCs be borrowed from to make the wastewater whole and keep the faith with the voters on the base rate increase they passed and pay back the SDCs when the GO bond passes.

Mawson cautions that even if the capital improvements are done it is not likely to save on operations and maintenance because of the deferred maintenance that has happened for years and years with a negative impact to the department budgets. So, while it has been used for this pump or that pump, there are eight other projects that should have been done, too. It may keep us from increasing the operations and maintenance budgets as quickly.

The next meeting is April 22, 2019, at 7 p.m. for State Revenue Sharing hearing.

4. ADOURNMENT

The meeting was adjourned at 9:03 p.m.

Submitted by: Denise Russell, City Recorder

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2019-2020 BUDGET COMMITTEE MEETING BANDON CITY HALL

COMMITTEE: 0 Mary Schamehorn, Mayor of Bandon 0 Chris Powell, City Councilor 0 Brian Vick, City Councilor 0 Geri Procetto, City Councilor 0 Madeline Seymour, City Councilor 0 Claudine Hundhausen, City Councilor 0 Peter Braun, City Councilor

STAFF:

April 22, 2019

0 Matt Winkel 0 Sheryl Bremmer • Michael O'Neill 0 Ruth Keith 0 Linda Frick 0 Blythe Tiffany 0 Doug Spencer

0 Robert Mawson, Budget Officer 0 Denise Russell, City Recorder

1. CALL TO ORDER

A. Roll Call: The meeting was called to order at 7:00 p.m. by Chair Mary Schamehom. Roll call was taken with those present shown above.

2. STATE REVENUE SHARING PUBLIC HEARING

A. Schamehorn opened the State Revenue Sharing hearing:

B. Schamehom requested that the applicants be available to answer questions should any arise during the discussion of the requested grant amounts. As all the applicants have submitted a written application, it is unnecessary for every applicant to reiterate in presentation form what was submitted in writing.

The following are the applicant requests: ORGANIZATION AMOUNT REQUESTED

Bandon Bridge Club $ 2,000.00

Bandon Community Emergency Response $ 3,S00.00

Bandon Feeds the Hungry $ 3,S00.00

Bandon Historical Society Museum $ 2,500.00

Bandon Lions Charitable Assoc. $ 1,500.00

Bandon Prepares $ 3,500.00

Bandon Veterans Honor Guard $ 2,758.00

Bob Belloni Ranch, Inc $ 5,000.00

Coos County Area Transit - Dial-A-Ride $ 5,000.00

Coastal Harvest $ 3,500.00

Common Ground Mediation $ 900.00

Coquille Watershed Association $ 3,500.00

Cowboys and Angels $ 3,500.00

E.A.T., Inc. $ 3,500.00

Good Earth Community Garden $ 1,658.00

Greater Bandon Association $ 3,500.00

South Coast Business Employment Corporation - Senior Nutrition Program $ 3,000.00

SMART $ 1,500.00

Southwestern Oregon Preppers $ 2,000.00

The SAFE Project $ 1,000.00

$ 51,316.00

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Bandon Bridge Club - Don Starbuck: Requesting funds for improvements for the Senior Center. Braun asked if the membership of the club would be including some of their funds. The membership doesn't have that much money and they have not discussed including some of their funds.

The Bandon Community Response Team (CERT) - Tony Chatman: They are a volunteer and donation­based organization that provides assistance and training to the citizens of Coos County for what to do in an emergency situation. CERT has recently been donated a trailer. The organization would like to put communications in the trailer by ham radio to facilitate acquiring emergency supplies and what is needed in an emergency. The City used to have a ham radio system, which was to be put at the fire hall. The one the fire hall has is circa 1970 and does not have the current required technology capabilities.

Schamehom asked Chatman to explain how CERT, Bandon Prepares, and Southwest Oregon Preppers dovetail. Bandon Prepares was setup by the City to get ready for disasters. Hundhausen asked if the organizations were aware of each other and what they do. Southwest Oregon Preppers is a group that discuss disasters and CERT does something about.

Procetto clarified that Bandon Prepares provides CERT with $250.00 per year.

Bandon Prepares - No one was present from Bandon Prepares to answer questions.

Hundhausen noted that Bandon Prepares did facilitate the signage that is painted on the streets, so people know where to go.

Braun noted that the shipping containers in City Park do have food, shelter and water in them. Schamehom believes that there is not food and water, etc. in the containers. Mawson noted that there are survival buckets in the containers at the park. The container at the VFW hall does not have supplies in it yet. Bandon Prepares is an educational organization. Braun believes that Bandon Prepares is addressing the issue.

Bandon Community Youth Center- Charissa Stokes: They are asking for support for the after-school programs. Currently the programs that are offered are for 1st through 8th grade. The 1st through 41h grade programs are an art program and robotics. At Harbor Lights they provide math tutoring, a news and media club, and an art program. The Center receives proceeds from the Bite of Bandon Festival. They were a late submission and are requesting $3,000. The Center served 55 youth from the community, and they are hoping that the numbers increase since they will be taking over ·summer recreation. The office hours are from 1 p.m. to 3 p.m. with programs from 3:30 p.m. to 5:30 p.m.

Bandon Feeds the Hungry - Amy Moss-Strong: The organization that raises funds for the other community food distribution organizations, which are Bandon Senior Nutrition, Coastal Harvest Gleaners, Everyone At Table (E.A.T) program, Good Neighbors Food Bank and the Restoration Food Center Food Pantry. This year they will not be getting as much partly because the Sprague Family Foundation gives a grant directly to Good Neighbors. Moss-Strong noted that there was an individual that commented at a Council meeting earlier in the year about not having a place for people to get a hot meal. It might be a good thing to develop a brochure that can be placed in public places with information regarding the services that are available for those who need to find them. The funds received are shared evenly between the five entities that are supported by Bandon Feeds the Hungry. The Mike and Lindy Keiser Fund provided funding directly to the five organizations this year rather than sending it through Bandon Feeds the Hungry. Geneva Miller is going to help Moss-Strong develop the brochure.

Bandon Historical Society Museum - Doreen Colbert: They are requesting funding to help keep the historical information safe and useable, a new computer, furniture in the work room, photo paper and printer ink, etc. They were recipients this year of the Crab Feed monies.

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Bandon Lions Charitable Association - Archie Garrett: They are requesting funds for the Fourth of July BBQ for items like the bounce house and food. This is a longtime Bandon tradition, which the community looks forward to.

Bandon Veterans Honor Guard - Royce Kelley: They are requesting funding for the acquisition of new uniforms and people for the Veteran's Honor Guard. The Guard is down to 11 individuals; the average age is 71 years old. They are recruiting for new members.

Bob Belloni Ranch, Inc. -Thujee Lhendup: The intended use of the funds is for independent living services. In the last quarter 29 individuals helped through the residential intake program came from Bandon. This service reduces stress on the local law enforcement. A goal is to provide suicide intervention skills for a staff of l 00. They currently serve 18 girls and 19 boys in their residential programs. There are 69 who receive day services. The organization has offices in Roseburg and Gold Beach with the head office in Coos Bay in the Hall Building.

Coos County Area Transit - Dial-A-Ride - No one was present.

Coastal Harvest Gleaners - Christine Roberts: This organization is not a food bank, therefore, does not receive a lot of funding from other sources. They would like to acquire a freezer. They distribute products weekly where other food banks distribute once-a-month. They are fortunate that they receive a lot of donations. They do home deliveries for shut-ins and the disabled. They save McKay's receipts, which provides one penny for every dollar of consumable foods for their type of organizations. To donate receipts, take them to Coastal Harvest Gleaners.

Common Ground Mediation - Larry Safley and Karlee Cottrell: Cottrell is staffing the North Bend Office. Safley thanks the Committee for the funds provided in past years. The funds requested are based on the direct services for Bandon Citizens (15 mediations, 27 hours of volunteer mediation time, at a cost of $945.00.) These numbers do not reflect the phone calls that they have received from Bandon. Most of the mediation services are provided to Bandon citizens in North Bend. The organization is requesting $900.00 this year, which is less than the $1,000 received last year. They feel that they were the beneficiaries of additional funds last year but recognize that there are other organizations with needs and are looking to recoup the direct value for the year.

Coquille Watershed Association -Goldie Warncke representing the Gorse Action Group: They are requesting funding to improve their media coverage. They do have a website that has resources, facts, and tips. Warncke has been unable to get grant funding from the national level in spite of how much gorse is impacting the community. They would like to create a You Tube channel. They would like to facilitate having State agencies talk to local residents and being able to get out more of the best practices through media like Facebook and Instagram. Schamehorn noted that they will be having a joint meeting between the City Council and the Planning Commission about gorse on May 22, 2019.

Warncke shared a brochure with the Committee. The gorse is traveling by road system as far north as Tillamook and there is a patch between Bandon and Coquille on Highway 42. They have literature that discusses the types of herbicides that work best and contractors that work with gorse removal.

The County has a cost share application. It also shares information on the herbicides and how they work. The residents do not have to have a license to apply herbicides, so it is important to get the best practices out to citizens.

Cowboys and Angels- Heather Harris: They are seeking funding for equipment (horse tack), opening a store up in Bandon that all proceeds will go to benefit the program and insurance for the program. They currently have the lease of the barns. They have three therapy animals lined up once they are able to start the program. They have a waiting list for donation of therapy animals. Schamehorn clarified that the program is not currently up and running but that they are trying to get the equipment and property worked out. Harris responded that they are in the process of applying for a Vista grant through AmeriCorps for

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someone to run the storefront. Once established, they will be up and running in 90-days. They have to follow the guidelines from the PA TH International. There must be three volunteers per horse, two side walkers and a leader. The groups that they will focus on to begin with is at risk children, foster children and trauma victims of all ages. When fully operational, they will help approximately 400 community members a month. The volunteers will be trained according the PA TH guidelines. Harris plans to collaborate with like professionals in the area to include physical therapy and social therapy. In Oregon, they cannot bill for their program to insurance. If they have a licensed therapist that uses the service as part of their therapy, they can bill insurance. Cowboys and Angels will be reliant on partners, donations, and their storefront for funding. They do not want cost to be a constraint for those who need to use the services.

Schamehom asked if they had received funding from 100 Women Strong. Harris responded that they have not yet received funding from that organization. Harris further explained that when they registered the organization federally incorporated, there was not enough room for the name to be put on the form with the appropriate spacing in the name, so it was registered as one word. This led to a question about whether they were an organization or not.

E.A.T., Inc -Allison Hundley: In June the program will start its fifteenth year. The program serves low income individuals with a free homestyle meal and everyone is welcome. There is a donation basket for those that choose to donate.

Good Earth Community Garden - Susan Ryan: They have had to spend a lot of money on the greenhouse this year, $700 on germination mats and new lights. Prior to the season starting, they sanitized the greenhouse, which caused electrical problems that are temporarily fixed. They are going to be improving the electrical by moving them up above the shelves and improving moisture resistance in the system. Braun asked how much food was donated to some of the food programs. Ryan noted that she doesn't have that number with her, but it is kept track of. They donate to the EAT program. This year they have three master gardeners who will be donating the foods produced to EAT from two or three beds.

Greater Bandon Association - Harv Schubothe: Greater Bandon Association received its first donation from the City of Bandon. The investment of these funds can lead to all kinds of benefits for the community. They are looking to implement some of the projects outlined in the submitted application. They would like to use the funds as a match for two additional grants that they are applying for.

South Coast Business Employment Corporation - Senior Nutrition Program - No one present.

SMART - Cheryl Brown: Brown thanked the Committee for their funding for last year. Funding for this year would support children at Head Start (18 children) and Ocean Crest (46 children). Twenty volunteers read with children one-on-one for twenty-eight weeks. The program will purchase and distribute about 900 new books this year to those two programs. The program itself is child guided, which means they do not control what books they choose to read, and this helps motivate the child to read based on their interests.

Southwest Oregon Preppers - No one present.

The SAFE Project - Rachael Espy: They provide intervention services for domestic violence in Coos, Curry and Douglas counties. They served 1000 clients in 2018, of which 52 came from Bandon. Espy thanked the Committee for their support last year. The funds were used for three staff members to be trained to lead support groups.

C. No Public Comment

D. Discussion/ Action Budget Committee Minutes - April 22, 2019 - DRAFT Page 4 of6

Schamehorn noted that the amounts requested has increased from $25,000, last year was $38,000 and this year it is $51,000. Schamehom provided some background on the State Revenue Sharing history. In the 2014 Budget Committee meetings, the Committee decided to place a hold on new applicants for the State Revenue Sharing funding. Seymour noted that the limit of funding is $3,500 per request. Schamehom would like to see the funds used for the most vulnerable in the community.

Mawson noted that the $3,000 for the Bandon Youth Center is not on the list so the total requested amount is $54,316.

Schamehom commented on CERT's request for the radio communication is a big one for a disaster situation.

Hundhausen thought that we put Bandon Prepares in the City's budget. Schamehom indicated that was fact, which prompted the Committee to recommend removing them from the State Revenue Sharing funds.

Southwest Oregon Preppers was removed as they have not presented in person for the last two years.

Braun requested that Bandon Bridge Club's request be set aside until they were done talking about the other applications to see if we have funds leftover that they may be funded. Hundhausen noted that the mental stimulation that this type of activity provides is important. Tiffany thought that $500 is adequate to start. The Committee agreed.

Mawson noted that the Bandon Youth Center is included in the City budget to cover Summer Recreation. The suggestion was to include their State Revenue Sharing request as part of the budgeted line item, which the Committee agreed with.

Cowboys and Angels was tentatively funded in the amount listed below. The funds will be released if they are able to get the project up and running in the community. Bremmer noted that the numbers of suicides are going up, the therapy is good for those with autism or post traumatic stress syndrome. The Committee compromised on $1,500.

Good Earth's request was increased to $1,500.

The Budget Committee discussed the applications and decided to fund these at the listed amounts:

ORGANIZATION AMOUNT FUNDED

Bandon Bridge Club $ 500

Bandon Community Emergency Response $ 3,500

Bandon Feeds the Hungry $ 3,500

Bandon Historical Society Museum $ 2,500

Bandon Lions Charitable Assoc. $ 1,200

Bandon Veterans Honor Guard $ 3,000

Bob Belloni Ranch, Inc. $ 1,500

Coos County Area Transit - Dial-A-Ride $ 3,500

Coastal Harvest Gleaners $ 1,000

Common Ground Mediation $ 1,000

Coquille Watershed Association $ 3,500

Cowboys and Angels $ 1,500

E.A.T., Inc. $ 3,500

Good Earth Community Garden $ 1,500

Greater Bandon Association $ 3,500

South Coast Business Employment Corporation - Senior Nutrition Program $ 3,000

SMART $ 1,500

The SAFE Project $ 1,000 $40,200

Budget Committee Minutes - April 22, 2019 - DRAFT Page 5 of6

The Committee requested that the letters indicate that funding may be decreased or not funded if a representative is not present to answer questions that the Committee may have about the programs and applications.

3. ADOURNMENT

The meeting was adjourned at 8:37 p.m.

Submitted by: Denise Russell, City Recorder

Budget Committee Minutes - April 22, 2019 - DRAFT Page6 of6

Regular Meeting of the Budget Committee at Bandon City Hall

COMMITTEE: 0 Mary Schamehorn, Mayor 0 Peter Braun, Council President

0 Madeline Seymour, Councilor 0 Claudine Hundhausen, Councilor 0 Chris Powell, Councilor 0 Geri Procetto, Councilor 0 Brian Vick, Councilor

STAFF: 0 Robert Mawson, City Manager

1.0 CALL TO ORDER/ROLL CALL

April 29, 2019

0 Michael O 'Neill 0Ruth Keith

0 Linda Frick 0 Blythe Tiffany 0 Sheryl Bremmer 0 Matt Winkel D Doug Spencer

0 Denise Russell, City Recorder

Schamehorn called the meeting to order at 7:00 p.m., and Roll Call was taken as indicated above.

2.0 PRESENTATION/DISCUSSION OF FY 19-20 PROPOSED MUNICIPAL BUDGET

Before Mawson began his presentation, he had handed out a narrative walk-through of what he would be presenting to the Committee. He reminded the Committee that the budget had been discussed at its previous meeting-specifically, some deficits in the Water and Sewer Funds. His handout contained page numbers that referred to the original document the Committee received two weeks before the current meeting.

Mawson began by directing their attention to page 20 for the City's General Fund (100). He said owners of the Bandon Beach Motel are likely to shut it down later this year if approvals for their new hotel go through. For the City, this would mean a loss of Transient Occupancy Tax. So, an adjustment was made to the transient tax receipts from $700,000 to $685,000, bringing the General Fund revenue down to $2,925,551. Mawson said the General Fund expenditures would be balancing to that number.

In a previous discussion, a question had come up as to whether there should be overtime expenses in some of the budgets. Mawson pointed out the increases in the Administration Budget (page 23) and the Accounting Budget (page 24) reflected overtime costs being added. Responding to another question from the Committee's first meeting, when he had mentioned that the City was budgeting for an additional half-time police officer, Mawson noted that the salary for that officer ($24,800) had been moved from the Regular Employee Salary line to the Regular Part-time Employee Salary line (page 26), with no effect on the budget's bottom line.

April 29, 2019 Budget Committee Meeting Page 1 of 9

Mawson fielded a question from Powell, who had noticed that some employee wages were showing increases, but health insurance expenses were going down. He had only been hearing that health insurance costs were generally going up. Mawson replied that there were two reasons: After the collective bargaining agreements ran out, CIS (City County Insurance Services) no longer offered a 90/10 plan, moving everyone to an 80/20 plan, which he said is cheaper but not as good; and as a result of this change, some Public Works employees have joined the Police and participated in the Teamsters plan, which is a less expensive 90/10 plan.

Asked by Winkel if employees are still paying 10 percent for health insurance premiums, Mawson confirmed that was correct, and he further explained that the plan is called 80/20 because the patient pays 20 percent of the cost of services, in addition to a copay. He said a couple of collective bargaining units are requesting a reconsideration of that plan, but nothing has been worked out so far.

Moving to page 29, Mawson pointed out that the Parks and Recreation budget had been amended because the Code Enforcement Officer had incorrectly been placed in that department, and the salary for that position was added to the Planning Department. There was no change to Parks and Recreation's bottom line, because the budget for Park Repair and Maintenance was correspondingly increased to $40,641.

Schamehom told Committee members who had become confused that to simplify the adjustments, she had changed the bottom line from $234,014 to $209,600 in her copy of the budget.

Mawson added that all the items he mentioned fell under the General Fund and the amounts can move back and forth. Then, he moved on to the Planning Department (page 30). He said the City looked at the way Planning Staff salaries were proportioned to the General Fund and the various Utility Funds and decided to decrease the amount of funding coming out of Utilities for Planning and to withdraw the request for an additional position on the Planning Staff. The resulting Planning Department budget would increase by $61,827, making the adjusted budget total $205,128.

The Community Center budget (page 31) came to $92,142 with the addition of $500 overtime pay.

Mawson told the Committee that contingency money held in the Non-Departmental category (page 33) was reduced by some of the changes discussed previously. Additionally, $100,000 was transferred from this fund to the Capital Projects Fund (510), which had about $230,000 carryover. Mawson explained that this money is usually used to fund facility repairs and improvements and some small projects.

The expenditures balance equaled the $2,925,551 General Fund revenues and included a remaining contingency balance of $72,557, which had been reduced from a proposed $232,071, largely due to moving money to Planning, Utilities, and Capital Projects.

Next, Mawson addressed the State Tax Street Fund (page 37). An in-fund amendment was made, moving $6,500 from the Other account to the Overtime account in the Salary section, causing no change to the bottom line.

Mawson recounted that he had met with the librarians and the Library Board president to discuss the way the Library funds were organized. Fund 220 (page 39) is the Memorial Fund and Fund 230 (page 41) is the operating fund for the Library. The operating fund receives the district library funding and miscellaneous fees. Fee receipts for lost books, copies made at the Library, and fines were being receipted into the Memorial Fund rather than the Library Fund, but the offsetting expenses were

April 29, 2019 Budget Committee Meeting Page 2 of9

coming out of the Library Fund. So, the City was seeing the Memorial Fund increasing a little while the Library Fund was struggling to be in balance. It was decided to enter the miscellaneous receipts into the actual operating budget and leave the Memorial Fund to receive grants and other money. In the future, the Library Board and Library Director will be able to consult about moving money from the Memorial Fund to the Library's operating fund for specific purposes.

Mawson clarified that the Library budget pages he had handed out to the Committee were intended to replace pages they had in their books.

Schamehom couldn't understand why revenue from sources like fines and lost books would have ever gone into the Memorial Fund. Mawson said they were trying to clean up the process.

The State Revenue Sharing Fund (260) on page 45 was amended because the State awarded Bandon $40,200, which was less than the $51,316 that had been put into the budget as a marker. As a result, $40,200 replaced $51,316, and the difference between the two amounts was added to the Other line, to be retained for the following year with no change to the fund's bottom line.

Looking at the Capital Improvement Fund (510) on page 78, Mawson observed that in the past, whatever was left over from the General Fund budget was moved into capital projects. With a carryover in capital projects this year, he said it wasn't deemed necessary to move all the leftover funds over. The Capital Improvement Fund ended up with a beginning balance of$232,788 and will have about $350,000 to spend on capital projects-mainly in Utilities-after a transfer of over $110,000 from the General Fund.

Mawson's final handout covered Enterprise Funds, beginning with page 48. As an aside, he noted that the Committee had been working from printouts that showed the accounts in numeric order, but that order changed when repagination occurred for the actual City Budget book. For example, the Electric Fund (910) appeared on page 48 in the packet the Committee received, but it was on page 80 in Mawson's handouts. Braun recommended using color-coded paper to facilitate the process of replacing pages in the Committee members' materials due to budget revisions.

The Committee spent several minutes rearranging the pages in their copies of the Budget, trying to make the correct page substitutions. Meanwhile, Mawson recounted that there had been multiple discussions involving the Budget Committee, the Utilities Commission, and department heads involving the Electric, Water, and Sewer budgets. The goal was to either balance the budgets or bring them to a "reasonable" deficit.

Mawson explained that after the revenues and projected revenues for the Electric Fund were taken into account, the Extension Fees had been increased by $10,000, raising its budget to $7,108,778.

Referring to pages 81-86 (formerly 50-56), Mawson pointed out some changes. Salary expenses in Electric Fund's Administration Department were reduced by $67,000 to reflect money that was transferred to the Planning Department, making a new total of $396,385.

On page 84, some items in the Materials and Services section under the Conservation Department were removed to reduce redundancy-Office Supplies, Printed Materials, Training & Travel, and Meetings. The adjustment caused a $3,000 decrease in the Conservation budget, which dropped to $200,863.

In the Electric Fund Distribution Department (page 85), changes were made to reflect a new hire that was inadvertently left off the initial proposed budget. The additional employee costs, plus ongoing undergrounding project costs, increased the Distribution budget to $2,849,757. April 29, 2019 Budget Committee Meeting Page 3 of 9

The only change noted on page 86 was the Electric Fund Grand Total, which increased to $7,108,778.

The Water Fund (940) revenue, on page 87, had no change to revenues.

Mawson said there was a $25,862 reduction in the Water Fund Administration Department, resulting from salary distribution, leaving a new adjusted total on page 88 of $83,209.

On page 89, no revisions were made to the Water Fund Accounting & Billing Department figures.

A few amendments were made to the Materials and Services section of the Water Fund Distribution Department budget, resulting in a savings of $15,000, reducing the total on page 90 to $270,339.

Changes to Materials and Services were also made in the Water Fund Plant Operations budget, resulting in a $2,500 reduction and a total on page 91 of $339,024.

On page 92, the Water Fund Non-Departmental section showed a negative $152,737. Mawson explained that although overall expenditures had been reduced, the Water Fund remained in a deficit situation.

Schamehom asked about the Depreciation Expense line under Capital Outlay, because she hadn't seen it in a budget before. Winkel said that item started to appear in budgets after he left the City Manager post, and he didn't think it should be there. Mawson thought it may have come about at the request of an auditor, although Schamehom and Winkel surmised it started with former Finance Director Harry Staven.

No change was made to the Water Plant Improvement Fund (941) revenues on page 93. However, in the Expenditure Details for the Fund, on page 95, the proposed $200,000 transfer to Fund 940 was removed, but the total of $565,179 remained intact.

Jumping to the Water System SDC Fund (721) on page 72, Mawson noted no change on the revenue side, but on the expenditure side $250,000 had been budgeted for debt reduction. After those obligations were examined, they were reduced significantly to $22,000 for interest and $25,000 for principal. That provided an increase to the money available for water projects to $1,355,278 instead of $982,278.

On page 96, the Sewer Fund (950) showed no changes in revenue. Schamehom wanted to know how the beginning 2019-2020 balance was a mere $697 compared to $336,397 in 2018-2019 and $480,887 in 2016-2017. She asked Russell for a clarification by the next meeting. Russell verified that the beginning balance in the fund for 2017-2018 is an audited number that matched the ending balance for 2016-2017.

The Sewer Fund Administration budget (page 97) was decreased to $103,230 due to the reduction in salaries discussed earlier. Mawson noted that a minor adjustment in the Sewer Fund Collection Department on page 99 had lowered the total to $192,083. The Sewer Fund Plant Operations budget (page 100) went up in order to partially cover costs of some requested materials and services. Mawson pointed out that some line items were increased, while others were reduced. He said some of the items would be paid for from the SDC (System Development Charge) Fund and would be considered a capital expense instead of being classified as equipment repair and maintenance. The revised total for Plant Operations was $612,716. Mawson said there was an increase in overall expenditures in the Sewer Fund for 2019-2020 (page 101), leaving it in a deficit and needing $218,848 to balance.

April 29, 2019 Budget Committee Meeting Page 4 of9

The members spent several minutes arranging pages in their budget books after O'Neill noticed that some pages that had been removed earlier need to be added back in a different place.

3.0 PUBLIC COMMENT

There was no public comment.

4.0 DISCUSSION/ACTION ON FY 19-20 PROPOSED MUNICIPAL BUDGET

Next, Winkel distributed a document describing an approach recommended by the Utilities Commission to address the deficits in the Sewer Fund and the Water Fund. He explained that the City Charter was amended in 1996 to preclude the City Council from raising water or sewer rates without a vote. Several times, he said, the same issue has been before the voters in various forms. The last budget Winkel was involved in as City Manager, 2014-2015, included a recommendation for a significant increase in water and sewer rates. Since the City did not receive those increases, he asserted that its water and sewer operations have barely been getting by for several years.

Under loans for the electric and sewer system that predated the 1996 Charter Amendment, Winkel said the City had been required to keep its sewer and electric rates at a level that would operate and maintain the systems. The City had rate-setting authority under those loan documents, which expired around 2013. Electric rate increases are currently allowed to cover increases in electricity the City purchases from Bonneville Power Administration, but the Charter does not allow the Council to raise rates to cover Water, Sewer, or Electric operating and maintenance expenses.

A Water Resource Committee was appointed at one time, which developed a ballot measure that was presented to the voters in November 2014. It would have granted limited authority to the City Council for modest annual rate increases, but it was rejected. About three years ago, measure promoted by the Utilities Commission did succeed in boosting water rates $10/month for residential users and $20/month for business users, to be used strictly for capital improvements at the Water Plant. Winkel said some of the improvements have been made and some are still in progress, but nothing has been done to fund improvements in the Sewer system.

The proposed 2019-2020 budget had a deficit of about $153,000 in the Water Fund and a deficit of around $218,000 in the Sewer Fund. To ensure that the City continues to maintain adequate high-quality water and properly treated sewage, the Utilities Commission submitted a written recommendation to the City Council. Finding no additional appropriate budget cuts, the Commission recommended that the Council declare an emergency in the Water and Sewer utilities and institute and emergency rate increase for the upcoming fiscal year, believing that the rate increase would generate enough money to balance the budgets in both departments. Based on the earlier budget deficit figures, the Commission suggested a water rate increase of approximately 37 percent and an increase of about 24 percent in the sewer rate. Revised deficit figures would lead the water rate to be adjusted slightly lower and the sewer rate to be raised a little. The rate increases would be aimed at covering operating and maintenance expenses.

Winkel observed that improvements are still needed at the Water and Wastewater plants. That is why the Utilities Commission recommended that $250,000 be used from the Water Plant Improvement Fund for water storage tank seismic protection valves. That fund (941) receives the fixed $10 and $20 fees, and installation of those valves was one of the projects identified when those fees were passed. Winkel said it appears there are sufficient funds to make those improvements this year.

April 29, 2019 Budget Committee Meeting Page 5 of9

The Utilities Commission also recommended two other projects that need to be done at the Water Plant. One is repainting and corrosion repair on the one-million and two-million-gallon treated water tanks, at a cost of $500,000. The other is installing an emergency backup power generator for the Water Treatment Plant, which currently has none. Winkel said those projects have been planned for some time, and the Commission is recommending $1 million from the Water SDC Improvement Fund be taken out for these improvements.

The Utilities Commission further recommended that the City initiate negotiations with private and public financial institutions, bond counsels, and lenders to determine what might be available in terms of loans and grants, in order to provide $3,450,000 to finance several sewer plant projects. Winkel stated that the plant had been completely redone and dedicated in 1994 and was now beyond its life expectancy. Schamehom interjected that it had originally been built 40 years ago. The Commission decided the Wastewater Treatment Plant's headworks need to be upgraded and the Fillmore Avenue Pump Station should be replaced. Winkel pointed out that tens of thousands of dollars are being spent to have parts made to repair the pumps. Several ultraviolet disinfection system improvements are also recommended, plus projects to address a handful of the most critical inflow and infiltration problems in the sewer system that were identified by a study conducted last year.

Winkel said the Commission was recommending that the budget and capital improvement plan include a general obligation bond, placed on the November 5 ballot. He suggested a $3.8 million bond for 20 years at five percent interest, which would mean property tax assessments in the range of $0.62/$1,000 assessed value. If that were to be approved, he expected there would be sufficient revenue to do those projects. The Commission hoped the City could sell general obligation bonds faster than revenue bonds, because the voters will be voting to assessing the property owners in town and not just the water and sewer customers.

If voters do not approve the bond measure, the Commission recommended that the City Council pass a 20-year emergency rate increase and float a revenue bond to pay back loans. The Utility Commission offered these recommendations based on its concern that there are major projects that must be done, and as proposed solutions to cover the anticipated budget shortfall for water and sewer expenses.

The Commission further recommended that the Council place a City Charter Amendment before the voters sometime before the end of the upcoming fiscal year to restore permanent rate-setting authority to the City Council, in order to avoid a similar situation in the future. Winkel told the Committee that these recommendations will be presented to the Council at its next meeting.

Winkel observed that alternatives had been discussed, such as transferring money from other funds, which he said was not an option in municipal budgeting, because the funds are dedicated to specific purposes. Capital funds, for example, could not be used for operations and maintenance.

Schamehom remarked that 37 percent and 24 percent may seem like large increases, but only the water and sewer costs are affected, not the electric costs that are the largest utility costs for most people. She estimated that someone using 1,000 gallons a month would see an increase of $14 in their water bill. Winkel added that the City's water and sewer rates were already much lower than other municipalities in the area, even with potential increases.

Tiffany wondered if declaring an emergency would override the Charter. Schamehorn replied that the City would hope so. As to the likelihood someone might sue the City over an emergency rate increase, Winkel contended he would rather be on the side that took the action to properly operate and maintain

April 29, 2019 Budget Committee Meeting Page 6 of9

the system to provide good drinking water and sewer facilities than to wind up like Flint, Michigan. The City doesn't want to have to issue "boil water" alerts, and if sewage were to be spilled into the bay, there would have to be signs posted all around the boardwalk, saying "No Crabbing, No Fishing. Stay Away from the Water." Winkel felt that would be disastrous for Bandon's economy, and Schamehom added that the smell alone would make sure the tourists would stay away.

Tiffany expressed her concern over the legality of an emergency increase, and Winkel replied at least it's an effort toward a solution. He offered to give up his seat on the Utilities Commission to anyone with a better idea, and he mentioned there had been talk of holding a community forum where the public could meet and have a discussion with the Council and the Commission, after the rates have been increased.

Seymour stated the worst-case scenario would be that the State would step in and take over the City's utilities. Once the State restores a balance and everything is operating with a surplus, she maintained, the State would sell the utilities to a private company, and costs would really climb.

Schamehom pointed out that Coquille has a base rate of $125/month and the rate is $100/month in Brookings. In Myrtle Point, the base rate is $70, and Powers has a $74 rate. With the proposed emergency increase, Schamehom calculated Bandon's rate for water and sewer would be something like $66. She declared she would love to go to court against whoever might decide to sue the City, bringing pictures of mud flats and boil water notices with her. She and Winkel recalled when the Wastewater Plant' s clarifier broke down previously due to deferred repairs, causing a boil water alert and a negative impact on the City's economy at that time.

O'Neill said he was most worried about the Fillmore Avenue Pump Station, because, in his words, "if it's not pumping, you can't flush your toilet." He elaborated that sewage would certainly not make it to the sea if the Fillmore Station went down, because it wouldn't even make it to the Treatment Plant. Winkel remarked that it would come out of the manholes.

At this point, Mawson refocused the Committee, recalling that the Utilities Commission, at its Study Session and Special Meeting the previous week, had also requested that a backup clarifier for the Water Plant be included in the general obligation bond. The estimated cost was at least $936,000, and would bring the bond request to around $4.4 million, which Schamehom speculated would still allow the resulting property tax increase to stay under $1.00 per $1,000 assessed value.

Mawson also sought to clarify how the Commission arrived at the 3 7 percent water rate increase and the 24 percent sewer rate increase. He pointed out that the City has a base rate for water and sewer meters and a usage charge. Winkel explained that he took the total projected revenue and determined how much more was needed. He and Mawson agreed that if enough people decided to reduce consumption due to higher rates, the revenue coming in could be less than projected. Winkel added that the Commission had recommended that the rates should be adjusted based on the final budget figures and what the City Manager can find out about available funding and financing.

O'Neill suggested the base rate and the usage rate should both be going toward operating costs, and that all capital costs should be tied to the general obligation bond, paid for by property taxes. He voiced concern that if the bond measure were to fail, the City would tum to a revenue bond, which would be dependent on usage rather than property value, and which he did not favor.

Winkel responded that it might help sell the bond issue if people knew that the City Council stood up and called an emergency and will raise money for maintaining their water service by raising their rates.

April 29, 2019 Budget Committee Meeting Page 7 of9

O'Neill observed that the water users who see their rates increase might think the burden needs to be put on owners of big, expensive homes or business property owners, but if the City is going to get the general obligation bond, it is actually all those who rent or live in small, inexpensive homes who have to tum out and vote to authorize it.

Regarding the budget, Winkel made a request to Mawson and Russell that their beginning balances be as accurate as possible. He told the Committee that the current total balance in the City's funds in the Local Government Investment Pool (LGIP), aside from Water and Sewer, was $9.1 million. Winkel added up the beginning balances in the proposed budget and they totaled $8.3 million, a difference of $780,000 from the current bank balance. He interpreted _that to mean the city would be spending that much more than it brings in over the remaining three months of the fiscal year. If that is inaccurate, Winkel asserted, and it turns out the Water and Sewer Funds have more than is projected, the Committee's credibility will suffer.

Schamehom emphasized that the Committee needs to know the actual cash balances as of March 31 in all funds by its last meeting, on May 2, to have an accurate picture to present at the next Council meeting.

In response, Mawson noted that the 11th Street drainage project-costing about $380,000-and the 11th

Street paving project at around $250,000 are both on the books to complete this fiscal year, so he contended that spending $780,000 before the end of the fiscal year would be possible.

O'Neill remarked that it should be possible to confirm the anomalous $697 beginning balance in the Sewer Fund in the next couple of days. Winkel and Schamehom underscored that the actual cash in the Water and Sewer funds was the most critical concern.

5.0OTHER

Bremmer called attention to the fact that the Utilities Commission puts out a newsletter that is inserted in utility bills every month, and the latest edition tells what capital improvements are necessary for the Wastewater Treatment Plant, along with actual estimated costs and priority lists. She stressed that the City and the ratepayers do not want equipment to break and cause an emergency, because that becomes extremely costly, so the Utilities Newsletter will provide information on ongoing projects and projected costs to raise public awareness. In the next issue, Bremmer planned to include graphic photos of some of the problems at the Wastewater Plant. She urged the Committee to read the newsletter and to encourage others to do the same.

The Committee discussed other means of spreading the information in the Utilities Newsletter, including local newspapers, a Facebook page, and the City website. Powell and Schamehom said people need to be urged to read everything in their utility bill and become informed.

Tiffany wondered if it would be worthwhile to consider delaying the next Budget Committee meeting and the upcoming City Council meeting to allow Staff to be sure of their budget numbers. The Committee members and Councilors who were present discussed the options. Winkel suggested that the Council could meet twice in the month and delay the water and sewer issue until the second meeting.

Asked by Winkel if there would be enough time for the budget to be adopted before the publishing deadline, Russell replied that it must be sent to the paper by May 15 for publication on May 22.

April 29, 2019 Budget Committee Meeting Page 8 of 9

The Committee discussed whether they had enough information to approve the budget at the current meeting. Considering the Council's potential emergency rate increase, a number of the members wanted to make sure their decisions were predicated on reliable numbers-particularly the beginning Water Fund and Sewer Fund balances.

It was resolved that the Committee would stay with its scheduled May 2 meeting, with Russell checking the cash balances beforehand. The regular Council meeting would be held the following Monday as scheduled.

Winkel raised an additional question, having noticed there was no overtime included in Public Works collection and distribution. Mawson thought the reason for that was probably because staff is split between departments, and he was trying to keep the overtime number as reasonable as possible. Winkel was concerned about weekend water or sewer repairs that would require overtime compensation.

6.0 ADJOURN TO URBAN RENEW AL BUDGET MEETING

Schamehorn determined that the Urban Renewal budget would be covered at the next Committee meeting, and then the Budget Committee meeting was adjourned at 8:53 p.m.

Budget Committee Meeting Minutes Submitted by Richard Taylor, Minutes Clerk

April 29, 2019 Budget Committee Meeting Page 9 of9

Regular Meeting of the Budget Committee at Bandon City Hall

COMMITTEE: 0 Mary Schamehorn, Mayor 0 Peter Braun, Council President 0 Madeline Seymour, Councilor 0 Claudine Hundhausen, Councilor

0 Chris Powell, Councilor D Geri Procetto, Councilor

0 Brian Vick, Councilor

STAFF: 0 Robert Mawson, City Manager

1.0 CALL TO ORDER/ROLL CALL

May 2, 2019

0 Michael O'Neill @Ruth Keith 0 Linda Frick 0 Blythe Tiffany 0 Sheryl Bremmer 0 Matt Winkel

0 Doug Spencer

0 Denise Russell, City Recorder

Schamehorn called the meeting to order at 7:00 p.m., and Roll Call was taken as indicated above.

2.0 PRESENTATION/DISCUSSION OF FY 19-20 PROPOSED MUNICIPAL BUDGET

Schamehorn handed the meeting over to Mawson, who began by discussing adjustments to the General Fund (100). He directed the Committee to page 20 in the proposed budget, the first of two pages of General Fund revenue accounts, after which there followed numerous expense account pages. Reviewing the narrative he provided for the meeting, Mawson noted the anticipated revenue had been reduced by $15,000 because the likely closure of the Bandon Beach Motel would decrease the Transient Occupancy Tax (TOT) received by the City. As a result, the grand total on page 29 had been adjusted to $2,925,551.

Hundhausen inquired about the impact of the reduced TOT amount on the Chamber of Commerce's share of that tax revenue. Mawson clarified that the Chamber receives 20. 7 percent of the previous year's TOT revenue, so the 2019 revenue decrease will not have an impact on the Chamber until 2020.

On page 23 of the Municipal Budget, $4,500 was added to the Overtime Pay account, which increased the Administration Department total to $514,089. The Accounting & Billing Department received $2,500 in Overtime Pay, bringing its budget to $214,525. The bottom line of the Police Department budget remained unchanged, but $24,800 was moved from the Regular Employee account to Regular Part-Time Wages. The Parks Department (page 29) had incorrectly included pay for a Code Compliance Officer. That portion of the Salaries & Wages account-$40,641-was removed, and Mawson said the new balance in the account was $49,676. The savings in salary was distributed to the Parks Department's Materials and Services accounts, with $10,000 going to Utilities and $5,641 added to Park Repair & Maintenance. The Parks Department total remained $234,414.

Turning to the Planning Department budget (page 30), Mawson stated that salaries were reapportioned from the three utility departments, increasing Planning salaries by $61,827 to a total of $161,378. The overall Planning Department total rose to $205,128 as a result.

May 2, 2019 Budget Committee Meeting Page 1 of 8

The Community Center Department (page 31) saw $500 added to Overtime Pay, which increased the budget to $92,142.

The General Fund Grand Total (page 3 3) increased to $2,925 ,5 51-equaling the General Fund's total revenue (page 22). Mawson explained that in order to make the changes he described in the various department budgets, $232,071 was taken from the Contingency account, which is the difference between the revenues and the expenditures. Those minor changes Mawson listed earlier added up to $69,327-which left $162,744 in the Contingency account. Then, $100,000 was moved to the Transfer to Other Fund (510) account, placing it in Capital Improvements. The remainder-$62,744-stayed in Contingency, the Total Contingencies and Reserves dropped to $162,744, and the Total Non-Departmental budget was adjusted to $189,244.

At Schamehorn's suggestion, the Committee members and Councilors located the Budget Summary page in their materials and made sure everyone was working with the same numbers. Mawson read the totals from each of the General Fund departments, and the General Fund Grant Total, so everyone could confirm their figures.

The Contingencies and Reserves and Non-Departmental Totals still needed to be reduced by $15,000, to enable the General Fund's Grand Total to match its the total revenue. Mawson gave the new numbers: $47,744 in Contingency, $162,744 as the new total for Contingencies and Reserves, and a total of $174,244 in the Non-Departmental budget.

At the previous meeting, some members had questions about the Water and Sewer Funds, and Staff reviewed that part of the budget between meetings. Mawson directed the Committee to the Water Fund (940) on page 87 and described the budgeting process. To arrive at a beginning fund balance, he said, Staff used numbers from March 31 of the current year to project ahead to where the funds will be on June 30, the end of the fiscal year. They tried to get as close as possible to the actual outcome by looking at historical data and taking into consideration anything that may come up before the end of June.

At the April 29 meeting, there were questions as to why the Water Fund's beginning balance was considerably lower for 2019-2020 than the year before. According to Mawson, when the budget was prepared for 2018-2019, the beginning Water Fund balance was $291,568, but the actual balance turned out to be $233,542. The first beginning balance was an estimate, and by the time all the bills came through, the real beginning balance was about $60,000 less. Mawson told the Committee that this is how budgeting works-you try to make your best guess.

The proposed Water Fund balance for 2019-2020 was $58,821. As of March 31, the current balance in the fund was $104,976. It was anticipated that by June 30, the Water Fund would have dropped to about $58,000. Starting the new fiscal year, Mawson was cautious to avoid overestimating the Fund's beginning balance. He felt comfortable with what Staff was proposing for the Water Fund budget.

Mawson also addressed Winkel's concerns about having sufficient overtime allotted in the Fund's Distribution Department (page 90). He pointed out that $4,500 had been added to the Overtime Pay account, increasing the Distribution budget to $274,839. The Water Fund revenues would stay the same, but the expenditures would increase to $1,092,358 (page 92). That made the deficit in the Water Fund $157,237.

Similarly, there had been questions about the dramatic decrease in the 2019-2020 Sewer Fund (950) beginning balance on page 96, compared to the beginning balance in the previous three fiscal years. In the 2018-2019 budget, it was $336,397, but it shrank to $697 for 2019-2020. Mawson explained that the actual balance at the outset of 2018-2019 turned out to be only $233,542. As of March 31 of this

May 2, 2019 Budget Committee Meeting Page 2 of8

year, the Sewer Fund's cash balance was only $34,965. He told the Committee the biggest reason for the drop was a project in June 2018, replacing the sewer line on 11th Street near City Park-a $200,000 expense. To pay for the paving portion of the project, $50,000 came out of the Local Option Street Tax (750), but the remainder came out of the Sewer Fund Collection budget, because the project involved a sewer collection line.

Schamehom asked if the money could have come out of the Sewer SDC Improvement Fund (731 ). Mawson answered that the SDC Fund is not typically used for that type of project. O'Neill noted that there was a difference between replacing a line and putting in a new line. Mawson said an extensive amount of sewer line had been replaced in the 11 th Street project, along with all the laterals, and that project accounted for the majority of the decrease in the Sewer Fund's actual 2018-2019 beginning balance.

Looking at the March 31 cash balance and taking into account the spending that historically must be done before the end of the fiscal year, Mawson said the City was hoping to end with $697 in the Sewer Fund. Although comfortable saying that the numbers were correct, he admitted he wasn't comfortable with the numbers themselves. O'Neill added that the numbers supported emergency measures to get money back into the funds, and Schamehom agreed.

Mawson pointed out that the total revenue in the Sewer Fund budget remained $838,197. The Sewer Fund Collection Department budget (page 99) increased to $194,583 because $2,500 had been added to Overtime Pay. The resulting deficit in the Sewer Fund was $221,348.

O'Neill questioned whether the Sewer Fund could have any amount in its Interest Income account, considering it was going to begin the year with such a small balance, and certainly couldn' t earn interest with a deficit.

Referring back to the Water Fund Distribution Department budget on page 91, Bremmer drew attention to the Capital Outlay accounts. She asserted that the first two items listed there represented the last two promises the City made to the ratepayers when there was a ballot initiative. Noting the zeros on those two lines in the budget, she asked Mawson ifhe had any intention of proposing anything for those accounts. He replied that those items would come out of the 941 fund and they were in the Capital Plan, which was still being worked on.

Bremmer followed up, asking why the two items appeared in the 940 fund. Russell answered that when Staff worked on the initial budget before deciding to split funds from 940 to 941, those funds were part of the proposed budget, and they would remain temporarily. Mawson directed the Committee to the Expenditure Detail of the Water Plant Improvement Fund (941) on page 94. He said the Miscellaneous Capital Projects account in the Capital Outlay section covered the kinds of projects Bremmer had asked about, and $495,179 was in that account's budget.

Mawson added that the details of the Miscellaneous account haven't been developed yet. It had been requested, but not yet formalized by the Council, that $250,000 for seismic protection valves for the City's two-million-gallon water tank be spent out of the 941 Fund. So, that recommendation had not yet been included with the budget numbers. Additional projects including emergency backup generators and anti-corrosion painting of water tanks, totaling around $500,000, would be coming out of the Water System SDC Improvement Fund (721). They were showing as Miscellaneous Water Projects in the Capital Outlay section but would be broken out to show individual project costs later. Mawson noted that the $4.4 million general obligation bond, if okayed by the voters, would have to be added to this part of the budget.

May 2, 2019 Budget Committee Meeting Page 3 of8

Schamehom offered another question that had come up at the previous meeting, about the cost of two projects that might be completed before the end of the fiscal year. Mawson went over those remaining projects and their costs -a $280,000 paving project on 11th Street and an ongoing $400,000 storm drain project on 11th Street. He said balances were drawn up that reflected the anticipated completion of those projects within the current fiscal year.

Schamehom pressed Mawson on the question of whether or not the projects would be completed as planned. He replied that the paving project should be mostly complete by then, but the drainage project will not begin until the second week of July. The amount carried forward to the next fiscal year will be higher than estimated if any projects are not completed by the end of the current fiscal year. Mawson pointed out that the expense just moves from one time frame to another.

Hundhausen asked Mawson if the Committee members could be given a printed calendar to tell them what the target date is for an approved budget. Mawson replied that the budget is typically adopted at the June City Council meeting. Schamehom added that the Committee could add another meeting on May 13 if it didn't approve the budget at its current meeting. It already had an evaluation scheduled for the 4:00 p.m. and could reconvene at 7:00 to finish working on the budget. She observed that the May 13 date WOl;lld allow for the required public announcement period before the hearing is held at the June Council meeting.

Russell agreed there would be enough time for her to submit the notice on May 15 for the May 22 issue of Bandon Western World. Along with Mawson, she assured the members that they would receive updated budget books at the May 13 meeting.

Mawson stated that if the direction from the Committee was to incorporate the Utilities Commission's recommendations, then Staff would incorporate those elements into the budget. To generate the additional revenue for water and sewer, he said a rate increase would have to be assumed, in order to cover those deficits in the budget. Schamehom agreed, saying the City must have a balanced budget.

The capital projects that are proposed and other items being worked on would be included in the revised budget, Mawson promised, as will the general obligation bond.

Braun hoped the Committee could have copies of the budget book before the next meeting.

Winkel inquired about the type of health insurance plans being offered to City employees, and Mawson told him that the majority of City Staff, other than the Police Department and the Electric

· Linemen, had moved to an 80/20 plan this year. He said the Public Works Department, which is under the Teamsters Union, is considering moving to the Teamsters' plan, a 90/l O plan with lower rates. The Teamsters have been approached with the idea of the rest of the City following suit and joining that plan, although employees may find that they would be losing some of the benefits they have had under the CIS (Citycounty Insurance Services) plan, and they may end up with some issues with prequalifying conditions.

Schamehom asked if the employees moved to the Teamsters' plan, would the City then pick up 100 percent of their insurance. Mawson replied that the union has said that to make the collective bargaining agreement whole, it would like to see a share of the savings the City would gain by switching policies. He said the insurance issue is still under discussion, and if it is decided the employees would like to pursue that change, it will be brought to the Council.

Mawson added if the employees save money on their premiums by going to the Teamsters' plan, and the City pays the extra 10 percent, the City will still be saving money. He noted that the Teamsters' plan has been consistent over the past few years, with little change in its premiums, and the Police Department has been on the Teamsters' plan for years and seemed pleased with it.

May 2, 2019 Budget Committee Meeting Page4 of8

Winkel also was curious about the Planning Department staffing in the budget, which had been reduced from 4.5 to 3.5. Mawson indicated that the request for a fourth person in the department had been removed. Winkel needed a clarification about the potential half-time employee for code compliance and gorse eradication. Mawson detailed the Planning Department's current personnel-a Planning Director, a Planner who is temporary, and a Planning Assistant. He said there was not a request for a change to the current structure, but the regular half-time Code Compliance position was vacant.

Mawson said current Planning Director Dennis Lewis feels vegetation management deviates from the Planning Department's purpose. The Council has scheduled a work session with the Planning Commission to discuss gorse control and enforcement. Mawson said the City has talked with the Coquille Watershed Association (CWA), which is the administrative association and project manager for the Gorse Action Group (GAG). Wild Rivers Coast Alliance pays CW A for a half-time position associated with gorse. If the Council wishes to get into gorse enforcement and vegetation management, Mawson thought the City could possibly use some of its code compliance money to contract with CWA or some other entity to carry out the City's gorse and vegetation compliance in a helpful and friendly manner, and he would recommend doing so. In that case, code issues that have to do with planning would be taken care ofby current Planning Department staff, general compliance complaints would be handled by the Police Department, and enforcement of gorse regulations would be the City's responsibility.

Mawson explained that the contracted independent agency, such as CWA, would work in partnership with the City, seeking compliance with the City's noxious weed ordinance. There is already an individual working for CW A who assists members of the local community to combat gorse, and the City would fund the work that person does on behalf of the City. CW A and GAG are already coordinating with Coos County, and that would facilitate addressing the gorse-infested parcels in the County land called the "Donut Hole;' bordering the City.

Acknowledging that the Budget Committee wouldn't be the right place to examine the logistics of what Mawson described, Braun contended that dedicating a staff position for gorse regulation compliance would be short-sighted, because it would rob funds necessary for dealing with other municipal code compliance issues. He also felt the Planning Department would be reluctant to become more heavily involved with code compliance.

Keith requested a clarification about the Contractual Services account listed under Materials and Services in the Police Department Expenditure Detail of the General Fund (100) on page 26. Mawson told her the $90,000 budgeted to that account primarily covers the cost of dispatch services provided by the County.

Schamehom encouraged additional questions from the Committee, and Winkel noted that the budget shows expenditures for the Summer Recreation Program, but no fees coming in. He asked Mawson to explain how the program would work, and Mawson said the City has entered into an agreement with the Bandon Community Youth Center (BCYC) to conduct the Summer Recreation Program. The City would be paying BCYC a fee to supplement its existing programs by offering swim lessons, an afternoon program, and other activities the City would normally conduct.

According to Mawson, the City felt it was not productive to compete with BCYC, which has been increasing its summer activities. BCYC will extend the ages served to 6 to 14. Arrangements have been made with North Bend and Coos Bay for swim lessons, provisions for busing and staffing have been made, and a budget has been generated. Registration fees will go directly to BCYC to help support the program. In the past, the City's budget included money targeted to the summer program, as

May 2, 2019 Budget Committee Meeting Page 5 of 8

well as registration fees to offset program costs. Mawson said the City would use the money it usually budgets for summer recreation to contract with BCYC for its services.

Schamehom pointed out one benefit ofBCYC's conducting the summer program would be lower fees than the City has been charging. BCYC already has staffing, and will add some positions, such as a bus driver. The City will contribute about $20,000, which is less than it budgeted in the past for the City itself to run the Summer Recreation Program. Mawson and Braun observed the City will benefit by saving the indirect costs it incurred in the past when Planning Department staff time had to be devoted to the summer program. Schamehom emphasized that BCYC and the City are enthusiastic about the new arrangement, and Mawson noted BCYC is already in the business of youth activities and has appropriate insurance coverage.

As Chair of the Utilities Commission, Winkel told the Committee that the low cash balances in the Water and Sewer funds came as a big surprise to the Commissioners. He recalled that the Local Government Investment Pool gives the City a monthly allocation of interest, and he suggested the City should return to its past practice of keeping the cash balances in each fund and allocating the interest to those funds each month, to be able to track the cash balances more closely.

Mawson responded that the system Winkel described was still in place and the accounting had been brought up to date. He added that there is a cash allocation report in the accounting system that provides the balances the Utilities Commissioners needed.

For future budgets, Winkel recommended reestablishing reserve funds for the water and sewer services, to help avoid emergency situations and the need to float bonds. Mawson agreed on the benefit of having reserves, and he cited the struggle to fund operation and maintenance of the water and sewer systems as the reason the reserve funds had ceased to exist. He added that the SDC funds are the only reserve funds the City has to deal with its utilities. Winkel noted that unlike SDC funds, reserve funds could be tapped for operation and maintenance expenses.

Going back to the Capital Improvement Plan spreadsheet that Mawson called "a work in progress" and handed out at the previous meeting, Winkel remarked that it is helpful when reviewing the budget to have fund numbers accompanying their names. Mawson stressed that the document was incomplete, and he promised to have it completed for the next meeting. He said each project will show its funds, and fund numbers will be provided for those projects that are planned for the next fiscal year.

Winkel saw $100,000 budgeted for an SDC study update, and he wondered what fund that money came out of. Mawson replied that those were consulting service costs that would come out of various combined SDC funds.

Winkel asked if specific projects would be listed for the coming fiscal year, because he was seeing numerous items listed as "miscellaneous" in the budget. In part, Mawson said, Staff was waiting for the Council's goal-setting session, but he did list two of the City's planned projects that will appear in the Capital Improvements Plan: the endcap at the South Jetty, and paving and sidewalk improvements in front of Edgewaters Restaurant-both part of a trail project funded by Urban Renewal.

Next, Winkel inquired about the status of the old City shop site and the lot on the comer of Fillmore Avenue and 4th Street, which he thought Urban Renewal had purchased from the City. Mawson responded that they were in the process of being sold to Face Rock Creamery, and the proceeds will go back into Urban Renewal for reinvestment.

Still referring to the Capital Improvement Plan, Winkel wondered about the $30,000 expenditure this year on a City Park storage building, with a total cost of $75,000. Mawson told him the building has been on the books for many years and will be located behind the Community Center and next to the

May 2, 2019 Budget Committee Meeting Page 6 of8

Sprague Theater if it is built. He added that Public Works has plans for the building and quotes for construction, and that it was intended to be built this year.

Schamehom pointed out that the building was put in the budget a number of years ago when it was felt there was a need for it, but she said the Sprague Theater has many other needs for capital projects that should come first. She alluded to a conversation with Community Center manager Jeff Norris, who told her the storage facility wasn't very important.

Hundhausen recalled that the storage building was requested by Bandon Playhouse. Braun agreed and offered the perspective that repair and maintenance of the Theater might not qualify for funding, but funding might be available to construct a building that could serve as a workshop and storage area for sets and costumes used in theater productions.

Schamehom said although currently there is not an active Bandon Playhouse, it is getting started again. She stressed the need to have a functioning heating system in the Theater, and Mawson advised that insurance will replace the heating system. He echoed Braun's observation that new siding and roofing would not be eligible for funding, but opening up more activity space in the theater by building a storage facility would qualify.

Braun pointed out the challenge of explaining to the public that the City can afford to construct a new storage building but cannot afford necessary maintenance on the existing buildings.

Schamehom suggested meeting with an urban renewal consultant to determine a way to avoid deterioration of the City's existing capital assets while constructing new buildings.

Similarly, Powell thought there must be a way to fund replacement of sewer plant machinery that goes beyond treating it as routine maintenance. Braun maintained the funding should not come out of Urban Renewal.

Concerned about the potential for mold, Hundhausen asked if there were plans to control the moisture and temperature in the proposed storage facility. Mawson indicated that existing plans were only for the building's structure and were open to appropriate future modifications.

Winkel wanted to know if the City's department heads had reviewed their budgets and were satisfied that their priorities were reflected. Mawson replied that the budgets were developed based on projects that had been requested by those departments.

Winkel concluded his comments by recommending that the budget process begin earlier in the year.

3.0 PUBLIC COMMENT

There was no public comment.

4.0 DISCUSSION/ ACTION ON FY 19-20 PROPOSED URBAN RENEW AL BUDGETS

The Committee segued into its Urban Renewal Budget discussion. Mawson told the Committee that Staff had checked Urban Renewal balances when it double-checked the Water and Sewer Funds.

On page 142 of the members' budget books, Mawson pointed out an anticipated budget of $910,396 for District #1 (560). He said part of the storm drain project was initially to be paid out of the SDC Fund, but that wasn't happening. A realistic reexamination of fund balances caused small increases in the two Urban Renewal Districts' budgets. The beginning balance for District #1 had been $564,396, but the amount carried forward was revised upward to $850,000 as a result of reduced project expenditures prior to the end of the current year. The resulting grand total increased to $1,196,000.

May 2, 2019 Budget Committee Meeting Page 7 of8

On the expenditure side of the District #1 budget (page 143), Mawson focused on Fa9ade Grants, which are awarded for businesses to make improvements to the front of their buildings through a program of $5,000 matching grants, which are in essence partially-forgivable loans. Because $5,000 doesn't accomplish as much now as it did when the grant program began, it has been suggested that the amount of each grant and/or the total amount of grant funds should be increased.

To illustrate that $5,000 does not go very far, Braun noted that the painting on the front of the Masonic Temple building was originally budgeted at $24,000. Schamehom stated that additional funding could be put in the budget, and the Council would decide what to do with it. Mawson had decided on $50,000 for Fac;:ade Grants, leaving $708,151 of Urban Renewal Capital that could be programmed for other capital projects.

Braun pointed out that nothing was budgeted in 2017-2018 for Old Town Sidewalk accounts or South Jetty Park Trail Improvement, but $400,000 of the 2018-2019 District #1 budget was devoted to South Jetty Park and Trail Improvement. Mawson said the City has prepared plans for the Jetty Endcap and Edison Endcap projects. The Urban Renewal Agency will decide which projects to prioritize.

For District #2 (570), the beginning balance (page 144) was revised to $625,000, based on the current balance at that time and taking into account which projects were likely to be completed by the end of the 2018-2019 fiscal year. The new revenue total was raised to $800,000. In the Expenditure Detail (page 145), Total Capital Outlay increased to $716,794.

Seymour made a motion to approve the proposed Urban Renewal Budget for fiscal year 2019-2020 as amended and in the record and to forward it to the City Council for consideration and adoption. Keith seconded the motion, which passed by voice vote, unanimous.

Seymour moved that the Budget Committee approve the full and maximum taxing authority that each Urban Renewal Plan (UR#l-12003980 and UR#2-7314821) allows. The motion was seconded by Powell and it passed by voice vote, unanimous.

5.0OTHER

No other business was discussed.

6.0ADJOURN

Schamehom announced that the next Budget Committee meeting would be on May 13 at 7:00 p.m., and then the meeting was adjourned at 8:35 p.m.

Budget Committee Meeting Minutes Submitted by Richard Taylor, Minutes Clerk

May 2, 2019 Budget Committee Meeting Page 8 of 8

Regular Meeting of the Budget Committee at Bandon City Hall

COMMITTEE: 0 Mary Schamehom, Mayor

0 Peter Braun, Council President 0 Madeline Seymour, Councilor 0 Claudine Hundhausen, Councilor 0 Chris Powell, Councilor 0 Geri Procetto, Councilor

0 Brian Vick, Councilor

STAFF:

May 13, 2019

• Michael O'Neill

• Ruth Keith 0 Linda Frick 0 Blythe Tiffany

0 Sheryl Bremmer 0 Matt Winkel D Doug Spencer

0 Robert Mawson, City Manager 0 Denise Russell, City Recorder 0 Sherri Wheeler, Administrative Services Manager

1.0 CALL TO ORDER/ROLL CALL

Schamehom called the meeting to order at 7:00 p.m., and Roll Call was taken as indicated above.

2.0 PRESENTATION/DISCUSSION OF FY 19-20 PROPOSED MUNICIPAL BUDGET

Before the meeting, Mawson had provided the Members with an updated copy of the Municipal Budget that reflected the numbers and pagination discussed at Committee meetings over the previous two weeks. He also included a copy of the Capital Projects Plan.

Mawson directed the Committee to the first page of the Budget and pointed out the projected 2019-2020 Budget Total came to $23,589,991-about $1 million more than 2018-2019 and an increase of around four percent. He noted that this total did not include the proposed General Obligation Bond, which would need City Council approval.

Additionally, Mawson had edited his Budget Message with revised numbers and he had updated the amounts in department budgets where necessary. On page 10, he adjusted the language describing the Planning Department's budget, to clarify that costs for the department are more than shown, because salary allocations for support services the department provides to the City's three utilities are not included in its budget.

The State Shared Revenue Funds table on page 14 was updated to match decisions made by the City Council at its Public Hearing on the funds. Responding to Schamehom's question about when the recipients of Revenue Sharing receive their share, Mawson said the funds will be dispersed in the next fiscal year.

Hundhausen asked what would happen if some change makes an allotment of the funds no longer appropriate. Mawson told her there will be another hearing at the June Council meeting to go over the allotments, and changes could be made before that hearing for the Council to review and approve.

In the Organizational Chart on page 18, adjustments were made to the personnel listed for the Planning Department, showing three and a half positions.

May 13, 2019 Budget Committee Meeting Page 1 of 6

Schamehom wanted to know why the Organizational Chart in the new budget book showed a City Manager/Director of Utilities position, but the previous book showed City Manager/Finance Director. Mawson told her the multiple titles hadn't changed, and Russell determined that Finance Director was probably hidden due to a formatting error in the Organizational Chart that she could easily correct.

Mawson went over the Budget Summary on pages 2 and 3, which showed how the $23,589,991 total was dispersed among the various funds and departments whose spreadsheets appeared later in the budget book.

Mawson spotlighted the Capital Improvement Program (CIP), which had been added to the budget book since the previous Committee meeting. The CIP included $4,479,677 for municipal projects and $1,418,151 for Urban Renewal projects. Among the notable projects highlighted in the CIP narrative, beginning on page 132, were the 11th Street Drainage Improvement Project, the Jetty Park and Jetty Park Trail Project, Underground Electrical Projects, the Water Plant Two-Million-Gallon Storage Tank Seismic Valve Installation, and Sprague Theater Roof and Siding Replacement.

Mawson noted that five major capital projects included in the plan will be dependent upon a successful vote to approve a General Obligation Bond (GO Bond): New Headworks and UV Treatment Improvements for the Sewer Plant, New Fillmore Avenue Pump Station and four Inflow and Filtration Projects, and New Water Plant Clarifier. Pages 134 and 135 listed the funds that will pay for these projects. He said the City's GO Bond debt service is usually placed in Fund 365, where prospective projects that depend on the passage of bonds are shown, totaling $4.4 million.

Continuing through the Capital Improvement Program list, Mawson showed around $109,000 in the Block Grant Fund (410), destined partly for roofing Sprague Theater. Siding for Sprague Theater and several other items will be paid for from the Capital Improvement Fund (510), which receives money from the General Fund. One of the other projects listed for the Capital Improvement Fund was the Facilities Maintenance Program, which Mawson said depends on inspection reports. It supplements other maintenance budgets and helps with needs in any of the City's facilities. He told the Committee that all the City's facilities had been inspected and reviewed during the current fiscal year, and a report was produced on each facility.

The Water Plant Improvement Fund (941) included $250,000 for seismic protection valves on the two-million-gallon storage tank. The Water SOC Improvement Fund (721) included $250,000 each for rehabilitation of the one- and two-million-gallon storage tanks, plus $500,000 for an emergency generator for the Water Plant. Mawson elaborated that rehabilitation of the two-million gallon tank and the seismic protection valve project must happen simultaneously, because the tank must be emptied for the valve replacement and for the interior rehabilitation. Water currently flows from the floor of the tank, but that will have to be sealed and the valves placed on the side, on the outside. The rehabilitation of the one-million-gallon tank will be on the exterior.

Mawson also mentioned that the Storm Drain SOC Reimbursement Fund (715) would help pay for the 11th Street Drainage Project. The Sewer SOC Reimbursement Fund (730) included $85,000 for Clarifier #1 repairs at the Wastewater Treatment Plant. Mawson also pointed out that the City 's SOC Manual would be updated during the upcoming fiscal year by drawing from any SOC Funds that had money available.

In the Local Option Street Tax Fund (750), money was budgeted for the 11th Street Drainage Project and Highway 101 Safety Improvements, and $500,000 was set aside for the Ferry Creek Bridge Project, which has a ten percent matching funds requirement. Mawson said anything outside the scope of the bridge has to be paid for by the City, including apron work.

May 13, 2019 Budget Committee Meeting Page 2 of 6

Voicing unease about truck traffic over Caroline A venue, Schamehorn asked Mawson when he anticipated the Ferry Creek project would begin, and he replied that ODOT has pushed it back from 2020 to 2021. He didn't think many heavy vehicles were crossing the bridge, but he expressed concern that funding for the project had been approved two years ago, and increased costs since then will mean a greater share borne by the City, unless something can be worked out to obtain other outside funding.

Braun pointed out that some personal vehicles can exceed the current weight limit on the Ferry Creek Bridge.

Mawson turned next to the Electric Fund (910) and observed that the Electric Utility buys many necessary items which do not appear in the Capital Improvement Program-such as transformers and wire-which are capital expenditures but not seen as capital improvement projects. $261,893 for Service Trucks was listed as one of the Electric Fund's capital outlays, and Seymour asked Mawson how many trucks that amount would purchase and what type they were. His answer was two trucks with buckets, one of which was ordered during the current fiscal year but could not be delivered before June 30, causing the funds to be carried over into the next fiscal year. .

Asked how old the existing trucks were, Mawson estimated 12 to 14 years, and said he worried about sending workers out late at night in 70-mile-an-hour winds with an iffy bucket truck. The City will put the trucks up for auction when they are replaced. One larger truck had been passed along to Public Works, which rarely uses it. Mawson said the City may sell that one and keep a smaller one for Public Works.

Urban Renewal (UR) projects were at the bottom of the list of accounts in the Capital Improvement Program. In UR District #1 (560), Endcaps to the South Jetty Trail and 11th Street Drainage Improvement Projects were funded, and $60,000 was set aside toward matching a $200,000 grant from the Main Street Program for the Masonic Lodge building.

Braun inquired about the status of the 11 th Street Project. Mawson told him June 15 was the start date, with digging set to begin July 8. He stated that the bid was around $385,000, and payments will come out of four different funds, adding that pavement should be done this fiscal year, financed by the Local Options Street Tax Fund.

Mawson said $85,000 earmarked for workforce housing would be added to the UR #1 capital improvement fund as the result of Face Rock Creamery's purchase of City property.

The UR #2 budget contained appropriations for a storage building and parking lot paving at the Community Center, ballfield improvements, and miscellaneous unspecified projects.

3.0 PUBLIC COMMENT

There was no public comment.

4.0 DISCUSSION/ACTION ON FY 19-20 PROPOSED MUNICIPAL BUDGET

Mawson took questions from the Committee, and Schamehom observed that the Code Compliance Officer position was back in the Planning Department budget. Mawson retorted that it was never removed, adding that an option had been discussed for utilizing part of the money for that position for vegetation management compliance, which he didn't necessarily recommend. He pointed out that the Council could be compelled to choose that option after meeting with Gorse Action Group (GAG) and Coquille Watershed Association (CWA) representatives the following week. Mawson said another possibility would be to consider using State Shared Revenues for a gorse control line item, but that money takes time to accumulate, and there might not be enough available every year.

May 13, 2019 Budget Committee Meeting Page 3 of 6

Schamehom recalled that the City had allocated Revenue Sharing funds for CW A, which that organization could use for educational purposes. Mawson said the amount was $3,500. Schamehom suggested limiting the next Revenue Sharing Fund (260) to existing recipients as much as possible, to make sure the activities and organizations being funded are successful. Mawson reminded her that the City is required to hold a Public Hearing to solicit recommendations for assignment of the funds.

The Members discussed the relationship between alcohol taxes and the State Revenue Sharing money the City receives, along with similar issues involving marijuana sales. Braun asserted that the City had missed the window that would have allowed it to ban marijuana sales, but it hadn't missed the window allowing it to implement a tax on the substance.

Schamehom had a question regarding the status of the City's two low income assistance programs-the Round-Up Program and the H2Others Program. Mawson stated that historically a report hadn't been done on those programs, but the City does have a line item that tracks the money that comes in and goes out, and a report could be generated to show the activity in those programs.

Schamehom asked who monitors the TOT (Transient Occupancy Tax). Mawson explained that the Planning Department keeps an eye on the Vacation Rental Dwellings (VRDs), but Sherri Wheeler, the City's Administrative Services Manager, handles the TOT.

Commenting that Airbnbs are escalating across the country, Schamehom asked if the City gets money from them. Wheeler thought the State is enforcing taxation of Airbnbs. She said the difficulty is that companies like HomeAway and Vrbo are reporting taxes-and some ofBandon's vacation rentals are working with them to rent their properties-but these companies send the City a check without supplying the address of the rental location or other information. Some local vacation rental owners are also frustrated because they don't know when to pay the taxes, and she tells them to pay when they rent their property. IfVrbo rents the property, then they pay the taxes. Because Vrbo may not tell the City the location of the property when it pays the taxes, the City may not know if that vacation rental is being rented within the time specified in the City's ordinance, and it could lose its VRD status. Mawson emphasized that it is the owner's responsibility to report to the City.

Braun offered his understanding that Planning Staff has been doing regular searches on Vrbo and contacted a number of people who had advertised on Airbnb but were not located in the appropriate zone. He and Mawson confirmed to Schamehom that a VRD permit was required to rent even just a room using Vrbo or Airbnb.

Mawson resumed reviewing a list of budget recommendations from Winkel, including a full-time Finance Director. Schamehom stressed the Council's determination that the City needs that position, and Mawson acknowledged that the topic had been discussed previously. He indicated Staff could try to work funding for a Finance Director into the budget and advertise for the position.

Winkel wondered about the budget impact of DRBs (Development and Review Board), which according to Bremmer have been shown to streamline the permit application process and benefit the Hearings Officer and Planning Commission by bringing representatives from Planning, Public Works, and Utilities together. Schamehom expressed her support for use ofDRBs. Mawson said the Planning Department is currently doing internal DRBs. Winkel wished to see DRBs more widely used by City Staff, and he observed that DRBs allowed the ex-City Manager to be apprised of development projects and how they were viewed in the various departments involved.

Another of Winkel's recommendations was to create reserve funds for the General Obligation Bonds. Mawson noted that Fund 941 was already set up in the capital funds for water, and he said Fund 951 could be added to do the same thing for the sewer utility.

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Winkel also suggested putting money in the budget to add to what is being fundraised in the community for the proposed 9th Street Crosswalk installation on Highway 101, and he recommended funding the Bandon trolley. Mawson said funding for the trolley had been found in the budget, amounting to $30,000, covering all costs related to the trolley, including the driver and the fuel. The Committee discussed the success of the trolley over the past year and a legal challenge it has faced over an accessibility issue.

Schamehom asked if anyone was ready to make a motion, but Winkel still had questions. He wanted to know if the Code Compliance Officer was budgeted as an actual position or a potential position. Mawson replied that it was paid for through the Planning Department, as it has been in the past. Winkel asked if money was budgeted to pay Coquille Watershed for gorse eradication. Braun and Schamehom pointed out CWA will receive $3,500 in State Revenue Sharing funds, mostly to be used for education.

Winkel was puzzled about the small amounts in the low-income utility assistance programs, and he wondered if those programs were being publicized. Schamehom suggested putting information about the programs in the City Manager's Newsletter and the Utilities Newsletter.

Winkel had recommended putting Workforce Housing in the Capital Improvement Program, and Mawson repeated that $85,000 from Face Rock Creamery was applied to Urban Renewal District #1 for that purpose, and he could also list it in the UR # 1 budget. He stated that Capital Improvement items that appeared in the plan but not in the budget would be added to the budget in its amended vers10n.

The Committee discussed how a Finance Director position could be funded if the amended budget were to include that position. Mawson thought the Utilities budgets would be the source, and Winkel and Braun noted that would increase the deficits in the Water and Sewer funds.

As a Budget Committee member and a Utilities Commission member, Winkel said he assumed the necessary water and sewer projects would be funded one way or another-whether by general obligation bond, revenue bond, or rate increase. He favored creating reserve funds in preparation of the receipts from any of those sources. Mawson agreed with the idea of establishing reserve funds, but preferred waiting for money to come in before creating them. He also believed a revenue account could be added to the 941 Fund as a capital fund, and a sewer fund could be established with its own revenue fund.

Winkel remarked that he was here when the City's reserve funds were empty and were eliminated. Braun asked if it was a State recommendation to get rid of the reserve funds. Winkel and Mawson told him the State would like cities to run on a minimum number of funds. Several on the Committee disagreed with this restriction, noting there is no penalty if they do not follow the State's guidelines. Schamehom commented that unlike Bandon, many cities do not have an electric utility, which adds additional funds to the City's budget.

Bremmer agreed with Winkel and Schamehom, who had stated earlier that the 941 account was intended for the past $10 and $20 water rate increases. She said when the City asked voters to approve those increases, they were told the payments would go toward the capital projects that were listed at the time. After the projects were completed, the extra receipts were to serve as a reserve fund for use as needed for the City's Water Treatment Plant. Bremmer stressed that the City had made a promise to tell its residents truthfully what was being done with their money.

Seymour concurred with Bremmer that the 941 Fund should remain strictly for the Water Plant, and Mawson stated that the 941 does function as a capital improvement fund and a reserve fund specifically for the Water Plant's capital projects.

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Seymour countered that the 941 Fund should only show revenue from water rates, so ratepayers can see how much is accumulating there, and she insisted GO bond proceeds should be given a separate account, fearing voters will feel lied to if they see 941 grow by millions of dollars while they are still paying increased rates.

Powell maintained some voters will feel that way anyway, if they are still paying the higher rates after the City has collected proceeds from the bonds.

Seymour responded that the public might not understand that the bond is not free money, and the City will have to begin paying it back.

Mawson thought the City might be able to resurrect the fund numbers that had previously been used for reserve funds.

Winkel and Schamehom advocated a specific line item for the 9th Street Crosswalk, and Mawson said it was covered in the Capital Improvement Program by the $100,000 for Highway 101 Safety Improvements in the Local Option Street Tax Fund. Winkel emphasized that the Council had seen an urgent need for the crosswalk, and he thought it should be addressed separately and expedited. Schamehom and Braun favored giving the Crosswalk Project $30,000 and making it a separate line item, leaving the remaining $70,000 in the existing Highway 101 Safety account.

Seymour moved that the Budget Committee approve the Proposed 2019-2020 Fiscal Year Budget for the City of Bandon as amended and in the record, and to forward it to the City Council for consideration and adoption. Procetto seconded the motion, and it passed by voice vote, unanimous.

Seymour moved that the rate of Ad Valorem Taxes for Fiscal Year 2019-2020 be set at $0.458 per thousand of assessed valuation, that the rate of valuation for the Local Option Street Taxes be set at $0.8455 per thousand of assessed value, and that the total for all other funds receiving tax revenue be approved at $229,500. The motion was seconded by Braun, and it passed by voice vote, unanimous.

5.0OTHER

No other business was discussed.

6.0ADJOURN

Mawson thanked the Members for their input, and Schamehom adjourned the Meeting at 8:00 p.m.

Budget Committee Meeting Minutes Submitted by Richard Taylor, Minutes Clerk

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