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>> OKAY. WE'LL COME BACK IN ORDER.
>> MAYOR, MEMBERS OF COUNCIL, IF YOU RECALL --
>> OKAY. ALL RIGHT, GUYS.
>> MAYOR, MEMBERS OF COUNCIL, IF YOU RECALLESS SUMMER, WE WERE --
LAST SUMMER, WE WERE APPROACHED BY SIMON, LLC, FOR THE
OPPORTUNITY FOR A RETAIL DEVELOPMENT FOR PREMIUM
OUTLETS -- >> PULL THE MIC A LITTLE CLOSER.
>> FOR PREMIUM OUTLET MALL AT LAKE WRIGHT, AT THE INTERSECTION
OF I-64 AND NORTH HAMPTON BOULEVARD.
AT THAT TIME, NRHA WAS THE TITLE HOLDER FOR THE PROPER OF THE
GOLF COURSE AND -- PROPERTY OF THE GOLF COURSE AND THE TRANSFER
WAS MADE TO THE NORFOLK ECONOMIC DEVELOPMENT AUTHORITY FOR THE
OPPORTUNITY FOR US TO CONSIDER WHETHER A SALES AGREEMENT COULD
BE REACHED FOR THAT DEVELOPMENT. THE REASON WE'RE BRINGING THESE
CONCEPTUAL PLANS TO YOU THIS EVENING IS BECAUSE AS THEY
CONTINUE TO DO DUE DILIGENCE ON THE OPPORTUNITY FOR THAT SALES
AGREEMENT, THERE ARE A NUMBER OF ITEMS OF APPROVAL THAT WOULD
NEED TO BE MADE IN ORDER TO REACH A SALES AGREEMENT, WHICH
COULD POTENTIALLY BE MET IN MAY. AS A REMINDER, THIS IS THE
OPPORTUNITY THAT SIMON HAS PRESENTED, AND THE CONCEPT THAT
WE'RE PRESENTING TO YOU THIS EVENING IS SIMON PREMIUM OUTLET
PARK. THIS WOULD BE A $75 MILLION
INVESTMENT WITH APPROXIMATELY 350 GROSS LEASABLE SQUARE FEET
FOR THE OUTSET MALL THAT WOULD GENERATE -- OUTLET MALL THAT
WOULD GENERATE 450 PER SQUARE FOOT IN SALES.
THAT'S AN ANNUAL $130 MILLION IN SALES.
DIRECT BENEFIT IS APPROXIMATELY 3.3 MILLION ON AN ANNUAL BASIS
AND SALES TAX TO THE STATE IS 7.2 MILLION.
THERE'S AN ESTIMATED 800 PERMANENT JOBS THAT WOULD BE
GENERATED BY WHAT IS APPROXIMATED TO BE 90 STORE
FRONTS. 300 JOBS WOULD BE DEVELOPED
DURING CONSTRUCTION, WHICH IS CONTEMPLATED TO BE BETWEEN 12
AND 18 MONTHS FOR THE CONSTRUCTION.
THAT WOULD -- DIRECT LABOR INCOME COULD GENERATE OVER
$18.5 MILLION. AS THE CONCEPT AND NEGOTIATIONS
HAVE EVOLVED, IT WAS ALSO BECOME EVIDENT THAT SIMON IS A WILLING
AND ABLE PARTNER TO DEVELOP THE CONCEPT OF SIMON PREMIUM OUTLET
PARK TO INTEGRATE AN ESSENCE-BASED PLAN NOT ONLY WITH
THE PREMIUM OUTLET, BUT ALSO FOR THE BURTON STATION STRATEGIC
ROADS AREA. THAT WOULD PROVIDE PUBLIC
RECREATIONAL ACCESS THAT WE DO NOT CURRENTLY HAVE, RIPARIAN
BENEFITS TO THE WATER RESERVOIR AND PRESERVATION OF A LARGER
OPEN SPACE IN THE BURTON STATION AREA.
AS YOU RECALL, THAT AS IT STANDS TODAY, THAT THE GOLF COURSE IS
NOT PUBLICLY ACCESSIBLE WITHOUT FEES AND THE AESTHETIC OR
ECOLOGICAL BENEFITS PALE IN COMPARES SON TO WHAT WE
CONCEPTUALIZED TODAY. 90 POTENTIAL STORE FRONTS ON THE
NORTHERN END OF THE LAKE WITH -- ADJACENT TO MILLER STORE ROAD.
IT WOULD NEED AN EXTENSION OF ACCESS FROM NORTH HAMPTON
BOULEVARD UP TO THE DEVELOPMENT AND THAT THE DEVELOPERS ALSO
ACQUIRED PROPERTY FOR A BACK ACCESS OFF OF WEST STORE ROAD.
WHAT YOU SEE HERE, IT GIVES YOU SOME SENSE OF -- THAT WILL
EVOLVE SWOT NEXT SLIDE OF WHERE THE DEVELOPER AND SIMON ARE
CONTEMPLATING THAT THIS INTEGRATED EXPERIENCE BETWEEN
THE SHOPPING AND ALSO THE RECREATIONAL/OPEN SPACE
OPPORTUNITIES. THIS CONCEPTUAL SITE PLAN
PROVIDES STORE FRONTS ON THE OUTER RING AS WELL AS THE INNER
RING AND A FOOD COURT IN THIS. IT ALSO, BECAUSE LAKE WRIGHT IS
A WATER RESERVOIR, CANNOT SERVE AS A STORM WATER RUNOFF OR
RETENTION POND, SO TWO PONDS WOULD BE DEVELOPED THAT WOLS BE
INTEGRATED INTO -- WOULD ALSO BE INTEGRATED INTO THE OPEN SPACE
PLAN. THE OPEN SPACE PLAN WE'VE WORKED
ON WITH SIMON CREATES THE OPPORTUNITY FOR MULTI USE
TRAILS, FOR PEDESTRIAN BRIDGE ACROSS THE LAKE, FOR FOUNTAIN
AND EVEN AMPHITHEATER THAT COULD BE BUILT ON THE LAKE WITH BOAT
RENTALS, WITH PASSIVE PARK OPPORTUNITIES AND TO ENHANCE THE
RIPARIAN BENEFITS OF THE VERY LONG TAGE ALONG THE LAKE --
VEGETATION ALONG THE LAKE. WHAT WE HAVE HERE,
CONCEPTUALIZED FOR THE LOOP HERE, WOULD PROVIDE A ONE-MILE
RADIUS AROUND THE SOUTHWESTERN AND JUST UNDER A MILE ON THE
NORTHEASTERN LOOP AROUND THE LAKE.
YOU CAN SEE A TRANSITION HERE FROM A LITTLE MORE HARDSCAPE
BOARDWALK ATMOSPHERE TO THE MULTIPURPOSE TYPE OF PATH.
BECAUSE THE GOLF COURSE IS CURRENTLY MANICURED WITH VERY
LOW-CUT GRASS, WE WOULD BUILD IN MEADOWS WHERE WE'LL NATURALLY
LET THE GRASS GROW AND THEN MANICURE LAWN OPPORTUNITIES FOR
PICNICS AND EVEN POTENTIAL OPEN AIR TYPE OF MUSIC EVENTS THAT
COULD BE PLAYING. WE HAVE PARKING ACCESS HERE
THAT'S AT THE BACK SIDE OF THE HOTEL THAT'S THERE.
WE DIDN'T DO THIS IN A VACUUM. WE DID ALL THESE CONCEPTUAL
PLANS ALSO WORKING WITH THE CITY OF VIRGINIA BEACH, REALIZING
THAT THIS DEVELOPMENT OPPORTUNITY DOES BRING RETAIL
DEVELOPMENT OPPORTUNITIES THAT WEREN'T PREVIOUSLY CONTEMPLATED
IN THE BURTON STATION STRATEGIC ROADS AREA PLAN THAT'S EMBEDDED
IN THE CITY OF VIRGINIA BEACH'S COMPREHENSIVE PLAN.
SO THERE ARE TWO PRIMARY ASPECTS OF CONCEPTUAL PLANS THAT HAVE
BEEN DEVELOPED IN CONJUNCTION WITH THE CITY OF VIRGINIA BEACH.
I APOLOGIZE, THIS GIVES YOU SOME IDEA OF THE RIPARIAN PLANTINGS
THAT WOULD OCCUR, ENHANCEMENT AROUND THE LAKE IN THE OPEN
SPACE PLAN TO MAKE SURE WE HAVE GOOD FILTRATION INTO THE WATER
SYSTEM THAT WE DON'T CURRENTLY HAVE AT THE GOLF COURSE.
NUMBER ONE WOULD BE AN AREA PLAN THAT STARTS TO BUILD ON A ROAD
NETWORK. THERE WAS A ROAD NETWORK THAT
WAS PREVIOUSLY CONTEMPLATED BUT WASN'T DONE WITH THE TRAFFIC
ANALYSIS. WE HAVE DONE THE TRAFFIC
ANALYSIS AND UNDERSTAND THAT WE HAVE SOME CHALLENGES WITH THE
POTENTIAL EXTENSION OF WESLEYAN DRIVE AND THE ANALYSIS
IDENTIFIED THAT A BETTER CONNECTION WOULD BE AN EASTWARD
MOVEMENT OF A CONNECTION INTO THE CENTER OF THIS AREA,
UNDERSTANDING THAT THE PROXIMITY TO INTERSTATE 64 AND THE WEAVING
PATTERNS AND ALSO CONGESTION AT THE WESLEYAN INTERSECTION ARE OF
CONCERN AND IT WOULD BE BEST TO MOVE THAT AND PROVIDE A BETTER
INTERSECTION EASTWARD. THIS WOULD BE PHASE ONE THAT
COULD BE DONE POTENTIALLY -- WELL, WOULD BE DONE SIMULTANEOUS
TO THE DEVELOPMENT OF THE OPEN SPACE AND THE PREMIUM OUTLET
MALL. WHERE THIS FILLS IN IS INTO A
GREATER NETWORK OF POTENTIAL FUTURE ALIGNMENTS AND
DEVELOPMENT OPPORTUNITIES IN THE CITY OF VIRGINIA BEACH'S
STRATEGIC ROADS AREA. THE PRIMARY GOAL FOR THE
STRATEGIC ROADS AREA, ONE GOAL IS TO PRESERVE THE RESIDENTIAL
VILLAGE AT BURTON STATION AND TO SEVER BURTON STATION ROAD SO
THAT THE TRAFFIC IS NOT ENCOURAGED TO GO THROUGH THAT
RESIDENTIAL DEVELOPMENT. THIS CONCEPT CONTINUES TO
PRESERVE THAT OPPORTUNITY, BUT MORE IMPORTANTLY, HOW IT DOES
THAT IS IT BUILDS IN APPROXIMATELY 130 ACRES OF OPEN
SPACE THAT CAN BE MASTER PLANNED ALONG WITH THE CITY OF VIRGINIA
BEACH LIKE WE'RE WORKING ON WITH THE LAKE WRIGHT MASTER PLAN.
SECONDLY, IT PRESERVES THE OPPORTUNITY FOR DEVELOPMENT IN
WORKING WITH -- WHERE THEY ARE IN THEIR CAPITAL IMPROVEMENT
PLAN WITH THEIR DEVELOPMENT OF TOLIVER ROAD AND THEN HOW WOULD
THE INTERCONNECTIVITY OF THIS NEW ACCESS TO THE PREMIUM
OUTLETS WORK INTO THAT. SO THE NEXT STEPS ARE THAT SIMON
HAS ALREADY MADE APPLICATION TO THE CITY OF VIRGINIA BEACH FOR
REZONING FOR THE AREA OF PARKING, THE PARCELS THAT ARE
BEING CONTEMPLATED FOR SALE FROM THE EDA TO SIMON, THAT ARE UP
NEAR MILLER STORE ROAD. SIMON ALSO NEEDS TO MAKE
APPLICATION TO THE CITY OF NORFOLK.
BOTH THOSE WOULD GET CONSIDERATION BY EACH CITY
COUNCIL IN THE APRIL/MAY TIME FRAME.
WE ALSO NEED TO COORDINATE WITH THE CITY OF VIRGINIA BEACH TO
ENGAGE THE COMMUNITY OF BURTON STATION VILLAGE FOR DISCUSSIONS
ABOUT THIS EVOLUTION IN THE AREA, WHEREAS BEFORE MUCH OF THE
DEVELOPMENT OPPORTUNITY WAS FOCUSED AROUND COMMERCIAL OFFICE
SPACE, WE'RE NOW INTRODUCING A DIFFERENT AND ADDITIONAL JOBS
AND RETAIL OPPORTUNITIES THAT WEREN'T CONTEMPLATED BEFORE AND
SO WE WANT TO TAKE THAT AND RECEIVE SOME FEEDBACK ON THESE
CONCEPTUAL PLANS. >> RON, WHY DO WE NEED TO GET
INVOLVED WITH VIRGINIA BEACH'S ISSUES WITH THE RESIDENTS?
WOULD WE HELP ON WHICH SIDE? >> THEY ASKED BECAUSE WE'RE
WORKING COOPERATIVELY, TO MASTER PLAN THE WHOLE AREA AND NOT LOOK
AT ONE SINGLE PARCEL AND UNDERSTAND THAT ANY DEVELOPMENT
CAN HAVE RAMIFICATIONS FOR THE WHOLE AREA, THEY ASKED THAT WE
PARTICIPATE IN THAT WITH THEM. >> AND I ASKED YOU A FEW MINUTES
AGO, AND I'LL BRING THIS UP, THERE ARE ABOUT 12 HOMES BETWEEN
THE GOLF COURSE AND BURTON STATION ROAD HAVE BEEN IN LIMBO
FOR OVER TEN YEARS. WHAT HAPPENS WITH THAT?
IS THAT A PART OF THIS CONVERSATION?
>> IT WOULD BE A PART OF IT. OF COURSE, THEY'RE IN THE CITY
OF VIRGINIA BEACH. >> RIGHT.
>> WE DON'T HAVE ANY OWNERSHIP OF THOSE PARCELS AT ALL, BUT
THAT WOULD OBVIOUSLY BE PART OF THE DISCUSSION THAT WE WOULD
TAKE INPUT ON. >> RIGHT, THANK YOU.
>> THERE ARE TWO COOPERATION AGREEMENTS THAT WE WOULD LIKE TO
DEVELOP AND BRING TO BOTH CITY COUNCIL -- TO EACH CITY COUNCIL.
ONE WOULD BE A COOPERATION AGREEMENT FOR A CONTRIBUTION TO
THE ROADWAY IMPROVEMENTS IN THE AREA WITH THE CITY OF VIRGINIA
BEACH AND THEN BETWEEN THE CITY OF NORFOLK AND NORFOLK EDA FOR
THE WATER AND STORM WATER IMPROVEMENTS THAT NEED TO BE
MADE. WE NEED TO WORK THROUGH FINAL
DESIGNS FOR THE OUTLET MALL AND OPEN SPACE AND AS PART OF THAT,
WE'RE ALSO LOOKING TO POTENTIALLY, WE'RE CONSULTING
WITH THE VIRGINIA LAND CONSERVATION FOUNDATION ABOUT
THE OPPORTUNITY TO LAND CONSERVATION EASEMENT THAT WOULD
ALSO BRING OFFICIAL FUND, BUT MOST IMPORTANTLY, PRESERVE THE
OPEN SPACE IN PERPETUITY AROUND THE LAKE.
SO AS WE WORK THROUGH THE NEXT STEPS, WE'LL CONTINUE TO KEEP
YOU UPDATED, BUT WE WANTED TO BRING THE CONCEPTS THAT WERE
THERE TO THE PUBLIC AND TO THE COUNCIL BECAUSE WE WILL START TO
SEE APPLICATION DECISIONS THAT NEED TO BE MADE OVER THE NEXT
SEVERAL WEEKS AND COUPLE MONTHS. >> LET ME ASK YOU A QUESTION IF
I COULD. GETTING BACK TO THE CONVERSATION
WITH VIRGINIA BEACH AND THE RESIDENTS AND WHAT'S DESCRIBED
AS BURTON STATION VILLAGE, IN THE EVENT -- IF WE DON'T OWN ANY
OF THE PROPERTY THERE, BUT VIRGINIA BEACH WOULD BE THE
PERSONS WHO WOULD BE THE GROUP THAT WOULD DEAL WITH THOSE
RESIDENTS SHOULD THEY TRY TO -- NEED TO ACQUIRE THAT PROPERTY.
>> RIGHT. YES, SIR, OR THE MARKET.
>> OR THE MARKET WOULD, OKAY. BECAUSE BURTON STATION, WHAT'S
DESCRIBED WITH BURTON STATION VILLAGE, ME BEE VERY FAMILIAR
WITH IT OVER THE YEARS, IT'S BEEN SOMETHING THAT VIRGINIA
BEACH HAS BEEN DODGING BACK AND FORTH WITH FOR YEARS AND I CAN'T
IMAGINE THE LIMBO PROPERTY OWNERS THAT LIVE -- NOBODY'S
LIVING THERE RIGHT NOW, SO I HAVE ALWAYS BELIEVED THAT
VIRGINIA BEACH NEEDED TO STAND THIS ALONE.
TEN YEARS AGO THEY WERE TALKING ABOUT THE NORTH HAMPTON
BOULEVARD PROJECT AND I THINK IT'S SOMETHING THAT VIRGINIA
BEACH NEEDS TO OPEN UP TO AND WE DON'T NEED TO GET -- WELL, IF
WE'RE GOING TO GET INVOLVED, ASKED TO BE INVOLVED WITH IT,
BUT I DON'T BELIEVE WE NEED TO HAVE EGG ON OUR FACE BECAUSE
VIRGINIA BEACH HAS NOT HANDLED THIS ISSUE THE WAY THEY SHOULD
HAVE OVER THE YEARS. >> OKAY.
RON, THANK YOU FOR AN EXCELLENT PRESENTATION.
IF NO OTHER QUESTIONS, THEN WE'LL BREAK FOR DINNER.
>> OKAY. I THINK WE'RE READY TO BEGIN
AGAIN. >> BEFORE YOU, YOU HAVE THIS
NICE PRETTY BOOK THAT'S A COMPREHENSIVE ANNUAL FINANCIAL
REPORT, AND IN THAT REPORT, WE HAVE OUR ANNUAL ASSESSMENT
THAT'S DONE BY THE AUDITORS. THEY COME BEFORE THIS FINE
GOVERNMENT BODY TWICE A YEAR, THEY COME AT THE BEGINNING OF
THE AUDIT AS PART OF THE PLANNING STAGE, AND TODAY, OR
RATHER THIS EVENING, THEY'RE GOING TO COME TO PRESENT THEIR
AUDITOR REPORT AND WE'LL LISTEN TO THEM AS THEY COME AND SHARE
THIS. THIS IS THE PARTNER FOR KPMG,
WHO IS OUR AUDIT FIRM COMING AT THIS TIME.
>> THANK YOU. GOOD TO SEE YOU AGAIN, THANK
YOU. >> THANK YOU.
WELL, FIRST OF ALL, I'D LIKE TO THANK YOU FOR LETTING US COME
AND -- WELL, FIRST OF ALL, TO SERVE AS THE AUDITORS FOR THE
CITY AND WE'RE HERE, AS JOHN INDICATED, TO PRESENT THE
RESULTS OF THE AUDIT. OUR AGENDA FOR TONIGHT IS, FIRST
OF ALL, GIVE YOU A FEW HIGHLIGHTS ABOUT THE AUDIT
ITSELF AND THEN WE'RE GOING TO GO THROUGH -- THERE'S A SET OF
REQUIRED COMMUNICATIONS THAT I NEED TO MAKE TO YOU AS THE
GOVERNING BODY THAT HAS OVERSIGHT OVER THE FINANCIAL
REPORTING ROLE, WHICH ARE ALSO SUMMARIZED IN A LETTER AND WE'LL
GO THROUGH THOSE AND THEN TALK FOR A FEW MINUTES ABOUT THE
INTERNAL CONTROL PROCEDURES WE PERFORMED UNDER GOVERNMENT
AUDITING STANDARDS AND THE A-133 AUDIT, WHICH IS THE AUDIT OF THE
CITY'S FEDERAL GRANTS. OKAY, SO WE'LL START WITH THE
HIGHLIGHTS. JUNE 30, 2013, AUDIT IS
COMPLETE. AS AN AUDITOR, WE ALWAYS LIVE IN
THE PA, BUT I KNOW -- PAST, BUT I KNOW YOU ALL HAVE A COPY OF
THE FINAL ISSUED REPORT THAT WAS HANDED OUT TONIGHT.
SO CONGRATULATIONS TO ALICE AND HER STAFF ON A JOB WELL DONE
WITH THE REPORT. WE DID ISSUE A CLEAN OR AN
UNQUALIFIED OR UNMODIFIED OPINION ON THE FINANCIALS, WHICH
MEANS THAT THE NUMBERS AS PREPARED BY THE CITY'S STAFF,
YOU KNOW, WERE FAIRLY STATED. WE ALSO ISSUED, WHICH IS AT THE
BACK OF THE REPORT, A COUPLE OF REQUIRED REPORTS UNDER
GOVERNMENT AUDITING STANDARDS. THOSE REPORTS PROVIDE YOU WITH
SOME NEGATIVE ASSURANCE ON THE OPERATIONAL CONTROLS.
LIKE WE DON'T ACTUALLY AUDIT CONTROLS LIKE A PUBLIC COMPANY
WORK BUT WE DO PERFORM SOME PROCEDURES AND ALSO PROVIDE YOU
WITH SOME NEGATIVE ASSURANCE THAT NOTHING CAME TO OUR
ATTENTION ON CERTAIN COMPLIANCE MATTERS.
THE AUDIT IS ALSO PERFORMED IN ACCORDANCE WITH A SET OF
SPECIFICATIONS THAT THE AUDITOR OF PUBLIC ACCOUNTS OF THE
COMMONWEALTH OF VIRGINIA ISSUES, AND WE PERFORM CERTAIN
PROCEDURES ON THEIR BEHALF AND HAVE COMPLETED THOSE AS WELL.
WE ALSO COMPLETED, AS I STATED BEFORE, AN A-133 AUDIT OF THE
FEDERAL PROGRAMS OF THE CITY AND WE'LL TALK ABOUT THAT A LITTLE
BIT FURTHER IN A MINUTE. SO NOW WE GET TO THE REQUIRED
COMMUNICATIONS AND I THINK AT LEAST IN YOUR DROPBOXES, YOU GOT
A WRITTEN COPY OF THOSE COMMUNICATIONS, SO I'M GOING TO
TRY TO BE BRIEF AND JUST GO OVER THE HIGHLIGHTS, AND OBVIOUSLY AT
ANY TIME, WE'RE HAPPY TO ANSWER QUESTIONS IF YOU HAVEN'T HAD A
CHANCE TO LOOK AT THE LETTER IN DETAIL.
THE FIRST STEP IN THE LETTER IS JUST TO LAY OUT FOR YOU, LIKE
WHAT AN AUDIT IS AND WHAT IT ISN'T.
THE OBJECTIVE OF AN AUDIT IS TO LOOK FOR MATERIAL ERRORS.
THE OBJECTIVE OF AN AUDIT IS NOT TO IDENTIFY FRAUD, ALTHOUGH WE
DO PERFORM SOME PROCEDURES TO DO RISK ASSESSMENTS THAT WE TALKED
TO YOU ABOUT WHEN WE CAME A FEW MONTHS AGO THROUGH THE PROCESS.
AND THEN IN TERMS OF OTHER REQUIRED COMMUNICATIONS, THE
BOOK IS VERY THICK AND OUR OPINION ONLY COVERS CERTAIN OF
THOSE PANELS IN THE MIDDLE -- PAGES IN THE MIDDLE, BUT WE DO
READ THE ENTIRE DOCUMENT TO MAKE SURE WHAT'S PRESENTED IN THE
DOCUMENT IS CONSISTENT WITH, YOU KNOW, WHAT WE'VE LEARNED IN OUR
ROLE AS THE AUDITORS OF THE CITY.
IN TERMS OF ACCOUNTING POLICIES AND ALTERNATIVE TREATMENTS, THE
SIGNIFICANT ACCOUNTING POLICIES FOR THE CITY ARE IN THE FIRST
FOOTNOTE TO THE FINANCIAL STATEMENTS AND THERE WERE REALLY
NO SIGNIFICANT CHANGES THIS YEAR.
THERE WERE A FEW SEMANTICS, AND FOR THOSE OF YOU THAT WERE HERE
EARLIER, THERE ARE SOME MORE SIGNIFICANT CHANGES THAT ARE
COMING DOWN THE ROAD NEXT YEAR THAT, YOU KNOW, WE'LL TALK TO
YOU ABOUT WHEN WE COME BACK AS WE'RE HEADING INTO THE NEXT
AUDIT. WE ALSO ARE REQUIRED UNDER
PROFESSIONAL STANDARDS TO DISCUSS WITH YOU THE QUALITATIVE
ASPECTS OF YOUR ACCOUNTING PRINCIPLES AND WHAT THAT REALLY
MEANS IS, YOU KNOW, DO WE AS THE AUDITORS OR THE ACCOUNTING
EXPERTS HAVE ANY CONCERNS ABOUT THE CHOICES THAT THE CITY IS
MAKING IN TERMS OF ACCOUNTING PRINCIPLES AND PRACTICES, AND WE
DON'T. I MEAN, THE CITY IS CHOOSING
CONSERVATIVE AND APPROPRIATE POLICIES AND ACCOUNTING
STANDARDS AS THEY PREPARE THEIR FINANCIAL STATEMENTS.
MANAGEMENT JUDGMENTS AND ACCOUNTING ESTIMATES, WE TALKED
TO YOU ABOUT OUR PLANS RELATED TO THESE WHEN WE CAME A FEW
MONTHS AGO, AND WE'VE COMPLETED THE AUDIT WORK OVER THESE THREE
AREAS, THE POST-EMPLOYMENT BENEFITS, THE ACCRUAL FOR
SELF-INSURANCE, AND THE TAX AND UTILITY ALLOWANCE FOR
UNCOLLECTIBLE ACCOUNTS. ESTIMATES OBVIOUSLY ARE
SENSITIVE BECAUSE THEY'RE SUBJECT TO MANAGEMENT JUDGMENT,
BUT WE DIDN'T HAVE ANY SIGNIFICANT FINDINGS AND DIDN'T
PROPOSE ANY ADJUSTMENTS IN THESE AREAS THAT WERE OF ANY
SIGNIFICANCE AS WE WORKED THROUGH THE PROCESS.
IF YOU LOOK RIGHT BEHIND THE LETTER, WHEN YOU HAVE A CHANCE,
YOU WILL SEE SOME ADJUSTMENTS THAT WE DIDN'T MAKE THAT WE
CONSIDERED TO BE IMMATERIAL AND WE ARE REQUIRED UNDER
PROFESSIONAL STANDARDS TO REPORT THOSE TO YOU.
THEY ARE -- I MEAN, SOMETIMES FOR A VARIETY OF REASONS,
WHETHER IT'S CONVENIENCE OR THE WAY THE ACCOUNTING SYSTEM WORKS,
THERE WILL BE CERTAIN ITEMS THAT WILL COME UP THAT WE'LL PASS ON
BECAUSE THEY'RE NOT MATERIAL TO THE FINANCIALS AND THOSE ARE
INCLUDED RIGHT BEHIND THE LETTER DATED DECEMBER 23rd AND I WON'T
GO THROUGH THOSE IN DETAIL BECAUSE IT GETS TO BE VERY
COMPLICATED. THERE WERE NO DISAGREEMENTS WITH
MANAGEMENT ON FINANCIAL ACCOUNTING AND REPORTING
MATTERS, NO CONSULTATIONS WITH OTHER ACCOUNTANTS THAT WE WOULD
WANT TO BRING TO YOUR ATTENTION. WE ARE A LITTLE BIT LATER IN
TERMS OF GETTING FINISHED WITH THE AUDIT FROM OUR PREVIOUSLY
ESTABLISHED SCHEDULE, BUT EARLIER THAN LAST YEAR, SO
THAT'S GOOD. ALWAYS GOOD TO MAKE PROGRESS.
AND WE DO CONFIRM TO YOU IN WRITING IN THAT LETTER, YOU
KNOW, OUR INDEPENDENCE WITH RESPECT TO THE CITY IN
ACCORDANCE WITH THOSE STANDARDS ESTABLISHED BY THE AICPA AS WELL
AS GOVERNMENT AUDITING STANDARDS.
OKAY, SO A BRIEF DISCUSSION ABOUT INTERNAL CONTROL AND THE
A-133 AUDIT. THERE WERE NO MATERIAL
WEAKNESSES OR SIGNIFICANT DEFICIENCIES AT THE FINANCIAL
STATEMENT LEVEL, WHICH IS ACTUALLY SUMMARIZED IN ONE OF
THOSE OPINIONS THAT I TALKED WITH YOU ABOUT THAT ARE AT THE
BACK OF THE DOCUMENT UNDER GOVERNMENT AUDITING STANDARDS,
SO THAT'S GOOD NEWS. WE ALWAYS IDENTIFY OPPORTUNITIES
FOR IMPROVEMENT AND OTHER MORE MINOR MATTERS THAT WE GO THROUGH
WITH MANAGEMENT OF THE CITY, AND THAT HAS BEEN DONE.
WE DID COMPLETE THE A-133 AUDIT. THERE WAS 108 MILLION IN FEDERAL
ASSISTANCE THAT THE CITY RECEIVED IN FISCAL 13, OF WHICH
APPROXIMATELY 5 MILLION WAS ARRA FUNDING.
FOR THOSE OF YOU WHO HAVE BEEN AROUND FOR A WHILE, THAT'S
STIMULUS MONEY AND USED TO BE A MUCH HIGHER PERCENTAGE, YOU
KNOW, OF THE FUNDS THAT WE'RE RUNNING THROUGH THIS DOCUMENT,
AND THE OVERALL NUMBER HAS COME DOWN A LITTLE BIT AS WELL IN THE
ABSENCE OF THOSE STIMULUS FUNDS FROM WHERE IT WAS A COUPLE OF
YEARS AGO. THERE WERE 11 PROGRAMS AUDITED,
TWO AT NORFOLK PUBLIC SCHOOLS AND THEN NINE FOR THE CITY.
ALL PROGRAMS THAT RECEIVED FEDERAL ASSISTANCE IN EXCESS OF
$3 MILLION ARE SUBJECT TO AUDIT AT LEAST ONCE EVERY THREE YEARS,
AND THEN BEYOND THAT, WE SELECT A NUMBER OF SMALLER PROGRAMS
THAT ARE RISK -- THESE ARE RISK ASSESSMENT TYPE PROCESS THAT
FILL THE COT IN THE OFF YEARS IN TERMS OF SATISFYING THE
REQUIREMENTS FOR THE NUMBER OF PROGRAMS.
THIS YEAR, IT WAS STILL DRIVING TO SOME DEGREE OUR SELECTIONS BY
THE ARRA, AND THERE WERE A COUPLE FAIRLY SMALL PROGRAMS
TESTED BECAUSE THEY WERE 100% ARRA AND I THINK THAT WILL
CHANGE NEXT YEAR AND WE'LL BE BACK TO BEING ABLE TO DO A MORE
TRUE RISK ASSESSMENT AND IN THAT CASE, WE'LL FOCUS MORE ON
HIGHER-DOLLAR, WHAT THEY CALL B PROGRAMS, WHICH ARE THE ONES
UNDER $3 MILLION, RATHER THAN SOME OF THE SMALLER ONES THAT
WE'VE BEEN FORCED TO DO THE LAST FEW YEARS WITH THE STIMULUS
FUNDING. A PIECE OF GOOD NEWS.
THE LAST COUPLE OF YEARS, THE CITY HAS BEEN A HIGH-RISK
AUDITEE UNDER A-133 BECAUSE OF A FINDING WE HAD TWO OR THREE
YEARS AGO IN ONE OF THE MAJOR PROGRAMS, AND THIS YEAR, WE DID
NOT HAVE ANY MATERIAL WEAKNESSES IN ANY OF THE A PROGRAMS, THE
ONES OVER $3 MILLION, SO WE'VE CLEARED OUR TWO-YEAR, YOU KNOW,
TOUR OF DUTY AS A HIGH-RISK AUDITEE AND NEXT YEAR WE'LL BE
ABLE TO GO BACK TO LOW RISK. WHAT THAT -- WHAT SHOULD HAPPEN
AS A RESULT OF THAT IS THAT 11 OUGHT TO COME DOWN A LITTLE BIT
IN TERMS OF THE NUMBER OF PROGRAMS BECAUSE WE'RE REQUIRED
TO COVER 50% OF THE DOLLARS AS A HIGH-RISK AUDITEE AND ONLY 25 AS
A LOW. SO HOPEFULLY THAT WILL BE A
POSITIVE THING GOING FORWARD. >> SO AGAIN, THE IMPACT OF BEING
HIGH-RISK IS WHAT? >> WE HAVE TO COVER 50% OF THE
DOLLARS THAT YOU RECEIVE IN THE AUDIT.
>> OKAY. >> VERSUS 25% FOR A LOW-RISK.
RIGHT. I MEAN, THERE ARE CERTAIN
PROGRAMS LIKE TITLE ONE AT THE SCHOOLS THAT ALMOST GET AUDITED
EVERY YEAR BECAUSE THEY'RE SO SIGNIFICANT, BUT WE'LL HAVE A
LITTLE BIT MORE FLEXIBILITY WITHOUT ARRA AND AS A LOW-RISK
AUDITEE TO, YOU KNOW, MAKE SOME JUDGMENTS ABOUT WHICH PROGRAMS
WE DECIDE TO LOOK AT MOVING FORWARD.
WHERE IT'S BEEN PRETTY FORMULAIC THE LAST FEW YEARS.
THERE WERE A FEW FINDINGS AS A RESULT OF THE A-133 AUDIT, AND
THEY ARE DISCUSSED IN DETAIL BECAUSE I'M GOING TO BE PRETTY
BRIEF HERE, ON PAGES 154 THROUGH 168 OF THE CAFR.
SOME OF THESE ARE REPEAT FINDINGS, SOME OF THEM ARE, YOU
KNOW, ODD, ONE-OFF TYPE THINGS THAT HAPPEN, BUT I'LL JUST KIND
OF BRIEFLY WALK THROUGH THOSE. THE FIRST TWO OR THREE ARE IN
THE TANF GRANTS, WHICH IS ADMINISTERED BY THE HUMAN
SERVICES DEPARTMENT. THE FIRST COUPLE WE SEEM TO HAVE
EVERY YEAR. I MEAN, THEY RELATE TO PAYMENTS
THAT THE CITY MAKES ON THE STATE'S BEHALF, THE TANF
RECIPIENTS, AND THEY'RE A VERY COMPLEX SET OF RULES AROUND
EXACTLY WHEN THOSE PAYMENTS START AND WHEN THEY STOP, YOU
KNOW, WHEN THE PARTICIPANT DOES CERTAIN THINGS.
THEY'RE NOT EASY TO ADMINISTER AND IT'S VERY DIFFICULT TO GET
ALL THE WAY THROUGH THAT, YOU KNOW, WITHOUT HAVING A COUPLE OF
ISSUES. SO THE GOOD NEWS IS THAT'S
IMPROVED. THE NUMBERS HAVE IMPROVED AND
THE NUMBERS OF FINDINGS. THAT ACTUALLY WAS WHERE WE HAD
THE MATERIAL WEAKNESS TWO YEARS AGO THAT CAUSED US TO BE A
HIGH-RISK AUDITEE FOR A COUPLE OF YEARS, SO I THINK THAT'S GOOD
NEWS AND PROGRESS. WE ALSO HAD AN ELIGIBILITY
FINDING IN TANF, YOU KNOW, WHICH WE'VE WORKED THROUGH AND
DISCUSSED WITH MANAGEMENT, AND I THINK THEY'VE GOT PROCESSES IN
PLACE TO TRY TO AVOID THAT IN THE FUTURE.
THAT AND COPF ARE TWO PROGRAMS THAT WERE SMALL PROGRAMS THAT
WERE ALL ARRA DOLLARS AND THAT'S WHY THEY WERE TESTED.
THEY WERE LESS THAN A MILLION DOLLARS EACH, JUST A FEW HUNDRED
THOUSAND. THEY HAD SOME REPORTING
DISCREPANCIES IN THOSE TWO GRANTS THAT, YOU KNOW, CREATED
SOME ISSUES WITH THE SPECIAL ARRA REPORTING THAT YOU'RE
REQUIRED TO DO WHERE A COUPLE OF NUMBERS GOT FLIPPED BETWEEN
QUARTERS OR, YOU KNOW, SOMETHING LIKE THAT, SO THAT -- OBVIOUSLY,
THAT WON'T BE AN ISSUE MOVING FORWARD.
THE SUBSTANCE ABUSE BLOCK GRANT AND ALSO TITLE ONE AND SCHOOL
IMPROVEMENT HAD A COUPLE OF ISSUES WITH SUSPENSION AND
DEBARMENT. THAT'S A FEDERAL RULE THAT
REQUIRES YOU, BEFORE YOU PROCURE A VENDOR, WHERE YOU'RE GOING TO
BE SPENDING FEDERAL DOLLARS, TO MAKE SURE THAT THAT VENDOR IS
NOT SUSPENDED OR DEBARRED. IN THE CASE OF THE SCHOOLS, IT'S
REALLY HAPPENING BECAUSE THEY'RE USING A LOT OF PIGGYBACK
PROCUREMENTS FOR EFFICIENCY PURPOSES WHERE THEY'RE, YOU
KNOW, JUMPING ON TO ANOTHER SCHOOL SYSTEM THAT'S BOUGHT THE
SAME THING AND GONE THROUGH THE WHOLE PROCESS, AND A STEP JUST
NEEDED TO BE ADDED TO MAKE SURE THAT THE SUSPENSION AND
DEBARMENT HAS BEEN COVERED. THERE WERE NO QUESTIONED COSTS
WITH ANY OF THOSE BECAUSE THE VENDORS WERE NOT SUSPENDED OR
DEBARRED. I MEAN, WE CAN CHECK ON THEM
AFTER THE FACT, SO NO ISSUES THERE.
IN THE *** GRANT, THERE WAS A FINDING -- AND THAT IS THE GRANT
WHERE THE CITY OF NORFOLK HANDLES THAT FUNDING FOR THE
ENTIRE REGION, AND THERE'S A FAIRLY COMPLEX REQUIREMENT IN
THERE WHERE THEY HAVE TO -- YOU HAVE TO MAKE SURE THAT YOU DON'T
SPEND LESS THAN LAST YEAR, AND OBVIOUSLY WITH SO MANY
LOCALITIES, YOU KNOW, CONTRIBUTING TO THE SPENDING,
THERE ARE JUST SOME SUGGESTIONS THAT WE'VE MADE ABOUT, YOU KNOW,
MAKING SURE THAT THAT IS -- THAT THAT'S MONITORED CAREFULLY.
HIGHWAY, IT WAS ANOTHER PROGRAM REPORTING FINDING, AND THERE ARE
A FEW OTHERS. PROBABLY THE BIGGEST OF NOTE
THAT FOR SOME REASON DIDN'T MAKE THE LIST RELATES TO THE FEMA
GRANT AND JUST GETTING THE REPORTING CLOSED UP ON HURRICANE
IRENE. I MEAN, I THINK SOME OF THE
THINGS THAT IMPACTED THAT WERE THE FACT THAT FEMA WAS ACTUALLY
PERFORMING AN AUDIT OF THE CITY AT THE SAME TIME, WHICH KEPT THE
FOLKS BUSY AND MADE IT A LITTLE BIT DIFFICULT TO GET ALL THAT
DONE. AND THEN WE ALSO, IN THE APA
FINDINGS THAT I DISCUSSED, HAD A FEW MINOR ITEMS WHICH ARE NOTED
ALSO IN THE SCHEDULE OF FINDINGS.
DOES ANYBODY HAVE ANY QUESTIONS OR --
>> I HAVE ONE QUESTION. >> YES.
>> I GUESS THE RYAN WHITE GRANT --
>> THAT'S THE ***, YES. >> YES.
NOW, IF ISLE OF WIGHT OR SOUTH HAMPTON COUNTY, SOMEBODY, IF
THEY DON'T ACCOUNT FOR THE DOLLARS THE WAY THEY SHOULD, ARE
WE HELD RESPONSIBLE? OR HOW DO WE MAKE SURE THAT THEY
ARE IN COMPLIANCE SO IT WON'T IMPACT US?
>> YOU HAVE A RESPONSIBILITY TO ENSURE THAT, YOU KNOW, THE
DOLLARS THAT ARE SPENT DON'T DECREASE OF LOCAL FUNDS FROM ONE
YEAR TO THE NEXT, AND YOU KNOW, YOU CAN HOLD THEM ACCOUNTABILITY
FOR MAKING SURE THEIR DOLLARS DON'T INCREASE, BUT ALL THE DATA
HAS GOT TO BE GATHERED AND MONITORED, YOU KNOW, HERE AS THE
KEY AGENCY THAT RUNS THE GRANT. NOW, ISLE OF WIGHT IS NOT ONE OF
THE MAJOR ENTITIES. THERE'S LIKE FIVE OR SIX, I
THINK IT'S NEWPORT NEWS AND VIRGINIA BEACH AND PORTSMOUTH,
YOU KNOW, THAT ARE THE ONLY ONES THAT ARE THE KEY ONES THAT HAVE
TO BE MONITORED, SO YOU REALLY DON'T -- I MEAN, IT DOES MAKE IT
A LITTLE BIT EASIER BECAUSE YOU DON'T HAVE TO CHASE EVERY TINY
LITTLE ENTITY THAT PARTICIPATES IN THE AREA.
THERE'S FIVE OR SIX THAT ARE CONSIDERED THE KEY, AND THAT'S
THE LEVEL THAT THE COMPLIANCE IS PERFORMED.
>> I NOTICE YOU HAVE SEVERAL THINGS HERE FROM THE SCHOOL
SYSTEM THAT APPEARED ON THIS AUDIT.
WHEN THE SCHOOL SYSTEM, WHEN THEY DO THEIR AUDIT, DO THOSE
SAME ITEMS APPEAR ON THEIR AUDIT AGAIN?
>> NOT FOR A-133. YOU KNOW, THE SCHOOLS' FINANCIAL
STATEMENTS APPEAR IN THE CITY'S CAFR WAS A COMPONENT UNIT
BECAUSE VIRGINIA HAS DEPENDENT SCHOOL DISTRICTS AND ULTIMATE
THEY RELY ON THE CITY TO BUILD THE BUILDINGS AND FUND
OPERATIONS AND THAT TYPE OF THING, BUT THE A-133 AUDIT IS
DONE AT THE REPORTING ENTITY LEVEL, SO WHEN I GO AND GIVE MY
REPORT TO THE SCHOOL BOARD NEXT WEEK, I'M GOING TO TELL THEM
ABOUT THEIR FINDINGS, BUT THOSE FINDINGS, BECAUSE THEY OBVIOUSLY
CARE ABOUT WHAT THE OUTCOME IS OF THE GRANTS THAT WE AUDIT ON
THEIR SIDE, BUT THE A-133 AUDIT IS NOT REPEATED IN THEIR REPORT
BECAUSE IT'S SUPPOSED TO BE PERFORMED AT THE LEVEL OF THE
ENTIRE REPORTING ENTITY, WHICH WOULD BE THE CITY.
ANY OTHER QUESTIONS? COMMENTS?
>> I'M ALICE KELLY, THE DIRECTOR OF FINANCE, AND I JUST WANTED TO
THANK EVERYBODY, INCLUDING KPMG, THE AUDITORS, AND ESPECIALLY THE
FINANCE DEPARTMENT AND ALL THOSE FINANCIAL STAFF OF THE CITY IN
PREPARING THE COMPREHENSIVE ANNUAL FINANCIAL REPORT.
SOMETIMES PEOPLE FORGET HOW COMPREHENSIVE IT IS AND EVERY
FINANCIAL TRANSACTION THAT GOES ON IN THE CITY IS IN THAT
REPORT, SO IT IS A VERY USEFUL AND POWERFUL DOCUMENT THAT WE
USE FOR A LOT OF DIFFERENT THINGS AND I JUST WANTED TO MAKE
SURE THAT YOU HAD A COPY AND IF YOU HAD ANY QUESTIONS, PLEASE
FEEL FREE TO CONTACT US LATER ON.
>> AND THANK YOU, ALICE, AND EVERYBODY AT THE CITY FOR THE
HOSPITALITY THAT OUR FOLKS GET WHEN THEY'RE HERE.
IT'S NOT ALWAYS FUN TO HAVE AUDITORS IN THE BUILDING, BUT WE
DO OUR BEST. >> THANK YOU VERY, VERY MUCH.
NEXT ITEM?
>> SURE. MAYOR, MEMBERS OF COUNCIL, NEXT
IS THE MID YEAR UPDATE AND THE FIVE-YEAR FORECAST, AND AS I
MENTIONED EARLIER, I'M REQUIRED TO PROVIDE FOR YOU AN UPDATE,
AND WE HAVE A COUPLE OF ITEMS, I THINK.
I THINK THAT -- I GUESS THE BEST WAY TO START THIS OFF IS WE
HEARD YOU OVER THE LAST BUDGET DEVELOPMENT PROCESS AND WE'RE
TRYING TO GET AS MUCH INFORMATION TO YOU AS EARLY AS
POSSIBLE. TYPICALLY, IT WOULD BE BETTER TO
HAVE THIS PRESENTATION EARLIER -- EXCUSE ME, LATER IN
FEBRUARY SO WE COULD MAKE SURE THAT WE HAVE ALL THE NUMBERS
REFINED, SO I APOLOGIZE FOR THE ENTIRE STAFF WHO WORKED A FEW
WEEKENDS TO MAKE SURE THAT THEY GAVE PEOPLE THE BEST NUMBERS
POSSIBLE. I THINK THERE IS ABOUT AS EARLY
AS WE COULD -- I THINK THIS IS ABOUT AS EARLY AS WE COULD GET
THIS INFORMATION TO YOU, SO ONE OF THE ITEMS, AND I THINK
SABRINA IS GOING TO COME UP. ONE OF THE ITEMS THAT YOU HAVE
AS BLUE NOTEBOOK WHICH IS A RESOURCE GUIDE FOR FY 14.
TYPICALLY YOU GET THAT IN THE APRIL TIME FRAME.
WE WANTED TO GET THAT TO YOU TODAY.
SO THROUGHOUT THIS DISCUSSION ON NOT JUST WHERE WE ARE IN TERMS
OF FY 14, BUT AS WE GO OUT INTO 15, 16, 17, 18, 19, THIS IS A
BUILDING BLOCK AND IF THERE'S SOME ADDITIONAL INFORMATION THAT
COUNCIL WOULD LIKE TO HAVE, WE'LL MAKE SURE THAT WE CAN
BUILD THIS BOOK FOR YOU. RIGHT NOW, THIS IS THE TYPICAL
TYPE OF INFORMATION THAT YOU WOULD GET AS WE DELIVERED THE
BUDGET TO YOU IN THE APRIL TIME FRAME.
WITH THAT SAID, TODAY WE WANT TO PROVIDE FOR YOU REALLY THREE
UPDATES. ONE IS WHERE DID WE END UP
FISCAL YEAR 2013, THE PERIOD THAT ENDS JUNE 30, 2013.
WE WANT TO GIVE YOU AN UPDATE OF WHERE WE ARE IN THE CURRENT
FISCAL YEAR AND THEN WE'LL GIVE YOU A FIVE-YEAR OUTLOOK AND YOU
KNOW AS WELL AS I DO, IT'S VERY DIFFICULT TO PREDICT TOMORROW.
I MEAN, EXTREMELY DIFFICULT TO PREDICT FIVE YEARS OUT, BUT
WE'RE GOING TO PUT A LITTLE BIT OF A GREATER DEAL OF EMPHASIS ON
THAT FIVE-YEAR FORECAST THIS TIME BECAUSE I THINK IT'S
SIGNIFICANT IN TERMS OF WHAT WE DO IN FY 15 AND FY 16.
SO WITH THAT SAID, I'LL START OFF WITH THE FIRST PIECE OF
WHERE WE'VE BEEN, AND THE ADMINISTRATION IS VERY
APPRECIATIVE FOR THE COUNCIL, THE ACTIONS THAT YOU TOOK BACK
IN SEPTEMBER OF 2011 WHEN YOU PROVIDED US WITH SIX PRIORITIES,
SIX PRIORITY AREAS WITH THE FOUNDATION BEING THE
WELL-MANAGED GOVERNMENT, AND I WILL SAY THAT THAT IS WHAT WE
DRIVE THE RESOURCES TOWARDS THOSE SIX IDENTIFIED AREAS.
ONE OF THE THINGS THAT I WOULD SUGGEST, IF YOU LOOK AT THAT
CORNERSTONE, SAFE, HEALTH AND INCLUSIVE COMMUNITIES, THERE ARE
CERTAIN THINGS THAT WE, I GUESS, HAD TO BRING BACK ONLINE BECAUSE
IT WAS IMPORTANT TO THE COUNCIL, SO IN OTHER WORDS, AS A BUDGET
SAVING STRATEGY YEARS AGO, WE CLOSED LIBRARIES ON MONDAYS AND
WE CLOSED REC CENTERS CERTAIN HOURS DURING THE WEEK AND THAT
WAS NOT SOMETHING THAT BODED WELL FOR THE COMMUNITY, SO WHAT
THE COUNCIL DID IS THEY OPENED BACK UP LIBRARIES AND OPENED UP
REC CENTERS. SO AGAIN, THOSE PRIORITIES AND
BASING OUR RESOURCES ON THOSE PRIORITIES MAKES IT EASIER FOR
THE ADMINISTRATION TO BEGIN TO EXECUTE.
THE OTHER THING THAT I'D POINT OUT IS THAT LIFELONG LEARNING,
THE COUNCIL HAD APPROPRIATED A GREAT DEAL OF MONEY IN TERMS OF
EDUCATION. ONE OF THE AREAS THAT WE TALK
ABOUT ANNUALLY IS JUST K-12 EDUCATION.
AND I THINK IT'S IMPORTANT TO NOTE THAT FROM FISCAL YEAR 2012
TO FISCAL YEAR 2014, THE COUNCIL PROVIDED ADDITIONAL MONEY FOR
K-12 EDUCATION TO THE TUNE OF ABOUT $7.5 MILLION OR MORE FROM
THE FY 12 TO FY 14, AND EVEN IF YOU GO BACK TO 2007, I THINK THE
MAYOR HAS SAID THAT IN A COUPLE OF SETTINGS BEFORE, WHERE THE
STATE MONEY DECREASED, THE COUNCIL ACTUALLY PROVIDED
ADDITIONAL MONEY FOR K-12 EDUCATION, AND AGAIN, UNDER THAT
PRIORITY OF LIFELONG LEARNING, SO FROM FY 2007 TO THE CURRENT
FISCAL YEAR, COUNCIL ADDED MORE THAN $14 MILLION IN ADDITIONAL
FUNDING FOR K-12 EDUCATION WHILE THE STATE HAS PULLED AWAY ALMOST
$20 MILLION IN FUNDING OVER THAT SAME TIME PERIOD.
SO THAT'S JUST A FEW EXAMPLES OF WHY IT'S SO IMPORTANT TO HAVE
THE PRIORITIES AND WE EARMARK THAT RESOURCE TOWARDS THOSE
PRIORITIES. I THINK IT ALSO PROVIDES THE
GROUNDWORK FOR WHAT WE CALL A WELL-MANAGED GOVERNMENT.
ONE OF THE THINGS I DIDN'T MENTION, IF YOU LOOK AT THE ORG
CHART WE PROVIDED FOR YOU, WHICH I BELIEVE WE HAVE TO UPDATE FOR
THE ORG CHART, WE HAVE START OFF WITH ALL OF THE PRIORITIES RIGHT
AT THE TOP AND WHAT THAT HAS ALLOWED US TO DO IS HAVE THE
STRATEGIC AREAS SUCH AS NEIGHBORS BUILDING
NEIGHBORHOODS, SMART PROCESSING, HEALTHY NORFOLK, WHERE WE'RE
ABLE TO, AGAIN, TAKE THOSE STRATEGIES AND ALIGN OUR
RESOURCES WITH THOSE STRATEGIES, AND WHAT'S NEAT IS THAT BECAUSE
OF YOUR ACTIONS, THE CITY HAS BEEN RECOGNIZED AS AN
ALL-AMERICAN CITY IN 2013 AND UPGRADE FROM STANDARDS AND POORS
IN TERMS OF OUR CREDIT RATING AND BEING IN THAT FIRST GROUP OF
100 RESILIENT CITIES, SO AGAIN, I BELIEVE THAT SPEAKS VOLUMES TO
WHAT THE COUNCIL HAS DONE IN TERMS OF HAVING PRIORITIES.
SO IF YOU START TO LOOK, CUT THROUGH THIS, THE PRIORITIES,
THE COUNCIL SETS THE VISION AND THE PRIORITIES AND THEN IT'S UP
TO THE ADMINISTRATION TO SET GOALS, OBJECTIVES AND
PERFORMANCE MEASURES AND EVALUATIONS.
AND ONE OF THE THINGS THAT YOU WILL HEAR FROM SABRINA TONIGHT
IS A NEW FOCUS ON THE EVALUATION OF RESULTS, SO IN OTHER WORDS,
THE TOP LEADERSHIP AND THE ADMINISTRATION IS BEING
EVALUATED BY THEIR PERFORMANCE MEASURES, THEIR OBJECTIVES AND
THE GOALS AND HOW THEY REACH THEM.
SO I THINK THAT IT TOOK US A COUPLE OF YEARS TO WORK THROUGH
SOME THINGS, BUT I DO BELIEVE THAT THAT IS THE WAY TO HAVE
WELL-MANAGED GOVERNMENT AND TO LIVE UP TO THE PRIORITIES THAT
THE COUNCIL HAD SET. SO THE PRELIMINARY FIVE-YEAR
OUTLOOK, SPECIFICALLY, THIS IS THE LAST SLIDE IN THE
PRESENTATION. WE'VE MOVED IT UP TO THE FRONT
BECAUSE I THINK THAT THE RED LINE AND THAT BLUE LINE SPEAKS
VOLUMES. I'LL START BY SAYING THAT BACK
IN SEPTEMBER, WE TALKED ABOUT A $20 MILLION GAP FOR THE NEXT
FISCAL YEAR. SOMEWHERE IN HERE, WE'LL AT THE
YOU THIS GAP HAS COME -- TELL YOU THIS GAP HAS COME DOWN
DRAMATICALLY, BUT I ALSO WANT TO PUT IN THE PROPER CONTEXT THAT
CHESTERFIELD COUNTY, THE CITY OF VIRGINIA BEACH, EVERYBODY HAS
SIMILAR CHALLENGES. THEY HAVE SIMILAR CHALLENGES, SO
IT'S NOT JUST THE CITY OF NORFOLK THAT HAS TALKED ABOUT
THIS STRUGGLE BETWEEN REVENUE AND EXPENDITURES.
I WILL SAY THAT WHAT'S IMPORTANT WITH THIS PARTICULAR GRAPH IS
THAT WHEN YOU START TO LOOK AT THE DIFFERENCE BETWEEN THE
REVENUE AND THE EXPENDITURES, THE EXPENDITURES EXCEEDING THE
REVENUE, ONE OF THE THINGS THAT WE FOUND OUT THIS FALL IS WE HAD
AN ECONOMIC ROUNDTABLE HERE IN THE CITY, WE INVITED THE
GOVERNOR'S CHIEF FORECASTER, WE INVITED FORECASTERS FROM THE
FEDERAL RESERVE, WE HAD CITY MANAGERS FROM ACROSS THE REGION,
AND WE EVEN HAD THE NAVY AT THE TABLE.
AND A THEME THAT CAME ACROSS BASICALLY WAS THAT THERE'S
ALMOST THIS NEW NORMAL. IN OTHER WORDS, THE EXPECTATIONS
OF GROWTH BEING 6%, 7% IS NOT GOING TO BE A REALITY FOR US
OVER THE NEXT TWO OR THREE YEARS.
SO WITH THAT, IF YOU TAKE THAT INTO ACCOUNT, I CAN TELL YOU
THAT ABOUT 25% OF THE REVENUE THAT IS GENERATED BY THE CITY
COMES FROM REAL ESTATE. THE GOOD NEWS IS THAT WE'VE
TALKED TO THE ASSESSOR AND THERE IS THE BELIEF THAT REAL ESTATE
ASSESSMENTS WILL ACTUALLY BE IN THE POSITIVE FOR FY 15.
>> WHAT DO YOU MEAN BY POSITIVE? >> ONE PERCENT.
POSITIVE FOR, LET'S SAY, THE CITY.
IN OTHER WORDS, SO SYMPATHY ABOUT REAL ESTATE AS -- THINK
ABOUT REAL ESTATE AS BEING 125% OF YOUR PORTFOLIO AND YOU HOPE
THAT YOUR PORTFOLIO GROWS EACH YEAR.
SO ONE OF THE SLIDES THAT WE HAVE IN YOUR RESOURCE BOOK, IF
YOU JUST GO TO PAGE 15, EVEN IN THE RESOURCE BOOK, WE'VE HAD 25%
OF OUR PORTFOLIO NOT GROWING 5% EACH YEAR, 6%, 7% EACH YEAR.
WE'VE HAD ACTUALLY 25% IN OUR PORTFOLIO THAT'S BEEN DECLINING,
SO WHEN YOU START TO LOOK AT RESIDENTIAL ASSESSMENT OR THE
POTENTIAL REVENUE ASSOCIATED WITH THAT, THAT'S FOUR
CONSECUTIVE YEARS OF DECLINE. AND LAST YEAR WAS THAT FIRST
YEAR IN FOUR YEARS THAT WE SAW AN OVERALL GROWTH.
THAT GROWTH WAS 0.28%. SO IN OTHER WORDS, IN THE PAST,
IF YOU ASKED ME WHAT WAS THE GROWTH IN REAL ESTATE OVER THE
LAST TEN YEARS, I'D SAY ABOUT 6.5%.
OVER THE LAST 20 YEARS, ABOUT 5%.
OVER THE LAST 30 YEARS, ABOUT 5.5%.
SO FOR US TO HAVE NEGATIVE GROWTH OR NOT TO HAVE THAT
GROWTH FOR A PERIOD OF TIME, AND NOW TO GET INTO WHATEVER THIS
NEW NORMAL IS WITH THE EXPECTATION AT BEING VERY
PLEASED THAT YOU'RE AT LEAST ON THE POSITIVE SIDE, BUT THIS
RETURN TO 5 AND 6% GROWTH, WE DON'T SEE THAT IN FY 15 OR FY
16. SO THAT'S WHAT'S THE VALUE OF
THAT ROUNDTABLE. IT'S NOT JUST SOMETHING THAT'S
UNIQUE TO NORFOLK. IT'S WHAT WE WERE SEEING ACROSS
THE REGION AND ACROSS THE STATE. BUT THAT -- HOW WE PUT INTO THIS
PERSPECTIVE, IF I STARTED OFF IN ON THE FAR LEFT IN FY 13, I WILL
SAY IN A FEW PAGES, IT'S A POSITIVE STORY, THAT WE ENDED
WITH A SURPLUS. I'LL TELL YOU RIGHT NOW THAT IN
FY 14 MID YEAR, WE'RE TRACKING THE BUDGET.
ON AN $800 MILLION BUDGET, MAYBE ONE OR TWO MILLION IN TERMS OF
MENTIONING OF KNOCKING OUT A FORECAST.
I COULD MISS THAT IN ONE DEPOSIT DAY, BUT WHAT I REALLY WANT TO
FOCUS ON AND SABRINA WILL GO INTO MUCH MORE DETAIL, IS REALLY
THAT 16, 17, AND 18, AND 19, BECAUSE OUR HOPE IS IF WE CAN
GET THROUGH 15 AND 16, THAT WE CAN GET BETTER GROWTH IN ONE OF
OUR KEY SOURCES, REAL ESTATE. MANY OF THE THINGS YOU'VE BEEN
HEARING AROUND THE TABLE IN TERMS OF GROWING THE ECONOMY, WE
WOULD HOPE THAT SOME OF THOSE PROJECTS ALSO HELP AS YOU START
TO GO, AS YOU GET THROUGH THIS ROUGH PATCH.
SO WHERE ARE WE WITH FY 13? WE TALKED A LITTLE BIT ABOUT
THIS AT THE RETREAT. I THINK WE'RE IN THE $3 MILLION
RANGE AND NOW WITH THE BOOKS CLOSED, WE DO HAVE A SURPLUS FOR
THE PERIOD ENDED JUNE 30, 2013, OF ABOUT $5 MILLION.
SO I THINK THE -- THAT'S GREAT NEWS.
WHAT I'D LIKE TO PUT IN PERSPECTIVE IS IF YOU GO BACK TO
THE LAST TWO FISCAL YEARS, WE'VE HAD SURPLUSES CLOSER TO
$9 MILLION, SO THE SURPLUS, THIS SURPLUS IS SMALLER THAN THE LAST
TWO YEARS AND PART OF IT IS BECAUSE IT STARTS OFF GETTING A
LITTLE EASY AT THE BEGINNING TRYING TO FINE EVERY NICKEL
THAT'S UNDER -- FIND EVERY NICKEL THAT'S UNDER THE CUSHION
AND EVERY ACCOUNT THAT COULD BE SCRUBBED AND NOW IT'S GETTING
MUCH MORE DIFFICULT TO HAVE SURPLUSES AT THAT 8 TO
$9 MILLION RANGE, BUT THE GOOD NEWS IS WE DO HAVE A SURPLUS.
NOW, THE COUNCIL APPROVED FINANCIAL POLICIES ABOUT HOW A
SURPLUS SHOULD BE USED. ONE THING I WOULD LIKE TO SAY IS
JUST HOW WE ACCOUNT FOR THE SURPLUS, AND WE TALKED A LITTLE
BIT ABOUT THIS AT THE RETREAT. I THINK THE BIG THING IS WHEN
YOU LOOK AT THE REVENUES, THE REVENUE CAME IN A LITTLE BIT
BETTER THAN EXPECTED. EXPENDITURES WERE LESS THAN WE
HAD PROJECTED, AND SHE HATES IT WHEN I BRING -- WHEN I BRING
ATTENTION TO HER, BUT DR. PATRICIA HARRISON, I MEAN TO
HAVE A REVENUE FORECAST THAT IS .3 OF A PERCENTAGE POINT IS
REMARKABLE AND I GUESS THE BENCHMARK IS IF 2% IS A GOOD
FORECAST, SO WE'RE VERY FORTUNATE TO HAVE DR. HARRISON
HERE. SHE LOOKS AT THE REVENUE ON A
DAILY BASIS. BUT WHEN YOU START TO LOOK AT
THAT, IT'S ABOUT $31 MILLION THAT WE'RE UP, BUT ONE OF THE
THINGS THAT OCCURS, AFTER YOU LOOK AT OTHER SOURCES, WE HAVE
THIS CONCEPT CALLED CARRY-FORWARD, SO A GOOD PORTION
OF THAT POSITIVE VARIANCE, WE ALREADY ROLLED INTO THE CURRENT
FISCAL YEAR, ABOUT $19 MILLION. IF YOU GO DOWN THE LINE, THE
SCHOOL SYSTEM DID THE SAME THING, ABOUT $7.7 MILLION THAT
THEY HAD AN APPROVED CARRY-FORWARD.
ONE OF THE THINGS YOU WILL HEAR FROM ME TONIGHT AND SABRINA
TONIGHT AS WELL AS THE SCHOOL SYSTEM IS WHEN YOU HAVE THAT
CARRY-FORWARD, IF YOU MATCH IT TO A ONE-TIME EXPENDITURE,
THAT'S FINE, BUT IF YOU DON'T MATCH IT TO A ONE-TIME
EXPENDITURE, YOU START THE NEXT YEAR WITH THAT PROBLEM AND
THAT'S SOMETHING THAT WE DISCUSSED A LITTLE BIT IN
SEPTEMBER. [ INAUDIBLE COMMENTS ]
>> SO THE DESIGNATION THAT WE HAVE, A PIECE OF IT IS -- AND AT
$19.6 MILLION, ONE OF THE THINGS THAT WE DID IS WE BASICALLY SAID
THE SURPLUS FROM 2012, IT WAS ABOUT 8.6 MILLION, WE ROLLED
THAT WHOLE THING INTO THE NEXT FISCAL YEAR, SO WE DESIGNATED
THAT FOR THAT PURPOSE. THAT'S THE BIGGEST PIECE OF IT.
WE HAD SOME DEPARTMENT SAVINGS THAT WE CAPTURED MID YEAR, THAT
WE SAID WE'RE GOING TO HAVE ON REDUCTION STRATEGY TO ENFORCE
THOSE SAVINGS AND ROLL THOSE OVER ALSO.
>> THERE'S A SEPARATE CATEGORY DESIGNATION?
>> RIGHT, THAT IS BASICALLY THE SCHOOL SURPLUS, ABOUT
$2.4 MILLION. THERE WERE SOME SCHOOL
ENCUMBRANCES ALSO, SO THAT'S -- [ INAUDIBLE COMMENTS ]
>> YEAH. SO THEN YOU SAY, OKAY, WHAT DO
YOU DO WITH THE $5.2 MILLION. IF WE GO BACK TO THE FINANCIAL
POLICIES, WHICH AGAIN PLAYED A TREMENDOUS ROLE IN THE UPGRADE
FROM S&P, AND ONE OF THE THINGS THAT THE COUNCIL DECIDED WAS
THAT LET'S ACHIEVE STRUCTURAL BALANCE, AND YOU GAVE US FIVE
YEARS TO DO IT. OKAY?
SO THIS IS THE FIRST YEAR OF THAT FIVE-YEAR PROCESS, BUT IN
ORDER TO ACHIEVE IT, WE HAVE TO WEAN OURSELVES OFF OF TAKING
THOSE SURPLUSES THAT ARE ONE-TIME, ROLLING THEM OVER FOR
ONGOING EXPENDITURES. OKAY?
SO ONE WAY TO DO THAT IS TO TAKE A SURPLUS AND YOU COULD EITHER
PUT IT INTO ONE-TIME EXPENDITURES LIKE A CAPITAL
PROJECT OR TECHNOLOGY OR THINGS OF THAT NATURE, OR WE COULD PROP
UP OUR RESERVES. THE GREAT THING ABOUT THE
RESERVES, THE CITY HAS MET EVERYTHING WITHIN THE RANGE OF
ALL RESERVES ESTABLISHED, THE 5% RESERVE, THE RISK MNGMENT
RESERVE AND THE ECONOMIC DOWNTURN RESERVE, SO WHILE
EVERYBODY WOULD LOVE TO GET RESERVES HIGHER.
WE HAVE MET THE MINIMUM LEVEL FOR EACH ONE OF THOSE RESERVES,
BUT THOSE ARE THE KINDS OF DISCUSSIONS THAT I BELIEVE YOU
WILL HAVE OVER THE NEXT COUPLE OF MONTHS ABOUT HOW TO USE THAT
SURPLUS. AS I MENTIONED EARLIER, PAYROLL
CAPITAL IS ONE OF THE BEST WAYS TO DO THAT BECAUSE WHAT IT'S
GOING TO DO IS USE THAT ONE-TIME RESOURCE FOR A ONE-TIME
EXPENDITURE. I'LL JUST TALK A LITTLE BIT
ABOUT RESERVES AND A LITTLE BIT ABOUT THE STRATEGY BEFORE I TURN
IT OVER TO SABRINA. >> MARCUS, WHEN YOU --
>> SURE. >> FIRST OF ALL, THE ONE PERCENT
THAT I'M TALKING ABOUT, I TAKE IT THAT'S ON -- DOES THAT
INCLUDE IN THERE THE PROPERTY THAT WILL BE DEVELOPED IN THE
FUTURE? WE TYPICALLY ADD THAT IN, RIGHT?
>> YES, THAT'S EXACTLY RIGHT. >> SO WE MAY SEE MORE THAN A ONE
PERCENT INCREASE. >> WE HOPE.
>> NOW, THE CASH PIECE THAT YOU'RE TALKING ABOUT HERE, OVER
TIME WE'VE HAD A GOAL, ANYWAY, OF CASHING MAYBE 10% OF OUR
CAPITAL PROJECTS. >> I SAY 12.5.
>> BUT A GOAL IS -- BEFORE YOU START THROWING OUT NEW NUMBERS,
SOMETHING LIKE 10% HAS TYPICALLY BEEN A PRETTY HEALTHY CASH
PAYMENT. >> RIGHT, YES.
SO WITH RESERVES, AGAIN, THE GOOD NEWS IS WITH THE POLICY
THAT YOU SET EARLY LAST YEAR, THE GOOD NEWS IS THE 5% RESERVE
THAT WE HAVE, WHICH WOULD BE ABOUT $41 MILLION, YOU HAVE MORE
THAN ENOUGH MONEY IN THAT POT. SO YOU'RE CLOSER TO $42 MILLION.
SO YOU HAVE EXCEEDED THAT MINIMUM LEVEL.
THEN WE HAVE THE ECONOMIC DOWNTURN RESERVE, WHICH YOU PUT
AS A FLOOR $3 MILLION. AND A CAP AT $5 MILLION.
WE'RE THERE AT 3. THE HIGHEST THAT THAT HAS BEEN
IS 4 AND THAT WAS BACK IN 2010, AND THEN YOU HAVE THE RISK
MANAGEMENT RESERVE, AND I'M GOING TO ANTICIPATE THE COUNCIL
AND WINN WILL ASK ME WHETHER THERE ARE MORE POTS OF MONEY
VERSUS JUST THAT POT. YES, WE DO.
WE HAVE A CLAIM PAYMENT, INSURANCE PAYMENT, AND WE HAVE
UNEMPLOYMENT COMPENSATION, WORKERS COMPENSATION, SO THERE'S
ANOTHER POT OF MONEY -- >> THAT'S NOT IN THE RISK POOL.
>> THAT'S NOT IN THE RISK. WHAT'S BUDGETED IN 2014 BETWEEN
THE CLAIMS PAYMENTS AND INSURANCE AND THE WORKERS'
COMPENSATION WAS 4.3 MILLION. >> WHY DON'T WE HAVE A FOURTH
POT THAT WE CAN HAVE? >> FOURTH POT?
>> SURE, WE NEED A FOURTH POT OF RESERVE.
>> SURE. WELL, YOU BUDGET THAT.
THAT'S BNLED EVERY YEAR -- BUDGETED EVERY YEAR IN THE
OPERATING. THIS IS OVER AND ABOVE THAT, YOU
SET IT ASIDE. IT'S SITTING THERE FOR CLAIMS.
>> WE'VE MET THAT OBLIGATION. >> YEAH.
>> WE PAY CLAIMS OUT OF IT. >> IT'S YOUR PROJECTED
EXPENDITURE AND IT'S A BUDGET ITEM, NOT A RESERVE.
IT'S INTENDED TO BE SPENT, PROJECTED TO BE SPENT.
>> RIGHT, RIGHT. >> SO EVEN WITH THE RISK
MANAGEMENT RESERVE, THE HEIGHT OF THAT WAS 5.7 MILLION BACK IN
2007, SO AGAIN, YOU'RE IN A PRETTY COMFORTABLE LEVEL WITH
THE RESERVES RIGHT NOW. THE RECOMMENDATION IS TO USE THE
FY 13 SURPLUS IN A MANNER THAT'S CONSISTENT WITH FINANCIAL
POLICY, BUT IN THE EVENT THAT REVENUE OR EXPENDITURES IS SO
FAR OUT OF BOUNDS, IT'S GOING TO IMPACT A SIGNIFICANT REDUCTION
IN PROGRAMS AND SERVICES THAT IS, I GUESS, THE FIRST LINE OF
DEFENSE. SO WITH THAT SAID --
>> THE SCHOOL SYSTEM LAST NIGHT WAS SAYING THEY HAVE A
$20 MILLION SHORTFALL? >> WELL, I CAN'T SPEAK FOR THE
SHORTFALL. I KNOW THAT THEY HAVE IDENTIFIED
A SHORTFALL, THE FIRST PIECE OF IT IS THAT ROLLOVER FROM THE
PREVIOUS YEAR, AND I BELIEVE THAT THEY HAVE A SURPLUS FROM FY
13 OF ABOUT 2.4 MILLION, WHICH AND IT PART OF THIS 5.2.
>> SO THEY'RE NOT INCLUDING IN THEIR 20 MILLION FIGURE, THE
2.4 -- >> I'M NOT SURE WHAT THEY --
>> THEY WILL SEE SOME INCREASED REVENUE FROM THE STATE THIS
YEAR. >> HE SAID ABOUT 1.8, I THINK,
LAST NIGHT. >> THAT'S A -- THEY'RE DOING IT
THE SAME THING, THE WAY MARCUS IS.
I MEAN, TRYING TO FIGURE OUT HOW TO MANAGE THEIR FUNDS.
AT LEAST THIS MORNINGS HE TOLD ME HE WAS ABLE TO DO IT.
>> AND JUST MY LAST COUPLE SLIDES, WHERE WE ARE RIGHT NOW,
I MENTIONED EARLIER THAT WE'RE TRACKING THE BUDGET,
$817 MILLION, 817.5 MILLION, GENERAL FUND BUDGET, WE ROLL
EVERYTHING IN, THE ENTERPRISE FUNDS, THE CIP, WE GET CLOSE TO
A BILLION-TWO, BUT IN TERMS OF GENERAL FUND, WE'RE TRACKING THE
FORECAST OR TRACKING THE BUDGET YEAR TO DATE, MAYBE A LITTLE BIT
BETTER BUT NOT SIGNIFICANTLY BETTER.
A QUICK UPDATE ON WHERE WE ARE PROJECTED TO BEGIN 2015 AND A
LOT OF DISCUSSIONS YOU'LL HAVE OVER THE NEXT COUPLE MONTHS, I
MENTIONED EARLIER THAT WE'RE NOT ALONE WITH PROJECTING THESE
SHORTFALLS, AND THAT'S WHAT HAPPENS IN THE TIME PERIOD TO
TRY TO CLOSE THE SHORTFALL. WE START OFF WITH THIS
$20 MILLION GAP AND AGAIN, YOU START OFF ON THE RESOURCES SIDE,
YOU BACK OUT THE ONE-TIME AND RE-FINE YOUR REVENUE ESTIMATE.
SAME THING ON THE EXPENDITURES, YOU BACK OUT THE ONE-TIME, BUT
YOU ALSO TAKE INTO ACCOUNT, IF YOU BUILD A NEW BUILDING, YOU
HAVE TO STAFF THE BUILDING. IF YOU BUILD A LIBRARY, YOU HAVE
PEOPLE THAT WORK IN THE LIBRARY AND YOU PUT BOOKS IT IN, SO EACH
TIME THAT THERE ARE CAPITAL PROJECTS, MANY TIMES THERE ARE
CAPITAL PROJECTS YEARLY, THERE WILL BE OPERATING EXPENSES THAT
ARE RELATED TO IT. THE GOOD NEWS IS WHERE WE ARE
TODAY, THAT GAP HAS BEEN CUT IN HALF, SO INSTEAD OF HAVING THIS
$20 MILLION GAP, IT'S CLOSER TO 9.5.
WE'LL CONTINUE TO HAVE STRATEGY TO BRING THAT DOWN TO APRIL,
BRING IT DOWN TO ZERO BEFORE WE PRESENT A BUDGET TO YOU IN THE
APRIL TIME FRAME. ONE OF THE WAYS THAT WE'VE BEEN
ABLE TO ABLE TO CUT THE GAP -- BEEN ABLE TO CUT THE GAP IN
HALF, AND I THINK IT'S VERY IMPORTANT BECAUSE THIS IS SOME
OF THE AREAS THAT SABRINA WILL TALK ABOUT THAT A LOT OF TIMES
WE DON'T TALK ABOUT AROUND THIS TABLE, IT'S JUST THE CONCEPT OF
MANAGING OUR RESOURCES. WE DID DO ESTIMATES, THAT'S
WORTH ABOUT ALMOST $4 MILLION IN SAVINGS STRATEGIES.
SOME ESTIMATES WENT UP, SOME WENT DOWN, BUT WHEN YOU NET IT
OUT, WE HAVE LESS THAN $4 MILLION OF STRATEGIES THERE.
THE NEXT TWO ARE EXTREMELY IMPORTANT.
IT'S REALLY A PHILOSOPHICAL CHANGE.
ONE IS TO LEVEL-FUND DEPARTMENTS IN 15 WHERE THEY WERE IN 14.
SO THAT IS A STRATEGY THAT'S WORTH ABOUT $3 MILLION, BUT WHAT
IT DOES IS THAT INSTEAD OF COMING INTO A DEPARTMENT AND
BASICALLY SAYING I NEED YOU TO GIVE ME A 5% REDUCTION STRATEGY
OR 10% REDUCTION STRATEGY, WE PUT THE PHILOSOPHY OUT TO
EVERYONE, SO IN OTHER WORDS, A LOT OF STRATEGIES THAT SABRINA
WILL TALK ABOUT HAVE REALLY RELATED TO THE ADMINISTRATIVE
DEPARTMENTS, NOT NECESSARILY CONSTITUTIONAL OFFICERS OR THE
COUNCIL APPOINTEES, BUT IF WE JUST LEVEL-FUND ALL DEPARTMENTS
AT THEIR 14 LEVEL, THAT'S WORTH ABOUT $3 MILLION IN SAVINGS.
THE OTHER THING THAT WE DID IS WE TOOK ONE PERCENT REDUCTION
FOR ALL DEPARTMENTS. NOT JUST THOSE THAT REPORT TO
ME, BUT AGAIN, THE CAPITAL APPOINTEES AND THE
CONSTITUTIONAL OFFICERS, AND THAT REDUCTION, ONCE YOU TAKE
AWAY SOME THINGS THAT ARE JUST MANDATED, WAS WORTH ANOTHER
3.7 MILLION. >> ARE YOU JUST MODELING DOING
THIS OR IS THIS SOMETHING YOU LOOKING AT AS BEING POLICY?
>> THAT IS HOW WE STARTED BUILDING -- CLOSING THIS GAP.
>> SO IT'S MORE THAN JUST MODELING.
YOU'RE LOOKING AT IT AS POLICY. >> WELL, I GUESS YOU CALL IT
POLICY. I GUESS IT'S A TOOL TO BRING THE
GAP DOWN. >> IF IT COMES FROM YOU, IT'S
POLICY FROM YOUR OFFICE. BUT I UNDERSTAND THAT THE
TROUBLE YOU RUN INTO IS THERE WAS -- AND I REMEMBER, MARCUS,
AND I DON'T MEAN TO BE STICKING YOU WITH IT, BUT I REMEMBER WHEN
YOU CAME ON, YOU WEREN'T GOING TO GO AND DO ACROSS-THE-BOARD
CUTS. I'M NOT GOING TO STICK YOU WITH
WHAT YOU MAY HAVE SAID TWO YEARS AGO, BUT IT WAS SOMETHING I
THOUGHT I REMEMBER YOU WERE NOT GOING TO USE AS A BUDGET TOOL,
TO JUST WALK IN AND SAY EVERYBODY CUT YOUR BUDGET BY ONE
PERCENT, ONE PERCENT, 2%, 3%. YOU WERE GOING TO DO A CASE BY
CASE BASIS AS MUCH AS POSSIBLE WITH EACH DEPARTMENT.
SO PARKS AND REC, YOU LOOKED AT THEIR BUDGET AND IT WAS 3% AND
THAT'S WHAT YOU CAME UP WITH. AND IF THE POLICE DIDN'T NEED A
BUDGET CUT, THEY NEEDED AN INCREASE, IT WAS ONE PERCENT,
THEN IT WAS A CASE BY CASE BASIS AND I'M JUST AFRAID WE MAY BE
BACK SLIDING ON WHAT WE MAY HAVE SAID.
IF THAT'S THE CASE, I THINK WE HAVE TO EXPLAINS THAT TO THE
DEPARTMENT HEADS THAT WORK FOR YOU, THOSE MANAGERS.
>> SURE. >> AM I WRONG?
>> THAT'S NOT WHAT I HEARD HIM SAY THOUGH.
>> THAT WAS MY CONCERN TOO. >> I HEARD YOU SAY SOMETHING
DIFFERENT. >> MAYBE I MISREAD WHAT YOU
SAID. >> WE START OFF WITH
ACCOUNTABILITY, SO WE SAID IN THE PAST, WHAT WE'VE DONE IS
SOMETHING AS SIMPLE AS, AND AGAIN, THIS IS SIMPLE, BUT TO
HIRE SOMEBODY, IT WAS ALMOST LIKE YOU HAVE TO HAVE 11
SIGNATURES BEFORE YOU COULD EVEN HIRE SOMEBODY.
SO THIS ORGANIZATION HAD BECOME AN ORGANIZATION THAT TO SOME
EXTENT HAD TO BE RUN THROUGH THE BUDGET OFFICE OR HUMAN
RESOURCES. SO WHAT THE DEPARTMENT HEADS
SAID IS JUST MAKE ME ACCOUNTABLE, YOU KNOW.
I WILL MUCH RATHER YOU REDUCE ME BY ONE PERCENT AND LET ME WORK
IT OUT THAN FOR ME TO HAVE TO HAVE SOMEBODY IN A CENTRAL
DEPARTMENT MANDATE OR DICTATE WHEN I CAN HIRE SOMEBODY.
SO IT'S MORE OF ACCOUNTABILITY THAN IT IS AN ACROSS-THE-BOARD
CUT. >> I GUESS TO CHARACTERIZE IT AS
A MATURING PROCESS. >> YES.
>> MARCUS, I'VE HEARD FROM A COUPLE EMPLOYEES IN TWO
DIFFERENT DEPARTMENTS THAT SAID THAT THEIR DEPARTMENT HEAD HAS
COME DOWN AND SAID WE HAVE TO MAKE ALL THESE BIG CUTS THIS
YEAR SO WE CAN BALANCE THE BUDGET.
>> RIGHT, SO -- >> IT'S NOT BIG CUTS.
IT WAS A ONE PERCENT. >> OH, YEAH --
>> BUT THAT ONE PERCENT COULD IMPACT A SECTION OF THAT
DEPARTMENT A LITTLE BIT MORE THAN OTHER SECTIONS BECAUSE THAT
ONE PERCENT COULD BE DIVIDED UP AND MAYBE 50% OF THAT IS WITHIN
ONE SECTION OF IT, SO THEY'RE FEELING A BIGGER PINCH THAN
MAYBE ANOTHER SECTION WHICH MIGHT NOT HAVE GOTTEN CUT AT
ALL. >> RIGHT.
>> BUT WE'RE NOT LETTING -- [ ALL SPEAKING AT ONCE ]
>> YOU'RE NOT LOOKING AT A ONE PERCENT LIKE EVERYBODY -- NOBODY
ORDERS STAPLES BECAUSE WE'VE GOT A MILLION OF THEM IN OUR SUPPLY
CLOSET. >> NO.
>> YOU'RE NOT AT THE TIMING -- TELLING THEM WHAT TO DO.
>> NO, NOT AT ALL. BACK TO ACCOUNTABILITY, AND
THAT'S WHY I HIGHLIGHT THE EVALUATION PIECE.
IN 2014, BECAUSE WE'RE HALFWAY THROUGH THE FISCAL YEAR, THE
CONCEPT IS WE'RE NOT GOING TO LAY OFF A BUNCH OF PEOPLE
BECAUSE OF THIS ONE PERCENT CUT, BUT I'M PRETTY SURE I HEAR THE
COUNCIL SAY, SHOW ME WHAT IS THE -- PAINLESS ISN'T THE WORD,
BUT SHOW ME YOU'VE MADE THE TOUGH DECISIONS FIRST.
SO SOMEWHERE IN HERE, THOSE ONE PERCENT REDUCTIONS, ONE PERCENT
WILL BE REFLECTED IN THE BUDGET THAT I PRESENT TO YOU, AND IF
YOU SAY WE CAN'T LIVE WITH THIS, THEN THAT BECOMES A VERY
DIFFERENT DISCUSSION AND THAT'S HOW WE'RE TRYING TO AT LEAST BE
AS EFFICIENT AS WE CAN, SHOW YOU WHAT THE IMPACT WOULD BE ON
PROGRAMS AND SERVICES. SOME PROGRAMS AND SERVICES MAY
BE A LOW PRIORITY FOR THIS BODY, AND SOME PROGRAMS AND SERVICES
MAY BE ABSOLUTELY POSITIVELY NOT, BUT I BELIEVE YOU WANT TO
SEE THE IMPACT FIRST. SO NOT DOING IT IMMEDIATELY, BUT
THAT IS WHAT'S GOING TO BE PROVIDE TO YOU IN THE APRIL TIME
FRAME. >> AND THE FLOAT THAT WE'VE
TALKED ABOUT BEFORE, THAT MONEY THAT SEEMED TO CARRY OVER, AT
THIS POINT WE'RE WILLING TO PAY THAT DOWN, AM I CORRECT?
IS THAT WHAT YOUR EXPLANATION, BEFORE WE MOVED ON, I DIDN'T GET
A CHANCE TO ASK YOU, BUT THE IDEA IS THAT WE'RE PAYING THAT
FLOAT DOWN. IS THAT RIGHT, SABRINA?
>> OR AT LEAST MATCHING WHATEVER THAT IS.
>> IT'S THAT CARRYOVER. >> YEAH, IT'S GOT TO MATCH.
SO WE'RE GOING TO HAVE $19 MILLION IN CARRY-FORWARD,
YOU SHOULD HAVE $19 MILLION IN ONE-TIME EXPENDITURES.
>> BUT WE'RE WILLING TO GET RID OF IT OFF OUR BOOKS?
I MEAN, YOU ARE WILLING TO MAKE THE TIGHT CALL -- I KNOW, SAB
NA, WE TALKED ABOUT IT BEFORE, WE WERE WILLING TO MAKE THAT
HAPPEN. [ INAUDIBLE COMMENTS ]
>> I THINK WE CUT THAT DISCUSSION SHORT.
WHEN WE WENT TO THAT, WE WERE LIKE, OKAY, I'VE HEARD ENOUGH,
IF I REMEMBER. >> JUST TO EXPAND ON THIS,
YOU'RE SAYING FOR EVERYBODY, THAT THEY'RE ACCOUNTABLE FOR
THEIR DECISIONS ON HOW TO CUT BY ONE PERCENT.
AND THEN WE WILL, AFTER THAT IS DONE, THEN WE WILL -- YOU'LL
COME BACK TO US AND WE'LL DECIDE WHETHER THOSE CUTS ARE
APPROPRIATE OR WE'RE COMFORTABLE WITH THEM.
>> EXACTLY. IT WILL BE IN THE BUDGET
PRESENTATION. >> WHAT ABOUT THE DEPARTMENT,
THOUGH, THAT FRANKLY NEEDS TO BE CUT BY 5%?
>> SURE. >> I MEAN --
>> SABRINA IS GOING TO TALK ABOUT THAT.
>> WHERE DOES THAT COME IN HERE? WE'RE STILL INDIVIDUALIZING OR
THE DEPARTMENT THAT NEEDS TO GROW BY 5?
WE'LL DO ALL OF THAT AFTER YOU'VE DONE THE UNIFORM ONE
PERCENT? >> WE HAVE A $20 MILLION
PROBLEM, WE HAVE NOT ADDRESSED IT YET.
THIS IS ONE STRATEGY, IT WAS WORTH $3 MILLION.
THERE'S ANOTHER STRATEGY THAT IS WORTH ALMOST $4 MILLION, SO WE
GET IT DOWN TO 9.4 MILLION. SABRINA IS GOING TO TALK ABOUT
EXACTLY WHAT YOU SAID. WE'VE ESTABLISHED SWAP TEAMS,
AND WE'RE NOT LOOKING AT THIS IN SILOS.
WE'RE LOOKING AT ENTIRE ORGANIZATIONS, THE CITY
ATTORNEY'S OFFICE, THE AUDITOR'S OFFICE, SO THIS IS THE BEGINNING
OF TRYING TO MAKE THE GAP GO AWAY BUT TO HAVE THE STRUCTURAL
BALANCE SO WE'RE NOT USING ONE-TIME STRATEGIES FOR ONGOING
EXPENDITURES. >> AND THEN JUST A DUMB
QUESTION. I KNOW THIS IS DUMB.
LEVEL FUNDING SAVES US 3 MILLION, HOW DOES THAT HAPPEN?
>> SURE. THIS IS A BAD EXAMPLE, BUT LET'S
JUST GO FOR IT. IT'S PRETTY EASY TO -- WE BUDGET
BY POSITION IN THE CITY. SO YOU BUDGET A POSITION AT
$40,000 AND YOU HIRED SOMEBODY ON JULY 1st AND YOU PAID THEM
$40,000, YOU WOULD BE FINE. BUT YOU COULD -- AND THE WAY THE
SYSTEM HAS BEEN, YOU COULD HIRE SOMEBODY ON JANUARY 1st AND PAY
THEM 80, AND YOU WILL STILL BE FINE BECAUSE YOU HAD $40,000 IN
THAT SLOT. WHAT WE'RE SAYING IS THAT SOME
OF THESE SURPLUSES WERE BASED ON DOLLARS RELATED TO PERSONNEL, SO
WHY WOULDN'T YOU RESET THE MODEL AND BASICALLY SAY, DEPARTMENT
HEADS, THIS IS HOW MUCH MONEY YOU HAVE FOR PERSONNEL AND YOU
CAN RESTRUCTURE YOUR ORGANIZATION AROUND THAT.
NOT EVERYBODY HAS A ONE PERCENT CUT.
THERE'S SOME DEPARTMENTS THAT WE KNOW GOING INTO IT, THAT AS A
COUNCIL PRIORITY, WE DIDN'T PROVIDE A STRATEGY FOR NORFOLK
PUBLIC SCHOOLS THAT HAD ANY REDUCTIONS IN IT BECAUSE WE
UNDERSTOOD THAT THAT'S IMPORTANT TO THE COUNCIL.
SO IT'S REALLY ALMOST STEP ONE, AND THEN YOU'RE GOING TO GET
ADDITIONAL STRATEGIES AND ADDITIONAL EVALUATIONS TO BRING
THIS DOWN TO ZERO. >> BUT THE $3 MILLION SAVINGS
IS... >> IT'S BASICALLY BECAUSE THE
EXAMPLE I GAVE YOU -- >> SOME PEOPLE WOULDN'T BE
HIRING RIGHT AWAY? >> RIGHT, AS WE TALKED --
>> IN PERSONNEL? >> NO, THE DEPARTMENT HEADS
BASICALLY SAID LET ME MANAGE MY DEPARTMENT, LET ME BE IN CONTROL
OF HIRING. DON'T HAVE THE MANAGER AND THE
BUDGET DIRECTOR AND THE H.R. DIRECTOR AND AN ACM SIGN OFF ON
EVERYTHING THAT WE DO. THEY SAID, GIVE ME
ACCOUNTABILITY, AND SO THAT'S WHERE WE'RE STARTING.
>> SO MARCUS -- OKAY, MAYBE I MISUNDERSTOOD THEN.
SO THE ONE PERCENT CUT, THAT'S ACROSS THE BOARD OR IS THAT JUST
FOR COUNCIL APPOINTEES. >> EVERYBODY.
>> THAT'S EVERYBODY, AND THE LEVEL FUNDING IS FOR --
>> EVERYBODY. >> OKAY.
SORRY. >> IT'S A STRATEGY.
WE COULD HAVE HAD A DIFFERENT STRATEGY THAT SAID GIVE ME A 5%
REDUCTION STRATEGY, GIVE ME A 10% REDUCTION STRATEGY.
THESE TWO STRATEGIES ARE WORTH $7 MILLION.
>> I HEARD TWO DIFFERENT THINGS. I HEARD ONE'S FOR ONE AND ONE'S
FOR THE ORROCK BUT YOU'RE SAYING -- FOR THE OTHER, BUT
YOU'RE SAYING THAT THEY BOTH APPLY.
ALL RIGHT, I GOT YOU. >> WITH THAT, AS WE MOVE
FORWARD, I THINK THAT THE BIG THING BEFORE I PASS IT OVER TO
SABRINA IS WHAT WE'RE TRYING TO DO TO GET TO YOUR QUESTION
EARLIER, IS THAT IF WE LOOK AT FY 15 AND FY 16 THROUGH THE SAME
LENS, THEN YOU KNOW WHATEVER ACTIONS YOU DO IN FY 15, WHAT
IMPACT THEY WILL HAVE ON FY 16, SO EVEN THOUGH WE WERE FIVE-YEAR
FORECAST, WHAT WE WANTED TO MAKE SURE WE SHOW YOU WHEN WE PRODUCE
THE BUDGET OR FOLLOW YOUR GUIDANCE TO PRODUCE THE BUDGET
OVER THE NEXT FEW MONTHS, IS TO MAKE SURE THAT WE'RE NOT
SINGLE-FOCUSED ON FY 15 BECAUSE SOME OF THE ACTIONS AND
STRATEGIES WILL HAVE AN IMPACT IN FY 15.
THAT'S A LITTLE BIT OF A DIFFERENT PHILOSOPHY.
OKAY. >> AS THE MANAGER SAID, WE'RE
LOOKING AT THE BUDGET, THE DEVELOPMENT OF THE 2015 BUDGET
WITH THE FIVE-PRONGED APPROACH, RAISING REVENUES, REDUCING
EXPENDITURES, BECOMING MORE EFFICIENT, GROWING OUR ECONOMY
AND SHARING SERVICES. WE CAN'T CUT OUR WAY OUT OF THIS
AND WE KIND OF HAVE TO GROW OUR WAY OUT OF THIS AT THIS POINT.
BUT BEFORE WE MOVE INTO THE WHOLE 2015 DEVELOPMENT AND WHERE
WE'RE GOING, I WANT TO TAKE A MOMENT JUST TO LOOK BACK ON THE
LAST THREE, FOUR YEARS SINCE THE GREAT RECESSION HIT US.
WHAT WE'VE ACCOMPLISHED SO FAR IN TERMS OF FOUR YEARS, WE'VE
HAD VERY LITTLE TAXES AND FEE INCREASES.
THEY HAVE BEEN VERY MODEST. WE'VE ALSO DONE A LOT OF
COST-CUTTING STRATEGIES AND CONTAINMENT.
LOOKING BACK THROUGH THE RECORDS QUICKLY, WE FOUND ABOUT
$9 MILLION IN CONSULTANT STUFF THAT WE HAD DONE THAT WE
RENEGOTIATED LEASES, LOOKED AT BEST PRICING, AND GOTTEN NEW
CONTRACTS. WE'VE REDUCED DISCRETIONARY
SPENDING ALL ACROSS EXECUTIVE DEPARTMENTS, AT LEAST BY
$2.3 MILLION. ONE OF THE BIGGEST COST
CONTAINMENT STRATEGIES THAT WE IMPLEMENTED WAS OUR HEALTHCARE,
OUR TRANSITION TO A CITY-ADMINISTERED, A
SELF-INSURED MODEL. THAT ACTUALLY SAVED THE
HEALTHCARE CONSORTIUM, WHICH HAS NORFOLK PUBLIC SCHOOLS,
REDEVELOPMENT HOUSING AUTHORITY AND THE CITY, ABOUT $5 MILLION.
WHEN WE WERE RIGHT ON THE CUSP OF GOING INTO THE AFFORDABLE
CARE ACT AND HEALTHCARE COSTS WERE RISING ABOUT 8%, WE'RE
MANAGING, I THINK WE'RE PROBABLY THE ONLY LOCALITY THAT CAN SAY
THAT IN CALENDAR YEAR 2014, OUR EMPLOYEES WILL NOT SEE A BENEFIT
INCREASE, AND BECAUSE WE JUST TRANSITIONED OVER, WE DON'T HAVE
A LOT OF EXPERIENCE DATA, SO WE'RE -- AND WHEN MARCUS SAID
THAT THIS WAS EARLY FOR OUR PROJECTIONS, WE ARE PROJECTING
HEALTHCARE FOR THE 2015 BUDGET, SIX MONTHS OF THAT BUDGET,
RATHER EARLY, SO WE'RE STILL REFINING THOSE NUMBERS, BUT
EARLY INDICATIONS INDICATE THAT WE WILL HAVE A VERY, VERY
MINIMAL, IF TO NO INCREASE. WE'RE STILL WORKING OUT THE
NUMBERS THERE, BUT AGAIN, THAT IS A -- THAT'S A BIG EFFORT THAT
WE ALL UNDERTOOK AND THAT SAVED US A LOT OF MONEY.
WE ALSO RIGHT-SIZED DEPARTMENTS OVER THE LAST THREE OR FOUR
YEARS. LOOKING BACK AGAIN, PERSONNEL,
WE'VE ELIMINATED A LOT OF REDUNDANT POSITIONS, VACANT
POSITIONS. OVER $16 MILLION WORTH OF
POSITIONS AND PERSONNEL ACTIONS THAT INCLUDES TRAVEL, TRAINING,
SOME PROFESSIONAL DEVELOPMENT, AND AGAIN, THESE -- MOST OF
THESE REDUCTIONS APPLY TO THE EXECUTIVE DEPARTMENTS.
THE ONES UNDER THE CITY MANAGER'S PURVIEW.
WE DID NOT INCLUDE JUDICIAL, CONSTITUTIONAL, COUNCIL
APPOINTEES IN THE LAST THREE YEARS OF BUDGET REDUCTIONS.
WHAT WE WOULD DO IS MID YEAR, WE WOULD COME ALONG, LOOK AT THE
FORECAST AND SAY WE'RE GOING TO HAVE PROBLEMS NEXT YEAR.
SO WE NEED TO SAVE SOME MONEY THIS YEAR AND WE'D IMPLEMENT MID
YEAR BUDGET REDUCTIONS. BEFORE I GOT HERE, THE CITY
WOULD IMPLEMENT MID YEAR BUDGET REDUCTIONS AND THOSE WOULD BE
ONE-TIME. NEXT YEAR, THAT MONEY WOULD BE
PUT BACK INTO THE BUDGET. WHAT WE STARTED DOING WAS WE
IMPLEMENTED MID YEAR REDUCTIONS, BUT THEN WE ALSO CARRIED THOSE
SAME REDUCTIONS INTO THE FOLLOWING FISCAL YEAR, SO YOU
PICKED UP THE ONGOING REDUCTIONS THERE.
SO THAT'S BEEN HAPPENING FOR ABOUT THREE YEARS WITH OUR
EXECUTIVE DEPARTMENTS. >> YOU'RE IN CONVERSATIONS NOW
WITH THE JUDICIAL FOLKS AND ARE THEY WILLING PLAYERS IN HELPING
WITH THIS? >> MOST OF THEM ARE.
MOST OF THEM, WE MET WITH THE CITY CLERK, WE'VE MET WITH
EVERYBODY, ACTUALLY, AND THE CITY CLERK SAID, YOU KNOW, WE'LL
DO WHAT WE CAN. WE'LL HELP WHEREVER WE CAN.
WE HAVE SOME FOLKS THAT JUST SAID NO.
>> WHAT ABOUT THE CONSTITUTIONAL?
>> THE CONSTITUTIONALS, THERE ARE A COUPLE THAT ARE HAVING
PROBLEMS AS WELL, SO WHEN IT GOES BACK TO YOUR QUESTION OF,
YOU KNOW, IS IT ONE PERCENT ACROSS THE BOARD, WE DO HAVE TO
LOOK AT WHAT THE IMPACT IS. SOME FOLKS JUST CAN'T HANDLE IT,
WHICH MEANS OTHER DEPARTMENTS WILL HAVE TO PICK UP THE
ADDITIONAL REDUCTION. >> YOU HAVE TWO NEW ONES THAT
ARE JUST FEELING THEIR WAY. >> RIGHT, RIGHT.
>> WITH REGARD TO THEIR STAFFING, AND SO I WOULD THINK
THAT THEY'RE IN POSITIONS THAT THEY COULD MAKE THEIR CHOICES
NOW FAIRLY -- >> WE'VE MADE PROPOSALS TO THEM
TOO. >> ONE OF THEM HAS BEEN THERE
FOR A PERIOD OF TIME, BUT STILL REGARDLESS, HE WAS IN THE OFFICE
STILL AND FEELING HIS WAY FOR WHAT HE HAS TO DO TO MAKE THOSE
HARD CALLS, SO, I MEAN, THEY CAN MAKE THEIR DECISIONS SINCE
THEY'RE FRESH AND IF THEY HAVE TO SHED PERSONNEL, THEY SHED
PERSONNEL. THOSE OFFICES ARE OFTEN -- I'M
NOT CASTING APERSIANS TO ANYBODY WHO -- ASPERSIONS TO ANYBODY
THAT WAS THERE BEFORE, BUT WE ARE POLITICAL FIEFDOMS AND ALLOW
PEOPLE TO PUT POSITIONS AND TO PAY THEM THAT MAY NOT
NECESSARILY BE QUALIFIED OR WORK THAT HARD.
IT'S JUST HOW THAT IS. THAT'S JUST HOW THOSE OFFICES
RUN AND IF THAT BE THE CASE, THE PEOPLE COMING IN NEW CAN SHED
SOME OF THAT AND NEAT THAT ONE PERCENT FAIRLY WELL.
>> THEY HAVE BEEN VERY ACCOMMODATING, ACTUALLY.
BACK TO CONSOLIDATING DEPARTMENTS, SPEAKING OF
EFFICIENCIES AND WHAT WE'RE LOOKING AT IN TERMS OF HOW WE
RUN THE CITY, WE'VE CONSOLIDATED SOME DEPARTMENTS.
THIS YEAR, THE 2014 BUDGET, WE CONSOLIDATED COMMUNICATIONS AND
I.T. WE LOOKED AT IT AND SAID THEY'RE
LIKE SERVICES, COMMUNICATIONS IS HEADING MORE TOWARDS THE SOCIAL
MEDIA TYPE OF ENVIRONMENT, AND WE BROUGHT THAT UNDER ONE
UMBRELLA. THERE WAS SOME COST EFFICIENCIES
THERE. WE'VE ALSO, TWO YEARS AGO, WE
CREATED A DEPARTMENT OF -- WE ESTABLISHED A DEPARTMENT OF
GENERAL SERVICES. WE TOOK FIVE FUNCTIONS THAT WERE
SPREAD OUT AND BROUGHT THEM UNDER ONE UMBRELLA FOR BETTER
OVERSIGHT AND ACTUALLY, DGF AS WE CALL THEM, HAS DONE A PRETTY
GOOD JOB IN MANAGING FLEET. THEY HAVE TURNED FLEET AROUND.
THEY HAVE DONE A COMPLETE INVENTORY OF THE FLEET VEHICLES,
THEY'RE REPURPOSING VEHICLES. WE'VE ACTUALLY OCCUR STALE OUR
FUEL COSTS. -- CURTAILED OUR FUEL COSTS.
THEY WENT TO A FUTURES MARKET WHERE THEY LOCK IN THE FUEL
PRICES AT THE BEGINNING OF THE FISCAL YEAR AND THEY'RE LOCKED
IN. I USED TO GRIT MY TEETH AT THE
END OF THE YEAR, I DIDN'T KNOW WHAT THE FUEL FRIES WAS GOING TO
BE BECAUSE -- FUEL PRICE WAS GOING TO BE BECAUSE IT
FLUCTUATED SO MUCH. WE'VE ALSO REFINED SERVICE
DELIVERY, MADE TECHNOLOGY CHANGES AND IN THAT, WE PICKED
UP SOME CHANGES. WE GOT RID OF A MAIN FRAME, JUST
GENERAL IMPROVEMENTS WITH TECHNOLOGY.
THOSE WERE ABOUT $2.1 MILLION WORTH.
>> CAN I ASK YOU A QUESTION ON THAT.
ONE OF THE ISSUES THAT'S COME UP AND I KNOW THE CHIEF IS HERE,
THERE'S BEEN DISCUSSIONS BETWEEN NORFOLK P.D., THE NORFOLK
COMMONWEALTH ATTORNEY'S OFFICE AND THE CITY AND THEIR I.T. AND
THE WAY THAT THEY DON'T TALK, THERE'S A PROBLEM WITH REGARD TO
THAT. IS THAT SOMETHING THAT WE CAN
LOOK AT TO REC STI PHI AND IF WE CAN -- RECTIFY IF WE CAN PUT IT
UNDER ONE UMBRELLA? I KNOW THE CHIEF IS HERE, I KNOW
HE KNOWS ABOUT IT, AND I KNOW THE COMMONWEALTH ATTORNEYS
TALKED ABOUT IT. I UNDERSTAND THEY'RE ON THREE
DIFFERENT SYSTEMS AND IT'S PROBLEMATIC.
THEY'RE NOT -- THE SYSTEMS DON'T TALK WELL, SO IF WE CAN LOOK AT
THAT TO TRY TO SAVE MONEY ON THAT, THAT WOULD BE GREAT.
I KNOW WE HAVEN'T DONE THAT YET AND I DON'T KNOW IF THEY'VE
BROUGHT THAT TO YOU YET. >> THEY BOTH HAVE TWO BUDGET
REQUESTS AND WE'RE WORKING THROUGH THAT.
>> SOMEHOW CONSOLIDATE, GET EVERYBODY ON THE SAME SHEET?
ALL RIGHT. THANKS.
>> ENERGY EFFICIENCY, THIS IS SOMETHING THAT I BELIEVE WE
SHOULD ALL BE PROUD OF. A FEW YEARS AGO, I THINK IT
WOULD BE ARRA MONEY AND WE UPGRADED THE CENTRAL ENERGY
PLANT AND PICKED UP QUITE A BIT OF SAVINGS FROM THAT AND OTHER,S
THAT THE DEPARTMENTS HAVE DONE, OVER $1.3 MILLION IN UTILITY
SAVINGS. WE'RE ALSO IN THE PROCESS OF
IMPLEMENTING A CLIMATE CONTROL POLICY FOR BUILDINGS.
SOME BUILDINGS, YOU WALK INTO, ARE JUST FREEZING WHICH MEANS
THEY'RE PAYING A LOT OF IN AIR CONDITIONING.
AGAIN, THAT GOES BACK TO THE ACCOUNTABILITY OF THE DEPARTMENT
HEADS, MAINTAINING THE FACILITIES.
SHARED SERVICES, YOU KNOW, THAT WAS AN INITIATIVE THAT WE
ENTERED WITH VIRGINIA BEACH AND CHESAPEAKE.
WE ACTUALLY HAD QUITE A BIT OF SUCCESS.
THE HEALTHCARE MOVING TO A SELF-ADMINISTERED MODEL WAS A
RECOMMENDATION FROM THEM. SIGN SHOP, WE ACTUALLY
CONSOLIDATED OUR SIGN SHOP WITH VIRGINIA BEACH.
WE HAVE AN MOU WITH VIRGINIA BEACH AND CHESAPEAKE NOW AND
THEY ARE ACTUALLY MAKING ALL OF OUR TRAFFIC WARNING SIGNAL
SIGNS. WE DO OUR INDIVIDUAL SIGNS, BUT
WE WERE ABLE TO PICK UP SOME SMALL SAVINGS, BUT NEVERTHELESS
SAVINGS THERE WITH SIGN SHOP. MOST RECENTLY, AS OF JANUARY
1st, WE'VE ACTUALLY STARTED ADMINISTERING THE HEALTHCARE FOR
NORFOLK PUBLIC SCHOOL EMPLOYEES. SO WE'RE TRANSITIONING, WE'RE IN
THE MODE OF TRANSITIONING WITH THAT.
MOVING ON, WHERE ARE WE GOING? BACK TO YOU ONCE ASKED, YOU
KNOW, SHOW US THE PAIN. WE'VE CUT, WE'VE CUT, WE'VE
LOOKED UNDER EVERY ROCK, WE'VE TURNED OVER EVERY STONE, WHICH
IS PART OF WHY WE HAVE THIS $19 MILLION CARRY-FORWARD ISSUE.
SO AS WE MOVE FORWARD AND WE DEVELOP A BUDGET, WE KNOW THAT
THERE ARE ONGOING PRIORITIES. FINANCIAL STABILITY IS ONE.
ONE IS TO DECREASE OUR RELIANCE ON ONE-TIME REVENUE FOR ONGOING
EXPENSES. WE HEARD YOU LOUD AND CLEAR WITH
NEIGHBORHOODS. CIP IS A PRIORITY, NEIGHBOR
PLANS IS A PRIORITY. YOU TOLD US TO LOOK FOR
OPPORTUNITIES FOR FUNDING TO THEM AND WE'VE ACTUALLY GONE
THROUGH SOME OF THE PAST PROJECTS, IDENTIFIED SOME
POTENTIAL RESOURCES. WE'LL BRING THOSE BACK TO YOU
AND YOU'LL HAVE TO MAKE SOME DECISIONS, BUT THERE ARE SOME
POTENTIAL RESOURCES YOU MAY WANT TO REPROGRAM.
HEALTHY NEIGHBORHOODS IS ANOTHER ONE.
COMPENSATION. OUR HUMAN CAPITAL THAT WE BEGAN
THE COMPREHENSIVE REVIEW OF COMPENSATION WITH THE 2014
BUDGET. >> BEFORE YOU GO ANY FURTHER ON
THAT POINT, MARCUS, WHERE DOES OUR INCREASE IN WAGE ON THE
EMPLOYEES THAT ARE BELOW THE LIVING WAGE FIT INTO THIS?
>> THAT'S WHAT SHE'S ABOUT TO ADDRESS.
PART OF THIS STRATEGY. >> OKAY.
>> SO COMPENSATION, WE HAVE COME UP WITH AN INITIATIVE CALLED
ATTRACTION, RETENTION, MOTIVATION, AND DEVELOPMENT.
WE'RE AFFECTIONATELY TERMING IT ARMD FOR OUR EMPLOYEES.
I HAVE SEVERAL MORE SLIDES ON ALL OF THESE, SO I'LL GO INTO IT
IN A LITTLE BIT MORE DETAIL. LIFELONG LEARNING, AGAIN,
MAINTAINING OUR CITY SUPPORT, THE DIRECTIVE FROM THE CITY
MANAGER WAS TO MAINTAIN CITY-LEVEL FUNDING FROM 14 TO
15, WHICH MEANS ONE OF THOSE -- THE SHARE SERVICES OPPORTUNITIES
THAT WE CAME UP WITH IN CLOSING OUR CENTRAL STORES, WE HAD A
$1.7 MILLION SAVINGS IN 2014. THAT $1.7 MILLION SAVINGS WE PUT
TOWARDS SCHOOLS. THAT AS ONE-TIME REVENUE SOURCE
THAT WE GAVE TO SCHOOLS THIS YEAR.
BECAUSE OF THE DIRECTIVE FROM THE CITY MANAGER TO KEEP CITY
FUNDING AT THE SAME LEVEL IN 14 -- IN 15 AS IN 14, WE HAVE TO
FIND $1.7 MILLION TO REPLACE THAT FOR THE SCHOOLS GOING
FORWARD. SO NOT ONLY DO THEY HAVE
$20 MILLION GAP, THEY ACTUALLY HAVE A $22 MILLION WITH THIS
1.7 MILLION. AND ALSO TO WORK -- TO DEVELOP A
FOCUSED WORKFORCE DEVELOPMENT STRATEGY.
I DON'T THINK WE HAVE VERY COORDINATED EFFORT.
WE'VE BEEN TALKING WITH THE SHIP REPAIR INDUSTRY, JOHN ANDREWS
AND I HAVE BEEN TALKING WITH THEM TO ESTABLISH SOME SORT OF
CONTINUUM OF TRAINING FOR SHIP REPAIR, SO WE'VE BEEN IN
DISCUSSIONS ABOUT TTC AND SOME OF THEIR PROGRAMS.
>> SABRINA, COUNCILMAN SMIGIEL JUST GAVE ME A LOOK.
YOU LEVEL-FUNDED SCHOOLS. YOU DIDN'T TAKE --
>> NO, I DIDN'T TAKE IT. I HAVE TO FIND THE 1.7.
>> SCHOOLS IS LEVEL-FUNDED. >> SO BACK TO -- YOU'VE SEEN THE
SLIDES ON STRUCTURAL BALANCE WITH THE SEE SAW, ONE UP AND ONE
DOWN, BUT THE BLUE LINE REPRESENTS OUR CARRY FORWARDS
AND YOU SEE IT GOING HIGHER FROM 11, 12, AND 13, AND INTO 14.
AND THE RED BARS GOING DOWN ARE REAL ESTATE, SO THERE IS A
CORRELATION. ONE OF OUR MAJOR REVENUE SOURCES
DROPPED AND WE INCREASED OUR CARRY-FORWARDS, WHICH MEANT THAT
WE SCRUBBED. WE FOUND ALL OLD ACCOUNTS, WE
CONSOLIDATED STUFF. ALL OF THIS ONE-TIME REVENUE
THAT WE'VE BEEN USING TO BALANCE THE BUDGET, BUT THOSE ONE-TIME
REVENUES ARE EXACTLY THAT, THEY'RE ONE-TIME REVENUES, SO WE
DON'T HAVE THEM GOING FORWARD. SO CARRY-FORWARD, LET ME DEFINE,
ALL CARRY-FORWARD IS NOT BAD. THERE'S CARRY-FORWARD THAT GOES
ON FROM YEAR TO YEAR THAT WE KNOW WE WILL HAVE A CONTINUOUS
AMOUNT, SO THAT'S THE CARRY-FORWARD AND THOSE ARE OKAY
BECAUSE THOSE ARE REPETITIVE. ABOUT HALF OF THAT, ABOUT
10 MILLION OF THAT 19 IS ONE-TIME AND THAT'S WHAT WE'VE
BEEN RUNNING, ABOUT 10 MILLION EACH YEAR OF ONE-TIME REVENUES
WE'VE BEEN USING TO SUPPORT SALARIES, LIGHTS, ANYTHING
THAT'S AN ONGOING REVENUE. IT'S REALLY THAT 10 MILLION OR
SLIGHTLY ABOVE THAT WE HAVE TO TARGET IN TRYING TO GET DOWN.
ANY QUESTIONS ON CARRY-FORWARD AND ONE-TIME?
BECAUSE THE ONE-TIMES ARE MIXED IN WITH THE CARRY-FORWARD.
THAT'S JUST HOW WE CLASSIFY IT. >> SABRINA, 10% -- OR I MEAN
10 MILLION, THAT'S A PERCENTAGE OF YOUR BUDGET, YOUR OPERATING
BUDGET IS, WHAT, ONE PERCENT? I MEAN, A MILLION IS A LITTLE
OVER ONE PERCENT, SO YOU'RE STRUCTURALLY BALANCED ALMOST
99%, RIGHT? >> RIGHT.
THESE ARE THINGS, WHEN WE LOOK AT OUR CARRY-FORWARD, WE SAY
WHAT CAN WE TIE? WE GO THROUGH THIS EXERCISE WHEN
WE GO TO BOND RATINGS AGENCIES, LOOKS LIKE EVERY YEAR NOW WHERE
WE SAY WHAT IS IN OUR CARRY-FORWARD THAT WE CAN TIE TO
ONE-TIME EXPENSES AND EQUIPMENT PURCHASES, WE DRAW THE LINE AND
BRING THAT AMOUNT DOWN BECAUSE THE RATING AGENCIES DON'T LIKE
AN UNSTRUCTURAL BALANCED BUDGET, AND THEY DON'T LIKE TO SEE A
VERY HIGH LEVEL OF ONE-TIME MONEY BEING USED FOR ONGOING
EXPENDITURES. WE ACTUALLY TOLD THEM THAT WE
WOULD GET IT DOWN IN FIVE YEARS. THE MANAGER HAS TOLD US GET IT
DOWN IN THREE YEARS. NO PRESSURE, BUT THREE YEARS.
SO HOW DO WE ENSURE THE FINANCIAL STABILITY?
AGAIN, IT'S A TWO-YEAR LENS THAT WE'RE LOOKING AT.
I CAME FROM THE STATE BUDGET OFFICE WHERE WE DID A BIENNIAL
BUDGET. WE'VE ACTUALLY ASKED THE BUDGET
OFFICE FOLKS TO START LEARNING HOW TO DO A BIENNIAL BUDGET.
WE WON'T PRESENT IT TO YOU THIS YEAR, BUT WE'RE IN THE PROCESS
OF CONVERTING PERSONALLY TO A BIENNIAL BUDGET SO WE ALWAYS
HAVE A HANDLE ON WHERE WE'RE GOING.
ECONOMIC ROUNDTABLE, THIS IS THE SECOND ANNUAL ONE WE HAD AND
ALSO OUR CITY ECONOMIST PUTS OUT ECONOMIC INDICATORS YOU HAVE IN
FRONT OF YOU. SHE TRACKS THE MARKET, THE
HOUSING MARKET, THE EMPLOYMENT, ALL OF THAT SHE USES TO DEVELOP
THE CITY'S PROJECTION AND AS THE MANAGER ALLUDED TO EARLIER, MOST
RECENTLY HE HAS ESTABLISHED TWO TEAMS.
THE EXECUTIVE STRATEGIC EVALUATION TEAM AND THE
STRATEGIC WORKFORCE ANALYSIS TEAM.
THE ESET AS WE CALL IT IS SORT OF AN INTERNAL ONE.
IT'S ONE WITH BUDGET OFFICE AND POSSIBLY FINANCE AND H.R.
LOOKING AT SPECIFIC ISSUES AND PROCESSES.
THE SWAT TEAM INCLUDES FOLKS FROM THE CITY ATTORNEY'S OFFICE
AND THE AUDITOR, AND THE WORK PLAN'S SET BY THE CITY MANAGER
FOR THE YEAR. AND AT THE END, THEY WILL
PRODUCE A REPORT JUST LIKE JLARC WITH RECOMMENDATIONS.
A FEW THINGS THAT WE'RE LOOKING AT IS CONSOLIDATING OR
CENTRALIZING STAFF FUNCTIONS. YOU KNOW, THERE ARE CO-LOCATED
DEPARTMENTS, CAN THEY USE THE SAME ADMINISTRATIVE PERSONNEL
FOR PAYROLL, SO CAN THEY USE THE SAME MAINTENANCE FOLKS.
WHY DO WE HAVE SO MANY REDUNDANT POSITIONS IN CLOSE-BY
DEPARTMENTS. WE'RE ALSO LOOKING AT FEES AND
CHARGES. WE DO EVERY YEAR AND EACH YEARS,
WE TAKE A LITTLE BIT OF A BITE OUT OF SOME OF THE FEES AND
CHARGES, TO HAVE FULL COST RECOVERY.
WE'VE ALSO STARTED ISSUING QUARTERLY FINANCIAL REPORTS,
BACK TO DEPARTMENTS. THIS IS SOMETHING NEW THAT THE
BUDGET OFFICE IS DOING. NORMALLY THEY WOULD TRACK
PROJECTIONS ON THE YEAR END, BUT THIS YEAR, THEY STARTED ISSUING
QUARTERLY REPORTS BACK TO EACH DEPARTMENT HEAD TO SAY THIS IS
WHERE WE SEE YOU'RE GOING TO END UN, SO IF THERE'S A SHORTFALL,
THE DEPARTMENT HEADS CAN READJUST.
THE EXECUTIVE DEPARTMENTS UNDER THE CITY MANAGER'S PURVIEW HAVE
TO SIGN AND RETURN THE FORMS BACK TO US.
THERE ARE A COUPLE OF DEPARTMENTS THAT ARE LOOKING AT
AN OVERAGE AT THAT POINT. FIRE IS ONE OF THEM.
SO WE ARE WORKING WITH THEM, BUT THEY ARE PROJECTED TO HAVE A
SHORTFALL. SO AT SOME POINT, WE MAY ALSO
WANT TO LOOK AT A POLICY THAT SUPPORTS THE REAL ESTATE TAX
REVENUE SUSTAINABILITY. WE TALKED ABOUT THIS DURING THE
RETREAT, ESTABLISHING SOME TRIGGERS.
THOSE ARE ALL SOME OF THE ACTIONS THAT WE'RE TAKING TO
ENSURE OUR FINANCIAL STABILITY. SO TAKING CARE OF OUR CAPITAL
NEEDS REMAINS ANOTHER FINANCIAL PRIORITY.
MORE ONGOING CASH FUNDING FOR PROJECTS.
AGAIN, WITH THE GREAT RECESSION, WE HAVE NOT BEEN ABLE TO PUT IN
CASH. IT LOOKS LIKE, WHEN YOU LOOK AT
THE CIP TABLES, IT LOOKS LIKE THERE'S CASH, BUT THAT'S BECAUSE
THERE'S CASH COMING IN FOR SLOVER AND WE HAVE TO CARRY THAT
APPROPRIATION. THAT'S NOT OUR CASH GOING IN.
THAT IS SOMETHING WE NEED TO IMPROVE ON, AND AGAIN, FUNDING
FOR NEIGHBORHOODS. ALSO, WE'RE IN THE PROCESS OF
CONDUCTING A FACILITY ASSESSMENT, THE RFP WAS JUST
RELEASED FOR AN INDEPENDENT EVALUATION OF OUR FACILITIES.
WE HAVE ABOUT 159 BUILDINGS, WITH AN AVERAGE AGE OF 35 YEARS.
WE HAVE LEAKY ROOFS, WE HAVE MAINTENANCE ISSUES AS WELL.
WE PUT ABOUT 1.4 MILLION A YEAR INTO THE MAINTENANCE OF OUR
FACILITIES. THAT'S HALF OF WHAT WE GIVE
SCHOOLS. WE GIVE SCHOOLS ABOUT
$3 MILLION, SO WE DO NEED AN ASSESSMENT.
OUR FOLKS DO A GOOD JOB, BUT I THINK IT'S TIME TO PRIORITIZE
ALL OF OUR NEEDS. SO MOVING ON TO OUR COMPENSATION
AND THIS IS A FOCUS OF THE 2015 BUDGET, WE BEGAN THE REVIEW WITH
THE MESSAGE WHEN HE SAID WE'RE GOING TO REVIEW COMPENSATION IN
THE 2014 YEAR. SO WE PRESENTED MOST OF OUR
FINDINGS DURING THE RETREAT. NOT MUCH HAS CHANGED SINCE THEN,
BUT THIS IS OUR FIRST ENDEAVOR INTO OUR COMPENSATION REFORM.
WE CONSIDER THIS AS SORT OF A FIRST DEPOSIT BECAUSE IT TAKE
YEARS TO CORRECT SOME OF THE ISSUES THAT WE HAVE GOING ON,
AND IN ADDITION, WE WERE NOT DOING YEARLY MARKET ANALYSIS OR
STUDIES. THAT'S SOMETHING THAT OUR H.R.
DEPARTMENT WILL BE DOING FROM NOW ON, A YEAR-TO-YEAR ANALYSIS
OF MARKET RATE ADJUSTMENTS. AGAIN, EVEN THOUGH WE PICK IT
NOW, WE WILL FALL BEHIND AGAIN BECAUSE ALL OF THE OTHER
LOCALITIES ARE ALSO ADJUSTING THEIR MARKET, SO THIS IS GOING
TO BE A PERIODIC REVIEW AND A RESTART.
SO TO RECAP THE GOALS OF THE COMPENSATION REVIEW, WE HAD NINE
CONVERSATIONS WITH EMPLOYEES, STAFF, SENIOR STAFF.
H.R. AND -- THIS IS CAPRICE STANLEY AND HER STAFF CONDUCT
ALL THE CONVERSATIONS. THEY WERE OFFSITE IN SOME TERMS.
EVERYBODY HAD A CHANCE TO PROVIDE INPUT.
ONE OF THE THINGS WE WERE ASKED TO LOOK AT IS WHETHER OR NOT THE
STEP SYSTEM IS APPROPRIATE FOR US, AND DURING THE CONVERSATION,
WHAT WAS REVEALED WAS FOR THE GENERAL EMPLOYEES, THEY WERE
OKAY WITH NOT HAVING STEPS. THEY WERE OKAY WITH GOING
THROUGH AN OPEN RANGE SYSTEM, MEANING A MINIMUM AND MAXIMUM,
WHICH ALLOWS US THE FLEXIBILITY TO PROVIDE MARKET RATE
ADJUSTMENTS WITHOUT HAVING TO HAVE HAVE BEEN LAND IN A STEP.
THE PUBLIC SAFETY OFFICERS DID NOT WANT TO ELIMINATE THEIR
STEPS. THEY WANTED TO KEEP THEM, SO THE
RECOMMENDATION AT SOME POINT WILL BE TO KEEP THE STEPS FOR
PUBLIC SAFETY. WE WERE ALSO ASKED TO CONSIDER
THE ADDITIONAL RETIREMENT PROGRAMS SUCH AS THE FIVE AND
FIVE CONVERSION, THE DROP PROGRAM AND THE VRIP.
I CAN GO INTO THOSE IF YOU -- >> JUST BRIEFLY.
WE DON'T NEED TO -- >> THE FIVE AND FIVE VERSION IS
ALL THE EMPLOYEES, AFTER OCTOBER 1st, I BELIEVE, 2010, CONTRIBUTE
5% INTO THE RETIREMENT. ALL THE EMPLOYEES PRIOR TO THAT
DO NOT. DOING A FIVE AND FIVE
CONVERSION, MEANING THE CITY IS NOW PAYING 5% FOR THOSE PRIOR TO
2010. WE WOULD TAKE THAT 5%, INSTEAD
OF THE CITY PAYING ON THE EMPLOYEES' BEHALF, GIVE IT TO
THE EMPLOYEES, LET THE EMPLOYEES PAY THE 5%.
WHAT THAT IMMEDIATELY DOES IS BASICALLY RAISES EVERYBODY'S
SALARIES ABOUT TWO STEPS RIGHT THERE.
SO IT'S A BASE SALARY CHANGE, WHICH IS A HIGHER BASE FOR THEIR
RETIREMENT YEARS. BUT WE'RE GIVING THEM THE MONEY
TO PAY FOR IT BECAUSE ALL WE'RE DOING IS TAKING IT FROM HERE AND
MOVING TO IT THEM SO THEY CAN PAY FOR IT.
IT ALSO PUTS EVERYBODY ON THE SAME PLAYING FIELD.
EVERYBODY AT THAT POINT BECOMES EQUAL, EVERYONE IS CONTRIBUTING
5% AND IT CREATES THE EQUITY. THE DROP PROGRAM IS SOMETHING
THAT PUBLIC SAFETY ASKED FOR FOR ITS SWORN OFFICERS AND THIS
REALLY HELPS THE ADMINISTRATION. THE FOLKS WHO ARE TRYING TO HAVE
PERSONNEL AND PLAN THE SCHEDULES.
WHAT THEY HAVE RIGHT NOW IS FIREMEN OR POLICEMEN THAT WILL
RETIRE. BECAUSE THEY RUN AN ACADEMY, INS
DIFFICULT FOR THEM TO FILL THOSE POSITIONS, IT'S NOT LIKE A
REGULAR OFFICE JOB WHERE SOMEBODY CAN FILL AN
ADMINISTRATIVE POSITION. THEY HAVE TO WAIT FOR THE
ACADEMY TO FILL IT. WITH THE DROP PROGRAM, THE
OFFICER SAYS I'M GOING TO RETIRE IN THREE YEARS.
THAT'S MY DATE. SO AT THAT POINT IN THE THREE
YEARS, HE WANTS -- THEY WANT TO ENTER THE DROP PROGRAM, THERE'S
A PAYMENT THAT WOULD HAVE GONE INTO THE RETIREMENT FOR THEM
WOULD GO INTO A SEPARATE ACCOUNT THAT WOULD EARN SOME INTEREST
THAT THE ACTUARIES WOULD DETERMINE.
AT THE END OF THREE YEARS, THEY GET THAT AMOUNT AND THEY WALK
AWAY WITH IT. IT'S A LUMP PAYMENT FOR THEM.
>> A SAFETY VALVE? >> I THINK SOME LOCALITIES DO
IT. I DON'T THINK THE STATE DOES
THAT. THE VRIP IS THE VOLUNTEER
RETIREMENT PROGRAM WHICH WE JUST IMPLEMENTED BACK IN DECEMBER.
WE HAD ABOUT 82 PEOPLE PARTICIPATE IN THAT, AND THAT IS
WHERE WE OFFERED $10,000 AS AN INCENTIVE TO RETIRE.
THERE WAS NOT AN EARLY RETIREMENT PROGRAM.
DOES THAT ANSWER? >> YEAH, AND I TAKE IT YOUR IN
FOR ANOTHER RECOMMENDATION OF ONE OF THOSE?
>> YES. THE OTHER THING --
>> IT WILL BE AFTER MEETING WITH FIRE AND P.D., RIGHT?
>> THE MANAGER HAS BEEN MEETING WITH THEM REGULARLY.
>> WE ARE RECOMMENDING A DROP. >> WILL THERE BE A SEPARATE FOR
CITY EMPLOYEES? >> THE DROP WILL ONLY BE FOR
SWORN OFFICERS. THE OTHER RECOMMENDATION IS TO
SIMPLIFY THE FORMAT OF THE COMPENSATION PLAN.
IT'S A LITTLE REDUNDANT THE WAY IT IS, AND IF WE WANT TO MAKE IT
EASIER FOR FOLKS READ, WE'RE GOING TO COLLAPSE SOME OF THE
SECTIONS. >> OTHER THAN THE FIVE AND FIVE,
IS THERE ANY OTHER CATCHING UP FOR THE OFFICERS?
>> YES, I'M GOING TO GET TO THAT.
>> SORRY. >> NO PROBLEM.
THIS IS THE ARMD MODEL. IT'S NOT JUST ABOUT
COMPENSATION, IT'S ABOUT ATTRACTING EMPLOYEES AND ALSO
FOCUS IS ON OUR NORFOLK RESIDENTS.
>> FROM THE SWORN, THE FIVE AND FIVE, WHILE IT ISN'T ADDITIONAL
MONEY IN YOUR POCKET, IT IS THE EQUIVALENT OF TWO STEPS.
>> I UNDERSTAND. I ACCEPT WHAT SHE SAID, BUT FROM
WHAT I HEAR, THAT THERE'S SOME THAT WANT TO BE CAUGHT UP OTHER
THAN THAT. THEY MAY HAVE MORE THAN THAT
THOUGHT. ARE WE LOOKING AT TRYING TO
CATCH -- >> THERE'S AN ADDITION, YES.
>> OKAY, THAT'S WHAT I THOUGHT SHE SAID.
>> I THINK WE'RE ON THE SAME SHEET.
>> SO IT'S ALSO ABOUT RETAINING EMPLOYEES AND COMPENSATION BEING
ONE OF THEM, BUT MAYBE ESTABLISHING ALSO CAREER LADDERS
AND A PROFESSIONAL DEVELOPMENT TRACK.
AS I SAID, WE, YOU KNOW, LOOKING BACK OVER THE FOUR YEARS, WE
REDUCED DISCRETIONARY SPENDING, REDUCED PROFESSIONAL TRAINING,
SO THOSE ARE THINGS THAT WE WOULD LIKE TO BRING BACK AT SOME
POINT WHEN OUR REVENUES ARE ABLE TO SUSTAIN THEM.
MOTIVATING EMPLOYEES, SOMETHING AS LITTLE AS A PICNIC FOR THEM
GOES A LONG WAY. WE HAVE AN EMPLOYEE RELATIONS
COMMITTEE AND WE HAVE AN EMPLOYEE ENGAGEMENT COMMITTEE
THAT ARE VERY ACTIVE. >> TELL US SOME OF THE THINGS
YOU'RE DOING TO ATTRACT EMPLOYEES.
>> ATTRACT EMPLOYEES, I CALL UP THE H.R. DIRECTOR AND I SAY WHAT
ARE YOU DOING? [ LAUGHTER ]
>> I WAS JUST WONDERING. >> THAT'S NOT YOUR BAILIWICK.
>> WE ACTUALLY, WE DO -- WHEN WE KNOW THAT THERE'S A QUALIFIED
PERSON THAT WE HAVE PERSONALLY WORKED WITH OR WE KNOW OF THEM,
WE CALL THEM AND WE TALK TO THEM.
ONE OF THE ISSUES THAT WE FACE IS THAT THE VRS CHALLENGE THAT
WE HAVE BECAUSE WE'RE NOT ON VRS, WE'RE AN INDEPENDENT
SYSTEM. A LOT OF FOLKS DON'T WANT TO
CHANGE THEIR RETIREMENT SYSTEM. BUT OUR H.R. DEPARTMENT, THEY DO
TARGETED RECRUITMENT FOR POSITIONS, SO THEY WILL REACH
OUT. SO IF IT'S A DIRECTOR OF ON
CERTAIN FIELD, THEY WILL REACH OUT TO LIKE ORGANIZATIONS AND
TALK TO PEOPLE AND DO TARGETED MARKETING.
DID I GET IT RIGHT? >> UNDER SWORN OFFICERS, DOES
THE SHERIFF'S DEPARTMENT FALL UNDER STEP OR DOES --
>> IT DOES NOT INCLUDE CONSTITUTIONALS.
SO JUST AS A QUICK COMPARISON OF REGIONAL AND MARKET ADJUSTMENTS
THAT LOCALITIES HAVE DONE, EVERYONE HAS DONE SOMETHING IN
THE RECENT YEARS OR THEY'RE IN THE STAGES OF A COMPENSATION
STUDY. PORTSMOUTH IS IN THE STAGES OF A
COMPENSATION STUDY AND AS WELL AS HAMPTON.
SINCE WE HAVE SUCH GOOD FOLKS ON OUR STAFF, WE FOREGO -- WE DID
NOT DO AN INDEPENDENT COMPENSATION STUDY.
OUR H.R. STAFF IT DID AND THEY HAVE DONE A DARN GOOD JOB AND
ALSO RYAN BERGMAN FROM THE BUDGET OFFICE HAS ALWAYS BEEN
COSTING OUT THE INCENTIVES. FOR NORFOLK, WHAT WE DID IS IN
2013, WE ACTUALLY PROVIDED 5% FOR SHERIFF'S DEPUTIES AND BACK
INTO 2009, PUBLIC SAFETY'S COMPENSATION PLAN WAS OVERHAULED
AND THERE WAS A RETENTION PROGRAM THAT WAS ASSOCIATED WITH
THAT. IN 2008, THERE WAS ADDITIONAL
MONEY GIVEN TO PUBLIC SAFETY OFFICERS.
I THINK THEIR TOTAL -- THEIR TOTAL WAS ABOUT 5%.
IT WAS HALF A PERCENT MORE THAN OTHERS, AND PLUS ANOTHER
THOUSAND DOLLARS THAT THEY GOT. SO PUBLIC SAFETY HAS HAD SOME
ADJUSTMENTS. IT'S THE GENERAL EMPLOYEES THAT
HAVE NOT HAD MARKET ADJUSTMENTS FOR THE CITY.
>> MAYOR, ONLY BECAUSE IT'S A FEW MINUTES BEFORE 7:00, OUR
NEXT -- I GUESS THIS IS A CONCEPT THAT, WHAT COUNCILMAN
PROTOGYROU SAID, A LOT OF WHAT SABRINA HAS PRESENTED, YOU
RECEIVED AT RETREAT. I THINK THE BIG DIFFERENCE, TO
ANSWER YOUR QUESTION, IS LIVING WAGE A PART OF STRATEGY.
THE BIG DIFFERENCE IS, THERE'S ALSO A THREE-YEAR STRATEGY
THAT'S IN THIS PRESENTATION THAT TRIES TO DEAL WITH THE ISSUE OF
COMPRESSION AND ADDITIONAL STAFF IN TRYING TO GET US MORE
COMPETITIVE WITH THE SALARIES. AND BASED ON TIME, WHATEVER
YOU'D LIKE FOR US TO DO, GOING FORWARD --
[ INAUDIBLE COMMENTS ] >> SO THE ISSUE ISN'T THAT WE
HAVEN'T PROVIDED INCREASES. WE'RE THE ONLY LOCALITY IN 13
AND 14 TO PROVIDE GENERAL WAGE INCREASE OF 12%.
NEWPORT NEWS IS CLOSE TO US, BUT WE'RE THE ONLY ONES THAT HAVE
PROVIDED 2%. >> CAN SHE PICK UP WHERE SHE
ENDED OR STOPPED WHEN WE COME BACK IN TWO WEEKS?
>> I'D LIKE TO KNOW HOW MANY PEOPLE ARE HAVE A STEP PROGRAM.
>> WE'RE THE ONLY ONE IN THE REGION WITH A STEP PROGRAM.
>> SO THERE'S SOME -- >> YEAH, WE HAVE THAT.
>> AND I'D LIKE TO SEE -- I MEAN, I DIDN'T GET A DIRECT
ANSWER TO MY QUESTION. MAYBE I DIDN'T ASK A DIRECT
QUESTIONS. SO TO ASK A DIRECT QUESTION,
WHEN ARE -- IT WAS ABOUT 75, PAUL, PEOPLE THAT WE HAD THAT
WERE WORKING FOR US FULL-TIME -- >> NOT MAKING A MINIMUM WAGE.
>> NOT MAKING A LIVING WAGE, SO MY DIRECT QUESTION IS WHEN ARE
THEY GOING TO GET -- I DON'T THINK WE NEED A STRATEGY FOR
THAT. I THINK WE JUST NEED TO FIX IT
BECAUSE WE'RE DOING -- I MEAN, WE'RE DOING THIS POVERTY
COMMISSION AND WE'RE TALKING ABOUT KEEPING PEOPLE OUT OF
POVERTY, AND OUT OF THREE OR FOUR, FIVE THOUSAND PEOPLE, WE
DON'T NEED A STRATEGY TO GET 75 PEOPLE TO A LIVING --
>> I THINK THE MAYOR TOOK CARE OF THAT.
>> THE MANAGER HAS DONE A -- >> IT'S IN THE BUDGET YEAR.
>> YOU SHOULD DO IT. >> HE SAID DO IT, BUT I'M ASKING
WHEN ARE WE GOING TO DO IT? >> THERE ARE TWO THINGS.
WE CAN DO IT JULY 1, WHICH MAKES IT VERY EASY.
IF YOU DO IT TODAY, YOU CREATE MORE PROBLEMS WITH
COMPREHENSION. SO OUR RECOMMENDATION IS TO DO
IT JULY 1 WITH THE BUDGET. >> THESE ITEMS THAT ARE OF
INTEREST, ARE WE GOING TO GO THROUGH THEM?
ONE-TIME ITEMS? >> I THINK THE ONLY ONE THAT
RELATES TONIGHT IS THE AIRPORT AND RON COULD DO A 30-SECOND
STAND-UP. >> AREN'T WE VOTING ON SOME OF
THESE ISSUES? >> IN TWO WEEKS, YES.
>> SO WE'RE NOT MEETING AGAIN, RIGHT?
>> NOT NEXT WEEK. >> WE'RE IN THE MEETING BEFORE
WE VOTE. >> NO, BUT --
>> SO I WOULD ASK THAT -- I MEAN, WE'VE GOT THESE TIME
SENSITIVE ISSUES THAT WE'RE SUPPOSED TO TALK ABOUT THEM TWO
WEEKS BEFORE WE VOTE AND NOW WE HAVEN'T DONE THIS, THAT WE
PRIORITIZE THESE AND DO THEM AT THE BEGINNING OF OUR --
>> I THINK THERE'S PEOPLE HERE. >> NOW WE'RE TOTALLY LOST WHAT
WE HAD HOPED TO DO AND -- ALTHOUGH YOU WANT TO TALK ABOUT
THE AIRPORT, I WANTED TO TALK ABOUT THE PCO AND WE DON'T HAVE
TIME TO DO IT AND NEXT TIME WE DO I, WE'RE VOTING.
>> ALSO THIS CHURCH STREET PROJECT AS WELL.
>> YES. YEAH, DEFINITELY THE CHURCH
STREET ONE. SO NOW WHAT DO WE DO?
>> LET'S DO THE AIRPORT THING. >> BUT NOW WHAT DO WE DO ABOUT
THE OTHER TWO? >> WELLING WE CAN STAY RIGHT
HERE, OKAY, UNTIL EVERYBODY IS SATISFIED AND THEN GO UPSTAIRS,
OKAY? WE'LL JUST START LATE.
>> AND THEN CHURCH STREET AND THEN THE OTHER -- THE PAWN
SHOPS. >> WELL, SHORT VERSION, ARE
THERE QUESTIONS DIRECTLY THAT YOU'D LIKE ME TO ANSWER AND I'LL
FLIP THE PRESENTATION. -- SKIP THE PRESENTATION.
>> CHANGING -- THERE'S A ZONING TEXT AMENDMENT, COULD YOU JUST
EXPLAIN WHERE THERE ARE LOOKING AT DOING THESE PROJECTS.
THERE'S OBVIOUSLY THE ZONING CHANGES BECAUSE THEY WANT TO BE
ABLE TO MARKET SOME OF THEIR PROPERTY A LITTLE BIT MORE --
WHERE IS THAT HAPPENING? IS IT BY THE ENTRANCEWAY?
DO THEY WANT TO SHIFT THE ENTRANCEWAY OFF OF AZALEA GARDEN
AND MOVE IT TO MILITARY HIGHWAY AND MAKE THAT THE ENTRANCE?
WHAT ARE WE LOOKING AT HERE? >> THIS IS THE AREA COVERED BY
THE AIRPORT ZONING IN PURPLE, OKAY?
IT DOES NOT INCLUDE THE AREA -- HERE'S THE ENTRANCE, IT DOES NOT
INCLUDE THE BOTANICAL GARDENS WHICH WE TALKED ABOUT LAST TIME.
SO IT ONLY INCLUDES THE AIRPORT PROPERTY ITSELF.
THE TWO AREAS THAT ARE REAL MOST AFFECTED ARE THE AIR CARGO AREA,
AND AS YOU KNOW, AIR CARGO IS SORT OF THE WAY THAT MARKET IS
WORKING, KIND OF CHANGING AND WE'RE NOT AS BIG A PLAYER IN
THAT AS WE'D LIKE TO BE, ALTHOUGH WE GET A PARALLEL --
WHEN YOU GET THE PARALLEL RUNWAY, WE COULD BECOME A BIGGER
PLAYER IN THAT. AND THEN, OF COURSE, RON TOLD
YOU EARLIER ABOUT SOME PLANS DOWN ON THE SOUTH SIDE OF MILLER
STORE ROAD. THIS AREA HERE THAT'S GOT
GENERAL AVIATION AND SOME OF THE OLD MAINTENANCE FACILITIES ALONG
MILLER STORE ROAD, IS THAT WOULD BE THE TWO AREAS THAT WOULD BE
THE VOTES. >> AND THE ADMINISTRATION
RECOMMENDS IT? >> WE RECOMMEND APPROVAL,
PLANNING COMMISSION RECOMMENDED APPROVAL UNANIMOUSLY.
>> THAT'S NOT THE PRIVATE AIRPORT, IS IT?
>> YES, IT IS. >> LANDMARK AREA.
>> YOU'RE NOT TALKING ABOUT REMOVING THAT, ARE WE I DON'T
MEAN. >> NO, SIR.
NONE OF THIS IS, YOU KNOW, NOTHING IS FOR SURE GOING TO
HAPPEN. IT'S JUST PROVIDING ADDITIONAL
FLEXIBILITY TO THE AIRPORT COMMISSION TO GENERATE REVENUE
AT THE AIRPORT. >> OKAY.
NEXT? CHURCH STREET.
>> OKAY. CHURCH STREET, THE REAL QUICK
THING, THERE'S THREE QUESTIONS -- THREE THINGS THAT
ARE COMING FORWARD. THE FIRST IS A PLAN AMENDMENT.
THE SECOND IS A REZONING, AND THE AREA IS TWO TRIANGLES
LOCATED ALONG CHURCH STREET, ALONG THE RAILROAD TRACKS, AND
ARE ALSO ACCESSED BY O'KEEFFE. THE PROPOSAL IS TO CHANGE THAT'S
AREAS INTO A PLANNED DEVELOPMENT.
THIS IS THE TEXT FOR IT, BUT LET ME GET TO THE PLAN.
THIS IS WHAT THE PLANNING COMMISSION SAW.
TWO TRIANGLES, THE SUPPORTIVE HOUSING IS HERE.
THERE ARE TWO BUILDINGS, EACH WITH 20 APARTMENTS, SOME OF
WHICH ARE MARKET RATE, SOME OF WHICH WOULD BE SUBSIDIZED, BUT
THE KEY IS THAT THAT 65% OF THIS PROJECT IS INTENDED TO BE MARKET
RATE, SO APARTMENTS HERE AND APARTMENTS HERE.
PLANNING COMMISSION AND THE NEIGHBORHOOD GREATLY CONCERNED
ABOUT HOW MUCH WOULD ACCESS ON TO O'KEEFFE, WHICH IS NOT A VERY
GOOD ROAD, AND THE IDEA WAS CAN WE TRY TO DIRECT AS MUCH STUFF
AS POSSIBLE ON TO CHURCH. WE DIDN'T GET THE RIGHT ONE BACK
N I'M SORRY. WE HAVE A NEW -- THERE'S A NEW
PLAN WHICH, LET ME GO BACK, ESSENTIALLY CUTS O'KEEFFE OFF AT
THIS POINT RIGHT HERE AND ALLOWS -- AND HAS THE
CIRCULATION GO THROUGH HERE. THERE'S SOME TECHNICAL
DIFFICULTIES, A FEW DETAILS TO BE WORKED OUT, BUT THERE AREN'T
ANY SHOW STOPPERS. NOTHING WITH THAT PLAN THAT
CAN'T BE MADE TO WORK. THERE'S SOME THINGS THAT WE'LL
HAVE TO WORK ON TOGETHER, BUT WE'RE PREPARED TO DO THAT.
>> WHAT DID THE PLANNING COMMISSION VOTE, HOW DID THEY
VOTE? >> PLANNING COMMISSION VOTED
AGAINST THIS 6-1. AND THAT WAS BASED ON THE
CONCERN OF THE NEIGHBORS. >> RIGHT.
>> IT WAS BASED ON THE PERCEPTION OF THE PLANNING
COMMISSION THAT THE TRANSPORTATION WAS NOT
APPROPRIATELY DESIGNED, WITH ALL THE TRAFFIC ENTERING ON TO HOE
KEEF, THERE WAS A GREAT FEAR ABOUT THE POTENTIAL FOR
CONCENTRATING POVERTY IN AN ALREADY CONCENTRATED CENSUS
TRACT AND THERE WAS THE NEIGHBORHOOD CONCERN THAT THIS
IS 161 RENTAL UNITS IN A NEIGHBORHOOD THAT IS ALREADY, IN
THEIR OPINION, OVER SATURATED WITH RENTAL UNITS.
>> AND I THINK THAT'S CRITICAL THAT WE NEED TO CONCENTRATE ON,
THE FACT THAT THE POVERTY ISSUE IS SOMETHING THAT'S A CONCERN AS
WELL AS THE NUMBER OF UNITS AND UNLESS IT GOES BACK TO THE
PLANNING COMMISSION, I THINK THEY'RE -- YOU KNOW, I THINK WE
NEED TO SUPPORT, YOU KNOW, THEIR VOTE ON IT.
>> BUT DOESN'T THIS ALSO ASSIST WITH YOUR INITIATIVE ON
HOMELESSNESS? >> LET'S TAKE IT OVER THERE TO
EAST BEACH THEN. IF THAT'S THE CASE, LET'S TAKE
IT OVER TO EAST BEACH, LET'S TAKE THESE 160 UNITS OVER TO
EAST BEACH. >> AND THEY'RE RIGHT ON A
RAILROAD TRACK. THAT DOESN'T SEEM RIGHT.
>> LET'S TAKE THEM TO EAST BEACH.
>> THAT'S A HEAVY RAILROAD -- >> THEY ARE RIGHT THERE ON A
RAILROAD TRACK, BUT IT'S VERY DIFFICULT, AS YOU SAW, IF YOU
LOOKED AT THE OUTLYING AREA, TO PUT -- YOU CAN'T PUT RESIDENTIAL
THERE BECAUSE OF THAT -- NOT LIKE SINGLE-FAMILY THERE.
>> I UNDERSTAND. >> BUT THERE ARE A LOT OF
CONCERNS IN THE COMMUNITY ABOUT THE ENTIRE PROJECT.
IN REALITY, YOU ARE BETTER PUTTING RENTAL THERE THAN YOU
ARE PUTTING -- THAN YOU ARE PUTTING SINGLE-FAMILY THERE IF
YOU HAD TO MAKE A CHOICE, BUT -- >> CAN WE PUT -- WE'RE NOT
DEBATING THIS. THIS IS -- I UNDERSTAND THAT THE
PLANNING COMMISSION VOTED 6-1 AGAINST IT?
>> RIGHT. >> SO CAN YOU STILL BRING IT
FORWARD? >> BUT DIDN'T THEY VOTE
PRIMARILY BECAUSE OF THE -- >> POVERTY IS THE ISSUE.
>> WHAT'S THE POTENTIAL FOR THAT PIECE OF PROPERTY?
>> WAREHOUSE. >> IT'S OFFICE, IT'S WAREHOUSE,
IT WOULD BE ANOTHER SCRAP YARD. >> IT NEXT TO A SCRAP YARD.
>> IT IS, RIGHT NEXT TO THE METAL YARD.
>> OKAY. WE GOT TO MOVE ON.
>> WHAT I'M THINKING IS WITH EVERYTHING THAT WE'RE DOING
DOWNTOWN, I'VE ALWAYS IMAGINED THAT SITE AS BEING AN AREA THAT
TRAINS COULD PULL UP, YOU KNOW, UNLOAD MERCHANDISE, SUPPORT
DOWNTOWN. THE PORT SOMETIMES, YOU KNOW,
SOME KIND OF WAY COULD BE -- I THINK THE INDUSTRIAL -- THE
MIDTOWN INDUSTRIAL AREA, I THINK WE NEED TO KEEP IT AS A MIDTOWN
INDUSTRIAL AREA AND TAKE ADVANTAGE OF THAT RAILROAD SPUR
THAT WE HAVE THERE. >> OKAY.
I THINK WE'VE -- THANK YOU FOR THE BRIEFING.
WHAT'S NEXT? THE PAWN SHOPS.
>> PAWN SHOPS. NORVIEW, THIS IS A REQUEST TO
AMEND THE PCO STANDARDS TO ALLOW PAWN SHOPS, SPECIAL EXCEPTION.
IT CAME TO US BY THE NORVIEW CIVIC LEAGUE TO ASK US TO -- THE
PLANNING COMMISSION TO SPONSOR THE APPLICATION.
IT'S PRIMARILY, OF COURSE, TO ALLOW THE RELOCATION OF THE
EXIST PAWN SHOPS TO THE FORMER BB&T BUILDING, AND IT WENT TO
THE PLANNING COMMISSION AND AT THE PLANNING COMMISSION, THERE
WAS AN AWFUL LOT OF COMMUNITY CONCERN EXPRESSED FOR THE FIRST
TIME THAT HAD EVEN BEEN HEARD, SO PLANNING COMMISSION
RECOMMENDED AGAINST IT. AFTER THE PLANNING COMMISSION
MEETING, SUBSEQUENT TO THAT, WE'VE HAD A NUMBER OF MEETINGS
WITH THE COMMUNITY. THE COMMUNITY SAID, CAN WE JUST
HOLD OFF ON THIS AND LET US TALK ABOUT IT, AND SO THERE'S BEEN A
LOT OF COMMUNITY MEETINGS. THE COMMUNITY IS QUITE SPLIT ON
WHAT THEY BELIEVE THE FUTURE OF THE PCO OUGHT TO BE, BUT AT THIS
POINT, THEY ARE -- THEY HAVE ACHIEVED CONSENSUS THAT THEY
WILL LIKE THE PAWN SHOP TO GO FORWARD, SO WE'RE RECOMMENDING
APPROVAL OF THE APPLICATION. WE WILL PROBABLY SEE ANOTHER
APPLICATION IN THE FUTURE TO TALK ABOUT THE PCO AS A WHOLE,
BUT THIS IS JUST PAWN SHOPS. >> IF YOU MOVED THE PAWN SHOP TO
BB&T FROM THE LOCATION IT IS NOW, THAT'S ALREADY APPROVED,
THAT MEANS YOU'LL HAVE TWO PAWN SHOPS OVER THERE BECAUSE ONE IS
ALREADY APPROVED AS A PAWN SHOP, SO IF WE MFD OUT, THE NEXT
PERSON -- MOVED OUT, THE NEXT PERSON WOULD NOT HAVE, UNLESS I
MISS MY GUESS, WOULD NOT HAVE TO SO TO SPEAK APPROVAL BECAUSE
IT'S ALREADY ZONED FOR A PAWN SHOP.
>> IF I COULD YIELD TO MR. PISHKO, YES, THAT'S TRUE
FROM A ZONING STANDPOINT. >> THAT'S RIGHT, BUT THERE'S
ANOTHER -- WE HAVE AN AMEND ON THE NUMBER OF PAWN SHOPS, SAY
IT'S 20, AND WE'RE AT THAT LIMIT, SO YOU WON'T SEE A NEW
PAWN SHOP BECAUSE THE REDUCTION, SO YOU'RE CORRECT.
IF SOMEBODY SURRENDERED THEIR PAWN LICENSE AND THAT LOCATION
WAS EMPTY FOR LESS THAN TWO YEARS, THEN IF THERE WAS ONE OF
THE 20 THAT WANTED TO GO THERE, IT COULD.
BUT IT WOULD -- IT WOULD HAVE TO BE WITHIN THE 20 THAT ARE
PERMITTED. >> BUT A NEW BUSINESS WOULD NOT
SAY THIS PLACE IS OPEN NOW, IT'S BEEN A PAWN SHOP, LET ME GO IN
THERE AND BE A PAWN SHOP. >> ONLY AN EXISTING PAWN WOULD
GO IN THERE. WE'VE ONLY GOT 20 PERMITTED.
>> AREN'T WE ALL ABOUT -- >> WHEN WE ESTABLISHED IT, WE
SAID WE WOULDN'T FORCE ANYBODY OUT OF BUSINESS AND UNTIL WE GOT
TO THE 20, WE WOULD NEVER DO A NEW ONE.
WE'VE NEVER GOTTEN FROM THE 21 TO 20, SO THERE WON'T BE A NEW
ONE UNLESS YOU INCREASE THE LIMIT.
>> SO TECHALLY WE COULDN'T HAVE A NEW ONE UNLESS TWO OF THEM
WENT OUT OF BUSINESS. >> OR UNLESS YOU CHANGED LIMITS.
THAT'S RIGHT. >> AND SO THEN HENCE FORWARD IN
THIS PARTICULAR PCO, IF THE LIMIT WAS LOWER, THEN SOMEBODY
BY SPECIAL EXCEPTION NOW COULD COME IN WITH A PAWN SHOP, IS
THAT CORRECT? >> NO, BECAUSE --
>> LET'S SAY SIX PAWN SHOPS GAVE UP BUSINESS.
NOW THIS IS GOING TO CHANGE THIS PCO SO THAT NOW YOU CAN HAVE A
PAWN SHOP WITH A SPECIAL EXCEPTION, WHEREAS BEFORE WE'VE
NOT PERMITTED IT, CORRECT? >> CORRECT.
IF YOU'VE GOT BELOW THE 20, SIX WENT OUT OF BUSINESS, THAT WOULD
BE A SITE. >> IT WOULD BE GRANDFATHERED.
>> IS LIPMANS GOING OUT OF BUSINESS, SURRENDERING?
YOU KNOW, THAT'S WHAT WE HEAR EVERY WEEK, THAT HE'S GOING OUT
OF BUSINESS. SO IF LIPMAN GOES OUT OF
BUSINESS, WHAT DOES THAT GIVE US?
>> 20. >> IT GIVES US 20.
>> WELL, WE LOST THE ONE DOWNTOWN.
>> THAT'S LIPMANS. >> I NEVER CALLED IT THAT,
THAT'S WHY. >> THAT WOULD STILL BE 20, SO WE
STILL COULDN'T GET ANOTHER ONE UNLESS SOMEBODY ELSE WENT OUT OF
BUSINESS BECAUSE THAT WOULD BE 19.
>> BUT THIS IS IN PERPETUITY, RIGHT?
I'M NOT TALKING ABOUT THAT, I'M TALKING ABOUT THE WHOLE PCO IS
NOW PERMITTED, THAT IF YOU'RE DOWN BELOW THE LEVEL, ANYBODY
COULD COME IN FOR ANY OF THOSE PROPERTIES AND BY SPECIAL
EXCEPTION AND CHOOSE TO HAVE A PAWN SHOP.
>> THAT'S CORRECT, AND THE REASON THAT --
>> AND THERE'S NOTHING ELSE FOR ANY OTHER PCO IN THE AREA,
CORRECT. >> EXCEPT THIS ONE.
>> ANYBODY KNOW THE LAST TIME ANYBODY TURNED IN A PAWN SHOP?
>> THEY TURN OVER VERY LITTLE. [ ALL SPEAKING AT ONCE ]
>> THEY HAVE A MARKET VALUE AND THE BUSINESS --
>> FIGURE OUT A WAY TO EVENTUALLY DO THAT PIECE.
>> WE GOT TO MOVE QUICKLY THEN. THANK YOU.
>> COULD WE IN FUTURE, THOUGH, DO THIS EARLIER?
>> WE CAME IN AT 4:00 AND WE COULDN'T GET EVERYBODY HERE.