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HomeMy WebLinkAbout10/13/1999 B A K E R S F I E L.D ~l-af~g~-er Patdcia J. DeMond, Chair /[,lan Tandy, Mike Maggard Staff: Darnell Haynes Mark Salvaggio AGENDA SUMMARY REPORT BUDGET AND FINANCE COMMITTEE Wednesday, October 13, 1999 12:00 noon City Manager's Conference Room 1. ROLL CALL Call to Order at 12:07 p.m. Present: Councilmembers: Patricia J. DeMond, Chair; Mark Salvaggio and Mike Maggard Councilmember Mike Maggard arrived at 12:10 p.m. 2. ADOPT AUGUST 20, 1999 AGENDA SUMMARY REPORT Adopted as submitted. 3. PRESENTATIONS None 4. PUBLIC STATEMENTS None 5. DEFERRED BUSINESS None 'ADOPTED ON DECEMBER 20, 1999 AS $~BMITI~D t~ITH ONE TYPOGRAPHICAL CORI~C?ION. THE ~/ORDS "CITY ATTORNEY ALAN TANDY" I~ERE REPLACED [~ITH [',6TTY ~L~NAGER ALAN TAN'DY." FILE COPf AGENDA SUMMARY REPORT BUDGET AND FINANCE COMMITTEE Wednesday, October 13, 1999 Page -2- 6. NEW BUSINESS A. REVIEW AND COMMITTEE RECOMMENDATION REGARDING REQUEST FROM KERN COUNTY FOR AIRPORT TERMINAL FUNDING City Manager, Alan Tandy indicated that based on discussions at the City Council, the Intergovernmental Relations Committee and from the joint City/County meeting, Kern County would be requesting $3 million dollars from the City to assist in the airport terminal project. The County indicated they needed a commitment from the City by March 1, 2000, so the money would be in place by the year 2003. Mr. Tandy provided the Committee a range of options with respect to their recommendations concerning the funding level of City participation and how each level would impact City operations. Essentially them am two options the Committee could consider if the City participates at the level of $3 million dollars. One is to accrue cash and capital improvement money between now and 2003. The other would be to participate in a 20-year COP debt obligation. Of the two mechanisms of funding Mr Tandy recommended the Committee consider the debt obligation as the best alternative. He then gave some examples of capital projects that would likely be affected over the next twenty years, if the City participates at the $3 million dollar level in the debt obligation. The numbers staff used in determining the debt obligation are preliminary and based upon averages and norms. Staff assumed 6% interest on a 20 year issue, which converts to a City contribution of $309,000 per year. That number would be refined as time goes on and as the County firms up the term and as interest rates vary. Mr. Tandy also recommended the City keep open the option to transfer the Airpark fund balance, together with the municipal airpark, to Kern County as part of the City's contribution. Staff still believes the transfer makes sense in terms of efficiency in governmental service. The $500,000 fund balance the transfer would carry represents a significant contribution. Another option is to monitor the tobacco tax settlement which will be giving Kern County $24 million dollars in new revenue between now and the year 2003. The City could take the position that this is the best source for financing the airport terminal and improvements. If all of the money becomes restricted, the City could respond with a different funding option. Committee member Maggard expressed his strong support for City financial involvement at a substantial level in developing the airport terminal project. He asked how much the City would save in bond issuance and funding costs if we were to participate with Kern County in issuing the COP's. AGENDA SUMMARY REPORT BUDGET AND FINANCE COMMITTEE Wednesday, October 13, 1999 Page He further stated it would also seem reasonable that some of the tobacco settlement money should be available for the airport terminal project, however, he was not aware of all the details associated with the settlement. He requested that City staff have a very frank conversation with Kern County staff to find out what savings could the City expect by participating in their COP and what monies, if any, might be available from the tobacco settlement to help lessen the City contribution. Committee member Maggard requested staff look into the issue of the Kern County airport enterprise fund issuing the COP's and the revenue stream generated from Kern County airport operations over a period of time be used to help pay off some of the COP debt. His understanding is that revenue stream being paid back to the County is already part of the $8 million that Kern County is going to contribute to the project. Similarly, if the City contributes $3 million towards the project and in essence helps create the revenue stream, then it is not unreasonable for the City to receive some benefit from that revenue stream to pay part of our obligation. Essentially there are three key questions that Committee member Maggard is interested in having clarified by City staff: 1) VVhat level do we participate and how can it be structured? 2) How does the tobacco settlement factor into the equation? 3) If the City were to issue COP's with Kern County, what savings would the City receive? Mr. Tandy stated if Kern County used an internal 10an as the funding source to be repaid with a combination of City and County monies, there would be savings to the City because there are no underwriter discount and bond issuance costs on an interfund loan. Those savings would be substantial. He further stated that in his last discussions with Kern County officials they indicated they would be using an external debt issue as the funding source. There are no savings on external debt issues because they carry with them underwriter discount and bond attorney's fees. Even if Kern County issued one County COP for $11 million, of which the City would guarantee $3 million, there would be little savings given the fact.that interest rates fluctuate from day to day. City Manager Tandy stated his last information on the tobacco tax settlement reflects that a portion of Proposition 10'monies is restricted and must be used for health related services. However, it his understanding there remains an unrestricted allocation which will give Kern County $9.6 million at the end of this fiscal year and $8 million the following fiscal year. Committee member Maggard reiterated the third question which had to de with the revenue stream that would occur over the years from the airport being used to repay part of the City COP isSue as well as the County issue. Mr. Tandy stated it was his belief that Mr. Bishop had built into the first part of the funding all of his revenue stream for debt retirement and operation and maintenance and he is asking for the degree that he has no more revenue and is consumed by that, then is asking the County for $8 million and the City for $3 million because he has no mechanism to retire additional debt. AGENDA SUMMARY REPORT BUDGET AND FINANCE COMMITTEE Wednesday, October 13, 1999 Page -4- Mr. Bishop stated that the County's $8 million already includes $3 million in Airport Enterprise funds and he has committed long-term revenues in the amount of $300,000 to $400,000 per year or 50% of all future profits for the 20 year period required to retire the debt. He stated he could not commit the entire revenue stream because there are operating expenses required to run the airport and he was uncomfortable in committing any revenue over and above that 50% profit level. Committee member Maggard noted that the County General Fund contribution or non-airport funds are really only $5 million. VVith the prospect of additional funds coming to the County from the tobacco tax settlement he is interested in whether Kern County would increase their $5 million contribution and lower the City's $3 million portion. Mr. Bishop added that he felt the proposed airport terminal is still too small and based on future needs, the terminal should be 65,000 to 70,000 square feet. Mr. Bishop stated they need the additional $3 million dollars from the City. Mr. Bishop stated that if additional funding from the tobacco settlement money does become available he would ask the County to increase its contribution to build a larger terminal. Committee member Salvaggio noted that this is a big policy decision for the Council to make, and feels it warrants further discussion. He said he is in favor of the City making some sort of contribution towards the construction of a new Kern County Airport terminal, but the issue is the impact on the City of Bakersfield's budget. One notable point is the projected increase of 12.3% or close to $900,000 in health premiums for City employees. In addition, there are some capital improvements that must not be ignored. Committee member Salvaggio is in favor of: 1) keeping the transfer of the Airpark and the $500,000 fund balance open for a year or two; 2) continue to explore the $3 million funding over 20 years on the debt retirement basis; and 3) urge the County to use the $8 million or so in new money from the tobacco settlement for this high priority project. It would be prudent to talk with Congressman, Bill Thomas, who sent a letter to Congressman Bill Young, Subcommittee of Transportation, Committee on Appropriations, indicating the need for a discretionary grant to Meadows Field. Committee member Salvaggio suggested that the next six months be taken to study the possibility of giving the County $1.5 million, in addition to the Airpark plus the $500,000 fund balance. He asked how committed the County is to this project. Could this possibly be funded without assistance from the City, or less than the $3 million requested? City Manager Tandy replied that the fund balance in the Airpark coupled with a commitment of $1.5 million for a total of $2 million was something that could be done without deep cuts or threatening municipal services. This option was essentially rejected in total by the Board of Supervisors at the joint meeting, with their preference being $3 million dollars. AGENDA SUMMARY REPORT BUDGET AND FINANCE COMMITTEE Wednesday, October 13, 1999 Page -5- Committee Chair DeMond noted that a resolution would not be reached at this meeting. However, she had concerns about the capital improvements such as road repairs and over 30 signals within the City which need to be constructed and are currently unfunded. It is her assumption the airport terminal is a high priority issue with the County. She questioned whether it is a sufficiently high pdodty project with our citizens to support a general obligation bond issue. Should such a cost be borne by West Kern residents only or residents from the entire county? She requested staff to research the cost. She further stated labor negotiations will take place next year and this obligation will be in addition to the $900,000 increase estimated for insurance premiums. She is willing to help under certain conditions, but not under what has been proposed by Kern County up to this point. All the other aspects that have been brought into question should be considered as well. Committee member Maggard asked how to direct staff to help determine how much is appropriate? Committee Chair DeMond replied that the minutes for this meeting would be reviewed and the salient points brought out, which will give staff direction. She requested that the draft minutes be made available to the Committee as a whole in order to determine whether their comments are adequately noted. This would ensure that all manner of funding will be defined so that there is no compromise as to public safety, roads and the most basic services we offer. Mr. Bishop distributed a copy of the letter from the Chairman of the Board of Supervisors. In that letter, the hope is that the City will participate at the $3 million dollar level. But as the architectural design progresses, it is getting to the point that if the City provides less money, it will cost more architectural money to redesign. The plans for the terminal show the projected expanded growth. In that letter a response is requested by March 1, 2000. The initial intent was to get a response by January 1, 2000, but he understands there are still a lot of questions that need to be answered. Mr. Bishop stated he has a meeting with Congressman Thomas on Saturday to further discuss discretionary funding, but the terminal building itself generally does not qualify for discretionary dollars. The Federal government has been asked for the discretionary dollars in the amount of $4.5 million for the land and aprons which is a capacity issue, and the verbal response is that it looks pretty good. There are some of the roads that could qualify, with no response on these yet. The total project is estimated at $20 million. The County will participate with $8 million for.the terminal building and of that $8 million, $3 million is Airport Enterprise funding. This project is ranked behind the Health and Human Services Building in County priorities. The anticipated $4.5 million or $5 million Federal funding for the apron and ramp is not part of this discussion. AGENDA SUMMARY REPORT BUDGET AND FINANCE COMMITTEE Wednesday, October 13, 1999 Page -6- City Manager Tandy reiterated the quickest action the City could do would be utilize the fund balance in the airpark, which would involve no reduction in any City program. He asked Mr. Bishop to keep this option open. Mr. Bishop replied that he believed the issue to still be open, and asked if this related to the terminal or if it is an issue that should be considered separately. Committee Chair DeMond told him that it does relate to the terminal. B. REVIEW AND COMMITTEE RECOMMENDATION REGARDING REQUEST FOR FUNDING FOR GREATER BAKERSFIELD 2020 VISION PROJECT A letter was received f rom Greater Bakersfield Vision 2020 requesting City assistance in the amount of $50,000. A representative of Vision 2020 stated that Kern County has decided to make a contribution in the amount of $25,000. No letter of request had been submitted to the County requesting any contribution. Upon request from Committee member Salvaggio, a summary of the major difference between 2020 and Future Bakersfield was presented to the Co.mmittee. It was stated that Future Bakersfield had completed Phase 1 of a long-term visioning process. VVhile Future Bakersfield involved a limited group of people, Vision 2020 involves the entire community. Residents have the opportunity to voice what they want for their community in the future, including education, infrastructure, business, civic, and social goals. The process is designed in phases that will complete two action plans over 15 months. It was reported that $170,000 has been raised so far, and there is additional funding available to meet the full budget. This amount did not include the $25,000 contribution made by Kern County. It is hoped that residents would make $1, $5, or $10 contributions. The project will conclude in December 2000. Committee member Salvaggio asked how Vision 2020 interfaced with the Chamber of Commerce? It was stated that the Chamber provides financial support, and the use of an office until the Vision 2020 office opens in three weeks. Any support the Chamber offers is as a separate entity. Committee member Salvaggio stated his support of a contribution and suggested the Veteran's Hall on Wilson Road as a possible location for a future Vision 2020 project meeting. Committee member Maggard voiced his agreement to participate. He suggested returning to the to City and County with community results and needs. Committee Chair DeMond suggested that a budget be attached for each project in the final compilation. She recommended a contribution of $25,000 with the monies being allocated from the Council Contingency account. She also noted that no promises are made for contributions in the next fiscal year. The Committee unanimously agreed to submit a request to Council for a$25,000 contribution from the Council Contingency account. AGENDA SUMMARY REPORT BUDGET AND FINANCE COMMITTEE Wednesday, October 13, 1999 Page -8- Committee member Maggard asked what the payroll output is for temporary employees on an annual basis, and the estimated cost savings. While the exact figure was not readily available, it was estimated that the costs for each temporary employee is $13 per hour. And the City has approximately 300 to 500 temporaries. Mr. Tandy estimated there would be an annual savings of $800,000 per year. Committee member Salvaggio asked if Chuck Waide was being kept informed of the status of the program, and if any Blue and White collar personnel were concerned that the program would be a means to hinder the City from hiring full-time regular employees. Ms. Hayden indicated that she has been keeping Mr. Waide apprized, who is monitoring the program closely, and the group in question has no problem with the City using full-time temporary employees. Ms. Hayden recommended a report to Council to submit an RFP to make this a City-wide program. The RFP would be for one year, with a two-year option. It is anticipated that one or more agencies would be utilized, depending on the expertise of the agency, in order to get the best bid. Committee Chair DeMond noted that the Administrative Report should include anticipated annual savings and report back with one year with a follow up. The Committee unanimously agreed to recommend the item be approved by full Council. E. SET FUTURE MEETING DATES The next two meetings will be held November 19, 1999 and- February 7, 2000. After the committee checks their respective schedules, it is anticipated meetings will be held in April and in May 2000. Committee Chair DeMond suggested combining the May meeting to be held in tandem with one of the City Budget meetings, as was done in 1999. 7. COMMITTEE COMMENTS None AGENDA SUMMARY REPORT BUDGET AND FINANCE COMMITTEE Wednesday, October 13, 1999 Page -9- 8. ADJOURNMENT The meeting was adjourned at 1:50 p.m. Staff present: City Manager Alan Tandy; Assistant City Manager John Stinson; Assistant to the City Manager Darnell Haynes; City Attorney Bart Thiltgen; General Services Superintendent, Brad Underwood, and Human Resources Manager, Carroll Hayden. Others present: Ray Bishop, Kern County Airport; James Burger, Bakersfield Californian; Sheryl Barbich and Barbara Harris, Greater Bakersfield Vision 2020; Tammy Brown, KUZZ Radio; Ray Allen; and Angelo Haddad. cc: Honorable Mayor and City Council DWH:al S:\Darnell\Bud and Fin\BF99oct13sum.wpd