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2023-03-02 Budget Work Session & Agenda Review NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 35 BUDGET WORK SESSION AND AGENDA REVIEW, MARCH 2, 2023 PAGE 655 ASSEMBLY The New Hanover County Board of Commissioners held a Budget Work Session and Agenda Review on Thursday, March 2, 2023, at 3:10 p.m. in the Harrell Conference Room at the New Hanover County Government Center, 230 Government Center Drive, Wilmington, North Carolina. Members present: Chair Bill Rivenbark; Vice-Chair LeAnn Pierce; Commissioner Jonathan Barfield, Jr.; Commissioner Deb Hays; and Commissioner Rob Zapple. Staff present: County Manager Chris Coudriet; County Attorney Wanda Copley; and Clerk to the Board Kymberleigh G. Crowell. Chair Rivenbark called the Budget Work Session meeting to order and announced that the purpose of the meeting is to discuss Fiscal Year 2023-2024 budget priorities and the March 6, 2023 Regular Meeting agenda. FISCAL YEAR (FY) 2023-2024 BUDGET WORK SESSION PRIORITIES DISCUSSION Chief Financial Officer Eric Credle and Budget Officer Michelle Daniels shared the following information concerning the FY 2023-2024 budget:  Agenda:  General Fund Estimates:  Revenue: Property taxes, sales taxes, and intergovernmental revenues  Expenditures: Continuation, New Hanover County Schools (NHCS), and enhancements  Next Steps  FY23-24 Budget Timeline:  November 17, 2022: Budget kickoff  January 17, 2023: Continuation and enhancement budget  February – March 2023: IT Governance Committee (ITGC) and capital improvement plan (CIP)  March – April 2023: Budget work sessions and development and county manager/departments joint meeting  May 15, 2023: Budget Recommendation  New Hanover County (NHC) Property Tax Rate History: County Manager Coudriet stated that this is a budget year in which the County is looking to refine what it is already doing. Brief discussion ensued regarding the revaluation cycles. Ms. Daniels reported that the County is on a four-year revaluation cycle. Prior to the 2022 revaluation, there was a revaluation completed in 2018. The last four-year cycle netted an increase in property values of 30% on average. The Board asked staff to provide the value of $1 on the tax rate and what it nets for the County.  North Carolina (NC) Property Tax Rates:  At $0.455, NHC is ninth lowest in NC (out of 100)  Range is $0.318 to $0.99  Average for the state is $0.666  Lowest NC property tax rates:  General Fund – Property Tax Estimates: NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 35 BUDGET WORK SESSION AND AGENDA REVIEW, MARCH 2, 2023 PAGE 656  General Fund – Recent Sales Tax Growth:  General Fund – Sales Tax Estimates:  FY Estimate: $90.8 million; level with FY23 projection  General Fund – Intergovernmental Revenue Estimates:  Based on projected receipts of and applications for state and federal grant applications  Other intergovernmental revenues (American Rescue Plan Act \[ARPA\], Opioid Settlement) require separate funds, allows the County to reallocate items that would have been budgeted in the General Fund  General Fund – Continuation Budget Estimates:  The impact of inflation will be considered as the County continues to work through budget development Discussion ensued regarding the average daily membership (ADM) rate for NHCS. Ms. Daniels explained that NHCS can use the ADM of month one or month two, whichever is the best. For the current fiscal year, the Board approved an ADM rate of $3,434 per student. Due to higher enrollment of 500 students, the ADM rate dropped to $3,359 per student. It was the first year in many years where there was student growth. To make up the difference, the Board would need to approve an ADM rate of $3,513, or an additional $2 million for FY23-24 which is where staff is starting as a baseline. A dynamic is being worked through where NHCS would true up by returning funds when the ADM is lower than projected or the County would true up if ADM is higher but not until the start of the next fiscal year. NHCS has the ninth highest ADM rate in the state. As for supplements, the County is currently fourth behind Chapel Hill/Carrboro Schools (first), Wake County (second), and Charlotte/Mecklenburg County (third). Durham County is fifth for supplements. In response to Board questions, the ADM for public schools in FY22-23 is 24,985 students. The ADM for charter schools is 1,932 and the ADM for the virtual charter school is 71. This brings the total ADM for FY22-23 to 26,988 students for the district.  General Fund – NHCS:  **FY22 ADM Rate recalculated based on actual enrollment: $3,473 NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 35 BUDGET WORK SESSION AND AGENDA REVIEW, MARCH 2, 2023 PAGE 657  ***FY23 ADM Rate recalculated based on actual enrollment: $3,359  County Spending Per ADM 2019-2020 School Year:  NHCS ADM:  FY24 Budget is expected to assume same school population as FY23  Funding Per ADM + Capital Contribution:  FY23 capital increased by $1 million = $4,696,000 The Board requested that staff add a subsect between 2% and 3% in the chart above to illustrate what an ADM rate of 3,513 would look like.  General Fund – Cape Fear Community College (CFCC):  7.95% decrease overall  No capital request In response to Board questions, Ms. Daniels confirmed there were CFCC salary increases in the request. Overall, the total salary enhancement is approximately $60,000. Of that, $30,000 is within administration.  General Fund – Enhancements:  Requested enhancements: $26.6 million  Includes $17.6 million in capital project expenses  Enhancements are currently under review: th  $2.8 million to be absorbed in existing (FY23) budget / March 6 budget amendment  Cost of living adjustment for employees  Non-County Agencies:  Applications under committee review; allocation methodology to be revised  Non-Profit Capacity Building Initiative expected to continue in FY24:  Funded by Revenue Stabilization Fund (RSF) A brief discussion ensued regarding the grant awards for the non-county agencies and if the Non-County Agency Funding Committee has looked past last year’s methodology regarding salaries. Some of the smaller non- profits have budgets that are mostly salaries because those employees are the boots on the ground to provide the services of their agency. Ms. Daniels confirmed that she believes the committee has looked past this for the upcoming fiscal year. NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 35 BUDGET WORK SESSION AND AGENDA REVIEW, MARCH 2, 2023 PAGE 658  Budget Priorities:  Tax Rate Stabilization - Fund Balance and Debt Policies:  The County has maintained a set of budget priorities over the years to include an effort to stabilize the tax rate, with a commitment to stay within the parameters of the fund balance and debt polices  Education: ADM rate, pre-K expansion, and capital:  Supporting education by increasing the NHCS ADM rate and expanding the pre-K program in addition to funding more capital in both the k-12 and community college spaces  The County has leveraged outside funding to offer more services and programs to the community and has planned and positioned to take on those programs that have made significant strides:  ARPA, Community Building + Endowment: Program sunset  Mental Health and Substance Use Fund: Leverage funds  Infrastructure - Growth and County CIP:  The County has established some solid footing by maintaining a solid CIP  Next Steps – Priorities:  Confirm Priorities:  Are we headed in the right direction?  Is there anything you have stated that we overlooked?  Refine Priorities:  Does it appear we fully understand your vision?  Are we communicating the plan as you see it?  Identify/Establish Additional Priorities:  Did this presentation make you think of anything we need to consider?  Ongoing - throughout the process we may need to pivot  Next Steps: th  March 16 Budget Work Session: Budget priorities, refine General Fund revenues and expenditures th  March 30 Budget Work Session: NHCS and preliminary Enterprise Fund data  April Work Sessions: Ensure budget allocations align with Board priorities th  May 15 Manager’s Recommendation: Includes Non-County Agency Funding Committee recommendation th  June 5: Public Hearing th  Budget adoption by June 19 In response to Board questions, County Manager Coudriet stated for NHCS capital expenditures that are one-time expenses, the revenue stabilization fund may be an option to help close the gap. It is a resource that can be used as opposed to deferred cost or limited obligation bonds (LOBs). Brief discussion ensued regarding school overcrowding, specifically at Porters Neck Elementary, and what NHCS needs for capital. Regarding the continuation budget for FY 2023-24, there is a $3.3 million increase. Staff is not going to recommend a tax increase. For the current year, the County is over budget in collections and under budget in spending. BREAK: 4:09 pm. to 4:18 p.m. DISCUSSION OF MARCH 6, 2023 AGENDA ITEMS Chair Rivenbark called the meeting back to order for agenda review to discuss the agenda items for the March 6, 2023 Regular Meeting with discussions as noted: Regular Item #8: Public Hearing and Rezoning Request (Z22-23) – Request by Cindee Wolf with Design Solutions, applicant, on behalf of 6844 Bayat Land, LLC, property owner, to rezone two parcels totaling approximately 3.83 acres of land located at 6830 and 6844 Carolina Beach Road from R-15, Residential to 2.00 acres of (CZD) B-1, Neighborhood Business for a convenience store and 1.83 acres to (CZD) R-5, Moderate-High Density Residential for 12 single-family attached dwellings. In response to Board questions, Current Planner Zach Dickerson confirmed that the correct Traffic Impact Analysis (TIA) numbers for the project are 512 AM peak trips and 437 PM peak trips. Planning and Land Use Director Rebekah Roth explained the number of trips provided in the staff report is the number of baseline trips and does not account for pass-by traffic which is where the discrepancy lies. She confirmed that she agrees with the numbers in the staff report. Brief discussion ensued regarding the traffic impacts the other projects will have on Carolina Beach Road aside from this proposal. Ms. Roth explained that in the TIA process, the North Carolina Department of Transportation (NCDOT) does determine the other projects that have to be accommodated in their analysis. She will let the Wilmington Metropolitan Planning Organization (WMPO) and NCDOT know the concerns, but a traffic engineer would be better suited to answer questions about the other projects that are incorporated into the TIA process. In response to additional questions, Ms. Roth stated that based on staff’s understanding of engineering guidelines for this type of use 75% of the trips would be generated from cars already on the roadway. What is a little more confusing is that during the TIA process, NCDOT and the WMPO require more trips to be analyzed then typically required to ensure that when offsite improvements are identified, they are accommodating the new trips that are being created. It is more complicated for staff to explain but the traffic engineers will be prepared to address the questions on Monday. NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 35 BUDGET WORK SESSION AND AGENDA REVIEW, MARCH 2, 2023 PAGE 659 Regular Item #9: Public Hearing and Rezoning Request (Z23-02) - Request by Samuel Franck with Ward and Smith P.A., applicant, on behalf of Swartville, LLC, property owners, to rezone two unaddressed parcels (Parcel IDs R02500-002-030-000 and R02500-002-006-000) totaling approximately 104 acres of land located between Castle Hayne Road and Blue Clay Road south of I-140 from R-20, Residential to R-7, Residential Moderate Density. In response to Board questions, Ms. Roth stated that currently water and sewer service is not available at the site, but it is early in the process. There may be the ability to run lines from Chair Road. As this is a straight rezoning, no conditions are allowed. Regular Item #10: Public Hearing and Rezoning Request (Z23-04) – Request by James Yopp with River Road Construction, LLC, applicant and property owner, to rezone two parcels totaling approximately 13.94 acres of land located at 6900 Carolina Beach Road from R-15, Residential and CZD O&I, Office and Institutional to CZD RMF-L, Residential Multi-Family – Low Density and CZD B-2, Regional Business for a storage facility and 126 multi- family units. In response to Board questions, Current Planner Amy Doss stated that the plan is to connect to Aqua North Carolina, Inc. for water and sewer service. As to the interior storage building, 6,000 square feet is the agreed upon space for boat and RV storage. Because this is a conditional zoning district (CZD), staff can approve only minor deviations. Any change in size larger than 10% requires the project to come back to the Board. Ms. Roth stated that representatives from the WMPO will be present to answer questions regarding traffic. The project does not require a TIA, but it will be required to go through the driveway permitting process. There should be some upfront information on what may be required for the driveway, but until NCDOT reviews it there are no concrete requirements. The project is less likely to have the pass-by traffic, then from a use such as a gas station. Ms. Roth believes the reason the subject area is classified in the 2016 Comprehensive Land Use Plan (Comprehensive Plan) for this type of use and density is to provide additional housing opportunities to those who may be priced out of Carolina Beach, just want to be somewhere closer to the road frontage, or even more commercial use. The applicant has committed to a 20-foot vegetative buffer with no fence. There was no discussion at the Planning Board meeting about the schools and Ms. Roth feels good about the projections outlined in the staff report. Further discussion ensued regarding traffic in the subject area. Commissioner Barfield suggested that it is time to update the 2016 Comprehensive Land Use Plan. Most of the County is built out and the Board cannot turn down projects because of traffic. He feels it is important to build nodes to serve various portions of the County. It is also important to know how projected growth will occur in the northern part of the County. Regular Item #11: Public Hearing and Rezoning Request (Z23-05) – Request by Frank Chapman with Davie Construction Co., applicant, on behalf of Milton Turner Schaeffer, III, property owner, to rezone the approximately 1.7 acre parcel located at 4629 Carolina Beach Road from (CZD) B-2, Regional Business to a new (CZD) B-2 district to convert an existing single-family home for office and veterinary services. In response to Board questions, Ms. Roth stated that the applicant is looking to turn the existing structure into a veterinary office. Consent Agenda Item #5: Adoption of Budget Amendment. Commissioner Zapple thanked Mr. Credle for providing more information in the email he sent earlier in the day regarding the budget amendment. ADJOURNMENT There being no further discussion, Chairman Barfield adjourned the meeting at 4:57 p.m. Respectfully submitted, Kymberleigh G. Crowell Clerk to the Board Please note that the above minutes are not a verbatim record of the New Hanover County Board of Commissioners meeting. The entire proceedings are available online at www.nhcgov.com.