Durham City Council Budget Retreat - Day Two: March 5, 2024

The second day of the Durham City Council budget retreat focused on strategic priorities, community input, capital improvement planning, potential municipal bond projects, ARPA updates, and council budget requests. The meeting included presentations from city staff and external consultants, followed by council discussions and decisions on budget guidelines and several council-initiated spending requests. Key themes included employee compensation, infrastructure investment (sidewalks, sustainability, parks, convention center), affordable housing, and public safety.

Strategic Plan Update

• Presenters Sherry Metcalf and Cecily Hamilton from Budget & Management Services reviewed the city's refreshed strategic plan, which includes 5 goals, 15 objectives, and 41 initiatives. The plan emerged from extensive community engagement (876 residents and 543 employees) and aligns with the comprehensive plan and carbon neutrality goals. A public dashboard launched in January 2024 tracks progress. Councilmembers praised the engagement and dashboard, with Councilmember Baker noting national recognition for Durham's dashboard.

Community Conversations Findings

• ETR Services presented findings from four budget-focused community conversations held in January 2024 (255 participants). Key themes: affordable housing (most comments, high priority), infrastructure (sidewalks, public transportation, bikeability), public safety (lighting, staffing, community care), and workforce development (training pipelines, small business support). Demographics: 60% people of color, 50% newly engaged in local government. Councilmember Caballero thanked staff for reinstating these conversations and suggested future co-funding with county and schools.

Capital Improvement Plan (CIP) and Municipal Bond Discussions

• Director Christina Reardon introduced the FY25 CIP process, with $104 million in general capital requests (up from $99 million last year) and enterprise fund requests. The discussion then shifted to potential general obligation bond projects.

Sidewalks

• Transportation Director Sean Egan presented a sidewalk pipeline of 21 projects (31 miles), costing an estimated $147 million. Current delivery rate (2.5 miles/year) would take 170 years to meet all needs. The bond could accelerate delivery to ~4.5 miles/year. Councilmember Riss questioned operational efficiencies; Councilmember Caballero requested a multi-year schedule and cost transparency.

Sustainability Projects

• Stacey Poston (General Services) outlined three bond-eligible categories: electric vehicle charging infrastructure ($18.5M), energy efficiency ($37M), and solar generation ($74M) – totaling ~$129.5M. Mayor Williams noted opportunities for public-private partnerships. Councilmember Cook asked about savings; Poston referenced prior estimates of $85M in savings against $90M in costs.

Durham Convention Center Feasibility

• Gina Propes (General Services) presented a study showing the existing 32,000 sq ft convention center is the smallest in NC. Expansion to 73,000 sq ft (new build) could cost $315M plus a potential $100M financing gap for a headquarters hotel. Mayor Williams and Councilmember Baker expressed support, citing economic benefits. Councilmember Riss raised concerns about cost-benefit and market niche; Councilmember Caballero stressed living-wage job requirements.

Parks and Aquatics (Splash & Play)

• Parks Director Wade Walco presented conceptual designs for Long Meadow Park, East End Park, and a regional aquatic center at the former Wheels site (Hoover Road). Total cost estimated at $43.7 million. Councilmembers Cook, Baker, and Riss praised the project, with Councilmember Baker asking about environmental remediation (separate funding). The project includes community engagement results.

Affordable Housing Bond Update

• Reginald Johnson (Community Development) reported that the $95 million 2019 affordable housing bond is fully allocated ($95.3 million committed) to projects including Fairhaven Walk, Crescent Drive, and partnerships with Durham Housing Authority. Councilmember Riss asked about progress toward Forever Home goals; Johnson noted challenges with the homeownership target due to rising costs and program redesign.

Debt Profile and Bond Referendum Process

• Finance Director Tim Flora reviewed the city's debt portfolio (~$987.7M by end of FY24) and the bond referendum timeline. A potential $610 million bond package (across categories) would require a tax rate increase (estimated ~$0.01 per $100 per $100M of debt). Councilmember Caballero requested a multi-year debt schedule and clarity on project readiness.

American Rescue Plan Act (ARPA) Update

• Deputy City Manager Bertha Wimbush reported that of the $52 million ARPA allocation, $52.8 million has been obligated (including $1.1 million unobligated). Projects include affordable housing, health and wellness, and the Federal Street Quarter development. 29 contracts executed, $3.4 million spent. Councilmember Riss asked about using unobligated funds for eviction diversion; staff confirmed eligibility with COVID-related conditions.

City Council Budget Requests (Part 2)

• Budget Director Lindsay Gavin led discussion of seven remaining “yellow” requests from the first retreat. Outcomes:
  • Expanding Council Internship Program ($98,560): Approved as green (up to $50,000).
  • First-Time Home Buyer Assistance ($1 million): Withdrawn by Councilmember Riss after discussion about existing unspent funds.
  • Expansion of Community Response Teams (no amount): Withdrawn by Councilmember Caballero, with commitment to revisit when ready.
  • $25/hour Minimum Wage (cost analysis requested): Withdrawn by Councilmember Baker.
  • 360 Heart of a Champion Summer Camp ($41,000): Rejected (red) due to lack of due diligence and precedent concerns.
  • Hayti Reborn Justice Movement ($3 million over three years): Referred to staff for analysis and potential integration with Community Safety Department.
  • City Staff Living Wage Request: Moved to green (already approved in previous round).
• Councilmember Caballero introduced a late request for the immigrant legal defense fund (Justice Matters) at $250,000 for one year; approved unanimously.

Budget Guidelines Discussion

• Director Reardon presented draft budget guidelines, including a proposal to consider an increase to the general fund tax rate (currently 31.55 cents per $100) to cover employee compensation adjustments. The pay plan includes 5% average step increases for general, police, and fire employees, and a 3% increase for part-time employees. Councilmembers Cook and Baker expressed concerns about flat percentage increases vs. tiered or equal-dollar approaches. No vote taken; guidelines will return for formal adoption. The document also maintained current rates for debt service (11.5 cents), solid waste, housing, transit, and downtown BID funds.

Key Outcomes

• Strategic Plan Dashboard: Launched and praised; continued engagement planned.
• Community Conversations: Will be used to inform budget priorities; staff directed to explore co-funding with county/schools.
• Council Budget Requests: Five items approved (green), three withdrawn, one referred to staff, one rejected (red), and one late request approved (immigrant legal defense fund).
• Bond Referendum: No final decision; council to consider a potential fall 2024 referendum with project scoping continuing.
• Budget Guidelines: Will be revised (clarity on tax increase language) and brought back for council vote in April.
• Employee Compensation: Intent to proceed with 5% step increases and market adjustments; additional structural changes to be discussed for future budget cycles.
• Library & Homeless Services: Not discussed in this session.

Note: The meeting date is March 5, 2024, as specified in the instructions, though multiple speakers referenced March 1st (presumably the first day of the retreat).