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HomeMy WebLinkAbout06/07/1996 - Special Study SessionCITY OF NEWPORT BEACH City Council Minutes Special Study Session Meeting June 7, 1996 - 4:00 p.m. • CLOSED SESSION - 3:00 p.m. [Refer to separate agenda from City Attorney] CLOSED SESSION REPORT PRESENTED - None RECESSED AND RECONVENED AT 4:00 P.M. FOR SPECIAL STUDY SES31_ON MEETING. ROIL CALL Present: O'Neil, Edwards, Debay, Hedges, Glover, Waft Absent: Cox Mayor Hedges announced that this afternoon's meeting regarding the budget follows an informal format, wherein he turned the explanation over to City Manager Murphy. Council Member Cox took his seat at the Council table at this time. City Manager Murphy stated that on Monday, June 10, the City Council will be conducting the formal public hearing on the 1996 -97 Budget, but this afternoon a short review of the proposed budget and an overview of the KPMG Studies with their respective representatives will take place. Reference and comments were made by City Manager Murphy to the printed information distributed by Administraflve Services Manager Danner [Revenue Summary 1996 -97, footnotes 1 - 37, and Ten Year Trends in General Operating Revenue and Selected City • Expenditures]. Questions of the Council ensued: Mayor Hedges, regarding the Ten Year Revenue /Expendffure Chart Capital Expenditures, questioned how much of the '94 -'95 Increase is attributable to the debt the City incurred with the bond sales that support the Groundwater Development Project? City Manager Murphy advised that he will have this Information for him on Monday. Mayor Pro Tern Debay, with regard to the General Fund Property Taxes, asked whether the County stopped reviewing appeals to lower property taxes (Le. The Irvine Company appeal)? City Manager Murphy advised that The Irvine Company appeal is already reflected in the print out before the Council. He added that the County's policy regarding a major appeal is that they will notify the individual City to give them an opportunity to actually intercede or protest the appeal if there is a significant drop in the City's property tax share, provided the City has justification. Council Member Glover requested more information under General Services regarding the $400,000 Grant, AQMD and vehicles, that was part of the backup material discussed by the Finance Committee. City Manager Murphy advised that the full City Council must formally approve the Grant before July 15, and staff is putting together the data for the Council to base their decision on for elf her the City Council Meeting of June 24, or the first meeting in July. • Council Member Edwards (under Ten Year Trends) asked for Information regarding the average salaries for Safety and Non - safety, adjusted for Inflation, as he was interested to see how close the Figures were over the 10 -year period. Volume 50 - Page 162 INDEX 1996 -97 FY Preliminary Budget /Study Session (40) City of Newport Beach City Council Minutes June 7, 1996 Council Member Waft questioned the Offstreet Parking Fund, wherein City Manager Murphy advised that in this particular fund, the money is derived from lots that are primarily on the peninsula, so moneys (per fhe Municipal Code) must be used in that area. Mayor Hedges agreed that the Council needs to take up the policy Issues regarding the reserve funds for proper reserve levels. He feels • that in the absence of a policy change for reserves, any additional revenues H ought to go to reserves when can be used to reduce the burden on the General Fund caused by some of the activities on the peninsula, and with respect to taking the money out and using it for general purposes, this should be done very judiciously. Mayor Hedges expressed concern over the $300,000 charges for services based on the KPMG Studies, which are budgeted but not supported by policy or Council action. The intention that the budget will not balance unless the fee Increases are passed is not a good way to budget, and the City must budget with what revenues they know they have including assumptions and predictions regarding the economy. City Manager Murphy added that the City will have to take a look at those "special user" areas through a cost covered by those fees, and he was of the opinion that this was what the City Council wanted. Council Member Watt referenced a letter from the Balboa Island Business Association citing the problem of the rental units that change hands on Saturdays and the problems with trash along the Bay Front. She wants to pursue the Saturday trash pickup just during the 10 weeks of summer. The Business Association's point is the City is falling below the standard for the visitor - serving area, and that by paying the transient tax fees they feel they deserve those services. Mayor Hedges was in concurrence, stating that the short-term rentals do contribute toward taxes to the City. City Manager Murphy advised that the • cost will be presented to Council for their consideration on Monday. Hearing no one In the audience wishing to speak before the Council, Mayor Hedges deterred to the KMPG discussion. City Manager Murphy introduced Peggy McBride and Joe Parker from KPMG, wherein Mr. Parker advised that the studies are the culmination of several months of complex processing, ending In a custom study including performance measures, and some costing tools that the City Council can use to look at the costing performance measure and build upon, referencing three costing reports: Cost Allocation Plan (City -wide Central Service) showing costs of the City, overhead costs, which are then allocated to the benefiting Departments; and two reports regarding the costing of activities (Summary Report and Appendix A that supports that report) and the fee study information including potential fees for activities. The last report is a Performance Measure Report which is a first step for the City to take a look at performance measures, i.e., goal setting with regard to performance accountability, performance budgeting, setting service objectives, and setting a level of performance measurement. Mr. Parker Introduced Bonnie Carlson, Sr. Consultant of KMPG at this time. Ms. Carlson advised that the documents are very technical and interrelated, illustrating the cost flow from one system to the next, and said that she was available for questions, adding that her background includes experience as a City Finance Director, Administrative Services Director and Assistant City • Manager for 15 years in the Midwest at various cities, and she has conducted a number of studies just like the one for Newport Beach as consultant for similar sized counties and cities. Her group specializes in cost accounting for the public sector government. The process began last August and has gone through summary reorganizations in certain departments which is reflected in their report as much as possible. She felt that the City has been very aggressive in setting the fees and keeping them current. In both Recreation and Community Services Volume 50 - Page 163 INDEX 1996 -97 FY .Preliminary Budget /Study Session KPMG Studies City of Newport Beach City Council Minutes June 7, 1996 the City averages over 80% of recovering full costs in those Departments. Depending on the types of services the City is providing, there are some services that the City is more willing to subsidize than others as they may be cost prohibitive. Her group believes that the decision to recover full cost, or 50% of cost, is a policy decision best made by the City Council. Their report is organized • by department as this is the way they cost things out and helps them to keep some sort of control on where the costs are coming from. If there is more than one department involved, they tried to reflect the fee in comparison to the cost in the department that collected the fee. In some cases, Revenue does collect some fees, but other than the collection, i.e., the taxicabs that are inspected by the Police Department, and they tried to show the full cost In Revenue only because they collected the fees. Animal Control permits are found in a number of different areas in the report, and it may be that the report should be all together. She pointed out that the costing methodology that they use is a standard methodology and is one that they feel Is appropriate to show the full costs. Another example is that Recreation Services includes the cost of Held maintenance that the General Services provides. As regards the costs that were excluded, enforcement costs are not reflected in police activities related to massage parlor licenses, or the parking citations. The primary purpose of their report is to give a comprehensive approach of costs to deliver these services and a defensible cost analysis to work with to set fee levels in the City. She concluded her presentation, extending a very special thank you to the City staff and all of the departments who worked so hard with them, adding that their group could not have had the kind of results without this assistance. Mayor Hedges commented that this report was a long time coming; it is the first audit that has been conducted in the history of the City; and he believes that it will be very valuable to the City's Administrative Services Department to update costs of services. City Manager Murphy stated that as the City's costs grow, staff be allowed to make recommendations to continue those policies to adjust fees • in various areas perhaps every five years, as opposed to relying on updating those numbers. Ms. Carlson, in an attempt to answer questions of the Council, advised that: The reorganization of the various departments, such as Community Development (Economic Development), Planning and Building were brought together as a Community Development Department. Public Works costs were allocated for Public Works Administration through the Utilities Fund based on the assumption That these departments were being combined to the study. City Manager Murphy stated that at this point he has basically the KPMG information, and along with help from the departments, they anticipate looking at 150 fee areas. i.e., Building Permits and Inspections (15 fees go into this area) and these fees need to be broken out as they are grouped now. Unless directed otherwise, staff felt it would be helpful to add a narrative to go along with recommendations This could probably be done next week and presented at a working session with the Council Council Member O'Neil agreed that this would be very helpful and a summary would give the Council a better understanding to make the necessary policy decisions. With regard to privatization or tax- supported information, City Manager Murphy suggested that he meet with Council Member O'Neil for more specifics. • Council Member Edwards questioned the need to view all the fees If the Council is to make a decision. Mayor Hedges suggested that Council review the fees, Department by Department over a series of meetings, and have the staff from that department available, but cautioned staff about throwing out a proposed fee figure. Volume 50 - Page 164 INDEX 1996 -97 FY Preliminary Budget /Study Session City of Newport Beach City Council Minutes June 7, 1996 Council Member Glover commented on the residential use Vs. nonresidential use aside from building and planning fees, i.e. service programs, to ensure that fees' not be imposed on residents which would Indeed subsidize out -of -city users. Council Member Cox stated that in absence of his attending the briefings or • committee meetings; he felt the report does not reflect a modern day performance measurement report or guideline; that one of the biggest mistakes of performance measurement is ourselves; the common measurement today is best in class, and best in class does not necessarily mean best in your industry, but it means best in the type of work that you're dealing with. He added that in the public sector the criticism in recent years is that they don't measure themselves against the private sector, and that is the reason there is such a demand for privatizing because government can't function in the cost - effective way that the private sector can. Deputy Administrative Services Director, Dick Kurth agreed that the performance measurement should have been a separate report, and may be confusing as is. He added that this is a pilot project, but the benchmarking study which compares what the City is doing with the private sector has not been prepared yet which will indicate more appropriate levels. With regard to Mayor Pro Tem Debay's question, "when your using figures that someone else is giving you, how do you know that your measurement is the same for your benchmarklngt" Mr. Parker advised that they have solicited Information from a dozen different cities to get this information, and the report has been several weeks late in getting to them. He stated that in some cases it will be obvious in looking at the data, i.e., fee information for building permits and if their information is based on something other than the City's, then it will be measured differently. He added • that the existing report on performance measurement is just a start, and he agrees that it would have been nice to have all of the Information incorporated in this report. Council Member Glover remarked that she feels H is a difficult task to make a transition to privatizing, as it may not work in today's culture. City Manager Murphy added that the City Is down 104 employees from what H has been in the past and this has forced re- thinking how things get done without cuffing out essential services. PUBLIC COMMENTS Tom Hyans, President of the Central Newport Beach Community Association, referenced the costs of providing services and the proposed fee increases, citing, i.e., the Building Department overall performs at 871/6, and this sounds good; and the Fire Department's paramedic program performing at 67176 at a full cost of $549,000 with a budget for 16 paramedics which costs the City $1.5 million in salaries and benefits. He is eager to review the completed performance measurement report by KMPG, as he feels that the City should be able to address the cost of government Vs. privatization. Overall, he felt that the study was a good 'start, but agrees that goal setting is primary. Hearing no further comments, Mayor Hedges suggested that the Council be prepared to run through department by department during the Budget public • hearing process, and remove those Hems in question to be put on the checklist. Volume 50 - Page 165 INDEX 1996 -97 FY Preliminary Budget /Study Session • • City of Newport Beach City Council Minutes June 7, 1996 Mayor Hedges adjourned the meeting at 5:58 p.m., to 5:00 p.m., June 10, 1996 Closed Session and the Regular Council Meeting at 7:00 p.m. 00000000000000••000000000*** 00 The agenda for this meeting was posted on June 4, 1996 at 3:30 p.m., on the City Hall Bulletin Board outside of the City of Newport Beach Administration Building. Attest: I r . rlis� ,_ 1,��r Mayor Volume 50 - Page 166 INDEX 1996 -97 FY Preliminary Budget /Study Session