February 29, 2008 - 8:35 AM - County Board of Commissioners Meeting Minutes (Special)

10 599 Meeting of the Johnston County Board of Commissioners February 29 , 2008 Special Meeting Work Session The Johnston County Board of Commissioners met in special session on Friday , February 29 , 2008 at Camp Mary Atkinson located at 8589 NC Highway 42 East , Selma , North Carolina The following members were present Present Cookie Pope , Chairman , Wade M Stewart , Vice Chairman , Allen L Mims , Jr , 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 , John R Massey , Finance Officer , J Mark Payne , County Attorney , Deva C Holt , Deputy Clerk , and Facilitators Pat LaCarter and Lu Hickey The Chairman called the meeting to order at 8 35 am and welcomed everyone to the work session 1 Agenda Review Board Expectations The Chairman turned the meeting over to Facilitators Pat LaCarter and Lu Hickey , who reviewed with the Board the proposed agenda Following the review of the agenda , the Commissioners briefly discussed their expectations for the work session , as follows • Chairman Cookie Pope indicated she would like to look forward to the upcoming year and outline specifics of what the Board hopes to accomplish • Commissioner Tony Braswell stated he hopes the Board can establish a roadmap of sorts for Johnston County to follow , not only for this year , but for years to come • Commissioner W Ray Woodall agreed that he also would like to discuss the future needs of Johnston County in general • Commissioner Jeffrey P Carver commented on the importance of prioritizing any goals established by the Board and reviewing those goals at the end of the year to see what has been accomplished • Commissioner Wade M Stewart recalled the recent community meetings involving land use matters and stated he hopes the Board can define exactly what the term growth management means for Johnston County 2 Presentation from Dr Roland Stephen from North Carolina State University Dr Roland Stephen , Associate Professor from the Institute for Emerging Issues at North Carolina State University , reviewed with the Board a PowerPoint presentation titled “ Financing the Future Fiscal Modernization in North Carolina ” Dr Stephen reported he has spoken with several groups recently regarding the local options of either a land transfer fee or the quarter cent sales tax increase During the presentation , Dr Stephen outlined the projected rate of growth for North Carolina in relation to other states and noted North Carolina has an extraordinary future ahead , with Johnston County at the center of the growth He cautioned there will be significant challenges related to keeping up with school construction , higher education opportunities , transportation issues , and infrastructure needs Dr Stephen reported he is of the opinion that problems with managing growth cannot be solved by tax revenues alone and will require public and private partnerships He pointed out that North Carolina is making a transition from manufacturing to the service industry and as consumers grow richer and older they will purchase fewer goods and buy more services , thereby steadily shrinking the sales tax base year by year Dr Stephen reported the North Carolina Association of County Commissioners along with Dr Carl Smith of the UNC School of Government is currently working on developing a tax calculator for all 100 counties in North Carolina The tax calculator would contain data specific to the counties and would allow each county to determine potential revenue yields as a result of changing local revenue options Page600 February 29 , 2008 Continued Commissioner Wade M Stewart stated it appears to him that there are many organizations who are trying to determine more ways for counties to raise revenues ; however , he questioned if there are any groups who are trying to establish how state and local governments can operate with less money so as not to tax people further Dr Stephen reported there are a few groups that study those issues and he believes this is a concern of the political leadership County Finance Officer John Massey noted the loss of sales tax revenues due to internet sales and asked if this issue was being examined Dr Stephen stated there is a streamlined sales tax agreement among some states to try and collect internet sales tax revenues from vendors in other states on behalf of each other ; however , it is voluntary at the moment and is taking some time 3 Johnston County Schools – Dr Anthony Parker , Superintendent – Land Use Studies Report Johnston County Schools Superintendent Dr Anthony Parker reviewed with the Board the most recent Land Use Studies Report dated January 31 , 2008 as prepared by the Operations Research and Education Laboratory OR ED Lab Dr Parker reported the study is performed every three years ; however , this year the OR ED Lab added a growth component as part of the Transportation Information Management System He noted in the last land use study , the OR ED Lab established the school system growth rate at 5 ; however , the growth rate has been downgraded to 32 due to the current slowdown of the housing industry Dr Parker indicated he along with the OR ED Lab will continue to monitor the growth rate closely Dr Parker reviewed the following sections within the report for the Commissioners • Key trend and status indicators – population , employment , and economic development ; • Growth in Johnston County – causes , factors constraining growth , and economic development activities ; • Transportation – planned highway improvements and other transportation modes ; • Water sewer – current and planned infrastructure ; • Anticipated residential development – areas with current and anticipated high residential growth , summary of interviews , and information on subdivisions approved under construction ; • Anticipated non - residential development – current and anticipated commercial , office , and industrial development , major manufacturers , summary of interviews Dr Parker indicated each of the municipalities in Johnston County was interviewed as part of the study and each will be receiving a copy of the report for their review Dr Parker reviewed with the Board a hand - out titled “ Johnston County Schools Out - of - Capacity Worksheet ” and stated the document assists the Board of Education with reviewing future facility needs He reported the next steps of the Board of Education will be to set priorities for future building needs and submit that information to the Commissioners Dr Parker outlined some of the key future construction areas for 2009 through 2011 , and noted three new elementary schools will be needed Commissioner W Ray Woodall commented he heard the school systems in Union and Cumberland Counties are reviewing the construction of two - story schools with three schools on one campus and asked if Johnston County had considered the same Dr Parker reported due to traffic congestion , constructing three schools on one campus is not advisable He noted on the site for the new Powhatan Elementary School , land is available for a middle school and the Board of Education is currently evaluating this idea Dr Parker cautioned against putting a high school on a campus with an elementary or middle school due to traffic congestion and other issues He stated the Board of Education is constructing two - story high schools ; however , based on safety issues , have not considered two - story construction for middle or elementary schools Commissioner Tony Braswell asked for a timetable on the next phases of new school construction projects Page601 February 29 , 2008 Continued Dr Parker stated the Board of Education has instructed him and his staff to move forward with developing a timetable as soon as possible for submittal to the Board of Commissioners He noted the Board of Education Chairman , Fred Bartholomew , has instructed him to hold the numbers down in consideration of the other demands the Commissioners must take into account during budget time Dr Parker indicated that based on preliminary numbers the next phase of construction projects could total approximately 80 million ; however , this estimate could change based on priorities At the inquiry of Chairman Pope , Dr Parker stated the dropout rates are a concern to the Board of Education and they are working on strategies to address and reduce the current rate of 5 He noted due to the ever increasing Hispanic population , it is difficult to track the students who attend school temporarily only to return to their home country or move to another state He stated one of the objectives of the Board of Education is to reduce the dropout rate by 50 ; however , it must be a collaborative effort with Johnston County Schools , Johnston County Mental Health , the Department of Social Services , and other agencies to achieve success Dr Parker reported the early and middle colleges are a good partnership between the Community College and the Board of Education He stated the Board of Education has recently reestablished the Evening Academy at Smithfield Selma High School and has enrolled 40 students Dr Parker shared with the Board a presentation he recently gave to the Joint Legislative Study Committee on Public School Funding Formulas He noted the presentation highlighted the financial assistance the Johnston County Board of Commissioners has provided to Johnston County Schools Dr Parker reviewed with the Board some of the State funding formulas and indicated how some of these formulas should be revamped related to transportation needs , education of children with disabilities , and the low wealth funding formula to provide more State participation Dr Parker commented that after his presentation to the Committee , Representative Doug Yongue acknowledged Johnston County had the strongest commitment to building schools in the State of North Carolina and Representative Yongue asked Johnston County Schools to work with him on a potential State Bond Referendum to build new schools Dr Parker asked the Board of Commissioners for their support as he continues to pursue better funding formulas from the State of North Carolina Commissioner Wade M Stewart stated most all of the older schools in the County had been demolished and rebuilt , and asked if this would allow new school construction to keep better pace with the growth rate Dr Parker stated although the County is in better shape , it will continue to be an ongoing effort to keep pace with the growth 4 Annual Financial Update from Davenport David Rose and Kyle Laux , with Davenport & Company LLC , gave the annual financial update presentation , which included the following points • Goals and Objectives o Update Johnston County on its financial standing as it relates to capital funding o Update the County on the financial impact of the accelerated bond issuance plan for the spring 2007 referendum o Provide the County with recommendations for maintaining enhancing its existing solid credit ratings • Background Events o May 8 , 2007 – County residents approve a new 1127 million referendum for public schools , community college , and recreation related capital projects o June 26 - 27 , 2007 – Moody’s and S & P tour Johnston County in concert with their annual update of the County’s credit rating o July 11 , 2007 – S & P upgrades Johnston County’s credit rating from “ AA - ” to “ AA ” ; Moody’s reaffirms the County’s existing strong “ Aa3 ” credit rating ; and both credit ratings are in the upper range of what is considered “ Investment Grade ” o August 8 , 2007 – County successfully closes on a 526 million general obligation bond ; The 2007 bonds provided the final phase of funding for the 2005 referendum and the first phase of funding for the 2007 referendum ; and the competitive bond sale resulted in an all - in interest rate of roughly 443 • Overview of Credit Rating Scale • Rating Agency Considerations o S & P’s upgrade of the County’s credit rating is the third upgrade the County has received since 2000 Page602 February 29 , 2008 Continued o The upgrade further solidifies the County as a strong investment grade credit contributing to lowering borrowing costs o Highlights from S & P’s formal report include “ Strong Management Practices contributing to a Healthy Fund Balance Position and Easing the Concern regarding the County’s High Debt Pressures … ” – S & P 2007 “ Institution of Programs Aimed at Attracting and Retaining Specific Employers , Facilitating Future Local Economic Growth … ” – S & P 2007 “ Commitment to Infrastructure Development … ” – S & P 2007 o In their affirmation of the County’s strong credit rating Moody’s noted “ … Sizable and growing tax base , healthy financial operations and slightly elevated debt position given school capital needs ” – Moody’s 2007 • 2007 Referendum – Bond Issuance Schedule o 801 million of the 2007 referendum remains to be issued o In concert with County staff , Davenport has been closely monitoring the County’s debt capacity over the past several months taking into consideration the desire to accelerate planned bond issuances and the impact doing so may have on the County’s future financial strength credit rating o The Board of County Commissioners recently approved an accelerated issuance schedule for the 2007 referendum • Accelerated Bond Issuance Timing – Rating Agency Considerations o Before the accelerated bond issuance plan was finalized Davenport contacted the National Credit Rating Agencies to seek their input as to the potential implications of accelerating the bond issuance schedule on the County’s credit ratings o Both S & P and Moody’s indicated that the accelerated bond issuance plan should not negatively impact the County’s credit rating so long as certain benchmarks conditions are met … Both rating agencies stressed the importance of maintaining the County’s financial flexibility and compliance with financial policy guidelines if the bond issues were to be accelerated Moody’s in particular stressed the importance of maintaining a solid fund balance that is in compliance with the County’s Policy as a means to maintaining the County’s financial flexibility and thus its credit rating • Debt Capacity Update – Selected Key Assumptions o Two debt capacity scenarios were analyzed Both take into account the accelerated bond issuance schedule for the 2007 referendum o Both scenarios continue to include dedication of 20 million per year of lottery proceeds to offset debt service o Value of one penny on the property tax rate 1,085,897 FY 07 - 08 o Historical and projected growth of the value of a penny on the property tax rate as follows 5 year Historical Average Annual Growth 574 10 year Historical Average Annual Growth 929 Projected Annual Growth Non - Reassessment Years 550 o Next re - assessments planned to be effective in FY 2011 - 12 and FY 2015 - 16 Scenario two factors in a moderate amount of additional tax base growth ie , property tax revenues resulting from re - assessment Assumed total assessed value grows at 800 per year in re - assessment years versus 550 in non - reassessment years • Scenario 1 Cash - Flow Impact o Updated debt issuance plan for balance of 2007 referendum o Assumes natural growth in tax base only ie , no impact from re - assessment o Under current assumptions the initial results are as follows Moderate short - falls projected in Fiscal Year 2009 - 10 through Fiscal Year 2012 - 13 Short - falls equate to roughly 12 cents on the tax rate The first capacity for additional debt is projected to be available in FY 2013 - 14 • Scenario 1 Impact on Financial Policy Guidelines o Maintains compliance with financial policy guidelines • Scenario 2 Cash - Flow Impact o Updated debt issuance plan for balance of 2007 referendum o Incorporates potential impact of re - assessment in Fiscal Years 2011 - 12 and 2015 - 16 o Under current assumptions the initial results are as follows Moderate short - falls projected in Fiscal Years 2009 - 10 and 2010 - 11 Short falls equate to roughly 12 cents on the tax rate The first capacity for additional debt is projected to be available in Fiscal Year 2011 - 12 • Scenario 2 Impact on Financial Policy Guidelines o Maintains compliance with financial policy guidelines • Financial Policy Guidelines Fund BalancePagePage pageNumber5603 February 29 , 2008 Continued o County Policy Legally available fund balances at the close of each fiscal year should be at least 15 of the total annual operating budget of the county • Summary Observations o Johnston County’s current financial standing is strong o Given its sizeable existing debt level and continued growth pressure the County would be prudent to continue its conservative planning practices in order to maintain its financial strength o Maintaining compliance with financial policy guidelines will be key in order to maintain enhance credit ratings o Based upon current assumptions additional revenues may need to be identified if the County is to incur any additional debt funded projects ie , in addition to the 2007 referendum over the next two to three fiscal years Following discussion on the points outlined by Mr Laux , Commissioner Jeffrey P Carver inquired as to when the next presentations to S & P and Moody’s would occur Mr Rose reported the next visits from the bond rating agencies would occur prior to the next sale Mr Rose stated he does not believe Johnston County will receive an upgrade from S & P in that he believes the rating agencies for the most part want to see how Johnston County will handle the national economic slowdown However , he feels the Board and County staff have taken adequate measures to ensure a rating upgrade sometime in the future 5 Discussion – Recent Community Meetings and Next Steps – Comprehensive Land Use Plan County Manager Rick Hester called on Planning Director Berry Gray to provide an update on the Request for Proposals RFP from consulting firms to possibly assist with developing a comprehensive land use plan for Johnston County Mr Gray reported the deadline to submit proposals was February 25 , 2008 , and the Planning Department received a total of 11 proposals Mr Gray stated the Planning Department staff is currently in the process of reviewing each of the proposals in an effort to identify the top choices In response to Commissioner Jeffrey P Carver , Mr Gray reported the timeline in between award of a contract for services and completion of a finished product varies within the different consulting firms ; however , a specific timeline could be narrowed down with the selected firm during the negotiations to finalize a contract Commissioner DeVan Barbour stated he hoped the Board could be in a position to award a contract for services in April Commissioner Wade M Stewart asked if the firms had proposed prices for their services Mr Hester stated staff wanted to first ensure that the consulting firms contained the proper qualifications to perform the study and the price for services could be negotiated at a later date Mr Hester noted the County has many of the components already in place that make up a comprehensive land use plan and this would help to keep costs down Commissioner Stewart expressed concern as to how an outside consulting firm would be able to understand the needs of the County and develop a plan specific to Johnston County Mr Hester stated a comprehensive land use plan means different things to different people and it would be a work in progress Commissioner Barbour stated the consulting firm should be able to help facilitate the County to fill in the blanks to determine what is best for Johnston County Commissioner Tony Braswell asked what the Board planned to do in regards to the other recommendations from the Blue Ribbon Committee that were not related to a land use plan He stated he feels the Board should at least address those other recommendations Mr Hester reported the Board has already acted on a few of the other recommendations of the Blue Ribbon Committee At the request of Facilitator Pat LaCarter , Mr Gray reported with regards to an outside agency understanding Johnston County’s specific needs , typically a consulting firm would work with a steeringPagePage pageNumber6604 February 29 , 2008 Continued committee made up of County staff , Planning Board members , and Commissioners Further , public involvement would be another component in developing the plan Mr Gray stated staff along with the steering committee would ensure the consulting firm would provide recommendations specific to Johnston County Commissioner Jeffrey P Carver stated the County needed to move on a land use plan soon He noted with the current economic slowdown , now is the time to make changes Commissioner Stewart stated he wanted to give the consulting firm guidelines to follow rather than the firm telling the County what they feel should be in the plan He expressed concern over the possible amount of time it will take to sort through the numerous recommendations and components associated with a plan At the request of Commissioner Braswell , Mr Hester reported he will provide an update to the Board regarding prior actions taken on the Blue Ribbon Committee recommendations at the March 3 , 2008 6 00 pm meeting Mr Gray informed the Board that a land use plan incorporates transportation matters , infrastructure components , as well as school information and the consulting firm would coordinate all this information into one document Once a consulting firm is selected , then the Commissioners or the steering committee can schedule an initial work session to identify specific components Before a final product is submitted , another work session could be held to ensure the specific established guidelines have been addressed The work sessions would help to iron out any possible confusion Commissioner Stewart asked how growth management and a comprehensive land use plan would intertwine Commissioner Allen L Mims , Jr stated a comprehensive land use plan would have to include some flexibility to allow for growth He reiterated the County already has many of the components of a land use plan but the consultant would help to put all the items in one place He noted a land use plan would need to be updated in approximately 5 years Commissioner Mims stated growth management is all about setting a goal and managing growth in order to reach that goal , as well as leveling the peaks and valleys of growth in an effort to grow and maintain the proper services in a timely fashion Mr Gray stated a land use plan , rather than being a tool in itself , would identify all the tools needed for properly managing growth and would take into consideration growth management issues along with recommendations on how and where to grow and how to support that growth After further discussion , Mr Hester stated staff would narrow down the top three choices of the consulting firms who responded to the RFP and would be prepared to coordinate a special meeting whereby the Commissioners can have the opportunity to interview all three firms Commissioner Carver instructed staff to provide copies of the Blue Ribbon Committee Report as well as the Growth Management Committee Report and any other appropriate ordinances to the consulting firms in advance of the interviews 6 Board Comments Reports A Update on Drought and Current Water Supply Commissioner Tony Braswell asked if the Board could receive an update on the current drought situation and where the County stands regarding the water supply County Manager Rick Hester reported the County is still not allowing automatic sprinkler systems , but is permitting handheld watering on the weekends only Commissioner Wade M Stewart questioned if the restrictions are still necessary because of the water supply or are they politically correct due to the ongoing drought issues that the City of Raleigh is experiencing Commissioner Stewart noted the Nurseryman’s Association is concerned that people are not buying new landscaping because they are afraid they cannot water new plants and trees properly Chairman Cookie Pope reminded everyone how important the horticulture industry is to the County PagePage pageNumber7605 February 29 , 2008 Continued Tim Broome , Director of Utilities and Engineering , provided the Board with a background of the water conservation restrictions the County has enacted since the drought began He noted in early June 2007 , the County began mandatory water conservation restrictions due to infrastructure concerns , rather than water supply issues in the Neuse River Mr Broome reported all other restriction orders that have been issued by the County since the end of the summer , have been done at the request of the City of Raleigh and the Governor and he expects those requests to continue Mr Broome further outlined the target flow values in the Neuse River for the Board and noted Raleigh is trying to get the target flow values reduced Mr Broome informed the Board that as long as the Neuse River can maintain the target flows , then from an environmental standpoint , he believes the County’s water intake will not adversely impact the river Mr Broome recommended that in order to meet the peak demands in the upcoming summer , the County should only allow alternate day watering by automatic sprinkler systems Further , Mr Broome stated the bulk water customers should also be mandated to follow the same restrictions as the County retail customers He indicated it would be reasonable to currently allow handheld watering and perhaps soaker hoses to address the concerns of the Nurseryman’s Association ; however , he cautioned that the County could receive some criticism by neighboring areas Commissioner Jeffrey P Carver commented on the need to utilize the reclaimed water source for irrigation as well as fire hydrants in the future Commissioner Carver indicated the Triangle J Council of Governments is in the process of drafting a uniform water conservation ordinance for all member counties to adopt and he will bring the draft uniform ordinance to the Board , once completed , for consideration 7 Work Session Review After a self - critique of the work session by the Board members , and conclusion that there was no further business , it was the unanimous consensus of the Board to adjourn The meeting adjourned at 12 55 pm Cookie Pope , Chairman Paula G Woodard , Clerk to the BoardPage