April 23, 2010 - 9:00 AM - County Board of Commissioners Meeting Minutes (Special)

10 781 Meeting of the Johnston County Board of Commissioners April 23 , 2010 Special Meeting Annual Work Session The Johnston County Board of Commissioners met in special session Friday , April 23 , 2010 at the Johnston Medical Mall Room 1404 A - B located at 514 N Bright Leaf Blvd , Smithfield , North Carolina The following members were present Present Wade M Stewart , Chairman , Allen L Mims , Jr , Vice Chairman , Cookie Pope , Jeffrey P Carver , W Ray Woodall , DeVan Barbour , and Tony Braswell Absent None Also Present Rick J Hester , County Manager , Paula G Woodard , Clerk to the Board , J Chad McLamb , Finance Director , Tyson Radford , Assistant Finance Director , Martha Lasater , Debt and Grant Management Analyst , David F Mills , County Attorney , Melissa A Daughtry , Paralegal Deputy Clerk , and Pat LaCarter , Facilitator Chairman Wade M Stewart called the meeting to order at 9 00 am 1 Approval Discussion of Agenda Upon a motion by Commissioner W Ray Woodall , seconded by Commissioner Allen L Mims , Jr , and carried by unanimous vote , the Board approved the agenda as presented 2 Board Expectations of Work Session The Chairman turned the meeting over to Facilitator Pat LaCarter who asked for the Commissioners to share their expectations for the work session • Commissioner W Ray Woodall stated he hopes that the Board can begin the process of developing a budget that is realistic , conservative , and contains no waste • Commissioner Tony Braswell stated he would like for the Board to create a strategy or roadmap of sorts for the County to follow in the future • Commissioner Jeffrey P Carver commented that the meeting is a work session for the purposes of being updated on several matters ; however , he stated at some point , the Board must have a planning session to develop a plan of action to follow for the coming years • Chairman Wade M Stewart agreed that the work session is more of an opportunity for the Board to be updated , and he stated future meetings could be scheduled to discuss specific issues and how to address them 3 Financial Update – Davenport & Company , LLC David Rose and Kyle Laux , with Davenport & Company LLC , presented the annual financial update Mr Laux began the presentation by reviewing background information with the Board as well as providing a historical look at the County’s credit ratings by Standard & Poors and Moody’s Mr Laux discussed the following bullets in his presentation with the Board Goals & Objectives • Provide Johnston County with an update on its financial standing especially as it relates to credit ratings credit markets • Educate the Board of Commissioners on strategies to help Johnston County maintain enhance its financial strength and flexibility and , in - turn , enhance its credit ratings • Continue Johnston County on the path to becoming a “ AAA ” locality ? During Davenport’s tenure as Financial Advisor , the County has • Been upgraded at least five separate times , • Locked - in total debt service savings of 74 million through a series of strategic refinancings ; • Strategically issued nearly 500 million of new debt for capital investment in the County ; • Adopted Johnston’s first ever formal financial policy guidelines ;Page782 April 23 , 2010 – Continued • Developed , initiated , and participated in numerous other presentations , meetings with the Local Government Commission and rating agencies , etc Overview • Johnston County enjoys strong “ AA ” range credit ratings • These credit ratings have been continually trending up during the past decade • The strong ratings are a direct result of the County’s history of pro - active financial management , adherence to financial policies , solid reserve levels , and expanding economic base • The upward movement in credit ratings , in concert with a favorable interest rate environment , has allowed the County to finance new capital projects at favorable interest rates and refinance existing debt for considerable debt service savings • Maintaining the County’s solid financial standing in the future will be key to allowing Johnston to continue refinancing existing debt for savings and financing new projects , if when needed , at the lowest cost of funds possible Recent Refinancing Success • During the past year , Johnston County has refinanced 877 million of existing debt for debt service savings purposes • Most recently , on April 20 , 2010 , Johnston County successfully sold 54735 million of General Obligation Refunding Bonds for significant debt service savings • The 2010 Refunding Bonds resulted in debt service savings of nearly 1 million in Fiscal Year 2010 - 11 and a total of over 277 million in savings over the life of the loan • In addition , in April of 2009 , the County successfully sold 29165 million of refunding bonds that produced , in total , 850,000 of debt service savings • During the past twelve months , Johnston County has locked - in 362 million of debt service savings through strategic refinancing A History of Johnston County’s Credit Ratings • During the past decade plus , Johnston County’s credit ratings have consistently moved upwards • S & P’s current credit rating for the County , “ AA + ” , is the second highest possible • As a result of a global ratings recalibration , the County’s Moody’s rating is expected to be increased in the near future to “ Aa2 ” Credit Spread Considerations • The spread between borrowing costs for an “ A ” range credit and a “ AAA ” range credit in the current market is roughly 60 to 70 basis points • The spread between borrowings costs for a “ AA ” range credit and a “ AAA ” credit in the current market is 20 basis points or under • The spread between an “ A ” credit and a “ AAA ” credit has been as high as 126 basis points 126 during the past several years • In contrast , the spread between a “ AA ” credit and “ AAA ” credit has historically been relatively steady in the 20 basis point range • This equates to a 1 savings for a “ AA ” Credit versus an “ A ” Credit • On a debt portfolio of roughly 400 million , this 1 difference equates to 4 million per year in debt service or roughly 4 ¢ on the real estate tax rate Mr Laux shared the following specific comments by the rating agencies regarding Johnston County’s finances He noted the agencies consistently monitor Johnston County and spoke on how important the credit ratings will continue to be Recent Rating Agency Commentary • “ … The County’s strong and well embedded financial management policies and practices , contributing to the maintenance of a healthy historical fund balance reserve position ; ” - Standard & Poor’s , 2010 • “ Despite the decline in Fund Balance , we believe the County’s projected reserve position remains strong headed into Fiscal Year 2011 ” - Standard & Poor’s , 2010 • ” A financial position that remains sound despite recession related revenue pressures , and an elevated debt position given sizeable school capital needs ” - Moody’s , 2010 • “ The County reportedly strives to adopt a Fiscal Year 2011 budget that restores structural balance and does not include fund equity as a revenue source Moody’s will monitor the ability to achieve these measures and believes that the current reserve levels afford the County with satisfactory flexibility in the event of sustained revenue declines ” - Moody’s , 2010Page783 April 23 , 2010 – Continued Mr Rose presented the following information to the Board related to the County’s debt portfolio and financial policies Mr Rose noted that because of the County’s bond ratings , there are certain standards that the credit rating agencies expect the County to follow as it relates to capital planning Existing Debt Service • The County’s existing tax - supported debt service ramps - up from Fiscal Year 2010 - 11 to Fiscal Year 2011 - 12 as the most recent phase of General Obligation Funding comes on line • The County’s debt is paid off at a rapid pace despite how much of the debt portfolio is The County’s 10 year payout ratio of 63 is well above the policy guideline level of 50 Existing Tax Supported Debt Service 40,000,000 35,000,000 Interest Principal 30,000,000 25,000,000 20,000,000 15,000,000 10,000,000 5,000,000 0 2011 2013 2015 2017 2019 2021 2023 2025 2027 Existing Tax Supported Debt Service Fiscal 10 Year Year Principal Interest Total Payout Ratio 2011 18,766,186 14,962,990 33,729,176 5 2012 22,311,186 14,813,014 37,124,200 11 2013 23,521,186 13,869,644 37,390,830 17 2014 24,116,186 12,853,149 36,969,335 24 2015 24,761,186 11,911,754 36,672,940 30 2016 24,491,186 10,890,159 35,381,345 37 2017 24,576,186 9,864,564 34,440,750 43 2018 24,471,186 8,871,484 33,342,670 50 2019 25,291,186 7,885,029 33,176,215 57 2020 25,146,186 6,871,185 32,017,371 63 2021 24,501,186 5,854,095 30,355,281 70 2022 24,093,652 4,800,805 28,894,457 76 2023 21,135,000 3,795,640 24,930,640 82 2024 20,530,000 2,872,263 23,402,263 88 2025 17,400,000 1,980,385 19,380,385 92 2026 13,700,000 1,240,820 14,940,820 96 2027 8,900,000 654,130 9,554,130 98 2028 6,600,000 278,190 6,878,190 100 Total 374,311,698 134,269,298 508,580,996 Expansion of Debt Portfolio • Johnston County experienced a decade of rapid population expansion that created the need to quickly build new infrastructure to meet the needs of the growing population , especially as it relates to schools • Population Grew Over 40 from 2000 to 2009 • The County’s tax - supported debt outstanding ie General Government and Schools tripled during the same time period Page784 April 23 , 2010 – Continued Fiscal Year Tax - Supported 1 Debt Outstanding Ended Increase 6 30 2000 120 million 6 30 2005 210 million + 90 mm 2 6 30 2010 373 million + 163 mm 1 Includes general obligation bonds , COPS , Installment Payment Loans , and Capital Leases supported by the General Fund 2 Projected at end of fiscal year • The most recent round of voter authorized General Obligation Funding May , 2007 Referendum was originally planned to be 1127 million issued over a Five Year Period Fiscal Year 07 - 08 to Fiscal Year 11 - 12 • This plan was revised first to a four year issuance plan then to a three year issuance plan • In addition , roughly 30 million was added to the original 1127 million to provide additional funding for a high school project • In total , the County has issued over 160 million of new debt during the last three fiscal years Fiscal Year 07 - 08 to 09 - 10 – includes balance of 2005 Referendum , 2007 Referendum , and 30 million high school completion • This equates to roughly 40 of the County’s total tax supported debt outstanding • The County has been able to issue this debt while maintaining a strong payout ratio Above 60 that is well above the County’s policy 50 and the debt was structured to coincide with traditional LGC policies • The new debt was originally planned to be paid over less than 20 years ie less than 50 to 60 of the useful life of the projects to be financed • Debt service expenditures as a portion of the County’s budget have doubled during the past ten years • Debt Service vs Revenues in Fiscal Year 1998 - 99 was roughly 10 • Debt Service vs Revenues in Fiscal Year 2008 - 09 was roughly 19 Note The County’s policy is for debt service expenditures to not exceed 20 of the County’s budget Compliance with Debt Policies • As the County continues to digest the last round of General Obligation funding , no additional debt capacity is projected versus the Debt Service vs Revenues Policy for several fiscal years • Revenue growth that is stronger than currently projected can also help to create debt capacity Debt Service vs Revenues 30 Existing Debt Service County Policy 25 20 15 10 5 0 2005 2007 2009 2011 2013 2015 2017 2019 • The County is solidly in compliance with its Debt vs Total Assessed Value Policy PagePage pageNumber5785 April 23 , 2010 – Continued Debt vs Total Assessed Value 600 Existing Debt County Policy 500 400 300 200 100 000 2005 2007 2009 2011 2013 2015 2017 2019 Compliance with Fund Balance Policy • Fund balance available for appropriation has been falling in recent years • The policy level 15 may be breached at the end of Fiscal Year 2009 - 10 Fund Balance vs County Policy General Fund As a of General Fund Fund Balance General Fiscal Operating Available for Fund 1 Appropriation Year Expenditures Expenditures 2002 108,954,496 26,698,835 245 2003 122,352,736 21,811,837 178 2004 127,658,517 26,044,373 204 2005 137,846,395 27,453,775 199 2006 151,036,780 33,370,254 221 2007 158,464,000 37,228,682 235 2008 174,752,973 35,055,264 201 2009 182,859,952 28,954,203 158 2 2010 169,000,000 20,500,000 121 1 Calculated in accordance with GS - 159 2 Projected Source Local Government Commission Fund Balance vs Expenditures 3500 General Fund Fund Balance Available for Appropriation Policy Guideline Level 3000 2500 2000 1500 1000 500 000 2002 2003 2004 2005 2006 2007 2008 2009 2010 2 PagePage pageNumber6786 April 23 , 2010 – Continued Mr Rose stated that initial projections place the available fund balance at 121 at the end of FY 2009 - 2010 and he noted that while 121 is still a strong number when compared to the national average and is above the Local Government Commission’s required level , it is in violation of the County’s own adopted financial policies Mr Rose noted that if the ultimate goal is to become a “ AAA ” rated County , then the County must meet its financial policies , even during tough times Mr Rose stated the County will be facing a significant challenge going into the FY 2010 - 2011 budget , in that ideally , the County should not drop much more below the projected 121 available fund balance Mr Rose continued his presentation by reviewing the following fund balance considerations with the Board Fund Balance Considerations • The County’s Fund Balance is projected to decline roughly 165 million from its peak of 37 million at the end of Fiscal Year 2006 - 07 to an estimated level of 205 million at the end of Fiscal Year 2009 - 10 • This decline was due in large part to the severe economic recession and the most recent phase of General Obligation Funding being incorporated into the budget • At 205 million , the Fund Balance versus Budget ratio would stand at roughly 12 versus the County’s Policy Guidelines of 15 • Although below the County’s Policy Level , 12 is still seen as solid from the rating agencies perspective for a “ AA ” locality • Going forward , eliminating the use of Fund Balance in the budget and moving back toward compliance with the policy will be key to maintaining the County’s credit rating and continuing on the path to “ AAA ” Mr Rose concluded the presentation by reviewing summary observations with the Board and offered to answer any questions Summary Observations • Johnston County has a history of solid financial results • These solid financial results have translated into consistently increasing credit ratings • The upward movement in credit ratings has allowed the County to continually lower its borrowing costs • Adherence to conservative financial management practices and policies will be important as Johnston strives to be a “ AAA ” Commissioner DeVan Barbour noted that Davenport is projecting the County’s available fund balance to be at 121 at the end of FY 2009 - 2010 and that the financial policies call for the County to bring the percentage back to 15 within three years Commissioner Barbour asked what an appropriate amount of money would be to set aside annually over the next three years , in order to bring the fund balance percentage back in compliance with the policy Commissioner Barbour stated that he feels the Board should have an estimated target number in mind to try and increase the fund balance each year over the next three years Mr Rose indicated that although there are many financial elements to consider , that perhaps 2 million each year could be a target number to help increase the fund balance back within the 15 range Finance Director Chad McLamb noted that even though the FY 2010 - 2011 budget will be less than previous years , the concern is that going forward as the budget increases annually , the available fund balance percentage could go down Commissioner Jeffrey P Carver stated the fund balance cannot be used to balance the budget and going forward , the expenses must be continually controlled Commissioner Barbour agreed that the money is not available in the fund balance for the budget and although the policy calls for the County to have three years to come back into compliance of a 15 available fund balance , progress must be made annually At the inquiry of Chairman Wade M Stewart and Commissioner Tony Braswell , Mr Rose noted that unless the economy rebounds at a faster rate than anticipated , without a tax increase , the County cannot take on anymore substantial debt until at least 2015 , without jeopardizing the credit ratings Mr Rose pointed out that the County’s population has grown by 40 in the last ten years and during that same period of time the County’s debt has grown by 300 Mr Rose spoke on the importance of the County’s conservative approach and good financial practices that have contributed to the bond ratings which have saved the taxpayers money over the years He stated that going forward the County must proceed with caution regarding any discussions for additional significant debt PagePage pageNumber7787 April 23 , 2010 – Continued Upon a question by Commissioner Allen L Mims , Jr , Mr Rose advised that because the available fund balance is being projected at 121 at the end of FY 2009 - 2010 , the County should begin thinking about a plan to bring the percentage back up to 15 sooner versus waiting until the next audit report is available and the actual percentage is confirmed Commissioner Mims agreed that the Board must begin thinking about a plan to bring the available fund balance back up as soon as possible Commissioner Mims mentioned the County’s Economic Development Incentive Grants and suggested that once those grants to the industries are finished , then perhaps the tax revenues from the industries that will begin coming back to the County should be allocated directly towards building the available fund balance back County Manager Rick Hester reported that staff has begun work on a plan for the Board to review possibly in the next 30 days Commissioner Cookie Pope asked Mr Rose to comment on the impacts of the State and Federal Government budgets to the counties Mr Rose explained there are unfunded mandates being passed down to the local governments by the State and Federal Government which significantly impacts the local governments ’ budgets He noted the situation is happening throughout the country and citizens need to be aware that counties are also having to address these unfunded mandates The Board took a five minute recess 4 Water , Wastewater , and Solid Waste – Public Utilities Tim Broome , PE , Director of Utilities and Engineering , and Rick Proctor , Solid Waste Manager , presented an update to the Board regarding Water , Wastewater , and the Solid Waste operations Water Mr Broome reviewed the following points of interest on the current water supply for the County Current Water Situation No of retail customers 22,900 connected 5,000 services available Average daily retail water 400 mgd No of bulk customers 9 Average daily bulk water consumption 40 mgd Unbilled usage 03 mgd Total average daily usage 83 mgd Peak daily water demand 110 mgd Water Supply Capacity County water treatment plant 120 mgd Bulk purchase agreements Smithfield 20 mgd Benson Dunn 05 mgd Harnett County 25 mgd Wayne Sanitary Districts seasonal 06 mgd Subtotal bulk purchases 56 mgd Total Supply Capacity 176 mgd Projected date supply capacity 2020 could be exceeded Mr Broome reviewed with the Board the following expenditures and revenues pertaining to Funds 67 – General Water System and 69 – Water Districts annualized through June 30 , 2010 PagePage pageNumber8788 April 23 , 2010 – Continued Expenditures Operation and Maintenance 6,447,000 Capital Outlay 1,650,000 Debt Service 4,924,000 Total 13,021,000 Revenues Bulk Sales 3,971,000 Retail Sales 8,904,000 Misc Revenue 80,000 Assessment Fees 50,000 Fund Balance 16,000 Total 13,021,000 Projected fund balance on 6 30 10 6,000,000 Other Total outstanding debt principal only 81,000,000 Salaries as a percentage of division budget 14 Mr Broome reported on the current water supply matters , as follows ? Funds 67 and 69 are solvent ? Magnetic Ion Exchange process addition is under construction and approximately 50 complete ? Funding appears to be successfully arranged for the 20 ” East Clayton Industrial Area Parallel Water Main 80 in grants for 25 million project ? USDA funding expected for the Wilson’s Mills to Cleveland Area Transmission Mains will probably not materialize ? Low pressure problems on NC 210 at Reedy Creek Road and Gordon Road at Edinburg Subdivision are resolved ? All water district construction will be completed and closed out by end of this FY ? Planning is still underway for the fire coverage initiative project with approximately 50 of the fire departments participating ; however , USDA funding is now questionable ? The FONSI for the Lower Neuse Water Supply Project was issued last fall ? Raleigh is now ready to discuss a bulk water allocation Following a presentation of aerial photographs of the water treatment plant , Mr Broome reviewed with the Board a map of the Wilson’s Mills to Cleveland transmission mains project He further presented the following challenges currently facing the County’s water supply ? Completing and starting up the Magnetic Ion Exchange Project ? Repermitting the distribution system for both free chlorine and chloramine zones ? Accomplishing construction of the Wilson’s Mills to Cleveland Water Transmission Mains without USDA funding ? Completing negotiations for purchase of the Hanson Corporation quarry in Princeton for the future Lower Neuse Water Supply ? Replacement of the floating cover on raw water reservoir No 1 at the wtp ? Acquiring an additional 099 mgd in withdrawal from the Neuse River for the Wilson’s Mills water intake ? Planning for continued improvement in our drinking water quality Wastewater Mr Broome reviewed the following points of interest on the current wastewater situation for the County • No of retail customers 2,680 • Average daily retail wastewater flow 080 mgd • No of bulk customers 6 • Average daily bulk wastewater flow 360 mgd • Total average daily wastewater flow 440 mgd • Total average daily wastewater flow 580mgd during wettest quarter • Unused , but allocated wastewater capacity Town of Clayton by contract 075 mgd Aqua NC - Flowers by contract 050 mgdPagePage pageNumber9789 April 23 , 2010 – Continued Carolina Water Service by contract 040 mgd Reserve for approved residential development 065 mgd Reserve for four municipalities 075 mgd Total – allocated , unused capacity 305 mgd • Wastewater capacity available 965 mgd • Surplus capacity – average annual basis 220 mgd • Surplus capacity – wet weather basis 080 mgd Mr Broome reviewed with the Board the following expenditures and revenues pertaining to Fund 68 – Wastewater annualized through June 30 , 2010 Expenditures Operation and Maintenance 3,570,555 Capital Outlay 738,051 Debt Service 2,787,740 Total 7,096,346 Revenues Bulk Sales 3,467,000 Retail Sales 1,394,000 Misc Revenue 0 Assessment Fees 500,000 Fund Balance 1,735,346 Total 7,096,346 Projected fund balance on 6 30 10 6,500,000 Other Total outstanding debt principal only 34,000,000 Salaries as a percentage of division budget 20 Mr Broome reported on the current wastewater matters , as follows ? Expansion of the wwtp from 70 mgd to 95 mgd has been completed ? Construction of the East Clayton and Wilson Mills wastewater transmission facilities has been completed ? A federal energy stimulus grant project will focus on power savings for the wwtp and several larger wwps’s ? The near - term remaining wastewater system necessary capital project is a 20 ” force main from Josephine Road and SR 1010 to the landfill Cleveland Area Force Main ? JCC RCW facilities are designed and permitted but not completely funded ? No other RCW facilities expansions are underway Following a presentation of aerial photographs of the wastewater treatment plant , Mr Broome reviewed with the Board a map of the Cleveland area force main project He further presented the following challenges currently facing the County’s wastewater supply ? Funding and planning debt retirement for the 30 million Cleveland Area force main ? Adding a force main segment on Industrial Drive in Selma to prevent future wet weather wastewater spills in the vicinity of Shoney’s ? Rehabilitation of the Buffalo Creek wwps ? Upgrading capacity for the Pine Level ww transfer station ? Completing the JCC RCW project ? Keeping Fund 68 solvent under the current debt service load with very low capacity fee revenue in this economic climate Solid Waste Operations Rick Proctor , Solid Waste Manager , reviewed with the Board the following points of interest for the County’s Solid Waste Operation ? Municipal solid waste MSW flow stream is down 45 from FY 08 - 09 and 15 from FY 07 - 08 ? Construction and demolition debris C & D flow stream is down 20 from FY 08 - 09 and 38 from FY 07 - 08 ? Decal sales are up 2 over FY 08 - 09 and 4 over FY 07 - 08 Page0790 April 23 , 2010 – Continued ? State imposed plastic bottle ban with no revenue stream is increasing operating cost ? State imposed electronic equipment waste E - waste rules will probably cause a similar cost increase with no revenue stream ? Negotiations for development of the Landfill Gas to Energy Project are still underway ? Complaints on the decal program continue to be received ? Complaints are received about processing time through the landfill scale house on busy weekends ? Phase 3 of MSW Cell 4A has been completed , and it should serve the County for 45 years ? C & D landfill cell No 2 should serve the County for approximately 25 years ? We must complete closure of C & D landfill cell No 1 in FY 10 - 11 at an estimated cost of 17 million At the inquiry of Commissioner W Ray Woodall , Mr Proctor confirmed that citizens can bring trash to the County Landfill and pay a fee based on the weight , without purchasing a decal He stated at the present time , citizens must have a decal to visit the convenience centers around the County Commissioner Woodall asked if a notice could be sent out to all County residents or perhaps advertised in the local newspapers advising citizens on how to dispose of electronic items such as televisions or computers Mr Proctor stated staff plans to develop an addition to the County’s website that will provide more information on how to dispose of electronic products Mr Proctor noted that Johnston County Industries will accept and recycle electronic products , for a fee on certain products such as televisions and computer monitors Mr Proctor reviewed with the Board the following expenditures and revenues pertaining to Fund 66 – Solid Waste annualized through June 30 , 2010 Expenditures Operation and Maintenance 4,973,800 Capital Outlay 1,834,900 Debt Service 0 Total 6,808,700 Revenues Landfill Fees 4,531,155 Decal Sales 950,000 Recycling Fees & State Tax Reimbursement 680,000 Fund Balance 647,545 Total 6,808,700 Projected Fund Balance on 6 30 2010 6,000,000 Other Total outstanding debt 0 Salaries as a percentage of division budget 26 Following a presentation of aerial photographs of the landfill operations , Mr Proctor reviewed with the Board the following challenges and special issues currently facing the County’s Solid Waste Operations Challenges ? Expected cost to be incurred due to upcoming e - waste ban ? Enforcement - Decal violations - Unsecured loads - Roadside littering - Prohibited wastes ? Starting up a household hazardous waste collection program ? Planning and permitting for next MSW cell No 6 Special Issues ? Alternatives to decal program ? Roadside litter ? MSW flow control Page1791 April 23 , 2010 – Continued ? County - wide franchised curbside service ? Construction of an additional western area convenience site Upon a question by Commissioner Tony Braswell , Mr Proctor acknowledged that there have been problems with the wait times , especially during weekends , at the Landfill due to customers having to weigh their vehicles when they enter the site as well as when they leave to determine the proper amount they should be charged for waste disposal Mr Broome reported staff is exploring other options to the scale system at the Landfill in an effort to reduce wait times for customers such as charging a flat rate per load Mr Broome reviewed with the Board a “ what if ” scenario as a possible alternative to the current decal program He explained that if the Board were to assess each household outside of the municipalities 50 each year and assess each household within the municipalities 20 each year , the County could generate approximately 26 million per year in revenue and allow the use of the convenience sites at no charge Mr Broome stated the revenue generated from the assessments would cover the costs of operating the convenience sites seven days per week with expanded hours , allow for an expansion of the materials recycling programs , and leave an estimated 600,000 per year that could be allocated to a privatized roadside litter cleanup Mr Broome reported that based on staff’s initial research , it is estimated that each state maintained road in the County could be cleaned up approximately once every 60 days Mr Broome acknowledged that the citizens inside municipal limits pay a fee to their respective towns for curbside trash pickup and he discussed various alternatives that could be considered for those households Commissioner W Ray Woodall indicated he was glad to see that staff was developing proposed options to the Solid Waste Program that could help with the litter situation in the County and he would like to see the Board look closer into the alternatives suggested by staff Commissioner Woodall spoke on his frustrations with the ongoing litter issues in the County At the inquiry of Commissioner Allen L Mims , Jr , Mr Broome stated if the Board were to assess the households inside the municipal limits , then the roadside litter pickup would have to continue into the town limits on the state maintained roads Commissioner Tony Braswell reminded everyone that the litter problem in the County is not only caused by the County citizens , but it is also caused by the motorists that travel through the County on the major highways Commissioner Braswell commented that while those traveling through the County do not care about the litter situation here , he stated after receiving so many complaints from the County citizens , he feels the Board owes it to the residents to address the situation Commissioner Braswell stated the issue of litter and the decal system has been discussed for years , but at some point an alternative needs to be put into place Stacey Johnson , 5872 Cornwallis Road , Garner , addressed the Board and stated he liked the options proposed by staff versus the current decal system Mr Johnson commented that by opening up the convenience sites to everyone , he believed that the roadside litter problem would be somewhat alleviated Mr Johnson expressed his concerns to the Board over the current decal system and asked the Board to consider other options Chairman Wade M Stewart thanked Mr Johnson for his concerns and interest in the County Chairman Stewart stated the County is not perfect ; however , the staff is always working on solutions to find a better way of operating Commissioner DeVan Barbour commented that if the Board is going to move forward with looking at alternatives to the decal program , then a plan must be quickly established before the new decals for next fiscal year need to be ordered Chairman Stewart stated the Board must first discuss in depth any and all options to the decal program and take into consideration all the residents of the County , noting there are those that currently support the decal program Chairman Stewart stated a special meeting will be scheduled in the future at the appropriate time for the purposes of discussing solid waste matters only Commissioner Mims commented that even if the County opens up the convenience center sites to everyone , there will still be those that will continue to litter the roadsides Commissioner Mims also spoke on the problems he sees with commercial trash haulers littering the roadways due to uncovered loads Commissioner Mims stated he has concerns with those folks that properly dispose of their trash subsidizingPage2792 April 23 , 2010 – Continued those that litter because they do not care Commissioner Mims noted he would like for the Sheriff’s Department to look at ways of increasing enforcement with regards to littering Commissioner Braswell asked for the staff to research how the surrounding counties charge their residents for solid waste disposal and report that information back to the Board 5 Landfill Gas to Energy Initiative Update Tim Broome , PE , Director of Utilities and Engineering , briefly updated the Board on the Landfill Gas to Energy Initiative He noted that contract negotiations are ongoing with Blue Source LLC Mr Broome stated staff hopes to have a final proposed contract soon 6 2011 Revaluation Update Tax Administrator Pat Goddard provided the Board with an update on the 2011 Revaluation project She introduced Fred Pearson of Pearson Appraisals , the revaluation consultant for the County , and Sheila Garner , the Tax Department Real Estate Supervisor Ms Goddard noted the primary purpose of a revaluation is to equalize the tax base She reviewed information regarding the laws regulating revaluation , how market values are affected , and fee appraisals versus mass appraisals Ms Goddard further presented information to the Board regarding recent market sales compared to the 2003 tax values Ms Goddard stated the Tax Office along with Pearson Appraisals has been working on the following tasks for the revaluation ? Visiting properties and collecting data ? Collecting and reviewing sales ? Mailing and reviewing sales questionnaires ? Mapping sales from 2003 – 2009 ? Establishing neighborhood boundaries ? Analyzing construction cost ? Analyzing income and expense statements ? Contacting hog and poultry farm owners ? Contacting owners of cell towers and billboard properties Ms Goddard explained that every real estate transaction resulting in a change of ownership is reviewed She stated the sale prices and terms of the transaction are verified and true “ arms - length ” transactions are qualified in a sales file Ms Goddard noted the Tax Office’s sales file contains over 22,190 qualified sales from January 1 , 2003 to March 31 , 2010 She reported on the next steps in the revaluation process , as follows ? Continue to test and refine valuation models ? Review predicted values for quality , reasonableness and equity ? Inform & Educate public ? Develop & Adopt schedule of values ? Send value notices to property owners ? Conduct informal reviews County Appraisers - 4 Pearson Appraisers - 4 ? Appeals to the Board of Equalization and Review ? Appeals to Property Tax Commission Ms Goddard stated a revaluation video will be produced for use in educating the public in tax and revaluation procedures She noted a County representative will be available by appointment to present this information to civic groups , homeowners associations , realtor groups , etc Ms Goddard reported that for the convenience of the County citizens , informal appeals will be scheduled at locations throughout the County , and the Tax Office is currently coordinating this effort with Technology Services Ms Goddard presented a timeline of the remaining elements in the revaluation process She noted it is anticipated that the Schedule of Values will be presented to the Board of Commissioners in September 2010 followed by a public hearing process and adoption of the schedule Ms Goddard stated once the Schedule of Values is adopted by the Commissioners , informal hearings as well as hearings with the Board of Equalization and Review will begin in early 2011 Ms Goddard concluded her presentation by briefly outlining and discussing the following points of interest in the revaluation process Page3793 April 23 , 2010 – Continued What We’ve Found ? There is no evidence that property values in Johnston County have collectively decreased by 10 , 15 , 20 , etc over the past year or the past eight years ? There is substantial market - based evidence that indicates property values in Johnston County have generally increased since 2003 Things to Remember ? Values must be set at or near 100 of market value ? Value may or may not be what the owner has invested in the property ? Different classes of properties change at different rates ? Percentage of increase is not a valid reason for an appeal ? Burden of proof is on the taxpayer to show that property is overvalued Finally ? Reassessments are volatile and established procedures must be followed ? The established appeal process outlined by the Machinery Act must be adhered to ? Properties will not increase at the same percentage countywide Location is still very much a factor ? Equity between similar properties must be top priority ? 7 months left before value notices are mailed The Board briefly discussed four year revaluations versus eight year revaluations Ms Goddard stated if the Board were to decide to go to a four year revaluation schedule , she would need for the determination to be made by mid 2011 in order to prepare Ms Goddard also noted that if a four year revaluation schedule were implemented , it would require additional staff within the Tax Office to carry out the work Following the discussion , it was the consensus of the Board to look into the matter of four year revaluations sometime during mid 2011 7 Budget Update County Manager Rick Hester and Finance Director Chad McLamb provided the Board with an update on the FY 2010 - 2011 budget Mr Hester reported that in FY 2008 - 2009 , the Board adopted a budget of 1804 million Mr Hester stated in FY 2009 - 2010 , the Board adopted a budget of 1717 million and for FY 2010 - 2011 he will give the Board a proposed budget at approximately 18 million less than in Fiscal Year 2008 - 2009 Mr Hester stated he expects to receive more information from the Tax Office in the coming days and he is waiting to receive the new estimates from the Tax Office before finalizing the proposed budget Upon a question by Commissioner Tony Braswell , Mr Hester confirmed that by adopting a budget in an amount less than previous years , the available fund balance percentage will increase ; however , he cautioned that the property tax growth may be less than 2 and sales tax revenues continue to be flat in the present economy Mr Hester stated he expects the proposed budget to be completed and ready for distribution in mid to late May He noted a public hearing will be held at the June 7 , 2010 10 00 am meeting following by scheduled evening budget meetings during the month of June Mr Hester stated the proposed budget would be submitted to the Board with no funds from reserves 8 Board Comments and Review Facilitator Pat LaCarter asked for the Board to review the expectations set out at the beginning of the work session After a self - critique of the work session by the Board members , and the conclusion that there was no further business , Commissioner Allen L Mims , Jr moved the Board adjourn Commissioner W Ray Woodall seconded the motion , which carried by unanimous vote The meeting adjourned at 12 30 pm Wade M Stewart , Chairman Paula G Woodard , Clerk to the BoardPage