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HomeMy Public PortalAbout2021_tcwsmin0222Council Work Session February 22, 2021 Council Chamber, 25 West Market Street, 7:00 p.m. Mayor Kelly Burk presiding. Council Members Present: Ara Bagdasarian, Zach Cummings, Suzanne Fox, Vice Mayor Martinez, Kari Nacy, Neil Steinberg and Mayor Kelly Burk. Council Members Absent: None. Staff Present: Town Manager Kaj Dentler, Town Attorney Christopher Spera, Deputy Town Manager Keith Markel, Director of Utilities Amy Wyks, Director of Public Works and Capital Projects Renee LaFollette, Director of Finance and Administrative Services Clark Case, Director of Economic Development Russell Seymour, Director of Parks and Recreation Rich Williams, Director of Information Technology Jakub Jedrzejczak, Airport Director Scott Coffman, Chief of Police Greg Brown, Deputy Director of Public Works Bud Siegel, Deputy Director Utilities Patrick Moore, Deputy Director and Treasurer of Finance and Administrative Services Lisa Haley (via WebEx), Deputy Director of Information Technology John Callahan, Management and Budget Officer Jason Cournoyer, Senior Management Analyst Cole Fazenbaker, and Clerk of Council Eileen Boeing. Minutes prepared by Executive Associate Corina Alvarez. AGENDA ITEMS 1. Electronic Participation for Vice Mayor Martinez Vice Mayor Martinez requested to participate in the Council Work Session electronically due to the health and safety concerns associated with the Coronavirus. Mayor Burk, Council Member Bagdasarian, Council Member Cummings, Council Member Fox, Council Member Nacy and Council Member Steinberg were physically present at the meeting. MOTION 2021-039 On a motion by Council Member Steinberg, seconded by Council Member Cummings, the following was proposed: To allow Vice Mayor Martinez and Council Member Steinberg to electronically participate in the February 22, 2021, Town Council Work Session. The motion was approved by the following vote: Aye: Bagdasarian, Cummings, Fox, Nacy, Steinberg and Mayor Burk Nay: None Vote: 6-0-1 (Vice Mayor Martinez abstain) 2. Items for Discussion a. Amendment to Town Code Section 2-223 Leesburg Executive Airport Commission Council Member Steinberg requested that this item be placed on hold until the ad hoc committee is able to review and makes its recommendations. 11Page Council Work Session February 22, 2021 It was the consensus of the Council to defer the item until after the ad hoc committee makes its recommendations. b. Strategic Financial Recommendations by Town's Financial Advisor Mr. David Rose from Davenport & Company and Clark Case provided Council with an update on the global and local financial landscape and the benefits and considerations regarding the recommendation for a revenue stabilization reserve. Council and staff discussed the item. c. Fiscal Year 2022 Proposed Budget Work Session: Capital Improvements Program and Utilities Fund Staff provided an overview of the Capital Improvements Program, project management and administrative overhead costs and the Utilities Fund. Ms. LaFollette will provide Council with the costs/impacts for moving the Lawson Road project forward in the CIP. Council and staff discussed the item. d. Board and Commission Meetings — Broadcasting, Recording, and Archiving Staff presented its recommendation for the use of Webex and Granicus to broadcast, allow for live remote public viewing, and to archive meetings of advisory boards and commissions. It was the consensus of the Council to allow for boards and commissions to use Webex and Granicus for recording, public viewing and archiving of meetings. e. Council Member Goals Mr. Dentler presented Council with the common themes that were compiled from the goals he received from the Mayor and Council members. Council and staff discussed the item. It was the consensus of the Council to discuss these goals at a retreat with a moderator in April/May 2021. 3. Additions to Future Council Meetings Council Member Steinberg requested a discussion for a letter to be sent to the Washington Metropolitan Area Transit Authority (WMATA) supporting the transition to electric buses. It was the consensus of the Council to add this item to a future work session. 21Page Council Work Session February 22, 2021 4. Adjournment On a motion by Council Member Bagdasarian, seconded by Council Member Steinberg, the meeting was adjourned at 9:20 p.m. CZezeit4, Clerk of Council 2021 tcwsmin0222 3 Page February 22, 2021 — Town Council Work Session (Note: This is a transcript prepared by a Town contractor based on the video of the meeting. It may not be entirely accurate. For greater accuracy, we encourage you to review the video of the meeting that is on the Town's Web site — www.leesburqva.qov or refer to the approved Council meeting minutes. Council meeting videos are retained for three calendar years after a meeting per Library of Virginia Records Retention guidelines.) Mayor Kelly Burk: Let me call to order tonight's Town Council work session at February 22nd, 2021. I need a motion to allow Vice Mayor Martinez to electronically participate in the February 22nd, 2021 Town Council work session. Council Member Neil Steinberg: So moved. Mayor Burk: So moved by Council Member Steinberg. Second? Council Member Zach Cummings: Second. Mayor Burk: Seconded by Council Member Cummings. All in favor, indicate by saying aye. Council Members: Aye. Mayor Burk: Opposed. That passes six, zero, one. Mr. Martinez, you are now part of the meeting. Vice Mayor Fernando "Marty" Martinez: Thank you. Mayor Burk: Our first item is an Amendment to the Town Code Section 2-223 Leesburg Executive Airport Commission. Mr. Spera. Christopher Spera: [unintelligible]. Mayor Burk: All right. Mr. Steinberg, this was yours. Council Member Steinberg: Thank you, Madame Mayor. After lots of discussions and further consideration, I'm willing to put this on hold and let the ad hoc committee do its work, and see what comes out of that. If the rest of the Council has no objections, I'm perfectly willing to pull this from the agenda. Mayor Burk: Are there four members that want this pulled from the agenda? Ms. Fox, Mr. Steinberg, Mr. Cummings, Mr. --. Okay, everybody but me. Go ahead. The next one is the Strategic Financial Recommendation by Town's Financial Advisor, Mr. Rose. Where's Mr. Rose? Kaj Dentler: Madame Mayoras our financial advisor David Rose is coming to de podium, he along with our Director of Finance and Administrative Services, Clark Case, are here to talk about the proposal that we have for revenue stabilization reserve to protect us if there's any economic downturn in the future. This is not a significant amount of funds, but it's not intended to be something that will get us through three, four, five-year period. It is something designed to help us get through in a short-term crisis if it occurs again in the future. Mr. Rose will talk through that as he goes in his presentation. Mayor Burk: Mr. Rose has asked for 20 minutes. Does anybody have a problem with this additional 10 minutes? All right. David Rose: Good evening Madame Mayor, Members of the Council - Mayor Burk: Mr. Rose, we are going to ask you to please keep your mask on. David Rose: Okay. That's fine. Absolutely. I believe if I can work this correctly. Mayor, I think I will be a lot quicker than 20 minutes, but perhaps question and answer, but I think I'll be about seven, eight Page 11 February 22, 2021 minutes, hopefully. I thank you again. Good opportunity to be here. I'd like to really talk about two things tonight. First is sort of an update if you would on the global, as we say, and local, financial situation as a result of all the things that are going on with COVID. Then, second, our recommendation, I say, our collectively the recommendation of your staff with ourselves for a revenue stabilization reserve. If that is acceptable, I will just go quickly here. A little bit of background with regard to for some of the new Council Members and even some of the existing Council Members because I know you all have a whole lot on your plates. Again, you may recall we do an annual comprehensive update to the Town. Typically we do it in late or early even January with the idea that you get ready for the springtime when you go forward with regard to the next year's budget. We did that last year. We gave a very positive report thanks to all the things that Council has done collectively with the staff. Again, I'll remind you and I'll say it a little bit later, you're AAA rated by the agencies, which means that you are the highest possible financial standing that there is for any town or local government. With that, no sooner did I get done with that, but six weeks later, we had COVID-19 kick in. Having said that, the Town did move very quickly. They created a multi -year plan, including reworking the balance of Fiscal Year '20, effectively the last quarter that a whole lot of things were done. As a result, you ended the year with reserve dollars as opposed to going into and that's because again, you were so quick to move. Finally we then also had the Town work on with the staff a multi -year plan, recognizing that this was something that was not just going to be there for three months. Where we are today, there are any number of economic uncertainties. I don't think I need to basically list them all and go through them all, but basically just to say that this COVID issue has been particularly difficult ironically for towns and communities that are so desirable. For you, tourism is a big thing. You have folks that love to come here, and eat, and shop, and do those things. That's been again, particularly difficult even though a lot of your various businesses have tried to be very, very creative. In addition, we are concerned that there is the possibility that there will be limited Federal and State dollars. We are hopeful that under the new administration, federally, that will reverse itself, but who knows? Again, you just don't know. We're in the business of trying to be as conservative as possible. Interest rates potentially are up as well. Anyway, a number of different things are occurring. Then finally, we just don't know with certainty about the data centers but are hopeful. Again, all of those uncertainties are real. We basically, working with your staff, try to be sure that we don't put you in a position where we come to you and say, "Well, we didn't anticipate this. We didn't plan for this." With that said, on page four there, the Town is looking at preliminarily here in Fiscal Year '21, which now has about four or five months to go about a 5M dollar revenue shortfall. One of the things that's also exacerbating that is the snow removal. I would say, I think last year there was no snow removal. This year, of course, when it rains, it snows, I guess that's how I think about it. Here we have it. With that said, the objective was to develop a multi -year plan. That was what we call best practices. Part of those best practices is to have some reserve funds, have some extra cushion. It was also to recognize that if we can stay as a AAA and act like a AAA, which you've been doing, then also it minimizes or avoids the need to have the equivalent or any direct real estate tax increase. I think that would be particularly desirous, especially at this time in the environment that we're in. Almost done. The multi -year plan there, basically, as I said, in 2020, the last quarter of last year, basically had a 3.5M dollar or thereabout shortfall but your staff moved very quickly and was able to basically make cuts. I think the important thing for those in the audience and for yourself, those cuts though, are not sustainable. You can't just cut for a community like this and expect that we never go back to where you want it to go. I think that's the takeaway. On top of that, we're looking at another 5M. When I say sustainable, I really mean last year's shortfall cuts and this that you're planning to do. I say you, the staff is doing. But they're still, for the moment, if everything holds and I hope it doesn't, they're still going to use some Unassigned Fund Balance dollars. Page 21 February 22, 2021 What's that mean? That means they're going to use some of your well -deserved and built-up rainy day funds. That's why they're there in part, it's raining. However, the reality is we'd like to have some cushion because again, when in such time things really do get better, we want to be a little above our absolute minimums. Here's where that revenue stabilization reserve kicks in. What we did last year as part of the plan that you approved, was we refinanced and saved a bunch of money, over a million dollars. We said, "Let's take and target that savings and use it for a revenue stabilization fund". I think the point here for you as a Council, is you can do anything you want. But the idea here graphically is if indeed the thought is that the '22 Fiscal Year will be a lot better than '21, let's hope it is, there's still going to be some shortfalls relative to an ideal budget. I think that's where the takeaway here is to try to use some of that revenue stabilization, and if necessary, some of the still excess of the fund balance. That is the thinking here. What I hope will happen is that none of this will be necessary, but that you'll have a nice return if you would, to normalcy or very close to normalcy. Revenues will kick up. The advantage then, if it does, is this plan will just have more dollars than we thought. Those more dollars than we thought will allow us, for example, to borrow less money as we think of for our capital program, and just use more cash than we have to. There's no way here that I see a downside to setting this up. This really just gives you more flexibility, and it is the way in which triple AAA operates. Basically, this last page, if you would, is we're thinking of this as a safety net and it's there, as we said, if uncertainties continue because of the COVID, who knows about the permutations of COVID, and what have you, and all the things that might do. That's just what it's here for and it allows the overall Town, again, to be in more control and not be on your last dollars if you would, and not tap into the Unassigned Fund Balance below your levels that you have, and your levels are quite good. Let's make sure we make no mistake about it. We're in a very strong position. We want to stay in that strong position. That's what we're talking about. Lastly, on page seven, our purpose here is to allow you to move forward with the next year's budget and maintain the current real estate tax rate. It's allowing you to take care of some of the unanticipated fluctuations and it doesn't tie your hands. You can do whatever you want with it. But again, at the end of the day, our focus here is to target basically- I'm going to round off here. It's about 2M dollars a year, and that's the focus it's about 3% of the General Fund revenues. That's roughly, as you can see almost 2M. With that, Madame Mayor, I am done, as I said. Happy to answer any questions. If there's none, it will be the quickest presentation I ever made. Mayor Burk: I think so [laughs]. David Rose: Anyway. Thank you. Mayor Burk: Ms. Fox, do you have any questions? Council Member Suzanne Fox: I do. Thank you. Loss of revenue. Have you had a chance to look at our fiscal proposed budget for this Fiscal Year? David Rose: Not yet. The one proposed for '22? Council Member Fox: Yes. David Rose: Not yet. No. Council Member Fox: You don't have any, I guess, anticipation or any concern. Would you let us know if you have a concern about revenue projections? I think they're very, I guess-- not excessive, but they exceed what we might get just looking at what's going on this year as well. I was just wondering when you do that, would you come back to us and let us know what you think of our revenue predictions? Because I was looking at them, and I thought they were very, very ambitious. David Rose: Too optimistic is what you're saying? Page 31 February 22, 2021 Council Member Fox: Yes. That's the question I had. Thanks. Mayor Burk: Mr. Steinberg? Council Member Steinberg: Thanks for the presentation. I want to be sure I understand. We're starting out in creating this RSR at a level of $2M. Is that correct? Is that immediate? Because I'm looking at this chart and it's showing a million dollars in '22 and a million dollars in '23. Are we doing this in stages or all at once? David Rose: Let's go back. Can you-? Okay. Clark Case: I can do that. You talk to them and I'll navigate for you. David Rose: Let me make sure we get to that Mr. Steinberg. I'll just go to my page. There you go. David Rose: You were talking about the idea that it would be a million and a million in each year. Council Member Steinberg: Yes. David Rose: The thinking is when we set that revenue stabilization, what is there now, those dollars are there, is to hopefully not even use any of it, but if we do, right now, your staff has a sense that in 2022, that shortfall could necessitate using. Council Member Steinberg: That's the use, not the allocation. I understand. Okay. That certainly clarifies that. The objective is to create this fund in the range of about 3% of the general revenues, is that correct? David Rose: Yes, sir. That's not a million that's about 1.8M or is thereabouts, meaning the 3% is about 1.8M. Council Member Steinberg: Again, just to understand, we want to create a separate reserve for immediate use because this doesn't, in effect, jeopardize our larger reserve, which keeps us in good standing with the rating funds. David Rose: Correct. The irony of that larger reserve is that the rating agencies really don't like to see you tap into that larger reserve, particularly below your policy level. Now, having said that, you do have some excess and that's that green right there, the excess Unassigned Fund Balance. If everything holds this year, meaning here in '21 for the rest of the year, you possibly could use-- or need, not use, need about $1 M of that. Part of that was what I was alluding to earlier that goes here in '21 no one knows-- for example, how much you all need with regard to snow removal, it's already been about a million dollars given what's going on. Council Member Steinberg: Out of curiosity, should we need to tap into the larger reserve? How does that in the end affect our ratings? David Rose: It's really looked at negatively. Again, particularly for a AAA community, because the thinking is that almost should be sacrosanct because remember this, part of the reason you have that very sizable reserve is because you don't want to be doing some pay-as—you-go loans with regard to running the actual government. Because if you think about it, unlike a lot of individuals that are fortunate, let's say, to get paid every month and have a more, call it, even cash flow throughout the year, local governments by their very nature, have a very uneven cash flow. Part of that Unassigned Fund Balance that you have is to help with the uneven cash flows during the year, as you are basically dollars are going out every month until such time as you get your taxes that come in, or your State monies that come in, because they don't come in evenly. That's part of why that Unassigned Fund Balance is there for any good governments at any [unintelligible]. Page 41 February 22, 2021 Council Member Steinberg: Okay. But in the end and under dire circumstances, should we be forced to use that fund? Would we expect it to affect our ratings? David Rose: It could. Here's what I would think. If you, as you say, in dire circumstances, which you also have is a policy that talks about replenishing that over a couple of years. I think the first thing that would happen is the rating agencies would say, "Okay, why did you have that happen?" Because let's face it, something else could happen that's unrelated to COVID. God forbid, some sort of earthquake or something catastrophic happens in this area that you can't help or foresee and the next thing so much of the business or so many of the revenues are curtailed. If that were to occur, you might, again, need a couple of years to get back on your feet or even get FEMA dollars or things like that. The idea is that if you use it and you don't want to use it, if you replenish it, then presumably you'll be okay. Council Member Steinberg: Thank you. David Rose: Thank you. Mayor Burk: Mr. Cummings. Council Member Cummings: Thank you. As a member of the finance industry, what are you seeing as the predictions for the next six to eight-- this summer into fall, as far as the economy in general? David Rose: I'm not an economist and I tell people that I was a chemist, so I'm not qualified in any way. I think even if I was an economist, I think everybody's got a different view. I think we know economists are terrific the day after. They do a pretty good job of analyzing why, but we really don't know. I don't really speculate. I've been saying for example in which we did, when rates are good, let's go and refinance. The last week or so, rates have shot up. We really picked our timing, which was just, do it when we can do it, and we wouldn't have that savings today but we had that just a couple of months ago. My thinking is I only want to try to do things we have control over and since I don't control the economic environment, just want to try to make sure that we know it's uncertain and if it is better, then I want to be in a mode where we say, "Guess what? We didn't use a lot of those dollars." We're that much better off. Council Member Cummings: Sure. Okay. David Rose: I'm not helpful, I'm sorry. Council Member Cummings No, that's all right. 21:32 Clark Case: I might be able to be a little bit of help on that. We do look at a lot of different economic forecasts from FHN, from Wells Fargo, from JPMorgan. We look at that and when we project our revenues, a lot of it has to do with what those economists are telling us. If you look at our chart for the shortfalls in the revenue, you notice that the shortfalls are going down. That's because the economists are telling us that the economy is going to get better. It's going to be gradual. It's not going to be all at once. We're not going to all be hunky-dory by summer, especially the hospitality industry. It's going to take a couple of years before everybody's comfortable with traveling, going out to eat, but it will come back. What we're doing is following what they're telling us is the likely trend. We're forecasting that in, and that's where we're wanting to spread these reserves across time. Mayor Burk: Mr. Bagdasarian. Council Member Ara Bagdasarian: Yes. Thank you very much. I wish we can predict what the future is going to look like. It's about being prepared and having a responsible program, I think is important. Just one quick question, being new, not relatively new, but being new. Does our AAA rating, is it Page 51 February 22, 2021 impacted by our ability or our usage of borrowing money? Is it like in consumer credit, the more you borrow that typically that tends to impact your credit rating? Is that how that works with the--? David Rose: Not quite. Just very briefly, your credit rating is a function of four different components. One is the economy, demographics, 30% roughly thereabouts. The second is financial performance in a given year or years. You have control over that. The third is your levels of debt and other liabilities like pension, things like that. For you, as a pension, unlike a lot of other places you read about as you do know, that's Virginia driven. Almost for everybody, you're a part of the State program if you would. It's very easy that way, you don't control that. You, meaning the Town. Then, lastly it's management. Ironically management doesn't mean the people here. It means you and these people here, both sides. That's what they call collectively management. That includes policies and adherence to policies. Basically, about 70% of a rating is what you collectively have control over. The demographic, the economic, you don't have much control in the short run. It's more of a global overtime thing. I say global meaning regional, and how things are going. When it comes to ratings, if you, for example, had no debt outstanding, that wouldn't necessarily get you a better rating because the theory would be that you're not investing in your community. You're not doing those things that are necessary to keep this community desirable. On the flip side, if you have too much debt, that certainly can work against you. In the normal course of events, if I were here, like I kidded with the Mayor, sometimes when I make our annual presentation, we will give you and show you how you compare to debt policies that you have. I can tell you, you compare favorably. You have been in compliance with those policies for years. That's part of management. It's part of debt levels. That's part of why you're a AAA, solidly a AAA and have been. Council Member Bagdasarian: All right. Thank you. David Rose: Thank you. Mayor Burk: Vice Mayor Martinez. Clark Case: He's virtual. David Rose: I'm sorry, okay. Mayor Burk: You look around for him. David Rose: Vice Mayor Martinez? Vice Mayor Martinez: Thank you. Can you go back to slide five? David Rose: Slide five. Okay. Kaj Dentler: I see we're on it. Clark Case: It's [unintelligible]. David Rose: Yes, Council Member. Vice Mayor Martinez: I'm making an assumption that let's say, for example, let's go to 2020, we have $3.4M shortfall, and we have all these different things we have been doing to compensate for that. Can we assume that the X-axis is a balanced budget and so that what we're doing is we're taking these things to make it a balanced budget? David Rose: Yes, sir. Page 61 February 22, 2021 Vice Mayor Martinez: For example, FY '20-'24. We can say the X-axis is a balanced budget? David Rose: You did. You had a balanced budget. Yes, sir. Vice Mayor Martinez: Is that correct? David Rose: Yes, sir. Vice Mayor Martinez: So, these are doing everything we can to maintain that balanced budget. David Rose: That's right, that's correct. If 2021 - Vice Mayor Martinez: Clark? David Rose: Sorry. Clark Case: Yes, sir. Vice Mayor Martinez: Can I make an assumption that a lot of these are based on trending and not actuals? Clark Case: The 2020 is based on the actual, the 2021 is our year data actuals plus our forecast for the last five months. The '22, '23, '24 are based on the trends. Vice Mayor Martinez: Right now, let's say we exceed expectations. It could be we may not need any of this if our revenues are generated. I'm assuming you're taking a cynical, pessimistic point or looking at this and that it could be that we exceed expectations. Clark Case: That's correct, we would very much like to exceed expectations. We are giving you what we see is our most likely scenario. We look at worst case, best case, and then most likely. This is what we regard as the most likely scenario. Vice Mayor Martinez: I guess the point I want to make is that these are based on trends and stuff that are happening right now, right in the middle of a pandemic. Of course, we can't chart optimism as we'd like to, as part of this, but I appreciate the view. I appreciate what you guys are working on and trying to do for us, but I'm going to be optimistic and say we're going to exceed expectations in the next three years and we won't have to worry about this. I do want to ask Kaj, as part of this, is this part of our disaster recovery plan? Kaj Dentler: I guess I didn't want it. It depends on what definition you're using. I think we're using similar terms. This is our multi multi -year financial plan, that's from FY 20 through FY 24, to help manage through the current economic challenges that we have as best we know them today. I'm not familiar with the term that you use for our financial planning, but I believe it is what you're asking about. Vice Mayor Martinez: My concern is Joe Dame is putting together a disaster recovery plan for all kinds of scenarios, tornados, storms. I'm hoping that part of that with this pandemic coming on, that part of his plans are including how we address some of the financials and how we can help in our town and staff, and keeping our services up and running. That's all I got. I appreciate your help. Thank you. Thank you for the presentation. I appreciate it. Mayor Burk: All right, I just have a couple of questions, Mr. Rose. I think you kind of answered one of them. I was going to ask, are there any bonds that are coming available at this point? Should we be looking at refinancing them? David Rose: For the moment, because it's always a changing equation with regard to timing, there is nothing right now that warrants refunding, but if it does we've been here it seems like every year for about three years now, where we've said something now comes due or something opportunities. If it is, by all means, I will definitely let you know through the staff. Page 71 February 22, 2021 Mayor Burk: You're not aware of any at this point that are coming to you that we could-? David Rose: Right now, there's just nothing that is of a meaningful enough savings that would be justifiable. Mayor Burk: Whenever you come, you've always talked to us about the fact that we need to keep that 20% rainy -day fund. How does this impact that fund? David Rose: Great question. So you see there on 2021 it says only the green excess Unassigned Fund Balance? That Unassigned Fund Balance is the 20%. You actually have dollars over and above the 20%. That's why, if necessary, we could in this fiscal year that we're in right now use $1 M dollars of that and not go below that 20% that we've talked about. Does that make sense? Mayor Burk: Why are we keeping more money than we need? David Rose: For this exact reason. That's exactly for this reason. Clark Case: I want to speak to that, I think. In 2020, the Town Manager cut more in expenditures than we lost in revenue. He took a very conservative approach. Mayor Burk: He cut more expenditures. Let me think about that. He cut more expenditures - Clark Case: He cut more expenditures in 2020 than we lost in revenue. We held a lot of positions vacant, frozen, and we were able to generate more money than we actually lost on revenue. That created an increase in the fund balance above the 20%. That's the money we're looking to use in 2021, is the amount that's over the 20%. Kaj Dentler: Just to add to that Madame Mayor, the only reason there was a surplus in FY 20 is because of the management reductions in 30 plus positions that are frozen or not filled. Had I not done that and the team not done that we would be an entirely different situation. As you heard earlier from Mr. Rose, that is not sustainable for the Town over the long period of time. In my proposed budget for '22, as I described to you two weeks ago, is only designed to get us back to their initial starting, the full funding that we had. There's no growth in the budget beyond the three things that we've talked about, outdoor dining, and office space, and some snowstorm budget. We're just trying to get back to where we started this current budget year. Eventually, the Town's going to have to address growth matters that are affecting us, things that you will want to get done as a Council, et cetera, as we continue to grow in our resident numbers, our businesses, et cetera. We're forecasting some challenges in front of us over the next few years, based on how the economy rolls recovers here in the next few years. We're just trying to get back to square one at this point. Mayor Burk: Maybe this will help me understand a little bit better. We have this unassigned-- Well, this rainy -day fund of 20%, which equates to how many millions? David Rose: It was about around 20M. Was it [inaudible]? Was it 11.5M? Clark Case: Yes, 11.5M. I was going to say 12, it was 11.5. Mayor Burk: So, 11.5M we have, we don't use that, we keep that for if there's an emergency. Clark Case: We need a year to fund our operations. Mayor Burk: Now we're going to have another fund. We're still going to have this fund over here, but we're going to have another fund of how much? David Rose: Basically, that idea is a little bit about $2M. Page 81 February 22, 2021 Mayor Burk: $2M, and that's to put towards a future budget possibly to balance budgets as we go along. It won't be more than 2M. David Rose: That's our recommendation, is to basically be roughly maybe even a shade under, but in that range, yes. Mayor Burk: Because 2M is how many pennies? David Rose: Good question. What's-? Kaj Dentler: A little more than two. Clark Case: Two and a half. David Rose: Two and a half pennies. That was our whole goal, Mayor, was while things are difficult, even they're not difficult, it's not to have everyone talk to you, meaning this collective body about tax increase, especially when things are difficult. That's the whole focus here, just like when we did the refinancing and the restructuring of all that debt, was to allow us to not have to come to you and do even more draconian cuts than what the Town Manager talked about, as well as allow us to keep some of those excess dollars and keep it in that way. Because if we cut into that, as I said, I can't remember if Miss Fox or Mr. Steinberg about, but asked about sort of not touching that. Our goal is to try to make sure our reserves stay strong, and, if we can have a few of those extra dollars, if they are around and we can get them done, targeted. They are around because, again, we did that whole refinancing where we saved the money and had the dollars set up. That's our whole appeal, is to now use it. Again, if indeed the economy turns around faster and better as the Vice Mayor says, Mr. Martinez said, we'd be the happiest. All of us would be very, very happy because that would just mean, I think for you, that in subsequent budgets, you can then get back to more normalcy in terms of positions and things like that that have been-- Kaj Dentler: Part of the intent of the reserves is to give us flexibility. It's not to lock us in. If it's needed, we'll have it available, we'll use it. If we don't need it, then you have a choice to make of how you want to use it if the economy turns back and we don't want it. You're not locked in to that. The 20% reserve, correct me if I'm wrong, is that we have that 11.5M is only about two -and -a -half to three months' worth of money to run the Town. If you think of a catastrophic situation that we hit, we wouldn't last very long. I know that we all, "Oh, a 20% reserve, that's a lot of money." It's not a lot of money if we get hit, so we have to be prepared for that. Even the reserve that we're talking about is a very minimal amount, but in the current situation is to our financial advantage to implement it, not lock it in, be flexible so we can make decisions. You can make decisions as we learn more over the next several months in a year or so that type of thing. Mayor Burk: There's a concern that's going to come up. I guarantee you that I talked to Mr. Clark about it today, or Clark about it that people are going to say, "You've got so much money over here and so much money over here. Why can't you lower our taxes?" We got to be able to answer that question cohesively and make sure that we're making sense in regard to why are we doing this. That's the impetus of the questions. Kaj Dentler: Sure, understood. Mayor Burk: My next question and my last question is I'm a little concerned that you have data center revenue sharing at 1M dollars for both '23 and '24. That's an assumption. I know these are all assumptions. Kaj Dentler: I can answer that. That's not his. David Rose: That's not mine. Page 91 February 22, 2021 Kaj Dentler: That's not his fault. That's that is there because in '23, '24, you're correct, we don't know, it is an assumption, but I don't know what our decision will be. What you can look at is if there is -and I said this in my previous meetings and in my presentation- if there is no new revenue source that we identify in the future, our economic situation is different than what you see there. If the economy doesn't recover as quickly as we hope, and there are $2M short that we don't have because a revenue -sharing agreement is not reached, then we have some economic challenges that we have to deal with. Just take away data center reserve if you want, but you recognize there's $2M that needs to be identified when the next three to four years, based on what we see today. I think Mr. Rose said it well, we hope that things are better as we work down the line, but we don't know. All we can go is based on what we have today. Mayor Burk: Why are you using that? As you say, if it doesn't work out, we're in a bad position, we've got to find that money somewhere. Kaj Dentler: We're identifying that because that opportunity is going to be discussed here in the near future and you will then know. We all know that there's an opportunity, but if that deal isn't worked out, then we're going to have to find another revenue source or make some real hard financial reductions to manage it. Again, this is just a four or five-year window of opportunities that things could go different directions. Be more positive, be less positive. We've identified this for several months now, this is based not this specific graph, but this four or five-year plan and hasn't changed. That's all. We're just identifying that we've got some crossroads ahead of us that we're going to have to decide. Mayor Burk: Okay, well, it's very interesting. Clark Case: We're using one-time revenue from refinancing and other measures the Town Manager was able to take, like not replacing equipment. Those one-time savings run out. That's what this chart tells you, is that you run out in 2023 by a million bucks or $2M and you run out in about a million bucks the next year. We've done enough one-time savings to get us through the next couple of years, but we need recurring revenue to bring us to where we need to be, to balance our budget in those out years. Mayor Burk: I understand that. Clark Case: The answer is the one-time money is going to run out. Mayor Burk: My concern is the data centers we originally were, even when we were talking about that was going to be one-time money. Because tomorrow that data center agreement, if we made it tomorrow, three years from now, the County may say, "Never mind, we're not going to do it anymore", and we're out of that money. You're saying this is at the end of the five years, so it might not be such a- Kaj Dentler: The data center money, the market, none of us have any insights into how long that market is going to last, but it's unlikely that it's going to go away in three or four years. If it does, the County is going to have a significant problem. There's going to be a lot of discussion on that particular point. think the key thing for Council to recognize is that's $2M over two years that a revenue source is going to need to be identified to put us in a position that we need to be able to sustain our operations. That's without growth and new programs or new services, whatever. The Town is not staying the same and you know that. Mayor Burk: So I will beat that horse again and I will say that money that's coming in from the data centers, we better be very careful with it because it could be gone. The County could decide they don't want to do it anymore. If we're including that as an ongoing source of money that we're going to continue to use for operations and things of that nature, I think we could get ourselves in trouble— Kaj Dentler: We agree, we totally agree. Mayor Burk: -- but that's a discussion that we need to have. Page 101 February 22, 2021 Kaj Dentler: How that money is used is to be determined, no question. Again, this is just a picture over a five-year period as best we know today. We agree. Mayor Burk: All right. Kari, I'm sorry. Did I forget you? Council Member Kari Nacy: No worries. I just had one quick question. Are there some examples of other localities that are doing something similar that have successfully done it or that that have a longer picture that we could compare to that have done something like this? David Rose: The answer is yes. I would say that your community, to your credit, is been one of those communities that tends to be ahead of the curve, or at the very much at the cutting edge. I say that and I don't say that to everybody. I've worked with you all for about 25 years, so I can tell you that wasn't always the case. We work with about 500 communities. I don't do 500 as you can imagine, but my department does, our group, our firm, and there are a number that do, they really are. Give an example, City of Cincinnati is a client of mine, is a very sizable community. They were as quick as anyone to immediately jump on doing some things because, like you, their revenues last year at this time were looking good, but then all of a sudden, it started to have a very significant impact because they were basically income tax -driven and that was a big issue. The upshot is they move very quickly, people like yourself. Both big and small move very, very quickly. There were others. Yes. They just come to mind very quickly. What's that? Clark Case: [unintelligible] County has a revenue stabilization fund for any. Council Member Nacy: Thank you. Mayor Burk: Anyone else have additional questions? You have three minutes. Miss Fox? Council Member Fox: Thanks. Just real quick. I want to go back to Mayor Burk's point. The ambitious that I'm talking about is actually what she pointed out here. That's some of the revenue that I don't feel comfortable, at least not yet adding in because we just don't know where we are with that and, into her point, it can go away at a whim just either County can say, "Oh, we don't want to do this anymore. Oh, we could too." It's a two-way street there. I'm a little worried about that and I was wondering, had you done any projections without those two $1 M things in both '23 and '24? Clark Case: As I said, we do different scenarios. What we're telling you here is that in those out years, you have a deficit situation of about $1M in each of those two out years in your ongoing revenues. We have not at this time tried to figure out how to fix that problem, but what we've done is identified it as saying we need to find a new source of revenue that's a recurring ongoing source of revenue. You can do that by raising BPOL, you could raise meals tax, you could raise real estate taxes. Those are very unpopular decisions. What we're looking for is to say we need to find economic development that's going to generate additional personal property tax, because personal property tax is paid based on the growth of the commercial sector for the most part. If we can generate additional personal property tax through economic development, we really don't want heavy industry. A lot of personal property tax comes from heavy industry and that is consistent with who Leesburg is. Data centers are a clean industrial source of personal property tax and that's why we're identifying as the data center. It could be something else as well, but the Town has to find another source if it doesn't want to raise the base real estate taxes and the base homeowner taxes. Or raise the burden on our industries. I bring you back to the-- Remember, the pie chart we showed you on where all our revenue sources come from and over 30% of our revenue now is from consumer taxes, and they're more volatile than personal property or real estate. We're looking for a recurring revenue source that doesn't really revolve all around us raising taxes on homeowners in one way or another. Economic development is one possibility, but the one that we know about that would meet the need is data centers. That's what we're telling you. Page 111 February 22, 2021 Council Member Fox: Okay. I totally understand it and I thank you for that. I just don't think it's in the bag, and even if it was in the bag, it could go away quickly. I'm worried about that. As far as the $11.5M that Mayor Burk alluded to, I had the same question she did. I understand the need for stability, especially when there's a lot of instability right now that money sits there. I'm sure we invest. We invest it, right? Clark Case: I'm sorry. Which money? Council Member Fox: The $11.5M in our -- Clark Case: That's our Unassigned Fund Balance. That's the 20% Unassigned Fund Balance. Council Member Fox: Okay. I know the good management, I know AAA is dependent on that. I just want to know why if it just sits there, why is it so necessary for us to have it as for AAA. I understand the lower interest rates and everything, but I just want to know if it would balance out something. Clark Case: Let me explain. That 20% represents about two and a half months of the Town's cash flow. At the beginning of your fiscal year, you're starting basically at what you have. The tax flows that come in are billed and collected the first week of December and then the first week of June. That's personal property and real estate that are within 30 days of each other. You have two big inflows that come in halfway through the year and at the end of the year. They basically are big lumps of money they come in. The 20% fund balance is what we have to spend down between those big inflows. We do have some quarterly flows that come in at the end of each quarter, the month after each quarter, but we are not a- - Our revenue comes in a steady stream, like a paycheck every two weeks. We have a few monthly revenues like sales taxes but the big dollars, if you look at that pie chart, they tend to come in twice a year. The 20% fund balance is what gives us that. Not living paycheck to paycheck ability to make our payroll. Payroll is about $1.2M every pay day. We've got to pay all that upfront, and then when we get the cash to come in. If something untoward happens that caused those taxes to come in late, even with the County's doing the best it could, maybe their data center gets flooded and they aren't able to bill and collect the taxes for a month, or something else happens that causes the Town to be offline. Flood is the one I point to cause it's actually the most common damaging disaster in the United States. If that happens, we got to be able to get to that next paycheck, that next big cash inflow, and that 20% is what gets you there. Council Member Fox: And it doesn't sit there? Clark Case: No, we draw it down. We build it up. We draw it down. We build it up. At the end of the year, we want to make sure we've got it there because that's when we have to report to the rating agencies and the debt holders. That's what they look at, is where we finished up at June 30th. Council Member Fox: Okay. All right. What's the difference in revenue? What if we weren't able to build it back up? What if we couldn't find the revenue? Marty's optimistic. Let's go to the pessimistic side. What if we don't get enough revenue to build it back up? Clark Case: Then what has to happen is we under policy, we have two years to get it back up over the 20%. We could pull it back up over two-year period under policy. Council Member Fox: Okay. All right. Thank you. Mayor Burk: Anyone else who has a question? Clark Case: We have to find the revenue for that. Mayor Burk: Anyone else has --? Mr. Cummings? Page 121 February 22, 2021 Council Member Cummings: The current plan is for the revenue stabilization reserve projects it to have this reserve in place for the next three to four fiscal years. Clark Case: Yes, sir. Council Member Cummings: Is there any recommendation to have a stabilization reserve longer than the next three or four fiscal years? David Rose: I think we'd love to be able to have that and to not have to use it and so it stays for as long as possible. That would be ideal. We have some situations like that. In fact, to answer Ms. Nacy's question, we've got several cities now that have moved to that model. Luckily, one did. Roanoke, for example, City of Roanoke, moved to that model about two years before the pandemic, and they actually built up that same 3% that you're talking about, fortunate because that helped when the pandemic kicked in at the same fourth quarter. Again, we want to underscore the goal here is to, hopefully, never have to use that. Never have to use the green. Again, the reason it's there is because I think the Town Manager would indicate that you want to have a certain level of absolute services that you all expect, and to do that you will need a certain amount of revenues. Council Member Cummings: Sure. Unlike the Unassigned Fund Balance-- Oh go ahead. Clark Case: Let me add to this answer because he is not down the weeds as much as I am. What staffs proposal says is we're going to exhaust this reserve through these next two years. But then in any year in which we have more money at the end of the year than the 20%, we strongly recommend you take 25% of the excess above the 20% and you put it in the stabilization reserve until it gets to 3%. Then once it's at 3%, you only adjust it if you need to. Some years you would take it, some of years you wouldn't. But only in years in which you've had more wind up in fund balance than the 20%. Once you get to the 3% we think at that point its Council's judgment, whether you think that reserve is sufficient or not. It would give you that on an ongoing basis down the road. We just don't anticipate that being doable until probably fiscal year 2024, and that would depend on our finding the additional revenue sources. Council Member Cummings: Perfect. You answered my second question already. Thank you. Mayor Burk: Mr. Steinberg? Council Member Steinberg: Thank you. Well, two things. One, obviously, these are projections. They're not dead certain but we are optimistic that those are potentials. If they're not, then as we've been told, we'll have to find other revenue streams. Now, I don't think it takes much of a crystal ball to see that the better prepared we are, the better off we are. I sent Council and several members of staff an article from the New York Times Sunday that, basically dealt with any number of communities in areas that are dealing with crises brought about by either climate change or other types of natural disasters. Most of them were ill -prepared. No one was prepared for the pandemic and that put us exactly where we are right now. This area, maybe geographically, we are not immune but less susceptible to certain climate factors. That's not a given either. It wouldn't take much on top of the pandemic at this point, plus, say a major tornado or we've had these snowstorm events, to really put us in a hole. As we're entering the budget discussions, my opinion is the reserves are critical and we may even want to determine that they're not enough in their present form. It isn't fun just to have money sitting there although we know we're using it throughout the year. I know taxpayers don't like to hear that we've got these reserves. In the end, we would be shirking our responsibilities if we weren't providing for the needs and the services that this Town and its residents require and it's up to us to explain to them why this is good fiscal policy and it's good for them and the survival and the running of this Town on a consistent basis. Thanks. Page 131 February 22, 2021 Mayor Burk: All right, everyone has had their three minutes. Ms. Fox, did you have your additional three minutes? Council Member Fox: No, I'm sorry. Mayor Burk: Everyone's okay? Is there any action that we need to do? Kaj Dentler: No, not at this time. Mayor Burk: Mr. Martinez, did you want to say something? Kaj Dentler: I'm sorry. Vice Mayor Martinez: The big thing about having these fallback funds, we have to reiterate, is that what's the alternative if we don't have them and something happens? We have to cut services. Imagine not being able to snow shovel when we need it. If the snow happens after 5:00, we can't do anything about it because we don't have the money to pay for it. Or if we have a tree and branch pickup and we don't have the money to pay for it. Just start thinking about all the different things and services that we provide to our residents, that if we don't have these funds, and correct me if I'm wrong, then we'd be having to take away services for our Town. Clark Case: That's in fact, what we've done in the last year, is we've not filled empty positions and service levels have in effect been reduced while we cope with the crisis. We've tried to make sure that they weren't critical. Vice Mayor Martinez: They would be. Vice Mayor Martinez: All right, thank you. Madam Mayor: Thank you, Mr. Martinez. Anyone else at this point? Kaj Dentler: Madam Mayor, just to conclude, to your question, there is no action that you need to take at this time. This is part of your budget deliberation process, and you'll make that decision here at the end of March as we work our way through the budget. Madam Mayor: Great, thank you. Thank you, Mr. Rose. It was nice to see you again. David Rose: Thank you, Madam Mayor. Madam Mayor: Take care. Are you driving back? David Rose: I'll stay tonight. With the weather, I thought I'll have several nights here. Madam Mayor: Better idea to wait. David Rose: So I thought I would try to-- I'm not used to driving in that kind of weather. Madam Mayor: Well, you have a good evening and thank you very much for coming in and explaining. David Rose: Thank you. Madam Mayor: The next one is our Fiscal Year 2020 Proposed Budget work session. I believe Mr. Dentler you asked for 10 additional minutes. Kaj Dentler: Madam Mayor, yes. Renee is going to go through the proposed CIP fairly quickly. We are going to cover the global. Then she'll go through the police station, the permanent bubble proposal at Ida Lee, the Town Plan, Town shop, expansion project as well and then any questions should you have. We also intend to talk about the project management program that I proposed to you during two weeks Page 141 February 22, 2021 ago. Then after all that is the Utilities Fund. I think Renee can go through the CIP fairly quickly and address all of your questions that you have. Our staff is here to address your specific questions. Madam Mayor: Thank you. Renee LaFollete: Good evening, Madam Mayor and Members of Council, we'll dive right into the Capital Program. The 22 to 27 proposed Capital Improvement Program was presented to the Planning Commission and they forwarded it onto Council with no changes to the proposed document. That's the first time in my 20 years that it's made it out of the Planning Commission with no comments. For the six -year plan, we're proposing 69 projects, $209M. We include 13 new projects. In the 22 section of the budget, there's 33 projects and 39% of the 22 funding is Utilities projects. What is a Capital project? It is a construction, renovation, demolition or land acquisition that's valued at more than $60K and has a useful life of at least five years. For you, new Council members, I wanted to make sure you understood what the definition of a Capital project is. We had a busy year for fiscal year '21. This list of projects will be, has been completed by the end of this fiscal year. That's 10 projects that include pedestrian connection projects, ADA projects, Airport, Utilities, and our storm drainage project on Tuscarora Creek. A couple of those are called legacy projects. Sycolin Road Widening Phase Four, completed a project that's been in the CIP since 1985. The Tuscarora Creek flood mitigation and restoration project completed a project that was in the CIP since 2003. What did we add in 22 to 27 draft? We added 13 new projects; two in general government, two in streets, two in storm, two in the Airport section, five in Utilities. They focus again, on pedestrian connectivity, flooding concerns, current asset renovation, and protection of those assets. Some of the notable changes in the CIP from a scope perspective is the Ida Lee Park tennis court air structure. We'II talk specifics about this one. In '21, it was approved as a seasonal structure. We are proposing it be a permanent structure with the 22 CIP, and that was endorsed by the Parks and Rec Commission on a 7-0 vote. The Edward's Ferry Road sidewalk project, if you remember, when this project was brought forward to Council, we moved it forward in the CIP and residents complained about storm drainage. So we did a quick drainage study, we added that to the sidewalk project so we only have to touch the road once. Budget, we were requesting a $4M increase to the police station, we'll talk about that one more in a bit. We're adding $5.7M to the Town Shop expansion, we'll talk about that one a little bit later. Miscellaneous roadway, pedestrian, and ADA projects were showing an increase in that budget each year to pick up projects that were identified in our draft ADA transition plan. The Route 15 Bypass/Edwards Ferry Road interchange, I didn't want this one to catch anyone by surprise, it is showing a $57M increase and that is primarily because of the way VDOT uses algorithm to calculate out years in the budget, so it has something to do with their formulas on that project. Schedule -wise, the Town Shop expansion has an extended schedule. Morven Park Road has a delay of approximately six to eight months. We were dealing with two development projects that we were coordinating with, one of which went away, which is the memory care facility. We've had some delays due to COVID and our engineers, and being able to get into the field to meet on certain things. Edwards Ferry Road sidewalk has about six to eight months delay on that one as well. Again, added the drainage component to the project, delays in meeting with Utilities on -site to talk about conflicts so that we could design around those, and staff not having a Capital Projects manager has played into some of that as well. The Airport Parallel Taxiway Relocation Project is delayed to meet FAA and DOAB funding availability, and, as you know, the Airport is funded a lot by FAA and DOAB funding for Capital projects that can pay for anywhere up to 98% of those projects, so having FAA dollars on that project is very important. In the future projects list and the priority projects list, the good thing is we only had one add to those lists and we moved seven projects into the active six -year plan. Those deleted from the CIP on those lists either are covered by proffers, by developer projects, are not covered in master plans anymore, or the interest has waned on those projects. Page 151 February 22, 2021 Let's talk about the police station expansion. This project we're proposing an increase of $4M, so our total project cost would go to $20.6M. The current project as proposed is a $16M project includes these five bullet points: a 14K square foot one-story addition that does not include the ability to go to a second floor for future expansion, just moderate renovation to the existing building, some new furniture and fixtures to go into the expansion, HVAC improvements to the technical support building, no expansion to that building, and approximately 38 new parking spaces. To fit all of this in a $16M budget significantly impacts the police's programming ability. The proposed footprint of the project is to do the building expansion on the green grass that is between the road and the building itself, so this area right here is the building expansion. The secure parking lot expansion is this yellow area here. With the $4M that we're requesting, we have a list of 10 items that are prioritized. The first is a $500K increase to cover project shortfalls, which is A&E expenses, inspection expenses. We're requesting an increase in the contingency on the project, given the booming construction industry in this Northern Virginia area. We feel it's prudent to increase the contingency on that project. The community room, we were not going to touch. That's a focal point of the police station and is used by a number of resident community groups. We'II have IT infrastructure upgrades. They're just primarily cabling and fiber optics. They have not determined whether new servers are going to be needed yet based on the new security systems that are being added to the project. The big one is this million dollars here for the addition and foundation design to be able to increase the project at a future date, to add a second story to the building. Then also the partial parking lot expansion would be increasing the secure parking, putting in the adequate storm drainage, storm water management pond, to be able to deal with future expansion. Doing it now saves us money than doing that later. Fitness room, doing a mezzanine for the fitness room so they have more space for a fitness facility at the police station. Upgrading an entrance feature, which is basically just materials. Some miscellaneous items that are ADA recommendations, some new furniture, some enhancements of IT equipment like projectors and TVs and monitors that are not included in the current budget, and then replacing the overhead lights in the secure parking lot that are aging out very rapidly. The Tennis Air Structure. The second highlighted project approved in the fiscal '21 is a seasonal bubble. We're proposing it as a permanent structure. What are some of the pros and cons? There's no program cancellations due to weather if we have it under a bubble, reduces the annual operating costs, and we'll get to that a little bit on this next slide. We extend the lifespan of the bubble by 25% to 40% because we're not taking it up and putting it down and taking it up and putting it down every year. We do recognize that there is some sightline impact to the project as well. The development costs on this project, construction -wise between a permanent and seasonal structure, we're only looking at about $18Knin difference in construction costs. The annual operating cost, a difference of about $16K has to do with that up and down, and the seasonal structure is not insulated. Your heating costs more, your heating system is larger because you have to heat something that is not insulated. Your current indoor usage and demand of the current functional bubble that we have has about 400 court hours, and there are only about two of those available on a weekly basis. The resulting revenue projection here is dealing, very conservatively, looking at only 75% utilization of the additional court time that would be available with the three court structures. Now Parks and Rec have not seen a significant decrease in the amount of time that people want to use the courts on the current bubble. Their demand is there for a permanent structure. The staff does recognize the viewshed impact. We did some renderings of what Ida Lee would look like with the second bubble. You have the existing structure here. This is what a three -court bubble would look like sitting next to it. This is after. The one to the right is before. Looking at the viewshed that would probably be most impacted from Old Waterford Road, where we get a lot of comments and complaints about the leaf pile, and we got a lot of comments about the initial structure. The other one will be behind all of these trees, and this is with no leaves on the trees. Those give you an idea of what it will look like. The third project is the Town Shop Expansion. We are asking for additional funding on this one to be able to purchase the adjacent parcel on the opposite side of Keystone Drive. It's approximately a 16 - Page 161 February 22, 2021 acre parcel. As quickly as the Town has grown, the Public Works facility has not, and we have outgrown that facility. We have found out this year with all of the ice and snow events and the number of lane miles, we need additional salt storage. We were struggling this year to keep up with enough salt on hand. Then we need to be planning for the next 15 to 20 years. That's why we're asking for the additional funding on this. We've spread the project out so that it is land acquisition, some design and security to the facility, and then construction of a new building and some renovation to the existing building. With that, questions on CIP. Mayor Burk: Before we begin questions, I have a general question. We've had two reports tonight and we didn't get them ahead of time. I know they got emailed to us at the last minute. Is there a reason that we're not getting them ahead of time to be able to go over them? Kaj Dentler: I'm sorry. Renee LaFollette: The presentation? Kaj Dentler: It should have. Renee LaFollette: It should have. Kaj Dentler: We apologize that we did not. We will get that to you. Mayor Burk: Okay, no, she sent it. It was sent to us, but it was sent tonight. Usually, we have them here to go through them. Renee LaFollette: Okay, I'm sorry. I didn't realize it didn't get to you. Mayor Burk: That's right. The other one too with Mr. Rose's. Kaj Dentler: Well, we've changed the process even last year where the PowerPoints aren't provided until the night before because your agenda items have it. Normally all your staff memo covers all the material, then the PowerPoint is just a review of the same information. That's been our practice, to provide those when you arrive tonight. If you remember, we used to pass it down on paper, the night of the meetings. Now, we've gone away from that and we're more environmentally friendly. Mayor Burk: Well, that's what I've been looking for, it's those paper ones, and we haven't been getting them. I understand now that there was a change, so I didn't realize. Kaj Dentler: If you like copies, we certainly can print you copies. We were trying to go away from that and make it electronic. Obviously, we can create that if you want that. Mayor Burk: Is there any way that we could get the reports ahead, not a couple of hours before the meeting? We'll talk about that later. Kaj Dentler: Let me know what you need, and we'll take care of it. Mayor Burk: All right, Renee, are you the only presentation? Renee LaFollette: I'm the only presentation for the Capital Projects. There's another small presentation for the project management component and then there's some presentation for the Utilities Fund. Kaj Dentler: Renee can address any questions you may have on the Town Shop. Mr. Williams is here for the seasonal bubble or the permanent bubble. I'm sorry, Rich. The Chief is here on the police station if there are questions on that. The staff could go into the project management. Mayor Burk: How much more time is needed? If we go through the questions now, how much more time do we need to add for everybody? There's eight more minutes. Page 171 February 22, 2021 Kaj Dentler: I think it's up to you if you want to do questions now, or you want the staff to continue on. Mayor Burk: Well, let's have everybody present and then see where it goes. Thank you. Kaj Dentler: Okay. Mayor Burk: The next one. Kaj Dentler: Project Manager? Renee LaFollette: Project management? Jason Cournoyer: I didn't get to talk to you, but she asked me to present the project management. Do you have the clicker? Renee LaFollette: I grabbed it. Jason Cournoyer: All good. All right, good evening. I'll go through quickly. There's only three slides here on the project management. This is to give you some foundational information on how we manage with a Capital Project management from a finance standpoint. First of all, there's three components to our project management of our CIP. There's obviously the direct. This is the Capital Projects Division staff that works directly with our contractors, our vendors, the contract administration, all the elements that go into completing a capital project. There is also time when these same staff conduct studies for future CIP projects. They go on leave, they have their annual certification trainings and things like that. We call that an indirect cost of the same staff. Then there's the overhead, where all the planning that goes in the CIP, the Procurement, the management, the Town Manager's Office, the Attorney's Office, Finance staff and everything like that does the indirect project management costs to make sure everyone's paid and all the contracts are correct and everything. Those are three components to the project management. Oh, boy, what happened there? The current practice and the practice probably since Kaj became the Town Manager was to move towards paying for project management on a PAYGO basis or on a cash basis annually. For FY 2022, the proposed CIP has approximately $2.42M dollars in project management costs for both direct and indirect. The 2021 contribution was $1.6M. That would leave a gap of PAYGO funding compared to the total project management cost of about $820K. At the going rate, our current practice has been to add a $200K increase of the contribution annually. Even now, we're about four years behind of catching up to that goal. The proposed practice of the FY '22 budget is to move towards continuing to fund all indirect costs, all the administrative overhead, and all that time where Capital Projects division staff is not working directly on a project on a cash basis. It's similar. It's an operating expense. It is not capitalized expense. We're treating it as if we treat the operational staff in the General Fund. However, we're proposing to move towards continuing to capitalize the direct project management cost and use non -cash contribution sources. We can use grant funding, we can use NVTA funding, but primarily, we would shift to using general obligation bonds. This is a perfectly acceptable practice. It was one that we ideally would want to go to a PAYGO for all of it but we think where the CIP is now and some of the goals and challenges we have over the next few years that this is a good time to start considering a practice change. What that does for FY22 proposed budget, however, is allows for some funding to be available out of that PAYGO contribution for FY '22 to address some of the operational enhancements proposed in the budget. Mainly, there's about $335K that can help pay for the proposed snow and emergency response funding of $300K and the remaining $35K could go towards the Mayor and Town Council office needs. This chart is just to quickly exhibit how the project admin costs are. There is a project page in the CIP under Administration if you guys look in there, then all the direct project management there's a line in every project page that has the allocated amount for the direct project management cost. The green and the red on the left is what is being covered by cash. This is what we're going to continue to do. Page 181 February 22, 2021 These are the indirect project management costs, and then of the direct management costs, we are utilizing some more PAYGO funding, about $200K towards that, for small projects that are going to be completed in fiscal year 2022, as well as NVTA funding, some proffer funding, and then I think there's about $800K, just under $800K for general obligation bonds, additional bonds, for the direct project management. With that, we just wanted to make sure we walked you through that and could address any questions of our proposed practice change. Mayor Burk: Thank you, and we'll just do the last part and then everybody will come back in. Amy Wyks: Good evening Madam Mayor, Members of Council. I'm now here to give a Utilities Overview related to budget for fiscal year '22 that's proposed. The proposed budget for the Utilities Fund is just over $43M. Operations is $25.2M of that, and then we have about 18.4% in Capital Projects. $2.1 of that is related to the Capital Asset Replacement Program. That's where we repair or replace our infrastructure, as well as $16M with Capital Projects. Just a friendly reminder, the utility system, we provide both water and sanitary sewer services to our citizens, as well as within our budget we are funded solely through availability and user fees and charges. No General Fund revenues, otherwise known as taxes, are used in funding the Utility Enterprise Fund. In January of 2019, Town Council adopted a 5 -year water and sewer rate study plan and that's what we continue to follow right now. We're currently going into the third year. The utility system, fiscal '20, we reflected and showed positive performance as well as notable development activity within our service area. As everyone knows, we are a 24/7 operation with significant assets both underground and two treatment facilities. Just to put a little perspective here, in 2000, the number of miles of water main we had was 122 and we've almost doubled that in 20 years. As well as our connections back in 2000, we had 9,000 customers and we have well over 16,000 today. So our assets are definitely significant and growing. Our rates are intended to support our day-to-day operations, as well as repair, replace, maintain and pay debt. Just a quick reminder on what we did in the 2018 rate study focus. We looked at where we were, where we needed to be, and then how we were going to get there. So the focus on where we were and where we needed to be looked at where we're at with our assets. How are we going to reinvest? How we get our projects done as well as staffing? Then how do we get there? That was the purpose of the 5 -year rate study plan, to have a sustainable, long-term financial planning tool as well as for the rates. Our utility system goals, our goal is to have a 40 -year replacement cycle. To put it in context, prior to the rate study that we did, we were at well over 100 years before we ever replaced assets. That's approximately $10.5M a year in just replacing our assets. Obviously, we want to continue to have our high quality of service, timely repairs, great customer service, and having award - winning water quality and Clark, of course, long-term financial sustainability. Again, how do we get there? Similar tools there. The 40 -year replacement, maintaining our proposed staffing levels, and then the rates. In 2022, in the rate study, they had four additional positions that were proposed. One is the customer service representative, two utility workers, one with the plants themselves as well as the other out in the field, and then a wastewater plant operator. Just wanted to give a quick summary of where we're at related to the delinquency rates that I'd spoken to you in January about. As of last week, we're just over $500K. We are continuing our enhanced communication that we had talked about at that meeting. Just as a recap, we want to continue and encourage the third year of the five-year rate study, which includes a 4.5% rate increase for staff positions. We continue to work with customers impacted for COVID-19 and the pandemic. In the coming months, there will be some decision points that will be coming to Council related to availability fees, reviewing if we're going to expand the plants as well as the revenue sharing. Mayor Burk: Thank you. Appreciate that. Is there more tonight? There's no more discussion tonight. Then let's start with the questions. Kari, let's start with you this round. Page 191 February 22, 2021 Council Member Nacy: Just a quick question about the tennis bubble. Just scrolling back up to the slides so I see. Then the Town Shop one. There'll still be outdoor courts remaining, right? It's not covering the remainder of the - Richard Williams: Correct. Council Member Nacy: -open-air courts. Richard Williams: We have, currently, seven outdoor courts. This new bubble would be enclosing three of those. We would have four remaining outdoor courts for use. Council Member Nacy: Perfect. We just had a citizen email about that. I wanted to make sure I answered it properly. Then for the Town Shop, the $11M and some change-- I can't get back to the slide. Oh, there it is. That is all -encompassing of acquiring the land and the building. That $11M is the entire -- Renee LaFollette: Yes. That $11M is acquiring the land, securing the parcel and clearing it so we can start using it for some staging, design of a new building and construction of a new building. Council Member Nacy: Perfect. That was really it that I have. Mayor Burk: Mr. Bagdasarian? Council Member Bagdasarian: I just need some time to digest everything. There was a lot of information presented today. Just one quick question on the project management side. Is that all overhead and what you're proposing is just a reallocation? Jason Cournoyer: Is all of it overhead meaning-- I'm sorry, meaning what? Council Member Bagdasarian: Is it staff? Jason Cournoyer: Yes, it's all staff. It's all Town staff, actually. Within some of that overhead is about $200K to $300K of studies for potential new Capital Projects, but generally, it's all staff. Council Member Bagdasarian: That's all for now. Thank you. Mayor Burk: Mr. Cummings? Council Member Cummings: One quick question, an overall question on the CIP budget. If there was an item that was listed farther down and we wanted to bring it up in the schedule, what is the process to go about doing that? Renee LaFollette: You would need to let us know which project that is, where you would like to put it in the CIP. Finance would have to look at it from an affordability standpoint, and Capital Project staff would have to look at it from a workload overview. Right now, if we move any projects around, if we try and move projects forward, something is going to have to give. A lot of the projects that are in '22 and '23 have other people's money on them that have specific deadlines for spending that money, VDOT, NVTA. It's a balancing act that we would have to look at. Kaj Dentler: Let me just jump in for historical purposes. Mr. Cummings, this doesn't lock Council in, but Council's practice several years ago, going back to when Council Member Kevin Wright was on board, was to create what was considered a reasonable expectation of a CIP schedule for the citizens. The normal process is, a project starts in year six, it may have started sooner with a study, and goes six and then moves forward. It doesn't always follow that progression, but it is designed so that if a particular project in a section of Town is scheduled for year four and you know it's moving forward, Morven Park Road is a perfect example that's followed that, residents can at least expect to know when it's going to happen. But when Page 201 February 22, 2021 projects get moved around on a regular basis, then it becomes chaotic and there is no more an expectation. Again, it doesn't mean you can't, it just wanted you to know that that's the history of why we've done it the way it is, but some projects have moved up over time - Council Member Cummings: Sure. Kaj Dentler: -for whatever that's worth too. Council Member Cummings: Perfect. I have a question for Jason on the PAYGO of the management fees. We're looking at capitalizing some of that cost to the Town, as far as using general debt obligations, what would it cost the Town to just at this point with interest rates, the way they are, what would it cost us overall for the citizen to just use a general debt obligation for all of that at this point, with our AAA rating in the lower interest rates and maybe that would free up some cash to go somewhere else in this tight budget? Jason Cournoyer: Generally, we don't want to take that on for recurring operating expenses. The goal has been at the Council for the last five years, to address that. What has always happened is that we capitalize direct cost. Staff time on a project goes into the value of the completion of the project's asset value into our system. One example, the police station is about $600K over the next three years of project management that's direct management cost. That will go into the value of that property. To your question -- Clark Case: The risk issue is the affordability of your Capital Improvement Program. There are policy limits as to how much debt the Town can carry. In fact that was the way it was done when I came over six years ago, and Council didn't like it. So Council changed it. But what it does is it takes another $2M almost, out of your debt capacity for building projects every year. If you do it, the result is your ability to add new projects into your CIP goes down because you've eaten up your debt capacity and you wind up at your 15% limit of debt as a percentage of General Fund Revenue. What you're really doing is eating up your capacity to do more capital projects. Council Member Cummings: Sure. A follow-up question to that, can you pay it that early? When you have a mortgage, you can pay off mortgage early. Clark Case: No. Local government debt is a commitment to pay on a set schedule at a set interest rate for the length of the debt. You can refinance it sometimes, but what you're really doing is borrowing money to pay off money and that money doesn't actually go away, it gets escrowed. Council Member Cummings: Okay. Clark Case: When we get extra money and we say we're going to reduce debt with it, we don't mean that we're going to go out and pay off that debt. What we mean is that we're going to borrow less this year or next year. That means you incur less debt, so you pay less debt. Council Member Cummings: Sure. Clark Case: That's how we reduce debt burden, is by putting more cash into the CIP and thus we have less debt to pay. When you do that, which is what this was intended to do, you have more flexibility. The first three years I was here, we were right at the 15% and we literally could not add sidewalks to the CIP because we had no additional capacity. Morven Park is a classic example, is it couldn't get in because we didn't have any debt capacity for it. Now it's come in, rolled down the CIP, but we have more capacity than we had because we started doing this. The purpose of the program was to try to build up how much bricks and mortar work we could actually do with the resources we have. Council Member Cummings: Well, my only reason I asked is because I'm not sure at judging this year's winter storm funds and the million dollars, give or take a million dollars at this point we're spending, if $335K in the next year's budget is going to be enough to cover those expenses. I would love to find more money to put into that fund so we're not moving, shuffling the chairs on the deck here to find more money next year, because I don't think the snow is going away. I think we're going to see it year after year. Page 21 1 February 22, 2021 Clark Case: The answer, it won't cover a million dollars, but it's $336K more than we're putting into it now. The same approach is we take some other things we don't try to get there all in one year. We try to add a little more each year until we have it where it needs to be. It's much easier for the taxpayers, if we don't raise taxes to do that. Mayor Burk: Mr. Steinberg. Council Member Steinberg: Thank you, everybody, for the presentations. I have questions that are going to be targeted to everybody. I guess I'll start with Renee. In addition to the land acquisition for the maintenance building, are there costs associated that are required to bring the land into the Town and rezone it to whatever purpose, and are those figured into the cost of the land? Renee LaFollette: Most of the land is in the Town. It's a total of 16 acres, part of it is in the County, part of it is in the Town, part of it is in the floodplain. My understanding is the zoning that is on the parcel currently for the auto dealership is compatible with our proposed use. Council Member Steinberg: The six acres or whatever that are in the County, there are no costs associated with those becoming part of the Town? Renee LaFollette: No, they're on the other side of the creek, and we would not need to have access to those immediately. Council Member Steinberg: For the police station expansion, is that including a potential server location site for the Town's servers? Renee LaFollette: That's being analyzed. I'll let Kuba address that because they've been having some discussions on IT -related issues. Jakub Jedrzejczak: There will be always a need for some servers to be located at PD, for the backup purposes, or for the primary operations so we can't eliminate that. Even having a data center, we always will have some call handling equipment on the side that support 911 and other servers. Council Member Steinberg: I appreciate that. I was thinking more of the Town's servers as opposed to LPD servers. I know when we're talking about co -location for Town servers, I wasn't sure. There had been a discussion that that might arrive at the police station because it's a hardened site. Is that part of that equation now? Jakub Jedrzejczak: All other equipment, when it comes to IT, all the other servers were actively co - locating to the data center. There'll be no servers anywhere else than PD. There will be some networking equipment in this building, which is always necessary but servers, no. Council Member Steinberg: Thanks. Back to Renee, are these bubbles always so white? Do they have to be white? Don't they come in other somewhat less obtrusive colors? Renee LaFollette: They do come in other colors. They come in anywhere from white to tan to dark green to blue. The choice at the time we put the first bubble up was to put up the white structure. There was concern about fading of the darker colors over time. Council Member Steinberg: That concern about fading over time, is that also equivalent to the lifespan of the unit itself? Even if it does fade somewhat, is it still quite as bright as the white one? Renee LaFollette: I'm not as familiar with colored bubbles. Richard Williams: I'm not actually as familiar with them as well. The only thing I could say is, it might stand out a little bit more if it's a different color from the original bubble, because I think from certain angles, the two bubbles may blend in and be viewed as one. Council Member Steinberg: I recognize that, I'm thinking over a period of time, at some point, we have to replace the original bubble. If this is an ongoing thing, you start with installing the second one, we Page 221 February 22, 2021 start with another option, and at some point, we're going to replace the first one. Yes, for a while they will conflict but at some point, maybe they'll blend better and be less visible. Richard Williams: It is something that you can do. You can purchase the bubble in the color in a tan color, there is varied color spectrum that you can choose from. If that is a direction the Council feels strongly to go in a color choice and we are indeed comfortable with moving forward with a permanent bubble, we would need to know that information sooner than later because we're at the point now where we need to, I believe it's coming up in March, the contract award for this, that decision point would need to be made. Council Member Steinberg: Something to be made. We have water tanks all over Town. They are not white. They are blue and you see them in green. I have questions about the availability fees and snow removal and the direct management costs. Are those going to be part of another discussion? The direct management costs, why are we just doing this now if it's considered a favorable practice? Is that because of Council direction in previous years, but now we consider this a better practice, or is this being born out of necessity by the fact that we are in somewhat financial straits? Clark Case: Yes. Council Member Steinberg: Okay. Clark Case: It's all of the above, really. The original direction to go this way was intended to try to free up the debt capacity and have the Town borrow less and not be borrowing money to pay for recurring staff expenses. One of the principles is you don't borrow money to pay for salaries. We were trying to go to a completely Pay As You Go. We were trying to free up our ability to spend money on the bricks and mortar part of the Capital Projects. We've achieved 75% of that goal, but we are on harder times. This is a management practice decision. Council Member Martinez initially brought this to our attention earlier in a session in '20 and suggested that perhaps we could split the difference, pay for the indirect costs and capitalize the direct costs and free some current funding. We looked at that and we tried to incorporate that request as we put together the budget. That was the only money we could come up with for funding enhancements. We were able to balance the budget through cuts, and through the debt restructuring, some other things, but the only way we could really come up with the money and pay for the enhancements was to consider this option, which is why we're recommending it to you. Council Member Steinberg: Okay, a stopgap measure, we would consider it. Obviously, this is why they pay the Vice Mayor the big money. Thank you. Mayor Burk: Ms. Fox? Council Member Fox: I have got quite a few questions. How long, number one, Rich is a lifespan of a bubble exactly? Mayor Burk: Ms. Fox, could you move the mic up closer to you? Council Member Fox: Sure. Mayor Burk: Thank you. Council Member Fox: Is there a range? Richard Williams: Yes, there is. For a seasonal air structure, you're looking at a 15 to 18 -year life span. For a permanent bubble, you're looking at a 25 to 28 -year life span. There's a roughly 7 to 13 -year difference between the two. Council Member Fox: You're proposing a - Richard Williams: Permanent. Page 231 February 22, 2021 Council Member Fox: -- permanent for the second bubble. Richard Williams: Yes, ma'am. Council Member Fox: Okay, we're going to leave the first bubble as is. Richard Williams: Yes, ma'am. Council Member Fox: Okay, next question is Utilities. Real quick. Amy, you went over a slide that says exactly what the fees and funds that the Utility brings and pays for. You mentioned a few things. That does not include CIP projects? I couldn't remember. Amy Wyks: Utilities Fund pays for Utilities projects in the CIP. Our CIP is based on our Utility Funds, availability fees, and uses and charges. General fund taxes do not pay for any Capital Projects that are related to Utilities. Council Member Fox: As I looked through the CIP, I noticed that your projects have a lot of PAYGO as far as the funding. I was really excited to see that. That's the question I had for you, so thanks. Now, Jason. Amy Wyks: Just for clarification. Sometimes Renee does have a sidewalk project where we'll also replace water, sewer while she's on that street that would be also Utilities paid. Council Member Fox: I see. Okay, great. My next question then, I guess, would be for Jason. I think I understand the change, sorry, the change in strategy paying for the direct costs and capitalizing indirect costs. Did I have that right? Jason Cournoyer: Yes. Capitalizing the direct costs. Yes. Ma'am. Council Member Fox: I passed through, I like to take a look at all the CIP projects, which I think there are a lot of them. I think there's over 40 projects that are not Utility projects. Am I correct? Jason Cournoyer: No. I actually think Utilities is the largest section now. Yes, I think they're over 30 - Council Member Fox: Between general government, recreation, Airport, I counted about 40 or 43. Jason Cournoyer: Yes. Kaj Dentler: Utilities is over 30% of the CIP. Council Member Fox: I know it's pretty substantial. Kaj Dentler: It's all a third of CIP. Council Member Fox: The thing I was getting at is I took a look at PAYGO compared to the bonds, and the PAYGO, there's a handful of PAYGO projects, about nine of them that come to about almost $700K in PAYGO as compared to bonds, which comes to $59.67M. I see a huge disparity in the PAYGO efforts for the Utilities, but not for everything else. Could you explain that to me? Jason Cournoyer: Yes, I can. The Utilities' fee structure is actually based on our policy of a substantial amount of PAYGO going towards a Capital Project. Our general practice has been 45% PAYGO, 55% in debt. Utilities, when new development comes in collects pro -rata share for certain facilities that are built for our capacity or availability fees, that funding is used towards the PAYGO, generally contributions for Capital Improvements. The rates also cover the capital cost for their replacement, the three "r" and their operating, but there is some of the recurring revenue that it's also used for capital. It is a designated policy in order to have that availability fee and the pro -rata share fees that are one- time go towards PAYGO. It's similar to having a reserve. The availabilities that are collected from Page 241 February 22, 2021 developers go into reserve and they're tapped in, and built into the Utilities Capital Projects Fund. On the general government side, which is heavily funded through grants, specifically in transportation area and some of our storm drainage areas, there's less need for PAYGO, except the project management costs. We have strategically put in PAYGO towards some construction costs for smaller projects that can be completed very quickly. Some projects might not last what a 20 -year bond note, because the lifecycle of a Capital Project is only six years. You don't want to take a 20 -year note out for something that won't last. We strategically tried to fund that either through grants, or PAYGO, or some other thing like that. Generally, our PAYGO contribution for general government projects is only going towards project management costs. Generally, it's gone to cover completely the indirect project management cost, but we also were trying to chip away at those capitalized direct project costs. That's the only real change in our proposed practice, is to take the PAYGO away from those direct project management costs. Council Member Fox: I didn't parse through every single one of them. There's a lot of proffers here. There's a lot of NVTA kind of contributions. I see all that, and I'm glad about that. I was very concerned with the decision that Council made years ago to try and chip away like you're telling me. I don't see it where it connects. It seems like the PAYGO is just about 1% of all the bonds here. The project management costs are pretty hefty. What you're saying is that the project management is about 1% of everything else? Jason Cournoyer: In any given year it's going to change. This year it's 2.4M, about $100M, so you're about 2.5% this year for project management. Don't quote me on math on the fly like that, but it's something like that. Yes, the PAYGO portion may be a 1% of the total, but it is covering more than half of the project management costs for this year. Council Member Fox: All right. That's the only question I had. The projects are needed and good, and I just was a little worried about our project management fees still. Thanks. Jason Cournoyer: That's alright. Mayor Burk: Vice Mayor? Vice Mayor Martinez: Thank you. I have a couple of questions. Clark, you're a name dropper. Rich, we're talking about white bubbles. They have a great place to put murals. Mayor Burk: Great place to put what? Richard Williams: I think that might impact the warranty. Vice Mayor Martinez: That was coming to you. You're okay. Thank you. As far as the project management goes, for those of you who don't know, the Town used to do project management as taking the task out of the project and taking the money out of a project and assigning it to the project leads for the Town staff. That was not as efficient as what we're currently doing today. That's some of the reasons. I think Clark, maybe somewhere down the road we can do a little white paper or something on and explain the advantages of doing the project management as we're doing today. Clark Case: No problem with that. It's a best practice to try to fund as much with PAYGO as you can, but it's also a trade-off that is a policy decision for Council to make. What we're doing is making a recommendation that helps us get through this period. I still believe that fully funding all project management costs is to the Town's long-term advantage for fiscal long-term sustainability. When you get into a very big turn down, sometimes you have to slow some of the processes of getting there. That's really what we're doing here, is we're slowing down the process, we were putting in an additional $200K every single year and this year we're going to try and catch up another $200K. When you're hearing the crunch, it may not be the time to try to push the progress quite so fast. This is a little bit of a compromise for us, but it is, we believe, the best thing fiscally for the Town in the current Page 251 February 22, 2021 year. Next year Council can decide to do something different if they choose, and they could this year if you choose. This is the staff recommendation because we think it's the middle ground. Council Member Martinez: Thank you. Renee, I needed to talk to you on something that Zach hit on. Lawson Road has been a nightmare since I've been on Council. Several times we've tried to refix it and patchwork it. Now it's getting to the point where we're back here again with Lawson Road. Now, I know we got it way down in this CIP schedule. I know we're getting a lot of residents that are getting really frustrated with that road not being fixed, or at least that little access bridge that used to be there. My question is, can we find out what impact that will have to move it up in as far in the CIP schedule as we can? I noticed that the initial cost is going to be $195K and that later on we have about an $800K additional cost to construct it. I would appreciate knowing what it would take to move this up in the CIP. One question I have for you, when was the last time staff went out and looked at Lawson Road? Renee LaFollette: We just completed a study on that section of Tuscarora Creek at Lawson Road. We have been out there recently. The Town staff has been directed by DEQ not to do any additional work in Tuscarora Creek because of the sediment transport that any work in the creek creates currently. We do not have a permit or permission to do any additional work to the current crossing. That's why we have not done anything yet. Council Member Martinez: Renee, forgive me, but my Webex locked up, and the last thing I heard if directed. Can you repeat? Renee LaFollette: Town staff has not done anything with that crossing, because we have been directed by DEQ not to touch that crossing because of the sediment transport down Tuscarora Creek. We have been instructed to leave it alone and they will not grant us a permit to do any additional work until we move that project forward as a full project. Council Member Martinez: I understand that. What would be the impact on the other CIP projects if we were to move it forward? I know that's not a fair question to ask you right now, but maybe later on when we start doing a little more in-depth discussion on it we can talk about moving it up and what the impacts would be. Renee LaFollette: We will look at that, Council Member Martinez, and we'll let you know. Vice Mayor Martinez: I really appreciate that. For those who don't quite understand about the FAA investments and our Capital Projects at the Airport, they do invest about 98% in some things like runway, taxiways, ILS, remote towers, and stuff. The problem is that when they do that investment, then that means the Airport isn't ours just to do what we want. They now have- [inaudible]. Mayor Burk: I think we lost him. Renee LaFollette: He just locked up again. Council Member Martinez: My Webex froze up again. I apologize. They're major stakeholder in what and how we can do our Airport. I just wanted to put that out there. I wanted to thank Renee, Amy, and all those, Clark and his group for their work on the budget and their briefings tonight. Thank you very much. Sorry, my sense of humor sucks. Mayor Burk: No comment. Related to what Mr. Martinez just talked about, the projects that we have in place right now that are on the list, the ones that are on the list for this year, were they just put on this year, or have they been on the list for a while, moving up to get to this point? Renee LaFollette: They've been in the CIP in that active six -year section for their life. We have three projects that Council has made the decision to put in earlier than the sixth year. The Edwards Ferry Road sidewalk was one that got moved forward last year. Royal Street was another one. Morven Park, Council never moved that one forward, even though it was requested a number of times by residents. It stayed in its course and made its way forward through the process. Page 261 February 22, 2021 Staff has recommended this year that we add a project in 23 for Town Branch at Mosby. The reason that project is in '23 is because that project meets a TMDL requirement for the Town for a sediment load reduction that we must meet by 2028. We are a good candidate for receiving 50% of that project cost through the Stormwater Local Assistance Fund Grant, which we will be applying for this spring. That is the only project that we as staff has put forward in the CIP, other than being in the sixth year, as we started about 11 years ago. We do a study. We have the project in the sixth year and it works its way forward in the CIP. The Lawson Road project was in the potential futures, it moved forward to priority futures. We did our study, we have our information, we've put it in the sixth year as our rule of thumb. That's why that project is where it is. Mayor Burk: We're at a point where we can't proceed because DEQ has made certain requirements of us to take care of the sediment that's being created by - Renee LaFollette: By what the Town put in there as a temporary structure. With all of the large rainstorms washing that sediment downstream, we've been put on notice that we cannot do anything additional with that current crossing until we bring it up to a standard that meets the total daily maximum load requirements and floodplain requirements for that section of the creek. That is what our study gave us, that information on what we need to do. Mayor Burk: Lawson Road, if I remember right, used to be able to drive over it. Renee LaFollette: Lawson Road was a connection through, but once Battlefield Parkway was built between Kincaid and Route 7, we were required to close Lawson Road. That was a decision that was made by Council at the direction of VDOT. Mayor Burk: VDOT? Renee LaFollette: VDOT was involved in that decision as well. Mayor Burk: Interesting. It's just not going to be quite as easy as just moving it up forward. Renee LaFollette: If Council directs us to move it forward, we have the information to move into design. It's a matter of funding, whether it's affordable to move forward, and then it's a workload issue for Capital Project staff. Mayor Burk: Okay. All right. Thank you. I have a question about the tennis bubble. If we are putting it on top of tennis courts that are already in place, are we going to have to do anything with the tennis courts themselves? Or we're going to repave tennis courts? Recreate tennis courts? Richard Williams: No ma'am at all. Not at all. They'll be building a concrete perimeter that goes around the courts in which that the bubble structure will anchor into. The existing courts will have to be repainted just because there'll be some movement of the court where the actual court lines line up, but other than that, there will not be any more development on those courts. Mayor Burk: We're not considering making the other one permanent? Richard Williams: Not at this point. No, ma'am. Mayor Burk: Is there a reason that we're not considering making it? Richard Williams: I think there's a balance to maintain of keeping some outdoor courts available for folks to walk up and play on and have and have that ability, since they are public tennis courts. There's some value to that. Mayor Burk: I would think there'd be value have some of them out there. The idea of not having it be that stark white that really struck me as we were looking at how white they are. Page 271 February 22, 2021 Richard Williams: I mean, you could definitely go with a light tan color. Most definitely the current structure probably has another 15 to maybe 20 years lifespan left on it. I mean, that's just something to take into consideration that would have the contrast in colors for a period of time. Mayor Burk: Well, maybe we could make it dark green, maybe that would mix it with the trees. Renee LaFollette: We'll also have to look to see what that does to the price of the structure as well, because I'm sure there will be a cost impact for colored structure versus white, but we will ask that question. Mayor Burk: All right. The rest of it, I need some time to look over and think about that. Thank you very much for your presentation tonight. There is no action, Mr. Dentler, at this point? This is just the beginning of the budget process. Alright, the next thing is Board and Commission Meeting — Broadcasting, Recording and Archiving. Look at them all run. Bye. Jakub Jedrzejczak: Good evening, Madame Mayor, Members of Council. My name is Jakub Jedrzejczak. I'm the IT director. I'm here to present some information in regards to our boards and commissions. Today we have 13 commissions, and we have Town Council. Three of the commissions, that's the most difficult part of my presentation, are adjudicatory commissions, and there's three commissions and Town Council today are being broadcasted using Webex, as well as our cable channels. Also, today not all commissions are recording the video and not archiving. Some commissions are not utilizing the Webex platform, so I will have a little bit more details in the next slide. This is where we are today, we have some space for improvement, I would say, and we can address this through some options I may propose. I would like to propose two options to standardize how the commission's operate in regards to use of technology, and they both have some pros and cons, they're not ideal because of our current configurations and setups. The option number one, focus around having option in -person present people and utilizing a Webex. Access to the video meetings archives can be achieved using our current technology, is just a matter of a little bit of more training and working with commissions. Commissions will be able to access live meetings using Webex technology. No need to schedule meetings, no need for advanced IT support when commission utilizing a Webex. Webex is fairly easy to learn. Also very important, there's no need to relocate meetings to different locations. Recently, we equipped 13 conference rooms with their equipment that is fully capable of providing this type of service for commissions. Unfortunately with this option, commissions will not be able to broadcast using the cable option. The other option is focused around utilizing all the technologies providing live Webex meetings, live meetings using our broadcasting services with the cable TV, and meeting archives. Unfortunately, if we like to utilize this whole set of technologies for all commissions, we'll have some challenges. Seven meetings will have to be rescheduled. The schedule is a little bit tight. Some meetings we'll have to have it on Saturday. Some meeting will have to happen on Friday, and that's not the best days, maybe for somebody. Unfortunately, some advance assistance from the IT perspective is required if we like to utilize for all commissions these options. Also, unfortunately, we'll have to relocate three of the commissions today. Parks and Recs, Airport Commissions, and Balch Library. Unfortunately, we'll have to meet in Town Hall to be able to utilize the cable technology broadcasting. This will indicate some costs also in regards to the support. There's some contractual services might have to be purchased. Some staff time additional will be required. I have some recommendations with this on [unintelligible] stuff. What we will recommend is to first continue doing what we doing for Town Council and these three adjudicatory commissions and boards. I did it. Mayor Burk: Very good. Page 281 February 22, 2021 Jakub Jedrzejczak: Continue to do what we're doing, plus what's new? I'm going to use my little cheat sheet here so I remember about everything. We're recommending all commissions to start using Webex, plus we recommending that all commissions will actually record their meetings. Plus we recommend that these recordings will be posted to the archives. There will be an access to the live meetings for the residents, just not to the cable, but through the Webex. All the archives will be available through the same mechanism, through this [unintelligible] mechanism. In one list, we already tested out, we had a technical commission. Our last meeting, we upload to the main repository where the archives are available. This is what we recommend. If staff recommendations are implemented, this slide shows all the improvements. It looks much better than the two days slide. This will provide the access to all archives and all of meetings live will be streamed through the Webex. This will conclude my presentation. I'm here to answer any questions you might have. Mayor Burk: I think Council Member Bagdasarian this was your item. Do you have any questions? Council Member Bagdasarian: Thank you, Kuba. I appreciate you putting this together. Do we know the level of engagement of the cable access? Do we know folks are actually? Jakub Jedrzejczak: I do not have statistics. I'll be happy to reach out to our Public Information Office and try to provide some information in that regard. I do not have access to these statistics, no. Council Member Bagdasarian: I'm not sure if we could actually track that since it's not IP-based. I think that this is a great step towards increase citizen engagement, transparency, and cross-pollination, that'd be great if commissions could see what's going on with other commissions and Council Members. Tuning in to see what's happening on a commission. We have to deal with everything there, but certainly makes sense to your recommendation about in -person Webex with a web archive, seems to be the most practical approach. I don't think there's any need to move everybody to relocate their meetings to be in a specific space with physical hardware that's there. I think your recommendation makes complete sense. Jakub Jedrzejczak: And no budget impact with the recommendation as well. Council Member Fox: [inaudible]. Jakub Jedrzejczak: No. We just have to provide some additional training for the commissions. Since COVID push us to implement all these conference rooms. Implement the Webex technology is just a little bit of the training for the commissions and we can accomplish that. Mayor Burk: Ms. Nacy? Sorry. John Callahan: I'm sorry. We don't have the Webex licenses. It's a service. It is in our budget each year. I just want to clarify that point briefly. Mayor Burk: Ms. Nacy, do you have any questions? Council Member Nacy: I don't. I agree with what your recommendation was, so thanks. Jakub Jedrzejczak: Thank you. Mayor Burk: Vice Mayor? Vice Mayor Martinez: I have no question. Thank you, Jakub. Mayor Burk: Mr. Cummings? Page 291 February 22, 2021 Council Member Cummings: No question. I agree with your recommendations. I think it would be worthwhile to the commissions and the boards as well as the members of the public to be able to watch what happens on the Commission on Public Arts and some of the other commissions. Mayor Burk: Mr. Steinberg? Council Member Steinberg: Also no questions. Thanks, Kuba, for the presentation. Mayor Burk: Council Member Fox. Council Member Fox: Just clarifying. You said no budget impacts, so expanding this to all boards it goes under one license. Jakub Jedrzejczak: We have enough licenses in regards to the Webex and we verified that we have unlimited storage that we can upload actually these images. We did check with our current service provider, Granicus, because that was the main concern. What would happen if everybody starts uploading this archive? The answer was we have unlimited storage with our current contract, so we don't have to change anything to that. Council Member Fox: Okay, thanks. Mayor Burk: I just have one question and this, probably, is a question of ignorance here. Will the Webex still be available after we no longer are allowed to do virtual meetings? Will we still have the access to the Webex? Jakub Jedrzejczak: Yes. For now, the plan is to keep the Webex even when we're implementing 0365, some technology to host the meeting is going to change for the Town staff. For now, we are planning to keep the Webex as a tool for Town Council and the commissions to conduct. Christopher Spera: Madam Mayor Burk, if I may. The Webex is really a supplement. I think what Jakub is proposing is that even if we're out of the pandemic, and not operating under emergency powers, that the Webex functionality simply is another means of the public viewing what's taking place as opposed to being the venue, if you will, for the meeting. I think what he's proposing is if we get out of the emergency situation, the commissions will still meet in person but the Webex tool would be a tool by which member of the public who didn't want to come in person to watch the meeting, could both watch the meeting live or go to the archives and look at it at a subsequent time. It's not replacing the venue. Mayor Burk: Thank you very much. I appreciate you coming up with the solution. Jakub Jedrzejczak: Thank you. Mayor Burk: It is 9:10 at this point. We have Council Member Goals. Kaj Dentler: I'll be pretty quick. Madam Mayor, Members of the Council. You gave direction for each Council Member to give me at least three or four of your top goals, some gave me more. What I did was, in broad terms, was took some liberties, to take your information. I'll jump to the end here where we started. This happens to be the Mayor's and various categories that you see there. This is Mr. Martinez's, this is Ms. Fox's. Not all of you gave me these specific categories. Ms. Fox, has you see in bold, Council economic development sector. created those based on what I took as my liberty of what you were saying in order to try to chisel it down. That's what a facilitator would do, is start with the broadest information, and then work everything down to the common points. In essence, this is our starting point. Then what I did was, I took the main categories of what you talked about in whatever form you created. This happens to be Council Member Nacy's, and identified Council relationships, property acquisition, recovery, economically, Town Plan, government efficiency. Page 301 February 22, 2021 Again, my liberty that I took to try to tell the story that I think she was telling, and then our communications back and forth to see, "Am I on point with what you wanted?" From that, all of this information times seven, seven of you. I work towards what I took as the most common themes. These were eight different themes from those seven different inputs of Council Members. That was based on if this showed up at least three times from the seven of you, it may not be said the same way but it's close. Again, taking some liberties. I identified obviously economic development, environmental stewardship. Some of these I placed together. Some of you used the term sustainability, some of you talked environment, some of you talked open space. We could argue till the cows come home, if this is the category or not, but that's ultimately what you would do in any type of planning retreat to ultimately decide what you want your ultimate goals to be. From these eight goals or themes that I identified, then I identified from those eight, these were your top three. How did I get to these top three? By looking at these eight and then basically looking did at least three of you say, there are things in here you liked in your longer narrative that you gave. Again, what I did was exactly what a facilitator is going to do. My exercise produced an economic development and recovery plan, in essence, your relationships amongst yourselves, as Council Members, how you're going to work together, and then looking at government efficiencies and Town processes. Now that being said, trying to play the role of the facilitator, I'm doing this without you being in the room and debating back and forth, "Yes, I like that. No, I don't like that. Yes. Let's make a modification to that. Let's end up with that." Again, these are done in broad terms. These are not at this point-- Although they are yours, I can't say that this is the Council's top three goals because you haven't stated that. From here, where do you go? Again, you can debate these, and I think you should discuss these, process it, and take it in. Where do we go from here? That's really the question to me that's even larger is, what's the process? What are your next steps? Are you going to want to have work sessions to discuss these and really get into it? Is that a special meeting? Is that a regular work session? Are you going to hold your planning retreat? Do you want me to go ahead and reschedule that in the spring or not? Or is there another plan that you have that I'm not aware of yet? In order to move forward, you're going to have to talk about how you're going to get to what your goals are. Do you really want to establish that? Ultimately that's what I'm looking for, but the information that you gave me, I think results in essence of these three main categories. I'll stop there. Take any questions. Mayor Burk: All right. Kari, any questions? Council Member Nacy: [unintelligible]. Mayor Burk: Mr. Bagdasarian? Council Member Bagdasarian: Once I got to take this in, but I appreciate you putting this, distilling this down because I know that there's quite a few priorities and the question is how do we operationalize these? Or what do we do with these themes and priorities? Kaj Dentler: That's correct. I'm glad you said that because I should have said that. It's perfect lead-in. Let's just say these were your top three goals, then the next step of whatever process we use of work session or planning retreat, then you start getting into these specific things that you provided me. You would want to have a conversation arts and cultural district on this. Where does that fit in? Where does arts and cultural district fit in to any of these if you even want it in there? You may say, "No, don't want to talk about it. That's not our top priority." Mr. Martinez had these. Where did these specific bullet points underneath those broader categories fit? That ultimately is where the only way we can get there is you have to get at the table, and then have these respective conversations. Thank you for leading up. Totally missed that point. Thank you. Mayor Burk: Mr. Cummings? Page 311 February 22, 2021 Council Member Cummings: Thanks. Thank you Mr. Kaj Dentler for reading our minds and coming up with this what we really meant. I think that this is helpful. I brought this issue up after talking to Mr. Dentler and others, because I was upset with the circumstances of not being able to have a planning retreat early on. I totally understand why we had to push that in the calendar due to COVID and the concern. I personally feel that some of these items, these goals and priorities would make sense to talk about it at a work session. Economic development is especially one, it's changing every day and I think it would be good to talk as a Council on what we see the role of Economic Development for the Town. If there are adjustments or updates we need to make to our plan. Government efficiencies is a reviewed Town process. I know other Council Members are working on that already. I just appreciate you putting this together and I would be open to have conversations about any of these issues at a work session because to me, if we're all putting these onto paper, that's the work that as Council, we need to talk about. I would love to try to come up with a solution to get the planning retreat back on the calendar someway, somehow, maybe when the weather's better, we could all sit outside, I don't know. I just appreciate your work on this, Mr. Dentler, and I'm open to discussing any of these issues, and having a work session to talk this out and come up with maybe some legislation or some resolutions to move these issues forward. Mayor Burk: Mr. Steinberg? Council Member Steinberg: Thanks Kaj for the presentation. I think strongly that the retreat would actually be the better forum for this discussion, because I believe it could be a more freewheeling situation. Sometimes the work session, especially with the time limitations, although we could suspend the rules often gets in the way. I think the retreat format might serve us better, especially since we do have a variety of issues, some of which on this list, especially the top three, seem far more short-term and less directional as far as a vision for the Town. absolutely believe we have much more complex issues that we would like the opportunity to discuss, not necessarily adverse to a work session, but I think the retreat format would serve us better. Thanks. Mayor Burk: Ms. Fox? Council Member Fox: I agree with that. I think a retreat format would work a lot better because I think this discussion should be frank discussions without the time constraints as Council Member Steinberg said, and be more conversational. I feel we need that in order to really pound out what we want our goals to be. It's easy to talk about them on the dais but we are constrained and sometimes we don't come up with everything, and we don't have enough time. I think it's more time, honestly. That's what would be in favor of. Kaj Dentler: I agree. Mayor Burk: Mr. Martinez, did I already ask you? Vice Mayor Martinez: No, you didn't, but that's okay. I'm in consensus with everybody on Council. I do also favor a retreat, but I will support anything we do. Mr. Dentler, thank you. Mayor Burk: I think we all thought we were going to be doing a retreat, we just needed to postpone it. I think most of us— Kaj Dentler: You want to use the facilitator that we've--? Mayor Burk: Yes. Kaj Dentler: Okay. He's not available in March, so it will be April to May. Are we comfortable moving forward in April, if he's available in that timeframe? Page 321 February 22, 2021 Mayor Burk: Sure. Kaj Dentler: I know some of us were not comfortable yet. I'll find out the dates. Mayor Burk: It was cold, and couldn't open windows, we can open doors, and that kind of stuff. I think it would be fine, too. Kaj Dentler: Okay. I'll find out his availability in the months of April and May, communicate that to you, and we'll begin to figure out what's going to work on a Saturday. Is that correct? Mayor Burk: That's good. Kaj Dentler: All right. Thank you. Mayor Burk: Thank you. Next is, Future Council Meetings and agenda topics. Vice Mayor Martinez, anything to add to the agenda? Mayor Burk: We'll come back - Vice Mayor Martinez: Sorry about that. No, I have no additions. Mayor Burk: Ms. Nacy? Council Member Nacy: Nothing from me. Mayor Burk: Mr. Bagdasarian? Council Member Bagdasarian: No, no items. No, thank you. Mayor Burk: Mr. Cummings? Council Member Cummings: Nothing at this point. Mayor Burk: Mr. Steinberg? Council Member Steinberg: Yes, thank you, I do have an item. I'd like us to have a discussion about the possibility of sending a letter to W -M -A -T -A, WMATA, regarding the electrification of the DC regional bus system. I got a request via email today from a woman who is heavily engaged in environmental issues in the region, and also a gentleman from the Sierra Club. They pointed out that the cities of San Francisco and New York, with much larger systems, are on a much more aggressive schedule to electrify their systems, and I recognize this is not necessarily or particularly a Leesburg Town issue per se, but its transportation, and the environment and air quality are issues for the entire region. I'm just asking for a chance to discuss the potential of us sending a letter in support of that. Mayor Burk: Are there four people that would be interested in putting this on the agenda for future discussion? Mr. Steinberg, Mr. Cummings, Ms. Burk, Mr. Bag -- Council Member Bagdasarian: I'm sorry, I couldn't hear [inaudible]. Council Member Steinberg: Okay, I'm sorry. It's to discuss sending a letter to W -M -A -T -A. Mayor Burk: WMATA. Council Member Steinberg: WMATA, which is the DC Regional Transit Authority, basically. To encourage them to have a more aggressive schedule in electrifying their buses in their system. Page 331 February 22, 2021 Mayor Burk: What do you think? Okay, Mr. Bagdasarian, so there's four that would be willing to do that. I have nothing. Ms. Fox, do you have anything? Mayor Burk: Nothing. Okay, is there a motion to adjourn? Council Member Bagdasarian: So moved. Mayor Burk: So moved by Mr. Bagdasarian, is there a second? Is there a second? Council Member Steinberg: Second. Mayor Burk: I was going to say, "You all want to stay?" Council Member Steinberg. Kaj Dentler: We'll wait for that. Mayor Burk: All in favor, indicate by saying aye. Council Members: Aye. Mayor Burk: Opposed? 7-0. Thank you all. Page 34I February 22, 2021