Fort Walton Beach Council agenda — 06-26-2007 regular agenda — reading text

meeting of the Municipal Planning Board is in August, so they will lose June and July for operation of a snow cone business as there is no formal process to allow temporary use. She said the applicant has suggested to her if there is in August they will cease anyway they can operate June and July and if the conditional use is denied operation immediately. She said it is a use that has been there for years, accepted and loved, and there is nothing bad to say about it but they are losing two months to a formal process as there is no temporary approval she or the City Manager can give. The questioned was asked of the City Attorney if there was a way City Council could grant a and as a permanent temporary use. The City Attorney replied they are going to lease the property use she did not believe there is any. way other than the conditional use permit to achieve the there sales permitting but it would be on a much shorter term than objective. She said are temporary a lease, and it would still have to go through the process for CDS and whether or not they would it has expired. approve it. She said the Code does not allow the use they are dealing with once The Mayor received confirmation that Council cannot override the Code. 16 Regular Meeting 6- 12- 07 GENERAL PUBLIC cont. It was questioned whether the Municipal Planning Board could hold an emergency meeting to consider the conditional use. The City Attorney replied according to their rules the Municipal Planning Board could call a Special meeting, but the whole process of a conditional use would have to be satisfied prior to the meeting. . The CDS Director explained there are special advertising requirements for the conditional use, which' they could prepare and meet the requirements by early to mi.ddle July, which would be in four to six weeks. She said a temporary use is for a limited period of a week and continual renewal for two months would not be the intent of the ordinance. The question was posed whether Council could pass a resolution to allow operation for the period of time. The City Attorney stated she could not advise Council that would be a legally defensible action because there is a Code and she would recommend following the Code. She said it is an unfortunate situation but she did not believe they should change the Code to address one situation rather than handling it as a comprehensive issue. She explained the use that was grandfathered in as a non- conforming use in a zoning district expired because it was abandoned and not being used any longer. She said under the Code that means they are back at point zero where they have to follow the code that is now in effect. She said the only thing she could suggest is that she look at the temporary sales issue and perhaps have the City Manager and the CDS Director contacts them later in the week. QUARTERLY REPORTS Presentation of quarterly reports for General Employees Retirement Fund. Chris AllianceBernstein, gave a synopsis of the investment performance through the quarter Toma.. ending March 31, 2007. He reported since inception they have an absolute return of 7. 1% which is 300 basis points over the benchmark and' one year ending it is 13. 9% which is roughly 200 basis points over the benchmark. He went'over a few displays to go over the value market and stated they are well positioned going fOlWard and they have done well so far. Larry Cole, Merrill Lynch, gave a recap of the funds total performance through the quarter ending March 31, 2007. He commented the markets have been very strong since the end of March through May and the fund is probably up another 3- 4% total return. He went over the asset allocation, the firms managing the money, the total investment returns, and pointed out the Plan has made 11. 3% per year for the last few years. This was an information only item for Council and required no action. REVIEW OF PENSION PLANS Review of financial condition of the Fort Walton Beach Pension Plans with ten year history. The Mayor noted that Mike Tierney the actuary, Jim Linn the Pension Attorney, and Angela Ballant with the auditors, is present. The Finance Director gave a presentation on the current funding situation and financial condition of the General Employees' Pension Plan, which included conclusions, findings to date, and recommended improvements. The Finance Director explained funding for the Plan. comes from mandatory employee contributions of 5%, employer contributions, and investment earnings. She reported the current situation with the Plan is the City is currently contributing $ 1. 6 million, equivalent to 10% of the annual general fund operating budget; the current funding level is 19. 95% with 5% from the employees and 14. 95% as the current required City contributions, and the averages should be between 5- 8%; and it is a significant burden on the City' s finances. She went over the concerns which included a declining schedule of funding progress, the Actuary warns of increasing contributions from 19. 9% to 20. 95% next year to meet the minimum actuarial liability, and there will be a $ 200, 000 increase for unfunded liabilities.  17 Regular Meeting 6- 12- 07 REVIEWuOF PENSION PLANS cont. The Finance Director mentioned the City Manager and staff have discussed possibly abandoning the Plan due to the cost of contributions and that City Council requested an inquiry into alternatives at the Strategic Planning Workshop in January. reported reasons for the Plan' s current situation She include poor investment returns; increases in employee benefits; it is a mature plan with a history of negative cash flow, and minimum City contrtbutioM in years of poor cash- flow and investment performance; and a history of redirecting budgeted City pension contributions to other budget needs where the City would budget 8%, 6%, etc., actual contributions would be 2%- 5%, the difference would J be re- budgeted, not saved or contributed, and used to balance the budget, and repeat back to 8%, 6% next years. The Mayor wished to know how it was considered re- directing from the Plan when it is a request to budget a certain amount. The City Manager explained each year the City funded the annual required. contribution to the City' s Pension Plan which is an actuarial number estimated in June and July when the budget process comes about then in January they know the final number because that is when the Actuarial Evaluation is due. She further explained it is just like they do for health insurance where they estimate a need of $ 1 million to budget for health insurance then in February the renewal comes in at $ 800, 000 but they do not pay the additional $ 200, 000 to the health insurance company, it goes to fund balance. She said in 2002 a reserve fund was created as part of the designated fund balance and a $ 600, 000 reserve fund established for future retirement contributions. was She said the unspent pension monies either fall to fund balance and in some cases the money is shifted from line item to line item, but in no case did the City exceed its budget amount without a budget amendment in each of those years. She did not believe it is a fair characterization to say budgeted dollars' were redirected, what they did was budget what was thought the annual contribution was going to be and funded that annual required contribution. She believed the Actuary will tell Council that is standard policy for most all of the plans they deal with and in some cases fund in a lag period where what the Actuary says in January of 2007 they budget for 2008 and be a year behind in funding the pension requirements and many City' s do it on a retrospective basis. She said the City is a bit more pro- active where they adjust it in the current year and last year they had a budget amendment because the City budgeted a certain amount then the Actuary Valuation came in and said it was higher so the City had to amend the budget to accommodate it. She said each year when the budget document is presented to Council there is an estimate for workers compensation, health insurance, retirement, social security, salaries, and staff gives their best guess at that time and if at the end of the year they do not need to spend all that money, they don' t and in years where there was a surplus they put money away as part of a designated fund balance. The Mayor commented it may have been a bad management decision on Council not to keep adding to the retirement fund, they just put in what they Were told was the minimum required. He noted they did not take money that was required by the Pension Fund and used it elsewhere because the document said they were required to contribute so much and that is what was contributed and the rest went into fund balance. The City Manager commented the budget is merely an estimate of the requirements. She requested that Mr. Tierney share with. Council the practice of other pension plans he reviews and provides actuarial services. Mr. Garvie asked the City Attorney if Council bUdgeted 8% for the retirement fund then the decision is made down the line by the result of an actuarial report to only fund 2% or 3% if the decision comes back to Council to approve the lower amount. The City Attorney respectfully requested Mr. Linn or Mr. Tierney to answer the question. The City Manager explained Council adopts a total fund budget, it is not a line item budget and it is not an individual fund budget, and currently there is authority in the ordinance that allows the transfer within funds from line item to line item with City Manager and/ or Finance Director approval, and it does not need to come back to Council. She asked if Mr. Tierney could come forwarq to answer the question. 18 Regular Meeting 6- 12- 07 REVIEW OF PENSION PLANS cant. The Mayor also asked Mr. Linn to answer the question on whether they have violated some pension law by not transferring the entire 8% into the Pension Fund. Mike Tierney, Plan Actuary, stated so the Finance Director can finish the presentation, the short answer is there was no violation, the budget amount is not the requirement, it is whatever is in his report and the City can choose to do with it whatever they want as long as it is at least that much. The Finance Director first spoke about what other Cities do and stated there are a lot of Pension Best Practices. She referenced a book