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HomeMy WebLinkAbout2004-03-17 Packet CITY OF UKIAH CITY COUNCIL AGENDA Regular Meeting CIVIC CENTER COUNCIL CHAMBERS 300 Seminary Avenue Ukiah, CA 95482 March 17, 2004 **5:00 p.m. **5:00 - 6:30 p.m.: Consideration of Budget Priorities Conference Room #4 1. ROLL CALL 2. PLEDGE OF ALLEGIANCE 3. PRESENTATION a. Presentation by Madelin Holtkamp, EDFC, regarding Comprehensive Economic Development Strategy 4. APPROVAL OF MINUTES a. Regular Meeting of February 18, 2004 b. Regular Meeting of March 3, 2004 c. Annexation Workshop of March 10, 2004 B 1 RIGHT TO APPEAL DECISION Persons who are dissatisfied with a decision of the City Council may have the right to a review of that decision by a court. The City has adopted Section 1094.6 of the California Code of Civil Procedure, which generally limits to ninety days (90) the time within which the decision of the City Boards and Agencies may be judicially challenged. CONSENT CALENDAR The following items listed are considered routine and will be enacted by a single motion and roll call vote by the City Council. Items may be removed from the Consent Calendar upon request of a Councilmember or a citizen in which event the item will be considered at the completion of all other items on the agenda. The motion by the City Council on the Consent Calendar will approve and make findings in accordance with Administrative Staff and/or Planning Commission recommendations. a. Disbursements for Month of February 2004 b. Award of Purchase of Ferric Chloride 40% Solution to Kemiron Companies Inc. in the Amount of $55,500 c. Adoption of Ordinance Amending Chapter 12, Section 1965 of the City of Ukiah Municipal Code Describing Parcels of Land as Parks and Recreation Facilities d. Adoption of Ordinance Amending Portions of Sections 3731A and 3835, Article 12, Chapter 2, Division 4 of the Ukiah Municipal Code Pertaining to Sewer Connection Charges e. Authorize the Interim Public Utility Director to Execute the Annual Letter of Agreement 04-SNR-00639 Between the City of Ukiah and the Sierra Nevada Customer Service Region of the Western Area Power Administration to Provide Daily Excess Capacity and Associated Energy from the Shasta Rewind Project 7. AUDIENCE COMMENTS ON NON-AGENDA ITEMS The City Council welcomes input from the audience. If there is a matter of business on the agenda that you are interested in, you may address the Council when this matter is considered. If you wish to speak on a matter that is not on this agenda, you may do so at this time. In order for everyone to be heard, please limit your comments to three (3) minutes per person and not more than ten (10) minutes per subject. The Brown Act regulations do not allow action to be taken on audience comments in which the subject is not listed on the agenda. 8. PUBLIC HEARINGS (6:45 P.M.) a. Continuation of Public Hearing for the Airport Building Area and Land Use Development Plan 9. UNFINISHED BUSINESS a. Adoption of Resolution Making Findings in Support of Negative Declaration for Water System Improvement Project 10. NEW BUSINESS a. Receipt of Audited Financial Statements for Fiscal Year 2002/2003 b. Approval of Extension of Contract for Audit Services c. Discussion Regarding Candidate Interviews for City Commissions and Boards- Councilmember Rodin d. Discussion of Letter From Vice Mayor Baldwin Concerning North Star Freeway Sign 11. COUNCIL REPORT 12. CITY MANAGER/CITY CLERK REPORTS 13. CLOSED SESSION 14. ADJOURNMENT The City of Ukiah complies with ADA requirements and will attempt to reasonably Accommodate individuals with disabilities upon request. AGENDA ITEM NO: 3a. MEETING DATE: March 17, 2004 SUMMARY REPORT SUBJECT: PRESENTATION FROM ECONOMIC DEVELOPMENT CORPORATION REGARDING THE COMPREHENSIVE DEVELOPMENT STRATEGY FINANCING ECONOMIC Madelin Holtkamp, Executive Director of the Economic Development and Financing Corporation, will be presenting the recently completed Comprehensive Economic Development Strategy for Mendocino County, as attached. Both Councilmembers Rodin and Andersen participated on the committee that developed this plan. RECOMMENDED ACTION: Receive presentation. ALTERNATIVE COUNCIL POLICY OPTIONS: N/A Citizens Advised: Requested by: Prepared by: Coordinated with: Attachments: N/A Candace Horsley, City Manager Candace Horsley, City Manager Madelin Holtkamp, EDFC 1. Comprehensive Economic Development Strategy for Mendocino County Approved' Candace Hoi~anager 4:CAN/ASR,Present. EDFC.031704 Comprehensive Economic Development Strategy Mendocino County 2004 Table of Contents Vision ................................................................................................................................... 1 Introduction .......................................................................................................................... 2 The Area and Its Economy .................................................................................................. 3 Strategy- Support existing local business ........................................................................... 4 Strategy - Prepare for new business .................................................................................... 5 Strategy- Find i~movative solutions to our housing needs ................................................. 6 Strategy- Use local, state, and federal funds to improve infrastructure ............................. 7 Innovations for Economic Development ............................................................................. 8 Innovative Strategy 1 - Energy Self-Sufficiency ................................................................. 9 Innovative Strategy 2 - Solve our Water Issues .................................................................. 11 hmovative Strategy 3 - Embrace Our Diversity ................................................................ 13 Evaluation of Our Progress ........................................................................ 14 CEDS Committee Membership ......................................................................................... 15 Appendix 1 - General Plan Background Report Appendix 2 - Other supporting documents for the "Area and Its Economy" section Vision We believe that economic, environmental, cultural, and social values are inseparably related. The quality of life so valued by Mendocino County residents depends on economic opportunity for all, while preserving rural beauty and natural resources, and a thriving, diverse community. Our adventure, in the next five years, is to use our creativity to find the balance. As we look ahead, we see Mendocino County growing prosperous through self-reliance, innovation, and community investment. While we believe that much of our future economic development will come from the growth of businesses that now thrive in Mendocino County, we heartily welcome appropriate new business to our county. We support economic development which protects the predominantly rural nature of the county and which maintains and/or enhances our air, water or land resources. We will prepare our vacant industrial lands for new and expanding businesses to occupy. We will continually improve local governmental response to economic development opportunities. The future of Mendocino County lies with the people who live, work, learn, and recreate here. We will invest in people, maximizing our potential through innovative educational and social programs aimed at all age levels and targeted employment needs, and through integrated, current data bases, making up-to-date information accessible to all segments of the community. We encourage our leaders and citizens to see our county as a whole region and to work together to build the local economy. We want our governments to coordinate effectively in providing services to our citizens, and to lead their jurisdictions in the direction of sustainable development. We will seek participation and collaboration from all segments of our community in assessing needs, evaluating performance and modifying the ongoing economic development process. Introduction Inhabiting a Northern Califomia region of rugged natural beauty, Mendocino County boasts vast open spaces, timeless villages, mountains, rivers, and spectacular coastline. Mendocino County is home to a rich cultural heritage, strong community values, connection to the land, lively civic participation, and a shared ethic of cooperative self- reliance. Our current complex challenges present numerous opportunities for parmership and innovation, in which our success will be measured not only by material improvements, but also by our growing ability to work together with flexibility and commitment to achieve common goals. In formulating this Comprehensive Economic Development Strategy, Mendocino County has established an on-going, participatory planning process, bringing together the experience and expertise of people who have been working on the issues for some time. We have sought and included diverse perspectives, inviting the broad participation of stakeholders in the area's economy to discuss our county's potential and obstacles, to propose solutions, to strategize and to set priorities that will benefit our economically distressed population and the region as a whole. In agreement with EDA guidelines, we have explored actions that could be undertaken locally to coordinate local, state, and federal financial assistance, with attention to civil rights, environmental laws, and sound principles of sustainable development to leverage available resources and improve quality of life. Economic development refers to a "qualitative change, which entails changes in the structure of the economy, including innovations in institutions, behavior, and technology." (Bearse and Vaughan, EDA report) Economic development allows an economy to increase its effectiveness and productivity, enabling more outputs with fewer inputs over time. The measures of success have to do with such things as how effectively scarce natural resources are being utilized, how well pollution is being reduced or prevented, material improvements such as income and opportunities for personal growth, and the overall sense of safety and well-being experienced by all the inhabitants of a place. The goals of such development (taken from EDA publication, 2001) include: stimulating a dynamic, self-sustaining process to ensure on-going viability; jobs at living wages, offering benefits and career ladders for area residents; producing goods and services that meet social needs; establishing greater local control, participation, and accountability in decisions such as hiring, investment, and location; broadening business and asset- ownership within lower income communities. Sound economic development policies must be compatible with protecting environmental assets while providing the earnings from jobs, revenue and tax base needed for further investments in education, services, amenities, infrastructure and quality of life. Our goals and strategies strive toward an integration of local and regional planning initiatives, to incorporate different viewpoints and strategically piece together components of multiple efforts and resources. We recognize that this calls for capacity building across a wide spectrum of participants, bull ding and supporting cooperative relationships. The Area and Its Economy Since our last plan was prepared, Mendocino County has seen extreme changes to its economy. Our traditional economic sectors have diminished greatly. For example, there remain no lumber manufacturing operations in the coastal area of the county, and only n few mills operating in the inland area. These operations are importing logs to keep running. The rise of grapes as a cash crop worked quite well at first, but with the glut of new production coming on world-wide, we are beginning to see unharvested crops, no long term or pre-season contracts and falling prices. The largest sectors remaining in our traditional economy are government and non-profits. We have seen growth in our hospitality sector, with many new rooms coming on line in the last few years. While we welcome our visitors and the jobs they create, we are eager to avoid the trap of the one-sector economy, a historic problem in our county. Since Mendocino County has historically concentrated on a few economic sectors, the thrust of the current plan is to diversify the economy to mitigate the peaks and valleys of the economic cycle. The demographics of our county are changing as well. We are bringing more retirees who wish a less urban lifestyle. We are attracting more immigrants who come to work in our agricultural and service businesses. Many people in the region commute long distances to balance the cost of housing with wages, as wages in most California counties are not aligned with housing costs. Our plan attempts to capitalize on these changes. We embrace the medical opportunities that retirees and an aging population bring. Our minority populations are creating new sorts of business opportunities as well Our problem remains one of sustainability. The average job in our county pays approximately 1/3 less than the cost of living. Housing prices are out of reach of even families in the top third of earners. In the appendices, we have included data demonstrating these trends. Strategy- Support existing local business Since our locally grown businesses have always been our best job creators, we believe that supporting them should be our first priority. The following steps will further this strategy. Goals · Focus programs on local businesses first. · Support a marketing campaign for local businesses and local products. Add value by branding a local identity. · Mentor small businesses. · Create programs that support downtowns, neighborhood areas and town centers. · Educate the public about how the local economy works and mount an anti-leakage campaign. · Encourage local institutions (banks, chambers of commercc, etc.) to support business improvement. Improve marketing for the business support services that currently exist. · Recapitalize our public loan funds. · Develop a public loan/grant program to assist businesses with regulatory compliance. · Understand and develop our existing business clusters. · Put first priority on developing housing for the existing workforce, including farm worker housing. To assist us in meeting this goal, we have assembled a list of local resources available which can be seen via the intemet at www.mendocinoresources.com. Strategy - Prepare for new business Because we have lost so many of our family wage jobs, we want to be ready to welcome new businesses. Goals Offer the same capital and technical assistance programs we offer to existing business. Recapitalize local loan pools. Prepare our existing vacant sites for new occupancy. Study each existing site and create certainty about the development process required for each site (e.g. infrastructure needed, zoning, environmental studies) · Continue to educate our labor force at all levels. · Continue to support our quality of life institutions (libraries, theaters, schools, arts organizations.). · Be very specific in targeting our recruitment efforts. · Streamline the regulatory processes and have thorough, consistent information or contact information available at city and county offices. Strategy - Find innovative solutions to our housing needs We believe that housing is a key piece of the economic development picture in Mendocino County. There is a need to raise awareness of this vital connection. We want to find solutions to the housing needs of special populations such as young adults, farm workers, and seniors. We also need affordable housing that can be rented or purchased by individuals earning average (80-120% of Adjusted Median Income) wages in our county. In order to further this goal, we will: · Work to bring lenders, builders, jurisdictions, planners, employers, non-profit agencies and other stakeholders together to discover what options are available. These options include new approaches to pro-forma projections that factor in progressive energy solutions as long-term affordability factors to be considered at the feasibility stage of development. · Support changes to our general plan and zoning ordinances that would expand the types of housing available and advocate for practical implementation of those changes. · Encourage the development of different housing strategies like co-housing, condominiums, live-work studios, downtown infill conversion, etc. · Expand the range of financing strategies available to lower-income buyers. · Attempt to foster an integration of strategies included in this report among Housing Service providers. Strategy - Use local, state, and federal funds to improve infrastructure The infrastructure of Mendocino County is aging and in need of repair, improvement or expansion. Deferred maintenance has accumulated and public infrastructure built quickly at the end of World War II is now in need of upgrading. We believe that these improvements are essential if we are to attract jobs to the community. We define infrastructure as: all utilities, water (including sewer and storm ....... telecommunications, roads and other transportation. We identify the following sources: Sources of Money for Infrastructure EDA, (Economic Development Administration USDA, (United States Department of Agriculture) CDBG, (Community Development Block Grants) Redevelopment (districts generate tax increment funds to use for improvements) Infrastructure bank (a State program for lending infrastructure funds to jurisdictions) Banks Sales tax Ratepayers (the local taxpayer or service customer) Franchise fees (cities can get these from cable companies) Development impact fees (fees assessed to developers to cover the costs of impact mitigation) Voluntary Donation Funds (tax) (Project specific, community controlled) Goals Leverage local funds with other State or Federal funds to make needed improvements. These projects will be prioritized by the individual jurisdictions based on need and readiness of the project. Innovations for Economic Development Our committee developed several innovative ideas for economic development. We think that all of these ideas have value and we hope to develop each idea as time and funds permit. For our present CEDS, we've developed three ideas as a place to begin and these three ideas follow this list. · More comprehensive planning; · Energy independence; · Housing for youth and other groups, for example, create "art zone", a live/work space for artists; · Four year college and educational institutions that teach skills needed to achieve the vision for economic development expressed in the Mission Statement. See "Educational niches" for specific examples; · Workforce sharing · Marketing what is unique in Mendocino County, tbr example: Agricultural products specific to the County, Organic produce and meats Organic seeds; · Innovative ways of delivering health care; · Educational niches, for example: Designing and building renewable energy facilities, Organic crop and livestock production, "Green building" design and construction, Native American education, crafts, languages · Performance and visual arts institutions; · Tourism based on niche groups and interests · Waste treatment alternatives; · Water conservation and use; · Local telecommunication access; · Free broadband. · Support groups working to create a sustainable forest industry in the County · Maintain an inventory of timber in Mendocino County · The principle of sustainability as a goal in all economic endeavors that impact natural resources; Innovative Strategy 1 - Energy Self-Sufficiency Achieving energy self-sufficiency within Mendocino County emerged as one of the highest priority innovative strategies for economic development. The cost of gas and electricity is a large part of the "leakage" of revenue from Mendocino County. Yet Mendocino County is rich in sunshine, ocean waves, some consistently windy locations and some excess biomass, all of which might be transformed into useful electric energy. Mendocino County is home to a cluster of renewable energy companies, which provide local as well as national and international technical expertise in planning and installing renewable energy facilities. These facilities range from systems for individual homes to those designed for whole communities. There is strong interest among county residents in renewable energy and energy self-sufficiency. Mendocino County has the highest percentage of homes powered by renewable energy of any county in the State. In addition to recirculating money spent on electricity inside of Mendocino County, designing, building and operating local energy producing facilities, either for individual homes or whole communities, would be a source of jobs in the county. As the county progresses toward energy self-sufficiency and the demand for these skills grows, the establishment of training programs and ultimately educational institutions to train professionals in this field could also be a source ofjobs in the county. In summary, we feel that Mendocino County is uniquely positioned to pursue this economic strategy of energy self-sufficiency to create skilled and valued jobs in the county. We believe that the early adopters of this strategy will reap marketing benefits and will be the "authorities" of the future. We propose a five-step process for embarking on the strategy: Goals assess the county's energy needs, both the current energy use and the projected use to some foreseeable future date. This would include an inventory of housing, commercial, industrial and public facility energy use as well as energy used in transportation. It would include an inventory of the quantity and type of fuel being used and a projected future demand for each category of energy use. assess the renewable energy resource potential that exists in the County including solar, wind, water, biomass and geothermal. We will then assess the technical requirements to develop these potential energy sources. assess the market potential, the feasibility and affordability of developing these energy sources, - i.e., is it realistic? For example, how many roofs with how many solar panels would it take to produce a given amount of energy and at what price? We will also assess the energy savings gained through energy conservation. assess any possible barriers to local energy development. We will examine current local, state and federal policies and standards, both voluntary and mandatory, as well as private sector incentives that encourage the development of renewable energy and energy conservation. We will consider possible future public and private sector incentives to encourage such development. We will study the successes of other jurisdictions in the state, country and worldwide in employing policies and standards to conserve energy use and produce renewable energy. educate the public and its decision makers about the costs and benefits of renewable energy and energy self-sufficiency and the actual science of energy conservation and renewable energy production. In this way, we would hope to engage the citizens and decision makers in achieving local energy self- sufficiency. 10 Innovative Strategy 2 - Solve our Water Issues Water availability is a limiting condition for economic development throughout the West. An economic development advantage can be created by solving these problems while the solutions are still voluntary. We have established goals in several areas. Goals: Availability and storage Establish water budgets (needs and availability assessment) for the watersheds that exist in part or entirely within Mendocino County and their sub-basins. (For watersheds like the Russian River, this needs to be done for the entire watershed.) Evaluate existing reports and studies regarding dam operations and maintenance projects to determine the watershed-wide impacts of agency activities and potential alternatives (e.g. reduction of Eel River diversion, low summer flows, infiltration ponds, raising Coyote Dam). · Explore a wide range of methods and feasibility for diverting and storing winter water for use during the summer low flows. Conservation Investigate upland groundwater recharge and infiltration opportunities to reduce excessive run-off, improve soil infiltration, and increase water-holding capacity in the watershed. (e.g. innovative housing designs like Village Homes in Davis, CA, use of permeable paving materials for parking lots, drip irrigation systems, etc.) · Explore a wide range of methods and feasibility for treating and reusing wastewater in the watershed. (e.g. agriculture, redwoods, golf courses, etc.) Improve forest management practices to protect stream conditions and promote soil retention. · Investigate incentives to encourage innovation and conservation and policies to encourage the use of conservation devices. 11 Education of public on water issues · Promote awareness of watershed, basins, and aquifers and their relationships to water flow, supply and quality. Data to base decisions on Assess the scope of data currently available. Develop an informational warehouse or database of existing data and identify methods used to collect specific data and the question answered by the collection of specific data (Russian River Interactive Information System or RRIIS) Waste Water Treatment · Reduce storm water pollution entering Mendocino County watersheds and ocean fronts. · Explore a wide range of methods and feasibility for waste water treatment for different size communities. 12 Innovative Strategy 3 - Embracing our Diversity Embracing our diversity means using the assets that different groups of people bring to Mendocino County. Though many kinds of diversity are represented in our count, y. ~!'..', plan will focus on ethnic diversity. Assets of each group: City of 10,000 Buddhas- international tourism, Chinese language fluency, university offerings, classes, girl's and boy's schools, restaurants Native Americans - tribal resources, casinos, Pomo Heritage Institute, native arts - basketry, beading, regalia making, contemporary arts - health consortium, federal land base, celebratory events Mexicans and Mexican Americans- Spanish language fluency, entrepreneurship, restaurants, specialized service businesses - Moneygrams to Mexico, travel agencies, quincefiara, wedding and confirmation supplies, special dances and clubs, community celebrations and holidays. Goals · street vendors around central locations in towns, perhaps along with farmers markets, to bring different groups together large Latino, Native American or other ethnic festivals; bring in new arts activities - film, theater, visual arts that reflect these traditions; focus tourist attraction toward minorities · focus on developing cultural handicrafts or arts (like Salsa Cookbook ladies in Boonville) · harvest celebration honoring farm workers hiring more bilingual personnel · support leadership training, Latino Chamber of Commerce · more elected officials who represent these groups · bring immigration services, employment services, adult education and literacy programs in Spanish to entire county · find ways to encourage the mainstream community to participate in ethnic- sponsored activities 13 Evaluation of our progress The committee believes that we are putting forth a realistic, achievable plan. Many ideas in our plan are already happening in agencies, government and private groups. Many are and will be taken up in the business sector. We have taken many pieces and fit them into an economic development framework. What we hope to present to our neighbors is a vision for changing our local economic circumstances. We believe that by embracing the changing realities of the 21 st century, we can gain an edge for our businesses and an improved quality of life for our residents. In other words, we suspect that the early bird will get the worm. The CEDS process is a starting point for local economic development. The document is a compendium of dialog and consensus built among a committee of diverse interests and backgrounds. While the Committee hopes that the CEDS is embraced as a hub of common ground by the various entities interested in or performing economic development, we recognize that each jurisdiction will have its own unique reaction and utility for the document. We hope that each jurisdiction will be able to find elements in this plan that will give momentum to its own strategies. We present a spare plan--an outline of the diverse ways we each saw our own constituencies participating. Our true success will be measured by the engagement of individual citizens, governments, and businesses in modifying, creating and implementing the vision. It will also be measured by how the jurisdictions embrace and build on the strategies herein. Therefore, one measure of success will be an on-going public discussion forum to recognize and document success, identify tasks to be done, and learn from one another. Our community leaders can best help us by being champions of the plan, conveners of the common ground where citizens come together, and moderators of an engaged, energized and productive civil discourse. 14 Comprehensive Economic Development Strategy Committee Established by BOS Resolution 02-240 on October 22, 2002 Member Name Carrie Brown Patti Campbell Michael Delbar Ellen Drell Lois Lockart Marry Lombardi Cindy Miller James Mulheren Ron Orenstein Victoria Patterson Meridith Randall Mari Rodin Tony Shaw John Trinterud Dave Turner Stephen O'Mara Christina Carpenter Paul Andersen Eric Enriquez Madelin Holtkamp Joan Kelley Area of Representation CEDS - Other (Nominee Made by an Agricultural Business Association) EDFC - County of Mendocino/Supervisor Alternate for Patti Campbell EDFC- Environmental Community EDFC - Tribal Representative EDFC or WIB Business (Finance/Insurance/Real Estate) WIB - One-Stop Operator EDFC or WIB Business (Manufacturing/Wholesale Trade, Constructions Trade) EDFC - City of Willits WIB - Migrant and Seasonal Farm-Worker Services WIB - Education/Adult, Education-Literacy/Vocational Programs EDFC - City of Ukiah CEDS - Other (CEDS Coordinator or Other Economic Development or Planning) EDFC or WIB - Business (Retail Trade/Service/Hospitality) EDFC - City of Fort Bragg EDFC or WIB - Other EDFC - City of Point Arena WIB - Organized Labor WIB - Community Based Organization (Housing or Small Business Assistance) Staff Staff 15 Appendix 1 Executive Summary and Background Report from the Mendocino County General Plan Note: This plan is being prepared in 2004. As with any compendium of data, we are working with older data. The preparers of the report above are working with data from the 2000 Census. Employment data necessarily lags as well. One goal of our CEDS is to try and develop more current local information that can be locally maintained. EXECUTIVE SUMMARY EXECUTIVE SUMMARY OF THE BACKGROUND REPORT The Executive Summary briefly highlights information presented in Background Report for the Mendocino County General Plan Update, January 2003. An expanded Summary is also available. INTRODUCTION The Update. In 2001, the Mendocino County Board of Supervisors initiated a comprehensive update of the County's General Plan to review and revise the 1981 General Plan to reflect changing conditions and issues, legal requirements, and policy direction for the future growth and development of the unincorporated County over the next 20 years, through approximately 2025. Requirements. The updated General Plan will address the requirements of the California Government Code, Sections 65000 et seq., as well as community facilities and services, and other relevant topics of local concern. Scope. The Coastal Element, Mendocino Town Plan, Gualala Town Plan, Brooktrails Township Specific Plan, and Ukiah Valley Area Plan (if adopted) will not be amended through this process, except as required for consistency with the updated General Plan. However, policies in the updated General Plan may be applicable in these areas. The Background Report provides a "snap shot" of existing conditions in the County and is a technical resource for the General Plan update and associated environmental document. Major subject areas include population, demographics and land use, economic development, infrastructure, storm water drainage, energy and cormxmnications, community facilities and services, transportation and circulation, recreation, open space and scenic resources, air quality, historic, cultural and archaeological resources, biological resources, agricultural resources, forestry resources, surface and ground water, geologic resources, and mineral resources, and physical hazards. Community focus areas include the Covelo, Potter Valley, Laytonville, Redwood Valley, Hopland, and the Anderson Valley/Boonville areas, the unincorporated area around Willits, and the greater Fort Bragg/Mendocino areas outside the Coastal Zone. POPULATION, DEMOGRAPHICS AND HOUSING Population. Between 1990 and 2000, Mendocino County's population increased 7 percent from 80,345 to 86,265 people. The unincorporated County area absorbed 67 percent the County's growth. The Hispanic population comprised 15 percent of the County population, a 72 percent increase from 1990. The median age and number of elderly persons continue to rise. The County's population is projected to increase 38 percent from 86,265 to 118,800 persons between 2000 and 2020. Housing needs. The elderly, persons with disabilities, single parent households, large families, farmworkers, and the homeless have special housing needs. Affordable, decent housing with access to services is a common need for most. In fact, the demand for affordable housing for lower and moderate-income groups is projected to continue to increase as the supply of lower paying jobs in the retail and tourism sectors rises. Housing stock. The unincorporated County's housing stock increased from 23,018 to 25,517 units from 1990 to 2000; multi-family comprised only 6 percent and mobilehomes declined to 16 percent. Vacancy rates declined to 1.4 percent for owner and 3.3 percent for renter-occupied units; nearly all of the 260 vacation home rentals recorded between 1991 and 2001 were located in coastal areas. Affordability. While median incomes increased 30 percent from 1990 and 2000, housing values increased 37 percent and rents increased 27 percent. Approximately 41 percent of residents in the unincorporated area had. low or very-low incomes. Countywide, more than 50 percent of renter and 31 percent of owner households had low or very-low incomes, .and 36 percent of renter and 25 Mendocino CounO, General Plan Update Background Report January 2003 EX~'~CUTIVE SUMMARY percent of owner households overpaid for housing. In 2002, the maximum 'affordable' housing cost for a 4-person low-income family was $56,429 for owner and $481 for renter units.~ Between 2001 and 2008, 3,391 new units are needed in the unincorporated County; 1,391 should be affordable to low and very low income households. LAND USE · Land ownership in the County is comprised of 16 percent Federal (2 percent Federal trust in Rancherias/Reservafions), 4 percent state, county and cities, and 79 percent private. · New parcels. An average of 100 new subdivision parcels (net) were created each year over the past 20 years; nearly an equivalent number were recognized via certificates of compliance. · Vacant parcels. In the unincorporated County, the number of vacant residential parcels zoned for less than one acre is limited in most areas, except the Brooktrails Township, and to a much lesser extent the Ukiah Valley. Brooktrails remains virtually the only area with parcels zoned for multi- family uses without a use permit. · Vacant commercial and industrial zoned parcels are most abundant in the Ukiah Valley, the Willits/Brooktrails area, and to a lesser extent in the Laytonville area. Significant special plans and planning areas in unincorporated Mendocino County include: · Mendocino County Coastal Zone/General Plan Coastal Element · Gualala Town PlarffGualala Municipal Advisory Council (GMAC) · Mendocino Town Plan/Mendocino Historic Review Board · Ukiah Valley Area Plan (2002 Draft) · Brooktrails Township Specific Plan · Mendocino County Redevelopment Area Project No. 1 · Laytonville Area Municipal Advisory Council (LMAC) · Mendocino County Airport Comprehensive Land Use Plan (CLUP)/Airport Land Use Commission ECONOMIC DEVELOPMENT · Declining sectors. The decline in high-wage resource based jobs, such as timber and fishing, has contributed to the County's profile as a high unemployment, low-income area. The County's remote location and lack of infrastructure melee it difficult to attract large scale and high wage businesses. Companies with 10 or fewer employees supply more than 80 percent of the County's jobs. · Tourism. Decline of the timber cluster and the transformation of agriculture toward vineyards and wine production have shifted the County's economic focus toward the tourism sector. Between 1992 and 2000, tourism spending in Mendocino County expanded by 40 percent, accounting for 24 percent, of all wage and salary jobs in the County. · Upward trends that affect employment include increased grape acreage and wine production, tourism (including Indian Gaming), and organic farming, retail/service industries, as well as increased demand for housing. · Downward trends include reduced timber harvest and product manufacturing, and a declining fishing industry. COMMUNITY SERVICES, FACILITIES AND INFRASTRUCTURE The status and future objectives of the following community services, facilities, and infrastructure serving the unincorporated County are highlighted. Affordable generally means paying not more than 30 percent of total income, including payment, basic utilities and insurance. Mendocino County Background Report General Plan Update 2 January 2003 EXECUTIVE SUMMARY · Wildland fire concerns include lack of water for structural and wildland firefighting; access, road sign and road name issues; and financial and workload burdens due to the provision of services in rural areas outside fire district boundaries. The lack of emergency medical responders (ambulance) has transformed the fire services into medical responders. · County facilities. Mendocino County has worked to consolidate its services and physical facihties and to meet a variety of critical needs. · Law enforcement. The Sheriff's organization has faced ongoing personnel shortages which hamper the ability to perform its varied functions. · Solid waste management. The system has been transformed fi.om landfills to transfer stations. · School districts in many areas require additional educational facilities and upgrades to address program expansion or facility maintenance, despite declining enrollment. TRANSPORTATION Roadway system. Travel in the County continues to emphasize the roadway system. As of 2000, over 71 percent of County residents drove alone to work, 14 percent car pooled, and some 6 percent biked or walked. Circulation and emergency response. The transportation system is also vital to basic circulation and emergency response. Many of the State Routes have deficiencies; it is therefore essential that the County road system provide alternatives to the State system. The County Department of Transportation has identified roadways and intersections important to the County's circulation system and improvements that would eliminate gaps in areawide circulation and enhance access between local communities. Maintenance. Addressing the backlog of deferred rehabilitation and maintenance remains a high priority. Alternative transportation modes include public use airport, bicycling, pedestrian, maritime, and public transit used alone or in combination. These modes also support economic objectives, community character, favorable air quality, and other objectives. RECREATION, OPEN SPACE AND SCENIC RESOURCES · State scenic, unique or historic resources attract statewide and national visitors. At least 25 Federal and State parklands exist in Mendocino County. The inland State Park units of greatest concern to the General Plan Update include Hendy Woods State Park, Montgomery Woods State Reserve, Mailliard Redwoods State Reserve, and Mendocino Woodlands State Park. · County parks typically serve local communities or neighborhoods. The County maintains seven parks and two public access areas, focusing on maintenance due to lack of funds. · Public trails and corridors. Coordinating local, State and Federal trails and parklands can create corridors and enhance recreational opportunities and ecological diversity. There are 1,007 miles of trail opportunities in Mendocino County · Cultural history. Most Native American Tribes living in the County prior to European settlement have members associated with the County's ten Raneherias or Reservations. Some 60 histohcal sites or structures in Mendocino County are on Federal or State historical registers. NATURAL RESOURCES · Biological communities. Mendocino County has a wide range of climatic, topographical, soils, and watershed conditions, producing the habitat for diverse plant and animal communities. Many listed and special status species and sensitive habitats exist within the County. · Air quality. Particulates and ozone are the primary pollutants of concern in Mendocino County. Mendocino Co#nO~ Background Report General Plan Update 3 January 2003 EXF. CUTIVE SUMMARY · The County is designated non-attainment for the State PM~0 (particulates 10 microns) standard. Unpaved road dust and wood burning appliances are the maj or contributors. · Motor vehicles are the single largest manmade source of ozone precursors. The Sanel and Uldah Valleys are also threatened by transport of ozone into the valley from northern Sonoma County. · Naturally-occurring asbestos and diesel particulates are now designated as toxic air contaminants. Agricultural resources. Agriculture continues to be important to the culture, heritage, and economy of Mendocino County. · In Mendocino County, 'prime' soils total approximately 69,209 acres, with about 19,830 acres designated by the State as 'Farmland of Statewide Importance.' About 469,241 acres, or 26 percent, of the County's private land holdings were in WilIiamson Act Agricultural Preserves in 2002. The acreage in Preserves declined less than one percent between 1991 and 2002. · Fruit and nut crop sales, livestock production, and field crops predominate. For the fn'st time in 2001 wine grapes were the County's leading agricultural product. The County has the third highest number of organic farmers in Cahfornia. · A comparison of livestock inventory between 1980 and 2000 indicates sheep declined 55 percent, cattle declined 16 percent, and hogs increased 13 percent. · Forest resources. The predominant vegetative communities in Mendocino County are coniferous and hardwood forestlands, which total about 1.7 million acres. About 80 percent of the private timberland in the County, 47 percent of the private lands or 885,000 acres, were zoned Timber Production in 2002. Conversion of forested lands to other crop production, grazing, urban development, and rural residential uses is an important issue in Mendocino County. · Mineral resources: Aggregate is the most significant mineral resource in the unincorporated County. As of 2002, 29 commercial extraction operations were permitted, consisting of 21 quan'ies and 9 in-stream gravel extraction operations. · Surface water resources: · Water projects in the County include the Potter Valley Project (Van Aarsdale Reservoir), Lake Mendocino, smaller reservoirs such as Morris and Centennial Reservoirs, Lake Emily and Lake Ada Rose, over 300 surface water diversions, numerous other small dams and reservoirs, and many small agricultural ponds. · Surface water development and other human activity, as well as natural processes, have degraded water quality. The Eel, Russian, Albion, Big, Garcia, Gualala, Mattole, Ten Mile, Navarro, and Noyo Rivers are listed as 'impaired' waterways under Section 303(d) of the Clean Water Act. Total Maximum Daily Load (TMDL) pollution control plans are being developed to reduce the effects of sediment and/or temperature on the cold water fishery and in some watersheds municipal and domestic sources. The TMDL completed for the Garcia River encompasses measures to reduce the effects of excessive sedimentation on the cold water fishery. The TMDL plans and maintenance of stream flows adequate for fishery resources will affect development in the County. · The complexity of watershed ecosystems requires a collaborative approach to watershed planning and management; there are at least 15 public agencies and 25 private organizations whose work on Mendocino County watershed-based issues is documented. Ground water resources. Wells throughout Mendocino County support onsite and community water system conveyances for urban, residential, agricultural, fire protection, and monitoring purposes. · Water quality for domestic use is an issue in the Round, Potter, and Anderson Valleys. Seasonal variations or shortages in ground water availability may occur in Long Valley, portions of Little Lake Valley, coastal and mountainous areas, and possibly Anderson and Round Valleys. Mendocino CounO~ General Plan Update Background Report January 2003 EXI*.CUTIVE SUM3iARY Ground water levels in the past 30 years have remained relatively stable, with seasonal fluctuations, but no significant long-term trends. Post-drought levels have rebounded to approximately the same as pre-drought conditions. HAZARDS Hazard planning revolves around risk management, which focuses on reducing the likelihood or severity of an event. Many factors are involved in defining the level of risk that is acceptable to the community. · Significant hazards in the County include (1) earthquakes, landshdes, erosion and related hazards, (2) tsunamis, floods, and inundation, (3) wildland fires, (4) hazardous materials releases, storage, and transport, and (5) naturally-occurring asbestos. · Dams. There are 30 State-registered dams in the County; 16 have inundation maps that indicate a potential threat to population. Not all have been evaluated at this time. Wildfire. Concerns relating to wildland fires include lack of water for structural and wildland firefighting; access, road sign and road name issues; and financial burden posed by the provision of services in rural areas beyond fire district boundaries. Emergency response. Maintaining utilities, facilities and services critical to emergency response and recovery is essential. COMMUNITY FOCUS AREAS Affordable and available housing, need for public water or sewer systems, transitioning from resource- based industries, and downtown development are common issues countywide. · The Round Valley area suffers from distance to markets and services, limited short-term economic potential, and marginal public services. The largest Native American population in the unincorporated County resides in the valley. The area has low median income and high poverty levels. · Potter Valley has experienced timber industry downturns and services in the community have dwindled; lack of public water and sewer limit density. · The Laytonville Area Municipal Advisory Council is working to implement the Downtown Development Plan. A wastewater treatment feasibility study has been prepared. The central north County has relatively high unemployment and low median income levels. · In the Willits area, the 101 Willits Bypass will affect transportation, land use and economic patterns; the Brooktrails Specific Plan addresses services necessary for transformation from second home to year-round occupancies, possibly fueled by rising home prices to the south. Along the southern 101 corridor, growth demands may accelerate with increased commuter to and from Sonoma County when the Hopland Bypass is constructed The Ukiah Valley Area Plan and Redevelopment Plan are moving toward adoption. Water supply is a significant issue for the Redwood Valley to Hopland areas. Growth of the wine and tourism industries affects Anderson Valley. 'Downtown' development, public water or sewer systems, rural character, and decent affordable housing are issues. A relatively high percent of Hispanic/Latino persons live in the valley. Anderson Valley has relatively high employment and high income levels. The Fort Bragg area is transitioning from resource-based industries. Conversion to vacation rentals and retirement homes has contributed to housing shortage in the area, and on the Coast generally. To the north, 'Caspar Community' is developing a town plan including evaluation of a public water system. The Gualala Town Plan adopted in 2002 focuses on consolidating development in a pedestrian friendly downtown. Mendocino County General Plan Update 5 Background Report January 2003 3.0 ECONOMIC DEVELOPMENT 3.1 OVERVIEW This section provides a countywide overview of employment and business trends in Mendocino County. It highlights the key industry clusters in the County-such as agriculture and tourism-and identifies what kinds of businesses have been growing and expanding in the County. The analysis generally addresses trends over the past ten years and reports on projections of employment and population out to 2020. This information can assist the General Plan update process in considering alternate growth scenarios for the County. Figures cited in this chapter are located in the back of the section, after the Bibhography. 3.2 PURPOSE AND METHODOLOGY The purpose of this section is to .provide an economic backdrop to the discussion of future growth and policy in Mendocino County. The information in this Background Report was developed from the sources in the Bibliography; via interviews with local residents, business owners, and government representatives; from written information provided by local organizations and individuals; and from site tours. 3.3 EXISTING SETTING Economic development addresses a number of issues of importance to residents of Mendocino County. Of primary interest is the creation of well-paying jobs to support incomes for residents in the County. This not only supports the economic well-being of the County's residents, but also leads to additional sales and income for local retail businesses. The sales taxes paid by these businesses, as well as visitor- serving businesses, are a major source of revenue for County government. These revenues help pay for services to residents of the County. With the passage of Proposition 13, local government can no longer rely primarily on property taxes to fund necessary services. A well-balanced business mix is essential to providing both private income and public revenue. In subsequent phases of the General Plan Update process, a cost/revenue analysis of residential and non-residential land uses will be conducted. The current report focuses on the job creation aspect of economic development. The Mendocino County Workforce Investment Board's Five Year Plan for labor force training provided the following characterization of recent economic conditions in the County: "Mendocino County's economy and work force are changing. "l In the past, Mendocino County has counted on seasonal crops, the thuber and fishing industries, and tourism for the majority of its jobs. With the significant decline in natural resource extraction over the past 15 years, jobs dependent on these sectors can no longer be counted upon. Filling the gap that has been left with the decline of the Resource dependent economy is a great challenge. Mendocino County's remote location and lack of infrastructure development make it difficult to attract large scale and high wage businesses. More than 80 percent of the jobs in the County are from companies with 10 or fewer employees. As well, most traditional employment opportunities are located in the three large towns, but only 30 percent of the population lives in them. The decline in high-wage natural resource based jobs has contributed greatly to the County's profile as a high unemployment, low-income area. ~ Mendocino County Workforce Investment Board Five-Year Plan, July 27, 2001. __ Mendocino County ' General Plan Update 3-1 Background Report Janua~. 2003 3.0 ECONOMIC DEVELOPMENT Upward economic trends that affect employment include increases in grape acreage, wine production, tourism, and organic farming, as well as increased demand for and limited supply of housing. Downward trends include reduced timber harvesting and product manufacturing and a declining fishing industry. Grape acreage has now passed pears and all other agricultural crops combined. Grape acreage has grown significantly over the last 20 years, from 9,800 to 15,800 acres in 2000. Although many of the grapes produced are turned into wine locally, 50 percent are exported to other counties for production, the equivalent of 17 small wineries at 50,000 cases eacha. About 900 people work in wineries, 20 percent of total manufacturing employment. There is a general perception that enough grapes are now planted within the County and throughout California to meet demand for the foreseeable furore. The County could expect the rate of new plantings to decline over the next several years because supply is increasing both locally and statewide. Any future increase in wine production in the County would increase exports and agricultural value, as well as tourism that is linked to the industry. Tourism is a cyclical industry, highly dependent on worldwide economic conditions. Nevertheless, there has been a general upward trend in the County for at least the past 30 years. In 2001 the County had 3,099 hotel rooms in 191 establishments, plus about 375 homes used for vacation rentals3. Hundreds of new hotel/motel rooms have recently been developed on the coast and in Ukiah. Other visitor-serving businesses also serve locals such as restaurants, gas stations, and entertainment venues, and are also trending upward. Indian Casinos are another growing visitor-serving service. There are currently four casinos along State Route 101, in or near Hopland, Redwood Valley, Willits, and Laytonville. Housing in the County is generally more expensive than in other areas of the State. Rental vacancy rates are low in the cities (averaging 4.1 percent), and higher in the unincorporated areas (averaging 12.5 percent). There are too-few multi-family and rental units to meet the affordable housing demand, driving up rents. Conversion to vacation home rentals, especially on the coast, has reduced housing supply. Substandard housing is an issue in unincorporated areas. New housing construction in the 1990s lagged below household demand figures; this also affects construction employment. Most housing starts are single unit owner-builder. The largest housing construction project in the period 1995-2002 was 125 residential lots with 3-5 bedroom homes south of Lake Mendocino Drive near the area referred to as "The Forks." New developments must address a range of constraints. As a predominately rural County, existing infrastructure in many areas is inadequate to accommodate even modest housing development; hmited water supplies, lack of public sewers or capacity, circulation deficiencies, environmental constraints, and at times, neighborhood opposition are all factors. Existing developments (e.g. Brooktrails, coastal enclaves, etc.) are hmnpered by water, sewer and emergency response constraints. More information about housing issues can be found in Section 1.0 Population, Demographics, and Housing. The timber industry has been in decline for several decades. Of the three dozen fonner mills in the County, only a handful remain open4, some just barely. The rate of timber harvest declines has slowed recently, and could eventually reach a level of sustainability, perhaps around the current 250 million board feet per year (Figure 3-15). Many factors, including pressure from 2 Mendocino County Wine Grower's Alliance, Memo to Mendocino County Planning Department. ~ Ibid. 4 Mills still operate in Hopland, Ukiah, at The Forks, Calpella, Redwood Valley, Willits, Branscomb, Philo, etc. Several are remanufacturing mills that turn sawn logs into molding and other products. Mendocino CounO, General Plan Update 3-2 Backl,,round Report Januao~ 2003 3.0 ECONOMIC DEVELOPMENT environmental groups and regulatory agencies, will combine to determine the sustainable harvest level. Employees laid off from closed mills may often try to stay in the community, taking low-paying jobs, but many also must move away to find jobs. Ongoing retraining programs can be of only limited success, since they often are high cost, and new jobs to replace those lost are being created slowly or not at all. The commercial fishing industry (at Fort Bragg, Albion, Point Arena, and Gualala) is much smaller than in the past. Increased regulations and declining fish populations have contributed, as has competition from larger corporate operations and overseas. Future viability will in large part depend on levels established by regulators for maintaining a sustainable harvest. Party boats catering to tourists are becoming an increasing percentage of the local fishing fleet. Government employment, a significant component of total employment throughout the County, is generally stable. Staffs manage Federal lands and programs, and work for local governments and educational institutions. Organic farming, including crops and livestock, appears to have au expanding niche in the County, especially in Potter Valley, Covelo and Redwood Valley. This component of the economy is still small, though it typically produces a premium-priced product for consumers.5 Home occupations and cottage industries, especially the advent of interact-based activities, contribute to the livelihood of some residents, but are probably not a significant economic contributor. This mode of operation provides an opportunity for employment and income that might not occur, as well as creating a demand for locally purchased supplies and other goods. · Mendocino County has a mix of business sizes similar to the makeup of California as a whole (Table 3-1). 3.4 REGULATORY FRAMEWORK LEGAL BASIS AND REQUIREMENTS An Economic Development Element is not a required component of the general plan under California law. Therefore, the information in this section of the Background Report is intended to assist in the development of other General Plan elements such as Land Use and Circulation. 5 Value-added is the incremental enhancement of a product at each stage in the production process. High value- added products tend to support higher wage jobs. Mendocino CounO~ Background Report General Plan Update 3-3 January 2003 3.0 ECONOMIC DEVELOPMENT TABLE 3-1 BUSINESS SIZES IN M_ENDOCINO COUNTY Mendocino County California Number of Number of Number of Employees Establishments Percent Establishments Percent 0-4 2,633 66% 663,510 64% 5-9 586 15% 147,624 14% 10-19 350 9% 101,293 10% 20-49 262 7% 79,284 8% 50-99 98 2% 31,425 3 % 100-249 40 1% 16,815 2% ,,, 249+ 0 0% 4,290 0% Total 3,969 100% 1,044,241 100% Source: County Business Patterns (does not include government establishments) 3.5 ECONOMIC TRENDS AND PROJECTIONS ECONOMIC BASE ANALYSIS Labor Force Trends. Mendocino County is located along the Northem California coast. Sonoma, Trinity, Tehama, Glenn, Humboldt and Lake Counties border on the inland side. An employment and wages trends discussion is presented below by comparing Mendocino County to Sonoma and Humboldt Counties and the State of California. The 2000 Census places Mendocino County's population at 86,265, a 7 percent increase over 1990. Mendocino County's civilian labor force increased to 42,340 in 2000, an increase of 480 over 1999 (Figure 3-1). Mendocino County's economy is affected by seasonality, which can result in cyclical instability and slow growth. The fluctuating growth and decline in the County's civilian labor force reflect this key factor. Mendocino's growth in labor force during the period 1996 to 2000 averaged 0.6 percent; however, this average masks considerable fluctuations ranging from an increase of 1.8 percent in 1996 to a decline of 1.8 percent in 1999. The County's 2000 statistics reported a 1.1 percent annual increase in labor force (Figure 3-2). The unemployment rate of 7.6 percent in 1990 rose nearly 5 percentage points from 1990 to 1992, but then declined steadily to end at 6.6 percent in 2000 (Figure 3-3). While this is above the national average of about 4 percent, it is typical for regions like Mendocino County where there is substantial seasonal employment. Mendocino County's 2000 annual average unemployment rate was higher than California's rate of 4.9 percent. However, the County's rate has been decreasing over the last five years from a high of 9.6 percent in 1995 to a low of 6.6 percent in 2000. Lower unemployment rates are indicative of increasing employment opportunities in the area. Sonoma County's annual average unemployment rate of 2.6 percent was lower than the State's rate. Humboldt County's rate was similar to Mendocino County at 6.3 percent (Figure 3-4). However, Sonoma County and the State civilian labor force posted more consi'stent growth. California and Sonoma County experienced a similar pattern of declining unemployment. Mendocino County General Plan Update 3-4 Background Report January 2003 3.0 ECONOMIC DEVELOPMENT EMPLOYMENT TRENDS Mendocino County's total employment reached 32,700 wage and salary jobs in 2000. Of this total, 52 percent or 17,080 jobs were service-producing jobs6, 21 percent or 6,730 jobs were goods producing, and 19 percent or 6,360 were government jobs (Figure 3-5). In 2000, total employment grew by two percent or 650 jobs from 1999 (Figure 3-6). This is far below Sonoma County, which saw 4.3 percent growth or 7,900 jobs, but higher than the growth in Humboldt County, which added 500 jobs during the same period. During the period 1995 to 2000, total employment in Mendocino County grew by 12 percent, adding 4,000 jobs. Employment by Major Sectors Mendocino County's economic base is becoming increasingly more diversified. Figure 3-7 shows employment trends by major economic sector from 1990 to 2000. Service, retail trade, and government are the three largest industry employers in the County. Figure 3-8 shows that trade and services accounted for the largest share--24 percent or 7,670 and 23 percent or 7,400 jobs, respectively. Government made up 19 percent, with the majority of jobs in the local government sector. Employment figures for California show an overall growth of 3.7 percent from 1999 to 2000. Most of this growth was in nonfarm industries, including significant increases in services, retail trade, and construction. PROJECTIONS Short-Term Projection: According to 1997 to 2004 nonfarm employment projections, the services, trade (wholesale and retail), and manufacturing industries will have the largest growth during the forecast period (Table 3-2). These three industries combined are expected to account for 71.9 percent (3,204) of the total projected growth in employment (3,860). By the year 2004, the service and trade sectors are projected to add 1,560 and 1,090 jobs, respectively. The manufacturing industry is also estimated to increase by 554 jobs over the seven-year period, despite projected losses in lumber and wood products manufacturing (3.2 percent). Growth is primarily expected in the manufacture of nondurable goods, specifically in the food and kindred products sector (490 jobs). Long-Term Projection: Mendocino County's total employment is forecast to grow at an average annual rate of about 1.2 percent, or 9,140 new wage and salary jobs between 2000 and 2020 (Figure 3-9) 7. California is expected to grow at the same rate, adding 5,304,000 new jobs in the same period. The highest growth is forecasted in the services sector, representing a 1.8 percent annual growth rate, followed by the agriculture sector with 1.5 percent annual growth over the next two decades. Mining and manufacturing are expected to decline over the forecasted period (Figure 3-9). Total population is expected to grow only one percent per year over the next two decades (Figure 3-10). EMPLOYMENT AND WAGES As Table 3-3 displays, Mendocino County businesses had a total payroll of more than $585 million in 1999. Relatively high paying manufacturing employment payrolls constituted 27 percent of total wages, as opposed to only 16 percent of total jobs. Services employment generated 26 percent. Construction employment payroll contributed 7 percent of the total; nearly double its share of jobs, with very high earnings increases (33.7 percent) during the study period. Agriculture employment earnings grew by 101.6 percent during the same period; however, it constituted only 8 percent of the total payroll. Services producing jobs include transportation and public utilities, trade, and finance, insurance, and real estate. 2000 State Profile, State and County Projections to 2025; Woods & Poole Economics, Inc., Washington, DC. Mendocino County General Plan Update 3-5 Background Report January 2003 3.0 ECONOMIC DEVELOPMENT The prosperity index (Table 3-3) measures the payroll growth rate of the region relative to the employment growth rate. A factor above 1.00 indicates that the County payroll growth outpaced the employment growth, while a factor below 1.00 indicates that employment growth outpaced the payroll growth. The County's payroll growth rate exceeded employment growth. Construction and agriculture led this trend, the latter driven by increasing vineyard development in the County. The annual average earnings per employee reached $21,507 in Mendocino County, compared with $22,371 in Humboldt County in 1999 (Table 3-4). In Mendocino County, the transportation and public utilities industries, at $33,000 per year, led earnings. Mining, construction, manufacturing, wholesale trade and finance, insurance and real estate employment payroll ranged from $25,000 to $30,000 per year. The lowest pay was in the agriculture and service industries at $16,000 and $18,000, respectively. Mendocino County's average wage relative to Humboldt County's wage was higher in construction, transportation and public utilities industries, but lower than Sonoma County's industry wages as a whole. Specialized and Competitive Industries The strength of a local economy lies in its ability to support and grow specialized and competitive industries. The analysis used in this section identifies the local concentration8 and relative employment growthgof industry sectors, compared to the same industries statewide. The local concentration helps to de£me the economic base of the area, which creates most of the income that is recirculated in local- serving retail and service businesses. The relative employment growth is an indicator of the competitiveness of the industry locally, compared to the State. If an industry grows at a faster rate in the County than statewide, it signifies that the County is a good location for this industry. The local concentration and employment growth of industry sectors in Mendocino County were calculated by 3-digit SIC (standard industrial classification) codes for 1991 and 1999. The discussion below identifies four categories of industry sectors within the local economy: the growing, transforming, emerging, and small declining industries. Figure 3-11 provides a schematic explanation of the following conceptual discussion. The growing economic base includes those industry sectors that have positive growth rates and a high local concentration (location quotient greater than one). These industries will be the major source of employment growth, at least in the near future. Assuming they are creating quality jobs, businesses in this category merit the attention of policy makers and planners in helping to maintain and improve the economic conditions that enable these industries to show their comparative economic advantage. Comparative economic advantages come from local conditions such as specialized marketing organizations, credit and transport facilities, a trained labor force, and the existence of complementary industries. 8 Local concentration is measured with a statistic called the location quotient (LQ). In this report, LQ shows whether an industry makes up the same proportion of total employment in the County as in the State as a whole. An LQ of 1.0 means that the indusa3, is in exactly the same proportion to total employment in the County as it is statewide. Industries with LQ's greater than 1.0 (higher local concentration) typically export their goods and services outside the County. 0 Relative employment growth measures the rate of industry growth in the County compared' to the growth rate for the same industry statewide. If the statistic is positive (greater than 0), the industry is growing faster or declining less rapidly locally than it is statewide. Mendocino County General Plan Update 3-6 Background Report January 2003 3.0 ECONOMIC DEVELOPMENT TABLE 3-2 MENDOCINO COUNTY EMPLOYMENT PROJECTIONS BY INDUSTRY 1997 TO 2004 Title 1997 2004 Increase Percent Increase Construction & Mining 1,160 1,290 130 11.2% Manufacturing 5,340 5,894 554 10.4 % Transp°rtation.. & Public Utilities 1,220 1,380 160 13.1% - Trade 7,710 8,800 1,090 14.1% Finance, Insurance & Real Estate 920 950 30 3.3% Services 7,460 9,020 1,560 20.9% Government 5,310 5,660 350 6.6% Total NonFarra 29,120 32,980 3,860 13.3 % Note: Employment is reported by place of work and excludes self-employed persons, unpaid family workers domestics, volunteers, and those involved in labor-management trade disputes. Source: EDD; Applied Development Economics, Inc. TABLE 3-3 MENDOCINO COUNTY WAGE GROWTH 1991 TO 1999 Industry Employment Earnings 1999 Prosperity Percent Index 1991 1999 1991 1999 of Total Agriculture 1,671 2,820 $22,567,301 $45,496,798 8% 1.48 Mining 23 11 $545,846 $323,169 0% 0.78 Construction 1,210 1,329 $29,000,379 $38,766,273 7% 3.42 Manufacturing 4,655 5,182 $136,976,218 $156,684,603 27% 1.27 Transportation, Public Utilities 1,009 1,036 $34,454,833 $34,492,290 6% 0.04 Wholesale Trade 1,068 871 $27,911,937 $21,942,069 4% 1.16 Retail Trade 6,184 6,881 $100,539,830 $111,515,679 19% 0.97 Fire 979 918 $23,337,428 $24,454,782 4% -0.77 Services 5,878 8,175 $105,606,316 $151,822,343 26% 1.12 payroll growth rate of region relative to employment growth rate. +1.00: region payroll growth outpaced employment growth, -1.00: employment growth outpaced payroll growth. 1991 wage is adjusted to inflation. Source: Minnesota IMPLAN Group, ES202 Employment and Wage Data Series, 1991-1999 iii i iii i Mendocino County General Plan Update Background Report 3-7 January 2003 3.0 ECONOMIC DEVELOPMENT TABLE 3-4 EARNINGS PER EMPLOYEE RELATIVE TO NEIGHBORING COUNTIES AND CALIFORNIA, 1999 Percent Average Earnings Relative To Industry Average Earnings Per Employee ($) _ Neighboring Counties And State Humboldt Mendocino Sonoma Humboldt Sonoma California Total 22,371 21,507 31,643 0.96 0.68 0.58 Agriculture 22,546 16,134 19,459 0.72 0.83 0.89 Mining 0 29,379 61,038 0.00 0.48 0.44 'Construction 28,487 29,170 38,335 1.02 0.76 0.78 Manufacturing 31,196 30,236 44,719 0.97 0.68 0.61 Transportation, Public Utilities 33,024 33,294 39,539 1.01 0.84 0.72 Wholesale Trade 27,885 25,192 38,889 0.90 0.65 0.55 Retail Trade 15,176 16,206 19,555 1.07 1.21 0.8 Fire 29,895 26,639 42,063 0.89 0.63 0.49 Services 19,747 18,572 28,518 0.94 0.65 0.5 Notes: Index enrnnnr~ aW/neighboring counties' share of payroll to share of jobs. Value less than 1 mean the region,s jobs account for a disproportionately low share of regional earnings. Values greater than 1 mean the region's jobs are paid better as a whole. Source: Minnesota IMPLAN Group, ES202 Employment and Wage Data Series, 1991-1999 The transforming economic base includes industry sectors that have a high local concentration but have a negative or lower growth rate in relation to statewide industry growth. Very often these businesses represent the past economic base of the region but are now declining, either because of industry-wide technological and market changes or because of the loss of some local competitive advantage. They are important industries because of the number of jobs they provide locally, and the reasons for the transformations could be investigated. If the decline is due to issues under local control, then business retention efforts may be fruitful. If the decline is due to structural changes industry-wide, it is less likely that local efforts will have substantial impact. The emerging industry sectors are those that are growing in employment, but whose local concentration is small compared to the share of the same industry sector in the State economy. Firms in this .category deserve some attention and help. The trend indicators suggest they will be larger employment generators in the future because of emerging local competitive advantages, meaning that local market conditions and locational factors are conducive to accelerated growth in these industries. The fourth category, small declining industries, is made up from businesses that have a small share in the local economy (location quotient less than one) and are either declining in employment or are growing more slowly in Mendocino County than statewide. This category is not the subject of an in-depth analysis because the types of businesses that fall in this category lack some fundamentals for long-term viability and growth. Industry sectors in this category would nonually be considered targets only (1) as part of a strategy to strengthen a local industry cluster by increasing the local creation of products or services now being imported, or (2) if they produce exceptionally-high-wage jobs. Mendocino County General Plan Update 3-8 Background Report January 2003 3.0 ECONOMIC DEVELOPMENT Figure 3-12 displays industries in Mendocino County based on the quadrant categories just described. By ranking industries within the region on the basis of industry competitive status relative to the Central Coast Economic Region (Industry Shift-Share analysis) and employment concentration--the level of specializationwrelafive to the economic region (Location Quotient), the industry position in Figure 3-12 indicates the role of particular industries within the regional economy: Competitive Industries and High Employment Concentration: The upper right quadrant, which portrays the economic drivers of the region, includes elements of the traditional economic base of Mendocino County in tourism. Industries within this quadrant are considered highly specialized and industry location in the region gives the industry a competitive advantage over the same industry located in most other regions of the State. Tourism industries such as lodging places, hotels and motels, camps and recreational vehicle parks, miscellaneous amusement, recreation services, and botanical and zoological gardens had high employment concentrations and were competitive industries. It also showed up as a major employment source in the County. Less Competitive Industries and High Employment Concentration: Industries in the upper left quadrant are large but declining industries, with high employment concentration but without competitive advantage. Several lumber and wood product industries suer as sawmills and planing mills, wood containers, and miscellaneous wood products industries are included. Miscellaneous food and kindred products and beer, wine, and distilled beverages were heavily concentrated but also were not rapidly growing during this period. Less Competitive Industries and Low Employment Concentration: Industries within the lower left quadrant have low employment concentration, or are less specialized. They also do not have competitive advantage. Such industries include non-residential construction, office furniture manufacturing, and certain machinery industries. Competitive Industries and Low Employment Concentration: Industries within the lower right quadrant are less specialized, but they have competitive advantage. The "emerging industries" quadrant contains a number of various manufacturing and service industries. Manufacturing industries include commercial printing, concrete, gypsum and plaster products, miscellaneous fabricated textile products, and industrial machinery. Service industry includes farm labor and management services, commercial banks, accounting, auditing, and booldceeping. REGIONAL CLUSTER ANALYSIS Industry clusters are networks of firms that benefit from business-to-business relationships and share common markets, labor pools, technologies, supplier industries, and institutional supports such as educational institutions or specialized government programs. Industry clusters are typically the source of much of the dynamic growth in the regional and national economy, fostering technological innovation and generating global marketing strength. Most often, clusters represent a competitive advantage for a region when they reach sufficient concentration such that most of their products or services are exported outside the County or economic region to other markets. At other times, clusters form to serve local businesses or the resident population. Clusters can also decline, however, as Mendocino County has experienced with the timber industry. Whether growing or declining, industry clusters provide a convenient unit of analysis for examining issues pertaining to labor supply and economic diversification. By looldng at a cluster rather than an individual sector, such as manufacturing, a picture of employment and job development opportunities can be seen in a variety of sectors with ongoing business relationships. Mendocino County has three Mendocino CounO, General Plan Update 3-9 Background Report .lanuary 2003 3.0 EcoNo,nc established industry clusters--lumber and wood products, agriculture, and tourism. The decline of the timber cluster and the transformation of agriculture toward a predominance of vineyards and wine production have shifted the economic development focus in Mendocino County toward the tourism cluster. Lumber and wood products industry cluster accounts for 2,520 or 9.2 percent of all the wage and salary jobs in the County (Table 3-5). This reflects a loss of 354 jobs since 1991. During this period, the only segment of the cluster to show any employment growth was logging, which gained 149 jobs. The lumber and wood products industry cluster average annual wage was $33,245 - higher than the County's average at $21,507 (Table 3-6). Mendocino County's economy has historically depended on the harvesting of timber, and the production of value-added wood products. For many years, logging and wood products manufacturing provided an excellent opportunity for high paying, blue collar jobs. In the past these jobs were relatively well paid and did not require extensive education or formal training. The County's economy is in a difficult state of transition caused by the decline of timber production and timber related jobs. The downturn of timber production has spread to a broad range of wood products occupations including foresters, timber fallers, choker setters, mechanics, truck drivers, millwrights, sawyers, planer operators, board handlers, log and lumber graders, and electricians, all of whom are forced to relocate, retire, or retrain in new career occupations. TABLE 3-5 MENDOCINO COUNTY LUMBER & WOOD .PRODUCT INDUSTRY CLUSTER EMPLOYMENT CHANGE 1991 TO 1999 Description Sawmills and Millwork, plywood & structural members mills Wood containers Miscellaneous wood Woodworking Wholesale Lumber Cluster Total Total Jobs In County Percent of County Total Employment Change 1991 1999 1991 to 1999 57 52 538 687 149 1,213 973 99 292 150 93 535 294 226 82 56 47 193 57) 22,677 27,223 4,546 13% 9.2% Source: Minnesota IMPLAN Group, ES202 Employment and Wage Data Series, 1991-1999. Percent Change 1991 to 1999 -8.8% 27.7% -19.8% 194.9% -38.0% -45.0% -63.7% -16.1% -12.3 20.0% Mendocino County General Plan Update 3-10 Background Report January 2003 3.0 ECONOMIC DEVELOPMENT TABLE 3-6 MENDOCINO COUNTY LUMBER & WOOD PRODUCT INDUSTRY CLUSTER EARNINGS CHANGE 1991 TO 1999 SIC Description Earnings per Employee Percent Change 1991 1999 1991 to 1999 08 Forestry 18,449 39,379 113.4% 241 Logging 31,711 31,166 -1.7% 242 Sawmills and planning mills 34,484 36,561 6.0% 243 Millwork, plywood & structural members 25,191 22,205 - 11.9 244 Wood containers 29,659 25,454 -14.2% 249 Miscellaneous wood products 35,047 38,098 8.7% 3553 Woodworking machinery 38,823 37,569 -3.2% 5031 Wholesale Lumber 27,765 28,474 2.6% Cluster Total 33,672 33,245 -1.3% , , Total Jobs In Count~ 21,208 21,507 1.4% tm ....... · ar_'___ , .r~ a.-.a~ · n.~ .,.-.n ~, ~ Source: Minnesota IMPAN Group, ES202 Employment and Wage Data, 1991-1999 An analysis of Mendocino County's economy showed that there was $3.6 billion of economic activity in 1992. The timber and wood products industry produced $419 million of output as shown in Figure 3- 13.]0 Sawmills and reconstituted wood products were the most significant sources of industry output generated. ]2 The industry continues to decline as described below. Wood products have declined as a component of Mendocino County's economy since the 1970's. In the early 1970's wood products comprised between 35 and 40 percent of all jobs. By 1999, wood products comprised less than 10 percent of all jobs (Figure 3-14). Timber sales retained their financial value between 1987 and 1996 despite the dechne of board feet sold from nearly 430 million in 1987 to 275 million by 1996. However, more recent trends have shown declines in both production and their financial value (Figure 3-15). The agriculture industry cluster consists of agricultural production--crops and livestock, specialized agriculture services, food processing, farm product storage and warehousing, and wholesale food distributors. Cluster employment accounted for 4,463 jobs in 1999, 16 percent of total employment. (Table 3-7). Agriculture production, specialized services, and food processing accounted for 90 percent or 4,023 of the total cluster employment. The cluster average annual wage for 1999 was $24,266, slightly higher than the County's average at $21,507 (Table 3-8). Mendocino County's agriculture and food processing industry produces $519 million of output, which now exceeds the timber industry's output. Wine production is the largest component of the agriculture sector with an estimated output of $232 million. Figure 3-16 demonstrates the dominance of wine grape production as the key component of Mendocino County's agriculture sector, as described below. · Fifty-three percent of agricultural jobs are in either wine grape production or farm labor establishments working in the grape fields. l0 Industry output estimates were made by ADC using Implan's Mendocino County's input/output estimates. The tourism industry estimates utilized data presented by Dean Runyan Associates, 1999 for the State Office of Tourism. ~ See Appendix A, Table 1 Mendocino County General Plan Update 3-11 ii Background Report January 2003 3.0 ECONOMIC DEVELOPMENT Only 18 percent of Mendocino County's agricultural jobs consist of tree fruit production, mostly pears and apples. The remaining agricultural sectors are limited such as livestock (4 percent), forestry (2 percent), commercial fishing (3 percent), landscaping (10 percent), and others. The traditional resource based industries of commercial fishing, forestry, and livestock account for less than 10 percent of agricultural production employment. Figure 3-17 provides additional indicators of the wine industry's dominance of Mendocino County's agriculture sector. The inflation-adjusted value of Mendocino's wine grapes expanded from $31 million in 1980 to $83.1 million in 1999. In comparison, the value of pears and apples (the next largest crop categories) declined from $24 million in 1980 to $13.7 million in 1999, and the value of all other agricultural products (including tree fruits) declined from $62.9 million in 1980 to $44.5 million by 1999. Consequently, wine grapes have expanded their importance within the County's economy so that the single crop is now more valuable than all other agricultural products combined (excluding timber). Figure 3-18 demonstrates that a single establishment dominates the wine industry. Mendocino wineries sold 4.5 million cases in 1996, and one establishment sold 3.5 million cases. The second and third largest establishments sold another half million cases. The remaining 30 small wineries sold less than 50 million cases. Moreover, a general industry "rule of thumb" indicates that economically healthy wineries sell more than 100,000 cases of wine per year.n With only three such wineries in Mendocino County, small wineries need to expand their market share by expanding marketing and production capacities. Finally, value-added agriculture is a sizeable presence within Mendocino County's manufacturing sector as shown in Figure 3-19. Nearly one-fourth of all manufacturing .jobs in Mendocino County consist of food processing and wine making. Mendocino County's wineries create approximately 890 jobs, beer production facilities create 90 jobs, and specialty food processing creates 320 jobs. Agriculture Industry Cluster Occupational Distribution For the agricultural cluster, the occupational matrix for direct employment in the commodity production industries is not available, but relevant data exists for about two-thirds of jobs in the cluster. Figure 3-20 indicates that 51 percent of the jobs are in agricultural occupations. It includes transportation and material moving (25 percent), production (13 percent), construction, extraction and maintenance (2 percent), and fanning, fishing and forestry (11 percent). Service occupations accounted for 23 percent of the total cluster jobs. Table 3-9 shows the cluster wage distribution by occupation. Some variation in wage levels by occupation type exists. For exaanple, chief executive salaries in this cluster are much higher than those in management occupations, at $92,734 and $54,370, respectively. Business operations, human resources, and financial specialties earned on average $41,136. Office administrative support occupations, production occupations, and transportation and material moving occupations earned an annual average wage of between $26,000 and $27,000. At $39,165, construction, extraction, and maintenance occupation wages tended to be higher than professional and related occupations at $35,839. n Personal Conununication, John Dickerson, Executive Director, Promotional Alliance of Mendocino County _ Mendocino CounO~ "Background Report General Plan Update 3-12 Jan#arj, 2003 3.0 ECONOMIC DEVELOPMENT TABLE 3-7 MENDOCINO CO. AGRICULTURE INDUSTRY CLUSTER EMPLOYMENT CHANGE 1991 TO 1999 SIC Description Employment Change Percent Change 1991 1999 1991 to 1999 1991 to 1999 Agricultural production--crops 1,231 1,853 602 4.5% 0172 !Grapes n/a 1,222 1,222 n/a 0175 IDeciduous tree fruits n/a 364 n/a n/a 0179 Fruits and tree nuts, nec n/a 73 n/a n/a 018 !Horticultural specialties n/a 18 n/a n/a 019 !General farms, primarily crop n/a 75 n/a n/a 02 Livestock, Animal specialties n/a 101 n/a n/a Agricultural Specialized Services 312 815 503 11.3% 072 Crop services 47 168 121 15.2% , 074 Veterinary services 66 83 17 2.6% 075 Animal services, except veterinary 26 14 -12 -6.6% 076 Fan~ labor and management services 87 261 174 13.0% 078 Landscape and horticultural services 86 289 203 14.4% unallocated Fishing 72 76 4 0.6% 091 Commercial fishing 67 74 7 1.1% , 092 Fish hatcheries and preserves 5 2 -3 -9.7% Food Processing 991 1,299 308 3.1% 201 Meat products 4 5 1 2.5% 203 Preserved fruits and vegetables 12 10 -2 -2.0% 204 Grain mill products 0 2 2 n/a 205 Bakery products 61 105 44 6.2% 2082 Malt beverages 79 90 11 1.5% 2084 Wines, brandy, and brandy spirits 572 890 318 5.0% 2086 Bottled and canned soft drinks 22 2 -20 -23.4% 2091 Canned and cured fish and seafoods 12 4 -8 -11.5% 2092 Fresh or frozen prepared fish 211 187 -24 -1.3% 2096 Potato chips and similar snacks 12 0 -12 -100.0% 2097 Manufactured ice 6 4 -2 -4.4% !Farm Product and Wholesale Food 579 440 -139 -3.0% 4212 :Local trucking without storage 306 219 -87 -3.6% 4226 Special warehousing and storage, nec 3 10 7 14.3% 5141 Groceries, generalline 14 6 -8 -9.0% 5142 Packaged frozen foods 2 0 -2 -100.0% 5143 Dairy products, except dried or canned 13 19 6 4.3% 5148 Fresh fruits and vegetables 2 16 14 26.0% , 5149 Groceries and related products, nec 89 91 2 0.2% 5181 Beer and ale 47 35 -12 -3.2% 5182 Wine and distilled beverages 72 25 -47 -11.1% ,, 5191 Farm supplies 31 19 -12 -5.3% Cluster Total 3,185 4,463 1,278 3.8% Total Jobs in County 22,677 27,223 4,546 2.1% Percent Coun, ty Total 14% 16% -- -. Source: Minnesota IMPAN Group, ES202 Employment and Wage Data, 1991-1999 Mendocino CounO, General Platt Update Background Report 3-13 January 2003 3.0 ECONOMIC DEVELOPMENT TABLE 3-8 MENDOCINO CO. AGRICULTURE INDUSTRY CLUSTER EARNINGS CHANGE 1991 TO 1999 SIC Description Earnings per Employee Percent Change 1991 1999 1991 to 1999 Agricultural productionmcrops n/a $25,756 n/a ~17 Fruits and tree nuts n/a 13,581 n/a 0172 Grapes n/a 12,733 n/a 0175 Deciduous tree fruits n/a 16,410 n/a 0179 Fruits and tree nuts, nec n/a 11,952 n/a 018 !Horticultural specialties n/a 10,014 n/a 019 General farms, primarily crop n/a 16,790 n/a 021 Livestock, except dairy and poultry n/a 14,446 n/a 1027 Animal specialties n/a 15,710 n/a Agricultural Specialized Services $13,060 17,835 36.6% 072 Crop services 20,692 16,428 -20.6% 074 Veterinary services 13,540 13,425 -0.8% 075 Animal services, except veterinary 21,204 8,404 -60.4% 076 Farm labor and management services 4,509 13,827 206.6% 078 Landscape/horticultural services unallocated 14,710 23,996 63.1% Fishing 30,268 37,709 24.6% 091 Commercial fishing 31,677 38,249 20.7% 0,.92 IFish hatcheries and preserves 11,392 17,741 55.7% iFood Processing 21,305 24,182 -3.5% 201 Meat products 11,565 11,210 -3.1% 203 Preserved fruits and vegetables 14,532 9,262 -36.3% 1204 Grain mill products n/a 19,282 n/a 205 Bakery products 22,564 22,608 0.2% 2082 Malt beverages 16,928 24,597 45.3% 2084 Wines, brandy, and brandy spirits 26,250 27,039 3.0% 2086 Bottled and canned soft drinks 12,091 24,627 103.7% 2091 Canned and cured fish and seafoods 12,947 12,566 -2.9% 2092 Fresh or frozen prepared fish 11,835 12,935 9.3% 2096 Potato chips and similar snacks 14,390 n/a n/a 2097 Manufactured ice 11,982 13,750 14.8% IFarm Product and Wholesale Food 25,187 27,901 10.8% 4212 Local trucking without storage 27,167 31,347 15.4% ~226 Special warehousing and storage, nec 15,323 15,621 1.9% 5141 Groceries, general line 16,479 27,855 69.0% 5142 Packaged frozen foods 21,296 n/a n/a :5143 Dairy products, except dried or canned 19,580 21,676 10.7% 5148 Fresh fruits and vegetables 18,200 20,569 13.0% 5149 Groceries and related products, nec 20,651 19,573 -5.2% '5181 Beer and ale 38,623 28,670 -25.8% 5182 Wine and distilled beverages 16,586 35,907 ......116.5% 5191 Farm supplies 26,202 34,995 33.6% Annual Average $13,171 $24,266 84.2% T, otal Jobs In County 21,208 21,507 1.4% Source: Minnesota IMPAN Group, ES202 Employment and Wage Data, 1991-1999 iii ii I iiii I I ii I i iii Iii i i iii iiii I Mendocino County Background Report General Plan Update 3-14 January 2003 3.0 ECONOMIC DEVELOPMENT TABLE 3-9 AGRICULTURE AND NATURAL PRODUCTS WAGE DISTRIBUTION Employment Change Entry Level Mean Wage Occupational Title* 1999 to 2006 Hourly 1999 (projected) 2006 Wage IHourly Annual Chief Executives 60 71 11 $28.90 $44.58 $92,734 Management 199 233 34 $15.00 $26.14 $54,370 Business Operations, Human 37 42 5 $13.30 $19.78 $41,136 Resources, Financial Specialist Professional and related 65 79 14 $12.36 $17.23 $35,839 Service 313 699 99 $8.72 $14.74 $30,675 Office and Administrative Support 600 341 28 $8.79 $12.68 $26,377 Farming, Fishing and Forestry 313 323 53 $10.03 $14.91 $31,011 Construction, Extraction and Maintenance 270 61 4 $12.88 $18.83 $39,165 Production 323 368 45 $8.23 $12.92 $26,862 Transportation and Material Moving 641 710 69 $8.23 $13.01 $27,060 Total** 2,565 2,927 362 $12.64 $19.48 $40,523 Notes: * The occupational title is based on the new classification, Standard Occupational Classification (SOC) Code ** Total employment does not include direct employment in the commodity production Wage information is based on 2001 data Source: http://www, calmis, ca.gov The tourism industry cluster includes eating and drinldng places, hotels and other lodging, and a variety of recreation, cultural, and amusement attractions (Table 3-10). The tourism industry cluster accounted for 6,660 jobs, or 24 percent of all the wage and salary jobs in the County. Considering the indirect jobs supported by tourism activity, the full economic impact of this cluster is likely much higher than the job figures in Table 3-10 would indicate. The top growth occurred in lodging and recreation places, adding 765 jobs; this represents about 78 percent of employment growth between 1991 and 1999, or 6 percent per year. Eating and drinking places, supported in part by local residents as well as visitors, accounted for 2,387 jobs in 1999, followed by hotels and other lodging places with 1,238 jobs. In 1999, the tourism cluster average annual wage was $14,780, lower than the County's average at $21,507. The highest average pay within the cluster was for the transportation industry, at $32,000 to $34,000 (Table 3-11). Mendocino Count. I, General Plan Update Background Report 3-15 January 2003 3.0 ECONOMIC DEVELOPMENT TABLE 3-10 MENDOCINO COUNTY TOURISM INDUSTRY CLUSTER EMPLOYMENT CltANGE 1991 TO 1999 Employment Percent SIC Description Change 1991 to 1999 Change 1991 1999 1991 to 1999 Transportation 40 120 80 200.0% 451 Air transportation, scheduled 15 105 90 600.0% Passenger transportation 472 arrangement 25 15 -10 -40.0% Eating and Drinking Places 4,161 4,649 488 11.7% 533 Variety Stores 56 13 -43 -76.8% 539 Misc. general merchandise stores 134 126 -8 -6.0% 541 Grocery stores 1,107 1,180 73 6.6% 581 Eating and drinking places 2,072 2,387 315 15.2% 59 Miscellaneous retail 792 943 151 19.1% Lodging and Recreation Places 1,016 1,781 765 75.3% 701 Hotels and motels 944 1,238 294 31.1% Camps and recreational 703 vehicle parks 20 54 34 170.0% Amusement and recreation, 7999 (not elsewhere classified) 43 457 414 962.8% 842 Botanical and zoological gardens 9 32 23 255.6% Cluster Total 5,217 6,550 1,333 25.6% Total Jobs in Coun ,ty 22,677 27~223 4,546 20.0% Percent of Coun ,ty Total 23% 24% Source: Minnesota IMPAN Group, ES202 Employment and Wage Data, 1991-1999 It is estimated that in 1999 Mendocino County had a $303 million tourism industry, dominated by coastal visitations. The inland communities along the State Route 101 corridor also serve an hnportant niche in the County's tourism economy. A substantial amount of State Route 101 traffic utilizes commercial services in Hopland, Ukiah, and Willits. These communities have not historically been visitor destinations, and are challenged to attract the pass-through highway traffic. A 1995 consultant report estimated that there were 650,000 visitors staying overnight along the Mendoeino Coast. ~3 Visitors have a variety of coastal lodging options including upseale bed and breakfast establishments, moderate priced motels, vacation rentals, and campgrounds. Resort and lodging owners are trying to attract visitors during the weekdays and off-season periods in order to soften the boom and See "A Market and Financial Analysis of a Proposed 18-hole Regulation Length Public Golf Facility in Mendoeino County, California." Prepared by ERA, San Francisco. Mendocino CounO, Background Report General Plan Update 3-16 January 2003 3.0 ECONOMIC DEVELOPMENT bust cycle of visitor spending .and to stabilize employment. During the peak summer periods it can be difficult to fred available lodging along the coast. There is a limited supply of rooms and lodging owners find it difficult to obtain permits to expand or build new facilities within the Coastal Zone. Table 3-11 Mendocino Industry Cluster Average Earnings Change 1991 to 1999 Earnings per Earnings per Percent Employee Employee Change SIC DESCRIPTION 1991 1999 1991 to 1999 TRANSPORTATION $20,763 $31,526 51.8 % 451 Air Transportation, Scheduled 34,451 345,827 1.1% 472 Passenger Transportation Arrangement 12,550 8,414 -33.0% Eating And Drinking Places 14,851 14,759 -0.6% 533 Variety Stores 16,467 12,238 -25.7% 539 Misc. General Merchandise Stores 18,860 11,796 -37.5% 541 Grocery Stores 20,656 20,900 1.2% 581 Eating and Drinking Places 10,357 10,783 4.1% 59 Miscellaneous Retail 17,700 17,572 -0.7% Lodging And Recreation Places 11~865 13,704 15.5% 701 Hotels and Motels 11,847 11,828 -0.2% 703 Camps and Recreational Vehicle Parks 10,773 11,768 9.2% 7999 Amusement and Recreation 10,652 18,945 77.9% (not elsewhere classified). 842 Botanical and Zoological Gardens 21,936 14,683 -33.1% Cluster Average $14315 . $14,780 3.2 % Total Jobs In County 21,208 21,507 1.4% Source: Minnesota IMPLAN Group, ES202 Employment and Wage Data Series, 1991-1999 Visitor spending by sector is displayed in Figure 3-21 and can be summarized as follows. · Visitors spend $86.1 million at eating and drinldng places. This type of spending ranges from fast food establishments to upscale restaurants along the coast. · $57.3 million is spent on recreational equipment rentals, services, golf, fishing, etc. · $60.3 million was spent on general retail sales, which includes all kinds of establislunents, ranging from the large retailers in Uldah to upscale art galleries in the village of Mendocino. Mendocino County visitors spend an additional $15.9 million at food stores. Campers and vacation rental visitors purchase and prepare their own food locally, rather than eat out in restaurants. · Visitors spend $17.4 million on. transportation services, primarily gas stations. The inland communities along State Route 101 capture a major share of this spending. Mendocino CounO, General Plan Update 3-17 i iiiii Background Report January 2003 3.0 ECONOMIC DEVELOPMENT · $66 million was spent by visitors on accommodations, which include campground fees, overnight lodging stays, and vacation rentals. Key economic sector dependence on tourism spending in 1999 is displayed in Figure 3-22 and described below. ~4 Lodging establishments are highly dependent on visitor spending, as the area serves a minimal amount of business travel. Accommodations employ 1,292 people, of which 92 percent depend on visitor spending. · It is estimated that 80 percent of Mendocino County's 2,387 eating and drinking establishment jobs are created by visitor spending. · Other visitor serving retail such as art and gift shops account for 24 percent of other retail employment. · Gasoline stations and auto repair services have a smaller number of tourism dependent jobs, with just one-third of the jobs in these businesses dedicated to serving tourists. There are significant tourist segments other than overnight visitors to the Mendocino Coast (Figure 3-23). More than half (58 percent) of the $303 million visitor spending came from overnight guests at bed and breakfast inns, motels, and vacation rentals. While the coastal area attracts the majority of overnight guests, there is also a supply of lodging establishments along the State Route 101 corridor. Day travelers comprise 21 percent of visitor spending. This includes all Mendocino County spending by visitors traveling the State Route 101 corridor, as well as any day visitors traveling along the coastal highways. Eleven percent of Mendocino County's visitor spending comes from campers. This visitor segment is more outdoor recreational oriented, spends less on lodging, and many prepare their own food. They spend more in local grocery stores, and less eating out. Ten percent of visitor spending in Mendocino County is from persons visiting friends and fmuily who are permanent residents. Figure 3-24 also shows a $94.8 million expansion of tourism spending in Mendocino County between 1992 and 2000. While this is a large increase in dollar terms, Figure 3-25 indicates that the percentage growth of tourism in Mendocino County was below that for California as a whole. Between 1992 and 2000, tourism spending in Mendocino County expanded by 40 percent. In comparison, tourism spending in California expanded by 60 percent. Monterey, Napa, and Sonoma counties all matched or exceeded the State growth rate, while neighboring Hmnboldt County was lower at 33 percent. ~4 See Appendix A, Table 2 for more detailed data on visitor employment by industry. Mendocino General Plan Update 3-18 Baclcgro#nd Report January 2t~03 3.0 ECONOMIC DEVELOPMENT ECONOMIC DEVELOPMENT TRENDS Economic Opportunities, Constraints, and Observations Persons interviewed for this Background Report generally thought that a healthy economy is essential to a high quality of life in Mendocino County. There is support for a strong County economic development function and support for a more diverse and balanced economy that weathers economic downtums. Industrial Land The Ukiah Airport Industrial Feasibility Analysis prepared for the City of Ukiah in 2001 concluded that, based on employment growth projections, industrial land would develop at a rate of about seven acres per year in Mendocino County as a whole. 25 As of the end of 2002, it appears that about 280 acres would be available for reuse at the former Masonite m/il facility (about 75 acres are in the Redevelopment Area). Section 2.0, Land Use includes an inventory of vacant industrially and commercially zoned lands throughout the County based on potential development reports based on Assessor's Parcels correlated with zoning. However, improved parcels such as the Masonite property are not counted. Commercial Space Development within unincorporated areas is typically not as dense or compact compared to areas within cities, resulting in significant opportunities for infill and use of underutilized land. Economic productivity and infill can be accomplished by ensuring an adequate supply of commercially zoned land exists within the core areas of each community, overcoming infrastructure deficiencies, and using the County's redevelopment powers. Policies to encourage infill or reuse, along with financing mechanisms, can be useful tools to more efficiently use available land. As above, Section 2.0, Land Use provides an indication of existing vacant commercial parcels. Grape Production The conversion of agricultural land from grazing, pears, and other crops into vineyards is slowing due to · the statewide glut of grapes for wine production. Vineyards are expensive to develop ($6,000 per acre and up) due to length of time to production and capital outlay for land and preparation, planting stock, water systems, trellises, etc. Water availability or production cost is a constraint to agriculture in many areas of the County. Residents may also have concerns over environmental issues, spraying, dust, conversion of native vegetation, wildlife habitat, and viewsheds, etc. Tourism is often not adversely affected by new vineyard conversions, and may actually be enhanced as a picturesque backdrop to local communities. While wineries and related processing, often locate on the same ownership as the vineyards, some facilities located within agricultural areas process grapes from a variety of growers, while others locate in industrial areas in the County. Grapes are also sent out of County for processing. A trend to tasting rooms accompanying onsite wineries has been seen in Anderson Valley and to a lesser degree along the State Route 101 corridor in southern Mendocino County as an attraction to tourists. Centralization or consolidation of processing in locations with existing facilities or on industrial land may present an opportunity to maintain this value-added function in the County, with the possibility of attracting imported grapes--especially as agricultural operations become more expensive or regulated in other urban areas. Wine production activities not directly associated with farm operations or tourism could be encouraged to locate on industrial land. Public Sewer and Water Systems Public water and sewer systems are basic components of commercial and industrial development. A full two-thirds of the County's residents live in unincorporated areas, many in or around the small Applied Development Economics, Ukiah Airport Industrial Feasibility Analysis, 2001. Mendocino CounO~ General Plan Update 3-19 Background Report .lanuary 2003 3.0 ECONOMIC DEVELOPMENT communities or adjacent to the cities. Even so, a number of the larger unincorporated towns, as well as most of the smaller communities, lack public water or sewer systems, or both. Section 7.0, Community Facihties and Services, and Section 4B, Water Supply and Wastewater, of this report provide more information. Lack of one or both services can translate into lower densities, higher land capital outlay, operation and maintenance costs, inefficient land use, supply and distribution issues, issues relating to environmental contamination or constraints, or inability to conduct certain activities. The Laytonvilie Area Municipal Advisory Council is investigating a community sewer system to remedy existing problems, and the 'Caspar Community' has identified a community water system as one of its priorities. Even in areas with public services, service providers and future customers may experience short or long term supply or distribution problems. Water rights (supplies) are an issue in the Ukiah-Redwood Valley areas. Since housing affordability depends in large part on density, public water and sewer systems could make housing costs more affordable and also encourage new growth in employment centers rather than outlying areas. Other Service Districts In addition to school districts, most communities in the County are served by a variety of independent service districts which may include community services district supplying a range of services, fire protection, cemetery, highway lighting, emergency service related and others. Airports The six general aviation public use airports in the County include Ukiah Municipal Airport in the City of Ukiah, Ells Field (owned and operated by the City of Willits), Round Valley and Little River (County), Boonville (Anderson Valley CSD), and Ocean Ridge (privately owned, near Gualala). Community airports often support aviation-related uses and light industry. These airports also support emergency service and public protection functions. Commercial freight carriers and rental car services operate at the Ukiah Airport. With the exception of the Ukiah Airport, economic development efforts at or near the Round Valley, Little River, and Ells Field airports are most likely due to available area, existing activities, and adjoining land use compatibility. Rail Current rail service in Mendocino County is limited to the tourist operation lmown as the Skunk Train. Existing rail is available through rights of way along US 101 connecting the Bay area with Humboldt County, with branches along the Noyo (Fort Bragg to Willits) and Eel Rivers (Longvale north to Humboldt County). Originally laid to support the logging industry, service is now curtailed pending renovation of the line. In addition to again bringing rail to much industrial land throughout the County, potential future uses for rail include tourism, passenger train, commerce, as well as ancillary uses of the right of way for the "rail trail." Tourism in the cities of Willits and Ft. Bragg benefits from the Skunk Train. The Mendocino County Museum in Willits complements this use with its raikoad collection. The City of Ukiah is planning to renovate the train station and implement a rail trail. Local Planning Assistance When catalyzed by critical or local issues, citizens and organizations in the County have tackled planning and cmmnunity betterment efforts, ranging from town plans and infrastructure projects to community design. The Gualala and Laytonville Area Municipal Advisory Councils appointed by the County are just two of many standing and ad hoc committees and organizations. The number of local community plans administered by the County appears to be increasing, as described in Section 2.0, Land Use. Indian Gaming Indian casinos are located near Laytonville, Willits, Redwood Valley, and Hopland. Because of the unique sovereignty of Indian tribes, these establishments do not provide local property or sales tax. While Mendocino County General Plan Update 3-20 Background Report .lanuary 2003 3.0 ECONOMIC DEVELOPMENT these casinos currently lack full-service restaurants and lodging, they provide a form of indoor entertainment that attracts tourists that bring additional revenues to nearby communities. The potential to expand or augment facilities within the existing Reservation/Rancheria boundaries or on other acreage petitioned for Federal trust status exists. For example, the Coyote Valley Rancheria proposed in 2000 to bring 13 contiguous acres into Federal trust. Other Activities Other pro-economic development activities within the local communities, County and regionally include downtown and building renovations; beautification and revitalization; improved social services; work by chambers of commerce and others to promote businesses, festivals, and events, and the region generally; and the enhancement of recreational, cultural and natural resource assets for local appreciation and as an attraction to tourism. These and the many other activities can improve the quality of life for local residents and improve the co~muunity's attractiveness to tourists and business owners. COMMUNITY FOCUS AREAS The County can generally be divided into the coastal, southern, and northern economic regions, each with many issues in common, but also many differences. Table 3-12 outlines key economic priorities for communities with more than 1,000 residents and two or more commercial establishments (Figure 3-26). Appendix A tabulates the number and type of businesses located in each community. The heavy outline areas in Table 3-12 represent regional concentrations. Promoting these priorities will enhance economic diversity, which is healthier than the County's former reliance on a single industry. Round Valley/Covelo Area Covelo, a remote community in Round Valley, is located an hour northeast of Willits at the end of State Route 162, 17 miles east of State Route 101. With a population of about 2,400, half of which hve on the Round Valley Indian Reservation, this community has limited short-term economic potential. Covelo's residents continue to make their living grazing sheep and cattle, raising horses, growing crops such as alfalfa and pears, and/or working for the govermuent. The Indian health clinic is the largest employer. Round Valley is a picturesque location as a Western Gateway to the Mendocino National Forest. Hunters, fishermen and hikers are the primary visitors to the area. Covelo has the potential for limited additional tourism if the local parks add more campgrounds and other facilities. There also appears to be a chance to develop a ski resort in the mountains, which if developed would draw additional tourists. Covelo has a fully developed industrial park, patterned on the European live-work model, with seven industrial lots and nine home sites, plus existing space for lease. The community's remoteness limits its attractiveness to new industry. Skilled labor would also have to be imported. The park owner operates a machine shop. The small downtown has the potential for limited commercial expansion to support the local population. A community center/cmrnnunity theater project has been proposed by local residents. Mendocino CounO~ General Plan Update 3-21 i Background Report January 2003 3.0 ECONOMIC DEVELOPMENT TABLE 3-12 KEY ECONOMIC PRIORITIES IN M. ENDOCINO COUNTY Community :Agriculture Retiree Agriculture Wine Timber Tourism Pressure Fishing Other Government Coastal 1 2 3 Gualala 1 3 2 Point Arena 1 2 3 Mendocino 1 2 Fort Bragg 2 1 3 4 Southern 1 3 2 Hopland 1 2 Boonvillem Navarro 1 2 Ukiah X 3 3 2 X 1 Redwood Valley/ Calpella 2 1 * X 3 Willits 1 * 2 3 X I Potter Valley 2 1 Northern 2 1 3 Laytonville/ Branscomb 1 2 Leggett 2 1 Covelo 1 2 Notes: Incorporated cities include the unincorporated surrounding areas. 1-3 = relative importance, X=significant component of economy *Other manufacturing is an increasingly significant component of this community, increasing Slowly as timber dependence declines. Sewer capacity provided by the Covelo CSD is limited. The sewer plant can be upgraded if significant infiltration is controlled and pond leaks fixed. A CDBG Planning Grant is in preparation to study the sewer situation. Water supply is constrained by high iron and sulfur content, which is acceptable for agriculture and marginally acceptable for human and commercial use. A 900-foot well drilled by the US Army Corps of Engineers is available for service if needed. Potter Valley Area The community of Potter Valley is in a rural valley northeast of Ukiah. It is accessed via State Route 20 between Ukiah and Lakeport. The Valley suffered a lumber and pallet mill closure in the early 1990's. Since then, the community of about 2,000 is slowly recovering. Currently the economy is based on agriculture. A small number of organic fanx~ers are gaining a reputation for their products. The Valley is another gateway to the Mendocino National Forest and to Lake Pillsbury. While Lake Pillsbury has four campgrounds, its water level fluctuates dramatically and is not navigable year-round. Laytonville Area Laytonville is the northernmost community along State Route 101 with significant commercial activity in Mendocino County. Many of the community's residents work at the Branscomb mill. There is also a local Indian Casino and active Rancheria. A noted boot maker and lumberjack supplier is expanding in town, Mendocino County Background Report General Plan Update ~ 3-22 January 2003 3.0 ECONOMIC DEVELOPMENT and will be vacating its key building on State Route 101. Undeveloped land with industrial potential exists along State Route 101 both north and south of town. Discussions with local business people point to demand for additional commerce in Laytonville. Retail services in Laytonville have been limited. However, when the Wilhts bypass is constructed, Laytonville will become a more convenient stopping point on State Route 101 on the way to Garberville or points south. Laytonville, an active community interested in the social welfare of its residents, has worked through the Laytonville Municipal Advisory Committee to prepare a Community Action Plan and Downtown Development Plan, including efforts to build a new high school, among other community improvements. Policies to encourage business development along State Route 101 frontage coupled with rezoning where appropriate and coordination with Caltrans to improve traffic and pedestrian safety in downtown Laytonville could be effective. Most of the town is in the Laytonville County Water District and there is an active effort to create a sewer system to remedy water quality problems from use of septic systems. Houses must be built on alternating lots to accommodate septic systems, limiting development potential of the community. Willits Area Willits is a City whose expansion is constrained by wetlands to the east and north, and hilly terrain to the west and south. Most of the available commercial and industrial land in the area is within the City limits. Willits supplies public sewer and water services; its sewer treatment facility also serves the Brooktrails Township northwest of the City. The City of Willits has three industrial areas. The industrial park on State Route 20 includes timber- related uses, recycling operations (including a solid waste transfer station), and multi-tenant development (incubator space). An elementary school and Indian Rancheria with casino are accessed through the industrial park. The second area located at the east edge of town (Shell Lane, et. al.) with expansion potential has attracted some specialty, high technology, and light industrial enterprises. This type of industry represents the future for manufacturing in the County. This attractive industrial cul-de-sac is built-out and over 53 acres are available for future development. A third industrial area to the northeast includes several businesses as well as the City's sewer plant. This area also has plenty of vacant land for future expansion. The City of Willits has a 1,'u'ge number of commercial establishments along State Route 101 including its share of national chains, a significant downtown, and overnight lodging. However, there is currently little commercial development outside the City limits. The Willits freeway bypass will include two interchanges outside the City limits. Both will be constrained by topography, but will probably have some commercial development potential. Two notable industrial parcels located outside the City limits include an operating Mendocino Redwood stud mill about a mile to the north and a closed millsite west of the City south of State Route 20. Also located in the unincorporated area north of Willits is the Brooktrails Township, which was developed as a 6,000 lot rural residential subdivision. The Brooktrails Specific Plan calls for a reduction in number to around 4,000 lots. A small cmmuercial center, golf course, and Ells Field airport provide amenities. Redwood Valley and Calpella Areas Redwood Valley and Calpella are two small communities just north of Ukiah on State Route 101, about 1.5 miles from each other. Both are communities with significant working-class residents and commuters to jobs in Ukiah. Their combined population, including surrounding areas, is 6,500 to 7,000. There has Mendocino CounO, General Plan Update 3-23 Background Report January 2003 3.0 ECONOMIC DEVELOPMENT been more than a decade long moratorium on new water hookups from the Redwood Valley County Water District, although wells are being utilized. There is no sewer system in Redwood Valley. Redwood Valley supports eight wineries, and much of the Valley's agricultural land is being converted into vineyards. Both communities have active lumber mills. Each has a small downtown, which includes a market and other commercial activity. Redwood Valley's downtown has a small industrial site in need of rebuilding. Downtown commercial revitalization efforts would be useful in providing more attractive and vibrant communities especially for local residents. Calpella is in the proposed County Redevelopment Plan Project Area 1. Though Redwood Valley and Calpella have freeway frontage, transportation to and from the communities is generally indirect; neither downtown is visible from State Route 101. Ukiah Valley Area North State Street and The Forlcs Much of the productive industrial land in the Ukiah Valley area is located north of the City limits, including the former Masonite plant, a significant number of small service commercial establishments, manufacturers, and retailers of various sizes. North State Street has developed with intermingled and mixed uses, including housing, large and small retail, service connuercial, and heavy and light industrial activities. Several light industrial condominiums and developments exist in this area. Space is available for lease by starmps such as at the Carousel Industrial Park in The Forks area. The Forks area has a number of secondhand stores intermingled with newer and more modem facilities. This area appears to have developed over time without the application of strict land use or design standards. Much of the land is underutilized with significant inflll opportunities. The potential for reuse of the vacated Masonite industrial site adds 280 acres, with significant water rights, to the area's industrial land inventory (75 acres in the Redevelopment project area). A new housing tract (125 lots) south of Lake Mendocino Drive, within this area, is building out. Masonite Plant Historically, closed mills and military bases make large tracts of land available for reuse in a business climate that favors smaller developments. In these cases, a sole business enterprise can seldom be found, leading to the establishment of separate buildings, parcels and/or facilities ownerships or leases over time. Whether this occurs tinder a master plan, or strictly subject to market conditions, may be influenced by the County. A strategy for eventual reuse could include a master plan and environmental document for the site that responds to County and community goals and economic climate, including: - Demolition of structures that pose a hazard. · A site remediation plan and mitigations for areas of toxic contamination, floodplain, and other constraints. · Design standards for attractive and functional development. Consider the potential for a mix of uses, parcel sizes, and ownership patterns including manufacturing, retail (the site is at an interchange and has good freeway visibility), and multi- family housing. · Develop an ownership structure and financing strategy to speed redevelopment of the site. Mendocino County General Plan Update 3-24 Background Report Januao, 2003 3.0 ECONOMIC DEVELOPMENT Redevelopment North State Street appears to be an excellent area for redevelopment and the North Ukiah Area is within proposed Redevelopment Plan Project Area 1. As the tax increment builds in the Redevelopment Area~6 its borrowing power and accumulated cash can be used to make the area more economically productive. Brush Street Triangle The Brush Street Triangle is a large essentially level undeveloped area of 75 acres zoned light industrial, with excellent freeway visibility, near other retail shopping and the fairgrounds. Other uses in the area include light industry, undeveloped land within the City, and older housing. Armexation by the City of Ukiah has been discussed. The City of Ukiah's General Plan calls for a looped road from Orchard Avenue to Brush Street, which will enhance suitability for a variety of uses including commercial and residential. The area is proposed for commercial uses in the County's Draft Ukiah Valley Area Plan, which also proposes a Brush Street/State Route 101 interchange. Potential flooding, water availabihty, circulation, and other issues would need to be addressed. South State Street South State Street, south of the Ukiah City limits, also appears to be a favorable location for Redevelopment Plan projects. The area includes multi-family housing, light industrial, and commercial development. This area includes Norgard Lane south of the Ukiah Municipal Airport. South State Street is a former motel row, and portions may be considered bhghted. Most of the former motels have been converted into transient and low-income units. However, the former Deep Valley Shopping Center is being transformed into a new elementary school and Valley community center. Talmage Talmage is a small agrarian co~ranunity located about a mile east of central Ukiah, east of the Russian River. It encompasses rural housing and convenience services. Heavy commercial and industrial uses such as an aggregate supplier and truck repair are located to the west. The City of Ten Thousand Buddhas' university and religious center occupies the former State Hospital site and was approved in 2002 for expansion on adjacent lands to the north. Talmage currently has limited commercial or industrial development opportunities, and could remain a rural housing area. Employment growth at the university could be encouraged. The Draft Ukiah Valley Area Plan supports retention of the rural agrarian character of the community. Hopland Area Hopland, ten miles south of Ukiah on State Route 101 in the Sanel Valley, is an attractive gateway to Mendocino County. Its mix of establishments, largely wine industry related, cater to tourists. A solar "living center" is also located at the entrance to Hopland. The town has renovated many of its old buildings into retail establishments, and continues the process. The Indian casino located three miles east of town may have expansion potential. There is a small lumber mill in town, and additional industrial land along Feliz Creek that can be developed as long as flooding is mitigated. Old Hopland, a rural agricultural center with a mix of commercial and residential use types, is located, to the east. The State Route 101 Hopland bypass will affect Hopland's commercial downtown. The bypass could be designed to encourage travelers to stop, with easy on-off ramps and maximum visibility from the freeway. Hopland is also a significant agricultural area. Fetzer, the largest wine producer in the County and a significant employer, is headquartered there, as are most of its operations. The University of California's agricultural research Hopland Field Station is also located nearby. ~6 The project area generally includes North State Street between Ukiah and Calpella. iii I II ii i i i i Mendocino County General Plan Update 3-25 Background Report January 2003 3.0 ECONOMIC DEVELOPMENT Anderson Valley/Boonville Corridor The Anderson Valley corridor along State Route 128 provides the fastest route from the Bay Area to Fort Bragg on the coast. Public water and sewers do not exist. The valley has a burgeoning wine industry with eleven wineries and many vineyards. Boonville, the largest town in the valley, has a microbrewery, the County fairgrounds, several markets, offices, restaurants, and a hotel, all of which serve tourists as well as the local population of 2,000. Anderson Valley has room for more vineyards - albeit at the expense of grazing land and orchards, and the potential to expand its tourist serving and commercial services. Philo and Navarro are smaller comauunities also with potential for commercial development. Philo is the site of an operating lath mill. Navarro, a small enclave, marks the west end of the Anderson Valley and the beginning of the scenic coastal redwoods. Town of Mendocino Mendocino is an historic town on the bluffs above the Pacific Ocean. Mendocino includes a number of historic structures that have been renovated, and a number of new structures built with a similar historic theme. Reminiscent of Point Reyes and other quaint coastal towns, the town has no industry other than tourism. A plethora of hotels, motels, and bed and breakfasts served an upscale tourist clientele. Many businesses close during the off-season. Mendocino has often been used as a movie or television setting. The community is within flue Coastal Zone, subject to coastal regulations and the Mendocino Town Plan. Much of the town is within a Historic District, and its detailed planning will be a subject for a future Local Coastal Plan update. Maintaining the historic character, tourism promotion, l~usiness-friendly policies, while retaining residential occupancy, are strategies for this community. Point Arena Air Force (Radar) Station The Point Arena Air Force station, previous home of the 776th radar squadron, is 9 miles east of Point Arena at the end of Eureka Hill Road. This relatively isolated 82 acres has limited potential for commercial real estate development. It currently lacks a sewer treatment plant. Possible uses include a civilian satellite tracking station, minimum-security prison, park or recreational, or educational use. Congress has authorized the Secretary of the Air Force to convey the base to Mendocino County, assuming the base would be used for "municipal and other public purpose?7 If sold or exchanged by the County, proceeds must likewise be used for municipal and other public purpose. Fort Bragg Area (unincorporated parts) Most of this area is in the Coastal Zone. Fort Bragg's economy is largely based on tourism. The Georgia- Pacific sawmill established in 1885 recently closed, in November 2002, leaving the prime coastal acreage located in the City presumably available for reuse. The State Route 1 corridor north of town towards Cleone is a significant light industrial area. The area includes a number of supplier industries, some of which may be affected by the mill closure, leaving additional vacancies. The area south of Fort Bragg along State Route 1 is a classic commercial strip of the type commonly found in coastal tourist towns. This conuuercial area has opportunities for infill and for more efficient uses of the developed l:md. Infil] and redevelopment would be enhanced if the area had public sewer, perhaps via an agreement with the City of Fort Bragg or by the creation of an independent sewer district. Caspar is a primarily rural residential enclave. A local group, Caspar Community, is developing a town plan to preserve and enhance the quality of life in Caspar by identifying and protecting significant 17 Congressional military z~ppropriations for fiscal year 2001. Mendocino County General Platt Update 3-26 Background Report January 2003 3.0 ECONOMIC DEVELOPMENT resources, developing walking and bicycles paths, and creating a pubhc water system based on the existing water system developed by the Caspar Lumber Company.~8 Retirees and tourists find Fort Bragg and other communities on the Mendocino coast attractive as retirement and vacation homes. There is demand to build upscale housing, golf courses, and other amenities for retirees. These amenities are coincidentally attractive to tourists. Retirees also bring with them the assets earned durh~g their working careers and in some cases a desire to make investments in the community. The combination of conversions to vacation rentals and retirement homes has created a high demand for housing, and has contributed to a shortage of housing. In addition, service employment wages are far below housing costs. This housing shortage is critical in Fort Bragg and other coastal communities. Although commercial fishing is limited, Noyo Harbor is the only commercial port between San Francisco and Eureka. This unincorporated nook surrounded by Fort Bragg is within the Noyo Harbor District. The harbor is a viable tourist destination in its own right, complete with party boats, restaurants, and a motel. The County's Coastal Plan provides that maintenance of the declining commercial fishing industry is the highest priority. Adequate infi-astructure for both the fishing industry and for tourist attractions should be maintained with as few conflicts as possible. The harbor is supplied public sewer and water via an agreement with the City of Fort Bragg. 3.6 RELATIONSHIP TO THE GENERAL PLAN The General Plan update process is an opportunity to examine a comprehensive, systems approach to achieving economic development objectives. The decline of natural resource based industries, particularly timber and fishing, requires a continuing effort to diversify the County's economy. The General Plan process can assist in defining land use- related needs and policy to support diversification. Telecommunications-based industries can overcome some of the economic disadvantages of rural location. Local actions to attract and facilitate investment in telecommunications infrastructure by both the telecommunications industry and business could be examined. Sufficient land to acconnnodate the projected commercial, industrial, residential, and infrastructure needs of each connnunity should be identified and designated based on the preferred development alternative. · Planning for infrastructure development and financing to support business (and workforce) growth is crucial for successful economic development, as well as funding applications. The multiplicity of service and assessment districts may present confusing and potentially inefficient service delivery systems to new businesses looking to locate in the County. Land use, service delivery, and inter-j urisdiction coordination may also benefit permitting, cost and service efficiencies. The quality of commercial and industrial development is important to many businesses potentially locating in Mendocino County. Still, many commercial and industrial sites are unattractive or resemble blighted areas. Redevelopment plans, development standards, and community programs are some ways to promote attractive yet cost-efficient development patterns and designs. Judy Tarbell, Caspar Community, Letter to Mendocino County,.September 6, 2002. Mendocino CounO, General Plan Update 3-27 Background Report January 2003 3.0 ECONOMIC DEVELOPMENT The wood processing sites that have closed present significant redevelopment, reuse, and infill opportunities. A diverse and econom/cally balanced housing supply is essential to retain, expand and attract businesses and workforces. The expansion of value-added agricultural and tourism clusters will continue to generate significant job and local revenue growth. Ways to resolve conflicts (i.e., traffic, water availability, wastewater disposal, workforce housing, and community change) and facilitate sector growth could be examined. The evolution of the telecommunications industry will continue to generate home-based business and telecommuting opportunities. The implications of this trend on the economy, community, and infrastructure could be examined. 3.7 BIBLIOGRAPHY AND GLOSSARY California Employment Development Department Labor Market Information, California Size of Business Report, Third Quarter 2000 Dickerson, John. Executive Director, Promotional Alliance of Mendocino County. Personal Communication with Doug Svenson. 2000 Dow & Associates. 2002. 2001 Regional Transportation Plan, Mendocino County Appendices Draft February 2002. Ukiah, California. "Feasibility for a Revolving Loan Fund and Airport Business Plan", Final Report, November 2001 for the City of Ulciah by Applied Development Economics. Funded by CDBG Economic Development Grant Funds, Grant # 99-EDBG-658. "Final Wastewater Feasibility Study for the Laytonville Area Municipal Advisory Council", Mendocino County, November 2001 by Oscar Larson & Associates. Geohydrology of Part of the Round Valley Indian Reservation, California. Selected information provided by Covelo Conmmnity Services District. Information Questionnaire for Preparation of RTP -- Responses. March 2001, by the Willits Chamber of Commerce. "Laytonville Area Colnmunity Action Plan", July 1999, by Planwest and the Economic Development and Finance Corporation. Funded by a U.S. Forest Service Grant. "Laytonville Downtown DeveloPment Plan," January 2001, by Samantha Kotte and the Economic Development and. Finance Corporation. Funded by a U.S. Forest Service Grant. "Mendoeino County Agriculture and Tourism Industry Analysis", Progress Report and Data Findings, November 17, 1997, by Applied Development Economics. Menflocino County Alliance. Memo regarding General Plan Update Process, to Mendocino County Department of Planning and Building Services, dated 2/15/02. Mendocino County General Plan Update 3-28 Background Report January 2003 3.0 ECONOMIC DEVELOPMENT Mendocino County Department of Planning and Building Services, Preliminary Identification of Economic Development Issues. Memo to Applied Development Economics from Pamela Townsend, Senior Planner, May 31, 2002. Mendocino County Department of Planning and Building Services. Ukiah Valley Area Plan - Economic Development, January 2000, excerpts from unpublished draft. Ukiah, California Mendocino County Depamuent of Planning and Building Services. 2002. Draft Ukiah Valley Area Plan. Ukiah, California Mendocino County. 2002. Economic and Demographic Profile, ©2002 by the Center for Economic Development, California State University at Chico "Mendocino County Industrial Site Summary", prepared by the Mendocino Development Corporation, undated (circa early 1990's). "Mendocino County Joint Tourism and Agricultural Marketing and Promotion Feasibility Study," March 1998, Prepared for Mendocino County by Swan and Associates, et. al. Mendocino County Workforce Investment Board Retreat -- Selected Notes, October 22, 2001. "Mendocino County Workforce Investment Board Five Year Plan," July 27, 2001. "Overall Economic Development Plan for Mendocino County", Prepared by Mendocino OEDP Committee, June 22, 1993 Pacific Bell Smart Yellow Pages, including White Pages. Lake and Mendocino Counties, October 2000 Tarbell, Judy, Caspar Conununity. Letter to Mendocino County Department of Planning and Building Services, September 6, 2002. Mendocino CounO~ Background Report General Plan Update 3-29 January 2003 3.0 ECONOMIC DEVELOPMENT 44,000 Figure 3<[ Mendocino County Civilian Labor Force Trends 1990 to 2000 43,000 42,000 41,000 40,000 39,000 38,000 37,000 36,000 42,720 42,340 6O 3 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 Source: California Employment Development Department 0EDD) Figure 3-2 Percentage Change of Labor Force 1995 to 2000 4.2% ~ 3.5~ 1.2% : __ -0.3% -0.4% 0.3% -0.3% -1 ,1.8% ~' . ~g--:-~-Wg~_--"~ .......... ,,, , ,,,,,, , , .. ~-'~i; Ti ...................................... $.0% - 4.0%- 3.0%. 2.0%. 1.0% 0.0% -I .0% -2.0% 1995 1996 1997 1998 1999 2000 iF'lHumboldt ~Mendo¢ino I'qSonoma J Source: Applied Development Economics, based on data from CA EJ3D ', Mendocino CounO, General Plan Update 3-30 Background Report January 2003 3.0 ECONOMIC DEVELOPMENT 14.0% Figure 3-3 Mendocino County Unemployment Rate Trends 1990 to 2000 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 12.0% ?% .9.6% 7'6~~' ~ ~ 6~ 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 Source: California Employment Development Department Figure 3-4 Regional Unemployment Rate 1995 to. 2000 10.0%- 9.0% - 8.0% - 7.o%2 6.0%. 5.0% 4 .O% 3.0% 2.0% 1.0% 0.0% 1995 1996 1997 1998 1999 2000 V1Humboldt V1Mendocino r'lSonoma J Source: California Employment Development Department Mendocino CourtO, General Plan Update 3-31 Background Report Januarj, 2003 3.0 ECONOMIC DEVELOPMENT Figure 3-5 Mendocino County Employment by Major Production Sector (2000 Annual Average: 32f700) Government 19% S ervic e Pro ducin 52% F arm ro duc tio n 6% Farm Services 2% Goods Pro ducing 21% Source: EDD' s Labor Market Information Division, March 2000 Benchmark Figure 3-6 Regional Total Employment Percent Change 1995- 2000 6.0% ~ 4.9% 2.0%, ..- 0.0% ~ 1995 1996 1997 4.70~ 2.0 o.6%' 1998 1999 2000 4,3% Humboldt I"IMendoeino [] Sonoma I Source: EDD' s Labor Market Information Division, March 2000 Benchmark Mendocino CounO, General Plan Update 3-32 Background Report January 2003 3.0 ECONOMIC DEVELOPMENT Figure 3-7 Mendocino County Employment Trends by Major Economic Sectors 1990 to 2000 i [ i i i i i , [ i --)ka- A gric ulture Construction & Mining Manufacturing ~ Transportation & Public U tilitie s '~' Trade Finance, Insurance & Real Estate Services \1/ ,~ Government Source: EDD' s Labor Market Information Division, March 2000 Benchmark [ Mendocino CounO, General Plan Update 3-33 Background Report January 2003 3.0 ECONOMIC DEVELOPMENT Figure 3-8 Mendocino County Employment by Industry 2000 Annual Average (Total: 32,700) Agriculture Construction & Government 8% :19O/o Mining 4% Services 23% Manufacturing 16% Finance, T'ra nsportation Insurance & Trade & Public Real Estate 24% Utilities 3% 3% Source: EDD' s Labor Market Information Division, March 2000 Benchmark Mendocino County General Plan Update 3-34 Background Report Jannary 2003 3.0 ECONOMIC DEVELOPMENT Figure 3-9 Mendocino County Projected Employment Growth Rate 2000 to 2020 Agriculture Mining Construction Manufacturing TCPU Wholesale Trade Retail Trade FIRE Services' Government -0.5% 0.0% 0.5% 1.0% 1.5% 2.0% TCPU denotes transportation, communication and public utilities. FIRE denotes £mance, insurance, and real estate. 2000 to 2020 projected based on 1998 data Source: Woods & Poole Economics, Washington D.C. Mendocino CounO, General Plan Update 3-35 Background Report Januarj, 2003 3.0 ECONOMIC DEVELOPMENT 140,000 Figure 3-:t0 Mendocino County Population Trends 120,000 100,000 80,000 60,000 40,000 20,000 / 116t700 ~ 103,200 109t700 ~ ~ 95,500 86~800 87~400 i i i i , 1999 2000 2005 2010 2015 2020 Source: California Department of Finance. 2000 Data is estimated population and 2005 to 2020 is projected. Figure 3-:11 Framework for Four-Quadrant Analysis RelaEve Employment ~ Relative Employment Decrease Increase TRANSFORMING BASE SMALL DECLINING GROWING BASE EMERGING Source: Applied Development Economics High EmpJoyment Concentration T Employment Concentration i Mendocino CounO, General Plan Update 3-36 Background Report January 2003 3.0 ECONOMIC DEVELOPMENT INSERT FIGURE 3-12 Mendocino Countj, General Plan Update 3-37 Background Report January 2003 3.0 ECONOMIC DEVELOPMENT _ FIGURE 3-13 Industry Output ($1998 Millions) Tourism Timber and Wood Products Wine Production Agriculture / Food Processing $232 Sources: -Ag/Timber data from IMPLAN Input/Output Model (1998), Tourism from Dean Runyan Associates, "California Travel Impacts By County, 1999" FIGURE 3-14 Percent of 3obs in Mendocino County Wood Products Industry 40% 30% 20% 10% O% 1970 1980 Source: Mendocino County Promotional Alliance 1990 1999 Mendocino County General Plan Update 3-38 Background Report January 2003 3.0 ECONOMIC DEVELOPMENT FIGURE 3-15 Timber Production and Sales Mendocino County, 1987-1996 600 · 462.6 million board-feet sold 500 · , I 400 - ~ o o - et sold '°°' m...m...m--.m....m ..~,... m...,~..]...l... ' '"'~ ,oo. ~ - -B...m...m.--m $156.6 million value of timber sold ~. o . $160.1 million value of timber sold Source: Applied Development Economics, data from MIG ES202 county employment database F/GURE 3-16 Agriculture Production Employment 1999 Lands_c_aping Commercial Livestock 76 101 Other Ag 265 Other 93 Total Production 2,74 Grape 1,22 (44% Farm 261 Tree 437 Source: Apphed Development Economics, data from MIGy employment Mendocino CounO, General Plan Update 3-39 Background Report January 2003 3.0 ECONOMIC DEVELOPMENT F/GURE 3-17 Production of Winegrapes, Other Fruits, and* Ali Other Agricultural Products 1980 to 1999 90,000,000 80,000,000 70,000,000 60,000,000 -- $0,000,000 40,000,000 30,000,000 20,000,000 10,000,000 0 1980 1985 1990 1995 1999 Winegrapes Other Frutts All non-grape Ag NOTES: 1999 Vegetable Production: $1.7 million 1999 Nursery Product Production: $2.7 million Source: Applied Development Economics, data from County Ag. Commissioner Note: Figures are inflation adjusted to 1999 dollars, and do not include timber production. FIGURE 3-18 Single Winery Dominance 30 Small Wineries .44 Million Cases Sold Second and Third Largest Wineries .57 Million Cases Sold Total Volume of Mendocino County Wine Sold 4.5 Million Cases Source: Applied Development Economics, data provided by Mendocino Count3, Winegrower's Alliance Mendocino County General Plan Update 3-40 Background Report January 2003 3.0 ECONOMIC DEVELOPMENT FIGURE 3-19 Beverages, Food Processing, and Hanufacturing Employment 1999 Total Manufacturing Employment Malt Beverages 5,182 90 (20/0) Wine 8~)o (=.70/0) Specialty Food Processing 3:m (6%) , Other M an.ufacturing ..' Source: Applied Development Economics, data from MIG ES202 county employment database Figure 3-20 Agriculture Zndustry Cluster Occupational Distribution, 1999 (Total Cluster Employment = 2,565 *) Transportation and Material Moving Occuaptions 25% Production Occu 13% Chief Executives 2% Management Occupations Busiuos.q Operations , HR and Financial Specialist I% Professional and Related Occupations 3% Construction, Service Extraction, and Office and ~ation Maintcnancc Farming, Fishing, Administrativ¢ 23% Occupation and Fores try Support 2% Occupations Occupations 11% 12% * Total employment does not include direct employment in the commodity production. Occupations based on the Standard Occupational Classification (SOC) Code. Source: http://www.calmis.ca.gov Mendocino County General Plan Update 3-41 Baclq,,round Report .ianuary 2003 · 3.0 ECONOMIC DEVELOPMENT FIGURE 21 Tourism Spending by Business Type 1999 ($ Million) Transportation / $303.4 Million Travel $17.8 ~4 Total Other Eating and Retail Sales Drinking Places $60.3 M 86.1 M Recreation $87.3 M AccommodaUons $66 M Food Stores $15.9 ~4 Source: Apphed Development Economics, data from "California Travel Impacts by Count3.," i-mGURE 3-22 Mendocino County Employment by Industry and Tourism Employment 1999 Accommodations Other Retail Eating and Drinking Places Ill Non-Tourism ITourism Auto Services - _ta.~l - . 0 Food Stores '1~070 r ' ~ 110 Source: Applied Development Economics, dam from MIG ES202 count y data files, tourism data from Dean Rum, an Associates Mendocino CounO, General Plan Update 3-42 Background Report January 2003 Appendix 2 Supplementary materials for the "Area and Its Economy section go Mendocino Private Industry Council Rapid Response Breakdown by year 1995-2003 bi California Employment Development Department Labor Market Information Division charts 1. Self sufficiency vs. Average Wage per Job 2. Employment Compared to Public Assistance Recipients Mendocmo 3. Table of Civilian Labor Force, Employment, and Unemployment Co Los Angeles Times article, (January 22, 2004), "Low-pay sectors Dominate U.S. and State Job Growth" Mendocino Private Industry Council Rapid Response Breakdown by year 1995.2003 07/14/1995 Blue Shield 50 01/01/2001 Real Goods 20 10/31/1995 Loiusiana Pacific 80 01/31/2001 Rebanda Trucking 11 12/30/1995 Benos 15 01/31/2001 Eureka Fisheries 13 12/30/1995 Dalys DepL Store 30 .,, 175 ............ ~'~ ~:i*, :~: :i · 01/02/1996 Georgia Pacific 25 03/29/1996 Fetzer 14 05/31/1996 Home Federal 2 07/02/1996 Natural Sales 75 07/08/1996 Georgia Pacific 75 07/15/1996 North Coast Foods 12 09/21/1996 PV Ranch 27 11/24/1996 Wards 8 238 06/01/1997 Beacon Gas 3 06/12/1997 Loiusiana Pacific 13 02./28/2001 Office Depot 18 03/23/2001 Real Goods 30 03/30/2001 REBOL 5 04/20/2001 Retech 8 05/02/2001 Builders Glass 5 05/07/2001 Masonite 262 05/30/2001 Mendocino Forest Products 120 06/05/2001 Metalfx 44 10/19/2001 GP-Resin 14 10/12./2001 Willits Electronics 7 10/26/2001 Mendocino Forest Products 14 11/01/2001 VIP Pdnting 5 11/06/2001 Retech 48 12/19/2001 SPACE 1 12./27/2001 Mavedck 8 06/30/1997 Yokayo Market 07/01/1997 Coast Dist. Hospital 08/01/1997 Laruso's 09/05/1997 Ukiah Beadng & Gear ., 55 01/12/1998 AM&D 15 3 5 75 5 192 10 55 7 2O 2 57 6 452 02/02/1998 Microphor 02/06/1998 Sugar n Spice 01/29/1998 Heritage House 03/23/1998 Mendo Health Clinic 04/11/1998 Masonite 05/15/1998 Green Barn 05/22/1998' Sho-Ka-Wah 06/23/1998 Loiusiana Pacific 0~30/1998 Nolen-Benbow 06/30/1998 Behavodal Health Ctr 11/01/1998 Keene Pallet 11/02/1998 Mendo. Brewing Co. 01/13/1999 Lightel's Food & Fuel 2 01/29/1999 AM&D 40 02/01/1999 Real Goods 34 02/01/1999 Georgia Pacific 17 03/01/1999 Terrninex 1 06/30/1999 AM&D 50 09/02./1999 Ukiah Valley Medical Ctr 20 09730/1999 Ah Forest Products 4 =,, 188 02/04/2000 Retech 50 06/30/2000 MPIC '15 09/04/2000 Soda Creek Press 30 09/22/2000 Helllg Meyers 9 10/31/2o00 Don Nolan Trucking 45 11/17/2000 Piedmont Lumber 25 12/01/2000 Maverick 7 t81 12 633 8 02/14/2002 Salvation Army 5 6 02./22/2002 Pamum Paving 5 03/11/2002 Georgia Pacific 89 03/10/2002 Rite Aid-Ft Bragg 9 03/25/2002 McGehee 3 04/01/2002 Fosters Tires 6 04/06/2002 Penske Auto 6 05/01/2002 CPIA 3 05/22/2002 AAA-Ft Bragg 1 07/16/2002 Retech 15 07/01/2002 Rainbow Ag 1 06/01/2002 Georgia Pacific 125 08/23/2002 Potter Valley Store 5 09/30/2002 Poon-Kinny Ranch 1 10/11/2002 McGehee 9 11/15/2002 VanderHorst 1 11/22./2002 Retech 4 11/30/2002 Ukiah Valley Medical Ctr 35 11/22/2002 McGehee 12 12/04/2002 GP-Resin 8 12/13/2002 McGehee 6 .,, 349 01/23/2003 Rite Aid-Ft Bragg 7 02/07/2003 Retech 15 02/28/2003 Jamie's Meats 4 03/10/2003 Yellow Star Dried Fruit 1 03/14/2003 Eagles Nest Aviation 2 03/21/2003 Kmart 100 04/01/2003 Metalfx 8 04/04/2003 Retech 22 05/07/2003 Cemco Machining 2 05/20/2003 Ft Bragg Advocate 5 06/30/2003 MCOE 2 07/18/2003 Liqua Tech 2 08/01/2003 Mendocino Forest Products 59 08/01/2003 Ntech 1 06/22/2003 Napa Auto Parts 2 08/29/2003 Hopland Band Pomo Indians 23 09/02/2003 California Westem Railroad 12 09/16/2003 Shokawah Casino 15 09/26/2003 RWE Schott Solar 3 09/29/2003 Piedmont Lumber 25 10/01/2003 Orr Hot Springs 5 10/10/2003 Mendocino Cooperage 9 10/24/2003 Lolita's 4 10731/2003 Madrone Physical Therapy 2 11/17/2003 Circle K Foods 7 337 1995 262 1996 633 1997 6 1998 349 1999 168 2000 181 2001 633 2002 349 2003 337 324 C 0 0 0 0 0 0 0 0 L~ 0 0 © © 0 0 0 rrl O, 0 0 ~ mil Civilian Labor Force, Employment, and Unemployment -- Updated 1/14/2004 Mendocino County March 200'2 Benchmark; Data are not seasonally adjusted Notes: 1) The unemployment rate is calculated using unrounded data. 2) Due to the introduction of the 1990 Census population figures, the data for years prior to 1990 are not comparable with data for 1990 through 1999. 3) Effective with the release of January 2003 data in February 2003, labor force data for all areas have been revised back to January 2000. This revision is the result of incorporation of the 2000 Census population controls at the State level and changes in methodology. Therefore, data for years prior to 2000 are not comparable with data for 2000 and later years. Source: Employment Development Department, Labor Market Information Division, 916-262-2162 2003 Labor Force Employment Unemployment Unemp. Rate January 44,510 40,530 3,980 8.9% February 44,470 40,670 3,800 8.5% March 44,270 40,480 3,800 8.6% April~ 43,840 40,370 3,470 7.9% May 44,150 41,150 3,000 6.8% June 44,830 41,900 2,930 6.5% July 44,090 41,130 2,960 6.7% August 45,300 42,560 2,740 6.0% September 44,960 42,530 2,430 5.4% October 45,620 43,110 2,510 5.5% November 44,590 41,640 2,960 6.6% December 44,900 41,710 3,190 7.1% Annual Average 2002 Labor Force Employment Unemployment January 42,430 38,260 4,170 February 42,370 38,470 3,910 March 42,320 38,540 3,770 April 44,090 40,680 3,410 May 45,010 42,320 2,690 June 44,970 42,130 2,850 July 45,080 42,210 2,870 August 46,390 43,850 2,540 September 45,760 43,270 2,500 October 45,330 42,670 2,660 November 45,280 41,870 3,410 December 44,230 40,800 3,420 Annual Average 44,500 41,300 3,200 Unemp. Rate 9.8% 9.2% 8.9% 7.7% 6.0% 6.3% 6.4% 5 5% 5 5% 5 9% 7 5% 7 7% 7 2% 2001 Labor Force Employment Unemployment Unemp. Rate January 41,940 38,210 3,740 8.9% February 41,350 38,070 3,280 7.9% March 41,830 38,410 3,420 8.2% April 42,120 39,050 3,070 7.3% May 42,800 40,360 2,430 5.7% June 44,080 41,490 2,580 5.9% July 42,730 40,250 2,470 5.8% August 44,440 42,120 2,320 5.2% September 45,570 43,290 2,280 5.0% http://www.calmis.ca.gov/FILE/LFHIST/MENDOHLF.TXT 01/29/2004 ~'age 2 oI 4 October 44,880 42,530 2,350 5.2% November 43,230 40,000 3,230 7.5% December 42,840 39,470 3,370 7.9% Annual Average 43,200 40,300 2,900 6.7% 2000 Labor Force Employment Unemployment January 40,530 36,900 3,630 February 40,630 37,060 3,570 March 40,680 37,150 3,530 April 40,290 37,350 2,940 May 41,890 39,030 2,860 June 42,880 40,320 2,560 July 43,090 40,540 2,550 August 43,510 41,220 2,290 September 43,790 41,740 2,050 October 43,990 41,900 2,090 November 42,740 40,020 2,710 December 41,940 39,220 2,720 Annual Average 42,200 39,400 2,800 Unemp. Rate 9 O% 8 8% 8 7% 7 3% 6 8% 6 O% 5 9% 5 3% 4 7% 4 8% 6 4% 6 5% 6 6% 1999 Labor Force Employment Unemployment Unemp. Rate January 40,730 36,600 4,130 10.1% February 40,430 36,390 4,040 10.0% March 40,460 36,650 3,800 9.4% April 40,980 37,870 3,110 7.6% May 41,670 39,210 2,470 5.9% June 42,830 40,380 2,450 5.7% July 42,610 40,210 2,400 5.6% August 43,180 41,120 2,060 4.8% September 43,080 41,100 1,980 4.6% October 43,410 41,510 1,900 4.4% November 41,850 39,230 2,620 6.3% December 41,130 38,210 2,920 7.1% Annual Average 41,800 39,000 2,800 6.7% 1998 Labor Force Employment Unemployment Unemp. Rate January 41,900 37,220 4,680 11.2% February 41,640 37,180 4,460 10.7% March 41,930 37,950 3,990 9.5% April 41,640 38,060 3,580 8.6% May 42,320 39,120 3,200 7.6% June 43,270 40,050 3,220 7.5% July 43,610 40,520 3,090 7.1% August 43,490 40,770 2,720 6.3% September 43,340 40,790 2,560 5.9% October 43,690 41,390 2,300 5.3% November 42,760 39,690 3,070 7.2% December 41,760 38,330 3,440 8.2% Annual Average 42,700 39,300 3,400 7.9% 1997 Labor Force Employment Unemployment January 41,130 36,480 4,640 February 40,880 36,380 4,500 March 41,300 37,200 4,100 April 41,660 38,160 3,500 May 41,660 38,750 2,900 June 43,120 40,080 3,040 July 44,110 40,990 3,110 August 44,780 42,110 2,670 September 44,460 41,810 2,650 Unemp. Rate 11.3% 11.0% 9.9% 8 4% 7 0% 7 0% 7 1% 6 O% 6 O% http://www.calmis.ca, gov/FILE/LFHIST/MENDOHLF.TXT 01/29/2004 _~age _~ o:-: 4 October 43,970 41,310 2,660 6.1% November 43,000 39,670 3,330 7.8% December 42,580 39,110 3,470 8.1% Annual Average 42,700 39,300 3,400 7.9% 1996 Labor Force Employment Unemployment Unemp. Rate January 40,670 36,040 4,630 11.4% February 40,660 36,300 4,350 10.7% March 41,010 36,820 4,190 10.2% April 41,290 37,580 3,710 9.0% May 41, 640 38,230 3,410 8.2% June 42,690 39,410 3,280 7.7% July 43,120 39,650 3,470 8.1% August 44,180 41,200 2,980 6.8% September 43,510 40,570 2,940 6.8% October 43,010 40,130 2,890 6.7% November 41,870 38,490 3,380 8.1% December 41,390 37,600 3,790 9.2% Annual Average 42,100 38,500 3,600 8.5% 1995 Labor Force Employment Unemployment Unemp. Rate January 40,890 35,400 5,490 13.4% February 39,630 34,890 4,740 12.0% March 39,850 35,100 4,750 11.9% April 40,070 35,800 4,270 10.6% May 40,490 36,560 3,930 9.7% June 41,220 37,660 3,560 8.6% July 41,900 38,290 3,610 8.6% August 43,190 39,910 3,280 7.6% September 42,290 39,070 3,220 7.6% October 43,090 40,070 3,020 7.0% November 41,870 38,350 3,520 8.4% December 41,490 37,470 4,020 9.7% Annual Average 41,400 37,400 4,000 9.6% 1994 Labor Force Employment Unemployment Unemp. Rate January 39,950 34,850 5,100 12.8% Februal~y 39,900 34,750 5,150 12.9% March 39, 940 35,420 4,520 11.3% April 40,200 36,180 4,020 10.0% May 40,170 36,600 3,570 8.9% June 40,940 37,360 3,580 8.7% July 41,400 37,710 3,690 8.9% August 42,480 39,250 3,230 7.6% September 42,190 39,190 3,000 7.1% October 41,600 38,540 3,060 7.4% November 41,270 37,300 3,970 9.6% December 40,540 36,670 3,870 9.5% Annual Average 40,900 37,000 3,900 9.5% 1993 Labor Force Employment Unemployment Unemp. Rate January 39,200 33,280 5,920 15.1% February 38,670 33,060 5,610 14.5% March 38,430 33,400 5,030 13.1% April 39,520 34,690 4,830 12.2% May 39,860 35,570 4,290 10.8% June 41,190 36,570 4,620 11.2% July 41,420 37,020 4,400 10.6% August 42,380 38,560 3,820 9.0% September 42,020 38,300 3,720 8.9% http ://www.calmis.ca. go v/FILE/LFHIS T/MENDOHLF. TXT 01/29/2004 3age ~- October 41,900 38,290 3,610 8.6% November 40,430 36,560 3,870 9.6% December 40,910 36,490 4,420 10.8% Annual Average 40,500 36,000 4,500 11.1% 1992 Labor Force Employment Unemployment Unemp. Rate January 38,590 33,150 5,440 14.1% February 38,550 32,920 5,630 14.6% March 38,500 33,150 5,350 13.9% April 39,530 34,230 5,300 13.4% May 39,540 35,160 4,380 11.1% June 40,420 35,980 4,440 11.0% July 41,380 36,720 4,660 11.3% August 40,450 36,240 4,210 10.4% September 42,640 38,260 4,380 10.3% October 40,290 35,830 4,460 11.1% November 39,520 34,550 4,970 12.6% December 39,580 34,240 5,340 13.5% Annual Average 39,900 35,000 4,900 12.2% 1991 Labor Force Employment Unemployment Unemp. Rate January 38,500 33,370 5,130 13.3% February 38,220 33,170 5,050 13.2% March 38,240 33,120 5,120 13.4% April 38,190 33,690 4,500 11.8% May 38,070 34,200 3,870 10.2% June 38,820 35,250 3,570 9.2% July 39,540 35,980 3,560 9.0% August 40,280 37,130 3,150 7.8% September 39,210 36,020 3,190 8.1% October 39,680 36,570 3,110 7.8% November 38,430 34,230 4,200 10.9% December 38,330 33,920 4,410 11.5% Annual Average 38,800 34,700 4,100 10.5% 1990 Labor Force Employment Unemployment Unemp. Rate January 37,740 33,930 3,810 10.1% February 37,100 33,720 3,380 9.1% March 37,330 34,190 3,140 8.4% April 38,160 35,620 2,540 6.7% May 38,510 36,320 2,190 5.7% June 39,570 37,130 2,440 6.2% July 39,940 37,190 2,750 6.9% August 41,050 38,710 2,340 5.7% September 40,370 38,060 2,310 5.7% October 39,710 37,220 2,490 6.3% November 38,980 35,060 3,920 10.1% December 38,230 34,160 4,070 10.6% Annual Average 38,800 35,900 2,900 7.6% http ://www.calmis.ca. gov/FILE/LFHIST/MENDOHLF.TXT 01/29/2004 ::~age .. o:: STATE OF CALIFORNIA EMPLOYMENT DEVELOPMENT DEPARTMENT LABOR MARKET INFORMATION DIVISION 916-262 -2162 January 14, 2004 LABOR FORCE DATA FOR SUB-COUNTY AREAS (Data Not Seasonally Adjusted) 2002 BENCHMARK *Monthly sub-county data are derived by multiplying current estimates of county-wide employment and unemployment by the respective employment and unemployment shares (percentages) in each sub-county area at the time of the 1990 Census. Sub-county labor force is then obtained by summing employment and unemployment, and the result is divided into unemployment to calculate the unemployment rate. Based on Each Area's 1990 Census Share of County Employment and Unemployment* This method assumes that the rates of change in employment and unemployment, since 1990, are exactly the same in each sub-county area as at the county level (i.e., that the shares are still accurate). If this assumption is not true for a specific sub-county area, then the estimates for that area may not be representative of the current economic conditions. Since this assumption is untested, caution should be employed when using these data. !) Ail unemployment rates shown are calculated on unfounded data. 2) These data are not seasonally adjusted. 3) Due to the introduction of the 1990 Census population figures, the data for years prior to 1990 are not comparable with data for 1990 through 1999. Effective with the release of January 2003 data in February 2003, labor force data for all areas have been revised back to January 2000. This revision is the result of incorporation of the 2000 Census population controls at the State level and changes in methodology. Therefore, data for years prior to 2000 are not comparable with data for 2000 and later years. 4) Census ratios used to calculate sub county labor force are based on 1990 Census data. CCD stands for Census County Division. CDP stands for Census Designated Place. County Data are for December (Preliminary) 2003 Area Name Labor Employ- Unemployment Census Ratios Force ment Number Rate Emp Unemp Mendocino County 44,900 41,710 3,190 7.1% 1.000000 1.000000 Covelo - CDP Fort Bragg - city Laytonville - CDP Point Arena - city Ukiah - city Willits - city 510 460 3,500 3,290 610 550 230 190 7,770 7,240 2,600 2,420 50 9.0% 0 011034 0.014331 210 5.9% 0 078838 0.064313 60 9.4% 0 013178 0.017826 40 17.8% 0 004459 0.012583 530 6.8% 0 173599 0.164977 180 7.0% 0 057914 0.056973 http ://www.¢almis.ca. go v/FILE/LFMONTH/MENDO SUB. TXT 01/29/2004 Los Angeles Times January 22, 2004 Low-Pay Sectors Dominate U.S. and State Job Growth In California, industries that are hiring pay 40% less than those that are shrinking, a study finds. By Nancy Cleeland, Los Angeles Times Staff Writer California is being hit hard by a recent nationwide shift of jobs from high-paying industries to lower-paying sectors such as retail sales and tourism, a trend that doesn't bode well for the economy, according to a report released Wednesday. The report by the Washington-based Economic Policy Institute paints a picture of a state and national economy in which employment growth is being driven largely by Iow-skilled service jobs. In Los Angeles, according to the preliminary results of another studY, the shift is particularly pronounced because so many new jobs are in the "underground" cash economy of laborers who aren't counted in government statistics. These very Iow-wage workers - people who do yardwork or clean houses or wash dishes - might account for as much as 15% of all jobs in the metropolitan area, said Dan Flaming of the Economic Round Table, which is conducting its study for the city. "It's really scary," Jack Kyser, chief economist for the Los Angeles County Economic Development Corp., said of the long-term implications. An economy increasingly dependent on lower-wage jobs will have a smaller tax base and see less consumer spending, checking economic growth and reducing the quality of public services and infrastructure, Kyser said. Statewide, since the national recession officially ended in November 2001, the jobs that have been created are in industries that pay an average of 40% less than do those in which jobs have disappeared, the Economic Policy Institute said. The institute describes itself as focuSing on "the economic condition of Iow- and middle-income Americans and their families" and has been critical of the Bush administration's depiction of the economY. By the institute's measure, only three other states - Delaware, Massachusetts and Wyoming - fared as badly or worse than California. Only two states, Nevada and Nebraska, saw wages in industries with job growth exceeding wages in sectors with job losses. "We're losing important manufacturing jobs that have been available to support families, and gaining jobs that don't provide that opportunity," said Jeff Chapman, an economic analyst with the institute. "Now we see that the trend is worsening, .even in the middle of a recovery." For each state, researchers divided industries into those that were gaining in share of jobs and those that were losing share. They then compared average wages between the growing and shrinking industries. Chapman said California lost 127,000 manufacturing jobs and 55,000 jobs in the information sector from November 2001 to November 2003. Meanwhile, the leisure and hospitality sector gained 48,000 jobs, retail trade grew by 32,000 and health and education, which includes day-care teachers and Iow-wage hospital crews, grew by 65,000. Understanding the differences among states will take more analysis, said Michael Ettlinger, an economist who coauthored the report. What it clearly shows, he said, is that job quality is diminishing across the country. "These trends are real and anybody who looks at this data will see that this is happening," he said. Ron Bird, an economist with the Employment Policy Foundation, an employer-funded research group in Washington, offered a different assessment of the numbers. He divides job growth by broad categories of occupation - such as manager or production worker - instead of by sector, as the Economic Policy Institute did. By his measure, Bird said, the growth appeared to favor higher-paying jobs. He said the highest growth was in office and administrative jobs and in installation, maintenance and repair jobs, both of which pay higher-than-average wages. "The jobs where the growth was had higher average earnings," said Bird, whose analysis looked only at full-time jobs and did not break down the data by state. "It's a matter of looking at the glass as half empty or more than half full." For Joely Gardener of Carisbad, a laid-off executive from the high-tech field, there's no question about which way to view the job market. She has been scanning employment postings since losing her post as a research director at France Telecom in Silicon Valley in August. After searching in California for five months, she recently expanded her job quest nationwide. Still, Gardener, who has a doctorate and is a licensed psychologist, doesn't have a single hot lead. "I've been having a hell of a time finding the right job," she said. "I'm seeing an upswing in lower-level jobs in my field; they tend to be entry-level positions. I know other people in the same boat. What we're finding is that because of the glut of qualified professionals on the market, companies are being incredibly restrictive in how they look at people." Her stow is familiar to researchers focused on improving the local and state economies. "Our industries are changing very rapidly," said Kyser of the L.A. County Economic Development Corp. "You see it in the papers every day, but we look at the headlines and tend not to think much about it." Kyser said each local economy was unique, and that California had "special issues" such as runaway film production and high worker compensation costs that have driven away many good-paying jobs. Those need to be addressed in specific ways, he said. "This type of report starts the dialogue," he said. The jobs picture may be improving in California, he added, as jobs in aerospace and export industries grow. At the Economic Policy Institute, Ettlinger said unless the Iow-wage job shift identified by the institute was reversed, the nation's wage base would shrink and individual workers would have an increasingly difficult time finding quality jobs. "That means a declining standard of living," he said. "People rely on wages for their quality of life. If the nation's drifting into having lower wage levels, that's disturbing for everyone." The trend could be slowed or reversed through changes in public policy, Ettlinger said, suggesting raising the minimum wage, attaching labor standards to trade agreements to discourage outsourcing of manufacturing jobs or encouraging unionization in Iow-paying sectors. "Public investment could also increase productivity, which should boost wages," he said. MINUTES OF THE UKIAH CITY COUNCIL REGULAR MEETING WEDNESDAY, FEBRUARY 18, 2004 The Ukiah City Council met at a Regular Meeting on February 18, 2004, the notice for which had been legally noticed and posted, at 6:30 p.m. Roll was taken and the following Councilmembers were present: Rodin, Andersen, Baldwin, and Mayor Larson. Councilmember absent: Smith. Staff present: Administrative Analyst/Project Engineer/Manager Burck, Wastewater Treatment Plant Manager/Budget Officer Harris, City Manager Horsley, Wa Operator Jamison, Interim Public Utility Director McCann, City Attorney Rapport, Deputy Public Worl Director Stump, and Deputy City Clerk Ulvila. Supervisor Gall, Risk Treatment Plant Accounting Manager ,ector Seanor, Planning 2. PLEDGE OF ALLEGIANCE Members of the California Conservation Co~ Pledge of 3. PRESENTATION 3a. Adoption of Resolution Su Conservation Cor Residential Mayor Larson explained that the to funding for the California Cons( CCC's ability to meet the needs Coast. The City Council has been re~ Center in Ukiah. State ps (CO California includes significant reductions 'his will severely compromise services to the North of the Residential Deputy City a read resoluti n its entirety. M/S Andersen/Ba California ervatk call vot NOE~ 004-22 supporting the retention of the in Ukiah, carried by the following roll .mbers Baldwin, and Mayor Larson. ABSENT: Councilmember Smith. Marl with th, place 19 yea the CCC facility in Ukiah which has been in 3. PRE~ 3b. Presenl .ndocino Counl Youth Project Charlie Seltzer, the Mendocino County Alcohol and Other Drug Programs, provided a >n to the City Council regarding the status of Crossroads, the youth drop-in center located in downtown Ukiah. The state no longer supports this program and they don't have a way of staying open after March 1,2004. Lyle Coburn, current Crossroads Manager, discussed the programs and activities serving youth. J.P. Banks, member of the Board of Directors and volunteer at Crossroads, wanted the City to be aware of the situation that will be affecting the youth of Ukiah. 4. APPROVAL OF MINUTES Regular City Council Meeting February 18, 2004 Page 1 of 10 4a. Adjourned Regular Meeting of January 7~ 2004 · Deputy City Clerk Ulvila noted that the footer at the bottom of each page should be changed to "January 7, 2004". She also noted that on page 4 of 9, the third paragraph should read, "Topics discussed by members of the audience centered on the need to obtain more data concerning the rate increase and population growth, and not having new developments pay a higher connection fee or it will deter further development." M/S Baldwin/Rodin approving the minutes of the Regular M as corrected, and carried by unanimous consent. of January 7, 2004, 4. APPROVAL OF MINUTES 4b. Re.qular Meeting of January 21~ 2004 Councilmember Baldwin referred to page 4 paragraph under "Council Reports" should re; on the recent Russian River Watershed the first :ouncilmembe il meetin I." in the second n reported M/S Andersen/Rodin approving the minute 2004, as corrected and carried by the following Rodin, Andersen, Baldwin, and Larson. ABSENT: Councilmember Smith. Meeting of anuary 21, vote: AYES: Councilmembers None. ABSTAIN: None. 5. RIGHT TO APPEAL DECISION Mayor Larson read the 6. CONSENT M/S a. Approved Disbu b. Reject J. E C. d. Ado e. ;d Bid for to West Electrical Received R~ and $10,000. ~AR of E "a" :chia, and -'und; "f" of the Consent Calendar as follows: 2004; ]'oni Hoag, Michael E. Lane and Teresa ;d to Joint Powers Authority, Redwood and Pad Mount Transformers in the Amount of and Wesco; Requiring Use of City of Ukiah Claim Form; Purchase of Contractual Services for the Repair of )le; )enditure for Professional Services Costing Between $5,000 Motion carried by the following roll call vote: AYES: Councilmembers Rodin, Andersen, Baldwin, and Mayor Larson. NOES: None. ABSTAIN: None. ABSENT: Councilmember Smith. 7. AUDIENCE COMMENTS ON NON-AGENDA ITEMS Mike Decker, 601 Redwood Avenue, discussed taxes, dogs on his property and his attempt to make a living wage. al PUBLIC HEARING Regular City Council Meeting February 18, 2004 Page 2 of 10 8a. Public Hearin.q to Consider Increases in Sewer Connection Fees to Finance Improvements at the Ukiah Wastewater Treatment Plant Interim Public Utility Director Kennedy advised that at the January 7th meeting, staff presented to the City Council a proposed residential connection fee based on the number of bedrooms in a residential living unit. The City Council directed staff to reduce the difference between the connection fees for one, two and three bedroom residential structures, research the projected growth rate and provide a cost analysis. Staff prepared two proposed options for residential sewer service connection fees per Equivalent Sewer Service Unit (ESSU) and he discussed recommendation as contained in the Staff Report. Project Manager Burck discussed the two o dwellings which are based on the number of bedn rates for commercial and industrial uses as well from the City's Planning Department estimate= build-out in 2015. The Draft Ukiah Valley 2000 to 2020 to be 33% or a 1.65% Sewer Statistics" report published by the residential connections and 27% of the commerc District customers. If these s remain then 36.7% of the new connection Therefore, the cost to the City for th, Ukiah Valley Sanitation District (Distri~ )y staff for residential proposed 'he working notes 's annual to be 1% to 'lan estimates popu rowth from rate.ing to ti 2003 Department, !6% of the ctions within the City limits are ame from 2004 through 2025, in ity and 64.3% in the District. 50,925 and the cost to the Staff recommended differences in bedrooms and volume ~m res to the b utilized tee , Option A, to account for structures based on the number of ~e adopted ESSU. Dis( bed Staff concer growth ssed occupa~ sed options based on the number of of the Ordinance. There was also some odology of the calculations and the use of projected ieneral Plan, and possible expansion of the District. and that it is estimated to be 50% in Ukiah. Councilm revenues. charged more. cautioned about under funding of commercial connection motels have a lower fee while large apartments are (Tape l-B) City Manager Horsley explained that motels have a 50% lesser impact on the City's sewer system than apartments. She explained that staff will be meeting to discuss programs dealing with restaurants to improve the sewer system. City Attorney Rapport reminded Council that the Report recommends Council provide a definition for a bedroom. Public Hearing Opened: 7:26 pm Regular City Council Meeting February 18, 2004 Page 3 of 10 Jim Mulheren was of the opinion that Councilmember Andersen has animosity toward businesses in Ukiah. John McCowen spoke in support of the proposed increases for new hookups. Those speaking in opposition to the proposed increases and recommending further study were: Jeff Trouette, Jerry Harris (representing the Employers Council of Mendocino County), and Andy Nichol. Richard Shoemaker, a member of the Mendocino Ukiah Valley Sanitation District Board, discussed a that he would like Council and for the Sanitation Di= printout of a recommended fee schedule to Council the Sanitation District would have the same rates rd of Supervisors and to finance the project ~sider. He provided a ire that the City and Rick Ruddick, property owner across the water use incentives should be implem especially if there is a water crisis. as the treatment pl~ that an edu~ program, Public Hearing Closed: 7:52 Councilmember Baldwin preferre~ fees and connection fees at the treatment plant and he ,uncil should consider user expansion part of the Councilm~ th Opti, in Mr. Shoem~ chedule. however, she did not see the advantage Councilm~ schedul supportive Council and District work on the fee ~ proposal. Pr~ Manager B Distri act, that the project would move forward even if the not be provided new connections. Mayor La advised t the Sanitation District would also be obligated to pay for whatever ne' :hey create. He discussed the District's options and the benefits to th~ :rongly that the City adopt a collection formula that begins to pay for the expan the treatment plant. If the City did not receive a commitment from the District, th6 would most likely cancel the expansion portion of the project for the new connections in the District. He also preferred Option B and the incentive for housing. He was unsure about increasing the motel rate. (Tape2-A) M/S Andersen/Baldwin to reopen the Public Hearing, and carried by unanimous consent. Public Hearing Reopened: 8:08 p.m. Regular City Council Meeting February 18, 2004 Page 4 of 10 Richard Shoemaker discussed presenting his proposal to the District at their last meeting and thought it would be good if the District and the City had the same rates. He recommended holding a joint meeting of the Council and the District in the near future. James Mulheren discussed motel occupancy rates and thought that a 50% occupancy rate was a stretch. Bruce Foster questioned the design of the plant and reclamation of water. He felt that the TOT would be able rate of occupancy for motels. is a provision for a more accurate City Manager Horsley explained that reclamation project itself. The City is working with the Russi urban water management plan to cover all of but not part of the on an Public Hearing Closed' 8:11 p.m. Councilmember Baldwin, after some discu structure, suggested that the fee h addition B. h staff concerning the rate room be $1,500 under Option Motion by Andersen to research arrange for a joint San for lack of second. the TOT for motels and Council. Motion failed M/S Baldwin introducir Option B. title only utilizing the fee structure of It was hotel asse,' added to ,uncil to Staff to provide Council with the TOT for bedroom rate of $1,000 for each additional ucture, and if the proposed rate is an appropriate Di~ structure. with gard to working with the District and formulating a rate Motion carried b' Baldwin, and Mayor Smith. Ilowing roll call vote: AYES: Councilmembers Rodin, Andersen, NOES: None. ABSTAIN: None. ABSENT: Councilmember Deputy City Clerk Ulvila read the title of the Ordinance, "An Ordinance of the City Council of the City of Ukiah amending portions of Section 3731A, Article 12, Chapter 2, and Division 4 of the Ukiah Municipal Code pertaining to sewer connection charges." M/S Rodin/Baldwin introducing Ordinance, carried by the following roll call vote: AYES: Councilmembers Rodin, Andersen, Baldwin, and Mayor Larson. NOES: None. ABSTAIN: None. ABSENT: Councilmember Smith. Regular City Council Meeting February 18, 2004 Page 5 of 10 Recessed: 8:27 p.m. Reconvened: 8:33 p.m. 8b. PUBLIC HEARING Adoption of the Initial Study/Mitigated Negative Declaration for the Water System Improvement Proiect and Approval of SPH Associates' Design Recommendation for the Water System Improvement Project and Authorization to Proceed with Final Design Project Manager Burck discussed the project and ex tanks, the treatment plant, and a high service pump stati~ details of the project as provided in the Staff Report project cost is estimated at $10,950,000. The Ci reservoir and the treatment facilities construction needed redundancy in the treatment capacity ing the p water quality standards. She continued to de the status of t and laterals. it consists of storage went on to discuss ncil. The total probably to separate the also discussed the and the Collector Councilmember Andersen expressed residential sites, and questioned whether the m view sheds and to have the water n the hills near the Goll and were sufficient for the scenic y pleasing to the eye. Planning Director Stump discu= explained that a comprehensive Initia many technical studies ~e and regard to detriment~ aesthetic im s his o tanks are sited Iow environment. ThE adequatell mitigati >n that and to CEQA guidelines and He advised that s determination with a mitig~ ~n program. With regard to are adequately addressed. The storage ,e colored to blend in with the natural mitigations would offset the impacts monitoring program to ensure that the conc( member Ba population to page 39 of the Environmental Review/Initial Study its conclusion. Gary Bro~ Project Man~ usage of Ukiah Insultant, iised that the conclusion was based on the information that for doubling the treatment plant and the historical the fact the City is essentially built out. Councilmember La was of the opinion that increasing the capacity of the plant would not necessarily be growth inducing. If the City were to rebuild the infrastructure to increase its capacity, he inquired if the delivery system would be growth inducing. (Tape 2-B) Director Stump stated a biological assessment of the project was completed because of the potential wildlife habitat value of the Golf Course site and potential impacts of the water tanks grading and filling activity. A preliminary geotechnical investigation for the water system improvements was also completed. All of these technical studies are required of the Hillside Zoning Regulations. Regular City Council Meeting February 18, 2004 Page 6 of 10 Councilmember Baldwin inquired if the project is located in the flood plain, what would happen if there were a maior flood, and the impact on the fishery. Director Stump stated that the project is not in the floodway. He discussed construction code requirements and mitigation measures addressed in the document. Public Hearing Opened: 9:12 p.m. Lee Howard, 3900 Parducci Road, Ukiah, discussed tht opposition to the cut and fill at the Golf Course for the aesthetics. He provided a letter to Council dated Febru; record. He voiced is objection to the project going fo Impact Report (EIR). in 1964 and his tanks with regard to , which he read into the ut a full Environmental Public Hearing Closed: 9:38 p.m. Director Stump addressed the g and document. It was his opinion that they are the project. He discussed the correction mad floodway boundary. Staff would reference. He went on to discuss on pro! and growth program for the trees, in the any potenti; impacts to FEMA map that adjusted the statement into the Study by and long term maintenance Mr. Broad was of the caption. CEQA is Ihat so ook al '~c impact fall within the speculation City Attorney Council meeting so CO ~ation of the Public Hearing to the next analysis. (Tape M/S the Public Hearing to the March 3rd Council meeting. Cou ember Bald~ there are any changes in the interties. City Man; Iorsley on emergen~ 'med that there has been no change and that it is all based Motion carried ~ous voice vote. 9. UNFINISHED BUSINESS 9a.A;)Droval of Revisions to the Road Improvement and Land Use Agreement Between the City of Ukiah and County of Mendocino It was the consensus of the Council to continue the matter to the March 3, 2004 meeting. 10. 10a. NEW BUSINESS Discussion and Direction Regarding the City of Ukiah Sphere of Influence Boundary Regular City Council Meeting February 18, 2004 Page 7 of 10 Planning Director Stump advised that the current Sphere of Influence for the City of Ukiah was adopted in 1982 and he discussed the boundaries of the proposed new Sphere of Influence. There is a need to determine if the current or 1995 General Plan proposed Sphere of Influence is appropriate for the City over the next 10-15 years. No annexations can occur without the Sphere of Influence being consistent with the General Plan, and there is a current need to annex City-owned land adjacent to the airport and sewer treatment plant, and the Rural Communities Housing Development Corporation (RCHDC) project parcel in the Brush Street Triangle. He advised that the General Plan adopted in 1995 determined that the sh~ reduce its Sphere of Influence. Discussion followed with regard to potential area, agricultural lands adjacent to the City limits, policies in the past, and the process of services. Discussion was also had with City's Sphere of Influence. ,nlarging, ch as the Lovers Lane ressive annexation utilizing City reducing, the 10:24 p.m. Opened to the public comment John McCowen spoke in favor boundary. th ~'s current Sphere of Influence Bill Randolph, expressed his interesl for agricultural land. Ms. Carri Brown, Fa present Sphere nce sh~ not years. She the farm fc was the opinion that the City's the City's build-out area would be in 20 Lee Howa it was made to neral Plan Steering Committee and that the boundaries as they area now. Jam state area. of Influence should include the Boonville Road Discussion associated to research the m as development nea Council and Staff with regard to the time factor nnexation projects and it was felt that Staff should continue ~d provide input to Council. The Ukiah Valley Area Plan as well freeway and other areas were discussed. It was the consensus of the City Council to proceed to LAFCO with the 1995 General Plan recommended Sphere of Influence. 10. NEW BUSINESS 10b. for City Council Priorities Session for Fiscal year 2004-2005 After a brief discussion, it was the consensus of the City Council to hold a Council priorities session for Fiscal Year 2004-2005, beginning at 5:00 p.m. in Conference Regular City Council Meeting February 18, 2004 Page 8 of 10 Room #4 at the Civic Center on March 17, 2004, with the regular City Council meeting to follow. 10. NEW BUSINESS 10c. Set Date for a Workshop with the City.qate Associates City Manager Horsley advised that the City Council approved a contract with Citygate Associates to develop a strategy for annexation and revenue sharing. The consultants have recently completed an interim report that defines annexation procedures and property tax exchange basics. Due to the timeliness of development of this strategy, she recommended the Council's approval of a s workshop in order to discuss this issue. An ad hoc committee would to discuss strategy. After a brief discussion, it was the consensus March 10th from 5:00 to 6:00 p.m. for discussio their interim report on annexation. Citygate select the date of concerning 11. COUNCIL REPORTS Councilmember Baldwin discussed holding and the Ukiah Valley Sanitation District. He gas station on Perkins Street on side of th~ g between the Council [he Texaco sign at the former Mayor Larson reported that he signature gathering with Amy Unfortunately no one Councilmembers to the City would be ng its the March Mc( showe ~res. on tf that coalition meeting for of California Cities. packets delivered to advised Ms. McGorman that [ssage of the sales tax ballot measure for 12. City M; are becau: ly approved d noted that have beer the City been told by the state that its STIP funds ded Council with an update of the projects Council a report to Council with regard to the Golf have not been used to support the Golf Course to cover it. Deputy City spoke before ti them with edu( ported that both her and Police Detective Randy Johnson ist's club today regarding Measures F and G and provided .~. Adjourned to Closed Session at: 11:00 p.m. 13. CLOSED SESSION a. Conference with Legal Counsel- Anticipated Litigation Significant exposure to litigation pursuant to subdivision (b) of Government Code Section 54956.9 (1 case) No action taken. Regular City Council Meeting February 18, 2004 Page 9 of 10 b. Conference with Legal Counsel- Anticipated Litigation Initiation of litigation pursuant to subdivision (c) of Government Code Section 54956.9 (1 case) No action taken, c. Conference with Legal Counsel- Existing Litigation Subdivision (a) of Government Code Section 54956.9, Potter Valley Project (FERC No. 77-110) No action taken. 14. ADJOURNMENT There being no further business, the City Council ourned at 11:40 p.m. Marie Ulvila, Deputy City Clerk Regular City Council Meeting February 18, 2004 Page 10 of 10 MINUTES OF THE UKIAH CITY COUNCIL REGULAR MEETING WEDNESDAY, MARCH 3, 2004 The Ukiah City Council met at a Regular Meeting on March 3, 2004, the notice for which had been legally noticed and posted, at 6:31 p.m. Roll was taken and the following Councilmembers were present: Rodin, Andersen, Smith, Baldwin (arrived at 6:34 p.m.), and Mayor Larson. Staff present: Administrative Analyst Burck, Community Services Director DeKnoblough, Senior Civil Engineer Eriksen, Risk Manager/Budget Officer Harris, City Manager Horsley, Wastewater Treatment lnt Operator Jamison, Interim Public U.tility Director Kennedy, City Attorney Deputy Public Works Director Seanor, Planning Director Stump, and Deputy C 'k Ulvila. 2. PLEDGE OF ALLEGIANCE Mark Hedges led the Pledge of Allegiance. 3. PRESENTATII 3N 3a. Ado of Resolution Su Councilmember Smith read the Resolution Stud Ukiah M/S Smith/Andersen adopting Valley Studio for Public Radio Councilmembers Rodin, Andersen, ABSTAIN: None. ABSENT: None. ion J by in an~ pporting the creation of a Ukiah roll call vote: AYES: Larson. NOES: None. Barry Vogel, repres Counc the recognition. 3. PRE~ 3a. Proclamati, Mayor Lar~ read M 3n to comml Conference all citizens to attend the annual inference to 9Id at the Redwood Empire Fairgrounds, timber workers, their families, and their significant the Redwood Region. Mr. He extende~ devoted to the of the conference, advised that their theme is on environmental storage, and other associated areas. everyone to participate in conference and noted one day is students in the area. 4. APPROVAL OF NUTES 4a. Regular Meeting of February 47 2004 Deputy City Clerk Ulvila advised that an amended copy of the Draft minutes of the February 4th City Council meeting was distributed to Council and staff. Corrections have been made to pages 3 and 4, item 8b concerning the CDBG Public Hearing, as well as the footer of the document numbering the pages to 12 instead of 11. Staff informed her that CDBG requires certain information be included in the minutes, therefore the first two paragraphs under this title have been amended. Regular City Council Meeting March 3, 2004 Page 1 of 10 Councilmember Rodin referred to page 10, under her Council Report, the last sentence should read "She noted that their Ukiah residential facility is scheduled to close and they are soliciting letters of support to keep the facilib~ open. Mayor Larson referred to page 9, the first sentence in the fourth paragraph beginning with "2" should read, "2) design standards should be written into this Agreement so the County could not get out of their obligation by making a statement of overriding considerations". M/S Smith/Rodin approving the minutes of the Regular as amended, carried by a unanimous all "AYE" voice vote of February 4, 2004, City Council. 5. RIGHT TO APPEAL DECISION Mayor Larson read the appeal process. 6. CONSENT CALENDAR M/S Rodin/Smith approving item "a" a. Awarded Bid for 2004 Complete Ae~ Industries, Inc. for the Sum of $69,617.05; b. Received Report of Ac( Data C Consulting, Inc. in the ; c. Awarded Bid for 2004 Extend the Amount of $14,341.47; d. Awarded of $92.49 for Water Plant; e. Approved et Amen ~nt in Related to Li of the P h, to Cie. ~roved Budg~ Supplying Calenda Cab and Chassis to Altec )n Services from L.R. Hines Truck to Lasher Dodge in $464.9C LLC, at Unit Prices One Ton Cylinders for the lount of $10,000 for Special Legal Fees 25% Solution to Basic Chemical of $8,~ ; ;ouncil Regarding the Purchase of Services from AC&R rk at the Ukiah Civic Center in the Amount of $6,897; in the Amount of $725 to Pay for Repairs to the to the Lake Mendocino Fish Hatchery. Motion carrl~ Smith, Baldwin ing roll call vote: AYES: Councilmembers Rodin, Andersen, Larson. NOES: None. ABSTAIN: None. ABSENT: None. 7. AUDIENCE CC .~ ON NON-AGENDA ITEMS No one came forward to address Council. 8. PUBLIC HEARING 8a. Adoption of the Initial Study/Mitigated Negative Declaration for the Water System Improvement Project and Approval of SPH Associates' Design Recommendation for the Water System Improvement Project and Authorization to Proceed with Final Design (Continued from February 18th) Planning Director Stump explained that at the February 18, 2004 City Council meeting, the Council conducted a public hearing to consider the adoption of a Mitigated Regular City Council Meeting March 3, 2004 Page 2 of 10 Negative Declaration for the water system improvement project. After public testimony, and at the advice of the City Attorney, the Council continued the item, and asked Staff to return on March 3, 2004 with additional information concerning a number of environmental concerns. Staff provided Council with the information it requested in the Staff Report and recommended adoption of the environmental document and approval of the SPH Associates' design proposal for the water system improvement project, and to provide authorization to proceed with final design. Director Stump discussed the comments and responses in geotechnical/soils, aesthetics related to screening of the area, potential impacts on fishery resources, concern th site is being proposed in the floodway, future' environmental conclusions. Report related to tanks in the hillside existing water treatment of new sources, and City Attorney Rapport discussed his with regard to questions raised at the ' Initial Study and Negative Declaration for storage tanks and to add two treatment designed treatment capacity. He advised that written comments from to Mr. Lee Council members, but not to the by Vice-Mayor Baldwin concerning the storage tanks construction and the City needs to const orage which Clerk. e City Council ~eeting about the ;cope of the to cons1water the treatmenl plant to its he received a copy of sent to the homes of the City to questioning ~sider as separate projects rades, by stating that anything else happens. Project Enginee separated from the treatment units servicing. not lasti explai~ st of the ect, ~uld that if the construction of the tanks were that the City is having to run and is unable to take one off line for failure of the pumps and they are Int~ Public Util in prod Kennedy stated that the Ranney Collector has Discussior Iinued witliouncil inquiries of Staff with regard to various sections of the Initial St~ ect may relate to the Orrs Creek Bridge project, and a mandate that Ihe City treats meet its maximum peak demand. Staff discussed in detail he calculations were derived for the maximum day demand and also discussed treati the water. Staff also responded to Council's inquires concerning the functioning of the Ranney Collector and noted that the Ranney Collector is considered an existing well. Discussion continued with regard to needing additional source capacity Mayor Larson advised that the materials submitted by Mr. Howard had been sent directly to individual Council members and he inquired of Staff if they had seen the documents. Staff responded that they had not seen Mr. Howard's documents until tonight. Regular City Council Meeting March 3, 2004 Page 3 of 10 Smith/Andersen to open public hearing, carried by unanimous consent Public Hearing Opened: 7:18pm. (Tape l-B) Lee Howard, Parducci Road, Ukiah, distributed a letter dated March 1, 2004 as well as a Supplemental Report responding to City staff's report and the City Attorney's memo. He read his letter into the record and requested the supplemental report also be entered into the record. He advocated that the City should prepare an for the project. He felt that the Initial Study did not address fisheries and sed Rick Ruddick, Ukiah, discussed the fishery issues a~ with by many businesses in the valley. that are dealt Public Hearing Closed: 7:31 p.m. Discussion continued with regard to the was changed. Staff discussed the history 1992 as well as the delineation of the flood pl~ its relationship to the treatment pl~ It wa~ wastewater treatment plant 1992, the FEMA maps. for the map and why it ect was posed in on the FEMA map and by Staff that at the time of the was not delineated on Councilmember Ander,, science says even th de, opinion that the b! that the City an EIR proje. the process and of what map prevails. It was his ~ajor flood. He concurred with Mr. Howard Project Manager Bi Miti< is suffi< evidence and facts, staff thought a project. Inb ublic Util the is above the proce< noting that more acc ~. Kennedy explained that the elevation of the floor of level. He went on to discuss the FEMA study and ~ts did additional studies to pin down the floodway Councilmeml the project has g of the opinion that the floodway issue is critical and felt ential and needs an EIR. City Attorney Rapport responded to questioning regarding whether the Mitigated Negative Declaration was adequate to build the storage tanks, by responding that if the Negative Declaration is adequate for the larger project, it would be adequate for a smaller project. Mayor Larson discussed the urgency for the design and construction of the tanks and that if the project were to be separated; the construction of the storage tanks could proceed. He expressed some concern with waste storage in the flood plain that may need further analysis. Regular City Council Meeting March 3, 2004 Page 4 of 10 Director Kennedy explained that an estimated 25 cubic yards per year of colloidal material is taken out of the basins and on site. He referred to Mr. Howard's comment that approximately 100 cubic yards per year is taken out. The City is not expanding the back wash basin, just the number of treatment filters are expanding. City Attorney Rapport explained that an EIR would be necessary if there were substantial evidence in the record upon which to have a fair argument that the project may have an unmitigated adverse environmental impact. substantial evidence could include facts, not conjecture or based on facts. On the other hand, based on speculatior He stated that Mr. Howard's statements about the im River during a future storm event like the 1964 backwash material from the water filters was I~ would not constitute substantial evidence. further stated that , or expert opinion ~ot substantial evidence. habitat in the Russian from storing on-site speculation, and Councilmember Rodin was of the opinion right now, and for that reason, was not an en also felt there are separate issues about ex storage tanks. lie silt is curre g pact from the 'oject. She treatment plant and adding Councilmember Andersen inquire certain amount of concern expressed opinion that it makes rege picture and larger c~ ~cts, a Mr. Howard credit ~e conce he exp ed. n CEQA with regard to a ;Iger an EIR. It was his 'ect, to look at the bigger EIR. He stated that he gives Director Stump re,, to substantial evidence of fact. City ,d in the wh must on that in det~ lining whether an affect will be adverse or consider the views held by members of the public as in determining what the effects will be, the decision in the record. Councilm advised that her opinion th~ implications. ~r Rodin response to Councilmember Andersen's statements, source project at hand to make that assumption. It was not answer the question of the bigger picture or its City Attorney Rapport explained that if an EIR is required by the City Council, a decision will have to be made with regard to its scope. He discussed some of the assumptions and comments made by the public and that everything is based on the concern if additional water becomes available. He stated that it is currently speculative whether, which kind and how much water can be developed. The Council could make assumptions and base the scope on those assumptions of an EI R. He stated that, based on the record, he felt he could defend a Mitigated Negative Declaration if court action is filed. Regular City Council Meeting March 3, 2004 Page 5 of 10 (Tape 2-A) City Attorney Rapport continued to discuss Mr. Howard's Supplemental Report that was submitted into the record and noted some inaccuracies. He did not think any of the points raised by Mr. Howard change his opinion and he has responses to all of Mr. Howard's statements. M/S Smith/Rodin adopting the Initial Study/Mitigated Negative Declaration for the Water System Improvement Project. Discussion continued with regard to providing additional capacity with the storage tanks and the treatment of the water. It was staff that should new sources of water be found, it would require an EIR. Councilmember Baldwin was of the opinion construction of the storage tank project but requi~ Orrs Creek Bridge required an EIR, he requires as EIR. th; ~ould proceed with ~EIR for th, ment plant. If the the water plant project Mayor Larson stated that he did not thin discussed the City's needs and the stress on current needs inside its bou was his opinion that this project i~ inducement purposes. He felt the outside the scope of the project. inducing ect. He plant to meet the City's EIR for the Ukiah Area Plan. It le needing an EIR for growth existing condition and is Motion carried by and Mayor Larson ABSENT: roll ca AYES: Imeml: Rodin, Smith, and Baldwin. ABSTAIN: None. M/S Smith System Non( Larson. n recommendation for the Water and Auth~ Staff to proceed with the final design; vote: AYES: Councilmembers Rodin, Andersen, Smith, Baldwin. ABSTAIN: None. ABSENT: Recesse( R~ :25 p.m. 1 UNFINISH Adoption Of 'dinance Pertaining to Sewer Connection Charges and Discussion and Consideration of Connection Fee Increase for Hotels and Motels to Finance Improvements at the Ukiah Wastewater Treatment Plant Interim Public Utilities Director Kennedy advised that at the February 18, 2004 City Council meeting, the Council introduced an ordinance which included an increase in sewer connection fees for hotels and motels. The City Council directed staff to investigate the occupancy rates for hotels and motels in Ukiah to possibly modify the reconnection fees. He went on to discuss Staff's research and other information included in the Staff Report to Council. He also recommended Council adopt a sewer Regular City Council Meeting March 3, 2004 Page 6 of 10 connection fee in the amount of $3,504 for each bedroom added to an existing residential structure. Councilmember Andersen referred to page 3 of the Staff Report regarding residential connection fees for a bedroom addition and expressed concern that additions to existing homes would need to pay higher fees. It was his opinion that the City should make it easier to build on to an existing structure as opposed to someone building a new home. Director Kennedy explained Staff's recommended o Council. It is staff's proposal that the fee be based on the n~ presented to of bedrooms. City Attorney Rapport explained that staff's methodology and formula tied to the number of people the structure could house and that addition of a bedroom to an existing structure which represents 40% of the base ESSU. .n fees are based on a and the number of to~mmend that the nged to $3,504 bedroom (Tape 2-B) Councilmember Baldwin recommended the existing home and that this sam. additional bedroom above 3-bedro ~ew 500 for a bedroom to an y to each addition of to each Councilmember Rodin recomm~ it would cost $1,000 over that. Any room would it the same so that cost $2,500 for anything arged $2,500 per room. Jim Mulheren improvement proje and Sonom. Counci Baldwin with regard to home resale value of homes in Mendocino M/S am( fee of that the c, per ESSU, t Ordinance of $2,500 that ea~ in addition fee Article 12, Cha Ordinance, that (1) a sewer connection fee in the each bedroom added to an existing residential over three bedrooms would be charged a fee of $9,759; and to accept Staff's proposal be changed from $1,000 per ESSU to $4,380 recommended fee structure for motels and hotels, for an of the City of Ukiah amending portions of Section 3731A, 4 of the Ukiah Municipal Code Pertaining to Sewer Connection Charge: carried by the following roll call vote: AYES: Councilmembers Rodin, Andersen, Smith, Baldwin, and Mayor Larson. NOES: None. ABSTAIN: None. ABSENT: None. 10. NEW BUSINESS 10a. Annual Review of Traffic Signalization Fund for South Orchard Avenue anH East Gobbi Street Senior Civil Engineer Eriksen advised that the traffic signalization improvement fund for the intersection of South Orchard Avenue and East Gobbi Street was adopted on May 16, 1990. This fund was established to finance the construction of a traffic signal Regular City Council Meeting March 3, 2004 Page 7 of 10 at the intersection of South Orchard Avenue and East Gobbi Street. The resolution provided that the fund was to be reviewed every five years after fees were collected and reviewed and reported annually after the first five year period. He summarized the funding sources and estimated additional funding required for the improvement project. He reported that the recent State budget crisis has caused delays to the STIP funding availability causing STIP funded projects to be delayed. City Attorney Rapport advised that the City would improvements needed for the fee and how much it will be on the allocation of all of the projects. He stated that if project, it would have to return the money back to the agreement from them. have to identify the public and base the fee did not do the specific owner or obtain an Discussion followed with regard to using other financing certain projects. such as funds, to assist in City Manager Horsley discussed the conducted and noted there may be a way to signal timing and coordinating signals. study is being traffic just by ~anging the Councilmember Andersen expre,, and that the City needs to move some of the North State Street Fire rn that badly Congested intersection ble. He suggested using ect done. It was the consens South Orchard appropriately and 1st accept t Report and determined that Street Traffic Signalization Fund are 10. 10b. ~cilities Com Services owned hat them at this the end of Gol dedication at the i~ AB~ Section 1965 of the City of Parcels of Land as Parks and Recreation gh advised that the City has three new park ,perties to add to the parks and recreation system. He rrent budget restrictions, the City may not be able to open include the Observatory property, Riverside Park at Lnd fronting the Russian River, and property acquired by Cindee Drive and Orchard Avenue. M/S Smith/Rodin introducing Ordinance by Title only, carried by the following roll call vote: AYES: Councilmembers Rodin, Andersen, Smith, Baldwin, and Mayor Larson. NOES: None. ABSTAIN: None. ABSENT: None. Deputy City Clerk Ulvila read the title of the Ordinance, "An Ordinance of the City Council of the City of Ukiah amending Chapter 112, Section 1965 of the City of Ukiah Municipal Code establishing Park Facilities. Regular City Council Meeting March 3, 2004 Page 8 of 10 M/S Smith/Baldwin introducing Ordinance, carried by the following roll call vote: AYES: Councilmembers Rodin, Andersen, Smith, Baldwin, and Mayor Larson. NOES: None. ABSTAIN: None. ABSENT: None. 10. NEW BUSINESS 10c. Selection of City Councilmembers for Annexation Ad Hoc Committee City Manager Horsley advised that at the February 18, 2004 meeting, the Council scheduled an educational annexation workshop for March 10th, from 5:00 0 6:00 p.m.. The City's annexation consultants, Citygate Associates, will b to discuss City annexation procedures, including property tax reements, review of transfers of service responsibility, costs and revenues thur when land is annexed to a city, and impacts of annexations on other cies. It was the consensus of Council to selected to the Annexation Ad Hoc Committee. representatives from the County staff or County and City Planning Commissioners. ant ~cilmember Rodin il further dire( to invite members, and 11. COUNCIL REPORTS Councilmember Andersen re G at the March 2nd election. He there was discussion concerning cl Landfill. is disa at the he P( d with the outcome of Measure Management meeting Landfill to the Redwood City Manager Horsl :hat ;ss is y on hold. Council :h due to illness, he nable to attend the last Council meeting the meeting on TV. Counci they Several that Ukiah Valley Sanitation District met and They asked staff to come back with three different in attendance and expressed an interest. Mayor n reported the City's ~ntial communicate he met with Martin Bradley about Ukiah's observatory and with International Latitude Observatory. He will n Marguba-lnternational concerning the observatory. 12. CITY MAN~ ITY CLERK REPORTS City Manager Horsl y advised MESA met this week and approved a contract with Lou Canton who was the previous emergency director from San Francisco. He will be coming here for a month while Rick Paige is on vacation. She reported that Monday all of the Directors will be meeting with regard to budget cut recommendations. Deputy City Clerk Ulvila reminded Council that the deadline for filing FPPC form 700, Statement of Economic Interests is April 1,2004. Regular City Council Meeting March 3, 2004 Page 9 of 10 She discussed the elections results related to ballot Measures F and G and the process that the Mendocino County Election's Department needs to follow prior to counting the 133 outstanding City absentee ballots remaining. On Monday morning, March 15th, she will provide a tour of City Hall to a group of about 10 Japanese foreign exchange students, ranging in age from 15 to 17 years old. Adjourned to Closed session at: 9:50 p.m. 13. CLOSED SESSION a. Conference with Leqal Counsel- Antici Initiation of litigation pursuant to subdivision Code Section 54956.9 (1 case) No action taken. ~n rnment b. Conference with Leaal Counsel Significant exposure to litigation Code Section 54956.9 (1 case) No action taken. ~ated to ation (b) of 14. ADJOURNMENT There being no further business, th~ to March 10, 2004 at 5:00 p.m. Annexation Workshop h 17, Ukiah Civic Center ~n of b ~riorities. s adjourned at 11:30 p.m. Council Chambers for Room #4 at the Marie Ulvil Regular City Council Meeting March 3, 2004 Page 10 of 10 MINUTES OF THE UKIAH CITY COUNCIL ADJOURNED MEETING ANNEXATION WORKSHOP WEDNESDAY, MARCH 10, 2004 The Ukiah City Council met at an Adjourned Meeting for an Annexation Workshop on March 10, 2004, the notice for which had been legally noticed and posted, at 5:01 p.m. Roll was taken and the following Councilmembers were present: Rodin (arrived at 5:06 p.m.), Andersen, Smith, Baldwin, and Mayor Larson. Services Director DeKnoblough, Risk Manager/Budget Horsley, City Attorney Rapport, Planning Director Stump, Audience present: Mendocino County Supervis~ Wagonette, LAFCO Executive Officer Mc Michael, St~ present: Community City Manager City Clerk Ulvila. Shoemaker, and Fire Chief Grebil. 2. AUDIENCE COMMENTS ON No one came forward to address Council. 3. ANNEXATION WORKSHOP City Manager Horsley introduced Mr. Bob B; that invitations to attend the wor as req~ Mendocino County Board of ;rs, Commission, and City of Ukiah Pla~ ission. City Council. She advised by Council, were sent to the Mendocino County Planning Bob Braitman from Draft Report on Exchange A~ further discu: cities and that he Uki~, 3, discussed the and a Successful Tax Report as of February 18, 2004. He various LAFCO organizations in other cities. He prow~ the ne to be eli nt would be that e made as Resoluti~ ication were discu The County were the neutral effe~ annexation on oth )vernmental agencies and voters. Revenue and Taxation Code Section 99. printout distributed to Council, staff, and of annexation procedures and the requirements of property. Preparation of a master property tax went on to discuss certain City planning decisions application to LAFCO which would require a the City Council. LAFCO's review and approval process of service responsibilities concerning the City and the ngth as well as the reallocation of revenues. He discussed exation on an individual's property taxes and the effects of He made reference to the Discussion followed with regard to annexing residential areas as it relates to a tax exchange with the County. Besides property tax, sales tax revenue sharing was also discussed. Councilmember Andersen requested additional information regarding sales tax agreements as well as anticipated developments and sharing of taxes from those future developments. Adjourned City Council Meeting Annexation Workshop March 10, 2004 Page 1 of 2 Mr. Braitman stated that the current sales tax should be considered, however, he did not think the loss of potential revenue to the County should be considered. He went on to discuss services that the City may need or want to provide to annexed property. (Tape l-B) Frank McMichael, LAFCO Executive Office, commented regarding City annexations and service providers. He further discussed LAFCO's policy, gotiations between the City of Ukiah and the Board of Supervisors with regard to, g, infrastructure issues, and the importance of the City protecting its ;re of Influence when development occurs. Dan Grebil, Ukiah Valley Fire District Chief, JPA between the City of Ukiah and the Ukiah Ukiah valley that failed to develop. He furthe commitment to continue to respond to call~ City limits. otiations to form a District ~n in the ~ssed the Ukiah Fire District's c~ both inside outside the 4. ADJOURNMENT There being no further business, March 17, 2004 at 5:00 p.m. in consideration of budget priorities an; 17th would commence at ed the meeting at 6:10 p.m. to the Ukiah Civic Center for Meeting of March Marie Ulvila, De Adjourned City Council Meeting Annexation Workshop March 10, 2004 Page 2 of 2 UKIAH REDEVELOPMENT AGENCY Regular Meeting of January 21, 2004 The Ukiah Redevelopment Agency met in regular session on January 21, 2004, the notice for which had been legally noticed and posted, at 7:39 p.m. in the Civic Center Council Chambers, 300 Seminary Avenue, Ukiah, California. Roll was taken and the following Commissioners were present: Commissioners Rodin, Andersen, Baldwin, and Chairman Larson. Commissioner absent: Smith. Staff present:, Assistant Director DeKnoblough, Deputy Director Harris, City Attorney Rapport, Recording Secretary Ulvila. 2. AUDIENCE COMMENTS ON NON-AGENDA I' No one came forward to address the Agency. 3. APPEAL PROCESS Chairman Larson reviewed the appeal pro~ 4. APPROVAL OF MINUTES 4a. Regular Meeting Minutes Of October 1 M/S Baldwin/Andersen a ular presented, carried by the Andersen, Baldwin, and Chairman Smith. ABSTAIN: None. vote N( inutes of October 15, 2003, as 'ES: Commissioners Rodin, ABSENT: Commissioner w 4b. M/S Rodin presented, Andersen Smith. APPROVAL carried regular 2003 minutes of November 5, 2003, as vote: AYES: Commissioners Rodin, :None. ABSENT: Commissioner 5. EW 5a. James M thanked Cou O1 Chamber has a policy in Financial And Activities Report From Greater ~ommerce ~n of the Greater Ukiah Chamber of Commerce, for her participation. He advised that the Chamber now Iorsing candidates. Bruce Foster, newl Chairman of the Greater Ukiah Chamber of Commerce, explained that a report of the Chamber's activities was sent in advance of the meeting for the Commission's review. He expressed the need for the Chamber and the City to continue to work together on community projects. There was a brief discussion concerning the governor's budget proposal and possible affects on the Ukiah Redevelopment Agency. By consensus, the Commission received report from the Chamber of Commerce. Regular City Council Meeting January 21,2004 Page 1 of 2 6. COMMISSIONERS REPORTS Councilmember Rodin explained that she is a member of the Ukiah Players Board and promoted their new play. She also noted that a conference concerning land use decisions regarding water is scheduled for March 18-21st. She felt it would be a worthwhile conference for the Commissioners to attend. There was some discussion concerning the email sent by Amy O'Gorman from the League of California Cities in which she attempted to set a date to obtain the City Council's signatures. Chairman Larson advised that he happy to assist in the planning, however, most of the City's efforts in this ~nity will focus on the City's ballot measures. 7. EXECUTIVE DIRECTOR REPORTS None. 8, ADJOURNMENT There being no further business, the adjou~ 7:46 p.m." Marie Ulvila, Recording Secretary Regular City Council Meeting January 21,2004 Page 2 of 2 ITEM NO. 5a DATE: MARCH 17, 2004 UKIAH REDEVELOPMENT AGENCY AGENDA SUMMARY REPORT SUBJECT: APPROVAL OF 2003-2004 MID YEAR BUDGET AMENDMENT This Mid Year Budget Amendment is the opportunity to address the few issues with financial implications which have occurred since the budget was adopted or are anticipated to arise throughout the rest of the fiscal year. Modifications to the budget at this time allow for a greater degree of accuracy when actual revenues and expenditures are compared to budgeted figures at the end of the year. The specific accounts and dollar amounts are presented in the attached Ukiah Redevelopment Agency 2003-04 Mid Year Budget Amendment Summary of Transactions. Each proposal is discussed below. The only issues applicable to the Redevelopment Agency are the minimal costs associated with the Management Unit Memorandum of Understanding and Vacation buyouts. The total amount of the amendment is $2,778. It is still unclear what impact the State budget will have on the Agency's budget and thus Staff has not recommended any amendments associated with the proposals being considered in the Legislature. All other revenue and expenditure items appear to be consistent with the adopted budget. Staff recommends Agency approval of the 2003/04 Mid Year Budget Amendment as presented. RECOMMENDED ACTION: Approve Mid Year Amendment to the 2003/04 Agency Budget as Presented in the 2003/04 Mid Year Budget Amendment Summary of Transactions. ALTERNATIVE AGENCY POLICY OPTIONS: 1. Determine modifications to the budget amendment are necessary, identify changes, and approve revised amendment. 2. Determine budget amendment is not necessary and take no action. Requested by: Prepared by: Coordinated with: Attachments: Michael F. Harris, Deputy Redevelopment Directo Gordon Elton, Director of Finance and Candace Horsley, Execbtive Director 1. 2003/04 Midyear Budget Amendment Summary of Transactions, page 1; Ap p ROVE D :~--?t~~-~~.-~-... mfh:asrura03 Candace Horsley, Exec~ive Director 0317BA Attachment #1 UKIAH REDEVELOPMENT AGENCY 2003~04 MID YEAR BUDGET AMENDMENT SUMMARY OF TRANSACTIONS March 17, 2004 Account Number 960.5601.110.000 960.5601.141.000 960.5601.151.000 960.5601.1 52.000 960.5601.1 54.000 960.5601.1 55.000 Amount Type Comments $2,061.00 E $116.00 E $486.00 E $82.00 E $21.00 E $12.00 E Change ~n salary cost to reflect MOUs, Worker's Compensation, and PERS Change ~n retirement costs to reflect MOUs, Worker's Compensation, and PERS Change ~n group insurance costs to reflect MOUs, Worker's Compensation, and PERS Change ~n workers comp costs to reflect MOUs, Worker's Compensation, and PERS Change ~n medicare costs to reflect MOUs, Worker's Compensation, and PERS Change m unemployment costs to reflect MOUs, Worker's Compensation, and PERS Type: "E" is expense mfh:0203Budget MIDYEAR Page 1 of I 3/9/2004 9:43 AM ITEM NO. 5b DATE' March 17, 2004 UKIAH REDEVELOPMENT AGENCY AGENDA SUMMARY REPORT SUBJECT: RECEIPT OF AUDITED FINANCIAL STATEMENTS FOR FISCAL YEAR 2002/2003 Once again the auditors have issued an unqualified opinion on the Agency's financial statements and identified no instances of noncompliance and no material weaknesses in internal control over financial reporting. Stephen Herr, CPA of Davis Hammon & Co., Certified Public Accountants, conducted the audit of the Ukiah Redevelopment Agency's financial statements for the year ended June 30, 2003. Davis Hammon & Co. has audited the Agency's financial statements for a number of years and therefore has a good understanding of the Agency's operations. This continuity was significant in implementing GASB 34 which provides the financial statements with a new and very different presentation this year from prior years. The financial report is divided into several sections: REPORT Table of Contents Independent Auditors' Report Government-wide Financial Statements Fund Financial Statements Notes to Financial Statements Required Supplemental Information Single Audit and Other Compliance Report Pages i 1 2-3 4-5 6-12 14 16 (Continued on page 2) RECOMMENDED ACTION: Receive and file the Ukiah Redevelopment Agency financial statements for the year ended June 30, 2003, audited by Davis Hammon & Company. ALTERNATE COUNCIL POLICY OPTIONS: None Requested by: Candace Horsley, Agency Executi~J~rector Prepared by: Gordon Elton, Finance Director Coordinated with' Candace Horsley, Agency Executive Director Attachments' None Note: Bound copy of the Ukiah Redevelopment Agency Financial Statements for FY 2002- 2003 was forwarded under separate cover APPROVED' Candace Horsley, A~ency Executive Director Audited financial report - continued Independent Auditors' Report (page 1) The auditors' opinion, titled "Independent Auditors' Report", is unqualified. This means that, in the auditor's opinion, the overall financial statements present fairly, in all material respects, the financial position of the Agency as of June 30, 2003. The auditors refer to the changes required by GASB 34 in the fourth and fifth paragraphs of this report. Government-wide Financial Statements (pages 2-3) These are statements presented at an overview level. All activities of the Agency are identified as Governmental Activities. The first report, the "Statement of Net Assets", is divided into three sections: Assets, Liabilities, and Net Assets. This report compares to the Balance Sheet as presented in the past. The terminology is changed to use Net Assets instead of Fund Balance. Previously long-term debt was excluded from this report. This new presentation includes long-term debt of $6,188,455. The second report, the "Statement of Activities", is an entirely new presentation of revenue and expenses. The major element of this report is the method of presenting revenue either as Activity/Program revenue or as General revenue. All revenue is identified as General revenue. The ending balances on this report will equal the ending balances on the "Statement of Net Assets". The Net Asset balances include both current and long-term assets and liabilities. Fund Financial Statements (pages 4-5) The "Balance Sheet" identifies the four funds maintained by the Agency. This report identifies items not reported in Governmental Funds which are necessary to reconcile the "Fund Financial Statement" with the "Statement of Net Assets". The Fund Balance reserved for Debt service is slightly more than the cash with fiscal agent. This fund balance is reserved for the final long-term debt payment. The Fund Balance reserved for Capital outlay in the Capital Projects Fund is $75,404 less than the Agency's obligation to reserve funds for schools (Note 5.B. page 12). The "Combined Statement of Revenues, Expenditures and Changes in Fund Balances" lists Revenue, Expenditures and Other Financing Sources (Uses) and compares with the Income Statement prepared in previous years. Notes to Financial Statements (pages 6-12) In addition to the financial statements themselves, the "Notes to Financial Statements" provide important additional information about the financial condition of the Agency and the manner in which business is conducted. The Notes are reformatted from prior years to comply with the new reporting requirements. Note 1, Summary of Significant Accounting Policies, discusses other entities that are included in the financial statements and the Agency's policies regarding how various assets, liabilities, revenues and expenses are recorded in the financial statements. The sub- sections of this note are: A) Reporting Entity; B) Government-Wide and Fund Financial Statements; C) Measurement Focus, Basis of Accounting, and Financial Statement Presentation; and, D) Assets, Liabilities, and Net Assets or Equity. Note 2, Stewardship, Compliance and Accountability, discusses budgetary information, Funds with expenditures in excess of appropriations, and Funds with deficit Equities. Note 4, Detailed GE: Audi t 2 0 0 3 rdaagn, do c Page 2 Audited financial report - continued Notes on All Other Funds, provides information concerning: A) Deposits and Investments; B) Capital Assets; C) Interfund Receivables, Payables and Transfers; and D) Long-Term Debt. Note 5, Other Information, lists information related to: A) Risk Management; B) Commitments and Contingencies; C) Change in Accounting Policies; and D) Prior Period Adjustment. Required Supplemental Information (page 14) Schedule I compares the General Fund and the Low & Moderate Income Housing Fund Revenues and Expenditures to their respective budgets. Compliance and Internal Control (page 16) The Compliance and Internal Control section is the area where the auditors report on compliance in accordance with government auditing standards, compliance with general federal requirements, and on internal control structure. In the Compliance section, the auditors state: "The results of our tests disclosed no instances of noncompliance that are required to be reported under Government Auditing Standards". In the Internal Control Over Financial Reporting section the auditors state: "We noted no matters involving the internal control over financial reporting and its operations that we consider to be a material weakness". Recommended action Staff recommends receiving and filing the audited financial statements for the year ended June 30, 2003. GE:Audit2003rdaagn.doc Page 3 ITEM NO: 5(;; MEETING DATE: IVlarch 17, 2004 UKZAH REDEVELOPMENT AGENCY AGENDA SUMMARY REPORT SUB.1ECT: UKI'AH REDEVELOPMENT AGENCY FI'NANCI'AL PRO3ECTI'ONS Annually, staff prepares an update of the financial projections for the Agency. This report is presented to the Board for information purposes and to provide a picture of the Agency's current and projected future financial position. Consideration of Redevelopment Projects: When and if projects can be undertaken by the Agency is a continuing question. Staff has prepared projections to estimate the potential for new projects. As always, projections are based on conditions that may vary significantly from actualities. One of the largest uncertainties is the actions the State of California may take when balancing the State budget. For fiscal year 2003/2004 the State recaptured $142,010 of properly tax revenue that the Agency would have received. Based on information coming out of Sacramento, the State will recapture this same amount or even more in fiscal year 2004/2005. The projections described herein are based on the State NOT taking additional property tax revenue. Additionally both revenue and expenses for fiscal year 2003/2004 are projected at budgeted levels. Attachment #1 - Future Projections -is a calculation of the future financial picture of the Agency by use of standard annual increases for tax revenue and administrative/operating expenses. The Fund Balance totals (lines 23 & 24) represent the combined balance of the Debt Service Capital Projects and Administrative & Operations Funds. (Continued on page 2) RECOMr4ENDED ACTZON: Receive and file report. ALTERNATZVE COUNC]:L POLZCY OPTTONS: Provide alternate direction to staff. Citizens Advised: Requested by: Prepared by: Coordinated with: Attachments: N/A Executive Director Candace Horsley Gordon Elton, Finance Director Candace Horsley, Executive Director Future Projections Approved: Canda~e'Horsley, i~ecutive Director The results of staff's projections show the Agency has resources available to fund projects currently as well as the potential to pursue debt financing for additional projects. If all resources are utilized, $2.4 million of new projects are possible by June 30, 2005. Backaround: The capacity for the Ukiah Redevelopment Agency (Agency) to undertake significant redevelopment projects is a function of the tax revenue (increment) available to repay debt incurred to pay for the projects. The availability of tax revenue is driven by the increase of the assessed value of real property within the Agency boundaries. The available revenue is then reduced by various agreements with other local governmental entities that obligate the Agency to either set aside or pay to the other entity a portion of the tax revenue. Contracts with the Ukiah Unified School District, the Mendocino County Office of Education and the Mendocino-Lake Community College District require amounts to be set aside in a "Capital Projects" Fund for these entities. The agreement with Mendocino County requires repayment of property tax to the County beginning with the eleventh year of the Agency. The other significant allocation of Increment is the State requirement that 20% of the Increment is reserved for Housing. The Agency has further agreed to reserve part of the Housing money for Mendocino County and Mendocino-Lake Community College District projects. For fiscal year 2003/2004, the State of California shifted property tax from Redevelopment Agencies to the State as part of the State's budget. The impact on the Ukiah Redevelopment Agency is $142,010. The potential for a similar impact in 2004/2005 exists to the extent the State Legislature decides to shift Redevelopment Agency property tax revenue to meet State obligations. Proiections: Looking forward utilizing an annual Increment increase of 2.4% and projecting a continuation of current year activity at a static level of project expenditures and administrative expenses incrementing at 4% per year, a Fund Balance, exclusive of Housing money, of $12.4 million will be accumulated by .lune 30, 2030. This projection will change with any significant changes in actual assessed value of real property within the Agency boundaries, with any legislative changes at the State level or if the expenditures actually incurred vary from the projection. The projection of future Fund Balance suggests the Agency has capacity to secure additional debt to fund future projects. Staff has received initial information from a Redevelopment specialist estimating the Agency's capacity to fund additional future projects. The impact of the contract with IVlendocino County to return properly tax money to the County must be assessed to determine the impact on the Agency's ability URA Financial Update Page 2 of 4 to repay new debt. This process is underway. The current projection for Fund Balance at .lune 30, 2004 is $1,920,636. If continuing projects are budgeted at $205,000 (the same level initially budgeted for FY 2003/2004), administration costs of $242,000 (a 4% increase), debt payments of $697,000 and property tax revenue increases by 2.4%, the fund balance at .lune 30, 2005 will be $2.4 million. Table #1 identifies debt payments, other expenditures, total revenue and the beginning and ending Fund Balances for fiscal years 2003-2004 and 2004/2005. Table #1 Expendituresf Revenue and Fund Balance FY FY Description 2003/2004 2004/2005 Debt Payments REFA COPS * 520,330 521,505 Airport Park Blvd 87,325 87,325 City of Ukiah loan 88f128 88~128 Recurring projects 205~000 205~000 One-time projects 135~000 Administration and operations 232~498 241~799 Total Expenditures 1~268~281 1~143~757 Revenue 1~863~087 1~659~069'* Net Revenue over Expenditures 594f806 . 515~312 Beginning Fund Balance 1~325~830 1~920~636 Ending Fund Balance 1~920f636 2~435~948 includes Trustee fees ** After repayment to Mendocino County Debt: Table #2 lists the total Agency debt outstanding and the annual payments for fiscal year 2003/2004. It should be noted that the payments listed for the City of Ukiah debt are interest only. All projections are prepared with the understanding that the City will not require repayment of the principal until well into the future. URA Financial Update Page 3 of 4 Table #2 Principal Annual Balance Payment Debt Schedule 6/30/03 FY 03/04 Payment Includes * REFA** Certificates of Participation 5~935~000 520~330 P~ I~ T State of California - Airport Park Blvd 428~200 87~325 P~ I City of Ukiah General Fund 342~651 20~559 I City of Ukiah Electric Utility 1~126~144 67~569 I Total 7~831~995 695~783 * P = Principal; ! = !nterest; T = Trustee fees ** REFA = Redwood Empire Financing Authority The REFA debt has a final maturity in 2023. The final payment on the State of California loan is .luly ~., 2009. The principal repayment to the City of Ukiah may be delayed indefinitely by agreement between the City and the Agency. Proiec~ Expenditures: The Redevelopment Agency members had previously expressed their interest in completing a pedestrian-friendly rehabilitation of downtown State Street, along with an upgrade of the Main Street area parking lots, pedestrian walkways, and bike lanes. The Agency had taken action to commit funding to this project. Based on a recent submission by the City of Cloverdale of the design and construction costs for the reconstruction of their main boulevard, staff is requesting that the Agency reserve $4.5 million to the State Street project. The traffic studies are now in progress, and the next step would be to hire a consultant to perform the Downtown Revitalization design work, as well as meeting with the public to determine what the community would like to have constructed in the downtown area. Subsequent to the design work would be the actual construction of the streetscape, sidewalk planters, bulb outs, parking spaces and street furniture. This project is estimated to take between four and seven years to complete, so commitment of Redevelopment money at this time is essential. Staff will soon be returning to the Agency with the five-year implementation plan, so that the Agency may prioritize projects, and may at that time reassign funding of this project to other areas, before the traffic studies are complete. Staff recommends the Board receive and file this report and approve reservation of funds for the downtown core rehabilitation project. UR~ Financial Update Page 4 of 4 o o o ~.o 0 ~0 CO ~1' 0 0 0 ~ 0 0 0 ~ ~ 0 0 0 o o o~ o. , o ~0  0 0 0 0 v- wi' 0 0 0 ' 0 O~ 0 0 O~ ~0 0 0 ~- 0 0 0 0 ~0 0 0 0 ' 0 ~0 CO 0 0 0 0 O~ O~ 0 0 0 ' 0 ~- ~oo I~ I~ 0 o 0 0 ._ .[ >- oi7' <o~ ~0 0 'o-2 ~oOOoo° 0 ~1' 0 0 0 - ~, ~-~OoO~O 0 O~ 0 0 0 . 0 cO 0 0 0 ~,~oo~o ) ~'~ 0 0 0 · -- 0 0 0 0 04 0 0 0 ~888 0 ~ 0 0 0 ~ ' . o o ~0 o ~ o I~ o 0~ o ~-= o ~ o o o o o~ o ~-- o o~ oo oo ~°o ~8 ~8 0 ~ ~°o o ~o o o~ o I~ ~;) ,~- o o o ~.o~- ._ ._~ ._ >-. o I',-. ~ o e0 o . . IA~ .v=- w~=.. 0~0 ~ 0 0 0 I',.. 0 0 0 eO 0 0 0  0 0 0 0 CO 0 0 0 0 O~ 0 0 0 ~ ~' o o' c~ co 1~ IA~ 0 0 ~0 o o o v- o o o o ~1- o o o o o (o o ~0 o o~ o o o o o o~ (3) 0 0 0 I'- 0 0 0 ~0 0 0 0 0 ~ 0 w- 0 CO o,I (o o ~8 ~ o eq ~-- 0,1 o . o o o oo ITEM NO.: 6~, DATE: March 17, 2004 AGENDA SUMMARY REPORT SUBJECT: REPORT OF DISBURSEMENTS FOR THE MONTH OF FEBRUARY 2004 Payments made during the month of February 2004, are summarized on the attached Report of Disbursements. Further detail is supplied on the attached Schedule of Bills, representing the four (4) individual payment cycles within the month. Accounts Payable check numbers: 53046-53173, 53176-53284, 53375-53545 Accounts Payable Manual check numbers: 44166 Payroll check numbers: 52974-53045, 53289-53372 Payroll Manual check numbers: 53174-53175 Void check numbers: 53285-53288, 53373-53374 This report is submitted in accordance with Ukiah City Code Division 1, Chapter 7, Article 1. RECOMMENDED ACTION: Approve the Report of Disbursements for the month of February 2004. ALTERNATIVE COUNCIL POLICY OPTIONS: N/A Citizen Advised: N/A Requested by: Candace Horsley, City Manager Prepared by: Kim Sechrest, Accounts Payable Specialist Coordinated with:Gordon Elton, Director of Finance and Candace Horsley, City Manager Attachments: Report of Disbursements APPROVED: Candace Horsley, City Manger KRS:WORD/AGENDAFEB04 CITY OF UKIAH REPORT OF DISBURSEMENTS REGISTER OF PAYROLL AND DEMAND PAYMENTS FOR THE MONTH OF FEBRUARY 2004 Demand Payments approved: Check No. 53046-53173, 53176-53284, 53375-53440, 53441-53545, 44166 FUNDS: 100 General Fund 131 Equipment Reserve Fund 140 Park Development 141 Museum Grants 143 N.E.H.I. Museum Grant 150 Civic Center Fund 200 Asset Seizure Fund 201 Asset Seizure (Drug/Alcohol) 203 H&S Education 11489 (B)(2)(A1) 204 Federal Asset Seizure Grants 205 Sup Law Enforce. Srv. Fund (SLESF) 206 Community Oriented Policing 207 Local Law Enforce. BIk Grant 220 Parking Dist. #10per & Maint 230 Parking Dist. #1 Revenue Fund 250 Special Revenue Fund 260 Downtown Business Improvement 290 Bridge Fund 301 2107 Gas Tax Fund 310 Special Aviation Fund 315 Airport Capital Improvement 330 Revenue Sharing Fund 332 Federal Emerg. Shelter Grant 333 Comm. Development Block Grant 334 EDBG 94-333 Revolving Loan 335 Community Dev. Comm. Fund 341 S.T.P. 342 Trans-Traffic Congest Relief 345 Off-System Roads Fund 410 Conference Center Fund 550 Lake Mendocino Bond 575 Garage $223,135.48 600 Airport 611 Sewer Construction Fund 612 City/District Sewer $1,235.50 615 City/District Sewer Replace $717.94 640 San Dist Revolving Fund 650 Spec San Dist Fund (Cap Imp) 652 REDIP Sewer Enterprise Fund 660 Sanitary Disposal Site Fund 664 Disposal Closure Reserve 670 U.S.W. Bill & Collect 678 Public Safety Dispatch 679 MESA (Mendocino Emergency Srv Auth) $1,666.66 695 Golf $3,650.34 696 Warehouse/Stores 697 Billing Enterprise Fund 698 Fixed Asset Fund 699 Special Projects Reserve 800 Electric 805 Street Lighting Fund 806 Public Benefits Charges 820 Water 840 Special Water Fund (Cap Imp) $11,517.06 900 Special Deposit Trust 910 Worker's Comp. Fund 920 Liability Fund 940 Payroll Posting Fund 950 General Service (Accts Recv) 960 Community Redev. Agency 962 Redevelopment Housing Fund $8,628.88 965 Redevelopment Cap Imprv. Fund 966 Redevelopment Debt Svc. $1,147.15 975 Russian River Watershed Assoc PAYROLL CHECK NUMBERS 52974-53045, 53174-53175 DIRECT DEPOSIT NUMBERS 19441-19590 PAYROLL PERIOD 1/18/04-1/31/04 PAYROLL CHECK NUMBERS: 53289-53372 DIRECT DEPOSIT NUMBERS 19298-19440 PAYROLL PERIOD 1/4/04-1/17/04 TOTAL DEMAND PAYMENTS TOTAL PAYROLL VENDOR CHECKS TOTAL PAYROLL CHECKS TOTAL DIRECT DEPOSIT TOTAL PAYMENTS VOID CHECK NUMBERS: 53285-53288, 53373-53374 $29,489.54 $343,810.43 $51,910.84 $375.00 $17,187.52 $5,390.65 $24,032.47 $1,398.21 $11,447.59 $15,148.65 $1 418.74 $9 963.06 $6 750.00 $2 951.00 $622 828.72 $9 086.50 $1 673.95 $44 344.11 $9 568.77 ;813.75 $127,052.85 $35,233.12 $228,235.13 $1,981.81 $38,293.23 $10,661.21 $19,118.18 $6,782.81 $1,928,646.85 $64,282.42 $105,370.80 $334,095.34 $2,432,395.41 CERTIFICATION OF CITY CLERK This register of Payroll and Demand Payments was duly approved by the City Council on Deputy City Clerk APPROVAL OF CITY MANAGER I have examined this Register and approve same. CERTIFICATION OF DIRECTOR OF FINANCE I have audited this Register and approve for accuracy and available funds. City Manager Director of Finance O~ ~o 0 · o 0 i o~ _i 0 0 Soossooso O0 O0 0 000000000 o oo ~~ O0 O0 0 O0 o ~ O0 0 00 00 00 f'~ 0'3 0 0 00 ~0 {20 O2 O0 00 00000 °~°o o~ o 0 OoOoO ~ 0 u~ O0/O · . . 00~ O~ o~o O O L¢~ ~--~ , · 00oSS°o OOOOOOOOO OOOOOOOOO ~°° ~o~~o 0~~000 HHHHHHHHH ~~HH~ © o8~© Soosoossoo O0 O0 O0 00 00 6'4 ¢~ O06O o HHHHH HHHHH0 ('~ 0 0 n~ n~ o 0 ~ ~H ~ ~ 0 ~O O~ 0~ o~ om m~ ~ ~ H ~ oD,< i U~. 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OO oo~°° oo~ 0,..-4 ~o O~ O E~ H H C) H O~ ~H H O O O ~1 H n~H i O H H H H H H H H H I..-I ~° ~H~ H~ o ooooooooooooooo o~oo~oo~oo~oo 000000000~00000 o~oo~oo~oo~oo o~gg~g~gg~gg~oo oo o oo o~8~~~8~88~oo oo o o~oo~oo~oo~o 000000000000000 000000000000000 o~oo~oo~oo~oo 0 O0 O0 O0 O0 0 000 ~° 00 ~ ('x} o o o o o o o o ~8~o8oo8oo~8~o 0 O0 O0 O0 O0 000000000000000 ~~00000~~0 OOOO~~OOOO~ O O O~ ~ OO ............... o~7~o~oo~oo 0 ~ O~ O0 ~ H H ~H~HHO~O~HO oSSoosoos~oosoo O OO OO OO OO OOOOOOOOOOOOOOO OOOOOOOOOOOOOOO 0 ~ ~0 O~ 0~~00~0~~ ............... o~oo~oo~oo~o 0 O0 O0 O0 ~0 HHHHHHHHHHHHHHH o°o°° r../) H (/'J0 o o o o , . o ~ o 0'~ · , o o o o ~E~ ~00 >~ H~ o~ H ~E~ ,<~0 H H ¢~ mOD © O~ i ,~ ~J · o > 0 o o o o °~ o o o o o o o o o o o o o'~ o ["..- 00 o o kc, kc o o o o o o ~° o o o o o o o'1 o~ o o 6'40q O O O O O O Ln Ln ~ O'1 O0 ~ <2> 0 0 O H !~ E.-,O i Or..) 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H ~:~ © i o~ ~o H ,m~ ~ · o 0 0 o o 0 O~ Oh O O O O O O 00 cq LD ~o~ O O O OO Ln 0 0 0 O O O O O O LD O O CD O O O CO 00 L~ Ln C~ 0~ O o 0 o © © 0 0 0 0 ,--I 0 ('~ · 0 0 ,.-t © · 0 0 0 O O O · , · !D4 i ~ · 0 H H oo~ 0 HHH H~ O O O O H H oo ~o OC) E~ O~ o [.f.-] H o,~ E~O o o o Hn~ © 0 H r. an~ OE~n~ ~:~ H ~>~ H O~ ~o rj · > o o o o o o o 00 c0 o~ o~ ~0 og o o o o o o 0 0 o o o o o o ,r--I 0'~ g~o o© o© g ,~ o~ o'-" o°°o o© o© o°o° 0 0 0 0 0 0 0 0 0 0 0 0 o ~o ,-., o o ,.,-, ~oo ~ ~o oo ~D ~0 ~) 0'/ l.n kid 0'/ 0'/ . · . °© °© ,..,,o °© o ~ ,.--, o o oo ,-.t 0 0 ~:~ 0 0 0 0 H © oo~ 0,~ ~o ~ H 0 0 0 0 ~0 ~0 H ~ 0 H 0 H ~0 r.~ i O~ E~o > O0 O0 000000 00000~ 000000 000000 6O 00 o o o o o ~ o o o o o o o 0000 o o o o o oooooooo oooooooo oooooooo 00000000 00000000 00~~ oo~; po 0 0 oO~ O~ (JO HH~H~ 0 o o o o o o , . ~° cq ~ · [-~ ~ ~'~ 0'3 · ~° © oo8 88°°8°° oo ~ 00000000 o~oo~oo~ ~0~0~ 000~0~0 o ~° o o o · cq ('xl cq , . 0 oo O~ ~o OU~ 0 0 0 ~00000000 0 0 o o o oooo ~~ ooo ~g~ oo ~g 000 O0 O0 O0 ooooo ooo oooo 0 0 o 0 O0 O0 O0 O0 O0 O0 0 000000000000000000000000 ~°~°~°°~°°~°°~°~o~~ ~ ~ ~ ~ ~~~~°~°~~g~oo o o~ ~ o o ..... , . . . . . ~o~o~o~~o~~O~o o ~ ~ ~o oo O~ HO ~D i i ~H H ~ 0 ~0 O~ H o,< E-,o > OOOOOO OOOOOO O O OOO O08 '~'~ '~t~ "~1~ O O O O O OOO o 0 0 · , , OO~ HHH ~0 HHHO ot~ i o~ r..) oo E~ ~ o OH O~ r.,80 E-~ H H o o ~.., r..2 0,< ~,o > ,,--I *-4 0 0 0 0 O0 6O o'1 o~ 0 0 o ,4.4 .~ o oo oo 0 0 0 · . 0 0 O0 00 · roc~ ,<o O~ ~ 0 ~0 oo H~ 0 0 O~ E~o H ~ ¢J . 0 > °~ o 0 E~o H ~ r~ . 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IN THE AMOUNT OF $55,500 SUMMARY: Submitted for the City Council's consideration and action is Staff's recommendation that the purchase of 150 Dry Tons of Ferric Chloride 40% be awarded to Kemiron Companies Inc. in the amount of $370.00 per Dry Ton for a total value of $55,500.00 plus tax. The material is used at the Wastewater Treatment Plant as a primary coagulant in the Advanced Treatment process and the Chemically Enhanced Primary Treatment program. In response to the City's Request for Bids, three bids were received and opened by the City Clerk at the prescribed time for public bid opening. Noticing to bidders was in accordance with the City's informal bid process. The lowest responsible bidder was Kemiron Companies Inc. with a base bid of $370.00 plus tax per Dry Ton of Ferric Chloride. Funds for chemical treatment materials have been budgeted in the City/District Wastewater Enterprise Fund under account number 612.3505.520.000 and adequate funds are available for the requested purchase. RECOMMENDED ACTION: Award Bid To Kemiron Companies Inc. For Ferric Chloride At $370.00 Per Dry Ton For A Total Value Of $55,500.00 Plus Tax. ALTERNATIVE COUNCIL POLICY OPTIONS: Reject all bids and provide direction to staff. Citizen Advised: Requested by: Prepared by: Coordinated with: Attachments: N/A Jerry Gall, Wastewater Treatment Supervisor Jerry Gall, Wastewater Treatment Supervisor Rick Kennedy, Interim Public Utilities Director, and Candace Horsley, City Manager 1. Bid Opening Results 2. Initial page of bid from Kemiron Companies Inc. APPROVED: Candace Horsley, City nager CITY OF UKIAH 300 SEMINARY AVENUE UKIAH, CA 95482-5400 (707) 463-6217 (City Clerk=s Office) BID OPENING FOR: Ferric Chlorill~.Products -- SPECIFICATION NO. FERCHLR DATE: February 25~ 2004 TIME: 2:00 p.m. COMPANY AMOUNT KEMIRON COMPANIES, ,INC. 3211 CLINTON KARKWAY COURT, #1 LAWRENCE, KS 66047 . UNIVAR USA 2256 JUNCTION AVENUE SAN JOSE, CA 95131 , Marie Ulvila, City Clerk Bids: Ferric Chlorine Products 2004 1 .... Z~4 DET^iLED SPEC~FICAT;ONS- L{~!D F.FP,,RIC..C.Ht~ORIDE PROD!JCZ L!QUIC FERRIC CHLORIDE - 40% 300,000 lb,,,; A.W WA !ANS! Standards - ~07-93 Un~,t Pn~ D~LIVERY: City of Uk~ah Sever 3'fes~em Pla~t, 3~ Plant Road, Uklab, CA 9~82, TiWJe i5 of (he e~sence 'ct ~he de~wery cf lh,s producl, and deliveries s~al:~ ~ made within Itlree {3) calendar days after receipt C..¢ana Tclailwto 1axesi T~'~e (':,h' cf Uki,~h res,:':~vc,,s lhe rigf't to Ac::ep~ 2r reiecI ar~y or a.,1 ',;ids and wai:,,'e shy irreguiarit:ie.s, m.,r(:~:; 3..-.,; ~ ~r~ . ~ ...... b' c~ecged a~l o~ (ne f~gu~e,s s~ated o~ ],~e a~tac~Ued DETAILED SPEC~FICAT:ONS a~d a~p~s f'uh res~s~biiity for a~y er¢or c:r om~ ~,-' '~ ~he ¢¢epar~?on of ~is bid, (check one)' rd.,/;dual C,..r er (Specify: · ..7 .................. 6c ITEM NO. DATE: March 17, 2004 AGENDA SUMMARY REPORT SUBJECT: ADOPTION OF ORDINANCE AMENDING CHAPTER 12, SECTION 1965 OF THE CITY OF UKIAH MUNICIPAL CODE DESCRIBING PARCELS OF LAND AS PARKS AND RECREATION FACILITIES At the March 3rd meeting the Council introduced the Ordinance amending Chapter 12, Section 1965 of the Municipal Code to add Observatory, Orchard, and Riverside Parks into the City's Parks system. The ordinance is being returned to the Council at this time for adoption. RECOMMENDED ACTION' Adopt Ordinance amending Chapter 12, Section 1965 of the Municipal Code adding Observatory, Orchard, and Riverside Parks to the City's parks system. ALTERNATIVE COUNCIL POLICY OPTIONS: 1. Determine adoption of ordinance requires further consideration and remand to staff with direction. 2. Determine adoption of ordinance is inappropriate and do not move to adopt. Citizen Advised' N/A Requested by: Prepared by: Coordinated with' N/A Larry W. DeKnoblough, Community Services Director ~" f~ Candace Horsley, City Manager and Sage Sangiacomo, Community Services Supervisor Attachment: Ordinance for Adoption , C'~ APPROVED: ..~ ~"~'~ ~ Candace Horsley, Cit~Manager LD/ZlP2 ParksOrd2.Asr ORDINANCE NO. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF UKIAH, AMENDING CHAPTER 112, SECTION 1965 OF THE CITY OF MUNICIPAL CODE, ESTABLISHING PARK FACILITIES THE CITY OF UKIAH DOES HEREBY ORDAIN AS FOLLOWS: CHAPTER 12, section 1965 of the City of Ukiah Municipal Code is hereby amended to read as follows: Section: FACILITIES: The following described parcels of land are parks and recreation facilities of the City and shall be known by the names indicated: A. TODD GROVE MUNICIPAL PARK - Bounded by Walnut, Live Oak Avenue, and Park Boulevard; B. GIORNO PARK - Situated next to Anton Stadium and lying between Giorno Avenue and Park Boulevard; C. CARPENTER PARK - Bounded by Clay Street and Main Street; D. McGARVEY PARK - Bounded by Stephenson, Bush, Dora, and Clay Streets; E. OAK MANOR PARK- Bounded by Oak Manor Drive, Gobbi, and Gibson Streets; F. SEMINARY AVENUE - Bounded by Oak and State Streets; G. V1NEWOOD PARK - Situated between Elm and Pine Streets; H. MUNICIPAL GOLF COURSE- Situated along Live Oak Avenue and Park Boulevard; I. GARDNER POCKET PARK - Situated within Parking Lot A; J. ALEX R. THOMAS, JR., PLAZA- Bounded by State, School, and Clay Streets; K. OBSERVATORY PARK - Situated between Observatory Avenue and Luce Avenue; L. ORCHARD PARK- Bounded by Orchard Avenue and Cindee Drive; M. RIVERSIDE PARK - Situated at the east end of Gobbi Street and bordered on the east by the Russian River. Introduced by title only on March 3, 2004, by the following roll call vote: AYES: NOES: ABSTAIN: ABSENT: Councilmembers Rodin, Andersen, Smith, Baldwin, and Mayor Larsen None None None Adopted on March 17, 2004 by the following roll call vote: AYES: NOES: ABSTAIN: ABSENT: ATTEST: Eric Larson, Mayor Marie Ulvila, Deputy City Clerk AGENDA SUMMARY ITEM NO. 6d DATE: MARCH 17, 2004 REPORT SUBJECT: ADOPTION OF ORDINANCE AMENDING PORTIONS OF SECTIONS 3731A and 3735, ARTICLE 12, CHAPTER 2, DIVISION 4 OF THE UKIAH MUNICIPAL CODE PERTAINING TO SEWER CONNECTION CHARGES At the March 3, 2004 City Council meeting, an ordinance to increase sewer connection fees was amended and introduced by title only. The City Council approved an increase to the connection fee for additional bedrooms beyond three bedrooms in a new home from $1,000 to $2,500 per bedroom and a reduction to the connection fee for a bedroom addition to an existing home from $3,504 to $2,500. The changes authorized by the City Council have been made and the ordinance is presented for adoption. Staff recommends adoption of the ordinance to increase sewer connection fees as approved after consideration during the public hearings. RECOMMENDED ACTIONS: Adopt Ordinance of the City Council of the City of Ukiah Amending Portions of Sections 3731A and 3735 Article 12, Chapter 2, Division 4 of the Ukiah Municipal Code Pertaining to Sewer Connection Charges. ALTERNATIVE COUNCIL POLICY OPTIONS: Determine ordinance is not to be adopted, take no action, and provide direction to Staff. Citizen Advised: Requested by: Prepared by: Coordinated with: Attachments: N/A City Council Ann Burck, Project EngineedManager and Director Candace Horsley, City Manager 1. Ordinance for adoption Rick Kennedy, Interim Utility APPROVED: Candace Horsley, City~l~anager ORDINANCE NO. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF UKIAH AMENDING PORTIONS OF SECTIONS 3731A and 3735, ARTICLE 12, CHAPTER 2, DIVISION 4 OF THE UKIAH MUNICIPAL CODE PERTAINING TO SEWER CONNECTION CHARGES The City Council of the City of Ukiah does hereby ordain as follows: SECTION ONE Section 3731A of the Ukiah City Code is hereby amended to read as follows: §3731 A: SEWER CONNECTION CHARGES: The following charges are hereby established for the connection of the plumbing of any building or structure which discharges to the sanitary sewer system of the City and said charges are separate from any other charges presently levied or which may be levied in the future: A. Residential Schedule: Eight Thousand Seven Hundred Fifty-Nine Dollars ($8759.00) for equivalent sewer service unit (ESSU) per dwelling unit connected based on the number of bedrooms according to the following schedule: Single/Multi-Family/Modular Homes/Mobile Homes Connection Fee ESSUs 1. 1 bedroom $7,759 0.9 2. 2 bedroom $8,759 1.0 3. 3 bedroom $9,759 1.1 4. For each additional bedroom $2,500 beyond 3 bedrooms B. Commercial and Industrial Schedule: 1. Eight Thousand Seven Hundred Fifty-Nine Dollars ($8759.00) per ESSU for commercial and industrial connections, except hotels and motels, together with the charge to be determined by the City Manager based upon biochemical oxygen demand removal requirements, other treatment requirements, and gallonage of flow, and any other sewage characteristics as the City Manager deems appropriate. For hotels and motels, the charge per ESSU shall be Four Thousand Three Hundred Seventy-Nine Dollars and Fifty Cents ($4,380.00) for recognition of 50% occupancy, together with the charge to be determined by the City Manager based upon biochemical Ordinance No. Page 1 of 1 oxygen demand removal requirements, other treatment requirements, and gallonage of flow, and any other sewage characteristics as the City Manager deems appropriate. 2. [Remains the same] SECTION TWO Section 3735 is hereby added to Article 12, Chapter 2, Division 4 of the Ukiah City Code §3735: ADDITION OF BEDROOM TO EXISTING STRUCTURE. A sewer connection fee in the amount of $2,500.00, which is equivalent to 40% of the sewer connection fee charged for one equivalent sewer service unit, shall be charged for each bedroom added to an existing residential structure as permitted under the provisions of Division 3 of the Ukiah City Code. Said connection fee for each added bedroom shall be paid at the time the building permit is issued. The term "bedroom" as used herein shall include any room which can be used as a bedroom, no matter how designated on the building plans; provided, however, that a residential dwelling unit may have one living room, dining room, garage, kitchen, and family room which shall not be considered a bedroom. Bathrooms shall not be considered as bedrooms. SECTION THREE This ordinance shall become effective 30 days after its adoption, and will be published as required by law in a newspaper of general circulation in the City of Ukiah. Except as specifically provided herein, any application for a sewer connection received by the City after November 5, 2003, shall be subject to the fee imposed by this Ordinance, to be collected on or after the effective date of this Ordinance. The fee imposed by this ordinance shall not apply to an application for a sewer connection and connection fee received by the City prior to the effective date of this Ordinance for a project consisting of five or fewer sewer connections which does not require extension of an existing sewer main, if, prior to November 6, 2003, the project has received all planning approvals required for issuance of building permits. "Planning approval" means approvals required by the Ukiah City Code or other law for the development or use of real property from the Ukiah Planning Commission or City Council, such as, but not limited to, parcel maps or final subdivision maps, site development permits, use permits, and variances. Nothing contained herein shall require the City to furnish a sewer connection, if the City lacks treatment capacity to accommodate the additional connection, as determined by the City Manager or City Council based on engineering analysis and recommendations. Ordinance No. Page 2 of 2 Introduced by title only on March 3, 2004, by the following roll call vote: AYES: NOES: ABSENT: ABSTAIN: Councilmembers Rodin, Andersen, Smith, Baldwin, and Mayor Larson None None None Adopted on March 17, 2004, by the following roll call vote: AYES: NOES: ABSENT: ABSTAIN: ATTEST: Eric Larson, Mayor Gordon Elton, City Clerk Ordinance No. Page 3 of 3 AGENDA SUMMARY REPORT ITEM NO. 6e DATE: March 17, 2004 SUBJECT: AUTHORIZE THE INTERIM PUBLIC UTILITY DIRECTOR TO EXECUTE THE ANNUAL LETTER OF AGREEMENT 04-SNR-00639 BETWEEN THE CITY OF UKIAH AND THE SIERRA NEVADA CUSTOMER SERVICE REGION OF THE WESTERN AREA POWER ADMINISTRATION TO PROVIDE DAILY EXCESS CAPACITY AND ASSOCIATED ENERGY FROM THE SHASTA REWIND PROJECT Submitted for the City Council's action is a request that the Interim Public Utility Director be authorized to execute the annual Letter of Agreement (LOA) between the City of Ukiah and the Sierra Nevada Customer Service Region of the Western Area Power Administration which sets the terms for providing daily excess capacity and associated energy to the City of Ukiah from the Shasta Rewind Project. This year's annual Letter of Agreement is numbered 04-SNR- 00639 and it shall become effective on April 1, 2004 and shall remain in effect through December 31, 2004. The current year's LOA executed in 2003 by the previous Utilities Director, Darryl Barnes, terminates March 31,2004. In 1995, the Western Area Power Administration (WAPA) expressed concerns that the generating units at Shasta Dam were in major need of repair. Maintenance had not been done on the units for several years due to the lack of funding by the Bureau of Reclamation who is responsible for the operation of the dam. Since a major portion of the power marketed to WAPA customers is generated at the Shasta Dam, any major outage would significantly impact the cost of power. As a result, an agreement was reached that would allow WAPA customers to fund generator improvements at the dam. The agreement to participate was approved by the City Council on June 7, 1995. These improvements would have the affect of increasing output from the units making additional capacity and energy available. (continued on page 2) RECOMMENDED ACTION: Authorize the Interim Public Utility Director to execute the Letter of Agreement 04-SNR-00639 between the City of Ukiah and the Sierra Nevada Customer Service Region of the Western Area Power Administration. ALTERNATIVE COUNCIL POLICY OPTION: Provide other direction to staff. Citizen Advised: Requested by: Prepared by: Coordinated with: Attachments: N/A Rick Kennedy, Interim Public Utility Director Rick Kennedy, Interim Public Utility Director Candace Horsley, City Manager Letter of Agreement 04-SNR-00639 a Candace Horsley, City- nager AUTHORIZE THE INTERIM PUBLIC UTILITY DIRECTOR TO EXECUTE THE ANNUAL LETTER OF AGREEMENT 04-SNR-00639 BETWEEN THE CITY OF UKIAH AND THE SIERRA NEVADA CUSTOMER SERVICE REGION OF THE WESTERN AREA POWER ADMINISTRATION TO PROVIDE DAILY EXCESS CAPACITY AND ASSOCIATED ENERGY FROM SHASTA REWIND PROJECT March 17, 2004 Page 2 of 2 In consideration for funding these improvements, those customers who participated were granted a right to a pro-rata share of any increased capacity and associated energy by reason of the project. Since the City of Ukiah relies on power generated by WAPA for approximately 20% of the City's generation, any loss of WAPA power would have a major impact on the City's electrical cost structure. The City of Ukiah's share of the cost of improvements was $105,875. As a result, the City of Ukiah has the opportunity to purchase any excess capacity of energy when available from the Shasta Dam until the repair is fully amortized. The City of Ukiah has executed an annual agreement with WAPA for the excess capacity and energy since 1995. The LOA gives the City of Ukiah the right to purchase one half of one percent (.5%) of any excess capacity and associated energy available from the Shasta Dam from April 1, 2004 through December 31, 2004 on a daily basis. This LOA does not obligate the City to purchase the excess capacity and energy. When excess capacity is available, the City is able to replace higher cost generation with the cheaper excess generation. Excess capacity and energy under the LOA costs approximately $24 per MWh compared to the average cost of generation of $50 per MWh. This agreement has proven beneficial to the City of Ukiah and Staff recommends its continuance. Department of Energy Western Area Power Administration Sierra Nevada Customer Service Region 114 Parkshore Drive Folsom, California 95630-4710 FEB 2 4 2004 Letter of Agreement 04-SNR-00639 Mr. Rick Kennedy Interim Public Utility Director City of Ukiah 300 Seminary Avenue Ukiah, CA 95482-5400 Dear Mr. Kennedy: This Letter of Agreement 04-SNR-00639 (LOA) is made between the Sierra Nevada Customer Service Region (SNR) of the Western Area Power Administration (Western) and the City of Ukiah for SNR to provide Shasta Rewinds and daily excess capacity and associated energy to Ukiah. SNR and Ukiah agree to the following terms and conditions: 1. This LOA shall become effective on April 1,2004, and shall remain in effect through December 31,2004, except as otherwise provided in Sections 13 and 16 herein. All obligations incurred under this LOA shall be preserved until satisfied. 2. Excess capacity and associated energy shall be made available as follows: 2.1 Shasta Rewinds Excess Capacity (SREC): 2.1.1 Ukiah will be allocated its percentage share (0.5%) of SREC as a result of participating in the Shasta Rewinds project in accordance with Contract 94-SAO-00047. Allocations will be based on the weekly average additional capacity available as determined in Contract 94-SAO-00047. SNR will offer SREC with at least a 50 percent capacity factor; however Ukiah can preschedule SREC at less than a 50 percent capacity factor. The capacity factor associated with SREC shall not be more than 67 percent, unless agreed to by the Parties. 2.1.2 Five days prior to the beginning of each month, SNR will evaluate the upcoming estimated generation forecasts. Based on that evaluation, SNR will determine whether it is more beneficial to SNR to have Ukiah purchase or return the energy associated with SREC. SNR will notify Ukiah in writing by facsimile or electronic mail whether SNR will make the energy associated with SREC available on a purchase or return basis. If SNR offers SREC as a sale, it will be at the rates provided in Exhibit D to this LOA. If SNR offers SREC on an exchange basis, SNR will notify Ukiah in writing by facsimile or electronic mail of the terms and conditions for the return to SNR of the energy associated with the SREC. 2.1.3 On Thursday of each week, by 3:00 p.m., SNR will notify Ukiah of the amount of SREC and associated energy available for the following week (Monday through Sunday). 2.2 Daily Excess Capacity (DEC): 2.2.1 Five days prior to the beginning of each month, SNR will evaluate the upcoming estimated generation forecasts. Based on that evaluation, SNR will determine whether it is more beneficial to SNR to have Ukiah purchase or return the energy associated with DEC. SNR will notify Ukiah in writing by facsimile or electronic mail whether SNR will make the energy associated with DEC available on a purchase or return basis. If SNR offers DEC as a sale, it will be at the rates provided in Exhibit D to this LOA. If SNR offers DEC on an exchange basis, SNR will notify Ukiah in writing by facsimile or electronic mail of the terms and conditions for the return to SNR of the energy associated with the DEC. 2.2.2 SNR will notify Ukiah of the total amount of DEC and associated energy available to Ukiah each day during the term of this LOA. SNR will allocate the DEC MW to Ukiah and SNR will allocate the DEC MWh to Ukiah. 2.2.3 Ukiah will have the right to request all or a portion of the DEC and associated energy available to Ukiah. 2.2.4 SNR's preschedulers will confirm the requested amount, or a lesser amount, depending on the amounts requested and the criteria in Section 6. 3. SREC and DEC and associated energy may be curtailed to the extent required by an outage of one or more Central Valley Project generating units affecting SNR's ability to provide some or all of the SREC and DEC and associated energy for the duration of the outage. SREC and DEC may also be curtailed to the extent required by increased project use pumping which reduces the amount of SREC and DEC and associated energy available. SREC and DEC and associated energy may also be curtailed to the extent required by either a reduction in transmission capability on the California-Oregon Intertie affecting SNR's ability to import power from the Northwest or a reduction in the transmission capability on the Central Valley Project transmission system. To the extent that SNR must curtail deliveries hereunder, SNR will immediately notify Ukiah and will reduce Ukiah's schedule at the commencement of the next applicable scheduling hour that begins at least 30 minutes after the notification. SNR will determine the extent to which it curtails the SREC and DEC and associated energy. If necessary, curtailments will first apply to DEC, then to SREC. 4. The receipt of SREC and DEC and associated energy shall not reduce Ukiah's obligations to take its minimum annual energy entitlement and capacity requirements provided under existing contracts between Western and Ukiah. The 35 percent minimum take requirement set forth in Ukiah's power sales contract applies to Ukiah's entire contract rate of delivery as it is defined in such contract. 5. Exhibit A sets forth the authorized representatives for Ukiah and SNR for scheduling and real-time transactions. 6. Ukiah may request an amount of SREC and DEC and associated energy, in accordance with Exhibit B, not to exceed the balance of its unmet expected peak load for the month after adjustment for its current contract rate of delivery. Ukiah's peak load shall not include wholesale sales for resale. Ukiah shall provide its expected peak load forecast for a month by the 20th day of the preceding month. 7. SREC and DEC will be scheduled on the day and by the time specified in Exhibit B. Once scheduled, any changes to scheduled quantities requested by Ukiah shall be implemented only if agreed to by SNR. 8. Ukiah will not schedule amounts of SNR preference products, including commercial firm power, SREC and DEC, in excess of its load. 9. SREC and DEC and associated energy will be delivered to the point of delivery designated in Exhibit C. Transmission service beyond the point of delivery shall be the responsibility of Ukiah. 10. Subject to Sections 2.1.2 and 2.2.1, if SNR sells the SREC and/or DEC to Ukiah, SNR will bill Ukiah for SREC and/or DEC based on the scheduled energy. In the event that SNR curtails either SREC and/or DEC, Ukiah will be required to pay for only that amount of SREC and/or DEC made available at the delivery point. Exhibit D specifies the rate for SREC and DEC provided hereunder. 11. In order to ensure SNR's ability to continue to provide reliable, firm electric service to all of its preference customers, Ukiah hereby agrees to pay all or a portion of its bill under this LOA, as described herein, directly to SNR's power suppliers. 11.1 Ukiah and SNR agree that Ukiah assumes no obligation to the specified power suppliers for such payments and that they are made as an administrative and accounting accommodation to SNR. Ukiah and SNR further agree that all obligations for supply of Ukiah's power allocation hereunder remain with SNR. 11.2 SNR shall determine the amount of Ukiah's bill under this LOA to be paid to power suppliers. Such amount shall be deducted from Ukiah's bill under this LOA. In no event shall Ukiah be obligated to pay an amount in excess of its bill under this LOA, based on scheduled or actual use quantities. 11.3 Any failure to pay a power supplier in the time period specified on Ukiah's bill shall constitute nonpayment of a portion of Ukiah's bill and shall be subject to the General Power Contract Provisions attached hereto for nonpayment of bills in full when due. 12. 11.4 Agreement by Ukiah to pay a portion of SNR's power purchase contract obligations shall not be contingent upon Congress making appropriations for expenditures by Western for such poWer purchase contract. Billing and payments for the power provided hereunder shall be as follows: 12.1 Billing and payment for power provided pursuant to this LOA shall be in accordance with the Billing and Payment provisions (Article 13) of the General Power Contract Provisions attached hereto. Bills shall be sent to Ukiah at the following address: City of Ukiah Public Utilities Attn: Accounts Payable 300 Seminary Avenue Ukiah, CA 95482-5400 12.2 In accordance with Section 11 above, SNR shall notify Ukiah of the power suppliers, amount to be paid to each power supplier, and all other necessary information, by specifying that information on Ukiah's bill. 12.3 Ukiah shall pay the designated power suppliers the amounts due within the payment period specified on its bill. 12.4 Ukiah shall make payments to the power suppliers by an electronic transfer of funds or check, at the option of Ukiah, unless otherwise agreed between SNR and Ukiah. Ukiah shall send the documentation of payments sent to designated power suppliers to SNR as soon as practicable. 12.5 Payments due to Western may be wired for electronic transfer deposit to Western's sub-account (American Bank Association No. 021030004, Subtype 10) of the Treasury Department's account with the Federal Reserve Bank in New York City, (BNF = AC-89001602). SNR will include account number information with the bill. Ukiah may also send payments in check form to the following address: Department of Energy Western Area Power Administration File No. 51587 Post Office Box 60000 San Francisco, CA 94160-1580 12.6 If agreed to by the Parties, SNR may credit monthly amounts due Ukiah for power sold to SNR, under various contracts SNR may have for purchasing power from Ukiah, against the amounts due to SNR under this LOA. In the event the amount due by Ukiah to SNR is less than the amount owed by SNR to Ukiah, then SNR shall pay the difference to Ukiah. In the event the amount due by SNR to Ukiah under those purchase power contracts is less than the amount owed by Ukiah to SNR under this LOA, then Ukiah shall pay the difference to SNR. 13. In the event that Contract 14-06-200-2948A is terminated, this LQA shall terminate concurrently; Provided, That all outstanding energy return and payment obligations incurred prior to termination of this LOA shall be preserved until satisfied. 14. The Authorized Representatives; Posting, Response, and Confirmation Time Schedule; Point of Delivery; and the Rate for SREC and DEC with Associated Energy are set forth in Exhibits A, B, C, and D, respectively. Exhibits A, B, C and D are attached hereto, and each shall be in force and effect in accordance with its terms until superseded by a subsequent exhibit or termination of this LOA. 15. The General Power Contract Provisions dated July 10, 1998, attached hereto, are hereby made a part of this LOA the same as if they had been expressly set forth herein; Provided, That Articles 20 through 30 shall not apply. 16. Either Party may terminate this L©A upon a thirty-day written notice given to the other Party. If you are in agreement with the terms and conditions written above, please indicate your approval by signing and dating both originals of this LOA, and return one original to Gloria Davis (N6205) at this office. If you have any questions, please contact Jeanne Haas at (916) 353-4438, or Hiroshi Kashiwagi at (916) 353-4477. In Dupli( Seal PLEASE KEEP FOR YOUR RECORDS, Sincerely, Thomas R. Boyko Power Marketing Manager CITY OF UKIAH By: Title: Address: Date: Attest: By: Title: City of Ukiah Exhibit A to Letter of Agreement 04-SNR-00639 EXHIBIT A (Authorized Representatives) 1. This Exhibit A, made to be effective under and as a part of Letter of Agreement 04-SNR-00639 (LOA), shall remain in effect until superseded by another Exhibit A or upon termination of this LOA. 2. SNR's authorized representative for scheduling transactions shall be its preschedulers, who can be contacted by telephone at (916) 353-4091 or (916) 353- 4092, by fax at (916) 353-2210, or by electronic mail at presched@wapa.gov. For real- time transactions, SNR's dispatchers are the authorized representatives. Ukiah can contact SNR's dispatchers at (916) 353-2200. 3. The authorized representative for scheduling or real-time transactions for Ukiah shall be its scheduling agent, the Northern California Power Agency, who can be contacted by telephone at (916) 781-4281, by fax at (916) 781-4239, or by electronic mail at kevinm@ncpa.com. City of Ukiah Exhibit B to Letter of Agreement 04-SNR-00639 EXHIBIT B (Posting, Response, and Confirmation Time Schedule) 1. This Exhibit B, made to be effective under and as a part of Letter of Agreement 04-SNR-00639 (LOA), shall remain in effect until superseded by another Exhibit B or upon termination of this LOA. 2. The following table outlines the normal sequence of events, provided there is no prescheduling holiday, observed by SNR and Ukiah, during a particular week: If daily excess capacity is available on: Sunday Monday Tuesday Wednesday Thursday Friday Saturday SNR posts the amount available to Ukiah by 12:00 p.m., Ukiah responds by 1:00 p.m., SNR confirms the amount by 3:00 p.m. on the prior: Thursday Thursday Friday Monday Tuesday Wednesday Wednesday Ukiah schedules by 9:00 a.m. on the prior: Friday Friday Monday Tuesday Wednesday Thursday Thursday 3. SNR reserves the right to modify this Exhibit B if SNR deems it necessary. City of Ukiah Exhibit C to Letter of Agreement 04-SNR-00639 EXHIBIT C (Point of Delivery) 1. This Exhibit C, made to be effective under and as a part of Letter of Agreement 04-SNR-00639 (LOA), shall remain in effect until superseded by another Exhibit C or upon termination of this LOA. 2. SNR, under terms and conditions stipulated in this LOA, will furnish excess capacity and associated energy to Ukiah at the Tracy 230-kY Substation at a delivery voltage of 230 kV. 3. Delivery of excess capacity and associated energy to the point indicated will be subject to available transmission capability. City of Ukiah Exhibit D to Letter of Agreement 04-SNR-00639 EXHIBIT D (Rate for SREC and DEC with Associated Energy) 1. This Exhibit D, made to be effective under and as a part of Letter of Agreement 04-SNR-00639 (LOA), shall remain in effect until superseded by another Exhibit D or upon termination of this LOA. . The rate for SREC and DEC with associated energy shall be comprised of: 2.1 The estimated Pacific Gas & Electric Company's full thermal production rate (at the time of the excess capacity sale) used to determine Energy Account No. 2 transactions, currently 17.5 mills per kWh; 2.2 An administrative adder of 0.5 mills per kWh; 2.3 The Central Valley Project firm transmission rate of 1.0 mills per kWh; and 2.4 Any additional purchase power or other costs incurred by SNR due to decisions made to the benefit of the excess capacity program. SNR will assess this charge after the fact, once all costs are determined. 3. SNR may change the rate for SREC and DEC with associated energy by giving Ukiah 30 days advance written notice. SNR will modify Exhibit D to reflect the change in rate. ~POWER~MI}IISTRATION i-')i':: :;: .,:; '. ,. 1..:i Applicability ........... , ................................................... 2 II. ' DELIVERYOF SERVICE PROVISIONS. 2. Character of Service ........ -'..., .................. ;, ~ ......................... 2 3. Use of Capacity or Energy in EXcess of Contract Obligation .......................... 2 4. Continuity of Service ................................... . ...................... 2 5. Multiple Points of Delivery .................. . .................................. 3. 6. Metering ................................................................... 3 7. Existence of Transmission Service Contract 3 8. Conditions of Transmission Service .............................................. 4 9. Multiple Points of Delivery Involving Direct and Transmitted DSliveries ................ 4 10: Construction, Operation, and Maintenance of Contractor's Power System 4 III. RATES, BILLING, AND PAY1V[ENT PROVISIONS. 11. Change of Rates ........................... ' .................................. 5 ' 12. Minimum Seasonal or Annual Capacity Charge .................................... 5 13. Billing and Payment .......................................................... 5 14. Nonpayment of Bills in Full When Due ..................................... . ......6 15. Adjustments for FractiOnal Billing Period ......................................... 6 16. Adjustments for Curtailments to Firm Service ...................................... 6 W. POWER SALES PROVISIONS. 17. Resale of Firm Electric Service ................................................. 7 18. Distribution Principles ........................................................ 7 19. Contract Subject to Colorado River Compact ...................................... 7 V. FACILITIES PROVISIONS. 20. Design Approval ............................................................. 7 21. Inspection and Acceptance ...... - ............................................... 8 22. As-Built Drawings ...................................................... - .....8 23. Equipment Ownership Markers ................................................. 8 24. Third-Party Use of Facilities ................................................... 8 25. Changes to Western Control Facilities ............................................ 8 26. Modification. of Western Facilities ............................................... 9 27. Transmission Rights ......................................................... i 9 28. Construction and Safety Procedures ............................................. 9-10 29. Environmental Compliance ................................................... 10 30. Responsibility for Hazardous Materials .................................. : ....... 10 VI. ' *Revi~} SUlg'10.q99S~"- OTI~R PROVISIONS. 31. Authorized Representatives of the Parties ........................................ I0 32.. Effect of Section Headings .................................................... 10 33. Operating Guidelines and Procedures ................................ .. .......... 10 34. Uncontrollable Forces ........................................................ I 1 35. Liability .................................................................. I I 36. Cooperation of Contracting Parties ......................................... '.... 11 * 37. Transfer of Interest in the Contract ............................................. 11-12 38. Waivers ................................................................... 12 39. Notices ................................................................... 12 40.. Contingent Upon Appropriations .................. , ............................ 12 _ 4 I."Covenant Against Contingent Fees ..... · .......- ............. ;-....', ~ ~":,~. ~. ~ ;. ;'!~"~ ,~;' 12 42. Contract Work Hours and Safety Standards ....................................... 12 · . . ....................... . '.¢; ,- ..... 5. Multiple Points of Delivery. When electric service is supplied at or transmitted to two or mOre points of delivery under the same rate schedt~le, said rate schedule shall applY separately to the service supplied at or transmitted to each point of delivery;, ?mvided. That where the meter readings are considered separately, and during abnormal conditions, the Contractor's system is interconnected between points of delivery such that duplication of metered power is possible, the meter readings at each affected point of delivery will be adjusted to compensate for duplication of power demand recorded by meters at altemate points of delivery due to abnormal conditions which are beyond the Contractor's control or temporary conditions caused by scheduled outages. 6. Metering. 6.1. The total electric power and energy supplied or transmitted under the contract will be measured by metering equipment to be furnished and maintained by Western, a designated representative of Western, or by the Contractor. The Contractor shall ensure that metering equipment furnished and maintained by the Contractor or another power supplier, as provided in the contract, meets the metering standards of Western if such metering equipment will be used for billing or other accounting purposes by Western. 6.2. Meters shall be sealed and the seals shall be broken only upon occasions when the meters are to be inspected, tested, or adjusted, and representatives of the interested parties shall be afforded reasonable opportunity to be present upon such occasions. Metering equipment shall be inspected and tested each year by the party responsible for meter maintenance, unless another test interval is agreed upon by the parties. Meters shall also be tested at any reasonable time upon request by either party hereto, a supplemental power supplier, transmission agent, or control area operator. Any metering equipment found to be damaged, defective, or inaccurate shall be repaired and readjusted or replaced by the party responsible for meter maintenance. Meters found with broken seals shall be tested for tampering and, if appropriate, meter readings shall be adjusted by Western pursuant to Provision 6.3 below. 6.3. Except as otherwise provided in Provision 6.4 hereof, should any meter that is needed by Western for billing or other accounting purposes fail to register accurately, the electric power and energy supplied or transmitted during such period of failure to register accurately, shall, for billing purposes, be estimated by Western from the best available information. 6.4. If acceptable inspections and tests of a meter needed by Western for billing or other accounting purposes disclose an error exceeding two percent (2%), then correction based upon the inaccuracy found shall be made of the records of services furnished during the period that such inaccuracy has existed as determined by Western; Provided, That if such period of inaccuracy cannot be determined, correction shall be made for the period beginning with the monthly billing period immediately preceding the billing period during which the test was made. 6.5. Any correction in billing resulting from corredtion in meter records shall normally be made in the next monthly bill rendered by Western to the Contractor. Payment of such bill shall constitute full adjustment of any claim between the parties hereto arising out of inaccuracy of metering equipment. 7. Existence of Transmission Service Contract. If the contract provides for Western to furnish services using the facilities of a third party, the obligation of Western shall be subject to and contingent upon the existence of a transmission service contract granting Western fights to use such facilities. IfWestem acquires or constructs facilities which would enable it to furnish direct service to the Contractor, Western, at its option, may furnish service over its own facilities. III. RATES, BILLII~G, AND PAYM2E~ PROVISIONS. 11 ChangeofRate~, Rates applicable under the contract shall be subject to change by Western in accordance with appropriate rate adjustment procedures. If at any time the United States promulgates a rate changing a rate then in effect under the contract, it will promptly notify the Contractor thereof. Rates shall become effective as to the contract as of the effective date of such rate. The Contractor, by written notice to Western within ninety (90) days after the effective date of a rate change, may elect to terminate the service billed by Western under the new rate. Said termination shall be effective on the last day of the billing period requested by the Contractor not later than two (2) years after the effective date of the new rate. Service provided by Western shall be paid for at the new rate regardless of whether the Contractor exercises the option to terminate service. 12. Minimum Seasonal or Annual Capacity_ Charge When the rate in effect under the contract provides for a minimum seasonal or annual capacity charge, a statement of the minimum capacity charge due, if any, shall be included in the bill rendered for service for the last billing, period of the service season or contract year as appropriate, adjusted for increases or decreases in the contract rate of delivery and for the number of billing periods during the year or season in which service is not provided. Where multiple points of delivery are involved and the contract rate of delivery is stated to be a maximum aggregate rate of delivery for all points, in determining the minimum seasonal or annual capacity charge due, if any, the monthly capacity charges at the individual points of delivery shall be added together. 13. Billing and payrnent~ 13.1. Western will issue'bills to the Contractor for service furnished during the preceding month within ten (10) days after the end of the billing period. 13.2. If Western is unable to issue a timely monthly bill, it may elect to render an estimated bill for that month to be followed by the final bill. Such estimated bill shall be subject to the same payment provisions as a f'mal bill. 13.3. Payments are due and payable by the' Contractor before the close of business on the twentieth (20th) calendar day after the date of issuance of each bill or the next business day thereafter if said day is a Saturday, Sunday, or Federal holiday. Bills shall be considered paid when payment is received by Western; Provided, That payments received by mail will be accepted as timely and without assessment of the charge provided for in Provision 14 (Nonpayment of Bills in Full. When Due) if a United States Post Office first class mail postmark indicates the payment was mailed at least three (3) calendar days before the due date. 13.4. Whenever the parties agree, payments due Western by the Contractor may be offset against payments due the Contractor by Western for the sale or exchange of electric power and energy, use of transmission facilities, operation and maintenance of electric facilities, and other services. For services included in net billing procedures, payments due one party in 'any month shall be offset against payments due the other party in such month, and the resulting net balance shall be paid to the party in whose favor such balance exists. The parties shall exchange such reports and information that either party requires for billing purposes. Net billing shall not be used for any amounts due which axe in dispute. IV. POWER SALES PROVISIONS. 17. Resale of Firm Electric Service (Wholesale Sales for Resale). The Contractor shall not sell any firm electric power or energy supplied under the contract to any electric utility customer of the Contractor for resale by that utility customer, Provided, That the Contractor may sell the electric power and energy supplied under the contract to its members on condition that said members not sell any of said power and energy to any customer of the member for resale by that customer. 18. Distribution Principle~, The Contractor agrees that the benefits offmu electric power or energy supplied under the contract shall be made available to its consumers at rates that are established at the lowest possible level consistent with sound business principles, and that these rates will be established in an open and public manner. The Contractor further agrees that it will identify the costs offmu electric power or energy supplied under the contract and power from other sources to its consumers .upon request. The Contractor will demonstrate compliance with the requirements ofthisPmvision ta Western upon request. 19. Contract Subject to Colorado River Compact. Where the energy sold under the contract is generated from waters of the Colorado River'system, the contract is made upon the express condition and with the express covenant that all fights under the contract shall be subject to and controlled by the Colorado River Compact approved by Section 13 (a) of the Boulder Canyon Project Act of December 21, 1928, (45 Stat. 1057) and the parties to the contract shall observe and be subject to and controlled by said Colorado River Compact in the construction, management, and operation of the dams, reservoirs, and powerplants from which electrical energy is to be furnished by Westem to the Contractor under the contract, and in the storage, diversion, delivery, and use of water for the generation of electrical energy to be delivered by Western to the Contractor under the contract. V. FACILITIES PROVISIONS. 20. Design Approval. All facilities, construction, and installation by the Contractor pursuant to the contract shall be subject to the approval of Westem. Facilities interconnections shall normally conform to Westem's current "General Requirements for Interconnection," in effect upon the signing of the contract document providing for each intereonnection, copies of which are available from Western. At least ninety (90) days, unless otherwise agreed, prior to the date the Contractor proposes to commence construction or to incur an obligation to purchase-facilities to be installed pursuant to the contract, whichever date is the earlier, the Contractor shall submit, for the approval of Western, detailed designs, drawings, and specifications of the facilities the Contractor proposes to purchase, construct, and install. The Contractor assumes all risks for construction commenced or obligations to purchase facilities incurred prior to receipt of approval from Western. Western review and approval of designs and construction work in no way implies that Western is certifying that the designs meet the Contractor's needs. 26. Modification of Western Facilities. Westem reserves the right, at any time, to modify its facilities, westem shall keep the Contractor informed of all planned modifications to Western facilities Which impact the facilities installation purSuant to the contract. Western shall permit the Contractor to change or modify its facilities, in a manner' satisfactorY to and at no cost or expense to Western, to retain the facilities intereormection pursuant to the contract'At the C0ntraetor's option, Western shall cooperate with the Contractor in planning alternate arrangements for service which shall be implemented at no cost or expense to Western. The Contractor and Western shall modify the contract, as necessary, to conform to the new facilities arrangements. 27. Transmission Rights. If the contract involves an installation which sectionalizes a Western transmission line, the Contractor hereby agrees to provide a transmission path to Western across such sectionalizing facilities at no cost or expense to Western. Said transmission path shall be at least equal, in terms of capacity and reliability, to the path in the Western transmission line prior to the installation purSuant to the contract. 28. Construction and Safe~ Procedures, 28.1. The Contractor hereby acknowledges that it is aware of the hazards inherent in high=voltage electric lines and substations, and hereby assumes full responsibility at all times for the adoption and use of necessary safety measures required to prevent accidental harm to personnel engaged in the construction, inspection, testing, operation, maintenance, replacement, or removal activities of the Contractor pursuant to the contract. The Contractor and the authorized employees, agents, and subcontractorS of the Contractor shall comply with all applicable safety laws and building and construction codes, including the provisions of Western's current "Power Systems Safety Manual," "Construction, Safety, and Health Standards," and "Power System Clearance Procedures" in eff'ect upon the signing of the contract; Except That, in lieu of the safety program required herein, the Contractor may provide sufficient information to demonstrate that the Contractor's safety program is satisfactory to the United States. 28.2. The Contractor and its authorized employees, agents, and subcontractors shall familiarize themselves with the location and character of all the transmission facilities of Western and interconnections of others relating to the work performed by the Contractor under the contract. Prior to starting any construction, installation, or removal work, the Contractor shall submit a plan of procedure to Western which shall indicate the sequence and method of performing the work in asafe manner. No work shall be performed by the Contractor, its employees, agents, or subcontractorS until written authorization to proceed is obtained from Western. 28.3. At all times when the Contractor, its employees, agents, or subcontractors are performing activities of any type pursuant to the contract, such activities shall be under supervision of a qualified employee, agent, or subcontractor of the Contractor who shall be authorized to represent the Contractor in all matterS pertaining to the activity being performed. The Contractor and Western will keep each other informed of the names of their designated representatives at the site. 28.4. Upon completion of its work, the Contractor shall remove from the vicinity of the right-of-way of the United States all buildings, rubbish, used materials, concrete forms, and other like material belonging to the Contractor or used under the Contractor's direction, and in the event of failure to do so the same may'be removed by Western at the expense of the Contractor. 34. Uncontrollable Forces. Neither party to the contract shall be considered to be in default in performance of any of its obligations under the contract, except to make payment as specified in Provision 13 (Billing and Payment) herein, when a failure of performance shall be due to an uncontrollable force. The term "uncontrollable force" means any cause beyond the control of the party affected, including but not restricted to, failure of or threat of failure of facilities, flood,earthquake, storm, fire, lightning, epidemic, war, riot, civil disturbance or disobedience, labor dispute, labor or material shortage, sabotage, restraint by court order or public authority and action or nonaction by, or failure to obtain the necessary authorizations or approvals from, any governmental agency or authority, which by exercise of due diligence such party could not reasonably have been expected to avoid and which by exercise of due diligence it shall be unable to overcome. Nothing contained herein shall be construed to require a party to settle any strike or labor dispute in which it may be involved. Either party rendered unable to fulfill any of its obligations under the contract by reason of an uncontrollable force shall give prompt written notice of such fact to the other party and shall exercise due diligence to remove such inability with all reasonable dispatch. 35. Liability, 35.1. The Contractor hereby agrees to indemnify and hold harmless the United States, its employees, agents, or contractors, from any loss or damage and from any liability on account of personal injury, death, or property damage, or claims for personal injury, death~ or property damage of any nature whatsoever and by whomsoever made arising out of the Contractors', its employees', agents, or subcontractors', construction, operation, maintenance, or replacement activities under the contract. 35.2. The United States: is liable only for negligence on the part of its officers and employees in accordance with the Federal Tort Claims Act, as amended. 36. Coo_oeration of Contracting Parties. If, in the operation and maintenance of their respective power systems or electrical equipment and the utilization thereof for the purposes of the contract, it becomes necessary by reason of any emergency or extraordinary condition for either party to request the other to furnish personnel, materials, tools, and equipment for the accomplishment thereof, the party so requested shall cooperate with the other and render such assistance as the party so requested may determine to be available. The party making such request, upon receipt of properly itemized bills from the other party, shall reimburse the p.any rendering such assistance for all costs properly and reasonably incurred by it in such performance, including administrative and general expenses, such costs to be determined on the basis of current charges or rates used in its own operations by the party rendering assistance. Issuance and payment of bills for services provided by Western shall be in accordance with Provisions I3 (Billing and Payment) and 14 (Nonpayment of Bills in Full When Due) herein. Western shall pay bills issued by the Contractor for services provided as soon as the necessary vouchers can be prepared which shallnormally be within twenty (20) days. 37. Transfer of Interest in Contract. 37.1. No voluntary transfer ~)fth~ contract or of the rights of the Contractor under the contract shall be made without the written approval of the Administrator of Western; Provided, That if the Contractor operates a project financed in whole or in part by the Rural Utilities Service, the Contractor may transfer or assign its interest in the contract to the Rural Utilities Service or any other department or agency of the Federal Government without such written approval; Provided further, That any successor to or assignee of the rights of the Contractor, whether by voluntary transfer, judicial sale, foreclosure sale, or otherwise, shall be subject to all the provisions and conditions of the contract to the same extent as though such successor or assignee were the original Contractor under the contract; and, Provided I1 43. Equal Opportuni_ty Employment Practices. Section 202 of Executive Order No. 11246, 30 Fed. Reg. 12319 (1965), as amended by Executive Order No. 12086, 43 Fed. Reg. 46501 (1978), which provides, among other things, that the Contractor wilI not discrirflinate against any employee or applicant for employment because of race, color, religion, sex, or national origin, is incorporated by reference in the contract. 44. Use of Corivi~; Labor. The Contractor agrees not to employ any person undergoing sentence of imprisonment in performing the contract except as provided by 18 U.S.C. 4082 (0)(2) and Executive Order 11755, December 29, 1973. 13 ITEM NO. Sa. DATE: March 17, 2004 AGENDA SUMMARY REPORT SUBJECT: CONTINUATION OF PUBLIC HEARING FOR THE AIRPORT BUILDING AREA AND LAND USE DEVELOPMENT PLAN SUMMARY: Due to Staff illness, the Agenda Summary Report for the Airport Building Area and Land Use Plan could not be prepared in time for the March 17, 2004 City Council meeting. Accordingly, Staff is recommending that the Council continue the public hearing to the April 7, 2004 regularly scheduled meeting. RECOMMENDATION: Continue the public hearing to the April 7, 2004 regularly scheduled City Council meeting. ALTERNATIVE COUNCIL ACTIONS: N/A Citizen Advised: The public hearing was noticed according to the requirements of the Ukiah Municipal Code. ~ Requested by: Charley Stump, Director of Planning and Community Development Prepared by: Charley Stump, Director of Planning and Community Development Coordinated with: Candace Horsley, City Manager and David Rapport, City Attorney Attachments: None Candace'~-Horsley, City ITEM NO. 9a. DATE: March 17. 2004 AGENDA SUMMARY REPORT SUBJECT: ADOPTION OF RESOLUTION MAKING FINDINGS IN SUPPORT OF NEGATIVE DECLARATION FOR WATER SYSTEM IMPROVEMENT PROJECT SUMMARY: At the March 3, 2004, City Council meeting, the Council adopted a Mitigated Negative Declaration for and approved the SPH Associates' design proposal for the water system improvement project, and authorized proceeding with final design for the project. Because several issues were raised after the draft Negative Declaration was made available for public comment, the City Attorney recommends that the City Council adopt findings, which, in particular, address those issues which arose during the public meetings of February 18 and March 3, 2004. The attached Resolution makes those findings. The City Attorney will be available' at the meeting to answer any questions the Council members may have concerning the content of the Resolution. RECOMMENDED ACTION: Adopt the Resolution of the City Council of the City Of Ukiah Approving Findings for Approval of Mitigated Negative Declaration for Final Design of Water System Improvement Project. ALTERNATIVE COUNCIL POLICY OPTIONS: Adopted a modified version of the resolution or not adopt a resolution. Citizen Advised: Requested by: Prepared by: Coordinated with: Attachments: N/A David J. Rapport, City Attorney David J. Rapport, City Attorney Candace Horsley, City Manager, Charley Stump, Director of Planning and Community Development Ann Burck, Project Engineer/Manager and Rick Kennedy, Interim Public Utilities Director Proposed Resolution of the City Council of the City Of Ukiah Approving Findings for Approval of Mitigated Negative Declaration for Final Design of Water System Improvement Project. APPROVED: ¢,-~~ Candace Horsley, ~, Manager RESOLUTION NO. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF UKIAH A~PROVING FINDINGS FOR APPROVAL OF MITIGATED NEGATIVEDECLARATION FOR FINAL DESIGN OF WATER SYSTEM IMPRO~NT PROJECT 1. On March 3, 2004, the City Council adopted a mitigated negative declaration ("Negative Declaration"), mitigation monitoring program, approved SPH Associates' design recommendation for the water system improvement project ("the Project") and authorized proceeding with final design of the Project; and 2. The Project consists of constructing additional water storage tanks to increase the City's water storage capacity by 3.3 Million gallons, installing two additional treatment modules in the City's water treatment plant, each module capable of treating up to 3 MGD, installing additional and rebuilding pumps, and other associated improvements, all as more particularly described in the Agenda Summary Reports, which description is incorporated herein by reference; and 3. These findings are adopted to further explain the basis for the City Council's March 3, 2004, decision; and 4. The City Council has exercised its independent judgment in approving the Negative Declaration and has considered the findings set forth herein; and 5. The findings set forth the ultimate facts which the City Council finds to be true and the findings support the City Council's conclusions; NOW, THEREFORE, BE IT RESOLVED as follows: 1. The Negative Declaration was prepared and made available for public review and comment in full compliance with the procedures set forth in California Environmental Quality Act ("CEQA") and the CEQA Guidelines. 2. Both the Negative Declaration and the Project were considered by the City Council at properly noticed public meetings on February 18, 2004, and March 3, 2004. 3. The City Council has considered all documents submitted during the public comment period for the Negative Declaration and S: \u\resos04 \WaterProj ect Findings March 12, 2004 all documents and testimony presented during its meetings on February 18, 2004 and March 3, 2004, Agenda Summaries, including all attachments, prepared for said meetings, and the Response to Additional Howard Points, including attachments submitted by the City Attorney to the City Council at the March 3, 2004, meeting. In addition, the record upon which the Negative Declaration is based includes the files maintained by the City for the Project, and all documents referred to during the consideration of the Project at the City Council meetings of February 18 and March 4, 2004. 5. The Initial Study and Negative Declaration evaluated the impacts of the Project itself as well as its impacts in combination with impacts from past, present and probable future projects. 6. The Negative Declaration did not include in its evaluation of the Project's environmental impacts the impacts from new development in the City's sphere of influence which might be served, if the City water system produced an additional 6 Million Gallons per Day ("MGD"), because: a. The Project has been designed and is proposed to address storage and treatment deficiencies in the City's existing water system serving the existing water service connections to that system and to improve the efficiency and durability of the system; b. The water sources for the City's water system (wells and the Ranney Collector) produce a maximum 6.55 MGD which does not meet the maximum day demand of the City's existing water system; c. Unless new sources of water are developed, the Project will not produce a sufficient amount of new water to serve significant new development; d. The City intends to investigate new water sources, but the details of that investigation have not been developed and the exact nature of the investigation and its outcome are unknown at present; e. The City must undertake the Project whether it discovers and develops new water sources or not. The Project does not legally or practically commit the City to develop new water sources and is not a precedent for the development of new water sources; and f. Considering the environmental impacts of the Project in combination with a project of developing new water sources requires speculation and conjecture about a new water source project, including, but not limited to, speculation about the location of the new water sources, whether they will consist of groundwater or surface water, how much water can be developed and what practical S: \u\resos04 \WaterProj ectFindings March 12, 2004 2 and legal limitations may apply to the appropriation or use of that water. 7. There exists on the Treatment Plant property a pond which is used to store filter media (colloidal clay)produced when the water filters used in the plant are back washed. The record does not contain substantial evidence upon which a fair argument can be based that the existence of this pond may have a significant, adverse impact on the environment, because: a. The ponds and the process of back washing the filters are part of the existing water treatment plant which the Project does not propose to change. As such these facilities are part of the existing environment rather than an impact from the development of the Project. The size of the sedimentation pond will remain the same and, therefore, the amount of sediment stored in the pond will not change significantly, even if additional treatment modules are installed; b. The amount of filter media stored in the ponds currently is actually 25 cubic yards rather than the 100 cubic yards reported in the Initial Study; and c. The only evidence presented that the pond could pose a potentially adverse impact on the environment comes from the testimony of Lee Howard who speculated that in a flood like the flood in 1964, flood waters would reach the pond causing some of the sediment to be washed into the Russian River where it could adversely affect fish habitat. The testimony did not include any facts pertaining to the likelihood of another flood like the one that occurred in 1964, as compared, for example, to a 100 year flood event, how much sediment in the pond the flood waters would wash into the river, the sediment level in the river during a flood event, the flow of water or the movement of sediment in the river during such a flood, or the amount, if any, of the sediment from the pond which would remain in the river or where or how it would be deposited. The record contains none of these facts or the opinion of qualified experts based on facts. As such, the testimony does not contain substantial evidence upon which a fair argument can be based that the storage of filter media produced by the Project may have an adverse environmental impact. 8. The City Council has reviewed the summary of public comments and the responses thereto contained in the Agenda Summary Report prepared for the March 3, 2004, Council meeting, and adopts the responses as additional City Council findings, which are incorporated herein by reference. S: \u\resos 04 \WaterProj ect Findings March 12, 2004 PASSED AND ADOPTED on March 17, 2004, by the following roll call vote: AYES: NOES: ABSENT: ATTEST: Eric Larson, Mayor Marie Ulvila, Deputy City Clerk S: \u\resos04 \WaterProj ect Findings March 12, 2004 ITEM NO. toa DATE: March 17, 2004 AGENDA SUMMARY REPORT SUBJECT: RECEIPT OF AUDITED FINANCIAL STATEMENTS FOR FISCAL YEAR 2002/2003 The auditors have not only issued an unqualified opinion on the City's financial statements, but also, for the second consecutive year, the auditors reported no findings and no questioned cost in the audit of the City's financial statements (see report page 55). Stephen Herr, CPA of Davis Hammon & Co., Certified Public Accountants, conducted the audit of the City of Ukiah's financial statements for the year ended June 30, 2003. Davis Hammon & Co. has audited the City's financial statements for a number of years and therefore has a good understanding of the City's operations. This continuity was significant in implementing GASB 34 which provides the financial statements with a new and very different presentation this year from prior years. The financial report is divided into several sections: REPORT Table of Contents Independent Auditors' Report Management's Discussion and Analysis Basic Financial Statements Fund Financial Statements Notes to Financial Statements Required Supplemental Information Single Audit and Other Compliance Report Report on Appropriations Limit Worksheet Pages i-ii 1-2 3-14 15-16 17-26 27-43 45-46 48-55 56-57 (Continued on page 2) RECOMMENDED ACTION: Receive and file the City of Ukiah financial statements for the year ended June 30, 2003, audited by Davis Hammon & Company. ALTERNATE COUNCIL POLICY OPTIONS: None Requested by: Candace Horsley, City Manager ~ Prepared by: Gordon Elton, Finance Director/,/-'"~ Coordinated with: Candace Horsley, City Mahager Attachments: None Note: Bound copy of the City of Ukiah Financial Statements for FY 2002-2003 was forwarded under separate cover APPROVED: ...~.~-'"~, 't.. Candace Horsley, Manager Audited financial report - continued Independent Auditors' Report (pages 1-2) The auditors' opinion, titled "Independent Auditors' Report", is unqualified. This means that, in the auditor's opinion, the overall financial statements present fairly, in all material respects, the financial position of the City as of June 30, 2003. The auditors refer to the changes required by GASB 34 in the fourth and fifth paragraphs of this report. Manaqement's Discussion and Analysis (pages 3-14) This is an entirely new section created by the new reporting requirement. The intent of this section is creation of a more narrative report on the financial information as well as some discussion of future events and considerations. It is possible that this section will provide most readers with all the information that they desire about the City. As a new section, the format and content will evolve with future reports. Basic Financial Statements (pages 15-16) These are statements presented at an overview level. All activities of the City are identified as either Governmental Activities or Business-Type Activities. The names are self explanatory. Business-Type Activities are those intended to charge fees and generate all or most of the money necessary to pay their expenses. Governmental Activities are all others that are not Business-Type Activities. The first report, the "Statement of Net Assets", is divided into three sections: Assets, Liabilities, and Net Assets. This report compares to the Balance Sheet as presented in the past. The terminology is changed to use Net Assets instead of Fund Balance. The second report, the "Statement of Activities", is an entirely new presentation that requires some study to understand the information it reports. The major element of this report is the method of presenting revenue either as Activity/Program revenue or as General revenue. Expenses and revenues identified with a specific activity are presented to display the amount of General revenue each activity consumes. The ending balances on this report will equal the ending balances on the "Statement of Net Assets". The Net Asset balances include both current and long-term assets and liabilities.. Fund Financial Statements (pages 17-26) As a whole, the City is still fiscally sound. The "Balance Sheet" identifies the General Funds and Other Governmental Funds combined. This report identifies items not previously reported in Governmental Funds to reconcile the "Fund Financial Statement" with the "Statement of Net Assets". The "Statement of Revenues, Expenditures and Changes in Fund Balances" lists Revenue, Expenditures and Other Financing Sources (Uses) and compares with the Income Statement prepared in previous years. The third report in this section reconciles the total from the "Statement of Revenues, Expenditures and Changes in Fund Balances" to the "Balance Sheet" ending balance. The activities of the Proprietary Funds (i.e. Enterprise Funds) are identified in the reports on pages 20 through 24. The Fiduciary Funds are identified on pages 25 and 26. Notes to Financial Statements (pages 27-43) In addition to the financial statements themselves, the "Notes to Financial GE:Audit2003agn.doc Page 2 Audited financial report - continued Statements" provide important additional information about the financial condition of the City and the manner in which business is conducted. The Notes are reformatted from prior years to comply with the new reporting requirements. Note 1, Summary of Significant Accounting Policies, discusses other entities that are included in the financial statements and the City's policies regarding how various assets, liabilities, revenues and expenses are recorded in the financial statements. The sub- sections of this note are: A) Reporting Entity; B) Government-Wide and Fund Financial Statements; C) Measurement Focus, Basis of Accounting, and Financial Statement Presentation; and, D) Assets, Liabilities, and Net Assets or Equity. Note 2, Reconciliation of Government-Wide and Fund Financial Statements, discusses the new presentation of Government-Wide and Fund Financial statements as the basic required financial reports. Note 3, Stewardship, Compliance and Accountability, discusses budgetary information, Funds with expenditures in excess of appropriations, and Funds with deficit Equities. Note 4, Detailed Notes on All Funds, provides information concerning: A) Deposits and Investments; B) Capital Assets; C) Interfund Receivables, Payables and Transfers; D) Capital Leases; E) Long-Term Debt; and, F) Segment Information. Note 5, Other Information, lists information related to: A) Risk Management; B) Related Organizations; C) Contingencies; D) Landfill Closure and Postclosure Costs; E) Service Contracts; F) Employee Retirement Systems; G) Deferred Compensation; and H) Adjustments to Equity and Net Assets. Required Supplemental Information (pages 45-46) Schedule I compares the General Fund Revenues and Expenditures to Budget. Schedule II provides information relative to the City of Ukiah's participation in the Public Employees' Retirement System. Single Audit and Other Compliance (pages 48-50) The Single Audit requirement applies when assistance from the Federal Government reaches certain levels. The Schedule of Expenditures of Federal Awards and Other Awards is presented in a standardized format required of all recipients of significant federal funding. This report identifies each grant award, receipts or revenue and disbursements or expenditures for each grant. Compliance and Internal Control (pages 51-55) The Compliance and Internal Control section is the area where the auditors report on compliance in accordance with government auditing standards, compliance with general federal requirements, and on internal control structure. The "Schedule of Findings and Questioned Costs" (page 55) indicates: 1) The auditors express an unqualified opinion on the basic financial statements of the City; 2) No reportable conditions related to the audit of the basic financial statements of the City; 3) No instances of noncompliance material to the basic financial statements of the City were disclosed during the audit; 4) No reportable conditions were disclosed during the audit of the major federal award program; 5) The auditors express an unqualified opinion on compliance for major federal programs; 6) No instances of noncompliance material to major federal programs were disclosed during the audit; 7) The programs tested as major programs included: Department of Housing and Urban Development Home Investment Partnership Program and State of California GE:Audit2003agn.doc Page 3 Audited financial report - continued Department of Transportation (State Program) State Transportation Improvement Program; 8) The threshold for distinguishing major programs was $300,000.00; and 9) The City was determined not to be a Iow-risk auditee. Financial Statement Audit - No reportable conditions were noted during the current audit period. There were no findings outstanding from prior year audits. Major Federal Award Programs - No findings or questioned costs noted. There were no finding or questioned costs outstanding from prior year audits. Report on Appropriations Limit Worksheets (pages 56-57) In accordance with League of California Cities guidelines, the auditors performed a review of the appropriations limit work papers prepared by City staff. Based on the limited procedures performed, the auditors noted no exceptions. Recognition of staff I wish to publicly acknowledge Accounting Manager Mike McCann for his efforts in creating the new "Management's Discussion and Analysis" section of this report and also for his skill and dedication to improving the accounting system and maintaining it at a level of excellence resulting in no questioned costs and no reportable findings by the auditors. Recommended action Staff recommends receiving and filing the audited financial statements for the year ended June 30, 2003. GE:Audit2003agn.doc Page 4 CITY OF UKIAH FINANCIAL STATEMENTS TOGETHER WITH INDEPENDENT AUDITORS' REPORTS FOR THE YEAR ENDED JUNE 30, 2003 CITY OF UKIAH TABLE OF CONTENTS JUNE 30, 2003 FINANCIAL SECTION Exhibit Paqe Independent Auditors' Report Management's Discussion and Analysis Basic Financial Statements: 1-2 3-14 Government-wide Financial Statements: Statement of Net Assets One 15 Statement of Activities Two 16 Fund Financial Statements: Balance Sheet - Governmental Funds Three 17 Statement of Revenues, Expenditures, and Changes In Fund Balances- Governmental Funds Four 18 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities 19 Statement of Net Assets - Proprietary Funds Statement of Revenues, Expenses, and Changes In Fund Net Assets - Proprietary Funds Statement of Cash Flows - Proprietary Funds Statement of Fiduciary Net Assets - Fiduciary Funds Statement of Changes in Fiduciary Net Assets - Fiduciary Funds Notes to Financial Statements Five Six Seven Eight Nine 20-21 22 23-24 25 26 27-43 Required Supplemental Information: Schedule of Revenues, Expenditures, and Changes In Fund Balances - Budget and Actual - General Fund Schedule 45 CITY OF UKIAH TABLE OF CONTENTS JUNE 30, 2003 Schedule of Funding Progress - Public Employees' Retirement System SINGLE AUDIT AND OTHER COMPLIANCE Schedule of Expenditures of Federal and Other Awards Notes to the Schedule of Expenditure of Federal And Other Awards Independent Auditors' Report on Compliance and Internal Control Over Financial Reporting Based on an Audit of the Financial Statements Performed in Accordance with Government Auditing Standards Independent Auditors' Report on Compliance With Requirements Applicable to Each Major Program and Internal Control Structure Over Compliance in Accordance With OMB Circular A-133 Schedule of Findings and Questioned Costs Independent Accountants' Report on Agreed-Upon Procedures Applied to Appropriations Limit Worksheets Schedule III Page 46 48-49 50 51-52 53-54 55 56-57 FINANCIAL SECTION INDEPENDENT AUDITORS' REPORT Davis W. Hammon, Jr., CPA (1924-1989) Stephen B. Norman, CPA · PFS Stephen J. Herr, CPA Kerry A. Parapid, CPA Honorable Mayor and City Council Members of the City of Ukiah Ukiah, California 95482 We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregated remaining fund information of the City of Ukiah, California, as of and for the year ended June 30, 2003, which collectively comprise the City's basic financial statements as listed in the table of contents. These financial statements are the responsibility of City of Ukiah management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to in the first paragraph present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregated remaining fund information of the City of Ukiah as of June 30, 2003, and the respective change in financial position and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the Unites States of America. As described in Note 5(H), the City of Ukiah has implemented a new financial reporting model as required by the provisions of Governmental Accounting Standards Board No. 34, Basic Financial Statements- and Management's Discussion and Analysis- for State and Local Governments, Statement No. 37, Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Governments: Omnibus; Statement No. 38, Certain Financial Statement Note Disclosures; Statement No. 39, Determining Whether Certain Organizations Are Component Units - an amendment of GASB No. 14; and Interpretation No. 6, Recognition and Measurement of Certain Liabilities and Expenditures in Governmental Fund Financial Statements, as of July 1, 2002. This results in a change in the format and content of the basic financial statements. 1 MEMBERS: AMERICAN INSTITUTE AND CALIFORNIA SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS 2080 Myers Street, Oroville, CA 95966-5341 (530) 533-3392 FAX (530) 533-2714 co. _Ce~ified Public Accountants In accordance with Government Auditing Standards, we have also issued our report dated September 26, 2003, on our consideration of the City of Ukiah's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. The Management's Discussion and Analysis and other required supplementary information and pages 3 through 14 and 45 through 46, respectively, are not a required part of the basic financial statements but are supplemental information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consist principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of forming an opinion on the financial statements that collectively comprise the City of Ukiah's basic financial statements. The accompanying schedule of expenditures of federal and other awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, is not a required part of the basic financial statements. The schedule of expenditures of federal and other awards has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. September 26, 2003 MANAGEMENT'S DISCUSSION AND ANALYSIS As management of the City of Ukiah (City), we offer readers of the City's financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended June 30, 2003. Please read it in conjunction with the accompanying basic financial statements. All amounts, unless otherwise indicated, are expressed in thousands of dollars. FINANCIAL HIGHLIGHTS · The City's net assets increased 10.15% to $63,010 as a result of this year's operations. · During the year, the City's taxes, other governmental revenues and business activity revenues exceeded expenses by $5,806. · Governmental net assets ended the year at $17,971. · The total revenues from all sources were $37,892. · The total cost of all City programs was $32,085. · The General Fund reported expenditures and other financing uses exceeded revenues by $261. · Actual resources received in the General Fund were more than the final budget by $172 while actual expenditures were $571 less than final budget before other financing uses. · At the end of the fiscal year, fund balance for the General Fund was $3,951 or 46% of total General Fund expenditures (excluding other financing uses). USING THIS ANNUAL REPORT This annual report consists of a series of financial statements. The three components of the financial statements are: 1) Government-wide financial statements, which include the Statement of Net Assets and the Statement of Activities. These statements provide information about the activities of the City as a whole. 2) Fund financial statements describe how City services are financed in the short term as well as what resources are available for future spending. Fund financial statements also report the City's operations in more detail than the government- wide statements by providing information about the City's most significant funds. 3) Notes to the financial statements. Reporting the City as a Whole The Statement of Net Assets and the Statement of Activities (Government-wide) A frequently asked question regarding the City's financial health is whether the year's activities contributed positively to the overall financial well-being. The Statement of Net Assets and the Statement of Activities report information about the City as a whole and about its activities in a way that helps answer this question. These statements include assets and liabilities using the accrual t~asis oJ:ac~ountin~o,, which is similar to the accounting used by most private-sector companies. All of the current year's revenues and expenses are accounted for regardless of when cash is received or paid. These two statements report the City's net assets and changes thereto. Net assets, the difference between assets and liabilities, are one way to measure the City's financial health, or financial position. Over time, increases or decreases in net assets are an indicator of whether the financial health is improving or deteriorating. However, it is important to consider other non-financial factors such as changes in the City's property tax base or condition of the City's roads and other infrastructure assets to accurately assess the overall health of the City. The Statement of Net Assets and the Statement of Activities, present information about the following: Governmental activities - All of the City's basic services are considered to be governmental activities, including general government, community development, public safety, public works, and community services. Property taxes, sales taxes, Vehicle License Fees (VLF), ambulance fees, transient occupancy taxes and franchise fees finance most of these activities. Business (proprietary fund) type activities - The City charges a fee to customers to cover all or most of the cost of the services provided. The City's utility services are reported in this category. Component unit - The City's governmental activities include the blending of one separate legal entity; The City of Ukiah Redevelopment Agency. Although legally separate, this "component unit" is important because the City is financially accountable for it. Reporting the City's Most Significant Funds Fund Financial Statements The fund financial statements provide detailed information about the most significant funds--not the City as a whole. Some funds are required to be established by State law or by bond covenants. However, management establishes many other funds that aid in the administration of resources for particular purposes or meet legal responsibilities associated with the usage of certain taxes, grants, and other money. The City's two kinds of funds, gover~menta! and prop~ieta~, use different accounting approaches as explained below. · Gover~me~tai~ngs-Most of the City's basic services are reported in governmental funds. Governmental funds focus on how resources flow in and out with the balances remaining at year-end that are available for spending. These funds are reported using an accounting method called r~og~eg a~cr~gl, which measures cash and all other j~a~¢ial assets that can readily be converted to cash. The governmental fund statements provide a detailed short- term view of the City's general government operations and the basic services it provides. Governmental fund information shows whether there are more or fewer financial resources that can be spent in the near future to finance the City's programs. We describe the relationship (or differences) between governmental activities (reported in the Statement of Net Assets and the Statement of Activities) and governmental funds through a reconciliation in Note 2 in the Notes To Basic Financial Statements. · Business Type (Proprietary)funds-When the City charges customers for the services it provides, these services are generally reported in proprietary funds. Proprietary funds are reported in the same way that all activities are reported in the Statement of Net Assets and the Statement of Activities. THE CITY AS A WHOLE The net assets (Table 1) and changes in net assets (Table 2) of the City's governmental and business activities are presented in total on these tables. This is the first year the City of Ukiah has prepared its financial statements in conformance with GASB-34. As a result, some comparative data with prior year information is not available. Such comparative information will be included in future years as it becomes available. Table 1 City of Ukiah's Net Assets (Full Accrual, in Thousands) Current and other assets Capital assets Total Assets Long-term debt Other Liabilities Total Liabilities Net Assets: Invested in capital assets, net of debt Restricted Unrestricted Total Net Assets Governmental Business-Type Activities Activities Total 2003 2003 2003 $18,207 $43,839 $62,046 8,728 35,664 44,392 26,935 79,503 106,438 6,363 33,519 39,882 2,601 944 3,545 8,964 34,463 43,427 2,365 10,946 13,311 7,820 1,668 9,488 7,786 32,425 40,211 $17,971 $45,039 $63,010 Table 2 City of Ukiah's Changes In Net Assets (Full Accrual, in Thousands) Revenues: Program revenues: Charges for services Operating grants and contributions Capital grants and contributions General revenues: Taxes From other agencies not restricted to specific programs Use of money and property Total Revenues Expenses: General government Public safety Public works Community development Parks & community services Interest on long-term debt Electric Water Sewer Solid Waste Disposal Site Street Lighting Airport Parking District Golf Course Conference Center Total Expenses Increase in Net Assets Before Transfers Transfers Increase In Net Assets Net Assets - July 1, 2002 Net Assets - June 30, 2003 Governmental Activities 2OO3 Business-Type Activities Total 2003 2003 $2,187 $20,256 $22,443 784 21 805 1,574 154 1,728 8,572 8,572 945 1,747 2,692 1,651 1,651 15,713 22,178 37,891 2,095 5,550 1,645 2,069 1,342 544 11,708 1,878 2,421 968 145 695 143 583 299 2,095 5,550 1,645 2,069 1,342 544 11,708 1,878 2,421 968 145 695 143 583 299 13,245 18,840 32,085 2,468 3,338 5,806 365 (365) 0 2,833 2,973 5,806 15,138 42,066 57,204 $17,971 $45,039 $63,010 The City's combined net assets for the fiscal year ended June 30, 2003 were $63,010. The City accounts for its electric, water and sewer utilities as enterprise funds. In addition, the airport, parking district, solid waste disposal site, golf course, conference center and street lighting are accounted for as enterprise funds. These enterprise funds are categorized as Business-Type Activities on Table 1. The City's net assets for governmental activities increased 18.71% from $15,138 to $17,971, while business-type activities net assets increased 7.07%, from $42,066 to $45,039. Since full accrual reports were not available until City adopted GASB 34 accounting rules this year a discussion of year-to-year variances at the full accrual level is difficult. Following Table 5 we discuss variances under the modified accrual method, measuring cash and all other financial assets that can readily be converted to cash. Table 3 Statement of Inter-Fund Transfers (Full Accrual, in Whole Dollars) Governmental Business-Type Activities Activities 2003 2003 Total 2003 Transfers in Interfund Transfers in (A) General Fund (B) Conference center $675,000 $310,054 $675,000 310,054 Total transfers in: 675,000 310,054 985,054 Transfers out Interfund Transfers out (A) Electric utility fund (B) General Fund 310,054 675,000 675,000 310,054 - Total transfers out: 310,054 675,000 985,054 $364,946 $(364,946) $-0- Net Transfers in (out) (A) Payment to the General Fund in lieu of taxes by the Electric Department (B) Transfer from General Fund to Conference Center to subsidize several years of operating deficits Two transfers are included in the City-wide Statement of Activities. $675 is transferred annually to the General Fund from the Electric Utility, in lieu of taxes that would be charged to an outside provider. Second, a $310 transfer was made from the General Fund to the Conference Center to forgive several years of operating deficits. Table 4 Statement of Inter-Fund Transfers (Modified Accrual, per Fund Statements - in Whole Dollars) Transfers in Interfund Transfers in (A) General Fund (B) Conference Center (C) Capital project funds Amounts due from other funds (D) Workers Comp fund Total transfers in: Transfers out Interfund Transfers out (A) Electric utility fund (B) General Fund (C) General Fund (D) Amounts due to other funds Debt service fund Total transfers out: Net Transfers in (out) Governmental Business-Type Activities Activities 2003 2003 $675,00O 443,535 250,000 $310,054 Total 2003 $675,00O 310,054 443,535 1,368,535 310,054 1,428,589 250,000 310,054 443,535 675,000 753,589 925,000 $614,946 $(614,946) 675,0OO 310,054 443,535 -- 1,428,589 $-o- Interfund Transfers out (A) Payment to the General Fund in lieu of taxes by the Electric Department (B) Transfer from General Fund to Conference Center to subsidize several years of operating deficits (C) Transfer from General Fund to Capital Projects funds for various projects Amounts due to other funds (D) Due to Workers Comp. Fund from Debt Service Fund for funds used to payoff Civic Center debt early The modified accrual method Statement of Revenues, Expenditures and Changes in Fund Balances for Governmental Funds includes two other transfers which were eliminated in the full accrual statements: $443 to Capital Projects funds for future projects; $250 from the Workers Compensation fund in order to allow a favorable early payoff of debt incurred to build the Civic Center, saving $72 in future interest expense. Table 5 Statement of Revenue Expenditures and Changes in Fund Balance Governmental Funds (~Modified ~4ccrual Basis, Stated in Thousands) General General Other Other Total Fund Fund Govt Govt Govt 2003 2002 2003 2002 2003 Revenues: Taxes $5,458 Licenses and permits 184 Fines, forfeitures & penalties 70 From other Agencies 1,023 Use of money & property 1,041 Charges for current services 592 Other Revenue and Transfers to: General Fund 30 Equip Reserve Local Law Enforcement Community Development Fixed Assets Special Projects Total revenues $5,894 $3,114 $2,285 $8,572 130 184 43 25 12 95 984 2,281 1,451 3,304 964 583 930 1,624 733 0 592 18 30 2 3 2 3 30 30 345 499 345 2 210 2 Total Govt 2002 $8,179 130 55 2,436 1,894 733 18 2 2 499 210 8,398 8,769 6,383 5,389 14,782 14,158 Expenditures: General government 1,354 1,157 Public safety 5,020 4,757 Streets & roads 938 910 Parks & recreation 1,129 983 Community development 39 84 Debt Service (including principal) 48 Capital outlay 100 53 Total Expenditures 8,580 7,992 107 1,461 1,157 58 58 5,078 4,816 436 995 1,374 1,905 50 155 1,179 1,137 1,944 1,227 1,983 1,311 2,047 1,104 2,047 1,152 2,509 553 2,608 606 7,150 4,092 15,730 12,085 Other Financing Sources (Uses) from Electric Fund 675 to Conference Center (310) for Fixed Asset Fund (120) for Special Projects (324) for early debt payoff (123) 120 324 250 (19) 675 (310) - - 250 (142) Increase (decrease) in Fund Balance (260) 654 (73) 1,278 333 1,931 Prior Period Adjustment Fund Balance - Beginning Fund Balance - Ending 123 4,088 $3,951 3,435 $4,088 (158) 9,963 $9,732 70 8,615 $9,963 (35) 14,051 $13,683 70 12,050 $14,051 Governmental Activities Table 5 presents comparative governments revenues, expenditures and the resulting changes in fund balances for 2002 and 2003. Since full accrual reports are not available for 2002, before the adoption of GASB 34 accounting rules, this table is presented under the modified accrual method, measuring cash and all other financial assets that can readily be converted to cash. The following items reflect significant variances between the years: Revenues: Total governmental fund revenues increased by 4.41% to 14,782. The largest dollar increase of $393 or 4.8% occurred in taxes that includes, property, sales, occupancy, and franchise fees. From other agency revenue is up 35.7% primarily due to $880 in STIP Augmentation funding. Use of money and property, primarily interest earned on invested cash is down 14.2% ($270) due to the historically Iow near-term interest rates available on eligible securities. Charges for current services are down 19.2% ($141), with $114 attributable to a reduction in ambulance services revenue and smaller decreases in all planning fees. Other revenue is lower by 43.8% ($320) with large reductions in fixed asset and special projects revenue including $289 for streets and $50 in engineering. Expenses: Operating departments record costs to set funds aside for capital projects, which is recorded as Other Revenue within capital projects funds accumulated resources for the project. To prepare the comparative percentages cited below, we have removed those costs from the department totals Public Safety expenses grew by 7.34% over last year; principally due to personnel related cost increases. Streets and Roads expenditures were only 87.34% of last year's due to the completion of one-time projects in 2002. Parks and Recreation expenses grew by 5.63% over last year; principally due to personnel related cost increases. Community Development expenditures grew dramatically, 51.26%, due in large part from receiving a subsidized housing construction grant for $407 and increased utilization of fund balance in the Ukiah Redevelopment Agency housing fund. 10 Interest on long-term debt decreased 16.67% to $545, while principal payments grew from $498 to $1,502, with payment of $998 to retire debt incurred for the original Civic Center renovation in the 1980s to take advantage of lower interest rates and reduce future interest expense. Capital Outlays increased from $606 to $2,608, including the expenditure of $1,392 in previously reserved capital project funds and a number of one-time grant funded expenditures, principally STIP funding of $880. In summary: Total resources available during the year to finance governmental operations were $29,723 consisting of Fund Balance at July 1, 2002 of $14,016 (as restated) and General Revenues and other financing sources of $15,707. Total Governmental Activities and other financing uses during the year were $16,040; thus Fund Balance decreased by $333 to $13,683. Table 6 Statement of Operating Income And Expenses - Business-Type Funds (in Thousands) Operating Operating Costs Revenue Net Increase (decrease) from Operations 2003 2002 2003 2002 2003 2002 Electric $10,418 $12,978 $14,120 $13,889 $3,702 $911 Water 1,786 1,736 1,931 1,902 145 166 Sewer 2,279 2,089 2,334 2,366 55 277 Solid Waste Disposal Site (closed) 968 1,243 66 137 (902) (1,106) Street Lighting 145 159 179 178 34 19 Airport 686 672 703 788 17 116 Parking District 143 144 106 98 (37) (46) Golf Course 524 448 613 534 89 86 Conference Center 283 312 205 259 (78) (53) $17,232 $19,781 $20,257 $20,151 $3,025 $370 Business-Type Activities The City's net assets for business-type activities net assets increased 7.07%, from $42,065 to $45,039, on a full accrual basis, with 2003 results presented above in Table I and Table 2. Operating results are further broken out on Table 6. Electric utility results improved over 2002, primarily due to a $1,710 reduction in costs for electricity purchased this fiscal year and other operating reductions. Sewer expenses increased $190 while, the rate of 11 new costs declined $204 for the (closed) solid waste disposal site. Most other business- type funds were substantially unchanged. The return on all business-type activities was up $1,315 excluding the change in electricity costs. GENERAL FUND BUDGETARY HIGHLIGHTS Actual General Fund revenues closely matched the final adopted budget. Total revenues are $172 over budget, a positive variance of 1.92%. All General Fund services finished the year under budget with a total cost savings of 6.24% or $571. Numerous Citywide and departmental initiatives were implemented during the year as future revenue concerns mounted, driven by the State budget and economic outlook. The City Council approved additional year-end transfers of $310 for the Conference Center, $120 to the Fixed Asset Fund and $57 to the Special Projects Fund. The final impact on the General Fund's fund balance was an increase of $256, reflecting the $172 revenue gain and the $571 in operating savings, less unbudgeted (at mid-year) transfers out of $487. CASH MANAGEMENT The City contracts with Public Financial Management, Inc. (PFM), a specialist in municipal cash management, to direct its investments; and maintains flexibility by utilizing a pooled cash system. Under the pooled cash concept, the City invests the cash of all funds with maturities planned to coincide with cash needs. Cash is invested in certain eligible securities as constrained by law and further limited by the City's investment policy. The goals of the City's investment policy are safety, liquidity and yield. The City Council has appointed an Investment Oversight Committee, chaired by the elected City Treasurer, to direct and monitor the activities of PFM. CAPITAL ASSETS The capital assets of the City are those assets that are used in performance of City functions including infrastructure assets. Capital Assets include equipment, buildings, land, park facilities, and roads. At June 30, 2003, the City had not completed its inventory of infrastructure assets. GASB-34 allows the City an additional 2 years in which to have an accounting of its infrastructure. We plan to use a private asset valuation firm to inventory the City's infrastructure. At June 30, 2003, net capital assets of the governmental activities totaled $8,728 and the net capital assets of the business-type activities totaled $35,664. Depreciation on 12 capital assets is recognized in the Government-Wide financial statements but not in the General Fund statements. The City attempts to minimize debt by reserving current revenue for capital projects. A current expense is recorded and transferred to specific project accounts in either the Fixed Asset or Special Projects Funds. A given project may require transfers for several years to accumulate sufficient funding before going forward. Projects funding reserved in 2003 included: Cleveland Lane drainage improvements, Sewer system upgrades, Leslie Street gas plan mitigation, Orr Creek improvements as well as smaller airport, garage, parks and grant match set asides. CURRENT LIABILITIES AND LONG-TERM DEBT At year-end current governmental type debt is $2,601 and business type is $944. The City had total governmental type liabilities totaling $8,964 and business type liabilities of $34,463. Included in these totals are $6,363 of Redevelopment Agency long-term debt and $33,519 of business-type debt including the Lake Mendocino Hydro power plant bonds and other utility upgrades. The City has a total debt to net assets ratio of 69% NEXT YEAR'S BUDGET AND ECONOMIC FACTORS In considering the City Budget for fiscal year 2003-2004, the City Council and management were cautious as to the growth of revenues and expenditures. The large uncertainty surrounding the resolution of the State's budget deficit facilitated this caution. One goal was to rely on a small amount of General Fund reserves ($37) to operate the city for fiscal year 2003-2004 and avoid making operating adjustments that have long-range consequences to solve a potentially short-term problem. If the State's revenue picture for fiscal year 2004-2005 is still uncertain, the likelihood for more significant operational reductions will increase, since the State's approach to budget balancing includes taking funding away from local governments. In addition to reallocating tasks within departments, four General Fund positions were eliminated to reduce expenses and the duties of these positions were reassigned to existing City staff. In addition to challenges presented by the State of California, local and statewide economic conditions are impacting the City's revenue and expense picture. Local sales tax revenue is budgeted to decrease by $120 and all other revenue combined is budgeted to decrease by $156 from the fiscal year 2002-2003 levels. Fiscal year 2003-2004 budgeted expenditures are $301 less than the fiscal year 2002-2003 budgeted level. The City management and City Council are actively considering all potential avenues to raise operating revenue through taxes, appropriate user fees and grants. Voter approval may be asked for increased taxes. 13 Water and wastewater system improvements and upgrades are planned for the near future to meet increasing water quality standards and growing demand. These capital projects will significantly impact user and connection fees. Part of the cost of these improvements is expected to be funded by grants. The remaining project costs will be funded through reserves and debt financing. CONTACTING THE CITY'S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, taxpayers, customers, investors, and creditors with a general overview of the City's finances and to show the City's accountability for the money it receives. If you have questions about this report or need additional financial information, contact the City's Finance Department, City of Ukiah, 300 Seminary Ave, Ukiah, California 95482 or online: http://www.cityofukiah.com. 14 ~o~§o 0 ~ ~ 0 * -- o > ~ 0 (..~ c, EL _ ASSETS Cash and investments Cash with fiscal agent Receivables: Accounts (net) Interest Property taxes Grants Loans Employee loans From other funds Prepaid expenses Unexpended loan proceeds Deposits Total Assets LIABILITIES AND FUND BALANCES Liabilities: Accounts payable Accrued salaries and benefits Accrued compensated absences Contract retentions payable Deferred revenues Due to other agencies Due to other funds Total Liabilities Fund Balances: Reserved for: Encumbrances Petty cash Low/Moderate housing Park development Capital outlay Debt service Unreserved, reported in: General fund Special revenue funds Capital projects funds Total Fund Balances Total Liabilities And Fund Balances CITY OF UKIAH BALANCE SHEET GOVERNMENTALFUNDS JUNE30,2003 General $3,729,O40 482,979 64,057 38,327 2,434 351,854 5,085 $4,673,776 $161,941 156,044 404,863 722,848 52,711 1,700 3,896,517 3,950,928 $4,673,776 Other Governmental Funds $10,759,442 613,965 46,566 49,441 127,681 598,849 590,661 10,641 46,951 35 $12,844,232 $8O5,920 4,511 17,349 34,462 623,781 157,653 1,468,798 3,112,474 614,999 1,052,178 8,000 5,433,662 656,736 1,962,883 3,300 9,731,758 $12,844,232 Exhibit Three Total Governmental Funds $14,488,482 613,965 529,545 113,498 166,008 598,849 590,661 2,434 351,854 15,726 46,951 35 $17,518,008 $967,861 160,555 422,212 34,462 623,781 157,653 1,468,798 3,835,322 667,710 1,700 1,052,178 8,000 5,433,662 656,736 3,896,517 1,962,883 3,300 13,682,686 Amounts reported for governmental activities in the statement of net assets are different because: Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds Internal service funds are used by management to charge the costs of garage, stores, billing, workers' compensation, public safety dispatch and liability insurance to individual funds. The assets and liabilities of the internal service funds are included in the governmental activities in the statement of net assets. Long-term liabilities are not due and payable in the current pedod and therefore are not reported in the funds Net Assets Of Governmental Activities The notes to financial statements are an integral part of this statement. 17 8,433,838 2,249,329 (6,394,549) $17,971,304 CITY OF UKIAH STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2003 General Other Governmental Funds REVENUES Taxes Licenses and permits Fines, forfeitures, and penalties From other agencies Use of money and property Charges for current services Other $5,458,106 183,554 70,322 1,022,996 1,041,026 592,391 30,319 $3,114,004 24,582 2,281,038 583,237 380,158 Total Revenues 8,398,714 6,383,019 EXPENDITURES Current: General government Public safety Street and roads Parks and recreation Community development Debt service: Principal Interest Capital outlay 1,354,249 5,020,312 937,726 1,129,017 39,177 99,774 106,963 57,619 436,454 49,913 1,943,967 1,501,712 544,796 2,508,682 Total Expenditures 8,580,255 (181,541) 7,150,106 (767,087) Excess (Deficiency) of Revenues Over Expenditures OTHER FINANCING SOURCES (USES) Proceeds from intra-city loan Transfers in Transfers out 675,0O0 (753,589) 250,000 3,271,834 (2,828,299) Total Other Financing Sources (Uses) (78,589) (260,130) 693,535 (73,552) Net Change In Fund Balances Fund Balances, July 1, 4,088,058 9,962,963 (157,653) Prior pedod adjustment 123,000 Fund Balances, July 1, as restated 4,211,058 $3,950,928 9,805,310 $9,731,758 Fund Balances, June 30, Exhibit Four Total Governmental Funds $8,572,110 183,554 94,9O4 3,304,034 1,624,263 592,391 410,477 14,781,733 1,461,212 5,077,931 1,374,180 1,178,930 1,983,144 1,501,712 544,796 2,6O8,456 15,730,361 (948,628) 250,000 3,946,834 (3,581,888) 614,946 (333,682) 14,051,021 (34,653) 14,016,368 $13,682,686 The notes to financial statements are an integral part of this statement. 18 CITY OF UKIAH RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2003 Amounts reported for governmental activities in the statement of activities (page 9) are different because: Net change in fund balances - total governmental funds Governmental funds report capital outlay as expenditures. However in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlays exceeded depreciation in the current period The issuance of long-term debt provided current financial resources to the governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of the governmental funds. Neither transaction, however, has any effect on net assets. Also, governmental funds report the effects of issuance costs, premiums, discounts, and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. This amount is the net effect of these differences in the treatment of long-term debt and related items Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as an expenditures in governmental funds Internal service funds are used by management to charge the costs of garage, stores, billing, workers' compensation, public safety dispatch and liability insurance to individual funds. The net expenditures of certain activities of the internal service funds are reported with governmental activities ($333,682) 2,086,477 1,251,712 658 (172,006) Change In Net Assets Of Governmental Activities $2,833,159 The notes to financial statements are an integral part of this statement. 19 ~s tO 0 z z CITY OF UKIAH STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS JUNE 30, 2003 Exhibit Eight ASSETS Assets: Cash and investments Receivables: Accounts (net) Interest Deposits Total Assets LIABILITIES Liabilities: Accounts payable Accrued salaries and benefits Utility deposits REDIP loan payable Due to Ukiah Valley Sanitation District Due to Solid Wastes Systems Due to M.E.S.A. Total Liabilities NET ASSETS Held in trust for other purposes Private Purpose Trust $1,489,318 55 3,200 1,492,573 45,350 292,698 297,839 635,887 $856,686 Agency Funds $3,207,797 13,850 18,857 3,240,504 156,860 210,632 2,409,999 408,018 54,995 $3,240,504 The notes to financial statements are an integral part of this statement. 25 Exhibit Nine CITY OF UKIAH STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS FIDUCIARY FUNDS FOR THE YEAR ENDED JUNE 30, 2003 Addition~ Taxes Use of money and property Other Total Additions Deductign~ Current: Community development Total Deductions Change in net assets Net Assets - beginning Change in fund classification Net Assets - beginning - as restated Net Assets - ending Private Purpose Trust $19,829 68 180,731 200,628 36,604 36,604 164,024 2,613,536 (1,920,874) 692,662 $856,686 The notes to financial statements are an integral pad of this statement. 26 CITY OF UKIAH NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2003 1) Summary of Significant Accounting Policies A) Reporting Entity The City of Ukiah was incorporated March 8, 1876 under the applicable laws and regulations of the State of California. The City operates under a Council-City Manager form of government and provides a variety of services including police, fire fighting and medical emergency, sewage treatment, water treatment, electric power generation, street lighting and maintenance, parks and recreation, municipal golf course, solid waste landfill, conference center, and redevelopment activities. The accompanying financial statements present the City and its component units, entities for which the City is considered to be financially accountable. Blended component units, although legally separate entities are, in substance, part of the City's operations. The City has no component units that require discrete presentation. Blended Component Units. The Ukiah Redevelopment Agency was established in 1975 under the provisions of Community Redevelopment Law Section 33000 et. seq., of California Health and Safety Code. The Agency is governed by a Commission comprised of the members of the Ukiah City Council. The Agency's boundaries are within Ukiah's city limits and activities of the Agency will benefit the citizens of Ukiah. The activities of the Agency are reported in the City's special revenue, debt service and capital projects funds. Complete financial statements of the Agency can be obtained directly from the City of Ukiah, Civic Center, 300 Seminary Avenue, Ukiah, CA 95482. The Parking District #1 is a special district, primarily located in Ukiah's downtown area, is administered and accounted for by the City. The Parking Commission is appointed by the Ukiah City Council and acts as an advisory board to the Council in district matters. The District is reported as an enterprise fund. It is the District's policy not to prepare separate financial statements for the District as a separate component unit. B) Government-Wide And Fund Financial Statements The government-wide financial statements (i.e. the statement of net assets and the statement of changes in net assets) report information of all the nonfiduciary activities of the City and its component units. For the most part, the effect of Interfund activity has been removed from these statements. Govemmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. C) Measurement Focus, Basis Of Accounting, And Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary funds and fiduciary fund financial statements. Revenues are recognized when earned and expenses are recorded when the liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter pay liabilities of the current period. For this purpose, the City considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. 27 CITY OF UKIAH NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2003 Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures are recorded only when payment is due. Property taxes, franchise taxes, licenses and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. All other revenue items are considered to be measurable and available only when cash is received by the City. The City reports the following major governmental fund: The general fund is the City's primary operating fund. It accounts for all financial resources of the general government except those required to be accounted for in another fund. The City reports the following major proprietary funds: The electdc fund accounts for the activities of the City's electric generation and distribution operations. The water fund accounts for the activities of the City's water treatment and distribution operations. The sewer fund accounts for the activities of the City's sewage collection and treatment operations. The disposal fund accounts for the activities of the City's solid waste landfill operations. Additionally, the City reports the following fund types: Intemal service funds account for garage (vehicle maintenance), stores (purchasing), public safety dispatch, utility billing, workers' compensation and liability insurance services provided to other departments or agencies of the City, or to other governments, on a cost reimbursement basis. The private-purpose trust fund is used to account for resources legally held in trust for use by other organizations and departments. All resources of the fund, including any earnings on the invested resources, may be used to support the organization's or department's activities. There is no requirement that any portion of these resources be preserved as capital. Private-sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed in both the government-wide and proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board (GASB). Governments also have the option of following subsequent private-sector guidance for their business-type activities and enterprise funds, subject to this same limitation. The City has elected not to follow subsequent private-sector guidance. As a general rule the effect of Interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are payments-in-lieu of taxes and other charges between the City's proprietary fund functions and various other functions of the City. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or privileges provided 2) operating grants and contributions, and 3) capital grants and contributions. Internally dedicated resources are repoded as general revenues rather than as program revenues. Likewise, general revenues include all taxes. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. Principal operating revenues of the City's electric, water, sewer, golf and street lighting funds and the City's internal service funds are charges to customers for sales and services. Principal operating revenues of the City's airport, disposal and conference center funds includes charges to customers for sales and services and rental fees. The parking district fund's principal operating revenues include the sale of parking permits to customers and parking fines. The City also recognizes as operating revenue tap fees intended to recover the cost of connecting new customer to the City's utilities. Operating expenses for the enterprise funds and internal service funds include cost of power purchases, fuels and lubricants, operations, maintenance, utilities, insurance premiums and deductibles, general and administration, and depreciation on capital assets. All revenues and expenses not meeting this definition are repoded as nonoperating revenues and expenses. 28 CITY OF UKIAH NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2003 When both restricted and unrestricted resources are available for use, it is the City's policy to use restricted resources first, then unrestricted resources as needed. D) Assets, Liabilities, And Net Assets Or Equity 1) Deposits And Investments The City's cash and cash equivalents are considered to be cash on hand, demand deposits, and shod-term investments with original maturities of three months or less from the date of acquisition. Under provisions of the City's investment policy, and in accordance with Section 53601 and 53601.1 of the California Government Code, the City may invest in the following types of investments: U.S. Treasury direct obligations U.S. Agency obligations (GNMA, FFCB, FHLB, FNMA, FHLMAC, and SLMA) - Banker's acceptances - Commercial paper rated AI+/P1 or equivalent - Negotiable certificates of deposit - Repurchase agreements - Reverse repurchase agreements - Local Agency Investment Fund - Non-negotiable time deposits - Financial futures - European or American call options Medium-Term notes issued by corporations operating in the United States with minimum "A" rating Mutual funds and beneficial interest shares rated P-1/AAAm Notes, bonds or other obligations secured by securities listed by Section 53651 of the California Government Code - Pass through and/or certificate investments Investments for the City and its component units are repoded at fair value. The Local Agency Investment Pool (LAIF) is a special fund of the California State Treasury through which local governments may pool investments. The City may invest up to $40,000,000 in the fund. Investments in LAIF are highly liquid, as deposits can be converted to cash within 24 hours without loss of interest. Funds deposited in LAIF are invested in accordance with Government Code Sections 16430 and 16480. Oversight of LAIF is provided by the Pooled Money Investment Board whose members are the California State Treasurer, California Director of Finance and the California State Controller. For the purpose of these financial statements, the fair value of amounts in LAIF is equivalent to the dollars held. 2) Receivables And Payables Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to either "due to/form other funds" (i.e. the current portion of Interfund loans) or "advances to/from other funds" (i.e. the non-current portion of Interfund loans). All other outstanding balances between funds are reported as "due to/from other funds." Any residual balances outstanding between the governmental activities and the business-type activities are reported in the government-wide financial statements as "internal balances." An estimated receivable of $913,331 has been reported within the City's enterprise funds for services provided but not yet billed as of June 30, 2003. The receivable, and increase to related revenue accounts, was arrived at by taking the cycle billings the City sent the customers in July and prorating for the number of days applicable to the fiscal year ended June 30, 2003. All trade and property tax receivables are shown net of an allowance for uncollectible accounts. Allowances for uncollectible receivables totaled $626,034, including $240,894 for emergency response billings, and were determined based on an analysis of historical trends. 29 CITY OF UKIAH NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2003 Property taxes for the current year were attached as an enforceable lien as of January 1, 2002, and were levied on July 1, 2002. Taxes are due in two equal installments on November 1 and February 1. The City relies on the competency of the County of Mendocino Assessor's office to properly assess, collect and distribute property taxes. 3) Inventories And Prepaid Items Inventories are valued at the lower of cost (first-in, first-out) or market. An annual charge is made to various City funds to assist in the financing of warehouse operations in addition to being billed as inventory is issued. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements. 4) Restricted Assets Certain proceeds of the City's electric fund revenue bonds (as well as certain resources set aside for their repayment) and resources set aside for repayment of the golf fund capital leases are classified as restricted assets on the balance sheet because their use is limited by applicable bond or other covenants. 5) Capital Assets Capital assets, which include property, plant, and equipment and are reported in the applicable governmental or business-type activities column in the governmental-wide financial statements. Capital assets are defined by the city as assets with an initial individual cost of more than $5,000 and an estimated useful life in excess of two years. Capital assets are valued at cost where historical records are available and at an estimated historical cost where no historical records exist. Donated fixed assets are valued at their estimated fair market value on the date received. As of the balance sheet date, information was not available concerning the cost of infrastructure assets (e.g., roads, bridges, sidewalks, and similar items) and, therefore, pre-existing infrastructure assets are not included in the accompanying financial statements. As permitted by GASB Statement No. 34 (GASB-34), the City will begin reporting pre-existing infrastructure assets as data is accumulated during the transition period provided by GASB-34. However, as required by GASB-34 the City has begun prospective reporting of infrastructure assets acquired or constructed during the current fiscal period. During the current fiscal period, infrastructure projects that were incomplete are reported as "construction in progress." Interest is capitalized on construction of major assets acquired with debt. The amount of interest to be capitalized is calculated by offsetting interest expense incurred from the date of the borrowing until completion of the project with interest earned on invested proceeds over the same period. No interest was capitalized during the year ended June 30, 2003. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Improvements are capitalized and depreciated over the remaining useful lives of the related fixed assets, as applicable. Property, plant and equipment of the City is depreciated using the straight-line method using the following useful lives: Land improvements Buildings and improvements Infrastructure Licensed vehicles Machinery and equipment Years 20 - 40 years 30 - 60 years 30 - 60 years 5 - 10 years 5 - 20 years 6) Compensated Absences It is the City's policy to allow an employee to accumulate no more than two years vacation. Full time City employees are entitled to sick leave with full pay due to absence resulting from illness or injury to the extent 30 CITY OF UKIAH NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2003 of the amount earned. There is no liability for unpaid sick leave since the government does not have a policy to pay any amount when employees separate from service with the City. All vacation pay is accrued when incurred in the government-wide and fund financial statements. 7) Long-Term Obliqations In the government-wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of assets. Bond discounts, as well as issue costs, are deferred and amortized over the life of the bonds using the straight-line method, which is not materially different from the effective interest method. Bonds payable, and capital lease obligations, are reported net of the unamortized discount. Debt issue costs are reported as deferred charges and amortized over the term of the related debt. 8) Fund Equity In the fund financial statements, governmental funds report reservations of fund balance for amounts that are not available for appropriation or legally restricted by outside parties for use for a specific purpose. Designated fund balances represent tentative management plans for future use of financial resources and are subject to change. 2) Reconciliation Of Government-Wide And Fund Financial Statements A) Explanation Of Certain Differences Between The Governmental Fund Balance Sheet And The Government-Wide Statement Of Net Assets The governmental fund balance sheet includes a reconciliation between fund balance-total governmental funds and net assets-govemmental activities as reported in the government-wide statement of net assets. One element of that reconciliation explains, "long-term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported in the funds." The details of this $6,613,201 difference are as follows: Loans Payable: Ukiah Redevelopment Agency REDIP loan payable Ukiah Redevelopment Agency REMIF loan payable Ukiah Redevelopment Agency REMIF loan payable- accrued interest Net Adjustment To Reduce Fund Balance-Total Governmental Funds To Arrive At Net Assets-Governmental Activities ($428,201) (5,935,000) (31,348) ($6,394,549) B) Explanation Of Certain Differences Between The Governmental Fund Statement Of Revenues, Expenditures, And Changes In Fund Balances And The Government-Wide Statement of Activities The governmental fund statement of revenues, expenditures, and changes in fund balances includes a reconciliation between net changes in fund balances-total govemmental funds and changes in net assets of governmental activities as reported in the government-wide statement of activities. One element of that reconciliation explains, "Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense." The details of this $2,086,477 difference are as follows: Capital outlay Depreciation expense Net Adjustment To Increase Net Changes In Fund Balances-Total Governmental Funds To Arrive At Changes In Net Assets Of Governmental Activities $2,434,362 (347,885) $2,086,477 Another element of that reconciliation states, "The issuance of long-term debt provided current financial resources to the governmental funds, while repayment of the principal of long-term debt consumes the current financial resources of the governmental funds. Neither transaction, however, has any effect on the net assets. Also, governmental funds report the effects of issuance costs, premiums, discounts, and similar 31 CITY OF UKIAH NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2003 items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities." The details of this $1,252,370 difference are as follows: Debt Issued: Intra-City loan made from internal service fund Principal repayments: Capital leases Ukiah Redevelopment Agency loans payable Net Adjustment To Increase Net Changes In Fund Balances-Total Governmental Funds To Arrive At Changes In Net Assets Of Governmental Activities ($25o,ooo) 1,310,000 191,712 $1,251,712 Another element of that reconciliation states, "Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds." The details of the $658 difference are as follows: Accrued interest Net Adjustment To Increase Net Changes In Fund Balances-Total Governmental Funds To Arrive At Changes In Net Assets Of Governmental Activities $658 $658 3) Stewardship, Compliance And Accountability A) Budgetary Information Annual budgets are adopted on a basis consistent with generally accepted accounting principals for all governmental funds except the special revenue Asset Seizure, Asset Seizure (Drug/Alcohol), H&S Education and Federal Assets Seizure funds, which did not have budgets in the current fiscal period. Annually, each City department submits a request for appropriation to the City Manager so that a budget may be prepared. The budget is prepared by fund, function and activity, and includes information on the past year, current year estimates and requested appropriations for the next fiscal year. Before June 30, the proposed budget is presented to the City Council for review. The City Council holds public hearings and may add to, subtract from or change appropriations, but may not change the form of the budget. Any changes in the budget must be within the revenues and reserves estimated as available by the City Manager or the revenue estimates must be changed by an affirmative vote of a majority of the City Council. Expenditures may not legally exceed budgeted appropriations at the activity level. During the year, several supplementary appropriations totaling $1,739,333 were necessary. Encumbrances represent commitments related to unperformed contracts for goods or services. Encumbrance accounting - under which purchase orders, contracts and other commitments for the expenditures of resources are recorded to reserve that portion of the applicable appropriation - is utilized in the governmental funds. Encumbrances outstanding at year-end are reported as reservations of fund balances and do not constitute expenditures or liabilities because the commitments will be reapportioned and honored during the subsequent year. B) Excess Of Expenditures Over Appropriations Expenditures exceeded appropriations in the following special revenue funds: Community Development Fund Trans-Traffic Congestion Fund Community Redevelopment Fund Redevelopment Housing Fund $454,810 9,510 7,599 266,572 These overexpenditures were funded by additional grant revenues in the Community Development Fund and by available fund balance in the case of the other funds. 32 CITY OF UKIAH NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2003 C) Deficit Fund Equity The following special revenue funds had deficit fund balances as of June 30, 2003. The deficits were primarily caused by expenditures in excess of grant awards. Management is monitoring the activities in these funds to ensure improved financial position and the deficits do not represent a significant financial burden. Museum Grants Fund NEH1 Museum Grant Fund STIP Augmentation Fund $71 1,339 917 4) Detailed Notes On All Funds A) Deposits And Investments Deposits. At year-end, the carrying amount of the government's deposits was $827,025 and the bank balance was $717,732. Of the bank balance, $381,575 was covered by federal depository insurance. As required by the provisions of the California Government Code, the uninsured balance was secured by pledged government securities or pledged first trust deed mortgage notes held in financial institutions' trust departments, but not in the City's name. The value of the pledged securities must equal 110% of the City's deposits. The value of first trust deed mortgage notes must equal 150% of the City's total deposits. It is the City's policy to accept these forms of collateral. Investments. The City invests in collateral mortgage obligations (a form of mortgage-backed securities) in part to maximize yields and in part to hedge against anticipated rising interest rates. These securities are based on cash flows from interest payments on underlying mortgages. Therefore, they are sensitive to prepayments by mortgagees, which may result from a decline in interest rates. For example, if interest rates decline and homeowners refinance mortgages, thereby prepaying the mortgages underlying these securities, the cash flows from interest payments are reduced and the value of these securities declines. Likewise, if homeowners pay on mortgages longer than anticipated, the cash flows are greater and the return on initial investment would be higher than anticipated. The City's investments are categorized as either (1) insured or registered or for which the securities are held by the City or its agent in the City's name, (2) uninsured and unregistered for which the securities are held by the broker's or dealer's trust department or agent in the City's name or (3) uninsured and unregistered for which the securities are held by the broker or dealer, or by its trust department or agent but not in the City's name. The City's investments are categorized below to give an indication of the level of risk assumed by the entity at June 30, 2003: Money funds Commercial paper Corporate bonds and notes U.S Government Obligations: Direct Agency Money funds Mortgage-backed Investments not categorized: State pooI-LAIF State pooI-REDIP Category 1 2 3 Fair Value $5,7O6 $5,7O6 $4,000,000 4,000,000 7,023,023 7,023,023 $15,234,835 15,234,835 18,108,964 18,108,964 3,122,744 3,122,744 15,737 15,737 12,369,057 90,045 $11,023,023 $33,359,536 $3,128,450 $59,970,111 CITY OF UKIAH NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2003 B) Capital Assets Capital assets activity for the year ended June 30, 2003 was as follows: Government Activities: Nondepreciable Capital Assets: Land Construction in progress Total Nondepreciable Capital Assets Depreciable Capital Assets: Land improvements Buildings Licensed vehicles Machinery and equipment Infrastructure Total Depreciable Capital Assets Less: Accumulated Depreciation: Land improvements Buildings Licensed vehicles Machinery and equipment Total Accumulated Depreciation Depreciable Capital Assets, net Governmental Activities Capital Assets, net Balance July 1, 2002 $1,675,023 1,675,023 814,164 4,920,870 1,852,644 1,566,964 9,154,642 (559,669) (1,535,876) (1,268,598) (789,862) (4,154,005) 5,000,637 $6,675,660 Additions $191,137 191,137 1,166,148 128,021 115,094 833,962 2,243,225 (37,541) (98,526) (114,289) (131,752) (382,108) 1,861,117 $2,052,254 Business-Type Activities: Nondepreciable Capital Assets: Land Construction in progress Total Nondepreciable Capital Assets Depreciable Capital Assets: Land improvements Buildings and improvements Licensed vehicles Machinery and equipment Total Depreciable Capital Assets Less: Accumulated Depreciation: Land improvements Buildings and improvements Licensed vehicles Machinery and equipment Total Accumulated Depreciation Depreciable Capital Assets, net Business-Type Activities Capital Assets, net $2,644,348 2,644,348 909,883 42,531,012 1,412,280 4,240,307 49,093,482 (852,226) (12,112,586) (944,161) (2,419,341) (16,328,314) 32,765,168 $35,409,516 $632,971 632,971 15,000 641,500 23,072 13,563 693,135 (8,162) (849,038) (80,446) (133,682) (1,071,328) (378,193) $254,778 Deletions $0 0 0 $0 $0 0 0 Balance June 30, 2003 $1,675,023 191,137 1,866,160 814,164 6,087,018 1,980,665 1,682,058 833,962 11,397,867 (597,210) (1,634,402) (1,382,887) (921,614) (4,536,113) 6,861,754 $8,727,914 $2,644,348 632,971 3,277,319 924,883 43,172,512 1,435,352 4,253,870 49,786,617 (860,388) (12,961,624) (1,024,607) (2,553,023) (17,399,642) 32,386,975 $35,664,294 34 CITY OF UKIAH NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2003 Depreciation expense was charged to functions/programs of the City as follows: Depreciation expense was charged to functions/programs of the City as follows: Governmental Activities: General government Public safety Streets Parks Community development Total Depreciation Expense - Governmental Activities $108,086 131,129 81,502 60,732 659 $382,1 O8 Business-Type Activities: Electric $553,184 Water 126,767 Sewer 283,318 Disposal site 25,409 Airport 14,915 Golf course 19,385 Conference center 48,350 Total Depreciation Expense- Business-Type Activities $1,071,328 Construction And Other Commitments The City has active construction projects as of June 30, 2003. The projects include widening and reconstruction of a bridge and expansion of the water treatment plant and sewage treatment plant. The City has also entered into an agreement to develop new citywide financial software. At year-end the City's commitments with contractors are as follows: Orchard Bridge construction engineering Water treatment plant expansion Sewage treatment plant expansion Software development project C) Interfund Receivables, Payables And Transfers Expended Remaining To-Date Commitment $120,194 $0 90,812 500,225 542,159 6,200,358 70,943 400,069 The composition of Interfund balances and transfers within the City's fund financial statements as of June 30, 2003 is as follows: Due To(From) Other Funds Due To Due From General Fund Electric Fund Nonmajor governmental funds Nonmajor enterprise funds $351,854 1,126,147 $1,468,798 9,203 Total Due To(From) Other Funds $1,478,001 $1,478,001 CITY OF UKIAH NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2003 The purpose of the Interfund balances is to reflect advances made by the City to the Ukiah Redevelopment Agency. Advances are due upon demand, but will probably not be repaid in the subsequent fiscal year. A negative pooled cash balance in the Conference Center fund caused the nonmajor enterprise fund liability. In addition to the above amounts, the fund financial statements report a $250,000 intra-city loan due from the Civic Center debt service fund to the Workers' Compensation internal service fund. The intra-city loan was eliminated for the purposes of the government-wide statement of net assets. The loan was made to payoff the Civic Center capital lease obligation. Interfund Transfers Transfers In Transfers Out General Fund Electric Fund Nonmajor governmental funds Nonmajor enterprise funds $675,000 $753,589 675,000 3,271,834 2,828,299 310,054 Total Transfers In(Out) $4,256,888 $4,256,888 The $675,000 transfer represents payments in lieu of taxes by the electric department. Transfers from the General fund of $443,535 were made to fund various City project costs paid by capital projects funds. The General made an additional transfer of $310,054 to the Conference Center (a nonmajor enterprise fund) to subsidize several years of operating deficits. The remaining nonmajor governmental transfers were made to reclassify advances made to the Ukiah Redevelopment Agency as a liability of the Agency's debt service fund. D) Capital Leases At June 30, 2003, the City was obligated for one (1) agreement that financed the acquisition of a golf course that has been reported as a capital lease. This leasing arrangement is with the Redwood Empire Financing Authority (Authority). The Authority issued certificates of participation, the proceeds of which are used to acquire the actual property. The Authority then leased the property to the City, with the lease payments being used for the debt service requirements of the Authority. The terms of the agreement transfers ownership of the asset at the end of the lease term. The lease, therefore, meets the criteria of a capital lease that is defined generally as one which transfers the benefits and risks of ownership to the lessee. The lease obligation has been recorded at the present value of the future minimum lease payments as of the date of inception. The following is a schedule of the asset acquired through the capital lease: Business-Type Activities Asset: Land-golfcourse $1,001,350 Total $1,001,350 CITY OF UKIAH NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2003 The future minimum lease obligations and the net present value of these minimum lease payments as of June 30, 2003 were as follows: Year Ended June 30, Golf Fund 2004 $90,680 2005 88,580 2006 91,330 2006 88,930 2006 91,358 Thereafter 979,652 Total Minimum Lease Payments 1,430,530 Less: Amount representing interest (530,530) Present Value Of Minimum Lease Payments $900,000 E) Long-Term Debt Revenue Bonds. The City has issued bonds where the City pledges revenue derived from the acquired or constructed assets to pay debt service. Revenue bonds outstanding, net of unamortized discount of $427,095, at June 30, 2003 were as follows: Purpose Interest Rates Amount Electric Revenue Refunding Series 1992 3.20% - 5.90% $18,967,905 Department of Water Resources Loans. The City has obtained two (2) loans from the California Department of Water Resources to finance an upgrade of the water treatment plant and to finance an upgrade of the wastewater treatment plant to comply with safe drinking water standards. The water treatment plant maximum loan amount is $3,599,009 and is payable over 30 years. At June 30, 2003, the balance of the loan was $2,488,807. Principal and interest are payable semi-annually on April 1, and October 1, with the interest rate being 3.6024%. Loan payments will be made exclusively from revenues received from assessments and user charges of the treatment plant. The wastewater treatment plant maximum loan amount is $6,592,944, payable over 20 years. At June 30, 2003, the balance of the loan was $4,530,421. Principal and interest are payable annually with the interest rate being 3.0%. California Airport Loan. The City has obtained a loan from the California Department of Transportation to finance the purchase and installation of a fuel storage tank. The original loan amount is $165,000, payable over 10 years. At June 30, 2003, the balance of the loan was $44,208. Principal and interest are payable annually with the interest rate being 5.8957%. Ukiah Redevelopment Agency Loan Payable. The Ukiah Redevelopment Agency (RDA) has entered into a loan agreement, dated December 30, 1993, for $6,935,000 with the Redwood Empire Financing Authority (Authority). The Authority issued certificates of participation, the proceeds of which are used to provide funds to loan the RDA. The Authority then uses the RDA loan payments for the debt service requirements of the Authority. The loan balance at June 30, 2003, was $5,935,000. The terms of loan require semi- annual interest payments in December and June at annual rates ranging from 4.00% to 6.50%. Principal payments are due annually in December through the year 2023. Loan payments by the RDA will be made exclusively from revenues received from property tax increments. Ukiah Redevelopment Agency REDIP Loan Payable. The Ukiah Redevelopment Agency (RDA) has entered into a loan agreement, dated May 29, 1996, with the Rural Economic Development Infrastructure Panel (REDIP) to fund the construction of infrastructure within the RDA project area. The principal amount of the loan was $758,557 and the balance at June 30, 2003 was $427,201. Principal and interest payments 37 CITY OF UKIAH NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2003 of $43,662 are payable semi-annually on January 1, and July 1, through July 1, 2009. The loan carries an interest rate of 6.5% per annum. Rural Economic Development Infrastructure Program. The City of Ukiah accounts for some of the operations of the Ukiah Valley Sanitation District within the City's agency funds. As part of a sewer line construction project, the Ukiah Valley Sanitation District has received a Rural Economic Development Infrastructure Panel (REDIP) loan in an amount not to exceed $475,595. The City of Ukiah is not obligated in any manner to repay this loan, but has included the outstanding balance of $210,632 as a liability within the City's agency funds. Debt service requirements to maturity, including the loans payable by the Ukiah Redevelopment Agency, but excluding the Ukiah Valley Sanitation District REDIP loan, are presented on the following schedules. Governmental Activities Year Ended RDA Loans June 30, Principal Interest 2004 $174,746 $385,747 2005 217,423 387,731 2006 226,547 374,158 2007 240,943 359,862 2008 260,628 344,434 2009-2013 1,222,914 1,478,502 2014-2018 1,495,000 1,058,400 2019-2023 2,035,000 498,400 2024-2028 490,000 15,680 $6,363,201 $4,902,914 Business-Type Activities Year Ended Revenue Bonds State Loans June 30, Principal Interest Principal Interest 2004 $800,000 $1,200,775 $405,793 $227,344 2005 855,000 1,152,775 417,042 213,926 2006 910,000 1,101,475 407,832 200,174 2007 970,000 1,046,875 420,702 187,304 2008 1,030,000 988,675 433,981 174,024 2009-2013 6,235,000 3,904,375 2,384,367 655,664 2014-2018 8,595,000 1,681,250 1,921,033 267,010 2019-2023 672,686 55,365 $19,395,000 $11,076,200 $7,063,436 $1,980,811 Changes in long-term liabilities Long-term liability activity for the year ended June 30, 2003 was as follows: Balance Balance Due Within July 1, 2002 Additions Deletions June 30, 2003 One Year Government Activities: Loans payable $6,554,913 $191,712 $6,363,201 Capital leases 1,310,000 1,310,000 0 Intra-City loan $250,000 250,000 Compensated absences 283,025 283,025 0 Governmental Activities Long-Term Liabilities $8,147,938 $250,000 $1,784,737 $6,613,201 $174,746 125,306 $300,052 CITY OF UKIAH NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2003 Business-Type Activities: Revenue bonds payable Less: Unamortized discount Net revenue bonds payable Balance Balance Due Within July 1, 2002 Additions Deletions June 30, 2003 One Year $20,155,000 $760,000 $19,395,000 $800,000 (455,567) (28,472) (427,095) 19,699,433 $0 731,528 18,967,905 800,000 State loans: Airport loan 65,082 20,874 44,208 22,524 Water Resources - Water Treatment 2,578,722 89,915 2,488,807 93,188 Water Resources - Sewer Treatment 4,812,573 282,152 4,530,421 290,081 Total State loans 7,456,377 0 392,941 7,063,436 405,793 Capital leases: Golf course 935,000 35,000 900,000 35,000 Less: Unamortized discount (22,628) (1,382) (21,246) Net capital leases 912,372 0 33,618 878,754 35,000 Business-Type Activities Long-Term Liabilities $28,068,182 $0 $1,158,087 $26,910,095 $1,240,793 F) Segment Information As discussed previously, the City has issued revenue bonds to finance improvements in its electric department, and obtained State loans to finance improvements in its water and sewer departments. These departments were all determined to be major funds for financial reporting purposes and required segment information is presented in the proprietary fund financial statements. 5) Other Information A) Risk Management The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The City provides property, liability, and worker's compensation insurance through the Redwood Empire Municipal Insurance Fund (REMIF), a public entity risk pool currently operating as a common risk management and insurance program for several Northern California municipalities. The City pays quarterly and annual premiums to the REMIF for its general insurance coverage. The joint powers formation agreement of the REMIF provides that the REMIF will be self-sustaining through member premiums for liability insurance and will reinsure through commercial companies for other coverage. The City's deductible is $10,000 for worker's compensation and property losses, and $25,000 for liability loss, all per occurrence. Separate internal service funds, maintained by the City, are reserved to provide for the self-insured portions noted above. The total amount in these funds at June 30, 2003, was $1,610,533 which management feels is adequate to finance the City's share of any losses. The City continues to carry commercial insurance for all other risks of loss, including employee health and accident, coverage of the Municipal Airport and bonding of certain employees and elected officials. Settled claims resulting from these risks have not exceeded commercial insurance coverage in any of the past three fiscal years. B) Related Organizations The City is a member of various joint powers authorities that provide goods or services to the City and other authority members. Under the criteria established by GASB-14, the City does not have sufficient authority, influence or accountability over these entities to incorporate them in this annual report. Additionally, the City 39 CITY OF UKIAH NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2003 has determined that it has no ongoing financial interest or responsibility for any of these organizations as defined by GASB-14. The names and general functions of these joint powers are as follows: Northern California Power Agency (NCPA) - Membership consists of eleven municipal electric utilities, one Rural Electric Cooperative, an irrigation district, and a public utility district. The NCPA is generally empowered to purchase, generate, transmit, distribute, and sell electrical energy. Members participate in the projects of the Agency on an elective basis. A Commission comprised of one representative for each member governs the NCPA. The City is currently involved in several hydroelectric, geothermal and other energy related projects as a member of this agreement. The NCPA is financed by contributions from member cities, government grants and debt. The City is committed to provide substantial additional financial support for its portion of the actions and projects of the NCPA. During the year ended June 30, 2003, the City paid $6,020,634 (including a prepaid amount of $218,671) to the NCPA for power supplied by the agency. The NCPA holds certain funds under a separate member custodial agreement - the general operating reserve. The purpose of the reserve is to allow members to fund all, or a portion, of the contingent liabilities that the NCPA faces at any given time, while providing the individual member with the flexibility to draw upon their part of the reserve, as each member individually deems appropriate. At July 31, 2003, the City's balance held in the reserve was $3,007,163. Due to the nature of the reserve held by NCPA, payments made to the reserve are expensed as purchased power. Mendocino Transit Authority - This Agency consists of four Mendocino County cities and the County of Mendocino. The Agency was created to apply for and receive Transportation Development Act, Urban Mass Transportation Act, and other funds as a public transportation operator and to provide public transportation services within Mendocino County. Its activities are primarily financed from fare box revenue and federal and state government grants. A Board of Directors comprised of one member from each city and three members that are appointed by the Mendocino County Board of Supervisors governs the Authority. Redwood Empire Financing Authority (REFA) - This is an agreement between seven Northern California cities. The Authority is authorized to acquire, through lease purchase, installment sale agreements, or otherwise such property necessary or convenient for the operation of the member cities. A Commission comprised of one member appointed by each member city administers the Authority. As explained previously, the City has entered into various financing arrangements with REFA. Redwood Empire Municipal Insurance Fund (REMIF) - A group of Northern California cities participate in this agreement to provide themselves with various levels of liability, property and worker's compensation insurance. A Commission comprised of one member appointed by each member city administers the Authority. As explained previously, the City provides for its general insurance needs through REMIF. Annual premiums paid to the Authority were $521,146. In addition the City received refunds from REMIF totaling $177,457. Transmission Agency Of Northern California (TANC) - Members include eleven cities, one electric co-op, two irrigation districts, and one public utility district. The Agency was created to provide electric transmission or other facilities, including real property and rights of way, for the use of its members. A Commission comprised of one representative appointed by each member governs the Agency. The City has authorized its participation in the project up to one percent (1%) of the total. Mendocino Solid Waste Management Authority (MSWMA) - This Authority consists of three Mendocino County cities and the County of Mendocino. The Agency was created for the purpose of: (a) siting, licensing, developing, constructing, maintaining, and operating disposal sites and sanitary landfills and (b) preparing and implementing a solid waste management plan. A Commission comprised of one member from each city and two members that are appointed by the Mendocino County Board of Supervisors governs the Authority. Mendocino Emergency Services Authority (MESA) - This Authority consists of three Mendocino County cities and the County of Mendocino. The Agency was created for the purpose of coordinating disaster and other emergency preparedness planning and recovery programs. A Commission comprised of one member from member entity governs the Authority. During the year ended June 30, 2003, the City paid MESA $6,293 for its share of the Authorities operating expenses. 40 CITY OF UKIAH NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2003 C) Contingencies Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies, principally the federal government. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures which may be disallowed by the grantor cannot be determined at this time although the City expects such amounts, if any, to be immaterial. There are several pending lawsuits in which the City is involved. Although the outcome of these lawsuits is not presently determinable, in the opinion of the City attorney the resolution of these matters will not have a material adverse effect on the financial condition of the City. D) Landfill Closure And Postclosure Costs State and federal laws and regulations require that the City place a final cover on its landfill when closed and perform certain maintenance and monitoring functions at the landfill site for thirty years after closure. In addition to operating expenses related to current activities of the landfill, an expense provision and related liability are being recognized based on the future closure and postclosure care costs that will be incurred near or after the landfill no longer accepts waste. The recognition of these landfill closure and postclosure care costs is based on the amount of landfill used during the year. The estimated liability for landfill closure and postclosure care costs has a balance of $6,608,667 as of June 30, 2003, which is based on 100.0% usage (filled) of the landfill. This estimated total current cost of the landfill closure and postclosure care is based on the amount that would be paid if all equipment, facilities, and services required to close, monitor, and maintain the landfill were acquired as of June 30, 2003, as determined by the last engineering study performed. However, the actual cost of closure and postclosure care may change due to inflation, changes in technology, or changes in landfill laws and regulations. The City is required by state and federal laws and regulations to make annual contributions to finance closure and postclosure care. The City is in compliance with these requirements, and at June 30, 2003, held $6,355,422 within its pooled investments designated for these purposes. The City has made a pledge of future service revenues for anticipated remaining expected costs, future inflation costs, and any additional costs that might arise from changes in postclosure requirements (due to changes in technology or more rigorous environmental regulations, for example). E) Service Contracts The City has entered into several agreements to provide services to persons living outside the City limits. The general purpose and description of these contract agreements are as follows: The City has contracted with the Ukiah Valley Sanitation District to provide processing of the District's wastewater. In addition, the City provides billing, collection and other direct maintenance services for the District. District assets held by the City are accounted for in the Agency funds. The City has granted Solid Waste Systems, Inc. a franchise for mandatory residential and optional commercial garbage collection and disposal. The City has also contracted with Solid Wastes Systems, Inc., to provide a citywide recycling program. The City acts as billing and collecting agent for the residential accounts of Solid Waste Systems, Inc. Amounts held by the City on behalf of the corporation are accounted for in the Agency funds. During 2001, the City exchanged a parcel of land to the County of Mendocino for $1 and five (5) years of animal shelter services commencing in fiscal year 2000/01 through 2005/06. Animal shelter services are to include "acceptance, care, processing and disposition of all Ukiah animals, whether alive or dead." F) Employee Retirement Systems Plan Description: The City two (2) defined benefit pension plans, Miscellaneous Plan of the City of Ukiah and Safety Plan of the City Of Ukiah (Plans), provide retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. The Plans are part of the Public Agency portion of the California Public Employees Retirement System (CalPERS), an agent multiple-employer plan administered 41 CITY OF UKIAH NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2003 by CalPERS, which acts as a common investment and administrative agent for participating public employees within the State of California. State statutes within the Public Employees' Retirement Law establish a menu of benefit provisions as well as other requirements. The City of Ukiah selects optional benefit provisions from the benefit menu by contract with CalPERS and adopts those benefits through local ordinance. CalPERS issues a separate comprehensive annual financial report. Copies of the CalPERS' annual financial report may be obtained from the CalPERS Executive Office - 400 P Street - Sacramento, CA 95814. Funding Policy: Active plan members in the Plans are required to contribute 7.0% (10% for safety employees) of their annual covered salary. The City is required to contribute the actuarially determined remaining amounts necessary to fund the benefits for its members. The actuarial methods and assumptions used are those adopted by CalPERS Board of Administration. The required employer contribution rate for fiscal 2002103 was -0-% (-0- % for safety employees). The contribution requirements of the plan members are established by State statute and the employer contribution rate is established and may be amended by CalPERS. Annual Pension Cost: For fiscal year 2002/03 the City's annual pension cost was $-0- ($-0- for miscellaneous and $-0- for safety employees) and the City actually contributed $-0-. In addition, the City paid $619,309 representing substantially all of the employees' required contributions under the terms of the City's various employee bargaining unit agreements. The required contribution for fiscal year 2002/03 was determined as part of the June 30, 2000, actuarial valuation using the entry age normal actuarial cost method with the contributions determined as a percent of pay. The actuarial assumptions include (a) 8.25% investment rate of return (net of administrative expenses); (b) projected salary increases that vary by duration of service ranging from 3.75% to 14.20% for miscellaneous members (4.27% to 11.59% for safety members), and (c) 3.75% cost-of- living adjustment. Both (a) and (b) include an inflation component of 3.5%. The actuarial value of the Plan's assets was determined using a technique that smoothes the effect of short-term volatility in the market value of investments over a two to five year period depending on the size of the investment gains and/or losses. The Plan's unfunded actuarial liability is being amortized as a level percentage of projected payrolls on a closed basis. The remaining amortization period was 31 years (15 years for safety). Three-Year Trend Information Year Ending Annual Pension Cost Net Pension Net Pension June 30, Miscellaneous Safety Obligation Obligation 2001 $6,890 $0 100% 0 2002 0 0 100% 0 2003 0 0 100% 0 G) Deferred Compensation The City of Ukiah offers its employees deferred compensation plans created in accordance with Internal Revenue Code Section 457. The plans, available to all City employees, permit employees to defer a portion of their salary until future years. Participation in the plans is optional. The deferred compensation is not available to employees until termination, retirement, death, or unforeseeable emergency. The City has adopted the provisions of GASB Statement 32 and, therefore, the assets and liabilities of these plans have been excluded from the accompanying financial statements. H) Adjustments To Equity And Net Assets Change In Accounting Principle In the year ended June 30, 2003 City of Ukiah implemented a new financial reporting model as required by the provisions of Governmental Accounting Standards Board No. 34, Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Govemments, Statement No. 37, Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Govemments: Omnibus; Statement No. 38, Certain Financial Statement Note Disclosures; Statement No. 39, Determining 42 CITY OF UKIAH NOTES TO THE FINANCIAL STATEMENTS JUNE 30, 2003 Whether Certain Organizations Are Component Units - an amendment of GASB No. 14; and Interpretation No. 6, Recognition and Measurement of Certain Liabilities and Expenditures in Governmental Fund Financial Statements. This results in a change in the format and content of the basic financial statements. These pronouncements establish new financial reporting requirements for all state and local governments and consist of the following: a. Management's discussion and analysis b. Basic financial statements c. Government-wide financial statements, prepared using the economic resources measurement focus and the accrual basis of accounting. d. Fund financial statements, consisting of a series of statements that focus on a government's major governmental funds. e. Notes to financial statements. f. Required supplementary information, that requires budgetary comparison schedules to be presented. The cumulative effect of implementing these new accounting principles as been presented as an adjustment to beginning net assets, decreasing prior-year reported net assets for government activities by $1,549,558. Changes In Accountinq Policy For the year ended June 30, 2003, the City changed its accounting polices with regard to the capitalization of property and equipment; and the repoding of its risk management activities. As explained in note 1(D)(5) the City has increased its capitalization threshold for property and equipment items to $5,000. This change in accounting policy decreased government activities net assets by $23,193 and business-type activities net assets by $322,901. In addition, in prior years the City accounted for its risk management activities within its fiduciary trust funds. For the purposes of this report, these activities are now accounted for in internal service funds. The effect of this change was to increase governmental activities net assets by $1,920,874, and decrease fiduciary net assets by $1,920,874. Prior Period Adjustments The City has determined that certain transactions were not properly recorded in a prior year. The beginning fund balance of the general fund was increased by $123,000 to accrue additional sales tax revenues as of June 30, 2002. The effect on the reported excess (deficiency) of revenues and other financing sources over expenditures and other uses for the year ended June 30, 2002 was immaterial. An adjustment has been made to the beginning fund balance of the Ukiah Redevelopment Agency capital projects fund to record an overpayment of tax increment remitted to the Agency by the County of Mendocino in past years that must now be refunded. The effect on prior year reported excess of revenues and other sources over expenditures and other uses was immaterial. The beginning fund balance was decreased by $157,653 to a restated amount of $808,170. The following is a schedule of the adjustments to prior year equity and net assets: Cumulative effect of change in accounting principle Change in accounting policy Prior period adjustments Total Governmental Business-Type Total Activities Activities Government Fiduciary $(1,549,558) $(1,549,558) 1,897,681 $(322,901) 1,574,780 $(1,920,874) (34,653) (34,653) $313,470 ($322,901) ($9,431) ($1,920,874) 43 UKIAH REDEVELOPMENT AGENCY AGENDA SUMMARY REPORT ITEM NO. 5d DATE: March 17, 2004 SUBJECT: APPROVAL OF EXTENSION OF CONTRACT FOR AUDIT SERVICES Davis Hammon & Co. has completed a five year auditing services contract with the audit of fiscal year 2002/2003. Audit services for the current and future fiscal years must be secured in time to begin audit field work in June of this year. Staff is recommending the extension of the existing contract with Davis Hammon & Co. for one additional year. Staff is further recommending that formal proposals for audit services be solicited for the audit of fiscal years beginning with fiscal year 2005/2006. Typically governments acquire audit services in two ways: 1) Solicit formal proposals for services (RFP) or 2) Exercise options to extend existing contracts. Significant effort will be required to prepare the RFP and evaluate the responses. Typically the Finance Department prepares the RPF document, distributes it and meets with interested audit firms to inform them about financial practices and procedures in the Agency. Sometimes formal bidder conferences are held. Some cities require bidders to attend the bidder conference. Evaluation is usually performed by a committee that includes staff and Board members. This committee is charged with presenting a recommendation to the Agency Board. In the coming months, both the Board and staff will invest significant time and effort, devising extensive budget strategies. Adding the process of preparing the RFP, meeting with potential bidders and evaluating proposals received will be a significant work effort that would otherwise be devoted to budget related issues. Therefore staff is recommending extension of the existing audit services contract and (continued on page 2 RECOMMENDED ACTION: Authorize the Executive Director to sign an agreement with Davis Hammon & Co. for a fiscal year 2003/2004 financial auditing services in an amount not to exceed $4,600.00. ALTERNATIVE COUNCIL POLICY OPTION: Provide staff with alternative direction. Citizen Advised: Requested by: Prepared by: Coordinated with: Attachments: N/A Candace Horsley, Executive Directo~ Gordon Elton, Finance Director Candace Horsley, Executive Di.~ctor None APPROVED: ~~ive Director planning a procurement period for future years' audit services in the January to May 2005 time period. Mr. Stephen Herr of Davis Hammon & Co., has indicated his firm's willingness to extend the contract for one more year at a fee of not to exceed $4,600.00. Mr. Herr indicates that the contract just completed did not include any increase for compliance with the new financial reporting format (GASB 34) even though the actual hours required to complete the FY 2002/2003 audit increased by 25%. The audit includes several parts that are priced individually: Ukiah Redevelopment Agency financial audit Redevelopment State Controller's report Total Redevelopment Agency fee 4,000 600 $ 4,600 These fees compare to total fees of $4,000.00 ($3,400 and $600 respectively) for fiscal year 2002/2003. Staff believes these fees are reasonable. If additional services are requested they will be billed at Davis Hammon's standard billing rates. Recommendation: Staff recommends the Agency approve a one year extension of the audit services contract with Davis Hammon & Co. in an amount not to exceed $4,600 for Redevelopment Agency audit services. RDA Audit Services Contract Page 2 REQUIRED SUPPLEMENTAL INFORMATION CITY OF UKIAH GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2003 REVENUES Taxes Licenses and permits Fines, forfeitures, and penalties From other agencies Use of money and property Charges for current services Other Total Revenues EXPENDITURES Current: General government Public safety Public works Parks and recreation Community development Capital outlay Total Expenditures Excess (Deficiency) of Revenues Over Expenditures OTHER FINANCING SOURCES (USES) Transfers in Transfers out Total Other Financing Sources (Uses) Net Change In Fund Balances Fund Balances, July 1, Prior period adjustment Fund Balances, July 1, as restated Fund Balances, June 30, Budgeted Amounts Original Final $5,499,500 137,058 55,575 929,102 909,490 626,450 4,7O0 8,161,875 $5,499,500 137,058 55,575 994,102 909,490 626,450 4,700 8,226,875 1,443,176 5,168,381 1,092,303 1,155,530 51,400 63,200 8,973,990 (812,115) 675,00O (267,000) 408,000 (404,115) 4,088,058 0 4,088,058 $3,683,943 1,492,301 5,167,448 1,147,571 1,158,052 68,786 117,091 9,151,249 (924,374) 675,000 (512,229) 162,771 (761,603) 4,088,058 0 4,088,O58 $3,326,455 General $5,458,106 183,554 70,322 1,022,996 1,041,026 592,391 30,319 8,398,714 1,354,249 5,020,312 937,726 1,129,017 39,177 99,774 8,580,255 (181,541) 675,000 (753,589) (78,589) (260,130) 4,088,058 123,000 4,211,058 $3,950,928 Schedule I Variance With Final Budget- Positive (Negative) ($41,394) 46,496 14,747 28,894 131,536 (34,059) 25,619 171,839 138,052 147,136 209,845 29,035 29,609 17,317 570,994 742,833 0 (241,360) (241,360) 501,473 0 123,000 123,000 $624,473 45 Schedule II CITY OF UKIAH SCHEDULE OF FUNDING PROGRESS PUBLIC EMPLOYEES" RETIREMENT SYSTEM Miscellaneous Plan Of The City Of Ukiah Actuarial Valuation Date June 30,2000 June 30,2001 June 30,2002 Actuarial Value of Assets (A) $29,274,516 29,995,295 28,144,285 Actuarial Accrued Liability (AAL) - Entry Age (B) $23,031,491 25,759,401 30,403,380 Unfunded AAL (UAAL) (B-A) ($6,243,025) (4,235,894) 2,259,095 Funded Ratio (A/B) 127.1% 116.4% 92.6% Covered Payroll (c) $4,211,352 4,896,028 5,234,005 UAAL as a Percentage of Covered Payroll [(B-A)/C] (148.2%) (86.5%) 43.2% Actuarial Valuation Date June 30,2000 June 30,2001 June 30,2002 Actuarial Value of Assets (A) $21,821,939 22,362,545 21,102,193 Safety Plan Of The City Of Ukiah Actuarial Accrued Liability (AAL) - Entry Age (a) $17,000,156 18,271,279 19,973,039 Unfunded AAL (UAAL) (B-A) ($4,821,783) (4,091,266) (1,129,154) Funded Ratio (A/B) 128.4% 122.4% 105.7% Covered Payroll (c) $2,267,314 2,344,563 2,285,874 UAAL as a Percentage of Covered Payroll [(B-A)/C] (212.7%) (174.5%) (49.4%) 46 SINGLE AUDIT AND OTHER COMPLIANCE 00000 O. O. q O. O. ~o°~o° .- oI o~ 08 ~oo Go. o~ ~-00 o~ CITY OF UKIAH NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AND OTHER AWARDS JUNE 30, 2003 NOTE A SIGNIFICANT ACCOUNTING POLICIES The accompanying schedule of expenditures of federal and other awards is a summary of the activity of the City of Ukiah's federal and other award programs and has been prepared on an accounting basis consistent with the government-wide financial statements of the City of Ukiah. Therefore, all of the grants presented on the accompanying schedule have been accounted for using the accrual basis of accounting as described in Note 1(c) of the City of Ukiah's Notes To Financial Statements. 50 Davis W. Hammon, Jr., CPA (1924-1989) Stephen B. Norman, CPA · PFS Stephen J. Herr, CPA Kerry A. Parapid, CPA INDEPENDENT AUDITORS' REPORT ON COMPLIANCE AND INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF THE FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Honorable Mayor and City Council Members of the City of Ukiah Ukiah, CA 95490 We have audited the basic financial statements of City of Ukiah, California, as of and for the year ended June 30, 2003, and have issued our report thereon dated September 26, 2003, which was modified due to the implementation of Governmental Accounting Standards Board No. 34, Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Governments, Statement No. 37, Basic Financial Statements - and Management's Discussion and Analysis- for State and Local Governments. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. Compliance As part of obtaining reasonable assurance about whether the City's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grants, noncompliance with which could have a material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported under Government Auditing Standards. Internal Control Over Financial Reporting In planning and performing our audit, we considered the City of Ukiah's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the general purpose financial statements and not to provide assurance on the internal control over financial reporting. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control over financial reporting that might be material weaknesses. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively Iow level the risk that misstatements in amounts material in relation to the general purpose financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal 5! MEMBERS: AMERICAN INSTITUTE AND CALIFORNIA SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS 2080 Myers Street, Oroville, CA 95966-5341 (530) 533-3392 FAX (530) 533-2714 control over financial reporting and its operations that we consider to be a material weakness. This report is intended solely for the information and use of the City Council, management, and the Office of the Controller of the State of California and is not intended to be and should not be used by anyone other than these specified parties. September 26, 2003 52 co. Certified Public Accountants Davis W. Hammon, Jr., CPA (1924-1989) Stephen B. Norman, CPA · PFS Stephen J. Herr, CPA Kerry A. Parapid, CPA INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND INTERNAL CONTROL STRUCTURE OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 Honorable Mayor and City Council Members of the City of Ukiah Ukiah, CA 95490 Compliance We have audited the compliance of the City of Ukiah, California, with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that are applicable to its major federal program for the year ended June 30, 2003. The City of Ukiah's major federal programs are identified in the summary of auditors' results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to its major federal program is the responsibility of the City of Ukiah's management. Our responsibility is to express an opinion on the City of Ukiah's compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non- Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on the City's compliance with those requirements. In our opinion, the City of Ukiah complied, in all material respects, with the requirements referred to above that are applicable to its major federal program for the year ended June 30, 2003. Internal Control Over Compliance The management of City of Ukiah is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to federal programs. In planning and performing our audit, we considered the City of Ukiah's internal control over compliance with requirements that could have a direct and material effect on a major federal or other program for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133. 53 MEMBERS: AMERICAN INSTITUTE AND CALIFORNIA SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS 2080 Myers Street, Oroville, CA 95966-5341 (530) 533-3392 FAX (530) 533-2714 Our consideration of the internal control over compliance would not necessarily disclose all matters in the internal control that might be material weaknesses. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively Iow level the risk that noncompliance with applicable requirements of laws, regulations, contracts and grants that would be material in relation to a major federal program being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over compliance and its operations that we consider to be a material weakness. This report is intended solely for the information and use of the City Council, management, and the Office of the Controller of the State of California and is not intended to be and should not be used by anyone other than these specified parties. September 26, 2003 54 CITY OF UKIAH SCHEDULE OF FINDINGS AND QUESTIONED COSTS JUNE 30, 2003 A) Summary of Audit Results 1) The auditors' report expresses an unqualified opinion on the basic financial statements. 2) No reportable conditions related to the audit of the basic financial statements of the City of Ukiah. 3) No instances of noncompliance material to the basic financial statements of the City of Ukiah were disclosed during the audit. 4) No reportable conditions were disclosed during the audit of major federal award programs. 5) The auditors' report on compliance for major federal award programs for the City of Ukiah expresses an unqualified opinion. 6) No instances of noncompliance material to major federal award programs of the City of Ukiah were disclosed during the audit. 7) The programs tested as major programs included: a. Department of Housing and Urban Development Home Investment Partnership Program CFDA: 14.239 b. State of California Department of Transportation (State Program) State Transportation Improvement Program CFDA: not applicable 8) The threshold for distinguishing Types A and B programs was $300,000. 9) The City of Ukiah was determined not to be a Iow-risk auditee. B) Findinqs - Financial Statement Audit No reportable conditions were noted during the current audit period. There were no findings outstanding from prior year audits. C) Findings and Questioned Costs - Major Federal Award Programs No findings or questioned costs noted. There were no findings or questioned costs outstanding from prior year audits. Davis W. Hammon, Jr., CPA (1924-1989) Stephen B. Norman, CPA · PFS Stephen J. Herr, CPA Kerry A. Parapid, CPA INDEPENDENT ACCOUNTANTS' REPORT ON AGREED-UPON PROCEDURES APPLIED TO APPROPRIATIONS LIMIT WORKSHEETS Honorable Mayor and City Council Members of the City of Ukiah Ukiah, California 95490 We have applied the procedures enumerated below to the Appropriations Limit calculations of the City of Ukiah for the year ended June 30, 2003. These procedures, which were agreed to by the City of Ukiah and the League of California Cities (as presented in the League publication entitled Article XIIIB Appropriations Limitation Uniform Guidelines) were performed solely to assist the City in meeting the requirements of Section 1.5 of Article XIIIB of the California Constitution. This engagement to apply agreed-upon procedures was performed in accordance with standards established by the American Institute of Certified Public Accountants. The sufficiency of the procedures is solely the responsibility of the specified users of the report. Consequently, we make no representation regarding the sufficiency of the procedures described below either for the purpose for which this report has been requested or for any other purpose. The procedures performed and our findings were as follows: 1) We obtained the City's completed alternate computation Appropriations Limit worksheets, and compared the limit and annual adjustment factors included in those worksheets to the limit and annual adjustment factors that were adopted by resolution of the City Council. We also compared the population and inflation options included in the aforementioned worksheets to those that were selected by a recorded vote of the City Council. Finding: No exceptions were noted as a result of our procedures. 2) Using the City's alternate computational worksheet, we added last year's limit to the total current year limit adjustments, as computed, for this year, and compared the results to this year's limit. Finding: No exceptions were noted as a result of our procedures. 3) We compared the prior year appropriations limit presented in the alternate computational worksheets to the prior year appropriations limit adopted by the City Council for the prior year. Finding: No exceptions were noted as a result of our procedures. 5(; MEMBERS: AMERICAN INSTITUTE AND CALIFORNIA SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS 2080 Myers Street, Oroville, CA 95966-5341 (530) 533-3392 FAX (530) 533-2714 co. .~ Certified Public Accountants We were not engaged to, and did not perform an audit, the objective of which would be the expression of an opinion on the Appropriations Limit alternate computational worksheets. Accordingly, we do not express such an opinion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. No procedures have been performed with respect to the determination of the appropriation limit for the base year, as defined by the League publication Article XIIIB Appropriations Limitation Uniform Guidelines. This report is intended solely for the use of the City of Ukiah and should not be used by those who have not agreed to the procedures and taken responsibility for the sufficiency of the procedures for their purposes. However, this report is a matter of public record and its distribution is not limited. September 26, 2003 57 AGENDA SUMMARY REPORT ITEM NO. 1 Ob DATE: March 17, 2004 SUBJECT: APPROVAL OF EXTENSION OF CONTRACT FOR AUDIT SERVICES Davis Hammon & Co. has completed a five year auditing services contract with the audit of fiscal year 2002/2003. Audit services for the current and future fiscal years must be secured in time to begin audit field work in June of this year. Staff is recommending the extension of the existing contract with Davis Hammon & Co. for one additional year. Staff is further recommending that formal proposals for audit services be solicited for the audit of fiscal years beginning with fiscal year 2005/2006. Typically governments acquire audit services in two ways: 1) Solicit formal proposals for services (RFP) or 2) Exercise options to extend existing contracts. Significant effort will be required to prepare the RFP and evaluate the responses. Typically the Finance Department prepares the RPF document, distributes it and meets with interested audit firms to inform them about financial practices and procedures in the City. Sometimes formal bidder conferences are held. Some cities require bidders to attend the bidder conference. Evaluation is usually performed by a committee that includes staff and Council members. This committee is charged with presenting a recommendation to the City Council. In the coming months, both the Council and staff will invest significant time and effort, devising extensive budget strategies. Adding the process of preparing the RFP, meeting with potential bidders and evaluating proposals received will be a significant work effort that would otherwise be devoted to budget related issues. Therefore staff is recommending extension of the existing audit services contract and planning a procurement period for future years' audit services in the January to May 2005 time period. (continued on page 2 RECOMMENDED ACTION: ' Authorize the City Manager to sign an agreement with Davis Hammon & Co. for a fiscal year 2003/2004 financial auditing services in an amount not to exceed $28,425.00. ALTERNATIVE COUNCIL POLICY OPTION: Provide staff with alternative direction. Citizen Advised: Requested by: Prepared by: Coordinated with: Attachments: N/A Candace Horsley, City Manager Gordon Elton, Finance Director Candace Horsley, City Manager' None APPROVED: Candace Horsley, City M~ager Mr. Stephen Herr of Davis Hammon & Co., has indicated his firm's willingness to extend the contract for one more year at a fee of not to exceed $28,425.00. Mr. Herr indicates that the contract just completed did not include any increase for compliance with the new financial reporting format (GASB 34) even though the actual hours required to complete the FY 2002/2003 audit increased by 25%. The proposed fee represents a 9.75% increase over the fee for the recently completed audit. The audit includes several parts that are priced individually: City of Ukiah financial audit City State Controller's report City Streets report (Gas tax report) REMIF insurance report Total City fee Ukiah Redevelopment Agency financial audit Redevelopment State Controller's report Total Redevelopment Agency fee $21,000 1,500 1,000 325 $23,825 4,000 600 $ 4,600 These fees compare to total fees of $25,900.00 ($21,900 and $4,000 respectively) for fiscal year 2002/2003. Staff believes these fees are reasonable. If additional services are requested they will be billed at Davis Hammon's standard billing rates. Recommendation: Staff recommends the City Council approve a one year extension of the audit services contract with Davis Hammon & Co. in an amount not to exceed $28,425.00 ($23,825 for City services and $$4,600 for Redevelopment Agency services). City Audit Services Contract Page 2 AGENDA ITEM NO: 10 c MEETING DATE: March 17, 2004 SUMMARY REPORT SUBJECT: DISCUSSION REGARDING CANDIDATE INTERVIEWS FOR CITY COMMISSIONS AND BOARDS- COUNClLMEMBER RODIN Councilmember Rodin has asked for a discussion regarding which commissions the City Council believes are appropriate to have candidate interviews. Currently, the City Council, by resolution, has determined that interviews will be conducted for applicants to the Planning Commission, Parks, Recreation and Golf Commission, and the Airport Commission. Additionally, the Council conducted interviews for the Paths, Open Space and Creeks Commission. The commissions and committees that are not currently designated for candidate interviews include the Investment Oversight Commission, Traffic Engineering Committee, Civil Service Board, Disaster Council, Design Review Board, and Demolition Permit Review Committee. Resolution 2001-61 Amending Procedures for Filling Vacancies on City Commissions and Boards is attached for Council's information. Councilmember Rodin will lead an oral discussion on this issue. RECOMMENDED ACTION: Discuss and provide direction to staff. ALTERNATIVE COUNCIL POLICY OPTIONS: N/A Citizens Advised: Requested by: Prepared by: Coordinated with: Attachments: N/A Councilmember Rodin Candace Horsley, City Manager N/A 1. Resolution 2001-61 Amending Procedures for Filling Vacancies on City Commissions and Boards Candace Horsley, City I~nager 4:CAN/ASR.Commissionlnterviews.031704 RESOLUTION NO. 2001-61 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF UKIAH AMENDING PROCEDURE FOR FILLING VACANCIES ON CITY COMMISSIONS AND BOARDS. WHEREAS, 1. Ukiah City Code §1151 provides that members of the Planning Commission shall be appointed in accordance with a procedure established by resolution of the City Council; and 2. The City Council adopted a procedure for filling vacancies on the City's boards and commissions, including the Planning Commission; and 3. The City Council has determined that using a uniform procedure will insure fair and consistent treatment of candidates and Councilmembers; 4. The City Council has determined to amend its procedures for appointing commissioners; NOW, THEREFORE, BE IT RESOLVED that the City Council hereby adopts the following amended procedure for filling vacancies on the City's commissions and boards, including the Planning Commission. PROCEDURE FOR FILLING VACANCIES ON COMMISSIONS AND BOARDS The City Council shall fill vacancies on City boards and commissions, using the following procedure. 1. Applicant pool. The City Council shall develop an available pool of candidates for a vacancy by advertising the vacancy at least once in a newspaper of general circulation in Ukiah not less than thirty (30) days prior to the council meeting at which the vacancy is to be filled. The advertisement shall specify a deadline for submitting applications. All completed applications received prior to the deadline shall be included in the pool of available applicants, provided the applicant: a. meets the minimum qualifications for the position as established in the applicable Ukiah City Code section or resolution, establishing the commission or board; and b, participates in a personal interview, if the City Council conducts personal interviews for the position. The City Council has determined that interviews will be conducted for applicants of the Planning Commission, the Parks, Recreation and Golf Commission, and the Airport Commission. An application shall be deemed complete when signed by the applicant. Applications included in an available pool may be used as a source of nominations for a period of one (1) year from the application deadline. 2. Exceptions. The following shall be considered for appointment or reappointment to a commission or board without submitting a written application: a. Incumbents seeking reappointment for an additional term; b. Elected officials seeking appointment in their capacity as elected officials; c. City staff seeking appointment in their capacity as City staff; d! All appointees, except public members, on the Investment Oversight Commission, Traffic Engineering Committee, Cultural Arts Advisory Board and the Disaster Board; e. City Council members, including the Mayor, appointed in their capacity as City Council members; and f. Appointments to the Civil Service Board. Any such exempt applicants shall be considered for appointment, if they submit a written request for consideration within 10 days of the date the appointment is made. 3. Nominations. Each Councilmember, including the Mayor, shall have the right to nominate a candidate from the available pool of candidates. a. The right to place a name before the City Council for consideration shall rotate among the Councilmembers based on seniority with the most senior Councilmember going first. b. The Council shall vote on each nomination as it is made. C. A Councilmember's right to make a nomination shall terminate and the right to nominate candidates shall rotate to the next most senior Councilmember, when a Councilmember's nomination is approved by a majority vote of the Councilmembers present or the Councilmember agrees to pass the nomination to the next most senior Councilmember, whichever occurs first. d, This process for rotating the right to nominate candidates among Councilmembers to fill vacancies shall be followed for each separate commission or board. 1. The City Clerk shall maintain a record of the last Councilmember to make a nomination for each commission or board. . When another vacancy must be filled on that commission or board, the next Councilmember in line to make nominations for that commission or board shall make the first nomination to fill the vacancy. PASSED AND ADOPTED this 6th day of June, 2001, by the following roll call vote: AYES: NOES: ABSTAIN' ABSENT: Councilmembers Larson, Smith, Baldwin, and Mayor Ashiku Councilmember Libby None None ATTEST: Philip Ashiku, Mayor Marie Ulvila, City Clerk ITEM NO. 10d. DATE: March 17. 2004 AGENDA SUMMARY REPORT SUBJECT: DISCUSSION OF LETTER FROM VICE MAYOR BALDWIN CONCERNING NORTH STAR FREEWAY SIGN SUMMARY: Vice Mayor Baldwin has written a letter to fellow city council members taking issue with a decision by the staff and a memorandum to the Planning Director from the City Attorney. (Attachment 1 to this Agenda Summary Report.) Based on the facts, the Planning Director had decided not to take action requiring the owner of property at 704 East Perkins Street ("the Property") to remove the freeway oriented sign currently located on the property. The Planning Director requested an opinion from the City Attorney on this subject, which is attached. In a memorandum dated January 29, 2004, the City Attorney concluded: While it is possible to begin the process of requiring the removal of the North Star sign, it appears to be an unwise use of City resources. First, if statements by Dan Thomas prove correct, North Star may not be required to remove its sign, because the property would not be vacant. Second, even if the property is considered vacant, Starbucks will locate on the property within the next few months. By the time North Star is required to remove its sign or shortly thereafter, Starbucks would be removing the sign itself in order to replace it with a Starbucks sign which is permitted on the same structure. (Attachment 2 to this Agenda Summary Report.) In his letter Vice Mayor Baldwin disagrees with this conclusion, arguing that the sign is "abandoned" as defined in the City sign ordinance. The City, therefore, is legally entitled to demand removal of the sign. (Continued on page 2) RECOMMENDED ACTION: Discuss Vice Mayor Baldwin letter to Council and provide staff with input on sign ordinance enforcement decision. ALTERNATIVE COUNCIL POLICY OPTIONS: N/A Citizen Advised: Requested by: Prepared by: Coordinated with: Attachments: Dan Thomas, representing property owner Candace Horsley, City Manager David J. Rapport, City Attorney Candace Horsley, City Manager and Charley Stump, Director of Planning 1. March 10, 2004, Letter from Vice Mayor Baldwin to City Council; 2. January 29, 2004, Memorandum from City Attorney to Planning Director APPROVED: Cand-'-~ace Horsley, city M~t~ger (Continued from page1) 50 foot signs are unattractive, and a new prepared food, gasoline or lodging business specifically related to the traveling public along U.S. Highway 101 would not necessarily be entitled to replace the existing 50 foot sign with a new one. In support of this last point, Vice Mayor Baldwin contends that (1) other such businesses have agreed to forego 50 foot signs recently and (2) a "freeway logo board system" has been established for Highway101 within the City which, under applicable provisions of the City Code, terminates the right to 50 foot freeway oriented signs. The City Attorney memorandum agrees with Vice Mayor Baldwin that a factual basis exists under the sign ordinance to commence proceedings to require the removal of the sign based on abandonment. As stated in both the memorandum and Mr. Baldwin's letter that process begins with the Building Inspector serving a notice giving the business or property owner 10 days to remove the sign. The memorandum, however, points out that if the property owner contends that the sign is not abandoned, he has 30 days to appeal the notice to the Planning Commission. As stated in the City Attorney memorandum, Dan Thomas has contended that North Star continues to lease an office on the Property. He would have an opportunity to present those facts to the Planning Commission, if sign removal proceedings were commenced. The City Attorney memorandum indicates that according to the Planning Director Starbucks has commenced the planning process to locate one of its coffee oriented restaurants on the property. Based on that fact and Ukiah City Code ("UCC") Section 3227(A)(12), which would entitle a Starbuck's restaurant on the Property to a 50 foot sign, the City Attorney concluded that commencing sign removal proceedings did not represent a good use of city resources and could impose unnecessary costs on the owner of the Property to remove a sign, only to have it replaced immediately or within a short time by another 50 foot sign. Vice Mayor Baldwin disagrees. He maintains that Starbucks will not be entitled to a 50 foot sign, because a "freeway logo program" has been established for Highway 101. Under UCC § 3227(A)(12), if a freeway logo program is in place, prepared food, gasoline and lodging businesses specifically related to the traveling public along U.S. Highway 101 are no longer entitled to 50 foot signs. Although not defined in the Ukiah City Code, the only freeway logo program operated by Cai Trans is the roadside business identification sign program for roadside businesses offering fuel, food, lodging, or camping services mandated by Streets and Highways ("S & H") Code Section 101.7, adopted in 1992, and implemented in Cai Trans regulations codified at 21 California Code of Regulations ("CCR") Division 2, Chapter 19, (commencing with § 2102). 21 CCR § 2102 refers to these signs as "motorist services informational signs (LOGO Signs) along those portions of highways described in the Streets and Highways Code Section 101.7." S & H Code §101.7 requires Cai Trans to adopt regulations which allow the placement of certain roadside business identification signs near exits on freeways located in rural areas. That statute specifically prohibits Cai Trans from approving the placement of any such sign within any urban area designated by the United States Bureau of the Census has having a population of 5,000 or more. Moreover, where these freeway exit signs are authorized, the signs "... may be placed near freeway exits in addition to, or in lieu of, other highway signs of the department, but not in lieu of on-premises or off-premises highway oriented business signs and directional signs." (Emphasis added.) Ukiah does not qualify as a rural area under S & H Code Section 101.7 and, therefore, Cai Trans is actually prohibited from establishing a freeway logo program for the portion of Highway 101 within Ukiah. For this reason, 50 foot signs are still authorized by UCC § 3227(A)(12). Unless Starbucks agrees to forego the use of a 50 foot sign, it would be entitled to such a sign on the Property. The decision to issue a notice under UCC Section 3229 to remove an abandoned sign within 10 days is within the discretion of the Building Inspector. He is the City official with prosecutorial discretion to enforce this provision of the sign ordinance. The City Council should discuss this matter. While the Council may not control how the Building Official carries out his enforcement responsibility, it can provide staff with input on how the Council believes this enforcement decision should be handled. March 10, 2004 Fellow Councilmembers, The 50 foot "North Star" freeway sign at Perkins Street and Highway 101 (above the old Texaco Station on the east side of the freeway) is an abandoned sign and needs to be removed according to our sign ordinance,//822 (1983). Section 3229 of Ukiah's sign ordinance states that "any sign which is located on property which becomes vacant and unoccupied for a period of 60 days or more ... shall be deemed to have been abandoned ..... Permanent signs applicable to a business temporarily suspended because of change of ownership or management of such business shall not be deemed abandoned, unless the property remains vacant for a period of four months or more." For second time in less than six years (i.e. before and after North Star car sales) this definition has clearly been met. North Star has been out of operation at the site for more than six months. The ordinance states that for abandoned signs as this one is "The Building Inspector shall prepare a notice which shall state that if the sign is not removed or the violation not corrected within ten days, said sign shall be removed by the Building Inspector in accordance with the provisions of this ordinance." In a Memorandum of March 10, 2004, City Attorney Dave Rapport claims that "Dan Thomas represents that North Star continues to lease the property and maintain an office there." However, it is apparent to all who pass by daily there is no and has been no North Star business there for close to a year. The argument that a new business "Starbucks" may be coming to that location is irrelevant to the issue of abandonment. Mr. Rapport goes on to cite section 3227 (A) (12) that an exception to the sign ordinance is made for "prepared food, gasoline and lodging businesses specifically related to traveling public along U.S. 101 Freeway within 600 feet of the freeway centerline and ..... "and allows such business one 50 foot sign. Clearly, North Star Car Sales does not fit this definition, but, according to City staff we failed to catch that fact before the North Star business was underway with an unsightly sign. OK, granted, however, it is time for enforcement with the second abandonment. The City Attorney's memo also argues "The proposed Starbucks restaurant should be eligible for a freestanding, 50 foot sign." under the section noted above. In this analysis, however, he fails to note several key facts. Mr. Rapport, in citing section 3227 (A) (12) which provides an exception for freeway gas, food, and lodging businesses, fails to include the final paragraph of (A) (12): "At such time that a freeway logo board system is in place these special provisions no longer apply and the signs will have to conform to the General Provisions of the City of Ukiah Sign Ordinance. All such signs must be removed in favor of the freeway logo program within three years of availability of the logo system." Evidently, Best Western Motel, Shell Gas Station, Jack-in-the-Box learned of this proviso when they requested of the Planning Commission several years back permission to put up 50 foot signs. And if we read it correctly, given an existing State freeway logo program here, doesn't this call into question the legality of all Ukiah's garish 50 footers (Denny's, Burger King, MacDonalds and Henny Penny)? One reason wine country tourists steer clear of Ukiah is our ongoing obliviousness to tackiness, to signs like these. If we remove them when called for in our ordinance, surely these monsters will find a home in San Bemadino, Bakersfield, Stockton, or Rohnert Park. It should also be obvious that our failure to enforce the laws we have on the books hurts the community, as it breeds disrespect for law in general. Sincerely, Phil Baldwin Law Offices Of RAPPORT AND MARSTON ,An Association of Sole Practitioners 405 W. Perkins Street P.O. Box 488 Ukiah, California 95482 e-mail: drapport@pacbell.net David J. Rapport Lester J. Marston Scott Johnson Mary Jane Sheppard MEMORANDUM (707) 462-6846 FAX 462-4235 TO: FROM: DATE: SUBJECT: Charley Stump, Planning Director David J. Rapport, City Attorney January 29, 2004 North Star sign You have asked a question concerning the application of the Sign Ordinance to a freeway oriented sign, which arises from the following facts. North Star leases property from Alex R. Thomas & Sons at 704 East Perkins on the eastside of Highway 101. North Star installed a freeway oriented sign on an existing sign structure to advertise its business, which involved the display and sale of used cars. North Star has ceased the display of used cars on the property and little business activity as occurred on the property for several months. However, Dan Thomas represents that North Star continues to lease the property and maintain an office there. The North Star sign is in good condition and does not represent a hazard. Starbucks has plans to open one of its coffee oriented restaurants on the property and wants to replace the North Star sign with a Starbucks sign. You have indicated that Starbucks has already started the planning process. You want to know whether the sign ordinance requires the removal of the North Star sign and whether Starbucks could replace the North Star signage with a Starbucks sign at the same height on the same structure. CONCLUSION VVhile it is possible to begin the process of requiring the removal of the North Star sign, it appears to be an unwise use of City resources. First, if statements by Dan Thomas prove correct, North Star may not be required to remove its sign, because the property would not be vacant. Second, even if the property is considered vacant, Starbucks will locate on the property within the next few months. By the time North Star is required to remove its sign or shortly thereafter, Starbucks would be removing the sign itself in order to replace it with a Starbucks sign which is permitted on the same structure. ANALYSIS The North Star sign may not have been authorized by the sign ordinance, when it was installed. However, a site development permit was issued and the sign cannot now be abate, unless such action is authorized by a specific provision of the sign ordinance. The City can require the removal of an abandoned sign under Ukiah City Code ("UCC") Section 3229. An abandoned sign is one that is located on property which becomes vacant and unoccupied for a period of sixty (60) days or more. If the sign is permanent and the business is temporarily suspended because of a change in ownership or management, the sign is not considered abandoned unless the property remains vacant for at least four (4) months. If the City believes that a sign has been abandoned, the Building Inspector must prepare a notice giving the business or property owner 10 days to remove the sign. Within 30 days of receiving the notice, a person with an interest in the sign may appeal the notice to the Planning Commission. Under this procedure, the Building Inspector could initiate the process of determining whether the property is vacant. This process would take, at least, 30 days. If an appeal were taken, it could take much longer. If the property was, in fact, vacant, the existing North Star sign could be removed. However, under Ukiah City Code ("UCC") Section 3227(A)(12) prepared food, gasoline and lodging businesses specifically related to the traveling public along U.S. Highway 101 within 600 feet of the freeway centerline and 300 feet of any intersecting street in the City may have an allowed single freestanding sign at a height not exceeding 50 feet with Planning Commission site development approval. The proposed Starbucks restaurant should be eligible for a freestanding, 50 foot sign under Section 3227(A)(12), because the property location and the business type meets the requirements of the section. Accordingly, while it is possible to begin the process of requiring the removal of the North Star sign, it appears to be an unwise use of City resources, if Starbucks will locate on the property within the next few months. By the time North Star is required to remove its sign or shortly thereafter, Starbucks would be removing the sign itself in order to replace it with a Starbucks sign which is permitted on the same structure, subject to its receipt of a site development permit. I hope this answers your question.