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HomeMy WebLinkAbout05.24.2021 SP Minutes @1:00MINUTES S�,� SPECIAL MEETING BUDGET STANDING COMMITTEE c9z1fo to OF THE CITY OF SOUTH SAN FRANCISCO P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, California 94083 MONDAY, MAY 24, 2021 1:00 P.M. Teleconference via Zoom Housing Standing Committee conducted this meeting in accordance with California Governor Newsom 's Executive Orders N-25-20 and N-29-20 and COVID- Call to Order. Roll Call. AGENDA REVIEW No changes REMOTE PUBLIC COMMENTS None MATTERS FOR CONSIDERATION 19 pandemic protocols. Time: 1:04 p.m. PRESENT: Councilmember Nicolas and Mayor Addiego. Motion to approve the Minutes for the meeting of April 26, 2021. Motion — Councilmember Nicolas / Second —Mayor Addiego: to approve the minutes. Councilmember Nicolas submitted a minor correction to the minutes. The motion carried unanimously. 2. Report regarding the City of South San Francisco Operating Budget for Fiscal Year 2021-22. (Janet Salisbury, Finance Director) Director Salisbury introduced the item and provided a budget overview, General Fund projections and General Fund summary for Fiscal Year 2021-22. In 2017, the City made the strategic shift away from a one-year operating budget cycle to a biennial operating budget cycle. The current fiscal year (FY) 2020-21 represents the second year of the FY 2019- 21 biennial operating budget, which was adopted by Council on June 26, 2019. However, with the extraordinary economic downturn stemming from the COVID-19 global pandemic, significant adjustments were made to both the FY 2019-20 and FY 2020-21 budgets to react to the dynamically changing conditions. And while the American economy showed sign ofrecovery, bolstered by the unprecedented stimulus packages from the Federal government as well as the broader availability of vaccines in the U.S., the economic fundamentals remain uneven and uncertainty persists. As a result, for FY 2021-22, staff was pursuing an annual budget, as opposed to a biennial budget for the upcoming FY. The goal was to resume the two-year budget cycle once the economy showed signs of stabilization and longer-term recovery, as biennial budgeting generally requires a longer commitment of policy direction and funding levels. The General Fund is the City's largest and core operational fund, where the bulk of the essential services delivered by departments such as Economic and Community Development, Fire, Library, Parks and Recreation, Police, Public Works and City Administration are budgeted. While the current FY had not yet closed, it was the expectation that with tight controls on departmental expenditure budgets, the FY would end as expected. To remind the Budget Standing Committee, when the FY 2020-21 was adopted, the expectation was that the operating shortfall and additional Capital Improvement Projects (CIP) for FY 2020-21 would be funded through the General Fund surplus of the prior year (FY 2019-20). One of the largest unexpected monetary considerations to emerge in the current 2020-21 FY was the shortfall in property tax in lieu of Vehicle License Fee (VLF). Simply, due to a reduction in the number of non -basic aid school in the County, there was a shortfall in terms of how much property tax was available for the VLF due to cities and county. For South San Francisco, the amount due in VLF for FY 2020-21 was $8.6 million. However, the City would only collect $4.9 million this year; the effective VLF shortfall is approximately $3.7 million. A claim for the VLF shortfall would be filed with the State in August 2021, but whether the City collects on that claim would be dependent upon appropriation in the State's budget. Staff expects that the negative impacts of the $3.7 million in VLF shortfall would largely be curtailed by stronger revenues in other areas along with tough expenditure controls at the departmental level. However, final results for the current FY would not be determined until the books were closed and the accounts audited. For the upcoming FY 2021-22, the Finance Department projected operating revenues of $108,797,657 (not including carryover purchase orders) and $112,084,085 in operating expenditures, with the net operating shortfall of $3,290,000 to be funded via the fund balance available from the FY 2019-20 surplus and/or the federal stimulus available through the American Rescue Plan (ARP) Act. While the funds have not yet been received, South San Francisco's ARP allocation was $12.3 million, with half available in calendar year 2021, and the other half available in calendar year 2022. Projects to be funded with the remaining ARP allocations would go to Council as dedicated and separate actions, as was the case recently for the San Mateo County Strong Restaurant, Brewery & Winery Grant Program and the establishment of the Economic Mobility Resource Hub. South San Francisco was well positioned to recover economically from COVID-19, with a large industrial base anchored by the world's largest biotechnology research center. It was expected that the negative economic impact of COVID-19 would linger throughout FY 2021-22, as businesses recover, restaurants reopen, air travel (both domestic and international) improved, and hotel occupancy increases. Property Tax, which remained the City's largest revenue component, was projected to be $41.1 million in FY 2021-22. Property tax revenues have increased at an annual rate of 6% per year over the last seven SPECIAL BUDGET STANDING COMMITTEE MEETING MAY 24, 2021 MINUTES PAGE 2 years, redolent of a booming economy and a high rate of development. However, included in the property tax figures are the property tax in lieu of VLF. While projecting a 6% growth rate in secured and unsecured property taxes, the overall growth in property tax projections was tempered by the risk of further reductions of non -basic aid schools, resulting in additional VLF shortfalls such as those we have seen in the current FY. Sales Tax revenue (without Measure W proceeds) was expected to increase to $19.4 million or about 5% as the economy recovers from the acute effects of the pandemic. The sales tax forecast was provided by the City's sales tax consultant as the best estimate available at this time. Transient Occupancy Tax (TOT) revenue grew by 22% from March 2019 to March 2020 but was the hardest hit revenue source due to COVID-19. While the domestic leisure travel showed sign of recovery, the City's TOT revenue, which was highly dependent on business travel, remained beleaguered. It was widely recognized that there was a race between widespread vaccination and mutations, and it was expected that high levels of global immunizations may be a necessary threshold for business/international travel to resume to pre-COVID levels. When setting the FY 2020-21 budget a year ago, the original TOT projection was $7.9 million—a dramatic decline from the $17 million actually collected in the non- COVID fiscal year of 2018-19. However, by mid -year review, it was evident that the local hotel industry would not recover as shelter -in-place mandates were re -instated throughout much of California in the last quarter of 2020. As a result, TOT revenue projections for the current year, FY 2020-21, was further reduced to $5.9 million. Based upon the actual collections to date, staff expected to be right on track and meet that further reduced forecast of $5.9 million. Given the current trend of monthly TOT collections, staff was projecting about a 20% recovery in the local hotel industry, and thereby proposing a TOT projection of $7.1 million. Staff expected to adjust that projection at mid -year should additional signs of recovery in the hotel sector emerge. Licenses and Permit revenue had increased year -over -year since 2015. For FY 2021-22, staff was projecting revenues of $16.5 million, indicative of the robust rate of development expected especially East of 101. Charges for Services revenues, second only to TOT, had suffered the most because of the pandemic. While revenue projections were further reduced by almost $1 million from $8 to $7 million as part of the mid -year review, the expectation was that actual revenue collections may fall short, largely due to the limited programming in Parks and Recreation. For FY 2021-22, staff projected recovery to pre-COVID levels of $9.3 million considering nominal increases in overall charges as well as the expectation of pent- up demand for recreation activities in the coming year. In FY 2021-22 the City's General Fund, with projected revenues of $108,797,568, net of any carryover purchase orders, and $112,084,085 in expenditures, required an additional $3,290,000 to achieve a balanced budget. Staff recommended applying the balance from the FY 2019-20 budget surplus still remaining as fund balance in the General Fund. Any ARP monies that were allocated as General Fund support could then "reimburse" the General Fund at a later time once final determinations were made by Council related to the appropriation of ARP funded projects. Mayor Addiego queried the 10% drop for the Public Works Department. Director Salisbury stated the 10% drop was attributed to the Measure A Free Shuttle revenue source $1,000,000 appropriation that was not in the current budget. SPECIAL BUDGET STANDING COMMITTEE MEETING MAY 24, 2021 MINUTES PAGE 3 Director Salisbury advised there were three positions that were being requested in the FY 2021-22 budget. The City Manager's Office requested the addition of one (1) full-time equivalent hourly staff member to provide additional administrative and programmatic support. The Economic & Community Development Department (ECD) requested the addition of one (1) hourly staff member to provide additional programmatic support. The employee would support ECD in such efforts as the establishment of the Economic Mobility Hub and other mission -critical projects. The Finance Department requested the addition of a Financial Analyst II to provide vital support necessary to implement a new Enterprise Resource Planning platform. In conclusion, staff advised that the City remained financially strong, with a AAA -rated credit rating. The breadth and depth of the economic downturn associated with COVID-19, however, continued to make a sustained impact on the City's finances. Staff recommended a conservative budget approach with minimal reliance on city reserves to preserve the City's ability to respond over time if the economic downturn deepens further as well as to fund critical infrastructure projects necessary throughout the City. 3. Report regarding proposed Capital Improvement Program for fiscal year 2021-22. (Eunejune Kim, Director of Public Works/City Engineer and Matthew Ruble, Principal Engineer) The following individuals provided public comment: • Alan Perez, community member • Daniel Perez, community member • Olga Perez, community member Principal Engineer Ruble introduced the item and provided an update regarding the proposed Capital Improvement Program (CIP) for FY 2021-22. The FY 2021-22 CIP included 150 projects: 9 new projects, 33 potential projects and 108 continuing projects. The FY 2021-22 CIP budget was approximately $120,000,000 and was comprised of six (6) project types: Public Facilities, Parks, Storm Drains, Sanitary Sewer, Streets and Traffic. Principal Engineer Ruble gave a brief overview and identified the proposed new projects and additional appropriation request for continuing projects. New project (pf2201) City Hall Fire Alarm and Electrical Modernization — project would upgrade City Hall electrical service to support additional holiday decoration plans / EV charging station installation - $100,000. New project (pf2202) Grand Library History Room Renovation — project would plan and scope renovation to support ADA access - $50,000. Mayor Addiego was concerned of the small space and suggested looking into building a History Room in the new library. It was concluded for staff to revisit the item to the Budget Standing Committee at a later date. New project (pf2203) Terrabay Gymnasium — project would replace the HVAC at the Terrabay Gymnasium - $600,000. New project (sd2201) Francisco Terrace Flood Protection Levy — construct a flood wall behind the Francisco Terrace neighborhood to minimize flooding during storm events - $120,000. New project (sd2202) Colma Creek Pedestrian Bridge Replacement — replace existing pedestrian bridge with new bridge at a higher elevation to alleviate impacts caused by current alignment impeding flow SPECIAL BUDGET STANDING COMMITTEE MEETING MAY 24, 2021 MINUTES PAGE 4 during storm events - $250,000. New project (ss2201) Country Club Park Sewer Master Plan — district level study of sewer service expansion into the Country Club neighborhood; connecting to the existing sanitary sewer system. The project includes topographic and utility surveys, sewer modeling, and analysis - $210,000. New project (tr2201) Grand Avenue Off -Ramp Realignment —project to conduct preliminary studies and feasibility to realign the US 101 northbound Grand Avenue Off -Ramp, eliminating vehicle pedestrian conflicts of the current configuration - $750,000. New project (tr2202) Highway Safety Improvement Program (HSIP) Curb Ramp Improvements—project improves pedestrian crossing facilities, bringing the existing non -ADA compliant curb ramps up to current standards and replacing old and faded crosswalks with high -visibility, thermoplastic striping at six (6) non -signalized intersections along Olive Avenue, Linden Avenue, and Walnut Avenue - $324,000. New project (tr2203) E101 Transit Shelter and Bullbout Grant from MTC — project would add 11 new on -street bus/shuttle stops, upgrade two existing stops, and enhance sidewalks and crosswalks in a growing employment center that generally lacks bus stop facilities. The upgrades improve safe access to jobs, reduce travel times for Commute.org and Genenteh shuttles, and provide the necessary infrastructure to extend bus service via the Reimagine SamTrans project - $55,056. In conclusion, staff would amend the FY 2021-22 CIP based upon direction received from the Budget Standing Committee, and will present the revised CIP at the June 15, 2021 City Council Study Session. City Manager Futrell advised the next Budget Standing Committee meeting was scheduled for June 9, 2021 to hear the proposed five (5) year Sewer Rate Plan and Stormwater Rate Plans. ADJOURNMENT Being no further business Mayor Addiego adjourned the meeting at 2:18 p.m. Submitted by: cl­ GabrieKkodnijg'u'ez`_�_� Deputy City Clerk Approved by: a Mark Xddiego Mayor Approved by the Budget Standing Committee: Y / 1 q / Love SPECIAL BUDGET STANDING COMMITTEE MEETING MAY 24, 2021 MINUTES PAGE 5