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Home My WebLink AboutCC 2022-07-29 Minutes MINUTES OF THE BUDGET WORK SESSION OF THE CITY COUNCIL OF THE CITY OF NORTH RICHLAND HILLS, TEXAS, HELD AT NRH CENTRE, 6000 HAWK AVENUE JULY 29, 2022 Present: Oscar Trevino Mayor Tito Rodriguez Mayor Pro Tern, Place 1 (present at 9:01 a.m.) Rita Wright Oujesky Place 2 Suzy Compton Place 3 Mason Orr Place 4 Scott Turnage Deputy Mayor Pro Tern, Place 6 Absent: Vacant Place 5 Kelvin Deupree Place 7 Staff Members: Mark Hindman City Manager Paulette Hartman Deputy City Manager Karen Manila Assistant City Manager (via telephone) Jimmy Perdue Director of Public Safety Caroline Waggoner Director of Public Works Alicia Richardson City Secretary/Chief Governance Officer Maleshia B. McGinnis City Attorney Mary Peters Communications Director Craig Hulse Director of Economic Development Mark Mills Director of Finance Trudy Lewis Director of Budget and Finance Patrick Hillis Director of Human Resources Stan Tinney Fire Chief Cecilia Barham Director of Library Services Adrien Pekurney Director of Parks and Recreation Stefanie Martinez Director of Neighborhood Services Traci Henderson Assistant City Secretary Billy Owens Assistant to the City Manager Jennipher Castellanos Senior Budget Analyst A. CALL TO ORDER Mayor Trevino called the Budget Work Session to order July 29, 2022 at 8:34 a. m. B. PUBLIC COMMENTS There were no requests to speak from the public. July 29, 2022 City Council Budget Work Session Page 1 of 8 C.1 SUBMISSION OF THE JULY 2022 APPRAISAL ROLL TO THE GOVERNING BODY City Manager Mark Hindman provided an overview of the budget. The recent citizen survey confirms that North Richland Hills is a great community. The proposed budget presents challenges and opportunities. The city is experiencing a staffing shortage due to employees leaving for other jobs, fewer applicants, and increased competition. The city's contribution to TEXRaiI begins January 2023 with $2,000,000 and a 5% increase annually. The citizen survey identified areas for improvement, and the top three of four focused on streets. The 2020 Street Bond program will address 27 streets, but the city needs to increase the preventative maintenance budget. The community is experiencing escalated code complaints, obsolete commercial on Davis Boulevard and Boulevard 26, an increase in service demand and an aging housing stock and population. The city will see an increase in sales tax, a rise in property values by 10.6%, and the closure of Tax Increment Reinvestment Zone No. 2 ("TIF No.2"). Staff proposes to utilize property tax from former TIF No. 2 for the city's contribution to TEXRail. Future property value from the Transit Oriented Districts (TOD) will adequately support costs for TEXRail. The city's approach to the staffing shortage includes competitive salary adjustments, focus on entry level pay ranges and non-salary-based incentives. The proposed budget includes $5 million for the preventive street maintenance program, of which $1.3 million will come from the former TIF No. 2 property tax, and the addition of three positions — engineering associate, capital improvement project manager, and street/traffic supervisor. The proposed budget includes the following positions to address our growth, aging community, and basic services. • Three firefighters (grant funded) • Four police officers (grant funded) • Mental health person — PD (grant funded) • Code enforcement officer • Planning technician • Commercial revitalization funding • Communications coordinator • Cybersecurity analyst • HVAC technician • Equipment technician —fire equipment The city's current tax rate is $.572184 per$100 of assessed value. The proposed Fiscal Year 2022-2023 preliminary tax rate is $.547972 per $100 of assessed value. The proposed preliminary tax rate of$.547972 was used to prepare the proposed Fiscal Year 2022-2023 General Fund budget. The proposed budget was developed with the following in mind—addressing the top complaint from the survey (streets), enhancing public safety, enhancing communications with citizens, revitalizing our properties, retaining staff and continuingour services, and reducingthe tax rate. Thepresentationsprovided today include the revised 2021-2022 and proposed 2022-2023 Operating and Capital Project Budgets. July 29, 2022 City Council Budget Work Session Page 2 of 8 Deputy City Manager Paulette Hartman provided an overview of the city's accomplishments. • City Point Development is underway with the construction of multi-family units. • Approvedpermits of property valued more than $300 million. pp p p Y o Iron Horse Spanos project is under construction. o Tru by Hilton under construction. o • 76% of code compliance cases closed through voluntary compliance. • Neighborhood Initiative Program (NIP) — 219 volunteers completed more than 40 projects in Fiscal Year 2021 and 400+volunteers completed more than 50 projects in Fiscal Year 2022. • 2020 Street Bond Program. • Northeast Parkway extension was completed to include a new traffic signal. • Improved traffic signal synchronization. • Preventive street maintenance - nine (9) street overlays, 12 slurry seals, and 14 concrete panel replacements. • Telecommunications center implementation of ACPO Emergency Medical Dispatch Program. • Renewal of Fire Chiefs Best Practices Recognition Program. • Successful return of special events — Veterans Day, Christmas tree lighting, Daddy/Daughter Dance, `Round the Town with Oscar bike rides, Pop Up Easter egg hunts, and Sounds of Spring concerts. • Return of Neighborhood Services volunteer programs, combined total of 3,258 hours. • Makers Spot grand reopening and Mayor's Summer Reading Club. • Library in the Park and Mid-Cities Teen Book festival. • Economic Development — 130 new businesses and transition of former Alamo Drafthouse to B&B Theatres. • NRH2O record setting season. • Kemper Sports Management assumed operations of Iron Horse. • Implemented paperless permitting and plan review system and streamlined special events permitting. Director of Economic Development Craig Hulse presented an overview of the local economy. He reviewed city populations trends, key economic indicators, local development trends, existing single-family values, local commercial real estate trends, and taxable sales. He reviewed the following business that will call North Richland Hills home. • B&B Theaters • Wild Fork Foods • Catapult Adventure Park • Salad and Go • Keyworth Breaking Company • PJ Coffee of New Orleans July 29,2022 11 City Council Budget Work Session Page 3 of 8 Director of Finance Mark Mills reviewed the July 2022 Appraisal Roll.The data is provided by the Tarrant Appraisal District ("TAD") and the Tarrant County Tax Office. The Truth-in- Taxation calculation cannot be certified until the Certified Roll and Certified Collection Rate information is presented to the City Council. He provided a copy of the Certified Roll to the City Council. The Certified Appraisal Roll for July 2022 specifies $9,469,708,861 for appraised value, $7,576,210,392 for estimated net taxable value, and $176,943,505 for taxable new construction. According to the Certified Appraisal Roll, the market for a North Richland Hills average single-family residence is$316,497. The market is the value established by TAD. The appraised value for the same single-family residence is $294,713. The appraised is the value less appraisal caps. The taxable value for the same single-family residence is $233,679. The taxable value is the appraised value less exemptions (homestead) and tax ceilings (i.e., senior freeze). He reviewed the certified collection rates for the years 2019 — 2021. The city anticipates a 100% collection rate for 2022. The Certified Roll includes five categories—residential, commercial, industrial, mineral, and agriculture. Mr. Mills provided a historical overview of the net taxable value for Fiscal Years 2014—2023. He reviewed the city's single-family market values for Fiscal Year 2023 (table). • • ♦. •• ♦ soa,o� s500.,0 $599999 1,193 saoa,aoa-$439999 2,32 w ssoa000-$.399999 4,952 • •; szoaaoa-$299999 714 5100Q00-$199,999 • 1.900 2Qf30 '. 30d0 4040; 5000 6000 7000 3000 9-OGO:.. • ♦ Mr. Mills stated that the city has a 20% homestead exemption and $36,000 senior exemption and disabled person exemption. Seniors (over 65) and disabled persons will not pay more property taxes unless (i) they purchased a new home or (ii) they modified (addition) their existing home. Currently, the city has 6,040 (27.3%) residential accounts with senior tax ceilings and 310 (1.4%) residential accounts with disabled person tax ceilings. Mr. Mills provided an overview and breakdown of the total combined tax rate. The current fiscal year tax rate is $2.493783. The tax rate encompasses the Birdville Independent July 29,2022 City Council Budget Work Session Page 4 of 8 School District at $1.338000 (53.7%), Tarrant County and Associated Districts at $0.583599 (23.4%), and North Richland Hills at $0.572184 (22.9%). The city's property tax rate is the combination of Maintenance and Operations (M&O) from the General Fund and Interest and Sinking (I&S) from Debt Service. The property tax cap limits how much properties' taxable value can grow. The property tax cap does not affect the Debt Service rate.The city's current adopted tax rate is$0. 572184, of which the M&O is $0.348864 and the l&S is $0.223320. In preparation for the Proposed 2022-2023 Operating and Capital Budgets and Truth-in- Taxation calculations, staff determines the No-New Revenue Rate ("NNRR") and Voter- Approval Rate ("VAR"). The NNRR produces the same amount of taxes if applied to the same properties taxed in both years. The VAR requires an election if the City Council adopts a rate that exceeds the Voter-Approval Rate. The VAR is determined by calculating the No-New Revenue Rate and adding 3.5%, any unused increment, and the debt rate (I&S). State law allows an entity to utilize the unused increment in the Truth-in-Taxation calculation. The unused increment rate is the three-year rolling sum of the difference between the adopted tax rate and the Voter-Approval Rate. The city's unused increment rate is $0.009201. The Fiscal Year 2023 No-New Revenue Rate is $0.519595 per $100 of assessed value and the Voter-Approval Rate is$0.547972 per$100 of assessed value. The proposed Fiscal Year 2023 preliminary tax rate is $0.547972, of which the M&O is $0.338543, the unused increment is$0.009201, and the I&S is $0.200228. The proposed preliminary tax rate of $0. 547972 was used to prepare the proposed Fiscal Year 2023 General Fund budget. C.2 PRESENTATION OF THE BUDGET AND DISCUSSION OF REVISED 2021-2022 OPERATING BUDGET AND PROPOSED 2022-2023 OPERATING BUDGET. Mr. Mills provided reviewed ill r vided an overview of the Debt Service Fund and the 2020 Street Bond Program. The amount issued to date is $31,605,000 and the remaining authorized/unissued bond is $18,270,000. He reviewed the debt service capacity and other tax supportedpayments.debt The debt issuance for August 2022 includes $12,405,000 for streets identified in the 2020 Street Bond program; $2,510,000 for the Big Fossil Creek interceptor rehabilitation; $910,000 for the 12" and 10" sanitary sewer bypass project; and $360 000 for an ambulance replacement. The debt issuance for Yp p November 22 includes$5,000,000 for supplemental street maintenance; $985,000 for fire engine ine replacement; $390,000 for two 2 dump truck replacements; $3,075,000 000 for a Wataug Road 24" transmission main; and $4,855,000reading. cellular meter readin . 'll!, Director of Human Resources Patrick Hillis provided an overview of the current employment environment, recruitment and retention challenges, turnover rate history, and current vacancies. The recruitment and retention challenges have an impact on departments, such as lower priority work items being delayed or set aside, increased workload for remaining staff, steeper learning curves for new hires, investment and training of new employees who resign, and competitive pay. The survey results of July 29, 2022 City Council Budget Work Session Page 5 of 8 benchmark cities indicate an average salary increase of 4% with a range movement of 2%. The proposed recommendation for the general service pay plans include a salary adjustment to move pay range minimums 10% and pay range maximums 4%, effective October 1, 2022. The public safety (police and fire) pay plans include a 4% range adjustment on October 1, 2022 and additional salary adjustments on April 1, 2023 to move employees through the pay plan. The city has experienced a good claims year and anticipates coming in under budget for the Health Insurance Fund, and savings will be moved to the fund balance. He informed the City Council there are no health plan design changes. CityCouncil and staff discussed methods to retain and reward employees. Director of Budget and Research Trudy Lewis provided an overview of the revised 2021- 2022 General Fund revenues ($55,021,405) and expenditures ($53,424,927) and proposed 2022-2023 General Fund revenues ($57,947,278) and expenditures ($55,425,048). The revenue highlights for 2022-2023 include an increase of$5.7 million or 10.6% from the previous year's adopted budget. $4.4 million in property tax is due to the addition of new construction, the closure of Tax Increment Reinvestment Zones, and appreciation of existing value. The sales tax is forecasted to increase by 10% or $1,115,786 from previous year's adopted budget and development revenues are forecasted to increase by$267,493 due to upcoming projects. The expenditure highlights for 2022-2023 include an increase of almost $2 million or 3.5% from the previous year's adopted budget. Most notable is the first year for the TEXRail payment of $2 million as well as departmental inflationary cost increases. Considering the workload of staff in key departments such as Public Works, the proposed budget also considers allowing for split funding to cover full-time positions. This created salary savings for the General Fund as expenses are split between Utility and Drainage Fund for work produced in support of those operations. The fund reflects apositive endingbalance of $2.5 million prior to p consideration of the proposed additions to the base budget. The proposed additions to the base budget for consideration by City Council includes: $1,916,056 for the FY 2022/2023 Proposed Market/Merit Adjustment $96,348 (1) full-time Communications Coordinator $88,828 (1) full-time Street Supervisor $85,443 (1) Code Enforcement Officer $68,435 (1) Planning Technician $50,392 (1) Cyber Analyst $41,056 (1) Fire Mechanic/Technician $23,312 (1) Engineer Associate $19,750 (3) Firefighters $17,193 Surveillance Camera Replacement $17,838 Cradle Point Redundancy Cell Service $36,965 Cybersecurity Managed Detection and Response $1,539,264 Sub-total ($20,345) Bond Proceeds fora portion of the CIP Project Manager position $2,461,616 Net Increase July 29,2022 City Council Budget Work Session Page 6of8 A proposed market/merit for theyear is included for employees that are p p adjustment funded through the General Fund at a cost of $921,000 for general employees and $994,000 for the police and fire department. Other requests include the addition of new positions and technological needs. All the requested considerations can be accommodated within the remaining fund balance projected for the fund. Mayor Trevino recessed the budget work session at 11:50 a.m. Mayor Trevino reconvened the budget work session at 12:42 p.m., with the same members present. Assistant City Manager Karen Manila reviewed the Utility Fund, to include the revised 2021-2022 revenues ($40,567,839) and expenditures ($39,607,725) and proposed 2022- 2023 revenues ($39,969,180) and expenditures ($40,951,401). The negative ending balance will be offset with an appropriation from reserves. C.3 REVISED 2021-2022 AND PROPOSED 2022-2023 CAPITAL PROJECTS BUDGETS. Director of Public Safety Jimmy Perdue reviewed the Fleet Services Fund, to include the revised 2021-2022 revenues ($5,189,756) and expenditures ($5,346,649) and proposed 2022-2023 revenues ($4,484,554) and expenditures ($4,480,908). He highlighted changes in the revised and proposed budgets. Mr. Perdue reviewed the Facilities Fund, to include the revised 2021-2022 revenues ($3,100,818) and expenditures ($3,206,967) and proposed 2022-2023 revenues ($3,098,597) and expenditures ($2,915,883). He highlighted changes in the revised and proposed budgets. Ms. Manila reviewed the Information Technology Fund, to include the revised 2021-2022 revenues ($4,663,196) and expenditures ($4,683,196) and proposed 2022-2023 revenues ($4,607,481) and expenditures ($4,646,443). The negative ending balance will it be offset with an appropriation from the fund balance. Ms. Manila reviewed the Self Insurance Fund, to include the revised 2021-2022 revenues ($16,126,131) and expenditures ($13,033,911) and proposed 2022-2023 revenues $15 013 689 and expenditures ($14,187,657). C.4 REVISED 2021-2022 AND PROPOSED 2022-2023 PARK AND RECREATION FACILITIES DEVELOPMENT CORPORATION OPERATING BUDGET AND CAPITAL PROJECTS BUDGETS. Ms. Hartman reviewed the Park and Recreation Facility Development Fund, to include the revised 2021-2022 revenues ($10,444,586) and expenditures ($9,924,072) and proposed 2022-2023 revenues ($10,681,260) and expenditures ($9,309,885). Staff July 29,2022 City Council Budget Work Session Page 7of8 proposes the following addition to the base budget- $166,639 for proposed market/merit adjustment. Ms. Hartman reviewed future Park and Recreation Capital projects. • Fiscal Year 2024 - update Parks and Recreation Master Plan • Fiscal Year 2027 — replace Dectron system at NRH Centre Pool • Dog park south of Loop 820 • Norich Park Phase 2 • Crosstimbers Park Phase 2 • Neighborhood Park in southwest corner • Neighborhood Park in south central area • NRH Centre pool HVAC and indoor pool air quality improvements • NRH Centre additions to accommodate public demand. City Council had no concerns with the proposed 2022-2023 Operating and Capital budgets. Ms. Lewis reviewed the budget calendar and dates for the upcoming public notices and public hearings. D. ADJOURNMENT Mayor Trevino adjourned the budget work session at 1. 1 p.m. 0 ar vi ayor ATTEST: „ atlld41�11l1enii,,�,�� \a. .n • Alicia Richardson �r'• �� City Secretary/Chief Gove ° O e'� 'E4 4'�(r ;819141111sWS July 29, 2022 City Council Budget Work Session Page 8 of 8