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07-02-2018 - Special Meeting - MinutesCITY OF WEST COVINA CITY COUNCIL/SUCCESSOR AGENCY/ PUBLIC FINANCE AUTHORITY MONDAY JULY 02, 2018, 6:30 PM SPECIAL MEETING —FISCAL YEAR 2018-2019 3r d PRELIIVIINARY BUDGET WORKSHOP CITY COUNCIL CHAMBERS 1444 W. GARVEY AVENUE SOUTH WEST COVINA, CALIFORNIA 91790 MINUTE S CALL TO ORDER — Mayor Lloyd Johnson called the meeting to order at 6:35 p.m. PLEDGE OF ALLEGIANCE — Led by Mayor Lloyd Johnson ROLL CALL Present: Councilman Mike Spence, Councilmember James Tom., Councilmember Corey Warshaw, Mayor Pro Tern Tony Wu, Mayor Lloyd Johnson Staff Present: City Manager Chris Freeland, Assistant City Manager/Community Services Director Nikole Bresciani, Deputy City Manager Laura Biery, City Attorney Kimberly Hall Barlow, Assistant City Clerk Rosalia Butler, Interim Finance Director Judy Lancaster, Police Chief Marc Taylor, Public Works Superintendent Micah Martin, Public Works Management Analyst Michelle Mansour, Planning Director Jeff Anderson, Police Administrative Services Manager Alex Houston, Assistant City Engineer Monica Heredia, Human Resources Director Edward Macias, Police Captain Richard Bell, Police Captain Doug Murray, Fire Management Analyst Russell Narahara Monday July 02, 2018 PUBLIC COMMENTS/QUESTIONS Ray Edmondson inquired about the City's contingency plan should the City have to declare bankruptcy. John Shewmaker expressed concerns regarding City expenditures. Jim Grivich asked Council to amend the budget policy and added that all expenditures should be limited to the amount budgeted. Mr. Grivich also suggested for City staff to monitor all expenditures in order to ensure all expenses were paid in a timely manner. Bill Robinson suggested for Council to implement a hotline where residents and City staff alike, could voice their concerns anonymously regarding the budget, and provide solutions to remedy the financial decline of the City with no possibility of retaliation. He also advised Council to implement the 10% proposed cuts from the Special Budget Workshop on June 11, 2018. Chris Miller discussed the data detailing City staff salaries from the website Transparent California and expressed concerns regarding the redaction of City data. J.D. expressed concerns regarding the difference of Public Hearings and Budget Workshops and stated that staff presentations and reports should be given before public comments so residents can respond. City Manager Freeland gave responses to speaker inquiries and asked Council to eliminate the Consent Calendar from the Agenda in order to discuss each item separately. He also informed Council that the Closed and Open Session of tonight's meeting will happen concurrently based on the nature of Council discussion. CONSENT CALENDAR 1) Budget Policy It is recommended that the City Council approve the Budget Policy. City Manager Freeland gave a brief report regarding Item No. 1 and informed Council that these policies can be amended per Council direction. Councilmember Warshaw requested for the following changes to be implemented in the language of the proposed policy: • Page 3, line 8 - correct "does adopt broad goals" to "adopt broad goals" • Page 5, line 18 - correct "shall" to "will" • Page 5, line 80 - correct "should" to "will" • Page 6, line 129 - correct "The City Should" to "The City identifies broad goals" • Page 6, line 144 - correct "shall" to "will" 2 Monday July 02, 2018 * Page 7, line 162- correct "identify" to "identifies the purpose" • Page 9, line 249-correct "should" to "must recognize" • Page 11, line 313- correct "to" to "will" Councilman Wu asked for clarification regarding the difference in verbiage between the words "will" and "should." City Attorney Hall Barlow clarified that based on statutory law, "should" is interpreted for directory purposes whereas "will" is considered mandatory. Councilman Spence requested for the language of the proposed policy to be changed from "stakeholders" to "the citizens of West Covina" to reflect that City Hall is serving the City of West Covina and its residents. Councilmember Toma agreed that the residents are a top priority, but if that language is amended to only include the citizens of West Covina, then it excludes West Covina business owners who do not reside within the City limits as well as those property owners with a vested interest in the City. City Manager Freeland suggested for Council to amend the aforementioned policy to change the language to define stakeholder as "anyone affected by or has a stake in the City of West Covina, with priority to the residents and businesses of West Covina." Councilman Spence asked City Manager Freeland for clarification regarding budgetary compliance and the procedures the City Manager must adhere to. City Manager Freeland clarified the procedures he must follow in order to remain compliant with the proposed budget policy. Councilman Spence expressed concerns regarding City expenditures and stated that fiscal responsibility should be a top priority over fiscal goals. Councilmember Warshaw disagreed with Councilman Spence's sentiments, and stated that there will be instances where the budget will not always be balanced, and reserves must be utilized in order to balance it. A motion was made by Mayor Pro Tern Wu and seconded by Councilman Spence to adopt the recommended budget policy with the proposed amendment limiting all City expenditures to the amount budgeted. Motion was carried by a vote of 4-1 with Councilmember Warshaw in opposition. AYES: Spence, Toma, Wu, Johnson NOES: Warshaw ABSENT: None 3 Monday July 02, 2018 Councilmember Toma asked for clarification regarding stabilization funds and inquired about the policy on debt issuance and management. Interim Finance Director Lancaster indicated that stabilization funds were synonymous to that of fund balance reserves. She clarified that the debt management policy was effective on July 1, 2018 as a response to the audit items requested from the State Controller's Office. City Manager shared that the aforementioned policy can be made available on the website at the request of the Council. Mayor Pro Tern Wu asked where the template for the budget policy originated from and if nearby cities utilized an identical template. City Manager Freeland explained that the proposed policy is used by the Government Finance Officers Association (GFOA), and the same template is utilized by many cities throughout the nation, who alter the policy to better accommodate the needs of their City. Mayor Pro Tern Wu asked if the budget policy could be amended after it has been adopted should the Council wish to make any additional changes. Councilman Spence expressed concerns regarding the budget policy and requested for a more extensive explanation concerning each proposed procedure to ensure they are compliant with the California State Controller's Office (SCO). City Manager Freeland stated that he would review each section of the aforementioned policy to determine which individual goals and processes the Council wished to amend or remove in order to be compliant with the SCO. City Manager Freeland began to review ea& of the proposed goals from the proposed Budget Policy with the City Council to ensure City compliance. Mayor Johnson stated that the policy reflected what the City plans on doing in the future, based on Council direction. Councilmember Warshaw disagreed with Mayor Johnson and explained that the budget policy and the budget should be adopted concurrently. Couneilmember Toma stated that the adoption of the budget policy should be postponed and completed after the City's budget has been approved in order to amend the aforementioned policy to Council's specifications. City Manager Freeland asked Council if they would prefer a sub-committee to review the proposed budget policy with the amendments proposed by Councilmember Warshaw and bring the item back for further Council discussion at a future meeting. 4 Monday July 02, 2018 A motion was made by Councilmember Warshaw and seconded Mayor Johnson to approve Councilmember Warshaw's verbiage changes to the proposed budget policy. Motion was carried by a vote of 5-0. AYES: Spence, Toma, Warshaw, Wu, Johnson NOES: None ABSENT: None Mayor Johnson stated that the final adoption of the budget policy would be postponed to a future meeting so that City staff could complete additional research. City Manager Freeland asked Council to hold Item No. 2 until after Item No. 3 was discussed. DEPARTMENTAL MATTERS 3) Fiscal Year 2018-19 Third Preliminary Budget Workshop It is recommended that the City Council provide Staff direction on the various City priorities related to the Fiscal Year 2018-19 Operating and Capital Improvement Program Budget. City Manager Freeland gave a brief summary regarding the City's budget plan. Mr. Freeland also informed Council that revisions had been completed by staff regarding staffing changes, as well as additional recommendations concerning the City's budget. He also stated that per Council's request, staff would review all current and proposed Capital Improvement Program (CIP) projects and if at any time during the presentation the Council wished to discuss matters privately, they could adjourn into Closed Session. Interim Finance Director Lancaster explained that the previous proposed cuts approved by Council at the budget workshop on June 11, 2018 would be implemented into the final budget plan. She also discussed an updated vacancy list and gave a PowerPoint presentation detailing all department cuts and elaborated on all necessary revenue and expenditure adjustments_ City Manager Freeland stated that the Police Department's proposed cuts were not at the 10% level but at a 7% cut and if the Council proposed to make any additional cuts, they could be discussed in Closed Session. RECESS — City Council recessed to Closed Session at 7:59 p.m. and reconvened to the regular meeting at 8:49 p.m. with all Councilmembers present. Police Chief Taylor informed Council of the Department's proposed cuts and the impact they would have on the Police Department. 5 Monday July 02, 2018 Councilmember Warshaw inquired about the change of patrol division deployment model and suggested that this proposed cut could help with the increased amount of overtime within the department. City Attorney Hall Barlow indicated that per Council direction in Closed Session, Council had agreed to all the proposed cuts for the Police Department except for the elimination of the AB 109 task force. She also clarified and stated that no formal vote had been made and the decision was not unanimous among Councilmembers. Councilman Spence asked for clarification regarding the Business Inspection Fee and the Emergency Incident Billing Fee. City Manager Freeland clarified the definition and purpose of the aforementioned fees. He also stated that there were some restrictions to these fees and would be brought to Council at a later date for further discussion. Interim Finance Director Lancaster discussed the proposed cuts for the Fire Department. Fire Management Analyst Narahara clarified that the Business Inspection Fee would include the inspection of all types of businesses and informed Council about the two classifications for business type. Mayor Pro Tern Wu inquired about the total amount of the inspection fee. Fire Management Analyst Narahara stated that the business inspection fee would cost around $100 per business. City Manager Freeland informed Council of the proposed ongoing firefighter model and the staffing changes for the West Covina Fire Department. Mr. Freeland also explained that there were two proposals from the Fire Association, and one must be implemented into the final budget. In addition, he also stated that the Community Services Department is seeking Council direction regarding the fate of the Discover West Covina newsletter. Mayor Johnson and Councilmember Warshaw requested for staff to compile more information regarding the business inspection fee. City Attorney Hall Barlow indicated that more information regarding the aforementioned fee would be compiled by City staff for Council consideration at a later date. Mayor Pro Tern Wu expressed his disapproval regarding the proposed fees. City Attorney Hall Barlow stated that the Council did not need to vote whether or not they approved the proposed fees but needed to provide direction to determine how staff would proceed regarding the adoption of the City's budget. Mayor Johnson stated that Council had reached a consensus to approve the proposed fees, 6 Monday July 02, 2018 with the stipulation that items would be brought back to Council at a future meeting for further discussion. City Manager Freeland clarified that the Business Inspection Fee and the Emergency Incident Billing Fee were approved by Council provided that they were both brought back at a future meeting for further discussion. Councilmember Warshaw asked if any additional sources could be utilized in order to better advertise the Discover West Covina newsletter to residents. Assistant City Manager/Community Services Director Bresciani indicated that the Community Services Department had already reached out to a vendor for publication needs but was still awaiting a response. Mayor Johnson and Councilmember Warshaw agreed that more information was needed to be obtained regarding the publication of the newsletter before Council can make an informed decision. City Manager Freeland informed the Council of the Business License Ordinance amendment recommendation from staff which had already been agendized, but staff was requesting Council reconsideration. He stated that by reconsidering this item and approving it, the City would have $1.7 billion in revenue to offset the cuts needed to balance the budget. In addition, if Council wished to approve this item and place it on the upcoming ballot, it would need to be adopted by the August 10, 2018 deadline. He also indicated if the Council chose not to adopt the aforementioned Ordinance, the City would have to be make additional cuts totaling the $1.7 billion loss. Mayor Pro Tern Wu expressed concerns regarding the impact of the increase in business licensing fees on small businesses and on the community. Councilmember Warshaw shared his concerns regarding said fees and asked what how much City businesses would be charged and if the amount changed based on lot size. Mayor Pro Tern Wu requested for the Business License Ordinance amendment to be agendized and brought back to a future Council meeting for further discussion. Councilman Spence expressed concerns regarding the proposed measure and asked how said measure could be included in the final City budget if it had not been adopted yet. A motion was made by Councilmember Warshaw and seconded by Mayor Pro Tern Wu to hold over discussions on whether or not to place the Business License Tax measure on the upcoming ballot at a future Special Meeting. Motion was carried by a vote of 4-1 with Councilman Spence in opposition. 7 Monday July 02, 2018 AYES: Toma, Warshaw, Wu, Johnson NOES: Spence ABSENT: None Mayor Pro Tern Wu asked City Manager Freeland if the super majority vote was necessary to approve the placement of the aforementioned measure on the upcoming ballot. City Manager Freeland stated that a super majority vote was needed from Council in order to approve placing said measure on the ballot. He also discussed deleting the Maintenance of Effort (MOE) for Senate Bill (SB) 1 regarding the gas tax increase. Mr. Freeland also indicated that this bill would be placed on the upcoming ballot for repeal and had two options for Council consideration which included: returning the grant from the State Controller's Office in order to keep General Fund monies or cut the MOE with the possibility that SI3 1 would be eliminated during the November election. He explained that if SB 1 were to pass at the upcoming election, the City would need to reevaluate the General Fund contribution towards transportation. Furthermore, he clarified that the City was slated to receive $1.8 million in transportation funds next year, with the stipulation that the City would spend $567,148 of General Fund dollars. In the event the City did not collect the grant for the next two years, if they chose to collect the year after, they would be forced to pay the retroactive pay for the previous two years. Interim Finance Director Lancaster stated that there were still financial challenges that needed to be resolved and gave a brief overview regarding the impact of the proposed cuts on the General Fund in future fiscal years. Councilman Spence asked if the numbers in the overview reflected the change in the West Covina Plaza's mall sales tax. City Manager Freeland stated that those additions had not been included in the PowerPoint Presentation. Interim Finance Director Lancaster briefly reviewed all current Capital Improvement Projects (CIP) and the expenditures. She also informed Council of the upcoming budget workshops occurring July 11, 2018 and July 19, 2018, if necessary. At 9:30 p.m. Mayor Johnson proceeded to Oral Communications for the public. ORAL COMMUNICATIONS Jerri Potras suggested for Council to defund the open police positions instead of eliminating them completely. Bill Robinson suggested for Council to implement a hotline where residents and City staff alike, could voice their concerns anonymously regarding the budget, and provide solutions to remedy the financial decline of the City with no possibility of retaliation. 8 Monday July 02, 2018 Chris Miller expressed concerns regarding the increase in sales tax of the City. Councilman Spence, City Attorney Hall Barlow, and City Manager Freeland gave responses to speaker inquiries. 2) Resolution to Continue Fiscal Year 2017-18 Appropriations It is recommended that the City Council adopt the following resolution: RESOLUTION NO. 2018-96 - A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF WEST COVINA, CALIFORNIA, TO CONTINUE APPROPRIATIONS CONSISTENT WITH THE ADOPTED FISCAL YEAR 2017-18 CITY OF WEST COVINA AND THE SUCCESSOR AGENCY TO THE FORMER WEST COVINA REDEVELOPMENT AGENCY OPERATING BUDGETS AND THE CAPITAL IMPROVEMENT PROGRAM UNTIL THE ADOPTION OF THE FISCAL YEAR 2018- 19 ANNUAL BUDGET City Manager Freeland asked to discuss Item No. 3 before Item No. 2. Mayor Pro Tern Wu expressed concerns regarding the high amount of sales tax in the City. Councilmember Tom expressed his approval regarding public comments and suggestions concerning the City's budget. He also stated that with the yearly increase in PERS costs, there was not enough revenue available to keep the budget balanced. Mayor Pro Tern Wu expressed concerns regarding the amount of City expenditures and the proposed increased tax rate. City Manager Freeland explained that due to a conflict in schedules with the Councilmembers, the next Budget Workshop Meeting would be rescheduled to July 12, 2018 at 6:30 p.m. After a more in-depth discussion between Councilmembers and City Manager Freeland, a motion was made by Mayor Johnson and seconded by Councilmember Toma to hold over the resolution to continue Fiscal Year 2017-18 Appropriations until July 12, 2018 for further Council discussion. Motion was carried by a vote of 4-1 with Councilman Spence in opposition. AYES: Tama, Warshaw, Wu, Johnson NOES: Spence ABSENT: None City Manager Freeland suggested for the adoption of the budget policy to be made after the City's budget is finalized. 9 Monday July 02, 2018 Councilmember Toma expressed concerns regarding City Manager Freeland's suggestion. ADJOURNMENT A motion was made by Mayor Johnson to adjourn the meeting at 9:59 p.m. Ro'salia A:13titlerkVIMC Assistant City Clerk 10