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2023-05-11 Agenda Review NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 35 AGENDA REVIEW MEETING, MAY 11, 2023 PAGE 763 ASSEMBLY The New Hanover County Board of Commissioners met May 11, 2023 at 3:05 p.m. for Agenda Review in Conference Rooms 138-139 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 Dane Scalise; and Commissioner Rob Zapple. Staff present: County Manager Chris Coudriet; Deputy County Attorney Kemp P. Burpeau; and Clerk to the Board Kymberleigh G. Crowell. Chair Rivenbark called the Agenda Review meeting to order and announced that the purpose of the meeting is to review and discuss the agenda items for the May 15, 2023 Regular Meeting with discussions as noted: Consent Agenda Item #2: Approval of the Contract Renewal for Audit Services with Cherry Bekaert LLP for Fiscal Year 2022-2023. County Manager Coudriet explained in response to questions that the audit is sent to Local Government Commission (LGC) for approval. Once the LGC approves and accepts the audit, the auditor will make the formal presentation to the Board. All local government units must submit their audit for LGC approval. The County has never had an audit questioned by the LGC or not submitted an audit. One time the audit was submitted late but with the LGC’s knowledge that it would be late. Regarding the County’s contract with Cherry Bekaert LLP, Deputy Chief Financial Officer Martha Wayne stated that this will be the second year of the current contract. The previous contract was for four years with two contract extensions, both for two years. The audit contract was bid out last year and she noted that there are a limited number of firms that manage local government audits. Cherry Bekaert LLP was the only firm to submit a bid last year as the other firms stated that they did not have the capacity to submit a bid. Consent Agenda Item #3: Adoption of Budget Amendments. Staff provided the following information in response to Board questions regarding budget amendments (B/A) 23-062, 23-064, and 23-066:  B/A 23-062: Environmental Management Director Joe Suleyman stated that most of the donations are in-kind and staff time. Examples of in-kind donations include latex gloves, trash receptacles, and stickers. The program teaches students at the elementary school level how their trash from lunchtime becomes compost.  B/A 23-064: County Manager Coudriet stated that he will confirm with Chief Financial Officer Eric Credle which installment loan is being used and provide that information via email.  B/A 23-066: Ms. Wayne stated that the funds have not been reassigned at this time. During the internal audit, staff found that some funds had not been used for their intended purpose and had to be recouped. There is no immediate plan for those funds unless the Board directs otherwise. Regular Agenda Item #6: Public Hearing and Consideration of Approval of a Development Agreement for the Redevelopment of the Wilmington City Block bounded by Chestnut Street, Grace Street, Second Street, and North Third Street. County Manager Coudriet stated that this is the third time the Board will be considering the project. A presentation will be provided on Monday and if approved, final bidding numbers will be provided to the Board in July, and staff will prepare to go before the LGC for their approval in September. The item will be conducted as a public hearing, although a public hearing is not required as the Board fulfilled that requirement in March 2021. Discussion ensued regarding parking spaces in the parking deck. County Manager Coudriet confirmed there will be 630 parking spaces in the deck, and with restriping there could be close to 700 spaces. The parking deck is not solely for County use. There are lease agreements in place for hotels to use the parking deck, but there is no longer a reservation for the court system. There is more than adequate parking in the parking deck for this project. Assistant County Manager Lisa Wurtzbacher stated that the parking contract is intentionally vague because details have not yet been worked out. A parking study has been completed. The County will continue to own and manage the deck and will likely lease spaces to the developer. Additional parking can be accommodated by restriping, but there is no option to add to the deck. The County currently has leases with two hotels for parking. Parking revenue comes back to the County, including any leased spaces for the developer. Regarding the 80/20 split on cost reduction for anything that comes in under budget, the contractor and developer will split the 20%, so essentially, they would both receive 10% of the cost savings on construction costs. This was set up to ensure that the contractor and developer are trying to achieve cost savings throughout the project. Regarding the reduction in lighting, Chief Facilities Officer Sara Warmuth stated that the quantity of the lighting is being reduced but does not remove LED lighting. The users of the facility will not notice the change. Regarding the removal of the terraces, Ms. Warmuth stated that was done in agreement with the staff. For the staff terrace, it was determined that it was not needed at this time but is something that can be added in the future. For the other terrace, it was determined that an expansion of the conditioned space was preferred by staff and concerns were expressed about items getting tossed off the terrace. Staff would be able to better manage the area as a conditioned space. There are still discussions going on about what could go on the exterior wall where the terrace was going to be, but no decision has been made. Regarding the schedule of the project, if approved, construction could start this fall with a potential completion date in early 2025. Regular Agenda Items #8: Presentation of Fiscal Year 2023-2024 Recommended Budget and Fiscal Year 2024-2028 Capital Improvement Plan. County Manager Coudriet stated that Budget Officer Michelle Daniels will provide a presentation of the proposed budget. The proposed budget will be available on the County website and a line item budget is available for review. Ms. Daniels then presented the following information: NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 35 AGENDA REVIEW MEETING, MAY 11, 2023 PAGE 764  Fiscal Year (FY) 2023-2024 Recommended Budget:  Fund summaries:  Total spending plan: $590.8 million  Major fund revenues:  Major General Fund revenues:  Property taxes:  3.55% growth in assessed value  99.6% collection rate  Approximately $12.0 million increase  Sales taxes:  County has received high receipts in the first six months of the current fiscal year – irregular since then:  Currently 4.7% ($3.3 million) over budget  Continued inflation and a generally strong economy positively impact projected receipts  Federal Reserve actions to cool the economy pose a risk  FY 2024 budget: no growth over current year projections  Investment income and fund balance:  Investment income: $5.8 million versus $0.2 million in the prior year  Fund balance usage: $5.8 million:  Funded from the above 21% balance  For one-time capital items:  Sheriff: vehicles, furniture, fixtures, and equipment (FFE) for vice/narcotics facility  South College Road trail  Ogden Park playground replacement  Museum park shade  Design costs: Cooperative Extension administrative building and Trails End pier Regarding the museum park shade as it relates to spending funds with the potential of Project Grace to move forward, County Manager Coudriet stated that the plan is that existing Cape Fear Museum facility and the park remain. As such, long term there is going to be community use on that site. The shade will allow for the park to be better utilized by patrons.  General Fund Expenditures:  Enhancements - $4.4 million:  $1.9 million = 25 new positions  Medicaid Expansion (5) Mental Health and Substance Use (5)  $2.5 million = Capital Outlay (part of appropriated fund balance noted above)  Capital Projects - $44 million:  Last Frontier infrastructure: $23.5 million  North Chase Library : $8.4 million  Smith Creek Park and North College Road Trail: $6 million  CFCC Nursing renovations: $3.6 million  Echo Farms: $1 million Regarding Echo Farms Park, County Manager Coudriet stated that the long-term plan for the park would be the addition of four or five clay courts, which would complete the project. For the CFCC Nursing renovations, the cost covers just the first phase. The $8.4 million for the North Chase Library covers the complete costs for the new library and is the last branch to cover the County. Regarding the Last Frontier infrastructure, it is the last buildout for water and sewer for development on the northern end of the County and is needed to build out the commercial park on Holly Shelter. Once constructed, Cape Fear Public Utility Authority (CFPUA) will work with private development to build out the delivery and collection systems. Regarding the Robin Hood Road property, the funding for it is covered under the Mental Health and Substance Use strategy. The boarding school is covered under Community Building and is funded by the General Fund. NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 35 AGENDA REVIEW MEETING, MAY 11, 2023 PAGE 765  Employee compensation:  Pay study implementation: $4.8 million  Cost of living adjustment: 5.5% - considers South Atlantic CPI change from March 2022 to March 2023  Non-County Agency Funding: $1,474,442 versus prior year adopted of $1,496,667  Community Building initiatives: $11.8 million across all funds versus $11.5 million in the prior year  Includes $1 million for career and technical certification programs  Miscellaneous:  American Rescue Plan Act (ARPA) programs that sunset, absorbed by General Fund: $1.6 million  CFPUA: $450,000 water/sewer prioritization study  CFPUA: $500,000 initial seed money to fund connections for currently adjacent property owners  Tourism Development Authority: $250,000 for airline marketing for direct routes  The Healing Place – 50-bed commitment: $1.0 million  Other major funds:  Recycling and Solid Waste total budget: $25.5 million:  $2.3 million capital outlay – primarily for a major piece of equipment rebuild  $8.0 million cell construction/closure  $3.7 million appropriated fund balance  Fire Services total budget - $36.2 million:  $1.5 million capital outlay: fire engine rebuild  $15.5 million capital projects: Castle Hayne and Gordon Road stations  $304,000 appropriated fund balance  Stormwater Services total budget -$4.9 million:  $1.3 million capital outlay: facility renovations and miscellaneous equipment  $311,000 appropriated fund balance Ms. Daniels responded to questions stating that there are a few pieces of equipment that need to be rebuilt. Mr. Suleyman explained the benefits of equipment rebuilding. Once a piece of equipment is about five years old, the options are either the equipment can be replaced or rebuilt. To rebuild a piece of equipment, it is stripped down and receives all new components, a new serial number, and a new warranty. Rebuilding a piece of equipment is about 85% of the cost of purchasing a new piece of equipment.  Escrow – Mental Health and Substance Use Fund projections:  Escrow – Revenue Stabilization Fund: A brief discussion ensued on how the County can show the citizens that they are benefiting from the sale of the hospital, especially through the interest received from the Revenue Stabilization Fund as it has helped to keep the tax rate lower. A penny of the tax rate generates about $5 million. Regarding the reduction in funding for elementary School Resource Officer’s (SROs), several one-time expenses in FY2023 are not required in FY2024. There is no reduction for SROs for FY2024.  Education – New Hanover County Schools (NHCS): NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 35 AGENDA REVIEW MEETING, MAY 11, 2023 PAGE 766  The recommended capital includes 60% of the incremental increase requested, which is estimated to be the attainable capacity for the fiscal year  Capital funding for the current year is $4.7 million, so the capital recommendation for FY 2024 is a 128% increase A brief discussion ensued regarding the New Hanover County Teaching Fellows, about sharing that information with the citizens, including the investments the County has made in the program and the benefits. Discussion also ensued regarding school funding. The County is using the number of students provided by NHCS which is 27,432, at the average daily membership (ADM) rate of $3,434 per student and increased the capital appropriation. County Manager Coudriet also listed other items the County provides to NHCS that are not included in the appropriation such as SROs, school nurses, school-based mental health counselors, and maintenance at various athletic fields. The Board stressed the importance for the County to tell its story when putting out the budget message. Regarding the number of students and ADM, County Manager Coudriet stated that the NHCS board is open to a claw back if there are not 27,432 students and there have been discussions about providing more funding if there are more students.  Education – Cape Fear Community College (CFCC):  New Hanover County also recently purchased a building for CFCC to expand nursing and other medical professions and committed to funding renovations:  Total expected investment = $26 to $27 million  Next steps: th  Manager’s recommendation presented and published: May 15  Includes Non-County Agency Funding Committee Recommendation th  Public Hearing: June 5  Feedback and/or work sessions as directed by Commissioners thth  Budget adoption: June 5 or June 19  There was a brief discussion regarding escrows. County Manager Coudriet stated that the County received $350 million at closing for the hospital and there will not be additional cash flows into the County. Another escrow is about to be released for $75 million, half of it will go to the New Hanover Community Endowment and the other half will go to the Novant Foundation. There being no further discussion, Chair Rivenbark thank County Manager Coudriet and Ms. Daniels for the presentation. ADJOURNMENT There being no further business, Chair Rivenbark adjourned the meeting at 4:16 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.