 Okay, well let us begin. So I would like to call to order the Tuesday, January 17th, 2023 meeting of the South Burlington City Council. And our first order of business is the Pledge of Allegiance. Tim, you want to start that, please? Pledge allegiance to the flag of the United States of America and to the republic for which it stands, one nation, under God, indivisible, with liberty and justice for all. Here we go. Okay, second item is instructions and exiting in case of an emergency. Great, thank you. So for those in the room, there are two doors at the back of the auditorium. You can go out either side and then till after the right to get out. For those participating remotely, thank you for joining us. If you would like to speak tonight, you can turn your camera on or indicate to me in the chat that you would like to and the chair will call on you. Otherwise, we are not monitoring the chat for content. Thanks. Thank you. All right, item three, agenda review. Are there any additions, deletions, or changes in order of items? Seeing none, okay. We'll move on to comments and questions from the public, not related to the agenda. I don't see anyone in the audience who would make a comment. Is there anyone at home? All right, okay. Are you interested? Is that Frank? Are you interested in making a comment on something not on the agenda? Okay. Good, okay, well, I just wanted to make sure. So we'll move on to item five, councilor's announcements and reports on committee assignments and the city manager's report. Tim? Tim? Sure, so last week I attended the economic development committee meeting and also the energy committee. And today I attended the pension advisory committee meeting and you will be hearing from the SEI representative and also Eric Shate from Northern. Is that the name of the company? The actuarial person, so, thanks. Okay, Megan? No, I have nothing to report. I'll have more to report at our next meeting. All righty. And the only thing, well, I have two meetings that I went to. One was the natural resources and what is it? Conservation committee meeting and I also attended the CCTV meeting. Now I'm here, so that's all I have to share. Well, those were all today. What? Those meetings were all today? No, they were last week. Oh, okay, yeah, yeah, no. It works pretty well. Okay, Jesse, do you want to give your report? Sure, texting Paul to come down because you guys are flying. So actually, I only have a few updates for you as well this evening. Our communications union district that voters approved us joining in on the November ballot has officially been convened with our partner municipalities who joined on. We had our first board meeting about a week and a half ago where we adopted bylaws just for the community's reminder. This is the group that will allow us, specifically in Chattenden County, to do that last mile connection. So we have pretty good coverage. We're interested in duplicative coverage. But through the standing up of the CUD, we'll have access to state and federal dollars to do that last mile connection. In South Burlington, we have 7,143 folks who are already served by broadband and 22 who are not. So really, we're targeting those 22. Would you 100 or 22 properties? 22 properties. Wow. We are in a much more privileged position than a lot of the state. Once this gets up and going and there is a plan forward, I would suggest the council that we put out a request to the community to see if others wanted to serve as representatives to the CUD like we do to CCRPC or things like that. So more to come on that front, but it's often rolling if people want information about that organization, all of our agendas and information is hosted on the regional planning website. Oh, CCRPC. Yeah. OK. Last week, we swore in three new police officers who will, yes, who are now in our three week field training program and will go to the 115th Academy on February 6th. They are fantastic candidates and we're excited to see kind of that rolling investment in new police officers going to the academy. We also welcomed a new dispatcher, Caitlin Howard, who we brought on from the state's PSAP dispatch service. So she brings a lot of experience with her, which we're really excited about and celebrated the promotion of two sergeants. And then finally, I just want to remind the council that on next Monday on the 23rd, we have our steering committee meeting right before that. We'll have a special council meeting where you will hold your public hearing on the education impact fees and then we'll go right into the steering committee meeting. Is that at 630 or 7? The public, the special council meeting starts at 630 and then the steering is at 7. OK. And then is it at the police department? No, it's here. Oh, it's here. OK. You want to host, Sean? Sure. It's scheduled to be here. I have that in my calendar. So for some reason, I thought you had said that. Tom, I'm sorry, since I didn't see your cheery little face, I didn't ask if you had anything to report. First week, did you want to tell the world what wonderful committees you're on and stuff? Sure. I was reappointed to transportation as the vice chair, and I was also very excited to be appointed to Senate finance. Great, those are two good committees. On to the consent agenda. There are five items, the disbursements, approving minutes from December 19, accepting the easement deed for the community center access and the market street access public roadway easement from the self-growing to school district and the easement deed market street from Allard Square. Approved requests to the Chittenden County Regional Planning Commission for their FY24 unified planning program. I think we've got five requests. Is that right? I don't know. Something like that. And then lastly, approve the acceptance of Baycrest Drive, Irish Farm Road, Haymaker Lane, and Harbor Ridge Road as city streets. So I'll move to approve. Second. Okay, is there any discussion? Okay, we're all set with those roads? Yes. Okay, all right, because sometimes we've been asked. We've been plowing them all this time or no. Tommy, do you want to come up? We would have heard if we hadn't been probably. Well, somebody would have been plowing them. Well, yeah. Good evening. Hi, good evening. Tom DiPietro, director of public works. Yes, we have actually been maintaining these roads for a little while now. It was more of a paperwork process to finish it up. And it's a portion of some of those roads you listed. I think the information is in your packet. But okay, thanks. All righty. So if there's no questions or discussion, if you're ready for the vote, all those in favor, signify by saying aye. Aye. Aye. All right. Okay. So that's four zero and the consent agenda is adopted. We're a little early for the worn public hearing. I would recommend you skip over eight, seven, eight, nine and go to items 10 and 11. And Paul Connor is here to walk you through those. Okay. So we'll move to item 10, which is receiving an update on the comprehensive plan outreach plan. Going to be busy. We sure are. Hey folks, Paul Connor, director of planning is owning. So we're entering the, as chair really just said, the busy point with the comprehensive plan. We're really excited. We, our city planner Kelsey has been working with all of the committee liaisons as well as the committees themselves getting information out to them the last couple of months. We have hired Joe Sigali to be a professional facilitator for us for 11 public meetings that we're going to be hosting in February and March specifically on the comprehensive plan. As talked about with the planning commission, the way that we've divvied it up is that there are going to be four that are focused on geography. So the northwest part of the city, the city center and Kennedy drive corridor, the southwest and the southeast. And then there are going to be seven, no, yes, seven topic based ones that go along sort of major themes of issues in our communities, in our community, and also generally aligned with the statewide planning goals that we need to make sure that we've addressed all the topics of. So we're going to be hosting each of those today. In fact, we met with the liaisons and chairs of just about all the committees with our facilitator to walk through the process that's going to happen in each one. There's going to be a little overview of what is the comprehensive plan? What's its purpose? What does it do for the next 10 years for us? And then talk a little bit about some of the things we know in terms of the city having adopted a climate action plan about what we have done in past years in terms of conservation and zoning and things like that. And then what we anticipate in terms of future growth based on the forecasts that have been done for the school district by McKim and demographics and our historic trends. So things that we sort of can expect to see in our community to help shape the conversation. And then the facilitator is going to gather feedback on these topics using the city's comprehensive plan goals that you talked about with Planning Commission back last fall to sort of again give it all a framework and gather pretty broad community feedback. We're expecting that people will bring all sorts of ideas. They're going to be hosted by committees but it's really this is the opportunity for the public to weigh in. And we expect that the nature of this work is that everything is cross cutting. So somebody may choose to show up at the city center Kennedy and talk about transportation issues in their area and that's perfectly fine. And then somebody may come to the transportation topic specific one and share a similar thought and that's fine. That's why we're going to we're having a consistent facilitator and staff attending. We're going to pair this with a bunch of outreach the first of which is going to be in this week's other paper letting folks know about these events. We are going to be doing an online poll to sort of kick off all of this through the city news. The poll will ask some really basic questions around the comprehensive plan goal yet goals and vision. It's primary purpose as you know our moderator and former professor of statistics would say Vince Balduk oftentimes a poll is just to get people's minds going. So we're using that as an introduction to this work. Committees are then going to be invited after the public input to gather their thoughts about what they've seen what they've heard and share additional feedback to planning staff. They've already been invited to share feedback on what they see are some key issues. We're then going to roll that into the work over the next few months of developing the first draft of the plan in the various chapters bring those to the planning commission give the chance for the committees on the various different subject areas to provide feedback and then pull it all together come late spring and into the summer. So we're very excited by all this. We have invited the planning commission members and they have agreed to have to try to have at least one at every one of these different sessions and we've encouraged them to you know please feel free to attend ones that they're passionate about but attend one that they know less about as well and they were very interested in doing that and we extend the same invitation to any counselors that are able to attend any of these. They're going to be all held in Room 301 of the City Hall and online with a consistent go-to meeting link that's going to be the same one for everyone so it makes it a lot easier for folks to keep track of which one they want to attend or ones and be able to provide their feedback. So that's where we are, we're really excited and this is you know launching into our next 10 years of policy making. Right, questions? Will there be planning commissioners at each of these public outreach meetings or will they rely on the facilitators to report back on the public input? So the facilitator is going to be doing facilitating that's their primary work. They'll debrief a little bit with staff but really they're there to keep the discussion going. Staff is going to be also there taking notes and debriefing with one another and with a facilitator afterwards. Planning Commission members are really, they were very interested in attending and our primary goal with that is for them to just be hearing what is being said by the public. The committees will also be at all but one of the topic-based ones are hosted by one or more committees. We've asked in a couple of cases for a couple of committees to get together because the topic areas are similar so we're having the public art, the recreation and parks and the common area for dogs committee all together to host the session about community amenities and culture and on the other spectrum we're asking a few committees to stretch their mission a little bit. So for example the bike-ped committee is going to be hosting the subject of transportation and they understand that they're a bike-ped committee but as far as the public is concerned the public wants to may want to give feedback on whether it's buses or cars or trucks or rail I suppose or bike-ped and so they've agreed to host that which makes it a little bit more clear for the community and gives the committees as well maybe some feedback and input on subjects that they can always hear so yeah. Okay so we'll be more of the policy committees that will report back to staff as they well right so staff will be there together on notes and then Kelsey has laid out a schedule for each of those committees and when any feedback that they want to provide based on what they've heard needs to come to her so that she can be incorporating that into the very first draft that goes to the planning commission and that's all been laid out in the schedule for each of the committees. And then we have one topic, I've forgotten the title that we gave it in the end, public safety, public works, basic needs which does not have a committee but it's really all the things that are amazing partners in the public out in public safety do what public works does that isn't necessarily roads and then we added the word basic needs is really a bit of a catch-all for folks to share an opportunity for folks to share what they're hearing or what they're experiencing in our community that may not fit easily with a committee so somebody were to say you know I would really love to see greater times of opening of the food shelf or other service you know greater partnerships with Howard Center things like that that there's an opportunity for folks that we haven't we haven't made the boxes so tight that people can't provide feedback on those subjects we felt that those are you know we know that they're going on in the community and we'd love people to share any and all thoughts that they have and just because it's budget night I will add that's probably about 75 percent of our budget in that one conversation in detail core municipal government and we put it first okay Tim more importantly at each of these meetings with the public will there be refreshments well it depends on whether you choose to attend at home or in person if you come in person you'll have a selection of refreshments that we have provided if you're attending at home it's really up to you and the negotiations within your own household and then so did you hear that Tom Chittenden refreshments if you show up so what do you what do you envision is the so we have a current comprehensive plan right and there's a lot of good information in there that you want to retain and some new stuff you want to add and some things you want to tweak because things have changed right so is it a scrap redo or is it a take the existing and add a few sections and change some sections and the way we've been talking about this and this came up a little bit in the joint planning commission council meeting as well is really looking at this is building on the 2016 comprehensive plan the 2016 plan was a pretty thorough rewrite so I would you know describe this as doubling down or supercharging the 2016 plan so the areas which were identified are now being said more clearly the the the the direction of the city the feedback that we've gotten so far has been you know the the city is generally headed in the right direction so now let's refine these things make our objectives even more measurable for the next eight years and advance and I think that that's reflected in the discussion that the council and planning commission had around what are the key goals that are refined but they didn't change direction if you're hearing otherwise we'd love to hear it at the sessions too no I'm impressed with your plan and outreach and I hope that the public responds um and really takes the opportunities there certainly are enough of them yes um to tell us what they think and I might add I think the there's probably a majority on the planning commission right now who worked on the current so at least four right three or four and certainly yeah at least at least three maybe four I think Michael came in just at the end so he might be the fourth one okay yeah but I think that's good there's some continuity and then there's our newest member uh fresh perspectives which are always yeah and our newest member Donna Leibin has been involved with the community for a long time and so she was certainly aware of the last one so yeah yeah I think there's continuity and new um invigorating energy both which is great well great well thank you it's a lot of work a lot of work okay um let's see what else can we do item 11 okay receive an update um on the Eau Claire parcel yep uh Paul Connor director of planning and zoning so uh it's laid out in a memo to you last uh gosh now I guess two summers ago the council voted on a second um or an additional contribution towards the conservation of the project about three hundred and nine thousand dollars um so that that action took place since that time we've provided council with a couple of updates the parties are getting ready specifically the mont land trust to close on the conservation of the bulk of parcel b which is the west side of hindsburg road north of cheese factory and um uh we had felt that it would be uh prudent to put in writing in a public form enumerating what exactly is um being accomplished with this uh conservation essentially so uh we are inviting the council's action to um essentially authorize the city manager to release those funds and we're providing that documentation about exactly what um uh you know what this conservation is achieving um on all for all parties okay so do we need to so in the memo from Kelsey um like to this agenda item there are two proposed actions um we'll walk through this oh right just need to get them up in front of me excuse me do you want me to start we can read them if that would you know have them right here be helpful the first one is allocate the remaining three hundred and nine thousand thirty three dollars from the city's open space fund toward the vlt acquisition of the conservation conservation easement on parcel b conditional on the execution of an acceptable right of first refusal refusal on the so-called excluded area of thirteen point four one acres of partial parcel b so can i ask a question about that again yeah because i i remember when we voted on this and i think i voted against it just at that time but the three appropriating the three hundred nine thousand i voted for the point six mil yeah but that's okay um i still support this so why what is the excluded area again so um the excluded area is at the very northern extent to the property and this is um it was acknowledged from the very beginning that um both to achieve the objectives of bread and butter farm to be able to provide for some uh level of housing hopefully farm worker housing and also frankly to make all of the numbers work the uh the value of all the contributions from all the different entities uh nrcs the city the state grant funds could achieve conservation on the overwhelming majority of the property but not the entirety of the property so this is the excluded area that could be used um um to essentially become the farm hub the way that the uh so in addition to that the way that the nrcs easements work that using the federal funds is you have to lay out very specifically which land will be conserved and which land can be used for anything including whether it's farm worker housing but it also could be a food hub or it could be uh in a point of sale that kind of thing and that needs to be excluded so that's what this is achieving the update uh that is rend um that is uh discussed in here and that is part of that motion is that we have worked with um the various parties to um to create a right of first refusal for the city upon for that 13 acres and that's something that um had been discussed with council um as a possible item it was not uh committed to at that time but um given that there's still some fluidity in the ownership with this is something that we advocated for and we felt um would put the position put the city in a solid position if for whatever reason it's it's taking a left turn that was unexpected by the city so that's the one new addition is that you are uh gained a right of first refusal if you if you choose that would be right of first refusal to purchase the property right correct the 13 acres yes right yep do we need to vote on these separately because we can if there aren't I think if you're fine with both of them that's as long as they're both um read into the record and okay that's fine the second one is approving the memorandum documenting the conservation agriculture recreational and other public benefit outcomes of the city's total approximately nine hundred and fifteen thousand dollars funding so I'll move to approve both proposed actions that you just read out loud recently well second okay is there any further discussion tom do you have any questions we have a map up so I can't see you you can bring it back not no I guess not so if you if there's no further comment or question um I'm so glad we're almost done I am I drive by there a lot and I see what they're doing and it's it's it's fun and I'm proud of our action as a community to preserve this so all those in favor signify by saying aye aye tom are you going to vote or any opposed looks like it's just three zero two absent okay thank you for your time I climbed the Mount Everest of south burlington uh two days ago that's the dirt pile near your house at cider mill edgewood yes and I could see your house from up there it's not the highest point though I think that the ledge that where the barn was I think that's even higher yeah that is according to tom that is the highest point in south burlington as we've been told several times okay um so it is seven o'clock so we can now go back to item seven our warned meeting a public hearing on the f y 24 all funds budget and capital improvement plan so shall I make a motion to open the public hearing so moved second all in favor aye okay so the public hearing is open do you want to do any sitting with table so um in the interest of public disclosure for folks who may be watching this in the future since we don't have a whole lot of engagement tonight or online um I would like to run through a presentation just quickly so you all are reminded of what you're voting on tonight um also out of respect for your process and in thanks for the time that you have spent over the last um two months on hearing this budget and and uh asking great questions about it I did want to uh invite the leadership team to be here tonight so we have um obviously our wonderful finance director martha mature who really is the architect of this budget we have paul connor the director of planning and zoning alana blanchard the community development director shan berg the police chief steve lock the fire chief collin mcneill the city attorney jennifer marita library director martha lions the tax and assessing director gray gando the physical plant director daisy bray and our hr director and tom de petro our public works director um online we also have holly reese our parks and recreation director and mike mott our it director we also have lots of tom's leadership team who is also here with us tonight so we have marissa and adam and bob and erica of course in the room as well and i think i've hit everyone did i hit everyone excellent good job team thanks for being here um so again they are here to express their thanks to you all for the time you spent on the um budget um presentation so and davie wheeler just joined us as well um and also to answer any questions that you may have during your final discussion so this is what i'm going to run through tonight i'm going to do it very quickly uh you all have seen this information a number of times it's also for those who are watching at home or watching afterwards linked here off of our main budget website um and we will be going over this um many more times again before 10 meeting day as well uh so you heard about the challenges that we experienced in building this budget um we are at certainly once in in thus far my career high inflation and cola um rates i think we are all experiencing that across our community we continue to come out from our lean covid years and we really focus as a leadership team on what we needed to do to maintain um our service delivery to the community as we continue to grow as a community uh we've made a number of key assumptions to develop this budget we are assuming a 1.75 percent growth in our grand list that's the total assessed values of all of our properties in south berlington i do want to know really good news for us as a community um one percent of that is in our city wide grand list um almost 10 percent of that growth is in our city center grand list so the investment we have made in public infrastructure in our tiff district and in our city center is realizing that level of growth um we're also including the arpa stepdowns we have previously talked about um and other um individual budget items as laid out here so for the goals um the goals that we are realizing as part of this budget and what i'm specifically talking about today is the leadership team recommended budget that the council um indicated support for at your last meeting so with this budget we are really focusing on ensuring those core municipal services support our community expectations we are meeting those inflation and cola uh rates we are focusing on maintaining our parks reinvesting in our police department and fire department um investing in our capital improvement program so we are incrementally investing general fund dollars in our capital needs every year um and restoring a gis data analyst staff position that was eliminated during covid so during the budget presentations you heard about a lot of different service needs to maintain those core operations you heard from public works about our ability um our need to grow our ability to maintain not only our parks which we will invest in this year but also our ability to maintain our roadway system we've invest we have about 20 new miles of road in the last 22 years and have not grown our staff as a result uh you heard from our police department um about the need to restore officers that were previously underfunded to again meet those community service needs um restore specialized assignments for our police officers and train for that future succession planning so this budget includes investing in one additional um restored funded police officer position as well as restoring the deputy chief position in the police department could i just clarify that the underfunded the police being underfunded it wasn't necessarily the council it was that's absolutely correct council emory that was a financial decision that was made during lean covid years um to have the finances of the city reflect the operational staffing realities that we were facing at the time as we struggled to recruit officers it wasn't an intentional unfunding of the police department but now we have to build that tax capacity back into the budget thank you for that clarification good point good point right chief uh you also heard from the fire department about our need to um restore the 30th firefighter position in order to maintain our minimum staffing without mandated overtime um as well as invest in our second ambulance in the city right now we operate one um as we are seeing those numbers continue to creep up and right now 23 of our 911 calls are answered by professionals from other communities and other organizations um and then finally you heard about our need to incrementally continue to invest in our capital improvement plan as you can see in this chart our property tax capacity to fund cip over the last what is that seven years has fluctuated pretty significantly um and what that means is we are not every year as cost increase incrementally investing in our ability to um keep up with maintaining and improving our infrastructure um so this year we'll start our um level funding and increasing that every year so this is the proposed f y 24 budget that the leadership team is presenting um it accomplishes those goals that i just outlined it is a two-year plan um it maintains the 800 000 of general fund funding to the tiff capital reserve um and it has a 5.75 impact on the tax rate or just over two and a half pennies so for the average condo owner in the city that's an additional 78 dollars next year um and the single family home owner that's an additional 117 dollars i do so that's the general fund budget i do want to call out a number of different funding streams that if you approve this tonight you will also be approving uh we've had lots of conversation recently about arpa um so with this budget you are continuing that plan to step down our investment and salaries and capital from arpa um and you see that outlined here where those um dollars will go both in staff and cip funding um in the out years uh this will remain this will um have remaining arpa funds available of two million dollars for the council to discuss um and of course you have talked you talked last week about using that arpa fund to fund our city's commitment to climate action you have not that vote is not part of the vote tonight but i don't want to lose the community commitment to implementing our climate action plan here um and then of course you if approved tonight you will also be approving our 10-year capital improvement plan um here you see some of the specific things that are highlighted in that amazing 150 page document which i highly can recommend everyone go through with a fine tooth comb it's very exciting a lot of think ways we are investing in our community um we as i said we're investing um 450 thousand dollars of new general fund capacity into our capital projects with this budget and we'll continue to do that for the years to come i always want to include what is not included in this budget um so not included in this year's budget is funding for the recreation center um or specific funding for regional dispatch although we do think we have other solutions for that and then of course with the approval of this budget you are the council is also approving the enterprise funds budgets these are budgets that aren't specifically brought to the taxpayers to vote on on town meeting day but are approved by the council so the stormwater fund includes a 1.64 percent rate increase or a dollar 44 for the year you can see the projects that that will specifically fund in the coming year as well as the amazing level of grants that dave and tom and the team have been able to bring into our community that have really been able to maintain those low rates in our water and stormwater funds we have we have under invested in infrastructure for a number of years so we are we with the upcoming Bartlett bay wastewater treatment plant bond issue that is on the ballot as well as well as future water capacity we do need to increase these rates this year so this includes on the wastewater side an 8.34 percent rate increase or about $30 for the average rate payer and you see here where we stand as compared to other our neighboring communities water rates we are the lowest same on the water fund it's about eight and a half percent rate increase or $23 next year and again we are at the lower end of that capacity this is anticipating and being part of this rate increase is being driven by an anticipated bond vote next town meeting day for additional storage water storage capacity that we will need to keep up with our community's growth you heard from Erica about pennies for our pennies per path funding stream so that's the one cent on the property tax rate for pennies for paths and how those funds about 400,000 will be allocated in FY 24 and then continuing in future years really important to note that with this investment that the community has made 86 percent of our residential buildings are in within a tenth of a mile of a shared use path which is great for meeting some of our other community goals similarly on the open space front again this is a penny on the tax rate that we have here in south brillington you see how we are proposing to use those dollars this year with your vote tonight those will also be approved and fun fact here is 68 percent of our residential buildings are within a quarter mile of a park and open space which is great but obviously work to continue to be done with this budget you'd also be approving the use of our special funds we have 25 other special funds across the city which total almost 10 million dollars of spending in this fiscal year and you've seen those those are all linked on our website as well so if people are watching and really wondering what those 25 special funds are you can dive into the detail on our website you've already approved the two bond votes to go on to the town meeting day ballot that's our 15 million dollar bond vote for our final tax increment increment financing district authorization to incur debt broken out into those four projects and of course our 33.8 million dollar bond vote for our Bartlett Bay wastewater treatment plant facility so with approval of the warning tonight you will be putting those on the ballot um almost done I promise so I think it's always important to talk about what are the remaining emerging issues so again this is a two-year operations budget proposal which means this is a pretty significant increase this fiscal year and we'll have a hopefully not quite as matching impact in FY 25 to add capacity and incrementally invest in our capital we are seeing significant transitions in our executive team continuing which may impact other decisions regional dispatch is something we continue to focus on we do have that anticipated bond vote in 2024 we are not currently funding a recreation center which I know that there's still some community interest in we are in octave negotiations with our health clinic so that structure could change going into FY 24 our fire collective bargaining agreement does expire at the end of FY 24 so that will have an impact on next year's budget potentially and we are certainly seeing wage pressures from our surrounding municipalities especially in public safety so more to come on those issues as we get into FY 24 so with your approval tonight this is the community engagement process that we will undertake over the next couple of weeks to ensure that our community is educated and informed about what will be on the town meeting day ballot of course we will meet with the steering committee on the 23rd we will be doing the town meeting day presentation on January 31st and then that will be rebroadcast and then we plan Alana and Tom and I plan to do three different informational meetings over the course of February and early March really hyping the valentine's day love your city budget informational meeting right before your dinner reservations it's going to be fantastic we are doing those from six to seven so people can come to an informational meeting and then go to a comp plan meeting so lots of ability to get your voices heard and stay informed and then of course town meeting day from polls are open from seven to seven that is my presentation thank you for allowing me to run through it thank you so now it's the public's turn is are there any comments Frank would you come up to the mic please and make sure the green light is bright green you have to push the little buttons we can hear you I just have a question about process would you please um for the I'm sorry my name is Frank Culkman I live on Hadley road thank you my only question is about process it's a very ambitious public information schedule you've laid out does that lend itself to modification of the budget between now and town meeting day are you simply explaining and what you see is what you get on town meeting day that's the question well I think we're always able to make some changes I think we have had a lot of conversations and believe that this is the right budget for the community and we're looking to both educate you and hear your comments do you have anything else dad um so I would only add that with the council's approval tonight the general fund budget for FY 24 will be set pending voter approval on town meeting day so so that can't change however there are many aspects of the non-general fund budget um that the council can change mid-year or redirect funding middle year so certainly always going to the community and educating as as the council chair says is part of that what are the future policy decisions that the council will make with the dollars allocated and and Frank we did have some council conversations about our goals and expectations for the budget to give the management or leadership our thoughts about that on which they acted and and presented this and whenever we did that the public was able to make comment if they so chose not too many did but that's kind of the process it's not a public hearing but we like to hear from the public through the whole process which began last December actually what the question was directed at was not so much anything programmatic at all but rather trying to avoid I mean what I'm struck by is the the tax increases are going to be pretty hefty this year and if it's just up or down on town meeting day uh I would prefer that the the council sniff the air and and avoid a series of up or down votes on uh successively reducing budgets that's all it was it was a numbers question not not a program question I'm just curious I I'm not here to to suggest anything in particular I was wondering what the process would be and that's my that's my underlying concern I hate to see budgeting and dragged out it's helpful to have certainty as soon as you can and if that means adjusting up front rather than going back to the drawing board after one failed after a failed vote I'd prefer to see that that's all just I would too but I think in our process we have been sniffing and I think we had additional thoughts or concerns that both the public and council members brought to the fore that are not reflected in this budget because they were too costly so um I appreciate your your comments and sensitivities to that but I think the council feels pretty strongly that this is um a really appropriate and reasonable budget request even though it is two and a half cents and that's usually higher than we go but there's expectations that we've heard for the last two years in terms of I think services that the public expects and wants um and I think this budget reflects that in as lean and careful a way way as we could yet I think it's a real balancing act I mean every budget is a balancing act right and this year is different in particular I mean in the past we didn't have to vote on the city budget if it was less than uh three percent increase or something to do with the CPI remember that and then the charter got changed and then we were allowed to vote on the city budget every year right the only budgets that have been voted down that I can remember was 2017 when the ed budget was voted down twice but that was also in conjunction with you know a process about changing the mascot name if you remember that pretty clearly right and finally it passed on the third try right big issue so this this year is a little bit different like as you were I think um you were talking about we have there are a lot of things at play here one is inflation right I mean inflation hits everybody here when they go to the supermarket and they can't believe that a dozen eggs is 599 to start with 899 if you want the other ones right okay I'm going there right now but you know we we're all seeing we're seeing increases in the price of of your Vermont gas bill went up I think your gmp bill went up a little bit they probably are going to go for another one uh you know food is up right fuel is up enormously right for for this budget compared to a year ago right and then on top of that there's the human capital which we've really poured over and had a lot of feedback from especially public safety and fire where you know the city expects services and we're glad to provide them but then you have to turn around and look at the toll that it takes on the human lives that provide those services and when they're working a lot of overtime their quality of life suffers you know and so this budget takes those people into account and tries to to add resources so that they get to spend more time with their families so we're trying to be fair to everybody including the voter and normally we shoot for 3% right now you got to go back two years and realize that we reappraise the whole city right and that was a shock because housing prices have went up through inflation following the pandemic but through the grievance process I think we pushed down all the outliers and tried to make it more level and and and more fair than it could have than it that it was when Tyler technology has had the first whack at it right so we flattened that out and but then the grand list has grown so we have more growth more tax receipts and then we have this tiff district right here which is is going to have an enormous impact as well so the 5% to me and we looked at three different sets of numbers there was a number higher than this one and we said we should probably stick in the middle of the road for now and stay at five because it's a little bit less painful right so does that summarize I think yeah and I think it's important that you you really stress the public safety both police and fire where we really need to invest in order to make sure that they are prepared to respond to our needs as a community so I think that that that has to be stressed we have grown tremendously as a community at a time when you know it's very difficult to find police officers and firefighters and we need to increase that personnel we need to increase the force and and our firefighter membership otherwise we will lose police and firefighters and then where will we be so it's it's these are the choices that we were faced with I don't I don't want to imply really any criticism of what you've been through I don't envy the task I'm just suggesting that well perhaps this is a good warm-up for the next for all for all the public public meetings I hope it comes out that we have a budget at the appropriate time that's all yeah thank you thank you very much are there any other public members who would like to share a comment or thought oh I'm sorry I didn't see you him come up excuse me I can't walk as fast as I used to either if the light is bright there we go okay my name is John Pfeiffer I live in Willowbrook Lane I wrote you folks a letter back in April of last year about a 911 call we made and mutual aid and I appreciate your service and I appreciate you supporting both Chief Burke and Chief Locke in their in their budget proposals I fully support public safety I've done it for 31 years I agree with everything you're doing but I just noticed tonight on one of your emerging issues is the ability to recruit and retain firemen and police officers and I did a little online research I just stayed in Chittenden County the only department police department that's currently offering hiring bonuses is Burlington and I'm not proposing that what I am proposing is that our HR department here in South Burlington look at options for a more robust recruitment and retention of that workforce it's not an emerging issue in my opinion it's already here well yes and and maybe it's just that's the way it was categorized on the slide but the hours that the fire department puts in is ridiculous over time doesn't fix anything actually we're going to lose more of them I think I'm afraid if it wasn't for their dedication to stay and I just wanted to come here tonight and thank you for what you do in supporting them but I really think there should be more attention on that emerging issue of the recruitment and the retention thank you very much John I think the council agrees with you and I think that's why it was included as maybe emerging was the wrong verb but we recognize that issue and in this budget we tried to address as best we could with hiring and paying for additional personnel and recognizing that keeping it as an emerging issue we haven't solved that problem we recognize that we need to do what's in this budget and we need to continue to really um make the effort to recruit and retrain and retain the professionals that we have and very proud of of what they have done in terms of the overtime and dealing with the fallout I guess of of COVID and um you know not having as much um budget as we would like so I appreciate and um your concern as well it's a shared one and and you know I'm I've been a taxpayer here since 2005 I'm now on a retired fixed income I went back to work part-time so I appreciate you know how much everything costs and your constraints and your competing priorities but the number one function of government is public safety and I think people have to realize that when the numbers that they're talking about 22 of the time you're getting a mutual aid ambulance the city it's we're already there and and we can approve five more positions or 10 more positions but unless we can get them there's already a two or three year cycle of getting that new person on the ground working by themselves and so if we don't start now I'm afraid we're going to be back here next year with either a plateaued line on on the workforce or lower and that's just what I just wanted to bring up thank you know as a resident here in South Burlington well if I may be so bold I would encourage you to write a letter to the editor that um identifies that as um an important issue and that this budget doesn't fully resolve that and we have to keep our eye on that ball but they should definitely pass this budget because if this gets cut then we really are in a situation where we may lose more firefighters or or police because we aren't supporting them enough all right well thank you for your time thank you is there anyone else not here I don't see any hands here you're sure there's no one in the public right we did a really good job I guess huh we we yeah our fearless leader thank you okay so I would entertain a motion to close the public hearing so moved second all in favor okay I will move on to um oh tom did you want to make any comments nope thank you though okay um number eight is the budget discussion and approval of the general fund capital improvement plan and enterprise fund budgets with directions to send it to the steering committee and the voters yes so if you have no additional changes you would like to see in what was presented there are three votes that are required there's two resolutions the first resolution adopting and amending the capital improvement program second resolution approving the FY 24 all funds budget as presented including the ARPA allocations and then with those two on this agenda item the third we would move to approve the warning on the next agenda item sorry the packages so right so who would like to make a motion twice sorry it's three it's three if you could do the two different resolutions separately so approve the initially the resolution um for the amending the capital improvement program first all right so I move that we approve a resolution amending the capital improvement program for fiscal years 2024 to 2033 second is there any discussion seeing none all in favor signify by saying aye aye okay and I move that we approve a resolution adopting and warning the fiscal year 2024 city budget and enterprise funds including the use of american rescue plan act or ARPA funds second any discussion seeing none all those in favor signify by saying aye aye so they pass do we have a third one and then the yes agenda item nine is to approve with all of those included the 2023 town meeting day warning and valid language in its entirety do we have to read the whole thing no let me start now it does include setting the public hearing for march 6 the night before town meeting day at 6 30 in the evening so that should be part of your motion okay so I'll move that we approve the 2023 town meeting day warning and set the public hearing from march 6 2023 at 6 30 p.m it will be here or at the middle school here 180 market street second any discussion all in favor signify by saying aye aye great fit nice work thank you all very much thank you leadership team for all of your work building this budget thank you martha yeah good job they actually made the hard decisions we just make the final okay wow we are an hour and a half ahead of time we like you too much all right um is is mr capel gonna join us because the next item we have is the city pension asset update yeah I just emailed both of them that we were running ahead and oh okay great then we'll be here I think that's 745 all right do you want to move down to item 14 then that is and we'll hear the pension people when they arrive the pension people no okay item 14 then consider and possibly approve an update to the purchasing policy so martha major yeah so I'm gonna martha is going to talk through these two policies but just by way of introduction for both item 14 and 15 um we are really trying to focus on our core operations policies and modernizing those those include both the finance policies the personnel policies and our code of ordinances so you this is the start of a a slew of these policy updates you will see coming before you and I really want to thank martha for her leadership in bringing these two policy changes really policy updates updates to our existing policies forward to you tonight go for it so for the purchasing policy last year during the audit process there was a recommendation from our annual auditor that we should be updating our purchasing policy to include the current issuance by the office of management and budget that that's regularly issue regulations on how federal grants award are that should be managed but when they are awarded and our purchasing policy had not been updated I believe since 2014 and we needed to do that it was also a recommendation by the state auditor which audit one of our grant this year and they recommended that we do the updates so that our purchasing policy is current and our grant procurement processes are in line with the recommendation okay so all the red language is the new language is all the new language and the code used in those red lines with the VLCT purchasing policy model which is updated we use that to mirror what those languages and also the code of federal regulations so has this purchasing policy already pre-existed and it's just being modified that's correct okay so I read through it and found a couple things I have questions about can I ask those now they're not the red stuff it's the regular the previous non-red stuff so I didn't cut out the section that it's in but shoot so there's a section that says departments have direct access to any MRC so it is the department's responsibility to track purchases so the department knows when a proposed purchase will be will over expend a budget line and it goes on to say if DCM agrees and the proposed over expenditure is less than or equal to ten thousand dollars the DCM may approve the PO if the proposed expenditures over ten thousand approval must be obtained from the DCM did you mean to instead of the second one if it's over ten thousand it should be the CM not the DCM yes I my read of that is that is should be the city manager okay so do you want me to highlight that typo to you I I can send you it no I see it right oh you see it okay because I was saying well why would they say it the same twice if it was over ten thousand under ten thousand it's because previously you had said if it was over ten thousand the city manager has to approve the other thing that I was puzzled about was section four the vendor selection criteria just some of the wording of it like line C it says do so promptly or within timeline specified it just seems like the wording that could be improved you know that the the bidder has to you know it's not it's not a complete sentence right so it doesn't really tell me what I know I think I know what you mean there and on line E it says the quality availability and adaptability of the service or product being purchased and the ability of the vendor to it just stops there Tim I'm sorry that was what what section are you on section four line E for what the vendor selection criteria it's the second page of the document so section four vendor selection yeah is that go into C does it go into C and to do so promptly I mean and even with G the contractor and consultant she used by that department I I mean so it was just a little wordsmithing on C doesn't really it's not a complete sentence and so the rest of them try to be line E it ends with the word two and I'm not sure I mean I know what you're trying to say but that yeah it sounds like you want to say something else and you don't you don't finish it so yeah E and F are the same line and B and C to and G and H oh so E and F should be just line E line E I see okay I didn't even notice that thank you yep we can easily fix those okay and and that's all I found but I could have looked even closer but those stood out to me believe those are great catches and the result of taking documents we only have in PDF and wording them oh okay and just our eyes miss that in the but good catches happy to fix okay thanks so are we ready to approve the purchasing policy changes as amended as amended as further amended from Tim as presented in with further amendment we ready okay I would but could I just ask I didn't see where Tim's first change was what it's uh it was I didn't it's way it's below it's the next page from where he just was yeah um so if you go to purchase orders and then it's the paragraph three down from the alphabetized lines let's say where departments have direct access okay it's the last sentence of that okay yes so it should be got it thank you city manager now I I'm ready to go yeah the only thing is is from two thousand dollars to twenty five thousand dollars a that's not that's letter a a p o must be sent prior to purchase a p will send the p o to dc m for approval so over ten thousand dollars to twenty five thousand dollars I don't write it's over twenty five thousand dollars that it's sent to the city manager for final decision that's c trying to tell you what's calling Martha did you follow when I was like no right because a says that it's sent to the deputy city manager from ten thousand dollars to twenty five thousand dollars c says greater than twenty five thousand dollars that's when it's sent to the city manager right and that final line says if the proposed expenditure is over ten thousand dollars with could go up to millions and however more than that approval must be attained from the dc m so that's we're changing that to the but over ten to twenty five it goes to the dc m yeah I think it's it's just missing a final sentence there about if the expenditures between I think actually we could probably get get rid of that whole section since it is outlined above an a b and c are we I just want to be sure that it's not something different because the logic well I didn't have a problem with with purchase orders a b and c it's down it's down lower in that paragraph that says departments have direct access to any m or c and it's the last it's the last sentence in that paragraph so the way we're purchasing policies work is anything that is after ten thousand can be approved by the deputy city manager but if it is twenty five thousand that's when it goes to the city manager for approval but after twenty five yes that paragraph has to do with over expenditures right so it's separate from the a b c because it's not an over expenditure it's just a purchase right so my reading of that paragraph is if there is an over expenditure if you exceed you know the the allotted amount that you're to spend you have to go through the deputy city manager it seems like it's a separate process or a separate situation yep it is a difference so approval of the current price purchase orders as approved in the budget is separate from when the that approved amount needs to go over or it's going to go over if let's say the line the budget line is approved to be ten thousand but the actual expenses came beyond ten thousand then if it is up to ten thousand deputy city manager can approve but beyond that it goes to the city manager for approval so you would change that to the city manager in that paragraph that final lines the final three characters strike the d right so the final sentence should say if the proposed expenditures over ten thousand dollars approval must be obtained from the city manager because it's still this is on this is an overage not that what the yeah this is a different right it's a different i mean this would be ten thousand dollars over a an approval that was half a million and then if it's over ten thousand dollars it it's bumped up to you to say that's okay or no it's not yeah we changed that you would put it before the city manager anything uh that's above ten thousand yeah we'll go to the city manager for approval there's just a lot of cms and dcms there so they i was just it might be a material at this point i was going to suggest that since these um we know that some changes have been made due to the transfer from a word from a pdf document to a word document um and that some of the context might be missing it just a quick read it might be worth it for us to review it and bring it back to you next time on these changes and you can you can approve the red line changes now and then we could review the entire document to see what's consistent and what is it and bring it back to you okay all right so do you want to modify your did someone did you make a um no i didn't no i think i asked before a motion was made okay so the motion then we'll entertain is that we do we even need a motion for the for the red lines just have them bring it back entirely again unless you need it in place to expense the market funds that's a question to you i'm happy to make the motion it's up to you for the red lines because it might be time do we need it for the audit we do not they accepted it they accepted the draft of the red line because their line is what matters to them and we said that we were bringing it to you for approval okay okay so you'll just bring back the whole thing red lined and okay and is that true now we go on to the um the grant policy yeah they're coming in person okay so let's keep working okay so the next so you don't have to hand write finance director every time there's a grant request yeah um is the grants management policy was was this also a pdf they're all pds yeah did you find some more black no i think this one's a little bit shorter i think i found on five the f and financial capitalized good catch it's my contribution for tonight and these basically are just correcting the titles that we give people in city government to do this correct yes correct she's taken over right yeah okay we have not previously had a finance director so with the creation of that role and martha stepping into it um we are undoing some of those policies okay i would suggest you sprinkle a few commas in there for clarity that sounds like a new you know commas for clarity there are fewer commas in today's typographical rules than because it's like let's eat comma grandma that's really important to put the comma there you know we will review and bring back to you okay oh this one is well this one's good this one is good oh i thought you guys were saying you wanted us to work with no well no we just need a capital f capital f and i do see a need for a couple of commas but it's okay you know unless things have changed him since when we were in college you can't take two phrases and join them together without a comma it totally it can it can be confusing i mean i'm not one for overage overusing commas because then it's just waste it's inefficient and it doesn't it's meaningless but like i said some commas are really important well you certainly have identified one with eating grandma but this i didn't see that line in this document so let's have a motion to approve the grants management policy as amended and presented so moved with the exception of the capital f second all in favor i i oh tom i okay i okay thank you wow and um so the pension people aren't hearing oh yes they are excuse me there's daniel all right so let's go back to item 12 the asset update and if you'd like to sit you can sit or you can stand what do you prefer it's whatever you want we can hear you both places so will we will join you bring the pillows we we have the partnership review yeah yes do you have a bright green light there in the middle of your mic there you go there we go i'm live okay well welcome thank you very much and thank you for having me it's great to meet all of you as a brief introduction my name is daniel capel i'm filling in for pat blizzard who is also a represent representative of sci so thank you for for having me here and look forward to presenting last year's results so flipping over to the executive summary which is on page four and before i dive into the results in the economic point of view from this year i'll add a little historical context to the year that we had in markets last year so if you take the 6040 portfolio which is a standard portfolio for investors kind of your your baseline portfolio last year was the second worst year in the past century and there was only one worse year on record and that was in 1931 so it was considerably bad on both the fixed income side of things and the equity side of things so the standard balanced portfolio that's not what the plan for just one second yes sorry do you want to present the pages he's going to be talking about like like put them up on the screen is that what you're saying martha can you are you you're on right no no problem that's you're cutting into bad news so it's always always good yeah yeah no problem can you make me a presenter so i can yes just going too fast we're ahead of ourselves here i know what i'm going to do with all the six for time did that work yes it did i'm trying to go where i need to be and i'm on uh slide four or page four i'm not getting any younger perfect all set yes okay thank you fantastic uh so returning back to how historically bad things were last year in the markets and again so the the only time that we saw the results like this dating relative were dating back to 1931 was the only worse year so it was extremely difficult and that was for both stocks and for fixed income so for equities and fixed income it was challenging and i'll get a bit i'll dive a bit further into into just why that happened as well as we move forward so with that historical context i'll first touch on our economic point of view of where we see things going this year and then i'll dive into the portfolio perspective speaking directly to the pension plans portfolio and then i'll go on to speak to just some some economic background and capital markets background as well feel free to interrupt me and jump in at any point with any questions that that you have along the way so from an economic point of view in the new year we expect many of the same headwinds that we saw throughout 2022 inflation has been stubborn we have central banks set on bringing these inflation rates down and as a result we see tightening monetary policy there's ongoing political tensions in the globe namely the ongoing war in the ukraine with russia's invasion and there's constant fears of recession throughout the globe particularly in in europe in light of what has gone on there there was recessionary concerns there and domestically in the united states looking at the second half of the year the summer session concerns there it really is a story of the fed and interest rates and we expect the fed to continue raising interest rates into 2023 with a terminal rate of around five point one percent is where things are expected to go the real question is whether this is going to be enough to bring down inflation on the one end and then on the other side of things it's is the fed going to pump the brakes too hard in the economy and are we going to see a recession so there's this narrow path to what is referred to as an often seen headlines of the soft landing which is what what is trying to be achieved here to bring down inflation on one hand without going into recession on the other as a result on the equity side of things we saw valuations come in as we've seen a number of the the large cap stocks the technology names a lot of their valuations have come down and they were quite inflated through the covid period so a lot of what we've seen is the prices of a lot of these equities come down in light of the higher cost of capital and also as well starting to spill in is is fears over a slowing economy as well speaking to directly to the portfolio and the performance for the 2022 calendar year in the fourth quarter we saw a positive return which was great after the first three quarters of the year it was quite difficult and the the portfolio returned just over seven percent and that brought the calendar 2022 return to negative 11.65 percent for some context to the overall portfolio returns the S&P 500 was down just over 19 percent and the U.S. aggregate bond index was down around 13 percent so the overall pension portfolio did fare better than both of those those major broad indices speaking specifically to the equity markets as we mentioned it was a very choppy year and in 2022 we did see a bounce off the lows in q4 which was positive and there is a value bias within the portfolio I think of companies with strong operating cash flows price to earning multiples price to sale multiples those did considerably better than they had historically and SCI has those as one of their focuses in their portfolios so that was beneficial to to the plan taking a look at the fixed income markets again we saw a modest rebound as bond yields moved lower and I'll touch a bit further on this on the on the next page but we did see one of the most challenging years for bond investors on record last year it was really just the speed of change as we saw interest rates come up and yields come up across the the curve at all maturities and when yields come up that means the price of fixed income assets is going down and that's what we saw last year is when inflationary concerns come into play and the Fed is raising rates that will that will lift bond yields across the board overall the portfolio is well diversified from both the geographical standpoint from an asset class standpoint with equities fixed income real estate there's exposure to small cap equities there's exposure to large cap equities and then in fixed income there's high yield debt there's emerging markets debt and there is also a core US fixed income among them so it is a very broadly diversified portfolio which is designed to perform well in long term and help the plan achieve its its goal and just one action and this is SCI being a manager of managers uh in the in october of 2022 SCI replaced zina investment management and jupiter asset management and replaced uh and replaced alliance Bernstein uh in the world equity x us fund and this was to add a concentrated value approach so these changes are happening seamlessly and are happening in all of SCI's funds as we see fit to either react to changing manager expectations or changing market expectations as well so we are constantly monitoring the not only the total portfolio but the managers underlying the funds that the plan is invested in can I ask you a question yes so those investment managers they must charge you a fee right i mean they have you have an expense ratio for being in those funds yes did that expense ratio improve by going to the to the two new managers or is about the same or i don't have that information off hand i i do know that uh that when we do all of our we use our collective assets when we are going out to these managers and that's one of the benefits of this model is we use our scale and we're using our negotiating power of you know the the hundred and twenty billion dollars of assets in or just our ocio program alone and then we also have other investment programs so uh we do have competitive fees and we are able to use our bargaining power based on the assets we have i doubt there would be a substantial change as there's not a significant difference in the type of managers that are coming in and being in the same asset class you would not see a drastic difference in the change of fees right moving on to page five and i mentioned that there is has been a substantial change in bond yields and that has been a result of rates coming up and uh and as well that means that the price has come down on fixed income the one thing that that means going forward is that as assets are reinvested or as new contributions come into the fund they're being invested at much higher yields than they have been historically and that's very important for achieving long-term goals it's been extremely challenging over the past decade we've seen historically low rates and you have that risk management piece of your portfolio not generating yield so it's great to see although it's painful to get there that you are being compensated for holding fixed income if you look for example the core fixed income fund at the beginning of 2022 was yielding just over one and a half percent and that has increased to over four percent in uh as the beginning of this year there's also compensation for for taking on credit risk as well high yield has almost doubled and it really does present opportunities for skilled managers to be able to go and get paid uh and taking on that risk and they always say risk is the price of admission uh when you are investing and it allows you to find opportunities to be compensated for taking risk and also being compensated appropriately with with those yields that are out there so as you can see across the board these are much higher yields which we don't expect uh yields to be going back to where they were really throughout the past decade and of course the pandemic it was uh on the short end uh the the Fed took the rate stand to zero in response to the pandemic which makes it challenging for for fixed income investors when you're not getting paid on your fixed income so is our portfolio is 60 40 no no i was just i was the 64 no the the portfolio is is in much do we have in bonds the in bonds that is on if you look on this is curious yeah that is on page and though if you go to the portfolio review tab you can see all the allocations of each fund so you can see the total fixed income is 30 percent okay and that's the actual allocation and do you see that core income a percentage hitting five this year it it's completely possible uh again if we have a a terminal rate of the Fed going up to five percent again mind you would we do have an inverted yield curve so you're seeing that would be right now if you look at the tenure that's still you know but as of today it was around 3.55 it really depends where where managers so i'd say core fixed income uh it could could get up there certainly it it is trending in that direction and again if you look at some of the the shorter and the limited duration with credit exposure as well you are going to have yields and keep in mind that the core fixed income fund does have some some credit exposure in there as well which it is why it's higher than the limited duration which is just government government investment great exposure any other questions on on the the bond yields here on on page five before i move along so just do a brief market and economic review and that is on page seven so as i mentioned with the challenges of last year if you look at the the light blue line the one-year performance there is only one line pointing to the right and that is commodities there was only one positive major asset class throughout the year last year speaking to the challenges that investors face across the board if we look at the the darker the the black lines that is representative of the fourth quarter so we did see some some positive results as inflation has been cooling down a bit and investors are looking for something to be positive about and we definitely have seen that continue into the the beginning of this year another big thing that's going on right now is the strength of the US dollar has backed off a bit which has been positive for international markets and there is the the reopening of China and then reverse the the government there has reversed course on their COVID policy and has essentially opened up the economy which could spark economic activity as the world's second largest economy so it's definitely the fears of inflation are still lingering but really the question is of whether a recession is going to happen if it does happen when when is it going to happen and how deep would the the recession be but i would say overall it would be difficult to have a year in the fixed income markets as difficult as we had last year but there are still a number of headwinds in the equity space that that we're seeing just quickly on on the slide eight speaking to us equities as i mentioned we've seen a reversal in the trend where growth stocks were outperforming value stocks and if you look on the bottom left hand side of this chart on on page eight you can see that value was a significant outperformer of growth on a year to date basis which really what it's it could be changing tide similar to fixed income where a number of the unprofitable growth companies or companies with expected earnings much later in the future they're coming back down to earth and we were saying value which is companies that have earnings now with the cost of capital and and bond yields where we are you're being rewarded for having earnings now as opposed to in the future so we do think that it could be a meaningful change in in what we see going forward in that's from that standpoint looking over on slide nine within the international equity markets another without the us dollar the the negative impact of that we did see that things actually weren't particularly bad on a relative basis to to the us in emerging markets if you think of some of the major emerging market economies they're very resource oriented and that was beneficial and we also saw in europe they did not they did not suffer as much from the expectations that there was going to be an imminent recession from from the ongoing war in russia and they sorry in ukraine with russia's invasion of of ukraine and we we really think that there still is some some recession risks there and they were have been given the the good grace of not having overly cold weather that was another big concern was heating their homes and that they've avoided that as well thus far looking at slide 10 on the fixed income review just wanted to bring your attention as i was speaking about the yields on the bottom left hand side you can just see the magnitude of the shift in yields if you look at the line at the bottom that's where yields were as of 1231 2021 and you can see that shift up where on the short end which is on the left hand side you can see rates were at zero and you can see the incremental increases in the the federal funds rate all the way just north of four percent there on the left hand side and across the board as you can see across all maturities there was a massive shift up in the yield curve which resulted in the price decline across the the fixed income securities one thing to point out is as you can see peaking up on the the left hand side is that on the short end looking at the the shorter dated maturities they are higher in yield than the longer dated and an often indicator of a recession is an inverted yield curve economists like to look to the tens and twos and as we can see here that the tens and twos are inverted and that is typically indicative at a recession some point in the future so something to to keep an eye on as as we see sorry i don't understand where are the tens and the twos i guess they don't really yeah so if you look at the light blue line there that's that's the yield oh i'm on slide 10 yeah okay so if you look at the light the light blue line you can see that it's it is higher at where the two year is the maturities are along the bottom so you can see that the yield on the two year is higher and then if you go over to the 10 it's lower so it's inverted by about 50 50 basis points right now or or half a percentage point so it's the the tens are the tens and twos as they call it is that's that's that's inverted currently and that is depicted by the lighter blue line being higher than the the darker lines further along the maturities and then just on the right hand side as well you can see the option adjusted spreads and really that is the premium built in overtreasuries and those have been increasing as well which is you know again you're being compensated for taking on on risk and there is there is higher yields across the board i'm just going to touch briefly on a couple of economic themes that we're seeing and then that will be all for me so i'll flip over to to slide 11 one of the difficult challenges of the the current economic environment is that there are enough workers anywhere you you constantly see it leaving you know the leaving lunch day you see help on it you see you see help on its signs everywhere it's very difficult trying to find employment in these times particularly in the service industry we really do see it and it's if you look at the the darker blue line that is above all the others that's that is domestically in the U.S. and you can see that it is an extremely tight labor market and those are the job vacancies so after COVID you can see it was just a straight line shot upwards and it's kind of slowed down a bit but it's pretty stubbornly sitting at a very high ratio and the the U.S. by far has the the tightest labor market at other relative to other developed economies the issue with that is looking on to slide 12 is when there are job vacancies and people are trying to find workers in order to get them you need to pay them more and that is how you acquire the workers and if you look at again the the dark blue line and this is you know that all major economies are trending upwards but particularly in the U.S. you can see that taking a four-quarter moving average and that is just to smooth out the results through time you can see that compensation has has gone up substantially and that is considered a form of sticky inflation it's much easier to set a price at a gas pump take it down the next day much harder to say you're getting paid $25 an hour and then go to the person the next day and say I changed my mind I want to pay you $20 an hour it's not the same adjustment that you can make so wages are very sticky from from an inflation standpoint as well and we are seeing some of those some of those components that are starting to trend upwards and could prove difficult for for the Fed moving on to slide 13 and this is the the question of when will the Fed pivot and and that really is and you know the the bond market is pricing that the Fed is going to be done and actually reverse course at some time in the middle of this year whether that's because a recession is being predicted in the second half of this year or simply that inflation will be in a spot where where the Fed has some some leeway and what they're able to do but typically what you would see is that the the Fed will only pivot when the economy lands in a divot as as indicated here and typically it's you know the the the Fed is not going to want to have inflation trending in the right direction only to have it a resurgence again they want to stamp it out in the 70s we saw instance of that where inflation was coming down it's and then it they reared its ugly head as they say and then we come to it's really so it would a recession would typically be why the Fed would change course in order to ease monetary conditions from where they are and on slide 14 this is just to paint a picture of where we have been for the past decade from a monetary policy standpoint and where we are today so if you look across the board and all of the the major developed economies central bank policy rates were near zero near one and that really started after the global financial crisis and and they stayed there really with the exception of australia kind of held on for longer but ended up joining its peers so we've really had a decade of easy money which has made it we've seen a lot of inflated valuations you know in the non-profitable tech we've seen investors not being compensated for being savers and holding fixed income investments and this could be a change that going forward returning to normal environment where rates are not having a lower bound of zero which difficult to get there as companies are dealing with the higher cost of capital and as bond yields go up and the prices come down but we do think that that monetary policy has definitely shifted and likely to not return to where it was as we saw over the past decade post-GFC and then really again during COVID when when rates were dropped to zero and almost all major global economies to support the economic environment during those difficult times that is I kind of covered on the economic outlook so I won't dive into this slide as well I kind of touched off but here's a summary of all the major points I've discussed any final questions for me before I can I can do again a quick I'll do a quick portfolio performance review on the and this is it for the the economic portion though just a couple comments right so at the meeting today we discussed that probably October meeting of the pension advisory committee we would talk about looking at the expected rate of return and a change in that and maybe Eric will talk about that when he gives his presentation there also we marked the research that the the 8.168 million dollar loan that was taken out in 2010 right it has to be will be paid out and finished in April of 30 of 2031 to see you know 30 20 yeah 2031 right and the current annual loan payment is about 661 thousand dollars right now on that so and remember we refinanced it while Tom Hubbard was still here right and in fact and the interest rate went way down and I think we paused the payment because we were able to during the budget problem during COVID so anyway those are just some points to remember and I just wanted to point out on page 11 with the nine of workers and we talked about this at the meeting today was where did the workers go right and from what I've read there's a lot of factors at play one is that you know pre-pandemic pre-pandemic the unemployment rate was pretty low to begin with then the pandemic hit and you had a lot of people that are on the verge of retiring and they said forget it I'm just going to retire they left the workforce then you had a million people plus die of which probably more than half of those were employed at one point right so you had over a half a million people just die and they're gone from the workforce that's awful then on top of that you know there is this problem with opioid addiction and fentanyl overdoses and that's taking out another swath of 100,000 young people a year that would be in the workforce or or should have been in the workforce at some point right and then I think on top of that you have a lot of discomfort in the housing market right which is making it harder for people to find good housing or affordable housing and so then I think that the probably that affects their employability or you know because they you know they can't find a place to live so they find it hard to find a place to you know be able to work at so there are all of these stresses in our population and and that's borne out in this graph by the number of openings per person right now and and then the thing I worry about is that the is the I don't mean to go on is the effect of the pandemic on young people today especially in the educational system as they move through and there's probably a proportion of them that are they're going to be finding it difficult to enter the workforce like their predecessors would have just from whatever stresses they experienced you know during their educational years where they lost two years essentially right and so I worry about that so I think that this problem is going to be with us for quite a while and you know we need to I don't know what we need to do to try and boost people into the workforce but I think there's a lot of retirees out there that need to come back to work if you're thinking about retiring don't retire well that includes me sorry take that back Tim I would just throw in child care as well as yeah oh absolutely right factor that keeps half the workforce or not half but a lot of people at home right and that's on our radar right along with housing right so that's just another piece and that's a great point Tim as well and as the unemployment is one of the key things that the Federal Reserve is looking at when they set their monetary policy with their targeting an unemployment rate they want the unemployment rate to go up to bring down inflation and when you see job vacancies that high it's difficult to see that number coming down when it's everyone needs workers right now so it presents an interesting conundrum for for central bankers and this problem is it's as you can see it's uh it's magnified in the U.S. but it is really a global issue as you can see all developing economies are dealing with with similar stressors if we had a decent immigration policy this problem might not be as severe I would agree with you it might not be as severe in the future if we could get some people in Washington D.C. to put their heads together and come up with some good ideas Canada has a decent immigration policy but they don't have a southern border so well thanks for that happy note yeah good way around you're welcome before I depart I will just again I'll just take you quickly to the overall portfolio performance and that is on page 21 uh and and as uh as I showed sorry that is on page 20 I apologize so as I mentioned uh the for the one-year period it was negative 11.65 percent uh relative to the index at negative 12.68 percent uh and that's on a gross iffy basis on a net of fee basis uh the the portfolio is still ahead of the benchmark I think it's important though and it's extremely difficult when you're going through these years especially one that is uh generationally bad if you look out over the longer term and you look at since the inception of of investing with SEI that number is still closer to seven percent which is nearly at what the the expected return or the intended return for the portfolio is of 7.25 percent so even factoring in a huge down year uh over the longer term the it's still in a good spot and with yields being higher that is promising if they are to stay higher moving forward that gives you that that fixed income piece of of the portfolio so again while it has been extremely challenging for institutional investors for individual investors it didn't matter who you were uh it was it was tough to to avoid these these types of numbers but it's important to again be in well-diversified portfolios from a global standpoint from an asset class standpoint and try to focus on the longer term as best you can uh even though it's difficult at times like this and that is that is everything for my part of me what do you think will turn us around well I think the uh I think there's a lot to digest right now if you look at if you look at what happened if you saw that that interest rate increase it's normally a tightening cycle is 25 basis points is a standard rate hike in normal times and the Fed was issuing 75 basis point rate hike so it's just the magnitude was was so fast and uh and it really was because inflation went from being transitory to not being so transitory there was almost a panic to saying we need to tighten things up before you end up in a spiral with with inflation so I I think the turnaround comes from the market accepting that there is going to be a higher cost of capital moving forward which we're not going to have that lower bound of zero uh and really just digesting and and processing this this new environment that we are in where rates could potentially be higher for longer and I think on the equity side again the the the Fed is trying to engineer a ever session or a slowdown that's that's how you bring inflation down and once investors are comfortable that a slowdown is coming and and the brakes haven't been pumped too hard I think that's when you know the you could potentially see things turning around but uh there's a lot of negative uh negative headwinds facing facing the market so it's I think as difficult of an answer as it is time certainly uh is one of those things and uh we got so used to if you look at what happened with COVID is markets went off a cliff in in March of 2020 and then central banks stepped in right away and equities recovered very quickly typically those types of things take time to to evolve and and sort themselves out and you know to find a fair value for where the market should be so I think it should expect to be longer and um it could be you know a year two years for things to really get back on on a regular footer that doesn't mean that what happened last year is going to happen again but I think uh expectations should be tempered based on the changes that have happened would you ever shift the investment proportions or percentages certainly that's that's a great question and the way that these that the this fund is constructed is within each asset class and this is revisited on an annual basis we do look at the asset allocation and we do an advice study with with our own house actuary and one of the things you don't want to is is being overly tactical often can be detrimental uh the one thing that does happen is underneath in the active components all of the managers that are hired within our funds they are constantly adjusting based on their expectations of the market and we're able to our portfolio managers at SEI will also make adjustments based on their expectations for example leaning into value based on the market environment which which has been favorable so far so at the overall asset mix I don't think there is any need to make changes again it's a well diversified global portfolio of course along the way make changes but nothing drastic and I believe the the last asset allocation review took place in august of last year so it expect particularly in light of the changing fixed income environment it would likely be prudent to do another one in august of this year and revisit changes then I have a question in terms of the different management firms with whom you work yes and and you probably you probably don't know how to answer or don't have the answer but I'm just curious from kind of things I've read it seems as if there's an incredible amount of PPP money that was given out and not used and to my mind it ought to be given back I mean if you don't need it if you needed it you would have spent it so how do they factor in how much a particular corporation may have piled away in their bank accounts of all this free money to dig them out of a hole that they apparently didn't need because they didn't spend it and there it is and they don't want to invest because the rates are so high yet they have all this money that was essentially zero that they're sitting on I mean how do we as a country I guess come to grips with that or do we just sort of forget that and it's like oh we what we won't talk about that money we'll just complain about rates going up and we can't afford to invest I wish I had an answer for you on that one regards the the PPP loans and investing I mean that's that's often been you know it's it's not with just the PPP loans there's often been particularly recently the lack of investment in capital expenditure particularly domestically which has been a challenge but I think as we are seeing things change and really you think about a lot of the investment has been in technology and real estate over the past decade and it looks like there is going to be a capex boom in investing in America as well if you look at what's going on and Tim and I discussed this earlier today with with the chip spill and the the foundry is going up there's a huge one going up in Ohio in Arizona so there really is going to be this need to invest in capital expenditures and tangible assets so whether it's the the investment managers deploying it or whomever it is deploying it I can't speak to that but I do think that we will see a capex boom and I know that the federal government has also allocated a large a large sum of assets to infrastructure and other projects like that which starting to see it get off the ground and I do think that you know that will come to the forefront as really needing to to invest in intangible assets overall but to individual managers on page 24 there is a list of all the managers that are in the investment program I'm not too I've heard rumblings of what you're referring to I think it was more so in PPP loans not being used in the proper manner or used for certain expenses I I can't remember the specific names off hand I can't speak to our individual managers but I'm sure that is something that would be looked at from a governance perspective or would be addressed as our manager research was speaking to them to you know they they are the seeing the the list of the number of questions and the amount of information that is collected even for managers that aren't hired and it's it's quite quite extensive so thank you one bright spot in all of this is the the chaos in the energy markets right has really tried to freeze Russia out of the natural gas supply in Germany has completed they're down to zero percent Russian gas imports right which is really great and I think other countries are on track for that as well so so so there's a couple things going on China is starting to free unfreeze in terms of consumer demand because they're you know they're they're reducing their COVID lockdown so that means more production so their GDP was only three percent last year so that should pick up this year because they won't have the lockdowns they had before unfortunately they're having huge surge in COVID infections and COVID deaths right so they're going to go through what we went through two years ago probably but then at the same time that the raw material prices to make batteries is dropping quickly and the price of solar panels is all also dropping quickly and there's a huge push to get into renewables as faster than we ever had because of everything that's going on in Ukraine so so this is from a climate perspective even though there's been a conversion to coal in Germany and other parts of Europe right unfortunately but they they they need power right and they've lost a lot of it so the nice thing is that there's this big push to get into renewables even more so more solar more wind and then all the technologies that go with it right and then the building of a battery couple battery plants in the us and the building of some more chip plants in the us right so I mean this is all I think goodness long term but it's not going to make a difference right away but the fact that solar panel prices are going down is really good because we just need to grow that enormously and Germany is a great example of where when humans are faced the problem and it's right in front of them they're able to adapt right away as opposed to it's difficult to think of something that could be a year a decade from now 15 years from now and the as you mentioned to him that the pivot and being able to get completely off of Russian gas in a matter of four months is pretty incredible when the coffers were almost empty at the beginning of the conflict so they have some coal deposits because they just opened a new coal pit but anyway all right well any more questions tom do you have any questions you're usually no questions tonight thank you though okay that's it for you perfect thank you very much for having me and it'd be a happy new year well thank you and hopefully there are better results that it would be very difficult to be as bad as it was last year but never say never in these things it would be yes exactly when you're comparing yourself as I said earlier today to an arrow of the great depression it's usually means things can only go up from there so except if 1931 was the worst wasn't the crash in 1928 it was that was the the sell-off in both bonds and and equities that year it was yeah I think you're thinking of the was it black monday is that the that I think that was in 1929 I believe I was it was 1931 was the the calendar year where both equities and bonds sold off the most it was a series of bad years let's yeah this was still not you remotely close to as bad as that was but it's still it it took second place I believe that was still a large number to take first it would have had to been a significant number of percentage points higher but nonetheless just to add some historical context normally equities go down fixed income provides a buffer either way but they decided to to go hand in hand town based on the economic environment we're in okay well thank you very much thank you very much for having me it's great to meet all of you as Ted mentioned he's having some frustrating days too hello welcome so you're going to tell us about our pension evaluation yay yeah so I'm I'm Eric Shate from New Park Group and I'm going to talk about the liability side of the pension plan we'll go through some different funding methods the liability the contribution and just look at your funding status compared to other cities start off on page four I'm just gonna briefly I'll try not to bore everyone or get to an in-depth but I'm gonna start off briefly briefly with the funding methods and that's how we allocate liability over time to participants in the plan so we're gonna look at two liability measures what's called unit credit which we'll also call present value of accrued benefit and then the other one's entry age normal so when we're talking about the liability the unit credit is let's say on 7 1 2022 for participants in the plan that's what they'd earned on that date if they were to stop working if the plan stopped existing that would be the liability on that date with nothing further in the future but then entry age normal takes into account that they will work into the future they'll earn more compensation and so we know that they're gonna be earning compensation into the future so we're gonna spread it out over time and incorporate that now and just to look at that graphically if we go to slide six just two different ways of getting to the same point the top line is the entry age normal liability the bottom is unit credit the unit credit will shoot up towards the end and because we want to keep your contribution even over time we will do all the funding method on the entry age normal which has a higher liability now but grows slower over time and it's also the method that you have to use for gasby purposes next slide slide seven just i'm been talking about liability liability is just participants in the plan earning a benefit it's the present value of their benefits earned in the past when we talk about liability and then when we talk about normal cost we're talking about the present value of what we expect to be earned in the next year so a one-year period of putting money in to put in benefits earned and then you have the liability for what was in the past and so then we go through to the next slide on page eight what we do is we take the entry age funding the entry age normal method for liabilities are used to calculate your contribution to the plan and it helps to smooth out volatility and there's also the gasby method if we go to slide 11 so each year we calculate a contribution for the plan and what we do is we take the liability and we compare it to your assets in the plan and if there's any unfunded liability the first part of the contribution to the plan is going to be an amortization payment to pay down that unfunded and then the second part of the contribution is going to be a payment for the normal cost or additional benefits that are being earned in the current year there's a small portion of interest added but when we make the amortization payment it's a 20 it was a 20-year amortization payment you'll see in a little bit that it's come down we've been shortening the period to amortize the unfunded faster over time but it originally was 20 years and then on the side employees are also putting money into the plan so then on the next slide slide 12 what happened in 2019 the plan was frozen to new entrants so no new employees will enter the plan and at that time because the 20-year amortization period it's a long period it's 20 years and it was resetting every year so it never actually ended it kept being 20 every year so in 2019 the city started making contributions on a slowly quickening schedule so it was 20 in 2019 it was 20 years in 2020 it was 19 years 18 years for the amortization schedule because that aligned with when most employees from the plan will be retired so the goal is that as no new employees come in the population will mature and you'll fund the plan up in a quicker rate as they get towards retirement so that you have 100 funding when there's no employees earning benefits and then you're just making monthly payments out of the plan and not funding the plan as much in the future so that started in 2019 on the next slide it's just a comparison of what the contribution was the top line is the contribution this year with the 20-year amortization versus the 17 which is what we're at right now so the contribution for the city making to make to the plan is 1.175 million compared to what it would have been of 1.129 million so it's not a lot more but it's more and each year you know that adds up over time as we get further in the future and it'll get bigger each year until you're fully till we are fully funded so the contribution for the quicker method relative to the old method will be bigger the actual contribution could theoretically get smaller depending on asset returns and stuff like that from here so we'll get into it in a little bit but these contributions are based on a smooth value of assets so if you're looking at this year compared to last year last year's contribution was 1,050,000 this year it's 1,175,000 it's an increase it's not a large increase and that's because the assets are smoothed out if they weren't smoothed out you would have had several hundred thousand increase from year over year and your contribution and then maybe in the next year after that drop way down so just to smooth out the volatility we use the smooth value of assets so in the next slide this is just graphically the big box is the city's total portion it's split up between current benefits being earned of the normal cost and the amortization payment you could see it's almost 50-50 whereas you know eventually the amortization payment will go away as you get close to 100 funded and then it will move down to just the normal cost and then you have the employee contributions of about 300,000 in addition if we go to slide 16 so we talked briefly about the two liabilities the unit credit and the entry-age normal earlier this is the funded status of the plan based on the the top section is the present value of accrued benefit the bottom is the entry-age normal and this is using the smooth asset value but on the present value of accrued benefits the plan was about 99 funded on 7-1-20-22 so that's using you know benefits earned through that date if you walked away at that point in time you would have been 99 funded of benefits earned in the plan then if you go to the entry-age normal it's it's lower at 88 percent and that's because it's a little more forward-looking knowing that you know you're not walking away from the plan now people will earn compensation in the future and their last several years have a large impact on their benefit and that's incorporating that in there but so you're 88 funded on the smooth entry-age normal uh basis we'll see a graph yeah sorry forgive me that I was not at asked this question when you're doing the entry-age normal um calculations are you looking at this at each specific employee and like if they're in those last three years and that and shortening that value are you using some kind of average employee model each employee will like if someone's 10 years from a retirement expected retirement they'll have 10 years of compensation increases applied and then their their benefits kind of splits you get that straight line over time from now to that so it's on an individual basis it's on an individual basis thank you on the the next slide this is the same same two methods funded status but based on the market value so for this one the present value of accrued benefits is 95 percent and the entry-age normal liability is about 83 percent and so if you're looking at your actual financials that 83 percent 82.73 is what will go on financial statements for the year or your auditor's report um we'll see shortly how these have moved over time and how it compares to other cities in the state and everyone had movements down in the market value compared to the prior year if we just go to slide 19 this is the that chart kind of looking back at history you could see where the bond was taken out and a large payment was put in at around 2011 into the plan the top line is the unit credit funding method and the bottom is the entry-age normal so we the unit credit went from 113 percent to 95 percent whereas the entry-age normal went from 99 to 83 percent and it's it's a large drop year over year which everyone has had but you also had a large increase the prior year from asset returns that year so you're almost basically back to where you were the year before that so the next slide just to compare these numbers to other plans you have points of reference your plan was 82.73 funded on the entry-age normal basis the average public plan was 74 funded average for bremont or for the country average for the country and that was down from 85 percent the year before so roughly same drop year over year for your plan compared to the average plan beamers is 73.6 percent and then the teachers are 54.8 percent um on here burlington is 80 percent and st alvins is 61 percent but just to point out these two numbers for those two cities the most current numbers I could get was from the year before so that doesn't that's not 630-22 that's 630-21 so they don't have that current market deficit showing up in those ratios for them there oh so they'd be even lower they'll be lower yeah yes you were very yeah we're still ahead of the pack oh yes yeah you're very well funded um and hopefully the assets bounce back and we recover some of that but you're in by no means in a bad spot right now well the teachers don't look too good yeah but for our purview um slide 20 we'll go 23 um i'm gonna briefly go through the assumptions in the plan I don't want to bore you to depth and go into it too much the quick version is that we use assumptions for things like when people are expected to retire what the discount rate is or what future compensation increases are expected to be and we do review the experience in the plan every year compared to what the assumptions are and so for this year there were no changes from the prior year but i'm just going to go through them all real quick just because they're major assumptions in the plan um so on slide 24 briefly talking about mortality um we use what's the most up-to-date mortality table and mortality projection that was available it had been updated every year so every year the site of actuaries would come along and take new data from social security and put it into the you know mortality table and just update it for experience and we would adopt those changes every year make very small changes year over year for 2022 they did not publish those tables because it was the first year that covid data was going to show up in everything and there was no consensus on how to treat that and how to project it out into future mortality and how that's going to affect everything so as of right now we're using what's the 2021 table it's still the most current table but in the next coming years we may have more updated tables but that's just the reason why i didn't update this year we use a standard it's called scale t3 turnover table and what that's there's a low likelihood of somebody leaving just just because they quit go to another job and it's graded based on age so the older they are the less likely they are t3 is a very low low probability scale of turnover and there's not much turnover in the plan in general the long term rate of return is 7.25 percent and this kind of gets used interchangeably with discount rate but it's the long term expected return on assets and it's used to discount future liabilities to the present in the plan but it's currently seven point two five percent i believe it was seven years ago that it was lowered from seven point five to seven point two five and as of right now the median rate for public plans is seven percent so when you when you move down to seven point two five you're a little ahead of everyone else but every year it's kind of been inching down what everyone's been doing and long term expectations have come down whereas now you're a quarter of a point above the median which isn't a big deal but it's the reason why we will be looking at it again going into next year to see if it's something to get changed to go down to seven percent does that affect how you can sort of make it more consistent year to year yeah so if if it's lower it'll put a larger liability present and less in the future and we'll see kind of actually on the next slide we can look at real quick it's just what the impact of this is a one percentage point change would do to the liability so one percentage up or down would change would add about six million to liability but we would probably be looking at a quarter percentage point change so one point two five million no two million ish in current liability and just to go back to slide 24 real quick some of the major assumptions we assume public safety employees retire at age 53 which they can retire at 50 but historically they've stayed a little longer and that's the experience of the plan and non-public at age 65 there's expected future compensation increases of public safety at five percent and non-public at four and historically you know from year to year there may be a little bit above or below that but it's the averages have come in pretty close to those two numbers so slide 28 real quick we were talking about the smooth assets for the market value the lighter blue line that starts underneath jumps up and then comes back down as the market value of assets and the teal line is the smooth value so you could just kind of see how over time you know the market will jump up above and below but the smooth value keeps you know steadily going along and what that does for you is say last year you made a contribution on a smooth value that was much below the market value so it helped you fund for the future for years when there's a downturn in the market and now this year you're making a lower contribution than you otherwise would have on the market value but it it's because you put in more last year to kind of smooth it out from year to year um i will go to slide yeah slide 29 real quick the historical returns three years 6.25 percent five years pretty similar 10 years about 7.4 percent and it's compared to the 7.25 percent assumption and just to point out when i was talking about the you know the long-term rate of return looking at it that really has nothing to do with this past year it's a long-term expectation that's just it's been trending down over time pre-covid pre-everything now and it's not directly related to prior year returns slide 32 we have different groups of employees in the plan you have the top group here which is the light blue which is the active employees they're employed by the city they're in this plan and they're earning benefits there are 68 of those as of 7.122 and that's down from 78 the year before so some of those active employees either left employment or most of them retired you have 52 employees who worked here have a benefit but they're not getting paid yet maybe they're just not old enough or they haven't taken their benefits yet but they're not earning new benefits it's just sitting there waiting for them to get paid and then there's 93 that are actively getting paid monthly payments and you can kind of see the trend over time here where the retirees at the bottom is growing as a portion of the population and the active are shrinking and you're gonna keep seeing that over time because there's no new employees eventually everyone will be retired a long time from now but eventually and that and then just quickly participant random statistics on the participants not really random but the average non-public safety employee has been employed for about 17 years public safety 14 and then both have between eight and nine years of expected future service before they retire and this is South Burlington specific or is this yeah okay and so how does that is that pretty similar to other communities I would say it's pretty similar the the way you can compare it is how mature you get over time and by mature I mean like as there's there's no new employees entering the plan so the average service of someone in this plan is going to slowly get more and more over time because nobody news coming in people are just in there but for a similar plan it's pretty similar to other plans that's all I have there's any questions do we have any questions it's just interesting because we have no new entries into our pension plan and and from as of 2019 right everybody's going into Veeamers right so I was just curious I mean can we quantify the difference in cost to the city of a unit of contribution to the Veeamers versus the unit of contribution to our pension system I mean are they about the same or is Veeamers less expensive normalized somehow I it also depends on what the payout supposed to be you know what the pension formula is also for each you know retiree I just but from a raw point of view right now I mean if you know if you just like normalize it the number of employees that are in each system you know that we're paying for I was I don't know the specifics of Veeamers but I do believe that overall the the per participant cost on a percentage of pay is a little less I believe Veeamers yeah even you have to look at the different because different people in different groups right right but the biggest impact is that you don't have the risk or the liability of say investing the assets or like that amortization payment if right yeah yeah those things can balloon and right then it's all but then we have to wait for the legislature to to act if that funding liability gets too precarious right we know how well that they have responded to teachers yes they have in a down year I do think it's important to note that the Veeamers retirement system and the teachers retirement system are significantly different Veeamers being much healthier primarily because Veeamers doesn't come with health insurance so that that's a benefit employees don't have through the Veeamers system the Veeamers includes the health insurance the teachers the detention includes the health insurance cost oh I didn't realize that was present in that okay right Veeamers does not um I think we could do that analysis I don't think we've done that analysis and I think it would include a lot of far out year modeling of what the Veeamers employees experience would be for Veeamers decision making out into the future in a way that we have more control now in those out year decisions do we normally give colas to our retirees within our city pension system there is a cola in the public safety side the public safety side yeah and is that a formula based on cpi or it is 3 per cent per year but it stops when they start taking social security oh that's right that's right okay yep okay and okay yep I forgot about that thank you what stops when they start taking social security the cola okay so it's just a flat payment after social security yeah once they get well there's when they hit social security and they take it there's an offset to their benefits they actually have a reduced payment from this plan but then it just stays the same going forward and we rely on the employee to the retiree to tell us when they go on social security right yeah yeah is that a contractual thing or is that just a pension policy that we have written and adopted the social security offset yeah the offset itself is a part of the plan document the plan document and I believe it was bargained when it was originally okay okay thanks so I think it actually may sit in both which is part of an active discussion okay there are no questions tom do you have any questions no thank you though early night for you or earlier than we had anticipated okay thank you very much Eric thank you so we flip down to number 16 now consider prioritizing adopting a short-term rental ordinance and associated implementations it's nine o'clock does anybody need a break i'm just asking oh if anybody does do you want a five-minute break south rowington city council meeting of tuesday january 17th 2023 and we are on item 17 oh i'm sorry 16 um consider prioritizing adopting a short-term rental ordinance and associate associated um implementation steps with the conversation tonight as one to identify as though i guess if the council as a majority would like to pursue this and to provide leadership or management with um a direction or directions so um do you want to jump in here is a an important initiative for council for emery still a lot of work on this there's a lot to read but it was good stuff it was interesting yeah yeah well i brought this to your attention um last spring and i think we had a discussion on june first of last year and um i continued to receive emails from residents and i think sometimes it's a sent to the entire council um talking about you know it houses that are being bought from people from out of state and that will be um turned into a short-term rental and it is um something that people see as an investment and and um when we are dealing with our housing shortage and with uh the lack of workers i i think that um that is something that should be foremost on our mind how can we respond to that we also have neighbors who are concerned about losing the character of their neighborhood and we also have um in a hospitality industry uh who has to compete um and so i know that when the economic development committee looked at this that was foremost in their mind you know the hospitality industry and how um these homes aren't necessarily paying into our into our rooms and meals exactly um so i know that staff is a is an issue for us here um and so i you know was looking at you know what happened in denver um which is note six in my my initial write-up from last march um the law in denver requires registered hosts to sign in affidavit and hundreds of property owners are reportedly shutting down short-term rentals to avoid legal implications so it would perhaps just simply be self-enforced right um all it takes is you know one one quick note to the planning and zoning office this person isn't in compliance and and that signed affidavit you know would be there to i think as a as a deterrent to anybody who would want to go around our regulations and and currently people are going around the regulations um our current regulations um they define bed and breakfast um as a detached single family residence uh with four or fewer rooms for rent um they must be the primary residence of the owner or operator and i believe that there was also um i have it on my computer um was it an acre minimum or right and and i know that there are homes in my neighborhood where we're quarter acres that are air bmbs um sold out long term um and my neighborhood is an entry neighborhood in our very expensive city um not that homes are cheap there uh for for the necessarily everybody but um it's it's a real concern i think um you know based on all of the the things that i i just raised about our economy about our housing market um and about our our neighborhoods so what i did last year was i just simply came up with some language this clearly isn't ordinance it's this language that could be integrated into an ordinance um that's not finalized i just put down you know kind of things that i saw as industry standards um that you know might be open to to different um language for instance the all pets are prohibited that's that's an industry standard but vermont is very pet friendly so um in note nine um i wrote down what helen had suggested regarding you know the requirement that they be vaccinated um and informed of the ticks but also our city requirements for leashing and and poop bags keeping keeping the the neighborhoods clean um there's uh you know just the concern that that would of course require some staff oversight right um so anyway i just wanted to bring this forward because we are receiving a lot of communications about it um i know that the affordable housing committee is eager to see something move forward so i told them that i would bring this forward to you all again and i i would be in favor and i hope you agree that we have our staff take a look at this language um and potentially draw up something that you know with our current staffing um either something that would work or to come back and say with our current staffing we can't possibly do this but here's what we would need in order to move forward um i think i mean i certainly don't want to have you know um an uproar from people um but at the same time um i think that we are regulating body and when we have real uh impacts on our on our workforce we have to take it seriously and so i think that you know i never like to rile up a controversy but if it's something we have to discuss i i we have to face that fact so um i certainly would be up to that challenge because i think our workforce needs needs to have housing and this is you know this is a high tourist area so we're we're really having to to compete and and determining which for instance summer residences obviously where they're not being inhabited year-round i mean there could be categories that we could see if they exist in our city um just some some thoughts tim do you i have some opinions i'll bet you do okay let's hear him and then i want to ask tom a question about i i like the spirit of this um i i think we need to take some action um the things that are important to me first of all i hate it when people don't pay their taxes that they owe either the state right so no not not number one but high on my list is people who are not paying um you know uh the correct rooms and meals taxed to the state that's number that's a big thing for me second of all we can't get our hands around two things which is short and long-term rentals because we don't have a rental registry right so to me i'd love to see them both combined short and long term because then we have the opportunity to make sure that all rentals are safe and fire inspected right so in burlington if you have a rental unit it has to be inspected every x years and they check a lot of things electrical safety fire safety um you know whatever else is required in you know in their their rules railings all sorts of things yeah well railings sometimes are section eight more than they are you know non section eight but but they're but they have a lot of rules right and so you have to and they if heating system whatever it is right to make sure that the properties is safe and i know that we've been told by the fire department in the past like when i like in 2017 that they regularly looked at craigslist i'm dating myself right for people who were starting to rent out their homes you know like they let's say they they were moving to a new home they didn't sell their old home in south burlington so they they rented it out and they would contact them and say if you're going to rent it out you have to have hard wired interconnected smoke detectors and they all have to work if you don't you'd be liable to be fine you know because you can't do that so the same situation appears obvious to me whether you're a short term or a long term rental unit owner right like even if to me i mean i don't know if this is correct but if if i'm renting out three bedrooms in my home you know on a weekend for airbnb or whatever platform it is that home because your people are paying you to stay there your home should have hardwired interconnected smoke detectors period right i mean if they're wireless and that's acceptable which i think it is to the city nonetheless they're hardwired and they're interconnected right and that's that's really important to me so one is safety two is registration three is affidavit and four is taxes right and i think if we if we had that ability then that would give us the stake in the ground to say now we can go start start squeezing on how many units you may have or whether you could do a whole house as short term i mean obviously they're going to do long term i mean we there are lots of long term rentals in the city right now go look at east harris right and they're all uvm students there and all spear street you know close to the university and and other you know places as well so um i think it's and and then the next question is then how much do we charge in order to fund the work that has to be done by the city because it's going to need man it's going to need need person power to do it right so i'm i'm concerned about that that cost but so i mean a lot of the things that you hear you have about like you know whether or not dogs are allowed i mean you know to me that's we think that's a staff issue yeah we could you know we could say yeah well i think some of them are more related to the owner willing to have animals or not that's their that's their choice you know i don't think that the city ought to be saying okay you may not rent anyone who is an animal some cities i know i just think that that's goes a little beyond what a city should be but but the concept of somebody let's say um i mean just you know arbitrarily uh a single person is barely able to buy a duplex on their own right and they're employed right but they count on the income from the other unit to pay let's say taxes you know property taxes or whatever right or help with the mortgage so um i to me if a person occupies and really does occupy and live in a unit in a multi-unit building depending on one that limit of number of units is i think we should not disallow them from having short-term rentals there if that's what they want to do because that's their own personal you know residential you know building so let's say it's a duplex right you know i i don't i don't want to encumber them too much by denying them the ability to have a short-term rental if they live in one of the units and the short term is next door or if it's inside their own house right would you limit that just to duplex is because well i'm just thinking who if they can hardly live who's going to be able to afford a fourplex live there and then rent the other three i mean that's a business that exactly so and where and i mean the country is full of examples where when air b&b was booming and residential real estate property prices were not that high they were like going to the bank and getting loans and buying individual properties to add to their their monopoly board right to extract large amounts of income which i mean which is the american way i have no problem with that but you know in our situation here that ends up pulling a lot of you know real estate out of long-term rental or possibly sales for you know long-term occupation and that's part of our housing problem right so well i would agree i would like to look at it i think there certainly is a cost i like the connection with a rental registry i know that's expensive but i think there are some safety issues that go you know beyond our ability to ensure that you know we don't have a lot of house fires or something because there's they're not maintaining the electrical systems etc i also wanted to ask tom you megan shared with us the the dart miss study that was done at the behest of the legislature i don't know if it was the house or the senator both and i was just curious tom if you think that's having because it certainly is related statewide i think to affordable housing and i'm just curious if you've heard anything about where that might be going no there's a lot of focus on affordable housing but i have not heard any rekindled interest in a statewide rental registry and what i would say is i echo everything i heard counsel barrett say and i've longed for the last five plus years stated that i support a war rental registry in south brolington the city our size we need to get a handle on a rental stock with all of our aging inventory for all the safety reasons as well as the the enforcement of collecting the appropriate taxes but i always come back to safety i remember walking many neighborhoods in south brolington and rental properties that were not up to a standard to a to a code that i would expect a commercial property to have to maintain so to answer your question council really know i haven't heard any renewed interest i can ask about that this week but i've had a busy week and i haven't done so but i would definitely support south brolington pursuing a rental registry i do have some concerns similar to what you raised council really which has to do with the privity bets and i think there was another one on here the not allowing the entire home to be rented out i think those that nuance needs to take more time and consideration but i certainly support a rental registry for the city of south brolington well one of the um as i read the report from dartmouth i think it was the dartmouth one they um they did suggest that you know this was um requested or paid for something by the legislature in the sense of a statewide kind of way to address this issue but one of their conclusions was you know the communities are so different and what might work in south brolington or what south brolington or brolington or ruttland or whatever need is very different than you know barnett so um you know i i think rather than go the root of a statewide unless the state wanted to come up with some examples or options for communities and do some of that lead legwork for communities i think it would work better if each community came up with the solution for them looking as as megan did at what other communities have done and getting feedback from them about what worked i'm sure they could tell us what also was didn't work very well or had the unintended consequence um and develop something um of our of our own i think and maybe that's where you have to go tom with the the um the rental registry because it doesn't sound like the state's going to do it but um and i kind of understand that because it's the communities are so different um so it makes sense to do something that is um focused on the ability the money that a community might have to invest in that kind of tool but i do i do think it's it's important and i would you know love to have the um jesse comment with you know can you come back with when can we do this or what might it look like or how complicated is it with you know some things that maybe we can start small and go towards some bigger solutions you know and starting already with our ldr's i mean where we have a lot of homes that are already out of compliance they're not on one acre lots the owner doesn't live in the residence um you know there are already a lot of people who are out of compliance if 70 is our number in 2019 i would be surprised to learn that that number wasn't close to 70 of people who are out of compliance yeah possibly so i'll so this is really helpful the conversation is great for us to understand how we focus our efforts and what the interest of the council is so we're we're more targeted and more focused you know i think you've heard me say before i'll say again you know i think the real policy magic and making these types of policy decisions real is the staff education and enforcement angle i mean megan you're bringing up a really good point about enforcing our current ldr's we're not enforcing them so of course they're not going to work um and how do we so there's that that initial hurdle to get over how do we currently enforce what's on the books and then get over the what else are we going to add with an enforcement team so i think linking those two is is i think staff will be very responsive to that concept because we also like to enforce the rules that are on the books you know um so i think this conversation is great i guess i would suggest that this is a conversation with all due respect councillor chinden um to bring back to you you know give us a month six weeks to start putting together some high-level ideas and bring back after town meeting day so it's a new council anything we do here is going to require future elected officials to really weigh in on ordinance changes and budgetary decisions and whatnot so involving them in the from the beginning of the conversation other than this conversation i think would be really useful um so with your head nods happy to bring it back to you after our kind of orientation council meetings after town meeting day that would be great is that okay with you tom sounds good sorry well no i think he appreciates that i mean we're not going to get it done be by march so so okay well thank you um megan for doing all that legwork it was good reading and i think that's um yeah and it's a start thanks to john burton who gave me those studies actually the dart myth in the washington dc studies the um anecdotal stories i've heard about these the short-term rental one particular platform um is that people are getting turned off by the first price they see for per night and then when they check or when they finally go through the you know the reservation process when you add in the cleaning fees i mean the number just blows way up right and now hotels are like going you know because really what you see on that price is what you pay when you check out if you don't add anything else you know in or if you don't park at parking on top whatever it is but you know because i'm telling you the numbers i see oh it's 150 a night six hundred dollars for two nights well the cleaning fee was 200 for what you know so there is there are changes happening in that area as well and i think that it's not as i think the shine is worn off on some of those platforms in some areas so okay can i make a personal policy statement that has nothing to do with my job um i think as our community shifts and changes from to a more rental community i think we're going to see that tipping point within the next comp plan where right now we have the majority of of our residents who are living in in owner occupied homes in or single family or duplex homes and i think we're going to or townhouses and i think we're going to see that shift into the majority of our residents living in multifamily rental homes um i think we as a community need to think really intentionally about how all of our residents are participating in our community and are valuable to our community we you know we have lots of staff and lots of volunteers and lots of people who participate in city things that are renters and i think that there's it's easy to go to the voices we hear who are all homeowners and privilege that and i think we really need to think broadly about privileging all of our residents regardless of their own home ownership status and so i think focusing on this kind of conversation on short-term rentals and a rental registry enables us to think about the safety of the entire community and not those who are just able to rent in a airbnb in south berlington but really think about all of those residents who we are trying to keep connected to our community and productive and healthy and happy and all those things so i really like that pairing yeah no i think that's very good i think it's it's important to connect it to the comp plan as one of the potential values of how we see our community as a safe place to live so great okay item 17 opportunities for counselors in the public to share information and resources on climate change does anyone have anything to share i already shared mine you did megan do you have anything i i'm a hearten that we're looking at ecosystems in the state i was glad to hear that update that we're looking at ecosystems in in the state because i i think that no in the state in in the state of vermont that's okay okay that would be but i because i think that you know there hasn't been enough attention focused on how our ecosystems are really the the the basic kind of living blocks to our civilization um you know i was thinking as we had our two chiefs you know really struggling with overtime and and employee you know hopefully not burnout but definitely fatigue um you know as we were talking about investing open space funds and you know all of those zeros i could just imagine you know if i were the two chiefs sitting there and seeing the zeros um and you know so i think it's important for us to think in that long-term way uh that our health as human beings really rely on their being open space and ecosystems that are intact and thriving um i certainly don't want to you know say that life will end i mean but i don't know that i want to eat protein pills to get through the day either i mean i think that quality of life and um just what people value going out and you know seeing a tree in a blue sky that these are these are things that add to the quality of our lives um we can subsist we can subsist on you know just eating vitamins and protein tablets and and not have to get our food from from nature but um i'm not so sure that that's the future we should invest in so i i know that you know that we have a lot to balance and we certainly are asking the voters to think very carefully as we put forward the budget um that we must invest in public safety knowing that we are also i think looking to do something that's very holistic we are looking you know at various priorities that will have short-term payoffs but also long-term payoffs so i that's why i appreciate the state legislature really looking at ecosystems because we take it for granted we truly do take it for granted um and i know that we've been talking about population growth in this country and in the world for a long time but um i think ecosystems has to be brought up there in terms of you know it's not just taking land away from tigers and lions it's it's taking land away from the the whole web that that makes sure that we have healthy and and meaningful lives so okay well thank you sir any other business okay we need to consider a possible executive session yes i would move that the council enter into executive session for the purpose of discussing the negotiation of securing a real estate for purchase released by the city of south burlington inviting in jessie baker and collin mcneill second is pooh alana okay um any further discussion all in favor signify by saying hi hi will tom be following us in electronically okay this is some of your link okay this is an early meeting too all right we will not be coming back with any announcements correct okay so the meeting can adjourn thank you very much