Loading...
HomeMy WebLinkAboutMinutes - Minutes - City Council - Meeting Date: 5/3/2016 City of Glendale 5850 West Glendale Avenue Glendale, AZ 85301 , 1 rl .1 41 L . A n Meeting Minutes - Final Tuesday, May 3, 2016 9:00 AM Budget Workshop Council Chambers City Council Workshop Mayor Jerry Weiers Vice Mayor Ian Hugh Councilmember Jamie Aldama Councilmember Samuel Chavira Councilmember Ray Malnar Councilmember Lauren Tolmachoff Councilmember Bart Turner City Council Workshop Meeting Minutes-Final May 3, 2016 CALL TO ORDER Present 7- Mayor Jerry Weiers, Vice Mayor Ian Hugh, Councilmember Jamie Aldama, Councilmember Samuel Chavira, Councilmember Ray Malnar, Councilmember Lauren Tolmachoff, and Councilmember Bart Turner Also present were Kevin Phelps, City Manager; Michael Bailey, City Attorney; and Darcie McCracken, Deputy City Clerk. WORKSHOP SESSION 1. 16-188 FY15-16 THIRD QUARTER FINANCIAL REPORT Staff Contact and Presenter: Vicki Rios, Interim Director, Finance and Technology Staff Presenter: Lisette Camacho, Controller, Finance and Technology Ms. Rios introduced Lisette Camacho, City Controller. She said they were going to provide a report on the actual results of all of the city's major operating funds, which include the General Fund, Special Revenue Funds and Enterprise Funds. The actual results of the third quarter ending March 31, 2016 will be compared to the actual budget. Items are considered on target if they are 75% of the budgeted amount. Results will also be compared to results from the same time last year. This is the first year that all of the General Fund Revenues and Expenditures include the rollup of a number of sub-funds, so it may be a little difficult to compare this year's results with last year's results. Per Council's request, three years of data are being presented. Ms. Rios said results all look positive at this point. Ms. Camacho said total General Fund revenues are on target at 74% of the budget, revenues increased $18 million or 12% over last year. Out of the $18 million increase in revenues, $14.6 million is due to the consolidation of the general fund sub-funds into the general fund. Excluding the sub-fund revenues, total general fund revenues increased 2%. Sales tax revenues are on target at 76% and revenues increased $12.9 million or 20% over last year. Approximately $10.9 million of the increase is due to the consolidation of the sub-fund revenues into general fund. Excluding the sub-fund revenues, sales tax revenues increased $2 million or 3%. She said state shared revenues are on target at 75% of the budget. Other revenues are on target at 69% of the budget. This variance is primarily due to the amendment to the professional management and arena lease agreement in which surcharge revenues were deleted from the original contract with an offsetting reduction in the arena management fees paid by the city. Arena revenues are at 17% of the annual budget, which includes surcharge revenues. Total expenditures are below target at 67% of the budget. The variance is primarily due to the amendment to the professional management service and arena lease agreement in which the arena fees paid by the city was reduced from $15 million to $6.5 million. She said transfers out are on target at 73%of the budget. Ms. Camacho said HURF revenue is below target at 70% of the budget, and this is an increase of 6% over last year. She said expenditures are below target at 39% of the budget, and this is due to a Capital Projects Budget of $20.7 million, and only $6.5 million have been expended. City of Glendale Page 1 Printed on 6/27/2016 City Council Workshop Meeting Minutes-Final May 3, 2016 Ms. Rios said this presentation is different than prior years because they split the capital line out to draw attention to it. She said this will make this item more transparent so Council can see where they are with capital expenses. She said staff will also talk about carryover funds and this item will be included in that discussion. Ms. Camacho said transportation revenues are at 83% of the budget and revenues are $1.1 million lower than last year. She explained this variance is due to a one-time reimbursement from the State of Arizona in 2015 of $1.6 million. She said after adjusting for this reimbursement, revenues increased 2% over last year. Expenditures are below target at 33% of the budget. This is due to budgeted capital expenditures of $20.1 million, and only $3.4 million have been expended. Ms. Camacho said transportation also had a reduction in debt service due to refinancing the transportation bond in FY 15. Debt service decreased 8%compared to the same time last year. Ms. Camacho said Police Special Revenues are on target at 76% of the annual budget, and revenues increased 2.5% over last year. There are no expenditures in this fund due to a change in the method for accounting and budgeting for enhanced police services, and all expenditures are recorded as transfers out. The transfers out are on target at 75% of the annual budget. The deficiency is a budgeted draw down of fund balance. Ms. Camacho said the Fire Special Revenue funds are on target at 76% of the budget, and revenues are 2.4% higher than the same time last year. Transfers out are at 75% of the annual budget, and under new accounting and budgeting method for enhanced fire services, all uses of this fund are accounted for as transfers out. The deficiency is a budgeted drawn down of fund balance. Ms. Camacho said water revenue is 3% higher than last year and sewer revenue is at 73% of the annual budget. Other revenue is above target at 146% of budget due to a refund from Multi-City Sub-Regional Operation Group (SROG) for an overpayment of the city's share of capital expenditures. Water and sewer expenditures are below target at 41% of the annual budget. This is due to $31.5 million in budgeted capital expenditures, and only $4.5 million have been expended. She explained the debt service decreased $4.9 million as a result of refinancing the water and sewer bonds in FY15. Ms. Camacho said sanitation revenues are on target at 76% of the budget and revenues have increased 2% over last year. Expenditures are below target at 59% of the annual budget, and this is due to $3.3 million in budgeted but unspent capital projects which are spent unevenly throughout the year. Ms. Camacho said landfill revenue is at 68% of the annual budget and this variance is primarily due to recycling sales, which is below target at only 36% of the annual budget. Expenditures are at 46% of the annual budget, with only $3.1 million of the budgeted capital projects of $11 million expended. Operating expenses are also below target at 64% of the annual budget. Ms. Rios summarized that all of the major funds meet or exceed revenue targets and expenditures in each of the funds is at or below 75%. She said staff will continue to monitor fund performance. Councilmember Turner said the city saved over $5 million in debt service due to the refinancing and revenue projects are also on target. Councilmember Tolmachoff asked about the decrease in revenue in the General Fund and the arena surcharges. Ms. Camacho said the other revenues include development service fees, business City of Glendale Page 2 Printed on 6/27/2016 City Council Workshop Meeting Minutes-Final May 3, 2016 license fees and franchise fees. She said those fees were in line with projections and the only thing that stood out was the forecasted revenues for the arena. She said the city also received rent revenues as well as the surcharge revenues from the arena. Ms. Rios said the city is still receiving some revenues from the arena, but all other revenue such as ticket surcharges were budgeted in that fund, however, under the new agreement, the city is not receiving those. She said staff can provide more detail to Council on this issue. Councilmember Tolmachoff said the revenue streams for the arena were not coming in at those amounts. Ms. Rios said they can provide more detail to the Council. Mayor Weiers asked if the low recycling numbers presented were due to the economy. Ms. Camacho said in FY16 there were budgeted contract revenues that did not pan out and in February, the baler machine at MRF was broken, so they did not take in recycling revenues at that time. Ms. Rios said there was a little bit of backup in some of the recycling materials, but the city should see some revenue coming in from those later. Mayor Weiers asked if the materials were there, but just hadn't been processed or sold yet. Mr. Friedline said there is an inventory, and the world market has plummeted over the last 18 months. That has affected city revenues. He said they are going to be dramatically lower than projected. Mayor Weiers asked if they were stockpiling to wait out the market, and said it didn't cost anything to just let the items sit there. Mr. Friedline said to a degree it does degrade the paper and plastic products. He said they also end up losing inventory space and it is better to just sell the items when the market is reasonably good. He said the MRF is over 15 years and they are going to upgrade the machinery to increase efficiency. With those upgrades, expenditures will drop dramatically. 2. 16-211 FY16-17 BUDGET WORKSHOP Staff Contact and Presenter: Vicki Rios, Interim Director, Finance and Technology Staff Presenter: Tom Duensing, Assistant City Manager Staff Presenter: Terri Canada, Budget Administrator, Finance and Technology Ms. Rios said this presentation will provide an update on the FY16-17 budget for some of the other major operating funds and the capital improvement program. Staff will also provide follow up from items originally presented at the April 19th and 21st budget meetings. Ms. Rios discussed the HURF FY17 request and said the Capital Improvement Program line item is the front loading of the pavement management into the HURF fund. She also pointed out there were changes to the fund balance policies for these various funds. The City of Glendale Page 3 Printed on 6/27/2016 City Council Workshop Meeting Minutes-Final May 3, 2016 information presented showed a large spend down of the fund balance in the HURF fund. At the recommended level of 15% of ongoing revenues for the balance for that fund, the minimum fund balance would be $2.1 million and the budget shows there will be an ending fund balance of $2.8 million which is within the 15% mark. The Transportation Sales Tax Fund has budgeted spend down of about $10 million. The fund's recommended fund balance is 10%, and at the budgeted level of spending, this fund balance will still be well above that mark at $25 million because 10% is only $2.5 million. The Water and Sewer Fund currently has a balance of $99 million. This fund has a budgeted spend down due to the large $92 million Capital Improvement Program. She said that if we were to spend the entire amount for the Capital Improvement Program, the ending balance in the fund would be about $24 million. However, she pointed out that for budget purposes, the entire appropriation for a project is put in the year the contract is going to be issued. These projects will carry over for multiple years and the cash will be expended in more than one year. Staff recommended keeping this fund at about a 50% level or $45 million and since the funds are not all spent in the first year; the fund balance is not expected to go below the recommended balance. Ms. Rios said the balance for the Sanitation Fund would be 10% and she said that at the budgeted level of spending, the fund will meet this goal which is $1.4 million. The Landfill fund recommended fund balance is 15% and with the budgeted level of revenues, expenditures, and capital improvements, this fund will meet its target fund balance of$1.5 million. Ms. Rios presented the total FY17 Capital Improvement Program funding sources and explained the total CIP amounts now include $72 million in carryover of funds from this year. This is a reflection of capital spending over multiple years. She said most of the CIP spending is by the Enterprise Funds. She also provided information on capital funding projects by funding type, which included Enterprise, HURF, transportation, grant, bond construction, pay-as-you-go and development impact fee funds. Ms. Rios provided detail on the changes to the pay-as-you-go capital project funding. The original amount was about $2.8 million. The revised amount is $6.6 million. The General Fund projects which were added include arena capital repair, the tennis court as Paseo Park, building maintenance reserve, Camelback Ranch capital repair, heart monitors, turnout gear and emergency vehicle preemption. Changes to Sanitation Enterprise Funds capital projects include the deferred purchase of roll-off, frontload, side load and pickup trucks and landfill capital projects, which include deferral of landfill south closure and soil excavation projects due to ADEQ permit approval for increasing existing height at the landfill. The original fund amount was $90.4 million and the revised amount is$72.7 million. Mr. Phelps said modifications have been made to the proposed budget. The first item is for contract review funding. The City Manager's Office proposes putting $125,000 into the City Attorney's budget for outside legal services to assist in addressing Council questions on several city contracts. A second item that has been changed is for Code Enforcement assistance. He explained both FTEs are currently grant funded and Council had questions about those positions if that grant funding was to go away. Mr. Phelps said Contingency Funds would be used to fund one or both positions in the event that happens, and those positions are considered permanent FTE positions. Mr. Phelps said staff is also recommending an increase in the Development Services budget in the amount of $50,000 for Code Enforcement. These funds would give the department the ability to hire temporary employees or bring in additional overtime hours to make sure the Code Enforcement work gets done. He also recommended increasing the City Auditor budget by $21,000 to provide additional ongoing support for outside consulting services for specialized audits. This will also free up the city audit staff to broaden their scope of audits. He said specialized audits might include IT and security, which is very City of Glendale Page 4 Printed on 6/27/2016 City Council Workshop Meeting Minutes-Final May 3, 2016 challenging in many organizations. Mr. Phelps said there were still several items that required additional review. Those included balancing library hours and recommended referral of this item to the Library Advisory Board. Once a recommendation was received from the board, this item would be brought forward for additional Council review. Assessing O'Neil Recreation Center is another item that requires further review. Staff recommends referring this item to the Parks and Recreation Advisory Commission and further review by Council. The Heroes Park Master Plan also required further review, and Mr. Phelps recommended a current funding budget of $50,000(DIF funded) and then further review by Council. Mr. Phelps said the Mayoral office staffing also required further review. He explained the options for this position included use of a senior administrative assistant position to help strengthen the volunteer coordination efforts or transferring this position to the Public Affairs division to strengthen public information efforts for Mayor and Council. He said these two options are budget neutral and he looked to Council for further direction. Councilmember Malnar asked if the Mayoral staffing item was two different options. Mr. Phelps said yes. He explained one option was to take half of that full time position and coordinate with the community volunteer program and the employee would work on the front end of recruitment, intake and administrative support. This would free up the employee who is currently oversees this program to concentrate more on training, scheduling and deployment. The goal would be to increase the total number of volunteers for the upcoming budget year and increase the total number of hours donated to the city. He said volunteer hours were valued this year at$179,000. Councilmember Tolmachoff asked for clarification of how the Heroes Park budget would be used. Mr. Strunk said it has been many years since the original master plan was established and staff suggested revisiting the master plan with the community to see if the plan still fit the needs of the community. He said they do need to move forward with this type of assessment to make sure the plan is still on point. Councilmember Tolmachoff asked if staff was looking for a consensus on the Mayoral Office staffing. Mr. Phelps said Council direction would be appreciated and further study would be necessary to see how these positions would best fit within the new department of public affairs or with the volunteer effort. Councilmember Tolmachoff said the enhanced coordination of the volunteer efforts has a direct benefit to the taxpayers. She said any money not spent on the study at Heroes Park can be spent at the park itself. Vice Mayor Hugh would prefer to see the position work with enhancing volunteer coordination efforts. Councilmember Aldama supported the volunteer coordinator position. He thought about the additional support for the City Auditor's Office was very important. He said he was still concerned about the Code Enforcement positions. He asked that the library hours issue not only be reviewed by the Library Advisory Board, but also provide the community with an opportunity for input. He would also like to see citizen input regarding the O'Neil Park pool. City of Glendale Page 5 Printed on 6/27/2016 City Council Workshop Meeting Minutes-Final May 3, 2016 Councilmember Chavira said he was in favor and aligned with all of staff's recommendations today. Councilmember Turner was glad to see that staff was able to frontload the Pavement Management Program. He also said he supported the option to enhance volunteer coordination efforts with half time FTE hours. Mayor Weiers said there was consensus. Mr. Duensing said staff was looking for consensus for funding for the contract review funding, code enforcement assistance and city auditor additional support for a total of $196,000. Mayor Weiers said there was consensus on the contract review funding. Mr. Duensing said the library hours issue will be referred to the Library Advisory Board, the O'Neil Recreation Center assessment will be referred to the Parks and Recreation Advisory Commission, and staff will provide Council with additional information regarding the Heroes Park Master Plan. Councilmember Malnar asked if the funding for any recommendations would come from the FY17 budget. Mr. Duensing said staff will bring options for funding back to Council after further review. Councilmember Tolmachoff asked about amortization for the CIP for water and sewer. Ms. Rios said the detail is in the Capital Improvement Plan and said staff will provide that to Council. Councilmember Tolmachoff said she can look it up as well. Councilmember Aldama said the request for additional library hours goes to the commission and that a decision will be made and implemented in FY17, and not wait for the following year. Mr. Duensing said staff will bring back any fiscal impact to Council for discussion and a decision can be made at that time whether to proceed. Mayor Weiers said Council already had a consensus on the final issue. Mr. Duensing said yes. Ms. Rios provided a summary of the FY16-17 General Fund Budget with those changes. She said this request shows a surplus of just over $1 million and explained how staff arrived at those figures. She said operating expenditures were reduced by $2.8 million. She said $2.4 million of that went down into the net transfers' line item. These funds will be transferred to be used for pay-as-you-go capital projects. She explained that is money the General Fund is paying for capital projects. She said additional savings came from a recent bond refinancing and staff estimates about $275,000 in savings next year. She said there was also a small savings when they recalculated the salaries for next year of about$100,000. City of Glendale Page 6 Printed on 6/27/2016 City Council Workshop Meeting Minutes-Final May 3, 2016 Ms. Rios went over the budget calendar and next steps in the budget process. She said tentative budget adoption is scheduled for May 24, 2016 and final budget adoption is set for June 14, 2016. Mr. Duensing said Council has had a chance to hear a great deal of detail from the individual departments. Mr. Phelps said staff is thankful for the time the Councilmembers have invested in the budget process. He said the budget is the most important policy document for the city. He said he would like to survey the Council to see if there are ways to strengthen this process in the future. Councilmember Tolmachoff thanked staff for their budget presentations, and felt the process was very productive. Councilmember Chavira said the team has come together and worked hard to right the ship. He said this has been a productive experience. Councilmember Turner thanked staff and department heads for their work. He said the Councilmembers have learned so much during this process. He thanked the City Manager's office as well for their hard work. Mayor Weiers thanked everyone for attending and adjourned the meeting. ADJOURNMENT Mayor Weiers adjourned the meeting at 10:04 a.m. City of Glendale Page 7 Printed on 6/27/2016