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HomeMy WebLinkAbout04-23-2012 Budget Study Session MINUTES SARATOGA SPECIAL CITY COUNCIL MEETING BUDGET STUDY SESSION SARATOGA CITY HALL—ADMINISTRATIVE CONFERENCE ROOM APRIL 23,2012 CALL MEETING TO ORDER Mayor Page called the meeting to order at 6:07 p.m. ROLL CALL PRESENT Council Members Manny Cappello, Howard Miller, Emily Lo, Vice Mayor Jill Hunter, Mayor Chuck Page ABSENT: None ALSO PRESENT: Dave Anderson, City Manager Crystal Morrow, City Clerk John Cherbone, Public Works Director Mary Furey, Finance and Administrative Services Director James Lindsay, Community Development Director Michael Taylor, Recreation& Facilities Director Mainini Cabute, Administrative Analyst II REPORT ON POSTING OF AGENDA City Clerk Crystal Morrow reported that pursuant to Gov't. Code 54954.2, the agenda for this meeting was properly posted on April 20, 2012. ORAL COMMUNICATIONS ON NON-AGENDIZED ITEMS Terrie Creamer with the Saratoga Monte Sereno Community Foundation addressed the Council and asked the Council to consider allocating a portion of the funds needed to replace the flooring in the Joan Pisani Community Center Multipurpose Room. Additionally, she suggested that the City partner with the Saratoga Monte Sereno Community Foundation to raise the remaining funds needed to replace the flooring. The project cost is estimated at $60,000. Nancy Jamello, Saratoga resident and City of Saratoga Recreation yoga instructor, encouraged the Council to fund replacement of the Multipurpose Room floor. She also raised concerns about the lack of business in the El Quito Shopping Center. COUNCIL DIRECTION TO STAFF Council directed staff to identify and return to Council with flooring upgrade options that do not require removal and replacement of the existing flooring, such as temporary dance floors, encapsulation of the current flooring, and partial replacement. 1 1. Review of FY 2012/13 Proposed Operating and Capital Budgets and Financial Policies Recommended Action: Review, consider, ask questions, and discuss staffs proposals for the FY 2012/13 Operating and Capital Budgets and updates to the financial policies, and subsequently, provide consensus direction to staff. Finance and Administrative Services Director Mary Furey informed the Council that she planned to cover 3 different areas during the meeting, including the Operating Budget,the proposed additions to the Capital Budget, and financial policies. Operating Budget Finance and Administrative Services Director Mary Furey then proceeded to provide an overview of the FY 2012/12 Operating Budget. She explained some of the changes to the Operating Budget, including increases in Internal Service Funds and elimination of Trust Service Funds. Council Member Miller asked about increases in liability and risk management expenditures. Finance and Administrative Services Director Mary Furey explained that the increase is the result of higher premiums and claims. She added that budget expenditures for Workers Compensation have also increased as a result of an increase in premiums and claims. Council Member Miller inquired about increases in vehicle and building maintenance. Finance and Administrative Services Director Mary Furey explained that in recent years, funds for these expenses were reduced as a cost saving measure to the General Fund. However, declining support for vehicle and building maintenance have placed the maintenance program behind schedule. Consequently, funding for vehicle and building maintenance was increased this year to avoid deferred maintenance. Council Member Miller asked about funding allocated to the Capital Budget, including the additional funding allocated to parks and trails capital projects. Finance and Administrative Services Director Mary Furey shared that the increases are partly due to anticipated grant funds and funding for the Quarry property master plan. Council Member Miller asked for additional information on changes to property tax revenue and estimates for sales tax revenues. Finance and Administrative Services Director Mary Furey noted that property tax revenues for this fiscal year are projected to increase slightly as a result of turnover in property ownership. She also explained that sales tax revenues do not 2 necessarily reflect sales taxes generated during a given fiscal year. The State estimates sales tax revenues for the year then refunds or bills the City the following year based on actual sales tax revenues. Approximately $35,000 in sales tax revenues from a San Jose store was incorrectly applied to Saratoga. The correction will be made in the next year. Council Member Cappello asked about the amount of transient occupancy tax revenues expected in the next fiscal year. Finance and Administrative Services Director Mary Furey said she projected transient occupancy tax revenues to remain steady. Mayor Page asked how transient occupancy tax levels are established. Finance and Administrative Services Director Mary Furey said that it is a tax that is voted upon by residents in the City. Council Member Lo asked about changes in business license fee revenues following the business license audit. Finance and Administrative Services Director Mary Furey said that they are expected to level out in FY 2012/13. Council Member Miller observed that revenues in Fees, Licenses, and Permits, which includes development fees, have seen a slight uptick. Mayor Page asked Finance and Administrative Services Director Mary Furey what is included in Charge for Services. Finance and Administrative Services Director Mary Furey explained that this category includes any services that the City charges a fee for, such as recreation classes and planning services. She added that rental activity has increased. Vice Mayor Hunter asked if the improvements at Saratoga Prospect Center have resulted in increased rentals. Recreation and Facilities Director Michael Taylor answered that the improvements have increased rentals. Mayor Page asked if the improvements also resulted in higher maintenance costs. Recreation and Facilities Director Michael Taylor said that maintenance costs for the floor in Friendship Hall of Saratoga Prospect Center will increase as the floor ages. Additionally, renters occasionally cause damage to the floor. However, the Recreation and Facilities Department charges a higher security deposit to pay for any damage. Council Member Miller asked about the source of Fund Transfer In on the summary of total revenues and transfers in. 3 Finance and Administrative Services Director Mary Furey explained that the funding is from gas tax revenues. She then explained that salaries and benefits have decreased in FY 2012/13 by more than $27,000. This is in addition to the negotiated decreases that took effect in FY 2011/12. The decrease is due to a reduction in full time employees, including the Code Compliance Officer and a Public Works Maintenance Worker. City Manager Dave Anderson added that the City may want to consider filling the Code Compliance Officer position when the budget is stronger. Finance and Administrative Services Director Mary Furey noted that while there is a reduction in staffing in Public Works, work is being contracted out. Vice Mayor Hunter asked for additional information about changes to oversight of economic development and special events. City Manager Dave Anderson explained that all economic development functions are now being handled by Community Development and special event permits and special event grant funding will be managed by the City Manager's Office. Council Member Cappello asked if funding for a Code Compliance Officer has been maintained in the budget. City Manager Dave Anderson said that while the position is being held open, the position will not be funded. Council Member Lo suggested that the City make it clear that Code compliance issues are still being handled by the City, even though the Code Compliance Officer position is vacant. She also asked that information on the website and code compliance hotline be updated to reflect the change in staffing. Council Member Miller asked why contract services have increased. City Manager Dave Anderson explained that contract services have gone up due to an increase in the contract with the Santa Clara County Sheriff's Office,the addition of contracts for landscape maintenance at the Civic Center and Saratoga Library, and the update of the Noise Element of the General Plan. Vice Mayor Hunter noted that she thought that the Noise Element update would cost$75,000. Community Development Director James Lindsay explained that the Noise Element update would cross fiscal years. Consequently, $50,000 is proposed for the Noise Element update in FY 2012/13 and $25,000 for FY 2013/14. Vice Mayor Hunter asked staff to provide the attorney costs associated with the sign ordinance update. Finance and Administrative Services Director Mary Furey explained changes in the General Fund Balance Reserves under the new Government Finance Officers 4 Association(GFOA) structure. In particular, she explained distinctions and changes in the definitions of unassigned fund balances, assigned fund balances, committed fund balances, and restricted fund balances as well as how existing reserves fall within these different categories. Finance and Administrative Services Director Mary Furey concluded the overview of the Operating Budget and moved on to the Capital Budget after a 10 minute break. Capital Budget Finance and Administrative Services Director Mary Furey asked Public Works Director John Cherbone to provide an overview of proposed projects in the Streets Program and Parks and Trails Program of the Capital Budget. Streets Program Public Works Director John Cherbone provided a summary of the Fruitvale Avenue Median Improvements Project, which will be a joint project between the City of Saratoga and West Valley College. Approximately 72% of the project will be funded by West Valley College. Mayor Page expressed concerns about the impact to roadways from traffic to and from the college and asked if there are ways to mediate the impact, such as a road impact fee. Public Works Director John Cherbone said that the City could look into opportunities to introduce a road impact fee if the bond for the college on the June ballot is approved. Public Works Director John Cherbone then reviewed the Arroyo de Arguello Outfall Repair, which will be a joint project with the Santa Clara Valley Water District. Council Member Miller asked if the storm drain would be replaced with corrugated metal. Public Works Director John Cherbone said that it will most likely be replaced with concrete. Vice Mayor Hunter asked if the Water District would be interested in taking over the entire project. Public Works Director John Cherbone said he thought that was unlikely, since the Water District is already taking responsibility for the repair work to the creek bank. Public Works Director John Cherbone then moved on to the Quito Road Storm Drain Project, which would add a storm drain on Quito Road and connect it to the existing drain system. 5 Public Works Director John Cherbone provided a brief description of the proposed Parker Ranch Retaining Wall Repair project, which would repair two retaining walls in the Parker Ranch area that are starting to fail. Council Member Cappello asked if the project would include repair or replacement of the retaining walls and if the repairs or replacement would be done with wood or concrete. Public Works Director John Cherbone stated that project includes repair of one retaining wall and replacement of the other. The work will probably be done with concrete, since it has a longer lifespan than the wood currently used for the retaining walls. Parks & Trails Program Public Works Director John Cherbone then reviewed the Quarry Property Park and Trail Master Plan project proposed for the Parks and Trails Program of the Capital Budget. He indicated that the requested funding would allow the begin work on a basic master plan. Council Member Miller expressed concerns about the timeframe of the master plan development, because the City has a limited amount of time to develop a master plan, including plans to connect the property with the neighboring San Jose Water Company property and establish a trail across private property to Hakone. Consequently, $100,000 may not be enough for the master plan to be completed in sufficient time. Council Member Miller noted that there are a number of tasks that need to be done immediately, such as a good topographical map of the property, before a master plan can be developed. Mayor Page asked about the timeline to annex the Quarry property. Community Development Director James Lindsay said that the City is in the process of completing the Garrod property annexation. Once that is complete, probably in late summer or early fall,the City will apply for an expansion of the urban service area boundaries and then annexation of the Quarry property. He added that he would prepare an article on the timeline of the process for the weekly Council Newsletter. Mayor Page expressed concerns that funding for the master plan may be insufficient. City Manager Dave Anderson noted that the Council could consider increasing funding for the project to conduct a more expansive study and make improvements to the property to make portions of it accessible to the public. Public Works Director John Cherbone added that $100,000 is not enough to do the full master plan and make the property accessible. Development of the master plan will depend on initial costs associated with mitigation work and creation of a topographical map. 6 Council Member Howard Miller suggested that the funding for the project be increased to $250,000 this fiscal year to make improvements that will allow public entry to the property, develop a topographical map, and create a master plan. Additional funding for the project can be allocated in future budgets, if needed. Council Member Cappello asked if work done now to make the park accessible and usable would potentially conflict with uses or improvements identified in the master plan. Public Works Director John Cherbone said he felt that work to make the property safe and accessible to the public would not be significant. Furthermore,the master plan will most likely maximize use of the existing grading and trails. While the master plan may call for improvements to existing trails,parking areas, or other features, it probably will not require a complete overhaul or relocation of these attributes. Council Member Lo asked if a master plan is necessary, since there are already existing trails on the property. Public Works Director John Cherbone said that the master plan is necessary, but can be done in phases, beginning with a conceptual plan. Vice Mayor Hunter said that she felt residents should be informed of the planning process and be given the opportunity to be involved. Mayor Page recommended that the funding for the project be increased to $300,000 for FY 2012/13 to allow for any contingencies. Facilities Improvement Program Following conclusion of the Council's discussion on the Parks and Trails Program of the Capital Budget, Recreation and Facilities Director Michael Taylor reviewed proposed projects in the Facilities Improvement Program. The first project he reviewed was the Electronic Door Lock System—Phase 2, which would replace manual locks with electronic key card locks at the Saratoga Prospect Center,the City's Corporation Yard, and a number of buildings throughout the City used by Public Works. Recreation and Facilities Director Michael Taylor then summarized the Emergency Power Backup—Phase 2 project. This project would install an emergency power generator for the City's server room and the Community Development/Public Works building. The first phase of this project upgraded the City's electrical panel. Vice Mayor Hunter asked how often the City experiences power outages that impact City Hall. City Manager Dave Anderson said that there are generally 2 power outages per year that affect City Hall and they typically occur when the City is responding to other issues, such as storms. 7 Recreation and Facilities Director Michael Taylor added that the City currently has to manually connect the servers to a generator when the power goes out. Mayor Page raised concerns about the necessity of the project. Council Member Miller indicated he felt troubled by the amount of money proposed for the project. City Manager Dave Anderson explained that most City Halls have similar emergency generators that allow City operations to continue as usual during power outages. Mayor Page asked if the project is a high priority and what the timeline of the project would be. Recreation and Facilities Director Michael Taylor responded that it is a high priority and if funding is allocated to the project then it could be completed by April 2013. Administrative Improvement Program City Clerk Crystal Morrow provided a brief update on the Safety Element Update, which is budgeted within the Administrative Improvement Program in the Capital Budget. Council Member Miller asked why the Safety Element Update is part of the Capital Budget rather than the Operating Budget, like the expenses associated with the Noise Element update. Finance and Administrative Services Director Mary Furey explained that the Safety Element Update is part of the Capital Budget, because it is a one-time, grant funded, and non-routine expense. Funding for the Noise Element in the Operating Budget reflects costs associated with consultants that will be working on the more technical aspects of the Noise Element update. Recreation and Facilities Director Michael Taylor provided an explanation of the Risk Management Mitigation Project, noting that the intent of the project is to reduce exposure to risk and liability. Council Member Miller raised concerns that the project would fund operational issues and asked why it was included in the Capital Budget. City Manager Dave Anderson clarified that it would be used to proactively mitigate exposure to risk as projects arise or come to the City's attention. Finance and Administrative Services Director Mary Furey added that including the project in the Capital Budget makes it easier to allow the funding to continue across fiscal years. 8 Recreation and Facilities Director Michael Taylor also noted that he has a list of more than 100 projects that will mitigate risks associated with accessibility requirements. Mayor Page recommended that the funding be limited to projects that mitigate ADA risks and that the project description in the Capital Budget includes a specific list of high priority projects to be funded through the project. Community Development Director James Lindsay then introduced the proposed addition of the Condition Use Permit(CUP)Reimbursement Program to the Capital Budget. Because the program crosses fiscal years, adding it to the CIP allows the program to remain in the budget until funding for the program is expended or reallocated. Council Member Miller expressed concerns about the benefits the CUP Reimbursement Program and shared that he feared it does not significantly contribute to economic development in the City of Saratoga. Vice Mayor Hunter asked if there is a time limit on how long applicants have to use a CUP Reimbursement after it is granted. Community Development Director James Lindsay responded that there is no time limit, but time limits could be added as a condition of the CUP Reimbursement Program. Mayor Page said he felt that reimbursing the cost of a CUP, which is not a significant expense, may not be a very attractive incentive to businesses. Council Member Miller noted that the CUP Reimbursement Program was started at the same time that other changes intended to encourage economic development were launched, such as the expedited CUP process and the Village Façade Improvement Program. These other incentives may be more effective than the CUP Reimbursement Program. Vice Mayor Hunter observed that the CUP Reimbursement Program has helped some Village businesses, such as the Vine Life. Council Member Lo added that while a CUP reimbursement may be a relatively small portion of business start up costs, it is still acts as an incentive to businesses that are considering a location within Saratoga. Mayor Page said he worried that businesses that choose to locate in Saratoga strictly based on the CUP Reimbursement Program may not have the capital or planning needed to start a successful business. Council Member Lo argued that business savvy individuals will open their businesses where the cost of entry is lowest. Council Member Miller added that the cost of entry in Saratoga is already among one of the lowest in the area. The City may attract more businesses just by 9 reducing the cost of all CUPs rather than maintaining the CUP Reimbursement Program. Council Member Cappello noted that the length of time to start a business is usually a bigger concern than cost of entry when selecting a business location. To that end,the expedited CUP program may be more effective than CUP reimbursements. While the CUP reimbursement is a nice incentive, it may not be enough to influence a business owner to locate in Saratoga. Council Member Lo suggested that the funding proposed for the CUP Reimbursement Program could be used instead for other businesses incentives, not limited to the Village. Mayor Page shared that there is interest in holding monthly food truck gatherings in the City. They City may want to consider using its business incentive funding to encourage these types of activities that increase business in Saratoga. Council Member Miller suggested that staff return to Council with recommendations for how the $25,000 could be used for business development. Council Member Cappello indicated he would like to review uses of the business development funds on an annual basis. Council Member Miller questioned whether the CUP Reimbursement Program should be in the Capital Budget. The Council consented to keep the business development funds in the Capital Budget and noted that funding should not be limited to business development in the Village. Mayor Page suggested that it would be better if uses of the business development program funds are driven by the needs of the business community, rather than being strictly determined by the City. Mayor Page pointed to Destination Saratoga as an example of how the business community can effectively steer local economic development efforts. Unfunded Capital Projects Finance and Administrative Services Director Mary Furey then introduced unfunded capital projects proposed to be added to the City's Capital Improvement Plan. Mayor Page asked that the location of the Saratoga Creek Trail be amended to 4th Street to Saratoga-Sunnyvale Road, instead of Walnut Avenue to Saratoga- Sunnyvale Road. Financial Policies Finance and Administrative Services Director Mary Furey introduced discussion on the City's financial policies. She reviewed changes influenced by Governmental Accounting Standards Board(GASB) 54 requirements regarding 10 fund balance reporting and governmental fund type definitions. The City's policies include maintaining an Other Unassigned Reserve of$500,000 and a proposed policy that General Fund Reserves are a minimum of 20% of General Fund appropriations. Council Member Miller asked for clarification on the purpose of the $500,000 Other Unassigned Reserve. City Manager Dave Anderson explained that the Other Unassigned Reserve provides fluidity for cash flow and budget stability in the event of a catastrophic event. Mayor Page asked if the Council could use the funds, if needed. Finance and Administrative Services Director Mary Furey said that the money could be spent, but would require a vote of the Council. Council Member Miller suggested that the Other Unassigned Reserve seems to serve a similar purpose to the Economic Uncertainty Reserve. It may warrant further discussion on the part of the Finance Committee to determine if the purposes of the various reserves need to be more specific or clarified. Finance and Administrative Services Director Mary Furey added that another proposed change to the Fund Balance Reserve policies is to add $100,000 to the Hillside Stability Reserve annually, until the reserve balance reaches $1,000,000. Council Member Lo asked if the existing balance of$500,000 is sufficient for a hillside disaster. City Manager Dave Anderson shared that estimates suggest that $1,000,000 is a good minimum for the Hillside Reserve Fund. Mayor Page added that during a large disaster, the City could also seek financial assistance from FEMA. Council Member Lo asked if the City would rebuild the reserve if a portion of it had to be used. City Manager Dave Anderson clarified that if some of the Hillside Stability Reserve had to be used, then the City would rebuild the balance until it reached $1,000,000. Finance and Administrative Services Director Mary Furey also shared that a policy on Capital Improvement Plan funding priorities should have been included in the draft Financial Policies. This policy would state the Council's previous direction to automatically give funding priority to ministerial capital projects, including the Annual Sidewalk Repairs project, Annual Storm Drain Repairs project, Annual Roadway Safety and Traffic Calming project, and, now with Council's approval, the Risk Management/ADA Mitigation project. 11 COUNCIL DIRECTION TO STAFF: - Provide Council with Joan Pisani Community Center Multipurpose Room flooring upgrade alternatives to floor replacement at the May 16, 2012 City Council Meeting. - Clarify City information on Code compliance to reassure residents that Code issues are still being handled by the City. - Update Council on the attorney costs associated with the sign ordinance update. - Increase funding for the Quarry Property Park and Trail Master Plan to $300,000. - Limit the Risk Management Mitigation project to ADA risk mitigation and include a list of high priority improvements to be paid for through the project in the project description. - Eliminate the proposed CUP Reimbursement Program from the Capital Budget, replace it with a new business development program, and return to Council with suggested uses for the program funds. Consider options that take business community interests, needs, and opinions into account. Allow Council to review the business development program annually. - Revise the location of the unfunded Saratoga Creek Trail capital project from Walnut Avenue to Saratoga-Sunnyvale Road to 4th Street to Saratoga-Sunnyvale Road. - Take the General Fund Reserve definition to the Finance Committee for clarification and distinction. ADJOURNMENT Mayor Page adjourned the meeting at 9:38 p.m. Minutes respectfully submitted: I 00(YD/U Crysta orrow City Clerk 12