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Home My WebLink About01-City Administrator CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION rom: Fred Wilson Acting City Administrator Su~~t:Proposed Funding Alternatives to Measure "S" ept: ~(Q)(P)W 'ate: March 25, 1997 ynopsis of Previous Council action: 2/27/97 __ Ways and Means Committee reviewed mid-year Budget Report. FORM MOTIONS: 1. That the Director of Public Works be authorized to proceed with the establishment of a city-wide assessment district for the purpose of funding street lighting, street sweeping, traffic signal maintenance, and graffiti abatement. 2. That staff be directed to develop budget reduction alternatives in the amount of $4.3 million. This is in addition to the $2.9 million that will be reduced from the FY 1997-98 budget based on the mid-year budget report. 3. That the Acting City Administrator be directed to pursue the feasibility of privatization of city services that are outlined in the attached staff report, and instruct the Director of Personnel to meet with the appropriate bargaining units to discuss staffing considerations and imp t jobs performed by unit employees. Contact person: Phone: Supporting data attached: Ward: FUNDING REQUIREMENTS: Amount: Source: (Acct. No.! (Acct. DescriPtion) Finance: Council Notes: 3/3//'17 #/ -- Agenda Item No 7S.0262 , STAFF REPORT Since Measure S was not approved by the voters, and Assessment District 994 expires July 1, the city is faced with a projected budget deficit of $7.2 million for FY 1997-98. In order to reduce the projected deficit, all departments (except Police and Fire) have been asked to submit proposed budgets for next year that include a 5% reduction. The Police Department is also considering the feasibility of privatizing certain operations in the department. If the Mayor and Council approve all these reductions, the deficit will be lowered to $4.3 million. Several options have been identified for the consideration of the Council that would potentially close the remaining budget gap. OPTION 1: Propose a new maintenance assessment district to fund street sweeping, traffic signal maintenance, street lighting, and graffiti abatement. AD 994 currently generates approximately $4.2 million per year to fund these services. Indirectly, 65 Police Department positions are paid for using money from the General Fund that would otherwise be needed to provide for these services. A new assessment district could be created that would continue to pay for street sweeping, traffic signals, street lighting, and graffiti abatement. It should be noted that assessment district funds could not be used for general government services, such as police, fire, or parks and recreation. Under Proposition 218, property owners can only be assessed for the "special benefit" that each parcel receives. Since these general government services are not "special benefits", they can only be funded through the General Fund or through a special tax (as was proposed with Measure S). Also, with the passage of Proposition 218, the requirements for how the district would need to be structured have changed. The assessment calculation methodology would use zones of benefit for each service provided. Rather than a simple set of assessments per type of parcel, the assessments will vary because each property would be assessed only for the special benefit it receives from the services. Proposition 218 also mandates that any "general benefit" portion of an assessment district's services must be paid for out of the assessing entity's General Fund. It is estimated that approximately 10% of the services currently provided by AD 994 will be considered "general benefit". Therefore, using FY 1996-97 as a baseline, the new district would collect $420,000 less per year than AD 994. The remaining $420,000 needed would be paid for through the General Fund or another source of funds. 2 If this option is to be considered by the Mayor and Council, it will require a slightly different process than what has been used in the past due to Proposition 218. In their March 21, 1997, letter, attorneys from the law firm of Nielsen, Merksamer, Parrinello, Mueller, and Naylor state: " . . . new and increased assessments must be approved by the majority of owners in the affected area...The principal method for securing owner approval of an assessment is by submitting ballots to the record owners of each parcel identified as receiving a special benefit from the proposed assessment...However, each vote is to be weighted 'according to the proportional financial obligation of the affected property'." Provided in between AD Attachment B Attachment A 994 and the is a proposed is a summary of the key differences new city-wide assessment district. schedule for reference purposes. OPTION 2: Make significant reductions in City services. Over the past six years, the total number of City employees has been reduced by over 120 positions. This year, departments have already been asked to make a 5% reduction in the budget they will submit for FY 1997-98, which will reduce the deficit by $2.9 million. In addition to this 5% cut, the Mayor has proposed another list of potential reductions in City services. These possible reductions include the following (preliminary savings estimates are given where available) : Eliminate the Telecommunications Division ($413,800) Reduce library funding by $350,000 Close all community centers ($651,500) Close all senior centers ($206,700) Close the Center for Individuals with Disabilities ($174,900) Eliminate remaining crossing guard funding ($81,400) Eliminate funding for Little League ballfield lights ($120,000) Eliminate fee waivers for non-profit organizations Reduce funding for civic and promotional events such as the 4th of July and other parades OPTION 3: Privatize city services. Privatization of services has been discussed in past years, and is being actively pursued by many other cities in the area. As services are privatized, savings are achieved by reducing the number of City employees. Areas for possible pri vatization include: 3 Police Records Bureau and Disoatch: The Chief of Police has preliminarily examined the feasibility of privatization of these functions. Preliminary estimates show a significant annual savings could be achieved. Park Maintenance: Parks, Recreation, and Community Services would like to explore the feasibility of privatizing some park maintenance operations. Refuse collection: The City of Colton privatized its refuse collection services in 1996. Without a thorough appraisal of the worth of the operation in San Bernardino, it is difficult to estimate the revenue that could be raised by privatizing the city's refuse service.. Currently, the refuse operation contributes approximately $4.2 million annually to the city's budget through overhead charges, internal service charges, Liability and Worker's Compensation charges, rents, and refuse collection services for city departments. These current contributions would need to be weighed against the potential revenue from privatization. In order to facilitate the exploration of this option, the Mayor has directed that Public Services issue a RFP for an independent consultant to undertake an appraisal of the refuse operation. The appraisal is expected to be completed by mid-May. Cemeterv Ooerations: The sale of Pioneer Memorial Cemetery did not move forward due to the buyer's concerns regarding debris in the undeveloped portions of the cemetery. It is recommended that we continue to pursue other alternatives for the operation of the cemetery by a private entity. In the meantime, maintenance of the facility could be considered for privatization. Other services: Other services that could be privatized include street sweeping, traffic signing and striping, and print shop services. Further analysis is required to determine if privatization is feasible for these functions. Recommendations It is recommended that the Mayor and Council approve one or more of the following motions: 1. That the Director of Public Works be authorized to proceed with the establishment of a city-wide assessment district for the purpose of funding street lighting, street sweeping, traffic signal maintenance, and graffiti abatement. 2 . That staff alternatives be directed to develop budget reduction in the amount of $4.3 million. This is in 4 addition to the $2.9 million that will be reduced from the FY 1997-98 budget based on the mid-year budget report. 3. That the Acting City Administrator be directed to pursue the feasibility of privatization of city services that are outlined in the attached staff report, and instruct the Director of Personnel to meet with the appropriate bargaining units to discuss staffing considerations and impact on jobs performed by unit employees. 6 Attachment A Comoarison of AD 994 and the ProDosed Assessltll!nt District AD 994 New Assessment District What does it fund? Street lighting, street sweeping (twice per Street lighting, street sweeping (twice per month), traffic signal maintenance, graffiti month), traffic signal maintenance, graffiti removal removal Does it (und Police services? Indirectly, 65 Police positions are paid for No. Under Prop 218, assessments can only using funds that would otherwise be used for pay for services that have special benefits to assessment district services. the properties assessed. How is it enacted? Council action; protest hearing process Council action; protest hearing process that includes a weighted mail ballot procedure. Requires majority of weight of ballots responding to support the assessment How much does it cost? $65 per assessment unit Varies, because each property is assessed for $47.45 per apartment unit the special benefit it receives. Those $58.50 per condo, PUD, duplex, ilnd triplex properties receiving more benefits will pay unit relatively higher assessments. The mailed $20.15 per mobile home unit in a mobile notices for the assessment will state the home park amount of the property owner's proposed assessment on the ballot How is the assessment Costs spread across all assessment units; Zones of special benefit created for each ealculated? assumes all residents benefit from all services service; any given property may be in ODC or more lones. Assumes benefits vary from property to property How does tbe assessment Only if costs increase. If needed, increase Onlyifco~increase. Ifneeded,increase increase? carmot exceed CPI or 50/0, which ever is less cannot exceed CPI or 5%, which ever is less Does it have a sunset clause? Yes To be detennined What happens irthere is a AD 994 sunsets on July I, 1997 Using last year's assessment as a baseline, majority protest and the this would create a budget deficit of $4.2 assessment district does not million. City services would have to be pass? reduced in order to balance the city's General Fund budget. What property owners are Govemment-owned properties, schools, all None. All property owners will be assessed, exempt? other parcels not assessed property tax unless their specific property derives no special benefit from district services. Collection procedure would need to be established with gov't agencies 7 ~ Attachment B CITY WIDE ASSESSMENT DISTRICT FORMATION SCHEDULE March 18 Measure "S" Vote April 7 Authorization to Proceed to Council (Form motion) April 16 Submit Agenda Item for May 5 Council meeting May 5 May 23 June 4 June 16 June 25 July 7 July 21 Resolution of Intention, Setting Public Meeting and Hearing and preliminary approval of Engineer's Report (including proposed assessment roll) Absolute last day to mail notices Submit Agenda item for 06/16 Council Public Meeting Submit Agenda Item for 07/07 Council Public Hearing --- all ballots must be received by the conclusion of the public input portion of the hearing. Matter continued to next Council Meeting to allow tabulation of ballots. Presentation of tabulation results to Council. Resolution Ordering Work, establishing the district, approving the Final Engineer's report and confirming the Assessment Roll. 8