MEMORANDUM

TO: City Council

FROM: David J. Deutsch, City Manager

SUBJECT: Financial Issues

DATE: November 22, 2006

A quintet of issues was raised for possible review by the Financial Advisory Committee (FAC). Council decided to discuss the issues to determine whether to pursue the issues by Council, or to refer to the FAC, another committee, or to staff.

The issues are listed below, along with a staff commentary.

1. The financial benefits of using bonds rather than reserve funds to construct a new city hall/municipal center.

It is not a question of bonds “rather than reserve funds”. Given the scope and cost of the city hall/municipal center, funding the project solely with reserve funds is not possible. Staff has suggested a three-legged stool of financing comprised of the use of land sale proceeds, an allocation of reserves and borrowing. A potential scenario based on a thirty million dollar project is shown below.

Council may want to refer this approach to financing the municipal center to the FAC.

2. The financial impact of the City undertaking to establish its own library system and taking over the Hall Road Library as a City facility to help facilitate its construction.

This issue ought to be retained by the Council for its consideration, and not be referred to the FAC. Libraries are a County function in Maryland. It is the County’s responsibility to assure the construction and operation of a library at Hall Road. The proposal uses the term “library system”, suggesting that the City should step into the shoes of the County at the Bowie Library, as well as at the Hall Road facility. Operating two libraries would create significant financial burdens for the City.

3. A review of the cost/benefits to hiring a full-time lobby firm to assist the City in securing more federal and state funds for projects.

The Strategic Plan addresses the issue of a lobbyist, but only in the context of pursuing additional land use authority via State legislation. It is impractical to pursue State legislation until the authority provided by The General Assembly in the 2005 Session is implemented via County legislation.

It may be prudent to consider using a lobbyist at the County level to promote the passage of the needed County legislation.

Some communities use lobbyists to assist in seeking federal funding for various projects. Rockville and Gaithersburg are among the area municipalities employing lobbyists to seek federal “earmarks” in the appropriation process.

I believe this is a policy question for Council.

4. Whether there is any financial impediment to the City establishing a small/SDB contracting program.

The review of a local small/SDB contracting program will take some additional research. There would be financial implications, both in terms of increased contracting costs and increased staffing to manage the program.

The City currently hosts weekly meetings of the Maryland Small Business Development Center’s (SBDC) Procurement Technical Assistance Program (PTAP) to help small/SDBs find and win federal government contracts.

Much of the City’s contracting is through cooperative bidding involving The Council of Governments, the State or other jurisdictions. Those entities have programs in place to reach out and include small/SDB companies.

The City follows federal regulations in contracting under the Community Development Block Grant (CDBG) program. Contracts for construction and engineering have consistently been awarded to minority contractors under this program.

One of the things we can do is to provide a link on our website to the Prince George’s County Minority Business Development Division within the County’s Office of Central Services to further help small/SDBs find and use existing programs and resources.

5. Whether it is possible for the City to establish a web portal for paying taxes and fees through the City website.

Staff expects to have on-line bill paying and automatic clearinghouse (ACH) payment capabilities for water and sewer bills within the next ninety days, now that the utility billing system has been switched over to the new MUNIS software. Other on-line applications will follow in 2007, including reservations and fee payments for recreational offerings, job applications, etc. Staff will keep the Information Technology Committee apprised of our efforts, and seek their advice on making as much of the City operation as accessible as possible via the website.

Paying taxes through the City website is not an option since the County collects the property tax for us. We can inquire if the County is considering on-line tax payment. For many taxpayers with a mortgage escrow account, the bill is sent directly to the mortgage company, so the taxpayer is not directly involved in the transaction.