COUNCIL COMMITTEES
The Council Committees Meeting was held on October 27, 1997, at 6:45 p.m., with Council President Christiansen presiding. Members of Council present were Mr. Lambert, Mr. Leary (arrived at 7:05 p.m.), Mr. Pitts, Mrs. Malone, Mr. Salters, Mr. Weller, Mr. Truitt and Mayor Hutchison.
AGENDA ADDITIONS/DELETIONS
Mrs. Malone moved for approval of the agenda, seconded by Mr. Salters and unanimously carried.
LEGISLATIVE AND FINANCE COMMITTEE
The Legislative and Finance Committee met with Chairman Salters presiding. Members present were Councilwoman Malone and Mr. Merritt. In the absence of Councilman Leary and Mr. Kramedas, Mr. Salters deputized Councilmen Weller and Lambert to serve as temporary members.
Request for Tax Abatement (Sec. 19.5, Art. IV) - Dr. Julia Pillsbury - Professional Building at Greentree - (BM2OR)
A request for tax abatement under Section 19.5 of the City Code was received from Mr. Jack Richter of BM2OR, representing Dr. Julia Pillsbury. Dr. Pillsbury is planning to substantially expand her professional medical services and BM2OR is designing the new facility to be located in Greentree Village.
Mr. Lucas explained that the request is for the abatement to be granted on the condition that the employment requirements (as outlined in Section 19.5-33-b) will be met before the abatement of real estate taxes would be implemented. Mr. Lucas explained that although the ordinance does not clearly state when application should be made, past requests have been made once the building permit has been issued.
The Deputy City Solicitor reviewed the ordinance, and in his opinion, a conditional approval of the abatement request would be permitted, with the stipulation that all conditions of the ordinance must be met prior to actual abatement of real estate taxes. Mr. Lucas, however, conveyed concern with this action setting a precedent for future applicants. If Council approves this request, he suggested review of the ordinance to address such questions as: how far ahead a preapproval could be permitted; how long approval would be good for; and, once construction is completed, if a time limit should be set for hiring requirements to be met.
Responding to Mr. Salters, Mr. Lucas stated that once a property is constructed, certain tax obligations are created which would have to be met until such time as the abatement requirements are met.
Asked by Mrs. Malone if this particular request could be approved by Council, with the stipulation that fifteen (15) employees will be hired within a certain period of time, Mr. Lucas stated that this is an option that Council could consider.
Mr. Lambert asked when tax abatement would commence if the construction of the building is complete but the hiring requirements are not met. Responding, Mr. Lucas stated that if a time period has been set for the applicant to meet all obligations set forth in the ordinance, any tax obligations that are created during that period of time are the responsibility of the applicant and that the abatement of taxes would not commence until all provisions of the ordinance are met.
Mr. Jack Richter of BM2OR, addressed Council and stated that this project, located in Greentree Village off of Rt. #8, will create new employment opportunities for citizens of Dover and will ultimately strengthen the city’s tax base. Plans are currently being developed for the issuance of a construction permit with construction to begin late this year. The estimated cost for construction is $1.5 million. The new facility will have a total projected staff of 29 on a regular and full-time basis. Mr. Richter stated that in order for this project to move forward, financing and business plans need to be executed in accordance with financing requirements.
Mr. Salters reminded Dr. Pillsbury that all qualifications set forth in Section 19.5-33 would have to be met before abatement of taxes would be granted. Mrs. Malone felt that Council should set a time limitation, from the date of original approval by Council, in which the applicant must meet all requirements of the abatement ordinance. If the requirements are not met within that set period of time, then the applicant would no longer be eligible for the abatement of real estate taxes under the abatement program.
Mr. Christiansen asked what would be a reasonable period of time to meet all qualifications set forth in the ordinance. Responding, Mr. Lucas stated that he felt that there would not be a need to place a time period on the construction of the building; however, there may be a need to place a time period for the hiring requirements to be met.
Dr. Pillsbury addressed Council and indicated that it may take two (2) to three (3) years after completion of the building to meet all hiring requirements. She stated that she intends to recruit additional physicians and support staff. She hopes to have one (1) full-time physician and support staff in place once the construction of the building is complete. Dr. Pillsbury explained that she will attempt to recruit a physician from the June graduates. If she is not successful, she may have to wait until the next graduating class. Mr. Christiansen suggested that the committee take this into consideration when making a recommendation.
Mrs. Malone expressed that she was pleased with the location of the building, which she felt would provide a buffer for residential and commercial properties and will also be convenient for residents to receive medical attention. Asked by Mrs. Malone if the additional 15 new employees to be hired would be for her medical practice only, Dr. Pillsbury indicated that when the request was submitted, they were mainly focusing on her employment projections. She stated that her husband, who also has a medical practice in the same building, plans to hire additional staff as well. Dr. Pillsbury indicated that her practice currently has 14 employees, including physicians, which is a combination of full and part time employees. She stated that her husband currently has five (5) employees, including himself, employed at his medical practice for a total of 19 employees between both practices.
Mr. Salters indicated that Section 19.5-33(b)(1) of the Dover Code indicates that a new or expanded facility would be required to hire at least 15 qualified employees (including owners/operators). Mr. Lucas stated that only 15 additional full-time employees would need to be hired since the combined practices are located in the same building.
Mr. Lambert questioned if a business constructs a new facility in the City and the business does not meet the hiring requirements after three (3) or four (4) years, could a request for tax abatement be considered. Responding, Mr. Lucas stated that an applicant would not be considered for tax abatement after a Certificate of Occupancy has been issued. Mr. Salters stated that it may be necessary to make changes to the ordinance to address concerns of the committee.
Mr. Truitt asked if the request for tax abatement has an effect upon acquiring financing from a bank and indicated that a bank normally requires some type of time table for a particular project. Dr. Pillsbury stated that the bank they are working with suggested that they apply for the tax abatement. She indicated that their business plan will project when they plan to hire a physician and subsequent support staff.
Mr. Lambert asked if approval of tax abatement comes prior to the issuance of the building permit. Responding, Mr. Lucas stated that approval of tax abatement normally comes prior to the issuance of the Certificate of Occupancy once construction of the facility is completed. He stated that during the course of construction, a request is usually submitted (after the building permit is issued and prior to the completion of the building). Mr. Lambert stated that at that point, the developer usually knows if they intend to meet all conditions of the tax abatement ordinance.
Mrs. Malone moved to recommend that the abatement of taxes for Dr. Pillsbury’s new facility to be located in Greentree be granted once the provisions of the ordinance are met, stipulating that a hiring time limit be set for two and a half years (2½) from the date the Certificate of Occupancy is issued. The motion was seconded by Mr. Salters and unanimously carried with Mr. Leary abstaining.
Mrs. Malone suggested that staff review this ordinance for possible revisions that will address concerns expressed during the meeting.
Proposed Amendment to Chapter 19.5 - Addition of Art. V, Sec. 19.5-41 - Collection Costs (City Assessor)
Mr. Lucas relayed to members that over a period of time, the collection of delinquent property taxes has become increasingly more time consuming and more expensive. He stated that the normal collection process is to send a delinquent notice and then several (4) increasingly strong letters implying that legal collection action will be taken. He indicated that only when this procedure fails, do they proceed to sale preparation, at which time extra expenses are incurred.
Currently, the City Assessor’s Office absorbs “soft” costs, such as costs associated with postage, envelopes, delinquent letter preparation, etc. To keep costs at a minimum, the City Assessor prepares all sale documents and assembles the sale packets that are taken to the Prothonotary’s Office for filing. The City Solicitor must review all documents and attends to all legal requirements of a sale. The costs associated with the work of the City Solicitor, which is estimated at an average of $50, is absorbed by the City. It is Mr. Lucas’ recommendation that the taxpayer be held responsible for all hard costs associated with collection of their taxes.
The only hard cost that is currently recouped is a $50 to $100 fee paid to the Prothonotary and Sheriff Offices.
Mr. Lucas explained that beginning September 1996, there were 162 accounts that had in excess of one year’s billing unpaid. Of the 162 accounts, 30 accounts required actual preliminary sale preparation with seven (7) accounts requiring final sale preparation. Five (5) properties were ultimately sold, although two (2) have since been reclaimed. Collection costs for 1997 to date total $2,537.
Mrs. Malone felt that $50 was a minimal fee to charge a delinquent taxpayer for incurred costs, but wondered if this amount is sufficient to cover all costs. Mr. Lucas stated that if the ordinance is modified with the fees as proposed, it would allow the City to sufficiently recoup estimated legal fees incurred by the City. He stated that it is not his intent to charge the fee for punishment, but rather to recoup actual expenses associated with collection of delinquent taxes.
Mr. Truitt questioned the Assessor on the proposed fees, stating that discussion has centered around the additional $50 fee, but it appears that the ordinance actually permits additional fees totaling $150. Mr. Lucas agreed, stating that the first $50 fee would be for delinquents that result in a court filing, but is settled prior to sale of the property. An additional fee of $100 would be levied if the filing results in sale of the real estate.
Mr. Lucas explained that if collection proceeds to sale preparation (filing with the Prothonotary’s Office and posting of the property by the Sheriff), the collection costs are approximately $50. This collection cost is in addition to the $50 fee incurred from the Prothonotary and Sheriff. If collection then proceeds to an actual sale, an additional $50 filing fee is incurred from the Sheriff and Prothonotary’s Office, as well as an additional $100 collection fee, over and above costs. This fee would cover the Solicitor’s costs for review of the Prothonotary’s execution praecipe; review of lien holder’s list; mailing of lienholder’s notification; preparation of total amount due for sale bid; sale attendance; and disbursement of funds after the sale.
Mr. Lambert moved to recommend approval of the proposed ordinance (Attachment #1), as recommended by the City Assessor. The motion was seconded by Mrs. Malone and unanimously carried.
Meeting Adjourned at 7:34 P.M.
UTILITY COMMITTEE
The Utility Committee met with Chairman Lambert presiding. Members present were Councilmen Pitts and Weller and Mr. Carey. In the absence of Mr. Kramedas, Mr. Lambert deputized Mrs. Malone to serve as a temporary member.
Middle West Service Company Report
The City’s bond resolutions require that the City retain an independent engineering consultant to inspect the City’s electric system and to review the electric budget and insurance program. The City’s current engineering consultant is Middle West Service Company. They have submitted their annual report for 1997-98 which includes information on the following:
1. Discussion on the working of Duke/Fluor Daniel arrangement for the power plant management.
2. Confirmation that the transmission and distribution system of the City are generally in good condition, well maintained and operates efficiently.
3. A mention of continuous improvement in grounding and outage problems.
4. A mention of the conversion of 4kv system to 12 or 22kv.
5. A discussion on the project and funding approval process.
6. A mention that the revenue and expense budgets provide for the operation and maintenance of the electric system according to sound utility practice.
7. A discussion of funding of the improvement and extension fund.
8. A conclusion that, for the fiscal year 1997-98, the rates are adequate from the bond holders point of view.
9. A review of the insurance program for our electric system.
Mrs. Malone relayed her appreciation to the Finance Department for providing the report for review prior to the meeting.
Mrs. Malone moved to recommend approval of the report as submitted, seconded by Mr. Carey and unanimously carried.
Mr. Salters moved for adjournment, seconded by Mr. Weller and unanimously carried.
Meeting Adjourned at 7:50 P.M.
Respectfully submitted,
Robin R. Christiansen
Council President
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