HomeMy WebLinkAbout2001-06-11 City Council (6)City of Palo Alto
City Manager’s Report
TO:HONORABLE CITY COUNCIL
FROM:CITY MANAGER DEPARTMENT:ADMINISTRATIVE
SERVICES
DATE:JUNE 11, 2001 CMR: 277:01
SUBJECT:ADOPTION OF THE 2001-03 BUDGET AND APPROVAL OF
A BUDGET ADOPTION ORDINANCE, INCLUDING THE
2001-03 CAPITAL IMPROVEMENT PROGRAM, CHANGES
TO THE MUNICIPAL FEE SCHEDULE, UTILITY RATES
AND CHARGES, AND CHANGES TO COMPENSATION
PLANS
RECOMMENDATION
Staff recommends that the City Council approve the following:
¯ 1. The Budget Adoption Ordinance (Attachment 1), which includes:
a. The City Manager’s Proposed 2001-03 Budget (Exhibit A previously
distributed).
b. All changes detailed in the "Amendments to the City Manager’s Proposed
2001-03 Budget" (Exhibit B).
c. Proposed 2001-02 Municipal Fee Schedule (Exhibit C previously
distributed).
d. Re*ised pages to the Table of Organization (Exhibit D).
e. Amendments to the Proposed 2001-02 Municipal Fee Schedule (Exhibit E)
2. Utility Rate Schedule Resolution to increase Electric Utility Rates (Attachment 2).
o
Resolution Amending the Compensation Plan for Classified Personnel. (Service
Employees’ International Union, Local 715) (Attachment 3).
Resolution Amending the Compensation Plan for Management and Confidential
Personnel and Council Appointed Officers (Attachment 4).
5.City of Palo Alto General Fund Reserve Policy and Proposed Changes to the City’s
Reserve Policy (Attachment 5).
CMR: 277:01 Page 1 of 9
6.Resolution of the Council of the City of Palo Alto determining the calculation of the
Appropriations Limit of the City of Palo Alto for Fiscal Year 2001-02 (Attachment 6).
BACKGROUND
The City Manager’s 2001-03 Proposed Budget (Budget) was submitted to the Council on
May 8, 2001. During the month of May, the Finance Committee held hearings and
reviewed the Budget, including the General Fund and Enterprise Fund Capital
Improvement Program and the Municipal Fee Schedule. The Finance Committee also
reviewed a rate increase in the Electric Fund. As a result of those hearings the Finance
Committee and staff have recommended changes to the Proposed Budget (Appendix 1).
Attached to this staff report is the Ordinance adopting the 2001-03 Budget and the related
exhibits, attachments and appendices.
DISCUSSION
The changes in Exhibit B as recommended by the Finance Committee and the
adjustments suggested by staff are discussed below. The financial changes proposed for
the General and Utility Funds Proposed Budgets are summarized in Appendices 1, 2 and
3. Recommended changes to departmental key plans and impact measures will be
included in the final budget document.
Finance Committee-Recommended Changes to the City Manager’s Proposed Budget
Shuttle Program/Traffic Calming Program - During the Finance Committee meeting
held on 5/17/01, the following amounts were reallocated from the Council
Contingency to the Planning Department to support the Shuttle Program and the
Traffic Calming Program.
Shuttle Programs
Weekday Crosstown
Downtown Marguerite
TermardGunn corridor
Jordan/JLS extension
Total
2001-02
$52,000
4,000
42,000
72,000
$170,000
Traffic Calming Programs
Mayfield Underpass Access Study
Downtown North Trial
Lytton Study
Total
2001-02
$10,000
85,000
35,000
$130,000
2002-03
$52,00O
4,000
52,000
86,000
$192,000
2002-03
¯ $0
10,000
40,000
$50,000
CMR: 277:01 Page 2 of 9
HSRAP Additional Appropriations - The Finance Committee approved additional
appropriation of $50,743 to the Human Services .Division 2001-02 Proposed Budget.
Of this, $50,000 will be transferred from the Council Contingency as detailed below:
Project Sentinel $ 15,070
YWCA-Youth Community 12,360
Service ~,
Peninsula Association’ of 15,033
Retarded Children & Adults
(PARCA)
Senior Adults Legal Assistance 8,280
Total 50,743
Capital Improvement Program (CIP) - As requested by the Finance Committee,
$20,000 was reallocated from CIP 10207 Roundabout Demons~ation Project to CIP
10026 Local and Neighborhood Collector Street Calming (Appendix 4).
Staff-Recommended Changes to the City Manager’s Proposed Budget
General Fund
¯Residential Parking Permit Program -The Finance Committee reviewed
CMR:229:01 on May 10 and approved the incorporation of program #3 into the 2002-
03 Proposed Budget, with the stipulation that the program must be cost-recovery. Due
to lack of quorum on 5/29101, the Finance Committee was unable to recommend
funding as proposed by staff in CMR:258:01. Staff recommends funding of $357,748
in 2002-03 to begin implementation of the Downtown Residential Parking Permit
Program. Associated revenues in the amount of $495,000 are also included in the
budget to offset the costs.
¯Sales Tax Revenue - The City is receiving, $30,000 in net revenue due to the sales tax
audit reimbursement contract.
Service Employees’ International Union (SEIU) Contract - As noted in CMR:256:01,
the City has negotiated a new three-year contract with the SEIU employee’s
bargaining unit. Included in the budget is an additional $300,000 in 2001-02 and
$600,000 in 2002-03 added to the salary contingency, for classification realignments.
The General Fund portion of this expense is $210,000 in 2001-02 and $420,000 in
2002-03. The remaining amounts have been distributed among the Enterprise Funds.
CMR: 277:01 Page 3 of 9
Utility Users Tax/Increased Street Light Expense - In CMR:249:01, staff
recommended rebating a portion of the Utility Users Tax due to recent increases in
gas and electric rates. After these rebates are taken into account, staff projects
increased revenue of $300,000 in 2001-02 and 2002-03. Also noted .in the staff report,
is an increased expense to the General Fund for street light operations and
maintenance of $143,000 in 2001-02 and $286,000 in 2002-03. Given this Change,
the net result to the General Ftl,nd BSR is an increase of $157,000 in 2001-02 and
$14,000 in 2002-03.
City Attorney Staffing- As presented by the City Attorney at the May 24 Finance
Committee meeting, the Utility department has a need for extensive legal support in
the form of two additional positions related to the PG&E bankruptcy and related
utility issues. The proposed addition of 1.0 FTE Senior Assistant City Attomey and
1.0 Paralegal/Confidential is estimated to cost $228,026 annually, including salary
and benefits, and will be fully funded by the Electric Fund. If at any point the staff is
reassigned to other City issues, there would then be an impact to the General Fund.
Building Inspector - As presented at the May 17 Finance Committee meeting, staff
recommends the addition of 1.0 FTE Building Inspector at an estimated cost of
$75,596 including salary and benefits in 2001-03. This addition is needed to maintain
service levels due to an unexpected increase in building inspection work requests.
This expense is fully offset by a reduction of temporary staff expense.
Community Services - The Finance-Committee recommended for staff to identify
funding alternatives for the design phase of the Children’s Theatre Sound and
Lighting Project. Staff proposes funding this expense from the Community Services
Department operating budget in fiscal year 2001-02. A proposal to fund the
construction phases of this project in future years will be presented to the Finance
Committee as part of the 2002-03 Capital Improvement Program.
Special Revenue Fund
¯ Housing-in-Lieu - Staff recommends an increase of $15,000 to support the Below
Market Rate (BMR) Program administration and consulting services. This amount
was inadvertently omitted from the Proposed Budget.
Local Law Enforcement Services Fund - In 2000-01 the Police Department received
grant funding from Citizens Options for Public Safety (COPS) program to support the
addition of a Police Sergeant position. The funding was deposited in the Local Law
Enforcement Services Fund and a portion was transferred to the Police Department in
2000-01 to cover the costs of adding the Police Sergeant position in the middle of the
fiscal year. The remaining $61,435 .was inadvertently omitted from the Proposed
Budget, and therefore should now be transferred to the Police Department in 2001-02.
CMR: 277:01 Page 4 of 9
Enterprise Funds
Electric Fund
¯Bond Funding of Capital Expense Withdrawn- Staff does not recommend
financing the Electric Fund capital project expense with bond proceeds in the
2001-03 Proposed Budget. As a result, $719,000 in proposed debt service expense
has been removed from the groposed budget.
Backup Electric Generator - Staff recommends the purchase of backup generators
rather than leasing machinery. The 2001-03 Proposed Budget reflects several
changes due to this change, including: removal of capitalized lease expense ($1.25
million), addition of natural gas expense and maintenance expense ($0.6 million),
and the addition of- diesel fuel expense for temporary generators.
Legal Expense/Cost Plan Increase - As noted in the City Attorney section, the
Electric Fund is responsible for the additional legal positions to address issues
relating to the PG&E bankruptcy. This cost is estimated at $228,026.
Additionally, staff proposes establishing a contingency for pending additional
legal council as it pertains to representing the City in the PG&E bankruptcy case,
as well as PG&E’s proposed rate increase filing with the Federal Energy
Regulatory Commission. An additional $805,000 in 2001-02 and $830,000 in
2002-03 have been added to the Electric Fund proposed budget to address these
additional legal expenses.
Strategic Plan Positions - As noted in CMR:223:01, staff recommends the
addition of 1.0 FFE Senior Resource Planner and a reclassification of 1.0 FFE
Market Analyst to Senior Market Analyst to the 2001~03 Proposed Budget. The
Senior Resource Planner is needed to focus on increasing Palo Alto’s influence in
the legislative, regulatory and outside agency arenas. The Senior Market Analyst
reclassification is necessary to retain qualified staff to engage in customer
analysis, performance measurement and technical research on new product
designs. The approximate cost of these additions is $147,546 and will be spread
amongst the Utility Funds.
Gas Fund
As noted in CMR:198:01 of 4/23/01, a proposed increase in CIP 80i7 (Appendix 4) of
$50,000 is necessary for work related to connecting the Gas fired backup generators to
the City system.
CMR: 277:01 Page 5 of 9
Storm Drainage Fund
As a result of the Storm Drainage Fund continuing to operate at a deficit, staff is
increasing the General Fund transfer to the Storm Drainage Fund in 2001-03.
The increase was mostly necessary to augment the Rate Stabilization Reserve to cover
bond covenant requirements. This requires that the Fund reserves have a balance
sufficient to cover debt service payments for the 1999 bond issuance.
Staff has revised the coverage calculation for 2002-03, which results in $200,000 transfer
reduction from the General Fund. The transfer from the General Fund is $1,122,018 in
2001-02 and $917,650 in 2002-03.
Municipal Fee Schedule
Once adopted by Council, the fees in the Municipal Fee Schedule (Exhibit C) will be
effective 7/1/01, with the exception of two development related fees which will not take
effect for 60 days to c6mply with state noticing requirements.
Finance Committee amendments to the Municipal Fee Schedule include (Exhibit E of
Attachment 1):
¯Admission fees to the Children’s Theatre.revert back to the $1.00 - $3.00 range
¯Pool fees revert to 18 and over as the adult age category
¯Cancellation service charge for Recreation, Open Space & Sciences reverts back to
$10.00 for residents.
Staff amendment to the Municipal Fee Schedule includes:
¯A new category in Refuse is added for disposal of television and computer monitors.
The Finance Committee requested information on the breakdown of non-resident versus
resident use of the pools. Recreational swim use for resident versus non-resident during
the high swim season (summer) is approximately 60 percent residents and 40 percent
non-residents. The winter months do not include a recreational swim schedule. Adult lap
swimming shows a lower number of non-residents using the pool. The ratio of residents
to non-residents is 85 percent to 15 percent during the winter season.
The Finance Committee inquired as to why the classroom fee for non-profit on page 21
now the same as the basic rate. These fees were established by Human Resources and,
for consistency, are listed under Human Resources, Training Center Rental, Class Room
H-5 (page 35), as well as under Cubberley Community Center, Facility Rental (page 21).
Fees were set in a median range to (a) support the high quality of amenities in the room,
and (b) be affordable for all types of organizations.
The Finance Committee inquired as to why non-profit rates been raised to the same level
as the basic rate on page 25. Items 1 and 5 are related to reimbursement of staff
expenditures for these services, and the expenditures are consistent for all users. Charges
for Items 4, 6, 7 and 8 are very nominal for expensive pieces of equipment.
CMR: 277:01 Page 6 of 9
The rental fees offset the costs for equipment replacement, maintenance and damage
repairs by user groups. City expense for these items is the same whether they are for
profit or non-profit groups.
General Fund Reserve Policy
The following is in response to an inquiry on current reserve policy and how proposed
changes may incorporate the City,Managers "$22 Million Solution" into the 2001-03
Proposed Budget.
The current reserve policy includes a Budget Stabilization Reserve (BSR), Infrastructure
Reserve and a Reserve for Emergencies. The policy dictates the following parameters:
¯Reserve for Emergencies: The reserve level shall be maintained at roughly 10
percent of General Fund salaries and benefits, or the equivalent of
approximately 30 days of personnel costs.
¯Budget Stabilization Reserve: A reserve level of no less than 10 percent of
General Fund operating expenditures, to a maximum of 20 percent shall be
maintained.
¯Infrastructure Reserve: After funding the Reserve for Emergencies and the
BSR, any balance left is allocated to the Infrastructure Reserve. Because this
reserve is to be used for priority capital projects that will be reviewed by
Council, no maximum level was established. Conversely, because of the
discretionary nature of this reserve, no minimum balance is required.
As part of the "$22 Million Solution" staff proposes to move the funding from the
Reserve for Emergencies (approximately $6.4 million) to the Infrastructure Reserve and
eliminate the Reserve for Emergencies. Staff feels confident that the BSR is sufficiently
funded to absorb emergency needs. The BSR currently has a balance of approximately
$21 million or 19 percent of the 2000-01 Adjusted Budget expenditures.
The Finance Committee recommended a reserve level of no less than 15 percent of
General Fund operating expenditures, to a maximum of 20 percent. The Proposed Budget
includes a reserve level of 18.5 percent of General Fund operating expenditure, s.
Compensation Plans
Several classification changes are requested in the Management and Confidential, and
Classified Compensation Plans. New or changed classifications are included, along with
the accompanying resolutions in Attachments 3 and 4.
CMR: 277:01 Page 7 of 9
RESOURCE IMPACT
The 2001-03 Proposed Budget as submitted to the Finance Committee r~sulted in a total
incre~ase to the General Fund Budget Stabilization Reserve (BSR) of $1.2 million in
2001-02 and $1.6 in 2002-03. Based on changes made as a result of the Finance
Committee hearings and staff recommendations, the General Fund Budget being
forwarded to the Council for adoption increases the Infrastructure Reserve by $0.5
million in 2001-02 and $1.0 millio~l in 2002-03 (Appendix 1). Additional changes to the
Enterprise Funds .Budget result in anet decrease to the Enterprise Funds Reserve of $9.2
million in 2001-02 and $0.6 million in 2002-03 (Appendix 3).
POLICY IMPLICATIONS
These recommendations are consistent with existing City policies.
ENVIRONMENTAL REVIEW
Adoption of the budget does not represent a project under California Environmental
Quality Act (CEQA).
ATTACHMENTS
Attachment 1:
Exhibit A:
Exhibit B:
Exhibit C:
Exhibit D:
Exhibit E:
Attachment 2:
Budget Adoption Ordinance with the following Exhibits:
City Manager’s Proposed 2001-03 Budget
Amendments to the City Manager’s Proposed 2001-03 Budget
Proposed 2001-02 Municipal Fee Schedule
Revised Pages in the Table of Organization
Amendments to the Municipal Fee Schedule
Resolution of the Council of the City of Palo Alto Amending the
Utility Rate Schedules E-l, E-l-G1, E-l-G2, E-l-G3, E-2, E-2,G1,
E-2-G2, E-2-G3, E-4, E-4-G1, E-4-G2, E-4-G3, E-7, E-7-G1, E-7-
G2, E-7-G3, E-8, E-9, E-10, E-11, E-12, E-13, E-14, E-16, E-17 of
the City of Palo Alto Utilities Rates and Charges pertaining to
Electric Rates.
Attachment 3:Resolution of the Council of the City of Palo Alto Amending the
Compensation Plan for Classified Personnel (SEIU) Adopted by
Resolution No. 7782 and Amended by Resolution Nos. 7812, 7837,
7872, 7904 and 7962, to change Certain Salaries and Classifications.
CMR: 277:01 Page 8 of 9
Attachment 4:
Attachment 5:
Attachment 6:
Resolution of the Council of the City of Palo A!to Amending the
Compensation Plan for Management and Confidential Personnel and
Council Appointed Officers Adopted by Resolution No. 7890, and
Amended by Resolution Nos. 7897, 7902, 7907, 7914, 7927, 7945,
7958 and 7966, to change Certain Salaries sand Classifications
Approval of the City of Palo Alto General Fund Reserve Policy and
Proposed Chan’ges to the City’s Reserve Policy.
Resolution of the Council of the City of Palo Alto determining the
calculation of the Appropriations Limit of the City of Palo Alto for
Fiscal Year 2001-02.
Appendix 1:
Appendix 2:
Appendix 3:
Appendix 4:
Appendix 5:
Appendix 6:
Related Staff Reports:
Summary of Changes to the 2001-03 General Fund
2001-03 General Fund Summary and Reserve Balances
2001~03 Utility Fund Summary and Reserve Balances
Capital Improvement Fund Summaries and Amended Projects
Special Revenue Funds
HSRAP Funding
CMR:258:01; CMR:260:01;
CMR:240:01; CMR:216:01;
CMR:229:01 and cMR:249:01
CMR:250:01; CMR:251:01;
CMR:256:01; CMR:.198:01;
PREPARED BY:
Myrna McCaleb, Sen(~r Financial Analyst
DEPARTMENT HEAD APPROVAL BY:
CITY MANAGER APPROVAL:
-~Ai~’--YEAfS, Director
Administr~ive Services
EI~IILY HARRISON
Assistant City Manager
CMR: 277:01 Page 9 of 9