City of Ferndale Headlee Override Town Hall

Alright. Alright. We are rolling. Hello, everyone. Welcome.

Just to kinda kick things off, go kinda over what we're doing here tonight. So we held a the city council held a town hall on November 18 to talk about kind of reactions since the, how the override vote took place early in November early in November. Tonight, we're gonna kinda go through some of the information we received there. We're gonna go through a little bit of information as to the importance of, of Headley to the operating the operating, operating revenue for the city, kinda why we've had a head of the override for the last couple years, go through some of the cost pressures the city is facing, and then go through some scenarios as to, you know, what are the options moving forward. As we go through the night, we're gonna have a couple interactive questions.

In the shares by the aisle, you'll see sheets with the same slide that's up here right now. You can use that QR code to scan and sign in to be able to participate participate, or you can, go through and use the website and that code. Other than that, throughout the night, we'll open up for questions and feedback. I do ask, we're gonna have a couple wireless mics going around. We are showing this on YouTube right now.

If you guys are talking from the back, the mics won't pick it up, and they won't hear it online. They won't hear it online. Alright. So with that so with that so with that and by the way, for those who don't know, I'm James Kurzand, the intern. James Kurzand, the intern.

Alright. So November 18, we held the town hall, to receive feedback and start looking for a community solution community solution. Residents voiced support for the city services that are provided, but they wanna see some constraint on spending on spending. Residents voiced support for a more modest Headley Override Headley Override. Some of the issues that residents had about the November proposal, they didn't didn't like that it was all inclusive, that we had the operating police and fire facility, the Martin Road Rec facility bundled together for a total Headley reset.

The two high of a of a request, going from the current 15.7 ish to 20 mils was a lot for people a lot for people. And then the other was that there was no expiration for the operating millage. It was gonna be levied in perpetuity in perpetuity. So a little bit of history here. For the last now, it's like eight eight years.

We've been operating somewhere between 16.9 mill levy and a 15.7 mill levy. As a note, for a good number of years during this last headly override, we did not levy the full amount levy the full amount. Instead of levying the full 5.4552, we levied a lesser amount to get to a consistent 16.9917 mills for a number of years in there. Only in about 2021 as our original charter original millage levy kept rolling back to a point where we needed to be able to use that whole, voter authorized, additional operating millage operating millage to get close to that 16.9, which we haven't been able to do since 2020 since 2020. As you see as you see, our charter millage has been rolling back been rolling back truly since, since for sure 1994 when we no longer were able to start rolling it back up when we had property value loss property value loss.

It's consistently gone down, the last number of years number of years. So what does this mean? What is our general fund made up of when it comes to revenue? When it comes to revenue. We just talked a little bit about property taxes.

We are limited in the growth in property taxes we collect by both Headley and prop a. If existing taxable if if taxable value on existing properties grows at a rate where we're gonna be able to collect more than inflation or 5% on property taxes, we have to roll back our operating millage. Prior to prop a, if the opposite were to occur, we could have rolled up our property, millage to be able to continuously collect a consistent amount of property taxes to provide the services that residents need. Unfortunately, we haven't been able to do that since the the passage of prop a, which hadn't been an issue. Over the the time from 1994 until about 02/2008, property values continuously rose continuously rose.

And so, consequently, our millage rate would decline would decline. Unfortunately, in 02/2008 and subsequent years subsequent years, a property crash a property value crash occurred throughout the country, specifically hitting older communities, and communities here in Southeast Michigan, where we dropped about a third of our property value in just a number of years. And, unfortunately, our millage rate could not change could not change. This is where we originally got our head our first headly override, to try and recoup some of the revenue that we lost during that time during that time. Other other general fund revenue sources are variable revenue.

So this is gonna be grants, charges for services, fines and fees, that are collected by the court. Grants usually are tied specifically to projects. We don't usually look for grants to cover operating expenses because what do you do when they operate when that grant goes away? You have to stop the operating expense or find a different way to fund it. So they're tied to projects.

So when you're looking at our our general fund revenue, you might sometimes see fluctuations based on whatever projects we're working through with grants. Charges for services. These are things, for example, building permits. These are things that not everybody uses it everybody all at the same time in the same year. Specific individuals are using it, and therefore, we cover the costs through charges for services charges for services.

Something that's really important here, we can only charge we can only charge a fee to recover the cost of providing that service. We can't make a profit. We're not, business. We are here to provide service

to provide service,

and so we can't charge more than it costs us to provide the service. Also, there's headly restrictions involved here as well as other state laws. When we're talking building permits, the construction code act is pretty specific on what we can charge for, building permits building permits. And then the other main bucket of general fund revenue is state shared revenue. This comes from two sources from the state, all tied to sales tax revenue sales tax revenue.

And there's the constitutional formula, which truly doesn't change much. It fluctuates very minorly throughout every year, only by a couple hundred thousand dollars. And at this point now, that makes up about two thirds of our revenue sharing of our revenue. And then there's also an annual appropriation that the state legislature, or provides to municipalities. But this requires, approval from the state legislature to be able to collect this this money.

At this point now, this state makes up about the other third of state revenue sharing state revenue sharing. Back in 02/2003, this was flipped. Our constitutional revenue sharing made up about a third as opposed to the annual appropriation, which made up about two thirds. That the annual appropriation has gone from approximately 2,100,000 in 02/2003 down to, this next year. It's been rising, thankfully, slowly.

We we're estimated to be at about 1,200,000.0, so about half over the last, twenty one years. Twenty one years. So at the same time as we have these handcuffs, you know, to be able to raise revenue, to provide the services required, we have cost pressures. A general fund is generally made up

of

the following costs. We've got 69% of it tied up in personnel. Because we are government, we provide service. Service means people. So 69% is personnel.

Another 13%. So total 82% here are tied to people. That 13% is legacy costs. These are promises we made to employees years ago that we need to make sure we we maintain. These are pensions.

These are retiree health care. Now we've reformed all of our, legacy systems. However, we still have those long term costs, for the time being for the time being. And then the other 18% is made up of capital expenditures. If you watch the council meeting last night, I presented the capital improvement plan.

So these are things these are improvements, construction, rehab to city facilities, infrastructure, vehicles, and all of that. And then the operational expenses. The this, you know, as far down as needing to buy pens and as big as, you know, software for being able to do things like this things like this. As I said, you know, 70% almost is people. Of our people, 80% are, union.

We currently are at a point where we have five of our six union contracts coming up for renewal this year renewal this year. And as you see, in our in our unions, we still have vacancies for positions. This is something we have to be aware of as we move forward. And really none more so than when we look at our police department our police department. Since we last negotiated union contracts union contracts in 02/2021, we have fallen behind other communities.

We were competitive. We are right in the middle of our neighbors, Royal Oak, Madison Heights, Eastpointe, and then us. We are right in the middle. We are right in the middle. Since then, we have fallen behind to a point where we are significantly at a disadvantage for recruitment, retention, and this is something we have to address we have to address.

We need to be able to maintain a quality department with quality officers, so we need to be attractive to new recruits and our current people who have been with us for all this time and about 83% of police and fire budgets are personnel are personnel. So what have we done since the Headley override failure in November? First thing first thing, we took the feedback. We have downsized the Martin Road Rec Facility. Instead of, moving forward with the full, multipurpose multipurpose community building, we are utilizing the grant funding that we had elected to be able to provide a restroom concession building that can help support the activities in Martin Road Park, specifically the splash pad, and the ball diamonds right there ball diamonds right there.

We are deferring other major building construction. We're starting to look at options to do a voter authorized general obligation bond for the public safety headquarters safety headquarters. So this will be another this will be, ballot issue in the future that we may look at. And then what we're doing tonight, we're looking for a new voter authorized operation village operation and looking to address what it was we had what it was we had. So, so at the moment, I'm gonna give you guys a chance give you guys a chance.

If anybody has any questions before we start moving on before we start moving on, I just kinda wanna open this up. As as I've been telling everybody, this is everybody this is kind of an open forum, but also with presentation. So I do want to stop every now and again, breathe, give everybody a chance to ask questions because ask questions because this is heavy information heavy information. So, with that, is there any questions anybody might have? Yeah.

Yeah. Yeah. And, yes, again, reminder about the microphone. We are broadcasting and on YouTube, so we can't hear at home if we're not using the mics.

Hi. My name is, Dave Hoppe. I live on university. I was a member of the finance committee. We did a lot of this hashing about when we were debating on debating on what the recommendation to city council was gonna be.

I was curious, if any time has been spent looking back at those debates when we talked about something other than an o a full override a full override.

We've been look yeah. I mean, we've been looking at everything.

I mean, they they were in Jan well, I mean, at one point, everybody had everybody had, I think the assignment was was if you were king for a day and you could have and and and you can just say this is what it was gonna be. And everyone went around. And everyone and that was before that was before everyone came to the conclusion well, the majority of the committee majority of the committee wanted to recommend to city council for a full override. But there were some pretty detailed pretty detailed, ideas presented at that time presented at that time, which is essentially what we're doing now. So I was just curious I was just curious how much time has been spent looking back at that work we did that work we

Absolutely. Time has been spent on it. Time has been spent looking back at that and also looking forward, you know, continuing to continuing to address what we might need to do in the future need to do in the future.

By looking back by looking back, I mean, looking back at the discussions that we're having in January, which is about a year ago now about a year ago about something other than a full override that could possibly work that could possibly work with a pretty well informed committee. That's all.

And I think you're gonna you're gonna find you're gonna find some of that coming forward here. Coming forward here. Yeah. Coming forward here. Yeah.

Yeah. Okay. So first topic I wanna hit on, with the the interactive polling. But first before that, if everybody has a chance, I'm gonna go to that again so everybody can take a look. If you have your phone, you can scan from there.

Again, we have, some instruction sheets instruction sheets through the aisle way there aisle way there. I'll give you guys a couple minutes to try and sign into it sign into it sign into it. Yes. Yes. Okay.

Okay. So as we heard, one of the big one of the big issues, residents had with the November proposal was that it wasn't time it was, it was, in perpetuity in perpetuity. So to that effect, our first question tonight question tonight question tonight if I can get it going. If we looked at a ten year Headley override, you got three options here. Is that too long?

Is that too long? Is that about right? Is that too short? Is that too short? And if you need Wi Fi access, it looks like Jenny's going around with the credentials the credentials.

Thank you, Jenny. Thank you, Jenny. How are we doing online, Eddie? How are we doing online, Eddie? Okay.

We'll close this one out in just one minute. In it. So it's looking so far so far, ten year a ten year override, I'm seeing mostly about right and too short. I I I totally can understand all three all three feelings on this on this. Doing a ten year override, he we'll be back here again ten years from now.

Absolutely. Absolutely. It's the nature of nature of, the the mechanics of Headley. About right. You know, that's people are pretty comfortable with stuff we've been doing.

You know? We've done a ten year override for the last override for the last nine years now. I can understand the comfort level there. And then too long, of course, I know, there are opinions that opinions every four, every two, every every five years, we should be coming back. So we should be coming back.

So thank you everybody for your feedback. I think it'll stay up for a little bit, but, but we'll go back here now go back here now. So so the first option the first option, that we're gonna talk about tonight and explore, this would be to restore the voter authorized operating millage to a 20 to the twenty fifteen level. As you may remember, 2015, the Headley override, authorized the city to to levy an additional 5.445 mills. And as I showed on the previous slides a little bit back, we didn't start levying the full authorized amount that had actually been rolled back at that point until about 2021.

So what this would look like what this would look like, is we would is we would add an additional 5.445 mils above 5 mils. The charter millage rolled back to 11.19 so this would be a total of be a total of, 16.6425 mills for the next, tax year, which is very, very similar to our level in fiscal year twenty twenty two, which was 16.16159. Looking at this and projecting out and projecting out, and I'll I'll just preface this for every one of these models. Every model we do, every millage we we request, we have to maintain an eye for efficiencies. We have to be able to make some course corrections in our spending to be able to address projected deficits in the future.

Every single one of these models, including including, if we had if we had had we have, adopted the November request, we still would have had to be looking at course corrections to address deficits. So I just wanna preface that there. In this model, we would be projected to hit a deficit in 2031. So this one gives us a good amount of time to be able to make some of these course corrections, at the same time as, levying a proper millage that will help us meet the needs currently, and towards the future. So on that, I'm gonna open up another, another Mentimeter poll here.

Renewing at this level. Is this too much? Is this too little? Is this about right? And I think after we do the vote here, we'll do a do another round of questions and get some feedback.

So I guess while we're finishing up the votes and are there any thoughts, any questions, any feedback we want to give on this one? Yeah. Quinn?

Hello. My name is Quinn Ziegler. I chaired the finance review committee. So I'm a little bit more familiar with this than perhaps, you know, an average person who's watching online. James, could you clarify at the twenty fifteen level, does this mean no additional investment in maintaining our buildings?

Because that's obviously something that was very important to, the facilities task force, which I also had an opportunity to serve on. And on the finance review committee, we learned that the city of Ferndale is performing or is, budgeting for building maintenance at significantly lower than the, industry standard rate of building maintenance. So does this level allow for, additional and appropriate building maintenance?

So this would essentially keep us pretty much on current spending trends. Now that's not to say by potentially finding different areas, making course corrections on other spending, we can't reprioritize. But, no, this currently assumes maintaining, if maintaining our next three year triennial budget and then inflationary spending on that. So this doesn't really take into account that as, in the model.

Mike Thompson, West Troy Street. So are you asking for an additional mill to the initial override? We're not talking about adding a building. Right? You're asking

No. This would be just operational. This, yeah, this would be about a 1.2 mill increase over what we're currently levying k. But to what is what was originally authorized in 2015. So this would restore the Headley override to its original amount.

So are those funds do they have a home already?

So what this will do hang on. Let me take a look at my they have it. So what this will do is essentially provide the adequate funding to address inflationary increases in the short term.

Okay. What would be an example of inflationary pressure? Right? I mean, obviously, I know what that means, but tell me give me an example.

The major one is going to be, the wages for police.

Okay. So so and I'm asking this with sincerity so I can get clarification. Yes. I'm curious about the Medicare Advantage. Is that first of all, what is that savings?

Where's the money going? And, also, can we sort of show the work of what those increases in wages look like? I saw the the the slide for the police officers in Roanoke versus Ferndale. I don't know how many employees Ferndale has, but but, you know, a purse you know? Mhmm.

I understand 3%, but, you know, we have to it's more than 3% for those guys. It's gonna be closer to 10% or something that they need. So I guess I'm just trying to identify where those dollars are going, you know, that you're asking for and go ahead.

Right. So looking at this, looking at this this option, we have to keep in mind the fact that property taxes generally are not gonna grow very fast. Right? Initially, that first year of the levy, we would see an increase, which would be pretty much offset by the inflationary increase on, all of the unions, but also police. And then also just everything else is costing more.

Health insurance for employees is costing more. Other personnel related expenses are costing more. From then on, we don't increase general revenue just projecting out. Projecting out that would put us where we would increase over the life of this about $700,000 from the first year we levy it to the last year. That doesn't really keep up with inflation.

So that is where a lot of this talk of projected deficits is coming in because we are going to have to continue to find ways to save some of this money. Things like the Medicare Advantage, a lot of that gets eaten up because of that simple fact that our general fund revenue does not keep up as we go through. And, Dan, correct me if I'm wrong. We're at about a million a year in savings just under.

Yeah. It started off being

What's the current TV?

It did start off being about a million dollars a year, but then that is the obviously, those premiums are also increasing. So it's, you know, we're losing some of that savings. Even though if we were with traditional insurance, that would have risen at a more robust rate. So overall, there is that savings. And I will say that this year with, changes that the current administration made to Medicare Advantage Plans, those plans have also increased

quite a bit.

So we're losing some of that savings.

Said that if we restored it to the 02/2015 level, that in 2031, we would have a deficit.

Yes.

Right? And another thing that, so I was curious, how does your model take into consideration, properties that were, I don't know, financed through the city, is the right word, but, like, the development I live in Wilson Park Homes right over here, and I know that they were the builder was given a ten year incentive essentially that the city has to refund back our property taxes. How is that so that's just one example.

Right.

That was the same thing at the Parkdale, community as well. Does your, model take into consideration that The incentives coming off. Because because I mean, those 28 homes, you said property taxes doesn't they don't go up fast. But if all of a sudden you're getting property the city in 02/1617 is when those should that incentive should the incentive payback should fall off. How is that taken into consideration in your model for the 28 homes in Wilson Park and the what is it?

A 80 units? Parkdale? I'm just curious.

Yeah. So that is one of the things. Right? Like, we are modeling, so we aren't able to take everything into account. So that would that would absolutely make a change in the model and could

So is is that captured in your model is my question.

Right. It it isn't it isn't cleanly.

Okay. So we have property taxes. So but we know what those amounts

are. Right?

We we know what that that bump will be in '17 and '18 when the incentive payoff that the city owes back to the developer comes off, and we also know what that should be about for Parkdale.

So

one of the concerns that came up during the finance review committee was accounting for things like that because that will be a windfall to the city, something that's not currently in the three year budget window.

Right. Yeah. And that will help.

And that's on the revenue side.

Yeah. That would help for sure.

Okay. So I I think it would be a if there is a way that we could figure out to add that into these projections, it would be really helpful, I think.

Yeah. And and I don't disagree. Phil, do you thank you. Phil, our finance director, Phil, is coming up to, give a little more info.

Yeah. I understand the scenario that you're talking about. Problem is with it's very difficult to predict what property value is gonna be about four or five years in advance or the ten years when you're talking about when

it would fall off. There's way. I I under I understand that because a lot of those a lot of those properties in Parkdale are they've actually increased the tax base quite a bit. And my understanding is is that the portion of those taxes that should come back to the city is actually being refunded to the to the developer right now. So the city is actually cutting a check for that.

Right?

Right. Right.

So whatever that check amount is plus 2% that I or or just keep that consistent because I'll tell you, it's it's 28 homes. I understand there's a lot of homes in the city, but, you know, a good 10 of them have turned over and doubled in value. And so that does add a lot to the tax base. And so I think that it's very difficult to come asking for revenue when there is actually a revenue windfall in the window of within the next three to five years for the city. So it would be great if we could factor that into determining what the city needs.

So hold on real quick. Phil, these are, we collect the entire tax right now and then reimburse

for those developers. Those yep.

If an issue Right. So right. And and and there's also So as far

as so as far as the actual revenue goes, there shouldn't be any change because that's our that has to be

It would only go up.

That's already accounted for in the revenue. There's an expend there's an expenditure that is then on the other side accounted for as well.

Right. So, currently, any of that revenue for the city comes in and goes out

Right.

Until you've reached the $3,000,000 or whatever it was for that the city gave to the developer to develop those properties. But there's also scenarios that the city has where they're gonna be you know, certain areas are gonna be developed again, and those same developers are probably coming back and asking for those same incentives, which may or may not be required. But I'm saying that those can be taken into consideration in this outlook. And instead of just saying, oh, we're gonna run out of money in 2031, it's not taking into consideration that huge bump in property taxes that the city is actually gonna have in a short window.

Yeah. And I I absolutely hear you. What that will actually do is less on the revenue side and more it will show as less of an expenditure in the future. So, yes, accounting, but,

So so I'm glad to say

to factor in

the role

of that

that would get you all the way there.

Right.

What I do know that it'll help. Right? It I mean,

it can't possibly

but you also have to factor in the rollback because while there's gonna be an increase in the property values, kind of what we've we've been saying even during the finance committee because I remember you from the finance committee. Yes. Of course. It's gonna still continue to roll back. So even though we're going to see because I see what you're saying.

When when it sunsets, that ten year window, what your what what your logic is is that we should have a a windfall of of revenue that we should have available to you to use. To to use to I'm understanding that correct.

Yes. Of course.

Okay. So

then And then we also have future development opportunities, which aren't which we can't Yeah.

That we can't predict.

No one has a crystal ball, but we do know that there's a church over there that had its last service that is looking to probably sell and be developed and probably gonna be approaching the city for something, and that can be taken into consideration once we know that that's a possibility. I mean, it it, I mean, developers don't come I so all I'm saying is this, There's a big revenue portion that I see that's not being captured in these projections, and it would be great to actually include that or include a consistent because it is a check that we're writing, and I'm sure somebody could go search online and find out what that check is. But the city does know because they are making they are cutting that check to Robertson every every year. Right?

Yeah. The well, they're getting reimbursed for what they paid in their in their property tax. So yeah.

Right.

So it flagged for the city as a wash. And so after ten years, yes, the the the revenue for that one particular parcel is gonna go up. And so we'll

One particular parcel.

I'm a say it will that group

of parcels.

Okay. Okay. Like, Wilson Park or Alright. The

other way.

Yeah.

So that that the the, the taxable value, while it it may increase, we're, we're still gonna be limited in this. And, again, that's what I'm saying. It's hard to project what that dollar amount is gonna be to, relay that and include it in the model.

But we could include something because we know that it's gonna be something. It is partially included. It's it's not. We

Yeah. I mean, it's

confirm that it's not. And because the budgeting window is three years. Right?

Yeah. Yeah.

Yep. And and I don't know off the top of my head. Maybe you don't, Phil. When is a

Out of my head, probably not. What's that? Off the top of my head, probably not.

When when is Parkdale gonna fall off?

I would have to look it up. I'm not sure.

Exactly. Exactly. But but it's not far away.

Again, I would have to look. I don't know I don't know when Parkdale started. It started before I got here, so it should sunset. I've been here three years. So it's a week before.

I'm not sure what that date is. Yeah. Well, like I said, I I I don't know if that might get out of there.

It's a large windfall.

Yeah. When you you're talking Tom Keiser, Wellington. When you're talking about the millage, what's that worth in terms of dollars and cents?

So, for this current fiscal year, we we are we levied approximately what would be 14,400,000.0, in property taxes. With this one, we would be at the first year 16.1, and that would essentially stay 16.1 at the and the peak would be 16.2 at the end. So once, you know as I said a little bit ago, like, it doesn't once you you get that initial bump, that's pretty much what you're working with for the next ten years.

Ray Kruset. So the initial the, the November ballot, the portion of the, operating expense and the Headley override that was voted down, that was $4.4.2 mils?

Roughly, it was 4 point to restore, we would it would have been a total of just over 8 mils total. And the 4 would have been, for the facilities. Excluding the facilities. So, yeah, it would have been about 4.2.

Operating expense was 4.2, and now you're asking us how we feel about 5.4. Yes. Just wondering what the logic is in asking how we feel about an additional mill when we just voted down

4.2.

So what what was voted down was a restoration to 20, which included those facilities But as well as the operating.

So what we're trying already saying that you're gonna you're gonna you're looking at a separate bond for that purpose.

We're also looking at multiple models tonight, so let's not get hung up on just a single model. We are trying to find where the sweet spot is. Some of the feedback we've received was that the operating millage was okay. People would support a little more. So far, this this poll right now is showing that this might be too little.

So there are multiple opinions, and we're trying to get them all.

Okay.

Simon Cohen. Just to go back earlier, did I hear you that the home for most of this is, police wages?

I'm sorry?

Did you when you were asked where the home for this was, did you say it was police wages?

The home is so the additional money will likely cover the inflationary expenses for police wages as well as other personnel.

The additional 5.4 or the additional five?

Yeah. You're looking at this is not an additional 5.4 over

what's currently levied. We're paying four or something.

Yep. Right. This last year was about 4.28. Okay. Next year, it's projected to be 4.19 ish.

Okay. So the additional one mil, you're expecting to largely go to personnel?

Yeah. And lot most of that is police. 8083% of police and fire costs are personnel.

83.

What percent of personnel

percent of general fund is personnel costs.

What percent of personnel is the police cost?

Police and fire make up about 57% of the general fund.

How much of that is fire?

How much of that is fire? Fire tip fire typically is at 6,000,000 a year. Police is at 8.3. Okay.

And we're looking to increase that?

That's not just personnel. That is

Okay.

All inclusive. That is operating expenses. That is capital expenses, vehicles, all of that.

Okay. Are we struggling in the police department?

We are struggling to maintain staff.

Because of wages? They're moving out of state.

Because of facilities that we have issues that we are trying to address.

Okay. And they're coming to us and saying you're paying us too little. We're leaving

them. Yes. Okay. Okay. So we will move on to the next idea.

This one is a higher increase. And as I just said, we're looking at multiple options. Our last last poll just showed that the restoring to the 2015 level was too little. So this one is a 2 mil increase over what is currently rolled back to the 4.2. In this scenario, we'll be at a tax rate that is just slightly higher than that between fiscal years 2018 and 2021, a total of approximately 17.4 mills.

In 2018, we were at 16.9917, which is what we maintained for a few years there. So we still would have to be looking at identifying efficiencies, cost cutting scenarios as we are projected a year later than the previous scenario in 2032. And all of these models are using the same assumptions, to try and be standard, with the exception of, of course, the Headley override. So this one, we'll open this one up to see everybody's opinions. The 6.2, we will this will give us a little bit more opportunity to increase costs or increase expenses in capital, to start making some improvements, not deferring maintenance.

As I showed last night, we have been consistently not investing in capital. We had about 4,700,000.0 in this fiscal year that was requested in capital expenses, and we only funded about 2.3. That stuff doesn't go away. It just gets more expensive. This would give us a little more flexibility in the in the next few years to be able to do so.

However, again, as we get closer towards the, later years and we've had heavy rollbacks and other inflationary pressures, we'll still have to be looking at other expenditure cuts. Hey. We'll give people a couple more minutes, then we can kinda process this one. K. So this one, it's a little more spread out, I guess.

Four people are saying too much. Eight are saying about right. Four are saying too little. Does anybody wanna offer thoughts on this one? And, also, I know we have some people online that I think Riley's been getting questions.

No? Okay. K. Yeah. Dave looks like he's got a question.

But the

way you explained it, yeah. The any yeah. The way they asked the question was providing me more clear ideas on, okay. Yeah. You've maintained the buildings better, and that appeals to me because I don't like how they you know?

I want them actually maintained and not waste expenses.

Yeah. Absolutely. Well, and and I will preface this as well. This also doesn't I mean, this wouldn't be being able to build new buildings at you know, that extra mill isn't gonna be enough to build new buildings or it's going to you know, we're gonna still be trying to address current issues, but hopefully, better fund capital issues, so that we don't have more expensive emergency issues come up later down the line.

Okay.

So then the next scenario we have is to restore the voter authorized operational millage at the current level, you know, that is rolled back to. So, basically, just extending what we currently have. So this would be for the next, tax year, 4.2 mills, for the additional voter authorized operating millage for a total of 15.4. Immediately, we would be looking at finding ways. This including trying, like, trying to help get our police department to a more competitive wage, we would need on the other end to be looking at about a hundred 37,000 of expenditure cuts in the immediate fiscal year.

And that number will grow over the, the life of that. So, at some point, we would be this is the first one where if we don't make changes, the deficit that happens would balloon to a point where we would deplete fund balance by 2033. Not trying to use it as a scare tactic, but it is something we would have to be looking at, and we would be needing to make cuts with this. It would keep us a little more constrained than the other two options for sure. So with that oh, we can yeah.

Hundred and 37.

Hundred 30 7. So

What's the first to go? What's the second to go?

So, as I was talking about earlier, you know, about 18% of our general fund budget is capital expenses Okay. And operations. So before we hit anything with personnel, we'd have to be looking at making changes there.

Okay.

Now, again, here we are talking we were just talking about being able to finally start

Yeah.

Funding some things so it's not as expensive in the future. We'd probably have to defer a lot of capital costs. Okay. And then look towards other efficiencies and operations, trying to avoid you know, because, again, we are in the business of providing service. Service means people, you know, trying to avoid that.

Okay. Yeah. I don't wanna hammer on the point too hard, but I think, you know, we're looking at, you know, efficiencies in a lot of the budget, and personnel is such a huge part of the budget. And such a huge part of the personnel budget is police. Are we looking at efficiencies there?

Yeah. The police department is looking at ways to improve operations, improve spending Okay. Looking at ways to try and and get leaner as far as their expenditures go. If I could weigh in Absolutely, please.

I wanna provide some perspective on, how our operations and the scale of our operations, evolved where they're at now. You gotta remember when I when I started in 1997, there is it was 52 sworn officers. We're operating at 42 sworn officers right now. There has been substantial cuts. There's been reorganization.

We used to work at eight hour shifts, which took more people. We were ultimately forced, back in 02/2010 when we laid off 20% of our department and had to buy people out. We reorganized twelve hour shifts. That didn't come at a cost. We used to operate with higher minimum staffing levels.

We lowered those staffing manual staffing levels already. Again, I'm here to tell you that we're running as lean as we can, to provide the the basic service that we have to by charter. So to say that there is more to cut, I would argue that there is not. And again, that our officers are we're currently all to 15% behind competitive our competitors as far as, municipalities. They're already that far behind.

So it it provides strain. So I I wanna I don't wanna I I wanna provide an accurate picture that summonses will just scale back. We're pretty much scaled back as much as we can at this point based on those historical numbers, if that makes sense.

Thanks, chief. That was really good. Ray Cruzett.

So just to reiterate, this that you're showing here is identical to the operating expense portion that was on the November ballot

Yes.

And that we were all told would not result in any layoffs or cuts to services.

Exactly. And that's what I was just saying. We would be avoiding that. We would have to look at other efficiencies. But

The other two proposals were increases over that. You know, in bargaining, it's not unusual to ask high as a bargaining position.

Absolutely. Okay. I I'm we're not we're just showing the models here, showing the options.

Okay.

Thanks.

Oh, oh, Quinn's got one.

Yep. Quinn Ziegler. I I would like us to be clear about the words that we're choosing, because you're saying we need to look for efficiencies. And efficiencies are great. Right?

The this this, HR benefits, Medicare, improved benefits for employees, cut the cost. Great. That is an efficiency. What point in which year do efficiencies actually mean cuts to service? Because there's a difference between efficiencies that save money, make things better, or at least leave things in the same position that they're in and a cut that is going to change services.

So at what point, if this is what was voted on, would we start have to start cutting services?

So assuming we're able to, make up that initial assumed deficit of about a hundred 60,000, we would be able to buy at least four or five years before we had to really start digging deep again. So I without having crystal ball, maintaining what we currently have, the first time we see a real solid deficit of a million dollars would be the fiscal year twenty thirty. Up until then, you know, we're looking a hundred $60,000 and then that will compound, of course. If we're able to cut some now, that's a course correction. Right?

You make a couple couple moves on the the compass one way, you end up, you know, three miles off course. Right? And so trying to get back where we're trying to get to, if that answered your question. Okay. So we will take a straw poll on this one.

Okay. Still get a couple coming in, but does anybody wanna offer anything else on this one before we move forward and okay. Let's move on to the I mean, of course, another option is to do nothing, Kind of based on what we were just seeing on that that poll that's probably is not gonna be palatable for the majority. But, in this instance, you know, we would levy one more year of the the current Headley override, and we would need to begin looking for massive service cuts. We would be needing to address approximately $4,000,000 in fiscal year twenty twenty seven.

By the end by, you know, ten years out, you're looking at a operating millage of 9.4, which is less than less than half what our charter original operated millage was. So, we can talk about this one and or just move into the voting on this one. K. So this is the no renewal, allow it to expire. And, honestly, this is considering what we just saw in the last one.

I've

this is kinda what I was expecting. So those are the options I've prepared to show you tonight. At it seems like there's a lot of opinions varying between all of them. And I would like to open it up now for general feedback and suggestions on other other options that you might want us to explore.

So so?

I'm sorry. I missed the beginning of the presentation. It was shared, but can you share some of the assumptions in your model? Like, for example, how long of a look back does it include? What percent of new home sales does it assume each year to account for the reset and then also other incremental values?

I just did a super quick calculation that would be about if assuming new sales about three to six hundred thousand dollars of in or reduced expenditures. So I am just curious about the assumptions of the model itself.

So in order to be able to model out a bunch of scenarios in a relatively short time, we did have to use some basic. We used, a CPI of 2%. We used a Headley rollback factor of what would be 2%. So the the millage would roll back basically by 2% every year at the same time as the taxable value would increase. Now, of course, if we start having multiple, multiple on cappings, now our head lease is gonna roll back even more.

And then if an inevitable property crash happens, we're in really bad shape. So that was the general. We also did an like, a CPI of of about two on most of the expenses, with the exception of the first couple years. The first couple years we have is our triennial budget. And so we did inflationary expenses thereafter.

And then same thing on the other the variable revenues. So so it does include various things that we know are gonna happen. Like, this this current fiscal year, there's been a lot of park development that's gone on. Next year, that's not gonna be the case quite as much. So there's a decrease of about a million dollars there.

But we've got some of the hard numbers, and then some of it is, unfortunately, because of the situation, a little bit less hard. You know?

I think was it yesterday? The city just passed an approval for all R 1 zoning to go to R 3 and R 4. I don't know, like, on whether you or not you included in the model, but just like a gut check maybe from anyone here. Do we know what that's gonna look like in terms of property tax? Is it gonna help?

Is it gonna hurt?

So we didn't rezone all r one. What we did was allow, duplexes and accessory dwelling units as a right Yeah. Within the R 1 District, and then triplexes and quads will be allowed through a special land use.

Okay.

We haven't been able to really project, but we don't just like we haven't had a lot of, push for them in where they're allowed now, we haven't had we we don't anticipate a massive push for the tri and and quadplexes in the R 1. So I'd I'd be shocked if it had a major impact as far as property values go on, taxable value.

Thank you.

Any other general comments?

I don't know what we're using this survey for if it's just for discussion tonight. I mean, obviously, the voters spoke in November, and that's probably more significant than what's happening tonight. Right? So we also don't know what the police proposal looks like. So it's hard to, you know, right, to offer the whole picture to people and say, are you willing to, you know, absorb another $400 increase on your taxes or something when you're, you know, not offering that right now.

That's that's yeah. That's fair. And, honestly, the operating making making sure we're able to provide services is the priority right now. We need to be able to it wouldn't wouldn't make a ton of sense to have a brand new building and nobody able to work in it.

Okay. So from this is an opinion. This is just an opinion. But my fear is what what I think is possible is that the the voters would be happy support the police and the fire and their operations. And I think they're also willing to, do some damage to the city.

And that is something I think we have to take seriously when we're building these proposals, you know, and we have to, let's succeed. You know, let's put something together that's gonna succeed. So we're not having this conversation in October of next year or, you know. So that's up to this point. If that's premature, I'm sorry, but I just wanted to share that.

So

No. I think that's fair. And that's that's why, you know, that's why we're doing this is to try and yeah. This within the framework of tonight, this helps us hone, you know, obviously throw out some of the, you know, some of the proposals that are less likely to be supported. But to help us move forward and get to a point where we do think we have something that can be supported by the majority of the residents in the community.

And the a a bond proposal for a building, it's hard to say at this moment. And

the

the issue is interest rates are constantly changing. You know, right now, we could see a bond proposal that we would estimate about, you know, 1.7 mills. Right? And we could have an issue where interest rates go crazy and now it's 2.7. So it's hard to model that out right now, as we speak.

But the point is valid. Anybody else?

I'm gonna add a little bit to that. I I wholeheartedly agree with that comment that in this room, it's a group of highly engaged individuals. Right? I think you're gonna it will struggle to pass. I will go even further.

I think that if the city doesn't give something up or reduce, not just reduce the incremental, but reduce overall, I don't think it will pass. And we wanna have a sustainable city that we all wanna love and live in, but I think there's gotta be a demonstration of just not reduce not just reducing the ask or reducing the length, but showing some serious, like, going back to the drawing board and thoughtful communication about that.

Well, so I'll I'll I'll Mhmm.

Push a

little bit. What does that what does that mean to you? What does

I I don't know. So I'm also not as informed as the rest of the group here, so I don't know, like, what the whole balance sheet is or what your annual budget is and what those expenditures are. I'm this is like a sacrificial concept. Right? I'm not saying this, but, like, I love the composting program.

I use it all the time. But that's something that you could eliminate without a lot of hurt, even from someone who deeply loves it. Right? Like, something like that that I I think there has to be some components. I know everyone in this room is looking at me, and I'm gonna get, like, eggs out of my house tonight, but I think it's gotta be something for the larger, greater good.

Otherwise, the 60 or 65% of people who voted and the majority of those people who aren't here are gonna vote the same way, and we can have these conversations in a a room like this where most of our citizens aren't participating.

I I will preface a little bit there. The composting program

Look. I I would I know. I mean, it was like, what are what are the items, right, that, like, we could give up and, like, have a real conversation, about that and and make some hard choices. Like, thing all a lot of us are in jobs right now where we're always making hard choices about what we fund and what we don't fund. And if we're not doing that here as a city, it's not going to pass.

And we have to show that hard work, that real introspection that we did. Otherwise, it's gonna be the same exact situation while we'll just be hoping.

Yeah. But as I was saying, the composting program is covered under a completely different different portion of the budget, not the general fund.

I do love the composting thing.

But but the for, you know, for just clarity, the general fund funds general government services. So things like, you know, city council, city manager's office, city communications, budget, finance, the clerk and election department, IT, facilities, legal services, HR, the district court, police, fire, some DPW, general services, the motor pool, our street lighting, community and economic development, which is generally covered, by charges for services anyway. And then parks, recreation programming, special events, those are the types of things that, general fund covers.

So something you said just resonated with me. And you said, like, how do you show it? How do you communicate what this is for? Essentially, in saying that we have that something that's gonna pass needs to be communicated well. And if if you ask me if you go back to that slide where it showed the average police officer wage and had something that said, we have, chief Emmy, did you say 42 sworn officers?

Is that so if you said, we would like to have 50 and this is what it costs to bring to be competitive, And this is and they actually gave, like, a really high level breakdown of what the people are voting for, and then we're capable of following through with that. I think that's what you're saying. Right? And I think that that makes sense to to me as opposed to sort of like a blank check. Right?

Saying people are willing to pay for their services for the services that they value. If you vote for this, it's gonna be an additional 2,000,000. This million is gonna go towards this. This million is gonna go towards that. And this is not have it be clear is what you're saying.

Yeah.

I mean, if if some if there was if the city was capable of communicating some sort of next proposal that this is what you are voting for and this is what it's gonna go towards and then we're able to follow-up and show that this is exactly what it went towards, people would be more comfortable with that.

Yeah. I just had what's the percentage of the population that's 65 years and over? They're the taxpayers.

Do you know? Because just remember, they're getting big increases

in their Medicare costs, Social Security,

and then they got their Medicare.

I think that was they have to pay extra. Anyway, it doesn't go as far as it does. And then they got a problem with d part d. There's gonna be more and more elderly people who have to pay out of pocket expenses to port medical. Besides that, all your insurance has gone up.

My insurance has gone up 40% for car, house insurance, and you have to figure that because these people that are on fixed incomes okay. If they don't have a savings, they don't have Bitcoin, they're screwed because they're only getting a half percent on their savings.

And you have to understand that because

these people are gonna say

so currently, we have, we have we have approximately, 1,600 households with seniors. 16, it's about 10% of of the total households. Mhmm. Yeah. Eight and a half percent.

900 votes, I think. Yep.

I just

I just want one one comment. I I think it would be a mistake if you guys were thinking about trying to put the operating proposal out on its own without taking care of the police that you guys made a big deal out of in the last round. I think it's gonna be a big mistake. So I would advise against that, you know, for whatever that's worth.

Hi, Raylan, mayor. So, James, would it be helpful even to Kara to fully go back to the, presentation we had months ago that showed the tiers in which the cuts would affect, which departments and things like that? Just so, I think I heard this lady upfront say what would the city be giving up. And I think we probably need to show, what those tiers look like again because it was a while ago.

Yeah. Let me see if I could pull that up real quick. And, Kara, if you have if you have it quickly, if you wanna send it to the Teams lectern.

Yeah. Just

to, I think, echo some of the comments from the room. It sounds like what we have is and I think moments that I've had conversations that I've had about this outside of this room. Seems like what we really have is a communication problem. Right? That if we can communicate what we're paying for, people in Ferndale like Ferndale.

Right? Some people in Ferndale like some parts of Ferndale. And I think if we can yeah. I think there's some cause. Right?

Like, a lot of us voted that the first

one of the proposals was too high. Right?

I think there's a limit for all of us. And I think we can get the facts out, a lot of people that I talked to before November had no idea what the Headlee was, no idea what the override was. And you have, like, three triple negatives, in the override. And I think what we you know, I think what I would like to see come out of this is, you know, if this is what convinces people to fund the city, get this out, you know, figure out what communication is lacking, where the actual line is with the maybe less engaged voters. I don't know if that's hitting the streets and knocking doors or, you know, finding ways to reach them.

I'm just pulling up that, presentation.

Another question until that happens.

Yep. Go for it.

Is there a communication plan in regards to marketing to the citizens by chance? Because I think what's happening is no one everyone hates newsletters. I am working communications. I deal with it all the time. The engagement rate with newsletters are crap.

I think it needs to be a branded communication in regards to what exactly is being proposed. And then for even more detail, it needs to be on the website. And then figure out the click rate and figure out if people are actually engaging in that.

Yeah. It would because we don't have a proposal yet. You know? We are honing that, but that is a good idea. Just give me one second here.

Uh-huh. Let's see if this is yeah. Yeah. The first tier is is $800,000, and a lot of that you know, it's it's software. It's things like the newsletter.

It's IT security, that sort of that sort of stuff. I might not be able to show it because it doesn't look like it's letting me. But it the Joe's presentation from April is on the website. We still have the active Headley, page from this this last year. So let me go on here.

James, if I may make a suggestion, can you show the website?

Oh, I think I could.

Alright.

Right here, you go to the Ferndalemi.gov site. First thing you see, you can click on it. We have a lot of resources, the state tax estimator, a newsletter from, summer. I that's why I I was and then right here in the corner, you'll see a link to the video, where the budget cut scenarios were presented, where we were targeting just shy of $4,000,000.

And Under the government tab?

It's homepage. Homepage? Homepage, first thing you see. And so the tier one cuts included some cuts to public works, parks and rec, IT, special events, city comms, and then some operational expenses in the police department. And what that got us was 800,000.

So

I just wanna make sure I'm following. You're saying tier one was the was that, like, a scenario that was proposed or was it actually conducted?

No. That was if if there is no headly override and we have to make up $4,000,000

It was like this is all the

scenario planning. These are the you know, I don't wanna call it low hanging fruit. Right? Because these are services that people enjoy, but these would be the first ones that would be on the chopping block for lack of a better term. Then our tier two, we start looking at furthering parks and recreation, furthering IT cuts.

We've, for the last couple years, had a couple staff in the city manager's office that essentially go down in half. Human resources, we would be looking at, making some cuts. Community and economic development and then city communications. Still only another 700,000. At this point, we're only at 15 1.5.

So we would still need approximately another two and a half. Tier three, we start looking at infrastructure and facilities and that we would be looking at 700,000. Still, you know, not quite there. And that's when we would end up looking at essential services and public safety, which is the last one that was looked at. So, this information is on the website, and I think we can try and, I mean, I the best way to do is watch the the presentation that took place.

It was, you know, well explained, you know, in in a longer time than I just took in the five minutes there. But, that was a little bit of a summary for everybody.

I just wanna echo what the last two gentlemen, but particularly the gentleman over here from marketing or who proposed kind of a marketing thing said that I really do think there is a messaging problem in terms of how this kind of data, these kinds of potential cuts or scenarios are being communicated. And I think we just kind of wind up with people in echo chambers, a lot of times just making up data or pulling things out of the air. And I would also encourage that, you know, it is easier to watch the presentation in some way, but those things can be kind of long, and the average voter is not going to watch those. I mean, the more that you can have some kind of outreach, you know, quick graphics kind of like the mayor was just suggesting where it's like, you know, tier one, tier two, tier three. I think these are gonna be really much easier ways to get this across, and we need to find a way to boil down some of the content from those presentations in a way that's more quickly digestible to the average person doing a quick scroll on their phone to get their news about Ferndale.

Thank you.

Thanks.

Sometimes you might not hear it in here, depending on how the volume's working. Yeah. If it's on working. Yeah. It is.

It's good. Yeah.

I just wanna make the, the comment that I've seen Ferndale over the years turned into a, urban planning laboratory. A lot of consultants hired, spent a lot of money on that. And at the same time, I don't see a clear method for city council to find out what's really what citizens really desire, what their values are. Instead, we're using consultants to tell them. It's very expensive to do that, and previous administrations have spent a lot of time in the laboratory.

But, you know, if you're looking for cost savings, for god's sakes, stop with the consultants, and find out what people really want. And if we had a better tool for doing that, would be great. I I appreciate the voting up here that you you've been doing this, the snap polls, but that's not really indicative of what the broad population

wants. It was it it's a snapshot of the people in the room and watching online. Yeah. Absolutely.

And how do you really find out what everybody wants and break that down? And, you know, is does city council really align with what the the majority of the population of Ferndale wants? Good feedback.

Yeah. I just wanna ask a follow-up question and ask how much have we spent on consultants over these kind of urban planning laboratory years? Whatever period of years that comprises.

You know, I wouldn't I don't have that offhand, because we do you know, we don't have an in house engineering department. So if we are doing, doing projects that need engineering, we do have to use consultants. And in this scenario, it is more cost efficient to have a contracted engineer, who can work when we need them as opposed to an engineering department on staff that might not have a % capacity, or be working in a %, you know, efficiency, if that makes sense.

So were we really kind of bringing in consultants ad hoc then when we see the need for them arise, or are we kind of doing them looking at things down the line?

Doing a little bit of all of it. We used consultants to help with planning. You know, we were using McKenna for a zoning ordinance. That is something that we definitely were not gonna have the capacity in house to be able to do. Okay.

Any other questions? And I would, again, encourage people if you have time, to take a look at stuff we had on the website for the last ballot proposal. Some of it doesn't really relate anymore because this proposal that we are going after in the fall is not what we're doing now. But things like costs, needs, that stuff is still there. So it's a good spot to look at.

You can also if you have questions, what was the email? Was it Ferndale proposal proposals twenty twenty four at Ferndale MI? I think we have that on here. I think it's proposals twenty twenty four. That is yep.

Twenty twenty four proposals at FerndaleMI.gov. That is still active. That goes to a couple of us. We try and be as responsive as possible. So if you have any questions after tonight, feel free.

With that, I do wanna thank everybody for coming out. Looks like the mayor has

I just wanted to just, ask you to kind of just, reiterate what are the next steps, James?

Well, the next steps are taking a look at what we've got here, and then maybe looking at another way to get some more community feedback. And then what we need to do in order to have a proposal on a May ballot, we need to have, have the language to the county in early February. So within the next couple meetings, the the city council is gonna have to make a decision on what they are looking at. So still have couple weeks here, but not a lot of time. This is, I mean, this has taken up a lot of staff time right now because this is so important.

First, I think you did a good job, and, thanks for doing this.

Thank you.

I don't know if this would be helpful for the majority of people, but I I would love to see, you know, a sort of a bond expert come in and say, this is what $20,000,000 looks like. This is what $40,000,000 looks like. You know, we're gonna pay 6% on 40,000,000. We're gonna pay 8%, you know, and what that mill is gonna be and kind of break that down. And in terms of facilities, you know, where can we start with let's not say the minimum, but let's solve your issues.

And then, you know, as a community, we can say, you know, we value this, you know, plus one, plus two, or, you know, in other words, give them, you know, more than the basics, but maybe not $45,000,000 or something. Right? I mean and and I understand that interest rates are fluctuating and things like that, and we don't know what's gonna happen in the future. But if we could at least maybe go through that exercise, maybe it's not helpful, but for me, it would kind of solve that, you know, that unknown of, you know, how do we help these folks and and eliminate that argument going forward. You know?

Right. Right.

Okay.

For sure. And we do, we do have an ongoing relationship with a bond counsel, as well as a financial adviser. Whenever you issue bonds, you have to have a financial adviser on record as well as your bond counsel, and we are working with them to start crafting some some of those numbers exactly like you're asking.

Yeah. Unless you put it into dollars and cents, millage means nothing to the average person. Right. But they can't compute it.

Okay. Thank you very much. I'm gonna hang around for a little bit if anybody has questions or just wants to sidebar. But, really, thank you all for coming out tonight. This was helpful.

I think we got some good feedback. Thank you. I hope everybody has a wonderful holiday season.