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HomeMy WebLinkAbout05-20-2004 City Council Study Session MINUTES CITY COUNCIL STUDY SESSION CITY OF LAKE ELSINORE 183 NORTH MAIN STREET LAKE ELSINORE, CALIFORNIA THURSDAY, MAY 20, 2004 ****************************************************************** CALL TO ORDER The City Council Study Session was called to order by Mayor Buckley at 5:10 p.m. ROLL CALL PRESENT: COUNCILMEMBERS: HICKMAN, KELLEY, MAGEE, SCHIFFNER, BUCKLEY ABSENT: COUNCILMEMBERS: NONE Also present were: City Manager Watenpaugh, Assistant City Manager Best, Assistant City Attorney Mann, Administrative Services Director Pressey, Community Development Director Brady, Community Services Director Sapp, Fire Chief Gallegos, Fire Division Chief Windsor, Lake & Aquatic Resources Director Kilroy, Police Chief Fetherolf, Engineering Manager Seumalo, Finance Manager Magee, Information/Communications Manager Dennis, Parks & Open Space Manager Fazzio, Planning Manager Villa, Public Works Manager Payne, Recreation & Tourism Manager Fazzio, City Treasurer Weber and City Clerk/Human Resources Director Kasad. DISCUSSION ITEM 2004-05 Fiscal Year Budget (F:30.1) Mayor Buckley noted that the Fire Department had a brief presentation. City Manager Watenpaugh noted that this was the third budget workshop for the City Council; and indicated that staff anticipated bringing the budget back for Page Two - City Council Study Session - May 20, 2004 consideration on June 8th, however it could come back to the second meeting in June. He indicated that staff had already removed the vehicle license fees and the reimbursement for booking fees and ERAF. He advised that based on the latest budget projections, staff was recommending a 6% reduction, while maintaining current staffing levels and increasing several areas. He explained that the proposal was for a 90%' increase in fire and 12% increase in police, plus three planners and two engineers to keep up with the growth factors. He advised that the 6% reduction included some special events, which the Council might want to replace. He pointed out that the proposal was for a multi-year budget, and noted that it was a five year capital budget; and seven year revenue and expenditure projections were provided. He indicated that with the increases to the Fire Department, Fire Division Chief Windsor and Fire Chief Gallegos would be providing an overview of fire services. Division Chief Windsor noted that he was part of California Department of Forestry and Riverside County Fire Department. He explained the regionalized fire protection and infrastructure needs. He noted the second fire station at Mc Vicker park, and reminded the Council that construction was about to start on the third station on Railroad Canyon, and others were being discussed. He stressed that it was important to provide an understanding of how determinations were made for levels of service. He explained that the Fire Chief and the Department deal with Fires, Floods, Hazardous Materials and Weapons of Mass Destruction. He further explained that the department covers a large area, serving about 1.5 million residents. He noted that the County contract allows for a percentage of the indirect costs for local resources. He stressed that if the City had an event requiring additional fire engines, it would have them; and it would not cost the City an extra dime. He indicated that they were very happy to continue to long standing cooperative Fire Service Agreement. Division Chief Windsor detailed the 2003 incidents, the mission statement for the Riverside County Fire Department and the master planning process. He detailed the land use categories and categories into which the calls fell, noting that medical emergencies were the highest category of calls. He detailed the emergency medical service goals and stressed the importance of quick responses in light of the clinical and biological death time frames. He further detailed the fire protection - - Page Three - City Council Study Session - May 20, 2004 goals, and noted the damage vs. time matrix as it related to potential reductions in property damage. He explained that the fire suppression goals were based on the land uses, and indicated that the fire station and apparatus placement were part of the overall planning process. He advised that they used GIS programs to determine appropriate service areas. He detailed the overall map of the existing fire stations, noting that the current response time was seven minutes from the stations. He reiterated the coverage provided by outside stations, as part of the regionalized fire protection agency. He explained the need for the new Rosetta Canyon Fire Station, and noted the other proposed new stations. He stressed the department's responsibility to maintain the seven minute response times. He noted that the areas of the City which were currently not within the seven minute area were in the Lake, and parts of the North Peak project area. He indicated that with the new stations, the City was very well covered. He stressed that a benefit of regionalized protection was the sharing of indirect costs. Ron Bradley, representing Temecula Valley Bank, noted that a lady approached the bank about five years ago regarding a project in Lake Elsinore, which was submitted and -received approval with a building permit issued on the day her husband died. He indicated that the project had lagged for a while, but the applicant had been in contact with City officials and he had assisted in putting together a business plan and loan package for an assisted living facility in the City. He requested consideration of$150,000 of housing set-aside dollars, noting that this project would qualify under Redevelopment Agency law. He indicated that $150,000 was about 10% of the cost, and indicated that the applicant had just over $250,000 of her own money invested, with a pending loan application for nearly $1 million. He advised that the facility would be for people age 55 and over, in need of one of seven basic services. Al Jaskar, Inland Empire Small Business Development Corporation, indicated that they provided free consulting services and this applicant came seeking support about five years ago. He explained that it was the applicant's husband's dream to build an assisted care facility in Lake Elsinore. He noted that they met with staff and worked to develop a project and put together a business plan. He indicated that they worked on the financial aspects and helped to put together the necessary statements. He commented that this would be a facility for the elderly on Graham. Page Four - City Council Study Session - May 20, 2004 - He offered his further support to help get the project complete. Mayor Buckley questioned the location on Graham. Mr. Jaskar indicated that it would be located at 138 E. Graham Street, adjacent to the mortuary. Tim Fleming, 17670 Lakeshore, indicated that he had two issues to address, the first being the paving of Wilson Way, off Lakeshore Drive. He indicated that they have been waiting since 1996, and were promised that it would be taken care of last year. He noted that it is an extreme dust hazard and the kids use the street to spin cars. He also addressed the in-lieu fees charged for new homes and extensive remodels. He indicated that he had heard the excuse that there was some question where the street right-of-ways were; but expressed disbelief that it was possible that this was not known in a City that was well over 100 years old. He commented that Country Club Heights might be different, but indicated that he would like an accounting of where the in-lieu fees had gone and why development was allowed without curbs, gutters, etc. Edith Stafford, 29700 Hursh, commented on Ellis Street and indicated that she couldn't believe how bad it was. She questioned who was contracted to maintain the streets, and suggested that no one was maintaining them. She suggested that someone take a survey of the streets, as even her street had potholes that were recently filled, but were back to the same situation. She stressed that someone should look at what was happening with the streets. - Administrative Services Director Pressey commented that this meeting was the first look at the RDA and LLMD operating budgets, as well as an update on the General Fund Budget with the changes incorporated since the last study session. He indicated that this session would end with a review of the elP Budget. He noted that with regard to the RDA operating budget, a handout was provided last week, and an additional summary was presented today. He detailed the unallocated revenues, available funding and the housing set aside fund. He addressed the request for $150,000 and indicated that he would look at the available funding, but he was not aware of any other projects being considered at this time. He explained the fiscal year 2003-04 unallocated revenue page and reviewed the net income and anticipated deficit for the fiscal year. He noted that pursuant to the RDA Committee recommendation the excess from other projects areas was proposed to be used to pay back the housing fund and the City; and - Page Five - City Council Study Session - May 20, 2004 indicated that 70% would be about $215,000 for the current year, with the remaining 30% to be paid to the General Fund toward the $9 million outstanding. He noted the recent discussion of interest payments, and commented that he was pleased with the 30% payback recommendation as it would go a long way to help resolve the debt. He stressed that the RDA was getting stronger and indicated that over time the revenues would increase. He detailed the available funds at June 30,2004, and noted the future balances for June 30th 2005 and 2006; at which point the bottom line would be up to $4.7 million. He addressed the RDA summary for fiscal years 2003-04, 2004-05 and 2005-06, and detailed the 70-30 split factors for repayment. He stressed that overall the RDA was improving. He noted that the Project Area III assessed value had not yet taken off, but would with future development. ' Councilman Hickman commented that this presentation was an interesting snapshot of the financial picture. Councilman Magee questioned the interest on account 910 and inquired if that was the 6% the City was charging the RDA. Administrative Services Director Pressey indicated that was the Project Area I Capital Project Fund and the interest being paid was what the City had accrued but not received in cash. He stressed that the City was still owed the cash. Councilman Magee commented that there was still interest owed, and noted that the amount was significant. Mr. Pressey confirmed that about $9 million was owed. Councilman Magee reiterated that he was not sure there was a benefit to charging interest. He addressed obligations/legal debt for Amber Ridge and Camelot. He questioned the payout for this year and each of the next two years, and inquired if it was for both projects. Mr. Pressey indicated that Camelot was paid off last year, so there was a significant drop this year. Councilman Magee inquired how much longer payments would be required. Mr. Pressey indicated that there were obligations until 2020. Mayor Buckley addressed the interest issue and noted it was like charging ourselves interest and administration fees. He addressed the summary of unallocated revenues and questioned how much the RDA ultimately had to spend. Mr. Pressey in,dicated that right now the summary sheet for 2004-05 revenues showed $12.2 million, with expenditures of$10.8 million, for a balance of$1.3 million. Mayor Buckley surmised that there was about $500,000 to spend. Mr. Pressey confirmed and noted that the majority went into the housing fund and Page Six - City Council Study Session - May 20, 2004 Project Area II, with Project Areas I and III making up the shortfall, for a net of $500,000. City Treasurer Weber noted a drop in second quarter investment earnings; and commented that the workout was intended to increase interest instead of decreasing it. Administrative Services Director Pressey clarified that what was presented was a history vs. what was proposed. He clarified that historically it was decreasing because of a decline in the market and until the market turned around that would not change. City Treasurer Weber questioned if this was a matter of the financial markets or the housing markets. He noted the debt service principle retirement, and questioned if that was all that was being retired. Mr. Pressey explained that there were open bonds and the principle was a fixed rate with a fixed schedule. City Treasurer Weber indicated that as he understood the numbers $358 million would be paid on $58 million, and noted negative bracketed numbers which showed the bottom line all negative. Mr. Pressey explained the accounting standards requirement that advances be carried on the balance sheet, which varied from typical government accounting standards. He explained that this process was specific to RDA funds, with the bottom line intended to determine the health of the RDA and look at the current available resources. He clarified that the California Code on the RDA required the RDA to issue debt and pay it back over future years with tax increment. He explained that if the RDA did not issue debt, the funds would be withheld by the County. City Treasurer Weber noted the proceeds from the bonds and questioned if they were dispersed. Mr. Pressey indicated that the proceeds were part of the 1995 issuance, with the only other outstanding bonds being four issuances in 1999, with proceeds of$4.5 million. City Treasurer Weber questioned the proceeds from bonds on page 2. Mr. Pressey clarified that those were the proceeds of all debt other than advances, and noted that small loans were made in the past, so there was a difference in the numbers. City Treasurer Weber questioned "incremental property taxes", and if this was because they were built on; and questioned the possible future amount at build out. Mr. Pressey indicated that he did not recall at this time, but it would continue to increase. City Treasurer Weber noted the Rancho Laguna earnings revenue, and suggested that it would increase substantially via the workout that was just done. Mr. Pressey commented that right now it was under water, but it might be helpful for the fiscal agent investment. City Treasurer Weber noted that Area III still - - Page Seven - City Council Study Session - May 20, 2004 needed work, and expressed hopes that it would look better next year. Councilman Schiffuer addressed the issue of interest between the City and the RDA; and commented that he felt the two organizations were separate with separate income and responsibilities. He stressed that the City of Lake Elsinore was responsible to provide services to the public, but City money was used at a time when the RDA was in the hole. He commented that money was used that could have gone for police and other services. He stressed that the City had fixed sources of income to provide services; and indicated that it should get any kind of income possible to provide services. He further stressed that the RDA had a different function; and noted that it was unfortunate that it had lost money. Councilman Hickman questioned what was being paid to the State for loans. Mr. Pressey indicated as far as earnings on the State pool it was about 1.62%. Councilman Hickman further questioned what loans were owed to the State. Mr. Pressey indicated that there were no loans due to the State. Councilman Hickman questioned page 5 and inquired if the ERAF money was included there. Mr. Pressey confirmed. Councilman Hickman inquired if the money was already pulled out, questioning the 2004-05 figure. Mr. Pressey indicated that number was year to date, and clarified the ERAF monies for the current and future years. Councilman Hickman questioned the other costs included in the RDA budget. Mr. Pressey clarified that it included the audit, administration fees, and annual compliance reports. Councilman Hickman questioned the cost for administration. Mr. Pressey indicated that it was not broken out, but he believed it was about $200,000. Councilman Hickman noted that legal and accounting fees were $100,000 by the end of March and suggested that they would triple by the end of the year. Mr. Pressey clarified that was a place holder which was projected for the project area plan amendment to move the cap and other contingencies, but it could be significantly less. Councilman Hickman inquired if there could be more precise numbers on the next consideration, as he believed them to be a little inflated. He questioned $100,000 for each fund. Mr. Pressey indicated it might be an oversight, but in the past it was that high including contingencies. Councilman Hickman commented that there was $200,000 to the City and $300,000 for the attorney. City Manager Watenpaugh addressed the contingencies and clarified Page Eight - City Council Study Session - May 20, 2004 - that they would not be used if they were not needed, but were planned for redoing the Project Areas and modifying the cap on Project Area 1. He stressed that this was to be a place holder and not the precise amount. Mr. Pressey noted that the City Attorney had said it would be $150,000 for the RDA, and commented that each Project Area was currently overstated by $50,000, which could be adjusted. Councilman Hickman indicated that he would like to have the RDA committee go over the figures. Mr. Pressey indicated that the Committee had been provided a copy of the budget via e-mail. Mayor Pro Tern Kelley indicated that she was going to ask the City Attorney's office for clarification, but as a place holder, it would go up based on what was happening in each project area; and concurred that the money should be there, as the Attorney had been asked to do a lot of things. Councilman Hickman inquired when there would be an RDA Committee meeting. Chairman Ryan indicated that they could have a meeting next week. City Manager Watenpaugh indicated he would need to be sure that date was not already booked. - Councilman Schiffuer indicated that he would like to see the money deleted to allow it to be used for other purposes. Councilman Hickman indicated that he would like to see work done on Franklin and Ellis too. Administrative Services Director Pressey addressed the Lighting & Landscape Maintenance District Budget and explained that the revenues and expenditures were equal at $1.2 million. He commented that the City-wide assessments in this area were fixed and could not be increased, so it was important to control costs in light of the rising electric and maintenance costs. He explained that improvements would come in the form of new areas annexing into the District. He stressed that under the old District, there were no inflationary factors included. He detailed the types of facilities that could be included in the LLMD. City Treasurer Weber commented that it was nice to see something balanced. Councilman Magee commented that in all fairness, the reserve had been consistently maintained, which was good news. Councilman Hickman noted that he received a call about tree trimming, and apparently some palm trees had been - Page Nine - City Council Study Session - May 20, 2004 trimmed. He stressed that trimming of palm trees should be limited. City Manager Watenpaugh indicated that he was aware ofMr. Fleming's concerns; and determined that the Edison Company had trimmed them, however City staffhad since met with them to address the agreement on tree trimming and they had agreed to be more careful in the future. Councilman Hickman questioned Mr. Fleming's concern on the issue of cash in- lieu fees for streets and sidewalks and questioned if the money went into the general fund. City Manager Watenpaugh clarified that it was placed in a dedicated fund for streets, etc. Councilman Hickman expressed concern with the streets where the sidewalks start and stop. He questioned if that would be addressed with this budget. Engineering Manager Seumalo indicated that they had not looked at infill, but it could be addressed if the Council was concerned with it. He noted that staff was hoping to address one area at a time. Councilman Hickman suggested that staff address it instead of letting someone else handle it, but questioned other issues. Engineering Manager Seumalo indicated that typically drainage was an issue. Councilman Schiffner noted the possibility that some houses had never paid the fee. Engineering Manager Seumalo indicated that Engineering and Maintenance staffs were looking at the storm drain master plan. Councilman Hickman inquired if staff had just started collecting the fees. City Manager Watenpaugh noted that the TIF was recently adopted for the lanes of travel, but staff was looking at the developer impact fee for curbs, gutters and sidewalks. Councilman Hickman expressed concern that inflation would set in and the improvements would cost more than the homeowners had paid. Engineering Manager Seumalo confirmed that this was a possibility. Councilman Schiffner questioned the fund for school safety. Engineering Manager Seumalo confirmed that there was a program and money was available for Safe Routes to School. Administrative Services Director Pressey addressed the General Fund budget materials presented today. He indicated that page one was a summary of changes, with three additions. He emphasized the changes since the April 15th session, and noted that on the revenue side, the property taxes had been understated. He indicated that the sales taxes projections at mid-year had been reduced by $100,000, but Was significantly less, as the Governor's budget included additional Page Ten - City Council Study Session - May 20, 2004 - take-aways. He highlighted the changes to expenditures, and noted that the City Council budget decreased to accommodate funding for the Public Safety Advisory Commission and other Committees. He detailed the additional changes as presented. Councilman Magee indicated that he would like to see increased police hours in the current year; although the two motorcycles have been moved from fiscal year 2005-06 to 2004-05 for one month. Administrative Services Director Pressey indicated that the Lake Safety study had been requested; and noted the questions at the last meeting regarding new personnel positions. He detailed the proposed additional positions and summarized the cost of those positions. He advised that the cost-of-living increases per the MOD were estimated at 1.8%, but the actual amount was 2.29% or about $20,000 additional dollars City wide. He noted that with regard to benefit costs, the biggest increases were for PERS and Worker's Compensation. He detailed the changes between departments, including street maintenance moving from the CIP budget. He advised that with the goal of being in the black, staff was recommending a 6% reduction scenario. He detailed the projections for the next seven years, noting that the bottom line would remain in the black. - City Treasurer Weber thanked staff for providing the information in a timely fashion, and noted that he reviewed it in depth over the weekend. He indicated that he was glad to see that the sales tax had been revised. He questioned if it would remain flat at about $5 million each year, and expressed hopes that the money would be realized. He questioned why the numbers were calculated out to August 3rd. Administrative Services Director Pressey explained that accounting wise, that was when it would be measurable and available; generally within 60 days of year end. He indicated that it was standard practice to include that one month for closing the books and preparing for the audit. City Treasurer Weber indicated that he was looking at the cuts for 3% and 6%, but there was not much change in the numbers. Mr. Pressey referred to pages 2 through 4, and noted that not all departments were requested to cut budgets. He addressed the scenario on page 4 which included increases for law enforcement, fire and community development via cost recovery. He noted that there were also decreases with the Lake Department cut by 7%, the City Clerk's Office cut by 13% and the City - Page Eleven - City Council Study Session - May 20, 2004 Manager's Office cut by 14%. City Treasurer Weber addressed the cuts for each scenario and suggested that they did not add up. He questioned if it was an overall cut vs. a departmental cut. Mr. Pressey clarified that it was based on an established benchmark, and if the cuts couldn't be made or did not make sense, staff worked to accommodate the needs. He indicated that Community Services made significant reductions, but they were masked because of the shift of capital improvement dollars. He commented that in any event, when it was done, over a two year perio,d there was a balanced budget. City Treasurer Weber addressed page 6 and indicated that it was a good cut in the right direction for this year with a savings of about $700,000 less than projected. Mr. Pressey clarified the situation and confirmed the savings. He indicated that the bottom line was a $1.2 million deficit for the year, but it was originally projected at $2.3 million; so the City was $1.1 million better overall than projected. City Treasurer Weber addressed page 8 in the 20-20 account for professional services and noted that there was a change of $1.8 million. ,Mr. Pressey confrrmed. City Treasurer Weber suggested that there was a 10% budget increase. Mr. Pressey clarified that the increases were in police, fire and community development. City Treasurer Weber addressed the improvements in buildings and questioned the adjusted vs. actual costs. Mr. Pressey clarified that most of the capital expenses were related to the Destratification System, which was grant funded. City Treasurer Weber noted the reimbursements from the RDA and questioned if the RDA could afford to pay them. Mr. Pressey confrrmed that the RDA would pay debt service, legal obligations and general fund payback. City Treasurer Weber addressed page 14 for 2004-05, and inquired if the $931,000 out of Canyon Hills was the special tax for police and fire. Mr. Pressey clarified that it was for the facilities, and noted the operating and maintenance fund. City Treasurer Weber questioned page 28 regarding contractual services, and questioned the responsibility for this area. Mr. Pressey indicated that this page was under the Community Development Department and represented the total for four divisions. He explained that this represented contract labor for planners and engineers and was an end of the year projection, which was accurate based on the underlying assumptions. Councilman Hickman requested clarification that this was cost recovery and essentially a wash. Mr. Pressey confirmed. City Treasurer Page Twelve - City Council Study Session - May 20, 2004 - Weber questioned the regular employees adjusted budget and suggested it should be double. Mr. Pressey indicated that was possible, but he did not analyze the number of pay periods represented. He stressed that some of the new employees had not been hired, so with the vacancies it would be close. City Treasurer Weber questioned the' department request and if the costs would still be a wash. Mr. Pressey indicated that there would be an overrun, but he would not propose a budget adjustment, so the department would have to absorb it. City Treasurer Weber indicated that it would go over budget by $300,000. Mr. Pressey indicated that it would go over, but it would all be cost recovery. City Treasurer Weber addressed page 33 and indicated that with regard to regular employees it looked like a lot was being expended when it was $30,000 over. Mr. Pressey indicated that was possible. City Treasurer Weber noted that the requests were up by $400,000 for next year. Mr. Pressey indicated that the number included vacant positions and a mid-year adjustment. City Treasurer Weber inquired if fees would come in to cover the overage. Mr. Pressey confirmed that this would be cost recovery. City Treasurer Weber expressed hopes that the future overages would be able to be absorbed. Mr. Pressey reiterated that the cost recovery revenues would off-set a large part of the costs. - Councilman Hickman commented that the budget was going from $20 to $25 million, but there was discussion of a 6% cut. He commented that the budget was $1.2 million in the red, and questioned if it would drop the reserves. City Manager Watenpaugh indicated that the reserves would remain at $3 million. Councilman Schiffuer addressed page 15 regarding employee insurance, and assumed that it included health insurance for City Council. Mr. Pressey confirmed. Councilman Schiffuer noted that there was a substantial reduction, but insurance had not decreased. Mr. Pressey indicated that there was a different mix of new Council Members. Councilman Schiffuer noted that every Council person was entitled to be covered, he questioned if approval was needed to allow a Councilperson to take outside insurance and be reimbursed. City Manager Watenpaugh indicated that such an issue would require Council action. Councilman Schiffuer noted that it might be cheaper to pay for a Councilmember's existing insurance than to take the City's insurance. He noted that when elected - Page Thirteen - City Council Study Session - May 20, 2004 Councilmembers might already have primary insurance in place. Assistant City Attorney Mann suggested that it might be treated as compensation, rather than a reimbursement. Councilman Schiffuer requested that the City Attorney look into that question, and noted that he pays his own insurance, and it could not be obtained again if it was cancelled. Assistant City Attorney Mann indicated that he would check the rules. Councilman Hickman questioned if the budget included contingencies for the sale of the Stadium. Administrative Services Director Pressey indicated that it did not. Councilman Hickman questioned the impact of the sale. City, Manager Watenpaugh noted that there would be about $200,000 profit in that case. Councilman Magee addressed page 4 for the 6% cut summary; and indicated that he wanted to be clear on the staff proposal to spend more than was taken in next year and the year after that. Mr. Pressey confirmed, but noted the ending balance in the second year. Councilman Magee addressed page 10 under licenses and permits, and questioned the launch pass revenues for the boat launch near Swick- Matich field. City Manager Watenpaugh clarified that it was the launch ramp at the campground. Councilman Magee noted the revenues in 2001 and commented that now there was nothing because the Lake was too low. He questioned the day use and annual passes. Lake & Aquatic Resources Director Kilroy indicated that the campground revenues were included on page 13, of which the City receives 7%. Councilman Magee questioned if there was an assumption of lost revenues, due to the low'water level. Mr. Kilroy confirmed that lost revenue had been anticipated. Councilman Magee questioned page 13 regarding the Stadium and noted that compared with the expenses and revenues on page 5, it would appear that there was a loss of$528,000. He noted that if Impact Capital steps forward it will help, but right now it was a net loss. He next addressed the skate park revenue and inquired if the 'expectation was to ever make money on it. Mayor Pro Tern Kelley indicated that as of two weeks ago they were showing a profit. Councilman Magee commented that it was generating more interest and he received compliments all the time, so he was shocked to see no revenue. Mayor Pro Tern Kelley noted that the operator was going to be turning in his report. Councilman Magee reiterated that he was receiving positive comments. Page Fourteen - City Council Study Session - May 20, 2004 - Councilman Magee addressed page 16 regarding the Public Safety Advisory Commission expenditures for $27,000. He noted that they only had one meeting and inquired if that was the correct cost. City Manager Watenpaugh clarified that was the proposed budget for the commissions and committees, not the cost to date. Mr. Pressey indicated that number should be zero, which was his error. Mayor Pro Tern Kelley addressed the same page, and noted that the 6% cut went to the Commission/Committee's $20,000. Mr. Pressey clarified that the $20,000 was for all the committees and was brand new funding. Councilman Schiffuer inquired if there was $20,000 for each committee. City Manager Watenpaugh clarified that was the total for the commissions/committees. Councilman Magee addressed page 26 regarding general law enforcement and the account for training and education; and questioned if that was not covered by the contract. Councilman Schiffner indicated that officers were paid for during training. Mr. Pressey indicated that some of the expenses were based on specialized training costs not covered by the contract. He noted that another example of items outside the contract were helmets, boots, etc. for the motorcycle officers. Councilman Schiffuer questioned the months paid for training. Mr. Pressey indicated that the City paid three months for training at the unsupported rate. Councihnan Schiffner inquired if the time frame was the same for fire and paramedics. Mr. Pressey confirmed. Councilman Magee addressed the newest handout material and questioned the two motors for law enforcement in 2005-06, and the patrol officer increase of 20 hours. Mr. Pressey clarified that on July 1 st patrol hours would go from 90 to 110, with the motorcycles coming on line next May 31 st. He indicated that if the Council wanted two motorcycles and 11 0 patrol hours on July I st, it would be an additional $300,000, offset by any revenue they would generate. - Mayor Pro Tern Kelley addressed the first page under personnel and noted the correction of Associate Civil Engineer and upgrade of two positions to senior level. Mr. Pressey clarified the upgraded positions. Mayor Pro Tern Kelley commented on animal control and noted that Animal Friends of the Valley was working toward a new facility. She questioned when Page Fifteen - City Council Study Session - May 20, 2004 this expense was expected to impact the City budget and what the City's portion would be. Mr. Pressey indicated that there would be about $170,000 per year in debt service payments to finance the City's portion, and noted that the budget assumes that would be July 1 st. Community Services Director Sapp clarified that staff was not certain what the portion would be or the time line, but the draft Joint Powers Agreement had been sent out for review. He further clarified that the $170,000 was for annual service and the start up costs. He indicated that the City's charges could change from year to year because they were based on the percentage of animals turned in; and right now the rate for the City was 28%. He confirmed that there would be some costs associated with the JP A, but he was not sure of the figures. He noted that it was possible that in the next fiscal year there would be some bond payments, but advised that construction was still two years away. Mayor Pro Tern Kelley indicated that she had read the information, but there was no price tag on the new shelter. Mr. Sapp confirmed that there was not one available. Mayor Pro Tern Kelley noted the $650,000 for water in the budget. City Manager Watenpaugh indicated that the Water District was pumping water and the $650,000 was a set amount that was tracked and monitored before the bill was paid. Mayor Pro Tern Kelley indicated she just wanted to be sure the City was keeping track of the water. Mayor Pro Tern Kelley noted that the 6% cut in Community Services would delete the Winterfest program, Music with a View concert series and the Children's Fair. Community Services Director Sapp confirmed that the staff costs associated with those events had been removed to reach the requested cuts. Mayor Pro Tern Kelley commented that the City needed to keep providing those events, as they are enjoyed by the community, and noted the addition of fireworks for the 4th of July. She stressed that the impacted events were the only things the City provided that were fun for the community. She questioned the cost of these events. City Manager Watenpaugh indicated that the total cost was about $25,500. Mayor Pro Tern Kelley recommended reinstatement of all three events. She addressed the Music with a View event and indicated that she raised money on the side for that event for the musicians, but they rely on staff to set up and take down. She stressed that they had already contracted out the musicians for this year, and advised that they had already raised $30,000. She reiterated that she would Page Sixteen - City Council Study Session - May 20, 2004 propose that the Council reinstate these programs. Mayor Buckley indicated that $25,000 was available. He commented that the cost of insurance went down with the new Council. He suggested that while looking at the issue raised by Councilman Schiffner, consideration be given to the legality of giving Councilmembers a total of $500 per month in payor benefits. Assistant City Attorney ,Mann indicated that he would have to look at the limits for reimbursement. Mayor Buckley suggested funding the extra $28,000 to restore the community events. He addressed the concept of a 6% cut, and indicated that overall it was actually only 1.3%. Administrative Services Director Pressey indicated that it actually resulted in a 16% increase overall. Mayor Buckley addressed the scenarios from a 0% cut to a 6% cut, and indicated that only $301,000 had been saved out of a $25 million budget. He stressed that was not 6%. Mr. Pressey indicated that the reductions were not hard and fast cuts, as some increased and some decreased; but the three different scenarios were prepared with that in mind. City Manager Watenpaugh clarified the budget preparation instructions to staff, and indicated that some service levels could not be met with the requested cuts. He suggested that the scenarios should have been labeled one, two and three, rather than percentage cuts. Mayor Buckley commented that in looking at all of the scenarios, pay and benefits overall were not being cut. Mr. Pressey confirmed, and clarified the initial assumptions. City Manager Watenpaugh commented on the existing contract MOD with the employee's union. Mayor Buckley commented that the MOD did not have a bearing on the management side. City Manager Watenpaugh indicated that staff was working from the established policy. Mayor Buckley suggested if cuts were being considered, they should be made. He questioned how much of staff was exempt, and suggested a 6% cut for the exempt employees. Mr. Pressey indicated he was not sure offhand. City Manager Watenpaugh indicated that staff could run that scenario and determine what percentage of employees were exempt from the MOD. Mayor Buckley questioned what 6% of the compensation package would be and addressed page 15 regarding merit increases. He suggested that there were not "merit" increases. Mr. Pressey clarified that if the increases were not merited, they were not granted. Mayor Buckley questioned the percentage of employees getting merit increases. Mr. Pressey indicated that the assumption was 100% of the employees'. Mayor Buckley requested clarification that this included every - - - Page Seventeen - City Council Study Session - May 20, 2004 employee. Mr. Pressey clarified that some employees do not have any more steps left for increases. Mayor Buckley suggested that if everyone gets a merit increase, maybe it should not be a called a "merit" increase. Mr. Pressey clarified that if a merit increase was not warranted, it was not received. City Manager Watenpaugh clarified that merit increases were included for anyone eligible for a step increase, but everyone does not automatically receive merit increases. He noted that most management employees were not eligible for merit increases. Mayor Buckley questioned page 2 with regard to $1.5 and $2 million and questioned where the case was coming from. City Manager Watenpaugh indicated that those numbers were based on the scenarios prepared by staff. Mr. Pressey noted the new development happening in the next year versus this year. Community Development Director Brady noted that the Costco/Lowe's project was coming forward, as was Home Depot, the Auto Dealership and a number of housing tracts which would generate a large amount of fees. He noted that Rosetta Canyon, Canyon Hills, Tuscany, Murdock and a number of other tracts were anticipated to pull permits in the coming year. Mayor Buckley inquired if the. budget was based on only the things that had been approved, rather than those things proposed to be approved. Mr. Brady indicated that they reviewed the timing and only looked at those that were anticipated to pull permits this year. City Manager Watenpaugh noted that it was also the balance of the Serenity and Forecast/La Laguna tracts. Mayor Buckley requested confirmation that the numbers did not include John Laing Homes. Mr. Brady confirmed. Mayor Buckley questioned the dip in property taxes. Mr. Pressey indicated that the property taxes might be understated. Mayor Buckley noted that on the sales tax side there was a reduction of $325,000 this year and questioned the projections for Costco/Lowe's. Mr. Pressey indicated that staffhad initially projected income from that project, but now understood that it would open in July, 2005; and noted that other revenue generators would be coming on line this year. Councilman Hickman inquired if an actual 6% cut would balance the budget. Mr. Pressey indicated that it would still require a two year budget, but it would come close based on the projections. Mayor Buckley questioned the cost of Health and Wellness. City Manager Page Eighteen - City Council Study Session - May 20, 2004 Watenpaugh indicated that it cost $18,900 annually. Mayor Buckley inquired if there was a cap on the program. Mr. Watenpaugh indicated that executive management received $150 per month and mid-management received $75 per month. Mayor Buckley questioned the possibility for them to receive more than that. City Manager Watenpaugh indicated that the funding had been the same since 1988. Mayor Buckley questioned who received the benefit. City Manager Watenpaugh clarified the staff levels and amounts, and noted that it accrues. Mayor Buckley questioned the accrual. City Manager Watenpaugh indicated that there was not a limit on accruals. Councilman Hickman questioned why the program was established. City Manager Watenpaugh indicated that the original program was established in 1985 as part of a County grant, and was listed as a benefit to provide additional fitness to keep people at work. He noted that in 1988, the then Assistant City Manager did a memo modifying the program and listing what it could be used for, including prescription reimbursement, fitness centers, medical costs not covered by insurance, etc. Mayor Pro Tern Kelley inquired ifit was an automatic draw. City Manager Watenpaugh clarified that staff was required to submit receipts for reimbursement. Mayor Buckley inquired if there was a budget line for the accrual. Mr. Pressey indicated that it was listed on the balance sheet as a liability. Councilman Magee addressed Resolution No. 88- 1, and noted that it listed the benefit at $100 a month, but he heard two different figures. He requested a copy of the amendment. City Manager Watenpaugh indicated that it could not be provided, but he could provide a copy of a memo from 1988. He expressed the assumption that it had been dealt with in Closed Session; and noted that this was an area changed by staff, as the previous Finance Director had a problem with items not coming back to open session of the Council for ratification. He explained that items now came back to Council to provide a paper trail. Mayor Pro Tern Kelley commented that it appeared to be an amendment years ago. Councilman Magee expressed concern with having a document that says one thing and a practice that says another. Mayor Buckley suggested this was an unfair situation. Administrative Services Director Pressey indicated that he needed any input on changes either via the City Manager or discussion at this meeting. He indicated that the next meeting for discussion of the whole budget would be the first meeting in June, where staff intended to bring the final budget forward for adoption. He - - - Page Nineteen - City Council Study Session - May 20, 2004 requested clarification as to how the Council wanted to convey changes. Mayor Buckley noted that no decisions could be made at this meeting and suggested that anyone on Council could send e-mails or chat with staff about different scenarios on costs and savings potential. Mr. Pressey confirmed. Councilman Magee inquired ifhe was able to recommend some changes now. Mayor Buckley confirmed. Councilman Magee noted that this was his first time at this process and thanked staff for being patient with him in meetings. He distributed to Council and staff his proposed items for consideration. He expressed concern with spending more than was brought in and proposed looking at a 6% cut as a base; and if cuts were considered they would be suspending action and spending in certain areas while the finances were reevaluated. He proposed holding back on the Information Technology System Upgrade, pushing back the General Plan Update, suspending Travel and Meetings, suspending Training and Education, suspending Merit Pay Increases, suspending New Hires and suspending Palm Tree Relocations. He indicated that these changes would result in a $1.2 million savings, that would be a potential surplus. He further indicated that this would maintain core commitments to increase public safety, lake and recreation, and efforts for economic development, while remaining fiscally responsible. He proposed that the Council not pass a budget with deficit spending; and indicated that he would like to stop the trend before the June 8th meeting. Councilman Schiffuer questioned what the surplus would be for. Councilman Magee indicated that it would be for a rainy day. Councilman Schiffuer indicated that in actuality, more would be needed in the case of a rainy day. Councilman Magee indicated that he does not operate that way either personally or in his business. City Treasurer Weber indicated that he wanted to look at interest incomes. He stressed that the City needed to make better money on the money available for interest income. He noted that there was $7 million in the cash fund and he was trying to work a better deal. He indicated that LAIF was getting 1.4% and suggested looking at getting more on that money. He also suggested looking at the RDA and Assessment District funds, as he was hearing it was possible to get 5.9%. He noted recent e-mails on the issue and the discussion of a financial Page Twenty :- City Council Study Session - May 20, 2004 - advisor. He indicated that a financial advisor was more important than he thought it was, and explained their efforts and ability to advise the Council on the bond reserves and potential interest. He indicated that the City needed to take a quantum leap on interest on current funds available, stressing that right now it was minimal. He stressed that he thought the interest could be increased, and indicated that a financial advisor works pro-bono and takes very small amounts. He suggested looking at someone who knows what is going on and could suggest a plan to find more money. He further suggested that they might be able to gain $130,000 or $140,000 on the LAIF funds alone. He recommended setting a date for this consideration, and stressed the need for an action plan with a date for completion. He questioned the Council's thoughts on a financial advisor and when work could start to look at the issue. Mayor Buckley noted that work was underway on an investment policy and the numbers were in the budget. Mr. Pressey confirmed. Councilman Schiffuer noted that a financial advisor was used in Orange County a few years ago to their detriment. Mayor Buckley noted that the City needed to prevent investment in derivatives. He noted that SCAG might come up with $200,000 for the public part of the General Plan, and stressed that the General Plan had to be updated. - Mayor Buckley commented on the Capital Improvement Budget and addressed the boat launch, questioning the ability to leverage the money the campground would invest. City Manager Watenpaugh indicated that he had a proposal, but he needed to go through it; and noted that $1 million was needed to keep the grant, to which the concessionaire could contribute. Mayor Buckley addressed the Lake Destratification System and noted that the City was not actually paying for any of it; and requested clarification that the project would not go over the cap. Engineering Manager Seumalo confirmed. City Manager Watenpaugh confirmed that it would be within the set dollar amounts. Mayor Buckley commented that the Swick-Matich restroom had been on the books for about five years. He inquired if the Casino Drive Bridge Retrofit would include a useable sidewalk. Engineering Manager Seumalo indicated that he didn't think so. Mayor Buckley addressed the need for traffic signals and noted the - - Page Twenty-One - City Council Study Session - May 20, 2004 back-up at Grand/Ortega and Grand/Ontario. He indicated that he spoke with Supervisor Buster and he agreed to assist with funding at those locations. Mr. Seumalo indicated that he learned from the County yesterday that they were looking at Ontario/Grand, but it was not yet funded. Mayor Buckley questioned the need for a light at the Main/Graham intersection; and further questioned if it would allow more stacking than now. Engineering Manager Seumalo concurred that those were valid points; but they had been included in the program as a result of discussions 'with the Traffic Engineer. Mayor Buckley questioned if there would be a way of justifying the need. Engineering Manager Seumalo indicated that staff was on the way to justifying it, and with the development in the future it would be needed. Mayor Buckley addressed the Pavement Maintenance System, and suggested it would be fair to work on roads that are dusty and put in magnesium chloride. City Manager Watenpaugh noted that grading would be required as well. Mayor Pro Tern Kelley indicated that she was very concerned about the intersection ofl-15 and Highway 74. Mr. Seumalo indicated that it was not identified in the program, but staff was looking for alternative funding sources. He advised that no costs were anticipated for this budget, as the next step would be a project report from the impacted development funding. Councilman Magee addressed page 22 regarding park and recreation capital projects; and noted that there was Lincoln Street Park funding in the amount of $100,000, but nothing for the Serenity Park. He noted that he had a discussion with the City Manager about that project. City Manager Watenpaugh indicated that he was not sure where the developer was on that proj ect; but the park would not start until their plans and specifications were approved. He inquired of staff if the plans had been submitted. Community Services Director Sapp indicated that the park plans had been submitted. Community Development Director Brady indicated that the grading plans had not yet been submitted. Councilman Magee surmised that this project would not occur until next year. Councilman Magee addressed page 25, and indicated that it still depicted the Lincoln Street Park on the wrong parcel. City Manager Watenpaugh clarified that Page Twenty-Two - City Council Study Session - May 20, 2004 - the 888 park site was properly placed, but the triangle parcel was the old fire station site. Councilman Magee indicated that he was pleased to see the inclusion of the Grand/Ontario traffic signal, and noted that there was a significant amount of vehicular carnage at that location. He commented that he was glad to hear that the Mayor spoke with Supervisor Buster for assistance. Councilman Hickman noted that he had received a request for striping for pedestrians near City Hall on Main Street for the grocery store. Engineering Manager Seumalo indicated that he could study that issue, however staff does not support unprotected crosswalks. Councilman Hickman noted that many families were crossing Main Street to the market. Mr. Seumalo reiterated that he could look at it. Councilman Magee addressed page 83 and noted that the landscaping at Grand/Ontario originally wrapped around the comer onto Ontario. He suggested that as long as the landscaping was going in, it needed to be completed around the circle. Mr. Seumalo concurred. - Councilman Magee noted that Mr. Fleming had addressed Wilson Way, and requested that it be included on the unfunded improvement list as a first step. He addressed the comments by Mrs. Stafford regarding Ellis, and indicated that Public Works Manager Payne could tell her when it was scheduled. Public Works Manager Payne indicated that Ellis Street was included in the budget as an unfunded project. Mayor Buckley inquired if Chief Fetherolf had an update on the incident which occurred today. City Manager Watenpaugh suggested a private briefing on the matter. City Manager Watenpaugh indicated that he appreciated the City Council's comments and Councilman Magee's efforts to meet with staff. He commented that staff had brought forward budgets in excess of existing revenues per the financial plan, which was an effort to balance the budget over a period of time. He - - Page Twenty~ Three - City Council Study Session - May 20, 2004 indicated that the direction received in the past was to try to continue to return services; and that was why a two year budget was presented. He stressed that it had been quite a feat over the last seven years. He expressed understanding that they were public dollars, but indicated that he was concerned with the potential for cutting services. ADJOURNMENT The City Council Study Session was adjourned at 7:55 p.m. AT(ES..T.: r / /'"'\ -\ 2 J / I .I /. '- I. . J -=U\....- cC_L~-L"c} VICKI KASA , CMC, CITY CLERK! HUMAN RESOURCES DIRECTOR CITY OF LAKE ELSINORE