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HomeMy WebLinkAboutMinutes_Special Meeting_12/07/1995VILLAGE OF TEQUESTA Post Office Box 3273 357 Tequesta Drive Tequesta, Florida 33469-0273 (407) 575-6200 Fax: (407)575-6203 VILLAGE OF TEQUESTA VILLAGE COUNCIL SPECIAL MEETING MINUTES DECEMBER 7, 1995 I. CALL TO ORDER AND ROLL CALL The Tequesta Village Council held a special meeting at the Village Hall, 357 Tequesta Drive, Tequesta, Florida, on Thursday, December 7, 1995. The meeting was called to order ,,, at 7:05 P.M, by Mayor Ron T. Mackail. A roll call was taken by Betty Laur, Recording Secretary. Councilmembers present were: Mayor Ron T. Mackail, Vice Mayor William E. Burckart, Elizabeth A. Schauer, and Joseph N. Capretta. Also in attendance were: Village Manager Thomas G. Bradford, Attorney Scott Hawkins sitting in for Village Attorney John C. Randolph, Village Clerk Joann Manganiello, and Department Heads. Councilmember Carl C. Hansen was absent from the meeting. II. APPROVAL OF AGENDA Councilmember Schauer requested the addition of her report of a meeting for Indiantown Road and Bridge Task Force under Any Other Matters. Vice Mayor Burckart made amended. Councilmember vote on the motion was: Ron T. Mackail a motion to approve the Agenda as Schauer. seconded the motion. The C r~,,...,..r„a n,...,... for VILLAGE COUNCIL ~,~~.: SPECIAL MEETING MINUTES DECEMBER 7, 1995 PAGE 2 ---------------- William E. Surckart - for Elizabeth A. Schauer - for Joseph N. Capretta - for The motion was therefore passed and adopted and the Agenda was approved as amended. III. PUBLIC HEARING A) Consideration of Village of Tequesta Intent to Revoke Membership in the Florida Retirement System and to Consider the Proposed Alternative Retirement Plans. 1) Overview of Florida Retirement System Opt-Out Procedures Village Manager Bradford commented that this was an historic occasion for the Village since Tequesta had tried to find a way to opt out of the Florida Retirement System for the past ten years. When Tequesta joined the plan in 1974 its cost was fairly reasonable, however, costs had escalated over the years so that the Village now paid 28~ of police salaries, and 18% of general employee salaries; and in spite of high contribution rates the Florida Retirement System has an unfunded liability of 13.9 billion dollars. This past summer the legislature passed House Bill 1505, which allowed municipalities to get out of the FRS and set forth specific procedures and time frames for doing so. Village Manager Bradford reviewed the Opt-Out Procedures: 1} Decide the type of whether defined benefit plan. alternative plan desired, contribution or defined 2} Although no plan is required for general employees, Village Manager Bradford VILLAGE COUNCIL SPECIAL MEETING MINUTES DECEMBER 7, 1995 PAGE 3 ---------------- recommended a defined benefit plan for both general employees and police, which required an actuarial report certified by an enrolled actuary illustrating the cost to the Village and to the future employees. Village Manager Bradford reported that included in the Councilmembers' packets was the actuarial impact statement prepared by Stephen Palmquist. 3) Since Tequesta has a collective-bargaining unit, a copy of the proposed alternative plan and actuarial report was required to be given to each representative, which Village Manager Bradford stated he would do the next day after changes were incorporated 4) Notice of Public Hearing regarding revocation from FRS stating time, place and place of the meeting and intent of the hearing must be published in a general circulation newspaper 7 - 15 days prior to public hearing, with proof of publication submitted to the Division of Retirement. 5} A Public Hearing must be held on the proposed revocation and proposed alternative plan within 7 - 30 days prior to adoption. Tonight's Public Hearing on December 7 and proposed adoption on December 14 would meet the required time frame. 6) Written notice of revocation must be provided to the Division of Retirement by mailing a copy of the resolution to the division postmarked no later than December 15, 1995 in order to be effective January 1, 1996. Village Manager Bradford stated that all requirements had been met and future requirements would be met. Village Manager Bradford stressed the importance of VILLAGE COUNCIL ~,~,, SPECIAL MEETING MINUTES DECEMBER 7, 1995 PAGE 4 ---------------- the following proposed changes: A) Proposed Resolution No. 12-95/96 referenced in Agenda Items III (A) (4) and (6) should be Resolution No. 11-95!96, and henceforth referred to as Resolution No. 11-95/96. B) Certain changes need to be made to the Retirement Plans themselves. In the case of the Police Retirement Plan the definition of salary that appears on page 4 of the document needs to be amended to state the following: Salary needs to be defined as: the total cash remuneration paid to a police officer for services rendered. Village Manager Bradford stated that definition was a verbatim quote per Florida Statute 185.02(8) which was required for police officers. C) In both plans, in Section 4 entitled Finances and Fund Management on page 11, item 6(b) a new subsection should be added which would state the following: A11 monies paid into or held in the pension fund shall be invested and reinvested by the Board of Trustees and the investment of all or any part of such funds shall be invested in accordance with an established investment policy adopted by the Board of Trustees. Village Manager Bradford explained that plan would have to dovetail restrictions listed in the plan for investments. D) In both plans, the definition of the word Act, appearing on page 1 of each plan should be deleted altogether because it references ERISA, which according to the Florida League of Cities does not apply to the Village of Tequesta. Village Manager Bradford explained that three VILLAGE COUNCIL SPECIAL MEETING MINUTES DECEMBER 7, 1995 PAGE 5 groups of employees exist in the Village: Police, General Employees, and Firefighters--who effective October 1, 1993 had their own plan adopted which under Florida Statutes is a local law retirement plan which has local law benefits. The Opt-Out Law for Police Officers requires that the plan be a local law plan with chapter benefits. Chapter 185 applies to Police Officers. Chapter benefits enumerated in the Statutes are more liberal than the requirements for a strictly local law plan with local law benefits. If it were a local law plan, it could be restricted so that certain cash payments received by Police Officers, such as a lump sum bonus for longevity, would not count towards their retirement contributions; but with the definition amendment just made the law requires that the total cash remuneration paid to an Officer must be deducted and they must pay their retirement contribution themselves for that. 2) Review of Proposed Municipal Police Officers Pension Plan Village Manager Bradford reviewed the Plan Summary: Effective Date: January 1, 1996. Eligibility: Full time police officers hired after December 31, 1995 are eligible for membership on date of employment. Compensation: Total cash remuneration for services rendered. Average Final Compensation (AFC): Average of Compensation over the five highest years within the last ten years of service. Credited Service: Number of years and completed months of continuous full-time employment during which time the required employee contributions are made. ~.. VILLAGE COUNCIL w~ SPECIAL MEETING MINUTES DECEMBER 7, 1995 PAGE 6 ---------------- Normal Retirement: Eligibility: The earlier of age 55 with ten years of credited service, or age 52 with 25 years of credited service. (Same as Firefighters pension plan) Benefit: 3% of AFC multiplied by credited service; maximum benefit is 1000 of AFC. (Same as Firefighters pension plan} Form of Benefit: Ten year certain and life annuity, with other options available. Early Retirement: Eligibility: Age 50 with ten years of credited service. Benefit: Accrued pension benefit reduced by 3o for each year early. Delayed Retiremen t: Eligibility: Any time after the Normal Retirement Date. Benefit: Calculated in the same manner as the Normal Retirement Benefit but based on credited service and AFC as of the actual retirement date. Service Incurred Death: Eligibility: Death in the line of duty. Benefit: 50% of AFC payable to spouse for life. Non-Service Incurred Death: Eligibility: Ten years of credited service. Benefit: Spouse receives actuarial equivalent of the accrued pension. Service Incurred Disability: Eligibility: Continuous and permanent incapacity for rendering useful and efficient service as a police officer. Benefit: Greater of the accrued pension :. benefit or 42~ of AFC. VILLAGE COUNCIL ,, ., SPECIAL MEETING MINUTES DECEMBER 7, 1995 PAGE 7 ---------------- Nan-Service Incurred Disability: Eligibility: Continuous and permanent incapacity for rendering useful and efficient service as a police officer. Benefit: Greater of the accrued pension benefit or 25% of AFC. Termination Benefits: For a member who is not vested when he terminates, a refund of his accumulated contributions is payable. For a member who is vested when he terminates, his vested accrued benefit is payable at his normal retirement date, or with the appropriate early retirement reduction, at his early retirement date. The vesting schedule is under 10 years of credited service - 0% vested; 10 or more years of credited service - 100% vested. Contributions: From Members: 5% of compensation From the State: Premium tax refunds received pursuant to Chapter 185, Florida Statutes. (The full amount of refund is received whether one police officer of 100 are in the plan, and Tequesta may not have to fund the plan in the early years since with only a few officers the state premium tax refund may be sufficient to fund the plan for a number of years.) From the Employer: The remaining amount necessary to fund the plan properly according to the plan's actuary. {According to the actuary, Tequesta would contribute an average of the scenarios listed in the actuarial valuation results, which would be approximately 14%. This would cut the current 28% contribution under FRS in half over time as attrition occurred.) Village Manager Bradford explained that he had written this plan with the help of the actuary, the Village Attorney`s office, the Florida League of Cities, and the Division of Retirement. After ~LL sending the plan to the Division of Retirement on VILLAGE COUNCIL •~.~~_ SPECIAL MEETING MINUTES DECEMBER 7, 1995 PAGE 8 ---------------- December 15, they will send it back if errors are found in order to amend any errors and omissions, and that would not affect opting out of the FRS. Village Manager Bradford explained that all current FRS members must remain FRS members and only newly hired employees would fall under the new plan. Village Manager Bradford commented that the defined benefit plan had been chosen because (a) it is required for policemen under the opt-out law, (b) it is exactly what the firefighters have, and (c) all three groups of employees could be under the same umbrella for administration purposes. The three plans were all written to have separate boards since Florida League of Cities had advised that one board serving all three plans would create a hybrid plan for which documentation could not have been prepared in time for a January 1, 1996 effective date. The Village Manager reported that the League was working on a plan under which the three separate retirement plans could operate under one board and one document in the future, which would have lower fees and expenses than three separate plans. Village Manager Bradford explained that Firefighters were under Florida Statute 175, Police under 185, and there was no Florida Statute which applied to general employees except for the reporting requirements in Statute 163. The Village Manager reported that savings benefits would be realized only through either natural or accelerated attrition, and that the League was currently working on opt-out requests from 40 municipalities. Mr. Bradford stated that the assets of the taxpayers of the State of Florida would guarantee the payment of the 14 billion dollar unfunded balance. Village Manager Bradford explained that according to the actuary, the defined benefit plan could easily be designed with benefits that cost between 5% to 10% of covered payroll, a range very common VILLAGE COUNCIL SPECIAL MEETING MINUTES DECEMBER 7, 1995 PAGE 9 ---------------- in the defined contribution arena. Jupiter's defined contribution plan provides for a 6% contribution for the employer and a 6% contribution for the employee. Tequesta's plan would provide a guaranteed benefit at retirement and called for a 5% contribution by the employee and 5% paid by the employer. 3) Review of Proposed Municipal General Employee Pension Plan Village Manager Bradford explained that the general employees pension plan was very similar to the police employees plan. Effective Date: January 1, 1996. Eligibility: Full time general employees hired after December 31, 1995 are eligible for membership on date of employment. Compensation: Base pay excluding overtime and any other nonregular payments. (Different from the police plan because of their statutory requirement) Average Final Compensation (AFC): Average of Compensation over the five highest years within the last ten years of service. Credited Service: Number of years and completed months of continuous full-time employment. Normal Retirement: Eligibility: The earlier of age 62 with ten years of credited service, or 30 years of credited service, regardless of age. Benefit: 1.6% of AFC multiplied by credited service; maximum benefit is 100% of AFC. Form of Benefit: VILLAGE COUNCIL _,, SPECIAL MEETING MINUTES DECEMBER 7, 1995 PAGE 10 Life annuity, with other options available. Early Retirement: Eligibility: Ten years of credited service. Benefit: Accrued pension benefit reduced by 5% far each year early. Delayed Retirement: Eligibility: Any time after the Normal Retirement Date. Benefit: Calculated in the same manner as the Normal Retirement Benefit but based on credited service and AFC as of the actual retirement date. Death Benefits {Pre-retirement}: Upon the death of any vested member, whether or not still in active employment, a survivor ~~ benefit is payable to the beneficiary starting when the member would have reached retirement age. The benefit payable is equal to the vested pension benefit. Service Incurred Disability: Eligibility:. Continuous and permanent incapacity for rendering useful and efficient service. Benefit: Greater of the accrued pension benefit or 420 of AFC. Non-Service Incurred Disability: Eligibility: Continuous and permanent incapacity for rendering useful and efficient service. Benefit: Greater of the accrued pension benefit or 250 of AFC. Termination Benefits: For a member who is vested when he terminates, his vested accrued benefit is payable at his normal retirement date. The vesting schedule is under 10 years of credited service - 0°s vested; 10 or more years of credited service - 100~ vested. Contributions: From Members: 5~ of compensation VILLAGE COUNCIL ,__~ SPECIAL MEETING MINUTES DECEMBER 7, 1995 PAGE 11 ---------------- From the State: None. From the Employer: The remaining amount necessary to fund the plan properly according to the plan's actuary. {The actuarial valuation was in the range of 5% but might actually be closer to 3~, an astronomical savings over the current 18o under FRC.) 4) Review of Proposed Resolution No. 11-95/96 Village Manager Bradford explained that this resolution was a resolution of intent to establish an alternative plan for all employees or officers hired on or after January 1, 1996, effective by separate ordinance or resolution, proposed for adoption on December 14, 1995 in accordance with the law requiring the collective bargaining negotiation process to be concluded before opting out. If any employee bargaining units acted to prevent implementation of the opt-out on a timely basis, the law of collective bargaining in the State of Florida allows impasse to be called, and a hearing before Special Master, who would make a determination, and the final decision presented to the Village Council at a public hearing for the Council's decision over the issue being bargained. By adoption of this Resolution of intent, the Village Council will have initiated actions required to effect the opt-out of Tequesta from the FRS effective January 1, 1996, or as soon as possible thereafter, upon conclusion of collective bargaining and adoption of the retirement plans by separate ordinance. Village Manager Bradford stated that collective bargaining was expected which would necessitate plan changes and some errors and omissions were also anticipated. 5) Village Council and Public Comments Councilmember Schauer questioned whether the same CPA currently used by the Village to review the Firefighters' plan would be used for these plans, to which Village Manager Bradford responded that VILLAGE COUNCIL SPECIAL MEETING MINUTES DECEMBER 7, 1995 PAGE 12 ---------------- the same one would be used. Village Manager Bradford responded to Councilmember Capretta that a new policeman hired in January would receive approximately the same benefits as a current police officer at retirement, and approximately the same benefits as a fireman; and the general employees would have the same basic benefits they have under the FRS. The only difference besides the high contribution rate is that the FRS plan is strictly an employer generated payment plan. Employees by law do not contribute. Councilmember Schauer responded to Village Manager Bradford that Diocese of Palm Beach did not require employee contributions and employees were fully vested after 5 years; however, that was the only private sector employer that anyone mentioned who had a plan where the employees did not contribute. Councilmember Capretta pointed out that the situation far ~~ Tequesta employees would be no different than under FRS, while the Village would save a significant amount of money. Village Manager Bradford commented that when the 13 billion dollar deficit was needed, the state would have to vote in an amount each year to fund pensions. He also stated that it was interesting to note that the actuarial study done for HB1505 to identify the impact of municipalities opting out of FRS had actually caused the contribution rates effective January 1 to go down. Mayor Mackail questioned whether these plans were accepted by the IRS through Florida League of Cities and were actual plans and not prototypes, to which Village Manager Bradford responded that the police plan had been designed to follow the outline of Statute 185, and Florida League of Cities would probably be the manager at least in the beginning, and the board would have the power to choose a fund manager. Village Manager Bradford clarified that in the beginning years that the tax refund received from the state might be sufficient to fund the police plan. Mayor Mackail commented that he liked the program, that the Village would enjoy substantial savings in the future, and that employees contributing would - VILLAGE COUNCIL SPECIAL MEETING MINUTES DECEMBER 7, 1995 PAGE 13 provide a good incentive. Councilmember Capretta questioned what FRS rules were concerning accelerated buyouts for people in their plan today. Village Manager Bradford responded there was no plan feature for buyout but it was not precluded; and that there was a 5$ penalty for early retirement. Councilmember Capretta commented that large corporations were offering employees a buyout package which would cover the penalties. Village Manager Bradford stated that the Village would be working on an Early Retirement Incentive Program (ERIP) . Wade Griest questioned whether this resolution only applied to the pension fund and was told that was correct. Mr. Griest stated he had been an AFL/CIO union member for many years and had other union experience so he could see both sides of the union question; and understood that some of the Village employees were going to join the Communication Workers of America union. Mr. Griest questioned whether this plan would fit into whatever the union demands might be. Village Manager Bradford responded that those employees' representatives would be provided a copy of the plan and if they wished to negotiate under the plan they could do so. 6) Motion to Adopt/Reject Proposal, to Proceed with Adoption of Resolution No. 11-95/96 at December 14, 1995 Village Council Meeting. Vice Mayor Burckart made a motion to adopt Resolution No. 11-95/96 at the December 14, 1995 Village Council meeting. Councilmember Schauer seconded the motion. The vote on the motion was: Ron T. Mackail - for William E. Burckart - for Elizabeth A. Schauer - for Joseph N. Capretta - for VILLAGE COUNCIL SPECIAL MEETING MINUTES DECEMBER 7 , 1995 PAGE 14 The motion was therefore passed and adopted. N. ORDINANCE - FIRST READING -AMENDING THE RATES FOR PROVIDING WATER SERVICE. (Staff Recommends Approval) Water System Manager Tom Hall reported the Village had retained Mr. Phil Gonot of PMG Associates as water rate consultant to review the matter of water rate increases needed to cover the $646,050 annual increase from the Town of Jupiter, or $53,838 additional per month that Tequesta must generate to pay the increase. The proposed ordinance would provide a pass through and would generate no excess funds. Mr. Gonot's recommendation was that the funds be tracked so that in the event Tequesta was successful in their litigation that the funds could be refunded. Mr. Hall reported the average customer with a 5/8" meter using 10,000 gallons per month would see a 30% net increase in their water bill; the base rate of $8.80 would increase to $15.80. Councilmember Capretta questioned whether the method which had been chosen to collect the increase, which was to place it in the base rate rather than the gallonage, would be the preferred way in the event there was no chance the Village would prevail in the lawsuit, and Mr. Hall responded that it was. Councilmember Capretta questioned whether this was the way rates would be structured when the Village had its own reverse osmosis plant. Village Manager Bradford responded that it was not, however, this method was an interim proposal until the Village knew the outcome of the lawsuit so that the amount could be separately tracked. Another point raised was that with imposition of the higher rates, resulting conservation could conceivably be great enough so that there would not be sufficient funds to meet the expenses of the water department. Attorney Hawkins commented that an optimistic time for the lawsuit to reach judgement would be approximately 10 months; a pessimistic view would be 18 to 24 months . Village Manager Bradford reported that in the December issue of the newsletter residents would be informed of the situation and why the charges had to be increased, Village Manager Bradford stated that the situation could be resolved before second reading of this ordinance, since Jupiter had suggested their attorneys confer with Village attorneys to set ground rules ,~_ VILLAGE COUNCIL SPECIAL MEETING MINUTES DECEMBER 7, 1995 PAGE 15 ---------------- for accelerated mediation. Mayor Mackail commented that the Village was ready to negotiate, and he believed Jupiter had no basis for the increase, that he had spoken with Mayor Golonka, and that a settlement could be reached prior to proceeding with litigation. Village Manager Bradford stated that Jupiter was considering alternatives to litigation. Attorney Hawkins clarified that the Village was now in litigation and any accelerated mediation would not suspend the litigation process. Mike Meder suggested that a separate line be placed on the water bill labeled Jupiter surcharge, and possibly the running total of the surcharge in the comment area. Finance Director Kascavelis stated it could not be called a surcharge. Councilmembers' suggestions were: the Jupiter bill; Tequesta's subsidy of the Jupiter taxpayer; the Jupiter robbery; the Jupiter escrow account. Mr. Meder stated that he believed it was important to show the amount was a 97o increase, and believed it would help rally voters. Jim Humpage expressed concern for the increase that residents would have to bear, and suggested that if the Village Council felt comfortable that the litigation would be successful or that there might be a compromise, then perhaps only a portion of the annual increase might need to be collected and the water rates increased by a smaller amount. Mayor Mackail commented that the drawback would be that if the litigation failed that residents would be hit with substantial bills. Betty Nagy questioned whether the dollars collected for the rate increase would be placed into a separate fund, and was assured that the funds would be accounted for separately. Village Manager Bradford explained that it was still unknown whether Tequesta, Jupiter, or the Court would hold the money; however, it was the intent of the Village at this time that the funds would be reimbursed. Vice Mayor Burckart made a motion to adopt this Ordinance on first reading after it had been read by Attorney Hawkins. Attorney Hawkins read the Ordinance on first reading by VILLAGE COUNCIL ~;,~,.. SPECIAL MEETING MINUTES DECEMBER 7, 1995 PAGE 16 ---------------- title only. Councilmember Schauer seconded the motion. The vote on the motion was: Ron T. Mackail - for William E. Burckart - for Elizabeth A. Schauer - for Joseph N. Capretta - for The motion was therefore passed and adopted. V. ANY OTHER MATTERS Councilmember Schauer reported that she had attended a meeting of the Tndiantown Road and Bridge Task Force where she had learned that construction would begin January 16, 1996 with an 875-day schedule; and that Mayor Mackail would receive an invitation to the ground-breaking ceremony to be held January 12, 1996 at 11 A.M. U.S. Highway One and Indiantown Road intersection would be closed from Friday evening to Monday morning on several weekends so that the asphalt could be laid. DOT had been requested to provide message boards to inform drivers of future closings. Also, concrete piles would be driven into the river for ten hours per day for four months, and the noise level would be excessive. Vice Mayor Burekart stated he had learned that the reason for such a tall bridge was to allow barge traffic on the Intracoastal waterway. V. COMMUNICATIONS FROM CITIZENS All communications from citizens had been taken under previous Agenda Items. VI. ADJOURNMENT Councilmember Schauer moved that the meeting be adjourned. Vice Mayor Burckart seconded the motion. The vote on the motion was: ~. VILLAGE COUNCIL SPECIAL MEETING MINUTES DECEMBER 7, 1995 PAGE 17 ---------------- Ron T. Mackail - for William E. Burckart - for Elizabeth A. Schauer - for Joseph N. Capretta - for the motion was therefore passed and adopted and the meeting was adjourned at 8:30 P.M. Respectfully submitted, Betty (Laur Recording Secretary ATTEST: J ann Mangani lo~ Village Clerk DATE APPROVED: ~_