City Council Retreat Day 1, 1/26/2026

City Code 2-21 and by authority vested in me as mayor of the city of Virginia Beach, I hereby call a special meeting for the Virginia Beach City Council on Monday uh January 26, 20 uh 26 and Tuesday, January 27th at uh 2026 beginning at 8:30.:30 a.m. uh Virginia Beach Convention Center, 1019 Street, Sweet 3. The purpose of the special meeting is to hold the uh to conduct a city council retreat as listed in the

attached and publish agenda. The special meeting will be broadcast on cable TV, VB, Virginia Beach.gov, and Facebook live. Sincerely, yours truly, Bobby D.

Bobby Dyer, Mayor. Okay.

Do you want to start?

All right. So, Mr. Mayor, members of council, um, welcome. We avoided snowageddon. It's always great to be in Virginia Beach and looking forward to our budget retreat. As you know, this has become a regular cadence for us for the past 3 to four years. And it's always good and enlightening for us to hear from counseling perspectives as we get ready to finalize the budget that we present to you all. Eager to hear your

topics. As council knows, we've shared some updates as where we are from a revenue standpoint. You know, so there's going to be some opportunities for us to discuss how best to use those resources in a way that aligns with your policy positions.

Good morning, C mayor, mayor, vice mayor, members of council. Uh thank you for having us back. Um as a reminder, I'm Julie Brenman with Fountain Works.

Got Laura Gomez Nichols with Fountain Works here with me also. and we are here as your facilitators today. I wanted to start by just orienting you to the plan for today and tomorrow. Um we have an agenda on the wall over there so you can do quick looks and reference it at any point. You also have binders um in front of you. You got all these materials electronically, but I'll just quickly

orient you to the binders. You have your agenda. You have all the PowerPoint presentations, um funding requests, benchmarking information, PISK information, dedications, and then um information for tomorrow as well on political signage. There's the school calendar, the focused action plan, council policies. So, you've got a lot of materials in front of you and with the PowerPoints you can follow

along. So, our agenda today, we're going to start by asking you to just think think ahead. What are your aspirations as a council for um leaving a legacy for the community? After we do that, we're going to get into the nitty-gritty and have a number of budget presentations.

Your budget director is going to be um sharing a lot of reminders of things that you have heard in the past, but we want it fresh in your mind as you enter the discussion today about the FY2627 budget. Um so we'll we'll be doing a number of presentations.

During the presentations, feel free to ask questions. After the presentations, we'll lead you through some discussions.

Um uh we talked to you all ahead of time and I I started those uh conversations with all of you. We said this budget retreat is really about giving guidance to the manager and his team on how to balance the budget. And when you balance a budget, you either um adjust revenues or expenses and you need them to match.

So think of the um retreat as uh how do you want to invest in your community or reduce uh reduce the cost burden for your community. So it's really about balancing through investment or reductions.

Um, so we'll conclude today with getting from you some of that preliminary budget guidance so the the manager and his team know how to develop the budget to bring back to you in March. The guidance that you're providing today isn't final because the budget will come back to you in March. It's just giving them enough guidance so that they can develop a budget that meets your needs. Tomorrow

we're going to be um focusing on the roles of the governing body of all of you as well as governance discussion on particular issues that you all have raised. So today we're planning the focus to be budget tomorrow um which is a half day tomorrow will be on governance.

So that's setting the stage. Our purpose here is really to provide the staff with guidance for developing the budget.

Sound good? sound like what we're all here for. Okay. So, just to to get us started thinking in that role you all have of setting that vision, defining the legacy that you all as a body might leave for Virginia Beach. I'm going to ask you each to uh take a minute, write on your big post-it in front of you, use the Sharpie, what is the legacy that you want to leave for Virginia Beach as a

council, thinking of how you're working together um to leave a legacy for future generations.

So, take a minute, write something down.

Council member Ramick, you're like, "Whoa, that's big.

Might need two minutes to write something down.

All right, I think almost everyone's done. So, I'll start with Council Member Cummings because your pants definitely down.

You want me to present?

Yeah, I want you to present.

I uh have two uh aspirations for the uh for the city.

First is housing affordability. I know that's a new catchphrase and everybody seems to be jumping on that, but I've been talking about it for two years and I think that we need to get um deliberate and purposeful about uh addressing the issue here in Virginia Beach. And then long term, I'd like for this to be a city where future generations can live and thrive. That it's a place where our children, our

grandchildren are going to want to stay.

Um people are going to want to come back to and um be able to have a career, professional career, and and um raise their families the way that we've raised ours here.

Thank you, Council Member Rouse. Crisscross.

ready.

Good morning everybody. Um, so my similar to council member Cummings, I put home in quotation marks so that touches on housing, but also that this would be a place where people want to be so uh families can put down roots and uh grow and be here and stay here. And then um I put sustainability and my mind went to both environmental so making sure that um it's a place that exists and can

continue in the future um but economic as well. So that as a city particularly with our budget process regardless of what's happening at the federal or state level as a city how can we make sure that we're creating an infrastructure and a ecosystem that is uh sustainable for our residents so we can try to be as stable as possible. Thank you, Council Member Hutcherson.

I'm kind of like uh Councilman Worth is it's going to take me more than a minute and one cup of coffee to get this brain rolling this morning, but um you know, I went with kind of what we've been talking about and uh you know, it's and I can't take the public safety part out of me, but it's the you know, we protect and serve the citizens and visitor and

visitors to our city, you know, and that entails safety. uh economics, schools, infrastructure, tourism. You know, I've said it before. The way I see it, and and as as Councilman Cummings said, and of course affordable housing, you said put the pens down before I was finished with my little dots. Um but is is that uh we I believe what we're here for is to not get in the weeds for those folks

sitting back over there and behind me there. That's y'all's job to run the city. We're here to try to clear hurdles, set expectations, and do what we can to work with you to uh keep our city. We We are a great city. There's just no two ways about it. So, uh and I've seen it. I've been all over the country, you know, seen other cities how they're run. Um yeah, we argue, fuss,

and fight. I think that's healthy at times, but um overall, I would say we we are at the top of the accreditation stuff. We our departments, you know, they're winning awards. We we constantly, as the mayor points out, get recognized as being one of the greatest cities. So, it's really just keeping that machine. We're we're a big machine and keeping that rolling.

Thanks.

Thank you.

Council member Re.

Uh good morning. And yeah, I did spend a little bit more time on a broader topic because you said aspirational. So, uh I'm going to read this uh because it it needs to be read. So uh my aspirational uh for today and tomorrow and for my service on council, a safe, welcoming city that provides a top quality schools, job and career opportunities, great neighborhoods, and a housing stock

that is both affordable and plentiful, attention to storm water and flood challenges, and operated by a responsive, professional staff, city staff. And I might add at the end of this all with no tax increases, but I know that's that's super aspirational, but I do want my point on that is um I'm just going ahead and say it. I mean, I don't think we can have a budget neutral or revenue neutral budget. I think the

cost of loaf of bread is more expensive this year than last year. So, give us some leeway with inflation.

Thank you, Council Member Schulman.

Good morning, everybody.

Um, I wrote something down, too. I'll read it, but um, it doesn't include two things that I just heard. Um, schools and public safety. So, thank you for mentioning those two items. Um, because they they are kind of woven in with what makes for um, I don't know, a city that attracts and retains people and grows. But um what I wrote down was uh growing a resilient economy that balances environmental

stewardship and affordability alongside strategic investments that grow non-residential real estate and business tax revenues. So um really a theme out of that is balance, I think.

Um, and if we can keep and achieve that, um, with those goals in mind, I think we're setting oursel up for a a successful future.

Thank you, Council Member Berluchi.

Thank you. Um, I wrote down that um, the aspirational goal here is to foster a community where every person has the opportunity to fulfill their full potential. And this is essential to my philosophy about public service in two ways. first um in order for each person to achieve their full potential. It speaks to the diversity of priorities that we confront and uh grapple with each day. Uh economic opportunity,

education safety infrastructure affordability, uh all the top issues that we're aware of uh can be um can inform and can support that goal. Um and the other thing is that um it places I think appropriately the power where it rightfully belongs which is with the people. And I think that's important that we remember that as we contemplate these discussions is that we're here to make sure that people thrive that the

our neighbors thrive and um everyone has the chance and the freedom and the opportunity to fulfill their full potential.

Thank you Dr. Rasc.

Okay. What I wrote down, my legacy for Virginia Beach, for it to be a livable community that's capable of balancing its essential services with its amenities so that we can equally enjoy working, playing, and living well in a healthy environment. a place for affordable housing and health care and recreation through our culture and arts.

Having those two in place with the culture and arts usually brings in retention. So I wrote that no more out of migration. Thank you.

Thank you, Council Member Henley.

Very simply, I wrote, uh, Virginia Beach is known as a well-managed city that provides services needed without excessive taxes and is a good place to live, work, and raise a family while being known for its unique environment.

And of course, all these other things that everybody else has said that makes those things happen.

Great. Thank you, Vice Mayor.

Sorry, I couldn't figure out I turned it on. Um, good morning everybody. Uh, quality of life with keeping our taxes as low as we as we can to support this. And this includes public safety, quality education, recreational opportunities, uh, storm water and flooding and an environment to attract businesses and jobs. Uh, and we also want to be a magnet for our visitors and and tourism.

And we also want to be a very clean city. And I think sometimes we forget it's like when you walk in your house and it's clean, you don't really you just sort of take it for advant for granted. But if you walk in and your house is really a mess, you like it makes you feel bad and and you know that it's not clean and and we've been into cities that we kind of feel that way

when we go there. And ours, we have a very clean city which is really important and I think sometimes we take that for granted.

Thank you. And Mr. Mayor.

Okay. Uh thank you very much and I appreciate this opportunity. Welcome uh everybody. You know this is obviously very important. Uh we talk about legacy and I think we have been building that legacy uh over the years. Uh just three years ago we had five new council members, a new voting system and everything. Yet here we are today once again I'll use that quote. I think it was from Dizzy Dean. If it's a fact it's

not bragging. You know when uh New York Times says we're one of the best places to come you know throughout the in the world. uh you know when we're uh constantly being cited for the quality of life uh the safety uh and things of that nature, we have a lot to be proud of in terms of accomplishments and this has been a very very proactive you know for my time on council for 30

years both the dome site and the Rudy loop has sat vacant that is no longer the time that is establishing a role in the future for everybody that lives in Virginia beach. You know, we have we're uh we have weathered many storms over the years and you know, whether it be tragedy and COVID and things. And what happened was this the council the councils came together and focused on

getting through and we were able to get through incredibly tough times. we are doing better than a lot of other cities and we just got to be uh you know realize that you know and but once again as we go forward we're going to have to confront reality you know costs have gone up and gone up con you know uh consistently but the one thing that is special about Virginia Beach it's not

the mayor it's the people it's the people that live here work here have their businesses here but just think about the thousands of people that volunteer their time talent and treasure to make us great. But once again, I think the commitment really comes down.

We have a reputation, especially with our military friends. Uh Admiral Codle said, "We are the most requested duty station in the entire Navy. People want to come here." And why does the folks in NATO live in Virginia Beach? Because of the quality of life. The underlying theme of everything we do is to maintain that quality of life. It not only benefits the people that live here with

the rec centers and all the amenities, the great schools, the public safety, people are getting value for their tax dollar. And uh the other thing is that you know once again with quality of life, it's the key to the future. It helps with economic development. when a a company comes here to eval evaluate if they want to come here the quality of life is the essential. So whatever discussions that we have we have to

really focus keep the quality of life is the key to our future.

Thank you mayor. Thank you all of you for starting the day with thinking about that legacy and impact you want to make.

I encourage you throughout the day as we start digging in and focusing on a lot of numbers and balances to remember that big picture of what the council is doing. It's setting those um those legacy policies, setting those priorities um through the staff, through the budget, but keep the the big picture in mind. So, with that, I'm going to turn it over to Laura. She's going to um provide a sort of summary of what we

heard from you in the interviews that we did with you ahead of time and then after that we're going to shift to Kevin to um talk a lot about the budget.

Mayor, vice mayor, members of council, good morning and thank you. Can you I'm not good at microphones. Is that okay?

In November and December, we interviewed each of you individually to ask you questions about the budget and really get this process started early. I'm going to walk you through what we heard from you. And this is really to give you a sense of what you feel as a body at this time. And I want to caution you.

This isn't this wasn't you giving directive on what the budget will be.

This is you starting to think about what you're looking for so staff can start to get an idea of your opinions. Um, each of you should have a handout that's summarizing this and it's going to be on the screen as well.

So, the first question that we asked you was about what are core government services and we didn't present this to you as a list of services and ask is this a core government service? is this?

We asked you an open-ended question and you told us what came top of mind. And the most common answer, as you can see, was public safety and emergency services. And that was a a near universal response. This is something that pretty much all of you saw as a core service. And up here at the top, we also have infrastructure, public works, storm water, and schools.

The rest of what you're seeing really comes back to this idea of quality of life, which I think we just heard from pretty much all of you and what you see as your aspiration for the city and the legacy that you want to leave. And it's worth noting that that's not a theme that you always hear in every community.

It's really important to you as a body to be sure that you're building community, to make sure that your residents are taken care of, and and it's noteworthy.

The other thing that we hope that you take away from looking at this is that this idea of core government services isn't this solid black and white idea.

It's much more fluid and flexible than that.

You know, at different times you might even answer it differently. at different places, you might answer it differently.

Um, and many of you said as much in your in your responses. You know, what is core depends on what's going on at the time or who you're asking. So, you all recognize that this is a much more fluid concept than we like to think it is sometimes.

We also asked you about what would you consider in order to generate revenues.

And um I'm going to go ahead and orient you to these infographics just a little bit. The green person holding a check mark, that means yes, I would consider that. The yellow guy with the question mark shrugging, maybe I'd think about it. And then the orange guy with the X, no, I wouldn't consider that. And the size of the icon relates to how common we heard, how common the theme was. So that big green

guy in the top next to reallocating dedications, that means that a lot of you were saying this is something that you would consider in order to generate revenue for fees and fees for services and new taxes or new fees. These are things that you were open to seeing, but what we heard you say is it would really need to be justifiable. We we'd need a reason for doing it. It's not a

willy-nilly, yes, let's add more. And at the other end of the spectrum, we had raising property taxes. This was generally not something that you as a body are open to considering and and we looked at property taxes a little bit closer than that. Like I said, the idea of raising taxes, it's not very popular, but the idea of keeping taxes the same seemed to have a fair amount of consensus around it.

On the other end, reducing property taxes or even reducing them to revenue neutral because we're a little bit more middle of the road, but leaning towards no, we wouldn't consider it. It's not as popular. Again, most of you are coming around this idea of like we should keep them the same.

And the last question that we're going to go over today is what would you consider in order to reduce expenses?

And these are listed in order from most likely to consider to least likely with those on the left being the ones that you would be most likely to consider. So reducing funding to dedications, most of you are very open to that at least to having the conversation. Same with identifying efficiencies and eliminating vacant positions.

I will say that though you were open to it, these are when we spoke to you, most of you gave a pretty qualified answer.

So, it wasn't a blanket yes with the eliminating vacancies. It was most of you were saying something along the lines of if it's been historically vacant and the unit that the vacancy belongs to seems to be running okay um in spite of things and reducing funding to nonprofits, outside agencies and consultants.

I would say as a body you guys are kind of in the middle on this. Most of you recognize that this is a very small portion of the budget. Um, and that a lot of these organizations provide services that the city doesn't and that they provide a lot of positive impact. That said, if there was a reason to look at it, most of you were open to hearing it if there was a good

justifiable reason. Same with eliminating programs. That's the biggest yellow we had on on any of those. And that's because all of you, not all of you, most of you said if there was a reason, you would listen to it. But it's it's not cut and dry. It's not easy to just eliminate programs. And you can't just say yes outright. At the very end of the spectrum, we have laying off employees,

and that's pretty much just a a no. A few of you said that would be a a last resort oper option in a dire situation.

Um, and I just want to say again to re-emphasize that this wasn't firm opinions. This was really about getting a sense of where you are at as a body.

And we're going to hear a lot more about different issues related to the budget today. And after we hear those presentations, we're going to revisit these questions and ask you, is this how you feel? Um, is this the general direction that you want to give staff?

Are you prioritizing reducing or investing?

And none of this is final or formal.

Again, this is preliminary guidance to give staff so that when they come back to you in March with a draft budget, it looks a little bit closer to what you're hoping to see and that there's a lot more opportunity at the front end of this process to shape things. Um, formal discussions will come later.

Thank you.

Mr. Mayor, do we get to ask a question?

Thank you. Um, sorry to gum us up a little bit, but I I just wanted some clarity. When you asked all of us, I I can't remember um raising property taxes or keeping property taxes the same. Are we talking about the real estate tax rate or are we talking about all all of the tax revenue streams that that we realize?

Um, when we asked it, we were talking about the property tax rate, but real property.

Um, we didn't make that distinction during that conversation.

Okay.

Yeah.

Uh, and just to emphasize what Laura said, this was this is intended to remind you of some of the thinking you were doing month and a half, two months ago. We're going to revisit it all today. Uh, we just wanted to share generally what your off-the cuff thoughts were back then. We'll when you're grounded in all the budget information, we'll revisit some of these questions.

Thank you. Yeah.

All right. If no other questions, we're going to have Kevin start talking about a lot of the budget information.

Hey, good morning, Kevin.

Good morning, Mayor, Vice Mayor, members of council.

So, I'm going to see if the clicker here progresses forward.

There we are.

Good morning.

So, in light of the conversations of the uh that city council had in their one-on- ones with Fountain Works, um one of the things that we thought we would start having a conversation with today is the budget process. Uh the current budget process, where we're at in the budget process and the information that we've been able to gather, as well as uh the framework or the timeline where city

council was providing the responses to the questions they were asked based on the information they had at that point in time. So, this is typically uh the slide, the timeline that's presented to city council forformational purposes.

Um, starting in August, we always talk about how the operating budget's a year- round process. It really is. We begin forecasting revenues right out of the gate with only a month of data. Uh, but we're really looking on the prior year actuals to be get a framework or sense of how the revenues are trending. we have an idea, a conceptual idea at that point in time of large budget drivers

and things that we're able to pencil in that might be big knowns. Um, we also incorporate in at that point in time information or direction provided by city council as a part of the rec pre prior year uh budget reconciliation process where city council might have given direction to explore gather information to report back to city count or for staff to report back to city council. And then in August, uh, city

council had their focused action plan retreat, which again allowed input for us to work on developing the operating budget and, um, guidance. Uh, in September, we began, um, formally, uh, the budget process by working with departments to give them a sense of operational targets. Um, that's what we typically told refer to as the amount of local revenue that we're able to identify um, to provide departments in

the building of their operational budgets.

They then go um in the months of October uh and November and they build their operating budgets internally and then they submit them um for the budget department's review in the month of December. Um in November, city council might recall um as we h have historically done, we engage with city council and the public and what we refer to as the five-year forecast. So, it's a preliminary look and the first point in

time where we're comfortable, somewhat comfortable with the revenue projections we're seeing to engage city council to give a sense of how things are trending as well as what some of the budget drivers might be uh in December. Another important note of that is that's whenever the governor's budget comes out, the governor's proposed budget, which we're able to look at and review as part of

the budget's operating um review of individual department submitted operating budget and get a sense of what those impacts might be for the departments but also for schools.

Went backwards, need to go forward. Uh in January, uh we begin a one-on-one budget process where we um individually meet with each department to discuss their operating budget and operational needs. Um VRS, we gather that information, the Virginia retirement system. Every couple of years, the rate adjustment is made by VRS determined by the actuarials of the fund. So the city participates in the Virginia retirement

system. And so it's a process that happens every two years where they establish the rate for all the localities in the localities's budget and plan for a contribution rate amount up to that. Obviously, we're here right now at the city council retreat trying to give an update on additional information we've gathered to this point in time in the budget process. And new um to the process this year is the

school's deliberate working towards having a budget focus focused workshops internally as a part of their operating budget process which u will result ultimately next month in the month of February of the city receiving the superintendent estimate of needs um about two weeks later than what we historically have.

And so that's just something worth noting as the schools are trying to revamp their operating budget process as well. Don't know why it disappeared.

There we go. Um, also uh important about next month, month of February, that's whenever we'll get the real estate assessment information. Thank you, Katie. Which is a big component of the operating budget. It's really our last big revenue source um and our most important revenue source in the development of the operating budget that we get.

In March, uh we received the school's um proposed operating budget.

um the city manager's proposed operating budget based on the input and guidance from city council will be presented on the 24th of March and then from that point in time we'll have a series um historically have had a series of budget presentations to city council and in the month of April we'll have two public hearings before the May process uh which will lead to city council having a

reconciliation process which is um city council letting staff know the changes and modifications that their recommendation recommending to make to the city manager's budget and then ultimately adoption by May 15th which is the mandated adoption deadline for purpose of schools having a operating budget. Um so this is the typical process that we work through. Um and there's some things cut off here. So

I'll go ahead and plan on reading this to city council if if that's okay. The input into the development of the operating budget is really a year- round process. Right. So each month, every Tuesday, city council's having discussion and the topics of discussion typically focus around priorities of the city council that staff are taking as input in the develop of development of the following year's operating budget.

Um the budget department works with various stakeholders throughout the year engaging, presenting um revenue information, specific fund information, um gathering input from various stakeholders throughout the community.

We engaged with civic leagues presenting the operating budget, the proposed operating budget for their input um as well as other interest groups within the city. Um city uh budget office engages in task force meetings and typically has an analyst assigned to each of those gathering feedback and input from the task forces that are then um given recommendations to city council for consideration of policy guidance.

uh new to the uh process this year was um having um meetings with PISK pro process improvement steering committee um and giving input and feedback to them and providing information to them so they can give city council a list of recommendations for for consideration trying to provide them an answers as best possible. Um and then we have several online tools, SpeakUp, VB, uh balancing act tools, and we got a lot of

civic and process engagement um tools that go into the overall development of the operating budget.

Um, but kind of a a softball uh I guess point of discussion that we typically like to ask city council at this point in time in the process each year is what's the city council's preference in terms of the budget presentation format.

Historically, um, over the last several years, we've had a focused concentration of every department director providing a overview of their proposed operating budget, what's included in the city manager's um, budget for their considerations. uh gives an opportunity for the public to not only digest what's included, but also for city council to be able to ask questions and receive

responses and input uh provide input on each department specifically, but also something that we would like to ask and for guidance on. Is there a desire or request to have a special called session on March 31st, the fifth Tuesday in the month of March to allow for an additional city council meeting to discuss the operating budget?

So, do we want that to have that discussion now or at the conclusion?

I think can we leave our options?

I I'll tell you what, why don't we just play it by ear? You know that that's my thought. If it's necessary at the time, you we can do that. But, you know, if we get the information as we traditionally have gotten in a timely fashion, it may not be necessary. But let's put a placeholder on it.

Those are my thoughts as well.

Mr. Mayor, I'm assuming you're speaking about the possible fifth Tuesday. Um, but what about does council want the traditional cadence of having um all the key departments and all the CIP sections coming before them during the budget session?

Michael, um, thank you, mayor. I would just like to share that that that's sort of been the way that um the council has operated as long as I've been a member. But I actually think that we miss an opportunity uh to have a more meaningful discussion about the budget because we spend so much time on those presentations. Um and if I'm going to be really blunt about it, we don't always

get the full picture. I mean with with great respect and deference to the professionals who come before us, they don't come and tell us all the always all the hard and bad news. So we sort of get a rosy picture and that informs the discussion. I think we get all the information in I would I guess what I'm trying to say is we spend so much time on those presentations. I think we are

uh responsible and capable enough to to receive that information, process it individually and then sort of do our homework and then we can and then I would rather leave that time for more meaningful substantive conversations than the boilerplate, you know, PowerPoint after PowerPoint after PowerPoint. um we learn a lot and I think that's a good thing but I think uh we're capable of of

reading and processing that information independently and the time would potentially be I'm welcoming other people's thoughts but the time could potentially be better spent actually having meaningful dialogue about the things that we've read rather than just receiving the information. Uh before I get to Hutch and Josh, uh would it be better to have executive summaries, you know, that we have in front of us? Uh

may maybe in a form of a SWAT analysis, you know, from each department uh you you know because once again, I think uh you know, the point being we got to know what the challenges are too. And uh you know and you know you know budget time is a contact sport and uh you know but once again I I agree with Michael because uh yeah let me put it this way. I think a lot of

gets lost in translation when we have one department come right after another and things of that nature. Hush Josh and Cash.

So uh a couple things. one is is having, you know, and I'm going to keep referring to the gallery back over here as having come from over there. Um, getting to speak in front of the body was of the utmost importance to me. I felt like it gave me a chance to speak to y'all, you know, and be a part of it.

Um, so I respect that, but I certainly hear what Council Member Beluchcci is saying. I I want some more time. Uh, I've now done this enough to know that I want to have some more meaningful discussion around the table time. So, I was thinking about a um, and I've been thinking about this a little bit now off and on for a while is um, like the first four folks that are sitting over there

in the gallery right now, we see quite regularly LJ more than more than his share, I think he would say. Um, but the others we get to see. So uh and I and I want to say this too is I feel like we have um we are in tune with our departments. I feel very safe in saying that everybody here you know we know what the needs are. We feel their pain.

We know the vacancies. You know Patrick keeps us well informed everybody else.

So, is there a way to do like maybe and Patrick I would I would you know give deference to you um and the mayor and the vice mayor as far as figuring this out. Is there a way that there are four or five departments we got to hear from every year like this is what it is and then the other departments go every other year and or there's a top you know some number of a

hybrid there to where we are getting them and like every two years some of the other departments that don't really need to come in front of us uh do I'm just putting this out there as Michael said for some conversation it feels like to me there could be a middle ground that could save us a couple of days to have some meaningful discussion.

Thanks.

You know, before we move on, you know, Hutch, you know, I think what you you say is good, but you know, maybe the comp the compromise instead of having as referred to as the death by PowerPoint that we have an executive uh summary in front of us. the department head comes up, we already got the information and the questions we need and and and then just have a instead of somebody coming

to give a you know 40 minute presentation you know they're just in front of us you know to answer the questions based off an executive summary just a thought okay Josh and then cash well thank you mayor and um to your point and to the others that were made um you know especially budget time and the volume of information that's coming before us. Um I agree having something in front of us adequately beforehand

uh in paper or on the online it would be extremely helpful. Um sometimes even our weekly cadence where we get stuff on a Thursday or Friday and we got to make sense of it, ask questions and have you know string a sentence or two together by Tuesday to have something intelligent to say about it is you know um especially with the volume that we deal with. So um you know any any written

materials that can be made available via you know executive summary or otherwise that maybe can be uploaded to a shared drive that we can look at you know at our leisure um and you know backed up by the paper materials would be helpful. Um I completely agree with council member Beluchcci where you know that the time is the most precious resource we have right so um yeah I just remember there

was a conversation we had I don't remember when but it and coastal I think got nine minutes and that was you know couple hundred million of our budget because we were talking about something else that cost a million bucks for about an hour. So, um, you know, trying to to avoid those kinds of situations, um, would be helpful. And then, um, I would I would put back the question on staff,

too, because, you know, they've been involved in this and it's been the same kind of cookie cutter in a way for for many years. So, what would be what would be better for them as well? I would really like to know that how um and and I value obviously what um, Council Member Hutch said is everybody should be able to if you're a department head come before us and speak to us. So, and if

that means more meetings, um, you know, that's that's why we get paid two bucks and 85 cents an hour. So, giddy up.

Um, and and that's a fitting um launch off for me. Um, talking about the working class, right? And so the working class, if you are a council member and you truly are a part of the working class, you don't have enough time to visit every department when a certain issue arises, right? And so I think a meaningful conversation needs to be had.

Councilman Belaluchcci, I really echo that the executive sum summary is appropriate. But most importantly, I think um when you come on to council, you are hit with so many uh departments and you're going to meeting after meeting. It's not until your uh first year into council that you understand the different departments. What do we have 72 plus departments?

Got 30. See my point talk about inflation. Huh?

To your credit, it feels that way. It feels that way because some of the departments like public works are several.

Yeah.

So, so I think at this point I can identify the department heads, right? Um I can have meaningful discussion because I really do understand their issues um where they would like to go as a department. So, I I'm very much in favor of what uh Mayor Bobby Dyer said about an executive summary, but I'm very much in favor of us having a um a meaningful discussion when I'm just not at their

department and I'm on a hour um I really get to hear them ask them questions as if my constituents would ask me questions so that I can translate that back to them and then I can really say the uh cities input is actually happening. Not my own input, but the public's input is actually happening. Thank you, Rosemary and Jennifer.

I've been doing this for a while and and I agree it's it is death by PowerPoint.

However, I do think it's very special time where we get to see all of our department heads, a lot of them that we don't see throughout the year. And a lot of it's because they're doing such a great job and there aren't any issues that but I think it's important to see the people that are running our city and all these different departments. So maybe if the staff can somehow magically

figure out these convers these comments and put something together possibly a blend of where we can I think it's important to see our department heads.

most of them we only see them once a year and I I think that's is important but to maybe have executive summary um do the SWAT analysis the pluses and the you know uh the needs and we you know we also need to know you know what else they could benefit from and and thrive from as well as some of the areas that maybe aren't as important. So I know this kind

of I think it sounds like an impossible task for staff but we have an amazing staff.

No, thank you Rosemary. I agree. That's why I think if we had the executive summaries and just uh instead of having a presentation have a discussion you know that you still engaged you know with the department heads would still come uh but but once again like I said instead of a presentation there would be a discussion and I think you bring some very valid points in your there you go now now it works Jennifer

thank you mayor and I'm just going to reiterate some of the what you all have mentioned which is I think it's not only that they come before us but what kind of information are they giving us. So like what information will be useful for us as we're deciding priorities. So I think the SWAT analysis is helpful. Um I don't I don't know if this is useful or not but I'm thinking about you know in

terms of the public um you know what constituencies do the departments interact with and what are the needs that they're seeing through their interactions with the public. I think that to make it more meaningful and more substantive um we can give more guidance on the kind of information that we need.

So that's just where my mind is. Thank you.

Thank you.

Just real quickly, I agree with what I think is the sense of the body here and that is we do want to hear from everyone and it should be like a one-pager summary uh executive summary. All that being said, I do think towards the end, but like in before the public hearings or around that time, I think we as a body also need to be talking about the bigger picture where where we are

revenues and expenses and what can be what can't be in the budget. Maybe not wait till reconciliation, but um before that I think we should we're missing a little bit on that. I know this is a lot of time, but that's why we're here.

Thank you. You know, that being said, you know, um I think if we had uh you know, basically you know what Hutch was talking about, Michael was talking about you know a blend where we had more time among oursel I think reconcilation would be a you know far far smoother per uh you know process um you know reconciliation is you know that's where the rubber meets the road but you know I think the more

discussions we have among ourself instead of being a captive audience being bombarded with information that we can take each one of the 30 departments and you know discuss it dissect it uh go back and forth have the interaction with the department head you I think it's just a um going back to my organizational leadership days um you know a better feedback loop of communication that goes before us and

then also to demonstrate to the public that we're being more deliberative and thinking about things and going forward.

Just a thought. Patrick, do you have any comments on this?

Um, it sounds like what I don't have clarity on is that it sounds like council, you guys are divided where some of you all want a more thematic approach to um the budget process that allows for you all to focus in themes and have more conversations, but then another portion of you all still want to have all the departments come by and present to you all. The only way I can see of

reconciling that is to give you all more meetings, start earlier or add additional meeting days. You know, we could go through a hybrid process where we have a cadence of departments come one year, always being mindful that you probably want to hear from your public safety and public works every year, but have the other ones on a two-year cycle.

And then also then focus on themes like compensation like um C certain CIPs or certain themes that's going on in the budget. Like for example, last year council could have had a whole session on top of about EMS billing or other kind of things like that. We could morph it like that and keep the current schedule without having council start at 10:00 every day, you know, for the next

couple cycles. But if we want to if we want to focus on thematic things and have every department come through, that's when it kind of gets complicated because when you're in the budget season, it's not just the budget that you get the luxury to focus on.

Everything else still comes along as well. Like you remember 2 3 years ago, it was the it was a collective bargaining conversation that came because you got the the mandatory requirement once you got noticed. So something's always going to come up.

this year probably likely with the legislative session that's going on.

There's going to be a significant amount of things that's going to come up during your budget cycle. So the council never has the luxury of just the budget we could amend to a hybrid approach and a thematic approach if council wants us to do that. you know before we get to Barbara um you know because you know once again I think my s you know the you know just you know a thought but once

again we'll decide this collaboratively you know to get the executive uh summary but instead of the usual drill with the PowerPoint with stuff that's sitting in front of us have the department heads actually come and be available for Q&A explanations because I'm sure once we see the executive summaries. You know, they're going to be questions raised and also it's an opportunity for

justification of items, but I think this Yeah, let's agree to at least uh, you know, drift towards something like this.

Barbara, what what did you have?

Well, I just don't want folks to go away thinking that we don't want information.

I'd much rather have too much information than not enough. And it can be up to me to decide what's the important stuff and what is something that's not important. So, I really I'm afraid we are giving the impression that we don't want to to hear the interpretation from the staff and so forth. So it may be that we might want to have some basic sessions and then have some extra sessions for people who

are interested in asking more questions and the folks who feel like they have enough wouldn't have to come. So we could have a choice uh of people who, you know, who who do want more information uh to be able to to get it if they want it maybe on an extra day that we could have for for those kinds of sessions. So uh I I don't ever think I've gone away thinking I've had too much information.

Michael, I think Mrs. Henley raises a really good point um about um kind of a hybrid. Uh, I agree that we want all the information that we can get. And the point that I was trying to make, I think maybe I wasn't as articulate as I should have been, is that I think we can glean all of that information. I still want the information. I just want it written

and in advance and then I want to be able to have a discussion about that with if I have more questions and with the council and with the manager and with the relevant department head if necessary. And we always have the ability to I mean everyone is so accessible. If we have a question, if we have a concern, we can always reach them. So the more information we can get, the better. I just don't know that

it has to be presented in a PowerPoint in these elongated sessions in March because I think I think the uh citizens would be better served by a collaborative discussion that prepares us for reconciliation. That's the point that I'm making. So I'm wondering just just an idea just brainstorming um maybe it's a high level so it's a um you know by portfolio so we have a public safety day we have you know uh human

services day you know or however it's it's organized and then um we'll have chance to ask questions based on all the information we got I don't I'm not asking for less information I'm actually asking for more just in a different format and then that will give us time to answer questions and then that would give us the flexibility if we needed to schedule one or more days to say I've

got some questions about animal services division for example and I'd love for the director to come there and maybe we can strategize that as we go along but I think getting all the information written and that's accessible to the public as well so they all have it in the same format we have it and then they can share with us their perspectives and um and uh and wishes about how that is

formulated. as we move forward.

Pino Hutch.

So, the three of you like where we're headed there now. I hope that helps you. And then what I was going to say, and not to try to get in the weeds, as I just said a minute ago, but maybe instead of the SWAT analysis, which can be longer, is a bluff method, you know, where we where the directors give us just that up front and then we have the other. So, they

could talk for a minute and then they would but it would be a minute. We're not talking 15 minutes and a history of the departments and stuff like that because we know that. So then that way it would help with you and I'm also in agreement the portfolio way and you pick a couple that would talk and if we had the paperwork then if we had some other questions we could delve in and

say hey you know what is it about this part that's so important to you? So that to me feels like a even I'm not even talking about saving time right now. It feels like a good new way to try something so that just to change it up a bit to get a feeling. But by no means are we not going to be informed. I don't I don't worry about that at all. I'm I'm

not for me anyway, you know. And then along what uh Hutch and Mike were talking about, I I think the point is that if we have these things preemptively and they get out to the public and the public views it and then the public has the ability uh to get with their council people and and so now we get more multiple inputs instead of educating the public or just having them come, you know, to two public

sessions uh to discuss it with us. you know, if we, you know, I think a public education uh component of it, let them see what we go through, you know, because one, once again, if you squeeze one end of the balloon, uh, it puts pressure on another side. Um, you know, so, but once again, you know, I really think it's always been an interesting exercise when we ask the public, you know, put them through

an exercise similar. What do you cut?

What do you want cut? what are you willing to give up to get to what you need and how difficult it is to come to a consensus during a budget.

Yeah. Yes.

Just real quickly um and then council woman um Ameilia Ross um I just want the public to know that it's not just these meetings that we are or I or the other members are stopping to learn about these departments. It's throughout the work day or the work week where I'm dropping in to visit uh do uh director Kimberly Knight at the library and uh or the library uh department and so I can

understand how the library works. So I just want people the public to know that it's just not um we're getting all of this information during retreat time.

We're we're also making special visits.

And so this is a a culmination of getting the information that we need and not just a central meeting where we're getting all the information then we're making a decision because that wouldn't be um a a a good process. You need throughout the year to visit department heads based on your community needs.

Thank you.

Amelia, do you have anything?

Yes. I was just mentioning where you have you all mentioned about the executive summary. I think we still need the SWAT analysis because that tells you how the department is feeling what they feel they lack or what they feel their strengths are. So if we have the portfolio uh put together along with that SWAT analysis we can look at both and be prepared to ask the hard questions about those areas. I also like

um what uh the mayor mentioned about the public education because you suddenly sometimes have when it comes to public hearing. We said well how come you're asking this now and that's because maybe that's the first time they have been exposed to knowing this is being cut or that is being cut. So this way all along the way they cannot say we didn't know you were going to cut up uh employees.

who didn't know you did this. They can see it through the process we're going through. So, we need all parts in there, the executive summary, the SWAT analysis, feeding it out to the public in a timely manner so that way there's no question and we have public say all along. Thank you.

Thank you. Stacy, do you have anything?

Sure. Um, I'd like to hear from each of the department heads because I'd like to hear how they're going to be more efficient and reduce cost so that we can reduce the burden on the homeowners.

So, I would be totally open to hear from everybody on that.

Yeah. Now, I think uh you know hopefully as we you know you know start to finalize it, we we got the discussion out there. It's like any other thing and can be refined over time. I think you have the best of all worlds if you you you do have face-to-face contact with each department head. You know, you know, Hutch kind of mentioned that that's a critical, but I I think what

we're talking about is format and that is that we preemptively have an executive summary, a SWAT analysis or whatever method we do. And that way you have a discussion with the department.

Hey, can you just justify uh why do you need these FTEEs? Um you know what are the other things? What are what are your priorities for your capital needs? And these are things that can be discussed.

So you know once again rather than a presentation, it's more of a interactive discussion which each department head which is televised based on information uh that was preemptively given to the public. I think it makes for a robust and more transparent uh you know form of doing things. You know we can work out the details but I think this was a very good discussion.

Okay.

Everything's definitely tentative here.

I I'll just add I took notes on your discussion and when we come back to debrief later in the day, we'll make sure we're all on the same page.

Okay.

All right.

So, the next portion of this presentation is just going to include information that city council and the public have seen before. So, this is kind of what Julie was talking about earlier. A lot of this is just going to be refresher information just to remind city council of the various challenges and um components of the operating budget as we continue to navigate it.

So, we typically have this or provided this to city council a couple years ago and we've kept it um current and up to date and what we call the myth of the $2 billion budget. It's not that the budget isn't $2.8 billion, but it's that whenever you start dissecting it into different groupings, it's there are more compartments and there's things that you have to navigate um making the

challenges what seems simple of finding a 4% across the board reduction much more challenging. So this is the visual.

Uh so for context, starting at the top is the FY26 operating budget, which is about $2.8 billion. And then as you start working down this, you start taking revenue sources off that have to be used for a purpose for which they're actually being collected or or generated. So for example, uh enterprise fund revenues, public utilities, storm water, those are revenues that are collected through specific fees and

charges for services that have to be utilized for the purposes of that enterprise fund. So as you work down um excluding the enterprise, state, federal um and then the next category, the SSD, that stands for special service district funds. That's taxes generated specifically for the purposes of enhanced services in a geographical area. Again, the revenues have to be used for that purpose. Navigating the

dedications the city council has been well briefed on and up up to date on the last couple of processes. Uh schools revenue shared with schools through the revenue sharing formula as well as their department specific generated revenues.

And then whenever you exclude things such as the uh tax exemption programs and the department specific revenues. So give a sense as to what I mean by that.

Uh so the planning department is a good one for example. They have various building permit fees um that they charge for the application processes and the services. The departments generate those to support the very programs within their operations. So whenever you exclude all those things, there's really about $683 million remaining that's shared out across all the other general fund supported departments.

But then there's other things that have to be navigated and without reading to city council, these are the things that we typically refer to as the musto or the citywide um initiatives, things that keep um keep the city operating, right?

Such as we have to meet our existing debt service obligations. We have federal grant match revenues that we have to meet. Um, working down the lighter blue section, grants, contributions to uh, regional entities or regional organizations. Um, about $5.6 million. Again, not large parts of the operating budget, but still things that we have to navigate as we're working through it and developing the

budget. And then you get down to the things such as utilities, leases, fuels, etc. So whenever you start working all that down and you allocate the resources to cover those needs, you have a residual about 451 million which then gets shared across all the various departments um supported by the general fund. So I've just got these in groupings um to try to give uh context.

So the top group public safety type departments um about 54% of those resources go towards that. The next grouping down are the constitutional um city council elected official type departments. Then you got the serviceoriented departments as I'm calling them such as human services and public works. And the purpose for isolating these those are our two largest departments. But whenever you

look at the amount of local general fund support that actually support those departments, you'll see it's a much less amount as compared to their 100 plus million dollars um in the operating budget. And that's the reason the reason for that is they have a heavy amount of state and federal revenue that support those programs and services. Uh and then the bottom portion that's the remaining

20 departments that um share the residual amount of general fund local government resources. So that's a crosswalk of the allocation of the $451 million. Um and so city council uh in seeing this information a couple of years ago, this was the the demonstration of how difficult it is in trying to make a 4% across the board reduction because unless the public safety departments share in that 4%

across the board reduction, then it actually generates very little just reducing the other remaining departments by 4% which again just kind of makes it difficult to navigate.

Uh, this one's new. I've called this one the myth of the 700 vacancies. Part of the discussion city council was having with Fountain Works was the topic of reducing some of these vacancies that are communicated or understood within the operating budget. So, it's not a myth that there's 700 vacancies. So, whenever a vacancy reports taken, it's something it's a snapshot at any given

point in time, right? There's a natural churn that's going on throughout the year. And if you look at that report at different points in times, the number is going to fluctuate. So based on the information we obtained from HR uh last month, the snapshot of general or not general fund but snapshot of vacancies was about 756.

But following the whole uh exercise, if you start putting these into categories, it creates some extra things that have to be navigated when looking at these vacancies. So for example, 51 of those were are within enterprise funds, right?

Again, the revenues collected by those enterprise funds have to be used for those purposes. So, that's a that's a segment that's not general fund supported or general tax dollar supported special revenue funds. Um, these are the ded majority of these are the dedications um supported by the dedications that we've discussed in previous years such as the tip tap.

State supported positions 176 of those are vacancies, federally funded positions, seven and then grant funded 21. So reducing these vacancies doesn't necessarily generate um general fund savings. All this is going to do is result in a lower amount of reimbursement coming from those state and federal agencies. Again, those are specific for specific programs that without the FTEEs to implement those

then the states and federal government's not going to reimburse us for them. uh dedications within the general fund. Um storm water uh real estate dedication supports FTEEs for storm water purposes as well as within cultural affairs the arts and culture dedication.

And then you get down to the remaining vacancies. So including the public safety departments including the sheriff about 229 um there's about 229 vacancies right now and then for the remaining general fund departments about 203. So the reason for the ups and downs in the public safety type departments are they hold those vacancies and they go throughmies right so at any given point

in time in looking at public safety the vacancy count could depend on what they're seeing in recruitment class coming out and graduating from thesemies and the number of um cadets that are graduating.

So, for several years now, the city's been using attrition savings to balance the operating budget um around $10 million a year. But there's other utilizations of those attrition savings that occur throughout the year. Um for example, you can see here in this table that the budgeted amount for contracting manpower and overtime uh combines about $35 million. The actual amount utilized at the end of FY25 was about $46

million. So, it was a overage about $1 million. departments utilize the vacancy savings within their operations to sustain and keep operations going. A good example of this is I the IT department, right? So for competitive purposes, pay competing with the private sector, there are a lot of hard to fill positions within the IT department.

However, if you look at the end of the year, they actually utilize about 98 or 99% of their personnel operating budget because they're relying on contracted manpower for those services to be continued.

So, that's one way. Um, and then another example is overtime. We're always chasing the overtime. Um, public safety departments are a large draw. They have shift coverages that have to be met. Um, oceanfront events, things where if they're down in some of their other vacancies, they might have to rely on the individuals to come in on overtime over the course of a weekend to staff that event to a proper um ratio. So

again, that's one mechanism that we use attrition savings.

Um, another way that we utilize attrition savings annually within the operating budget. Um, any unexpected event that might arise throughout the year, typically staff will give a recommendation, utilize vacancy savings to cover that. Good example, in 2023, the tornado that hit the Great Neck section of the city. Um the reliance on attrition savings gave capacity for staff to begin transferring

and ensuring that there was a proper staff up to get the um damage of that clear and public works the coordinated effort to get that clean up cleaned up.

Another utilization which is a little bit more sophisticated so I tried to time stamp this is we utilize vacancy savings in the development of the following year CIP. So what I tried doing here is given the visual of this.

So, in the development of the FY26 CIP that we're currently um year one that we're currently executing, when the city manager's proposed budget was being developed in February of 2025, we provided a projection or an estimate of general fund vac general fund um fund balance at the end of the year. Included within that was a portion of assumed vacancy savings that would occur. So the

FY26 proposed operating budget came out in March and within that a portion of the vacancy savings were programmed for the use of fund balance in year one of the CIP. In July the appropriations were authorized in December. This last December uh we received the final audit statement. And so it was not up until that time that we actually had a true understanding of where the general fund

fund balance would be and would we be within our 8 to 12% city council directed policy. So we were fortunately.

However, say that we weren't. What this process of using vacancy savings after the fact instead of on the front end allows is for January to June, say that we were not within that cash position, the 8 to 12%. It would give staff an additional 6 months throughout the course of the year to work scrub the CIP and look at potentially freezing or delaying some projects that utilize the

fund balance. again freeing that back up um to preserve the CA city's cash position prior to the year end. This isn't something that we've historically had to do in the past, but we did utilize at one point in time uh with the pandemic when there was so much uncertainty that was going on. One of the things that we actually did at the direction of city council was we froze about $20 million worth of

appropriations in the CIP that were supported by the utilization of fund balance until we knew for certain where the city's cash position would be at the end of the upcoming audit. So just for reference looking at the CIP, um I'll quickly go through this. This is something the city council has seen before again. Um $5.6 billion CIP. Um but the big takeaway from this is only year one of the CIP is

appropriated. Years two through six are for planning purposes. So those allocation of resources are not anything that could be reduced necessarily to balance the operating budget. Um as what we're only looking at as year one of the operating budget which is appropriate at any point in time.

Similar to the exercise of the myth of the operating budget um in looking and dissecting the CIP, there's various categories that have to be navigated through um when trying to identify the general fund resources or general government tax dollars that are supporting various projects as there's a lot of state federal um dedicated revenues that support CIP projects.

And then this is the allocation um of what those local dollars look like across the various CIP categories that the city manages, buildings, coastal, economic, tourism, IT, parks and w and roadways.

One of the uh topics of conversation that city councils often had um not just this city council but pre previous city councils is a discussion of tax diversification and how do we compare with other localities. We typically do this as a part of the annual operating budget with doing a local look at the Hampton Roads localities. However, at the direction of city council, we did a much deeper dive than this through the

tax diversification report that was provided last year. So, I'm going to quickly walk through this to try to give a refresher reminder um as to what the information was that was provided to city council.

Uh as I've noted, this discussions occurred many times over the years. In fact, um there was a task force established back in 2007 called the Blue Ribbon Task Force that was trying to look at this very thing. Part of the reason for this is largely being driven by um historically by trying to find less of a reliance on real estate tax revenue um within the city to diversify that to position the city um to not only

rely so heavily on that which it can be assumed or p perceived as being a tax burden on the residents. um but also because that's um largely what is driven by state code as being a primary tax source revenue for all the localities within the commonwealth.

So the independent review that we provided and um reported out city council last year had many of the same findings as the 2007 blue task force ribbon excuse me blue ribbon task force findings. um we're largely driven um and the cans and the can'ts are governed by the Commonwealth and state code and in such we do have some flexibility but we're limited in what our flexibility is. The findings um in doing the

benchmarking is that Virginia Beach was a little bit lower than what some of the other comparative localities were in terms of fees and charges for services um but pretty much in line with all the other larger tax categories.

So this is some information that was provided. So each year the auditor of public accounts puts out an annual report um reporting out the tax revenues reported by each localities. So what this table here is trying to capture and reflect is for all the major tax categories uh that the city of Virginia Beach receives and relies on as part of his annual operating budget process.

This is reflecting those as a percentage of the total. So, for example, with real estate 48.9% of the total um revenues received by the city. Um and then the far right column is if you were to take an average of the localities, all the cities um across the Commonwealth, it's aggregating that up and coming up with an average as to what their percentage is as a portion of their operating budget. And if you kind

of go top to bottom, you'll see the Virginia Beach is fairly in line with this comparison here. Um, and it really is not of surprise as we're all operating within the same uh limitations and and legal boundaries established by state code.

This one is a new comparison. Uh the University of Virginia puts out an annual tax comparison tax rate comparison report and one of the things that they included in the report this year was tables categorizing comparison of local tax rates across Virginia cities, towns and counties. So this is a reflection of the reports um reporting out of tax rates within cities across the Commonwealth. Just a caveat about

that. Uh the staff in the UVA, they're dependent on localities reporting the information to them. So sometimes whenever you're looking at the direct report itself, there might be gaps in information. Perhaps the real estate wasn't reported out by a locality. So, what I had staff do is try to leave the integrity of the information um intact, but where there were gaps within some of

these localities um to include the uh tax rate applied within that locality.

An example is within Frederickburg, the real estate tax rate applied is a 80 cents tax rate, 80 cents per 100 assessed value. It's atalicized here as my staff would have added that as opposed to it being in the report.

Um, included towards the bottom in the bold is Virginia Beach and how Virginia Beach's tax rates compare. Um, worth noting again, they're dependent on the information that they're able to gather uh, based on in input um, provided by the localities. You might notice that Virginia Beach's hotel tax rates 9% or local tax rates 8%. Um, outside of the Sandbridge, the citywide tax rate is 8%.

the state does apply an additional 1% regional tax that goes to HR TAC.

However, the city doesn't receive that and it looks like in doing this they might have compared um pro pulled the information as we provided in the operating budget that others might not have uh because some of the other localities here in Hampton Roads that have the same tax rate applied, they didn't include that such as Chesapeake and Norphick. But at the bottom, something interesting as a takeaway from

this table is that the UVA provides a median and a mean um rate for all the cities. And in comparing that with Virginia Beaches, you can see that Virginia Beach is um either at or below um the rates applied across the Commonwealth on a on an aggregate in terms of an average, especially when controlling for the hotel tax rate. If you were to look at that at the local level, this is typically the information that

city council is used to seeing because um whenever you're benchmarking, it's really difficult to try to get a applesto apples comparison outside of not just Hampton Roads area but the Commonwealth. And if you really try looking beyond the borders of the Commonwealth, that's when it gets really challenging. Right? Some information was provided as a highlevel overview or attempt to doing this of finding

Virginia localities or excuse me localities with an equivalent population size or operating budget size across um the the US in different states. But if city council is digesting reading the information, the things that makes it really difficult for the apples to apples is that each locality outside of Virginia has different taxing authority.

they're not necessarily um bound by the same restrictions that Virginia Beach has to operate within the Commonwealth here. For example, some of them are allowed to apply sales tax and generate sales tax revenue based on um streaming services, whereas in Virginia, we can't do that. So, this is the typical information that we provide um in trying to look at Hampton Roads, our our surrounding um localities and neighbors

to see how competitive we are. You can see Virginia Beach is the lowest in majority of the categories. Um, one thing I do have in a in a red box here is the hotel flat tax. So, Virginia Beach has a hotel flat tax of $2 per room night.

uh topic of discussion that came up recently in October. The city of Norfolk amended their policy um their short-term rental policy in the way that the hotel flat room night tax is actually applied.

Previously, theirs was implemented in the same manner as Virginia Beach, one or $3 per room night of the unit regardless of the number of bedrooms.

That's how Virginia Beaches is implemented and continues to be implemented to this day. Um, so just wanted to kind of highlight that because that was a topic of conversation by city council to potentially explore what would that look like, what would the impact of that be if we were to amend our policy, what would the feedback of the community look like? And so even though the rates are one way of

comparing this, the implementation of how these fees are charged or the taxes are charged as well can vary in terms of the amount of revenue that's being generated.

So um kind of to open up at at some point the discussion about the short-term rental um the short-term rental program and the flat tax and its application. We have had um at the direction of city council when Norfick was doing this city council gave direction okay well what would that look like budget has um pro performed a a highle hypothetical and we were able to engage with the rack um at the resort

area to share that information and educate them on the current application of it how the revenues are dedicated and the areas of the city that might be impacted through this policy change however We that's the extent of our level of community engagement. There's likely more engagement to occur prior to um city council would probably like us to engage more prior to giving specific

direction whether to implement or make a modification to the existing program.

But that is something that uh we would like to try to um find time for city council to have a conversation and give guidance and direction on.

And so Mr. Mayor, we covered a good amount. Um, council is free to ask questions about um the myth of the billion dollar budget, the myth of the CIP, um the questions about vacancy, but one thing we also wanted to talk to council about was this council wants us to explore this further for consideration. You know, adding the hotel tax per bedroom instead of per um overall unit. Is that something that

council wanted us to continue further?

Um, I know we initially had a conversation with um, Rack, but also members of the Sandbridge Civic League also communicated to us as well that they'll be interested in having a conversation about this as well.

Okay, let's open it up. Worth Thank you, Mayor. Uh, thank you, Mr.

Manager, Mr. Budget Director. Uh last week this was taken up as you said Kevin at the rack subcommittee and I call it leveling the playing field because uh short-term rentals do uh benefit from our advertising the tourist advertising program the tap fund uh which hotels pay into but currently STRs do not pay into but they do get benefit from the marketing of the city for tourism. So I

call it this committee last week we called it leveling the playing field that STRs are a form of a hotel. It's just a smaller hotel. So the other question with this is how many do you cap the bedrooms because some and like to hear from councilwoman Henley on this. Most of the STRs in Sandbridge are 8 10 12 bedrooms. Do you tax all of those or just some or do you cap that?

And so that's the other discussion because uh we're not trying to get, you know, tax more here. We're just trying to level the playing field. And the STRs do benefit, the owners of STRs citywide do benefit from a lot of the city services and they should in in return pay for their fair share.

No, thank you. Worth Josh.

Thank you, Mr. Mayor. Um appreciate the update uh or the the overview. Um, and a couple of things that just pointed out uh or that stuck out to me were um uh thankful for the explanation of the vacancy savings and how um how we we use those to um to help cover uh exigent circumstances like the the tornado that happened and and and um expenditures on things besides just people um including

the contract and manpower and overtime which is important. Um, and then also appreciated the differentiation you drew between, you know, when people try and compare apples to oranges. It really is just that with a Dylan rule state like Virginia versus other states that don't have the constraints on how they can um, you know, be a little bit more flexible, growing revenue opportunities and um,

and how constrained we are uh, in in in comparison. But um certainly open to exploring the hotel tax as a reflection of occupancy and and the number of bedrooms. Uh hadn't even thought about the you know the 15bedroom situations and how that might be a maybe we step that or you know or some some other way to try and alleviate some of that just all of a sudden impact.

Um, and then because short-term rentals, as you mentioned, Councilman, um, have implicate other services than than do hotels. I mean, they they are obviously create challenges for neighborhoods and and, um, and public safety inspections and things that that hotels don't, but um, and then along along with that, I'd love to take another look at parking um, with short-term rentals. So, okay, Stacy, thank you. Um,

one of the big contentions that some people have with the budget and you've addressed it was with the myth of the 700 vacancies.

Uh, I understand and I think most people would understand about the federal state and the the mandated vacancies or where were but for the city vacancies.

Is there a reason why we could not have a separate line item and instead of calling them vacancies, uh, we had a line item said contracted manpower, overtime, and contingencies for each department. That would seem to me to be a little more transparent and would maybe alleviate that angst that people have with that.

Kevin, before you go, um, in looking at it, it's kind of, you remember when we used to have the non-EP departmental account, right? It's kind of and then council mentioned how that was kind of confusing and um the public kept asking what's non-EP departmental and then we kind of changed and pivoted the name.

I'm kind of thinking of what Mr.

Cummings mentioned is something to like that effect. Obviously they are vacancies but it allows additional clarifying information of what they could be used for. So it could be something that we kind of consider a way of like expressing that information. But go ahead and express your thoughts.

Yeah, council member. Uh to avoid the granularity of the table, we can get that breakdown by department. Um if that's if that's something that you would like to have a sense of, one of the things we do um as a part of the department one-on-one meetings with the city manager is we discuss the longest active vacancies that department have.

is if a department has an FT that's been a vacant a year or vacant for a year or longer, we do have that type conversation with the department. So, we are familiar with it and often what comes about is the example of the IT that I was talking about um where it's a hard to fill position and they're um utilizing contract manpower dollars for it. So, um it's we could shift and in

some cases we have shifted from departments where we've just went ahead um reduce the FTE and move the dollars over to contracted to better bring that in alignment. Um but we can we can find a way to better articulate it and communicate as a part of the budget process um of the vacancies captured at that point in time because it is a changing number. It's a change. Well, I guess it would not change the overall dollar

value in the budget, but it would just clear more clearly identify.

Yes, sir.

Would it doesn't alleviate those questions that people might have about those un um vacancies.

We'll we'll find a way to communicate that.

Thank you.

Okay, worth to on the topic of vacancy savings and overtime, just want to make the comment or observation. A few years ago, we uh increased the fire department's request for employees. And so we saved money on overtime pay. And so there is I mean I know it's a paradigm shift that you want to fill some of these vacancies and it cost money. At the same time it potentially can save on overtime and I'm sure

everyone's aware of that and it's hard to to predict what you're going to need.

You don't know when a tornado or emergency comes along but there is potential savings. I know everyone knows. I just want to make the point that there is overtime savings payment uh if you can reduce that in predicting how much staff you're going to need.

Thank you.

Rosemary, I'd like to talk about this STR thing again. Um do you anticipate that this is going to be part of our budget and if so, how would the money be allocated?

Vice Mayor, that's some of the guidance that we're seeking here because I'm not necessarily certain if council wants us to take this up as part of the budget.

Does council want us to have more engagement before we bring it up? And one of the things that Sambridge reached out to us as well was not necessarily general opposition to the idea, but just more clarity and more desire to to get a sense of what the city council and staff would want to use the funding for if it was proposed. So, I don't at this time I'm not necessarily certain we're ready

to bring something forward as far as a recommendation unless council um wants us to send us down that direction, but it seems like council's open to the idea. The rack is certainly open to the idea and there are other folks in the community who could be open to the idea but want a little bit more clarity on it. So I think what I'm looking for right now is does council want us to

explore this further and bring back more information because we got a sense that rack is on board with it but does council want us to have further more commun uh more engaged with the community and then bring back something forward for consideration and I think a lot of it will have to depend on how the money is going to be used whether you know people want to go that route or not. In my mind, it

probably should be used like we we do the other, you know, just continue using it like we are of the hotel tax, which I think Sandbridge does get a benefit from that as well. Um, but I think that's probably the first questions to be answered is how would you utilize this extra funding? And uh, and I'm glad you reached out to San Bridge. I know Miss Henley asked for

that and and I asked for, you know, I told the rack when they were talking about to make sure that they reached out to Sandbridge as well and and and maybe the cap because the rack had a very interesting breakdown which maybe we can get that for all of the council of how many bedrooms there were, you know, in the with the SDRs and uh you can kind of get a I think over

eight bedrooms. There weren't quite as many. Do you do you recall worth what those numbers were?

Most of those bedrooms, the eight or more really all almost all are in Sandbridge. So that's right. But there weren't that many compared to everything.

Well, it's a small amount. So that's I think that's a real consideration because especially in Sandbridge usually rentals are for a whole week and if you multiply that amount for seven days, it's really does add a lot. So, I I I I think a lot of the hotel people didn't want it capped, you know, but I I think that ought to be a consideration.

Yes, I would very much like working with you on that. I think there's turn on your microphone.

I can't see up there if I'm down here.

I do think we have to look at Sandbridge uh very I mean it's unique because it also allows STRs without conditional use permit and so forth. They have a lot of uniqueness with this STR program. So I think we really have to sit down with that community and try to work all these things out.

Okay. Is anybody object uh directing the manager to at least go forward, get some more information and uh you know bring it back to us for consideration?

Okay, before we have Kevin continue talking, just want to pause there. Are there any other questions or clarifications?

Sorry. um on anything he's presented so far on the myth of the billion dollar budget, the vacancies, the CIP, anything that you want clarification for before we keep going.

Take the win, Julie.

Okay.

All right. So, brief pause there for the discussion of of the U hotel flat tax.

Um so again a recap of some of the information that was provided to city council about a year ago as part of the tax diversification report. Um we tried providing and and we have that information and have shared it with city council again. uh we try providing as much granular level look with within the larger tax revenue resources to try to give context as to if there is discussion to be had about

diversification or rate adjustments and changes. We tried to narrow down as best we could the timeline of that when the changes might impact the residents or who within the local community it might impact. So for example with real estate here uh the rate being 97 cents per 100 generating $84 million each penny generates 8.2 million and then the timing is that the billing or the payment um of real estate taxes due

twice a year on average. Um it's estimated that about 80% of this tax revenue is remitted and paid through escrow accounts, meaning that individuals um pay their monthly mortgage with the lending institution and then the taxes are collected throughout the course of the year and the city receives a payment from the lending institution um on behalf of the homeowner for the for the real estate

tax bill. Um trying to get a look at the individuals within the local community impacted. um we were able to use the real estate assessors report to get a breakdown of the residential unit meaning or the residential and commercial breakdown. So we have a percentage of the property types and it's based on assessed value with 60.5% being residential um 8.4% being apartments 5.8% 8% town homes,

agriculture, and then for the commercial component um as well. And then the information we had provided was again the comparison of Virginia Beach's tax rate to surrounding Hampton Roads localities. So this is the type of information that we were providing. Um some of them got a little bit more complex and complicated like the personal property one for example. This one's a calendar year tax. So any rate

adjustment that was done by city council would not take effect until January. Um so it wouldn't actually unlike the real estate where you might have a portion of it um a reduction in the bill seen by a resident um earlier in the year personal property wouldn't actually happen until later in the year when the bills due or the majority of the bills are due in June.

uh it's a direct payment provided um by the residents or by the business community to the city. There's some categories within personal property that have tax relief initiatives associated with them such as disabled veterans, EMS volunteer.

And then the complicating thing with personal property is there's various different personal property tax categories within that single revenue stream. Um so there's vehicles uh following the table across just to familiarize everybody with it. Um 429,000 vehicle count tax rate being applied is $4 per 100 assessed value with an estimated per penny amount generated um being about $465,000

per penny. And then if you go down, you might notice that each of the various personal property categories have different tax rates applied to them.

meaning that changes in the tax rates within those categories will vary in the amount of actual tax either increase or tax reduction or more or less revenue um depending on the rates that are applied.

So the bottom table here compares Virginia Beach as a locality with the other surrounding Hampton Rous locality localities and some of those other I guess subcategories of personal property.

And then I'm not going to go through all of them again. Um this is just a reminder for city council recap. Um so the last one I'm including on here is the meals tax. The other two um are tax rates established. The meals tax um is a tax rate that's established as well, but this one comes in on a monthly basis.

And so um the tax rate applied is 6% of the sales price. Total revenue being generated is about $111 million, meaning $18.5 million per 1%. And the timing of the tax, this is what I was getting at, is real estate's twice a year, personal properties really once a year. This is a monthly tax. So, it's collected at the point of sale and remitted um by the business owner um each month throughout the year.

So, uh, the thinking is or the estimate is that this is one of the taxes that Virginia Beach applies that's not, um, solely to residential property owners, commercial property owners, or residents or businesses owning personal property, vehicles or, um, assets within the city, but instead this is something that's applied and shared with not only Virginia Beach residents, but tourist.

um and estimated that about 40% of the total revenue is generated by tourist.

And again there at the bottom you can see Virginia Beach's tax rate compared with other Hampton Rose localities.

So um shifting away from the the closing of the benchmark comparison um wanted to provide a update on budget drivers um some of the things that we're seeing.

So, we engaged with city council in November at the 5-year forecast to give a snapshot as to what we see um we're estimating as being some of the potential budget drivers.

So, there hasn't been a change necessarily in our original estimate of the veterans tax relief program. This mandated program still is estimated to equal about $44 million um at this point in time in FY27.

Um that's an increase year-over-year of about $9.2 million. So again, um year-over-year comparison, the city's losing about one penny um more than one penny of the real estate tax rate. There was a change in terms of line of duty.

So this is a mandated contribution um around 2010. Uh this program was turned over to VRS who um VRS we, as we've discussed, sets our Virginia retirement local contribution rate. Well, they also establish our local contribution rate towards this premium in that the state program where if an individual is killed in the line of duty that they receive a set of benefits. And so what we were

notified by VRS is that there was a um increase in the per employee um contribution to that equaling about $900,000 year-over-year growth in this program.

Compensation part of the five-year forecast. I may note um part of the biggest budget driver that we're experiencing or we experience year-toear is related to personnel and compensation adjustments. We've gone into the operating budget estimating a 3% general um workforce increase that's equal to about $17.5 million. But we've have tried making adjustments and annualizing some cost related to the implementation

of the recent market salary survey for such public safety departments and those that were found to be furthest out of market. Um, so for example, I think overtime adjustments increase by about $2.5 million, which makes sense, right?

So if public safety now receives a hour an increase in their hourly rate wage, then the overtime for time and a half or double time um results in an increase in the operational need. And then al also something else we're being mindful of is year-toear um we typically see increases in our contracted manpower or our contractual services annual contract as it's trying to keep up with wages that

are in the market as well to be to maintain competition be able to keep a steady supply of workforce for the city to rely on. Um they're increasing their their wages slightly as well.

Health insurance as an operating budget driver. So this is the information that we had communicated to city council at the 5-year forecast. The top table is a historical review of the city's health fund. The city's self-insured um in terms of health insurance. And so you can see that the revenues expenditures uh relate to any given year's difference plus or minus and then the rolling

cumulative fund balance left to right.

So, historically since 2020, the city's maintained a steady, healthy fund balance in excess of our two-month reserve. So, we haven't found a need to adjust employee premium rates with minor increases in some of the years to employer contribution rates is what we've been doing to try to smooth it out because we knew at some point in time costs were going to go up and we were going to experience a need to give

adjustments. And so, we're actually seeing that now. So last couple of years we've been seeing a draw down on the fund balance. You can see there in FY 24 and 25.

The bottom portion of this table is capturing and reflecting the year-over-year change of expenditures.

So in FY20 we experienced a reduction of expenditures of 7%. In 21 an increase of 11% in 22 an increase of 11% a reduction in 20 FY23. In 24 we experienced a 21% increase in FY25 at 2%. So on average it's about 5%.

But the challenge is trying to time up when that 21% increase is going to hit you um on average. We try to do it have historically had to tried to do it on average and the 5%s worked based on recent market trends. our consultant Mercer um in working with uh the consolidated benefits office is recommending a assumed rate increase year-over-year of about 8%. So what this is tempting to do is plug in a couple of

scenarios and variables.

So, assuming a 8% year-over-year increase in expenditures, assuming a 10% employer and employee contribution increase in FY27 all the way through FY30, the reflection of that scenario is in this table here. So, revenues and expenditures, the difference, and then the cumulative fund balance. Based on that scenario, we would see a continued draw down on fund balance out through FY28 with it going negative in FY29.

Keep in mind, we're doing multiple years planning out. So, um, this is based on assumptions with lots of time to adjust in any given year based on assumptions.

say expenditures don't go up 8% but only 5% as the historical average is then you would see a more favorable trend going forward based on this scenario or this assumption of 10% um the bottom table here reflects the impact on employees and employers with the employee um cumulative citywide having an increased contribution FY27 about $624,000 and then in FY28 8 about 1.3. The reason for that is the rates go into place

halfway through the year. It's a calendar year plan that's being managed.

So the rate adjustments wouldn't go into effect until January.

The employer's contribution, which can just be contributions over to the fund itself. Um it doesn't have to be in the scripted draw down per pay period. Um but the contribution would be about $6 million a year um more than what otherwise would be programmed if no increase of if the increase of 10% was not occurring.

So the question always comes up what's this mean on the workforce? So again this is all assuming we're still um having these conversations working with Mercer trying to get a sense of what the trends are doing. It's not saying that 10% is going to be um the increase.

We're still trying to work on a range, right? It could be anywhere eight um 15.

I don't we're we're trying to find that that middle ground to where the funds in a sustainable path, but we're not also overcharging or over overt taxing the workforce. So, we're still working on that, but this is a visual to kind of help demonstrate. And this is the reason why I landed on the 10% because it's easy to articulate what the impacts might be. So, assuming that an employee

received a year-over-year increase of about 3% and they don't change their health plan selection and they continue to choose the single employee point of service um where the premium increase was 10%. So, the employee in FY26 made $60,000 a year. Their annual contribution towards the health plan based on the current premium is about $1,265.

So the net pay 58,734.

Carrying those assumptions forward to FY27, the 61,800 is reflective of a 3% pay raise. The health um contributions of 1,392 is reflective of a 10% increase with a net pay of 60,47.

And then the visualization of the math is over there to the right with pay increasing 1,800. The health insurance increasing $126 over the course of the year. Um and then reflected on a pay period basis is the last column. Um the asterk there is noting that there's a difference in the pay periods that um health insurance is withheld and taken out versus the number of 26 pay periods

health um contributions occur over the course of 24 months.

Uh so another budget change and significant um adjustment as to what we were anticipating going into the building of the operating budget for FY27 is VRS provided us with our local contribution rate in January. So uh at the time of the 5-year forecast um budget development we were assuming a 1 and a.5% increase um based on historical right. So you can see in 22 it increased 1.9 1.96%.

And then in FY24 it increased almost or 73%. So we have been experiencing increases and so our assumption was well we'll experience an additional increase. Again it's not really a known um it's a estimate that's taken. So on January 14th, we received word from VRS that there was actually going to be a reduction in the VRS um contribution rate for Virginia Beach as a locality as well as I think majority

of the other localities and schools as well received information that theirs is going down around 3%. So that results in an estimated general fund savings of about $13 million net. The reason I say net, um there are some nuances. So, uh, when the city, uh, began being a member of the VRS and paying into VRS several years ago, VRS made a a switch where you had plan one and plan two, which were

individuals who were um, grandfathered in or locked in to a previous Divi defined benefit contribution plan. And then the newer hires post 2010 I believe um are uh individuals that are in this hybrid program where the hybrid program employees have a an option for a locality contribution match that goes into the plan. So in looking at the numbers um we've now seen more of the plan one and plan two exit the workforce

in terms of retirement and we're now seeing a higher percentage of the workforce being of the hybrid. So, it's likely time to start properly adjusting and budgeting for that employee contribution rate. So, that's why um I I mentioned net $13 million adjustment.

Kevin, before you Kevin, before you move on that one, can you also go back to that slide, can you also explain is that 13 million ongoing or one time? And if it's ongoing, the fluidity fluidity associated with VRS rates. So, if we depend on it, just a note of caution on how we should approach it. So can you please explain that?

Uh yes sir. So um VRS rates are reset every two years. Um as you can see from the historical um time frame uh more often than not our rate adjustments go up as opposed to down. Um it's a complicated formula that VRS works through and looking at the um the overall health and the long-term liability of the fund. And what they're doing is assuming future rate of returns at the state level that the pension fund

is going to receive year-over-year to where if there's a downturn in the economy and that pension fund in the long term get looks less favorable, they're likely to adjust the rate the opposite direction as opposed to continue to to reduce it. So there's a good likelihood in a couple of years that that rate could go back up the other direction. I don't know if the full amount um or partial amount, but

more often than not the rate has increased every two years as opposed to been reduced. So there's a good chance in the future that the resource sources will be needed to put right back towards the VRS contribution.

So So Kevin, do you think this is because the interest rates have been higher or what what do you attribute this to? So the report that comes out from VRS of their annual briefing, it is complicated um and complex and they put a whole lot of variable changes in there. Um a big part of it is their assumed rate of return that they're anticipating based on how the fund has been performing based on investments

that have been made over the last several years um in the market. Um but curve balls come uh like for example my understanding of the reason for the 1.9% adjustment up in 2022 was they changed their calculation on assumed life expectancy of individuals because again they're thinking about the long-term what could an individual have to pay over the course of their retirement. And so that adjustment

obviously impacted the overall long-term health of the fund. And so that was a contributing factor. So there's a lot that goes into it um more than only the market, but that is certainly a component of it.

Stacy, thank you. Kevin, going back to the health care, um somewhat familiar with that. Sometimes um minor changes in coverages or deductibles can lead to significant cost savings in in the plan. Is that something that we look at? doing on an annual basis or is that uh not considered?

So as the um the city and schools have a consolidated benefits office and we have the benefits executive committee. One of the things that we have discussed in recent years are um not in great great detail, but the concept of needing to explore um plan modifications and coverage options should um the the fund and the cost begin to grow beyond what the city um can can handle in terms of

year-over-year growth. So, it's not been done to great length, but there is frequent conversations that happen about exploring the possibility of what if. Um, and it's only been done on the fringes, not a significant overhaul of what offerings are being provided. The last time, my understanding, it was before my involvement on the BEC when there was a a significant overhaul of plan coverages

and it was whenever the um Obamacare or the the federal U marketplace was changing and so there was a need due to mandated requirements to change some of the coverage in the options. Uh but I don't think a significant change in terms of the plan offerings has occurred since that time frame.

I would just say looking at where we're trending u becomes a little concerning for me.

Okay, Michael.

Thank you. Along those same lines, um the school's benefits packages and the funding for those benefits comes from the same revenue that's generated by the taxes we described previously.

And um the schools I guess make their own determination about how those benefits are distributed, but it does impact this entire discussion. And um I just want I'm just wondering if you could provide any greater detail about how those benefits align. We have a consolidated benefits package, but they've historically at times been funded differently and or I should say allocated differently. Um

so could you provide more context on that and then can you just clarify? I think we're at par and I I think as a matter of policy in my view we should remain at par. Um but I don't think we have any protections for that. For example, the school board could decide and the school administration could decide to to implement a vastly different benefits package than is available to city employees

and that would necessarily have a dramatic impact on what's available what revenue is available for allocation as to all these different initiatives and part of our budget. Could you provide more detail about that? I I can uh historically the consolidated benefits office um is a joint um collaboration of city and school staff and reviewing the the health plan. Um historically it was

considered one and the same plan. Uh the city and school rates were the same monthly premium rates. the offerings of the components within the health insurance offerings um co-pays and all that has not diverged. But the divergence occurred a couple of years ago when schools opted to reduce their employee monthly um premiums or their annual premiums for for the tiered services and um I believe they reduced them 47%

um a couple of years ago. So schools in um the current year they revised that and they increased their employee contribution premiums to be on par uh with city employee premiums for all the various tiers and um health plan options that we have. The difference in looking at the tables whenever the rates are determined and set is schools are on a 10-month um pay pay cycle and city's on

a 12-month. So typically the annual contribution as of right now um by each individual selecting um health insurance is the same uh just it looks different on the rate table depending on on the months of that contribution.

But just as a followup it looks different on the rate table. That's fine. I understand that part. But there's no there's no expectation that those that they remain this in at at par and there's no policy that requires it.

it it's historically just been a an agreed upon um it's historically just been an agreed upon policy of establishing them that the city and schools rates for the workforce will align. Um but you're correct there's nothing that that ensures that they establish the exact same rate for employee contributions that the city does. it and I with respectfully historically it I guess it had been an

agreement and then that agreement deviated a couple of years ago and I and now we're back into par. But one of the things just as a matter of consideration I think uh we might want to look at is implementing a policy that requires that we have consolidated benefits. These this this revenue is generated from the taxes that are contributed by the citizens of Virginia Beach. And I I

think it's frankly unfair to put public servants in the position of prioritizing um one a police officer is isn't worthy of the same benefits as a teacher for example or a custodian in the schools. I think there I think that we have a cons consolidated benefits program. I think they should remain in par and I think we saw what happens when they when they fall out of par.

Okay. Anybody else at this point?

Patrick and then Josh.

Mr. Mayor, that's certainly something that we can take up and I think Julie's making a note as we round out the day to see if that's guidance council wants to give. That could be something Kevin Dana um Mark Styles that if the council wanted to do that, that could be something that could be um decided in the school funding formula that's taken up by the council and the school board.

I think that would be a prudent thing.

Okay. Anybody object to that?

Okay. Did I see another hand up?

Oh, Josh.

It was mine, but I was going to ask about the how and you just answered it.

So, thank you.

Okay.

Before you go, attorney's office. Is that are we tracking in the right direction on that? Is that permitted or allowed if the council and the board went to do such a thing?

Yes, that'd be the place to do it because they would be committing on their own to make that a requirement of the funding formula to which they're a signatory.

There we go.

Can I add one more me mayor and members of council, can I can I add one more?

Um, council member Beluchia, I I don't I think there was one section of your question that I didn't answer and it was related to the revenues um allocated to the plan whenever schools made that decision. I'll flip back to the historical look of of the city's health fund. Um you'll notice that the city's fund balance was in the 30 plus million.

The school's fund um was equally in the same cash position um at that point in time. And so whenever they made the switch to it, there was a accelerated draw down on their fund. So the school's fund balance scenario is in a much different state than the school's fund balance scenario. And so I just want to put that out there in terms of the rates um that are are established if they're

if they're at the schools rate, say the schools need a little bit more in the early years um to get their fund back to their two months reserve. um applying the same rates on the city's behalf might might be a little bit too much if that makes sense.

Sorry if I could just follow up. It does, but it again emphasizes my I think that why it's important to to remain par to to remain in par.

But anyway, I don't know how we get there, but I think it's something we should look at so we don't find ourselves in that position again.

Yes, sir.

I could go further, but Thank you. Okay, Rosemary and War.

So, so here's a thought. Um, going back to that VRS that I'm sure the schools are going to save 3.09% too. Um, they have more employees than we do. Quite a bit more. Do you have any idea what their savings is going to be?

I think 14 14 between 14 and 15 million.

you know, so possibly they could use because it's all employee benefit uh money, they could use some of that money to plug that hole.

Mr. Mayor um vice mayor to your question from my conversation with the um school board superintendent not necessarily certain on the source but they are considering ways to shore up um the health fund as seen by the action where they ask council to use a portion of the reversion money for that as well from my understanding as part of the seon the school superintendent is looking into ways to address the um the

fund balance of the health fund as Kevin mentioned and they look forward to bring They look forward to bringing that forward to the schools super um school board. I think the superintendent Kevin and I and Chris will have a meeting on this very topic probably next week where he's going to talk about his possible ideas to present to the board.

Okay. Worth.

Thank you, mayor. If I could switch the topic uh back because you just covered the meals tax. I don't know if this is time to discuss or not, but I'll go ahead and start it. And I just want to make the observation that our meals tax, while it is 6% as a city, we just we did raise it a half a cent last year to raise 9.2 some million dollars, a significant source of revenue. When you

add in the state tax of 6% we're charging, we the government both state and local charging restaurants a 12% tax. I'm trying to compare that, Mr.

budget director with any other tax we charge whether it be the presidential real estate tax, personal property, but 12% to pay to the government for a business operating on the cost of groceries and labor costs and rent and everything, health cost and all that is to me I think excessive. And so the next question is Mr. Councilman Remick, where are you going to find $9.2 2 million or

more because the restaurants as you all know are asking us to reduce it more than the half of a cent that we increased it last year. So hat in hand here but um it is a good I mean 12% is a significant tax to pay for our business.

Thank you can I'm sorry. So, uh, just in looking at the meals tax, um, the comparison of the real estate, that is a tax on the property to the property owner, whether it's a a restaurant owner or a resident. The meals tax is a point of sale pass through tax, much like a cigarette tax, right? uh the business that decides to sell cigarettes, they go to the commissioner of revenue and they

buy a stamp and they then ha add that stamp um price of 75 cents per pack of cigarette and they charge that at the point. So the meals tax is similar to that to where the taxes charged at the point of the service and only collected by the business through through this legislation and the and the tax rate that's established and then remitted at the at the end of the month. So just in

terms of the comparison of the two, one could be perceived as a as a tax burden to the property owner. Um the meals tax is really the burden to the consumer if that makes sense.

Just as a thank you for that but just as a comparison in the state sales tax I think is max percent of 6% local and state added together. That's a mandatory state law but this is at 12% tax. It's regressive whereas a real estate tax is not necessarily regressive. So I just think think the 12% is excessive as opposed to all the other fees and taxes we charge.

Yeah. But worth isn't it in line with what what the rest of the region is doing?

We're the lowest.

We're the lowest.

It is with the rest of the region. No question about that compared to other states and like San Francisco or you know New York I think we're the highest.

And of course, people aren't necessarily worth with due respect, a lot of the states that do have the lesser taxes, they have a significant higher tax rate on all other taxes.

Well, agree all apples to apples, no question. Just making the point 12% seems excessive.

Yeah. Just um you know, I had a conversation with uh Martha from um the restaurant association. So, she just she wanted us to know that and she wanted me to know, right? um Centerville and yet the ocean front is u far away. I I really feel like um we need to have a conversation with her um and with the restaurant um association because I I you're right, we are the lowest, but um

I would love to bring some balance to where they feel and understand we care for them and and I know we do, but some reconciliation, lack of uh terminology, but but we really do need to uh let our restaurant know that we care about them I know we do. You guys have been doing this a lot longer than me, but you know, I'm for the people. You know, I'm about it. Uh,

we'll continue that, but I just want to echo Martha Davenport's sentiment that she cares and we care.

Thank you.

Okay. Anybody else?

Okay.

Okay.

U, thank you. I think if we get into a situation where we may have an opportunity to lower some taxes, I think there's a lot of things that we need to take in consideration. Um, people have to have a place to live.

So personal I mean so real estate tax you don't have a choice and and in a way that's a regressive tax as well because there are people who are retired who are not going to be making any more money and their values are going up and that that is not a that is an involuntary tax. um your personal property tax or your your car, you have to get back and forth to work. You have to have

transportation and that actually would help the renters as well because the renters will have to have transportation as well. So, I think that's an involuntary tax. Um the thing about the meals tax, it's not it's not the entire burden of our residents. that you heard Kevin say 40% of it is paid by the tourists 40%.

So I think if we get into a situation when we are going to be able to lower any rates or give anybody breaks I think we need to take all of these things in consideration of who will get the most benefit from it and uh just wanted to make that point.

Okay. Thank you. Any anybody else?

Okay, Michael. Thank you, Mayor. Well, just to follow up on that, um I know we're ready for a break. I'm ready for a break, too, believe me. Uh, but I just want to say I think it's important as we're contemplating these discussions to really point out in addition to what the vice mayor noted is that for me one of the top priorities and we discussed this at a previous retreat is

about establishing a leader and the the revenue associated with the meals tax is directly is going directly to fund that really essential project. You know, I was driving by today, just this morning, and looking over, and the men and women, sheriff's office, police department, um other first responders, uh they deserve better than to have to train inside a more than 80year-old old elementary

school. And we've got to cons we've got to take that into consideration. We have very very serious needs. Um, and that's I'm not placing any judgment or any any value on a meals tax or not. I don't know where it comes from, but I know we need it and I know the men and women who serve our community needs it. And um, and I hope we'll keep that in mind. What

the use, what is the ultimate use? And it's so people don't have to work all day, come here, work all day, train to protect us, and then have to use an elementary school-sized toilet on their breaks. It's not right.

Anybody else at this point?

All right, Mr. Mayor, we'll take a a 17m minute break. We'll come back at uh 11:10.

17 minutes and 12 seconds.

17 Yeah that's

Heat. Heat.

Heat. Heat.

Hey,

hey hey.

Kevin Kevin has some more information to share with you and we know we're sharing a whole lot of information. I want to just reiterate, we're taking notes of your comments and preliminary like brainstorming and direction that you're giving. We're also putting some notes over in our our wave pool of things that aren't budget conversations, but you want to come back to um later. Uh so Kevin, I'll turn it to you.

Okay. All right. Um, so one of the things, uh, the next thing I was going to talk about was going to be, um, update to the, uh, I went forward too much. Um, update to the revenues that we're seeing in terms of the current budget process and where we're at. Um, some of the state and federal changes and the ups and downs we're seeing with those. However, based on the conversation before, uh I was wondering

if city council wanted to um work through the slide deck related to the short-term rentals. I didn't have that in the information here. Um but Julie thought if there is to be a facilitated conversation around that later on, maybe that background um information could be helpful to council. Either I could do it now or maybe later on if city council wants to come back to it. But just any

preference in that keep going with as is or backtrack to it.

Now what what uh what's the pleasure of council is I think at this point what do you think about you know we can make this a separate topic for discussion in the near future and that way we'll be able to incorporate it into future budget. Is that okay with everybody?

Josh?

Yeah.

Can we see maybe how we're doing tomorrow? If it's an early day and we can I mean if if we get through the whatever we got going on in the morning and we've got sufficient amount of time.

I mean as long as we're all together, we might as well take a shot at it.

Yeah. Just for background, no decisions need to be made, right?

Yeah.

No, it's moreformational than decision.

Correct.

Absolutely. Yes, sir.

Yeah.

Okay.

Okay. All right. So, um keep going. Uh so in terms of the operating budget uh there was a lot of discussion in the five-year forecast. There was um several national headlines related to reductions being made at the state and federal revenue state and federal level that would potentially ripple through and have impacts all the way down to the local level. So some of the information

that we were providing at the time was context as to how much federal revenue is incorporated into the city's annual operating budget. provided this breakdown. So, human services um has about $25 million in federal revenue, housing about $36 million, and schools about $104 million. So, collectively about $168 million, which isn't a large uh portion of the overall pie in terms of the operating budget, but it's

certainly significant as the services that those cover, excuse me, excuse me, as the services those cover are core critical services. Uh some of the programs that were discussed in pretty significant depth of the five-year forecast were changes to the SNAP program, um Medicaid, the section 8 housing voucher program and continuum of care. Uh so discussed were more potential significant impacts to the

housing program which were being discussed and communicated at the time with a potential 31% reduction in federal funding um in the continuum of care program potential $150,000 reduction to the homeless services program and then also a reduction in the owner occupied grants program reducing it from 25 to 10. Those were preliminary estimates based on input from the housing department.

So, um, here we are several months later in the operating budget and there's still a great deal of uncertainty with how the ripple through of changes at the federal government are going to directly impact the local um, city of Virginia Beach's local operating budget. So, in terms of the um the human services SNAP program, it's possible that there could be a $2.5 million uh reduction in terms

of um federal support that will no longer reimburse locality for to administer, excuse me, administering the program. Um this comes as a ripple through, right?

So the federal government is going to push push 25% of the cost burden down to the states and the unknown is what's going to happen at the state level. Is the state then going to push it down to the locality or is the state going to pick that up in their overall operating budget? As of right now, um what we're seeing with the proposal or the government governor's budget as it came

out is that the 25% is going to be picked up. So, um, again, there's a lot of uncertainty, a lot of unknowns. Uh, but that's the status update that we have at that at this point in time.

We're still kind of in limbo. We're hopeful that the state will um continue to cover that, but if it put gets pushed down locality, we're going to need to have a decision point made in terms of funding that gap.

Mr. Mayor, Kevin, um, is there um, a sense of when will this direction be needed? Is this something that you would need in this budget that we're working on now?

because it's like a fiscal year 28 budget.

Yes, sir. That's a good point of clarification. Um, also adding to the complexity of trying to figure out when the timeline is of these or of these impacts will hit the city of Virginia Beach. Um, as it looks like right now is that this will not be something that does negatively impact the FY27 operating budget, but would be something that we need to take into consideration in developing the FY28 operating budget.

Um, some of the things that uh are known is that there's going to be changes in the Medicaid reimbursement program as some individuals are no longer going to be eligible to be reimbursed or covered through um federal reimbursement of Medicaid costs. So, as a result, um there's going to be a impact, but it's too early to articulate and demonstrate what that impact is necessarily. the D

Department of Human Services is going to continue to provide those services whether um reimbursement comes or not because they're required to. But the only question is will um what will the impact be of that loss revenue and will that squeeze something else out of locally supported u program in their operating budget? Again, that's only going to take time to flush out and that's not anything that we can

anticipate um for next year's operating budget. And Kevin, I just want to interject as well. When Kevin says that they're required to, there's a mandate that they provide these services and it's what we're trying to articulate is that currently right now as things project, it looks like there's going to be a need for council to give us direction at a future date on these items, but it's very fluid and it's

changing, right? So, the governor proposed supporting some of this stuff as well. the um the federal government are still having ongoing discussions on this. But what's being proposed in the governance budget and also what was adopted in the great beautiful bill seems to indicate that there may need to be a point when council gives us discussion gives us some kind of direction. However, it's very fluid and

there's ongoing conversations on it as well. Yeah.

Yeah. I'm definitely interested in this conversation especially for our seniors, right? that that's where I really want to make sure we have this um on the table worked out uh so that our seniors our most vulnerable population uh al although uh vulnerable means also our special needs community those two I think the seniors um is where I'm driving home with this we we have to have a discussion on this thank you

okay um just continuing that conversation to try to demonstrate the constant um you know what I think is sometimes the emotional roller coaster of the operating budget process. Uh news came um with the uh proposal of the thud bill um in January 20. Uh we received communication from the housing department that the information that they previously had been provided that they use to basically develop their

entire proposed operating budget for us to review and discuss has changed and that if approved the thud bill would in fact continue the um if not the same level of funding that they currently utilize in federal support for their programs and services perhaps even a little bit more. So again, this is a sense of things are constantly changing throughout the operating budget process and what we're trying to do is

incorporate them as best we can, but there's still a great window of uncertainty.

The real challenge and discussion in um going forward that we would like to receive from city council is each year as a part of the operating budget, we include for reference a city council policy that was adopted back in 2001 that specifically gives direction um and and solidifies the city council's long-standing stance to not supplant state and federal revenue reductions to program in the cuts. Right? So what's

been experienced over time is reductions occur at the state and federal revenue and the burdens in place on the locality and the question of sustainability then comes with that. So in terms of um section 8 housing or um within the housing department if there was was a reduction of $9 million a year in a housing voucher program that would be a very substantial thing for the city to pick up and continue to cover with

growing cost in the future. And that is going to result in different decisions being made in the development of future operating budgets should that be the direction for the city to continue those services or let those services go away without the additional um federal revenue to support those programs. So again, that's just something that we would like to perhaps try to get um some

direction and guidance on as we continue to navigate these potential state and federal revenue cuts.

Barber, just for clarification, if we were to change our policy so that we would supplant federal funds or in any way change, are you anticipating that just talking about it now will do that or would that require a vote of city council?

I would anticipate that the direction in terms of the guidance is there more flexibility to um review that policy or is the city council stance still? No, that's not the direction to to supplement that. Um, we would like alternative considerations and proposals to come out of city man part of the city manager's proposed budget or if the direction was for city staff to attempt to try to offset those reductions, what

would that scenario look like? But I do think ultimately if any reduction occurs in the development of of the operating budget and state and federal revenue, it's going to require an ultimate vote of city council as to whether um the program continues through the appropriation of local revenue or state and federal revenue.

So you say we would vote on it. It wouldn't just be talked about. I I would believe so. Yes, ma'am.

You know, I think we're going to have to it it'll wait and see for now to see how it shakes out over the couple, you know, next couple months.

Josh, thank you, Mayor. Um, Kevin, is it is it possible to have a written restatement of what that policy exactly is and the various alternatives that you just articulated and then perhaps a list of some sort of the services that we need to kind of start thinking about um in in those terms weighing whether because my understanding from what you just said is if if federal and state monies do not

come in the current policy is to not is is is to not cut the programs but to find money to pay pay for sustaining those programs but but but the suggestion could be that we revisit and and take a more itemized view of each of those programs in view of the money coming in. Does that fair perhaps I I misspoke and it it very well could. So the policy actually um is was

adopted by city council taking the stance that they would not um supplant state and federal reductions with local funding um pending uh a discussion of the the impact of said programs. Um so in the development of future operating budgets that if there really is this reduction in federal funding that could really shape the direction and guidance um that staff uses on the allocation of local funding resources in the

development of that trying to stand those programs up continue them or um redirect to other priorities of council.

And and just one followup, do we have a do we have a general sense of the magnitude of like what's in play or what's at risk of of um you know not not receiving potentially in the future?

Um I know with the Department of Housing um whenever they were doing their worst case scenario, I think it was around a $13 million reduction in federal revenue. Again, that's what they had put in the proposed budget for our discussion and review and that came in in December. And then this bill came through in January changing the the outlook of that. So that'll change our our discussion of their operating

budget. But I do know that was the potential impact was about $13 million reduction in programs.

And council members Schulman, the policy, the current policy is in your binder near the end. There's a tab that I think says policy. So it's okay. Amelia.

Yes. Just asking especially over time we've really increased the need for that area for housing neighborhood homeless and so forth.

Have we put a little rainy day fund in anticipation for something like this?

Yes. So, um Dr. Ross Hammond, Councilwoman Dr. Ross Hammond. Yes, we um we do. So there's obviously the city's rainy day general um fund balances, but also I think Kevin mentioned to me before when we discussed this that in some of the especially human services there's a reserve that we use to kind of hedge um how the flow of federal money comes in that could balance it for a period of time or

mitigate it for a period of time but eventually if there are significant changes we would need council direction how best to approach it. Anything else you want to add to that?

No sir that's correct. Thank you.

Okay. Anybody else at this point?

Looking at department specific revenues.

I've made note of these and um that itemization of the myth of the billion dollar budget. So, as part of our one-on-one with departments, um we review their department specific revenue and make recommendations to rightsize it based on actual trends that we're seeing with those. Some notable adjustments we're seeing are in the departments of planning treasure aquarium CVB and public works. Um, with some additional

state revenue being anticipated. So, in doing this, again, um, we're looking at these these aren't necessarily through the result of rate adjustments or changes for those departments, but just the changes in the trending growth of the revenues. And the departments get credit for those. And whenever we see growth in that, it obviously reduces the need of general government tax dollar

supports um supporting their operating needs in the general fund. And then with the Department of Parks and Rec, um we're discussing their operating budget now and they have put forward a series of um proposed rate adjustments and fee increases to support their operational needs of the rec centers.

some general government tax revenues. Uh majority of them are actually trending um right in line with where we originally had anticipated with the exception of hotel, cigarette, and amusement. Um with hotel uh monthtomonth, we're seeing it actually grow a little bit as opposed to the flat growth we had been seeing the last couple of years. So that's that's promising. Uh the amusement tax, we're

looking to continue to monitor that. we saw in looking at last year's actuals, there was a large um contribution or a large payment in one given month. And so we're trying to figure out is that sustainable? Is that going to continue year after year? And so far hasn't. So we're looking to revise that down just a smidge. And then with cigarette, um we're seeing that actually grow a little

bit higher than where we were in the 5-year forecast. So overall good news um primarily for the um tip fund which receives the bulk of these dedications.

Something we're also mindful of, um, we've been seeing growth year-over-year in the amount of interest income compared to the budgeted amount. This is a tricky thing to anticipate. It typically gets posted near the end of the fiscal year, not consistently throughout. That's dependent on when things mature, when um, you know, when investments mature and get posted and allocated out. So, we're going to be

monitoring that and the utilization of that to balance the operating budget. We want to be very mindful of it, right?

because just as it's coming in, it can go away um with a change in the federal rates or if returns aren't materializing like they did in the previous year. So, we would typically try to treat treat that like um fund balance. Think of it strategically utilizing it, putting it towards one-time cost. Good example could be for this self-contained breathing apparatus that we know there's a need for the fire department to

replace in the upcoming CIP at about $10 million.

And then the big um unknown at this point in time, we have a rough estimate um based on the 2.8% estimated part of the 5-year forecast, but it's real estate. It's our largest local revenue source, and we really won't know what that's finally going to be till close to the end of next month when the real estate assessor provides that information.

Um historically, it's been pretty consistent in terms of the original estimate given at the beginning of the process to the end of the process. So, this is a visual I've shared with city council before. Um, I know it's a lot of information going back a long time, but I just find this fascinating. It really tells a story. Um, the blue part of the bar chart is related to year-over-year

assessment growth, and the orange is related to new construction growth. And if you look back in the early 2000s and before that time, each year the year-over-year growth was considerably made up by larger percentage of the new development or growth um represented by the orange line. Um since that point in time, there's been more year-over-year growth in the assessment or the existing tax base um and less on the new

construction growth resulting in the year-over-year growth in Virginia Beach.

Um, I noted that historically it's been fairly consistent, but there have been times when there's been changes, right?

Things that weren't foreseen. The real estate assessor works through looking at a year of actual sales to determine what the market value is and sometimes things can change um that weren't necessarily anticipated. Um, for example, uh, FY23, right? So that was a year that we went into the budget process anticipating um growth of about 3.8% but what actually materialized um in February was an assessment growth of 9.2%.

So that really created um a different scenario or a different outlook on the overall development of the operating budget.

At that point in time, city council um had a decision made and the direction received by city council was to use a portion of the unanticipated growth to be able to implement a step plan for majority of the workforce which was not did not exist prior to um that implementation or that year. Uh another portion of it was decided to be directed towards increasing the minimum wage.

there was a known future increase in the minimum wage that was being slow rolled by the um by the state and so the decision was to increase that to make city the city more competitive and be ahead of that because we knew it was coming anyways. A portion of that growth was used for that initiative. Uh but the majority of that growth that unanticipated growth that happened late in the budget process was directed

towards offsetting um or giving a sustainable bill payer to the flood protection program. So the city council in lie of raising the real estate tax to fund the flood protection program and the bond referendum, they opted to use the assessment growth to dedicate 4.1 cents of the real estate tax rate towards that initiative and that purpose. So again, it's the biggest one and it's still yet to come, but we're

constantly taking input and feedback and trying to develop incorporate all these um all this information as we learn it and plan for the unforeseen.

So that's really the update that we have in terms of operating budget drivers as a change from the 5-year forecast and operational um estimated revenues.

So is there appetite for discussion at this point?

So um thank you. Um I do have a question and and I need to put this out here. We have to have this discussion and it is about cannabis. Um I see as a opportunity for us as a council.

I look at my district Centerville. We've got pop-up shops going up left and right and we cannot tap into that revenue source right now. Um I see cigarettes uh taxes declining. Um a lot of other sources are declining and yet we've got other revenue sources that we can't tap into that are increasing, right? They're making a lot of money. Uh I'm concerned a little bit. I don't see that

discussion. And I don't see cannabis anywhere um in our display in our discussions, our future discussions, that needs to be on the table. Um if we if we talk about keeping tax rate the same, well, how are we going to do that?

You either cut something or increase something. Um what new revenue sources do we have as a discussion for keeping the tax rate the same? I mean, I don't see that. And maybe you guys can help me here.

So, Council Member Jackson Green, as it specifically relates to cannabis, there is currently no authorization from the General Assembly for cities to tax cannabis. The general assembly is currently contemplating what the framework would be for allowing for cannabis use and taxation for the Commonwealth and also for the localities in the Commonwealth. Should the should the general assembly pass

something, we will then we'll get a sense of what it is that we can what we can do. Currently, right now, I think it's contemplated that there's going to be a 2.5 to 3.5 local share if it's passes if it passes out of the general assembly. And council has been proactive in that council has created a cannabis task force to talk about how would we address the externalities and all the different impacts to the

city should the um the commonwealth pass such legislation into law. But currently right now there isn't an ability to tax cannabis. And if it is then it'll be up to the council to determine it and act it if it becomes available to the council. As it relates to cigarette tax, totally understand your point. cigarette tax you cigarette use is going down which is a good thing but we're also

seeing an increase in the pop-ups that you talked about like vaping right that is another thing that the general assembly is still currently contemplating and we've asked the city council have asked for several years for them and other localities have asked for this as well for the general assembly to consider imparting on localities the ability to tax vaping we currently do not have that ability but you're think

what you're saying about the revenues are spot on but as a Dylan rule state you We have to take our cadence and our authorization from the Commonwealth and we're awaiting their decision on several key components of that and if they pass those into legislation, we'll be able to have a discussion with the council and the council may possibly support it.

Thank you.

Okay, Stacey.

Yes. Um not holding you to this but just asking for informationational. The 2.8% uh increase in assessments, is that a swag? Is that based upon preliminary information? in this set the the 2.8% 8% we we work closely as soon as this will go back. We work closely with the real estate assessor um in the development of the uh operating budget. Um we work with them work with the individual

uh for input going into the 5-year forecast that we use to frame that. Um and then obviously whatever the land book comes out to be um at their assessment of true market value come February. So the estimate does come from them based on what they're seeing, but things do change. U I think there was a recent um discussion at a regional economic forum or a regional forum that made note of changes in the apartments

um within the region is growing at a rate faster than previously anticipated.

So you know they're they're working off of the best information that they have.

Uh, like I said, historically we've typically been really close or they've been really close between the original estimate and the end with a little breakage, but sometimes things do change.

Mr. Mayor, um, the city assessor is here. So, Sue, I don't know if you want to illuminate anything.

I don't know that I have much to add to that other than the um, the market is definitely when you ask for a five-year projection when we get there, we don't have a lot of data available at the time. Um, and there were some changes.

Apartments were kind of a surprise this year that did a little bit better than expected. So, um, it it's just a matter of trying to hit that, you know, and and when you when you ask for that 5-year forecast, we've had some changes. My team right now is working really hard to reconcile all those values, and we should have something to city council with some final numbers very shortly here.

Okay. And then just to follow up, has there been any preliminary calculation made to determine what a revenue neutral rate would be based upon the 2.8%.

It it would be roughly a reduction of about 3 cents 4 cents in the in the real estate rate to generate that. I don't I don't have it here in front of me, but that would be holding.

Okay. Thank you. That that would be what the math um basically pencils out to to offset that 2.8%. Thanks.

Okay, Michael, speaking of of the concept of a revenue neutral budget, in in most um conversations when a revenue neutral budget is mentioned, it's it can be challenging for me because I'm aware that the costs as as Councilman Ramik mentioned at the beginning of this of this uh retreat session, the costs go up every year in every you know, in every way related to inflation. So is the

revenue neutral, let's just use the re the the uh the number that's required to be advertised in the newspaper for example, does that account for inflation?

No, it it's the it's a direct calculation based on the amount of revenue that was received the previous year um with the amount of revenue anticipated to be generated. And so that's specifically how the state code um explains or or defines how that calculation is.

That's how the state code defines it.

But in an actuality and in practice, the re the so-called revenue neutral budget would actually be a reduction in in revenue.

Yes.

Yeah.

I'm just I'm just trying to make sure I understand it and that we're all on the same page about what that actually entails. I don't know if I have it in here because that's the challenging part and I know we're getting into this later but when when you have a discussion about reducing the tax burden which we all are uh have affordability in mind but then reducing or eliminating then you have to

have a conversation about reducing or eliminating services in order to achieve that revenue neutral budget and and that's where it gets difficult because people have different ideas about what's essential to the as as what's an essential service in in that same um same conversation thread council member so I had ran this calculation going back right so if back in 1987 if the city council at that point in

time had adopted or reduced the real estate tax rate to adjust for the assessment growth year-over-year so it was 80 cents back in 1987.

And then if it was adjusted according to what the actual change in assessment is, then in FY26, the real estate tax rate would be about $16.7 um equal to about $137 million or roughly the ple cost of the police department.

Um and in doing this calculation and trying to keep up with that over time, you might notice in some years it was adjusted up, right? Because the notion would be when assessments declined after the great recession, then the calculus works the same way, right? There's an adjustment up in the real estate tax rate to offset that revenue adjustment due to declining assessments. So that's

what the fluctuation of this graph visualizes.

Okay, Josh.

Thank you, Mayor. And um Council Member Ruuchi, your your line of thought and and dialogue reminded me of um a question I had asked. It was maybe a year ago in in last year's budget because we had just a natural assessment growth. What and I tried to zero in on how how much that was. Um some of it was attributable building to new construction. most of it was just, you know, um natural assessment growth and

it was somewhere in the neighborhood of $38 million. I wanted to say um and this is I'm doing this for memory but um just with that revenue there um if you take roughly half that that goes to schools and then you've got your dedicated funds like what we saw earlier and you're r left with I mean roughly just say 14 $15 million out of that um and then and then

here we are you just said that employee step p step plan raises for 3% % is $17.5 million. So, um just even with the natural assessment growth, you've got, you know, you got a we we've got employee raises and then, you know, we have um you know, we have payo situations that we have to, you know, un unanticipated cost increases and capital projects. So, um it I'm glad that you brought up the those aspects of the

conversation.

Okay. Worth.

Thank Thank you, Mayor. Just want to add uh the observation that the assessment estimate at this point is about the cost of inflation right now as I believe most people it's below 3% about 2.8% 8% I think most people so that I know assessments don't necessarily follow inflation it's really market driven but I think it's an interesting note but also uh observe that if in fact you have

to dial back the assessment rate four cents or so to make up to a budget neutral revenue neutral um budget then that means that we're lacking in other areas of the budget because re uh real estate taxes are about 40% so the other 60% % aren't necessarily growing at the same rate. So the real estate tax has to make up the difference. That's just a case in point there. So while I don't

want to necessarily raise taxes in the other areas, it it does point out that revenues across the board are necessary to increase.

Anybody else? You know, let me uh go back to my opening statement uh about the necessity to maintain the quality of life that we have right here in Virginia Beach. you know, it does come at a cost.

You know, we spend a lot of money on parks and wreck. I think 88 million uh we spend a lot of money uh you know, on arts because that actually is a economic driver and we got to think about to maintain the quality of life to keep our economics going. And hey, you know, trust me, I'm one of the poor guys on city council. I'm on a fixed budget,

too. But um you know but that being said I think it's essential that we realize that you know I think once again over the last couple years we we have two budgets presented to us side by side a revenue neutral one and the impacts of it and but then also we should also have a budget that we can agree on that would maintain the quality of life and so this

way we can have a compare and contrast but also the public would be part of that and if you know the conversation we had with some of the recommendations from Hutch and uh Michael before you know getting the public involved okay you know what are you willing to cut what what are you willing to sacrifice and things of that nature so I really think we need to compare and contrast you know to Patrick you've done it

before and you know let people see what you know the impacts would be of both budgets. So that's my thought there, Stacy.

Okay. With all due respect, the revenue neutral on the real estate tax does not mean that all the other revenues are revenue neutral. That our sales tax is going to increase. Our, you know, the hotel tax, the um the the other taxes that we charge in the city are all the meals tax, they're all going to increase. So, uh, to maintain a revenue neutral, and I'm not necessarily advocating for 100% revenue neutral, um,

um, position on the on the real estate tax, but quality of life also includes the ability to stay and afford to be in your house. And, you know, the the rate of increase in our real estate taxes over the last several years has made that challenging for a number of people.

So again, quality of life means to be the affordability of staying in your home. So we need to take that into consideration when we're looking at these budget proposals.

Julian Kev, I can wait on this if you want, but I wanted to talk about sort of what Councilman Cummings is talking about about the uh real estate versus the personal property. Do you want me to do it now? You want me to?

It's your call.

I I think it's okay to start now.

Yeah. I think it's Germaine, you know, because we got to look at the big picture.

Yeah. So, I think I've heard around the table and talk personally with most everybody here. Um and and I'm going to talk and ask questions at the same time.

Okay. Well, you know, not at the same time but in the same conversation.

Yeah. In my head. Um, so when we start when we start off, you know, we talked about the real estate tax and I learned this last year, the year before, um, that it's and you know, help me on this stuff, y'all. 48% are homeowners in the city. Is that is that correct? Roughly 48% of homes I got the residential in my head. About 60% right now for some reason that are that are of the population.

He He's not asking about how much of the revenue is No apartments.

Yeah. I'm talking about versus renters.

48%.

It's going to be up way more.

Is it?

This is this is what I have stuck in my head is the res residential. Sue, whenever that's broken down, is that single family homes?

For the for the residential?

Yes.

Um it would be single families probably in condominiums based on that target that you show there. So then probably the houses, okay, it doesn't matter, but we'll we'll move on. Is the the part that I'm getting at is is that for me and and I y'all have heard me talk about the diner a lot and uh I had a robust conversation this last Saturday because this was I knew this was coming and I wanted to get

some input from them. They're not worried about necessarily whether it's their real estate or their personal property. They just want more money in their pocket. And I ask them to a point is is that so they're not they're not concerned if we lower the real estate tax or the personal property tax. And from what I see that the personal property tax has a whole lot more reach across a city. So if we're trying to put

more money back in our folks's pockets, it would come we and and I'm not trying to get in the weeds here and tell you where to do it. Um, but as far as am I wrong in thinking that you have a you have a a much greater reach to our population if we went for the personal property over over the real estate.

I mean, based on the number of records um that are here, the 429,000 vehicles um 25,000 business personal property, I would think it's a safe assumption to make that that's going to reach um segments of the population that otherwise, and council's talked about this before, I've heard this conversation, homeowners versus the renters. um whether you're a homeowner or a renter, if you own a vehicle, um

you're you're paying the personal property tax in the case of either of those scenarios. So, right. So, as long as we so as long as we equaled the amount like you know what I'm saying, whatever that would be if we if we and I'm just picking a number, Kev, if we picked a $100 we wanted to give everybody, you know, save a hundred bucks, it doesn't matter which one it comes from, they're going to see a

savings of $100, right? And then and then we have things that are tied. Are there more things tied to the personal property or to the um real estate tax?

Is there any is there anything there that we'd have to look at? I'm just asking like future questions.

I I believe I know what you're getting at with that. In terms of dedications, yes, there's a lot more dedications tied to the real estate.

That's what I thought. And in the development of those long-term financial plans, which I'm going to get into in um um future presentation of the afternoon presentation, um I'll touch on for example the uh rec center or the parks and recck dedication. When that dedication was established, all future modeling assumed growth in that dedication would occur through assessment growth and the per

penny additional being generated. Um and so there are dedications like that and financing plans tied to the real estate.

The personal property does not. The personal property is really more so um the only shared um component of that is a portion with schools via the revenue.

So then to the layman then the answer is personal property would have less impact on all our other programs.

It would have much less of a negative impact on any. So, I think that's important for our citizens that are watching and when it gets out that that's what we're looking at here. It's one to me. The other is is that when we were looking at that 60% for me a minute ago, I just want to be real clear on that cuz I'm I'm I don't know where I

had the 48%. So, I want to make sure is like those are not when you talk about 60% is that is that rental properties as well that are owned? It it could be.

Yeah, Sue, I'm sorry.

I just want to clarify that slide that Kevin was showing sir council brother Roersonson it was just basically the breakdown of the properties right so 60% of it is residential probably single family and then 5.8 and it's probably townhouse. So, it wasn't signifying that that's 60% owner occupied rate.

I I don't know that I have that number because I assess a property whether it's rented or owned. I might have some income information. Um perhaps some other department has that, but yeah. All right. So, what I'm getting at though is is that the and and it's okay.

I own rental property as well, but the uh if if you cut 3% from the real estate tax and the rental property company still goes up 3%. Then they've seen a 6% gain, right? I mean, I know that's simple math, but uh to me that's that's not where we should be headed. It should be more of the the personal property for the folks that need it. And I keep saying personal property. I'm open to

others, but I'm just saying to me that looks like a a better way to make an impact for our folks with a a larger reach. So, anyway, I'm done. Thank you, Josh. And then Stacy.

Thank you, Mr. Mayor. um in a in our first in the first budget that I participated in, I remember we had this conversation and and um and we personal property tax you it's based on the the the property as owned on January 1st in in the tax year and then I think the taxes are due at by April, right? I mean is it is it is it June?

June the bulk of them are due in June.

Okay. So like a real estate tax rate tax reduction would would be would be implemented in in in effect as of the first the first half of the this next fiscal year which would be the second half of this calendar year. Right? So and those would be paid in December in rears. So if you if you do a personal property tax reduction, you don't necessarily see that the the the resident wouldn't necessarily see the

benefit until next year in in June, which is I think some of the um I would expect part of part of the reason why we we or the prior councils haven't really looked at it in the past is because it's kind of a delayed benefit. Um and and I know that another another one that we talked about was u vehicle registration fees. Um, and how many how many levers

do we have to pull really besides a real estate tax rate? Um, and I remember vehicle registration fees being one of those. And that was also complicated by the fact that some people pay multiple years ahead and and then there would have to be some sort of process to reconcile that. But um but it would be interesting um as as we're as we're talking about it to kind of get what it

looks like you just already did and put up there with um you know what what what kind of what levers do we have to pull and how much of a benefit would it actually mean because I remember the actual benefit was relatively kind of small if you I mean it was like 30 bucks a year to somebody as opposed to the couple hundred or maybe a couple thousands of dollars of relief that

could accompany a real estate tax reduction. So just to have that kind of relative understanding would be helpful.

Hey Stacy.

Okay. Um when when you're looking at personal property tax versus real estate tax, the people that homeowners that are paying real estate tax are paying a disproportionate share of the cost of government. the the uh homeowner versus the renter, if they both own vehicles, they're both paying the same amount of taxes, but now the homeowner because they own a home versus renting a home is

paying an additional substantial amount of tax versus a renter who's not paying that tax. So, if we're looking at giving relief to um to taxpayers, we should look at those proportions. the same people, the two uh two families, one homeowner and one a renter, they're paying the same amount of tax on their personal property, but the homeowner is now paying a disproportionate tax because they own the home. And if we're

going to look at giving relief, I think we should give relief to that segment of the population first. I don't like any taxes. I wish they was a way to reduce them all, but if we are going to be looking at reducing taxes, I think we should reduce the one where there's an uh disproportionate burden uh cost of government placed upon those that live here and own a home.

Okay. Hutch.

Yeah. not to have a debate, but um if if if we do that though and we do just the the um uh real estate, then the person that doesn't own the home is getting zero. So for me, for affordability, if we're talking affordability for our citizens and maybe we have to look at both, I don't know, maybe there's some way to do both. I don't I don't know.

That's that's y'all's problem. Um but uh but if we're It's all of our problem, I know. But uh but to me if you so if you do it just for the person that owns the house of which I am and then you don't do it for the renter then they're getting zero there. There's no there's no nothing for them. I understand the disproportion but maybe we have to look

at that is what that means. But if you you you know if you if you do it for the everybody for the personal property then everybody's getting some to go buy some extra bread or eggs or whatever it is.

So that to me is something we have to at least uh look at.

Okay. Uh let's Worth just Thank you, mayor. Just a clarification because landlords of apartment buildings, they look at all of their operating expenses, mowing the grass, uh pest control, insurance, and real estate taxes. And they put that all in uh as a part of the operating expense and charge that as part of the rent. So in theory, a reduction in real in real estate taxes for apartments should in

theory go to the renter. We don't know that. We we don't make the decisions on rent. Apartment owners do. Just want to make that clarification. So we don't know for sure if a tax reduction in apartments goes to the tenant or not.

Just bringing that up. Thank you.

Okay. Jennifer and Cash.

Cash is laughing because he just whispered, "I'm going before you. Look how look how that worked out. Uh, council member, um, I don't I've been sitting on it because I don't know quite where my mind is going with it, but my observation is on slide 31 to the conversation about the kinds of residential properties that we have in the city. And at the opening, my idea of v a vision for Virginia Beach was sustainability.

And what the trend is showing is we are we have approved a lot of apartment complexes for construction but not homes that people can then purchase and own that would then contribute to the residential tax base. So, I know that one of our issues is that we're running out of land.

And so, when you the slide of new construction and how that can kind of take some of the burden off versus assessment growth, that the trend looks like it's going to be assessment growth more and more and more and more. Um, and how do we balance that? Because then for people who don't have the opportunity to own because they we don't have the units for them. Um, I just see us in a bit of

a quagmire here. And then my so the so the sustainability issue of we're not bringing on enough in my mind opportunities for ownership that are affordable. I think the it's usually like $700,000 is like what the new construction is coming in. So that's that's pricing out a lot of people. Um, but then we we tie so much to the existing rate. So it's so difficult to raise it once we lower it. And that's my

concern that if the cost of everything is as has been mentioned is going up at some point we're going to be out paced in my mind like the the re it's not going to so if we cut while it's going up how do we close the gap on the services that are by policy built into the residential rate. So that's where I I understand the the challenge that we're facing, the balance of I'm leaning

on the side of personal property because of the reach. Um but also just the sustainability of we're not really building more units for people to own.

So the existing tax base is not that tax base isn't growing. Um so that's just where my mind is.

Patrick and then cash C cash.

Mr. Mr. Mayor, it's also important to note and it's it's council's decision and we go over a council send us, but in essence, as Kevin shows with the tax relief programs, in particular, the veterans um tax relief program, you're losing 1% of your assessment growth, basically a penny every year as well, right, as more and more people age in or go into the um the veterans tax relief

program. Also before, mayor, I also want to mention you asked about um staff preparing a budget reduction based on the um revenue neutral rate that is included in your packet. Like if you look underneath um funding requests, we did have the departments go through and present what their budget would look like if they took a 4% um reduction, which was the revenue neutral rate that we knew of at the time

at the 5-year forecast based on the assessments and how revenues was coming in. So, that packet is included in your um 5-year forecast folder.

Okay. Cash.

Thank you, Mayor. Um when I ran for office, I ran um I I was in the auto industry and so I ran um to um cut personal property, right? That's what I ran on. And and that was a candidate before I was in that seat. And once I was in the seat, then I realized that whole departments have been built around the revenue from personal property taxes. That's a problem because um on

one hand, as a um candidate or as a citizen, you think in terms like we'll just cut personal property taxes and um we'll just put that money back into our pockets. And so I came up with this whole plan about tax credit um so that that money will be going back to the residents, the working class. I am truly the working class. When I tell you I am

I am Is there a way for us to get money back? Um and I'm I'm speaking sorry. So is there a way for us to get money back into our pockets? We're not going to cut personal property taxes. That's just that's a nice campaign slogan, right?

But when I did my research in Richmond, we're a Dylan state, right? Uh there's a lot of businesses and departments that rely on that money. But is there any way that citizens could get some type of tax credit back for personal property taxes that they have paid into the system? Is there anything of that structure or mechanism in place or could be in place?

Um, Mr. Mayor, Dana, um, to Mr. Jackson Greens was asking is there a way to for personal property tax for residents to get a credit back a credit back based on taxes paid or there's a statutory procedure called return of local surplus funds and that could apply to real property or personal property tax revenues.

So what Dana is saying in short, council member Jackson Green, is that yes, there's a possibility that the council could declare a surplus in personal property funds and then and then send that a reverse send back money to the public.

I think we have explored that one time.

Yes.

Before, but yeah. Yeah, I think we explored that one time before, but I think the council opted to not go down that route because of the different um restraints and complications from administrative standpoint with the treasur's office. That council at that time opted to because revenues were um above expectations and things were in a different situation reduce the tax rate from 99 to 97.

I understand it is a difficult complicated ask. I understand that. I I I'm telling you, I've done my research for a year and and when I tell you I'm in the I was in the auto industry. I was in the auto industry. I was a top salesman for years. And so I can tell you, I understand.

But but I think we've got to begin to look at four things. Or let's just make it simple. One thing, I've got to return some money back to the residents somehow.

I I mean, I ran for this, but I don't know how to return money back to them if I can't declare that we have a surplus somewhere or without making cuts, right?

I don't want to make cuts. I don't want Right. But how do I return money back to them, have a neutral, balanced budget, and have a thriving economy?

That is the question. Thank you.

Okay. Anybody else? Okay. Let me uh just do a little bit of a capstone here right now. Um since I became mayor, u the term I often use is here we are another confrontation with reality. Okay. And once again, we got to play with the cards that are dealt to us.

Housing taxes are a national crisis.

This is not a unique conversation we're having here today. You better believe every municipality are having it. And uh but you know once again you know Worth and I talked over the years about uh the fact that we are weighted I think we are 86% uh residential and only 16% commercial and you know things of that nature. So the burden of us, we are a residential type situation where Norfolk has more

industry, Portsouth has more industry, but you know, we we can on the residents and you know, hence the the the dilemma and I am very sympathetic because, you know, once again, I pay my residential taxes like everybody else. But the other thing I can tell you, if I had the exact same home on a lake up in the People's Republic of New Jersey, I would I spent every year I would be spent every

quarter. There's a migration of people coming from high tax states moving down here. But once again, we still have to understand that mission creep is up there. But the other thing is too um and you know as we live it all live in you know the world um the increase in taxes only is part and parcel of the strain that is putting on every individual uh you know when we have uh you know we're

still suffering from the uh effects of co you know in terms of inflation and things and uh and especially the restaurant industry was you know still being hurt by some of the things with inflation and everything. My goodness, a Big Mac costs six bucks now thereabouts and it used to be three years ago. Um, number of years ago, my homeowners association was a little less than 200.

I just wrote a check for 470 for that. I just also wrote a Dominion Power check for $600.

Okay, that's not just affecting Bobby D and Trish. that's affecting everybody.

You know, the cost of living all across, you know, has, you know, gone up. So, you know, taxes are part of the thing, but the economy is good. The reality that we have, okay, and Jennifer really hit it, you know, is the cost of housing. And you know the exa uh thing I give now running out of land if you buy a piece of property for 100,000 or 150 the regulatory cost as established by

Wells Fargo is something around $93,000.

So it's costing a quarter about a quarter million before you put the first nail in the first board. So, it's the cost of housing and once again, you know, with the, you know, with all the regulations and the increase of cost with uh storm water and everything, uh I remember what was it a couple years ago, we opened up uh an apartment complex off Hampton Boulevard somewhere and the studios were going for 1,500.

Okay? And that's the that used to be my mortgage before I paid it off. So when you think about somebody living in a studio, uh when you talk about somebody living in, you know, uh one of the apartments, uh you know, that they bet, you're talking about $2500 a year, I'm sorry, a month in rental, you know, for the people that are renting. And that's disposable income, not going to the restaurants, not going

to the Target stores or JC Penney. So once again this is part of a national morass of economics that the country is in right now and for that matter this is going on in Canada uh you know from what I understand you the the h cost of housing in Canada is far more expensive than it is here. So once again I think if we got to look at a a uh you know

situation we got to look at it big picture and globally uh that you know you know we have a decision but once again with the quality of life because you know once again you know the dilemma that we have with affordable housing and you know once again you know when we move towards uh uh affordable housing you know some of the neighborhoods don't like it but I can tell you that the military and I've

been very involved with military advocacy. They are saying we need uh affordable housing. Another cost driver uh out there is really tapping into people is daycare. So, if you take a look at all of the multiple factors that are out there, uh, you know, the cost of food, you know, uh, I mean, where do you go to get a hamburger now at a restaurant and fries for less than 12

bucks when a couple years ago it used to be four bucks, you know, and so, you know, we're just living in an economy.

We got to deal with it. But once again, the secret is we're going to have to find, you know, the balance. But, you know, that's why we're having these discussions.

Yeah Patrick Julie, I think we're pretty much close to lunch and I think after that there's another presentation and then after that we go right into detailed discussions with council on some guidance and some next steps. Is that accurate?

Yes, that's correct.

Okay. So, you lunch time?

Yes.

Hey, don't forget we work for food.

So, Julie, what time do you want the council? What time do you want to council?

Let we'll reconvene at 1:00.

Okay.

We are going to start this afternoon with some more presentations from Kevin focusing on some bigger capital expenditures and then we'll shift the conversation uh to council preliminary budget guidance for staff.

Okay.

All right.

Mayor, vice mayor or mayor, members of council. Uh, so this next segment of presentations is really going to be more um I guess financing plan CIP oriented.

So, a little shift away from the operating budget just a little bit, but we will talk about some of the dedications and how they're used to finance some of these initiatives.

Um so uh included within this segment we'll have a overview of the major project fund as a refresher as to what that fund is what the intent of it and the direction has been of it to be utilized for at this point in time uh conceptual central beach financing plan um recreation modernization financing plan aquarium modernization discussion and then I will be getting out of the way to turn it over to Julie and

Fountainworks to have a facilitated conversation on um overall budget guidance.

Starting with the major project fund. Uh so this is the newly established um special revenue fund the city council put into place in the currently adopted FY26 operating budget. And what this is to allow is a sustainable bill payer for significant capital improvement needs that have been discussed at length um over the course of several budget cycles um including the direction is to utilize

it for the critical courts facility ADA accessibility Indian river road safety improvements VB trailil phase one and the law enforcement training academy as direction came from previous um guidance and retreats everybody at the city of Virginia Beach needs a leader Uh so the um discussion last year in the budget development um as potential utilizations beyond that um could be for

consideration additional future phases of VB trail coastal resiliency um beyond the uh the flood protection program and what's being implemented. Uh but that would be a collaborative effort with the Army Corps of Engineers, a 911 backup center um or even potential utilization for the aquarium existing infrastructure rehab needs.

The components that make up the major project fund are um a.3 cent dedication of the real estate tax rate generating about 2.5 million uh 40% of the town center tiff uh revenue capacity generated from the real estate about $4.4 4 million meals tax dedication of.77%.

There was a partial redirection in addition to a half of a percent increase that was dedicated to this purpose. Um and that came from the open space fund of a redirect of 27%.

So total annual revenue um that's being estimated within the funds about $21 million. So um this is again within a special revenue fund and the intent is to utilize the funds as a long go ongoing bill payer for these projects especially as they move into the capital construction phases.

So here's a scenario or not a scenario but this is a snapshot of how the funds are currently programmed and the use of the funds. So if city council might recall in the development of the current year CIP, there was a heavy emphasis and a focus on trying to utilize cash and put cash to work in the early years of the CIP reducing overall reliance on our city's debt metrics and debt profile in

the outy years of the CIP trying to preserve that capacity. Doesn't mean that capacity doesn't exist within the city but there was just a concentrated effort of putting these resources to work. So currently programmed within the CIP uh is the design funding for the law enforcement training academy. um the VB trail construction gap that was identified with 12.3 million in current year and program 3.1 million FY27

uh for the courthouse design in year current year three uh or next year will be year two of the CIP uh $15 million towards the design um and evaluation related to a courthouse modernization or the um critical infrastructure needs of the courthouse.

$9.2 $2 million um of this dedication is directed towards the design of Indian River Road. And then the residual you'll see if whenever you're looking at the operating budget, you'll see a reserve for future capital. So it has not been programmed, it's not being um put to work right away, but the intent is for the fund to accumulate funds over time to allow for a gradual draw down when

bonds are issued at a future point in time. So again, it's a very strategic look and plan that was put into place by city council um to meet these critical needs.

So that's just a quick recap of the major project fund. Um we had just had a break, so I'm going to move uh to another financing plan um where the direction for by city council was to begin exploring. Uh so city council has been briefed and updated on the central beach um conceptual uh plan for this area of the city. Um one of the things uh that was given was direction to um

evaluate the area here around the convention center and um put together a plan of the what if what could be possible? What would be the desire? So, city staff did a very thorough public engagement um exercise um that lasted from June um 24 to December 24. Had a series of public meetings, interviews with stakeholders, city departments, and then that plan was actually presented to city council as a conceptual plan. So

this is in line uh with what the directions were through the focused action plan initiative 2.14 that was um given at last August retreat which was for the city to understand how to potentially fund the elements of the small district area plan.

So with that um direction I'm going to try to talk through it at a really high conceptual level as to what components of a plan look could look like and what their cost could be. So, as a recap, the Central Beach small area plan was a um strategic vision um highlighting several different areas envisioning this area as a diverse area, place of events and cultures um connective to the um

neighboring communities and then the oceanfront vibrant um and really a driving place to spur uh visitation and overall tourism.

So, here's a map of the various components of the area is the plan that was presented. Components of it include parking, housing, mixeduse development, a sports district, civic campus, um, and then a desire for open space being a park.

Other components of it include sports venues, museum, um facilities that allow for a better sense of arrival to this area with the concept being that you're coming right off the interstate. And so you want to have that sense of arrival to the oceanfront area. Um elevated connectivity within it, raised sidewalks, storm water improvements, trails, and potentially hotel development.

Here's a color-coded map. Uh the plan that was presented to city council came in different various phases um with a uh phase one phase 1b two 2b and then a phase three.

So in using that information and being able to extract from the map the number of rooms, parking spaces, residential development, commercial space, action sport square space, uh square foot space, museums, retail, and then park.

We were able to put this together based on how m many rooms or how much square foot and parking spaces would be added with each phase of the overall development. So you can see to the far right um this conceptual plan would add about 600 hotel rooms. Again this is conceptual plan um being discussed. Uh parking spaces total of 12,880 residential square footage addition to the community about 2500

commercial square foot about 310,000 action sports square foot 160 museum 65 and then retail 150 with the vision of a park being about 2.4 acres.

So something my mentor, previous budget director David Bradley used to always tell me is that a plan without a way to pay for is just ink on a piece of paper, right? And so city council um with this very notion in mind, that was one of the first questions that was asked and that's why the direction was given is how are we going to pay for this? What would the plan look like to pay for

this? Well, in reality, it's way too early to get finite and with specificity what the cost of the plan would be. Um it's just conceptual as there would need to be a determination of what the overall storm water needs are for the area. Are those going to be a public infrastructure investment or private? Um what the street infrastructure improvements would need to be action sports or museums. Are they to be

privately funded or publicly funded?

Who's to cover the cost of an associated elevated walkway? Um the park development. Obviously there's going to be a need to not only if it's constructed but to maintain that over time. parking um infrastructure cost and then action sports and museum question being would that be privately funded or publicly funded as I had noted earlier that's a big unknown um obviously private development components

of this would generate additional revenue to help offset that and although it's really difficult to get into the nuances of all these other things one thing that we can get into and speak pretty clearly about is the cost of parking infrastructure and what that might look So I work through this scenario just looking at the overall parking right. So highle um concept here is that for every

$10 million in real estate improvement or um say that you have a parcel of land and there's nothing on it but then a development comes in and a building goes up that then becomes the improved value of that parcel. So for every $10 million generates about $100,000 in taxable assessment based on the tax rate of 97 cents per 100 generates about $97,000 a year. So in looking at debt service, $95,000

of annual debt service payments is associated with about $1 million bond issuance. So, keeping that relationship in mind, if the city were to issue a $1 million bond, uh we would be able to purchase or construct about 29 parking spaces considering the cost of a parking um space or structure parking is about $35,000 per parking space. So in in notion about $10 million of improved

value would sustainably support about 29 spots of a parking garage if constructed.

So then keeping that conceptual math moving forward, a hund00 million improved improvement value will generate um about $970,000 in real estate tax revenue which would support an investment of about $10 million or about would buy about 286 parking spots.

So, a $1 billion improvement would result in the city having a sustainable capacity to construct about 2,857 parking spaces at $35,000 per space. So, keeping this in mind and working from the previous um conceptual notion of 12,880 spaces. So, if the city were to fully construct that at $35,000 per space, it would require an investment of about $450.8 million, resulting in a debt service

need of about $42.8 million annually, which would require a tax to be generated um of an equal amount. The taxable billings would need to be 44.1 million, meaning you would need an improved value of about 4.4 4 billion um to cover that level of parking. Now granted, this is just giving context as to if those were to all come on at one time. Obviously, a plan is going to take multiple years to

accomplish, but this is just trying to give that level of context to give a sense of how much development it would take to generate about $4.4 billion of improved value. So this is a visualization of the town center tiff.

So the town center tiff totals $1.2 billion dollars. The initial um base assessment of this geographical area back whenever it was established was about $151 million. So it's been in place nearly 20 years. And overall the assessment growth through new development and the organic growth in the assessment base has this area totaling about $1.2 billion. So you would need a TIFF um theoretically

larger than the town center tiff.

Kind of further um taking a look at it and looking at some of the other components. So some general assumptions were to be made in terms of revenue um to be generated through real estate improvement for 600 hotel rooms uh residential units of 2575 and commercial square and retail square footage of 460.

You can see that's a highle estimate of how much real estate um improved value would be associated with those. So then if you were to um net out from the existing um base the existing value which keep in mind that's how the tiff calculation works for town center right the original um geographical area generated $151 million in improved value or the assessed value.

So that was kind of frozen at that point in time and then incrementally over time the improved value generated tax revenue that was captured and put into the tiff.

So the notion here being within this geographical boundary there's already an existing improved value or existing real estate value of about $104 million. That would mean there would be a net improvement of 638 which would generate an additional $6.18 million in real estate revenue.

So the realities of the central beach financing plan is that um private development of the parcels will not likely generate sufficient but for revenue alone um to cover the cost of infrastructure should the city um be responsible for covering 100% of the infrastructure cost. Um however it could help offset a portion of it. the tip fund um as a current status would not have sufficiency to cover this level of

an additional investment. So the likelihood of the tip fund alone um covering this the conversation will really need to be more than just tip fund looking to potentially use the parking enterprise fund um adjusting rates to get back into a status of perhaps issuing some bonds for the parking enterprise fund. general fund might as well have to provide some additional contribution to the overall project.

And just the reality that if there is a desire to establish a tiff within the geographical boundary, it will likely need to be substantially larger than the um plan area. as a sustainable plan um based on organic growth uh will likely take decades to mature and develop sufficient funds to be able to slowly develop this um vision over time.

Just to give a sense of additional context of the improved m value, um here's a visualization of the assessed value um broken down by real estate by city district. So, here's the 10 districts. Um, district 7's about 5.9 billion dollars and district 10's about $5.3 billion. So, again, keep in mind if you were to get 4.4 billion in improved value, um, it would need to be almost the size of a whole citywide district.

Um, also just another conceptual to give context to this. uh through the city's real estate assessor's website, you're able to um pull about 300 parcels um in within a geographical boundary. So, I've tried um doing that using this tool and picking up this area all the way down to the oceanfront. Um so, within that, the boundary um the assessed value of these properties was about 8.1 million. I need

to footnote that um because you can see that included within that are public properties that aren't necessarily taxable. I think there's some church parcels, but I'm just trying to give um a sense of what the exercise would need to look like um if a tiff was desired.

So, but how the math would work is if this were a tiff and all this were taxable property, the $8.1 million would be the base year assuming a 3% assessment growth. Next year, the 8.3 um million would be the assessed value, resulting in about a $200,000 incremental growth. Um I'm sorry, taxable value uh would result in about a $200,000 additional tax revenue to go into the TIFF fund.

So, some other uh things to be mindful of whenever it comes to a tiff. Um, tiffs are subject to the city's baseline tax rate. Meaning that if the 97 cent tax rate is adjusted up or down, that tax rate applies to the tiff. So that will impact the financing plan of a tiff as well. And then also something else uh to be mindful of is being a long-term strategic plan. Whenever a boundary is

drawn and the incremental growth is dedicated towards a plan such as this, then that just means that the general fund or other dedications are not going to receive that organic growth that would have otherwise occurred to support general government services, but instead it's been committed and dedicated to a a plan, a financial plan.

So, I'm going to keep going if that's okay because there's a couple of more um CIP things here to talk about real quick. Um this one's related to the Oh, sorry. And Mr. Mayor, do you want um do you want us to keep going or does Council want to pause and have a qu conversation about what was just recently presented to him? Because the the subject will change going to the rec

center modernization and want to spend some time and have some questions about this before we move on. Okay, any questions at this point of Worth and then Barbara and then Josh.

Thank you, Mr. Mayor. And if I could quote you on this, uh if this isn't a confrontation with reality, uh I don't know what is, but uh this is really a wakeup call. Um I think it's a great plan, but I from day one, I think this is really a 10 to 15 or 20 year plan.

So, it really is a wakeup call. I mean, you're just part you're talking about parking alone, not the talking about infrastructure, storm water, and other things that probably will come along with this. Um, that's not addressed here. So, um, and then ways to pay for tiff, expanding the tiff, when that's, you know, can be very controversial. So, um, and we do have two outstanding RFPs

that are in this area that I think one is, you know, perhaps a way to pay for it. the 19th Street parking deck and then the sports tourism is another one we we haven't seen yet but anyhow and then um you do have a property on the northern part of this that's also I think a part of this conversation that's the current mocha property that is in front of us as well so there's a lot to

consider um but it is a confrontation with reality patrick and Mr. Not not to intercede too much in discussion, but I I just wanted to clarify. This isn't to scare council away from taking cautious, deliberate steps in it, but it's exactly what you said. Um, council me, this will take decades. Town center wasn't built in year one. It was built over 20 years, right? So, really, it's kind of saying

it's you won't be able to to do everything that is contemplated in that plan and certainly not everything that is being proposed by developers. So, you all won't be able to get done in one time. But the iterative steps that council's taken like for example we parking is an issue that we need to solve for and if we take parking offline we're going to cause ourselves a problem. So 19 in parks let's see if we

can raise park index and possibly wrap that around right do that and see what it does and start to generate revenue and then be cautious and careful as we go into the other um opportunities that are there and see what kind of revenue it could unlock. It's not just city revenue. It's not just parking enterprise fund revenue, but it's a whole host of other different revenues that we would need in order to bring

something of this scale to fruition as the council did over decades for Town Center and other places as well. Yeah.

Yeah. Before I get to Barbara, um I have heard of, you know, cities building parking decks by himself and then inviting economic development to come in, you know, as you know, just that to get things facilitated. Barbara, uh yeah, this of course is looking at the major projects and includes the central beach district and the sports tourism in that area. Of course, the area that I've been working on with the

sports tourism is down in the ITA with the outdoor sports. Is that a different project?

I mean, that's not a part of this because I certainly don't want to lose track of that project because um two budgets ago in 24, I asked for an update of the master plan for the ITA and what it would look like and how it could be implemented. and I asked that it be prepared by October of 24, which it was.

And it came out then and was presented to the council and was presented to the public. And we've got a real big stack of uh support letters from people from all over the city to have this done. But of course, we haven't gotten there. And when council saw this at that time, I think what council said was, well, let's look at the soft cost and the lowhanging fruit and move forward with that, which

would have include things like the connectivity of the trails and the cross country track, which is desperately needed by our high schools and our colleges with track. And of course, this is two years later, and we haven't moved forward with any of that. And I certainly want to make certain that this doesn't get lost now because this is the time that we need to be doing all of

this and I I want to make sure this is a part of what we're we're looking at.

Okay. Thank you, Josh.

Thank you, Mayor. Um and Councilman, I guess I'll be your glass half full, so you're half empty. Um because I even though those are really large numbers um you know some of the things I wrote down just what the manager said I mean town town center itself over a 20-year period that tiff isn't even anywhere near close to being built out um the road improvements with Cleveland Street um

will unlock the central village district and there'll be um a heck of a lot more um taxable improvements that um that that will will make that we'll make that story even better over time I think. Um and Town Center also uses SSD. So I mean th that those types of things where um where we can use an SSD or some other some other layer uh that that is coming from I guess project revenues uh to help

pay for operations um and uh capital maintenance uh and and then you know even if we look at the we're looking at the this potential area as a tiff I mean we we can look at those boundaries to really maximize the benefit I mean that tiffs work where there's zero taxable improvements on them already. So, I I bet you we could probably be pretty creative drawing lines on properties that don't have buildings on them. Um

and and obviously the tiff can be used as a source of reinvestment once the bonds, you know, get get paid off um after their natural life cycle. So I I mean yeah really big number but if we phase it and do it I think carefully I think um there's a path to to you know potentially moving forward with it. Um my other question is the major projects fund. Um and I know I know the the use

of those funds um I guess have been directed by council in a series of conversations and and various council retreats and and such. But um and through a bud budget reconciliation process as well. But recognizing the need to stay flexible with those funds as as needs arise. Um, I'm just gonna ask out loud whether or not it's a good idea for us to talk about a written policy to to kind of define some loose

parameters on on projects that are eligible for for those funds so that um so that current priorities can be maintained on the one hand um and we see those through but also so that it doesn't become a a fund where it just gets picked apart.

Patrick, Mr. Mayor Stacy, Mr. I mean, I think the council did adopt some language about the use of the major projects fund, you know. So, obviously, Kevin, I don't know if you have it up in front of you, but I I did, council member, I didn't get into it. Um, and and I should have. I apologize. So, uh, the ordinance that, um, increased the meals tax rate of half of a percent, um, did in fact dedicate

that specifically to, um, for the prioritization of construction, modernization, and maintenance of infrastructure, um, related for the purpose of public safety and judicial administration. So there is already um in the the code or in the ordinance um to establish this a earmark for that dedication um for half of a percent of the meals tax to be specifically for that purpose um in perpetuity unless

otherwise directed by council.

Right. But that's that doesn't cover the entirety of the meals tax or any of the rest of it.

Correct. No sir.

Stacy.

Thank you. Yeah. There's an old saying um how do you eat an elephant? one bite at a time. And when we're talking about Central Beach District, that's exactly the way we have to approach it. I think Councilman Schulman touched on this that when you look at the entire project, it's daunting and you say, you know, where do we start? But where we start, we have an RFP out for the 19th Street

garage and we look at we'll look at those proposals and if when they make, you know, if they make sense, we'll build a garage. we can wrap it, it'll pay for itself and it'll open the way for the next phase. Then we do another building and that that makes sense and that'll pay for itself and it'll contribute. So I I think if we get lost in the uh overwhelming aspect of the finished product, we'll never get

started. But if we just take it a piece at a time and say this makes sense, let's do this now. this and we have a good plan going forward, then before you know it, um you know, hopefully I'll live long enough to see it, but before you know it, we'll have it built out and it'll be a beautiful u beautiful place and it'll be a place that we'll be proud of that'll bring more more and more

visitors into the city. So, I don't I hope we don't get lost in trying to determine, you know, uh the entire pathway forward. Let's just take it one step at a time and and we'll be fine.

Okay. Anybody else? I think Rosemary.

Um I I agree what's been said here and but before we spend any money on 19th Street Garage or anywhere else, we need to form the tiff district so that that baseline can be established and whatever values will start to accumulate from that point on to start paying for this.

Okay. Yeah. Let me just say, you know, worth along, you know, another example of confrontation reality. You know, when I walked in from the elevator, there was a bucket catching the water coming from the ceiling. And, you know, that's another capital project uh that we're going to have. You know, we got a lot of capital projects out there uh that are going to be addressing. But let me just

say, I think over the last couple years that we are moving in the right direction. Uh when I first got on council in 2004, 2005, and for a long time, u the beach shut down over, you know, over the summer, you had two shoulder seasons, a winter season, and there was I I remember going to dinner on Christmas about 15 years ago, and there was only one place open for Christmas dinner. Everything else was

shut down. But I think we see we're in a state of positive transition now where more and more people are starting to live at the oceanfront. Uh more businesses are here uh with the sports center online with the dome and you know the wave park and you know with the residences are there we're going to have new thing you know we are already creating that new uh revenue by keeping

the ocean front. We found out um you know once again over the years we always said oh my god a lot of stuff goes into the oceanfront but we found out during co especially the first year how important it was it was to us in term of being an economic engine that did keep property taxes low and did keep the quality of life and as a result of keeping it open there was a significant

and you know what was it year after co Kevin was it like a 3.23.4 billion positive impact, you know, we got by just keeping the beaches open, you know. So, I think that's, you know, that's an important thing. Yeah. The idea here is to create the new revenues that are to sustain us in the future.

Barbara, uh, back to what I was talking about with the, um, outdoor sports. Uh, when I asked what I had to do to move forward this area being designated a sports district branding, what I got was that I have to send a an email to the city council notifying you that I'm requesting this. So maybe this will do as the email. Uh, and this is what it was and and the name the um goal would

be to name and brand the Sports Plex Fieldhouse Hampton Road Soccer Pack area as a sports district. And so the operator of the Sports Plex has proposed that the city name the area around the Sportslex Fieldhouse Hampton Road Soccer Pack a Sports District. This branding would help with marketing the sports facilities located in the area and help create a sense of place. I have asked

the city attorney to prepare a draft resolution that would identify the district boundaries and apply the name.

Once completed, I will share the draft resolution with you and seek additional sponsors for its inclusion on a future agenda. I know the folks out there at the Sports Plex uh are are full every weekend and they have fantastic things going on and if we can complete that area, I think that will go a long way at a far less cost than it's going to cost uh the indoor sports and so I do hope we

can move this forward and I would like to bring that resolution forward uh soon.

Michael, thank you. Just as a point of clarification, my understanding is that there's analysis underway to look at sports tourism and the and uh and the ITA more broadly as well as a comprehensive plan update that's currently underway. So, is it premature?

I don't think so. Uh premature two years when I asked for it two years ago. Um, but I mean, shouldn't we at least allow for the completion of the staff work that's underway?

Well, I I really didn't know we had had that underway again, but anyway, I would like to pursue this if it's all right.

No, you know, but you know, once again, uh, you know, I think it, you know, the idea is that that we find a happy marriage uh, you know, to, you know, accommodate certain types of growth that obviously the Navy is in concurrence with, uh, for revenue generation and still have, uh, you know, the ability to do things. So, you know, I think a hybrid model is something that we should subscribe and move toward.

Stacy.

Well, just to support um Councilwoman Henley here, you know, I think that with the ITA, the general consensus throughout the entire city is that at least a portion of that should be dedicated to action sports and there's a lot of land out there and I know that we are waiting on this study, but again, I think there are certain aspects uh the lowhanging fruit, the cross country track that we could

start moving forward on at least in examining uh is that what we want to do because there's there's some really great opportunity out there to to move this forward and we've um you know I just don't know that we're taking advantage of it right now and it it can be uh really beneficial to the entire city and I I would like to see us also move forward with some of the aspects of

the sports that sports area uh that we we know we can take advantage of now.

Okay. Patrick, Mr. Mayor, members of council, there is space allocated after Kevin um completes this presentation for council to give us guidance on operational priorities that they may want us to invest in, but is also as well as strategic CIP priorities and those conversations can be taken up.

Then to Mr. Cummings point, council could ask us to explore funding opportunities similar to what it asked for in a focus action plan for sports tourism and um economic development opportunities in the ITA. That was already guidance that council gave us as well. And we could bring that forward in the proposed budget as council awaits the final product as it regards to how we can reconcile the three uses of

municipal uses expansion for economic development opportunities and also for active passive sports tourism.

I think that's a good path work. Thank.

And so on a separate note, back to the central uh beach plan here. By my calculations, it's about 80 acres. A good part of this, which is should not be necessarily a part of this discussion today, but should be considered in the future. Some of this is private investment, private. So that will generate tax dollars and revenues. It's like the green to the bottom, for example, or on the blue at the top uh on

the side, that's private. But a lot of this the public area we don't we own. So we can't necessarily tax it, but there could be future dollars generated in in private investment that mostly is residential. Thank you.

Yeah, I think a barrier to success there. Uh, you know, once again is the joint noise implications. Um, yeah, you know, kind of limit what can go there.

But I I think some of it is doable. uh but not to the um the density that you know I think you know the the main principle wants but you know we once again confrontation with reality.

All right so Mr. Mayor if there are no questions um Kevin wanted working with parks and rec staff wanted to bring forward a plan that we have as it relates to addressing the three oldest um rec centers.

All right. Uh again, there'll be space I think in just a little bit whenever Julie comes back up. But um this information here is just uh the direction we're headed in the development of the proposed operating budget. After working with the parks and recck department, um we've been looking at their special revenue fund and seeing what capacity exists within the special revenue fund to sustainably support the

modernization or recapitalization efforts of the oldest um three facilities that they have. So, um for context, the parks w uh operate within a special revenue fund for the overall maintenance and operation of the various recck centers throughout the city. They uh charge fees for services um program fees and then those are collected and all managed within that special revenue fund. This was established in 1993 again

as the intent of a long-term sustainable plan to um not only construct the the rec centers but also um operate them over time and ultimately replace them.

So the funding um is derived as I mentioned the user fees but largely by a 3.467 467 cents real estate tax dedication that the special revenue fund receives.

Uh so background um this is a very uh much condensed slide in terms of the exercise that parks and recck went through um to do an evaluation um of a modernization study that was conducted back in 2020. Uh there was various options and considerations taken into account from um simple uh maintenance of it to not only replacement but expansion of some of the facilities even potentially adding uh new facilities to

be maintained by the parks special revenue fund. However, due to funded funded um funding limitations uh and with the aging of the facilities um there is going to be an accelerated need um to move towards the replenishment or excuse me the modernization or recapitalization of the oldest three in the more near term. um that being the Great Neck Rec Center um which was constructed 1990, Bayside which was

constructed 92 and the Princess Anne um which was constructed in 1994.

In working with parks and wreck um these are the estimated cost options that have been put together for a uh for a framework of the modernization efforts being discussed. $47 million for Great Neck, $43 million for Bayside, and $35 million for Princess Han. Um, worth noting is that each year, uh, that construction is delayed or the programming construction doesn't get underway, um, there should be taken into

consideration a cost, um, of inflation, escalation, um, which will ultimately result in additional um, construction capitals being needed if they don't get moving sooner rather than later. Uh so the preliminary intent is for construction timeline um to be for two years for each of the facilities. Those that were here before receiving the briefing from Michael Kerschman. I think I even did a joint briefing with him at

one point in time. Um there's a staggered approach that goes on goes into this, right? So as one facility comes offline um you're able to then redirect the staff to the other facilities so that way you're not going dark, if you will. and sending staff home. Um, and then you're up against it trying to turn all the lights back on and staff back up. So, there's really a staggered strategic approach that goes

into planning this out um based on the uh tenative construction start of uh Great Neck being FY 2728, Bayside being 2930 and Princess Ambian 3031. There should be capacity within the parks and recck special revenue fund uh within the existing dedication as well as with moderate fee adjustments going up um sustainably over time for charging for additional services and keeping up with the cost of inflation to

where the special revenue fund can sustainably cover this recapitalization effort. There's also a um component going on in the parks rec special revenue fund similar to what is going on in the tip fund. City council might recall that the tip fund has a declining debt service um payment in future years related to the complete um the paying off of bonds associated with the construction of the convention center.

Here you have a similar situation going on where the debt service is retired being retired in the parks special revenue fund also contributing to some of that capacity that can be redirected towards this initiative. So just with that um just putting on here um unless otherwise you know directed through conversation or direction that would be the intent or what city council will likely see uh in the submission of the

city manager's proposed budget and CIP for your for your consideration and review discussion or Okay, Josh. Thank you, Mr. right here.

Um I want to make sure I read that right. U six years of uh that a rec center would be closed um in between. So one rec center down for at a time for years.

All right. Good.

All three.

Okay. Thank goodness. Thank you.

Okay. Michael and Cash.

Whoops. I honestly uh just want to make a note that to really compliment you on um in the manager on developing and your respective colleagues on developing a really extraordinary plan to address this modernization need.

It's been looming and it's been hanging out there and and I honestly think the for me anyway the awareness that we have these expenses coming up has been challenging to contemplate some of the new things that have been proposed time and time again. We have to put first things first and you know we talk about affordability and um and efficiency. we c we can't expand the reach of this

municipal government while ignoring the needs that we know we've we've had and I think this goes a long way to addressing some of those needs. So I think it's really fantastic and I I really want to thank you for developing a reasonable um and cost-effective way of addressing these modernization needs. Uh so I I will say that but I also have a question. Um I know it's a much smaller

scale but it's also very important. We have kind of a similar challenge around the playground replacement schedule and is there any similar plan to address that? I mean the neighborhood playgrounds are at the end of their useful life cycle in many instances and there are so many of them that are coming online for the that need for replacement that we've got to figure out a plan for

that. And I I've been knowing that since for years.

Ken, is Michael Kersman here?

Okay.

Mayor, is it okay from Michael Kersman to come and address that?

Sure.

Okay.

As uh Director Kersman's on his way up.

Uh, council member, um, one of the things I want to kind of, uh, reflect back on, a couple of years ago, city council made a a decision to, um, redirect some of the programs and the cost from the parks and rec special revenue fund, bringing that back to the general fund, freeing up capacity within the parks and rec special revenue fund.

What had happened over time is during previous budget reductions and cuts, some of those general fund government services had been rolled into the dedication because it could cover it through its growing sources. So, there's really credit to city council for um putting the plan out there and then obviously to uh parks and recck staff as well for coming up um identifying the needs, putting cost estimates to those

and working with us to um develop these reasonable.

Well, as you know, we've even had discussions about adding a rec center at at different points in the last several years and just hard to imagine that we would be adding one with until we fix the ones that we that we have. And we're finally at looks like we're finally at that point, which is great. But at one point you were, if I recall correctly, Mr. Kersman, we were looking at like a

$25 million gap in um playground replacement.

That is correct. We have around 185 playgrounds throughout the city. The cost did escalate quite a bit during CO.

Uh but just as a reminder, uh city council allocated a significant portion of the ARPA funds to playground replacements. So, we ended up doing over 65 playgrounds in three years. Uh, so we really did a great job of catching up.

Uh, just for general public information and your information, a playground should last about 15 years. For a commercial grade playground, um, out in a park exposed to elements, about a 15-ear life cycle before it needs replaced.

When CO hit, we had many that were over 20 years old and in dire need of even being torn out and not even replaced.

But significant ARP of funds went towards catching us up. I would say we're maybe just a little behind but nowhere where we were uh pre-COVID due to the wisdom of council and making that investment.

Okay.

Okay.

Amelia and then cash but um relating to the next steps. I think this is a great idea moving this forward and the incremental way you placed it. Um because for example people at Bayside Wreck are always over at Williams Farm because of the situation there. So that's putting extra burden on that rec center. So they seeing a way forward by having this come up will be important. And then on the second

question that um Councilman Palushi mentioned, it was important to hear from council woman Rouse about their playground being, you know, renovated.

This is what's happening around for a lot of the playgrounds that yes, you all have been they have been working on it thanks to Micah Kershmond. Thank you, Cash. Thank you. I I think it's important for the public to know that um when you're campaigning, I campaigned on having a rec center for District 7, Centerville, right? Um and then I campaigned on having a public library built, right? Once I got in the seat, I

was like, uh we first have to do these steps, right? modernization, which if anyone's running for office, it's it's better for them to understand behind the scenes. And I'm not sure how they do it except join a board like PISK and and really which I did and I still didn't get it until I got in a seat. So, so, so I I think it's I think it the point I'm trying to make is

what to do if you're like me. Um, you made a promise. You want to um have a rec center because you saw that there's a need in College Park. Uh, as well as that extending almost Chesapeake, right?

There's a need. You got 46,000ish people in your district. And if they don't have the transportation, then they're going to Kimsville, right?

Library, which is a wonderful library.

Chief Hutch and I, uh, we share that.

We, that's our joint library. But, uh, Oh, okay. Right. Right. Right. Yes. I mean, we'll take yours, too, but but the point is public private partnership is now become on the table for me. meaning I.e. I still have a need for it, right? But I understand that as a government, um, it's a difficult and heavy lift for us to do at this time. It's about $80 million if we're going to build is a rec

center. Well, I've I've got to think outside of the box. So, now I've got to go to the the faith-based organizations.

I've got to go to places that have land because in College Park, they still need a rec center. So, I say all of this to say um that if I don't want to put the burden on the taxpayers, I do still need there's still a need. So, what do I do?

There's a public private partnership that city council members need to start thinking about, right?

And for me as district 7, I had to start or beginning to start to have the conversations of a public private partnership. And I'm setting you guys up for something because there's a as down the line where um in College Park in Levelville Green where we've had the highest amount of crime in district 7 and thankfully for the last couple of years because of uh the uh Chief New Gates and uh Captain Gervin's

initiatives, we we we've haven't had violent crime as much. And so I'm very grateful for that. But that's because we're walking the ground. I'm gonna say this and I'll be done.

We still need a rec center.

We Right. We still need it. So So maybe it's not called a rec center. Maybe it's called a a community center because it's not the size of it. Um, and so I've I've called um Deputy City Manager Kenneth uh Chandler and asked him to come out and brief some of our business owners in District 7 who have space and land.

And so you may do we may do modernizations, but I still need a rec center. And it may not be called a rec center, but I am going to be working on a PPP, public private partnership, which is better for the taxpayers anyway. And I'll leave you with that.

Okay. Appreciate that, Hutch.

So, Kev, I got a one of those questions I'm going to need your help with. So, when we talk about this plan, which like everybody said, I appreciate it and it's a lot of merit. It's a lot of money.

Going back to our discussion about personal property versus real estate tax, does that have anything to do with this kind of would this do anything to this plan?

Um, in the past there have been times um I'll give an example actually uh the rate here that is received by the parks and recck special revenue fund 3.467% 467% or cents. That was actually reduced at one point in time um to whenever there was a decision by city council to reduce the real estate tax rate and so it was adjusted down um directing less revenue over to Parks Park special revenue fund.

the fund has not been in a situation the last several years to where when city council is given direction to reduce the rate that the fund has not had the capacity to absorb or handle any of that rate reduction. So that's a situation where this fund was held harmless through that rate reduction and the general fund ate that extra bit of real estate reduction if that makes sense Kevin and that one's because of the

capacity the fund wasn't healthy enough to cover its needs but if the tax rate goes down does that reduce the capacity to be able to do some of the plan or impacts the plan adversely if the parks and rack special revenue fund were to be reduced to offset a portion of the real estate tax rate that would cause us to revisit the the plan and the scenario that we put together.

Well, because the reason I remember I mean remember a little bit is when we did this a couple years ago, I know everybody says, "Well, the assessments went up, but we did lower the real estate tax from 99 cent to 97 cent."

Now, I know that I know the appraisals went up. I'm not but it was I think we talked about this. It just it just struck me as I remember something about this was it may have been another area but it was along the same lines of what you just said. So I just remembered that. So that's why I wanted to be clear.

I'm not messing around when I say there's going to be other ramifications.

It might be from both sides. I'm not I'm not saying that. And and I'm good with if we're trying to help the citizens.

I'm good with both. You know what I mean? I understand it. But but we have to look at it as um what's going to be feasible, I guess, is and what's going to do the most good. That's I guess where I'm coming from. That's Thanks.

No Barbara you may have answered this and and if you have, I I apologize, but I just remember when city council came up with the plan to build these rec centers, a very important part of it was to make certain that what we did at the time would also maintain them in the future.

And so that's why it has that funding plan for the recreation centers as a part of the original funding.

Have you gone back to look at what that funding was to see if it was off? If we just didn't do enough or I mean is it an inflation factor that's caused us to have to do more now or just what puts us in this situation? Because I just remember that when we sold the bond referendum to approve the rec centers, we, you know, said we're also providing for the long-term maintenance. So, how

far were we off and what what brought us here?

We we did a a a recreation of this whenever we presented this. I believe it was like two years ago now. Um, so it has been some time. There was a lot of things that changed um over the years.

Yes, it was established to be a long-term bill payer. I may made note earlier when recessions occurred at different points in time and general fund reductions in lie of making reductions to the general fund direction or decisions were made for the special revenue fund to absorb some of that.

That's the action the city council actually um deliberately cleaned up to where we we separated that and pulled all those general fund services back out to get the parks and rec special revenue fund to be pure again. Another thing that changed over time, um Council Member Henley, the Williams Farm Rec Center, that's another good example where uh this a decision was made to add a rec center. The debt actually was

covered by the parks and recck special revenue fund at that point in time and still continues to be covered um by the parks and recck special revenue fund delaying the the building of capacity to be able to put towards the renovation of these three facilities if that makes sense. So there's been some things along the way that delayed it, but it's actually on a point now to where it's

pretty much the exact point in time where Parks Rec needs to get to recapitalizing these facilities or else they're going to be in a situation to where they're putting on a 15 or 20 year roof, but the framework and the shell of the building needs considerable repair.

So it's probably better, best interest to do it all at one time and recapitalize it all.

Well, well, clearly, you know, new centers might be needed, too, but we certainly have to maintain what we have because we've got that investment there and we have to do that. So, I I think keeping them along the way is is extremely important, but I I I think it was a an important move that the council made in the late 80s to at least include some funding for the future. And uh it's

it's a good thing it's there.

Kevin, let me ask you how much u out of the 97 cents uh whether it be the storm water 4.1 and is the current rate still at uh basically 3.5 cents.

Yes. For the for the real estate or for the parks special revenue.

So that's basically 7 12 cents of our rate is for dedications that were approved in bond referendums.

Okay. Is there any other uh dedication there?

Um there's other dedications of the real estate, but in terms I would need to go back and research if there's any associated with a bond referendum. Um I can't think of any.

Kevin, I think that's I think those are the only two. The 4.1 and then the um the the amount associated with the parks and wreck.

Yeah. cuz I remember when we did the flood protection bond referendum, that was the first time in about 30 years that a bond referendum went through Virginia Beach, you know. So that's seven cents right there. And then um I asked for uh you know some figures uh you know I believe it was the last budget cycle and 30% of the remaining 90 cents is um underfunded and nonfunded mandates that we get from

the state and the federal government and that includes schools too don't get me wrong. So basically um it really cuts into our disposable income. That's what I'm trying to make.

Okay, Josh, just a quick follow-up question. Um, when the parks and wreck referendum was passed, was that an additional 3.5 cents that was levied on top of the base rate or was it absorbed in the current rate like what the decision was with the stormwater bond referendum?

It was an increase.

It was It was an increase.

So, the voters voted for a tax increase and they got a tax increase.

Yes.

Okay. Okay.

Ed Patrick.

Mr. Mayor, there is one more component and then after that we'll be open to um questions and discussions with city council. The next component is um a conversation we previously had with council and brief the public on the need for modernizing the aquarium south building or north building.

The aquarium north building. North building. Yeah.

The 40-year-old building. How about that one? Um so uh yes, as the city manager just said, this is the last um CIP presentation component that I have to talk through and this is just really an update to a conversation that city council's been having um for quite some time now. This is just a polling of the previous presentation that was provided by Dr. Chandler to city council um earlier in the year. Uh as a

recollection, the aquarium's nearly 40 years old. Uh there's been several studies underway to determine the future sustainability, operating vitality, um the interior exhibits, external structure, and an overall operational model.

Uh the core exhibits that we do know of um with the seal shark and turtle tank are um 30 years old and those have certainly exceeded their design lifespan which was 25 to 30 years old. So, there's going to be a need to take action sooner rather than later on the components of the aquarium. So, one of the things that um we just wanted to walk through with city council and for situational awareness is that whenever

the proposed budget comes out, unless otherwise directed, there is going to be an allocation of funding um similar to what was done with the Rudy Loop um park development where we're going to put some design funding in place to allow for a real engineer um evaluation, get a sense of what the needs are, um get a project manager manager assigned to it um and be able to uh start these this

initial first step of finding a long-term solution of replacing this facility. Again, we're not going to um try to get into uh a situation of programming or estimating the full amount, but what we really want to get in there and do is get some design costs um in place so that way we can get a better sense of what the overall need is and find the best long-term solution. Um

the reality is based on the timeline um of execution this is probably going to be it's probably forelling. I know um the budget's falling.

I just no sharks fell out so it's okay.

Um, so, uh, this is really likely going to be a seven-year, um, uh, time frame by the time we get into the budget development, get evaluation in place, um, to the year of completion. So, it's really again a long-term but not so long-term approach um, as we're seeing need to get something done on this.

So with that, I'll be glad to step out of the way and then Amelia and work and and I hope it's okay to say this, but uh in our meetings with the Cororeium Foundation, they don't want to remodel the building.

They want a new building. Um it's their feelings that it would be a whole lot cheaper to build something from scratch.

And also with the if you're remodeling one, what do you do with the animals during that time? So if you build something new, the animals can stay in place until that's been built and they can move in. And that for fundraising purposes, they could do a whole lot better with with a new with a new facility than just fixing up the old one. And um a new facility would have a

longer lifespan than the old one. So that's kind of what their feelings are at this time. I don't know worth if you want to add something to that.

Yes, thank you vice mayor. I agree with you. And also a new one could be a further away from the water like Rudy there which causes damages and underlying structural damages on the floor. So, um it's this is aspirational meaning this is I think a good move and a long-term uh approach uh the long game if you will u past this this because right now for every dollar we spend as a city that the

foundation makes up 60% we pay 40% and foundation pay 60% of the current maintenance. So this is uh stop gap if you will um 7 years out of course but uh the long range plan from the foundation standpoint is to replace the existing building with a new one.

Okay.

and then cash after hearing the two conversations you know mine is not as important because I was going to mention seven years and so that's make 37 years from what you've mentioned and grandparents of the wheels and all of that you know you're looking at the age of the um animals so um with this new idea of having something replacing it may be better.

Okay. Cash.

Yeah. So, Centerville would like to weigh in on this and that's You want an inquiry?

Yeah. Yeah. Well, I ran on this stuff.

No. Okay. No. No. Just play it. Just play it. Just play it. Just Just play it. No. But uh just I just know people from uh Centerville, they they like to take field trips to the aquarium. So this is near and dear to our heart is is what I mean and because it says the word and this is good for taxpayers for all of us.

Will the state think about um helping us with payment or modernizations even though we're thinking about a new bill? You're shaking your head council.

Okay. We need our our uh state legislator. Uh we need that guy, our lobbyist. Is there is there something there? Um city manager Dhaney.

Um the council has done included this in our legislative package for about 3 years and um each time the state hasn't taken it up as something that they felt like they had the capability to do. The aquarium foundation notified staff and the council that they were getting their um their own lobbyists as well because you know it's hard for this to be the singular focus of the city but they're

using their own lobbyists as well. I think their lobbyists may be getting similar conclusion.

Last I heard is that the state may be open to a study but not necessarily at this time open to funding. Right now, I know the t the council has changed our tactic this year in instead of just asking for design or capital funding also seeing if the state will be open to providing support for the stranding program which as you know the city provides for the entire commonwealth and sometimes even into Maryland and North

Carolina as well um to see if they'll be willing to support some of the costs associated with that as well. Um we're currently te testing that with the um general assembly, but I don't necessarily know if the general assembly is going to be able to take that up.

Understanding that the current administration, the current general assembly is focused primarily on affordability and other ways that they can support um the constituents of the Commonwealth.

Okay, Stacy.

Yeah, it seems as though um we're going to have to go down dual paths here because we If the foundation wants a new building and they're going down that path and they can't commit to making that happen within seven years, then we also have to go down the path of what happens if we have to modernize or you know renovate the existing um place and that that would be a

horrible waste of money if in fact we're going to build a new building. So I I don't I think that we need to get a hard commitment from the foundation as to what the direction is because to spend millions of dollars to design a new or to renovate this existing building to plan renovating this existing building only to say no we're going to build a new building. Um yeah I think we need to determine which

direction we're going in first. Okay Patrick and then we're and Mr. Mayor, members of council, as Kevin tried, as Kevin alluded to, what we're proposing is council approached this as they did with the financing and the funding of the Rudy Park design, right? If council recall, council did not authorize full design or full construction with that funding. Council authorized, I think around $2.4 million

for us to come up with a detailed plan on what's going to happen there for consideration and approval. Right? So we would propose that council would basically give us planning money so that the council the foundation can discuss the scope, the ter and the budget of said project to determine different options to include what happens to the old buildings if a new building happen is done or maybe even ask is it possibly

constructable feasible to to build in place and stuff like that. So this would give us funds to start that process and we're not asking for funds to move to construction design at that time. But there's a lot of questions that we all have before the city commits to fully funding design and constructing a a building worth.

Thank you, mayor. And if I could clarify, I think uh Mr. Budget director, we're talking about a $12 million.

What's the this short seven-year? What's the total to address Councilman Cummings point there? Because it could be a waste of money or not, but $12 million. Is that what we're 14?

It it it could be, but no one's asking for that at that time. But like traditionally, I think what was proposed if it's a $100 million or $120 million building, you typically would be at that range, but no one's asking for that at this time. I think the thing to note is basically what the consultant said to us is that your the work that the council authorized last summer basically buys you seven

to luckily 10 years in the current building and then after that you need to be getting out of that building or getting or or shuttering you know so basically um shuttering the operations. So basically it's we need to find a new solution for um the animals in the building you know right okay uh Hutch and then Worth Oh go ahead.

So just just to follow up so if you could go to page 30 Mr. Shadeline I just want to make the I'm sorry uh it's the assess the tax assessments by district. Oh, page 20, not 30. Just want to make the quick point here because a lot of this discussion in the last hour. Uh page 20 is uh the aquarium's in district 6. The central beach master plan is in district 6, which which uh includes the

convention center where we are now, the sports center next door. Um, a lot of the ocean front, of course, uh, district five is the resort, but a lot of our dollars into the coffers do come from district six and district 5 in the resort. And so, we do need to pay attention and invest in our resort. Uh, and there's some other Atlantic Park uh, is getting a big investment or has

gotten a big investment, but it's going to return a lot of tax dollars in the future, not just from real estate, but meals, sales, and other hotel taxes. is a tip fund replenishment. So, I just want to make that point. Thank you.

Okay. Anyone else? Yeah, Hutch.

So, um again, I you know, I'm the one that brings this up a lot and it seems like we have um I don't know what the answer to this one is, but um and I was sitting here thinking with the public safety chiefs here. Um, I know we have I think all five of them um that are in the in the gallery over there, but if I'm if I'm wrong and I know I well I

shouldn't have said I was trying to make a joke about the last chief left you a mess there, Chief Kravitz, but um um your buildings are I think we've got eight, nine or 10 that are over 40 years and there's four or five that are over 50 years and one of them one of them is at the courthouse that literally is I I mean, it's it's not in great shape,

y'all. Um, now we make do. We like to say we have our own cross to bear. You know, we get it. Um, that part. And then for the police chief, I was trying to think. I know the first is good and the fourth is good. The second marginal and the third, I don't know what year the third is, but it's it's in that range.

And then when I look over at Miss Lee and Topps that y'all's building has had some work done, but uh it's starting to get get a little longer as well. So my point is is that um when we we go to do all this and we start talking about cutting taxes, you know, I can hear some people saying, you know, what what are you what are you thinking? you know, you don't we haven't, you know, district

district three with the flooding and and then we all have some of our own flooding issues. I have a couple major areas, you know, so I'm I'm I'm I understand what we're all what we're saying, what we're trying to do, but I think the magnitude of what we're up against and I don't even know how we begin to affect when you have nine buildings that are over 50 years old,

you know, or right at it. It's just seems like a pretty, like you said, it's one bite at a time. I get it. But when we start about cutting taxes, just know that that's what you're doing. You know, you're pushing off some things that are pretty important. You know, whether it's the fish or or public safety or anybody else. And we're probably, and I'm not trying to say that there's not other

buildings that probably fall in that same thing. and that they're not all crap, you know, we there probably some that are just fine at 50 years old, you know, um they've been modernized or whatever, but um that's not cheap to maintain them. I mean, the roofs, Chief Pravitz, what's the cost of a roof uh at the fire stations? It's like $2 million, right? Yeah, I think it's $2 million a

roof. So, that's uh I'm just putting it out there of what we're what we're talking about. just when we're looking at the totality of everything that we're talking about. I don't think I'm off that far. No. All right. Thank you.

Okay. Anybody else? You know, let me just say this. We started off the morning, you know, talking about the tax rate, what it is, what what we should do. But since that conversation, we've been sitting in the taxi and the meter's been running. And think about all the stuff we have been talking about. And you know the stuff we were talking about are obligations. Uh let me just give you

a few. Aquarium getting the court uh house ADA compliant. Lita another big one that I think is NMO Parkway you know once we get going with the feds that is beyond mission essential and that's going to be very expensive. um along buildings. The city has as Hutch was saying uh you know many you know uh you know city facilities need it but we have 86 school buildings and a number of them

are going to work require and look how much we are wrestling just trying to get Princess Zan done uh and that's only one and not to mention our storm water obligations and uh so once again uh we're looking at that challenging future.

Uh oh, look at Oh, look at this.

Didn't mean didn't mean to interrupt you.

No, that's a good idea. You know, keep all the stuff on the whiteboard thing.

It's all depressing. So, cover it up.

Cover it up.

No, we're good.

Bob just interrupt us. Yes.

Next time you all wanted to cut him off just give the mayor the hook. Yeah.

Um so as we've been saying throughout the whole discussion this morning and the start of this afternoon, we've been trying to capture the points where you need to give staff good guidance. Um, and we've been breaking it down into categories. We started off this morning talking about the budget process, revenues, uh, expenses, the CIP, and we've got miscellaneous. So, we've been capturing capturing some notes. And I

think just because it's freshest in mind, I want to go backwards and start with the CIP and some of what you've been talking there. Um, as we said this morning when Laura went through the, you know, the, uh, preliminary interview comments that we heard from you all, we want to use today as a way to give staff guidance for developing the budget. It's not your final chance. It's not a final

vote, but we want to generally know where there's consensus, where there's not consensus, so staff has a better idea of what to include or not include in the budget that they're preparing for you.

So, related to capital improvements, we heard early this morning, Lita's a priority and the meals tax supports LITA.

We just heard about rec center modernization um including funds for future maintenance. The parks and recck special revenue fund. Is it sufficient for long-term funding of rec centers?

We heard about Central Beach taking one bite at the elephant at a time. It's going to take many years. Do you want to consider creating a tiff? Do you want to start working on parking? Do you want to consider creating a a SSD?

um sports tourism. We want to uh look at Central Beach and the ITA.

Should there be some uh naming and brand branding for outdoor sports um activities now? Should that be something going forward? The major projects fund um is the current ordinance designating its uses sufficient? Do we need more uh written documentation of the purpose, the aquarium?

Should we have design funds?

How can we use public private partnerships to support? And playground modernization.

Uh and then lastly, emergency service buildings are also old. So, those were some of the CIP conversations you were just having.

Of all of those, what do we want to be telling staff to move forward with at this point?

All of them.

Yeah, just label them all.

All of them. And it can be all of them.

Um, I'll start with the last one, the aquarium design funds, the doing a small chunk to keep it moving to protect the animals. Is that something We're assuming staff should take this first step.

To me, the amount will probably be I don't know probably similar to the initial amount for the Rudy project.

Probably around two to3 million.

How do you want us to do this?

Um, right now I'm just asking for discussion. Like is is it the sentiment of council that you'd like to see staff try and fit that into the budget they propose?

Sorry. How do you want us to How do you want us to respond? You want us to raise our hands? You want us to verbalize?

Ha.

Um, on on a few of these, Kevin's slide said, uh, thank you. Kevin's slide said, "Staff's going to move in this direction unless we hear otherwise." So, the aquarium is one of those. Staff is probably going to move in that direction unless we hear otherwise. So, on that one, do we hear otherwise?

I think I have some questions if I may. And and I'm not going to ask all those questions today.

I'm not actually going to ask any of those questions today. Um, we need we need to have more discussion about this because I don't understand the scope of the proposed expansion. I don't understand the use of the proposed expansion. I don't understand the proposed operational model. I don't understand the um sustainability of that program. Meaning, you know, to Mrs. Henley's point about

programming for um maintenance and operations moving forward. Uh what does that look like? Too many unknowns for me to provide any direction as we as we sit today. Um I'd like to know more about the stranding program that Mr. Johaney mentioned. Marine research is essential and it's very important. Um, I guess the question though becomes how much of the um costs of marine stranding research is

the Virginia Beach taxpayer responsible for in most other communities that's done through a university partnership or something along those lines supported by the state. In this case, the citizens of the city of Virginia Beach. And it's very important work, but these are all the things that we sort of need to work out. I could go on. Um, I just don't have enough I just don't have enough

information and I think we need much more information before uh we move forward. At the same time, time is of the essence.

So, um, also, you know what I was thinking? I was going to throw this out there.

There's so much discussion about this issue.

Maybe um it would be appropriate to have a referendum about it and that could solve it if the if the t I mean we we'll be you know we could be transparent about what the public cost would be and then let the voters make a decision about that.

It's just a just a thought. Yeah, that's not a bad thought at all. We're going to go Josh and Cash.

Um thank you mayor. And if we're just talking about the aquarium, um I I I I would just question whether or not the discussions and and inquiries and various studies that have been going on in the background if we're at the right kind of time to make a decision about um you know to that that we should give you direction with and and run with. And I I don't I don't really have a sense for

that and I share all of all of your concerns. um at the same time along with the rest of us, you know, that appreciative of the tremendous value and um community benefit and a wonderful amenity that the aquarium is and has been for for the city. So, I just I I agree. I don't think we're at a time where we have enough information. Um and and and if it truly is something that is

important to the public, which I know it is, um I I would I would be supportive of exploring putting that question in the public as well.

Okay.

So, so I just disagree. Um and I disagree because there are live animals, right? I get it that there needs to be a plan in place. A referendum has been thrown out, but I think we're missing something here. We we've got to have it's like I'm telling you that there are live animals here and if we do a referendum, if we do some other things which are smart, right? But that's going to be um

down the line couple of months.

I think we have to parcel this out.

Someone said some council members said that if you have a elephant and this is an elephant, we've got to take small bites. I I think we need to set aside uh a portion of money I'm speaking of because what happens if something fails on this 40year-old what did we say the age was 40 and and then we're caught where we didn't have a plan in place or we're caught because we're down the line

you you you have to have a plan in place I I don't understand I think we need to plan, but we've got to have a rainy fund or something put aside for this historic monument that lots of kids have grown up in, have developed a love for animals right here in Virginia Beach. I mean, we're we're treating this like this is and and maybe that's because I come from San Diego and I'm here in Virginia Beach

and and maybe now it's right size for me because maybe San Diego was too big for me, but Virginia Beach is right size for me. Um, we're missing this treasure.

This is a treasure that we have in Virginia Beach. So, I'm just going to leave it like this. I think we need to parcel it out.

I think we do need to plan for the public to weigh in, but we have to have money set aside just in case if a failure point happens, then we we don't have money dedicated for it.

Before we get to Rosemary and Worth, you know, Patrick, you know, all along whenever something popped up, we were animals were in danger or something from, you know, based on my history, we always were able to come up with something, even if it was a band-aid on a hemorrhage.

Yes, Mr. Mayor. Council puts aside probably $2 million, if not more, towards maintaining the facility. And if if things come up above and beyond the regular maintenance, the council has always set aside money. The thing we're asking council for right now is we are basically on a clock, right? 7 to 10 years. Um not asking for the full design money, but basically asking for funds so

we could answer some of the questions that you're asking for. Of which time once we get that information back to you all, we're not asking for extended construction design money. council could get that information and then determine to do a referendum at that time with a full suite of information and next steps to educate the public.

Okay, Rosemary, that kind of answers some of what I was going to say. I mean, we we are doing a a giant band-aid right now. I think was was it like $6 million to get it to last another eight years? But all these questions have been very valid to be asked and I think we need to take a hard look at all those things. But I think what Patrick is asking for right now is

just to put some money aside while we get this these things answered. So that's in the budget. So that doesn't mean that money is spent. It's only sort of as a placeholder as we get through a lot of these questions. So I mean I would support us putting the money aside and get the answers and if we want to do refund I'm not sure what the question's going to be. Um but it's and and and the

the also the foundation has got to figure out where where they want to move forward. Um that's a big part of this is the foundation is trying to decide because they had that consultant that they had come in that gave them some options. So they're a major partner with us. So I think we ought to just we could put some of this money aside. It doesn't mean it's going to be spent yet and then

we can make that decision at a later time.

Okay. Okay, Amelia.

Um, are you through with the, um, aquarium?

No, I got to follow up to that, but let him go because I'm coming on something different.

Okay.

Okay.

So, take it. And I concur with Vice Mayor Wilson, if we could put some money aside as a placeholder, but also hearing the discussion here and I think in general with the public, we do need an update and I would ask for an an informal presentation with uh with the foundation as well and get some answers questions answered. And that's too much decision probably today to say yes or

no. Maybe as a placeholder. Uh but let's I'm not saying kick the can. Let's have another let's have an informal discussion presentation and discussion.

We can drill down on this more and get you anything else on the aquarium. Yes.

Yeah. Sorry. I'm just looking for some clarification because I'm just looking for some clarification.

The vice mayor said that the money would be designated.

Sorry.

Can you not picking me up? a little better.

Okay. Is that a little bit better for you? Okay.

Um looking for additional clarification because I heard the vice mayor say that the money would be designated and set aside and I think that's responsible planning. um I understood that it would initiate a planning process and uh I guess that's where I where some of the questions and more that I that I um presented come into play because at one point I saw for example a facility that

was two or three times the size of the current facility and involved all kinds of other things and I think we need to be go into it eyes wide open and clear about what that looks like and what the need is and and what the capacity for supporting a facility like that potentially could be. So which which one is it? Is it setting did I misunderstand or is it setting aside

funds for potential design in the future or is it initiating a design process? So to clarify, I'm like I'm not asking for full design money, right? I'm asking for funds to start to answer some of the questions that you all have, right? What happens to the old building if a new building is built? Is it possible to build a to renovate in place? Right. to answer the holes of questions they have

about the facility. The aquarium foundation did bring on that consultant when council I think it was last year or two years ago um basically passed um a resolution authorizing us to fund a operational model study that's ready for it's initially ready to be brought to council for consideration. Right. um you will have all that information going into the budget process, right?

But we're not asking for funds to start construction design to go to construction at this time. I believe you all have a whole host of questions that need to be answered and then you all need to get comfortable on what will be the scope of this project and what you all are willing to tolerate from a debt standpoint before you even hit go on those design funds. So, I'm asking for

funds to get started on an initial phase similar like what we did with Rudy Loop where you all get a sense of we'll come back to you all with a sense of what a scope of this project could be, what a cost of this project would be, what some of the impacts would be to the existing operations and then at that time y'all determine where to go from there. And it could be

this would be too much for you all to support from a financial standpoint. It could be that you all may want to go to a referendum if you all want to support or it could be you all are not interested in proceeding beyond an initial planning process.

And sorry as a follow-up what would be the funding source?

I mean wouldn't it be appropriate for example that TIP would fund such a study? If council says that, we'll figure it out. But we were thinking possibly um the general fund because the tip isn't necessarily the healthiest that we would recommend to pull something from that. But if council said that, we can pull it from the fund balance of the tip, but there's a lot of stressors on a tip. We could

certainly do it if council wants us to, but that would not be what we would recommend.

Okay, Jennifer.

Thank you, mayor. So to clarify, this budget holder is for a study or is for phase one from the foundations study.

What they're saying will help carry the building for the next 7 to 10 years.

This is a placeholder for that or for our own study.

So it's basically to come up with a scope on what a new building could be.

would it make sense to renovate in place and to answer the other questions council has like what's the total cost associated with this building and stuff like that and what the scope of this building is going to be but it's not to start designing a project for ultimately a hund00 million or more right it's basically just an initial planning level document with to give get authorization from council do we proceed

Yeah.

Okay. So, just as a followup and then to uh council member uh Jackson Green because it's been what when did we start with the RFP about the aquarium?

Probably 2022.

Yeah. This has been so long and it's only for me gotten more confusing. So I feel like welcome to the club.

Yes. And to your point for the initial conversation was a conver in 2022 was a conversation of urgency because of the animals. The building's at the end of life we got to make. So, we were moving and then there was a stop and then there were studies and we don't know what is happening, but we're asking for money for a placeholder to keep the building going for another six or seven years.

We're not asking for money for a placeholder. So council after the after one of the studies came back and said you got seven to 10 years at best left in that building. Council gave us authorization to use some resources on a 60% covered cost by the city with 40% to be covered with the aquarium foundation to keep to address the building so that the building can have another 7 to 10 years of life.

consultant is basically saying after those seven to 10 years, you need to be out of that building, right? What we're asking for now is funds to start planning for what comes next, right?

Like if you're having another building, what would that look like? What would the scope of that building be? Is it a new building or is it buildings pl and then what is a range of acceptable costs for that to present that to council for council to consider. We're not asking for authorization to start going into construction design at that time. Right?

We will come back to you all that information and you will get a better sense of what this thing would cost. And then at that same time as well before you all get the budget, you're likely going to get the operational model information with the consultant that's working with the aquarium foundation.

Do we have a date for that?

I'm having conversations with them now where we can get the briefing set to council.

Okay Barbara I think we really need to hear from the foundation and have something pretty specific from them because we could be all over the place and not be where they want to be. So, I think having a request from them is what we need to have before we could go forward. I I certainly don't know enough and I would want to know what they what they want.

Yeah, Josh, sorry to chime in again, but thank you. Um, I just remember sitting here in 23 for our first retreat and hearing, you know, cuz there was a process that led up to the plan that we that the council originally looked at.

Um, and then came to us in a tough budget year to the tune of, you know, $250 million. Um, so being that the cost of money ain't going to get any cheaper, um, you know, even a scaled down version 10 years out from now could still be $250 million, um, based on when that could be constructed at some unknown point in the future. So, um, I I just want to be mindful that we don't set up

a future council for the same kind of reaction that we had back in 23 and then have the process repeat itself all over again. I do agree with council member Henley that um that we need some clarity from the foundation. Um I don't know the magnitude of the ask for these I guess preliminary studies. Do do we have a sense for that? Um and if it's you know relatively inexpensive and if that's

what you need to move forward to give clarity to the situation then then I think that's helpful because you know if we don't do anything we're going to be exactly where we're at. Um, but unfortunately that's kind of been the that that's kind of been the approach the last three years is I kind of feel like we haven't really, you know, I know there's been a lot of work in the background going on, but we're still

where we're at.

Okay, Michael. Thank you. I just want to follow up on this to emphasize a couple of things. One, the robustness of this conversation, I think, demonstrates the complexity of this conversation. We we're not going to solve it today. Um, that's why I think it requires more discussion. I understand the request a little bit better now and I'm a little slightly more comfortable with it. But I

really want to make sure that I emphasize for myself the aquarium is a valuable piece of the culture of Virginia Beach. Um I myself, Mr. Green, grew up going to the aquarium myself, taking field trips there. I think it may have been the first field trip I ever took. Um, I admire the folks who were part of the foundation that helped establish it in the beginning and who are part of the

foundation that continue to work to sustain it. None of these conversations or questions should be taken as a lack of appreciation or respect or consideration for the positive impact that the aquarium makes on our community. However, we also have a fiduciary and other types of responsibilities to the people to the citizens of Virginia Beach. So, we're talking about modernization of rec

centers, libraries, schools, we need new fire trucks. I mean, I could go on and on and on and down the list of the um portfolio of needs that exist within the community and asking questions and seeking to understand and finding ways to promote efficiency is not only the right thing to do, it's a requirement. It's a duty. It's part of our duty here today. And um one of the aspects of this conversation

that's been the most frustrating and disappointing to me is that there's a perceived lack of value when we ask the questions that we were entrusted to ask around this table. And I hope that that's the um spirit in which we move forward. Um, we're just trying to find a balance of affordability and continue to deliver the services and infrastructure and all of the essential government functions that the people of

Virginia Beach rely upon. As I understand it, uh, we just saw on a previous slide, the aquarium receives, according to that slide, $2.5 million in, uh, I think it's operating support.

Does that include maintenance?

No, that does not include maintenance.

The maintenance one is separate. I think the maintenance is probably 2 million by itself.

Mhm.

Yeah. And so that I mean just just back in napkin math that's $4.5 million. And I think another previous estimate showed somewhere around $8 million per year that the city was subsidizing the operations of the aquarium. And yet we know that aquariums and other municipalities, some private, some public, uh operate at a in the black or at least break even. And one of the things that I'm interested in um as part

of the discussion moving forward is how how could we could we at least explore the possibility of whether or not that will be possible here in Virginia Beach.

Um and with that uh it would it would potentially make resources available to provide tax relief to enhance affordability or to uh deliver other services that people are asking for. And again asking these questions is not a critique and it's not a a conveyance of a lack of value. It's part of the responsibility of public service.

So Mr. Mr. Mayor, in the context of what we need to give staff today for preliminary budget guidance, I think the message is clear. You all need more information. Um, and there may be openness openness to funding some next steps so you can get that information.

That's sort of the level of direction I want to give. It's not a firm yes. It's not a firm no, but you need more information and you're open to that.

Ameilia and Stacy, I've been patient um on Yes, I have. On a different subject where you have miscellaneous looking at what different districts and people on the whole need. Um I brought forth through my first time on council the opportunity that with the percentage we also need different cultures to include it. and that was trying to build a Virginia African-American cultural center. Since then, the city have worked

with me to at least um this has been about over eight years of working on this to at least give us some land as a private public partnership. We've uh maintained and kept well and besides that, I have worked diligently to also provide other amenities for the area. At this point, we would love to at least put something on the grounds and it's not 200 million. We're looking at about

26 million. But one of the things of having PPP, like you mentioned, private partners. We have gotten to the point and work that we do have some partners that's willing to help us fund that at uh 13.5 million but we will need like a three stool help from the city and help from the state looking at $6.5 million each. And it doesn't have to be all in one. Even if it's 6.5 incrementally 2 point

something over that will help. So I have already walked the talk up at the city, I mean at the state level trying to talk to see the value this would bring on the whole not only for Virginia but also Virginia Beach which is one of the early starts like we had the first landing and after that they did gave me as many of you know $1 million which I'm holding on

to. So that's part of their 6.5. But I would love to see the city because we have a lot of culture. Everyone does not get to go down to the aquarium, mobility transportation different things. So when we do a community fall festival, they come to the land.

We even had where um the NBA and them worked on helping us redesign the basketball court. And I tell you, it is used daily. What I would like to see is for the city to consider some form of dedication, some form of in some funding to help us with that 6.5.

is not a huge number compared to what we've been looking at, but I believe it's a doable number for our citizens, especially the African-American uh citizens and others who want to learn about the history and culture of that commu for our community. So, I'm just throwing that out just like my colleague throughout his um rec center.

This is also but at least we've worked over a design. We've worked over how much it would cost. That will include the FFE and we need that little lift.

Thank you, Mayor Stacy.

Hey, um I just want to put a bow on the aquarium conversation. I hope in before my time on council, this uh conversation started about the needs for the aquarium. And the biggest criticism I heard and this not my criticism but what I heard was the city has a partner in the foundation and the part and the foundation was not included in the conversation. So it's been brought up

that I think we need to sit down and have the conversation with the foundation get them in the room and as together as partners make a recommendation on how we want to move forward.

Period.

Okay. Rosemary, we've been having those conversations.

Um, Worth and I are the liaison and we've been with staff and with the leadership of the foundation and that's kind of the last meeting that we had is the foundation was going to go back and and talk to their people and find out their direction. So, we they are not left out.

Absolutely not.

Okay. Thank you. Tell you what, I think it's uh you I think we talked about it, but just to put a you know capstone on it. Yeah, we've been chewing on this elephant in a while, but we found out the hide is very, very tough. Okay, this is not an easy situation. But I tell you what, I think Patrick, you alluded to what we did with Rudy Loop where we're able to put together multiple scenarios

and then we were able to make a decision based on aesthetics, based on the design, based on uh cost and everything and I think we came out a winner with that. So if we can do something similar, you know, give give us a cafe version of what we can do, but with all by all means include the uh foundation as part of it.

Okay. So the the other two big topics related to the CIP were the um rec center modernization and the central beach like starting to take uh central beach is really justformational.

Okay.

Right. So we don't need direction from council because as the council mentioned we got a couple RFPs out and in time those will manifest the path that the council chooses to go. If the council hits goes on one of those responses, then it will be time to trigger opportunities for parking and tiff and possibly SSD. Yeah. But basically, this was justformational.

Okay.

Patrick, would I be right in saying that? Oh, I'm sorry. Please.

Go ahead. Go ahead.

Okay. Uh that in terms of the uh rec center modernization, I don't think there's an option but other than to go forward because if we delay, you know, the cost would, you know, just escalate.

Yes, sir. Yeah. I think you're correct and we've been watching this for a period of time to when the fund actually had capacity to do three in a respectable amount of time and I think this is about as best as we can get it because it it it just increases in cost as Mr. Schulman says the longer we wait the funding source can looks like it could support it at this time. So we

would like to move forward with that as recommending it in the proposed budget for you.

Anybody object?

Okay.

Okay. Um, so anything else anyone wants to give as direction to staff related to the CIP in particular capital projects?

Yeah. Cash.

So just um, Councilman Cummings, did you have something?

Oh, okay. I'll go first. All right. So just and and this is good for the public to to really understand how the CIP works.

Um there's a lot of things that I feel like since being on council for one year that u these are not my initiatives, these are not my projects, but yet they benefit the city.

Um it takes a couple of years for projects to even make it to the CIP.

There's one that I think that we should talk about. Um, and I don't know if if when you called me that I said it. I think I did. Storm waterer. Storm water.

I think um it's the businesses that have been in my ear saying that we are so stringent with how we require storm water regalization or regulations to be um you know submitted to businesses that people that consider doing business in Virginia Beach would rather go to Chesapeake and so forth and so on because our storm water um the way that we have it spelled out for local businesses. And so

I'm a little concerned of maybe we need an engineer, maybe we need some a study group, but if businesses are turning away because of our BMPs, right? or they're turning away because of how we have our storm water. I I think when we talk about taxpayers not increasing the taxes, well, the only way that we can keep the taxes low is by either either increasing businesses here.

If not, taxes go up. So if our storm water requirements are so difficult that businesses go to Chesapeake, Norfolk, you name it, the surrounding cities, and that's really because of our BMPs, our storm water um regulations, then in a couple of years, our taxes are going to be um in a place where our citizens are going to be requesting uh for new council members.

because we haven't done our job keeping their taxes low. So, I'm concerned about the storm water. I'm concerned about it.

We need it for safety, but I'm concerned.

Okay, Josh. And then Barbara.

Thanks, Mr. Mayor. And uh Councilman Jackson Green, uh you know, we and thank you for mentioning something about um the cost of doing business and and how it's impacting our um housing availability and affordability issues.

But um we the storm water we just had a storm water management implementation advisory group give us um a really great set of recommendations um that was circulated a couple of months ago. Um it was just just what you spoke of. A bunch of engineers, environmental folks, uh development community, city staff, um land use and environmental attorneys, um got together and made some recommendations on on um on how our

economy and our environment can kind of work a little better together along those lines. Um, one of the recommendations in the um in the the group's report included um resourcing an existing CIP relative to cost share on infrastructure improvements uh stormwater infrastructure improvements that would help um offset some of those um uh costs when when the private sector goes to uh redevelop and develop

property. Um so that you know to the extent there is an impact on public services, public storm water um that that there is money alongside that private investment to to go ahead and help make the project possible. I believe that's resource currently at about $2 million a year. Um I believe the task force report recommended um evaluating additional monies be placed into that into that CIP line item. So

that you know there's a laundry list of things that could be done I suppose that could help but um uh one thing I would request I guess is is maybe I I know that report was circulated among the council a couple of months ago and and we had a presentation but but it would be nice if it were brought back recirculated so that that the the council could consider formally accepting that that those

recommendations and then giving staff direction to move forward.

You have Barbara.

Well, the reality is that because of where we are and the type of soils that we have, we can't ignore storm water and we can't put buildings in places that are going to flood. I mean, we look at these places all over the country that the whole town is being wiped out because of of flooding. Well, we're in a situation that is extremely volatile.

And if we can't ignore what we are and just because we want to build something there doesn't mean it's the right place to build it. And now thank goodness we're going to start acknowledging the issues that we have because of sea level rise. The sea level is going to keep rising and if we don't start thinking about it right now in a few years this is not going to be a very good place to

be. And if we don't accommodate what it takes to to accommodate the sea level rise, that's a whole lot more expensive than storm water. But we have to recognize that we're in an extremely volatile area. I think we're the most susceptible on the east coast.

uh and we have to and so maybe folks don't like the fact that we have to accommodate the land but the reality is if we don't accommodate the land it's going to cost those folks a whole lot more once they get washed away. So, it's the reality of who we are and where we are and we can't ignore it. And thank goodness we're going to start applying the issues of sea level rise, but that's

going to be a lot more costly than storm water. And that's the bad news.

Stacy, I um we have the process improvement commission who has a lot of expertise.

They worked on what Councilman Schulman was talking about on the storm water report. Did an excellent job. They did a great job when we were talking about um the city budget and ways to make it uh recommendations for efficiency and cost reductions.

And I feel as though uh we have this new comprehensive plan coming about. As a result of that, I believe that planning is going to do a study to see what changes need to be made in our zoning and ordinances. And I would like to recommend that we have the process improvement commission work with our planning department because there's a lot of very technical expertise on that side of the equation to work with our

planning folks to come up with recommendations about the changes that the needed changes in our um in our zoning ordinances as a result of the comprehensive plan which would address storm water. will address uh a bunch of other issues uh as a result of this. I think we would get a lot out of their input.

Great. And uh you know, let me say this about that too. You know, I think one of the problems we have, unless I'm wrong, we have a one-sizefitsall program. The bottom line is you go out to various areas of the city. you know some pla places demand more stringent regulations other places may not so I think uh you know we just got to be adaptable and you know make it you you

know custom fit to you know the area that you know that's you know you know just a thought there okay so I'm going to take the direction the preliminary guidance on the CIP as move forward with the rec center modernization get more information about the aquarium.

I want to move next to expenses, revenues, and process. But I want to give you a 10-minute break.

So, 10-minute break.

Later break.

Heat. Heat.

Hey, hey, hey. Hey, hey, hey.

the bank.

Um during our break we looked at the other comments that we heard from you all on the different pieces we wanted to talk about today. And I'm going to summarize what I think we heard. I'll get a thumbs up or not. Um, and so we can go through those those a little more quickly.

Um, for the budget process, we had a lot of discussion early in the morning about how to give more time for council discussion while hearing all the information you need to hear.

And where we heard you leaving that is the staff will develop a proposal for how to do the pres presentations concisely and emphasize what you need to hear. Still giving you all the information you need in packets to read ahead of time.

And so if if we're good with that as the direction staff is good with that seeing nodding any I think we're good.

Yeah.

Okay.

We talked a lot about revenues as well um with a few presentations on a few specific ones.

Uh the staff will continue to work on the hotel flat tax, continue to engage uh but nothing specific at this point.

It will continue with community engagement and council engagement.

Um, we're going to ask you to kind of hold on to what to do with uh real estate versus personal property tax until after this conversation because we want to have a little more discussion on that. But in general, the discussion was we're there's a few kinds of taxes we're interested in. We don't have the authority for some of them.

We're interested in perhaps taxpayer relief. That's going to tie to the conversation after. But in general, just kind of a recognition that the revenue neutral rate doesn't account for inflation. The mayor's hamburger costs more.

Um, so revenues, we're going to continue the discussion in a couple minutes, but in general, that's what what we were hearing on what I'm saying. We're not we're we're not continuing on. Anything you want to add there? We'll come back to real estate versus personal property tax discussion. We'll come back to taxpayer relief in a few minutes.

Okay. Okay.

Expenses. Um, the guidance on a council policy for supplanting state and federal revenues sounds like a future conversation based on what we're hearing out of the state. Um, and so staff is comfortable with where we are knowing that you might need a future conversation.

um had some other interests but uh also want to have conversations through the funding formula conversation with the schools about parody and health benefits. So no no specific recommendations or guidelines right now to guide staff as they develop the budget but just kind of general comments.

Mr. comments.

Um over the course of the last several months, the process improvement commission has worked on uh they were given it was a um task force set up by city council after last year's budget.

They made a presentation had several recommendations for uh expense places where we could look at cutting expenses or um at least examining that and also some revenue enhancements. And so I think that should be part of this discussion as far as revenues and expenses go that they they did a lot of work on that and had some great recommendations. I we need to consider what what they brought

forward. So, council needs to consider the PISK um recommendations.

Yes.

Yeah. David, so I'm not sure if you want to talk about that now or is that just something we want to put on the radar to talk about as far as the PIS stuff because I have my I I wasn't here for the presentation and I have some I have an opinion on it.

I'll tell you Hutch, let me put it this way. There were numerous recommendations. It might be a little over the thing today, but I think it it is definitely worth worthy of a f discussion as we get into it.

Okay.

Cash, sorry. Um, I just wanted to make this clear on exploring a policy of party in health benefits, school plus city. Um I I'm also thinking that when you look at a pie and you look at the biggest portion of our budget uh the 2 point almost $8 billion budget the large portion of pie goes to the school district which rightfully so we've got one of the some of the best

schools um in the in the nation here in Virginia Beach. However, I look in the the audience and I don't see the anyone from the school board represented in our in our retreat. So, I'm telling you, we need to have the right people at the table to have the right discussion. If not, then it's secondhand information.

And next, human resources is another person. Don't we have human who's who's a part of human resource? Are they here?

Yeah.

Oh. Oh, no. Okay. So, I stand corrected.

Uh, human resource is here. So, school board is the problem. No. Um, I'm glad that you're here so that we can have the discussion. So, I think that's the only person that's missing or someone from their department missing so that we can really have a healthy robust conversation. If not, it's just one-sided.

You know, cash uh let me put it this way. Um, you know, a uh camel is a racehorse designed by a committee. Okay. And there's you there's sometimes you got too many voices here. You know, we are the deciding body, but once again, we will have, you know, integration. You know, we have the five-year forecast going. We understand they're a step a separate and distinct body for a reason,

you know, and once again, they have full jurisdiction over what we do. The only thing the main difference is that, you know, we are the ones that allocate the money, but be assured that going forward, there will be conversations, but this is not the appropriate time.

Jennifer, thank you, mayor. Um, I'm looking at the two that have to do with potential federal cuts. So, the policy for potentially supplanting uh state and federal money in the rainy day reserve thinking about the pisk recommendations and I know you probably you may have been thinking about this the human services cut. So, if you're thinking I'm thinking about the staff that's preparing for preliminary budget

guidance knowing that some departments are more precarious than others particularly human services. So, there were a number of cuts recommended. I guess that's that's a fair word from the PISK presentation, but um I mentioned the concern about losing and that came up in the earlier budget presentation. So um I don't know where that fits into the planning, but I think that needs to be accounted for. Um

when we're losing grants and the state may not pick up the loss, what does that mean locally for funding those services?

Any thoughts Patrick?

Doc, um, Mr. Mayor, council member Rouse is I'm think about your PhD, right?

Council member Rouse is spot on. That's literally the conversation we had with um, human services and housing last week in their um, internal budget hearing is how do we account for those impacts? And as Kevin had mentioned, a lot of those vacancies that we could possibly cut are used either for local match components or they're used to cover the fact that when we don't have the positions filled,

we don't adequately fund for overtime.

So to use those vacancy savings to cover the overtime for the staff that have to take on the additional work because those things are mandatory. I think when I hear this council's asking us to explore the PISK opportunities and if there's any ones that are um realistically feasible to do consider as PIS themselves noted that there are tremendous constraints and unknowns that they um have with what they brought

forward as well but they just set those a lot for consideration inside it inside the package that we provide to council.

There's also the departmental responses to the impacts that um that PIS provided that the impacts that PIS suggested for consideration and further conversation.

There's a response from the departments on what those impacts would have to those departments that we did look to look as part of the internal budget process and we will take those into mind as we um bring forward the proposed budget for council's consideration.

Okay.

anything else that you want to address or we'll we'll keep you moving.

We'll keep you moving. So, um the sort of late late in our planning for this retreat, the staff started getting potentially good information. Um and that's great. The the VRS uh information that they shared earlier is potentially good. the governor's budget is potentially good. And so we wanted to ask you all um to give a give a sense of if we had more money, how would you allocate it?

We're going to give you each a worksheet. Let me just turn this quick

multi-purposing.

Um, so you're Laura's going to hand out a worksheet like this for each of you. How would you allocate funding if you got new funding? We put four initial categories on here and we have two blanks. The first category is if you if you were able to invest more, would you invest into um closing federal state funding gaps or mandates? We don't think that you're going to have to do that this year

or you're not going to have to do much of that this year. So, this first line is probably less important.

The second line is if you had additional money money would you want to invest invest in attracting and retaining a qualified workforce. So that might be uh paying the market salary rate second phase.

So last year city council um or two budgets ago council authorized a market salary survey. We did the market salary survey but funds did not come into what there wasn't enough funds to fully implement it. So a portion of the workforce primarily public safety got the market salary survey adjustment right. One of the things that council could possibly consider is um attracting and retaining qualified workforce could

be to fund other portion of that or other additional um enhancements to workforce um recruitment and retention.

The next one on the list is capital infrastructure investment. Not asking for specific projects, but if you were given if you had access to additional money, is that where you might want to invest? Um, the last one is taxpayer relief. So, would you want to invest in taxpayer relief, which is reducing some taxes or fees for taxpayers? And we've got two blanks. if there's something

else on your mind. Um, we're not giving you a specific dollar amount. Say you you're you've got $10 million new money.

We're just wanting to understand your relative priority of these. If there's new money, where would you want to invest? And so we'll ask each of you to mark an X on the different lines of what's you relatively want to invest more in one of these or less in one of these. And if it's equal, just put them all equal. So just put your X's on.

We'll collect and display. Questions about what you're doing.

Any questions, Josh?

One question. When we're talking about attracting and retaining a qualified workforce, are we just talking about city workforce or are we talking about workforce in general as a means to grow our economy?

This one will be city workforce.

Any other clarifying questions? Yes.

Patrick, when you were talking about the uh the job, you know, the analysis we did in public safety, you know, there's job classifications, right? And we had done some I think the year before public safety. Do you know and it doesn't it's not it's not 100% necessary but how many job classes are still that we would need to bring up we have any idea on that?

Yeah Kevin I think there was a 48 but we did public safety is about 50% of the workforce or I don't know the class. Well, I'm not worried. I'm I'm really worried worried about then like are we at half or we at three quarters because I thought we had done some the year before public safety for the market adjustment. Um public savings was about 17 or assumed to be about 17 after implementation and I

think the remaining amount that was not funded was around $15 million. So I think that was in aggregate the total amount of cost.

Any other questions?

All right, go ahead and mark your papers. When you're ready, you will collect them.

One per row.

One per row.

Yeah.

Are you supposed to mark four or what?

One per row.

equally.

Yeah. But but you don't want to

these stickies.

We're not letting you touch the stickies.

They changed the color of the dock.

She doing

She noticed they don't trust us to go up and put the dots up. So for good reason.

I don't know.

We're almost done.

at the Africanamean Cultural Center.

African

One more.

Nice.

Sorry.

Let me get the last couple of writins and then we'll talk.

of those.

One of these.

Huh?

All right, we're close to done.

So, we're going to um give you averages in a second, too.

Where do you want it?

on the Okay,

guys.

So, I'm I'm going to start just like observing from the top. We've got a spread of it's important to look at federal state um funding gaps or mandates. Then we see it start shifting more toward um important to attract and retain a qualified workforce, shifting more toward capital improvement, capital infrastructure investment, taxpayer relief. Um, and then the ideas, the other ideas that came on to

things, uh, African-American cultural center, I think there was one here and one here, sports tourism has two at the high end, school modernization, aquarium, kind of in the middle, economic development, workforce development, housing and economic development, and seniors and special needs. So those are additional um areas of interest. We're getting our averages now. Um I thought I heard a you wanted Okay, so

we'll get our last average.

So these are your averages across um federal state funding gaps or mandates a 3.5 on this scale attracting and retaining a qualified workforce a 6.5 on this scale capital infrastructure investment 6.7 taxpayer relief 7.5 and then other other important things but because you weren't all voting on the same thing we don't have any averages but it's useful information here. Um, when I look at it,

these three all seem relatively important to all of you with taxpayer relief being the top important um piece to you that you want to be able to provide some taxpayer relief. So, this is when I'm going to come back get back from the discussion we were having earlier.

What does taxpayer relief look like?

There was mixed messages earlier about maybe it might be some um something with the real estate tax, maybe it's something with personal property um tax, maybe it's something else.

Is um is there any there was also several comments of we want the message to staff to be if there's the possibility to do some taxpayer relief, we want to do it. We'd like staff to kind of flesh that out and come back to us with a proposal. So somewhere in that spectrum, want to know how what what your interest is in if there's a ability to do so, what would taxpayer relief look like?

Hey, Michael and Josh. Yeah, you know, I thought it was a really interesting discussion and the last time I heard, you know, a really compelling appeal for um the more equitable distribution of relief and affordability. And then I also heard um you know, another council member I think correctly point out that the vast majority of the um revenue that comes into the city is paid by

residential homeowners. I think why do we have to pick between the two?

Couldn't it be yes and I mean I think it would be in my view I I would love to see options that that provide both relief for the people that don't own homes and also relief for people who do just in different ways.

I mean I don't see that as being so complicated.

Josh, um thank you mayor. I think it would be helpful to kind of have a sense or begin thinking about it with a sense of like who exactly it is who's suffering most right now and who who we want to you know be be in a position to give give some assistance to. Um and then and then once we once we have an idea of the the various categories of people who are having the most difficult

of times right now um maybe looking at what kind of taxes they pay so that we could target some some relief to those who need it most. Um, and I've and just kind of looking at the rest of these, it just it strikes me that all of these things cost money. Um, and then the ones that like the investments in economic development and workforce development and housing, those are the things that help generate

additional revenue to pay for those other things that are priorities. So, um I wish economic development was on there as a baseline so that we could we could all vote on that. But, um but that's the bill payer.

Thank you. So, you start with for me um you start with the seniors and the special needs community. Um some of them are not able to go out and generate um extra or additional income. And so you start with our most vulnerable population there. You put together a task uh group or a task force or a committee and study it. Um and it it's based on uh the needs and um

things that would put them in those brackets. I mean that's that's the the the population that's most vulnerable and near and dear to my heart. Okay.

Second, um I would say in the form of tax credits, right?

Because you're not going to issue direct cash back to them. So, where is this tax credit going to come from? Um personal property taxes. I told you I I ran on this because I was um in the auto industry and I I I I don't like the fact that we have to keep paying on the vehicles over and over again. um especially if you do a onetime um fee or tax or personal property tax when you

buy the car and then second after it depreciates you keep paying personal property taxes on it now. But I like Sue Cunningham over there as well too. I get it. It it does some good. So personal property taxes, you know, now that I'm in the seat and I see the other side too. So there has to be a balance. Um, so I would say how that looks for me given back to the

public is by tax credits.

Thank you.

Okay, Jennifer.

Thank you, Mayor. Um, yeah, I echo C council member Berluchcci that I we heard compelling arguments for both real estate and property tax um relief. I am leaning towards property tax as a relief that is my understanding will reach more people. What I'm curious about with the real estate tax relief, the way that works is through a tax rate reduction.

Is that the mechanism?

So that's my biggest concern. It's the we went from 99 to 97 and I don't know how sustainable a reduction is in the context of reduction in federal funding. We'll see what happens with state funding.

Things are expensive. So, keeping things as is to manage it is where I'm right now. Um, and I'm leaning towards property tax.

Rosemary, Rosemary then Stacy, we you could always give a credit on their bill and we we I think we did that the year um 2122 because used cars all of a sudden because people could their values went way way up which I'd never ever seen before. So we gave them I can think a 25% tax credit on their bills. So the nice thing about that is people see it. they get if you

just send them a bill with even if it's a reduced rate, they may not see it because it may be confused as well that might be because my of a depreciation, but if you actually gave them a credit, they could see what the city council did. So, that's one way you could handle that.

Okay, Stacy.

All right, just continuing the argument for the real estate side of it.

uh an estimate. I I'm sorry, Kevin. I told you I wouldn't hold you to it, but I'm just going to ballpark it here.

Okay. So, on the real estate tax side of it, if it's a three if it's going to take a threecent reduction to get revenue neutral, and I don't know that we're going to be able to get there, um but let's just say it's a twocent reduction in the real estate tax rate. That means that every homeowner is still going to be paying a little bit more on their real estate tax

bill. It's just that the increase is going to be less than if we didn't give the real estate tax um relief on the personal property tax. And again, I hate all taxes, but on the personal property tax, all things being equal, everybody's going to get a cut because their car is a year a year older and and theoretically going to be worth a little bit less. So, um, again, I just think

that we put the burden, we put the greatest burden on the homeowner, and if we do have the ability to give some relief, the the relief should come where the greatest burden has been placed. you know, over the last several years when we didn't have the flexibility to even think about, you know, reducing the rate, real estate got the real estate folks got hit hard, people that own homes. And again, they're not going to

if we reduce it two sets there, everybody's still going to see a little bump in their real estate bill, but it's just not going to be as dramatic as as it's been in the last several years.

Okay. Hutch.

So, we're just repeating ourselves here a little bit, but for me, it's like because I can tell you I've talked to past folks that have sat at the end of the table down here and they're like, "What are you doing considering with the flooding and everything else that you've got you're going to lower the taxes and we've got a billion dollars we got to come up with?" You know, they're they're

wondering how we're going to make that happen, you know. But I also understand we've come into some money. I, you know, this, you know, don't want to say that it hasn't. So, we have to be uh judicious about that. I just can't get past the fact that if you do it that way, the the homeowners, which I am one, that you're not you're not you're not doing anything for the folks that are

renting. And it's not a small percentage. Even on my wrong number earlier, it's still 40%. Thank you, Katie. Um, so 40% of our folks or 40% that's I don't know what how many hundreds of thousand you know whatever that's a lot of folks. So I think that's what's when we're talking affordability that's why we would do it. Again I I agree that either one is probably not wrong but I think one does a little bit

more good for everybody. So that's that's where I stand. And I've had a lot of folks that have sat around this table that I've talked to that all but said you're making a mistake if you if you cut the property tax that you should look at the uh personal property.

You I mean the housing, you know what I'm trying to say.

Josh, sorry. I'll take one more. But at the Apple um I just remember where we were at in 2023 where um I think you know we we were or 24 I think is what it was when when there was a reduction and then we were faced with I think what was a $170 million shortfall in the the CIP and that threw our capital budget off to the point where we we were sitting here trying to

figure out whether you know we was it nine year CIP now or or how are we going to how are we going to make all these things work because because we've made assumptions over the last several years on how to plan out the next six and to Councilman Rouse's point or Councilwoman Rouse's point um if we if we have a reduction in the rate that is a sustained reduction over over time that makes makes us miss

targets and um and that concerns me because I mean I know we've all felt the pain of a delayed deferred, you know, CIP project. I certainly have and and it's not fun. Um and and and we've in prior retreats, you know, we we've said that a priority of ours is is keeping our promises. Um and and I think we really and especially on the on the things that people use day in day out,

namely roads and and critical infrastructure.

um we we've we've got an aging city, aging infrastructure, um and and and now's the time for reinvestment. And if we're going to chop ourselves up at the knees now in the face of things continuing to to escalate in terms of cost, I think I think we put keeping our promises in in great jeopardy. So, um if we do have some sort of a surplus and there is interest at some sort of equitable

relief that touches all residents, um if there's a way to do a rebate and list it the kind of the way that you talked about even on the real estate tax bill that that it would show somebody this is this is one year only. We're rebating it this year and it's not a it's not a um a rate decrease that we're going to have to plan ourselves out of three, four,

five years from now so that we hit the projects that we need to hit.

Okay. Say anybody else over there.

Mr. Manager, were you going to say something about I don't know.

Yeah. I you know um the real estate one is has more impacts and I don't want to say adverse impacts is there impacts that we got to navigate around right so more challenges maybe on the overall city municipal corporation bottom line right but the personal property tax isn't leveraged as the way that the real estate is leveraged from a dedication standpoint right you know so um if the if a reduction was made on the

personal property tax has less a ramification on the debt capacity side of the city than a real estate tax reduction would have. Yeah. But they're all challenges.

But if you reduce the capacity, reduce our ability to do things. As we're starting to ramp into things like considering the fact that likely on the horizon probably in calendar year 27, the council is going to have to have another confrontation with reality as the mayor said with are we going to demonst demonstrabably indicate to the Army Corps chief engineer so they can demonstraably indicate to the Congress

that Virginia Beach is going to be a 35% partner of the coastal storm resiliency flood? project, right? We know that's probably several billion dollars.

First phase, you know, like as Mr.

Cummings mentioned, that's the elephant, right? But the first phase is probably going to be hundreds of millions of dollars, right? And we're going to need to show them that we're willing to consider our 35% match of that. If you cut the personal, if you cut the real estate rate, that's making it that much more difficult of a conversation for you all to have when you are faced with that decision as well. Yeah,

that's what I would like to offer out there.

Yeah, Stacy, I'd just like to comment on the uh one-year credit side of it. And you know, maybe I'm hurting myself a little bit on this, but you know, there are six of us running for re-election this year.

And I'm afraid that if we did that, you know, the public might perceive that as being an election year buyout or fraud.

And I I wouldn't want that to be the case. I want this to be a sincere uh effort to um to address public need.

Okay. Anybody else?

Yeah. Let me say something that, you know, may be controversial.

Um, I'm probably the senior guy at this table. You know, three quarters of a century old. You know, retirement on the horizon. I have a vested interest in keeping real estate taxes down. I'm going to be living on colas from social security, a part-time teaching gig, you know, things of that nature.

But I think if we're going to be once again, I'm going to come back to that confrontation with reality thing. In many a way, we're a victim of our own success.

People want to move here. Our properties are desirable.

They're willing to pay well over listing, you know, to come and live here. And I think Jennifer, I think you said something. we don't have enough inventory uh to accommodate you you know the future needs that we have and that drives the co costs of homes up. Okay.

So we got a dilemma uh here as far as that goes. Um but you know um you know worth can tell you I get what was it about 6 n months ago I got invited to go talk to the North End Civic League and they and the fact is that the folks that get hit with the highest probably in Sue you can probably bear out in other words if if there is a rating it's not across

the board for everybody in every d direction that you go by sales in different neighborhoods Some neighborhoods actually may see their taxes drop, you know, based on, you know, what's going on in their neighborhood, but, you know, for unfortunately the high-end homes in the north end and uh ba bay View and, you know, a few other uh, you know, places around, they get the dispers

disproportionate burden, you know, based on the fact that they live in extremely uh, valuable and uh, well sought over places. So I went up and spoke to the North End folks and you know Worth was there and I spent a number of time talking about the value of you know what they're spending money for and things of that nature and worth if I recall I didn't get any questions at all about

the real estate rate a after we explained to them you know what goes on you with there you know you know real estate taxes aren't fair they aren't equitable And you know that's kind of you know the situation that we face but you know uh you know uh cash you know I really expect how do we help the most vulnerable and a lot of the most vulnerable don't live in residences you

know you know we were saying nobody can afford the median cost of $450,000 to buy a house these days. So they live in apartments which doesn't make them less vulnerable. But once again, I think when we when I talk about the quality of life, it's all the collateral services that we do to help the poor in this house. Uh with the uh you know, with the relief to uh the people over 60, that's

helpful, the veterans and everything, but when government cannot do it all themsel in terms of helping families that are really in need. And the fact is that, you know, it's a high cost of living everywhere, including Virginia Beach, but the people that work in our service industries, you know, the hotels and, you know, things of that nature, the custodians and the uh, you know,

schools, you know, the people that, you know, pick up, you know, our waste and all the other things, you know, you know, they are stressed too and they maybe live in apartments and hopefully, you and there and once again you know the cost there but the services that we provide through our taxes to help out and a couple things we during uh the co we gave what do you what do we give a

million dollars to the food bank was that the uh the cost I think probably yeah back then well probably 10 million no but I'm just saying yeah I think it's between ARPA and um car's act yeah I think it is significant. Probably 10 million.

Yeah. Yeah. But I'm just saying uh the Southeastern Senior Services that goes out with meals on wheels and other uh services, the money that we put into the organizations for mental health and things of that nature. Um and then you know you believe it or not you know along with uh Michael's advocacy you know the you know funding the arts you know to you know give the culture but also

um an identity you know to the uh to the city of Virginia Beach. We spend a lot of money giving uh things to uh church uh faith-based and other organizations that are actually out in the community actually hands on people helping out.

So yeah, but once again I think as we look at the broad picture and that's why we're in such a dilemma, you know, right here, you know, that's why these conversations are not easy, but they have to have. But once again, let me just reiterate over and over every Nor, Chesapeake, Newport News, Richmond, everyone is going to have these conversations. And the thing is, I really think that in many ways, um, we

have proven our ability to come through the tough times. We're deliberative. You know, uh, the Marine Corps motto, improvise, adapt, overcome. and we got to use the resources that we have, but we just can't lose sight of what we want to do. And I'm I'm just going to keep myself deferring back to the quality of life because that is an economic driver for companies wanting to come here. And you

and I have had conversations that we got to get the commercial ratio up somewhere closer to 20%. Uh to help take some of the burden off the uh type thing. But one of the reasons I also put uh workforce development that it's non employee um if we can get and we were talking about getting our youth into trades and if we can get them making significant amount money being welders and carpenters and auto body repair and

we're able to improve their economic status you know significantly I think that goes a long way to, you know, helping people out there. Well, you know, when we built the Leser Bridge, we had to import welders from Baltimore at a premium pay because we didn't have any. So there's other strategies, collateral strategies that, you know, if we start thinking outside of the box and being creative, uh, creating more wealth

for people because the ultimate answer for our long-term sustainability is going to be creating new revenue sources through economic development and, you know, a few other things. But if we can raise the income level to people, you know, I I'll tell you what, I think that's a long-term strategy. But this is all part of the discussion that we we're going to have and uh that's my two cents.

Um Mr. Mr. Mayor, members of council, I think that we're feeling like we've got general direction on Yeah. I think what I got from the council is you all are open and would like if there's a surplus of scale to consider taxpayer relief means and how to do that to be determined, but obviously we'll present something forward to you all and then you all can always change it, you know, as part of

the budget process. But what I got from you all is that if we get an opportunity, we should not just um keep all of those resources for the city corporation, but we should also think about giving some back to the taxpayers that fund the city.

And Mr. Manager, just confirming if some is going to fund the city, capital infrastructure investment, attracting and retaining qualified workforce are priorities as well. And you don't need more detail on that right now?

Unless council wants to give it, but um I'm I'm fine with the general guidelines of where they want us to go.

So, um if council is good, we would be at the point where we'll just recap. A couple of you in our conversations ahead of time, uh said you're not always sure what we're deciding at these meetings, so we wanted to just do a quick recap if that's okay. and then we'll adjourn until tomorrow. Um, unless there's other business. So, we just talked about this.

C. Thank you, mayor. Can I just ask a quick question because I think you asked this in the interviews and I think this morning you uh one of the people or one of the categories was dedications and we didn't take up dedications today and to me I think it's worthwhile. I'm not ready to take change them necessarily, but you know what percent goes to open space, what percent goes to parks and

rec, which we I think we're fine with that, but ARP and I'm hoping everyone's okay with tip, but anyhow, we didn't talk about dedications because there might be there's fund balance in some of those areas and so do we want to keep the same amount going there where we could redirect that revenue somewhere else? Is that worth talking about or Yes.

Okay Michael.

Sorry. No, I I I couldn't agree more.

Um, and I think that was in the package that we got with the fund. I mean, some of those fund balances are quite impressive and would go a long way to providing sustained or or one-time relief or a or and or um addressing some of these emergent priorities that we've discussed today. So I think we must discuss the dedications. I think there from my impressions on previous retreats and

even in the discussions I've had I think there's a lot of interest in uh in in addressing that. And then we have to acknowledge the fact that if some of these dedications are overperforming that's inherently unfair to the taxpayer who's being overcharged and underexecuted. when you have these $30 million buildup in inside these dedication funds and um we need to rightfully return those resources to the people who

funded them or and andor uh set those resources to work for them which is their expectation of us. So, uh, I'm really glad you brought that up and and I hope that we address that tomorrow or in future. But I mean, honestly, the some of those funding dedications could could resolve some of these sticky issues that we've been discussing here today just outright.

We need to rightsize the dedications because people are being overcharged.

Amelia.

Yes. And I concur and agree with both of them because just setting the record straight how we got for the arts and culture getting that dedicated funding for them. Michael and I worked on that and that's important to show that dedicated funding helped us make that happen. So I agree with what Michael's saying as well as worth that we should look at the dedication.

Thanks.

Okay.

Um, would it be the desire of council to at this point just direct the staff to bring those to you all for consideration as part of the budget process or do you want to dig in deep into the dedications either in the next 45 minutes or tomorrow?

Yeah, I don't we do it I think tomorrow.

uh you know the uh you know because that's why we can really kind of sleep on uh you know the context of what we had today. You know don't we absorbed quite a bit today and thank you very much for uh providing you know a a path down a uh you know a bumpy road. Uh but you know I think at this point um you know let's you know we we we have I think we'll

have more flexible time that we can incorporate anything we got to tie up tomorrow.

Yeah.

Um just a a a suggestion or question. Um and I guess I'd put it to Patrick too.

Would it be helpful to have I guess a preliminary like a prelim analysis from staff on the health I I know I know that all the balances and some of the analysis is in the in the workbook but but just something to work with so that we're not just you know picking from here or there uh so that we've got maybe a little bit more meaningful background to say okay well this this fund is

actually really really healthy compared to what the annual expenditures are what the existing obligations are whereas you know another fund might have what appears to be healthy fund balance but it's committed so um is I don't know anyway if you can do that by tomorrow I mean that's awesome but uh but any anytime soon would be good yeah but let me say this Josh I think you know uh the success of this uh day

today was our magnificent facilitators gave us a schematic they gave us a plan, an overview uh as we go into the budget. You know, once again, when we get more budget details, when we get the assessments, then we can start, you know, plugging into what's on the schematic and then we can eventually get to a thing. But as of right now, until we get that necessary information that is not ripe yet, uh,

you know, but once again, I think, you know, we'll have a path to get to where we need to be.

Yes, sir.

Okay. Yes, Jen.

Just one final comment on the federal and state funding gaps. I didn't indicate a high priority for that with the assumption that for this budget it's not so much of an issue. After this year, my score will likely change. So that's with the understanding like with direction is for this budget.

So Mr. Mayor, when we were first starting to talk with Julie, there was a lot of unknowns going towards a negative place with state and funding support as it relates to um these programs. But since the last couple of weeks, it has flipped and as Kevin mentioned, just last week um the Congress passed something that looks positive as under horizon for the community development block grant and the HO program and stuff

like that as well. So, we do anticipate, knock on wood, that this will be a fiscal year 28 conversation and not necessarily a fiscal year 27, which is the budget that you'll pass in this coming May.

Okay, that's a wrap.

Um, so just we we've recapped this. We right before this recapped what was on the other board related to your guidance on uh process and expenditures and revenues and CIP and um I I think we're good for the day.

Yeah.

Yeah.

Yeah. M Yeah, I'm good for the day. And just to clarify as well, Kevin and Katie, you did acknowledge it seems like we got we can have the dedication conversation tomorrow because we've already looked at them based on expenditures and it's it's updated in what we said. So, we could have that conversation with the council tomorrow if desired.

All right. That was outstanding work today.

So, we are reconvening tomorrow. We're starting at 8:30. There'll be refreshments um at starting at 8, but we'll be seated at the table and getting started at 8:30. We'll talk about dedications. We'll talk about the role of the governing body and your governance um uh mishmash conversation about a variety of different governance topics. And that's our agenda for tomorrow.

Great. Outstanding work. Thank you.

Thank you.

Yes.