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HomeMy WebLinkAboutApproved Minutes - 2010-04-06 SpecialCITY COUNCIL SPECIAL MEETING MINUTES April 6, 2010 Council President Kristin Johnson called the special City Council meeting to order at 5:35 p.m. on April 6, 2010, in the City Council Chambers, 380 A Avenue. Present: Council President Johnson, Councilors Hennagin, Olson, Moncrieff, Tierney, and Jordan. Mayor Hoffman was excused. Staff Present: Alex McIntyre, City Manager; David Powell, City Attorney; Robyn Christie, City Recorder; Ursula Euler, Finance Director Budg t Com. Present: Ron Smith, Chair; Kelly Calabria, Daniel Williams, Frank Bearden, Kent Studebaker, Jeff Gudman. 3. STUDY SESSION 3.1 Financial Update Ms. Euler presented the financial update for the first eight months of the year, through February 28, 2010. She discussed the City revenues in particular (p.1). She reported that the property tax collection was on track for the year in comparison to the budget (p.2). She mentioned that she felt comfortable using the 94% collection rate of FY2010/2011 as an assumption in the FY2011/2012 budget. She indicated that they were also on track with delinquency collections from previous years (p.2). She reported that the economic situation was affecting the City's franchisees, resulting in lagging revenues (p.2) and less money paid to the City in fees. However, the overall fees were down less than 1 %, so it was a minor impact. She discussed the intergovernmental revenue stream (p.2-3), noting that cigarette taxes were down while liquor taxes were up. She reported that the Library District was collecting about $80,000 more for Lake Oswego than it had expected to collect. She indicated that the other intergovernmental revenues were on track (p.3). She reported that a closer examination of the data found that the City's licenses and fees were lagging (p.3), although the Building Permit Center was forecasting healthier revenues than initially anticipated. She indicated to Councilor Olson that she could look into whether the Parks & Rec fees seasonal pattern was different from other years. She noted that fines and forfeitures were holding, while miscellaneous revenues were lagging a little (p. 3). She indicated that the in direct interdepartmental charges were on track, although the sale of the 619 Maple Street property would not go through this year. She indicated to Councilor Olson that staff did not budget for an insurance reimbursement of this size (p.3). She explained that it was unusual and they could not expect it in future years. She commented that the City preferred the insurance company to charge an appropriate premium that avoided such large reimbursements, but Pacific Source's premium calculation methodology allowed for the possibility of large reimbursements. Mr. McIntyre indicated to Councilor Olson that it turned out that the City did not need the sale of the Maple Street property in order to reimburse the General Fund for the purchase of the Iron Mountain property. Staff was waiting to sell the Maple Street property in healthier economic times. City Council Special Meeting Minutes Page 1 of 4 April 6, 2010 Councilor Hennagin commented that Ms. Euler's suggested sale price of $360,000 might be optimistic based on his personal assessment of the house. Councilor Jordan mentioned that the City used the Metro Park bond funds to purchase the Iron Mountain property instead of the property that it originally intended to purchase with those funds. Ms. Euler indicated to Mr. Gudman that she could not confirm his estimate that General Fund revenues might come in only $200,000 less than budgeted because it could still change. She commented that if it did come in at that amount, it spoke well for the work done by those before her in forging these plans. Ms. Euler indicated to Chair Smith that she had only general knowledge regarding why Quest was lagging so far behind the other franchises. She mentioned hearing that Quest was losing market share while Verizon was gaining it. Mr. Powell confirmed to Councilor Tierney that the City charged a fee on the basic phone service only, and not the add-ons, such as Internet service. Councilor Tierney noted that Comcast paid franchise fees only on the video portion, and nothing on voice or Internet. He commented that one could argue that those services used the same right-of-way as the video, which was a discussion for another time. Ms. Euler discussed expenditures in the General Fund (pp.3-4). She mentioned the possibility of savings in personal services by the end of the year (p.4). She said that she renewed the City's line of credit for another three months today in the 1.6% realm (prime rate was 3.25%) using the LIBOR rate. Mr. Gudman pointed out that extrapolating the figures in personal services yielded a possible $1.3 million savings, instead of the $300,000 Ms. Euler mentioned in her memo (p.4). Ms. Euler indicated that she anticipated a possible 3% savings towards the end of the year due to seasonal labor and benefits. She explained that large vacation payouts before July 1 were a factor. They would know more as they got closer to the end of the fiscal year. Ms. Euler pointed out that the Tourism Fund was a young fund with the main purpose for the next three years of reimbursing the General Fund for the iron furnace restoration (p.4). She indicated to Mr. Bearden that the Tourism Fund would pay for smaller projects in addition to the iron furnace. She clarified that, prior to increasing the 4% hotel/motel tax to 6%, and allocating the additional 2% to the Tourism Fund, there was no separate Tourism Fund. Councilor Jordan recalled that a State law required cities to allocate any increase to the hotel/motel tax to tourism; the original 4% still went to the General Fund. Ms. Euler explained that staff wanted to split out the streetcar from the Trolley Fund and put it under Economic Development because its pace was speeding up (p.4). She expressed staff's hope that increased marketing would help the Golf Course Fund, which was a continuing concern. She indicated to Councilor Tierney that she could do a month-to-month comparison from this year to last year for the Golf Course Fund. Ms. Euler indicated that they were keeping a close eye on the Tennis Fund, which was doing very well (p.4). However, with increased usage came increased expenditures. She reported that she has put staff on notice that the Percent for Art fund might go over budget in expenditures in materials and services, based on the amount encumbered on a purchase order (p.5). She indicated to Councilor Olson that Ms. Gilmer was getting her information on the specifics of the encumbrance. Ms. Euler noted that the Water Fund customer revenues were still ahead of schedule (p.5), but the anticipated additional revenues have shrunk from $600,000 estimated at the last quarterly report to $450,000. She mentioned that capital outlay was lagging, due to projects coming in under budget. She indicated that Mr. McIntyre was working closely with Public Works and Engineering to get capital outlay spending back up to the planned levels. City Council Special Meeting Minutes Page 2 of 4 April 6, 2010 She discussed the Wastewater Fund and the Surface Water Fund (p.5). She mentioned that she has put staff on notice that personal services in the Surface Water Fund were tracking high. She said that they would watch it closely and make adjustments as needed towards the end of the fiscal year. Mr. McIntyre indicated to Councilor Olson that they would find out if they could slow down the expenditures, as opposed to waiting until the end of the year to fix it. He noted that they have hired an intern to help staff on water, which was a slight increase. Ms. Euler clarified to Councilor Hennagin that customer payments of the utility bill went into sales and services. She indicated to Councilor Jordan that she assumed that the volume rate was a little under plan, as could happen very easily. She commented that it was not enough to check into, unless the Council so directed. Mr. McIntyre reminded the Council that the City calculated wastewater rates based on the average winter water usage; staff would recalculate the rates for next year based on last winter's usage. Ms. Euler indicated to Mr. Gudman that the budget would reflect those recalculated rates. Ms. Euler discussed the Street Fund (pp.5-6). She noted the three revenue streams: $500,000 from PGE, the Department of Motor Vehicle shared revenues, and the street maintenance fee. She commented that they might not see as much revenue from the motor vehicle fees as they had hoped, so they would have to wait and see what happened. She discussed the Maintenance Services and Motor Pool Fund (p.6). She mentioned staff's intense scrutiny of this fund because it was not recuperating the costs that it should be recuperating, especially for direct labor. She explained that the going rate for labor was $80 an hour, but the fund only charged $55 per hour to the other funds that used this service. She noted that the cost allocation study on the administration costs had nothing to do with the labor rate computation. She commented that it would take a while to sort it all out but they hoped to make progress in the next few months. She indicated to Mr. Gudman that she did not know whether the FY2010/2011 budget would reflect the staff work. She clarified that the 'hard costs' referred to direct costs, such as labor, repair parts, and fuel. 'Soft costs' referred to administrative oversight and supervision. She confirmed to Mr. Gudman that the cost allocation study straightened out the `soft costs,' and now staff was following through on the 'hard costs.' She said that they would still reflect the right budget numbers in total. Ms. Euler discussed the Engineering Fund (p.6). She commented that transferring two engineers 100% to the LOIS capital project fund was a good deal for that fund because they could spend all their time on that project. Staff was reviewing what the resource allocation should be for the workload within the Engineering Fund in order to put the right tasks on the right desks and the right costs in the right buckets, but it was a work in progress. She indicated to Mr. Gudman that the answers to his questions were the same as for the Maintenance Fund. Ms. Euler reviewed the notable items in all other funds (p.6). She mentioned that Mr. Galante told her that the lag in LORA capital projects was by design; the Board delayed some projects past July 1 in order to take advantage of some cost reduction benefits. Council President Johnson explained to Mr. Gudman that the Board decided to delay Lakefront Park because of the cost savings of doing the work in conjunction with the lake down phase of the LOIS project. Ms. Euler commented that the higher than expected assessed values in the LORA District demonstrated the benefit of investment in economic development, which has resulted in economic growth in the District. She anticipated receiving higher than budgeted property taxes as a result. She confirmed to Mr. Gudman that the increased property taxes were due entirely to the higher assessed values. She confirmed that the delinquency for the current year came in at around 6%. City Council Special Meeting Minutes Page 3 of 4 April 6, 2010 COUNCIL QUESTIONS Councilor Tierney referenced p.7, with respect to the budget adjustments from contingency into expenditure accounts. Ms. Euler indicated that both adjustments totaled around $1.4 million, but she would have to check on the exact figure. Mr. Gudman complimented Ms. Euler on her excellent cover letter. He indicated that it would be helpful if staff began a capital budget by project summary, as opposed to only a grand total, for the capital budget areas in which the City was running behind. He mentioned that consolidated financials citywide would also be helpful. Councilor Jordan asked if the increased projections for the Building Permit Center, in light of the City decreasing staff in the Building Department, meant that the City would see more inspections that the current staff could handle. Mr. McIntyre stated that staff would closely monitor that, and make sure that no one was overworked. He commented that they wanted to establish whether this was a trend or a one-time bump in order to avoid responding prematurely. Councilor Jordan asked whether increased labor costs in Maintenance Services and Motor Pool would affect the replacement schedule for equipment. She mentioned increased costs possibly leading to an earlier break-even point. Ms. Euler explained that that was very difficult to assess, although people have been trying to do the computations. She indicated that right now they based the replacement schedule on the average estimated life span, assuming reasonable maintenance. Mr. McIntyre stated that staff was working valiantly on the numbers. He reported that they felt much better about where they were now than they did at this same point last year. He commented that staff was struggling with the question of adjusting the Maintenance and Motor Pool numbers because doing so impacted the entire budget document. He explained that the decision they were trying to make was whether to freeze the numbers where they were and deal with the increase through a budget supplement or another process. He indicated that staff would deliver the budget document on Monday. 4. ADJOURNMENT Council President Johnson adjourned the meeting at 6:20 p.m. Respectfully submitted, Robyn Christie City Recorder APPROVED• • ► 0 . �H�offma�n'. . City Council Special Meeting Minutes Page 4 of 4 April 6, 2010