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Minutes 2009-03-31MINUTES SPECIAL MEETING OF THE CITY COUNCILIREDEVELOPMENT AGENCY TUESDAY, MARCH 31, 2009 COUNCIL CHAMBERS, 215 EAST BRANCH STREET ARROYO GRANDE, CALIFORNIA 1. CALL TO ORDER The City Council/Redevelopment Agency of the City of Arroyo Grande met in special session at 6:00 p. m. to consider the Fiscal Year 2008-09 Mid-Year Budget, with Mayor/Chair Tony Ferrara presiding. 2. ROLL CALL Mayor/Chair Ferrara, Mayor Pro TemNice-Chair Costello, Council/Board Member Guthrie, Council/Board Member Arnold, and Council/Board Member Fellows were present. Executive management staff members present were City Manager Adams, City Attorney Carmel, Director of Financial Services Kraetsch, Chief of Police Aeilts, Director of Administrative Services/City Clerk Wetmore, Director of Building and Fire Hubert, Director of Public Works Spagnolo, Parks, Recreation, and Facilities Director Perrin, and Community Development Director Strong. 3. FLAG SALUTE Mayor/Chair Ferrara led the Pledge of Allegiance. 4. CITIZENS' INPUT. COMMENTS. AND SUGGESTIONS Stephen Brandt, Public Works Inspector, spoke in opposition to the proposed elimination of the Public Works Inspector position. Dennis Delzeit, retired Public Works Director, Pismo Beach, spoke in opposition to the elimination of the Public Works Director position. Financial Services Director Kraetsch presented the FY 2008-09 Mid-Year Budget Report and recommended the Council/RDA Board: 1) Approve detailed budget adjustments in the Mid-Year vbudget report; 2) Approve Schedule A; and 3) Approve requests for additional appropriations in the General Fund. Staff responded to questions from Council regarding transportation funding, and the status of the Hampton Inn and Suites project. Mayor/Chair Ferrara invited comments from those in the audience who wished to be heard on the matter. Ira Hushes, Arroyo Grande resident and business owner, commented on the budget shortfall as it relates to sales tax revenues and asked if any City capital improvement projects could be delayed or reprioritized. Hearing no further public comments, Mayor/Chair Ferrara closed the public comment period. Council comments and discussion ensued concerning the use of the local sales tax revenue for capital improvement projects; clarification of various funding sources for capital projects and those projects in progress; emphasis on the use of grant funding for key streetscape projects, and support for the proposed budget adjustments and appropriations. SPECIAL CITY COUNCIUREDEVELOPMENTRGENCY MEETING MINUTES MARCH 31, 2009 PAGE 2 Action: Council/Board Member Guthrie moved to approve detailed budget adjustments in the Mid-Year budget report; approve Schedule A; and approve requests for additional appropriations in the General Fund. Council/Board Member Fellows seconded, and the motion passed on the following roll-call vote: AYES: Guthrie, Fellows, Arnold, Costello, Ferrara NOES: None ABSENT: None City Manager Adams presented the staff report and reviewed high-priority goals for infrastructure improvement projects, City facilities, redevelopment projects, water projects, and operations; reviewed General Fund preliminary shortfall estimates ($1.9 million) for Fiscal Year 2009-10; reviewed the estimated FY 2009-10 General Fund Expenditure Budget ($14.7 million); reviewed the projected FY 2009-10 General Fund Revenue Budget ($12.8 million); reviewed proposed budget strategies, projected savings and revenues, and a proposed reorganization plan, which would include staffing reductions; discussed the objectives of the budget strategies, its negative impacts, future concerns, future cost control strategies and considerations, and provided alternate budget strategies. He then recommended the Council/RDA Board: 1) Approve staff's recommended strategies for addressing the projected budget shortfall; and 2) Direct staff to proceed to prepare the final budget for consideration at the May 26, 2009 regular meeting. Director of Financial Services Kraetsch provided a summary of projected changes in key revenue sources, when compared to the current FY 08-09 budget. Staff responded to questions from Council concerning the reorganization and proposed functional organization chart; the direction and status of pursuing a regional Joint Powers Authority or Fire Protection District; representation on regional committees, particularly Public Works as it relates to San Luis Obispo Council of Governments (SLOCOG) and Transportation Advisory Committee (TAC) meetings; opportunities for the use of community volunteers in the budget strategies; costs for providing the Children In Motion childcare program and making the program self-sufficient; status of labor negotiations and a proposed furlough for management employees; projected annual savings as a result of the PERS Golden Handshake Program; financial and operational impacts if the building on Mason Street is not pursued for City office use; elimination of a part-time Planner in Community Development upon the retirement of the Community Development Director; how many full and part-time employees the City currently has; plans to consolidate functions into one office building to provide more efficiency; and other joint efforts that can be pursued with neighboring jurisdictions. Mayor/Chair Ferrara invited comments from those in the audience who wished to be heard on the matter. Wendv Nerli spoke on behalf of and in support of Stephen Brandt, who has been the City's Public Works Inspector for the past 8.5 years; commented on his dedication and commitment to the City and that no one has addressed the issue of safety as it relates to capital improvement projects; commented that contract employees do not provide the same level of service as a full- time employee; and requested the Council reconsider the proposed elimination of the Public Works Inspector position. SPECIAL CITY COUNCIL/REDEVELOPMENT AGENCY MEETING MINUTES MARCH 31, 2009 PAGE 3 Wavne Peterson, County resident and former City of San Luis Obispo employee, commented on the proposed reorganization and recommended the Council consider the placement of the engineering division with the maintenance division as they work more closely together on projects. Ira Hughes noted that the State has asked employees to take two days off per month and suggested the Council consider looking at ways to cut back on staffing and find ways to do things differently, while ensuring that the City has qualified department heads in place; commented on the reduction in local sales tax; and demanded a traffic study be done for the proposed Centennial Plaza project. Hearing no further public comments, Mayor/Chair Ferrara closed the public comment period. Mayor/Chair Ferrara called a break at 8:07 p.m. The Council reconvened at 8:18 p.m. In response to a question by Council/Board Member Arnold, City Manager Adams provided clarification on furloughs. Council/Board Member Arnold expressed concern about increased risk exposure with the elimination of the Public Works Inspector position. City Manager Adams acknowledged there would be a reduction in service for inspections; however, he noted that the plan is to transfer the majority of duties to the Associate Engineer. He stated the risk is based on reduced time for inspections and discussed public versus private projects. Council/Board Member Arnold stated that while he still had some concerns, he could support the proposed budget strategies at this time. Council/Board Member Guthrie commented that the proposed plan addresses the reductions in revenues; noted that the City is reaching build-out; discussed capital expenditures, the intent of the local sales tax measure, and that it is essential to maintain public trust with regard to its expenditures; that stopping capital improvement projects would not help the General Fund; commented that he would have initially thought Community Development would report to Public Works, but after the presentation and his research, he understood the proposal; acknowledged the layoffs and reduced staff; however, he felt confident that services would be maintained; noted that inspection costs can be charged back to the project instead of paying from the General Fund; noted FY 2008 budget actuals versus FY 2009-10 budget projections equaled a 13% reduction; noted the increase in salary/benefit costs despite those reductions; expressed concern with balancing the budget with one-time revenues; noted that the City Hall project would come back to Council for final consideration at a later date; discussed the Children In Motion program costs and the need for a detailed analysis to determine the program's future; expressed concern about proposed fund transfers; noted that it would be beneficial to have a Public Works Inspector; however, there is a need for flexibility; stated he was comfortable moving forward with the proposal; and concluded by stating that the local sales tax transfer should be treated as a one-time transfer. Council/Board Member Fellows commented on the shrinking economy; noted that there are fewer projects, lower sales tax revenue, lower fee income and revenue, and less work for staff; that the City must address these issues to avoid further financial problems, including bankruptcy; commended the City Manager for a remarkable job in addressing last year's budget shortfall and exploring ways to address the upcoming budget shortfall; stated the management team has done a good job in creating a plan to meet the needs of the community in the future and maintain service levels with the least impact; that the proposed plan is the best the City can hope for to mitigate the City's income shortfalls and to streamline City functions; acknowledged SPECIAL CITY COUNCIL/REDEVELOPMENT AGENCY MEETING MINUTES MARCH 31, 2009 PAGE 4 the voluntary retirements; expressed regret for the two layoffs; and supported the budget strategies as proposed. Mayor Pro TemMce Chair Costello acknowledged that times are tough; supported aone-year budget process; does not want to have to utilize the local sales tax revenue to balance the budget; wants to maintain levels of service to the extent possible; noted that the City could not dictate furloughs, it would have to be negotiated, and it would not solve the problem long-term; could not require furloughs in Police and Fire; commended staff on efforts to minimize impacts to the organization and community; expressed concern about the inspection process; however, believed that the service would still be provided; noted that if the economy improves, the position could be brought back; and supported the budget strategies as proposed. Mayor/Chair Ferrara observed that there were too many variables and unknowns to go beyond preparation of a 1-year budget; noted the City is in uncharted territory; and emphasized that if the reorganization plan goes into effect, a monitoring system must be in place for inspections. He noted that a reorganization strategy is being proposed and the key to making it work is recognition that position descriptions, roles and responsibilities need to be clearly defined. He acknowledged that the local sales tax funds are being used as the public desired and is reflected in the past two Annual Reports; however, the City could not have predicted the current economic situation. He noted that the City may have to use some discretion and utilize some of those funds in the General Fund; however, the City is committed to its original objectives for the local sales tax. He reiterated that if the proposed changes are made, close monitoring will be required and the City should not be afraid to restore positions if the situation calls for it; and supported the budget strategies as proposed. Action: Council/Board Member Guthrie moved to approve staffs recommended strategies for addressing the projected budget shortfall; and to direct staff to proceed with preparation of the final budget for consideration at the May 26, 2009 regular meeting. Mayor Pro TemNice Chair Costello seconded, and the motion passed on the following roll-call vote: AYES: Guthrie, Costello, Fellows, Arnold, Ferrara NOES: None ABSENT: None 6. ADJOURNMENT Mayor/Chair Ferrara adjourned the Special Meeting at 9:49 p.m. to Special Tuesday, March 31, 2009 in the Council Chambers, 215 East Branch Street. Tony Ferr ayor/Chair ATTEST: Kelly etm fe, City Clerk/Agency Secretary (Approved at CC Mtg /{- /y-~-~~ ) Closed Session of