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HomeMy WebLinkAboutStaff Report 168-07TO:HONORABLE CITY COUNCIL City of Palo Alto City Man er’s Report FROM:CITY MANAGER DEPARTMENT: COMMUNITY SERVICES DATE: SUBJECT: MARCH 12, 2007 CMR: 168:07 PRIORITIZATION OF POTENTIAL PARK PROJECTS UTILIZING PARK DEVELOPMENT FEES FROM THE FINANCE COMMITTEE MEETING OF FEBRUARY 21, 2007 RECOMMENDATION The Finance Committee recommends by a 3-1 vote (Mossar, "no") that the Council: 1) Approve the use of development impact fees for the top ten ranked 2006-2011 park improvement projects (Attachment A); and 2)Consistent with the prioritized list, direct staff to proceed with the planning and development of proposed park projects as funds are available from the Park Development Fee Fund. BACKGROUND On March 25, 2002, Council adopted an ordinance (Ordinance 4742 creating Chapter 16.58 of the PAMC) to establish development impact fees for parks, community centers and libraries (CMR: 188:02) under the provisions of California Assembly Bill 1600. Park development impact fees are legally required to be expended to augment recreational opportunities through the improvement of parks in order to compensate for increased demand for City facilities and services brought about by new residential and commercial development. ’The ordinance became effective April 24, 2002, and applied retroactively to those project applications receiving final approval after January 28, 2002. As of December 31, 2006, the balance of accumulated development impact fees for parks was $1,628,497. After Council established the development impact fee ordinance in 2002, staff has worked with community groups, recreation clubs and the Parks and Recreation Commission to study strategies for enhancing park and recreational facilities in order to mitigate for increased usage caused by new development. The attached list of proposed park projects, including three projects that have been previously approved by Council, include the renovation of sports playing fields at Cubberley, E1 Camino Park and Greer Park with synthetic turf to increase use by 10 percent to 2 percent; the addition of restrooms at Cubberley, Seale and Eleanor Pardee parks where field and play area usage is notably high; and the addition of lights at the Cubberley Community Center tennis courts to result in an increase in tennis usage by an estimated 30 percent annually. CMR:168:07 Page 1 of 3 The actually funding of each of these prioritized conceptual projects will be reviewed and approved by Council as part of the annual Capital Improvement Program budget. Each project will be described in detail in the Capital Improvement Program budget document together with the amount of park development fees that will be used and the amount of grant funding or matching partnership contributions, if any. FINANCE COMMITTEE REVIEW AND RECOMMENDATIONS At its February 21, 2007, meeting the Committee voted 3 to 1 to recommend to Council the approval of the use of developmental impact fees for the top ten 2006-2011 park imp(ovement projects, and consistent with the prioritized list, that staff be directed to proceed with the planning and development of proposed park projects as funds are available from the Park Development Fee Fund (CMR:146:07). The Committee reviewed and discussed the evaluation criteria that were used to rank the potential projects and approved the list (Attachment A) with two additional criteria: 1) Does the project upgrade existing facilities?; and 2) Does the project create efficiency or result in lower maintenance or operation costs? Council Member Mossar suggested adding a criterion to consider the project’s ability to make it easier to access parks or for visitors to get to existing parks and facilities. This suggestion failed to gain a second from other Committee members. RESOURCE IMPACT The development of new or expanded parks or City recreational facilities will result in some increased operational and maintenance expense. Development impact fees may not be used for the operation or maintenance of facilities or programs. The anticipated annual maintenance expense required for new restroom facilities is estimated at $5,000 per restroom. The annual maintenance expense for the Greet Park expansion (Phase IV) is estimated at $9,000.. The renovation of playing fields, replacing irrigated turf with synthetic turf, and thereby eliminating mowing, fertilizing, de-thatching and irrigating costs, would result in an annual operational saving to the City estimated at $30,000 per field. Anticipating that the turf surface must be replaced every eight to ten years at a cost of approximately $350,000 per field, the net savings is neutral. The renovation of fields with synthetic turf will, however, result in significant increase in efficiency by increasing the number of playable days each year the fields would be accessible for field spdrts. POLICY IMPLICATIONS This report does not represent any change to existing City policies. Improvement and enhancement of City parks and facilities is consistent with policy C-22 of the Community Services element of the Comprehensive Plan: Design and construct new community facilities to have flexible functions to ensure adaptability to the changing needs of the community; and Policy C-24: Reinvest in aging facilities to improve their usefulness and appearance. CMR: 168:07 Page 2 of 3 ATTACHMENTS Attachment A:Prioritization of Potential Park Projects Attachment B:Except of Minutes of the Parks and Recreation Commission July 25, 2006, Regular Meeting Attachment C:Except of the Minutes of the Finance Committee February 21, 2007, Regular Meeting PREPARED BY: ’,G BETTS Space and Parks Division manager DEPARTMENT HEAD: CITY MANAGER APPROVAL:\ E~i~LY HARRI~$QN Assistant City Manager CMR:168:07 Page 3 of 3 C~ m z z o0 --I Z =: ATTACHMENT B APPROVED MINUTES PARKS & RECREATION COMMISSION REGULAR MEETING July 25, 2006 City Hall 250 Hamilton Ave Commissioners Present: Commissioners Absent: Jeanette Marquess, Paul Losch, David Charleson, Pat Markevitch, Anne Warner Cribbs, Judith Steiner Beth Trailer Others Present:Liaison Peter Drekmeier Staff Present:Catherine Bourquin, Rob de Geus, Paul Dias CALL TO ORDER:Meeting called to order by Chair Marquess at 7:00 pm ROLL CALL:Conducted by Catherine Bourquin AGENDA CHANGES, REQUESTS, and DELETIONS: ORAL COMMUNICATIONS: Herb Borock, PO Box 632, PA would like to have included the history of water recreation included in the City Council Colleagues Memo dated June 25, 2006. Requesting direction to the PARC. BUSINESS: 1.Approval of Draft Minutes of June 20, 2006 The Commissioners unanimously approved the June Minutes with three corrections. 6 approved:l abstention (Cribbs) Golf Feasibility Study-Fields Report Discussion Commissioner Chair Marquess opened up the discussion on the Golf Feasibility study. Craig Allen a representative of the Golfing Community reminded the commission of what the report recommended. "Not now, not enough money, don’t do any harm." He requested that the Commission recommend the same. Commissioner Marquess thanked Commissioner Losch draft recommendation to Council. She also apologized to the July 25, 2006 Approved Park and recreation (2ommission Minutes on writing the Commission for not Page ATTACHMENT B getting it into the packet for them to review before the meeting. minutes to review the draft recommendation. APPR 0 VED They took a few The recommendation report was discussed with input from all commissioners. It was the consensus that there were multiple conflicting options and not enough information to recommend anything. Commissioner Marquess and Commissioner Losch will revise the report to include what was discussed and hopefully come back next month as an action item. Impact Fees - Staff prioritization - ACTION ITEM Staff Dias reminded the Commission that at the last PARC commission meeting in June, the commissioners reviewed a potential list of projects to be funded through the use of Impact fees. It was requested of Staff to prioritize a list of potential short term projects that could be implemented during the City Capital Improvement Program as funding becomes available. This list was provided to the Commissioners in their July packets. ¯ Commissioner Losch asked the question of artificial turf on PAUSD owned lands. Staff Dias replied that the city would enter into discussion with PAUSD under the ’Cooperative Maintenance Agreement’ and could conceivably share on a 50/50 basis. More opportunities in the future for interest in this. ¯Commissioner Charleson inquired on the budgeted dollars and it seems as though the city will be overspending in 07/08. StaffDias replied that we are anticipating the amount and that we are counting on grant money to fund some projects. ¯Commissioner Losch asked a policy question "With the anticipated artificial turf sites, can we consider putting lights on them?" Staff Dias replied that we will have discussions on this issue. PARC will review potential sites as they come up and do outreach to the community for feedback. Motion: To approve the prioritization of impact fees as submitted. Motioned by Commissioner Markevitch and seconded by Commissioner Charleson. Approved: 6:0 July 25, 2006 Approved Park and recreation~2ommission Minutes Page Excerpt of the Draft Minutes of the Finance Committee February 21, 2007 Regular Meeting Special Meeting February 21, 2007 Chairperson Kishimoto called the meeting to order at 7:03 p.m. Conference Room, 250 Hamilton Avenue, Palo Alto, California. Present:Beecham, Klein (arrived at 7:08 p.m.), Morton, Mossar 1. Oral Communications in the Council None Status of Audit Recommendations (Street Maintenance Audit continued from November 7, 2006) City Auditor Sharon Erickson Said the Auditor’s Office issued a report in November 2006 on the status of auditor recommendations. Of the 21 recommendations made for the street maintenance audit, four were completed and progress had been made on 17 others. This is an informational report. No action required. 3. Prioritization of Potential Park Projects Utilizing Park Development Fees Manager Open Space and Parks Division Greg Betts said development impact fees were adopted by the Council five years prior for three separate purposes: parks; community centers; and libraries. The focus of the meeting related to development fees allocated for park projects; however, staff anticipated returning to the Finance Committee in the coming months to discuss the impact fees for libraries and community centers respectively. Impact fees were intended for mitigating development, the expansion population, the impacts on overuse of public parks, and in order to be able to expand recreational opportunities. The impact fees were not designed to be used to pay maintenance costs or general operational expenses, but rather to expand or mitigate the impacts on parks. A number of public meetings were held as well as interaction with a diverse group of park users to determine what the demands of the community was in terms of being able to expand the use of the parks and be able to mitigate for 02/21/07 FIN: 1 Excerpt of the Draft Minutes of the Finance Committee February 21, 2007 Regular Meeting development. CitY staff in consultation with the Parks and Recreation Commission (PARC) developed .a set of criterion to determine which projects had the greatest benefit for the public, would service the greatest number of users, and offer the best leverage for external funding. The criterion included: Council direction; a legal mandate; the public’s need as demonstrated by different user groups or interests; health and safety benefits; PARC’s priorities; external funding sources; the ability to mitigate for impacts caused by new development; and the estimated project cost/benefit ratio. In evaluating the list of potential projects, the two greatest needs were: 1) adequate playing field space for soccer, rugby and lacrosse; and 2) convenient public restroom facilities at neighborhood parks where field sports were played. By converting popular fields at the Cubberley Community Center, Greer Park, and El .Camino Park from natural grass to synthetic tuff, the fields would endure a full schedule use of play and would not require renovation every year or closure of the fields for the six-week re-seeding period. Presently seven of the City’s parks had restrooms, which allowed teams to stay in the area for longer periods while they either practiced or played full league games. Staff also reached out to other recreational groups including the tennis community. One proposal being looked at was the idea of providing lighting at the Cubberley Community Center to allow tennis players to play in the dusk and evening hours. Vice Mayor Klein asked how effective synthetic fields were. Director of Community Services Richard James said the entire Mayfield project cost approximately $2.5 million, with $750,000 of that going towards the playing fields. Council Member Mossar said at replacement time the entire fields were not replaced because the substructure was still in place. Mr. James said that was correct. The replacement of the turf equated to approximately $350,000. Council Member Mossar asked who developed the criterion. Mr. Betts said the criterion was developed by staff and the PARC. Council Member Mossar clarified the criterion had not been seen or approved by the Council. Mr. James said that was correct. Council Member Mossar said if one of the criteria for selecting a project was based on the PARC’s priority setting, the system was flawed. The PARC was advisory to the Council not to staff. Chairperson Morton asked whether Council Member Mossar envisioned the PARC making the presentation for park development fees. 02/21/07 FIN: 2 Excerpt of the Draft Minutes of the Finance Committee February 21, 2007 Regular Meeting Council Member Mossar said the fact the item had come to the Council through staff was a strange process. ~ Mr. Betts said part of staff’s recommendation was to have the Council review the criterion and provide feedback on whether they were appropriate. Council Member Mossar said attachment ’A’ of the staff report (CMR:146:07) included a set a recommendations for projects. If the Council did not agree on the criterion then all of staff’s work to identify Projects would be a wasted effort. Mr. Betts said the bylaws of the PARC stated the Commission was to review Capital Improvement Program (ClP) projects each year. Council Member Mossar said the PARC should review CIP projects through the lens of Council established criterion not something that City staff and the PARC decided on their own. Relative to the criterion, it was important to look more towards upgrading usefulness of existing facilities as opposed to building new ones. It was also important to include a project as highly ranked when cost savings were involved. She expressed concern about planning for access to facilities and was opposed to approving a project that would create traffic in places where no alternatives existed. Chairperson Morton said he understood from Council Member Mossar three potential criteria: 1) upgrading existing facilities; 2) a cost savings; and 3) facility access. Council Member Mossar said to the extent staff wanted to put facilities in areas where there were minimal alternatives then perhaps the project would need to include planning and the infrastructure work that would enable people to get to a place without driving. Vice Mayor Klein said he did not see the Arastradero Preserve on the list; however, he recalled the City spent some money on it in the 2006-07 fiscal year. Mr. Betts said that was correct. Vice Mayor Klein asked why the Arastradero Preserve was not in the same category as the Mayfield site. Mr. Betts said the opinion from the Nexus Study indicated park development fees were not to be used in open space. They were to be used in neighborhood parks or other parks such as Rinconada or Mitchell. Vice Mayor Klein asked whether there was legal opinion that stated the money could not be used for open space. Director of Administrative Services Carl Yeats said at the time of the Nexus Study it was the legal opinion shared by the City Attorney. However, based upon the amount of residential development that had occurred staff may want to shift the formulas for parks, 02/21/07 FIN : 3 Excerpt of the Draft Minutes of the Finance Committee February 21, 2007 Regular Meeting libraries and community facilities in order to consider open space. He believed the exclusion of open space in the Nexus Study was based upon the number of countable visits to each facility. Mr. Betts said a neighborhood park tended to have more residents from within the vicinity whereas an open space area such as Arastradero or the Baylands was more regional in nature and served a broader audience. Vice Mayor Klein noted Jordan Middle School was not on the list and asked how it fit into the criterion. Mr. James said both Jordan and JLS Middle Schools might fit into the criteria; however, they were on school lands not city lands. JLS was in need of work on its playing fields because it had a lot of use. Jordan’s issue related to noise rather than field usage. Vice Mayor Klein said he believed Jordan’s problem was also the lack of restroom facilities. Mr. James said the lack of restroom facilities applied to most of Palo Alto’s parks. Vice Mayor Klein asked whether there was partnership with the Palo Alto Unified School District (PAUSD) to construct restroom facilities. Mr. James said no. The City did however have an agreement with Terman Middle- School for use of its restrooms on the weekends. Vice Mayor Klein questioned whether that would be feasible at Jordan. Mr. James said it was possible. Chairperson Morton asked whether it would also be feasible at JLS. Mr. James said it had not been an issue at JLS because Mitchell Park was close by and had a full set of restrooms. Council Member Beecham said while the Council was being asked to review the criterion, he did not have any issues in that regard. He did note the staff report (CMR:146:07) did show the cost benefit ratio analysis. He asked whether staff’s potential park projects were listed on a prioritized basis. Mr. Betts said yes. Council Member Beecham recommended the Cubberley Community Center and Greer Park synthetic turf items be moved ahead of the tennis court lighting project. He believed the synthetic turf would enhance the usability of the playing fields throughout the year. 02/21/07 FIN :4 Excerpt of the Draft Minutes of the Finance Committee February 21, 2007 Regular Meeting Council Member Mossar asked whether the projects were listed in priority order or whether they simply listed the number of projects that could be built given the amount of money in the account. Mr. James said the projects were listed in priority order given the expressed needs from the public; however, there were not enough funds in the account to do them all. Chairperson Morton asked whether either of the synthetic turf projects had a CIP number. Mr. James said the Cubberley field synthetic turf project had a CIP number. Staff had been working with the National Football League (NFL) to try and obtain a grant to help fund the project. Chairperson Morton asked whether completion of the projects was determined by staffing and other seasonal issues. Mr. James said the proposed park projects were in addition to the Infrastructure Management Plan (IMP) projects that presently existed within parks. Council Member Mossar asked whether all of the proposed park projects had CIP numbers. Mr. James said no. Mr. Yeats recalled replacing the grass with synthetic turf was not part of the original IMP. Council Member Mossar asked if the Council were to approve all the projects would they be given CIP numbers and placed in the CIP budget. Mr. James said no. CIP numbers would be given only to those projects that fit into the CIP’s budget for the coming two years. Council Member Beecham said the projects would use development fees as the funding source. Mr. James said the project would be given a CIP number and would stay in the CIP funding source although impact fees and grants may be used. Council Member Beecham said he was satisfied with the proposed park projects as presented by staff. He asked CouncilMember Mossar if she were to include other criteria would she prefer to send the item back for further review. Council Member Mossar said no. She would like to see a set of criterion formally established and discussed, and adopted by the Council. She did not see the criterion 02/21/07 FIN:5 Excerpt of the Draft Minutes of the Finance Committee February 21, 2007 Regular Meeting formulated by staff as being adequate to the task. While she did not have a concern about the list of projects, she had previously expressed through colleagues memos and the Council had agreed that things such as improving non-vehicular access to the Baylands would be a great benefit. She would have liked to see staff’s recommendation include spending money to enhance the City’s recreational opportunities by making it easier for people to get to places already established. The PARC had been focused on recreational opportunities as well as meeting the growing recreational needs of the community, which was reflected in the list of proposed park projects. She asked whether projects were placed in the CIP budget after they were adopted by the Council. Mr. Yeats said yes. The CIP budget went out five years. When the Council adopted the City’s budget they were adopting the first year as an adopted budget, the second year was in concept, and year’s three through five were ready to be scheduled. The proposed park projects would go out five years unless their completion went beyond that timeframe. Council Member Mossar said because impact fees were being collected the Council should receive an annual status report on impact fees. She asked at what time the Council would see the reporting of impact fee monies spent and unspent, the balance left, and the balance needed to complete CIP projects waiting for funding. Mr. Betts said the previous reporting went to the Council in July 2006. If requested, it was possible to work with budget staff to integrate together with the dollars and cents how much money went in and how much was spent. Council Member Beecham clarified the City had approximately $1.6 million in the CIP fund which included the proposed park projects, and an unspecified $1 million land acquisition for a total of almost $3 million. He presumed impact fees would be. collected from the Arbor Real site (former Hyatt Rickey’s), the Campus for Jewish Life site, and Bridge Housing which would help add to the $1.6 million. Mr. James said yes. Vice Mayor Klein referred to attachment ’A’ of the staff report (CMR:146:07) and inquired aboul the fund balance as of January 2007, the sum of committed projects, and the current balance. Mr. James said the net balance was currently $941,000. Council Member Beecham asked whether the $687,000 was earmarked for the proposed park projects or other projects. Mr. James said it was earmarked for the proposed park projects listed in attachment ’A’. Council Member Mossar believed there ought to be a process that allowed the Council over time to make trade-offs. She expressed concern that the only way to get the 02/21/07 FIN: 6 Excerpt of the Draft Minutes of the Finance Committee February 21, 2007 Regular Meeting proposed park projects done as well as other things the Council and the community deemed important was to manage the impact fees carefully. Mr. James said one difficulty in managing impact fees was the five year horizon that was in place. If the City received $1 million today it would have to be spent within five years, which made it impossible to create a huge pot of reserves. Council Member Mossar said the Council would always have many more ways to spend the money which was why there needed to be some sort of information management tool. Mr. Yeats said staff had the ability to run a report in SAP of all the ClP projects by fund and inform the Council what was scheduled to be paid for out of all the impact fees. Council Member Mossar said perhaps that was something the Council should get. Chairperson Morton said staff provided that information to the Council in a ClP report, which was produced bi-annually. Staff also provided an annual summary of what the balances were and what expenditures occurred. Assistant Director of Administrative Services Lalo Perez agreed the Council needed to know what was in the adopted budget and what would be spent out in years two through five so the projects could be prioritized and indicate which ones were fully funded and which required additional funding. Chairperson Morton clarified the first three projects: Stanford/Palo Alto Fields; Heritage Park play structure; and Greer Park Phase IV had already been approved by Council, included in the budget, and were scheduled to begin in the coming months. Vice Mayor Klein asked whether staff had a schedule of what was anticipated for additional funds for the next two years. Mr. Yeats said staff did a projection which approximated to $5 million in five years. Council Member Beecham asked whether that was new monies. Mr. James said no. It was the total amount, or an additional $3.5 million. Recently the Quimby Act came into play which was more beneficial than park development fees for large developments. Mr. Yeats said he could not recall whether the $5 million was the total of parks, library and community centers combined. Mr. James said the $5 million related just to parks. Vice Mayor Klein asked whether staff had anticipated another $1 million in the 2007-08 fiscal year. 02/21/07 FIN: 7 Excerpt of the Draft Minutes of the Finance Committee February 21, 2007 Regular Meeting Mr. Yeats said he was unsure but he believed the impact fee was $1 million for the first year and then it would spread out over the next two years before it dropped off. He indicated there were other projects in the pipeline that would generate the same types of funding. Vice Mayor Klein said based on the numbers there were not enough funds to put the two synthetic turf projects ahead of the tennis court lighting at Cubberley. Council Member Beecham said he understood from staff there was approximately $5 million forthcoming in the next two years that would cover the synthetic turf projects with a surplus of nearly $2 million. Mr. James said that was correct. The ten proposed park projects were in a timeframe of approximately seven years of work to fit it into a work plan. Council Member Beecham clarified both turf fields would not be done at the same time. Mr. James said that was correct. Council Member Mossar said the preceding conversation was exactly why there needed to be some kind of reporting that allowed the Council to manage the use of those funds. Vice Mayor Klein asked if the monies were readily available why the projects could not be done within a year: Mr. James said City staff was already engaged in IMP projects for the next four or five years. To complete all the proposed park projects in a year would require hiring additional staff and consultants. Vice Mayor Klein said he presumed the synthetic turf project would be contracted out. Mr. James said yes, but it still required a project manager. Chairperson Morton asked if staff had any high expectations for the NFL grant. Mr. James said he was unsure what stage the process was in. PARC Commissioner Anne Cribbs had been working on it. Chairperson Morton said perhaps staff could move the Cubberley synthetic turf project above the tennis court lighting in order to fund them both from existing CIP funds. The Greer Park soccer field project could wait until more funding came in. Council Member Beecham asked if there was much distinction in the prioritization of the park projects if staff anticipated receiving $5 million within a couple of years, other than limited by project management. 02/21/07 FIN :8 Excerpt of the Draft Minutes of the Finance Committee February 21, 2007 Regular Meeting Mr. Yeats said staff had been working on the ClP document and prioritizing the entire workload. Moving the items up or down on the list made little difference. Council Member Mossar’s idea of having the Council come back and look at where CIP projects were, what staff had anticipated, and scheduling items into the future based upon park impact fees made a lot of sense. Council Member Mossar said the proposed park projects seemed recreationally driven which she had no particular interest in. She understood the community had a recreational improvement need; however the proposed list did not include what she felt should be included to make it more diverse. As an example, Palo AIto’s dog parks were less than modern. The fact that dog owners had not lobbied the PARC for recreational opportunities for families with dogs did not mean that staff was not obligated. She expressed concern there was not a mechanism for broadening the perspective of the proposed projects list. Mr. James said staff felt constrained by the Nexus Study and what the money could be used for. While the monies could not be used to improve an existing dog park, it could possibly be used to create a new one because of new development and a larger dog population. Council Member Mossar said just as new facilities were created at Greer Park, it was Council’s choice to select those facilities. Council Member Beecham recalled the Council did discuss the desired uses for Greer Park. Council Member Mossar said her concern was that the park funds were being driven toward recreational uses while there were other things that merited attention. Chairperson Morton asked whether the Finance Committee should direct staff to request another opinion from the City Attorney Council Member Mossar said no. She wanted to express her opinion about the list of proposed park projects, the criterion, and the process being used over time was not diverse enough to meet the kinds of park related needs of the community. Mr. Betts said one of the criteria had been the number of users or public need. It was less related to recreational needs and more towards how many people it would serve. Council Member Mossar she wondered if the PARC knew how many families in Palo Alto had dogs. MOTION: Vice Mayor Klein moved, seconded by Morton that the Finance Committee recommends to the City Council: 02/21/07 FIN:9 Excerpt of the Draft Minutes of the Finance Committee February 21, 2007 Regular Meeting 2)Recommend to Council the approval of the use of development impact fees for the top ten 2006-2009 park improvement projects; and 3)Consistent with the prioritized list, direct staff to proceed with the planning and development of proposed park projects as funds are available from Park Development Fee Fund. Vice Mayor Klein said CIP funds were not the only source of funding for park projects. It was funds received from development fees. There was already a process in place that allowed the Council to spend monies as the need arose during the budget process. Council Member Mossar believed it was important to diversify the ways monies were being spent from CIP funds. She was opposed to the motion. INCORPORATED INTO THE NOTION WITH THE CONSENT OF THE MAKER AND SECONDER to add to the list of criteria 1) upgrading an existing facility and 2) cost benefit analysis. Vice Mayor Klein said he was not convinced that synthetic turf resulted in a cost savings. Council Member Mossar recalled the organization ’Got Space’ did a study on synthetic turf and in terms of staff maintenance and the amount of water saved believed it was cheaper than natural grass. Mr. James said synthetic turf versus natural grass would almost be cost neutral; however, the environmental savings was great. Vice Mayor Klein said he was not opposed to using synthetic turf, but he did not want to see the Council over promise the public. Chairperson Morton asked whether his understanding was ’cost savings’ should not be added to the criterion. Vice Mayor Klein said the impact of ongoing maintenance was a reasonable category. While he did not have a problem with the concept he did have a problem with the idea it would produce a cost savings. Council Member Beecham said perhaps the term should be a cost benefit which was an overall cost. Chairperson Morton noted Council Member Mossar proposed adding facility access to the criterion. He asked whether that was acceptable to the Committee. NOTION PASSED 3-0, Mossar no. 02/21/07 FIN: 10 Excerpt of the Draft Minutes of the Finance Committee February 21, 2007 Regular Meeting 2006-07 Adjusted Budget - Second Quarter (Q2) Financial Results, Midyear Amendments and Capital Improvement Program Status Budget Manager David Ramberg said the City budget at the midyear point for 2006-07 fiscal year was stable and balanced. The contribution to the Budget Stabilization Reserve (BSR) in the General Fund was approximately $1.4 million at present. In the General Fund, detailed in Exhibit A of the staff report (CMR:141:07), overall revenues were at $50 million which represented 44 percent of the budget. Major revenue changes included an increase in property tax by three percent to $21.1 million, which was the result of an increase in commercial and residential activity. Despite declines in the state and national housing market, Palo Alto had increases in its property rolls. Sales taxes were up one percent to approximately $21.3 million which was attributed to increased sales in economic segments, such as electronic equipment, retail stores, and auto purchases. The transient occupancy tax (TOT) had increased by 4.7 percent to a total of $6.7 million. Palo Alto had increases in average hotel occupancy and room rates. On the expenditure side, expenditures were presently at $61 million or 55 percent of the budget. At the midyear point it was typical for revenues to lag behind expenses. This was primarily due to a lag in tax revenue collections; however, by the end of the fiscal year revenues would exceed expenditures as was usually the case. Major expense changes included an increase in overtime, which was at 83 percent of the budget. Overtime was primarily due. to disability leaves and staff vacancies in the Police and Fire Departments. By year end those expenses would be offset by a savings in salaries and benefits. The other major change in the General Fund was $268,000 which was being put towards temporary and contract staffing support in the Planning Department to support workload associated with major new construction projects. That expense would be offset by an increase in permit fee revenues. There were various grant supported expenses outlined in Exhibit A of the staff report (CMR:141:07)that were primarily focused in the Community Services, Library, and Police Departments. In the Enterprise Funds, there was a $4 million decrease in gas commodity purchases due to lower consumption in the Gas Fund, and an $800,000 increase in the Water Fund due to water rate increases. Highlights of the City’s Capital Improvement Program (CIP) changes were detailed in Exhibit B and Attachment 2 of the staff report (CMR:141:07). There was an increase in the street maintenance CIP by approximately $528,000 which reflected revenue from State Proposition 42 Traffic Congestion Relief Fund (TCRF). There were other funding increases for parks and open space CIP’s. The overall impact to the BSR remained healthy at $25.2 million as a result of the $1.4 million increase. At 19 percent, the BSR rate was within the Council’s approved range of 15 to 20 percent and above the target of 18.5 percent. The Infrastructure Reserve (IR) had a balance of $12.8 million at the midyear point. Vice Mayor Klein said based on his calculations staff had projected $1.9 million more in revenue than was in the adopted budget. Mr. Ramberg said that was correct. Vice Mayor Klein asked why there was not a comparable figure on the expense side. 02/21/07 FIN: 11 Excerpt of the Draft Minutes of the Finance Committee February 21, 2007 Regular Meeting Mr. Ramberg said staff had not indicated they were increasing expenses at the midyear point. Vice Mayor Klein asked what the projected figure would be and whether they were on target. Mr. Ramberg said staff believed the figures were in line with the Long Range Financial Forecast (LRFF) which was generated in December 2006. In the LRFF, staff forecasted approximately $1 million as surplus in the General Fund after $1 million was contributed to the IR and after taking into account some of the anticipated retiree medical costs. Vice Mayor Klein said he presumed the calculations were done prior to the midyear which showed $1.9 million in additional revenue. Chairperson Morton asked whether staff envisioned expenses for the $1.9 million would be adjusted by $650,000 so the net increase would be $1.4 million. Mr. Ramberg said yes. Chairperson Morton said out of the $1.4 million, allocations would be made to retiree medical benefits with $1 million to the IR. Vice Mayor Klein said that was a decision the Finance Committee would make. Council Member Beecham said he understood the construction cost index had risen for more than expected and some jobs were being re-bided, such as the wastewater pipeline. He asked what the status was on that project. J Director of Administrative Services Carl Yeats said once an award of contract was issued a budget amendment ordinance (BAO) was sent to the Council asking for more money for the CIP. Presently, staff was unsure what that amount would be. Chairperson Morton asked staff when the award of contract would occur. Council Member Beecham said the broader issue related to a number of the CIP projects. There were monies allocated for whatever stage in the process projects were at, but the amount of monies needed today would not be enough for tomorrow. He believed there had to be a major ’true-up’ coming on. Director of Public Works Glenn Roberts said staff had seen cost increases in projects over the past one to two years in the range of 20 to 30 percent as compared to the Consumer Price Index (CPI) of four to five percent. The overall ’true-up’ was in updating the cost estimates and coming back with a major update of the City’s inventory. 02/21/07 FIN: 12 Excerpt of the Draft Minutes of the Finance Committee February 21, 2007 Regular Meeting Council Member Mossar said while the financial report indicated the amount may be $1.4 or $1.9 million, in actuality the figure was inaccurate because there were a number of pending obligations. She concurred with the recommendation of Mr. Yeats as what to do with the monies. To do anything else would not be prudent fiscal management. Vice Mayor Klein said there were a variety of CIP projects, and the Council still had choices to make. NOTION: Vice Mayor Klein moved, seconded by Council Member Mossar that the Finance Committee recommend to the City Council to adopt the attached Budget Amendment Ordinance (BAO) (Attachment 1) and Resolution, which includes: a. Proposed midyear adjustments to the 2006-07 Budget for the General Fund, Enterprise Funds, Special Revenue Funds, Internal Service Funds, and Capital Improvement Projects Fund (Exhibit A) b.2006-07 Midyear CIP Adjustments (Exhibit B). c.Amendments to the 2006-07 Adopted Municipal Fee Schedule (Exhibit C). d.Amendments to the 2006-07 Table of Organization (Exhibit D). e.Amendments to the 2006-07 Compensation Plan (Attachment 4). The 2006-07 midyear Capital Improvement Program (CIP) Projects Status Report is attached as an informational item (Attachment 2). A list of continuous projects follows this summary (Attachment 3). No action is. required on these two items. Staff also recommends the Finance Committee review and comment on the preliminary financial condition of the City as of December 31, 2006 (Exhibit A to BAO). Council Member Beecham referred to Exhibit D of the staff report (CMR:141:07), the Table of Organization. He noted the changes in some positions and a net addition of one staff at the water treatment plant, and agreed the recommended changes were appropriate. The issue of increased costs on construction, labor, and overtime were items the Council would delve into in April 2007 for the coming year. Vice Mayor Klein asked whether the Finance Committee would receive another update on the numbers during the budget hearings. Assistant Director of Administrative Services Lalo Perez said staff could provide a third quarter (Q3) report to the Council. MOTION PASSED 4-0. Chairperson Morton asked where the item would go on the Council’s agenda. Mr. Yeats said the item would go on the Consent Calendar. 5. Discussion for Future Meeting Schedules and Agendas 02/21/07 ’FIN: 13 Excerpt of the Draft Minutes of the Finance Committee February 21, 2007 Regular Meeting Chairperson Morton announced the budget hearings would occur on Tuesdays and Thursdays beginning April 17, 2007. Director of Administrative Services Carl Yeats said the March 6, 2007 Finance Committee meeting would be cancelled because there were no items. The meeting of March 20, 2007 would include the final version of the Business Registry Fee (BRF) with the hope of being able to move forward on it so it could be included in the July 1, 2007 implementation budget. The meeting would also include the Citywide Transportation Impact Fee. He noted one correction to the budget hearing schedule; adoption of the budget was scheduled for June 11, 2007. Chairperson Morton noted he would not be present for the May 10, 2007 Finance Committee meeting. ADJOURNMENT: The meeting adjourned at 9:15 p.m. NOTE: Sense minutes (synopsis) are prepared in accordance with Palo Alto Municipal Code Sections 2.04.180(a) and (b). The City Council and Standing Committee meeting tapes are made solely for the purpose of facilitating the preparation of the minutes of the meetings. City Council and Standing Committee meeting tapes are recycled 90 days from the date of the meeting. The tapes are available for members of the public to listen to during regular office hours. 02/21/07 FIN:14