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HomeMy Public PortalAbout2024.02.01 Special Meeting MinutesMINUTES McCall City Council Special Meeting McCall City Hall — Legion Hall VIA TEAMS Virtual February 1, 2024 Call to Order and Roll Call Work Session Adjournment CALL TO ORDER AND ROLL CALL 1 Mayor Giles called the special meeting of the McCall City Council to order at 5:30 p.m. Mayor Giles, Council Member Nelson, Council Member Nielsen, and Council Member Thrower all answered roll call. Council Member Maciaszek was absent. City staff members present were Anette Spickard, City Manager; BessieJo Wagner, City Clerk; Sarah Porter, Deputy Clerk; Sean Reilly, Network Administrator; Amanda Payne, Local Option Tax Administer; Rachel Santiago-Govier, Permit Techician. Also, in attendance were the following Local Option Tax Commissioners: Todd McKenna, Dave Petty, Toni Curtis, Tabitha Martineau (Chair), Kelly Hill, and Craig Vroom. Local Option Tax Commissioner Diane Sanders was absent. WORK SESSION 1 AB 24-029 Joint Work Session with the McCall City Council and the Local Option Tax Commission and Direction to staff City Clerk BessieJo Wagner presented to the City Council and Local Option Tax Commission. The McCall City Council (Council) and McCall Local Option Tax Commission (Commission) met to discuss Council priorities for Tourism Local Option Tax (LOT) funding for FY25 and future years, the budget process for determining a budget amount, the scoring document, and the Local Option Tax Commission Guidance. Clerk Wagner reviewed the purpose and intent of LOT as set by Idaho State Legislature and the State of Idaho Constitution in relation to municipal corporations. Clerk Wagner additionally reviewed the history of LOT for the City of McCall noting the original intent to alleviate the demand on the General Fund. Every City project that is done through either the general fund or the LOT grant application process benefits the community and meets the intent of the state code. Clerk Wagner also reviewed the percentage of tourist LOT that has funded City projects in the past. Commissioner Petty noted that over the years, most of the funding has shifted from community projects to City projects. Clerk Wagner clarified that City projects are community projects. MCCALL CITY COUNCIL Page 1 of 5 February 1, 2024 Special Meeting Council Tourism Local Option Tax Funding Priorities Clerk Wagner reviewed the current City Council funding direction which includes $14,500 direct cost related to administering LOT, $200,000 annually (2022-2026) Parks building relocation, roughly $185,000 for downtown sidewalk maintenance, and $260,000 for housing. In creating LOT priorities, the City Council conducted a survey of the public and the maintenance of the downtown sidewalks was a high priority for the community. City Manager Anette Spickard noted that the City Code still requires adjacent property owners to maintain the sidewalk but with the feedback from the community and businesses the City Council decided that funding the downtown sidewalk maintenance with LOT was appropriate. Having clear and safe sidewalks is important for tourism and the local community. Council Member Nielsen expressed that the City should be able to pay for the downtown sidewalk maintenance out of the general fund and Commissioner Petty agreed. Clerk Wagner reminded the Council and LOT Commission that the legislative intent of LOT is to help alleviate the burden on the general fund. Clerk Wagner additionally noted that of the 22 cities that have a LOT, the City of McCall is one of three that use the funds to be dispersed to community projects completed by outside organizations. Clerk Wagner briefly reviewed previously discussed LOT Commission concerns with priority funding including frustration that the Council priorities for LOT funds are not clear. Suggestions from the LOT Commission include dividing the funds into a percentage with a certain percentage set aside for City projects and the remainder for community projects and considering a cap on how much funding could be asked for per application. Problems that need to be addressed include setting a budget amount, uncertainty that selected projects will receive funding, Council direction, and if the Council will modify the LOT Commission's recommendations. Clerk Wagner reviewed the current LOT budget process. The LOT budget is set in February the prior fiscal year (FY) and the budget is based on trend of a five-year period. Additionally reviewed was the difference between priority and contingency. The large increase in FY21 was due to the Covid-19 pandemic and an increase in lodging rates but trends are leveling off as evident in the current FY LOT collections. Commissioner Hill commented on how the short-term rental regulations will affect LOT revenue. Commissioner Hill works for DoneRight Management and noted that $102,000 was remitted from DoneRight Management to the City in 2023 from Short - Term Rentals that had an occupancy of 11 or more. The City Council and LOT Commission discussed the impact of STR regulations on LOT revenue. Commissioner Petty noted that the past five years trend of the LOT that the budget is based off of includes all three major spikes in revenue years and asked if there is anything prohibiting the LOT budget from being formulated based on a trend of eight years instead of five years. Clerk Wagner noted that there is no limit to the number of years used to forecast trends in order to set the LOT budget. Clerk Wagner further explained the forecasting process and how under or over estimation of LOT revenue is handled. All applications selected for funding by the LOT Commission are expressly told that funds, even on the priority list, are not guaranteed in the event that revenues do not meet budget. Conversely, if revenues exceed the budget, the City must do a budget amendment before September of that year in order to allocate the funds. If a budget amendment is not done, the excess revenue goes into property tax relief per state code. MCCALL CITY COUNCIL Page 2 of 5 February 1, 2024 Special Meeting Clerk Wagner briefly reviewed the LOT Commission's process including review of the budget, holding meetings for applicants to present projects, review of each application and deliberation and prioritization of projects according to how each project scored against criteria set by the City Council. Additionally, Clerk Wagner reviewed how LOT funds are distributed. Once the LOT budget is approved and priority order has been set, letters are sent notifying awarded applicants of possible funding if LOT receipts are adequate, contracts are sent when funding is available to fund the awarded project amounts and completion reports for projects are due prior to receiving funds the next year. Budget Proposal Option 1 City Clerk BessieJo Wagner reviewed budget Proposal Option 1. Budget option one is to collect LOT funds for 1 year and distribute the LOT funds for the Council Priorities first. The remainder of funds would be the budget for Community Projects and the LOT Commission would know the exact amount available for community projects. Additionally, City projects would not be funded through the community project application process. Budget option one would start in FY25 since FY24 LOT funds have already been allocated. The City Council, LOT Commission and staff discussed the City Council LOT funding priorities and funding housing efforts. Council Member Nielsen noted that by changing the process to Option 1 the amount of LOT funding available eliminates the uncertainty of what projects will receive funding. The amount of LOT funding prioritized by the City Council will change from year to year. It would be helpful to recipients of LOT funds to be able to know upfront that a project will be funded and also receive the funds the same year. Mayor Giles additionally noted the benefit to applicants who apply for LOT funding to match a grant. Commissioner Vroom asked if changing to budget option 1 would change the timing of the LOT Commission meetings and decisions to the Fall instead of the Spring. Clerk Wagner reviewed the timeline for option 1 which included meetings held by the LOT Commission between March 1 and 15 in 2026 to hear applications and contracts and checks being disbursed prior to April 30, 2026. The City Council, LOT Commission and Staff discussed the implications of having to skip a year of funding to implement Option 1. Budget Proposal Option 2 City Clerk BessieJo Wagner reviewed budget Proposal Option 2. Budget Proposal Option 2 is similar to the current budget process with the change of City projects not going through the community application process. City Council priorities for LOT would be funded first as funds are received and the remainder would fund community projects in priority order of the LOT Commission. The budget would be set conservatively with a plan to do a budget amendment before September 30`h if revenue is higher than budgeted. Council Member Nelson suggested an option to set a finite amount for community projects to be funded first and then the remainder goes to City Council priority funding for City projects which would give certainty to applicants. Clerk Wagner clarified that either new budget option would start in FY25 and have no effect on FY24. Additionally, it is the City Council's decision on the amounts budgeted for either City priorities or Community Projects. Mayor Giles expressed concern that without adequate LOT funding for City projects, the City Council would need to raise property taxes in order to maintain services to the community. City Manager Anette Spickard noted that the City Council would need to make decisions during the City Budget process about what is being paid for by the general fund property taxes and make tradeoffs. The City Council, LOT Commission and Staff discussed funding for housing including deed restrictions. MCCALL CITY COUNCIL Page 3 of 5 February 1, 2024 Special Meeting Council Member Thrower noted that regardless of the amounts determined, the intent with changing the LOT Budget process is to provide a degree of certainty for applications and clarification for the LOT Commission. Commissioner Martineau asked if there has to be a decision between the options presented or if an alternative decision can be made such as staying with the current process. The City Council, LOT Commission and Staff discussed the idea of staying with the current process instead of making a change. Specifically noted was the frustration of the LOT Commission with the percentage of LOT funding going to City projects and not community applicants and the City budget process. The City Council and LOT Commission consensus was to stay with the current process with a change to set a specific amount to be allocated to City projects and having any excess LOT revenue after all community priority projects are funded go to the City housing fund. The City Council, Lot Commission and Staff discussed the set amount for City projects. Commissioner Petty suggested that instead of. a dollar amount, the budget should be set by percentage. After reviewing the past five years of funding to City projects from LOT, Commissioner Petty suggested a 65/35 split with the City projects receiving 65% of the LOT revenue received. Clerk Wagner noted that if the City Council decides on the 65/35 split, any LOT revenue that is collected above the 35% of the set budget would then go into the contingency item for housing. Conversely if there is a shortfall in LOT revenues collected, the community projects would be impacted and the City projects would still be fully funded. Additionally discussed was the amount to set the LOT budget for FY25. The City Council and LOT Commission came to a consensus of setting the FY25 LOT budget to $900,000 and providing $585,000 to the City projects and $315,000 to community projects with any excess funds received going to City housing through contingency. Review of the LOT Commission Guidance Document The City Council, LOT Commission and staff discussed the guidance document provided to the LOT Commission for determining priority scoring on community projects. Clerk Wagner noted that the scoring criteria was developed to ensure that community projects meet the intent of the law for LOT. Additionally, by law, LOT funding is City money, and the City decides how to disperse the LOT money through the City Council. LOT funds cannot be given away because of the restrictions imposed on public funds through the State Constitution which is why receipts of LOT funding are required to sign a contract. Specifically discussed was number 1 on the criteria list, the project engages the community and/or visitors in a way that meets the objective of the LOT Ordinance. It was determined that criteria number 1 could be eliminated. The City Council, LOT Commission and Staff had an additional discussion on the LOT Budget. The Commission brought up concerns regarding the multiple smaller City requests that come through the application process aside from City Council priorities. Manager Spickard noted that in preparation for the meeting Manager Spickard communicated to department heads that applications for City projects would no longer go through the competitive application process for LOT. Additionally, it will be the City Council's responsibility to allocate the City project LOT funds to different departments and priorities. The Commission recommended putting an item in contingency listed as City projects instead of housing to give the City Council more discretion as to how any extra funds will be allocated. The City Council agreed. MCCALL CITY COUNCIL Page 4 of 5 February 1, 2024 Special Meeting 41 4'1 s ATTEST: C�r w it s BessieJo Wagner, City Clerk Mayor Giles complimented the LOT Commission on the Commission's ability to deliberate productively throughout the LOT process. Additionally, Mayor Giles commented on the recent City Official's Day at the Capital and the discussions with Legislators regarding LOT. ADJOURNMENT 1 Without further business, Mayor Giles adjourned the meeting at 8:15 p.m. .�` OF Mc(�''+. C 0 i too Robert S. Giles, Mayor MCCALL CITY COUNCIL Page 5 of 5 February 1, 2024 Special Meeting