Loading...
HomeMy WebLinkAboutMin 06-25-27-96MINUTES OF THE CITY COUNCIL OF THE CITY OF UKIAH - June 25-27, 1996 The City Council convened in a regular adjourned meeting, which was legally posted and noticed, at 9:01 a.m. in the Civic Center Council Chambers, 300 Seminary Avenue, Ukiah, California, with the following Councilmembers PRESENT: Mastin, Malone, Wattenburger, Shoemaker, and Mayor Schneiter. ABSENT: None. Staff Present: Customer Service Supervisor Archibald, Finance Director Elton, Assistant City Manager Harris, City Manager Horsley, Public Safety Director Keplinger, MIS Coordinator Klingbeil, Planning Director Sawyer, Executive Assistant Yoast, and City Clerk Giuntoli. Mayor Schneiter opened the headng at 9:05 a.m., gave introductory remarks, and defined the process of conducting the hearing. Overview of Proposed Budget by City Manaaer City Manager Horsley advised a review of individual goals and objectives given at a recent Council workshop would not be conducted dudng these meetings; relevant items involving changes/revisions requiring discussion would be highlighted by the Directors. She thanked Finance Director Elton and Assistant Manager Harris for their many hours of work dudng budget preparation, and stated she felt the information presented is clear and concise. Ms. Horsley presented an overview of the proposed 1996/97 budget, emphasizing that the major challenge will be to review the current operations and programs and develop a plan of operation for future years that will best match available revenues and projected expenses. She stated that in the last five years, the General Fund has spent an average of $225,000 per year over estimated revenue. City reserves and one-time revenues have been steadily depleted to a level that the 1997/98 expenditures must be reduced by $1 million or additional revenue sources must be established. The projected 1995/96 total revenues and expenses indicate a reduction of $1.2 million in the General Fund (#100) fund balance. These reductions were primarily the result of the loan to the Redevelopment Agency, transfers to cover deficits in various funds, and expenses exceeding revenue. Dudng 1996/97, the general fund balance is projected to decrease by $392,500. Expenses are projected to exceed revenue by $849,000. Revenues are projected to remain static. Ms. Horsley summarized by further stating that the total fund balance in the 1995/96 submitted budget showed a decrease in ending fund balance of $2.3 million. The actual balance changed dramatically to a combined fund balance decrease of $4.4 million. This reduction was due primarily to the sale of the derivatives and the set aside for litigation reserves. Loans to the Redevelopment Agency were the other most significant factor in the decrease. The proposed 1996/97 budget includes an additional total fund balance reduction of $2.45 million. The largest portion of this decrease comes from the expenditure of Gas Tax money on various street and road improvements ($1,090,000). Other significant reductions are General Fund ($393,000); Solid Waste Disposal ($386,000); Water ($135,000); and Golf ($108,000). Projected additional revenue generated by rate increases are included in the budget to cover the Electric Utility ($1,365,000) and the Street Light Fund ($37,751) deficits. If rate increases are not adopted to provide this additional revenue and/or expenses are not reduced in a comparable amount, fund balances will decline by an additional $1.4 million. Continuing her summary, Ms. Horsley stated the trend of using reserves to cover declining revenues started several years ago. The City is currently in a position that requires immediate steps to be taken by the next budget year to reverse this direction in spending. Financial planning is imperative to achieve a strategy that will be effective as well as prudent to the long term financial health of the City. Major changes in policy as well as programming need to be considered to lower expenses and eliminate deficit spending. Funds have been included in the budget to hold intensive financial planning sessions in the first five months of the year to analyze alternatives and options for each department. All programs and services will be examined to identify methods for continuing the maximum service levels for the citizens of Ukiah while living within the financial resources available. This proposed budget establishes the base from which to move toward a more economical service delivery plan. Discussion followed relative to the City's financial status, with Ms. Horsley noting staff was desirous of making major decisions and changes well before next year's budget. Councilmember Shoemaker stated his desire that this Council be accountable for the City's financial situation, and that it take action to remedy the problems rather than delegating the responsibility to a newly elected Council. Regular Adjourned Meeting June 25-27, 1996 Page I Councilmember Wattenburger stated he thought it was prudent the three retiring Councilmembers leave the budget with a sound set of management practices; however, he was uncomfortable with establishing budget cuts during these meetings, and would prefer to examine the basis for the cuts within a September/October time frame. Councilmember Mastin concurred with Councilmember Shoemaker's preference to take action prior to the election in November. Councilmember Malone expressed his disappointment at the Council's past lack of understanding regarding the overspending, and voiced his preference for prompt action. Mayor Schneiter stated he was desirous of setting the City's financial future in the right direction pdor to the completion of his Council term. Review of General Budget Figures Fund Summary Finance Director Elton reported on the Fund Summary, noting the addition of, General Fund Subsidy. He stated that whether the funds in that category were determined as loans or as transfers from the General Fund was a policy decision that could be made by the Council. Discussion followed relative to loans in comparison to transfers, and whether it was realistic to expect that loans to the Conference Center, Solid Waste Disposal, and Golf would be paid back in a reasonable period of time. It was noted there should not be a subsidy to an enterprise fund that is not a loan. MIS Shoemaker/Malone to determine subsidies to the Conference Center, Solid Waste Disposal, and Golf, listed as General Fund Subsidies, shall be considered as loans, carded by the following roll call vote: AYES: Councilmembers Mastin, Malone, and Shoemaker. NOES: Councilmembers Wattenburger and Mayor Schneiter. ABSTAIN: None. ABSENT: None. Mr. Elton continued his review of the Fund Summary. The Council queried staff regarding the electric fund, transfers, debt service, reserve accounts, and revenue projections. Discussion followed regarding electric revenues, cost of services, and reduction of expenses. Schedule of Transfers Mr. Elton reviewed the Schedule of Transfers, and described the three reserve funds of Worker's Compensation Liability, General Liability, and Public Employee Retirement System (PERS). Discussion followed relative to the reserve fUnds; it was noted the PERS reserves will not be replaced. Debt Summary Mr. Elton reviewed the Debt Summary for fiscal year 1996-97, wherein each individual debt is identified with the amount that is to be paid during the current budget year, the remaining balance, and date final payment will be made. The Council queried staff regarding principal and interest, internal debt, debt payment to outside services, redevelopment, and property tax revenue. General Fund Expenditures and Revenu~ Mr. Elton reviewed the General Fund expenditures and revenues, noting the Department Request column under Total Expenditures had been reduced from a $7.6 million total to $6.8 million. The Council queded staff regarding Miscellaneous Revenues for 1994-95; the increase in Charges for Services due to combining the ambulance revenue into the General Fund; rent and insurance charges for individual departments; general government service charges; and City Attorney fees. MIS WattenburgerlShoemaker to authorize loans to Golf Fund for $17,314; Museum Grant Funds of $2,958 and $2,908; Airport Capital Improvement Fund of $28,316; and Federal Emergency Regular Adjourned Meeting June 25-27, 1996 Page 2 Housing of $31,088; carded by an all AYE voice vote. Authorized Personnel Ms. Horsley reviewed the proposed personnel changes, noting that most of the positions that have been changed are actual trades or exchanges between departments. Overall there has been an increase of approximately one position over last year; since 1992 there have been 20 positions added within the City. The one additional position represents no dollar increase since part-time positions were eliminated to fund the full-time position. Recessed: 10:36 a.m. Reconvened: 10:49 a.m. Review of General Fund/Enterprise Fund Accounts City Council Discussion followed relative to the Travel and Conference Expense; telephone costs, which include an enhanced phone system with voice mail; and group insurance costs. No changes were recommended to the proposed budgeted amounts. City Clerk/Elections Ms. Horsley advised the Travel and Conference and Training Budgets had been left intact with the exception of the California and National City Clerk's Association meetings, which the newly elected City Clerk will have the option to attend. City Treasurer Ms. Horsley advised that due to the establishment of the Investment Oversight Committee, staff is recommending a significant reduction in the salary and duties of the City Treasurer. City Attorney Ms. Horsley advised the City Attorney has had a three-tier rate structure; the last rate increase occurred three years ago. Staff is proposing a fiat $100 per hour rate for all services in lieu of the three-tier rate. Discussion followed relative to the billing of fees and distribution of charges when litigation is involved, and a process which may allow some recouping of costs incurred for lawsuits filed against the City, which the City wins. City Management and Administration City Manager The Council queried staff relative to the Reimbursable Credit and the time allocation of the City Manager's function assigned to the Enterprise Funds. Personnel/Risk Management Ms. Horsley reported on the new Council approved half-time position of Compliance Officer. Recessed: 11:36 a.m. Reconvened: 11:39 a.m. v. Secretarial Pool Executive Assistant Yoast reported on the change in salaries caused by the transfer of Kari Revheim to Personnel Officer, and the increase in the hours of the part-time Administrative Secretary from 1,000 hours per year to approximately 1,500 hours. Discussion followed regarding the new copier, the optical scanning system, and the possibility of posting Council agendas on the FreeNet. Community Outreach/Public Information Regular Adjourned Meeting June 25-27, 1996 Page 3 Ms. Horaley reported on the proposed changes, including the elimination of the City newsletter and the attitude survey. Discussion followed regarding support to community activities/economic development. It was noted that although there were many worthy agencies deserving of the funds, the City was proposing budget cuts and could not continue to give away money it did not have. It was the consensus of the Council to discuss the matter post-budget. A verbal tally of the Council indicated Councilmembers Mastin, Malone, and Shoemaker were in favor of leaving No. 690 - Special Supplies in the budget; Councilmember Wattenburger and Mayor Schneiter were in favor of its deletion from the budget. Miscellaneous General Government Assistant City Manager Harris reviewed the report, noting that the City's participation in Mendocino Emergency Services Association JPA was a new item. Federal Emergency Shelter Grant Mr. Harris advised the City is on the tentative list for another two-year round. The $110,000 is for the expenditures for this year; there will be a reciprocal amount next year. The Council queried staff on the negative number shown in 1995-96, which was explained as a matter of cash flow; the bills have not yet been submitted to the State. Fixed Asset Replacement Fund Mr. Harris reviewed the report, and highlighted the Fire Department purchases of the new replacement ambulance and the construction of a new fire tower. Recess: 12:11 p.m. Reconvene: 12:50 p.m. Finance Mr. Elton reported the most significant change in this area is the deletion of the Controller position, which the City was unable to fill after two recruitments. Funds for project work on a contractual basis have been proposed, and some of the training and travel expenses have been reduced. MIS Coordinator Paulette Klingbeil reported IBM advised staff that at this time they were considering the system upgradable and some of the parts transferable into a newer machine; after October 31 they will not consider any of the equipment transferable to any of their other machines. Discussion followed relative to the upgrading/replacement of the current computer system. Computer Support Services Ms. Klingbell reported the computers purchased a year ago had failed to perform as well as some of the more expensive models, although they met the City specifications. Business Improvement District Mr. Elton reported this was the fund wherein the additional Business Tax License from the Business Improvement District is recorded. Amounts in the past have been used to fund the Main Street Program, although there appears to be no official or formal document written between the City and Main Street. Councilmember Shoemaker expressed his dissatisfaction with the appearance of the downtown area. Discussion followed relative to maintenance of the downtown areas and the involvement of Main Street and the Downtown Merchants in that endeavor. Purchasing/Warehouse Staff reviewed the reduction in costs due to personnel changes, and advised that the Purchasing Supervisor will move to an office in the Civic Center to allow for better integration within the Finance Regular Adjourned Meeting June 25-27, 1996 Page 4 Department, thus eliminating the need for a remodeling of the warehouse. Council queried staff relative to personnel in attendance at the warehouse and the person responsible for the active inventory. It was determined the Utility Department will have the pdmary responsibility in that area. Billina and Collection Mr'. Elton advised that previously the salary of one of the Customer Service Representatives had been charged directly to the Parking Fund. With the addition of the Customer Service Supervisor, that position has been combined into the Billing and Collection budget and allows for better integration and cross training in staff. The Parking District is then charged under reimbursable charges for the value of the services provided in handling the parking permits and tickets. The result is a net decrease in costs to the Parking District. Council queried staff on the significant amount of charges listed under utilities. Customer Service Supervisor Archibald advised regarding the costs involved in turning the power off for customers due to nonpayment, which averages approximately 40 times per month, tdps involved to turn power back on, and staff time involved explaining utility bills. Discussion followed relative to separate billing, hidng a billing service, and the costs involved. It was noted that if the Electric Department contracted for billing, it could be done at a lesser cost but would lack the customer support element. Plannin_= Community Plannine Planning Director Sawyer advised staff concurs with the City Manager's recommendations and the budget cuts suggested in vadous areas. He requested a proposal be brought forth to increase the planning permit fees; presently Planning is only recouping 25% of the costs incurred in issuing planning permits. There are no other substantive increases proposed in the budget. Buildinc~ Inspection Mr. Sawyer reported there were two requests for an increase in the budget, one being to reclassify the Code Enforcement Officer/Plan Checker, and the other for a $3,000 setaside for training for the Building Inspector and Code Enforcement Officer, as required by law. He further reported the building permit increases have been an overwhelming success with revenues collected up by 63%, whereas the number of permits are virtually identical. The Council queded staff regarding Contractual Services and funds for private-sector plan checking services such as structural engineering and energy conservation. Recessed: 1:46 p.m. Reconvened: 1:52 p.m. public Safety Police Public Safety Director Keplinger reported he agreed with the City Manager's recommendations and concurred with the major budget cuts. He outlined the personnel changes, which included the development of the Evidence Technician position through the elimination of three part-time Community Service Officers' positions, and the change in the status of the receptionist and records clerk from part-time to full-time. Mayor Schneiter inquired whether there would be any level of deterioration in service to the community as a result of the budget cuts. Mr. Keplinger replied the response time will be the same. He further reported that drastic reductions were made in Prisoner Expenses, and that the additional K-9 training was eliminated. There will be no new vehicles purchased during this budget year. Regular Adjourned Meeting June 25-27, 1996 Page 5 Council queried staff regarding cellular telephone fees, liability for K-9 dog bites suffered dudng apprehension of a criminal, booking fees, SWAT calls, the use of bicycles, and capital improvement. Narcotics Task Force Mr. Keplinger reported there were no major changes from last year's budget with the exception of the increased personnel costs. Discussion followed regarding the validity of the program and the cost of the task force versus having the narcotics officer position in-house. It was noted costs for either would be approximately the same; the difference would be in the control staff could exercise over assigned tasks. Further discussion followed relative to county wide drug activity. Police Reserves Mr. Keplinger continued his review of the Police Reserve Fund. He noted that Training Expenses were reduced due to the fact the training conference for the Reserves will be held in Sacramento, thus eliminating the need for air fare. Fire Mr. Keplinger advised the most significant change was the upgrade of one Captain position to Battalion Chief level. He further advised the ladder truck did not pass inspection; the repair will cost $45,000 and there is a $15,000 insurance deductible that has not been calculated into the budget. The department is presently attempting to sell some of the older equipment. Discussion followed relative to bdnging homes in the western hills in compliance with weed abatement requirements. Fire Volunteers Mr. Keplinger advised there were five Emergency Medical Technician II's that will take the paramedic upgrade exam, resulting in a total of eleven City paramedics. Parkin~ District There were no significant changes noted. Councilmember Shoemaker commented on the rundown appearance of one of the City's downtown parking lot. Ms. Horsley advised the City may not replace the Parking Enforcement Officers since the current employees are approaching retirement age, and the City is gradually eliminating the parking meters. Dispatch Mr. Keplinger reported the City is now eligible to have the 9-1-1 system replaced; there are funds available to have it paid for by the State. He further reported that Ukiah Ambulance will be taking their dispatch business to CDF instead of the City. The Council queried staff regarding the ambulance contract, antiquated dispatch equipment, and cramped working space. Council recessed at 2:56 p.m. June 26,1996 The regular adjourned meeting was called to order at 9:03 a.m. with the following Councilmembers PRESENT: Mastin, Malone, Wattenburger, Shoemaker (with a 10:45 a.m. arrival), and Mayor Schneiter (with an 11:28 a.m. departure). ABSENT: None. Staff present: Director of Public Utilities Barnes, Water and Sewer Superintendent Borecky, Golf and Parks Superintendent Carpenter, Finance Director Elton, Community Services Director DeKnoblough, Public Works Administrator Gooddck, Assistant City Manager Hards, City Manager Horsley, Public Works Director Kennedy, Public Works Superintendent Looney, Community Services Supervisor Weselsky, Museum Director Wilson, and City Clerk Giuntoli. Regular Adjourned Meeting June 25-27, 1996 Page 6 441 Continue Review of General Fund/Enterprise Fund Accounts City Manager Horsley reviewed the changes to the budget made as a result of the previous day's discussions. Public Works Engineering and Administration Public Works Director Kennedy reviewed the highlights of the proposed budget, which reflect a total budget increase of $25,900 from last year. He noted there has been a reduction in revenue received from gas tax monies due primarily to the greater apportionment to growing communities, as compared to a city such as Ukiah, which has a fiat population rate. Projected revenues will be $267,000; last year staff projected revenues of $277,000, and the actual figures will be under that projection. Discussion followed regarding the gas tax revenue. Street Maintenance Mr. Kennedy advised the increase in salaries and benefits of $25, 853 is due primarily to the change in the position of Public Works Administrator to Deputy Public Works Director, and the increased allocation of this position from 10% to 20%. The biggest portion of the increase is due to a reallocation of the Street Sweeper's time; staff is proposing an allocation of 40% of the time charged to Street Maintenance, and 60% allocated to Street Sweeping. Council queried staff relative to Waugh Lane and improvement of Perkins Street. It was noted there were no funds allocated for Perkins Street improvements. Discussion followed relative to various traffic projects and the timeline involved for project completion. Corporation Yard Mr. Kennedy advised the large increase in project costs is due to contractual services for removal of the gas pumps and tanks at the Yard. Staff is proposing use of card lock systems, which would result in an increase of 15 cents per gallon, and would force an increase in the surcharge charged to other departments from 13 cents to 24 cents. Discussion followed regarding underground tanks and the tightening of controls in waste management. Gas Tax Proiects Mr. Kennedy reviewed the projects to be completed with gas tax monies, and advocated taking a look at the larger picture pdor to funds being allocated. SB 325 Mr. Kennedy advised the expenditure of $50,000 will be allocated towards the final design of the Orchard Avenue bridge at Orr Creek. Municipal Garage Mr. Kennedy advised the Garage Supervisor will not be replaced; a portion of the Deputy Public Works Director's time has been allocated to management of that department; and a new 50% position of Garage Service Clerk is being proposed. He further advised Operation and Maintenance reflected an increase due to the higher cost of fuel and parts. Recessed: 10:14 a.m. Reconvened: 10:24 a.m. Solid Waste Disposal Site Mr. Kennedy advised staff was proposing the conversion of the part-time positions to a full-time position. Originally staff had requested the position of Maintenance Aide; however, they would prefer Regular Adjourned Meeting June 25-27, 1996 Page 7 442 a Maintenance Attendant, which would result in an additional cost of approximately $11,500. Comparable reductions have been proposed to offset the increase. He further advised staff is proJecting $300,000 more in revenue than is indicated in this year's ending. However, the fund will be approximately $270,000 in the red for the year ending 1994/95; the revenue will help offset the deficit from the beginning of the year. The year will end $202,810 in the black due to the fact some of the budgeted projects have not been completed. Mr. Kennedy continued his review of the Solid Waste Disposal Site improvements, including leachate pond operations and maintenance, and groundwater monitoring wells. Council queried staff regarding soil covedng and the auger/scraper. Council also queried staff regarding closure reserve funds. Refuse/Debris Clean-Up Enterprise Fund Councilmember Shoemaker ardved at 10:45 a.m. Council queried staff regarding the impact of the severe winter storm. It was noted there were no FEMA funds available for storm clean-up; expenses were absorbed in the salaries for the Street Department. Councilmember Shoemaker inquired whether the tree trimmers receive training and was informed the City arborist will be conducting the training. Councilmember Malone commented on the complaints of the Downtown Merchants relative to tree limbs growing over the tops of the buildings, and thereby increasing the maintenance due to leaves and debris in the gutter. Discussion followed relative to combining sweeping and weed killing in one process, and the need for a spray training program. Further discussion followed regarding Spring Clean-Up Week, with the notation that fewer people participated this year. The program will be evaluated relative to how it may be improved. Public Works Administrator Goodrick advised twice the number of senior citizens from last year were served by the program. Volunteers are continuing to assist the seniors because of the numerous uncompleted proJects, even though the dates for clean-up have ended. Community Services General Government Buildings Community Services Director DeKnoblough advised that repair and renovation of the Civic Center facade had been budgeted for under Machinery and Equipment. During power washing of the building, it was observed that large pieces of stucco were loose and ready to fall due to inadequate cure time at the time of remodeling. In addition, water leaks are causing mold and damage to the walls. Discussion followed related to the condition of the building. It was noted the budgeted amount of $30,000 was for the facade repair only; repair of the entire building will cost approximately $250,000. Parks Ms. Horsley advised Mr. DeKnoblough's salary is now included in the budget; the previous Director's salary was included in the Personnel budget. Mayor Schneiter left the meeting and Vice-Mayor Shoemaker assumed the Chair at 11:28 a.m. Park Development Fund Mr. DeKnoblough advised it may be possible for the County to adopt an in-lieu fee ordinance that will enhance the City parks, since the County population is being served by City parks now. Recreation Tammi Weselsky, Community Services Coordinator, advised the women's basketball group will Regular Adjourned Meeting June 25-27, 1996 Page 8 443 be eliminated as a City-sponsored program. She further advised the concession stand at the City pool will not open this year, but there will be a snack machine installed next to the soft drink machine. A new position of Activities Assistant for 1000 hours is being proposed to help with the sports programs and special events such as the Concert Series and PumpkinFest. Discussion followed relative to revenues for recreation programs and the use of franchise fees to supplement other City recreational programs. MIS Malone/Wattenburger to explore the possibility of charging a franchise fee to outside groups using City facilities, carried by an all AYE voice vote. Discussion followed relative to the men's softball team contract and use of the third field. It was suggested the current contract be reviewed and guidelines revised to be more specific; it is not stipulated in the current contract that the City can use the facilities out of season. MIS Malone/VVattenburger to review with action the contract with the men's softball program for performance of the third field, carried by an all AYE voice vote. Vice-Mayor Shoemaker suggested a two member committee be formed to consult with the City Manager relative to the issue. Ms. Weselsky requested the contract with Ukiah Unified School District be reviewed also. Aquatics Mr. DeKnoblough advised the aquatics budget deficit will be $65,000, primarily due to the increase in non-regular salaries. Several options will be considered during the year to reduce the deficit. Council queried staff regarding videotaping, age and condition of the swimming pool, and maintenance. It was noted only preventative maintenance to meet the health requiremements had been done to the pool up to this time; no projects have been instituted that will give longevity to the facility. Kort Peterson, Youth Services Ukiah, gave a short presentation dudng which he thanked Council for the $80,000 support for the Youth Services Ukiah (YSU) program. He stated he understood the City will not refund the program, and requested that he be allowed to continue to use the YSU logo, name, and program and t~ and network with other non-profit organizations in the community as long as the program continues to embody its original philosophy as a volunteer youth organization which has contributed to the well-being of the community. He will seek a letter from the other non-profit organizations releasing the City from the liability of the program; the Police Activities League (PAL) organization has demonstrated a willingness to assume that liability. He further requested that all the resources that have been purchased with monies dedicated to YSU be made available to him, such as painting supplies, maintenance supplies, access to a computer, and possible access to a desk and phone. Ms. Horsley stated she had a list of supplies the City can let Mr. Peterson have and others he can use during the transition. Council voiced their support of Youth Services Ukiah, and expressed their disappointment the program would not be funded. Mr. Peterson inquired regarding the van he had been using for transportation, and stated the maintenance had consumed much of his budget. He requested Council consider the possibility of a potential transfer of the vehicle to another non-profit organization that would assume its liability and maintenance. MIS .WattenburgerlMastin to approve Mr. Peterson's requests and direct the City Manager to work towards that end, carried by an all AYE voice vote. Recessed: 12:15 p.m. Reconvened: 12:50 p.m. Grace Hudson Museum/Sun House/Museum Grant Funds Rob Wilson, Museum Director, advised the full-time vacant Curator position was filled with two part-time employees, and that they had received a National Science Foundation Grant for $60,000. Regular Adjourned Meeting June 25-27, 1996 Page 9 444 Council had no questions regarding this project. Municipal Golf Course Reed Carpenter, Golf and Parks Superintendent, noted the increase in Grounds Maintenance, reduction in Travel and Conference Expense, and advised Council that staff was meeting with the Golf Course Committee regarding proposals to offset the $136,000 deficit. Discussion followed relative to golfer's complaints regarding weekend tournaments, membership increases, various fees, and the need for the City's recreation programs to pay a fair share of their operations budget. Conference Center Bruce Jenney, Conference Center Manager, reviewed the budget, defined the differences between conference and convention centers, and stated studies of national conference centers have shown 80% to 90% of total revenue should and will come from corporate entities, less than 1% to2% from social functions, and the balance from associations. Discussion followed regarding the merit of expending funds for a dance floor in the Center since the revenue generated by social functions was projected to be extremely Iow. Councilmember Mastin queried staff regarding the level of support given to the Ukiah Chamber of Commerce by the Conference Center. Mr. Jenney replied that approximately 62% of phone calls and reception desk inquiries were related to the Chamber and tourists/visitors. Councilmember Mastin stated it was his understanding the Chamber itself would staff the front desk in the Convention Center. Discussion followed regarding secretarial assistance and the Conference Center's relationship with the Chamber. It was noted the City Manager rejected the staffing proposal because the Chamber requested the City pay half the salary. It was suggested there be an accounting of the benefit involved to the Chamber by placing a merit value on items such as phone calls to credit against future funding requests. Mr. DeKnoblough reported the significant salary increase for the General Services Attendant was due to the additional maintenance activities which the Redevelopment Agency is prohibited from funding. Municipal Airport/Special Aviation Don Bua, Airport Manager, reported that little had changed regarding the Airport revenues and expenditures, and noted that the Building and Grounds Maintenance Fund reflected a holdover from 1995/96 budgeted monies for stdping the runway if state monies are not available. He further noted the increase in interest expense for the Electric Utility payment. Discussion followed regarding the dollar reduction in the category of Miscellaneous Revenue and the relationship of revenue to the number of fires in the area. Council queded staff regarding Miscellaneous Revenue, cost of fuel and new tanks. It was suggested that, for further clarification, "landing fees" be separated out of the category. Discussion followed relative to lease policies and parking within the Airport. A Motion by Councilmember Malone to prohibit parking on both sides of State Street along the Airport corddor during the annual Ukiah Air Show, charging for on-site parking, and allowing organizations to offer inexpensive seats on the grass along the fence, died for lack of a second. It was the consensus of the Council that the parking issue needed to be addressed, but that there would be insufficient time this year to implement the necessary procedures. Recessed: 2:10 p.m. Reconvened: 2:18 p.m. Regular Adjourned Meeting June 25-27, 1996 Page 10 445 Public Utilities Electric Darryl Bames, Director of Public Utilities, reported that the Electdc Department will not realize its revenue expectations and will be approximately $1.4 million short of meeting its expenditures. He cited the increase in purchase power, amount required for the bond covenant, and the cool summer and mild winter as being contributory factors. He further reported that a 15% rate increase would be needed to offset the revenue shortfall. Discussion followed relative to the proposed rate increase, possible suggestions for securing revenue through other options, and the impacts which would occur as a result of not implementing the increase in rates. It was noted that one option would be to propose a 6% to 7% rate increase at the present time, together with a plan for cost-cutting measures. Further discussion followed relative to use of the Electric Reserve Funds. Councilmember Malone stated he would support the notion of splitting the rate increase and getting a better picture of the situation in six months. Vice-Mayor Shoemaker stated he concurred with Councilmember Malone, but was concerned regarding the projected effect on the budget if a 7% increase was implemented now, and another 7% increase in six months. Councilmember Wattenburger asked Mr. Barnes for his recommendation relative to Council's action regarding the situation. He stated he did not think the public would accept a 15% rate increase, and that he foresaw the City losing customers to the competition. Mr. Barnes replied he did not like to make promises he knew he could not keep, and stated that even without the issue of deregulation, there was still the problem of not being able to pay the bills. Although he disliked raising rates and being non-competitive, he saw limited options at this point. He voiced his frustration at operating with a "bare bones" budget and having nowhere else to cut expenses. Discussion followed regarding personnel reductions, franchise and utility fees, and the refinancing or possible sale of the hydroelectric plant. Vice-Mayor Shoemaker stated he favored a 7% rate increase and elimination of the $674,000 franchise fee. Councilmember Mastin stated he advocated proposing the entire 15% rate increase. Councilmember Malone stated he was in support of the 7% rate increase and exploration of distribution of the franchise fees. Councilmember Wattenburger stated he was in favor of a maximum 7% rate increase, and that he felt the public would not accept anything higher. Vice-Mayor Shoemaker recommended continuing this item to Thursday afternoon, following the scheduled 1:00 p.m. Redevelopment meeting, when the full Council would be present for discussion. He requested that Mr. Elton prepare a scenario considering the possibility Council would fund only half the increase, define how much was in reserves, and promote in the strategic planning process that the franchise fee be eventually eliminated or severely cut back. Street Li¢lhtin;~ Mr. Elton reported that although electric rates have increased significantly, the $1.50 street light charge had not changed since 1988. He recommended the charge be raised to a $2.00 a month fiat rate, reflecting a 33% increase. Traffic Signals There were no comments by the Council. Regular Adjourned Meeting June 25-27, 1996 Page 11 4'46 Water Mr. Barnes reported the proposed budget projected a shortfall pdmadly due to the increase in the cost of operations; there are no extraordinary expenditures. It was noted there had been no increase in water rates since 1992, which amounted to approximately $4 per month per customer, and covered the construction of the water treatment facility. Sewer Mr. Bames reviewed the budget, and reported that the plant operations and maintenance costs of $1.4 million also contain $280,000 of non-recurring expenses to complete the levee repair and the study to look at the relocations of the levees back into the ponds. General discussion followed relative to the hookup costs involved to the City with the Mendocino Brewing Company. Recessed: 3:47 p.m. Reconvened: 5:00 p.m. Joint Meeting with Ukiah Valley Sanitation District and Ukiah City Council for Review and Adoption of 1996-97 City/District Sewer Service Fund Budget The City Council convened at 5:00 p.m. in a Joint Meeting with Ukiah Valley Sanitation District Board (Pinches, Shoemaker, and Chairman McMichael) and City staff to review the City/District Sewer Fund, revenue, expenditures and transfers. Director Pinches remarked that the District Board members had already reviewed a draft of the budget at the last UVSD meeting and all their questions had been answered. Mr. Barnes indicated that the budget being considered for adoption was the same as the draft that was presented at the previous meeting. He commented on the cost of completing the levee repair work that they started last year but were unable to complete because of the rains; this as well as the cost to do the levee study has been budgeted for this year, and is a one time expenditure. He also stated that the increase of the operation at the plant was because of the usage of more electric power and chemicals. Other than that, the budget is the same as last year. Chairman McMichael thanked City staff for the professional help they provide for the Board at the Sanitation District meetings. MIS Director Pinches/Director Shoemaker to adopt the 1996/97 District Sewer Service Fund Budget, as presented, carried by an all AYE roll call vote. Recessed at 5:07 p.m. to Redevelopment Agency Meeting, 1:00 p.m., June 27, 1996 Reconvened as City Council at 1:33 p.m., June 27, 1996 The regular adjourned meeting was called to order at 1:33 p.m. with the following Councilmembers PRESENT: Mastin, Malone, Wattenburger, Shoemaker, and Mayor Schneiter. ABSENT: None. Staff present: Public Utilities Director Barnes, Finance Director Elton, Assistant City Manager Harris, City Manager Horsley, and City Clerk Giuntoli. Public Utilities - Electric (continued from June 26, 1996) Finance Director Elton reviewed with the Council the changes made to the 1996/97 budget as a result of the discussion from the previous two days, specifying the projected revenues at varying levels of rate increases, and defining the basic problem to be that the revenues from the past year were insufficient to meet the debt coverage. Discussion followed regarding the reserve funds not being considered because they are not a part of the revenue ratio, and cannot be used for expense items. Further discussion followed relative to the budget impacts which would occur with the different rate increases, with the Council unable to reach a consensus on what percentage of increase should be sought. City Manager Horsley emphasized the gravity of the City's financial situation, and stated she felt if Council approved only an 8% or 10% rate increase, it was equivalent to "putting sand in the hole," with the City finding itself in the same hole next year. She further emphasized this may be the last Regular Adjourned Meeting June 25-27, 1996 Page 12 447 opportunity to implement a rate increase. Discussion followed regarding customer service and deregulation, with Mr. Barnes echoing the City Manager's concerns, and stating that rate-wise the City will be unable to compete. Concern was expressed relative to the loss of the City's commercial customers; it was noted the electric market will be opened to all companies in January, 1998. Discussion continued regarding construction of the hydroelectric plant, and rate reductions for Iow income and senior citizen customers. It was noted that while it was desirable to offer reductions to that portion of the population, the monies must then be collected from another part of the population. Further discussion followed relative to options for solving the budget dilemma. Ms. Horsley reminded Council that changes would be forthcoming within the next few months, and that she desired reductions to occur throughout the next year, and not wait until the year was over before taking action. Councilmember Mastin stated he favored a 15% rate increase, and had no comment on the franchise issue. Councilmember Malone stated he would support a 10% increase, with a change in the refund number from NCPA. Councilmember Wattenburger stated he would support an 8% increase. Councilmember Shoemaker stated he would support a 15% rate increase and the removal of transfers in the amount of $143,780 in the reserves. Mayor Schneiter stated he would support the 15% rate increase minus the PERS and insurance reserve transfer in the amount of the $143,780. He further stated he supported the reduction of the franchise fee tax. Discussion followed as the Council attempted to reach a consensus. Recessed: 2:58 p.m. Reconvened: 3:09 p.m. Consideration of Any Budget Issues Councilmember Wattenburger reiterated his previous comments, and emphasized the $20,000 designated in the budget as Community Funds should not be distributed if the City is short of revenue. He discussed franchise fees, and stated the departments have grown dependent on the Electric Utility to the point where that dependence is driving the cost of the utilities. Departments subsidized by the Electdc Fund need to be reduced, or other revenue sources explored to generate the necessary support. All departments need to be examined, including Fire, Police, and the Golf Course. Councilmember Mastin concurred with Mr. Wattenburger's comments, and stated that the City was obviously headed for some difficult times and could not afford to have any "sacred cows;" sacrifices will have to be made. All departments should be examined, including cuts in personnel. He recommended that next year the Electric Department should be the first budget considered, since it affects numerous other items in the budget. Councilmember Malone concurred with Councilmembers Mastin and Wattenburger, and further stated that when expenses exceed revenue, immediate cuts should be made. He recommended a quarterly report in terms of revenue projections, and agreed with putting the Electric Utility first in the budgeting process. He requested initial projections regarding the reductions be submitted to the Council within 90 days. Ms. Horsley stated she has already notified the Personnel Director not to fill any positions that come open without examining each one carefully, and to start the attrition process immediately. The strategic planning process has already begun. Councilmember Shoemaker stated he preferred the strategic planning information be submitted to the Council within 60 days. The Council must be prepared to take action predicated on the idea there is an absolute necessity for a $1 million reduction by this time next year. He further stated he was uncertain how to conditionally approve a budget in this form, yet say that in the next 12 months cuts would be implemented that would cut $600,000 out of this budget by the end of the fiscal year. Regular Adjourned Meeting June 25-27, 1996 Page 13 448 Mayor Schneiter stated his desire to adopt the Budget Resolution as modified and adjusted, and allow the planning process to occur so they could make some managed progress towards accomplishing what needs to be done. He further stated his desire that each item be brought to the Council and considered for deletion at that time, and not while the total budget is under consideration. Discussion followed regarding the process involved in determining the budget cuts. The City Manager was charged with the effort to bring back as early as possible those plans that begin to turn the deficit into prosperity. MIS SchneiterlMastin to adopt Resolution No. 96-73 approving the 1996-97 Fiscal Year Budget, with those changes as identified and directed toward the staff during the three days of budget hearings, carried by the following roll call vote: AYES: Councilmembers Mastin, Malone, Wattenburger, Shoemaker, and Mayor $chneiter. NOES: None. ABSENT: None. Mayor Schneiter commended the staff for their presentations. Ms. Horsley advised she will be meeting with all employee units in the near future. She queried Council regarding sending out applications for the $20,000 in community funds. Council suggested waiting until later in the year. Councilmember Shoemaker indicated he wished to reconsider his vote at this time, resulting in the following revised roll call vote: AYES: Councilmembers Mastin, Malone, Wattenburger, and Mayor Schneiter. Councilmember Shoemaker. ABSENT: None. NOES: There being no further business, the Council meeting was adjourned at 3:42 p.m. a:budget.96 Regular Adjourned Meeting June 25-27, 1996 Page 14