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HomeMy WebLinkAbout09/20/2004 B A K E R S F I E L D ___~_-- ~ ~ ~ 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. AGENDA SUMMARY REPORT 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 activity 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. AGENDA SUMMARY REPORT BUDGET AND FINANCE COMMITTEE MEETING Monday, September 20, 2004 Page - 5 - 6. COMMI'I-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 Mayor and City Council S:\Darnell\04Budget and Finance~bf04sept20summary