Fort Walton Beach Council minutes — 05-05-09 special minutes — reading text

175 MINUTES OF THE SPECIAL COUNCIL MEETING OF THE CITY OF FORT WALTON BEACH, FLORIDA MAY 59 2009 INTRODUCTION A special meeting of the City Council of Fort Walton Beach, Florida, was held on Tuesday, May 5, 2009 at 5:30 p.m. in the Council Chambers at City Hall, with the following members present: Mayor Mike Anderson Councilmen: Mike Holmes; Virgil Miller; Dennis Reeves; Bill Garvie, Bobby Nabors; Bill Patterson; and Dick Rynearson Also Present: Robert Mearns, Acting City Manager; Helen Spencer, City Clerk; and Department Directors. PURPOSE The purpose of this meeting is to hear a presentation and consideration of a defined contribution pension plan; and discussion on leases of City owned property. CALL TO ORDER The Mayor called the meeting to order and welcomed everyone. He requested anyone who wished to address Council to approach the podium after being recognized, and then state his or her name and address for the record. PLEDGE The Mayor led in the Pledge of Allegiance. PRESENTATION — DEFINED CONTRIBUTION RETIREMENT PLAN Presentation regarding a proposed defined contribution retirement plan for full time employees hired as of October 1, 2009. Mark Wiltsie, Administrative Services Director, introduced the pension attorney Jim Linn with the law firm of Lewis, Longman & Walker, and the actuary Mike Tierney of Actuarial Concepts. who were engaged to undertake a review of the City's defined benefit pension program and provide an analysis regarding the concept of transitioning to a defined contribution program. Jim Linn and Mike Tierney presented their analysis which included a review of the key provisions of the current General Employees' defined benefit Retirement Plan; the cost of the defined benefit plan to the City and the projected cost for the next five years; an explanation on a defined contribution plan in contrast with a defined benefit plan; the advantages, disadvantages, and cost of a defined contribution plan; examples of defined contribution plans recently established by Florida Cities; and the employer /employee contributions in various Florida Cities with a defined contribution plan. Mr. Linn and Mr. Tierney mentioned one approach would be to close the existing City retirement plan to new members and establish a defined contribution plan for future hires. They pointed out under this approach the existing defined benefit plan would be closed to new members and remain in operation for current members and the City would be required to continue funding the existing plan on a sound actuarial basis until the last benefit is paid. 176 Special Council meeting 5 -5 -09 DEFINED CONTRIBUTION RETIREMENT PLAN cont. Mr. Linn and Mr. Tierney went over the projected costs under several defined contribution plan scenarios: Scenario 1: 2. 5% employee contribution / 5% City contribution with a combined normal cost of the defined benefit plan and the defined contribution plan over 30 years projected to be 12. 7 % in year 1 down to 5.0% in year 30. Scenario 2: 4% employee contribution / 8% City contribution with a combined normal cost of the defined benefit plan and the defined contribution plan over 30 years projected to be 12. 7% in year 1 down to 8. 0% in year 30. Scenario 3: 4% employee contribution / 4% City contribution, plus optional employee contribution of up to an additional 4 %, with a City dollar for dollar match up to 4% with a combined normal cost of the defined benefit plan and the defined contribution plan over 30 years projected to be 12. 7% in year 1 down to 6. 0% in year 30. Scenario 4: 5% employee contribution / 5% City contribution, plus optional employee contribution of up to an additional 2. 5% with a combined normal cost of the defined benefit plan and the defined contribution plan over 30 years projected to be 12. 7% in year 1 down to 6. 3% in year 30. Mr. Linn and Mr. Tierney went over a proposed action plan that first, should the City decide to establish a defined contribution plan the City will need to determine the employer and employee contribution level that is most appropriate for employees and taxpayers, what the vesting period should be, whether the defined contribution plan will provide for participant- directed investments among a number of investment option or investment decisions made by a trustee, and what options should be provided for distribution of defined contribution plan account when an employee retires; second, staff should work with legal counsel to prepare the necessary documents to establish a defined contribution plan; and third, staff should prepare an RFP for a third party administrator for the defined contribution plan. Mr. Wiltsie reported staff recommends first that Council direct staff to prepare the necessary ordinance amendments to the General Employees' Pension Plan to accommodate introducing a deferred contribution plan program for all new hires after October 1, 2009; second, authorize staff to issue an RFP for a third -party administrator to administer the deferred contribution program; and third, Council adopt scenario 4 where the employees' and employer contributions would be 5% of payroll with an option for employees to increase their contribution up to 2.5% with a City match. The Mayor opened the floor for public input. As no one wished to speak public input was closed. Mr. Garvie moved to direct staff to prepare the necessary ordinance amendments to the General Employees' Pension Plan to accommodate introducing a deferred contribution plan program for all new hires after October 1, 2009. Mr. Reeves seconded motion and it carried unanimously with Holmes, Miller, Reeves, Garvie, Nabors, Patterson, and Rynearson in favor. Special Council meeting 5 -5 -09 177 DEFINED CONTRIBUTION RETIREMENT PLAN cont. Mr. Miller moved to authorize staff to issue an RFP for a third -party administrator to administer the deferred contribution plan. Mr. Reeves seconded motion and it carried unanimously with Holmes, Miller, Reeves, Garvie, Nabors, Patterson, and Rynearson in favor. Mr. Rynearson moved to adopt scenarios 4 where the employees' and employer contributions would be 5% of payroll with an option for employees to increase their contribution up to 2. 5% with a City match. Mr. Reeves seconded motion and it carried by a vote of 6 to 1 with Holmes, Reeves, Garvie, Nabors, Patterson, and Rynearson in favor and Miller opposed. ACTUARIAL STATEMENT AS O_ TOBER 1. 2008 Acceptance of the General Employees Retirement Fund Actuarial Statement as of October 1, 2008 dated February 2009. The Finance Director stated the actuarial report is prepared on an annual basis and every year it is brought to City Council to accept. Mr. Tierney noted the $ 1. 5 million City contribution for the 2009 -2010 plan year is large and pointed out there is another $ 5.4 million in unrecognized losses the City will be faced with in the future. He noted the advantage is that they are smoothing the recognitions over five years which will dampen the immediate effect of the losses to make the necessary contribution increases more gradual than they would have been. In response to a request, Mr. Tierney gave an explanation of Unfunded Actuarial Accumulated Liability ( UAAL) Mr. Reeves moved to accept the General Employees' Retirement Fund Actuarial Valuation as of October 1,2008 dated February 2009. Mr. Garvie seconded motion and it carried unanimously with Holmes, Miller, Reeves, Garvie, Nabors, Patterson, and Rynearson in favor. LEASES OF CITY PROPERTY Policy direction for leases of City property. The Acting City Manager mentioned the property leases to commercial and non -profit organizations are inconsistent in rent amounts and lease terms with no two leases identical. He discussed the need for a nexus test to determine whether or not an organization serves a municipal purpose. He mentioned the need for uniform application and a standard lease for the lease of city owned property. He talked about the potential to generate significant revenues if the properties are leased around fair market value and the need for professional advice in determining what the potential lease sites are worth. He mentioned the revenues could be placed in a separate fund to be used to either support upgrades to the properties or to support the enterprise funds to off -set shortfalls. He requested if Council is interested in the matter that they provide policy direction. Discussion included agreement with the need to look at all the City owned property for a full analysis of the surplus properties available; the importance of marketing available properties; the need to negotiate a fair market value on leases; the need for a review to determine if there is a better use of the properties; the need to research whether there are options available to make changes to some of the leases; and the need to look at City expenses and potential revenue to help balance upcoming budget shortfall. 1, 78 Special Council meeting 5 -5 -09 LEASES OF CITY PROPERTY cont. The Mayor opened the floor for public input. Jerry Melvin, President of Emerald Coast Wildlife Refuge, mentioned their organization has been in operation for 15 years. He said over the years the City and the County have funded the Panhandle Animal Welfare Society to take care of domestic animal but their only source of revenue is through donations or fundraising activities. He said their organization takes care of injured wildlife and they are the only organization licensed to rehabilitate and release animals back into the wild. He said they are currently located in Destin but have been talking with the City Manager about the possibility of leasing 5.5 acres next to wetlands in the Commerce and Technology Park for $ 1. 00 a year for five years with an option for an additional five years. He said an answer will be needed soon as there is a family trust considering a grant to their organization to purchase the necessary building to house the Refuge should a lease be approved. The Acting City Manager confirmed the proposed site in the Commerce and Technology Park adjacent to wetlands would be suitable for that organization because it is a habitat and they would not need to do anything to make it suitable for their organization. He will bring it to Council in the near future. Larry Sassano, President Economic Development Council ( EDC) said if they were given a list of properties in question they can determine, working with the Property Appraisers Officer, the value of the properties and they would work with a realtor to arrive at the fair market value ranges for the properties then Council can determine whether they want to hire an appraiser to perform a professional appraisal. He offered to provide that service at no cost to the City. Joe Gentilozzi, 154 Brooks Street, realtor with NBI Properties, mentioned Council