Charlotte County, Florida Municipal Service Benefit Unit (MSBU) Study

Transcription

1 Charlotte County, Florida Municipal Service Benefit Unit (MSBU) Study MARCH 2007 Presented by: Government Service Group, Inc Mahan Drive, Suite 250 Tallahassee, FL (850) (850) (fax) Contact Person: Camille P. Tharpe, Sr. Vice President

2 Table of Contents EXECUTIVE SUMMARY...1 INTRODUCTION...10 BACKGROUND...11 OBJECTIVES...12 STUDY METHODOLOGY...13 ORGANIZATION AND ADMINISTRATION...15 ANALYSIS...20 FINDINGS AND RECOMMENDATIONS...64 IMPLEMENTATION...70 Government Services Group, Inc. i

3 List of Tables Table 1 MSBU Projects by...1 Table 2 New sment Amounts and Reassigned Amounts (Maintenance and Capital) Since Table 3 Summary of Created and Reassigned MSBUs by sment Methodology Since Table 4 Minimum, Maximum and Average sment Rates by sment Since Table 5 MSBU Areas...20 Table 6 Total Sub-MSBU Codes Created or Reassigned by...22 Table 7 MSBUs Created or Reassigned by...22 Table 8 New sment Amounts and Reassigned Amounts (Maintenance and Capital) Since Table 9 MSBUs Not Recently sed...25 Table 10 Summary of MSBUs by sment Methodology Since Table 11 Type of MSBU by sment Methodology, Start Date and Number per...34 Table 12 History of sment Rates by MSBU and...38 Table 13 Minimum, Maximum and Average Total sment Revenue by sment Since Table 14 Minimum, Maximum and Average sment Rates by sment Since Table 15 MSBU Capital Revenue Compared to Total CIP...45 Table 16 Base Information for Road and Drainage MSBUs by Stormwater Region...53 Table 17 Cost Per Mile Information for Road and Drainage MSBUs by Stormwater Region...54 Table 18 Cost Per Unit Information by Road and Drainage MSBUs by Stormwater Region...57 Table 19 Base Information for Waterway MSBUs by Stormwater Region...58 Table 20 Cost Per Unit Information for Waterway MSBUs by Stormwater Region...59 Table 21 Example of Common Service Charge for Mowing...60 Table 22 Total Taxable Value by Category...61 Table 23 Total Taxable Value of Maintenance MSBUs by Stormwater Region...61 Table 24 Tax Increment Revenue for all Capital MSBUs...63 Government Services Group, Inc. ii

4 (List of Tables Cont.) Table 25 Tax Increment Revenue for all Capital MSBUs by Stormwater Region...63 Table 26 Financing Assumptions...63 Table 27 Financing Assumptions...63 List of Figures Figure 1 Charlotte County Functional Organizational Chart Figure 2 Charlotte County MSBU Related Departments...17 Figure 3 MSBU Codes Versus MSBUs by...23 Figure 4 Cumulative MSBU Codes Versus MSBUs by...23 Figure 5 Visual Representation of Maintenance MSBUs Not Recently sed...26 Figure 6 Visual Representation of Maintenance MSBUs Not Recently sed West County...27 Figure 7 Visual Representation of Capital MSBUs Not Recently sed...28 Figure 8 Visual Representation of Capital MSBUs Not Recently sed Tropical Gulf Acres...29 Figure 9 Visual Representation of Capital MSBUs Not Implemented in 2006 Farabee Road...30 Figure 10 County Stormwater MSBU Boundaries...48 Figure 11 West County Road and Drainage MSBUs...49 Figure 12 North County Road and Drainage MSBUs...50 Figure 13 South County Road and Drainage MSBUs...51 Government Services Group, Inc. iii

5 Appendices Appendix A MSBU Master List Appendix B sment Methodology Definitions Appendix C Ordinance Amending Section Government Services Group, Inc. iv

6 Executive Summary Charlotte County (County) has engaged Government Services Group, Inc. (GSG) to assist the County in reviewing and evaluating the County s current Municipal Service Benefit Unit (MSBU) System (MSBU Study). The purpose of the MSBU Study was to provide the County Commission and County staff with a complete overview and understanding of the County s current MSBU programs and their accompanying components. The goal was to examine all of the different MSBUs dating back to 1990 when the County last evaluated their programs. However, readily accessible data was only available dating back through 1993 and thus, this Memorandum provides an analysis beginning with The five areas of focus identified in the Scope of Services were: The history of the County s utilization of special assessment programs; Administration of the programs; Review of the County s application of its special assessment programs as it pertains to the size and number of MSBUs; The County s use and dependence on MSBUs/special assessments as part of the long-range Capital Improvement Plan (CIP) and financial plan. Identify strengths and weaknesses of existing system; Provision of recommendations based on guidance from County staff and Commission. The following conclusions and recommendations are a result of the analysis conducted by GSG for the MSBU Study. CONCLUSIONS Charlotte County has an increasing reliance on MSBUs for funding of services and capital projects. Countywide, there are currently 69 MSBU Programs with budgets totaling over $77 million dollars. 1 Table 1 illustrates the increasing reliance by providing an overview of the number of MSBUs created by year by discrete MSBU project area. Using 1998 as a breakpoint and crediting 1998 with no new MSBUs, the County averaged 1.7 new MSBUs a year for the period of 1993 through the end of If you take out an unusually active year in 1993, that number drops to an average of 0.6 new MSBUs per year. In comparison, the period of provides a different outcome; that eight-year period averaged 4.5 new MSBU projects per year. Excluding the year 2004 as unusual activity, this period still averaged 3.9 new MSBUs per year. Table 1 MSBU Projects by MSBUs Initiated Source: Master MSBU List using 1993 as baseline. 1 Charlotte County RFP No No projects were identified from Master MSBU List for 1994 or Government Services Group, Inc. 1

7 Table 2 reinforces the County s increasing reliance on MSBUs for funding services or projects. Beginning with the baseline year of 1993, the table illustrates the newly created or re-initiated MSBUs within the County by incremental dollars. Since 1993, an additional $27 million dollars of MSBUs has been created and funded by MSBUs or had a basis reassignment. reassignment does not affect Public Works, but does impact the administration of the MSBUs. Table 2 New sment Amounts and Reassigned Amounts (Maintenance and Capital) Since 1993 Incremental Total New Dollars of Newly Over sment Amounts Created MSBUs Percentage Increase Percentage Increase and Reassigned and Reassigned of New MSBUs or Since 1993 Amounts sment Reassigned ,336,960 1,336, % 0% ,150 1,410,110 5% 5% ,714 1,712,824 21% 28% % 0% ,924,982 15,637, % 1070% ,417 16,478,223 5% 1133% ,308 16,679,530 1% 1148% ,219,746 20,899,276 25% 1463% ,182 21,399,458 2% 1501% ,169 22,059,628 3% 1550% ,591,975 24,651,603 12% 1744% ,812 24,657,415 0% 1744% ,522,961 27,180,376 10% 1933% Source: Master MSBU List using 1993 as baseline. The County uses several different methodologies as the assessment basis to fund the various MSBUs. These different methodologies require additional administration by all affected departments and cause confusion among the property owners. Table 3 illustrates the use of different methodologies by showing the type of MSBU, assessment basis, total billing units initiated or converted and total assessment amounts initiated or converted. New MSBUs and converted units were combined to show the amount of activity in the program as a whole. A maintenance assessment program undergoing a methodology change requires the same level of administrative resources as a new assessment program. 3 No projects were identified from Master MSBU List for 1994 or Government Services Group, Inc. 2

8 Table 3 Summary of Created and Reassigned MSBUs by sment Methodology Since 1993 Type sment Total Units Total sment Amounts Capital ERC 1,551 $232,552 ERU1 15,209 $1,817,733 ERU4 9,853 $1,241,328 ERU5 9,320 $642,117 PAV 923 $148,718 Capital Total $4,082,448 Maintenance ACR 112,058 $5,680,730 CFF 48,737 $378,216 ERU 1,011 $20,347 ERU0 15,212 $506,096 ERU1 2,826 $366,690 ERU2 4,684 $594,512 ERU3 2,634 $233,762 ERU4 185,337 $14,184,640 ERU6 578 $216,079 ERUD 2,804 $288,201 ERUR 1,077 $40,472 FF 207,166 $374,897 LOT 1,060 $213,283 Maintenance Total $23,097,927 sment rates have been increasing since the beginning of the time period included in the MSBU study, A few MSBUs did experience a rate reduction; however, the decreases were short lived. In nearly every instance, rates were eventually raised and often times were considerably higher than the rates were prior to being reduced. To illustrate the rate history, Table 4 lists minimum, maximum and average assessment rates by basis. Capital MSBUs are listed for informational purposes, but since they are very specific in nature, similarities across MSBUs are difficult to identify. Maintenance MSBUs, on the other hand, have many similarities in both the types of services and also in the rates that are being assessed. Government Services Group, Inc. 3

9 Table 4 Minimum, Maximum and Average sment Rates by sment Since 1993 sment Minimum Maximum Average sment Type sment Amount sment Amount Amount Capital ERC $38 $118 $78 ERU1 $14 $448 $162 ERU4 $53 $200 $114 ERU5 $28 $67 $43 PAV $161 $161 $161 Maintenance ACR $3 $175 $83 CFF $5 $16 $10 ERU $20 $20 $20 ERU0 $25 $50 $33 ERU1 $100 $200 $150 ERU2 $45 $186 $99 ERU3 $50 $223 $106 ERU4 $30 $262 $100 ERU6 $55 $615 $335 ERUD $100 $150 $128 ERUR $16 $45 $27 FF $2 $2 $2 LOT $200 $222 $211 Source: Master MSBU List, Rounded to Nearest Whole Dollar Responsibility for special assessments and MSBUs are shared by many departments and sections throughout the County. For the MSBU Study, the four departments/sections with direct participation in the administration of special assessments and MSBUs are Public Works, Utilities, the County Attorney s Office and the MSBU section of the Budget Office. Recently, proposed assessment programs have not been implemented and proposed increases in assessment rates have been denied. Major reasons proposed increases in assessment have been denied were factors such as excessive cost burden or lack of communitywide support. These issues should be addressed before the County undertakes any new MSBU creation. Based on the interviews conducted during the MSBU Study, GSG has categorized the following major issues identified by the County staff. Issue 1: sment rates too high Last year, several capital MSBUs were not implemented due to public outcry over the assessment rates. In addition, several existing MSBUs had proposed assessment rate increases that were not approved because of the public objection. Issue 2: sment costs change dramatically year-to-year Costs for road and drainage maintenance and capital MSBUs change dramatically yearto-year because of increasing costs of labor and materials. Issue 3: Various methodologies There are several methodologies used in the County MSBUs even though the types of services to be funded by the MSBUs are similar. The different methodologies require additional administration by all affected departments and cause confusion among the property owners. Government Services Group, Inc. 4

10 Issue 4: Issue 5: Common/base costs There is an interest in developing a charge for all MSBU properties for all base or common services. This charge would be the same amount for every parcel and would include as many of the common services as could be legally included. Countywide or district-wide charge for paving MSBUs There is interest in developing a countywide charge for paving roads on a per parcel basis so that enough revenue can be generated to complete the road paving programs. RECOMMENDATIONS After reviewing the current MSBU and special assessment programs in Charlotte County, along with input from many of the County departments, discussions have generated some ideas and recommendations for the future. Recommendations are listed below and have been categorized as Short, Mid and Long Term. The main criterion for the different timeframes is the operational, legal and political hurdles each may face. These suggestions are not the only viable alternatives warranting further consideration. However, based upon GSG s extensive experience throughout the State of Florida and current environment, GSG feels the suggestions will move the County in a better direction in terms of special assessment program restructuring. SHORT TERM (1 YEAR OR LESS) RECOMMENDATIONS This section focuses on what steps can be taken by the County that will result in immediate enhancements to the MSBU system in the County. In most cases, these steps can be accomplished for a modest or no additional expense over current funding levels. GSG views these steps as necessary to ensuring that the County elected officials have adequate information to make public policy decisions regarding the MSBUs. Furthermore, these are necessary incremental steps for the County to move toward any additional enhancements that are addressed in the Mid-Term Recommendations section. Recommendation 1: Comprehensive Analysis of Maintenance Programs Most of the road and drainage and canal/waterway maintenance MSBUs have been created at the request of the property owners within the area desiring an increased level of service. However, this piece-meal approach to determining the maintenance service areas increases the costs of providing these services. The first step in combining individual road and drainage and canal/waterway maintenance MSBUs into larger areas is to conduct a comprehensive analysis of all the road and drainage maintenance and canal/waterway MSBUs to determine the required services needed to achieve base or common standards. Planning, expectations and costs should to be fully understood and communicated to the public regarding roads and conditions. The County, in creating these MSBUs, is generating expectations from the community that the problems are being addressed. If roads and waterways/canals were improved and a true maintenance program was introduced, there may be a better reception due to the cost savings achievable to all residents. Therefore, it is recommended that the County conduct a comprehensive analysis of all of the road and drainage and canal/waterway maintenance programs. Recommendation 2: Comprehensive Analysis of Capital Programs The County should conduct a comprehensive analysis of the capital programs in Public Works to determine if economies of scale could result from combining MSBU areas for purposes of the Government Services Group, Inc. 5

11 construction thus reducing overhead and administrative costs. The analysis should include the feasibility of combining the financing of several MSBUs to reduce borrowing costs and evaluating the policy of five-year increments for the terms of the loans to eliminate the expenses related to several separate transactions instead of one comprehensive transaction. Recommendation 3: Address High sment Rates One approach to resolving the issue of perceived high assessment rates is to tie the type and level of services to be provided to the expenditures and rates required to fund the services. A clear message about the level of services might provide a means for public support. Next, an examination of the central service and administrative services cost allocations to each MSBU should be examined to ensure that proper allocation has been conducted. Even if the cost allocations are deemed appropriate, the County Commission could make a policy decision to only charge a portion of these costs and allow a subsidy by the Transportation Trust Fund for the remainder. This subsidy might address the high assessment rates. Recommendation 4: Increase MSBU and Special sment Rates To Allow For Rising Costs The County has done a good job during the creation of the MSBUs and special assessments of setting maximum rates to allow increases to keep pace with rising costs. However, since some of the MSBUs have been active for a number of years, those maximum rates are at the point of forcing Public Works to reduce services. The biggest cost in most of the maintenance programs is labor. If an assessment program is at its maximum rate and the County cannot retain, or hire staff at a wage required by that rate, then service will be reduced. The maximum rates for all programs should be revisited every three years to ensure they are sufficient. A three-year review also allows for public input at public hearings that are statutorily required when assessment rates are increased. The initiation of Recommendations 5, 6 and 7 could also assist in addressing maximum assessment rates. Recommendation 5: Perform Benefit/Cost Analysis of MSBU Section The County MSBU section of the Budget Office performs all of the assessment database maintenance functions. The costs of this centralized assessment database maintenance function are prorated among all of the MSBUs. Another step in analyzing the current assessment rates is to analyze the cost of maintaining the existing MSBU database. This analysis can range from a benefit/cost analysis of the status quo to complete out-sourcing of the database maintenance services. By doing this analysis, the County will have performed a comprehensive analysis of all components of the assessment rates. Recommendation 6: Develop Three or Five Budget Projections to Calculate Average Rates The County should explore developing three or five year budget projections for each MSBU with the appropriate increases in certain line items to address inflation. Once the budget projections are developed, the County could calculate an average budget and average assessment rate to fund the average budget. The average assessment rate could be imposed for the three or five year period. In years where the average budget was greater than the annual budget, the excess assessment revenue would be carried forward. In years where the average budget was less than the annual budget, the excess assessment revenue that was carried forward would be used to fund the shortfall. Recommendation 7: Create an MSTU for Common Administrative Services Another way to address the increasing assessment rates is to charge for the common administrative costs through the creation of a municipal service taxing unit (MSTU) that encompasses all of the MSBU properties and impose a millage rate to recover the costs of these common services. This method would bifurcate the costs between the MSBUs and the MSTUs based on the apportionment methodology and the taxable value of the properties. The MSTU option was described in earlier sections of the Memorandum. The MSTU would need to be created by July 1 in order for the MSTU millage to be imposed for if it follows an existing MSTU boundary or includes all of the unincorporated portions of Charlotte County. Government Services Group, Inc. 6

12 Recommendation 8: Incorporate Legal Input in the Development of Methodologies The special assessments imposed in the MSBUs must meet the Florida case law requirements for a valid special assessment. The County Attorney is involved in the special assessment process on a year round basis. The attorney s role in the initial phase of the creation of assessments is the development and review of ordinances and resolutions. However, the County Attorney is not typically part of the initial methodology development process, but does review the methodologies that are proposed. In order to ensure compliance with the case law criteria, it is recommended that the County Attorney become an integral part of the methodology initial development in the future creation of all MSBUs. Recommendation 9: Eliminate Occupied/Vacant Distinction for Road and Drainage MSBUs Charlotte County has created different service levels for many of their road and drainage assessment programs. The most common type of distinction is between vacant and occupied properties. The logic for the distinction is that the vacant parcels need more attention by the County, since they are typically not being maintained as diligently as some of their occupied neighbors. However, it is difficult to correlate that methodology with the general notion that occupied properties need less service than vacant parcels. Mowing may make the case for occupied being charged less than vacant because a property owner will maintain the right of way for an occupied property: whereas, a vacant property needs the County to keep up the maintenance. However, a similar case can be made that occupied properties still benefit from the mowing services because mowing the vacant properties helps to maintain the aesthetic value of the area. Therefore, it is recommended that the County eliminate the occupied/vacant distinction for road and drainage MSBUs. The elimination of multiple assessment rates within each MSBU would allow the Charlotte County MSBU Section to slow the escalating burden of monitoring and accounting these two separate rates. In addition, the Public Works Department would have less accounting of the costs between the two types of properties. MID TERM (2 3 YEARS) RECOMMENDATIONS This section of the Memorandum addresses those issues that will require a longer term to implement and which may require additional funding from the County to move them forward. These options may also require the County to evaluate several alternatives in terms of policy or actions to be taken. Furthermore, these are necessary incremental steps for the County to move toward any additional enhancements that are addressed in the Long-Term Recommendations section. Recommendation 10: Equivalent Residential Unit (ERU) Standardization The utilization of several types of ERUs has been demonstrated throughout this Memorandum. These different ERU bases cause increased administration and maintenance costs for these MSBUs as well as confusion for property owners who do not understand the definitions. While the County is making progress in standardizing the definition of an ERU, this process should be completed within two years. The County is already addressing this issue by moving towards a standard methodology (ERU4), but this should occur on a more immediate basis. The County needs to continue to address this issue by moving towards a standard methodology. A corollary recommendation is provided in Recommendation 11. Recommendation 11: Methodology Review Condominiums The utilization of different methodology approaches to condominiums has been demonstrated throughout this Memorandum. These different methodology approaches cause increased administration and maintenance costs for these MSBUs as well as confusion for property owners who do not understand the approaches. While the County is making progress in standardizing the condominium approach, this process should be completed within two years. Government Services Group, Inc. 7

13 LONG TERM (3 5 YEARS) RECOMMENDATIONS This section of the Memorandum addresses those issues that will require the longest term to implement and those which will require additional funding from the County to move them forward. These options will also require the County to evaluate several alternatives in terms of policy or actions to be taken. Recommendation 12: Creation of Road and Drainage Maintenance MSBUs With Boundaries Mirroring Current Stormwater Districts Once the comprehensive analysis of the road and drainage maintenance MSBUs is completed, the creation of road and drainage maintenance MSBUs with boundaries mirroring current stormwater districts is recommended. The effects of combining the smaller road and drainage maintenance MSBUs into larger units will have the greatest impact on the Public Works Department and the MSBU Section. Not only will the number of MSBUs be reduced, sub-categories of each special assessment methodology will be eliminated. This will ease the administration in the MSBU Section. The combining of individual MSBUs may reduce the amount of time and effort by Public Works in tracking and accounting for expenditures which should reduce overall costs. It will also give more flexibility to Public Works in scheduling of work efforts and allow them to explore ways to reduce costs. In addition, if more properties are included within the MSBUs, the fluctuations in annual expenditures are easier to absorb among more properties with less effect on the assessment rates. Recommendation 13: Base Administrative Charge or MSTU for Common Services Once the combined road and drainage maintenance MSBUs are created as provided in Recommendation 12, the next step is to conduct a detailed analysis of the line items that comprise the budgets. This analysis will identify the true common administrative costs across all MSBUs. After these costs have been identified, a methodology could be developed to allocate these costs to each MSBU and then to allocate the costs within each MSBU either on a parcel or billing unit basis. The development of a base charge may provide some eventual economies of scale for these basic administrative services, which may help reduce these costs. Recommendation 14: Explore Financing Options To Identify Cost Savings and Future Certain Costs For Capital MSBUs The County should review the current financing procedures of only borrowing funds in five-year increments for capital MSBUs and the use of variable rates. Most capital MSBUs have a project life of years and the initial borrowing and debt service schedule should mirror the life of the project. Fixed rate financing options would provide exact financing costs over the life of the capital project and eliminate interest rate risk. As the financing on the current capital MSBUs nears completion of each cycle, the County should explore the option of combining the financing of several MSBUs at the same time. The magnitude of such combined revenue requirements may result in better financing options lower interest rates, longer terms for repayment, reduced borrowing costs all options that could lower the costs of capital MSBUs and result in lower capital assessment rates. Recommendation 15: Creation of Non-Tradition Tax Increment Funding (Non-CRA) for Capital MSBUs Once the comprehensive analysis of the capital MSBUs is completed and the County has investigated better financing options for capital costs, the next step would be to explore the creation of non-traditional tax increment funding for capital MSBUs. If created by County ordinance, the implementation of either tax increment option discussed in the Memorandum is not restricted to the general law requirements in Chapter 163, Florida Statutes; i.e., the proof of a blighted area is not required. One option is to provide by home rule ordinance for an annual contribution by the County from available revenue sources of an amount measured by all or a portion of the tax assessment increment that occurs within a defined area. Under this financing concept, all or a portion of a MSBU would be funded from special assessments levied against benefited property and collected on the ad valorem tax bill pursuant Government Services Group, Inc. 8

14 to the Uniform Collection Method. The level of such non-ad valorem assessments on an annual basis could be reduced, either area wide or on a per parcel basis, in an amount equal to the dedicated home rule increment by the County. As an alternative, the County could create a tax increment trust fund to fund capital MSBUs. The home rule ordinance could create either a Countywide Trust Fund or individual trust funds within each MSBU. By ordinance, an annual tax increment transfer could be required for the trust funds and applied to fund respectively the countywide road system and the road system corresponding to the specific MSBU areas. In the event bonds are issued payable from such trust funds, the ordinance commitment of the annual increment transfer would become a contractual obligation to the bondholders under the authorizing bond resolution. The amount of the annual required tax increment transfer would be calculated in a formula provided in the implementing ordinance and would be required to be deposited into each of the trust funds. IMPLEMENTATION Phase Two of the MSBU Study will be based upon County Commission policy direction regarding the recommendations provided within this Memorandum. However, Phase Two should include, at a minimum, the work effort to validate the initial findings and address the issues presented. GSG has provided a Scope of Services outlining the necessary steps required to implement the Short Term Recommendations and to provide a foundation for the Mid and Long Term Recommendations. Government Services Group, Inc. 9

15 Introduction Charlotte County (County) has engaged Government Services Group, Inc. (GSG) to assist the County in reviewing and evaluating the County s current Municipal Service Benefit Unit (MSBU) System (MSBU Study). GSG is Florida s most preeminent firm in the development, implementation, administration, and evaluation of local government special assessment programs. GSG specializes in addressing and resolving local government finance and taxation issues by working with cities, counties, special districts, and state agencies to develop uniquely tailored funding and service delivery solutions for critical infrastructure and service needs. This document is the Memorandum, which summarizes the results of the evaluation and which is the deliverable for this engagement. Government Services Group, Inc. 10

16 Background Charlotte County defines Municipal Service Benefit Units (MSBUs) as special benefit districts delineated by boundaries within the unincorporated area(s) of Charlotte County, which are established to provide construction and maintenance services for roads, rights-of-way, bridges, stormwater, waterways, bicycle paths and beach re-nourishment. In an MSBU, each property owner pays a special assessment that is fairly and reasonably apportioned among the properties receiving a special benefit for services provided. The County is granted specific powers by the Florida Constitution to carry on county government in a manner that is not inconsistent with general or special law. Specifically section (1)(q), Florida Statutes states a county may: Establish, and subsequently merge or abolish those created hereunder, municipal service taxing or benefit units for any or all of the unincorporated area of the county, within which may be provided fire protection; law enforcement; beach erosion control; recreation service and facilities; water; streets, sidewalks, street lighting; garbage and trash collection and disposal; drainage; transportation; indigent health care services; mental health care services; and other essential facilities and municipal services from funds derived from service charges, special assessments, or taxes within such unit only. Subject to consent by ordinance of the governing body of the affected municipality given either annually or for a term of years, the boundaries of a municipal service taxing or benefit unit may include all or part of the boundaries of a municipality. If ad valorem taxes are levied to provide essential facilities and municipal services within the unit, the millage levied on any parcel of property for municipal purposes by all municipal service taxing units and the municipality may not exceed 10 mills. The Florida Constitution prohibits the taxation of property inside a municipality by a county when no real and substantial benefit accrues to municipal residents and property from the county service. Section (7), Florida Statutes states: No county revenues, except those derived specifically from or on behalf of a municipal service taxing unit, special district, unincorporated area, service area, or program area, shall be used to fund any service or project provided by the county when no real and substantial benefit accrues to the property or residents within a municipality or municipalities. The special assessments imposed in the MSBUs must meet the Florida case law requirements for a valid special assessment. These requirements are: The services or facilities provided must confer a special benefit to the property being assessed and, The costs assessed must be fairly and reasonably apportioned among the properties that receive the special benefit. The County has a current population of approximately 160,000 people and is expected to exceed 200,000 residents within the next 10 to 15 years. 4 Countywide, there are currently 69 MSBU Programs with budgets totaling over $77 million dollars. 5 Charlotte County has a long history of utilizing MSBUs and other funding mechanisms to facilitate the improvements and repairs desired by the community. 4 Current population estimates taken directly from Charlotte County RFP No and projected population growth from the Charlotte County Website. 5 Charlotte County RFP No Government Services Group, Inc. 11

17 Objectives The purpose of the MSBU Study was to provide the County Commission and County staff with a complete overview and understanding of the County s current MSBU programs and their accompanying components. The goal was to examine all of the different MSBUs dating back to 1990 when the County last evaluated their programs. However, readily accessible data was only available dating back through 1993 and thus, this Memorandum provides an analysis beginning with The five areas of focus identified in the Scope of Services were: The history of the County s utilization of special assessment programs; Administration of the programs; Review of the County s application of its special assessment programs as it pertains to the size and number of the MSBUs; The County s use and dependence on MSBUs/special assessments as part of the long-range Capital Improvement Plan (CIP) and financial plan. Identify strengths and weaknesses of existing system; Provision of recommendations based on guidance from County staff and Commission. Government Services Group, Inc. 12

18 Study Methodology GSG s objective for this engagement is to review and evaluate the current MSBU Program including its history, administration, size and County dependence. The process included a due diligence review of the many components of the MSBU program. GSG has met with County staff on three separate occasions to gather information and to develop a thorough understanding of the program, the process and the issues. For the study, GSG utilized a master list of all current, completed and proposed MSBUs (Master MSBU List) which was provided by the Charlotte County MSBU Department. The List is provided as Appendix A and includes multiple listings of the MSBU areas based on items such as rates, occupied or vacant parcels or assessment basis. One of the first steps in the project was to confirm the scope of work effort. Using the Master MSBU List, GSG determined there are 13 general categories of MSBUs (based on types of services or facilities to be funded) within the County, as follows: Beach re-nourishment Canal maintenance Waterway maintenance Drainage maintenance Road maintenance Road and drainage maintenance Road and drainage capital Wastewater capital Water capital Water/wastewater capital Stormwater maintenance Fire services Solid waste services It was determined and confirmed by County staff that the following categories would not be included within the MSBU Study: Beach re-nourishment Fire services Solid waste services These categories are not included in the tables and analysis within this Memorandum. Types of information collected and reviewed for the MSBU Study include MSBU descriptions and cost data, countywide GIS information, countywide budget information, policies and procedures for County departments, procedures in notifying and dealing with citizens, meeting presentations, organizational charts, ordinances and resolutions adopted by the County and calendars. The majority of the data was provided during the meetings with the individual departments. A general meeting was subsequently followed by meetings with Public Works, the MSBU Section and Utilities. A meeting with the Budget Department never occurred; however, budget information was provided in a timely and complete manner. Government Services Group, Inc. 13

19 Following the completion of the data gathering and informational meetings, GSG reviewed the information. GSG s Technical Services Division assisted in capturing, organizing and concentrating much of the data used to understand the program. Weekly updates were used by GSG to communicate project status and additional data needs. There have been a number of assessment methodologies used historically and each has been tailored to meet the objectives of each specific MSBU. The scope of the project did not include reviewing each assessment methodology in isolation, but rather the County s general use of different assessment methodologies. Government Services Group, Inc. 14

20 Organization and Administration Responsibility for special assessments and MSBUs are shared by many departments and sections throughout the County. For the MSBU Study, the four departments/sections with direct participation in the administration of special assessments and MSBUs are Public Works, Utilities, the County Attorney s Office and the MSBU section of the Budget Office. Figure 1 provides a summarized version of the County s functional organizational chart and the placement of the departments involved in the MSBU Study. Figure 1 Charlotte County Functional Organizational Chart Charlotte County Board of County Commissioners Organization Chart FY 2006/2007 Voters Charlotte County Tax Collector Property Appraiser Board of County Commissioners Sheriff Supervisor of Elections Clerk of Circuit Court County Attorney County Administrator Assistant to County Administrator Budget Director Human Resources Director Assistant County Administrator Assistant County Administrator Tourist Development Director Economic Development Manager Redevelopment Manager Public Works Parks, Recreation & Cultural Resources Environmental and Extension Services Communications and Marketing Information Technology Human Services Purchasing Building Construction Services Community Development Fire/EMS Utilities Facilities Management Government Services Group, Inc. 15

21 ORGANIZATION Public Works employs two full-time Municipal Services District Representatives (MSDRs), who coordinate MSBU projects and budgets. The role of the MSDR is to interact with citizens and MSBU Committees to identify and implement capital and maintenance projects. The MSDRs report to the Public Works Finance Manager who also attends MSBU Committee meetings when needed to explain budget issues. The Finance Manager reports directly to the Public Works Director, who reports to the County Administrator. In addition to supervising the MSDRs, the Finance Manager is responsible for all budgeting and accounting functions within the entire Public Works Division. The Public Works Supervisor reports to the Finance Manager. The Supervisor spends approximately 80% of her time on special assessments and MSBU related functions. Reporting to the Supervisor is an Accountant II who also spends the majority of her time on MSBU related functions. The Utilities Director oversees all of the daily operations of special assessments and MSBUs directly related to utilities. Reporting to the Director are the engineering department, financial manager and community relations manager, which handle engineering and construction, finances and public relations respectively. The number of capital MSBUs managed by utilities is small compared to the number of capital and maintenance MSBUs managed by Public Works, but it takes a considerable amount of time. Recently, an employee has been hired to assist with these tasks. The MSBU section of the Budget Office has four full-time employees dedicated to the administration of MSBU programs throughout the County. Three employees in this section report to the MSBU Supervisor and the Supervisor, in turn, reports directly to the Budget Officer. The County Attorney is involved in the special assessment process on a year round basis. The Attorney s role in the initial phase of the process is the creation and review of ordinances and resolutions. The statutory requirements of advertising and noticing citizens are handled by the MSBU Department, but the County Attorney helps with managing the schedule to ensure critical deadlines are met. A representative from the Attorney s office attends every public hearing when potential assessment rate increases are on the agenda. With the number of special assessments combined with a rising cost environment, rate increase meetings are fairly frequent. Approximately 20% of the County Attorney s time is allocated to MSBU and special assessment related tasks. The County Attorney does not participate in the methodology development process nor does he typically review methodologies that are proposed. The largest pitfall of MSBUs and special assessments are methodologies that are unable to meet the two legally required tests: a methodology must be fair and reasonable and properties must receive real and substantial benefits. Government Services Group, Inc. 16

22 Figure 2 illustrates all personnel directly impacted by special assessments and MSBUs for the MSBU Study. Figure 2 Charlotte County MSBU Related Departments Government Services Group, Inc. 17

23 ADMINISTRATION The administration of special assessments and MSBUs can be divided into four sections: Identification, Creation, Implementation and Maintenance. Identification Most MSBUs are identified by citizens, or groups of citizens, such as home owners associations seeking an improvement within their community. The ideas are conveyed to the County directly through one of their departments (usually Public Works or Utilities) or through the citizens elected officials. Once a request has been made for a specific MSBU or improvement, the process moves into the creation phase. Creation This process differs slightly depending on the type of MSBU. In Utilities, engineering studies must be completed to determine feasibility and costs. The initial cost of the study is paid by the County and is added to the MSBU once underway. If the MSBU does not move forward immediately, the cost of the study either will be eventually added to the MSBU at a later date or is absorbed by the County. For road and drainage maintenance programs, one of the Municipal Services District Representatives will meet with the citizens to gain a better understanding of the services they are interested in receiving. Next, the information is forwarded to the MSBU Section where they identify the affected properties, apply a methodology and extend the rates that were calculated by Public Works. Last, the County follows the required statutory process of notification and adoption of the assessment program. Historically, different methodologies were created and tailored to meet specific financial goals of the County; however, the County is moving to a more universal measurement unit, ERU4. The County Attorney s Office assists with the creation and review of ordinances and resolutions. At the request of the citizens group petitioning the County for services, an advisory group can be created to provide additional oversight to the assessment program. Advisory groups are not required; however, they are beneficial in serving as central point of contact and information for the Municipal Services District Representatives. Implementation Depending on the program type, work on the MSBU may start immediately or may be delayed in order to complete studies and build up reserves. Usually, maintenance programs will begin soon after approval and will continue until the special assessment is dissolved. Most of the maintenance programs are found in Public Works. Administration duties are shared by Public Works, Utilities and the MSBU Department. Maintenance Public Works is responsible for the maintenance and operation of the majority of MSBUs and special assessment programs. Their duties include managing scheduling and allocating resources in conjunction with the general needs of the County. This phase is the most costly due to the ongoing requirements of time and resources needed to administer the assessment programs. Just the administration alone requires eight full time employees in Public Works, four in the MSBU Section and one in Utilities. In addition, indirect costs of these programs are likely to increase to over $1.8 million annually according to Public Works. Calls from citizens are handled by the MSBU Department as well as the Municipal Services District Representatives. All calls answered by the MSBU Department are logged. According to their records, from June 21 to July 28, 2006, 1,090 calls were handled from citizens regarding special assessments. 6 This type of call volume may not be typical of an average month; however, it demonstrates a level possible during peak volume times. Rising fuel costs and wages, combined with the inability of Public Works to pass on these increases without notification due to rates being at maximum levels, will require more frequent rate increase notices in the future. 6 According to MSBU Department from meeting on 1/10/07. It was noted this volume followed 140,000 notices sent to property owners in 22 MSBUs with rate increases. Government Services Group, Inc. 18

24 ADMINISTRATIVE S Public Works is in the process of migrating from the current maintenance management system, the Burke System, to a new system called DataStream. The move is necessary to handle the increasing complexity of managing public works MSBUs. The new central maintenance management system will be installed countywide and will assist the County in better planning and allocating resources to MSBUs countywide. The initial cost for the new DataStream system is projected at approximately $450,000 for the Public Works Department only. Ongoing costs are difficult to project, as Charlotte County will be the first user of this system. The Charlotte County Adopted Budget is over $992 million. 7 Service levels are in jeopardy of being reduced due to the lack of Public Works resources currently available and the inability to add any additional resources due to budgetary constraints. Other costs that need to be considered when evaluating an assessment program are those associated with the County Attorney s Office and the legally mandated annual requirements to update assessment rolls. 7 Source Online, 2003/04 and 2006/07 Charlotte County Budget Books. Government Services Group, Inc. 19

25 Analysis HISTORY OF ASSESSMENT PROGRAMS One of the tasks within the MSBU Study is to review and provide a history of the County s MSBU programs and the County s reliance on those programs. This review was to examine trends and program directions, not necessarily to review every assessment methodology. GSG reviewed each MSBU identified on the Master MSBU List, reviewed details and budgets of each program and categorized the programs for further analysis. A categorization that created a discrete list of MSBUs for each MSBU area was used by GSG for the historical analysis and is provided as Table 5 Table 5 MSBU Areas Name of MSBU Category Type Ackerman Waterway Waterway Maintenance Alligator Creek Waterway Unit Waterway Maintenance Boca Grande Street And Drainage Unit Road/Drainage Maintenance Buena Vista Area Waterway Unit Waterway Maintenance Burnt Store Village Street And Drainage Unit Road/Drainage Maintenance Charlotte County Maintenance Dredging Benefit Unit Waterway Maintenance Charlotte Ranchettes Street And Drainage Unit Road/Drainage Capital Charlotte Ranchettes Street And Drainage Unit Road/Drainage Maintenance Cook And Brown Street Unit Road/Drainage Maintenance Deep Creek (Non-urban) Street And Drainage Unit Road/Drainage Maintenance Edgewater North Waterway Unit Waterway Maintenance Englewood East (Non-urban) Street And Drainage Unit Road/Drainage Maintenance Farabee Road Street and Drainage Unit Road/Drainage Capital Farabee Road Street and Drainage Unit Road/Drainage Maintenance Gardens of Gulf Cove Street And Drainage Unit Road/Drainage Maintenance Greater Port Charlotte Street and Drainage Unit Road/Drainage Maintenance Grove City Street And Drainage Unit Road/Drainage Maintenance Grove City Waterway Unit Waterway Maintenance Gulf Cove Street And Drainage Unit Road/Drainage Maintenance Gulf Cove Waterway Benefit Unit Waterway Maintenance Harbour Heights Street And Drainage Unit Road/Drainage Maintenance Harbour Heights Street and Drainage Unit Solomon Drive Road/Drainage Capital Harbour Heights Waterway Maintenance District Waterway Maintenance Hayward Canal Area Waterway Unit Waterway Maintenance Lee Branch Waterway Unit Waterway Maintenance Lemon Bay Street And Drainage Unit Road/Drainage Maintenance Little Gasparilla Island Waterway Unit Waterway Maintenance Manchester Waterway Benefit Unit Waterway Maintenance Maple Leaf Estates/Victoria Estates/Kings Gate Water & Sewer Water/Sewer Capital Mid-Charlotte Stormwater Utility Unit Stormwater Maintenance Government Services Group, Inc. 20

26 Name of MSBU Category Type Northwest Port Charlotte Street And Drainage Unit Road/Drainage Maintenance Northwest Port Charlotte Waterway Waterway Maintenance Palm Shores Waterway Unit Waterway Maintenance Peace River Shores Street And Drainage Unit Road/Drainage Maintenance Peace River Shores Waterway Maintenance District Waterway Maintenance Pirate Harbour Wastewater MSBU Sewer Capital Pirate Harbour Waterway Unit Waterway Maintenance Placida Area Street And Drainage Unit Road/Drainage Maintenance Punta Gorda (Non-urban) Street & Drainage Unit Road/Drainage Maintenance Punta Gorda (Non-urban) Street & Drainage Unit Marl Paving Road/Drainage Capital Punta Gorda (Non-urban) Street and Drainage Unit Colon Road/Drainage Capital Punta Gorda (Non-urban) Street and Drainage Unit Magnolia Road/Drainage Capital Rotonda Broadmoor Street And Drainage Unit Road/Drainage Maintenance Rotonda Heights Street And Drainage Unit Road/Drainage Maintenance Rotonda Lakes Street And Drainage Unit Road/Drainage Maintenance Rotonda Long Meadow Street And Drainage Unit Road/Drainage Maintenance Rotonda Meadows Wastewater MSBU Sewer Capital Rotonda Meadows/Villas Street And Drainage Unit Road/Drainage Maintenance Rotonda Pine Valley Street And Drainage Unit Road/Drainage Maintenance Rotonda Pinehurst Street And Drainage Unit Road/Drainage Maintenance Rotonda Sands North Street And Drainage Unit Road/Drainage Maintenance Rotonda Sands Wastewater MSBU Sewer Capital Rotonda Villas and Springs Water and Wastewater MSBU Sewer Capital Rotonda West Street And Drainage Unit Road/Drainage Maintenance Rotonda White Marsh Street And Drainage Unit Road/Drainage Maintenance South Bridge Waterway Unit Waterway Maintenance South Burnt Store Street And Drainage Unit Road/Drainage Maintenance South Charlotte Stormwater Utility Unit Stormwater Maintenance South Gulf Cove (Non-urban) Street And Drainage Unit Road/Drainage Maintenance South Gulf Cove (Non-urban) Street And Drainage Unit Road/Drainage Capital South Gulf Cove Phase 1 Wastewater Collection Facilities Sewer Capital South Gulf Cove Phase 1 Water Distribution Facilities Water Capital South Gulf Cove Phase 2 Wastewater Collection Facilities Sewer Capital South Gulf Cove Phase 2 Water Distribution Facilities Water Capital South Gulf Cove Phase 3 Wastewater Collection Facilities Sewer Capital South Gulf Cove Phase 3 Water Distribution Facilities Water Capital South Gulf Cove Phase 4 Wastewater Collection Facilities Sewer Capital South Gulf Cove Phase 4 Water Distribution Facilities Water Capital South Gulf Cove Phase 5 Wastewater Collection Facilities Sewer Capital South Gulf Cove Phase 5 Water Distribution Facilities Water Capital South Gulf Cove Waterway Benefit Unit Waterway Maintenance South Punta Gorda Heights East Street And Drainage Unit Road/Drainage Maintenance South Punta Gorda Heights Street And Drainage Unit Road/Drainage Maintenance South Punta Gorda Heights West Street And Drainage Unit Road/Drainage Maintenance Suncoast Boulevard Street and Drainage Unit Road/Drainage Maintenance Government Services Group, Inc. 21