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ZEBULON - A joint meeting in the Local Option Sales Tax (LOST) renegotiation process between Pike County and its municipalities was held on Tuesday, August 14, 2012 at 1:00 p.m. in the Courthouse Annex Meeting Room at 79 Jackson Street. The meeting was convened by County Attorney Rob Morton. County Manager Mike Phillips, County Attorney Tom Morton and County Clerk Teresa Watson were also present. (O.C.G.A. § 50-14-1(e) (2))
Present as authorized attendees were: For Pike County, Commissioner Bass and Commissioner Don Collins, for Molena as City Manager and for Concord as Mayor, Jim Roberts; for Williamson, Council Member Lynn Hubbard; for Meansville, Mr. Virlon Rachels; and for the City of Zebulon, Mayor Mike Beres, Financial Administrator Kathleen Birney and Interim City Manager Chuck Ledbetter.
1. Welcome - Rob Morton
2. Agenda, Review and Approval - Rob Morton
3. Brief Summary and Review of Minutes of 07-26-12 LOST Renegotiation Joint Meeting
Mr. Morton opened the meeting with a brief summary of the LOST renegotiation process to date. Minutes from the previous meeting and agendas were distributed.
4. Open Discussion
An overview of Pike County’s counteroffer was provided by Mr. Morton, who noted the cities of Molena, Williamson and Meansville advised they were in agreement with the counteroffer being proposed, with the provision that individual cities could then negotiate each individual city’s share. He was unsure of the City of Concord’s position. Pike County proposes a distribution of 74% for the County and 26% for the municipalities as a group. Again, he noted the County made no recommendation as to individual city percentages of distribution but rather simply a proposed County/Cities split of 74%/26% with the cities then negotiating their own distribution.
Mayor Beres said this .6% fluctuation represented about $6000, or about $1200 to each of the cities. He noted that, as far as Zebulon was concerned, they have had additional increases in expenditures, many of which are due to County facilities located in the city that are nontaxable. Debt service to water/sewerage services is also problematic. The Board of Education, a State prison, and other governmental entities are serviced in the City and adversely impact its infrastructure while not providing any offsetting income. The City of Zebulon, Mayor Beres noted, would like to increase its distribution another 2 percent.
Mike Phillips said the costs for improvements to water/sewerage infrastructure should be handled as standalone in order to ensure self-sufficiency. He cautioned that if you delve too deeply into outside monies, you do not address the fact that these funds could be available for other issues. Mayor Beres said Zebulon has increased capacity and some of that service is allocated to the County. Additional customers will serve to help with the cost of services, but they will also serve to increase the County’s tax base at the same time. The City of Zebulon is looking at increasing its population by five or six times in the near future, and this type service enhancement requires a great infusion of money. It will impact the City’s infrastructure on several levels, i.e. utilities, law enforcement, schools, etc. While the water revenues pay for the system as it currently exists, this anticipated new growth will certainly extend beyond that threshold.
Mr. Morton said the County has increased its millage rate already slightly. Zebulon’s own report, said Mr. Morton, makes arguments for the County. Debt of the Water Authority and the possible increase in Zebulon’s population due to a proposed significant subdivision were considerations for the County, as was the increase in points of sale for the City of Williamson. A trend of population increases in the northern part of the County and the City of Zebulon were a part of the trending projections. The discussion has been that if the municipalities’ amount in totality is then allocated to each of the cities, there may be a city(ies) willing to take a reduction in their distribution.
Mayor Beres asked if any funding of Water Authority from county tax dollars was used for operations. Ms. Watson noted not specifically. The funding of the County is for repayment of the USDA loan for the Water Authority and not specifically used for operations. Mayor Beres inquired and was informed the obligation to pay back the USDA loan was from taxes, and this payment totaled $141,180 per year. Mr. Morton advised this was similar to any other USDA loan, and there were supposed to be sufficient user fees to support the system. Unfortunately, due to issues with agreements that were not in place as the Water Authority was going online with the system, many users were not required to tie on and the system is not self-sustaining at this time. They could not repay the debt without this funding from the County. It was not known how many water users there are on the County system. Mr. Morton noted the County does recognize this is one issue that has merit, but based on five of the eight criteria, an increase to the County is actually justified.
Mayor Roberts said the City of Concord would like to review this proposal before committing, and he would like to discuss it further with the City of Molena, as well.
Ms. Birney clarified that the 26%/74% City/County split being proposed did not address specific municipal distribution percentages. She advised that she will recommend tonight that the City of Zebulon not support this counteroffer. Mr. Morton reminded that the price of mediation quoted by the Carl Vinson Institute of Government was $4200 for the first day with $2100 for each day thereafter, plus expenses. Ms. Birney said GMA had cited three local mediators who would charge $100 per hour with a 2-hour minimum. She noted the insurance rollback premium payback decreased last year by $30,000, although they were advised that the intergovernmental agreement with the County for fire services would not adversely affect that. Mr. Morton advised that has nothing to do with County’s intergovernmental agreements with the City but rather with the distribution at the state level. The insurance premium rollback is not impacted by how much the City gets versus how much the County gets. Ms. Birney stated that perhaps it might just be coincidental. The LOST taxing district, noted Mr. Morton, is the County and that is what is common throughout Georgia.
Mayor Beres said Zebulon is not greedy, and this is not about greed. He lives in Zebulon and Pike County, so it affects him as both a city resident and a county resident. However, a small increase countywide has much less impact than a larger increase on just a small number of people, such as the case with city populations. City taxes are trying to be kept as low as possible, and a .6% increase in distribution only yields about $60,000 over the ten-year period of LOST certificate.
Mr. Morton said while researching the 37% increase in the County’s population, he discovered that the cost of servicing a residential customer at $1.45 is much greater than the $.40 it takes for industrial or commercial entities. Residences tax services at a much greater level than commerce. Mayor Beres asked the County to reconsider another 2% concession beyond this counteroffer, for a total increase of 2.6% to the cities with that reduction to the County. This would place the County’s distribution percentage at 72% and the municipalities at 28%.
Mr. Morton noted the County was trying to be fair to all. The County is willing to take a reduction in distribution even though the statistics seem to suggest they are entitled to an increase. When the County has been given the information that at least three of the cities are in agreement with this proposal for distribution, we will record the information as presented. He clarified that the City of Zebulon was requesting an additional 2% for a total of 2.6% overall to cities. Then the cities can divide the .6%. Commissioner Bass surmised the City of Zebulon wanted roughly $20,000. Some discussion followed.
Ms. Birney offered that the City provides some services that could perhaps be done by the County, such as the County assuming Public Works for the City of Zebulon to relieve the burden and equalize services between city citizens and county citizens.
Ms. Birney said they did receive some services from the County, but Zebulon solely provides financing of downtown beautification efforts with a 20% matching amount required from the City, averaging an annual $80,000. The City of Zebulon also provides a Head Start Center, and she noted that for these downtown development projects and Head Start, the County has never contributed a dime.
Mr. Morton urged care not to engage in inflammatory rhetoric, such as stating that the County did not provide a dime, because such language could come across as militant, and his hope was to work in a spirit of cooperation to avoid further costs, whatever those costs may be as agreed upon by all parties, with mediation which taxes the citizens even further for both city and county. There is a great many areas where the County has contributed to the City through agreement that has not been charged off, such as the use of a Public Works sidewinder and other things. He did not want to see negotiations become antagonistic.
Ms. Birney apologized and finished her thought which was to remind everyone that the City of Zebulon provides singular projects that are enjoyed by residents not only in the City but beyond, such as the Head Start Center, a neighborhood services center, the opportunity center, a GED facility, Promise Place, and a fire department area provided for training. Narcotics is based there, too. The City of Zebulon provides an enormous amount of services for Pike County and feels this request for an increase of only 2.6% is more than justified to help offset the cost of these services.
Mr. Morton advised that of the services mentioned by the City of Zebulon, which could be presented during mediation/arbitration, additional funding sources are available which the County does not have access to. Additionally, at more than 11%, the City of Zebulon is already getting the lion’s share of the overall distribution to cities, the remaining of which are receiving below 5%. One of the things to review in mediation and/or baseball-style arbitration is the availability of other funding sources. The City of Zebulon does receive rent for some of the areas mentioned and other funding sources related to those items, as well. These are considerations in the process.
Mayor Beres said Zebulon, as the county seat, traditionally is expected to get larger amount than other cities. It is a larger area and generally recognized as the business center. What Ms. Birney was trying to say, he noted, was that we do receive some services from the County to help on various things, i.e. hauling dirt, cutting grass, using sidewinder, but also that Zebulon residents are County taxpayers too, so it is not like the County is providing a freebie with these services. This assistance is not expected and is appreciated. Mayor Beres stated the City and County are working better now than we have in many years, in a spirit of cooperation and not antagonism. He concluded, though, that the City of Zebulon desperately needs an increase.
Commissioner Bass agreed the City/County relationship is better than in the past. Public Works has done some things she requested for the City of Concord, as well, and she would hate to appear to be sending a message that we are not willing to cooperate. She felt this can be worked out.
County Manager Phillips noted the County is very conscious of anticipated future issues, i.e. Williamson and Concord increasing in size and the anticipated population growth of Zebulon, as well. He urged everyone to remember that the County maintains the network of roads and bridges in the unincorporated areas, reminding them that getting to an area just as important as being in an area. He, too, is looking for partnership opportunities between the County and cities.
Mayor Beres cited much improvement in the last ten years with beautification efforts. The west side of the courthouse area was in total disrepair back then with buildings literally caved in and vacant. The downtown area has very much been revitalized, and the Courthouse will be absolutely beautiful. He reminded everyone, too, that if people go into a run-down city, they figure it is a run-down County.
Mr. Phillips said he was mindful of the County as a whole and not just in cities. He is aware that much has been done and is very appreciative. Commissioner Collins said the decreased insurance rollback money discussed indicated that previous SPLOST monies which created fire stations, etc. have been effective because the ISO has been reduced in most areas, resulting in less insurance premiums paid. Also, the County paid one-half of the first matching amount required in the initial downtown beautification project (10% by the City and 10% by the County), even though the City of Zebulon has paid all ever since. He was intimately involved in that process. Ms. Birney noted she stood corrected.
Mr. Morton said information will be relayed to the Board of Commissioners. The City of Concord will study more and discuss with other cities. Mayor Roberts wanted to convey to Mayor Callaway that while he acquiesced to the proposed distribution, he felt Mayor Callaway was unaware of how this would affect the remaining split among the cities.
After some discussion it was decided the next LOST Renegotiation meeting would be held on Thursday, August 23, at 9 a.m. in this Meeting Room. Mr. Phillips said in the ISO reinspections that are currently ongoing, perhaps they could identify inefficiencies in the Molena area which keep the ISO rating high and cost residents in greater premiums, as noted by Mayor Roberts. This is an ideal opportunity to help resolve these issues.
Mayor Beres stated that, up until two years ago, there were six fire departments; now there are two. Everyone did work diligently on trying to come together to create a Fire Department that could operate as a unit of one which helped with command structure and with shared equipment.
Commissioner Collins said the enhanced 911 service was not mentioned in the initial ISO, either, and the County totally funded that effort.
Mr. Morton stated we could use this information as a vehicle to readdress Service Delivery Strategy agreements relative to the provision of water, public works, and other services.
Mayor Beres reminded everyone that with regard to 911, while the County may have funded the equipment initially, all the cell phones in the cities contribute as well because city citizens are also county citizens. Everyone pays that monthly assessed fee for cell phone usage.
Mr. Phillips said the County had come up with a fair and good faith offer, not as a mechanism for bickering back and forth. Mayor Beres understood and this was the reason he proposed only 2.6%. He, too, felt this counteroffer to the County’s proposal was a fair offer and one reason they were not asking for what the consultant originally recommended. This would result in a 72%/28% County/City distribution. Mr. Morton understood but again noted this was coming from the City of Zebulon. We would need to hear from the other cities as to their desires for a municipal distribution, and we have until September 1, at which time we would need to consider mediation. These are things that can be discussed at the Zebulon City Council meeting tonight.
5. Other Related Business - None
6. Announcement: Next Renegotiation Meeting: Thursday, August 23, 2012, at 9 a.m.
7. Adjournment
There being no further business, the meeting adjourned at 1:43 p.m.