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02-22-2022 Meeting Minutes BOC February 22, 2022 1 PERSON COUNTY BOARD OF COMMISSIONERS FEBRUARY 22, 2022 MEMBERS PRESENT OTHERS PRESENT Gordon Powell Heidi York, County Manager C. Derrick Sims Brenda B. Reaves, Clerk to the Board Kyle W. Puryear S. Ellis Hankins, County Attorney Charlie Palmer Patricia Gentry The Board of Commissioners for the County of Person, North Carolina, met in regular session on Tuesday, February 22, 2022 at 9:00am. This meeting was set as the Board’s annual retreat focusing primarily on the Fiscal Year 2022-2023 Budget and/or any other topics as deemed appropriate. The Retreat location was at the Kirby Cultural Arts Complex Upstairs Main Hall at 213 North Main Street, Roxboro, NC. Chairman Powell called the meeting to order. DISCUSSION/ADJUSTMENT/APPROVAL OF AGENDA: A motion was made by Commissioner Gentry and carried 5-0 to approve the agenda. GETTING STARTED: County Manager, Heidi York stated the budget retreat kicks off the budget preparation for upcoming fiscal year. She noted it is an informal setting for staff to share information and the Board to discuss its goals and priorities. UNDERSTANDING OUR COUNTY RESPONSIBILITIES: County Attorney, Ellis Hankins provided an overview of how the Board of Commissioners does the public’s business through his presentation titled Understanding Our County Responsibilities. Mr. Hankins included significant statutes and requirements for the Board as well as highlighted the Person County Board of Commissioners’ Rules of Procedure and Code of Ethics. His presentation follows: February 22, 2022 2 February 22, 2022 3 February 22, 2022 4 February 22, 2022 5 February 22, 2022 6 February 22, 2022 7 February 22, 2022 8 PROPERTY TAX REVENUE PREVIEW: Tax Administrator, Russell Jones shared the following presentation for the County’s Property Tax Revenue Preview: Mr. Jones said the 2022 budget was projected at $4.72B with the actual $4.813B, over by $93M or over by 2%. He noted real property increased from $3.41B to $3.515B, or an increase by $105M or 3%. Machinery &Equipment went up from $470M to $479M due to depreciation (normal loss of 6%), but offset by new investments. Mr. Jones further noted that the loss of value due to Cogentrix, also known as Capital Power or Epcor closing was off set with $4M of additional equipment at Polywood. Mr. Jones stated the State appraised properties came in at $932M for 2022, which was the highest ever noting he had budgeted $900M for 2023, or a decrease of $32M or down by 3.5%. This equaled to be 18.5% of the County’s valuation. He said the total for 2022 was $4.813B, estimated conservatively for 2023 at $4.895B, an increase of $82M or an increase of 1.7%. Mr. Jones noted the average growth over the last eight years, not including reappraisal, was 1.26%. Mr. Jones estimated DMV at $425M (up from $400M) in MOTV. February 22, 2022 9 Mr. Jones that the fire tax valuations does not include with the City. He noted the 2022 budget was $4.035B with the actual $4.155B, an increase of $120M or over by 2.89%. He noted real property increased from $2.91B to $2.976B, or an increase by $62M or 2.22%. Machinery & Equipment went up from $326M to $341M due to depreciation but offset by new investments, an increase of $15M or up by 4.5%. Mr. Jones said the State appraised property was $914M for 2022 (highest ever) noted he budgeted $882M for 2023, or a decrease of $32M or down by 3.5%. This would be 21.17% of the County’s valuation. Mr. Jones stated the total for 2022 was $4.155B and he estimated for 2023 at $4.2B, an increase of $46M or increase by 1.1%. Mr. Jones estimated DMV at $350M (up from $325M) in MOTV. February 22, 2022 10 Mr. Jones said 2023 estimates at $900,000,000, which represents 18.38% of total value for Person County ($4,895,000,000) as compared to last year at $932,743,236 which represented the County’s total value of $4,813,273,629 or 19.38%.   February 22, 2022 11 Mr. Jones stated for the upcoming fiscal year the value of one penny would be $519,741 noting last year one penny was valued at $495,097, which reflects an increase of $24,644. Person County’s tax rate is .72. Mr. Jones noted the collection rate of 97.5%, along with the DMV collection rate of 99.95%. Mr. Jones noted the value last year for one penny for fire was $420,826 and is projected to increase by $23,657 to $444,483. The County’s fire tax rate is .0275 with a collection rate of 97.5%, along with the DMV collection rate of 99.95%. Mr. Jones further noted the 2.75 fire tax rate yields $1,222,328.   February 22, 2022 12 Mr. Jones stated the 2021 annual sales ratio ended up at 92.71% and January 2022 at 81%. He noted the general statute mandates that the county give the same tax discounts to state appraised properties when sales ratio fall below 90%. For this reason, Mr. Jones introduced the possibility of a county revaluation in 2025, which means he would request funding in the upcoming budget for flyover aerial images to be completed in March 2023. He said based on market fluctuations a decision would be required by the Board to proceed with revaluation with the fieldwork or to delay revaluation by one year in September 2023. County Manager, Heidi York added that the county sets aside funding annually in preparation for the associated costs of revaluation. Revaluation is required every eight years or sooner if the sales ratio falls below 90%. February 22, 2022 13 MID-YEAR FISCAL REVIEW: Finance Director, Amy Wehrenberg shared the following presentation for her Mid- Year (December to December) Fiscal Review: February 22, 2022 14 February 22, 2022 15 February 22, 2022 16 February 22, 2022 17 Ms. Wehrenberg stated the current audit firm that Person County is using is dropping government entities and the Finance Department has issued a Request for Proposals for a response deadline of February 28, 2022. She noted the worst-case scenario would be to extend for further bids or for lack of bidders, engage with the state of NC for audit services. February 22, 2022 18 Chairman Powell announced a brief recess for a break at 10:40am. The meeting reconvened at 10:55am. February 22, 2022 19 FINANCIAL PLAN FOR CAPITAL & DEBT FINANCING UPDATE: Mr. Douglas Carter, President and Mr. Andrew Carter, Vice President of DEC Associates Inc. of Charlotte provided the following presentation to the Board related to their services for County Financial Planning for Capital and an update on Debt Financing: February 22, 2022 20 February 22, 2022 21 The Excel spreadsheet shared with the Board illustrated capacity for debt with the anticipation of $10M issuance of debt in January-February timeframe. The Model would need to be updated with the value of a penny for next fiscal year. Mr. Douglas Carter stated $38M was the last number received from county and school’s staff. February 22, 2022 22 Mr. Douglas Carter noted that $395M in state funding has been earmarked for need- based schools; Mr. Andrew Carter said grants should be awarded in April and Person County was in the 5% match category, which could be included into the Model. Dr. Rodney Peterson, Superintendent for Person County School, who was present in the audience, stated applications capped in the amounts of $30M for an elementary school, $40M for a middle school and $50M for a high school are due in March. County Manager, Heidi York stated the County was poised to move forward with the first $10M debt issuance however wanted to make the Board understand that $735,000 from the General Fund or the equivalent to a 1.5-cent tax increase would be needed in June 2025. Finance Director, Amy Wehrenberg said the $10M debt issuance as discussed was contingent on Local Government Commission’s deadline to have the audit by October 31, 2022 and to allow another two months for review prior to a debt issuance. Ms. Wehrenberg said she would be presenting to the Board financial policies that would transfer excess Fund Balance to the CIF. Mr. Douglas Carter stated updates to the Model would take place should the Board adopt the policies and enact the one-time transfer of Fund Balance to CIF as well as the new value of the penny as reported by the Tax Administrator. Mr. Douglas Carter said they would evaluate the sales tax collection to determine if the increase in sales tax revenue was an anomaly or a new reset that may impact the Model but noted they would take the conservation approach. February 22, 2022 23 Chairman Powell stated the Board owed it to the taxpayers to follow the Model. Ms. York stated appreciation of the partnership with the Superintendent and School’s staff as well as DEC to implement the Model. February 22, 2022 24 FINANCIAL POLICIES: Finance Director, Amy Wehrenberg introduced new financial policies with the following presentation: February 22, 2022 25 February 22, 2022 26 February 22, 2022 27 February 22, 2022 28 A motion was made by Commissioner Puryear and carried 5-0 to approve the Budget, Accounting and Fund Reserve Policies as presented and to direct the Finance Director to include a Budget Amendment at the Board’s next meeting for the $6,382,681 to transfer from the General Fund to the Capital Investment Fund. February 22, 2022 29 AMERICAN RESCUE PLAN FUNDING: Assistant County Manager, Katherine Cathey presented to the Board the following information on the federal funding coming to Person County and referred to as American Rescue Plan (ARP) Funding that must be encumbered by 2024 and spent by 2026: February 22, 2022 30 Ms. Cathey stated Person County has not lost revenue however; broader categories include a standard allowance, which is more flexible. Ms. Cathey said compliance will increase staff time for reporting and written policies will be required or updated if currently in place. February 22, 2022 31 Alternatively, Ms. Cathey said supplanting was encouraged noting salary and benefits could be expended with the ARP funds which would free up those General Funds to be used for other needs. February 22, 2022 32 Other options include partnering with the state to release RFPs for state-guided areas for expansion. Already approved by the state is funding for purchase fire gear and radios. County Manager, Heidi York suggested a five-minute stretch break at 12:20pm; the meeting reconvened at 12:25pm. February 22, 2022 33 PREVIEW OF FISCAL YEAR 2023 & GOALS OF THE BOARD: County Manager, Heidi York shared the following presentation titled Preview of Fiscal Year 2023: February 22, 2022 34 Ms. York stated she and Chairman Powell received an email this date from Dr. Senegal with PCC stating their desire to amend its capital project request to a stand-alone building on campus. February 22, 2022 35 Ms. York stated the Board would hear from the County’s Insurance Broker at its March meeting noting the County could not sustain the current plan at the estimated renewal costs. Ms. York confirmed the top claims were cancer related with COVID being the second highest costs with the insurance. February 22, 2022 36 Ms. York explained the County’s turnover rate has far exceeded the best practice’s rate of 10% noting in FY21 the turnover rate was 21% and in FY22 it was 18%; she added it was due some to retirements, leaving to work elsewhere for more money or less work. Commissioner Puryear added people desire flexibility to work from home. Ms. York further noted at this time in 2021, the full-time vacancy rate was 4.88% and in 2022, it was 6.5%, which are higher than the state average of 4.8% Ms. York stated the Board would hear from the Human Resources Director in March for the results as well as an action plan of a recent Employee Engagement Survey; she added 80% of the survey participants said they were proud to work for Person County. Ms. York noted approximately ten years ago Person County stopped recommending cost of living adjustments as the trends, at that time, were relatively flat; about that same time, the County implemented Merit Based Pay. Ms. York illustrated the Consumer Price Index for the South region for the period January 2019 to January 2022, which showed an increase in the cost of doing business by 7.8%. Ms. York said to make a cost of living adjustment in that amount would be a recurring cost of $2.5M, or for an adjustment of 5%, the recurring cost would be $1.6M. February 22, 2022 37 It was the consensus of the Board to keep the same goals for FY23. Commissioner Puryear stated a goal of the Board should be to commit to the revaluation process with the fly-over aerial images in early 2023 noting prior to the fieldwork, evaluation whether the revaluation was warranted or could be delayed. February 22, 2022 38 Commissioner Gentry stated a goal to improve access to DOT infrastructure to obtain more industry. The Board then discussed the Human Services’ facility lease that is due to expire in 2025. Tax Administrator, Russell Jones added the building that the Tax Office and Register of Deeds was located has an upcoming lease expiration as well. Commissioner Gentry stated to consolidate all departments in one place would be beneficial. Ms. York stated she would update the Board’s goals in the proposed budget based on discussion at this retreat. CLOSING REMARKS: Chairman Powell closed the retreat discussion by noting what the Board had achieved in the last year, even under extreme conditions: kept the tax rate flat, transitioned the VFDs to a fully funded Fire Tax revenue system, awarded some of the VFDs for lowering ISO ratings which means savings for the taxpayer, conservative approach on spending, continue to support capital needs for schools and PCC, on course for the first issuance of debt for schools, hired a new County Attorney, lobbied with state officials to restore funding for the runway project at the Airport, and a new hangar is being constructed with inquiries currently for a tenant for that hangar. ADJOURNMENT: A motion was made by Commissioner Puryear and carried 5-0 to adjourn the meeting at 1:14pm. _____________________________ ______________________________ Brenda B. Reaves Gordon Powell Clerk to the Board Chairman