Submitted by Suanne Z. Thamm
Reporter – News Analyst
August 6, 2021
The Fernandina Beach City Commission (FBCC) met in a workshop on August 4, 2021 to identify over $400,000 in cuts to the City’s proposed FY 2021-22 Budget in order to bring it into compliance with the tentative millage rate set earlier. During an hour and a quarter of discussion they decided to cut $50,000 that had been programmed for converting softball fields to Little League fields. They moved certain other projects from the general fund to impact fee funding: $140,000 to replace the Atlantic Recreation Center roof; $200,000 to repoint the brick at Peck Center; $28,500 in smaller replacement projects for Parks and Rec.
Other than City Department Directors and media, few people attended the workshop. Only one public speaker addressed the FBCC during the workshop with suggestions for reducing City expenses.
Commissioners considered cutting or postponing other actions as well: Commissioner salaries and benefits; fuel tank replacement; decreasing the streets budget; decreasing funding for habitat conservation.
Since the adjustments agreed upon bring the budget into compliance with the adjusted rollback rate set by the FBCC last week, the second budget workshop scheduled for August 10 has been cancelled.
The Public will have two additional opportunities to speak on the proposed budget and millage rate at public hearings scheduled for September 7 and September 21. The new fiscal year begins October 1.
City receives additional revenue from state
Before the FBCC began its deliberations, City Manager Dale Martin advised that state revenue sharing funds had come in at a level higher than anticipated when the budget was drawn up, providing the City with an additional $380,000. Martin said that the FBCC could leave this money in reserves or use it to fund the shortfall, meaning that the FBCC would only need to cut $35,000 from the proposed budget. Martin added that the City is still awaiting additional revenues from the state, which have been coming in higher than expected.
The City is required to maintain a 20 percent reserve. Martin said that by using the $380,000 to fund the budget shortfall, the reserve would still maintain the 20 percent level.
It was the consensus of the FBCC to keep the $380,000 in the reserves.
Vice Mayor Len Kreger began discussions on potential budget cuts, asking that the capital improvement funds remain as proposed. He suggested a 4 percent cut across the board cut (except for police and fire) to reduce the budget.
Commissioner Chip Ross next proposed eliminating Commissioner salaries ($64,590), saying that the FBCC should lead by example. He went on to suggest eliminating health insurance and life insurance for Commissioners ($38,513). Only Mayor Lednovich seemed amenable to that suggestion. Commissioner Bradley Bean strongly opposed this measure, saying that eliminating the salary would reduce the pool of people willing to run for Commission seats.
Ross continued to advocate for eliminating health insurance for Commissioners. He noted that Commissioners are the only part-time employees of the City eligible for health insurance, suggesting that such a benefit should be made available to all or none.
Commissioners pivoted to discussion of other possible cuts without further addressing Ross’ suggestion.
Bean suggested cutting $200,000 from the $650,000 streets budget; cutting habitat and conservation; eliminating or delaying the replacement of the City’s fuel tank ($125,000). He also questioned budgets for office supplies and recreation programming; transfers to the cemetery fund; repairing the road to the lighthouse; increase in capital improvement funds.
Commissioner David Sturges suggested deferring the replacement of aging routers ($18,000); the budget for engineering; costs associated with revising the Comprehensive Plan ($163,000); the capital improvement budget.
Kreger said that he was reluctant to touch the capital improvement plan, because maintenance has been delayed so long that many of the projects are now critical.
Although Bean and Sturges seemed interested in Kreger’s proposal to require all City departments except fire and police to reduce their budgets by 4 percent, Ross disagreed. He said that most of the department budgets consisted of salaries, and he was opposed to cutting salaries. With respect to Bean’s suggestion to cut the streets budget, he cited a consultant’s report that suggested that the City should be spending $700,000-800,000 per year to keep City roads in good condition.
In response to Commissioner questions about the need to replace the City fuel tank, Maintenance Department Head Jeremiah Glisson reported that the replacement had been on the capital improvement plan for next year, but that it is nearing the end of its life. The interior wall of the tank is disintegrating. Replacing the tank sooner than scheduled will head off a potential environmental disaster which would prove costly.
Converting General Fund spending to Impact Fee spending
Mayor Mike Lednovich took a different approach to the budget. He suggested reprogramming certain expenses to be paid by impact fees, not general revenue funds that are raised from ad valorem taxes. He noted that the City has $650,000 in recreation impact fees and $1.2M in administrative impact fees. “We can justify using those fees for growth coming across the bridge,” he said. “Those people use our recreation
facilities, our beaches, our walkways, our marina. They are using our infrastructure. So we can use impact fees for $50,000 for beach access repairs, $50,000 for Buccaneer Field fencing; roofing at the Atlantic Rec Center ($140,000). These are related to wear and tear on our infrastructure due to growth.”
Lednovich identified $240,000 in projects that he believed could be funded with impact fees.
Ross took issue with Lednovich’s opinion on using impact fees. He read from the legal definition: “Infrastructure means a fixed capital expenditure or fixed capital outlay, excluding the cost of repair or maintenance.”
Addressing his remarks to Lednovich, Ross said. “What you have just rattled off there are repair and maintenance. You are not following the law.”
City Attorney Tammi Bach cited new legislation from the last Legislative Session that defines infrastructure for the first time. “Repairs and maintenance are specifically excluded from allowable expenditures,” she said, “even if you can cite growth as the reason for the extra wear and tear.”
Lednovich continued, “We are not repairing a fence, we are replacing a fence. We are not repairing a roof, we are replacing a roof.” He asked, “So who’s in favor of using impact fees to replace the fence?”
Ross told Lednovich, “You are skating the ice. As a City official you are supposed to support the law.”
Kreger said, “We can use impact fees, but we need to be careful. We lost an impact fee lawsuit a couple of years ago.”
Sturges suggested that the City could replace general fund money dedicated to street paving with money from impact fees. “Does anyone disagree that streets are infrastructure?” he asked.
Bean said, “We can nitpick what is and isn’t infrastructure. We are an authority. We are a government body. We do have authority to decide what is and what isn’t infrastructure. A lot of that is being replaced. There is a lot in the budget that is clearly infrastructure. So we can apply those impact fees. So let’s replace some of this proposed funding with infrastructure fees.”
Ross said, “You can’t use Parks and Rec impact fees to replace a road.”
City Attorney Bach agreed with Ross. “We are talking about City facilities,” she said. “We have a public buildings impact fee fund. Everything else in your discussion is correct, but there is no impact fee for roads.”
Lednovich summarized changes to include complete elimination of the $50,000 to convert softball fields to Little League fields at Ybor Alvarez Field; reprogram $140,000 from impact fees to pay for the Atlantic Rec Center roof; $28,500 in replacements under Parks and Rec to be covered by impact fee funding. All Commissioners but Ross were in agreement on the use of impact fees.
Sturges clarified with Bach that administrative impact fees can be used for construction, reconstruction or replacement. He suggested taking $500,000 from impact fees to pay for repointing the Peck Center. Lednovich modified Sturges’ recommendation to lower the amount to $200,000. Sturges agreed.
“What are the unintended consequences [of this reprogramming]?” Ross asked. “What was the long term planning for those funds?”
Tammi Bach said, “Some might argue that repointing the Peck Center is a repair, not an improvement.”
Lednovich said, “Let them argue.”
Kreger said he believed that the state law was written to allow flexibility in use of impact fees. “It’s home rule; we can do what we want to do. But we should document it and be careful,” he said.
Sturges said, “By state law, anything you do to a building is an improvement, even if it is just adding a trim board.”
In response to a question from Lednovich, City Manager Martin provided a report from City Engineer Charlie George that the total estimate for City Hall repairs and improvements $2.3M with an additional $400K for contingencies.
Lednovich suggested that architectural drawings for a new City Hall ($250K) be removed from administrative impact fees in the current budget. The question of bonding for City Hall and other bit ticket items will be discussed further at the FBCC workshop scheduled for August 17.
Some uneasiness remains about the use of impact fees
As the meeting ended various City staffers expressed uneasiness over the proposed use of impact fees. In an email to Commissioners sent the next day with a subject line: Improper Use of Impact Fees, former City Comptroller Patti Clifford opined:
Your decision (excluding Commissioner Ross) to use impact fees for replacement and repointing projects is, at a minimum, a violation of the SPIRIT of impact fees. Clearly repairs and maintenance are not a proper use and, although capitalizable because they extend the use of these buildings, these items are for EXISTING structures and not related to GROWTH!
Who are the impact fee police? It should be Ms. Bach and Ms. Testagrose. Each year Ms. Testagrose must sign an attestation as to the proper use of impact fees. See a copy of her signed affidavit included in the most recent audit report attached here for your reference. These uses should give her pause.
You are putting the city at risk. I urge you to seek outside independent opinions as to whether impact fees may be used in the proposed manner. Please contact the auditors NOW and ask them. Please get an opinion from the U of FL Professor (Dr. Nichols I think) whose study was used to support the impact fee rates.
If these are not valid uses of impact fees then you still have some heavy lifting to do budget-wise for the 2021/2022 fiscal year.
I am hoping you will have the suggested due diligence done before committing impact fees to these projects.