July 15, 2024 City Council Budget Workshop (2024-07-15)

MINUTES BUDGET WORKSHOP DESTIN CITY COUNCIL JULY 15, 2024 ANNEX COUNCIL CHAMBERS 6: 30 PM The Council of the City of Destin met in special session with the following members and staff present: Destin City Council Mayor Bobby Wagner Councilmember Johnny King Councilmember Jim Bagby Councilmember Kevin Schmidt Councilmember Dewey Destin Councilmember Teresa Hebert Councilmember John Stephens City of Destin Staff City Manager Louis Zunguze City Clerk Rey Bailey Public Information Director Tamara Young IT Specialist James Lauria Public Works Director Michael Burgess City Engineer Ryan Scott Code Compliance Director Troy Williams Finance Director Krystal Strickland Projects/ Grants/ Contract Manager Jeffrey Cozadd HR Director Jamie Haynes Parks& Recreation Director Lisa Firth Library Director Wen Livingston City Attorney Kimberly Romano Kopp Parks& Recreation Asst Dir Ryan Reed WORKSHOP A. Fiscal Year 2025 Budget The City Manager welcomed everyone and thanked the mayor and city council members for their attendance. He emphasized that this workshop was a follow-up to the previous one held in May. The main focus would be on changes since the May discussion. He expressed gratitude to all department heads and particularly,to the Finance Director for their efforts in preparing the budget. The two main goals of the budget were outlined: Addressing community needs. Advancing the council' s strategic goals. The Finance Director reviewed the agenda and reminded everyone of the important upcoming dates, including the need to certify the millage rate by July 17th Adopt Tentative Millage Rate and Certify to Property Appraiser— July 22, 2024 Adopting of a Balanced Budget: Public Hearing# 1 — September 5, 2024 Public Hearing# 2— September 16, 2024

The Finance Director provided the following Power Point presentation to the council: Vision and Strategic Goals: Destin is a family-oriented beach and fishing community where people want to live, work & play and where visitors are welcomed to respectfully enjoy our community and its resources. Prioritized Customers: 1. Year-Round City of Destin Residents 2. City of Destin- Based Businesses 3. City of Destin Visitors Prioritized Strategic Goals: 1. Financially sound city providing service excellence 2. Enhanced quality of life and safety for families 3. Economic development and revitalization 4. Effective, efficient, and aesthetically pleasing infrastructure 5. Improve mobility and connectivity 6. A green and sustainable environment 7. Offer livable wages & benefits to attract & maintain a high caliber, qualified staff. Council' s Critical Priorities: 1. Work with stakeholders to pursue the Destin City Center ( In Process FY24 Budget) 2. Public waterfront acquisition initiative (Completed FY24 Budget) 3. Underground Utilities (FY25 Budget + In Process) 4. Stahlman and US 98 Pedestrian vehicle improvements ( In Process FY24 Budget) 5. Pedestrian access concepts under the Marler Bridge ( In Process FY24 Budget) 6. Two-Lane Crosstown Connector (FY25 Budget + In Process) 7. Improve parking (In Process) 8. Annexation of unincorporated enclaves ( In Process) FY 2025 Budget— Guiding Principles (Approach) Safety of Citizens, Employees, Vendors Improve Beautification Service Levels (Median Maintenance) Improve Revenue Capture Apply adopted 5- year Renewal & Replacement as per April 2024 resolution Increase in taxable property values = 10% Page 2 of 16

Operational Highlights— FY 25 Proposed Budget = $65. 6 Million FY 2025 FY 2025 Uses by Category Operating Capital PROPOSED % of Total Budget General Government $ 10, 887, 124 $ 10, 887, 124 17% Public Safety 5, 906, 424 431, 000 6, 337, 424 10% Physical Environment 463, 277 14, 844,975 15, 308, 252 23% Transportation 2, 624,099 14, 036, 842 16, 660, 941 25% Economic Development 231, 391 231, 391 0% Health & Human Servicc 75, 355 75, 355 0% Culture & Recreation 5, 542, 372 10, 564,843 16, 107, 215 25% Total Uses 25, 730, 043 $ 39, 877, 661 $ 65, 607, 704 2025 Proposed Budget vs. 2024 Adopted Budget Expenditures by Activity 2024 2025 PROPOSED $ change % change BUDGET* BUDGET 2024 vs 2025 General Government $ 5, 361, 903 $ 5, 664, 751 $ 302, 848 6% Public Safety 5, 568, 640 5, 906, 424 337, 784 6% Physical Environment 643, 813 463, 277 180, 536) - 28% Transportation 2, 262, 936 2, 624,099 361, 163 16% Economic Development 395, 674 231, 391 164,283) - 42% Health & Human Services 107, 370 75, 355 32, 015) - 30% Culture & Recreation 5, 300, 929 5, 542, 372 241, 443 5% Debt Service 3, 441, 092 5, 222, 373 1, 781, 282 52% Capital Outlay 51, 822, 459 39, 877, 661 ( 11, 944,798) - 23% TOTAL EXPENDITURES $ 74,904,815 $ 65,607,704 $ ( 9,297,111) - 12% Changes Since 5/ 13/ 24 Workshop #1 PA Certified Taxable Values Increased Ad Valorem $200k( from $13. 2 to $13.4 million) Operations Added $ 150K for Annexation ( opinion survey, metes & bounds, special election) sfr Florida Blue Rate increase 11% ( from $1. 9 to $2 million) CPI 2. 97% for COLA Removed request for 1 code officer( STR $77k) Added CBA at $35k/year in 127 Water Quality Reduce Christmas Decor from $140k to $70k Debt issuance moved from FY 24 to FY 25 Page 3 of 16

Capital Projects: Increased Norriego Park from $ 162k to $ 234k as per 6/ 3/ 24 council adopted motion Increased Clement Taylor Park based upon July 2024 RFP results and moved to FY 25 ( 1. 96 million) Moved Undergrounding Project $11 million from FY 24 FY 25 Operational Highlights Percent All Funds 2024 2025 increase Expenditures by Type Budget Budget FY25 vs FY24 Personnel 10, 447, 643 $ 11, 757, 156 11% Contract Services 5, 148, 114 4,710, 126 9% Operations 3, 680, 012 3, 674, 892 0% Debt Service 3, 806, 588 5, 587, 869 32% Capital Outlays 51, 822, 459 39, 877, 661 30% Total Expenditures 74,904, 815 $ 65, 607, 704 14% Technology Cost Trend Tech Expenses by Year telco; software; devices; IT dept) 1 , 500, 000 1 , 009, 000 500, 000 CO CD O N CO ' Cr' LO CO r\ cO rn N N N N N N N N N N O O O C) C) O O O O C) O O N N N N N N N N N N N N Page 4 of 16

Ad Valorem —Averages for Different Parcel Usage Categories Ad Valorem @ $ Taxes/ Parcel Use Parcel Count',Taxable Value 1. 615* 95% Parcel taxes Homesteaded 3, 522 $ 1, 137, 261, 298 $ 1, 744,843 $ 495 13% Other Residential _ 10, 626 6, 568, 502, 151 10, 077, 724 $ 948 75% Non- Residential 2, 039 1, 024,596, 134 1, 571, 987 $ 771 12% 16, 187 $ 8, 730, 359, 583 $ 13, 394,554 $ 2, 215 100% Financially Sound City—FY 2025 Cost Per Property Public Safety Ops: $ 370 RR: $ 2 Library/Parks/ Rec Ops: 347 RR: $186 Roadways and Sidewalks Ops: $ 162 RR: $231 Stormwater Ops: $ 26 RR: $65 Gen Gov, Animal Control, Debt Service Ops: $ 660 RR: $0 Operational Highlights Personnel Update Bring Median Maintenance In-House Public Safety Sheriff Lifeguards Code Compliance Parks & Rec— Christmas Decor Personnel Highlights Personnel is 18% of the Total Proposed FY 2025 Budget 2. 97% Cost of Living (March CPI) 230,250 4. 0% Merit 310, 100 11. 0% Health Insurance Increase 176, 900 6. 73 FTE New Positions* 538, 400 Page 5 of 16

Percent All Funds 2024 2025 increase Expenditures by Type Budget Budget FY25 vs FY24 Personnel 10, 447, 643 $ 11, 757, 156 11% 134.63 FTEs (FY 2025) Base Salaries 7, 772, 773 COLA 230,249 Merit 310, 100 FICA 133, 679 Retirement 901, 852 Insurance 2, 023, 304 Workers Comp. 165, 286 Other 219, 913 Health Insurance Increase: 11% 6. 73 FTE New Positions* 538, 400 Fully loaded ( FICA, benefits, workers comp) Pay Plan # HRS per EMP ID2 T' Recommended Title H Grade Hi WEEK PIP Creator 103 29 W7 Planning Manager 112 40 W6 Systems Administrator Speciali 107 40 1964-1 105 40 W2 Lead Maintenance Technician 105 40 W3 Maintenance Technician 103 40 W4 Maintenance Technician 103 40 W5 Maintenance Technician 103 40 Page 6 of 16

Operational Highlights Bring Median Maintenance In-House FY 2025 PROPOSED BUDGET FY 2024 ( CITY MGR BUDGET LEVEL) FY 2026 FY2027 FY2028 PERSONNEL 298, 302 $ 309,020 $ 320, 150 $ 331,690 CONTRACTS _ 336, 176 OPERATIONS 15, 750 16, 230 16, 720 17, 220 CAPITAL EQUIPMENT 114, 000 336, 176 $ 428, 052 $ 325, 250 $ 336, 870 $ 348, 910 4 FTEs+ $ 114k in Equipment( Mowers, Truck, Trailer) 7/ 11/ 24 ( only 1 bid received: $ 462, 603) Public Safety: Sheriff Contract increase $ 195k (6. 8%) 21fte Lifeguard Contract increase $ 100k ( 100%; 2007) Code Compliance increase $ 170k ( 12%) 15. 5fte + • • - _ _ ' • • Percent 2024 2025 increase Department Recap Budget Budget FY25 vs FY24 General Public Safety 3, 004, 053 $ 3, 316, 139 9% Code Compliance 1, 213, 204 1, 383, 574 12% Emergency Management 43, 703 42, 995 2% Total Public Safety Expenditures $ 4, 260, 960 $ 4, 742, 709 10% SPECIAL EVENTS (Recreation) Christmas Decorations - $ 140k reduced to $ 70k as per Workshop #1 Percent 2024 2025 increase Program Cost Summary Budget Budget FY25 vs FY24 Contract Services 71, 000 136, 000 48% Operations 69, 700 72, 100 3% Total Special Events Expenditures $ 140, 700 $ 208, 100 32% Page 7 of 16

Renewal & Replacement 5- year plan FY 2025 Planned Expenditures by Asset Type Streets, Streetlights, Sidewalks 3, 745, 741 Facilities: Roof 717, 500 Facilities: HVAC 3, 844 Generators Outdoor Parks & Recreation 2, 137, 800 Parking Lots Vehicles 32, 000 Capital Equipment 158,000 Stormwater Total Planned Expenditures 6, 794, 885 I Ending Bank Balance 1, 295, 949 Renewal & Replacement Highlights: Morgan' s Sport Center Lighting (Safety - $ 1. 3m) Playground ($ 790k) Community Center Leaky Windows & Roof($ 717k) Roads & Sidewalks ($ 3. 6m as per RR Resolution) Capital Improvement Program Highlights Crosstown Connector $10. 1m Undergrounding $12. 6m ( encumber delay) Tarpon & Crystal Shores Parks $4. 8m Mattie Kelly Outfall at Joe' s Bayou $ 1. 2m Clement Taylor Park $1. 96m New Vehicles & Equipment $266k Page 8of16

City of Destin Department of Public Works& Emergency Management New and RR Requested Vehicles/ Equipment for FY25 Department Budget Prop Item Estimated Cost New or R& AComments _ Community Cente CCVEH Ford Transit Van 150, low- rise 40,000.00 New 11 Code Comp CEVEH Ford Bronco SportAWD 32, 000. 00 New additional officers Parks PREQ 35' Towable Boom Lift 40,000.00 New Tree Trimming, Painting, Christmas Decorations, etc. Parks IPRVEH Ford F1504x4, single cab short bed 40,000.00 New additional parks Parks PRVEH Ford F1504x4, single cab short bed 40,000.00 New additional parks Public Works PWMM John Deere Z920MZtrak 48" 20, 000. 00 New for new median maintenance crew Public Works PWMM John Deere Z920MZtrak 48" 20, 000. 00 New for new median maintenance crew Public Works PWMM John Deere Z920MZtrak 60" 24, 000. 00 New for new median maintenance crew Public Works PWMM Ford F1504x4, single cab short bed 40,000. 00 New for new median maintenance crew Public Works PWMM Trailer for equipment 10,000. 00 New for new median maintenance crew Subtotal NEW 266,000.00 Cost Recovery— Why? When user- fee type services cover their own costs, taxpayer dollars are freed- up to increase service levels ( i.e. add parks and other public spaces) Where We Are Now Fund Balance Projections FY2025 PROPOSED FUND BALANCE SUMMARY BUDGET FY2026 FY2027 FY2028 FY2029 FY2030 FY2031 ALL FUNDS PROJECTION PROJECTION PROJECTION PROJECTION PROJECTION PROJECTION PROJECTION Nonspendable( Town Center CRA+ prepaids) r 2,062,544 1, 862, 544 1, 562, 544 1, 162, 544 1, 211, 624 811, 624 411,b24 Restricted( FL Statute& Debt Covenants) 3, 642, 191 3, 021,, c 3, 533, 109 7, 182, 436 9,033, 342 10, 770,684 12,512,402 Committed( Council Resolutions& Motions) 22,740,825 22, 963,283 22, 663,668 23, 497, 319 23, 692, 678 25, 543, 630 27,946,554 Assigned( contracts/ PO balances) 3, 250,000 2, 500,000 1, 500,000 2, 416, 667 2, 138,889 2, 018, 519 2,191, 358 Unassigned 8,961, 028 7,553,262 8,018,190 2,993,097 1, 203,849 1, 458, 105 812,026 Ending Fund Balance 40,656,587 37, 900,6% 37,277, 511 37, 252, 062 37, 280,382 40,602, 562 43, 873,965 Page 9 of 16

What are the challenges to our General Fund Balance? 1. Building Permit Fees Too Low FY2025 PROPOSED 111 FLORIDA BUILDING CODE FUND FY2024 BUDGET FY2026 FY2027 FY2028 FY2029 RESTRICTED; PUBLIC SAFETY) PROJECTION PROJECTION PROJECTION PROJECTION PROJECTION PROJECTION 111- 32 Licenses and Permits 841, 311 921, 400 946, 670 972, 660 999,460 1, 026,970 111- 36 Investment Income 7, 726 1 5 10 10 10 TOTAL REVENUES 849,038 921, 401 946,675 972,670 999,470 1, 026,980 111- 52 Public Safety 1, 054,317 1, 161, 215 1, 200,002 1, 243, 920 1, 289, 500 1, 336, 830 111- 59 Capital Outlay 85, 125 TOTAL EXPENDITURES 1, 139,441 1, 161, 215 1, 200,002 1, 243,920 1, 289, 500 1, 336, 830 Excess( deficiency) of revenues over expenditi ( 290,404) ( 239, 814) 253,327) 271, 250) 290,030) ( 309,850) 111- 38 Transfers In 111- 58 Transfers Out 56, 258) 80,000) 82, 400) 84,870) 87,420) ( 90, 040) Total other financing sources( uses) 56,258) 80,000) 82,400) 84,870) 87,420) ( 90, 040) 111 Net change in fund balances 346, 662) ( 319, 814) 335, 727) 356, 120) 377, 450) ( 399, 890) 111 Fund Balance( deficit), Beginning 342, 260 4,402) 324, 216) 659, 943) ( 1, 016, 063) ( 1, 393, 513) 111 Fund Balance( deficit), Ending 4,402) ( 324, 216) 659,943) ( 1, 016,063) ( 1, 393, 513) ( 1, 793, 403) 2. Developer & Impact Fees Too Low The cost to do Growth Necessitated Improvements is not fully covered by the fees collected. Impact Fee Eligible Projects constructed/ funded Sources used/ to be used FY 2024 10, 764, 481 Impact Fees 2, 044, 000 FY 2025 9, 852, 400 Taxes 5, 811, 861 FY 2026 1, 599, 000 Grants 11, 846, 586 FY 2027 770,000 Loans 3, 003, 434 FY 2028 Parking Fees 1, 050,000 FY 2029 770,000 23, 755, 881 23, 755, 881 3. Increase Recreation covers 25- 30% of operations. FOPCCAST 2023 DESCRIPTION ACTUALS FY 2024 FY 2025 FY 2026 FY2027 FY2028 FY2029 FY2030 MORGANS REVENUE 119,782 113, 510 116,920 120,430 124, 040 127, 760 131, 590 135, 540 MORGANS OP EXPS 636,240 909, 097 940,900 973, 860 1, 008,040 1, 043, 500 1, 080, 270 1, 118,400 NET 516,458) ( 795, 587) ( 823,980) ( 853, 430) ( 884,000) ( 915, 740) ( 948,680) ( 982,860) COMMUNITY CTR REVENUE 150, 152 157, 200 160, 340 163,550 166,820 170,160 173,560 177,030 COMMUNITY CTR OP EXPS 688,679 988,028 1, 023, 150 1, 059, 640 1, 097,480 1, 136,760 1, 177,520 1, 219,810 NET 538,527) ( 830,828) ( 862,810) ( 896, 090) ( 930,660) ( 966, 600) ( 1, 003,960) ( 1,042, 780) Total Covered by Taxpayers ( 1, 054,985) ( 1, 626,415) ( 1, 686,790) ( 1, 749, 520) ( 1, 814, 660) ( 1, 882, 340) ( 1, 952,640) ( 2,025, 640) Cost Recovery Ratio 20% 14% 14% 14% 14% 14% 14% 13% Page 10 of 16

Recommended Cost Recovery Areas STR Registration for Condos ( 4200+) Visitors use our parks and roadways and add significantly to cost of public safety ( additional $3. 2 million/year) A$ 100 registration fee/ year would raise $ 420, 000. Building Fund: Building Permit Fees Community Development: Developer and Impact Fees Recreation: User Fees Add back the Joe' s Bayou Boat Ramp pass for residents 40k/year) Update 2014 Recreation Cost Recovery Policy NPEB (" Net Positive Environmental Benefit" for Harbor Water Quality i. e. Testing, Pump Ops & Main): Consider annual Op Fee Where We Could Be Fund Balance Projections— Adjust Building Permit Fees + 52% FY 2025 2024 PROPOSED ACCOUNT DESCRIPTION PROJECTION BUDGET FY2026 FY2027 FY2028 FY2029 BUILDING PERMIT FEES 664, 711 1, 216,000 1, 252, 500 1, 290, 100 1, 328,800 1, 368, 7(30 Total 111300 BUILDING FUND REVENUE 849, 038 1, 337, 401 1, 375, 175 1,414,070 1,454,070 I 1, 495, 280 Total 11152441 BUILDING FUND 1, 139, 441 1, 161, 215 1, 200, 002 1, 243, 920 1, 289, 500 1, 336,830 NET OPERATING( REV- EXP) 290, 404) 176, 186 175, 173 170, 150 164, 570 158,450 TXFR IN FROM GEN FUND 5, 000 TRANSFER OUT TO CD TECH FUND 56, 258) 121, 600) ( 125, 250) ( 129, 010) ( 132, 880) ( 136, 870) Total BUIWING FUND TXFRSOUT 51, 258) 121, 600) ( 125, 250) ( 129, 010) ( 132,880)' ( 136,870) 111 Increase( decrease) in Fund Balance 341, 662) 54, 586 49, 923 41, 140 31, 690 21, 580 111 Fund Balance, beginning of year 342, 260 598 55, 185 105, 108 146,248 177, 938 111 Fund Balance, ending of year 598 55, 185 105, 108 146,248 177,938 199, 518 TARGET BALANCE=$ 275K( 3 MOS OPS) FY2025 PROPOSED FUND BALANCE SUMMARY BUDGET FY2026 FY2027 FY2028 FY2029 FY2030 FY2031 ALL FUNDS PROJECTION PROJECTION PROJECTION PROJECTION PROJECTION PROJECTION PROJECTION Nonspendable( Town Center CRA+ prepaids)' 2, 062, 544 1, 862, 544 1, 562, 544 1, 162, 544 1,211, 624 811, 624 411, 624 Restricted( FL Statute& Debt Covenants) 3, 642, 191 3, 021,608 3, 533, 109 7, 182,436 9, 033, 342 10, 770, 684 12, 512,402 Committed( Council Resolutions& Motions) 22, 740, 825 22, 963,283 22, 663,668 23,497,319 23, 692, 678 25, 543, 630 27,946, 554 Assigned( contracts/ PO balances) 3, 250,000 2, 500, 000 1, 500,000 2, 416, 667 2, 138, 889 2, 018, 519 2, 191, 358 Unassigned 8,961, 028 7,553,262 8,018, 190 2,993,097 1, 203, 849 1, 458, 105 812,026 Ending Fund Balance 40,656, 587 37, 900,696 37, 277, 511 37, 252, 062 37,280, 382 40,602, 562 43, 873, 965 Page 11 of 16

Before FY2O25 PROPOSED FUND BALANCE SUMMARY BUDGET FY2026 FY2027 FY2028 FY2029 FY2030 FY2031 AU. FUNDS PROJECTION PROJECTION PR* ON PROJECTION PROJECTION PROJECTION PROJECTION Nonspendable( Town Center CRA+ prepaids)' 2,062, 544 1, 862, 544 1, . , 1, 162, 544 1, 211, 624 811, 624 411, 624 Restricted( FL Statute& Debt Covenants) 3,642, 191 3, 021, 608 3, 533, 109 7, 182,436 9,033, 342 10, 770, 684 12,512,402 Committed( Council Resolutions& Motions) 22, 740,825 22,963, 283 22, 663,668 . .' 7, 319 23, 692, 678 25, 543, 630 27,946,554 Assigned( contracts/ PO balances) 3,250,000 2, 500, 000 1. 500,000 2,41.,.. 2, 138,889 2, 018, 519 2,191, 358 Unassigned 8, 961, 028 7,553, 262 8, 018, 190 2,993,097 1, 203,849 1, 454105 812,026 Ending Fund Balance 40,656,587 37,900,696 37, 277, 511 37,252, 062 37, 280, 382 40,602, 562 43,873,965 FY2025 PROPOSED FUND BAIANCE SUMMARY BUDGET FY2026 FY2027 FY2028 FY2029 FY2030 FY2031 ALL FUNDS PROJECTION PROJECTION PROJECTION PROJECTION PROJECTION PROJECTION PROJECTION Nonspendable( Town Center CRA+ prepa ids)' 2, 062, 544 1, 862,544 1, 562,544 1, 162, 544 1, 211, 624 811, 624 411, 624 Restricted( FL Statute& Debt Covenants) 3, 673, 791 3, 061, 238 3, 572,559 7, 163, 856 8, 994, 242 11, 173, 934 13, 371, 322 Committed( Council Resolutions& Motions) 22, 783, 22523,049, 353 22, 794, 718 23, 674, 699 23, 917, 778 25, 817,880 28, 271, 434 Assigned( contracts/ PO balances) 3, 250, 000 bl 2, 500,000 1, 500,000 2,416, 667 2, 138, 889 2,018, 519 2, 191, 358 Unassigned 9, 311, 028. 8,288,262 9, 158, 190 4, 608, 097 3, 268, 849 3,523,105 2, 877,026 After Ending Fund Balance 41, 080, 587 38, 761,396 38, 588,011 39, 025, 862 39, 531, 382 43, 345, 062 47, 122, 765 Ad Valorem at Different Millage Rates FY 2024 FY 2025 Amount of D/D Budgeted Projected Increase Change GF Ad Valorem @ 1. 6150 $ 11, 073, 048 $ 12, 158, 495 $ 1, 085,447 9. 8% Town Center CRA ( city) 616, 955 678, 487 61, 532 10. 0% Harbor CRA ( city) 494, 030 557, 572 63, 542 12. 9% Subtotal 12, 184, 033 $ 13, 394, 554 $ 1, 210, 521 Rollback Rate 1. 5127 Current Year proposed as percent change of rolled- back rate 6. 76% Ad Valorem Taxes Payable per Household Two scenarios to demonstrate the difference 1/ 10th of a mill creates 1. 6150 1. 7150 Variance Property Taxable Value 100, 000 161. 50 171. 50 10. 00 360, 754 582. 62 618. 69 36. 08 400, 000 646. 00 686. 00 40. 00 600, 000 969. 00 1, 029. 00 60. 00 City of Destin median taxable property value on all properites = $ 360, 754 Funding to the City at the two Different Millage Rates 1. 6150 1. 7150 Taxable Value x Millage x 95% = total ad valorem collections 8, 730, 359, 583 = $ 13, 394, 554 or $ 14, 223, 938 var= $ 829, 384 Page 12 of 16

Next Steps July 22, 2024 Regular City Council Meeting: Adopt millage rate and confirm public hearing # 1 for TRIM notices. Determine if median maintenance comes " in- house" TBD: Refresh Building Fee Study and Adopt new fee schedule to make Building Fund self-sustaining TBD: Approve Mobility Plan projects TBD: Approve Mobility Fees ( created upon the approved Projects) TBD: Revise Park, Library, and Public Safety Impact Fees TBD: Adjust Fee Schedule to include STR registration for Condos TBD: Adjust Fee Schedule to include Boat Ramp passes PRESENTATION —HIGHLIGHTS/ SUMMARY Changes since the May 13th Workshop: Property Value Increase Property value increased by 10% affecting the budget calculations. Operational Changes: An 11% increase in Florida Blue health insurance rates. 2. 97% COLA adjustment for salaries. Removal of a proposed additional code officer position, reducing costs by 77, 000. Allocation of$ 150, 000 for annexation surveys and potential special elections. An estimated operational budget increase by 4. 4%. r Capital Projects and Debt Issuance: Delaying the issuance of$ 25 million in debt until October or November 2024. Reallocations for underground utilities and the crosstown connector project. Detailed cost breakdowns for capital outlays, showing $ 39 million allocated for capital projects. P. Operational Highlights: Personnel costs increase due to insurance and merit increases. Parks and Recreation budget adjustments and operational impact discussed. Public safety costs, particularly the Sheriff' s contract and lifeguard services, highlighted. Adjustments in event budget, including Christmas lighting. P. Technology and Capital Improvement Program: Increases in tech expenses for new software implementations. Continuation of the five-year Capital Improvement Program, focusing on assets lighting and park renovations. COUNCIL DISCUSSIONS OF KEY POINTS —SUMMARY J, The council discussed various ways to increase revenue without raising taxes, including soliciting donations, increasing short- term rental registration fees, and simplifying the building permit fee structure. Page 13 of 16

Advocated for unique ways to increase revenue and suggested soliciting donations from businesses for park funding. Mentioned the potential benefits of having builders include small parks in their developments. D. Improving parks, with emphasis on ADA compliance and safety for children. Differing opinions on the immediate need for a new playground at Morgan' s Sports Center. Concerns were raised about the sustainability of high debt service, and the need to manage costs carefully. Discussions on potential strategies to reduce debt quickly, including increasing payments on principal. Emphasis on balancing expenditure reductions with revenue increases. The need for a new playground at Morgan Sports Center was debated, with some council members advocating for immediate action due to safety concerns, while others suggested delaying the expenditure. Increasing impact fees for high-density developments to address infrastructure strain and to ensure these developments contribute fairly to infrastructure costs. Ideas for unique revenue generation, such as sponsorship and commercial fees for park use. Review of proposed new positions and the necessity of equipment purchases. D. Discussions on optimizing vehicle purchases and potential cost savings. Maintaining a healthy unassigned fund balance was emphasized to ensure financial flexibility and cover upfront costs for grants. Comments/Recommendations from Elected Officials —Summary Councilmember Schmidt D Suggested that instead of adding back the Joe' s Bayou Boat Ramp residents' user fees to consider adding a new commercial fee for commercial entities. Suggests getting rid of the" honor box" system and having an actual payment collection system. D Would like to see a list of new vehicles that are needed separate from those that fall under the Renewal and Replacement category. Questioned the immediate need for budgeting nearly $ 800, 000 for a new playground at Morgan Sports Center. Suggests delaying this expenditure to focus on more urgent budget items. Recommends pursuing sponsorships like banners at ballfields and placards on picnic tables. Councilmember King Emphasized the importance of having safe and updated playgrounds for the children in the community. Page 14 of 16

Discussed proposed registration fee for short-term rental condos and directing revenue towards mitigating the impacts caused by these rentals. Supported the idea of earmarking the funds for this purpose. Opposed increasing the millage rate. Highlighted the importance of exploring alternative revenue sources. Councilmember Hebert Defended the need for a new playground, stating that the previous one at Morgan Sports Center had deteriorated to a dangerous state and was appropriately removed. Emphasized the poor condition of the city parks. Find out how other cities often contribute to park funding and urged the city to explore these options. Suggested considering divesting underperforming parks, such as the one behind the elementary school, which might be costing more than it benefits the city. Councilmember Bagby Stressed the need to manage costs carefully, suggesting a cap on merit increases at 3%. Stressed that the 11% increase in personnel costs is not due to the Florida Blue medical insurance rate increases alone. A large portion of the 11% increase involves new staff positions, merit increases, and COLA. Recommends capping merit increases. Will make a motion at the next regular council meeting to do just that. Expressed concern about increasing their debt payment by 300% over the next 5 years. There will be some give and take, and some fee increases will be necessary. There are ways to reduce debt quickly, including increasing payments on principal. Will not support a millage rate increase arguing that it would not be fair to the citizens, especially in an election year. Supported the idea of increasing impact fees for high-density developments to ensure that new developments contribute fairly to the city's infrastructure costs. Highlighted the importance of simplifying the fee structure for building permits to avoid integrity checks" on the citizens and developers resulting in some required permits not being pulled. Charging a flat fee for permits for certain projects may be a better solution. Expressed that the " 2025 Budget Guiding Principles" produced by staff is not necessary as the council is responsible for providing priorities on budgeting and creating the guiding principles if they chose to do so Emphasized the importance of maintaining a healthy unassigned fund balance, ideally between$ 7- 9 million, to provide flexibility and cover upfront costs for grants. Councilmember Destin Opposed increasing the millage rate. Advocated for maintaining the current rate and exploring other ways to manage the budget without raising taxes. Page 15 of 16

Remove $ 10K special election costs from the proposed 2025 budget. The motion passed by the council on July 8th was to defer the referendum for annexation to the next general election cycle in November 2026. It is not proper to include anything in the budget that is contrary to an adopted motion by the council. Expressed concerns about the city' s growing debt service. There are ways of paying off the debt quickly and saving $ 3 million in interest by simply " tightening the belts" and living within their means. Supported raising impact fees for high-density developments to ensure they pay their fair share of infrastructure costs. Advocated for a holistic approach to address budget issues, considering both revenue enhancements and cost containment. Expressed concern about the complexity of the current building permit fee structure as compared to the county and other municipalities and suggests simplifying it. Councilmember Stephens Supported unique revenue generation ideas and recommended careful consideration of new budget versus deferred maintenance. Mayor Wagner Stressed the importance of providing quality parks and playgrounds for the city' s children and community. Proposed creating a consolidated landscaping crew to handle all city properties efficiently, rather than having separate crews for different departments. PUBLIC COMMENTS Mr. Brian Otto, a Destin resident, highlighted the poor condition of local parks compared to other cities. He recommends better management of existing park resources and supports divesting underutilized parks. ADJOURNMENT Having no further business at this time, the meeting was adjourned at 7:29 PM. r' P Bobby WAip ayor ATTEST: 1 Rey al , City Clerk Page 16 of 16