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HomeMy WebLinkAbout06-22-1992 Minutes MINUTES MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO ADJOURNED REGULAR MEETING JUNE 22, 1992 COUNCIL CHAMBERS This is the time and place set for an adjourned regular meeting of the Mayor and Common Council of the City of San Bernardino from the adjourned regular meeting held at 9:00 a.m., Wednesday, June 17, 1992, in the Council Chambers of City Hall, 300 North "D" Street, San Bernardino, California. The City Clerk has caused to be posted the Order of Adjournment of said meeting held on WedneSday, June 17, 1992, and has on file in the office of the City Clerk an affidavit of said posting together with a copy of said Order which was posted at 7:30 a.m., on Thursday, June 18, 1992, on the door of the place at which said meeting was held. The adjourned regular meeting of the Mayor and Common Council was called to order at 9:04 a.m., Monday, June 22, 1992, by Mayor Pro Tem Hernandez in the Council Chambers of City Hall, 300 North "D" Street, San Bernardino, California. ROLL CALL Roll call was taken by City Clerk Krasney with the following being present: Mayor Pro Tem Hernandez; Council Members Estrada, Hernandez, Maudsley, Minor, Pope-Ludlam, Miller; City Attorney Penman, City Clerk Krasney, City Administrator Clark. Absent: Mayor Holcomb; Council Member Reilly. INVOCATION The invocation was given by Council Member Pope-Ludlam. PLEDGE OF ALLEGIANCE The pledge of allegiance was led by City Attorney Penman. ANNOUNCEMENT - COUNCIL MEMBER ESTRADA (2) Council Member Estrada requested that the Mayor and Council allow a silent moment of prayer on behalf of Cathy Reilly, who is in the hospital intensive care ward; and a moment of silence for Art Parlas, owner of the local taxi cab companies, who passed away. ANNOUNCEMENT CITY ATTORNEY PENMAN REQUEST FOR INVESTIGATION GRAND JURY- (2) City Attorney Penman explained that he had prepared a letter 1 6/22/92 to the Grand Jury requesting that, pursuant to Penal Code Section 925A, an investigation be made of several issues relating to the City of San Bernardino. He explained that one issue was the proposed management study of the City Attorney's Office which he felt would not be fair and impartial if the consultant was hired by the Mayor. He explained that the other issues should not be discussed until Mayor Holcomb returns from his conference, so that they can be discussed with him. FISCAL YEAR 1992-93 BUDGET REVIEW - CONTINUED FROM JUNE 17, 1992 (1) This is the time and place continued to for a review of the City of San Bernardino Fiscal Year 1992/93 Budget. City Administrator Shauna Clark explained the format to be used for the budget review would be to assess the current status of the budget, and what action has been taken to date; then to make recommendations on how to resolve the budget shortfall; and what can be done relative to the State's proposed reductions to cities. Shauna Clark explained that the City started the fiscal year with a budget shortfall of $3,392,7S2. On June 8, 1992, the Mayor and Common Council took tentative action to reduce the shortfall by $2,637,200. On June 17, 1992, the Mayor and Common Council took an additional action to transfer the remaining $202,SOO Collateralized Mortgage Obligation (CMO) funds, after appropriations approved on June 1S, 1992 are made, to the General Fund. The combination of these actions reduced the budget shortfall to $SS3,OS2. Ms. Clark explained that one option the Mayor and Council have to eliminate the remaining $553,OS2 budget shortfall, is to change the $SOO, 000 revenue estimate for motor vehicle in-lieu fees. She reported new information relative to the proposed $3 million reduction in State property tax revenue over a three-year period. For this fiscal year the proposed property tax cut may be $1,067,171; however, the City will not know until the State budget is finalized whether this proposed budget action will take place. She explained that with the sale of the Police Station to the Economic Development Agency, the total budget shortfall was $3,720,223. Discussion ensued regarding the sale of the Police Station to the Economic Development Agency. The Council requested that Tim Steinhaus, Agency Administrator, be present at the meeting to answer questions regarding the sale of the Police Station to the Economic Development Agency. City Administrator Clark recommended that the budget be finalized, with the understanding that once the State adopts its 2 6/22/92 - budget, that the Mayor and Common Council return for further discussion and possible action on the City's budget. She felt that the State would take action to balance its own budget that would have significant impact on cities. She stated that the Mayor and Common Council should review each City program for possible reduction or elimination, and stated that staff would be available to answer any question, or conduct research, in order to prioritize the need for each City program. , Shauna Clark explained that the State Supreme Court had declared it would not hear the PERS (Public Employees Retirement System) case. This action means that the member cities would receive a credit, unless further legal action is taken. She explained that the City currently has $2.8 million set aside as a reserve, in the event the City is required to pay against its current credit of $7.3 million, of which $1 million is the Water Department.s credit, as the State has advised the City to stop sending in payment until the case was resolved. The City has been saving its payment, in a reserve account which has been accruing at a rate of $500,000 a month. One option would be to consider the $2,804,400 million PERS reserve, and set aside the proposed cut in the property tax revenue until the State makes a final decision. At this time the City can be reasonably certain that these funds can be utilized to reduce the budget shortfall; however, it must be stressed that this is a one-time help for the budget. Therefore, the City needs to seek long-term solutions for its budget problems. Andrew Green, Director of Finance, explained that Assembly Bill 702 (AB 702) eliminated, or liquidated, two cost-of-living funds, and directed those funds to be distributed to the member agencies. Ms. Clark recommended that the City take action to mitigate the impact the State's budget action would have on the City of San Bernardino. She explained several options that the League of California Cities has presented as possible action to mitigate the impact of the State's budget on cities. The League is recommending that City representatives meet face to face with their legislators to discuss their concerns, such as requesting that the various State mandates be reduced or eliminated. She recommended that each department audit the State mandates that affect them, and their respective costs. She explained that the options suggested by the League of California Cities are designed to draw media attention to the problems of the cities. "- Andrew Green, Director of Finance, explained the procedures that were utilized in preparing the program budgets. He explained that the departments were instructed to separate from the line item budget individual program expenses and subtract that amount from the Department's total budget. This program breakdown would allow the Mayor and Common Council to see on a 3 6/22/92 program-by-program basis, the costs for personnel and materials, services and supplies. If a program was reduced or eliminated, only that particular program's costs would be reduced or eliminated, and other departments' expenses would not be affected. The Council requested that Manuel Moreno, Jr., Director of Public Works, be present at the meeting to discuss the collection of trash within the City. , Shauna Clark explained that the City has exclusive rights for refuse collection services; however, over the years some outside haulers have established commercial accounts. This means that the City does not receive the revenue from these commercial accounts. The Ci ty has a number of ways to approach the situation; one would be a very strict enforcement program which would cost the City money, but would generate considerable revenue in the long term. It is estimated that with this option the City could gross an additional $SOO,OOO annually. Another option would be to establish a franchise fee for those private haulers, and limit their accounts. It is estimated that with this option the City would gross an additional $72,000 annually. Staff supports the strict enforcement option, because the City'S fees are less than outside haulers, and because under Assembly Bill 939 (AB 939), the City is required to reduce the waste stream by 2S% in 1995, and 50% in the year 2000, which would be possible with 100% control of the waste stream. She explained that taking control of these private accounts would require some legal effort, but felt that it was necessary to retain exclusive service rights. Senior Assistant City Attorney Barlow explained that under State law when an area is annexed, the private refuse haulers serving those areas are allowed to continue service for five years. The City subsequently extended that time for five years; however, the collection time for those areas has expired. Manuel Moreno, Jr., Director of Public Services, explained that if these private accounts were taken over, the City would receive an additional $SOO, 000 to $700,000 annually, and that approximately 20% would be returned to the General Fund through administrative fees. He explained that the City's refuse collection rates are lower, and pick-up is twice a week. It is estimated that if these private accounts were taken over, it would require an up-front capital outlay of approximately $300,000 for equipment. No new personnel would be needed, as other routes are being automated thereby reducing staffing levels. If these private accounts were taken over, the City would control 98% of the City's waste stream. Ms. Clark explained that the Finance Department is prepared to implement semi-monthly payroll if approved by the Mayor and 4 6/22/92 Common Council today. Mr. Green explained that if semi-monthly payroll was not approved by the Mayor and Common Council, the budget shortfall would increase by $290,000 to allow for the payroll reserve to be established. Timothy Steinhaus, Agency Administrator, Economic Development Agency, gave ~ history of the action taken relative to the appraisals on the Police Station. He explained that in 1991 an appraisal was performed by Boznanski and Company, Inc., 283 N. Rampart Street, Suite A, Orange, CA, relative to the bond issue to refinance City Hall. The value of the Police Station in that appraisal was $3.8 million. Subsequently, in the fall of 1992 the Economic Development Agency commissioned an appraisal with Gottfried, Gamble and Associates, Inc., 21S1 E. "D" Street, Suite 2l4-A, Ontario, CA. The value of the appraisal was $92S, 000. Staff has requested a report from Boznanski and Company, Inc., explaining the difference in appraisals. Mr. Steinhaus stated that he had been informed, by Boznanski and Company, Inc., that the differences in appraisals was due to the inclusion of the land surrounding the Police Station in the first appraisal, and that different depreciation rates were used. Boznanski and Company, Inc., used a 75% depreciation rate, where as Gottfried and Gamble and Associates, Inc., used a 10% depreciation rate. Mr. Steinhaus stated that the remaining balance of the CMO (Collateralized Mortgage Obligation) funds have been transferred to the general fund, and the only other source of funds, that could be used to subsidize general fund programs, is a balance of approximately $400,000 in Industrial Development Bonds (IDB). Discussion ensued regarding the use of bond proceeds, and IDB funds to subsidize general fund programs. The Council requested a full accounting of the bond proceeds funds. Peggy Ducey, Assistant to the City Administrator, presented the following outline for the Council relative to the status of the budget as of June 22, 1992: SHORTFALL $67,838,6SS $71.231.407 ($ 3,392,752) REVENUES EXPENDITURES 1. Council Action Taken 6/8/92 items 1-11 of the City Administrator's recommendations on page A-4 of the memorandum from the City Administrator dated June 3, 1992 $ 2.637.200 ~ S 6/22/92 SHORTFALL ( $ 75S,S52) 2. Council Action Taken on 6/17/92 that the balance of CMO (collateralized mortgage obligation) funds to be transferred to the general fund, after appropriations approved on 6/15/92 are made $ SHORTFALL , ($ 202.S00 553,052) 3. Proposed State Cut in Property Tax Revenue $ 1.067.171 ($ 1,620,223) SHORTFALL The Council discussed a variety of different programs; and staff answered questions from the Council relative to the following programs: the California Conservation Corps funding from the Mayor's Office budget; an Arborist position in the Public Services Department; the Police Station appraisals; the State mandates, such as the Inland Counties Emergency Medical Agency (ICEMA); the Public Employees Retirement System credit (PERS); and the Department of Motor Vehicles in-lieu fees, and what possible action could be taken regarding them. Council Member Minor made a motion, Member Miller, and unanimously carried, that Council adopt the semi-monthly payroll plan. seconded by Council the Mayor and Common Council Member Minor made a motion, seconded by Council Member Maudsley, that the Mayor and Common Council adopt the Voluntary Time Off (VTO) program. The motion carried by the following vote: Ayes: Council Members Estrada, Hernandez, Maudsley, Minor, Miller. Nays: Council Member pope-Ludlam. Absent: Council Member Reilly. Concern was expressed that employees would view the VTO program as mandatory and not voluntary. City Administrator Clark stated that she would endeavor to ensure that employees are not obliged to participate in the voluntary program. She explained that the program would be monitored for use, and the Council would receive a full report at the end of the fiscal year on its impact to the general fund. She felt that the program should be implemented in the event it is necessary to make use of it in the future. Ms. Clark explained that the City currently employs a legislative advocate, for approximately $36,000 annually, and is paid jointly by the City, the Economic Development Agency, and the Water Department. ~ 6 6/22/92 Discussion ensued regarding the work being performed by the legislative advocate. Council Member Hernandez made a motion, seconded by Council Member Minor, that the Mayor and Common Council terminate the current agreement with the legislative advocate. (Note: There was no vote taken at this time.) Lorraine Velarde, ,Executive Assistant to the Mayor, requested that before any action be taken to terminate the existing agreement, that the legislative advocate be allowed to complete projects he is currently working on. The Council expressed concern about the lack of information received by the Council Members from the legislative advocate regarding current projects, and it was felt that the information is not being properly disseminated by the Mayor's Office.' The Council requested a full accounting of the projects the legislative advocate has been working on during the contract period, and that he be advised to forward to the Council Members copies of any communication sent to the Mayor's Office. It was the consensus of the Council that the discussion and possible action relative to the legislative advocate be held in abeyance until July 6, 1992. Council Member Minor withdrew his second to the motion. Discussion ensued regarding the legislative advocate, and the various options available to the Council regarding the budget shortfall. Council Member Estrada made a motion, seconded by Council Member Miller, that the Mayor and Common Council reduce the sale price of the Police Department building by $700,000, and accept the $2.3 million appraisal; and add to the general fund the $2.8 million PERS reserve funds to balance the budget, thereby creating a reserve of approximately $484,400. Senior Assistant City Attorney Barlow explained that since the Mayor and Council represent both the City (Mayor and Common Council) and the Economic Development Agency (Community Development Commission), the only potential problem relative to the appraisals of the Police Station would be, if the Council ignored a valid appraisal in order to pay the City, from the Economic Development Agency, more money than the appraisal stated the structure was worth, and as the Council has not done that there is no legal conflict. The motion carried by the following vote: Ayes: Members Estrada, Maudsley, Minor, Pope-Ludlam, Miller. None. Abstain: Council Member Hernandez. Absent: Council Nays: Council 7 6/22/92 Member Reilly. City Administrator Clark recommended that the apparent $484,400 reserve be placed in an unappropriated reserve account, and that the PERS funds be transferred into the liability reserve account. Council Member Estrada made a motion, seconded by Council Member Miller, and unanimously carried, that the Mayor and Common Council direct that the $)84,400 reserve be placed in an account called Unappropriated Reserve, and that the $500,000, which is accruing as a reserve in the PERS reserve, be transferred to the Liability Reserve. CLOSED SESSION (2) The Mayor and Common Council did not recess to closed session during this meeting. ADJOURNMENT (3) At 10:S6 a.m., Council Member Maudsley made a motion, seconded by Council Member Minor, and unanimously carried, that the meeting be adjourned to Monday, July 6, 1992, at 8:30 a.m., in the Council Chambers of City Hall, 300 North "D" Street, San Bernardino, California. RACHEL KRASNEY City Clerk ~~-<,_.' ~ . By Melanie Vale Deputy City Clerk No. of Items: 3 No. of Hours: 2 8 6/22/92 BUDGET SUMMARY AS OF JUNE 22, 1992 REVENUES EXPENDITURES SHORTFALL , 1. Council Action Taken 6/8/92 items 1-11 of the City Administrator's recommendations on page A-4 of the memorandum from the City Administrator dated June 3, 1992 2. SHORTFALL Council Action Taken on 6/17/92 that the balance of CMO (collateralized mortgage obligation) funds to be transferred to the general fund, after appropriations approved on 6/lS/92 are made $ 3. SHORTFALL Proposed State Cut in Property Tax Revenue SHORTFALL 4. S. Reduce the sale price of the Police Dept. building by $700,000 and accept the $2,320,000 million appraisal Add PERS reserves TOTAL RESERVE 9 $67,838,655 $71.231.407 ($ 3,392,7S2) $ 2.637.200 ($ 755,552) ($ 202.S00 S53,OS2) $ 1.067.171 ($ 1,620,223) ($ 2,320,000) $ 2.804.400 $ 484,400 6/22/92