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HomeMy WebLinkAbout1974-11-14 MinutesMINUTES OF A SPECIAL MEETING OF THE BOARD OF DIRECTORS November 14, 1974 The Board of Directors of the City of Fayetteville, Arkansas met in a special session on Thursday, November 14, 1974 in the Director's Room of the City Administration Building at 4:00 p.m. Present: City Manager Donald L. Grimes; Administrative Assistant David McWethy, City Attorney Jim McCord; Darlene Westbrook, City Clerk, and Directors Orton, Purdy, Noland, Utley, Murray, Carlson, and Stanton. Absent: None Others Present: Representatives of the news media and members of the audience. CALL TO ORDER Mayor Russell T. Purdy called the special meeting to order, and, following a moment of respectful silence, waived consideration of the minutes of the last regular meeting until November 19, 1974 when the Board meets in regular session. Mayor Purdy then asked for the Board's consideration of the first item of business. 183 183.1 RESOLUTION LEVYING REAL AND PERSONAL PROPERTY TAX FOR THE YEAR 1974 The resolution, as read by the City Attorney, would levy a tax.: of 183.2 eleven mills for real and personal property within the city as follows: General Governmental Operations General Obligation Bond Fund Policemen's Pension Fund Firemen's Pension Fund 5.0 mills 4.0 mills 1.0 mills 1.0 mills TOTAL 11.0 mills The Mayor asked for discussion from the Board and there being none, Director Stanton motioned that the resolution be adopted. The motion, seconded by Director Carlson, was passed unanimously in roll call vote of the Board. RESOLUTION NO. 81-74 APPEARS ON PAGE 98-99 OF ORDINANCE AND RESOLUTION BOOK IV ORDINANCE SETTING DATE FOR SPECIAL ELECTION City Attorney McCord prefaced the reading of the ordinance by citing the recent Chancery Court decision of the case Carlson, et al. v. City of Fayetteville in which the court enjoined the city from levying and collect- ing five mills of "voluntary" tax in the form and manner previously levied. 183 183.3 183.4 184 184.1 The five mill levy in past years had been made in conjunction with the yearly constitutional levy of real and personal property in the form of a reso- lution. McCord said that the court recognized that voluntary taxes were not new in the state and had been authorized by a vote of the people in some municipalities and that they may be authorized by the General Assembly to municipalities under the Home Rule legislation. In quoting the court's decree, McCord said that the court opinioned that "most im- portantly they (voluntary millages) would have to be authorized by a vote of the people concerned, which is not done in the instant case. Hence, the injunction against future levying and collection of the five mills herein concerned." Mr. McCord said that even though the court left the opinion that the voluntary tax could be levied upon a majority vote of the electors, the favorable vote would not make the tax enforceable and the citizens could choosenot.to pay the tax without subjecting their property to seizure. 184.2 Stating that there were several options for recouping the lost revenue, the City Attorney said one option was to put the voluntary levy to a vote of the people, thus the proposed ordinance setting a date for special election which he read in full. 184.3 Following the first reading of the ordinance, City Manager Grimes opinioned that the collection of the voluntary tax would be difficult and would not produce the amount of revenues it had in the past As an alter- native to the voluntary tax, Mr. Grimes discussed the possibility of establishing a fire protection benefit district which would require en- abling legislation from the state legislature. 184.4 Another alternative, which would require only the consent of the local utility companies, would be an increase in franchise taxes paid by the utility companies. Mr. Grimes recommended that the franchise tax increase, if approved, be on an interim basis and be shown on utility bills as a city tax. The tax, he said, would be regressive. 184.5 Still another option would be to implement a municipal income tax upon all those employed in the city. Mr. Grimes said enabling legisla- tion for this option existed but that the implementation of an income tax would have to be approved by the electors. He said a vehicle tax could not be considered seriously because it would not produce enough revenue and had been defeated by the voters several years ago as a means of revenue. The adoption of an occupation tax, which Grimes said had serious inequities, would not net enough revenue. 184.6 Citing that the citizens were accustomed to paying the five mill tax, Mr. Grimes was of the opinion that the majority of the citizens would approve the levy and would pay it. Should an election be called by the Board which would place the voluntary tax question before the people, the City Manager recommended that the election be held as soon as possible in December and before the University closed for semester break. 184.7 Mr. Grimes then emphasized the extent of the loss of revenues from the five mill tax which produced approximately $234,000 in revenues. As a result of the loss of the tax levy, the tax effort would be reduced and would result in an estimated loss of $120,000 in revenue sharing funds. He told the Board that a twelve percent cost of living increase for the city's employees would cost the city an additional $250,000. Estimating 184 185 that $600,000 would be required to cover the loss of revenues produced by the five mills tax, Mr. Grimes said, "We don't have $600,000 in our budget, so we are facing very serious problems -- cut backs in services, layoffs of personnel -- if we don't find some way to recover these funds." City Attorney McCord said that should the ordinance calling an election 185.1 be passed and a favorable vote for the levy of the five mills attained, the city would not have to levy the tax if the Board should decide that collec- tion of the tax would be cumbersome or an alternative revenue source dis- covered. In discussion from the Board Director Orton expressed her relunctance 185.2 to place the voluntary tax before the citizens for their vote because she failed to see how the city could prepare a budget based on an indefinite amount of revenue and felt that revenues from a voluntary tax would be much less than what had been collected in prior years. Any source of revenue, Orton felt, should be involuntary so that the city could be certain of the amount of revenue to be received. Director Orton was of - the opinion that an election should be conducted on a "sure" thing such as a municipal income tax which she said could "piggy -back" on the state income tax. The municipal income tax would be fair since it would tax those who work in the city and enjoy city services, she felt. In commenting on the municipal income tax, Director Stanton pointed 185.3 out that there were many absentee property owners who would not be paying any type of tax for their property's protection if a municipal income tax were implemented. Converesely, Stantbn said that many people who do not own property in the city would be paying taxes to protect someone else's property. In answer to a question posed by Director Utley concerning the pro- 185.4 posed construction of an additional fire substation, City Manager Grimes said the construction costs had been budgeted in the 1972 Revenue Sharing budget but that the equipment and manpower could not be provided unless the city could recover the loss of the five mill tax revenues. The City Attorney said that one mill could be levied to pay for bonds that might be issued to build and equip a fire station. Such an issue is authorized under Amendment 13, McCord said, and a one mill levy based on the present tax base would result in approximately $40,000 in revenues which would have to be used to pay off the bonds. Director Carlson was of the opinion that the city should not expend 185.5 a large amount of money to conduct an election unless the election would result in the city's achieving a Source of revenue other than one that would be voluntary and unenforceable. If the city merely wanted a voluntary contribution from its citizens, Director Carlson stated that the Board of Directors could authorize the administration to solicit donations:AnShe felt the most easily implemented source of revenue would be the municipal income tax or something that would require enabling legislation. One disadvantage of the income tax, Carlson felt, would be that people with higher incomes would be able to escape more of the tax through loopholes and large investments than would the wage earner. Carlson said she pre- ferred a city sales tax which exempted food and drug items and further stated that a higher utility franchise tax would be agreeable except that it would place a hardship on low income groups. She said a business or occupation tax could not be geared to the size or income of a business and that the tax could not be so high as to stifle small businesses. 185 186 186.1 In reply to a question from Director Noland, City Attorney McCord said that if the voluntary tax were to be approved by the citizens, there would be two means for the collection of the tax. One method would be for the city's tax statements to be mailed with the county statements with proceeds from the tax to be remitted to the city by the county. The other manner for collection would be for the city to mail its own statements with remittance being made directly to the city. One dis- advantage of collecting the taicconcerns the fact that many loan companies are responsible for paying property taxes and they would have to obtain the mortgagor's permission for payment of the tax. 186.2 In further discussion, Mayor Purdy expressed his opinion that the voters would most likely approve of a fire protection district rather than an income tax. Director Carlson then asserted that the city had for the past several years shown a surplus of one million dollars and that the total for the past eight years amounted to more than seven million dollars. She asserted that the city had not been truthful with its citizens in reporting the city's financial status Mr. Pat Tobin, City Controller, replied to Carlson's statements by saying that the surplus funds she referred to were in the Sanitation fund, bond funds, and the water and sewer bond fund; and that the present discussion con- cerned the general fund. Mayor Purdy ruled Carlson out of order and requested that she limit her comments to the agenda item. Carlson then stated that the city should take managerial steps to make the city's present means cover the city's expenses; then, if necessary, find another source of revenue. She felt the income tax would win voter approval if the people were sufficiently educated as to the city's financial status. 186.3 Director Noland said he would prefer to see what legislation could be obtained concerning the fire protection district rather than to call a special election on the voluntary tax. City Manager Grimes said that if the enabling legislation could be acquired for the fire protection district, an election would not have to be held but that the majority in assessed value of property owners would have to sign a petition re- questing formation of the district. He said that the tax base for the protection district would count towards the city's tax effort for re- ceiving revenue sharing funds if the Board of Directors served as the district's commissioners. 186.4 In discussion from the audience, Mr. Ernest Lancaster stated that he favored calling a special election for the people to approve the five mill voluntary tax which they were accustomed to paying. He felt there would be no question that the levy would be approved but that an income tax would be defeated. Mr. John Todd, also commenting from the audience, said he would be inclined to favor a fire protection district while Mr. Robert Ellis said he would prefer paying an income tax rather than a voluntary tax. 186.5 The City Attorney said that he would have to do extensive legal re- search concerning the fire protection district before the city presented the legislature with a bill requesting the enabling legislation. 186.6 Mr. Grimes said that one problem to be faced if enabling legisla- tion were awaited would be the problem of preparing the city's budget and that if such legislation were awaited, the general fund would have to operated interimly from minimal operating reserves. 186 After slight further discussion, Mayor Purdy requested the Board's vote on a motion made by Director Stanton and seconded by Director Murray to place the ordinance on second reading. In roll call vote of the Board the motion passed unanimously. The ordinance was then read for the second time by the City Attorney. Following second reading and slight discussion, Director Stanton moved to place the ordinance on third and final reading. The motion was seconded by Director Utley and in roll call vote of the Board the recorded vote was five "Ayes" and two "Nays which were cast by Directors Orton and Noland. There being a two -third majority in favor of the motion, Mayor Purdy declared the motion passed. The City Attorney then read the ordinance for the third and final time. During continued discussion, City Manager Grimes said that even though he favored holding an election in December, he could see no advantage in calling a special election when all members of the Board could not agree that the election should be called. He said he would like to try to get enabling legislation for the fire protection district. Discussion completed, Mayor Purdy asked if the ordinance should pass. In roll call vote of the Board there were no "Ayes" and seven "Nays" re- corded. The Mayor declared the ordinance failed. BRIEFING SESSION CONCERNING COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM City.Manager Grimes explained that the Community Development Block Grant Program was deviked by tCongr`ess to replace a number of Department of Housing. -.and Urban Development grant programs. Fayetteville's alloca- tion under the new program will be $853,000 per year for the first three years and cannot be used to replace any lost revenues. He said the city was required to set up citizens' committees to study problem areas in the community and submit recommendations which will be decided upon by the Board of Directors. A recommendation had been submitted to the Board for the establishmentt,of two committees; one, the Community Development. • Study Committee, would contain seventeen members (two from each census tract and one at -large chairman); and the Community Development Housing Committee which would include nine members ( one from each census tract and one at -large chairman). • He recommended that the Board appoint the chairman of each committee. Mr. Grimes recommended that the Board authorize a contract with the Northwest Arkansas Regional Planning Commission for the preparation of the application. Upon completion of the applicationtappointments of three or four persons'w5u$d bexnecessatywto coordinate administration of the grant. Mr. Chuck Hoffman was then introduced by the City Manager as the prograti director of the Community Development Program. In Mr. Hoffman's presentation., a' brief history of the program and its inception was given. He said the program included eight titles and discussed each title with the Board including implementation, application, and guidance. Following Mr. Hoffman's presentation, the Board discussed, among other items, how the committees were to be appointed and what their duties would be. Mr. Hoffman requested an expression of support from the Board for the presentation of the three-year program to be made at the time the application is submitted so that contracts could be let as soon as possible. Mr. Hoffman said that the application could possibly be com- pleted by early January, 1975. The City Manager disagreed with 187 187 187.1 187.2 187.3 187.4 187.5 187.6 187.7 187.8 188 Mr. Hoffman's proposed timetable for submission of the application by citing the need for a great deal of staff work, preliminary committee meetings, and public hearings. 188.1 Concerning committee appointments, the Board decided to delay appointments until the next regular meeting to allow for nominations to be submitted by the Board members, citizens, and newly elected Board mem- bers. 188.2 The briefing session was concluded following additional discussion during which Mr. Hoffman answered questions pertaining to the grant pro- gram ADJOURNMENT 188.3 There being no further business for the Board's consideration, Director Stanton motioned, seconded by Director Orton, that the meeting be adjourned. The motion met with the Board's approval and Mayor Purdy declared the special meeting adjourned. ATTEST: a�u� Darlene Westbrook,City DalClerk APPROVED: Russell` T. Purdy, %Mayor 188 1