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HomeMy WebLinkAboutMinutes 1992-01-15Mayor John R. Penna Council: Jack Drago Joseph A. Fernekes Gus Nicolopulos ~oberta Cerri Teglia AGENDA ADJOURNED REGULAR MEETING CALL TO ORDER: (Cassette No. 1) ROLL CALL: 1. Mid-Year budget review and 1992-93 policy direction. MINUTES City Council City Council Conference Room City Hal 1 January 15, 1992 ACTION TAKEN ADJOURNED REGULAR MEETING 7:10 p.m. Mayor Penna presiding. Council present: Council absent: Drago, Fernekes, Nicolopulos, Teglia, and Penna. None. City Manager Armas stated that for the last few years staff had tried to give Council a profile to end the prior year with about six months experience under its belt, and to give an idea through projection of where we will be in the new fiscal year. He stated that this would give Council an opportunity to give direction on any adjustments the Council would like to make for the balance of the year and on the budget for the new fiscal year. Director of Finance Margolis presented her staff report on the 1991-92 Budget: general fund revenues were $2,000,000 greater than anticipated in the past fiscal year from interest rates and addi- tional savings during the year; premise of the budget was that we would be coming out of the recession in the summer or the fall, and the economy went into a deeper recession which resulted in a decrease in revenues; principal revenues were tied to the economy with a 7% drop in sales tax and in declines in property tax and T.O.T.; savings projected in spending of $1.8 million; looking at a decline in revenues of $370,000 from the State's action in trying to balance their budget. Councilman Drago noted that there was a $1.8 million deficit at the start of the budget. 1/15/92 Page I ml. AGENDA Mid-Year budget - Continued. ACTION TAKEN Director of Finance Margolis stated that because of the decrease in revenues she was showing an overall deficit of $2.8 million for the year of total expen- ditures over revenues. City Manager Armas stated that the $2.8 million was the annual operating deficit. Director of Finance Margolis stated that the projections were for the recession to continue to next fall and as a result we would see little increase in revenue next year. She stated that there would be no growth in overall spending and it would stay the same in absolute dollars because we are facing known contracts with employees generally of up to 6% in CPI increases in MOUs currently in existence and into next year plus the inflationary factors. City Manager Armas spoke at length: that the recession exacerbated the situation; recommendation was to stay at the same appropriation level for next year as was approved this year; the departments would have to absorb the salary costs which were 80% of their budget absent a Council decision to reduce positions, he had talked to Dept. Heads about reducing their expenses by $700,000 for the balance of this year; there would be information on those efforts in the next 2-4 weeks; assumption was to transfer $500,000 from the General Fund to the Capital Improvement Fund for projects; assumption to rely on the $500,000 in the economic contingency reserve; the City could weather this for another year based on the projections, but if there was not a change in economic conditions the Council would have to make tough choices. Discussion followed: deficit spending of approximately $2,000,000 this year and in 1992-93; whether the closure of Pay-N-Pak had been taken into consideration in revenue projects, as well as any new stores coming in and the expansion of the Price Club; Finance had not considered 1/15/92 Page 2 AGENDA -1. Mid-Year budget - Continued. ACTION TAKEN oope any new tax generators coming in this fiscal year. Councilman Drago had been concerned about last year's deficit of $1.8 million and was even more concerned about this year's $2.8 million deficit. He felt that this deficit resulted from the Manager's insistence on having multi-year employee contracts where the City committed money it did not have when 80% of the budget was salaries which included 5-6% for the next two years in raises. He stated that he did not feel that expenses could be cut to the tune of $2.8 million in six months, and was against taking the PERS money when the deficit was greater than the previous year. He stated that he was going to ask the Mayor to set up a subcommittee outside of City Hall to review the entire organiza- tional structure of the City. He stated that he did not see an end to this, and thought the Council would have to talk about layoffs because there were no salaries to hold back or cut and it would be like the Building Dept. where they are not filling vacancies, and that services that affect the public would be the first to go. Councilman Nicolopulos stated that his budgetary observation for the next two years was threefold: no new taxes; to not reduce services; and take serious steps to enhance the revenue base in view of the recession. Discussion followed: whether the Supreme Court would overturn Proposition 13, and if it did, there would be enough legisla- tion introduced to keep the conditions the same; staff did not know if the PERS funds could be used as a one time expen- diture; that the issue Councilman Drago raised with respect to City services was both legitimate and valid for Council would have to discuss and review with scrutiny the services the City cared to deliver and those to forego; there was 1/15/92 Page 3 AGENDA Mid-Year budget - Continued. ACTION TAKEN still debate on Council on multi-year employee contracts; because there were positive and negative aspects; projected interest income was $300,000 greater than anticipated; basis for revenue estimated projections; how the Council could deter- mine if it was an accurate estimate; that there was $2.7 million in a benefit fund from interest on PERS; Mayor Penna was concerned that there were no actual budget figures for Council to see where the City stood today; there would have to be an analysis of vacancies before a hiring freeze was recommended in order to see the affect on services; Mayor Penna wanted to see a projection over the next three years in the event the economy does not turn around and all contingencies; to see more saving through reduction of expenditures or less positions through attrition and the effect of the resultant services to the citizens; Vice Mayor Teglia felt the Council had to look at projects to postpone or drag out, and wanted a doomsday time line for six months and six months after that, and going into the following year if things do not turn around; Governor is talking about looking at a reform of Workers Comp., and there was a chance the State would raid local sources of motor vehicle taxes, and they were looking at reducing State obligations by reducing funding to Counties which trickle down to cities; good news could be the release of transportation type project monies that co-produce more jobs and more spending; Vice Mayor Teglia felt staff should talk to the Price Club and the hotel industry on increased activity; that staff had been meeting with the larger employers who were all suffering from the recession and do not know how long it would last; the Price Club was also suffering but continues to be optimistic with plans for expansion to continue to be competitive; staff was looking for more timely infor- mation on the lager sales tax people; occupancy level was up, but revenue was 1/15/92 Page 4 AGENDA Mid-Year budget - Continued. 2. Review of development fees. ACTION TAKEN down due to lowering of rent to attract people; Vice Mayor Teglia wondered if there was any room for the City to work with the South Slope Developer to salvage the project; the problem was with the obligations of Federal lending institu- tions; City Manager had read in the newspapers that the PERS Board of Directors had talked about releasing some $265 million for new capital for single family type housing, etc. Assistant City Manager Martel explained that the staff report responded to a need to change the method of establishing fees for certain development activity. She stated that a task force was established of City staff and they had tracked various projects over a period of three months to identify the real costs involved in staff time to conduct the review development applications. She then spoke in detail of the exhibits that summarized the results of the review of building planning processes and the esti- mated staff costs. Vice Mayor Teglia questioned if there was a joint recommendation as to when the Council might better examine this issue, and felt the time should be when the City came out of the recession. City Manager Armas stated that the real value of the report was to see if Council thinks this direction is sound, if it is not right at the present or if they were off-base. Discussion followed: that it was good that this would not be a burden to the homeowners; whether the estimated hours were inflated; that some figures showed the City to be overcharging some pro- jects; whether staff had checked with other cities on their fee schedules; Councilman Nicolopulos thought the report was well written, but questioned the purpose of the study; that it had been a request from Council for staff to review development activities and related fees; 1/15/92 Page 5 A6ENDA Review of development fees - Continued. ACTION TAKEN 00245 that the cases used in the study were not average projects; Councilman Nicolopulos questioned what the City would gain by this process or what it would lose; the potential of higher fees could scare off developers; the purpose was to cover the cost of providing the service; Mayor Penna questioned the benefits to the com- munity from these large or small develop- ments; that the purpose was to make sure that the cost was borne by the person making the demand rather than the tax- payer; Mayor Penna questioned if projects of benefit to the community could have a rebate in fees; that incentives could be offered to a developer; that this had happened with Terrabay, but staff had related that the project would not pay for itself; it was possible that a project had related service costs; Mayor Penna felt that if there was a benefit to the community and the project was producing revenue, then the taxpayer was not paying for it, and the increased fee was not warranted; that the Council did not have to accept staff's recommendation; Mayor Penna felt that the City should look at incentives for a developer to finish a project; that these fees were merely nickels and dimes; Vice Mayor Teglia felt that when a large development had money to go forward, they did not question the fees; Mayor Penna did not feel this was a good business decision to make in charging these types of fees; staff was talking about the people that take staff's time and never go through with the project; Mayor Penna felt that if the Developer had a choice of cities for a project, then the proposed fees would make him go to a City with lesser fees; City Manager Armas related that when the new master fee schedule had come before Council questions had arose on the Council and from the audience on the appropriateness of the fees which this report answered; Councilman Drago questioned the revenues these fees would have produced if they had been effected in July, and felt this was anti-business with the economic conditions being what 1/15/92 Page 6 e AGENDA Review - Continued. Operation and management S.S.F. 5~0~ Center. ACTION TAKEN 00246' they were; he felt that it was only the big projects that would make a financial difference in revenues, etc. Director of Conference Center Carl stated that this was a draft ordinance creating an authority for the purpose of pro- moting, operating, maintaining and managing the Conference Center. She stated that the Conference Center Board had been discussing for some time the best way to manage the Center: to pro- vide the efficient operation as possible to assure the maximum competitiveness in the market which is required to meet the revenue targets, and maintain the public safeguards. She stated that the Board had reviewed a variety of management options, such as the San Diego Convention Center and City Attorney recommendations and had come up with the draft ordinance. She responded to Councilman Nicolopulos query, and stated that this was a draft ordinance for a new management structure for the Center. Councilman Fernekes stated that he had questioned the City Manager on the com- position of a nine member board, on how the two Councilmembers would be selected, and the duration of a two year membership. Vice Mayor Teglia stated that the Mayor with the concurrence of Council would appoint the two Councilmembers for a two year term, unless there was an election. She stated that two year terms would work better for continuity of the authority. Discussion followed: why choose to have a nine member authority; that the Board felt that adding two more members would be more effective in going from an advi- sory board to a management authority for a successful operation of the Center; Councilman Drago questioned why the two additional members were not from this community; that the Board had recommended the City Manager as a new member with 1/15/92 Page 7 AGENDA Operation - Continued. ACTION TAKEN experience and a link to the City, two members from hotels, one member from a restaurant, one member from an airline, one member from the S.S.F. business com- munity, and one member from a visitor serving business in S.S.F.; Councilman Drago thought there should be two S.S.F. residents, and did not feel that the City Manager should be a voting member because of a conflict of interest by sitting on a board and voting on policy when he was the Manager; City Manager Armas related that the Board's thought was that the authority would only come to the Council a few times a year on budget matters, and wanted the Manager to look at some of the financial ramifications or personnel problems that might arise as a safeguard of the City's financial interests; Councilman Drago disagreed and felt the community should be represented by two members on the authority; he also felt that having the head of the City on the authority did not give a separation of powers; Vice Mayor Teglia felt it would work with the Manager on the authority, and the Board wanted the Mangaer to have a vote; Mayor Penna pointed out that under Section (d) the City Council appoints for a two year term but the hotel representative would be appointed by the hotel association with the con- currence of the Council for a three year term. Councilman Drago questioned the Executive Director being receptive to giving up her status as a City employee. Executive Director Carl stated that there was a provision to retain the existing Director for 24 months at the same salary and benefits as if the Director had remained employed with the City which could be modified by mutual agreement. She stated that she had no problem with that because it extended her current benefits for a two year period. Councilman Drago questioned how the $10,000 figure had been derived for 1/15/92 Page 8 AGENDA ACTION TAKEN Operation - Continued. budget transfers before approval of the Council was required. Executive Director Carl stated that the Board looked at legislation from San Diego as a rule of thumb in these types of transfers as more of a historic use of an existing operation, even though San Diego's convention center was larger and they did not have a transfer limit. She stated that this had been included to establish some guidelines so that if there was a savings in one area they could not arbitrarily move funds to another area without Council approval. City Manager Armas stated that this ordi- nance would be on the agenda for the next regular meeting for action, and tonight was only for Council discussion. Councilman Drago requested that the City Manager provide the information he had requested last October dealing with taxes and insurance before the next meeting. Discussion followed on the categories involved in the $10,000 budget transfer. Councilman Nicolopulos wanted to go on record as continuing to be in opposition to anything related to the Conference Center. Councilman Drago stated that he wanted the ordinance to read: that the City Manager was not a member of the authori- ty; that there were two additional S.S.F. residents on the authority; that the $10,000 be lowered to $5,000 because he felt they might sacrifice some personnel to meet some demands of some items that were not budgeted in the beginning because he was concerned about the taxes and insurance that were not presented in the operating budet. Discussion followed: on incorporating Councilman Drago's suggestions into the ordinance; that there was not an objec- tion to the City Manager sitting as an 1/15/92 Page 9 AGENDA ACTION TAKEN e Operation - Continued. Closed Session for the purpose discussion of personnel matters, labor relations, property nego- tiations and litigation. ADJOURNMENT: ex-officio member of the authority; Vice Mayor Teglia wanted a meeting planner as a member of the community on the authori- ty; the impact from lowering the transfer figure to $5,000 for the Executive Director. The Council chose not to hold a Closed Session. M/S Teglia/Drago - to adjourn the meeting. Carried by unanimous voice vote. Time of adjournment was 9:45 p.m. RESPECTFULLY SUBMITTED, ~--Barbara A. Battaya~ ~ity of South San Francisco naY~anci sco The entries of this Council meeting show the action taken by the City Council to dispose of an item. Oral communications, arguments, and comments are recorded on tape. The tape and documents related to the items are on file in the Office of the City Clerk and are available for inspection, review and copying. 1/15/92 Page 10