MINUTES OF THE REGULAR SCHEDULED MEETING
OF THE EMERALD ISLE BOARD OF COMMISSIONERS
TUESDAY, MAY 11, 2004 – 6:00 P.M. – TOWN HALL

The regular monthly meeting of the Emerald Isle Board of Commissioners was called to order by Mayor Art Schools at 6:00 P.M.

Present for the meeting: Mayor Art Schools, Commissioners Nita Hedreen, Robert Isenhour, Pat McElraft, Floyd Messer, and John Wootten.

Others present: Town Attorney Richard Stanley, Town Manager Frank Rush, Assistant Town Manager/Finance Officer Mitsy Overman, Town Clerk Rhonda Ferebee, Planning Director Kevin Reed, Parks & Recreation Director Alesia Sanderson, and Town Engineer Greg Meshaw, PE.

After roll call all who were present recited the Pledge of Allegiance.

4. ADOPTION OF AGENDA

Town Manager Frank Rush noted the addition to the agenda of a Proclamation for Emergency Medical Services Week to be added under Item 5.

Motion was made by Commissioner Wootten to approve the Agenda with this addition. The Board voted unanimously 5-0 in favor. Motion carried.

5. PROCLAMATION / PUBLIC ANNOUNCEMENTS

a) Osteoporosis Prevention Month

b) National Day of Prayer

c) Emergency Medical Services Week (added item)

Mayor Schools made note of the signed Proclamations as noted above. Mayor Schools stated that National Day of Prayer took place on May 6^th, the first time this had been done in Emerald Isle, and there was a great turnout. Mayor Schools also mentioned that the week of May 16 – 22^nd was Emergency Medical Services Week, and praised the Emerald Isle EMS.

Commissioner McElraft mentioned that Island Cat Allies was having a fundraiser, Saturday, May 22^nd. It will be a fashion show and lunch, being called the “Cat’s Meow Fashion Show and Fancy Feast”. She encouraged those interested to attend.

Commissioner Messer mentioned that Saturday, May 15^th a group of local citizens were having a barbecue dinner benefit for Jimmy Taylor and his family.

It will begin at 12:00 noon at the Lighthouse (between Willis’ Fish Market and Shorewood Realty). He also thanked those people who had made donations of various gifts and items for a raffle. He encouraged everyone to come out in support.

Mayor Schools noted that Jimmy’s wife (Laura) was back home and was feeling as well as they had hoped she would at this point.

Mayor Schools mentioned that Mary Wolff Isenhour had been named Volunteer of the Month for her work as President of the Friends of the Western Carteret Public Library by the Carteret Community Foundation.

Mayor Schools gave the dates of upcoming meetings as follows:

Budget Workshop Meeting – May 18, 2004 – 6:00 pm
Budget Workshop Meeting – May 20, 2004 – 6:00 pm
Planning Board Meeting – May 24, 2004 – 6:00 pm

Alesia Sanderson, Parks & Recreation Director announced that on Wednesday, May 26^th there would be a “Beach Jive after Five” at the Western Ocean Regional Access with Kitty West performing 5:30 to 7:00 pm. She also mentioned the Bicycle & Pedestrian Committee was having their first Fun Walk on Thursday, May 13^th at 6:00 at Western Ocean Regional Access.

6. CONSENT AGENDA

a) Minutes – April 13, 2004 Regular Meeting

b) Tax Refunds/Releases

c) Budget Amendments – General Fund/Disaster Recovery Fund Hurricane Isabel FEMA Reimbursements

d) Budget Amendment – Fire Engine Financing

e) Amendment – Town of Emerald Isle Fiscal Policy

f) Resolution Requesting a One-Year Extension from the Parks and Recreation Trust Fund (PARTF) for the Development of Emerald Isle Woods

g) Resolution Supporting Continued Maintenance of the Atlantic Intracoastal Waterway and Connecting Channels by the US Army Corps of Engineers

Motion was made by Commissioner McElraft to approve the Consent Agenda. The Board voted unanimously 5-0 in favor. Motion carried.

7. PUBLIC COMMENT

Barbara Harris, 5710 East Landing Court, brought to the Board a Petition, and read a short statement of request as follows: “Before the November election you were asked if you would bring back driving on the beach for fishing in the fall (after Labor Day) and spring (April to Memorial Day (excluding Easter week), and change the permit fee back to $40.00 per year. The majority of you said you would seriously consider it.

I have a petition to give you tonight that was circulated this past February, March and April. There are over 700 names on this petition with more to be collected and added to these until your decision. There is one name on this list that was signed before his death.

If Easter comes before Memorial Day we understand and ask that the beach be closed to traffic the week of Easter (Sunday to Sunday). Also, if you wish to hold a public meeting, have it on a Saturday with advertising in the local papers, web site and Island Review. Please make your decision before September of this year.”

8. PRESENTATION – FY 2004-2005 RECOMMENDED BUDGET

Town Manager Frank Rush made a presentation summarizing the FY 2004-2005 Recommended Budget for the Board and public. The Recommended Budget is balanced with a 16.5 cent General Fund tax rate, a 1 cent decrease from the FY 03-04 rate of 17.5 cents, and a $12 increase in the annual solid waste service fee. The Budget Message follows and is self explanatory:

May 11, 2004

Dear Honorable Mayor Schools and Commissioners:

I am pleased to present the FY 04-05 Recommended Budget for your review and consideration. The total Recommended Budget across all funds is $8,990,184, including the special district tax collections and debt service payments associated with the locally-funded Emerald Isle beach nourishment project.

GENERAL OVERVIEW

The largest portion of the total budget is the General Fund. The total General Fund budget is $6,132,241, which is a $23,931, or .39%, decrease in expenditures from the FY 03-04 original budget. The budget is balanced, and I am extremely pleased to report that the recommended General Fund property tax rate for FY 04-05 is 16.5 cents per $100 of assessed value, which is a 1-cent, or 5.7%, decrease from the FY 03-04 rate of 17.5 cents. Town staff and I have worked to limit additional expenditures, and these efforts combined with anticipated growth in key revenue sources and strategic budget planning have enabled the development of a Recommended Budget with this tax rate reduction. As you know, a General Fund tax rate reduction was the Board of Commissioners’ top priority heading into the FY 04-05 budget process, and I am pleased that the Recommended Budget addresses the Board’s top priority. The Board and the community should note that a 16.5-cent General Fund property tax rate would be the lowest actual General Fund property tax rate in Emerald Isle since 1969 (as far back as records were readily available), and perhaps in the entire history of the Town of Emerald Isle.

The Board should also note that the Recommended Budget includes detailed planning and forecasting of future revenues and expenditures over the next five years. It is a top priority of mine to make sure that the long-term impacts of current budget decisions are carefully analyzed so that today’s decisions don’t result in unavoidable additional property tax burdens in future years. I am pleased to report that based on the FY 04-05 Recommended Budget, future planned capital expenditures, reasonable inflation rates, and modest growth in the Town’s revenue sources that the Town should be able to maintain, if not reduce further, the recommended 16.5 cent property tax rate over the next five years.

As pleased as I am to recommend a tax rate decrease, I am equally pleased to report that the FY 04-05 Recommended Budget enables Town departments to continue current service levels, replace necessary capital equipment on a timely basis, and also includes funding for high-priority projects that will have a measurable and visible impact on the quality of life in Emerald Isle. Among these projects are construction of the first phase of the Coast Guard Road Flood Water Project, additional bicycle paths and sidewalks, efforts to improve the appearance of the NC 58 corridor and surrounding areas, and important long-range planning projects. Additionally, the Town is poised to construct the urgently necessary Bogue Inlet Channel Erosion Response / Western Phase Beach Nourishment Project in late 2004, and is in a good financial position to address any potential cost overruns associated with this vital project.

Due to escalating solid waste collection costs and waste volumes, the Recommended Budget does include a $12, or 8.8%, increase in the annual solid waste service fee charged to owners of all developed properties in the Town of Emerald Isle. The FY 04-05 Recommended Budget includes a fee increase from $135 per housing unit to $147 per housing unit, and the recommended annual fee equates to $12.25 per month for all solid waste services provided by the Town. These solid waste services include residential solid waste collection and disposal, recycling collection and marketing, yard waste collection and disposal, beach strand trash collection and disposal, container roll-back services, solid waste ordinance enforcement, and other miscellaneous solid waste functions. Although I would prefer not to recommend an increase in the solid waste fee, I am pleased that the recommended fee, when considered on a monthly basis, will still be significantly lower than many other communities’ fees and many private sector solid waste contracts.

The average property in Emerald Isle is valued at slightly more than $200,000. With a 1-cent decrease in the General Fund tax rate, the owner of a $200,000 property would see a $20 annual reduction in the property tax bill. Higher-valued properties will see larger actual property tax bill reductions, and factoring in the increase in the solid waste fee, nearly all property owners in Emerald Isle will see a net reduction in the cost of their Town government in FY 04-05.

The FY 04-05 Recommended Budget also calls for the third year of special district taxes to finance the debt service payments on the beach nourishment bonds. As you know, and as was communicated to the voters prior to the referendum, the Town’s financing plan calls for these special district taxes to remain in effect for a total of nine years. The Town’s financing plan intentionally stabilized the Primary Benefit (oceanfront) District rate at 48 cents per $100 of assessed value, and the Secondary Benefit District rate at 3 cents per $100 of assessed value for the entire nine-year period. I am pleased to report that the FY 04-05 Recommended Budget retains the 48-cent and 3-cent special district rates for the third year in a row, and enables us to meet our debt service obligations according to schedule.

For the second year, the Recommended Budget also includes a detailed Capital Replacement / Improvement Program to effectively plan for future capital needs that carry a significant price tag. The Board should note that the Capital Replacement / Improvement Program included in this document reflects established capital replacement schedules developed by the department heads and myself, and also reflects special projects already underway as well as my personal recommendations for additional projects over the next five years. While I believe I have included many projects aimed at addressing the Board’s priorities, the Board should thoroughly review and amend this plan before adoption so that it adequately reflects your priorities. The Board should also solicit public input in order to create a more meaningful plan that reflects the collective goals of the community. I am pleased to note that the proposed Capital Replacement / Improvement Program is not expected to result in an additional property tax burden on our property owners over the five-year planning horizon included in the program.

Again, I am extremely pleased to present this Recommended Budget to you with a 1-cent tax rate decrease. As you will read in a moment, there are several key factors contributing to this Recommended Budget, and it is important that the Board recognize these factors as you review and consider the Recommended Budget. The following pages include a detailed discussion about the many issues impacting the FY 04-05 Recommended Budget.

FY 04-05 BUDGET GOALS

Based on direction from the Board of Commissioners over the past 5 months, and priorities expressed at the Board’s special planning workshop in February, I compiled the following list of the Board’s expressed goals heading into the FY 04-05 budget process:

1. Present a Recommended Budget with a decrease in the General Fund tax rate,

2. Reduce reliance on long-term debt, with an emphasis on pay-as-you-go financing for capital projects and large capital expenditures,

3. Provide for the earliest possible construction of the Bogue Inlet Channel Erosion Response / Western Phase Beach Nourishment Project, and take actions to insure that adequate financial resources exist to construct the project,

4. Proceed with construction of the initial phase of the Coast Guard Road Flood Water Project, and utilize a pay-as-you-go financing approach for the initial and future phases,

5. Consider utilizing any projected FY 03-04 surplus to meet non-recurring expenditures anticipated for FY 04-05 prior to June 30, 2004, and

6. Maintain the Town’s General Fund balance at a level that is acceptable to meet cash flow needs, address disaster recovery needs, and maintain a sound financial position.

In addition to the budget goals expressed by the Board, I also established the following budget goals for FY 04-05. These goals are as follows:

1. Consider long-term implications of annual budget decisions, and attempt to stabilize the tax rate over the foreseeable future,

2. Limit expenditures to the maximum extent practical while continuing current service levels,

3. Maintain acceptable funding levels for the replacement of essential capital equipment, and schedule such in a manner that stabilizes annual capital expenditures,

4. Continue investment in projects and services that will have a measurable and visible impact on the quality of life in Emerald Isle, and

5. Provide for fair compensation for Town employees to continue healthy morale.

The FY 04-05 Recommended Budget has been carefully developed to accomplish the goals outlined above. Each of the key strategic decisions in the FY 04-05 Recommended Budget is rooted in the accomplishment of one or more of these goals.

FY 04-05 GENERAL FUND DISCUSSION

As noted earlier, the recommended FY 04-05 Recommended Budget for the General Fund is $6,132,241, a $23,931, or .39%, decrease from the FY 03-04 original budget.

Most departmental budgets have increased only modestly, and in most cases this is due primarily to increasing salary costs and health insurance premiums. Total capital outlay expenditures have increased by approximately 6%, however, some of this increase can be attributed to grant-funded capital outlay items included in the budget. Total debt service and special project (i.e., Transfers to Other Funds) expenditures have decreased significantly, a total of approximately $327,000, or over 41%.

On the revenue side, total revenues decrease by an identical amount. The 1-cent property tax rate reduction results in less property tax revenue, however this loss is offset by a significant anticipated increase in sales tax revenues, which continues to result from the establishment of the beach nourishment special tax districts. Other General Fund revenue sources are expected to remain relatively constant, with minor increases or decreases projected for most revenues. The recommended increase in the annual solid waste service fee (from $135 to $147) will enable this fee to nearly support 100% of the Town’s solid waste expenses.

The FY 04-05 Recommended Budget for the General Fund is impacted significantly by several factors affecting FY 03-04 and the implementation of two key FY 03-04 budget recommendations between now and June 30, 2004. It is important to consider these FY 03-04 issues and recommendations prior to analyzing the FY 04-05 Recommended Budget for the General Fund.

Recommended FY 03-04 Budget Actions Impacting

The FY 04-05 Recommended Budget

There are four main issues in the FY 03-04 General Fund budget that impact the FY 04-05 Recommended Budget.

First, and most importantly, the Town’s sales tax collections are expected to exceed budget estimates by approximately $200,000. As noted earlier, this additional revenue is attributed solely to the impact of the beach nourishment special tax districts on the Town’s sales tax distribution. Second, FY 03-04 has been a record year for new construction in Emerald Isle, and we expect to exceed development permit fee revenue estimates by more than $90,000. In addition, current projections indicate that other revenues will exceed expenditures in FY 03-04, and that FY 03-04 will end with an approximate $400,000 surplus.

As you know, the Town previously planned to issue new debt to finance pre-construction expenses associated with the Coast Guard Road Flood Water Project at the time of construction, however, the financing plan for that project has now been changed to a pay-as-you-go approach. The Town will have incurred approximately $288,000 of pre-construction expenses for this project by June 30, 2004, and must now identify funding for these expenses. The FY 04-05 Recommended Budget assumes that these expenses will be funded by the projected FY 03-04 surplus, and I recommend that the Board approve a budget amendment to accomplish this prior to June 30, 2004.

Finally, FY 04-05 is the last scheduled year of debt payments on the 2002 refinancing debt, with an annual payment amount of approximately $192,000 tentatively scheduled for FY 04-05. The FY 04-05 Recommended Budget assumes that the Town will retire this debt one year early, prior to June 30, 2004, utilizing the remaining projected FY 03-04 surplus along with a one-time use of General Fund balance equal to approximately $78,000. The early payment of the 2002 refinancing will “free up” additional capacity in the FY 04-05 General Fund budget, and is a key reason why a 1-cent tax decrease is attainable in FY 04-05. I also recommend that the Board approve a budget amendment to accomplish this prior to June 30, 2004.

As a result of anticipated timing adjustments, the Town’s available General Fund balance is still expected to increase slightly at June 30, 2004. Total available General Fund balance is projected at approximately $1.875 million at June 30, 2004, or nearly 31% of the FY 04-05 Recommended Budget amount.

Significant FY 04-05 General Fund Revenue Issues

1-Cent Tax Rate Decrease

In FY 04-05, 1 cent of property tax will generate nearly $140,000 of revenue. With a 1-cent tax rate decrease, the Town’s property tax revenue will decrease by approximately $140,000. However, growth in the Town’s tax base over the past year, in addition to additional collection of prior years’ taxes and penalties is expected to result in an additional $33,000 of property tax revenue, which makes the net effect of the 1-cent decrease equal to $107,000. For FY 04-05, the Town’s total taxable value is estimated at $1.41 billion.

Additional $200,000 of Sales Tax Anticipated

The Town’s actual sales tax collections for FY 02-03 were slightly higher than $1 million, and FY 02-03 reflected only ¼ of the total anticipated impact of the beach nourishment special tax districts. The FY 03-04 budget anticipated one full year of this impact, and anticipated a total of $1,400,000 of sales tax revenues. As noted earlier, FY 03-04 sales tax revenues are expected to exceed budget estimates by $200,000, and we now anticipate a total of $1,600,000 for FY 03-04. An equivalent amount is anticipated in the FY 04-05 Recommended Budget. This amount will more than offset the loss of 1-cent of property tax revenue with the recommended 16.5 cent tax rate.

$12 Increase in Annual Solid Waste Service Fee

The recommended increase in the annual solid waste service fee is expected to yield a net increase of approximately $55,000 of additional revenue (over the FY 03-04 original budget estimate) that is earmarked for escalating solid waste collection costs and waste volumes.

Contract waste collection costs (Waste Industries) and landfill tipping fees are projected to increase by approximately $42,000 in FY 04-05 over the FY 03-04 original budget amount. The total volume of residential solid waste collected in Emerald Isle is expected to increase by more than 14% over the amount of residential solid waste anticipated in the FY 03-04 original budget. In addition, the demand for Town yard waste collection services continues to skyrocket, and the Town expects to collect yard waste from 87% more collection points in FY 04-05 than collected just 3 years ago.

Conservative Estimate for Development Permit Fees

The FY 04-05 Recommended Budget anticipates a total of $181,000 from development permit fees. This estimate is admittedly very conservative, considering that FY 03-04 projections indicate total development permit fee revenues of approximately $256,000. FY 02-03 actual revenues were approximately $225,000.

The FY 04-05 Recommended Budget assumes that approximately 80 new homes will be constructed in Emerald Isle over the next fiscal year, which is less than the 124 new homes projected to be initiated in FY 03-04 and the 128 new homes initiated in FY 02-03. The actual number of new homes initiated in FY 01-02 was 67.

Due to uncertainty about the continuation of the current housing market, and the potential for interest rate increases later this year, it is difficult to arrive at an accurate prediction for this revenue source for FY 04-05. The $181,000 estimated for FY 04-05 is considered to be a relatively “safe” estimate at this time, however, it would not be surprising if actual FY 04-05 development permit fee revenues exceed this estimate.

Other Revenues

As noted earlier, other General Fund revenue sources are expected to remain relatively constant, with minor increases or decreases projected in FY 04-05. There are a few notable exceptions, however.

The FY 04-05 Recommended Budget relies on a net additional $70,000 of anticipated grant revenue than the FY 03-04 original budget. The Town hopes to receive a $56,000 grant for the installation of exhaust ventilation systems at both Fire stations, and also hopes to receive a $32,000 grant from the NC Clean Water Management Trust Fund to study the potential removal of existing ocean storm water outfalls near Bogue Inlet Pier.

Total Parks and Recreation fees are expected to miss the FY 03-04 budget estimate by approximately $10,000, and this shortfall is attributed primarily to a greater than 50% decline in enrollment in after school programs offered by the Parks and Recreation Department. The Parks and Recreation Director attributes this decline to the demographics of Emerald Isle’s school-age children, as well as the availability of other options. The FY 04-05 Recommended Budget assumes that this enrollment decline will persist in FY 04-05, however, the Parks and Recreation Department will be attempting to restore enrollment to historical levels.

General Fund interest earnings continue to be sluggish, and the FY 04-05 Recommended Budget assumes only a marginal increase in the Town’s FY 03-04 rate of return. The net impact on the FY 04-05 budget is a $10,000 reduction in anticipated revenues compared to the FY 03-04 original budget.

Due to the delay in the new Fire engine purchase, the Town’s FY 04-05 budget again relies on installment financing proceeds for this major equipment purchase. The FY 04-05 Recommended Budget assumes that the new Fire engine will be financed over a 4-year period, and that the first debt service payment will not be due until FY 05-06. This financing strategy has been factored into the Town’s 5-year financial forecast, and will not result in pressure to increase the property tax rate in future years. A total of $350,000 of installment financing proceeds is included in the FY 04-05 Recommended Budget.

Finally, the FY 04-05 Recommended Budget does not rely on General Fund balance to balance the budget. There is a $12,000 appropriation from the Powell Bill Reserve included, and this appropriation is earmarked for additional sidewalk construction by prison labor crews.

Significant FY 04-05 General Fund Expenditure Issues

Significant Decrease in Debt Service Payments in FY 04-05

FY 03-04 is the final year of debt service payments for the Emerald Isle Woods land purchase, and this results in a decrease of approximately $260,000 in the FY 04-05 General Fund budget. The early retirement of the 2002 refinancing debt prior to June 30, 2004 will result in a decrease of an additional $192,000 in the FY 04-05 General Fund budget

The delay in the first debt service payment on the new Fire engine will result in a $78,000 decrease in expenditures in FY 04-05. Finally, the temporary financing for the new solid waste containers will be retired in FY 03-04, and this results in an additional decease of $163,000 in debt service expenditures in FY 04-05. This reduction is offset by a similar reduction in one-time solid waste container fees on the revenue side.

If the 2002 refinancing debt is retired prior to June 30, 2004, the Town’s only outstanding general debt will be for the new brush truck purchased in FY 03-04, and the new debt for the new Fire engine. The remaining principal balance on the brush truck is approximately $56,000.

Pay-As-You-Go Funding Included for

Coast Guard Road Flood Water Project

The FY 04-05 Recommended Budget includes approximately $341,000 for the Coast Guard Road Flood Water Project. This amount is in addition to the $288,000 earmarked from the projected FY 03-04 surplus for pre-construction expenses.

A total of $246,000 is budgeted for the construction of the 3 planned pumps at Fawn Drive, Deer Horn Drive, and Conch Court, and for the associated piping and discharge at the Emerald Isle Woods Park site. An additional $20,000 is included for site modifications at the Emerald Isle Woods Park site, and $22,000 is included for electrical system modifications designed to enhance the reliability and longevity of the new system. Finally, a total of $53,000 is included to resume overall system permitting efforts after the initial construction is complete.

Essentially, the FY 04-05 Recommended Budget redirects funds previously budgeted for debt service on the Emerald Isle Woods land purchase for the construction of the first 3 pumps on Fawn Drive, Deer Horn Drive, and Conch Court, and additional funds are allocated for other project expenses in FY 04-05.

Funding Included for Local Grant Match Requirements

The FY 04-05 Recommended Budget includes a total of $40,000 to provide the local match for both a NC CAMA grant and NC Clean Water Management Trust Fund grant that would be used to improve the parking lot at the Western Ocean Regional Access. The $40,000 would match a $120,000 NC CAMA grant and a $160,000 NC Clean Water Management Trust Fund grant if pending grant applications are submitted and approved. Grant funds would be used to construct a demonstration pervious concrete / traditional asphalt parking lot at the Western Ocean Regional Access, and would complete necessary improvements to this valuable town facility.

A total of $35,000 is included to match a NCDOT Transportation Enhancement Grant of $140,000. If submitted and approved, these funds would be used to extend the soon-to-be-constructed bicycle path terminating at Merchants Park east along the south side of NC 58 to Black Skimmer Drive. The Town has an excellent chance of receiving grant funds for this project, and the Town’s completed sidewalk and soon-to-be-constructed bicycle path have been well received by residents and visitors.

Finally, a total of $8,000 is included to match the recently approved NC Clean Water Management Trust Fund grant application to study the potential removal of ocean storm water outfalls near Bogue Inlet Pier.

The Town has been fortunate to receive several significant grants in the past few years, and I hope to continue the Town’s aggressive pursuit of grant funding for beneficial Town projects.

Significant Increase in Health Insurance Premiums

The Town’s monthly health insurance premium per employee will increase by approximately 27% in FY 04-05, from $312 per month to $396 per month. This increase follows a decrease in premiums in FY 03-04 and a moderate increase in premiums in FY 02-03. The total cost impact of this increase is approximately $66,000.

Faced with this significant increase, staff reviewed other options for health insurance and was able to identify potential increases in employee co-payments and / or deductibles, however, the cost savings associated with these changes were not judged to be significant enough to justify passing the additional costs on to the Town’s employees.

The Town switched from the NC League of Municipalities’ health insurance program to Blue Cross Blue Shield prior to FY 02-03, and this change has been extremely popular with Town employees. The Town’s monthly BCBS premiums are still considerably less expensive than the FY 04-05 health insurance programs offered by the NC League of Municipalities.

Funding Included for Modest Salary Increases

The FY 04-05 Recommended Budget includes funding for a 2.5% cost-of-living adjustment for all Town employees. The Consumer Price Index for the 12 months ending December 2003 reflected a 2.3% increase, while the 12 month period ending March 2004 reflected a 1.7% increase. The total cost of these salary increases, including associated benefits, is approximately $60,000.

I have also included an additional $30,000 in the Recommended Budget (in the Nondepartmental account) for additional salary increases for targeted positions and employees. After accounting for associated benefits, this amount is equal to 1.29% of the Town’s full-time payroll. Any additional salary adjustments would be determined after considering current market conditions, changing job duties, and job performance over the past year. These funds will be used in the same manner as in FY 03-04, when a total of $20,000 was allocated for this purpose. Although not every employee would receive a salary adjustment from these funds, the net result is that the average salary increase budgeted in FY 04-05 is approximately 3.8%.

Additionally, a total of $7,000 is included in the FY 04-05 Recommended Budget to fund a detailed pay and classification study for all Town positions. The study would include complete job descriptions, a review of internal salary equity among Town positions, the establishment of defined salary ranges (but not steps), the implementation of new personnel policies governing salary advancement, and may or may not include a detailed comparison of other beach communities’ and surrounding communities’ salary structures, depending on the Board’s direction. In general, I believe the Town’s current salary structure is fairly competitive, and I would not expect the pay and classification study to recommend significant overall salary increases. If such a study is funded, the $30,000 earmarked for additional salary adjustments would be allocated to various positions and/or employees based on the results of the study.

FY 04-05 Recommended Budget Provides

Scheduled Funding for Capital Equipment Replacements

The FY 04-05 Recommended Budget implements the Town’s Capital Replacement / Improvement Program, and allocates sufficient funds for scheduled major replacements. The following are funded in the FY 04-05 Recommended Budget:

· three replacement Police cars to replace vehicles with excessive mileage, age, and wear,

· the replacement of an 11-year old ProJet water rescue boat and 5-year old Beach Patrol all-terrain vehicle,

· the replacement of a 9-year old 4WD pickup truck in the Public Works (Solid Waste) Department, and

· the replacement of a 13-year old 4WD pickup truck in the Parks and Recreation Department.

All of these scheduled replacements have been re-assessed prior to the budget process, and are judged to be in need of replacement. All surplus vehicles will be auctioned off through the Town’s website.

All of these scheduled replacements are funded with pay-as-you-go revenues in the FY 04-05 Recommended Budget.

Other Notable Expenditure Items

The Recommended Budget also includes funding for several other notable items, all of which will either maintain existing facilities and / or equipment, or result in measurable and visible impacts on the quality of life in Emerald Isle. The most notable items are as follows:

· a total of $25,000 to conduct a comprehensive review and rewrite of the Town’s development ordinances; this project would eliminate contradictions in existing ordinances, simplify and consolidate the Town’s ordinances, and implement CAMA Land Use Plan recommendations,

· a total of $27,000 to purchase an additional tractor to improve mowing capabilities along the NC 58 corridor; it has been a priority of mine to improve the aesthetics of the Town’s expansive NC 58 right of way through Town,

· a total of $10,000 to conduct a more detailed plan for the proposed Village East (Bogue Inlet Drive) and Village West (Islander Drive) areas,

· a total of $9,500 to replace the roof at Fire Station 2, which suffers from leaking,

· a total of $5,000 to hire an architect to make recommendations on the future renovation and/or expansion of the Emerald Isle Police Station,

· a total of $8,000 to offer additional aerobic and yoga classes at the Community Center,

· a total of $14,000 to make necessary exterior repairs to the Town Hall building,

· a total of $20,000 to resurface the tennis courts at Blue Heron Park and replace fencing; a $5,000 grant from the US Tennis Association would be requested to offset some of this cost, and

· a total of $12,000 to replace and upgrade the Town Hall computer server, which is aged and outdated.

OTHER FUNDS

Beach Nourishment Debt Service / Reserve Fund

This is the third year of the Beach Nourishment Debt Service / Reserve Fund, which is used to account for the special district tax collections and principal and interest payments on the beach nourishment bonds. The total budget for this fund is $5,175,443 in FY 04-05, however, the Board should note that $2,600,000 of this is associated with the roll-over of the temporary bond anticipation notes issued for beach nourishment, and overstates the total budget for this fund. Of the remaining $2.575 million, nearly $1.6 million is allocated for principal and interest payments, with the balance allocated to fund balance.

The Beach Nourishment Debt Service / Reserve Fund is expected to have a fund balance of approximately $3.4 million at June 30, 2004 if all FEMA reimbursements are received prior to June 30. FY 04-05 is the second full-year of debt service payments on the bonds, however, nearly an additional $1 million is expected to be added to the fund balance, bringing the estimated total fund balance to approximately $4.4 million by the end of FY 04-05. As you know, this fund balance accumulation is intentional in order to stabilize the special district tax rates over the entire nine-year period that they will be in effect. This fund balance will be depleted in the latter years of the debt service schedule.

Importance of the Beach Nourishment Debt Service / Reserve Fund to the Bogue Inlet Channel Erosion Response / Western Phase Beach Nourishment Project

Current projections indicate that the Beach Nourishment Debt Service / Reserve Fund will have a remaining balance in excess of $1 million after all beach nourishment bonds are retired in FY 12-13. As we have discussed in the past, this is the most likely source of funding if construction bids for the Bogue Inlet Channel Erosion Response / Western Phase Beach Nourishment Project come in over budget later this year. It remains extremely important for the Town to manage the Beach Nourishment Debt Service / Reserve Fund in a sound manner, and it is also important for the Town to maintain its overall sound financial position to achieve the best possible bond rating for the general obligation bond issue associated with this project. The better the Town’s bond rating, the lower the interest rate on the new bonds, and ultimately the more potential “cushion” that will exist for any cost overruns on this crucial project. A bond interest rate of 3% (compared to the currently projected 4% rate) would result in an additional $300,000 surplus in the Beach Nourishment Debt Service / Reserve Fund.

Debt Service Fund

The Debt Service Fund accounts for all general debt service payments. As noted earlier, the only general debt service payment anticipated in FY 04-05 is associated with the purchase of the new brush truck in FY 03-04. A total of $19,874 is included for this purpose.

Special Separation Allowance Fund

The FY 04-05 budget includes an increase in the annual contribution to the Special Separation Allowance Fund to $18,000. This level of funding should enable the Town to gradually reserve sufficient funds to meet the Town’s projected liabilities. As you know, the fund is used to reserve funds for future special separation allowance payments for retiring law enforcement officers.

Special Drug Fund

This fund accounts for restricted Police Department revenues resulting from drug seizures. The actual revenue collections in this fund are highly variable; thus a total of only $2,500 is anticipated in FY 04-05. If there is a need to utilize additional funds received, a budget amendment will be presented for the Board’s consideration during the fiscal year. These funds may only be used for Police Department equipment.

Regional Beach Access Fund

This fund will be used to budget and account for the Western Ocean Regional Access parking lot improvements noted earlier, for which the Town would seek NC CAMA and NC Clean Water Management Trust Fund grants.

LOOKING AHEAD

Looking ahead over the next five years, the Town’s budget situation appears to be relatively stable. I have put considerable effort into planning for future capital expenditures and reasonably anticipated revenue adjustments, and the General Fund 5-Year Financial Forecast included in the FY 04-05 budget document incorporates all of this information.

Based on this analysis, I am reasonably confident that the Town can stabilize the General Fund tax rate at the 16.5 cent level for several years, and that there also exists a good possibility of future tax rate decreases if the Town’s budget is managed carefully and the Town is not negatively impacted by natural, manmade, or economic disasters.

There are a few key points that the Board should be aware of regarding the Town’s financial future:

· The Town continues to rely more and more heavily on sales tax revenues to balance the General Fund budget. To illustrate this point, a graph is included in the Summary Budget Information section of the FY 04-05 budget document. You will note that in FY 01-02, the Town received approximately 30 cents for every General Fund property tax dollar received, and that in FY 04-05, the Town expects to receive 69 cents for every General Fund property tax dollar received. Without these additional sales tax revenues, the Town’s General Fund property tax rate would be significantly higher than the 16.5 cents recommended.

As noted earlier, this positive impact is associated entirely with the beach nourishment special tax districts. The Town’s sales tax revenues are highly dependent on the sales tax distribution method utilized by the Carteret County Board of Commissioners, which is currently based on the total amount of property taxes levied. The Board should continue to monitor any efforts at the County level or by other municipalities to change the distribution formula, which has obviously worked in our favor. A switch from the property tax method to the per capita method would have significant negative impacts on the Town’s budget. I don’t envision this occurring, as the County would also lose if the formula is changed, however, circumstances change and anything is possible.

The Board should also recognize that FY11-12 is the last year that the Town will receive additional sales taxes associated with the beach nourishment special tax districts. Although that date is still 7 years away, it will become important in future years to adequately plan for the loss of those sales tax revenues at that time.

· The Board recently authorized a $750,000 grant application to FEMA and the NC Division of Emergency Management to fund the next 3 pump locations planned for the Coast Guard Road Flood Water Project. The General Fund 5-Year Financial Forecast included in the FY 04-05 budget document assumes that the Town will not receive this grant, and will continue to allocate $250,000 annually for the next five years for future phases of this project. If the Town is fortunate to secure the FEMA / NC Division of Emergency Management grant, the Town will likely be able to eliminate this allocation annually, and could potentially decrease the General Fund tax rate by an additional 1.5 cents in the future.

· Although it requires discipline, I strongly recommend that the Town adhere to a responsible Capital Replacement / Improvement Program in the future. This tool can be very helpful in stabilizing annual capital expenditures, as it provides for the orderly replacement of the often expensive capital equipment that is essential for quality service delivery. Adherence to a planned replacement schedule will greatly enhance the Town’s ability to stabilize the property tax rate over the long haul.

· The debt financing strategy included in the FY 04-05 Recommended Budget and the General Fund 5-Year Financial Forecast utilizes debt financing for major Fire apparatus (and potentially future major capital projects) only. The Town’s annual debt service payments will stabilize at approximately $100,000 annually after the debt on the new brush truck is retired, and this will reserve additional debt capacity for larger capital projects.

· The Board should exercise discipline with regard to the General Fund balance. The Town is fortunate to have an acceptable level of fund balance now, however, there are some advisors (myself included) who believe that the Town should gradually increase the General Fund balance in the future to a level approaching 50% or more of annual General Fund expenditures.

CLOSING

As I noted earlier, I am extremely pleased to present a Recommended Budget that reduces the General Fund tax rate to 16.5 cents, which is believed to be the lowest rate in the history of the Town of Emerald Isle. I believe the Recommended Budget respects our taxpayers, effectively controls operating costs, invests appropriately in our greatest resource - our employees, and allocates funding for projects and services that will have a measurable and visible impact on the quality of life in Emerald Isle. I am hopeful that the Board and the community will be pleased with these recommendations.

I have once again included several charts and graphs in the budget document to better educate our citizens and property owners about the Town’s budget and our services and programs. I hope that the public will find this information useful as they review and critique the Recommended Budget. I sincerely want to do everything possible to educate our citizens and property owners about the Town’s activities, issues, and budget. I ask you to encourage any members of the community with questions or interest in the budget to contact me directly. I am happy to make the time to explain the Town budget to anyone who is interested.

I’d like to once again express my sincere appreciation to the department heads and all of our employees for their daily efforts to contribute to the excellent quality of life in Emerald Isle. Our organization is certainly not perfect, and there is always room for improvement, but I continue to be impressed by the high quality people that work for the Town of Emerald Isle. Their commitment to this community and this organization is outstanding.

It is truly a pleasure to work in such a wonderful community, and I feel truly blessed to serve as the Town Manager of Emerald Isle. I thank the Mayor and each member of the Board of Commissioners for your support and guidance as the staff and I give our best to make Emerald Isle an even better place than it already is.

I look forward to reviewing the Recommended Budget with you in the coming weeks. Obviously, I hope that you will concur with the vast majority of these recommendations, but I sincerely encourage you to adjust this Recommended Budget in any way that more clearly articulates your priorities for FY 04-05 and your long-term vision for the community.

Respectfully submitted,

Frank A. Rush, Jr.

Town Manager

(A copy of the Recommended Budget is attached and incorporated into these minutes)

Mr. Rush made note that budget workshop meetings are tentatively scheduled for May 18 and May 20 at 6:00 pm. A special meeting to conduct the public hearing on the budget is scheduled for June 1 at 6:00 pm. He added that he was hopeful that the Board would adopt the FY 04-05 budget at its regular meeting on June 8 at 6:00 pm.

Mayor Schools asked if there were any public comments about this item or any other item not on the agenda.

Doje Marks, 134 Sandcastle Drive, thanked Mr. Rush for making copies of the budget available to all citizens and for providing very clear, easy to read Powerpoint presentation. Ms. Marks noted that some of the Board had been very vocal in the past about the need to support the small property owners, and she asked that they be taken into consideration during this budget period. She felt the 1-cent tax decrease was fine but felt that when you add the $12 increase for solid waste collection that is what hits those small property owners the most, and asked that the Board keep this in mind. She also said she felt the pay as you go was a wonderful idea for short term capital expenditures such as vehicles, but was concerned when talking about long term projects like the stormwater project, they should require long term financing, adding that just going with funding for three pumps were not addressing the problems with flooding.

Don Henry, 2602 Emerald Drive, local contractor in Emerald Isle for 20 years, asked why they could not encroach into the 60 foot setback on oceanfront properties for just adding a swimming pool. He understood that most areas are not like Emerald Isle in the fact that they do allow them. He noted that a lot of money is brought into Emerald Isle because of oceanfront properties, and he noted that being in the real estate business he had found that the houses that have pools bring in a lot more revenue.

Mayor Schools said that they could ask the Planning Board to look into this and come back to the Board with a recommendation.

Commissioner McElraft gave a brief history as to why Emerald Isle has a rule on the 60 foot setback, and is probably the only beach town that does. She said the CRC was getting ready to make a ruling in August of a previous year, and in May or June of that same year the Town decided that it was pretty sure the CRC would make a ruling that you could not have pools in North Carolina in the setback area. She said that she went along with the rest of the Board and decided to go ahead and preemptively let Emerald Isle make a stance on that and say no pools in the 60 foot setback. She said now Emerald Isle is out of step with that because the legislature turned that down, they would not allow the CRC to make that ruling, so we are stricter than CAMA on this and she would love to see this go to the Planning Board.

It was the general consensus of the Board that the Planning Board be asked to look into the issue of swimming pools in the 60 foot ocean setback area.

9. REZONING REQUEST – LOTS 3 AND 4 OF JTW INVESTMENTS COMMERCIAL SUBDIVISION, BLOCK 15, FROM B-3 (BUSINESS) TO R-2 (RESIDENTIAL SINGLE / TWO-FAMILY)

Kevin Reed, Planning Director presented information to the Board concerning the rezoning request. He noted that the property is located on the south side of Emerald Drive, west of its intersection with Ocean Drive, more specifically known as Lots 3 and 4 of the JTW Investments Commercial Subdivision. Mr. Reed stated that this is the exact request that the Board considered during a public hearing held at the March 9, 2004 meeting, noting that at the conclusion of that public hearing the applicant withdrew the request for the rezoning. Mr. Reed said that they subsequently resubmitted that request. Discussion of that request was heard by the Planning Board at their April 26 meeting. Mr. Reed said that during that meeting several members of the Planning Board again reiterated their concerns that the rezoning was in conflict with the future Land Use Plan recently adopted by the Board of Commissioners. He added that at the April Planning Board meeting the Planning Board did recommend unanimously by a vote of 5-0 to recommend to the Board of Commissioners that this rezoning request again be denied.

Motion was made by Commissioner McElraft to open the Public Hearing. The Board voted unanimously 5-0 in favor. Motion carried.

Mike Lincoln, Attorney representing the applicant’s, the McCann’s, spoke concerning their request. He distributed handouts to the Board of Commissioners. Mr. Lincoln said he felt the key element to remember was that Block 15 was originally meant to be reserved for commercial use entirely, and eventually the oceanfront lots were rezoned to residential and later on second row lots (9 of them) were rezoned to residential. He noted that, looking at the rezoning map, the southern two-thirds is now zoned residential. What is left is basically 9-10 lots still zoned commercial. He noted there is also a lot next to Connie Street at the corner of Emerald Drive that is zoned residential, so not every lot along there is zoned commercial on Emerald Drive. Mr. Lincoln said that going back to 1997 when the rezoning was done on the second row lots, he believed at that time that Mr. Allen stated that the area had become more of a residential neighborhood rather than commercial, and that the history on this and the precedence had been to go to residential. Mr. Lincoln said that he knew that the March 2004 Land Use Plan calls for a certain amount of commercial to be retained in the east end of Emerald Isle. He added that is also basically the same plan that was in place back in 1997 when 9 lots were rezoned on the second row. He said the purpose of the Town plan is to provide a reasonable foreseeable use for each landowner of his or her property. He said if someone could show how him how this would be used as commercial anywhere in the near future he would be happy to listen, but he said history has shown that it’s going in the direction that this will be a residential area. He mentioned that the owner of the Mini-Mart, Ms. Creech was present tonight, adding that right now it is used as a snack bar, convenience store, gas station, and a gift shop. He added at this point in time if anyone were to come in commercially to provide any competition she would be out of business. He felt the commercial use here was very limited. He said the McCann’s own two lots (3&4), and the only reasonable use they have for those lots in the foreseeable future is residential, leaving still approximately 7-8 lots commercial. He referenced a series of pictures noting commercial blight. He added again the only reasonable use the McCann’s would have was residential for at least the next 15-20 years. He said this rezoning request was based on the fact that the adjacent property owners are for it. He mentioned letters from several property owners that are for it, and he noted in the back of the handout a petition signed by several property owners that want this zoned residential. Mr. Lincoln said he believed that the town plan should provide someone with reasonable foreseeable use, and this provides no foreseeable use for the McCann’s, it is investment property, and there is no use commercial, it can only be used as residential. He asked the Board to please grant this rezoning request and allow the McCann’s to make reasonable use of their property.

Motion was made by Commissioner Wootten to close the Public Hearing. The Board voted unanimously 5-0 in favor. Motion carried.

Commissioner McElraft commented that she felt strongly about this. She said they had downzoned the oceanfront, and the second row. She noted that in the Land Use Plan it does state that the convenience node is needed there, adding that there is a convenience node there now, mentioning a coffee shop, convenience store, gas pump, possibly a restaurant. She said there are 8-9 lots left and asked what other conveniences were needed. She felt they needed people to buy from the convenience stores. Commissioner McElraft added she also had the taxpayer in mind, looking at the property being requested to be downzoned, She is looking at single family/duplex that could probably generate $650,000 each into the tax base. Commissioner McElraft felt they had already set precedence, mentioning the downzoning of property that was zoned commercial in the western end. She mentioned her dilemma, between the taxpayers and the respect she has for the Planning Board members, because she knew they had thoughtfully considered this. She felt it should be downzoned.

Commissioner Wootten felt this type of property is a dying breed and the commercial needed to be retained, adding this is a function of planning. He disagreed that a precedent had been set, noting the properties downzoned were second row ocean.

Commissioner Hedreen added that the commercial property in the western end is more abundant and they needed to be protective of what was left down in the eastern end.

Motion was made by Commissioner Wootten to deny the request to rezone Lots 3 and 4 of JTW Investments commercial subdivision from B-3 to R-2. The Board voted 4-1 in favor of denying the request – Hedreen, Isenhour, Messer, Wootten in favor, McElraft opposed. Motion carried.

10. ORDINANCE AMENDING CHAPTER 16 – STORM WATER MANAGEMENT – TO REQUIRE ENGINEERED STORM WATER PLANS FOR ALL DEVELOPMENT

Kevin Reed, Planning Director and Greg Meshaw, Town Engineer presented information, and answered questions from the Board regarding this ordinance amendment. Mr. Reed summarized for the Board that currently the town’s stormwater management ordinance, particularly Chapter 16 of the Town Code, contains a variety of requirements relative to the retention of stormwater for various types of projects, and it breaks it down to two project types – 1) projects with less than 5,000 square feet of impervious area and, 2) projects with greater than 5,000 square feet of impervious area, residential or commercial project. He explained that Chapter 16 now requires any commercial development and any residential development with impervious area greater than 5,000 square feet to have a stormwater plan prepared by a licensed professional engineer from the State of North Carolina. Mr. Reed said that in late 2003 the town was notified that the licensing board had taken issue with the stipulation within the Ordinance which indicated that stormwater management plans for residential projects with less than 5,000 square feet of impervious surface need not be prepared by a Professional Engineer (PE), but still must be prepared in accordance with the Ordinance’s design guidelines. Mr. Reed said that Greg Meshaw, Town Engineer had worked very hard to create a series of calculations, and a “fill in the blank” approach for those wishing to construct a home with not more than 5,000 square feet of impervious surface. This approach would allow anyone to develop a stormwater plan that met the requirements of the Ordinance without using a Professional Engineer (PE). The Board of Examiners did not agree with this approach and indicated they did not foresee any change of heart on their position.

Mr. Reed said the issue was then presented to the Planning Board. The Planning Board at their March meeting created a subcommittee to look into this issue. The subcommittee recommended to the Planning Board that all residential or commercial development regardless of the amount of impervious area be required to have a stormwater plan prepared by a professional engineer. The Planning Board at their April 26, 2004 meeting then voted unanimously to recommend that Chapter 16 be amended to require all development in the Town of Emerald Isle to have an engineered stormwater plan with one exception currently in the Ordinance which is an addition or modification to an existing structure of 1,000 square feet or less.

Town Attorney Richard Stanley said in response to the question by Commissioner Messer about legality, that the Board of Examiners for Professional Engineers is basically taking the position that we are tacitly allowing the preparation of plans that violate state law, and they are also saying they will not prosecute the Town for allowing this but may prosecute the individuals that prepare the plans.

Following a considerable amount of discussion of this item, and various possible solutions, it was the consensus of the Board that more research was required. They directed that Planning Director Kevin Reed, and Town Engineer Greg Meshaw look into this issue further.

11. ORDINANCE AMENDING CHAPTER 19 – ZONING – TO RETAIN A 50 FT. BUILDING HEIGHT LIMIT BUT REMOVE THE STORY LIMITATION

Kevin Reed Planning Director addressed the Board and described the attached ordinance amendment. Mr. Reed stated that the Planning Board considered this amendment at their April 26, 2004 meeting and voted unanimously to recommend to the Board of Commissioners that the Zoning Ordinance be amended to remove the Town’s current 3-story limitation for commercial buildings. He added that the absolute mean roof height limit would remain at 50 feet, however the number of stories would be governed by the appropriate building codes.

Motion was made by Commissioner McElraft to open the Public Hearing. The Board voted unanimously 5-0 in favor. Motion carried.

There were no comments from the public.

Motion was made by Commissioner McElraft to close the Public Hearing. The Board voted unanimously 5-0 in favor. Motion carried.

Commissioner McElraft stated that in 2000 they had established the 50 foot height limit for buildings with a peaked roof. Commissioner McElraft wanted to clarify that they were not raising the building height, but allowing the building inspector, engineers, and fire code officials, to make the decision as to what is inside the building.

Commissioner Hedreen added that they were all committed to current building height restrictions.

Motion was made by Commissioner Messer to adopt the Ordinance Amending Chapter 19 – Zoning – To Retain a 50 Ft. Building Height Limit but Remove the Story Limitation. The Board voted unanimously 5-0 in favor. Motion carried.

12. RESOLUTION AUTHORIZING NCDOT ENHANCEMENT GRANT APPLICATION FOR EXTENSION OF NC 58 BICYCLE PATH

Alesia Sanderson Parks and Recreation Director presented the attached resolution to the Board. She referenced her memo which stated that the North Carolina Department of Transportation Enhancement Program had issued a call for applications for funding. She said what is proposed tonight is for the Town to submit an application for this funding cycle an additional 2,900 linear feet extending from Merchants Park to Blackskimmer Road. Ms. Sanderson said this would connect additional business district to the local government center, as well as heavily populated residential areas. She noted the total opinion of cost is approximately $175,000, the town share being 20% or $35,000. Ms. Sanderson explained the reason for the slightly higher expense for this section was due to undercutting draining with more businesses located close to the right-of-way.

RESOLUTION AUTHORIZING NCDOT TRANSPORTATION ENHANCEMENT GRANT APPLICATION FOR EXTENSION OF NC 58 BICYCLE PATH

WHEREAS, the North Carolina Department of Transportation provides grant funding to local governments and other groups for transportation enhancement projects, and

WHEREAS, a bicycle path would provide a safer transportation route for adults and children bicycling along NC 58, and also provide a walking path, and

WHEREAS, a bicycle path along NC 58 would encourage residents and visitors to use alternative forms of transportation to travel to area retail establishments, restaurants, Bogue Inlet Pier, the Post Office, the Town Hall Complex (which houses a park, tennis courts, outdoor basketball courts, a Community Center, and the center of local government), and beach accesses, and provide links to densely populated residential areas thereby reducing traffic congestion in this area, and

WHEREAS, the Town will soon complete construction of a ten-foot wide, 1.4 mile bicycle path along NC 58 between Coast Guard Road and Merchants Park, which was funded by the NCDOT Transportation Enhancement Program and the Town during FY 03-04, and

WHEREAS, an extension of this bicycle path along NC 58 from Merchants Park to Black Skimmer Road would further encourage residents and visitors to use alternative forms of transportation, and provide a continuous 2+ mile bicycle path through the center of Emerald Isle, and

WHEREAS, bicycle paths are an eligible activity for funding through the NCDOT Transportation Enhancement Program, and

WHEREAS, the Town Manager is the chief administrative officer of the Town,

NOW, THEREFORE BE IT RESOLVED by the Board of Commissioners that the Town Manager is hereby authorized to submit a NCDOT Transportation Enhancement Grant application for a bicycle path along NC 58 between Merchant’s Park and Black Skimmer Road. The total amount of grant funding requested is $140,000, which represents 80% of the total estimated project cost of $175,000. The Town’s local match of $35,000 will be included in the Town’s FY 04-05 budget.

Adopted this ___ day of ___________, 2004.

__________________________

Arthur B. Schools, Jr., Mayor

ATTEST:

______________________

Rhonda Ferebee, Town Clerk

Following general discussion by the Board mainly concerning parking, and landscaping issues - Motion was made by Commissioner Isenhour to approve the Resolution Authorizing NCDOT Transportation Enhancement Grant Application for Extension of NC 58 Bicycle Path. The Board voted unanimously 5-0 in favor. Motion carried.

Commissioner Hedreen thanked Alesia Sanderson for her giftedness with obtaining grant funding for the Town.

13. WESTERN OCEAN REGIONAL ACCESS PARKING LOT IMPROVEMENTS

Alesia Sanderson Parks and Recreation Director explained the attached resolutions noting that she and Town Manager Frank Rush had come up with an innovative approach for funding, as well as maximizing the potential for parking at the Western Ocean Regional Access. She said the total cost is $320,000. Ms Sanderson said what they plan is a combination of pervious concrete and traditional asphalt. The proposal consists of a preliminary grant application to CAMA in the amount of $120,000, which represents 75% of half of the project cost, with the Town providing a 25% local match of $40,000. They would then apply to the Clean Water Management Trust Fund for the additional half of $160,000.

Town Manager Frank Rush added that they will also request the county’s assistance with this project because it does serve a lot of county residents in Emerald Isle, and also one possibility for funding these improvements down the road is levying a fee, and he hoped the county would have interest in assisting with this in order to have a first class parking lot, and provide this facility for all the people in the county, and levying a fee at some point in the future.

RESOLUTION AUTHORIZING PRELIMINARY CAMA PUBLIC ACCESS GRANT APPLICATION

Whereas, the North Carolina Division of Coastal Management has issued a call for preliminary applications for public beach access funding in FY 2004-2005, and

Whereas, the Town of Emerald Isle has traditionally sought assistance from this agency to improve public beach access in Emerald Isle, and

Whereas, the Western Ocean Regional Access requires extensive parking area improvements, and

Whereas, the installation of a retention area associated with traditional asphalt or rock would utilize valuable parking spaces, which is contrary to the Town’s ardent efforts to maximize the number of parking spaces for beach access, and

Whereas, utilizing a combination of pervious concrete and traditional asphalt would eliminate the need for a retention area and preserve valuable parking spaces, and

Whereas, utilizing a combination of pervious concrete and traditional asphalt would serve as a valuable demonstration project for the effectiveness of pervious concrete in a North Carolina beach community, and

Whereas, the NC Division of Water Quality supports the Town’s efforts to construct a pervious concrete demonstration project at the Western Ocean Regional Access facility, and

Whereas, the Town recognizes that outside funding will be required to complete a project of this magnitude totaling $320,000, and

Whereas, the Town is proposing a funding partnership with the Clean Water Management Trust Fund and the NC Division of Coastal Management for this project, and

Whereas, the Town Manager is the chief administrative officer of the Town,

Now, therefore, be it resolved by the Board of Commissioners that the Town Manger is hereby authorized to submit a preliminary application in the amount of $120,000 to the NC Division of Coastal Management for parking area improvements at the Western Ocean Regional Access.

Be it further resolved that the Town will seek additional assistance from the Clean Water Management Trust Fund in the amount of $160,000, and that the Town will provide the a local cash match of $40,000 for the NC Division of Coastal Management grant.

Adopted this the_______ day of _____________, 2004.

____________________________

Arthur B. Schools, Jr., Mayor

ATTEST:

_________________________

Rhonda Ferebee, Town Clerk

RESOLUTION AUTHORIZING CLEAN WATER MANAGEMENT TRUST FUND GRANT APPLICATION

Whereas, the parking area at the Western Ocean Regional Access requires extensive improvements, and

Whereas, utilizing a combination of pervious concrete and traditional asphalt would eliminate the need for a retention area and preserve valuable parking spaces, and

Whereas, the NC Division of Water Quality supports the Town’s efforts to construct a pervious concrete demonstration project at the Western Ocean Regional Access facility, and

Whereas, the Town recognizes that outside funding will be required to complete a project of this magnitude totaling $320,000, and

Whereas, the Town is proposing a funding partnership with the Clean Water Management Trust Fund and the NC Division of Coastal Management for this project, and

Whereas, the Town Manager is the chief administrative officer of the Town,

Now, therefore, be it resolved by the Board of Commissioners that the Town Manager is hereby authorized to submit a Clean Water Management Trust Fund grant application in the amount of $160,000 to fund a pervious concrete and traditional asphalt demonstration project to improve the parking area at the Western Ocean Regional Access.

Be it further resolved that the Town will seek additional assistance from the North Carolina Division of Coastal Management in the amount of $120,000, and will provide a local match of $40,000.

Adopted this the ____ day of ____________ , 2004.

____________________________

ATTEST: Arthur B. Schools, Jr., Mayor

_________________________

Rhonda C. Ferebee, Town Clerk

Following general discussion about this proposed project, and the use of pervious concrete - Motion was made by Commissioner McElraft to approve the Resolutions, (Resolution Authorizing a CAMA Public Access Grant Applications, and Resolution Authorizing a Clean Water Management Trust Fund Grant Application) and approve the request for $120,000 from Carteret County for parking lot improvements at the Western Ocean Regional Access. The Board voted unanimously 5-0 in favor. Motion carried.

14. RESOLUTION AUTHORIZING CONTRACT WITH PITTARD, PERRY, & CRONE, INC. FOR ANNUAL AUDIT SERVICES

Mitsy Overman, Assistant Town Manager and Finance Officer briefed the Board on the attached resolution authorizing a contract with Pittard, Perry, & Crone, Inc. for annual audit services for the fiscal year ending June 30, 2004. Ms. Overman stated that the audit committee had conducted two interviews. McGladrey and Pullen of Morehead City, NC submitted a proposal of $14,768, and the second proposal from Pittard, Perry, & Crone, Inc. of Belhaven, NC submitted a proposal of $12,500. She noted that both firms were qualified but due to the cost factor, they chose Pittard, Perry and Crone to perform the audit, and that is the recommendation to the Board tonight for their approval.

RESOLUTION AUTHORIZING CONTRACT WITH PITTARD, PERRY, & CRONE, INC.

FOR ANNUAL AUDIT SERVICES

Whereas, the Town’s Audit Committee requested qualifications and proposals from interested auditing firms to perform the Town’s annual audit, and

Whereas, the Audit Committee interviewed two firms for this work, and has recommended that the Board of Commissioners contract with Pittard, Perry, & Crone, Inc., Belhaven, NC,

Now, therefore, be it resolved by the Board of Commissioners hereby authorizes a contract with Pittard, Perry, & Crone, Inc. for annual audit services for FY 03-04 in the amount of $12,500.

Adopted this the ____ day of ____________ , 2004.

____________________________

Arthur B. Schools, Jr., Mayor

ATTEST:

_________________________

Rhonda C. Ferebee, Town Clerk

Commissioner Isenhour noted that the GASB 34 compliance was included in the cost proposal of $12,500 from Pittard, Perry, and Crone, while GASB 34 was not included in the proposal submitted by McGladrey and Pullen.

Motion was made by Commissioner Wootten to approve the Resolution Authorizing Contract with Pittard, Perry, & Crone, Inc. for Annual Audit Services. The Board voted unanimously 5-0 in favor. Motion carried.

15. BOND ANTICIPATION NOTES – BEACH NOURISHMENT

Frank Rush Town Manager presented to the Board a resolution authorizing an additional $500,000 of bond anticipation notes for pre-construction expenses associated with the Bogue Inlet/Western Phase Beach Nourishment project. He asked for the Board’s approval in order to sell the bond anticipation notes, and take receipt of the proceeds prior to June 30, making the revenues exceeding our expenditures for this capital project. He noted this will temporarily finance already incurred pre-construction expenses and additional pre-construction expenses that will be incurred between now and the time of construction. The additional bond anticipation notes will be retired later this year when $7.6 million of general obligation bonds are issued for the construction of the project.

EXTRACTS FROM MINUTES OF BOARD OF COMMISSIONERS

A meeting of the Board of Commissioners for the Town of Emerald Isle, North Carolina, was held in Emerald Isle Town Hall, 7500 Emerald Drive, Emerald Isle, North Carolina, at 7:00 P.M. on May 11, 2004.

Present:_________________________________________________________________

______________________________________________________________________________

Absent:_________________________________________________________________

______________________________________________________________________________

Also present:____________________________________________________________

_____________________________________________________________________________

* * *

__________________________________ presented the following resolution and moved that it be adopted:

WHEREAS, the bond order hereinafter described has taken effect and the Board of Commissioners of the Town of Emerald Isle (the “Issuer”) desires to borrow money for the purpose for which bonds are authorized to be issued by that bond order in anticipation of the receipt of the proceeds of the sale of those bonds, as hereinafter provided;

NOW, THEREFORE, BE IT RESOLVED by the Board of Commissioners of the Issuer, as follows:

(1) The sum of $500,000 shall be borrowed by the Issuer in anticipation of the receipt of the proceeds of the sale of bonds authorized to be issued by the beach improvement bond order adopted by the Board of Commissioners of the Issuer on November 13, 2001, for the purpose for which those bonds are authorized to be issued. Negotiable notes, each designated “Beach Improvement Bond Anticipation Note” (the “Notes”), shall be issued for the sum so borrowed.

(2) The Notes shall be dated June 15, 2004, shall be payable August 25, 2004 and shall bear interest from their date at a rate which shall not exceed six per centum (6%) per annum. Interest shall be payable at the maturity of the Notes on the basis of a 360-day year consisting of twelve 30-day months. Each of the Notes shall be signed by the Mayor and the Town Clerk or Finance Officer and the seal of the Issuer shall be affixed to each of the Notes.

(3) The power to fix the rate of interest to be borne by the Notes and to determine the denomination or denominations of the Notes (which shall be $100,000 and multiples of $5,000 in excess thereof) is hereby delegated to the Mayor and the Town Clerk or Finance Officer who are hereby authorized and directed to cause the Notes to be prepared and to execute the Notes when they have been sold by the Local Government Commission of North Carolina.

(4) The Notes will be issued in fully registered form by means of a book entry system with no physical distribution of note certificates made to the public. One note certificate for the entire issue will be issued to and registered in the name of The Depository Trust Company, New York, New York (“DTC”) or its nominee and immobilized in its custody. The book entry system will evidence beneficial ownership of the Notes with transfers of beneficial ownership effected on the records of DTC and its participants pursuant to rules and procedures established by DTC. Principal and interest on the Notes will be payable by the Issuer on the maturity date thereof, in clearinghouse funds to DTC or its nominee as registered owner of the Notes. Transfer of principal and interest payments to participants of DTC will be the responsibility of DTC; transfer of principal and interest payments to beneficial owners by participants of DTC will be the responsibility of those participants and other nominees of beneficial owners. The Issuer will not be responsible or liable for maintaining, supervising or reviewing the records maintained by DTC, its participants or persons acting through participants.

In the event that (a) DTC determines not to continue to act as securities depository for the Notes, or (b) the Issuer determines that continuation of the book entry system of evidence and transfer of ownership of the Notes would adversely affect the interests of the beneficial owners of the Notes, the Issuer will discontinue the book entry system with DTC. If the Issuer fails to arrange for another qualified securities depository to replace DTC, the Issuer will authenticate and deliver replacement Notes in the form of fully registered certificates in denominations of $5,000 or integral multiples thereof.

(5) The Note and the endorsements thereon shall be in substantially the following form:

Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation (“DTC”), to issuer or its agent for registration of transfer, exchange, or payment and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein.

NO. R- $__________

United States of America

State of North Carolina

TOWN OF EMERALD ISLE

BEACH IMPROVEMENT BOND ANTICIPATION NOTE

INTEREST MATURITY DATE OF

RATE DATE NOTE CUSIP

August 25, 2004 June 15, 2004

REGISTERED OWNER: CEDE & CO.

PRINCIPAL SUM: DOLLARS

The Town of Emerald Isle (the “Town”), a municipal corporation within the State of North Carolina, acknowledges itself indebted and for value received hereby promises to pay to the registered owner named above, on the date specified above, upon surrender hereof, at the office of the Finance Officer of the Town, 7500 Emerald Isle Drive, Emerald Isle, North Carolina 28594-2917, (the “Note Registrar”), the principal sum shown above and to pay to such person, on the date specified above interest on such principal sum from the date of this note at the rate per annum shown above on the basis of a 360-day year consisting of twelve 30-day months. Both the principal of and the interest on this note shall be paid in any coin or currency of the United States of America that is legal tender for the payment of public and private debts on the respective dates of payment thereof.

This note is issued in accordance with the Registered Public Obligations Act, Chapter 159E of the General Statutes of North Carolina, and pursuant to The Local Government Finance Act of the State of North Carolina, as amended, and in anticipation of the sale of bonds authorized by a bond order adopted by the Board of Commissioners of the Town on November 13, 2001 (the “Bond Order”) and a resolution adopted by that Board (the “Resolution”) providing for the issuance of this note. The issuance of this note and the contracting of the indebtedness evidenced hereby have been approved by a majority of the qualified voters of the Town voting at elections held in the Town.

The notes will be issued in fully registered form by means of a book entry system with no physical distribution of note certificates made to the public. One note certificate for the entire issue will be issued to and registered in the name of DTC or its nominee and immobilized in its custody. The book entry system will evidence beneficial ownership of the Notes with transfers of beneficial ownership effected on the records of DTC and its participants pursuant to rules and procedures established by DTC. Transfer of principal and interest payments to participants of DTC will be the responsibility of DTC; transfer of principal and interest payments to beneficial owners by participants of DTC will be the responsibility of participants and other nominees of beneficial owners. The Town will not be responsible or liable for maintaining, supervising or reviewing the records maintained by DTC, its participants or persons acting through participants.

The Note Registrar shall keep at its office the books of the Town for the registration of transfer of notes. The transfer of this note may be registered only upon those books and as otherwise provided in the Resolution upon the surrender hereof to the Note Registrar together with an assignment duly executed by the registered owner hereof or his attorney or legal representative in form satisfactory to the Note Registrar. Upon any registration of transfer, the Note Registrar shall deliver in exchange for this note a new note or notes, registered in the name of the transferee, in authorized denominations, in an aggregate principal amount equal to the unredeemed principal amount of this note.

It is hereby certified and recited that all conditions, acts and things required by the Constitution or statutes of the State of North Carolina to exist, be performed or happen precedent to or in the issuance of this note, exist, have been performed and have happened, and that the amount of this note, together with all other indebtedness of the Town, is within every debt and other limit prescribed by said Constitution or statutes. The faith and credit of the Town is hereby pledged to the punctual payment of the principal of and interest on this note in accordance with its terms.

This note shall not be valid or become obligatory for any purpose or be entitled to any benefit or security under the Bond Order or the Resolution until this note shall have been endorsed by the authorized representative of the Local Government Commission of North Carolina and authenticated by the execution by the Note Registrar of the certificate of authentication endorsed hereon.

IN WITNESS WHEREOF, the Town has caused this note [to be manually signed by] [to bear the facsimile signatures of] the Mayor and the Town Clerk and [a facsimile of] its official seal to be [imprinted] [impressed] hereon, and this note to be dated June 15, 2004.

______________________________________

Mayor

(SEAL)

______________________________________

Town Clerk

Motion was made by Commissioner McElraft to approve the Resolution Authorizing the issuance of Bond Anticipation Notes for the Bogue Inlet/Western Phase Beach Nourishment Project. The Board voted unanimously 5-0 in favor. Motion carried.

Mr. Rush also presented a capital project budget ordinance amendment which is associated with the bond anticipation notes for the Board’s consideration.

TOWN OF EMERALD ISLE
CAPITAL PROJECT BUDGET ORDINANCE
BEACH NOURISHMENT - BOND ANTICIPATION NOTES

Be it ordained by the Board of Commissioners of the Town of Emerald Isle that, pursuant to NCGS 159-13.2, the following
amendments are made to Capital Project Ordinance originally adopted on June 10, 2003 for the Bond Anticipation Notes
associated with the Town's beach nourishment projects.

	Amended Budget	Amendments	Amended Budget
	(June 10, 2003)	(May 11, 2004)	(May 11, 2004)
Revenues
Bond Anticipation Notes	2,600,000	500,000	3,100,000

TOTAL	2,600,000	500,000	3,100,000

Expenditures
Transfer to Eastern Phase Beach Nourishment Project	2,510,000	-	2,510,000
Transfer to Western Phase Beach Nourishment Project	90,000	400,000	490,000
Transfer to Beach Nourishment Post-Project Monitoring	-	100,000	100,000

TOTAL	2,600,000	500,000	3,100,000

Copies of this ordinance shall be filed with the Finance Officer, Budget Officer, and Town
Clerk, to be kept on file by them for their direction in the disbursement of Town funds for this project.

Adopted this ______ day of _____________ , 2004.
		___________________________
Attest:		Arthur B. Schools, Jr., Mayor

_____________________________
Rhonda C. Ferebee, Town Clerk

Motion was made by Commissioner McElraft to approve the Capital Project Ordinance amendment. The Board voted unanimously 5-0 in favor. Motion carried.

16. COMMENTS FROM TOWN CLERK, TOWN ATTORNEY, AND TOWN MANAGER

There were no comments from the Town Clerk.

There were no comments from the Town Attorney.

Town Manager Frank Rush advised the Board regarding the Coast Guard Road Flood Water Project that he had received the draft plans and specs, and had forwarded them to the Town Attorney for his review. Mr. Rush also mentioned the street resurfacing contract and his dismay that they had not started on that, noting the contract had been approved in February with the initial goal of having work done by Easter weekend. He said in discussions with the contractor they expected to get started the following Tuesday, taking about a week to do the work, making sure they are done before Memorial Day weekend.

Mr. Rush mentioned that the Water Resources Congress, a lobbying group involved with dredging, and beach nourishment issues would like to have someone from Emerald Isle attend their annual meeting in Raleigh on May 26.

Mr. Rush advised the Board that today Representative Preston had introduced the bill to extend the town limits to incorporate all of the spit at the Point.

Mr. Rush noted that Town Hall Day is June 9, the North Carolina League of Municipalities Day in Raleigh with state legislators. Mr. Rush also mentioned that a letter from the Governor had been received asking for nominations for appointments to the Coastal Resources Commission. The recommendations are due by June 1. Mr. Rush would like to research this and bring to the Board at one of the budget workshop meetings for their concurrence of a nomination.

17. COMMENTS FROM BOARD OF COMMISSIONERS AND MAYOR

Commissioner Hedreen had no comments.

Commissioner Isenhour had no comments.

Commissioner Messer asked that when paving was done on Bogue Inlet, there is a tremendous old pine tree, if they could cut the roots down before paving so as not to continue to bust the pavement yet still save the tree.

Commissioner McElraft said that she would like to do something about the 700 signatures received tonight, she felt it important to look at both sides of this issue of driving on the beach, and felt it should be done during a workshop on a Saturday, requesting that a date be chosen that could accommodate everyone’s schedule.

Commissioner Wootten added that they also need to discuss the situation of another access in the Ocean Oaks area.

Mayor Schools mentioned that he had been in Raleigh for Save our Summers, and felt there was a lot of support for this.

Motion was made by Commissioner Hedreen to adjourn the meeting. The Board voted unanimously 5-0 in favor. Motion carried.

Motion was adjourned at 8:03 pm.

Respectfully submitted:

Rhonda C. Ferebee
Town Clerk