With expenses expected to outpace revenue for Fiscal Year 2013, Foxfire Village Finance Director Leslie Frusco is looking for public input on how to best balance the budget.
“Our options are to take more money out of the existing Village funds, increase our revenue sources, or cut expenses,” she explained at the Citizen’s Budget Workshop held on Tuesday, May 1.
[A second Citizen’s Budget Workshop to collect public input on the proposed budget will be held this evening, Thursday, May 3 at 6:30 pm.]
The concerns pushing the cost side of the ledger are palpable: deferred road maintenance projects, debt service -- particularly on the Woodland Circle extension loan; and eroding amenities -- the proposed budget includes funding to demolish but not rebuild the community tennis courts. All that has Frusco taking a very hard look at the existing tax rate of 32 cents per $100 of valuation -- or $640 for a $200,000 home.
“When we throw out numbers and talk about things in budget work sessions -- and when we look at possible things the Village needs on a long-term basis, we try to transfer that into dollars,” Frusco explained. “For example, to renovate the tennis courts, estimates were between $70,000 and $80,000. A five cent tax increase funds that kind of project. It’s very easy to say we should do this or that, but it is important to realize that all of those ‘should dos’ come with a price tag that our current funding is not able to meet.”
General Fund Expenses
The preliminary budget presented by Frusco, with total anticipated expenses of $934,175, had little in the way of new costs. She highlighted a revamped community website, a new police vehicle, a new server and printer for the Village offices, a new commercial-grade robotic pool vacuum, and a two-percent salary increase for Village employees.
At 22.9 percent of the total anticipated budget expenditures, Public Safety includes two full-time and one halftime police officer, and a K9 unit. The fire department contract with West End Fire & Rescue and a small utility bill represent an additional 10.9 percent of the budget. Administration is 18.5 percent of anticipated overall expenses, and includes two fulltime employees. Debt service also takes a sizable chunk of the budget, at 21.4 percent; streets are 15.4 percent. Other expenses include pool and tennis [6.5 percent], capital reserve [2.7 percent], Village Green Park [1.3 percent], and zoning [0.3 percent].
Directing attention to the anticipated demolition of the tennis courts, Frusco said the Long Range Planning Committee recommended that the facility either be dismantled or renovated.
“It is an aesthetic eyesore, Frusco said. "The Council does not have the funds to rebuild, but we have set aside money to demolish and remove the courts. And removing the court is what would have to be done if we were renovating the court.”
Expected Revenue
The proposed FY2013 Budget retains the current tax rate, set at 32 cents, the second lowest municipal tax rate in Moore County.
Net projected valuation for Foxfire Village is $161,550,000, and property taxes represent the primary source of revenue, at 59 percent. Local option sales tax brings in 17 percent of revenue, with assessments [7 percent], Powell Bill funds [4 percent], and pool fees [1 percent] also adding to the Village coffers. Total budgeted revenue is projected to amount to $862,725.
Frusco explained that the County tax department handles the property valuations on which taxes are calculated. “The second major source of revenue is local option sales tax, which is allocated partly by population," she explained. "Since our last census we are deriving a little more revenue.” The 2010 US Census pegged the VIllage's population at 901, nearly double the 478 counted in 2000.
To reduce the shortfall between revenue and anticipated expenses, Frusco said the Council intends to use unspent back taxes related to the Foxfire Golf Resort bankruptcy. She explained that, when the bank took over the facility a year ago, they made good on two year’s worth of back taxes -- about $80,000 -- which was then allocated to Village road maintenance projects. With approximately $52,000 of that $80,000 remaining, Frusco said those funds would be reallocated, leaving the budget shortfall at about $20,000.
“There is really not a lot of extras in the expenses, other than the normal things it takes to run the Village,” she said. Frusco noted that the budget does include a transfer of $25,000 from operating funds to a fund reserved for future capital projects. The Council could forego that deposit into its savings account this year in order to help close the budget gap.
Is a tax increase the answer?
With only one resident participating in the citizens' workshop, Dave Meldrum had the Council’s full attention.
“My thoughts are, I don’t like deferred maintenance, because little things become big things, especially with roads,” he said. “I would rather take care of potholes, and whatever else is creeping up, and be hit with a tax increase now, so we don’t have bigger problems down the road.”
Meldrum also zeroed in on a few specific expenses, arguing in favor of a larger salary increase for staff. “I think our people deserve more than a two percent increase," he said. "I would be willing to pay my share to give them a four percent raise.” Meldrum also expressed concern that the existing water system and storage tank may be inadequate to keep up with future growth.
“Looking over the budget, the only area that might be possible to cut expenses would be the pool and tennis court,” he observed. “You sent out a survey a year ago with questions about the pool and tennis area -- what did the survey show?”
Councilman Steve Durham said the pool was identified by residents as a strong asset to the community and “that we needed to invest in it.”
He noted residents also showed support for the tennis court, but it was not prioritized as highly as the pool. However, everyone agreed the courts could not be left alone in the current condition.
Frusco agreed.
“The pool came back in the survey as an important asset to the Village, not only from those who use it, but from those looking at it from a long range planning aspect,” she said. “If real estate professionals are bringing people here, that it is an asset they can say the community has.”
Pool fees were increased over the last few years, with a significant jump in non-resident fees, but Frusco said the pool will never be self-supporting. The cost to run the facility is simply too high to be offset with fees.
To address the eyesore of the unplayable tennis court area, Frusco said, funding has been set aside in the proposed budget for demolition. If the facility is rebuilt in the future, she noted a fee schedule would be developed with resident and non-resident fees.
Meldrum said his concern is the long term impact of decisions and that deferred maintenance is not the best solution.
Clarifying his position, Frusco asked Meldrum if he was suggesting that, in order to do some projects around the Village and to get a better handle on debt service, that he would not be opposed to a tax increase.
“This is correct,” he replied. “I would support a tax increase. Laws allow a municipality to build their reserve, and that is the way I would go.”
Frusco said that, based on current total valuation of all property taxes in Foxfire Village, a one cent tax increase would only net an additional $16,000.
A five cent tax increase on a $300,000 home would cost the homeowner approximately $150 in additional taxes per year, and would generate $80,000, an amount equal to the estimated cost of replacing the tennis court and also nearly equal to the anticipated shortfall on the Woodland Circle Extension loan in three years, once the Village has collected the remaining assessments due.
Debt service
“Debt service has a significant impact on the Village, and encompasses two areas -- the debt owed on the Village Green Park loan and Woodland Circle,” said Frusco.
In Fiscal Year 2013, anticipated loan payments include $27,000, at a 3.87 interest rate with a total balance due of $180,000 on the Village Green Park; and a payment of $173,000, at a 3.19 interest rate with a total balance due of $1,756,351 on Woodland Circle. The loan was re-amortized this year with five years added to the repayment period and a reduction in the fixed rate.
“The big thing for the public to know about Woodland Circle is that we have three more years to collect on assessments that current property owners are paying," Frusco said. "These payments cover about half of the loan payment. But at the end of those years, the entire amount is the responsibility of the Village.”
She said nearly all of the assessed property owners are up-to-date, with one in negotiation, and one property that may be foreclosed upon. The largest single property assessed -- at 160 acres and representing nearly three-quarters of the total assessment -- was donated to Village in lieu of payment and remains for sale on the real estate market.
Foxfire Water Department
The Water Department is not funded by taxes. Instead, it is a self-supporting enterprise system with 91 percent of its revenue collected through water bills. Additional revenue comes from assessments and tap on fees.
“It is very self-supporting from a financial standpoint," Frusco said. "We have looked at long term maintenance needs of the department and developed a 15-year schedule of anticipated maintenance.”
She also noted that the Village undertook an extensive water study a few years ago. At that time, the Council decided to increase water rates, so that additional revenue would be on hand as needs arose.
Frusco reported that administration costs represented the bulk of water department expenditures, at 38.2 percent of the proposed budget. Other expenses include maintenance and repairs [16.8 percent]; debt service [24.6 percent]; and costs associated with chemicals, utilities, water testing, and a contingency fund.
Foxfire Fire Department
West End Fire & Rescue offers one of the lowest fire district tax rates in Moore County.
Frusco explained that Village residents pay the same rate as all other property owners in the West End Fire District -- and that amount did not increase as a result of 24/7 coverage by a first responder housed at the Foxfire Fire Department facility. The only new cost involves minor utility bills to provide heat and air conditioning at the station’s living quarters, which Frusco estimated at less than $500 per year.
Foxfire Golf Resort
Resident Meldrum said he hoped the town and any future owners of the Foxfire Golf Resort, currently owned by a bank, would work together, “as a matter of cooperation and coordination . . . You have a real hidden asset there.”
Frusco agreed, noting that it will be critical for the Village to engage in a partnership with a new owner.
Mayor George Erickson recalled that when Avestra purchased the course several years ago, Foxfire and the new owners held a series of public meetings to discuss how to best promote the golf course and Village.
