A Special MEETING OF THE BOARD OF COUNTY COMMISSIONERS

october 16, 2019

The Lake County Board of County Commissioners met in special session on Wednesday, October 16, 2019 at 12:00 p.m., for an Impact Lake County meeting at the Clermont City Center, Clermont, Florida. Commissioners present at the meeting were: Wendy Breeden, Vice Chairman; Timothy I. Sullivan; Sean Parks; and Josh Blake. Others present were Jeff Cole, County Manager; Ron Russo, Deputy County Manager; Fred Schneider, Public Works Director; and Kathleen Bregel, Deputy Clerk.

introductions and opening remarks

Mr. Mike Bucher, Secretary for Impact Lake County, welcomed everyone and started the meeting by relaying that there had been discussions regarding the gas tax as a means to support transportation funding and that this was the purpose of today’s presentation.

Mr. Jeff Cole, Lake County Manager, introduced the County Commissioners and then asked each city manager represented to introduce their elected officials which included the Cities of Mount Dora, Fruitland Park, Eustis, Tavares, Clermont and the Town of Montverde. He specified that the County was asked to come and speak at this meeting on the gas tax, noting that the presentation had been broadened to include transportation funding. He relayed that the County was not present to champion any one funding source over another; rather, the goal was to provide information on how funding was allocated for road resurfacing and road construction, what the County was able to accomplish through this funding, and what other funding opportunities were available such as the gas tax. He then introduced Mr. Fred Schneider, Lake County Public Works Director.

lake county road network presentation

Mr. Schneider thanked the Impact Lake County group for allowing him to speak and shared that he had worked with Lake County since 1992, was the County Engineer for 20 years, and in February of this year accepted the position of Lake County Public Works Director. He said that since becoming director, he had worked to identify efficiencies within the department with one of those including combining the County Engineer and Public Works Director into one position. He remarked that road construction and maintenance were core functions of County government, that the Public Works Department was responsible for the planning, implementation and maintenance of the County road infrastructure, and that road resurfacing was one element of the maintenance program. He explained that the 20 year long range plan was coordinated through the Lake-Sumter Metropolitan Planning Organization (MPO) with the County’s five year Transportation Construction Program focusing on the different funding sources available to fund the annual projects such as new roadways, intersections, sidewalks, and resurfacing; additionally, he mentioned that maintenance included regular inspection, maintenance, and repair of the County road infrastructure including pavement, shoulders, sidewalks, and traffic signals. He reported that the transportation funding sources included grants and aids, road impact fee revenue, infrastructure sales tax revenue, and the transportation trust fund known as the gas tax which was 11 pennies for Lake County. He then displayed several graphs depicting the revenue and expenditure amounts for each funding source over multiple years. He explained that the transportation trust fund, or gas tax, was comprised of the following: one penny for the county fuel tax which was enacted by the Florida Legislature in 1941; two pennies for the constitutional fuel tax which was enacted by the Florida Legislature in 1943; one penny for the ninth cent fuel tax which is shared 50/50 with the municipalities; one penny for the municipal gas tax which is split between the 14 cities; and six pennies for the local option fuel tax, noting that this was per gallon and was split with two thirds going to the County and one third to the Cities. He displayed a graph explaining the gas tax revenue as it related to fuel efficiency and buying power, noting that the buying power decreased as vehicles became more fuel efficient since less gallons of gas were sold. He also indicated that the revenue from the gas tax was not keeping up with inflation. He then showed a chart depicting the amount of revenue collected for each penny of the gas tax and the expenditures spent on various roadway items. He reported that the county contained 1,388 centerline miles with 1,252 of those miles being paved, noting that the value of the County paved road infrastructure was about $377 million. He mentioned that the road maintenance elements that public works covered included the pavement, shoulders, curbs, stormwater systems, sidewalks, guardrails, bridges, mowing and tree trimming, and traffic signals. He then shared these accomplishments for the department: 14 miles resurfaced in fiscal year (FY) 2018 with about the same amount this past year; 1,053 roadway miles of right-of-way mowed from April to November; over 3,000 maintenance request calls received which resulted in 2,639 work orders; 114.5 clay miles graded every two weeks; 27 bridges maintained; 152 sidewalk projects consisting of new projects and repairs completed since FY 2011; 23 priorities of the Safe Access to Schools Study addressed; and 1,600 linear feet of new guardrail added in FY 2019. He then explained and showed pictures of road ratings with a ten rating being a new road and a road rated six or below being in the area of critical concern with immediate attention needed to preserve its condition; additionally, he indicated that about half of the County’s miles were currently in the six or below category. He commented that once roads entered the area of critical concern, the rate of deterioration became faster and roads were more costly to repair; therefore, he stated that the goal was to preserve and resurface roadways before they entered this stage, noting that a fully funded program would cost $5.3 million annually. He then displayed a map indicating the county roads rated a four or five with 63 miles of four rated roads at an estimated cost to resurface of $7.69 million, and 282 miles of five rated roads at an estimated cost to resurface of about $33 million. He then presented these four possible road resurfacing funding options: option one was to remain status quo and continue with the current allocation of sales tax going to resurfacing and increase the allocation if sales tax revenues were to increase; option two was a bank loan where the County would borrow a fixed amount and pay it back over 13 years while utilizing all or part of the current annual sales tax allocation for road resurfacing; option three would be through the General Fund; and option four would be implementing an additional five cent local option gas tax. He then shared the pros and cons for each option. He said that the pro for option one was that funding would work to keep roads from falling into areas where complete rehabilitation was needed while the cons were that it would not keep up with the continued deterioration of the roadway and roads rated a five or less would increase from 355 miles currently to 719 miles in 10 years. He reported that in regards to option two, the Board of County Commissioners voted on October 8, 2019, to proceed with a $10 million bank loan to accelerate road resurfacing with a public hearing to be held on October 22, 2019; additionally, he said the loan would be repaid with future sales tax revenue over the 13 years at an interest rate of 1.85 percent. He explained these pros for the $10 million loan: it would immediately allow the resurfacing of 91 miles of roads rated a four or five; after the initial loan expenditure, it would still allow about 10 miles of resurfacing annually for the remaining life of the loan; and it would allow for strategic planning for a designated funding program for road maintenance. He said that the cons for option two would be that 257 miles of existing five rated roads would not be resurfaced, additional funding would still be needed over the life of the loan as other roads fell into the area of critical concern, and roads rated a five or less would increase from 328 to 730 centerline miles by the end of the last loan payment. He stated that the pros for option three were a decrease in the backlog of roads needing resurfacing, the funding levels could possibly increase as property values increased, and all property owners would be contributing to the road resurfacing program. He said the cons for option three were that it was not a guaranteed funding source as there were many competing interests for ad valorem revenue, it would reduce the ability to increase reserves, and reducing ad valorem taxes could then be challenging. He indicated that for option four, the five pennies had not yet been adopted, the proceeds would be shared with municipalities, the estimated total annual revenue would be $6 million, and the County would receive approximately $4 million of that amount based on the current formula with the Cities receiving about $2 million. He added that routine maintenance of roads was not considered an authorized expenditure for this option; therefore, if this did pass, it would be used for resurfacing and new construction. He relayed that the pros for option four would be that it would provide a consistent designated funding source, and that funding would provide for a preservation program as well as resurfacing; furthermore, he said the cons for this option would be the increase in the gas tax was limited to five cents and would not account for inflation over time, and was subject to downturns in the economy. He concluded by showing a map comparing the surrounding counties and the amount of gas tax they each were utilizing.

questions and comments

An audience member inquired if the County Commissioners were planning to ask voters to approve the additional five cents gas tax or if they would approve it from the dais.

Commr. Breeden responded that the Board of County Commissioners (BCC) had not yet made that decision. She recalled that last summer they had voted to place it on the ballot; however, when the Lake County School Board needed to put an item on the ballot for school safety officers, the BCC believed it was prudent to pull the gas tax off the ballot due to the importance of the need for safety officers. She reiterated that the BCC would need to discuss but no decision had been made yet regarding the gas tax.

Commr. Parks remarked that prior to placing it as a referendum for the voters to vote on, the BCC would want to make the public aware through workshops in order to showcase the benefits of a gas tax and the roads which would be impacted if the gas tax was passed by the voters. He indicated that after the workshops, then the BCC would decide whether to place in on the ballot or vote as a Commission.

Mr. Jimmy Crawford, a meeting attendee, inquired if the amount which could be raised by the potential five cents gas tax was estimated to be around $3.5 million a year, if the County usually spent about $1 to $1.5 million in their road maintenance budget, and if the annual amount needed to keep up maintenance of the roads acceptably for a 20 year cycle was slightly over $5 million.

Mr. Schneider responded that for five pennies, the revenue would be about $6 million with $4 million going to the County and $2 million split among the Cities. He stated that the budget was approximately $14 million with most of it going to roadway operation and maintenance; additionally, he commented that based on the number of County miles, the County would need $5 million, assuming a 20 year lifetime for a road surface and with maintaining five percent of the roads.

Mr. Crawford then asked if the gas tax revenue would free up some funding that would otherwise be used for repaving and resurfacing currently in order to assist with reaching the need of $5 million a year. He also inquired if the sales tax money could be diverted to any area the County desired or would it have to stay in the public works budget.

Mr. Schneider indicated that sales tax funding was what was currently utilized for road resurfacing, and that the gas tax had not be used for quite a while for resurfacing since the revenue stream was not enough with the gas tax. He explained that the sales tax money would be committed for the next 13 years as the loan was being paid off, and it would be put into resurfacing because it would borrow off of the future sales tax; however, after the 13 years, a future BCC might decide to allocate to other areas. He added that when the sales tax was first approved by the voters, there were many different categories that the sales tax was used for such as quality of life projects, roads, etc.

Mr. Cole commented that it could vary from year to year, noting that it was approximately $15 to $16 million that currently came into the County from sales tax with it being divided among a variety of priorities. He explained that about $2 million was used for road resurfacing, and stated that there would be about another $1 million remaining from the $10 million loan after the debt service was paid which was already in the line item for road resurfacing. He elaborated that amount could be reallocated although he would not recommend it as funding would need to be available to resurface roads. He relayed that staff and the BCC evaluate the list of funded projects every year in August, that the project list has to be approved, and that then funding is allocated; additionally, he noted that the list projects five years out and can change annually.

Mr. Crawford clarified that he was wondering if the five cent gas tax was approved, would it assist with getting the County on track with their road maintenance needs or could it possibly result in current sales tax funding going to another project.

Mr. Cole reiterated that County staff was not advocating any specific source of funding; however, he relayed that his recommendation would be to accelerate the resurfacing of additional roads and not divert funds to other areas. He also cautioned that when many roads are done in one to two years, then the County would need to be prepared to address those same roads in ten years, noting that having a proper maintenance schedule in which roads are addressed each year helps to avoid a large number of roads being done every ten years.

An audience member asked if the County was wanting voters to vote in a referendum and Mr. Cole confirmed that they were not advocating for that. The audience member thought that the five cent gas tax could only be used for new roads, and Mr. Cole clarified that while it could not be used for routine maintenance, it could be used for resurfacing and that his expectations would be for it to accelerate road resurfacing. The same audience member opined that more citizens would vote for the gas tax if roads they were concerned about were on the resurfacing list.

Commr. Breeden mentioned that most likely it would be additional funding to assist with road resurfacing so that over time roads would improve which would hopefully reduce concerns about roads.

Mr. Cole relayed that County staff was currently compiling a list to be placed on the County website of the four and five rated roads that would be addressed with the loan, noting that staff could also make a list of roads for the gas tax.

An audience member thanked everyone for the information provided in this meeting and then inquired about the status of the Hooks Street extension.

Mr. Schneider responded that Hooks Street was built from U.S. 27 east to Hancock Road and that the extension from Hancock Road east to Hartle Road had been discussed for many years among the County, City of Clermont and landowners. He related that different alignments had been presented but no agreement had been made yet. He indicated that a project development and environment (PD&E) design process would start the coming year since this extension was a high priority for the City of Clermont.

An audience member opined that voters would need to understand the gas tax and what it would cover in order to vote for it, noting that the verbiage utilized on the ballot as well as how it was communicated would be important.

Mr. Cole responded that developing the verbiage would be easy since it had already been done when it was planned to be placed on the ballot last year, noting that it was as simple and straightforward as possible. He added that if the decision was made to place it on the voter ballot, then the County would also distribute material explaining it.

An audience member remarked that since a gas tax had been utilized since 1940 and did not seem to be addressing what was needed especially with inflation, he wondered why the County would do it again as he felt a better alternative should be considered.

Mr. Schneider explained that when the gas taxes were first adopted by the State of Florida it was a few pennies with some additional pennies added over time. He shared that in the 1990s, the State indexed their gas tax to inflation; therefore, he said that State dollars rise with inflation while the Counties and Cities are not indexed to inflation and remain flat. He added that as cars become more fuel efficient, there would need to be more options for funding sources, noting that the best system would probably have several sources.

Commr. Sullivan commented that the State Legislature controlled the revenue sources that could be used for roads with the gas tax being one of the sources. He reiterated that the state gas tax could be inflated each year but local government’s gas tax could not.

Commr. Parks remarked that a portfolio of options was needed to provide services, noting that discussions on how to capture a user fee for electric vehicles would need to soon be addressed as well.

An audience member asked how the taxpayer would be assured that any new money coming in would actually be utilized for road resurfacing as opposed to the County receiving additional new revenue and then moving it to other areas.

Mr. Cole reiterated that would not be his recommendation and that he felt certain that this BCC would not allow that to happen, although he could not speak for future Boards. He explained that roads which were to be resurfaced with the potential additional gas tax revenue would be identified, noting that the County would be posting a list to their website of the roads which would be done with the $10 million loan. He elaborated that it was a straightforward process since the County already knew which roads needed to be done and how much it would cost.

The same audience member asked for clarification that there was no certainty that the extra $4 million would be in addition to the funding already allocated for road resurfacing.

Mr. Cole responded that if and when the BCC were to vote on the gas tax, identifying how the revenue would possibly be spent would be a part of that process. He commented that there could not be a guarantee of what might happen in ten years but that he could only relay the intent at this time. He also stated that any gas tax funding had to be spent for items relating to the legislation, noting that there was current gas tax being collected and used for specific purposes. He said that the other thing that was currently being utilized on roads was sales tax which was the $2 million a year, and that this sales tax could be reallocated by future Boards each year; additionally, he related that $1 million of that $2 million was dedicated to debt service which meant there was only $1 million going to road resurfacing so there really was not any funding that could be diverted to another purpose because by law it was not allowed to be.

Commr. Blake specified that even the money currently allocated from the infrastructure sales tax was not guaranteed to go towards roads each year. He mentioned that the previous authorization of the sales tax had a larger amount spent on roads and that the percentage going towards roads was significantly reduced when it was reauthorized, which was part of the issue now. He said that another option discussed by the BCC was to increase the percentage of the current authorization of the infrastructure sales tax to go towards roads. He indicated that even though there were project lists for how the revenue would be spent, it did not legally obligate future Boards since it was an annual decision.

Commr. Parks commented that the process for proposing the gas tax would be important, that it should contain a specific list of roads to be addressed, and that he would support holding workshops to inform and answer citizens’ questions; furthermore, he thought that even having some type of accountability such as similar to the sales tax committee to make sure the funding was spent on roads might be an option. He also suggested that any additional penny sales tax revenue could possibly be designated to roads.

Commr. Breeden added that one of the other possible revenue sources for roads could be the Lake County General Fund.

Commr. Blake stated that he would be in favor of the gas tax being presented to the voters rather than being a BCC decision. He then gave an example of a landscaping business owner who purchases thousands of gallons of fuel each month and shared how this could be an annual tax increase of $600 for him, as well as another business he knew which could also have a $1,200 increase in taxes; therefore, he felt that businesses should have the opportunity to approve or not approve this gas tax.

An audience member mentioned that part of the reason for today’s meeting was to discuss if the portion of the funds which is designated to the Cities would be of value to the municipalities and if so, then what could the community do to push this forward. He said that he viewed this differently than the penny sales tax, and opined that the initiative to get this gas tax passed by the voters would be different than the initiative to get the penny sales tax reauthorized since it was a continuation and the gas tax would be viewed as a new tax. He mentioned that from an economics standpoint, when considering that some surrounding counties already implement the extra five cent gas tax, he did not believe that there was a difference at the gas pumps when purchasing in other counties with the higher gas tax; therefore, he did not feel that this gas tax would truly have a negative effect on the constituents of Lake County. He opined that the ability to get this gas tax passed by the voters could be a significant undertaking and that it might not actually pass.

Mr. Cole referenced the slide on road operations and maintenance revenue and noted that there had been a $700,000 reduction in expenditures from FY 2019 to FY 2020 in the engineering, contracting, technical support, and equipment category. He relayed that Mr. Schneider and Mr. Ron Russo, Deputy County Manager, had identified $700,000 in administrative functions and had moved that funding into road projects.

Mr. Bucher wrapped up the meeting by thanking Mr. Schneider and Mr. Cole for presenting and for providing the information. He also thanked all of the County and City elected officials for attending.

ADJOURNMENT

There being no further business to be brought to the attention of the Board, the meeting was adjourned at 1:00 p.m.

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leslie campione, chairman

ATTEST:

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GARY J COONEY, CLERK