Resolution - 2020-46RESOLUTION NO.2020-46
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF WEST COVINA, CALIFORNIA, DECLARING A
FISCAL EMERGENCY
WHEREAS, the City was recently listed by the California State Auditor as a fiscally
challenged city based on criteria that ranked the fiscal health of over 470 California cities across
the State; and
WHEREAS, over the course of the past five (5) years, the City's unassigned General
Fund balance has continuously declined: in FY 2014-15, the unassigned fund balance was
$20,531,695, in FY 2015-16, the unassigned fund balance was $15,032,389, in FY 2016-17, the
unassigned fund balance was $14,119,078, in FY 2017-18, the unassigned fund balance was
$11,979,653, in FY 2018-19, the unassigned fund balance was $9,884,913, and for FY 2019-20,
the unassigned fund balance is projected to be $1,903,251 and
WHEREAS, the City's General Fund balance reserves are currently below the amount
established by the City's policy and are continuing to decline; and
WHEREAS, in order to deliver a balanced budget for FY 2019-20, the City made
significant cuts in expenditures, including contracting out the Building & Safety and Engineering
functions, not funding vacancies in nine (9) positions citywide, layoff of eight (8) employees,
shifting some eligible salaries and benefits to special funds; and
WHEREAS, in order to ensure, to the maximum extent possible, that essential services
of the City are not jeopardized, public health and safety are preserved, the City is able to pay its
obligations when due, and the City is able to pay its employees for the work they perform, the
City must take immediate and comprehensive action to further reduce spending, including, but
not limited to, spending on personnel and benefit costs; and
WHEREAS, on March 4, 2020, Governor Gavin Newsom declared a State of
Emergency as part of the State's response to the global novel coronavirus (COVID-19) outbreak;
and
WHEREAS, on March 16, 2020, the City Manager, acting in the capacity of the City's
Director of Emergency Services, declared the existence of a local emergency due to the COVID-
19 pandemic; and
WHEREAS, on March 16, 2020, the Los Angeles County Public Health Officer ("Local
Health Officer"), issued an Order for the Control of COVID-19, directing, among other things,
the immediate closure of: (1) bars and nightclubs that do not serve food, (2) movie theatres, live
performance venues, bowling alleys, and arcades, (3) gyms and fitness centers, and (4) wineries,
breweries, and tap rooms that provide tastings; and
WHEREAS, on March 17, 2020, the City Council adopted Resolution No. 2020-19,
ratifying the City Manager's proclamation; and
WHEREAS, on March 19, 2020, Governor Newsom issued Executive Order N-33-20,
ordering all individuals living in the State of California to stay home or at their place of
residence except as needed to maintain continuity of operations of the federal critical
infrastructure sectors; and
WHEREAS, on March 19, 2020, the Local Health Officer issued a Safer at Home Order
for the Control of COVID-19, ordering, among other things, the immediate closure of: (1) non-
essential retail businesses, (2) indoor malls and shopping centers, including all stores therein
regardless whether they are essential or non -essential businesses, and (3) indoor and outdoor
playgrounds for children, except for those located in childcare centers; and
WHEREAS, the economic impacts of the COVID-19 pandemic have been significant,
and the City's 3,278 businesses are experiencing substantial losses; and
WHEREAS, the City has experienced a decline in economic activity due to the decline
in business activity and the closure of all non -essential business establishments within the City
due to the COVID-19 pandemic, thereby reducing revenues for Fiscal Year (FY) 2019-20 below
budget estimates, with similar trends projected for FY 2020-21; and
WHEREAS, the economic impacts associated with the COVID-19 pandemic are
difficult to predict at this point in time; however, City staff estimates a potential loss of
$2,800,000 in General Fund revenues (i.e., sales tax, Transient Occupancy Tax, etc.) for FY
2019-20, and a continuing loss of $2,100,000 in General Fund revenues in FY 2020-21; and
WHEREAS, all staff emails were sent from the City Manager on April 29, 2020 and
May 19, 2020 summarizing the City's growing emergency costs and strained financial position;
and
WHEREAS, during the week of May 4, 2020, management met with each one of the
City's nine labor groups to further discuss the City's fiscal situation; and
WHEREAS, on May 15, 2020, the Los Angeles County Department of Auditor -
Controller ("County Auditor -Controller") notified the City that due to delayed payments of
property taxes due to the COVID-19 pandemic, the City's May 20, 2020 property tax remittance
will be less than expected. On the same date, the County Auditor -Controller notified the
Successor Agency that due to delayed payments of property taxes due to the COVID-19
pandemic, the Successor Agency's June 1, 2020 property tax remittance will be less than
expected; and
WHEREAS, the City's General Fund reserves are insufficient to fully absorb the
anticipated loss in revenue that will occur from the COVID-19 pandemic; and
WHEREAS, as of May 19, 2020, the City's general fund deficit is $7,201,514; and
WHEREAS, the declaration of a fiscal emergency is part of the City's on -going process
to proactively address and improve the City's fiscal position thereby assuring sustained
operations; and
WHEREAS, the City Council desires to declare a fiscal emergency based upon the
foregoing recitals; and
WHEREAS, the City Council further desires to authorize the City Manager to take any
and all actions necessary to address the fiscal emergency.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF WEST COVINA,
CALIFORNIA DOES HEREBY RESOLVE AS FOLLOWS:
SECTION 1. The City Council finds that all of the foregoing recitals are true and
correct and hereby incorporates and adopts them as findings and determinations by the City
Council as if fully set forth herein.
SECTION 2. The City Council hereby finds and declares a fiscal emergency exists in
the City of West Covina due to the financial condition of the City, which has been exacerbated
by the economic impacts of the COVID-19 pandemic.
SECTION 3. The City Council hereby authorizes the City Manager to take any and all
actions necessary to address the fiscal emergency, including, but not limited to, measures relating
to personnel and benefit costs, operations, and reductions in services levels, and reviewing and
negotiating changes to labor agreements, service agreements, and franchise agreements, to the
extent permitted by law.
SECTION 4. The City Council hereby designates the City Manager as the City's
authorized representative for the purpose of processing, negotiating, and implementing the
layoffs of City employees, should they be deemed necessary.
SECTION 5. Due to the financial hardship facing the City, the City Manager is
authorized and directed to proceed with budget development that includes a reduction in force if
deemed necessary and any other reductions that may be implemented to meet the financial
condition of the City and to incorporate such reductions into the proposed FY 2020-21 budget.
SECTION 6. Management shall meet with all nine labor groups regarding the fiscal
emergency and possible cost savings measures. Any modifications to labor agreements shall be
subsequently approved by the City Council.
SECTION 7. Management shall meet with vendors and franchisees providing services to
the City to negotiate and approve cost savings measures. Any modifications to service
agreements shall be subsequently ratified by the City Council.
SECTION 8. That the City Clerk shall certify to the passage and adoption of this
Resolution and enter it into the book of original Resolutions.
APPROVED AND ADOPTED this 19th day ofl
APPROVED AS FORM
z "//// -
Thor as P. IfUte
City Attorney
ATTEST
Lisa errick
As ant City Clerk
I, LISA SHERRICK, ASSISTANT CITY CLERK of the City of West Covina,
California, do hereby certify that the foregoing Resolution No. 2020-46 was duly adopted by the
City Council of the City of West Covina, California, at a special meeting thereof held on the 19th
day of May, 2020, by the following vote of the City Council:
AYES: Castellanos, Johnson, Shewmaker, Lopez-Viado, Wu
NOES: None
ABSENT: None
ABSTAIN: ne
.Lis sS e •ic c
si ant City Clerk