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Home My WebLink About12/17/2004 B A K E R S F I E L D Mike Maggard, Chair Harold Hanson Staff: John W. Stinson SPECIAL MEETING NOTICE BUDGET AND FINANCE COMMITTEE of the City Council - City of Bakersfield Friday, December 17, 2004- 1:00 p.m. City Manager's Conference Room, Suite 201 Second Floor - City Hall, 1501 Truxtun Avenue, Bakersfield, CA AGENDA 1. ROLL CALL 2. ADOPT SEPTEMBER 20, 2004 AGENDA SUMMARY REPORT 3. PUBLIC STATEMENTS 4. NEW BUSINESS A. Staff report and Committee recommendation regarding Fireworks Fees - Klimko B. Staff report and Committee recommendation regarding Maintenance Districts -Tandy C. Staff report and Committee recommendation regarding Vehicle License Fee (VLF) Gap Loan Program - Stinson 5. COMMITTEE COMMENTS 6. ADJOURNMENT S:\Darnell~.004Bud&FinCom~bf04dec 17agen.doc B A K E R S F I E L D ~)'/.._~..~ C.~' Mike Maggard, Chair Staff: JOhn W. Stinson Harold Hanson For: Alan Tandy, City Manager Mark salvaggio AGENDA SUMMARY REPORT SPECIAL MEETING BUDGET AND FINANCE COMMITTEE Monday, September 20, 2004 · 4:15 p.m. City Manager's Conference Room - City Hall 1. ROLL CALL Called to Order at 4:20 p.m. Present:Councilmembers Mike Maggard, Chair; Harold Hanson and Mark Salvaggio 2. ADOPT FEBRUARY 12, 2004 AGENDA SUMMARY REPORT Adopted as submitted. 3. PUBLIC STATEMENTS 4. DEFERRED BUSINESS A. Review. and Committee recommendation on outstanding issue regarding park development fees a. Request from the North Bakersfield Recreation and Parks District (NBRPD) to have construction of required developer street improvements apply to the full street next to a park as it dOes in the City, instead of half the street improvements Assistant to the Public Works Director Georgina Lorenzi stated staff was not ' recommending any changes at this time to either the park development fee or park acquisition ordinances. Both NBRPD and the City are treated the same under both ordinances. If the City were to construct a park adjacent to an arterial or collector, the City would be responsible for the off-site street improvements. Committee Member Harold Hanson made a motion to accept staff's recommendation not to make any changes at this time to either the park development fee or park acquisition ordinances. The Committee unanimously approved the motion. .· AGENDA SUMMARY REPORT BUDGET.AND FINANCE COMMITTEE MEETING Monday, September 20, 2004 Page -.2 - B. Staff report and Committee recommendation regarding Audit Reports for fiscal year ending June 30, 2003 · Reportable Conditions Report- Management Letter · Required Communication with Audit Committee - SAS 61 · Comprehensive Annual Financial Report (CAFR) · Independent Auditors Report - Single Audit Report - Schedule of Federal Expenditures for the City of Bakersfield · Independent Auditors Report - Compliance with Contractual Requirements relative to the Bakersfield Subregional Wastewater Management Plan · Independent Auditors Report on Appropriations Limit Worksheet (GANN .Limit) of the City of Bakersfield Finance Director Gregory Klimko reported the audit was clean and there were no significant recommendations, no exceptions or areas of concern. Committee Member Mark Salvaggio made a motion to accept the financial statements as submitted. The Committee unanimously approved the motion. Finance Director Gregory Klimko explained-in light of the recent scandals in the world involving auditing firms, he is recommending changing auditing firms every five years. Staff is very satisfied with the current auditing firm and this is no reflection on their work. The recommendation' also included not allowing the out-going firm to bid on the next five- year cycle/contract. Since the City would be dealing with a new firm, it could be a one- year contract for the first year with 4 one-year extensions. Committee Chair Mike Maggard expressed changing auditing firms every five years would allow for a fresh look and would be a good idea. The Committee referred the issue to staff with a request to prepare a draft policy/ordinance to bring back to the Committee for review and recommendation to Council. 5. NEW BUSINESS A. Staff report and Committee recommendation on Amendment (No. 1) to Noriega House Agreement 99-9 regarding repayment of Economic Development Loan Economic Development Director Donna Kunz reported on the Economic Development loan to Mr. Jerry Randall for the Noriega House. This loan was a two-tier package. Tier one provided for half of the loan ($11,400) to be forgiven once the employment terms were met. The employment terms .have been met according to the contract and that has been validated. Tier two ($11,400) had a balloon payment at 0% interest due no later than January 13, 2004. Mr. Randall originally requested forgiveness of the loan. Staff met with Mr. Randall and explained these monies are needed to recycle to provide loans for other projects. Mr. Randall indicated he would be able to repay the loan if it could be restructured over a longer period of time. ~ BUDGET AND FINANCE COMMITTEE MEETING Monday, September 20, 2004 Page - 3 - Staff recommended the loan be restructured over the next four years beginning with the first payment due on January 13, 2005 at an annual interest rate of 5%. Mr. Jerry Randall, owner of Noriega House, spoke regarding the Noriega House revitalization project and its benefit to the Baker Street area. He was in agreement with staff's recommendation. Committee Member Salvaggio made a motion to accept staff's recommendation to restructure the .loan of $11,400 over four years beginning January 13, 2005. The Committee unanimously approved the motion and forwarding an amendment to the agreement to the City Council. B. Staff report and Committee recommendation regarding.Promoting Curbside Recycling The Committee deferred this item. C. Staff report and Committee recommendation regarding Independent Auditor's Report and FY 2002-03 Transportation Development Act Funds Financial Statements Assistant to the Public Works Director Georgina Lorenzi reported the financial statement summarized fiscal ac-tivity for the Bikeway and Pedestrian Fund and the Public Transit Fund. The audit was clean and there were no significant recommendations, no exceptions or aUditor's request for changes. Committee .Member Harold Hanson made a motion to accept the Independent Auditor's Report. The Committee unanimously approved the motion. D. Staff report and Committee recommendation regarding proposed road repair funding policy using facility replacement reserve or one-time funds City Manager Alan Tandy explained staff had both good news and bad news. Staff was not' recommending using the Facilities Replacement ReServe monies to fund road repairs. It is important to keep as much as possible in the Facilities Replacement Reserve as it is the only insurance against General Fund claims for unexpected capital replacement needs for such things as storm damage, canal failure, building roof or HVAC replacement. For example, recently $1.5 million was needed and approved by Council from the Fund for emergency canal repairs. The current remaining unencumbered balance in the Facilities Replacement Reserve Fund is $2.3 million. However, staff is working on a parallel path to reach the goal of the referral, which may allow for addressing the heart of the matter--more money for street repair. Staff is aware of the need to repair roads before the roads deteriorate to a point where repair becomes more costly. Due to State actions, the City's budget has not been. as predictable as in the past. Since the FY 2004-05 budget was adopted by the Council, the State Legislature has made its final decisions for the year. AGENDA SUMMARY REPORT BUDGET AND FINANCE COMMITTEE MEETING Monday, September 20, 2004 Page - 4 - Staff has been closely monitoring financial trends. One of the few good things to come out of the Legislature was the continuation of the booking fee reimbursement for the current fiscal year. -Staff had assumed it would not be inCluded and had pulled the revenue from the City's FY 04-05 budget. The fee reimbursement is approximately $714,000. Also, fund balances at year end were larger than predicted.. However, the City just received some counterbalance to that in the form of the new workers' compensation actuarial analysis. Despite all the funding put into workers' comp last year, the City's new liability is computed at $1.8 million higher than it was a year. ago. Finance-Director Gregory Klimko indicated the sales tax distribution information came in higher for .the second quarter than the same quarter last year. He explained the sales tax revenue projection will be changed from 4 percent growth to a 6 percent growth for the current year. The trend information for the last quarter received on property taxes shows a value higher than projected in the budget.. City Manager Alan Tandy explained if the State Legislature leaves the cities alone and with the help of the.local economy, it should result with a series of stair-step improvements for the City's financial situation. Staff would like to bring the financial equity plan back to the City Council, and based upon revised on-going revenue sources, recommend monies be plugged back into the Operating Budget. for departments .according to the equity plan. The financial equity plan is structured so those' departments which due to attrition lost more staff would be made right. There is also some one-time funding available which could go into Streets for road resudacing. Committee Member Harold Hanson explained he is a firm believer in reserve accounts to guard against catastrophes and not in favor of using the Facilities Reserve Fund for non- emergency spending. Finance Director Gregory Klimko explained due to the triple flip, the State would not be releasing the property tax monies for the first six months of the fiscal year, which has an effect on cash flow. Also, the current budget was predicated on the State taking $1.2 million and the final figure was $3.2 million. Committee Chair Mike' Maggard asked about a policy to dedicate one-time monies for a fixed amount of time for road improvements with a goal of at least $2 million if.possible. City Manager Alan Tandy said he would be comfortable with a policy direction from Council that streets are a major need and any one-time monies be disbursed for street repair/resurfacing. However, the numbers are just coming in and staff needs a little more time before making specific recommendations. A report to Council could be made at the October 6th meeting and subsequent reports each quarter as financial trends are available. The Committee was in agreement for the City Manager to make a report to the full City Council at the October 6th Council meeting on financial trends, the financial equity plan to put on-going revenue in the 'Operating Budget for departments, and a policy to dedicate one-time monies for street repair. BUDGET AND FINANCE COMMITTEE MEETING Monday, September 20, 2004 Page - 5 - 6. COMMrl-rEE COMMENTS 7. ADJOURNMENT The meeting adjourned at 5:30 p.m. Attendance: City Manager'Alan Tandy; Assistant City Manager John W. Stinson; City Attorney Ginny Gennaro; Finance Director Gregory Klimko; Economic Development Director Donna Kunz; Public Works Director Raul Rojas; Planning Director Stanley Grady; Assistant to the City Manager Darnell Haynes; Deputy City Attorney Alan Daniel; Assistant Recreation and Parks Director Allen Abe; Assistant Finance Director Nelson Smith; Assistant to the Public Works Director Georgina Lorenzi; and Real Property Manager Don Anderson Others: Colon Bywater, North Bakersfield Recreation and Parks District;. and Jerry Randall, Noriega-House cc: Honorable Mayorand City Council S:\Darnell\04Budget and Finance~bf04sept20summary · - MEMORANDUM December 10, 2004 To: Alan Tandy, City Manager From: Gregory J. Klimko, Finance Director//~,4 /St Subject: Fireworks Permit Fees The current Municipal Code (MC) section 8.44.040 was added by Ordinance No. 3452 on March 11, 1992 to provide for a fee not to exceed the cost of processing the application and inspecting the business as set forth in Section 3.70.040 (Cost Recovery System). The current Fireworks permit fee established in 1992 is $101: A comparison of the current and proposed fireworks permit fees is shown below: Current Proposed Application Fee- Building, City Clerk, Fire, Finance $ 0.00 $ 40.00 Permit Fee: Processing: Finance, Plan/Build, Risk, Traffic 49.00 90.00 Inspections- Fire 52.00 113.00 Enforcement- Fire and Police 0.00 97.00 Permit Fee 101.00 300.00 Elecirical Permit 40.00 40.00 Clean Up "Deposit" 100.00 100.00 Total Fees & Deposits $ 241.00 $480.00 A memo from the Fire Chief dated 09-30-04 regarding the enforcement cost of illegal fireworks for Fire and Police is attached. S:\KimG\Gregory\Memo - ATFireworkspermitfees.doc Memorandum To: Chief Fraze From: Dean CiasoR~ Date: 9/30/9.004 I:le: Enforcement of Illegal Fireworks Given the population and area of the City of Bakersfield a comprehensive enforcement program targeting the possession and use of illegal fireworks is a daunting task. The local fire agencies abandoned the practice of responding engine companies to reports of illegal fireworks years ago. The sheer number of calls resulted in virtually every en~qne in the metro area being out of place, with engines responding out of their areas and resulting in increased or delayed response times for emergency calls. Consequently, the efforts of the Bakersfield Fire Department, in conjunction with the Kern County Fire Department have amounted to little more than symbolic efforts. To further exacerbate the problem, the safety of department personnel has become a very real concern over the last few years. We no longer send individuals out alone to enforce illegal fireworks laws; therefore, costs go up and the number of "teams" put in service are reduced. By partnering with the PD, we should be able to field six teams in 2005, consisting of a BPD officer and one of our AP Captains or one of the four civilian inspectors. The twelve members of the teams will be on overtime, with an approximate cost for an eight hour shift being roughly $5,000.00. An eight hour shift allows the teams' time to muster before dark, have a briefing on the action plan and areas to be covered, and then patrol until midni~t or so, with time for a de-briefing afterward. ~ It is easy to see that six cars patrolling the 118 sq. miles of the city is marshal at best. We could add the four squads to the mix, which will help, but it will also increase costs. The cost of adding the four squads, each staffed with a captain and an engineer would add an additional $2,300.00 to the aforementioned $5,000. for a total of approximately $7,300.00. Ten enforcement teams would be the largest focused effort ever put into service by the City of Bakersfield. There is no question that the number of citations issued and fireworks confiscated would increase over past efforts. The impact of the enforcement would be enhanced if it were coupled with a Public Education proD'am outlining the increased efforts in enforcement. I have attached copies of Captain HolloWs reports on investigation efforts over the past few years. B' A K E R 'S :'F' I: E L .D CITY MANAGER'S OFFICE MEMORANDUM December 15, 2004 TO: BUDGET AND FINANCE COMMITrEE~-~'~-- /~ / FROM: ALANTANDY, CITYMANAGER /~./_ SUBJECT: MAINTENANCE DISTRICT COSTS Staff has completed a review of the City's maintenance district policies, practices and costs over the past several months. As a result of this review, it was determined that maintenance district assessments have not kept up with inflation or with current budgeted costs for providing these services. For over eight years since the passage of Proposition 218 there has been no increase in the assessment for the maintenance districts because of the new vote requirement to increase rates. Additionally, because assessments have not kept pace with inflationary cost increases there has been an increase in the General Fund subsidy provided to the consolidated park and landscape maintenance district. Since the General Fund has been hit hard by State revenue captures the quality of maintenance in the medians has deteriorated. Staff has formulated a new draft schedule of rates for the consolidated park and landscape maintenance districts which reflects FY 2003-04 costs. Additionally, the possibility of recovering costs associated with street lighting for newly developed areas was also reviewed. In an effort to recover some of these costs staff has prepared the following recommendations and questions for the Council to consider: Consolidated Park and Landscape Maintenance District~ Recommendation I - All new areas added to the consolidated park and landscape maintenance district districts are to be formed using the updated new rates. Recommendation 2 - Apply an annual cost of living factor to new areas added to the consolidated park and landscape maintenance district. Recommendation 1 would mean that when newly developed areas are added to the consolidated maintenance district they would agree to pay their assessments based upon the updated FY2003-04 costs, not the existing rates which are based on costs in 1996. Recommendation 2 would mean newly developing areas would also agree to additionally provide for an annual cost of living increase based on the consumer price index. This would ensure that assessments for these areas keep up with inflationary cost increases. Both of these recommendations if implemented, would over time help slow down the increase in the General Fund subsidy to the consolidated park and landscape maintenance district. The two recommendations above are relatively straight forward to implement since they involve newly developing areas which would agree to the higher assessment and annual CPI adjustments by a petition of the property owners when they request to be added to the consolidated maintenance district. The recommendation does not include the existing areas within the consolidated park and landscape maintenance districts. These areas would still retain the assessments based on 1996 costs. Therefore, if not modified, they would continue to increase the General Fund subsidy to the consolidated maintenance district over time. 'Questions: There is an additional question for the Council to consider. Should the City consider conducting a Proposition 218 mail ballot to increase rates for the existing consolidated park and landscape maintenance district? The election could consider adjusting the rates to bring them up to current levels and/or providing to annual CPI adjustments to keep up with inflation. There are several considerations to this issue. The positives include: · The city would come closer to recovering the cost of maintenance for landscaped streetscape and parks. · We would reduce the General Fund subsidy caused by not adjusting rates for inflation the past eight years, and could include an inflation factor for existing areas so that situation wouldn't continue. Some concerns are: · A 21'8 election requires majority approval of those voting within the maintenance district area. · It is questionable that residents within the maintenance districtS who vote would vote to increase their assessments. Tax and assessment measures have not fared well statewide in recent elections. · The City would incur the cost of the election, and pursuant to state law cannot use taxpayer monies or staff time to support or encourage the passage of the measure. If such a measure were to have any reasonable chance of success advocates from among the citizens and/or developers would have to step forward. Street Li_ahtinfl for Newly Developin.cl Areas: Historically, the city has added about 300 street lights annually to the city street lighting system. However, due to the increase in development activity in 2004 we have added approximately 1232 street lights to date. The annual maintenance, direct operational and overhead costs are currently estimated to be about $80.00 per light. This means the General Fund will absorb about $98,560 in street lighting costs annually from now on just for the lights added in 2004. As the rate of development increases and inflationary increases occur these costs will significantly increase over time. Staff is recomrr{ending that all new areas being developed be required to form maintenance districts for street lighting. The assessments for these districts would include operational costs for electricity, bulb replacement, etc. and maintenance costs. It is also recommended that an annual inflation factor be included in the assessment calculation. Similar to landscape maintenance districts if inflationary adjustments to the assessments are not included, over time the General Fund will increasingly subsidize these costs. Public Works staff has recommended that an engineering consultant' be retained to prepare the engineers report necessary to establish the district and calculate the assessment amounts. They estimate the cost of hiring this engineer to be approximately $19,000. These costs may be recovered as part of the assessment. Based on an average of 6 parcels per street light Public Works estimates the amount of the assessment would be about $13.33 per parcel including all operations, maintenance, electricity, and overhead costs. The .actual final assessment numbers would vary depending on the type of fixtures and lighting systems actually put in place. The County currently has assessments for street lighting which are about $69. Their assessments are significantly higher that what is being proposed for City areas due to the fact that the City owns its street lights and the street lights in County areas are owned by PG&E, which charges a higher electricity rate that includes maintenance and other PG&E costs. Consolidated Maintenance District Cost per Tier - Draft E~sting tier Tier rates w/CPI New tier rates Variance- New budget compared to current tier rates Street Tier Park Tier rates since 1996 ' w/03-04 Bud,qet $'s % 0.00 0.50 $8.56 $10.59 $8.58 SO.02 0.23% 0.00 1.00 $17.12 $21.18 $17.16 $0.04 0.23°/0 , 0.~0 .~,1.50 ~ _~_$.25.~§~~ ~1.77 .... ~_~5.74 $0.06 .... 0.23°/0 1.00 0.00 $22.80 $28.20 $30.24 $7.44 32.63% 1.00 0.50 $31.36 $38.79 $38.82 $7.46 23.79% 1.00 1.00 $39.92 $49.38 $47.40 $7.48 18.74% 1.00 1.50 $48.48 $59.97 $55.98 $7.~0 15.47% 2.00 0.00 $45.60 $56.40 . $60.48 $14.88 32.63% 2.00 0.50 $~.16 $66.99 $69.06 $14.90 27.51% 2.00 1.~ $62.72 $77.58 $77.~ $14.92 23.79% 2.00 1.50 $71.28 $88.17 ' ..$86.22 $14.94 20.96% 3.00 0.00 $68.40 $84.60 $90.72 $22.32 32.63% 3.00 0.50 $76.96 $95.19 $99.30 $22.34 29.03% 3.00 1.00 $85.52 $105.78 $107.88 $22.36 26.15% 3.00 1.50 $94.08 $116.37 $1 ~ 6.46 $22.38 23.79% C:\Documents and Settings~achdste\Desktop\Tier Impacts_l .xls "Bridging.the Gap" The VLF Gap Loan Financing Program The Opportunity California Communities ("CSCDA"),plans t~ issue bonds to purchase Vehicle License Fee (VLF) receivables from.cities and counties ("Local Agencies"). Local Agencies can 'elect to sell their VLF Gap Loan receivables to California Communities for an upfront fixed price currently estimated at 90%-96%* of their VLF GapLoan amount. Benefits for Local Agencies >Immediate cash relief >Level out cash flows from State over next three fiscal years >Finance capital or other needs on a tax-exempt basis >Mitigate impact of "property tax in-lieu of VL,F swap:' over the next two years >Create financial flexibility Timeline For Action Action TiminR Interested Local Agencies complete on-line VLF November 2004 Preliminary Participation Form Documentation and determination of taxable vs. November/December, 2004 tax-exempt participants Local Agency governing body approves required December/January, 2005 documentation CSCDA sells bOnds First week of February, 2005 Local Agencies receive proceeds Third week of February,. 2005 For Further Information Visit the C$CDA website at: htpps://secure.cacommunities.com/cacomm/apps/vlf/ Contact: James Hamill, ProgramManager CSCDA 925-933-9229 ext 216 jhamill@ cacommunities, com FINANCE CORPORATION *Preliminary- Subject to Change. The Opportunity California Communities ("CSCDA") plans to issue bonds to pUrchase Vehicle License Fee (VLF) receivables from cities and counties ("Local Agencies"). Local Agencies can eleCt to sell their~VLF Gap Loan receivables to California Communities for an upfront fixed price' currently estimated at 90%-96% of their VLF Gap Loan amount. Benefits for Local A_qencies Immediate cash relief Level Out cash flows from State over next three fiscal years Finance capital or other needs on a tax-exempt basis Mitigate impact of "property tax in-lieu of VLF swap" over the next two years Create financial flexibility ~ ~: Page 1 k~~'~ ........... CITIES The 'FY 03-04 C.alifornia budget "borroWed" a portion of the Veh. icle License Fee (VLF) backfill owed to Local Agencies. This VLF gap loan ~s to be repaid by the State in FY 06-07' ,,' Each Local Agency is owed a specific amount of money (its "VLF gap loan receivable") . ,,' State law requireS that the State repay the VLF gap loan by August 15, 2006 . CSAC and the League of Cities successf.ully sponsored recen, t le.g. isla. tion._. which permits Local Agencies to sell their VLF gap loan receivables zo a zn~rd party and get the money today, rather than waiting until FY 06-07 kt, L LEAGUE Page 2 ~,c..~,,~ cSCDA plans to issue fixed-rate bonds on either a taxable or tax-exempt. baSis (depending o'n participants' use of funds) and use the proceeds to purchase the VLF receivables and pay financing costs CSCDA bondholders will For Local Agencies participating in the program, look only to the State f°r repayment, not to the city or county First bond sale currently planned: Targeted for February 2005 IL~... LEAGUE Page 3 Repayment of VLF Receivables Purchased'by CSCDA Note Debt ~ Proceeds Service Repayment of VLF Receivable o, Page 4 ~0~'~' CIT1£$ POTENTIAL ROADWAY REHABILITATION MILEAGE CHART Resurface Cost Reconstruct Cost 100% Resurfacing 75% Resurfacing/ 50% Resurfacing/ 100% Reconstruction $ per mile $ per mile 25% Reconstruction 50% Reconstruction Local Street $174,800 $488,750 ' 7.6 6.4! 5.2 2. [ Oollector Street $334,650 $1,242,000 4.0 3.3 2.5 1.1 Arterial Street $510,600 $2,088,400 2.6 2.1 1.6 0.6 Mileage based upon a $4,000,000 program with an even 3 way. cost split on road types $4,000,000 Project budget