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HomeMy WebLinkAbout2011-06-27 CC Minutes - Budget HearingCITY OF UKIAH CITY COUNCIL MINUTES Adjourned Regular Meeting CIVIC CENTER COUNCIL CHAMBERS 300 Seminary Avenue Ukiah, CA 95482 June 27, 2011 3:00 p.m. 1. ROLL CALL Ukiah City Council met at an Adjourned Regular Meeting on June 27, 2011, the notice for which being legally noticed on June 24, 2011. Mayor Rodin called the meeting to order at 3:00 p.m. Roll was taken with the following Councilmembers present: Landis, Thomas, Crane (arriving at 3:10 p.m.) and Mayor Rodin. Councilmembers absent: Baldwin. Staff present: City Manager Chambers, Assistant City Manager Sangiacomo, City Attorney Rapport, Director of Finance Elton, Director of Public Safety Dewey, Director of Public Works/City Engineer Eriksen, Public Utilities Director Grandi, Human Resources/Risk Manager Director Harris, Airport Manager Owen, and Recording Secretary Elawadly. 2. AUDIENCE COMMENTS ON NON-AGENDA ITEMS - None. 3. APPROVAL OF MINUTES 3a. Regular Adjourned Council Minutes of 6/29/10 M/S Landis/Thomas to approve City Council minutes of 6/29/10, as submitted. Motion carried by an all AYE voice vote. ABSENT: Councilmember Baldwin 4. ADJOURNMENT: TO MEET AS THE UKIAH REDEVELOPMENT AGENCY (URA) 4a. Roll Call Roll was taken with the following Commissioners present: Landis, Thomas, Crane, and Chair Rodin. Commissioners absent: Baldwin 4b. Approval of Regular Adjourned Redevelopment Agency Minutes of 6/29/10 M/S Landis/Thomas to approve Ukiah Redevelopment Agency minutes of 6/29/10, as submitted. Motion carried by an all AYE voice vote. ABSENT: Commissioner Baldwin 4c. Resolution of the Ukiah Redevelopment Agency of the City of Ukiah Authorizing Investment of Monies in the Local Agency Investment Fund. Finance Director: • Provided a staff report and explained the City has maintained an investment account Local Agency Investment Fund (LAIF) for a long time. • Further explained the procedure for transfer of funds, noting the LAIF account is used for cash flow management purposes whereby LAIF pools funds from many governmental entities into large investments. • The City's investment advisor, Public Financial Management (PFM) has reviewed the investment possibilities for the reserve funds and recommends that LAIF is an appropriate investment vehicle. Page 1 of 15 Ukiah City Council Minutes of June 27, 2011 • Since the URA is a separate entity, LAIF requires a separate action by this agency to authorize the accounts and designate the account signers. • Staff is recommending adoption of the attached Resolution authorizing the accounts with Local Agency Investment Fund (LAIF) and identifying the signers authorized to transact business with LAIF relating to these accounts. M/S Landis/Thomas to adopt URA Resolution No. 2011-09, Resolution of the Ukiah Resolution of the Ukiah Redevelopment Agency of the City of Ukiah Authorizing Investment of Monies in the Local Agency Investment Fund. Motion carried by an all AYE voice vote. ABSENT: Commissioner Baldwin 5. RECONVENE AS THE CITY COUNCIL 6. UNFINISHED BUSINESS 6a. Discussion and Decision Regarding Appeal Of the United States Postal Service Closure decision. Mayor Rodin provided a background and history of the US Postal building located on N. Oak Street and subsequent occurrences regarding the US Postal Service decision to close this building. City Council is considering an appeal to the decision by the US Postal Service to close the post office on N. Oak Street. City Attorney Rapport: It is necessary to find a way to identify all of the legal and factual issues involved with the potential closure and corresponding administrative appeal in the event of a potential court challenge/proceeding. Generally addressed the procedure for an appeal that does not necessarily have to originate from the City Attorney's office whereby Council can make this decision. There was Council discussion regarding the next process should the City consider an appeal. Barry Vogel: • Represents a committee to save the post office. • The US Postal Service is aware of the community's opposition for closure of the post office on N. Oak Street and it does not appear the US Postal Service is taking an appeal seriously. • A letter-has-been-sent-to-the-US-Postmaster-concerning-the potential-impacts-to-the-community---- should the post office close. • Not good for the community to have a vacant building in the Downtown. • Emphasizes the importance the building continue to function in much the same capacity as it has should the building be vacated by the post office. • The City should actively be consulting with the `National Registry' for historical buildings since the post office is listed as such and include this fact in the appeal letter. • Supports the City make an appeal. Mike Sweeney: • Addressed the potential and significant impacts to the community should the post office close and agreed with Mr. Vogel's comments. • Views the Post Office as having some kind of apparent 'corruption' going on relevant to the manner in which the issue of closure is being addressed by the Post Office Service. Council consensus: • Formulate an Ad Hoc committee of two members to draft an appeal letter to the US Postal Service decision to close the Post Office in Ukiah and work with the City Attorney in this regard. Page 2 of 15 Ukiah City Council Minutes of June 27, 2011 The appeal letter must be postmarked July 8, 2011. 6b. Approve The Purchase of A Slip-In Style Pre-Mix Asphalt Patcher In the Amount of $34,632 plus tax and corresponding budget amendments. Director of Public Works Eriksen presented the staff report: Is of the opinion the equipment is valuable and represents a more efficient/systematic and cost effective approach to filling pot holes. • $30,000 of the cost has been budgeted for. • Machine would more than pay for itself overtime. • Staff's recommended action is to approve the purchase. There was Council discussion concerning the potential benefit of having a pre-mix asphalt patcher for street repairs in terms of increased efficiency and cost savings in the long term. Councilmember Crane: • Challenges whether purchasing the equipment is the best and highest use of resources and questioned why this particular machine is proposed for purchase when there are likely other options. • Purchasing a machine is not a high priority at this time, particularly if staff is requesting the authorization of two budget transfers to make up the difference in cost from the $30,000 that has been budgeted. • Addressed the 'industry standard' for this type of work and what this means. • Supports the preservation of resources as much as possible. • Worth comparing other like machines in terms of cost savings and efficiency. • Would like additional information about the potential cost effectiveness regarding the proposed equipment and explore other options. Commissioner Landis: • Understands the importance of maintaining roads and keeping them in good condition. • Does not have the expertise to make an informed decision about what types of equipment are necessary to maintain and repair roads, but understands the concept is for the 'load' to stay hotter longer in order to make the repairs without the load cooling off and having to start the process over with new asphalt material that is likely more costly. Council consensus: Councilmember Crane to meet with staff about the best approach for equipment and possible purchase thereof for repair to pot holes in City streets. Adjourned to closed session: 3:50 p.m. 13. CLOSED SESSION - Closed Session may be held at any time during the meeting 13a. Conference with Labor Negotiator 54957.6) Agency Representative: Jane Chambers, City Manager Employee Organizations: Police, Fire, Electric, Miscellaneous Units Reconvene: 4:27 p.m. 7. PUBLIC HEARING Consideration and Adoption of Fiscal Year 2011/2012 Budget 7a. Presentation of Key Financial Decisions FY 200809 Through 2011/12 - City Manager Page 3 of 15 Ukiah City Council Minutes of June 27, 2011 City Manager Chambers referred to City of Ukiah Fiscal Year 2011-12 budget presentation and introduced the budget by providing a PowerPoint that included graphic information & measures taken to maintain a Fund Balance in the General Fund pertinent to: • City expenditures FY 2011-12 • Annual General Fund #100 & Public Safety Fund #105 Revenue & Expenditures • General Fund #100 & Measure 'S'#1 05 Revenues Comparison FY 06-07 through FY 11-12 • General Fund & Public Safety Fund Expenditure Comparison FY 06-07 through FY 11-12 • Fiscal Year General Fund FY 2008 through proposed FY 2011/12 showing budgeted and actual revenues and expenditures • Strategy that has been done to preserve General Fund for last three budget years • Staff reductions & position changes 2008-2012 • Council & Staff Actions since 2008 • FY 11-12 Budget Approach • Plan to conduct a series of workshops regarding 'Strategic Services Planning' utilizing a 'core' versus 'added value' internal/external approach to looking at services the City will provide in the future and future revenues and expenditures. The document provides an overview of the City budgets from 2008 and where the City's budget is today with the measures taken to reduce expenditures and address the deficit to effectively offset revenue during the course of these budget years. 7b. Presentation of City Budget - City Manager and City Finance Director • Addressed the current budget and staff/Council worked diligently to formulate a balanced budget. • The budget approach for FY 2011-12 was to recognize a $1.6 million deficit in the General Fund that can be primarily attributed to lower revenue from the effects of the recession in conjunction with increased expenditures and/or the cost of doing business that include increases with regard to PERS, health care and employee costs. Some ways to manage this deficit is to eliminate one time expenditures, defer equipment purchases and maintenance expenses, and request a 10% employee salary reduction by going to a 36-hour work week. • The City is also being threatened by the actions of the State regarding redevelopment money and whether or not the City will have this money available to work with or not. • A significant reduction in services would be required if the City attempted to balance the budget through layoffs, noting layoffs of 14-25 full time employees would be required to balance the $1.6 million shortfall that would essentially reduce the City's service delivery capacity as well as eliminate highly qualified employees having expert knowledge necessary for a successful/effective City operation. 7c. Council discussion and consideration: questions to staff There was Council/staff discussion and questions concerning the evaluation of services while providing for cost savings and still being able to maintain the existing level of service to the public. The 'strategic services planning' process provides for as an opportunity for the City decision makers to look at the existing structure and plan for future services by using the internal/external 'core' and 'added value' method of evaluating the function of City departments. Council: Q1. Can staff elaborate on the risk in terms of potential loss of redevelopment funds as a method of funding general government? Q2. Using the strategic service planning approach would mean a comprehensive understanding/delineation of all City departments and have baseline knowledge about how the City functions before future budgetary decisions can be made. Is this the process we want to take? It is important to protect the investments that have already been made. Staff: Al. It is difficult at this point to comment on this aspect because the State legislature has not been clear about redevelopment funds. Estimating staff funding from different facets of redevelopment Page 4 of 15 Ukiah City Council Minutes of June 27, 2011 money is in the $600,000 - $900,000 range. Overall, redevelopment is approximately a $5 million dollar activity the City manages. The majority of this money is apportioned to other agencies or used for bond payments and typically leaves about 1 million to work with after the apportioning. In the event redevelopment money is eliminated, the City would have to determine how to make up the difference for those salaries or portions thereof paid out redevelopment funding. A2. Supports exploring this approach in workshop format with the expectation that what comes out of this strategic planning is that the City budget becomes sustainable in an effort to access how services can best be provided. One approach may be to begin working with percentages by asking the question how much of the General Fund should be spent on labor costs versus other 'can do' projects since labor costs currently represent a high percentage of the budget. Council and staff will begin the process of looking at'strategic services planning' on Wednesday. 8. ADJOURNMENT: TO MEET AS THE UKIAH REDEVELOPMENT AGENCY (URA): 8a. Public Hearing - Proposed Agency Budget Director of Finance Elton: • Referred to the URA budget and noted while the format is generally the same as last year's budget there are some changes. • Three new funds have been added and they include: Fund 963, Housing Debt Service Fund with an appropriation of $320,539, Fund 967, Housing Bond Projects with an appropriation of $2,744,655 and Fund 698, Redevelopment Bond Projects in an appropriation of $4,405,788. • Bonds were sold for both the housing and non-housing projects during FY 2010-1.1 In order to appropriately record/document these transactions three new funds were added to the budget to accommodate the proceeds. • With regard to the City budget, transactions were recorded for the transfer of redevelopment money in new Fund 765, City Redevelopment Projects. • Referred to page 12 of the URA budget and noted other budgetary transfers were made to the budget comprising of several sources from the City budget. • $714,000 is purposed to be transferred back in the fiscal year to Fund 765 for redevelopment projects that will exhaust the funds in this account including the current funds for projects. Assistant City Manager Sangiacomo: • Commented on the proposed budget and noted a conservative approach was taken to planning for projects and with protecting the funds because of the unknown actions on the part of the State with regard to redevelopment funds. • Nearly all of the revenue expensed and/or line itemed in the budget are for actual projects. • Specifically, money transferred to City budget fund 765 is to be appropriated for traffic improvements in and around-the Redwood-industrial-Park as well-a&-for-infrastructure improvements wherein approximately $1.5 million is budgeted in this fund for these improvements. Additional monies are also budgeted for this project in the URA budget Fund 965. • With regard to URA budget Fund 960, Administration, is used both for administration and project purposes. This fund remains relative static with $765,162 budgeted for this year wherein a majority of this money comes from the savings from the salary reductions staff will be taking. • Also commented on URA Fund 965, Program/Projects Fund. City Manager Chambers commented on the URA budget and noted whether or not projects will be completed out of City funds or redevelopment funds, the URA makes the final decision in this regard. At this point making decisions about redevelopment money and projects is unprecedented/unclear until the State makes a determination. Rest assured, staff will make every effort to stay informed of decisions that will not put the City at risk. All proposed projects reflected in the budget have been planned for by staff and the URA. Assistant City Manager Sangiacomo commented measures through the bonding process, contracts and other measures were taken to protect redevelopment money from being taken from the State. Page 5 of 15 Ukiah City Council Minutes of June 27, 2011 Council: Q1. With the preliminary allocation of funds the State may or may not encumber has any of this allocation put the City at risk that the City would have to pay for later? Q2. Has the City made any commitments for projects that if redevelopment money goes away the City would be responsible for? Staff: Al. The City has made payments to the State as required totaling approximately $2 million in the past two years. The City is not at risk at this point, however, as the State continues to take money whereby decisions will have to be make as to what projects are feasible to be completed and/or even if there will be a redevelopment agency in the future. The State Legislature has not yet made it clear about whether or not it will take redevelopment money from cities and this fact may not be fully known for some time. In staff's opinion the best course of action is to take in information as it becomes valid from the State Legislature and continue down the course with redevelopment activities because this is the best plan for the benefit of the community as opposed to just stopping the activities the City is doing. A2. Not at this time. Councilmember Landis observed changes concerning transfer of funds from City to URA budgets and vice versa, particularly with the City 765 fund was not easy to understand in terms of tracking the changes in the proposed revised URA budget and recommends finding some way to better track this accounting. Staff: The aforementioned request to summarize changes would be difficult to perform with the staff the City currently has. ADJOURNED TO JOINT MEETING WITH BOARD OF DIRECTORS, UKIAH VALLEY SANITATION DISTRICT: 5:25 p.m. 10. PUBLIC HEARING AT JOINT MEETING WITH BOARD OF DIRECTORS, UKIAH VALLEY SANTIATION DISTRICT (UVSD) - CONSIDERATION AND ADOPTION OF FISCAL YEAR 2011/2012 BUDGET FOR WASTEWATER 10A. ROLL CALL 5:30 P.M. Ukiah City Council met with UVSD at a Joint Meeting on June 27, 2011, the notice for which being legally noticed on June 24, 2010. Mayor Rodin called the meeting to order at 5:3o pm. Roll was taken with the following Councilmembers present: Landis, Thomas, Crane, and Mayor Rodin. Councilmembers absent:-Baldwin. Staff present: City Manager Chambers,-Assistant City Manager Sangiacomo, City Attorney Rapport, Director of Finance Elton, Director of Public Safety Dewey, Director of Public Works/City Engineer Eriksen, Human Resources/Risk Manager Director Harris, Airport Manager Owen and Recording Secretary Elawadly. Sanitation District Board present: Directors Porter, McNerlin, Pallesen, Marshall, and Chair Ronco Sanitation District Board absent: None. UVSD Staff present: UVSD District Manager Kennedy. 10B. Overview of Proposed Sewer Fund Budget by City Staff and District Manager Public Works Director Eriksen: • Presented an overview of the proposed sewer operations budget for FY 2011-12 for the City of Ukiah Wastewater system. UVSD Board: • Had questions about some of the budget appropriations in the Joint Sewer Operating Fund #612 (Sewer & Wastewater Treatment Utilities/Wastewater Treatment Plant) concerning transfers made by the City Manager within the Fund 612 subaccounts. • The issue is the adopted budget can be changed at the staff level without Board or Page 6 of 15 Ukiah City Council Minutes of June 27, 2011 Council approval. • Expressed opposition to some items in the budget: o Fund 612.3510.110, 612.3510.141 through 155, pertinent to the seventh water/sewer attendant position that has not been filled. o Fund 612.3510.639, fines and penalties with regard to allocations of funds in the sum of $50,000 o Fund 612.3580.639, Fines and penalties in the sum of $50,000. o Fund 612.3510.250, Contractual Services in the sum of $20,000. o There were questions concerning fines and penalties. o There were further questions about shared expenditures. • Supported the concept of approving the budget excluding the aforementioned items. • A concern regarding budgeting for an unfilled position is the money can be transferred within the 612 account for other purposes. Staff: • The seventh man issue is a budget item that has been carried over from budget to budget for several years whereby the question is whether to either fill the position or eliminate it. • The concern is eliminating this position may increase the exposure of a fine by the State Water Board. Councilmember Crane: • Addressed the matter of seventh man issue and corresponding budget inefficiencies/possible discrepancies with regard to General Fund employees and/or other employee funds versus Enterprise Fund employees and questioned whether the 10% salary reduction is really an effective solution. • The proposed salary reductions would not represent an actual 10% cost savings. • It does not make sense to have salary reductions and then hire employees. • Looking at the budget with having to maintain an appropriate Fund Balance from a General Fund and Enterprise Fund perspective, does not support a reduction of City employees to a 36-hour work week. • Supports looking at how the City could operate more efficiently and has some preferences/ideas on how this can be articulated. Questions whether going to a 36-hour work week is helping make the City more efficient. Director McNerlin: • With regard to the sewer side and not the water side of the budget, why not contract out to assist if there is an episode requiring immediate attention. • Understands not hiring a seventh person on the sewer side of the budget would save the taxpayers money. • Water/Sewer Department operates as an Enterprise Fund and should not go to a 36-hour work week. A shortened work week will impact the ratepayers. • Commented on the present operating system and noted the City and UVSD benefit from the multi-task use of employees so the ratepayers from both agencies have achieved effective cost savings because the process does not include single individuals performing single jobs. Not having single water and sewer crews directly benefits the ratepayers of both agencies from the corresponding cost efficiencies as they currently exist. The problem is the employees are limited doing multiple tasks from multiple funding sources. As far as fines and penalties, the District does not have much experience dealing with fines whereas the City does and acts on the District's behalf in this regard. There is the likelihood fines will be imposed by the State Water Board when this agency discovers that staff has been reduced. • It is the Board's opinion that reducing staff puts both agencies at risk from fines and penalties. Mayor Rodin: Page 7 of 15 Ukiah City Council Minutes of June 27, 2011 • The UVSD is contracting out with the City. • The intent of a seventh man would provide more manpower to be able to provide the adequate service to our client, which is the UVSD and to the City in order to operate effectively. • The City has a responsibility to protect itself from fines and penalties. • It would make sense to be able to negotiate salaries/agreements with persons being paid out of an Enterprise Funds versus the General Fund whereby desire has been expressed about separating Enterprise Fund employees for other employee funds, but this is not an option at this time. • Noted 4 out of 5 Councilmembers support a 36-hour work week as a way to keep the City operating during these economic hard times. At this juncture, the City does not have the financial resources to operate all the City services and be open for a 40-hour work week. • City employees even though they are a part of an Enterprise Fund will be a part of the 36-hour work week. This is the way it has to be for now. • The City needs to do what it needs to do to take care of 'our system.' Chair Ronco: • Disagrees with the process of how fines and penalties are handled and objects that the Board is asked to participate in paying the cost of fines that have been imposed by the State when the Board has no power to timely file the necessary reports to avoid fines/penalties being levied. • As of today, the seventh position has not been filled. City Manager Chambers: • Confirmed the seventh position has not been filled as a potential cost savings. Chair Ronco: • Managing the City's sewer operation is a joint effort by the UVSD and City as is the budget. • Is not pleased with the budget process when the City's sewer operation is supposed to be a joint collaboration and the Board essentially does not have a say and/or any power to act. • Questions the cost savings approach by the City. Director McNerlin: • Pointed out the cost savings approach by the City may cost the Board money by way of potential fines imposed by the State. There was further dialogue concerning the Sewer and Wastewater Treatment budget relative to the District's opposition raised above that concern the budget process and corresponding transfer between subaccounts-r-eduction_of_City _to_a_36-hour_work _week/seventh_man_issue,-fines-and-penalties, and-City's approach to cost savings, including other issues pertinent to the proposed budget. UVSD Board: • City employee reduction to a 36-hour work week would not be commensurate will the loss of services because employee benefits must still be paid as well as other associated costs in an effort for the City to reduce its deficit. • The approach taken by the City regarding the budget with addressing the City deficit is causing 'collateral damage' to the District which is say how does the City expect to maintain like services when an extra person is hired to make up for the fact the existing staff will not be working as much wherein benefits will still have to be paid to everyone. • Understands the City wants to save money, but cannot use the District in a negative way to solve City problems. The City deficit is not District problem. • Requests the City solve the budget problem in a way that does not have a negative impact on the District. City Manager Chambers: • With a 36-hour work week, the City will return calls and respond to reports on Fridays the same Page 8 of 15 Ukiah City Council Minutes of June 27, 2011 as is currently done on weekends so there will be no loss of service for any given individual. Customers can come into the City Monday through Thursday for service hook-up or disconnect as is currently the process. There will be no loss of service despite the 36-hour work week. UVSD Board: • While conceivably receiving the same level of service, ratepayers will be paying benefits for an extra person. City Manager Chambers: • The extra person has nothing to do with the 36-hour work week scenario. As Director of Public Works Eriksen explained, the intent for budgeting for an extra person was to be able to go ahead and fill the position this year or have the position eliminated. This is the question before the Board. • What is being conveyed to the Board in this discussion is if extra/seventh person position is eliminated, Council is being made aware of the potential risk for a fine that in turn has to be paid for by City or District ratepayers. • Do not mix the request for a seventh person with the 36-hour work week. Councilmember Crane: • Asked if the City Electric Department like the Water/Sewer Department that also operates as an Enterprise Fund is a part of the 36-hour work week scenario. City Manager Chambers: • Unlike the Water/Sewer Department the City Electric Department 'stands on its own' in this regard. Councilmember Landis: • While it would be beneficial to just be able to solve the City budget crisis and be able to allocate what the City needs, it is not that simple. Staff and Council have been working diligently to determine the most effective way to address the budget issue and still preserve services is to go to a 36-hour work week resulting in a 10% pay reduction for employees whereby negotiations are continuing with the different bargaining units. The City is at a point in its negotiations with the bargaining units to be able to trim a sum of money so that the deficit sum does not continue to escalate. The process has been long and tedious regarding analysis of the budget and the corresponding decisions made. - Director-McNerlin: - • Questioned money that has been moved around in subaccounts in the operating of Fund #612 without Board consideration. UVSD Board: • Referred to the budget and in addition to budget Fund #612 had other questions/concerns about Fund 611 (City of Ukiah/Ukiah Valley Sanitation District WWPT Construction/debit Payment Fund), Fund 614 (City of Ukiah/Ukiah Valley Sanitation District Sewer Capital Projects), Fund 641 (City of Ukiah/Ukiah Valley Sanitation District/Sanitation District Special Fund) & Fund #642 (Sewer 3Rate Stabilization Fund) and specifically addressed the issues for these accounts. Director of Finance Elton: Addressed how and why transfers work between accounts. There was discussion about how to move forward with approving the budget. UVSD District Manager Kennedy: • Addressed the matter of the 614 account relative to the UVSD's portion of the budget. • Commented on the District's objectives in terms of contributions and expansion of the grant Page 9 of 15 Ukiah City Council Minutes of June 27, 2011 program and outlined what this involves. • Had questions about'Projected Actuals' expenditures for fines and penalties for FY 2010-11. • Further questioned a transfer made by City staff from the Sewer Rate Stabilization Fund and a transfer made from Fund #641 that he does not necessarily agree with. UVSD Board consensus: • Supports approval of the budget excluding six of the budget items in question for Fund #612. M/S Director Porter/Pallesen to approve the budget as presented by City Finance Director Elton and Ukiah Valley Sanitation District Manager Kennedy with regard to Funds 611, 614, 641, 642, 650 and Fund 387 (a fund the District has with the County) except the six questioned items in Fund #612. Public Comment: None Motion carried with the following roll call vote: AYES: Directors Marshall, McNerlin, Pallesen, Porter and Chair Ronco. M/S Councilmember Thomas/Landis to approve budget with regard to Funds 611 and 614. Public Comment: Lee Howard, North Coast Building Exchange: • Addressed the budget and transfers made for repairs. • Some of the repairs appropriated for could have been contracted out and the work done cheaper. • Supports and encourages that more repairs be contracted out to the private sector and see if there is a cost savings. Motion carried by the following roll call vote: AYES: Councilmember Landis, Thomas, Mayor Rodin NOES: Councilmember Crane, oppose a reduction to a 36-hour work week. ABSENT: Councilmember Baldwin There was discussion on how to proceed with the Board's disputed budget items. i Councilmember Landis made a motion to approve the budget less the six disputed items in Fund #612. Motion failed for lack of a second. City Attorney Rapport advised Council has the option of approving the budget to include the six disputed items or approve the budget excluding the disputed items. It was noted in any case, the six disputed items will have to be resolved. Director McNerlin stated the biggest concern is salaries and benefits so if this aspect is disputed nothing can be paid for this fiscal year wherein this issue needs to get resolved quickly. District Manager Kennedy stated the recommended action for this is the allocation within accounts 612- 2510.110 612.2510.141-155 for the seventh water/sewer attendant. The salaries not allowed for this can be approved. Finance Director Elton: • Council can adopt the budget as proposed and the District can then take action to adopt a budget without those six budget items thus establishing those six items as something that is not agreed upon. Page 10 of 15 Ukiah City Council Minutes of June 27, 2011 • However, if the Council adopts the budget without the six disputed items and the District agrees, there are essentially no issues to resolve. M/S Landis/Thomas to approve Fund #612 with the allocations, as proposed. Motion rescinded and was restated. PUBLIC COMMENT: Director McNerlin recommended talking about the disputed items more in depth because it may be the District's disputed items make sense since there has been no discussion about these items prior to this meeting. Director of Public Works Eriksen: • With the exception of administrative costs and the seventh man issue, the other items are simply customary/routine approaches to the daily operation of a sewer and wastewater facility with regard to repairs/maintenance. Director McNerlin: • Emphasized the importance of understanding the reason some of the budget items are disputed by the District and highly disagreed with moving forward with approval of the budget, as proposed. Councilmember Thomas: • All that is being done is recognizing there are disputed items that can later be addressed. • Discuss the disputed items when there is sufficient time whereby a shared agreement can be reached. M/S Porter/Pallesen to approve the proposed budget with the exception of the following disputed items: 1. The allocation within accounts 612.3510.110, 612.3510.141 through 155 for the seventh water/sewer attendant. 2. The allocation of $50,000 for fines and penalties in account 612.3510.639. 3. The allocation of $20,000 for emergency repairs in account 612.3510.250. 4. The expenditure of $50,000 for fines and penalties as indicated in the projected actual for FY 2010-211. 5. The allocation of $50,000 for fines and penalties in account 612.3580.639. 6. The exclusion of $174,100 for the District's administrative expenses that should be included in Fund 612 as a shared expense. JR Rose: • Addressed sewer repairs and associated costs thereof. • Is of the opinion there needs to be better cooperation between the City and Board in order to get work accomplished. Motion carried by the following roll call vote: AYES: Directors Marshall, Pallesen, Porter and Chair Ronco NOES: Director McNerlin Adjournment of joint meeting at: 7:06 p.m. Public Works Director Eriksen: Addressed the four issues raised by the District and commented the seventh man is an issue that needs to be resolved one way or another. Another issue the Board has is if there is money that is unaccounted for and budgeted for emergency services and/or matters that are unforeseen, there is a concern that this appropriated money could be used for something else whereby the District might not agree to. Pointed out that when money is transferred inter-budget, the District is notified directly by email of the transaction, such as for emergency services. The District is more informed Page 11 of 15 Ukiah City Council Minutes of June 27, 2011 about such transactions than Council unless a matter is agendized for discussion. The problem from the District's perspective is having some control over these transactions rather than just being informed about them after-the-fact. Councilmember Landis: • Requested clarification the District just wants accounts 612.3510.111, 612.3510.141 through 155, 612.3510.250, and 612.3580.639 eliminated and not put in anywhere else in the budget. Staff: • If money is needed the District would like allocations to come out of the 614 account, which is a joint account. • The issue is really about the amount being transferred. It was noted with regard to budgeting that some costs are higher than anticipated. City Manager Chambers: • A concern of staff is that the true cost of sewer operation be adequately reflected in the budget so as not to under-budget. Councilmember Crane: • Questions how carrying $20,000 for engineering purposes in the budget year after year and using it or not using affects the rate, such as for the lining of the '100 manholes' project that was budged for several years and did not happened for awhile. • It may be that budgeting for contingency purposes and/or unforeseen circumstances is necessary for those times when adjustments must be made for costs that are more than anticipated. Staff: The District's concern is likely more about the accounting. of contingency items and how these budgeted items are actually used. City Manager Chambers: • Staff is aware of the procedure and time involved when an item is not in the budget and requires, for instance, approval by Council and/or the District before the City can act on a matter that requires immediate attention. • Desires some resolution regarding the seventh man issue. There was Council discussion about hiring the seventh man versus contracting the work out. It was noted the District should understand the cost for sewer repair, for instance, is costly so it may be more beneficial to utilize the City workforce that is trained and can multi-task as opposed to contracting out the work, which may require different contractors for each kind of work. PUBLIC COMMENTS: Mike Pallesen, speaking on his own behalf: • The real issue for the District is the `erosion' of its budgetary power. • The Participation Agreement gives the District budgetary power to work with the City. • The ability by City staff to move one line item to another within the budget without prior notice or approval by the District, basically reduces the power of the District to budgeting at the fund level. • The action taken by the City to move line items may be a violation of the Participation Agreement and is problematic for the District. • The request by the District is for City staff or City Council to agree regarding the four budgetary items and to talk to the District staff to staff about these items before transfers are made. Page 12 of 15 Ukiah City Council Minutes of June 27, 2011 Councilmember Thomas inquired whether notification of transfers would then require Sanitation District approval before the transfers can be made or proceed with transfer whereby the District could object for later discussion. City Manager Chambers: • A simple approach would be for Council to approve those items and state these items cannot be transferred without discussion by the District. M/S Landis to approve the budget allocations made in Fund 612, as proposed. Motion failed for lack of a second and was restated. M/S Thomas/Landis to approve the budget items for Fund 612 with the condition that staff will not transfer funds out of the numerated sub-funds without approval by the District and these funds include: 612.3510.250.000, 612.3510.639.001, 612.3580.639.001, and budget for the seventh man in account 612.3510.110-155. PUBLIC COMMENT: None. Motion carried by the following roll call voted: AYES: Councilmember Landis, Thomas, Mayor Rodin NOES: Councilmember Crane, opposes a reduction to 36-hour work week ABSENT: Councilmember Baldwin RECONVENE TO AGENDA ITEM 8b 8b. RESOLUTION AUTHORIZING ADOPTION OF UKIAH REDEVELOPMENT AGENCY FISCAL YEAR 2011-12 BUDGET: Assistant City Manager Sangiacomo further addressed the proposed budget appropriations with regard to housing: • Housing Bond Fund - There is approximately $2.7 million that has been bonded for and obligated in the proposed URA for this fiscal year although there has not been a specific project that has yet been identified. • There are a number of housing projects that are being worked on. 9. PUBLIC COMMENT REGARDING REGULAR AND REDEVELOPMENT BUDGETS - None. M/S Crane/Landis to approve resolution authorizing Adoption of URA Fiscal Year 2011-12 Budget. Motion carried by the following roll call vote: AYES: Commissioner Landis, Thomas, Crane, Chair Rodin ABSENT: Commissioner Baldwin 8C. ADJOURNMENT OF URA 11. RECONVENE AS THE CITY COUNCIL 12. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF UKIAH AUTHORIZING ADOPTION OF FISCAL YEAR 2011-2012 PUBLIC COMMENT OPEN: 7:66 p.m. Page 13 of 15 Ukiah City Council Minutes of June 27, 2011 Ross Liberty: • City Council has not done enough in its analysis of City operations to find/identify the 'efficiencies' necessary for the City to function more effectively. • Supports the concept of 'doing more with less.' Dick Selzer: • The proposed reduction from a 40-hour to a 36-hour work week and eliminating one work day does not achieve a 10% reduction in cost. • If expenses must be reduced and payroll is the way to do it, cut 5% of the employees. It would not be effective to cut 10% of the employees because a 10% cost savings cannot be achieved by reducing the workforce by 10% and keep the doors open five days a week in order to effectively supply the necessary services to the community that the City is obligated to do. • The City has a fiduciary responsibility to the community. • Addressed the intent of Measure S noting it was meant to be a 'stop gap measure' that the City would be looking at to reduce expenses whereby City Council has not done their jobs. Public Member, no name given: • Commented on the concept of 'doing more with less' and noted the City needs to do less with less people. • The City cannot possibly accommodate every demand for more services that come about. The City does not have the money to provide every kind of service the community and/or special interests groups demand. The City does not have the money and must learn to say 'no.' • Renewal of Measure S may bring about a different attitude from people because Council has not properly done the job of figuring out how to efficiently operate the City. Eric Crane: • Serves as Chair of the Airport Commission. • Is concerned Airport staff that operates from an Enterprise Fund will be a part of the 36-work week workforce. • Enterprise Funds must generate the necessary income in order to function as such or go away if it cannot operate with a fund balance. • Questions the Airport's ability to generate money, if the Airport staff goes to a 36-hour work week. This is not operating with efficiency. • Does not support the reduction to a 36-hour work week. Judy Hatch: • Does-not-support the-reduction-to-a-36-hour-work-week-as-budgeted, - ---j-- Keith Wood: • A 36-hour work week does not serve the community well and is not an effective cost savings approach nor is it perceived as such. Lee Howard: • A 36-hour work week will negatively impact the building/construction industry and is not cost effective in terms of employee getting work done, particularly during the winter months when construction employees at the City Corporation Yard, for instance, are working in the dark. It makes more sense to be open during light hours and not closed on Fridays and represents a huge waste of financial resources and cost ineffectiveness. • It may a cost benefit to look at the private sector at doing some of the construction jobs and contracting out for jobs. Ross Liberty: • Has observed over time the inefficiency of City crews and cited examples of seeing City workers at Starbucks on city time or having too many persons on a job site where they are ineffective. Page 14 of 15 Ukiah City Council Minutes of June 27, 2011 • Again, supports doing more with less. PUBLIC COMMENT CLOSED: 8:35 p.m. Councilmember Crane as a matter of record read verbatim, `Denial of Service Fridays - A Bit of History and What is at Stake' and this document is incorporated herein as part of the minutes as attachment 1. Director of Finance Elton: Specified some budget amendments with regard to Fund 920 as provided for in the most recent copy of the budget. Council: • The majority of the Councilmembers view a reduction to a 36-hour work week as being the most cost effective way to save money for the City. City Manager Chambers: • Going to a 36-hour work week is simply a way to cope with the fiscal crisis that every city in California is facing and this represents only one methodology. M/S Landis/Thomas to adopt Resolution of the City Council of the City of Ukiah authorizing of FY 2011- 2012 budget with the amendments to Fund 920 reflected in the last copy of the budget. Motion carried by the following roll call vote: AYES: Councilmembers Landis, Thomas, Mayor Rodin NOES: Councilmember Crane, opposes a reduction to a 36-hour work week ABSENT: Councilmember Baldwin 14. ADJOURNMENT OF MEETING There being no further business, the meeting adjourned at 9:02 p.m. Cathy awadl , Recordin Secretary Page 15 of 15 Ukiah City Council Minutes of June 27, 2011 Denial of Service Fridays - A Bit of History and What is at Stake As a part of the general budget process, In the name of cost savings to the general fund, City of Ukiah staff has establish a goal of 3 or more day weekends for themselves every week starting in July for at least the next 12 months.. How did we get here? About 8 years ago, in the name of saving money, city staff convinced the city council that substantial building energy savings would be realized by shutting down city hall Friday every other weekend. The savings were essentially bogus but the staff really liked the every other weekend as three days off which was the real reason for the Friday closures. When pressed for why staff promoted and wanted to preserve every other Friday off for city hall and four 10 hour days for the public works, sewer, water and electric field crews the answers included: "We like it". "It's golden". Fridays off was and is viewed as a benefit by staff which overrides the public's interest. About 5 years ago the council instructed staff to restore services. Reluctantly staff reopened city hall on those Fridays but did not restore all Friday services, short changing the tax and rate payers. To this day public works, sewer, water and electric crews are on a four day 10 hour day schedule even though in the winter it is dark for a substantial part of the shift and field work typically is done in the daylight so, much of many days per year are not very productive: Building inspections and access to the building inspector are now only 1/2 day on Fridays because staff hired the building inspector with the understanding that 1/2 the Fridays were days off. The public has been left out of the discussion which has been orchestrated by staff and conducted as closed session labor negotiations which are exempt from public meeting law. For the last several years, as city revenue has declined, the council has been unwilling to conduct the necessary analysis of tasks and resources available nor exhibited the will to reconfigure the city staff activities to be sustainable. The staff has postponed the discussion and evaluation. The council has defaulted it's duty to manage the staff to the staff. Staff goals for hours and conditions are not consistent with the community's best interests. The Friday closures have been presented by staff to the council and community as a 10% savings due to a 10% reduction in hours yet the benefits are not to be reduced and some are to be effectively increased. The real result will be little or no cost savings in exchange for a 20% reduction in days that city hall is open which will become an employee entitlement. So, if someone wants a business license, a permit, to pay a utility bill, seek information from staff or in any way interface with staff on any Friday, a normal business day, they can wait until Monday unless Monday is also a holiday. If the 10% reduction in hours does not reduce staff throughput then there is already too much staff and a reduction in staff would be more appropriate than the 20% reduction in days of staff availability to the public. If the reduction in hours does impact the throughput of staff than what tasks will be delayed or abandoned? That policy discussion has been postponed by staff until after staff secures the entitlement to 3 day weekends. To add insult to injury to the utility rate payers the staff stated goal is to reduce the hours of sewer, water and electric field crews in addition to the general fund employees even though the utility crews are funded by the utility enterprises not the general fund. one of the council members lauds that as "solidarity" which is being accepted by the majority of the council. The reduction in utility crew hours that are funded outside the general fund drags down annual productivity and decreases utilization of department resources, delaying completion of utility installation, improvement and maintenance. For instance staff confesses only 75% of the state required annual water system valve testing was done in 2010/2011. Some highlights from the Memorandum of Understanding, Department Head Unit, 2011/2012 that changes the work week from 40 hours to 36 hours, closed all Fridays. 3. No reduction of employee benefits, including health or leave benefits, will result from implementation of the reduction in hours, except as noted: 3b. The reduction in hours will not result in a reduction in management incentive pay or health contributions. 3d. Employees will continue to earn sick leave at 8.00 hours per month and will continue to accrue vacation according to the vacation accrual schedule according to the vacation accrual schedule established by MOU.... 3e. During the term of this Agreement, when a fixed holiday falls on a Friday, the city will add 8 hours of holiday pay to the employees' vacation accrual balance. This will provide for continuity of services and allow the employee to schedule the time off at their convenience. For FY 201112012 the following-holidays will fall on Friday and, therefore, will be added to vacation accrual balances: Veteran's Day, Day after Thanksgiving, Christmas Eve, New Years' Eve. The 10% claimed savings ignores the fixed and added costs. A) The same or greater health care costs due to at least a 10% reduction in on the job hours. B) No reduction in the sick leave corresponding to the reduction in hours. C) Adding 4 holidays to the vacation accrual alone offsets 15.5% of the supposed savings. Respectfully submitted for the communities consideration, Douglas Crane