 Good evening and welcome to the pandemic version of Montpelier Civic Forum, which means, of course, that we can all vote absentee, except for those of us who want to go and vote traditionally on Town Meeting Day, which is Tuesday, March 2nd this year. And we have an excellent election. We've got great candidates, we've got great City Council candidates, and we have good school board candidates. We also have one person running for a five-year term on the Parks Commission. We also do our regular shows, which include Anne Watson talking from the mayor's seat on what it's like in Montpelier, going from one side of town to the other at projects which are ongoing, projects which have been pushed off, and projects which might never be. And we do our budget shows. We're doing one with Jim Murphy from the school board. That's a good show. And we have Bill Fraser, our city manager, along with Anne Watson, our mayor, talking about the city budget. That is tonight's show. And I want to thank Anne and I want to thank Bill for coming. Thanks for having us. Yeah, thank you. We do this every year, pandemic or not. And the reason that we have Anne on is because budgets are built not out of nothing. They're built on policies. And Bill helps to construct off the policies that Council and Anne set. Now, this is not a zero-based budget, is it, Bill? No, we set targets. And maybe Anne can explain how the Council reaches their policy direction, but we set a target of how much we think the community can afford and what the key priorities are, and then try to build a budget from that. But obviously, maintaining our services is typically one of the areas that the Council gives us guidance on. And so the costs of doing that are somewhat fixed. So last year's budget really is the starting point of this process. And then what we do is we adjust to current priorities, current realities, and current, basically, desires. So the budget starts, in a sense, right after the last town meeting day when Council goes on its retreat and sets its objectives. Would you say that's when the budget kind of starts? Yeah, you know, it's kind of a funny process because the Council that's voted in on Town Meeting Day then goes to create their budget in sort of late March, early April. And that helps set some of the direction of the work of the Council and some of the staff for a good part of the rest of the year. And it's still the old budget through the July of that year. So whatever direction we set in April ends up kind of affecting a little bit of that year's fiscal budget, but it also helps inform the budget that we decide on that October, November, and December. Bill, there are some people watching who don't know who you are. You're a City Manager. How long have you been City Manager? I'm just finishing my 26th year. Ann, how long have you been on Council? I was originally appointed as a City Councilor for District 2 in 2012, which means that it will be 10 years next year. So we're not dealing with newbies here. Bill, how have City Council's priorities changed over the years? Because I'm going to ask the same of Ann. You've watched and helped that process over many, many Councils. How has that changed? I would say not drastically. It's usually incrementally as community priorities change over time. We all know that Montpelier has a high tax rate, so our constant has been to be careful with that, not to inflate the budget too much because of the tax burden that people have. I think infrastructure has been an issue, although that became more of a priority in say the last 8 to 10 years. Things like economic development have risen and fallen. Environmental issues rise and fall with the Council. In more recent years, we've seen some of the social issues come to the front like homelessness and those kinds of things that really weren't issues before. I think early in my tenure, it was really about the nuts and bolts of operating the City. I think over time, we've gotten more into things like funding Montpelier alive and more of the whole community-based funding and looking at things as more as a whole, which I think actually has been healthier for the City. But it definitely changes and each group brings a certain philosophy to it. The change of one person can kind of change the rhythm and philosophy of the Council as a group, so it's interesting to watch. The last 10 years, besides that one person bringing energy efficiency awareness that you brought to the Council, what else has changed in the 10 years? Well, I was going to say some of the things you just said there, Bill. I was thinking about the emphasis on infrastructure as well as social issues and the environment. Those have become more important to the Council over the last few years, I suppose. And parking remains a constant for 26 years? Absolutely. It was talked about in my interview. What are the Council's priorities and that shape this budget? So the Council has some large categories of goals that have been in place for a few years now. And those big categories are things like community prosperity or actually this year one of the goals is around COVID-19 recovery. It's also about having responsive and responsible government or sustainable infrastructure, that sort of thing. And those certainly play into our decisions around what we put money towards in the budget. So one of the things is having an inclusive community and that I think also speaks to the money that we put towards the Social and Economic Justice Committee. There's $10,000 in the budget for them to work with a consultant on doing a needs assessment for our community. So that's just one example of how those big goals have affected our budget. And so under those big goals we do have more specific targets that we're trying to hit, like how that plays out for that year. And those change from year to year and we'll revisit that again after Town Meeting Day this year. Bill, I want to take you back about three minutes when you talked about keeping our tax rate low. There are three different measures sitting on this ballot of which you're one. Major measures, Kellogg-Hovard, the schools and the city. Roughly what percent every year of our tax burden belongs to the city? About 40. Approximately 40 percent and I think that may be including the Kellogg-Hovard. Kellogg-Hovard Library is $350,000. It's a big number but compared to the $10 million for the city or $20 million for the schools, we tend to fold that into the municipal tax rate. So the combined of the ballot items in the city's budget is usually 38 to 40 percent of the total tax bill. Let's start off with Kellogg-Hovard because that kind of is out of your control a bit. They're requested to come in roughly zero or in terms of an increase. It was exact same as the last two years. Bill, in terms of the public budget, you issued a 179 page budget summary. So we're not going to go through line by line of 179 because we don't have enough bandwidth to do it. So this might seem a bit disjointed but it really isn't because we're going to go through a lot of different, as Ann said, we're going to go through a lot of different subdivisions in this. Let's start off on the higher level of this. How much is the city asking for this year? The city budget is actually down about 2.5 percent from last year, the overall budget. And that is because we started the process with about a $1.4 million budget gap due to loss of revenues and some expenses going up and shifts for expenses. And a very unusual thing that we had a 27th pay period which only happens once every 12 years. So of course it would be during the pandemic year. Could you explain what that is? So that most of us who don't think in terms of bi-weekly budgeting? Sure. So a normal 52-week year has 26 pay periods, assuming people get paid every two weeks. But by quirk of the calendar, every 12 years there's a 27th pay period. It just happens to fall within those 12 months. And so that adds about 6 percent to all your personnel costs. And that happened this year. So on top of an already difficult budget gap that was added to our challenge. So as a result, the overall budget is lower than it was last year. However, because some of it had to do with lost revenue, the tax request is about 0.6 percent up from last year. You know, half a percent. It's really one of the lowest changes we've had at some time. And that was something that was really important to account for. Now you've already made adjustments, downward adjustments in the budget before this? Correct. As we went through the pandemic, we had to downward adjust. Our parking revenues were next to nil at one point. Our local options tax. Our hotels didn't have many people in them. Our bars and restaurants literally didn't have people in them. What did that look like? What was that hit? Hopefully. I think you probably know the numbers better than I do. Well, I don't know them off the top of my head, but it was very significant. So we've actually had two, you know, when this started almost a year ago in March of 2020, we were still finishing up fiscal year 20. So the first thing we had to do with a quarter of the year to go was to make some pretty harsh adjustments for the last three months of the year to try to bring the budget in. Because of parking revenue suddenly just stopping local options tax, stopping other fees for service, just dropping out of the bottom. So we had to furlough a fair amount of employees. I think about 20 ultimately ended up being furloughed. Fortunately, the federal subsidy with the extra $600 a week helped keep them whole. So we didn't have to hurt any of our employees financially, but it saved the city quite a bit of money. Those employees were furloughed right through to the end of July. So not only through the end of the fiscal year, but into FY21, which started on July 1st. We then had to make those same adjustments for the fiscal year we're in now, FY21. And so that involved keeping positions vacant, rolling back capital projects, rolling back equipment, rolling back funding to various agencies. So when we came to do the FY22 budget, we really had all the good news, we'd already kind of thought about it because we'd had to do it for FY21. So we assumed that revenues were going to stay at the same lower level for FY22 now just so we're not talking inside baseball here. We mean FY22 means fiscal year 2022 starts July 1, 2021 and ends June 30, 2022. That's the budget we'll be voting on in March. So we started with that rollback budget as our base, not the approved budget, with the assumption that it was going to be at least till July 30 of 2022 before we were fully back on our feet financially as the pandemic ends, hopefully. And as I recall, I think the last three months of the FY20 budget when the pandemic started, if I recall, I think the estimates were something like half a million dollars for those three months. So projecting out it was going to be something like two million dollars, which turned out to be not about one and a half. Yeah, right, which was in the right ballpark. Guys, this is inside baseball. I want the viewers to know that we recognize that this is inside baseball. We're going to be throwing a lot of numbers out tonight. But at the very end of the show, we're going to talk about the next fiscal year because we've cut back. We've continued the cutbacks. Is it a dam that's waiting with a lot more deferred spending and we're going to end the show with that discussion because it's a legitimate discussion. Is this the Montpelier City government that we really feel we need? Or is this an austerity budget that really pinches more than Anne and the rest of the council would like to pinch? Well, let's stay in this budget. Bill, what has health insurance been like for this year and workers' compensation? So, fortunately, this year our health insurance rate was actually in the single digits was about 5%, which still is high. But in the health insurance world, last year we were looking at over 20%, which really was a budget buster for us. So the fact that it stayed stable this year made a huge difference as we were trying to balance this big gap. Do you anticipate that last year was a blip that won't be repeated? I think health insurance is a world of its own. So you don't know what's happening in the world of health costs. One of the things that does drive is our experience as an employee group. We are no longer for reasons that we don't want to get into unless we want to do a whole show on it. We are a pool of ourselves. We're not in a larger pool like we used to be. So an unusual experience or two amongst our employee group or their families can really drive our rates up because of the costs. And what had happened the prior year essentially was we spent more money on health care than our premiums had paid for. So the rates had to catch that up, but this year we were able to manage our costs. And we do. We work really hard on employee wellness and managing costs. But there's nothing you can do if somebody has a catastrophic illness or an accident or those kind of things. And we want our employees and their families to have that coverage so that they can work with peace of mind. What is the new spending in this budget? Approximately 100,000, 200,000? How much is embedded for new program initiatives? Well, I can speak to one of them anyway. There is, it's $10,000 I believe, that is dedicated towards the capital area neighborhoods. That is a program that was an initiative of the city many years ago, but had sort of fallen by the wayside. And I think has a lot of value for the community. It is a mechanism like getting neighborhoods together is a mechanism for communication between the city and residents, as well as just improving quality of life, particularly during a time of unusual isolation. And I think it's worth funding. I feel pretty good about that since it was a city service not that long ago. Can I go into other city services that are funded in this budget that people don't really think about much? Sure. The social worker with the place. What's going on with that? That's continued. In fact, I can give you a quick overview to answer your initial question and follow into with the exception of the capital area neighborhoods that the mayor mentioned. There are no new programming items in the budget and I would say reductions come across the board. So we're holding six positions vacant right now. We've reduced capital spending, we've reduced equipment spending, operating spending and funds. Some funds to our community agencies have stayed the same, but overall funding. Others got had drastic reductions. So overall, our community spending is down and, you know, therefore our external programming is down. And that reflects in some cases use. Obviously rec programs aren't running the way they used to be or senior programs. And but certainly one of the challenges is that we still have service demands, you know, the snow still falls. There's still crime. There's still, you know, police things happen, ambulance fire calls, those kind of things. Those those don't really pay attention to the economy or the pandemic they they have to be responded to. So how do you maintain a core level of safety services and basic services for the community? And respond to this crisis. Let's stay in recreation. Does budget assume we're going to have the pool open this summer? No. But I will also add that typically the pool is self supporting. So if we were to open it, we and it projected that revenues would support the expenses. We would do that it wouldn't. It's a city projecting that the recreation department will hold summer camp as it did last summer. Yes. Is the city projecting that the senior center will be able to accommodate seniors in that center? We don't know yet, you know, may depend on the level of vaccination. You know, seniors are one of the most vulnerable population in this pandemic. So opening them up for congregate activities is very challenging. They have had quite a bit of success with online classes, you know, virtual classes taught by senior center instructors. So that has has been a good source of continuing activity, but we don't know when we'll be able to open a full suite of activity. City Hall. When will we have City Hall? We tried it for a while. We had several days a week of City Hall. Do you anticipate during the spring that perhaps will several days of City Hall again? Again, it all depends on external factors. We're the city and I think wisely the council and staff made a decision very right at the beginning of this that we were not epidemiologists. We are not pandemic experts and that we would follow the CDC and the state health department that we would we would accept their guidance and follow it. That we were not in a position to make our own rules or regulations or policies. And so we closely monitor the governor's press conferences twice a week and we update our policies based on what we were told. And we had opened up to City Hall two days a week and we're starting to relax based on the case count in Vermont. And then in fall when the case count started going up and the state was asked as a whole to ratchet back down, we responded in kind with that. So we will reopen all of these activities when we are told by people who know more about this than we do that it's okay to do so. Now you had said that there's six positions that are waiting to be, well, that are still open. Parks picked up a position, didn't they? So a year ago, Parks added two positions. And so part, you know, they were fully funded in this year's budget. So yes, so those are still, those are full. So we have six vacant positions that normally we would be filling. Two are in rec. One is in police. One is in finance. And maybe two are in finance. Let me think. Police. Yeah, I think maybe two in finance. And those are held, you know, there's one other DPW, excuse me. So there's one in DPW, one in finance, two in rec, and one in police. So six. We're out of the weeds now. Anyway, anyway, so those are, those are being held until we are on financial footing to be able to restore them. We specifically call that as being held. We're not cutting those positions out, you know, forever and ever. Hopefully we can restore those positions to levels of service. Parks, because we had two retirements in rec, which were both field maintenance people, parks has agreed for this year to assist in the field maintenance. So one of the reasons we didn't need to reduce in parks was that they are going to do double duty and help mow fields and those kinds of things for the rec department. We may need to find some summer help, but we will not have the same full kind of time staff, but we're also not, we don't believe we're going to be running leagues and all those kinds of things on those facilities. Now I have to give the viewer a warning that we're heading back into the weeds again. The school resource officer and that position, the schools fund half of it, the city funds half of it, that person is on the police department. Is that included, that position, now that they're no longer in the schools? Is that halftime that's moving back from the schools back into the cities part of that police position that we're down one? Are we down a half a police position instead? No, do you want to take that one? Yes. Why don't you go? So maybe I'll just use raw numbers. The police have had 17 sworn police officers, including the chief, captain, everyone who's actually, you know, able to serve as a police officer. One of those 17 was the school resource officer. When we did our budget, we weren't sure what the school was going to do, so we did not plan on any revenue from the school. So when we didn't get any, it wasn't a surprise. So we now have 16 police officers instead of 17, the person who is functioning as the school resource officer will simply be a patrol person. And we're still holding one position to get back up to 17 eventually? Eventually when we can financially, correct. There's two different budgets. There's the operating budget and there's the capital budget. What is the capital budget about? Normally the capital budget totally would be about 2.4 million, but that includes debt payments. What does the capital budget fund? It funds debt payments for capital projects. It funds major projects. Typically public works projects, road reconstructions, road paving, sidewalk constructions. Bridges, retaining walls, those sorts of big things. This year, I think, for example, one of the things you said you wanted to talk about, there's funds in there for the reappraisal. Major things that aren't operating costs. And then we also have an equipment fund. And so we did take money from there because, number one, it was going to be difficult to manage projects because of contract or restrictions. And number two, they're also the kind of things that we can put back in easily as if funds come in, it's easy to, it's pretty simple to say, okay, here's another $100,000. Let's add one more project to the list as opposed to hiring a new employee or building a new program and those kinds of things. So in terms of capital projects, are we down in spending from where we were last year? Or are we holding constant? We are, well, we're down from what we budgeted from last year. In the end of the day, when we actually had to make the reductions due to the sort of emergency provisions, we're not that much down from where we've actually spent. To your question that you posed earlier is, is this sustainable for the future? That's our challenge is how do we then make up for lost time for two years of underfunded capital in a community that really desperately needs capital projects done? And that's one of the things staff is already working on now for next year's budget is to have a plan for how do we play catch up. Sustainable streets. That's something that John Holler talked about, level street funding. And it was a priority and had watched that while on console. Trying to put away, what, about $500,000 to keep the streets at a level where we're not playing whack-a-mole. What happened to that this summer or this coming year? Well, that is one of the reduction areas, absolutely. And so the question is how can we, we have a sense of the amount of money that we need and so we are looking at ways that we can restore that in next year's budget assuming that we are back to some normal level of revenues. And it may be even, I don't know, might be a short term bond where we front load some money to do a lot of improvements more quickly to catch up for the lost time. It may just be reallocating funds to those projects in the short run. It's absolutely a need. We need to get back on that schedule. It was a smart schedule. And we had reached the level of funding that our goal had been set. We were maintaining the streets in the way we wanted to and we've definitely fallen off right now. I think, well, if I may, I think one of the important factors in making this budget and knowing that we were making these cuts now for the FY22 budget was to go into it eyes open knowing that we would need to play catch up in the future and being honest with ourselves about that and was that the right decision for this moment in time. And we felt like it was and I'm really glad actually that we are preparing now to make those catch up payments and do those projects in the future. Now that also includes major equipment as well. That's right. So we might have put off something like a fire truck or I'm just speaking out of school. Ambulance. Yeah, there's a schedule for all of those purchases. So we've delayed an ambulance purchase. We've delayed police cruiser purchase for two years. So yeah, there are things that are queuing up. Let me go through a few programs and if you could explain to people the housing trust, how much are they in for and what did they come to console for and what projects do you anticipate them doing? I believe they asked for $40,000. Well the housing trust fund had hoped initially to be at $110,000. That's what we had funded them at in theory in last year's budget. We ended up dropping them to 60 I think in the current year and then I think maybe 40 for this budget coming up. I don't have the exact number but yeah. So they understood that they have some money left over as well but maybe you could talk about some of the things they do. Yeah, so one of the great programs that they offer is the first time home buyers program so that if someone is looking to buy in Montpelier they can get a small grant to help make that happen. They anticipate that there are larger projects that happen in Montpelier to increase the amount of housing and they're able to give a significant amount of money to those projects when they are ready and when they're about to potentially happen and need that funding. So things like the French block over Obachan's got received money from the Housing Trust fund, great projects that need a boost to get over the finish line. Montpelier Development Corporation, are they in the budget? No. They are not in the budget. They were in the past. Yes. What did they come for money or was it just there was nothing there for them? Well, so the Montpelier Development Corporation has gone through a little bit of a transition over the last year or so in that they changed the model of how they operate. Since their beginning they had an executive director that was really their sole employee and there's been a bit of turnover in that position and so they've actually moved to a new model that is project manager oriented and they also had some funding left over. So this year, especially as they're in transition and they had some money left over, they are not included in the budget for this year. But they're still operating? Correct. Yes. We anticipate seeing or I should say I believe that board will continue. We're having discussions with them about how to structure this going forward, but they were very gracious. They understood the circumstances, they understood where they were and they said, hey, if you need to hold us at zero for this year to get through the hump, we understand that. But normally they had been previously funded for $100,000 per year. During last year's budget recisions we dropped them to $75,000 in FY20 and then excuse me, 21 the year we're in now and then for 22 we've got them at zero and then we'll be discussing where we go from there. Now we're going back into the weeds again in warning. They were budgeted out of the local options tax, weren't they? What is the local options tax and what happened to the local options tax during pandemic? We definitely had a drought. The local options tax just for those who aren't familiar with it is a 1% rooms, meals and alcohol tax. And that's alcohol sold in restaurants or bars, not alcohol that you buy at the grocery store. So obviously it is a tax that is a revenue source that is generated when people are out congregating, going to these places, buying meals. And while there is some of that going on in you, whether it's takeout or small, it's certainly not at the level that has occurred. Certainly rooms are not being used at the rate they were used before. So we've seen about a 30% drop at least in local options taxes and we budgeted for a fairly significant drop. Hopefully we'll be wrong and we'll get more. But we tried to be conservative in our approach. So obviously one of the major things that's funded out of that is the economic development. So it made sense that since that was a drop in revenue, that would be an area that we didn't spend. Montpelier alive. Are they in the budget? Yes. They are in the budget, but I believe there's not funding for the July 3rd celebration. Right. So the operations for Montpelier alive remain in the budget at the same amount, but some of the extra event funding has been taken out. So funding for the energy plan or for Confluence Park? So yes, there is funding for the energy plan. What is the energy plan? Yeah, fair enough. So the city has a net zero energy goal to reach or achieve net zero energy or to produce renewably as much as we are consuming by 2030. That's the goal. So we've made great progress towards that. Actually, some of the data that we got from the energy committee had reduction in the amount of carbon emissions the city was producing. At about, we reduced it by 56% over the course of 10 years or so, which is pretty exciting. But there's a lot of work that still needs to be done. And so in order to plan the route, how we're going to get to net zero by 2030, there's funding in that budget. And yeah, we're going to be announcing who will be doing that work for us, who will be our consultant pretty soon. Confluence Park, is there anything in the budget for changes in Confluence Park? Not specifically. That would be a major capital project. We've got a design, we have some cost estimates, and there's some grant funding being sought right now. Ideally, we would try to do that with as much external funding as possible. But we could use existing city funding if we needed to match. But right now, there's not a specific fund to just go build it. Let's stay in the neighborhood, the parking garage. What is the status right now of the parking garage? Are we still in court? Is it budgeted so that we can stay in court as long as we want or need? Nobody wants to stay in court for as long as we need to stay in court. Where do you see that during this year? And where do you see the issue of the parking garage? Yeah, so it is still in litigation right now, and we are just waiting for some decisions to be made about that. And once that happens, if we get the green light to go ahead, I think we'll have to, we'll assess it based on the economic and pandemic conditions at the time. And I think we're all hoping that we'll be able to return to normal levels of travel at some point in the future. And certainly with the vaccine rolling out, I'm feeling pretty hopeful about that. And so we'll see. Has the Bishara family said whether they're still in for a hotel? They are. They've been very active. We have regular conversations with them, regular discussions about the status of litigation. They remain an active partner. As the mayor said, obviously once the litigation clears and we have no idea when that will be, at this point a trial is scheduled for probably late summer, early fall. There are going to be some motions coming actually at the end of this month and then decisions on those which will set the stage for what is left to be litigated. If the appellants choose to appeal decisions to the Supreme Court, that could add another year or so to the process. And I think what will have to happen is due diligence at that time, we will look at the market for hotel, we'll have to look at the finances, how much is it going to cost to build these. And all of that. I think it's interesting, you know, this is kind of a, the city right now is in a little bit of, it's an interesting quandary because the funds, the funds essentially for the litigation and all of this are coming from project costs. And if we were to discontinue the project, we would have to, so we have an approved $10 million bond for the project. If we were to discontinue the project, we'd have to issue the bond for the approximately a million or a little bit more that we've already spent, which means taxpayers would be paying for that for nothing because there wouldn't be anything built. And on the other hand, when we get to the end of it, with so much of the project costs being eaten up in litigation, you know, we may be looking at how to fund the difference. So it's certainly, it sounds like a lose-lose. Well, it certainly has created, and it may be the intent of those that are appealing it is to drive costs up into delay. I don't know, but it certainly is creating a situation that we have to manage and watch very closely. Let me take you out of the city budget. We're going to stay in budgetary stuff. Water rates. How are those handled this year? What do we anticipate for water rates? Yeah, so there's a plan over a very long period of time about how the water and sewer rates will change over time so that we can achieve a sustainable level of quality of infrastructure. And we actually just had a meeting about this not that long ago with the city council. And this, we approved some rates, unless we're having another hearing about them. I think we might have another hearing about them. So the council approved the budgets for the water and sewer budget. And the rates will be set in June, the anticipation. So the plan that the mayor referred to calls for us to try to add a 1% premium on top of whatever inflation is in a given year to help fund the infrastructure. So inflation this year ran about 1.4%. So I think we're probably looking at 2.5% rate changes in water and sewer to do that. That's also aided. And I think, you know, just, you think simply adding a percent over a long period of time, would that be enough to pay for the infrastructure? But there are other things to consider. There's some major debt coming off the books in a couple years. For example, the water treatment plant is about $400,000 a year in debt payments that we pay for it. And that will be coming off the books in three years or something. So without having to drastically raise rates, we suddenly can free up $400,000 a year to go into infrastructure. So part of it is managing what we know are those kinds of costs. Now our sewer rates, that's the water treatment plant over by Dog River? Yeah, the water resource recovery facility. Yeah. Boy, you have such a nicer way of putting it than I do. Is that budgeted so that we're already budgeting all of our changes and the like? Has that already been factored in or will that be a step increase every year as well? I believe that's similar. Because again, the wastewater rates, the sewer rates, aren't just on the plant. That is also old sewer lines. Those break and leak as well and require management. Some of them need to be increased in size. For water, it's called the distribution system. For sewer, it's the collection system that need a lot of underground work. Remember, we have an old city, so some of these lines are quite aged. There is some major work going on at the water resource recovery facility. The artist formerly known as the sewer treatment plant. That's very exciting. That is going to allow us to take food waste, generate more electricity to operate the plant, to reduce our costs, bring in more revenues. That was a bond that was actually approved the same day as the parking garage. No, thank you. I was struggling to come up with it. That is the savings from that is projected to sort of balance out what we would have had to spend if we just done normal maintenance and normal upgrades on the plant. Our reappraisal. Now, I'm going back in the weeds again for all of you who want to take the volume and shut it down for a little while. Bill, could you explain the reappraisal process in terms of you reach a certain level and then the city is asked to reappraise properties? Where are we in that? And explain the process. I hacked it. I did a hack job. Sure. The basis of a fair and equitable tax system is our tax assessment since property taxes are our major source of revenue. And so making sure that your house and your house and my house are all equitably appraised. It doesn't mean that they're the same value, but it means that they are meeting today's market value, not 10 years ago. Because those things could change or the relationship between commercial properties and residential properties. So equity is very, very important. The state because now there is a statewide property tax for schools. The state has set a standard that when you are what's known as the common level of appraisal. So how accurate are your appraisals? If they dip below 85%, then you're required to do a reappraisal and we've just hit 84 point something. That's not good. So we will be, we haven't gotten our notice yet, but we've known it was coming. So we actually already have contracted with the firm to begin work in 2023. The FY22 budget has half of the money in it and the FY23 budget will have the second half. Approximately how much is it? About $240,000. And what they do is they will visit or try to visit every property in the city to not only appraise its, you know, they will do statistical analysis of sales and to look at condition improvements since the last time they looked at your home. So that they're not only comparing, you know, are these both three bedroom homes with two bathrooms in the same neighborhood, but one is in really great shape and one is in really poor shape. You know, what they try to do an estimate of what the then current market value is. What people don't understand is that we have to, we have to tax people on their most recent reval, amount, revaluation amount. So the last one we had done was about nine years ago, 2011 I believe was. So we're all still being taxed on those values. As many of us know, you know, properties have sold in Montpelier at very high prices and very quickly. But a home could be valued at $200,000 and just recently sold at $350,000. We don't just change that value to that new sale amount. We are still at the $200,000 value. So that's where these inequities start stretching. Some homes appreciate faster than others or some buildings. Suddenly what was fair. So what you're saying is that your neighbor in approximately the same home is paying taxes on $350,000 and you're paying on $225,000? No. What I'm saying is that. I knew I'd mess this up somehow. No. What I'm saying is let's say both of you were at $200,000. So you're both paying taxes on a $200,000 value. Your neighbor sells their house for $350,000 and made a bunch of improvements to it. You're still both paying on the $200,000. So what we need to do is to see first of all is to reflect their sale and their improvement and then see what is the best analysis of what your home might be worth. It might be $280,000 now. There's might be $380,000. So instead of keeping you both at $200,000, it's adjusting them both to what now is currently fair. So what I think a popular concern with reappraisals is as people see maybe their home might double. It doesn't mean their taxes are going to double because everything's going up. So our tax rate is based on the total valuation. We don't get more money from a reappraised life. It's a common misconception that the city's raising the grand list and can suddenly get a whole bunch more money. We still only raise what the budget, the approved budget is. It's just redistributes how it's paid in a more equitable manner. There are more houses sold in Montpelier than there are commercial properties. Yes. I think that's a certainty. Yes. Is commercial downtown and commercial Montpelier also going to be appraised at the same time? Everything will be. All property will be. How do you establish a fair market value when you don't have properties selling that are approximately the same in downtown? So you do look at whatever sales exist. You also look at real estate sales in, say, Washington County to get a sense of what commercial sales might be. And then we do a survey of rental income. So if a business is a tenant in the building, unlike a home, a home is sort of, someone just says, I'll pay this much because I want to live in this home. It's got nice features. It's got what I want. Commercial buildings tend to sell or be valued based on how much they can generate. How much rent can I collect? How much will the storefront get? How many apartments upstairs get for me? And so we have to develop schedules that say, OK, a square foot of downtown rent is going for this. On average, not necessarily a specific rich building, but it might be OK. $16 per square foot, I'm making that up, is the main street rate. And $17 per square foot is the state street rate. And apply that to those buildings. And then that figures out what their market value might be based on their earning potential. So if I can summarize this in two points. One, we shouldn't be fearful of the reappraisal. That it isn't going to mean dramatically higher taxes. Not necessarily. However, it is fair to say in any reappraisal, anytime you redistribute things are based on equity. Some people whose properties have appreciated more than others are going to see a higher than normal tax increase. And those whose properties have not appreciated as much as others will actually see a tax reduction. Last time, I think the average was about a 30% adjustment. So for homes that were around 30%, their taxes didn't change. And then people above or below that mark. I will say not to alarm people, but I just think it's a reality. The last three reappraisals we have done have seen a much greater appreciation in residential properties versus commercial properties. So every time we've done it, the tax burden has shifted slightly to the residential sector. And as you mentioned, there haven't been a lot of sales, particularly with the current economic conditions. You know, I suspect that might happen again, but I don't know. Ann? I don't think of anything further to add. Will there be houses and savings faster by 23 that will be factored into this? Well, I think it's probably fair to say that we are looking at all the things that the city can do to help enable that. So, you know, just for example, one of our most recent council meetings we were talking about, just some of the zoning needs that might need to be adjusted in order to realistically accommodate housing in savings pasture. And so I think, you know, we're certainly hopeful. We're not holding our breath, but trying to do what needs to be done to plan for that to happen. So just to follow on that, the city has been working actively with the property owner, owners, and those zoning changes, which will actually be on the council agenda next week for formal hearing to be adopted. We're at their request feeling that it would make it easier. We believe there is intent to move forward with the project at the end of the day, and we are working with them about possible infrastructure funding using the tax increment financing district. What is tax incremental financing? So people refer to it as TIF. It is a program where anticipated new revenues from a development can go and pay for related public improvements. So maybe an expanded sewer line or a new sidewalk or those kinds of things. I think the best example we have in Montpelier is the parking garage where the anticipated tax revenues from the new hotel, which don't exist right now, would then be used to help pay for the garage, which is a public benefit, but also necessary for the private business to happen. So in Sabans, it could be some water and sewer infrastructure. It could be sidewalks. It could be maybe a roadway into the property if it were to become a public road. So we're still working on those kinds of things that would be of public benefit, so private benefit, and that would allow them to build their homes. Since we consider new residential properties a public benefit, and they would be adding new taxes to the Grand List. We've already been doing sewer work along Berry Street in that area, haven't we? We had to do a project last summer kind of quickly because of the rail line relocation, and they were on top of some sewer lines there. So we did have to do some work, but there's more to do. It's an old line and it's undersized, so it would need more needs to be done. If I'm correct, Jim Lane that's next to Distillery could in theory go all the way up that hill? It could. Jim Lane was located in a way that to be directly across from what will be the entrance to any Sabans pastor so that it will be a four-way intersection all lined up. So that was planned and that is where the entrance to any Sabans pastor projects will go. Ideally that would be, I don't know that it would be called Jim Lane on the other side of the road. It's also where the railroad crosses the street, which again was intentionally designed. What about the state property next to where the Beverage Store used to be between Shaw's and the art store? Are we purchasing that? Is that already budgeted for? Yeah, so we as a council decided that that was a priority, a property for us to own. We wanted to make sure that we would have control of what happened there and that did mean finding some money or basically coming to an arrangement with the state so that we will own that property. So that leaves open the possibility of whether it could be a park space or a building. So that's yet to be told and we've had a little bit of discussion around that but not very much. If the state said yes, would it be in the budget? The state has said yes. The state gave us terms for purchasing it. So it would be spread out over two years in the current fiscal year. So we've got to just reallocate funds out of our current budget and then we budgeted the second half in the FY2020 budget. So that purchase is budgeted already. It's not contingent. And then the elephant in the room, the recreation center, that's a very, very large ambitious project. Where does that stand right now? Yeah, so that is also on hold at the moment and we were able to make great progress on it so that we were just about ready to go to the voters, to the public for a bond. But then the pandemic hit. And so I anticipate that that is one of the things that we will revisit when it seems apparent that our economy has really returned. Obviously we're not there yet so it's hard to anticipate when that will be on our radar again. I promised I would end with the next year budget. Not this one but the following year. We have six positions that are on hold right now. We've got a truck and ambulance. We've got all of this that's been sitting there backed up. Does that budget look really awful in terms of sustainability? I know it's impossible for you to say given a steady growth curve. So if our revenues return to the level, so this has all been predicated on a loss of over half a million dollars in parking revenue. And a loss of a hundred or so thousand or more in local options taxes. We've anticipated and we don't know for sure a loss in payment lieu of taxes from the state. The reason for that is not that the state is not a fair player but the state's payment lieu of taxes fund comes from local options taxes around the state local sales taxes. So our assumption is if those taxes are down statewide the state will not have the revenues to make those payment lieu of taxes. And there are a few other assumptions that we've made. If our revenues come back to normal our budget will come back to normal and we would be allocating funds back into those capital projects, back into equipment, back into the services and obviously we also have an opportunity to look at how we might reprogram any of those funds since we would be coming in. So there's a huge contingency there but if things go back to normal then our budget shouldn't be any more difficult than it is. Except for we have backed up need. Right. So that's a challenging of itself for the capital, for the equipment and the capital. So we need to figure that out. But just in general it shouldn't be more challenging than a typical year. I think what my concern is and we've really talked about this as a public, you know it comes back close but not quite. Right. Like we get 80% of it back then what and I think that's when you know that's when then we could be in for a real challenge. I imagine that the state is cutting you people in to the could-be's of COVID funding for state and local governments. You know as to what that could mean, the local government section of that as well as cutting you into the potential talk of infrastructure funds. That's another major project that Congress is discussing. Is that happening, those kinds of discussions? Not to the level of specificity that I think you are assuming because the state doesn't know. You know it's still things are being discussed at the federal level. We occasionally get something from our congressional delegation saying here's what this proposal might look like. But the state doesn't know what they're going to get, how they're going to get at what funding it's going to be and who it's allocated for. Does it go to the community development fund and then be granted back out? How much would the state keep for its own needs? I mean they're hurting too. Their revenues are down. So I think there's a lot there. I know the city and the league of cities and towns are certainly advocating for funding to come to local governments. National groups like the National League of Cities, the U.S. Conference of Mayors, the International City Managers Association are heavily lobbying Congress for direct appropriations to towns and cities because you know we're really bearing the brunt of direct services. Now if you have these projects all lined up then you have all the planning of these projects all lined up. In which case when funds come in it should be fairly easy to sit and be able to put the bids out and get these things done, yes? That's correct and we do have that list. We haven't shared it with council yet that's coming right up soon. One of the next couple meetings we're going to share with the council are a list of staff's proposals of what the priorities might be and then the council will move those around however they see fit. So right, the idea is hopefully we can plug and play if money comes. The show that you're watching right now is a triangulation. We are a triangle. I am here. Anna's here. Bill is there. Is that a relief not being in a Zoom? It certainly is an unusual, gosh, I mean I spent all day today on Zoom meetings. Today was our remote day with students and normally I'm in a classroom with 12 other humans and we're all masked and six feet apart but it's certainly nice to be able to actually be a distance from each other but be able to see your faces. That's a good segue. As I'm a distance from you but I'm going to be voting on Town Meeting Day and actually I'm going to be voting with my wife on Town Meeting Day as we always do and I would encourage you not only to vote but to vote intelligently which basically means you've watched this show, watched the show that Anne did from Mount Pylir from her perspective which was a very good show and watched the candidates as well as the school board candidates. Jim Murphy with his show on the school budget as well as our candidate for the Parks Commission for a five year seat. All of them are great candidates. They're all very, very good shows and get out and vote and encourage your friends to vote. That's really important. You could do it F's and T's. It's not that hard to do. It doesn't take that much out of your life but do it for the sense of civic spirit for our town. Thank you very much.