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HomeMy WebLinkAbout05/24/1999 - Study SessionCITY OF NEWPORT BEACH City Council Minutes Study Session May 24, 1999 - 4:00 p.m. ROLL CALL Present: Adams, Glover, Thomson, Debay, Ridgeway, Noyes, Mayor O'Neil Absent: None CURRENT BUSINESS 1. CLARIFICATION OF ITEMS ON THE CONSENT CALENDAR. Regarding Agenda Item 22, Addition of Two Leased Electric Vehicles, Mayor Pro Tem Thomson noted that the vehicles are Toyotas, not Hondas. City Manager Bludau informed Council that Agenda Items 6 and 7, Adoption of the Fire and Building Codes, will be pulled during the regular meeting. 2. REVIEW OF AUTOMOBILE SALES TAX INCENTIVE PROGRAM AND REQUESTS FOR ASSISTANCE FROM JAGUAR (SOUTH COAST MOTORCARS) AND STERLING BMW. • Mayor O'Neil announced that he has a conflict of interest since his firm represents Mr. Belanger of Sterling BMW and Ford Motorland on another matter. He excused himself from the Chambers and requested that Mayor Pro Tem Thomson conduct this portion of the meeting. Assistant City Manager Wood reported that the City received a request for assistance from Sterling Motors in 1996, after they obtained a franchise for a Land Rover dealership, planned to move the existing BMW dealership onto the current Coast Highway site, and planned to expand the site. Due to the expense of the project and the projected benefit for the City, Sterling Motors requested that the City reimburse 50% of their incremental sales tax back to them. She indicated that Resolution No. 96 -88, establishing the Automobile Sales Tax Incentive Program, was then adopted. Ms. Wood indicated that she believed that the reasons the City did the program and why it is an important part of the economic development program are because new car sales are a significant generator of sales tax revenue. She noted that many of the individual dealerships are one of the City's top 10 sales tax generators. Additionally, feasibility studies have shown that these dealerships cannot establish feasibly in the City without some kind of public assistance because of the price of land. Ms. Wood stated that the current program is fairly general and allows each case to be analyzed on its own merits. She noted that the resolution provides • that the City can grant assistance in the economic feasibility of a project; provides that the assistance be provided only from incremental sales tax that the City would receive from the business; and requires a long -term commitment to the community from the business. Volume 62 - Page 476 INDEX Automotive Sales Tax Incentive Program /Request for Assistance from Jaguar (South Coast Motorcars)/ Sterling BMW (40) City of Newport Beach City Council Minutes May 24, 1999 • Ms. Wood reported that, after the program was established, the City conducted many discussions with Sterling Motors and almost brought an agreement to Council. However, in 1998, Sterling Motors sold Land Rover, so each dealership needed to reapply on its own. Using the provisions of the resolution, staff did not see that those findings could be made and the agreements were not brought forward. Ms. Wood reported that the City has a new request from Jaguar and that Sterling BMW reinitiated their request. She stated that Sterling BMW is making the same request to receive 50% of the incremental sales tax for a period of 5 years for the expansion. She indicated that Jaguar is starting a new concept for selling cars by establishing a satellite dealership in Corona del Mar. In addition to receiving 50% of the incremental sales tax for a period of 5 years, Jaguar is also requesting $600,000 in cash up front. Ms. Wood stated that staff believes that, should Council indicate a willingness to provide assistance to either or both of the dealerships, Land Rover would return to the City and reinitiate their request. Council Member Glover stated that her recollection of this when she was on the Economic Development Committee (EDC) was that this was put together because a program was done with Fletcher Jones; and that it was felt that it was unfair to not provide this to the other dealerships. She indicated that Lee West of Jaguar was unable to continue with his business and it went • back to a bank that was out of country. It took 2% to 3 years of trying to put together a deal with the bank to put a dealership back in that location. She stated that Jaguar would not put another dealership in a place that had failed, so EDC wanted to get Land Rover back since it was a part of the Jaguar dealership and since their sales were doing well. Council Member Glover stated that the Jaguar building, although nice, was almost overbuilt and had heavy overhead costs. She expressed the opinion that EDC encouraged Sterling BMW; that she believed some promises were made to Sterling BMW; and that EDC tried to work with Sterling BMW to move into the former Jaguar building and get Land Rover back into the City. Council Member Glover believed that this is characterized as being driven by Sterling BMW when it was really driven by the Fletcher Jones deal and the idea at the time that, due to revenue problems, they wanted to keep certain dealerships in the City. Council Member Glover stated that she and Ms. Wood met with the owner of Sterling BMW on two occasions and that she and the Mayor also met with him. She indicated that he stated that his base for fiscal year 1995 -96 was $187,000 and is asking to receive 50% of the incremental sales tax over that base. Council Member Glover pointed out that, at one time, the City was talking about helping him on some of the conversions he needed in his maintenance department. She expressed the opinion that, considering past conversations, this is probably a fairly reasonable request and that the better his business does, the better the City does too. • Council Member Glover emphasized that the City needs to put constant pressure on any of the dealerships the City works with to move all of their leasing point of sales back into Newport Beach, otherwise the City is losing revenue. She expressed the opinion that the program should be rescinded Volume 52 - Page 477 INDEX City of Newport Beach City Council Minutes May 24, 1999 • after Council deals with the current requests. Council Member Debay agreed with Council Member Glover's comment on the point of sales for leases. She expressed concern with providing cash up front and stated that she does not agree with doing that. She questioned if the earnings are a projection and asked what would happen if these dealerships start making profits immediately after development. Council Member Debay stated that it is important to keep the dealerships in the City; however, emphasized that specific criteria need to be made so that the dealerships do not go to different Council members to try to lobby support. Council Member Glover took issue with the statement and noted that Sterling BMW is in her district. Council Member Debay clarified that all Council members receive calls on different issues. Council Member Debay asked what promises were made and wanted to know if Council may be going against what a. previous Council assured. Ms. Wood indicated that she was not with the City for the earlier history described, but was aware that EDC worked hard to bring Land Rover back into the City. Further, she is not personally aware of any promises but indicated to Mr. Balenger at a meeting that it was her opinion that Council would provide some level of assistance but was unsure of how much. Council Member Ridgeway stated that, under Section LEA of Resolution No. 96.88, it appears that this addresses a capital improvement cost only in • the case in which assistance is needed to make it feasible. He expressed concern there is no definition for "project feasibility" and that this seems to be a way of having the City subsidize a landowner for overpricing property. In response to Council Member Adams' questions, Ms. Wood indicated that the dealerships' tax increment amounts for fiscal year 1998 -99 are confidential to the public but provided Council Member Adams with the information. Ms. Wood stated that she has never seen any documentation indicating the promises that were made to Sterling BMW. In response to Mayor Pro Tom Thomson's question regarding Jaguar's $600,000 request, Ms. Wood stated that this is their request with very little staff analysis and no negotiation. Dan Rogers, 245 Magnolia, No. 5, stated that he represents the Ford Leasing Development Company who is the real estate arm of Ford Motor Company, owners of Jaguar. He discussed their search for a new location and indicated that they finally found a location at the old Union Station site to hopefully be able to put in a "satellite boutique' dealership. Ford Leasing Development Company made a tentative deal with an option to purchase the property in the future. They initially believed they could fund the entire project out of the Jaguar budget. However, the budget was $600,000 short and the alternative left was to come to the City for assistance. He stated that the company believes they can sell enough cars to pay the City back its $600,000 in 3 to 4 years. He explained that the money needs to be up front because • they were told by the Jaguar franchise that they will not have a project unless Ford provides them with $600,000 up front. Volume 52 - Page 478 IRIOW4 • City of Newport Beach City Council Minutes May 24, 1999 INDEX Council Member Ridgeway asked if "up front" means he wants an agreement prior to proceeding with the conditional use permit. Mr. Rogers believed that Jaguar is saying they want $600,000 in order to pay for the construction of the facility. He stated that a larger request was made to Mission Viejo and they agreed to give them the money, plus a larger sum over the years once the $600,000 is paid back. He stated that Jaguar used this as the model for this request. Council Member Ridgeway stated that he is struggling with the City providing up front money and with getting a cash reimbursement over a period of time. Noting that this is to be a satellite boutique dealership out of Newport Beach, Council Member Debay asked how the City could be assured that the City's sales tax revenue will not go back to the main dealership. Mr. Rogers stated that the people running the dealership told him that the sales tax revenue will absolutely be awarded at point of origin. He emphasized that Jaguar is trying to downgrade leasing and promote the sale of vehicles. Council Member Ridgeway asked what it would take to have Jaguar go back to the table and negotiate a fair and reasonable lease, believing that the owner is basically asking the City to subsidize the values. Mr. Rogers stated that they would be back at "square one" if the City denies the request and that the option on the property expires June 4. In response to Council Member Glover's questions, Mr. Rogers stated that • the facility is only 6,000 square feet and that the main warehouse would be in Mission Viejo. Further, he believed that inventory would be based on a combination of the inventory in Newport Beach and the inventory at the warehouse. He stated that he was told that each inventory would be allocated separately but would be considered one dealership (South Coast Motor Cars) and that all sales that are generated in the City will be credited to the City. Regarding Jaguar sales in the 1980's, Mr. Rogers believed that the new dealership would sell about $200 million annually and that, since Ford bought Jaguar, many of the previous inventory problems are gone. Regarding Sterling BMW, Council Member Adams indicated that he is not supportive of looking at the request retroactively. He stated that the program is an incentive program and noted that Council Member Ridgeway pointed out that they need to show a need. Council Member Adams believed that, since they have an established dealership, this is evidence that they do not have a need. Further, in looking at the figures, he expressed the opinion that the request is almost ridiculous compared to their cash flow. Regarding Jaguar, Council Member Adams stated he would not be in favor of providing money up front under any condition. :He believed there should be investors in Newport Beach that can provide the $600,000 since the City is not in the business of loaning money to businesses despite the fact that it would be an attractive land use, has an interesting concept, and can be positive for the City. He expressed the opinion that this is out of the City's scope. He believed they have shown need under the Council policy for a • reduction of sales tax and stated that he would be willing to consider a request from them about that. Council Member Adams stated that they should establish their dealership in Mission Viejo and come back to the City after they have funding and cash flow. Volume 52 - Page 479 City of Newport Beach City Council Minutes May 24, 1999 • Mayor Pro Tem Thomson stated that the City does want to encourage business, but agreed with Council Member Adams that this seems a bit excessive. He expressed concern with the concept that the project cannot work unless they have $600,000. Further, receiving the reimbursement of sales tax ahead of time is a situation that can be dealt with in the future. Council Member Glover believed that there will be no support for her motion to help Sterling BMW and expressed the opinion that the resolution is ill- defined. In response to Council Member Glover's question, Council Member Adams clarified that the request is a relatively small amount compared to the moneys used to operate the dealership. In response to Council questions, City Attorney Burnham stated that Resolution No. 96 -88 can be rescinded by adopting a resolution that rescinds it. This can be done at the next meeting. Noting that the resolution has merit, Council Member Rideewav moved to send the resolution back to EDC, EQAC, and any other committee for review and bring back a report to Council. Council Member Adams asked Council Member Ridgeway if his motion included not approving both Land Rover and BMW; and up to the 50% of the • incremental sales tax for Jaguar. Council Member Ridgeway stated that he would be happy to amend his motion to that effect since the program was meant to be an incentive program. He noted that there may be a circumstance in which the City may want to do some type of tax -free based program to a car dealer. Prior to that, the dealers have to come to the table with a negotiated transaction and a lack of feasibility based on a fair market value of the property. He commended Ford and Mr. Rogers for being forthright with their numbers. Council Member Adams stated that he supports reviewing the policy; is not supportive of doing anything retroactively for E�MW or Land Rover; and is supportive of doing anything possible for Jaguar that comes within the framework of the current policy. Council Member Ridgeway stated that he agrees, but would rather first send this to the committees who have a better ability to review it. Mayor Pro Tem Thomson expressed the opinion that one way of reaching the goal would be to rescind the resolution and start from scratch through the committee system. Council Member Debay stated that the basics for the program are in the resolution. However, staff needs to be involved with EDC and the subcommittees and refine the points that Council is concerned with so that there is consistency. She indicated that the City may be able to waive the development permit fee for Jaguar. Council Member Noyes expressed the opinion that a resolution that favors automobile dealerships over common retailers is not fair or productive. He • stated that many cities are getting away from doing this and believed that the resolution should be rescinded since this has only been used for Fletcher Jones. He stated that he would be in favor of rescinding the resolution and Volume 52 - Page 480 INDEX City of Newport Beach City Council Minutes May 24, 1999 • possibly vote on the two specific cases. Council Member Adams stated that Fletcher Jones is a different case since they had an established business in the City that was generating a lot of sales tax revenue and threatened to leave the City. He noted that the City was prepared to assist BMW but they apparently did not need the assistance. Regarding Jaguar, Council Member Adams questioned how the City could save a business that left a long time ago. Council Member Glover stated that she will not support the motion because the policy itself and the resolution is bad. Further, she believed that the City will not be able to be fair if it keeps the resolution. Motion by Council Member Rid ewav to deny the request from Sterling BMW. The motion carried by the following vote Ayes: Adams, Thomson, Debay, Ridgeway, Noyes Noes: Glover Absent: None Abstain: O'Neil Regarding Jaguar, Mayor Pro Tem Thomson believed that the request is mute since they are requesting up front money, Council is not willing to • provide up front money, and Jaguar indicates that the whole project would not work without that money. The motion to send the resolution back to EDC, EQAC, and any other committee for review and bring back a report. to Council carried by the following vote: Ayes: Adams, Thomson, Debay, Ridgeway Noes: Glover and Noyes Absent: None Abstain: O'Neil 3. REVIEW OF 1999 -2000 BUDGET. Administrative Services Director Danner distributed a pie -chart that shows City revenues (page 14 of the budget). He reported that property taxes make up 20 %; sales and other taxes make up 24 %; licenses and permits make up 3 %; intergovernmental revenue make up 14 %; charges for services make up 7 %; fines, forfeitures, and penalties make up 2 %; use of money and property make up 9 %; other revenues make up 1 %; internal service fund revenues make up 9 %; and enterprise fund revenues make up 16 %. Further, there are 231 revenue accounts in the General Fund and 350 revenue accounts Citywide. Mr. Danner noted license and permit information comes from the departments; intergovernmental revenue information is supplied by other agencies; charges from current services come from the departments; use of • money and property information is primarily compiled by the Administrative Services Department with help from the Fire and Marine Department for tideland properties; and other revenue information generally comes from historical trends. Volume 52 - Page 481 INDEX 1999 -2000 Budget (40) • • E City of Newport Beach City Council Minutes May 24, 1999 Mr. Danner used information provided by the Policy Institute of California to compare how supplied revenues to cities by outside sources were used in 1978 versus 1995: Mr. Danner stated that there has been a push to make local government revenues dependable (not subject to State take -away) and to reverse all or a portion of the shift. Mr. Danner noted that he previously reviewed the City's major revenue sources (property taxes, sales taxes, and transient occupancy taxes) and reported that the following revenue sources generate over $1 million annually: franchise fees generate $1.3 million; business license fees generate over $2 million; motor vehicle license fees generate $2.8 million; COPS more grant generates about $1.5 million; administrative services /water service fees generate $3.3 million; parking fines generate $1.8 million; interest income generates $1.9 million; parking revenue generates $1.2 million; State gas tax revenue generates $1.3 million; Beacon Bay lease generates almost $1.1 million; tideland permits generate almost $1.2 million; Balboa Yacht basin generates $1.3 million; Balboa Bay Club generates $1.9 million; Balboa parking lot generates $1.1 million; contributions to fund refunds and rebates generate $1.2 million; Measure M funds generate about $1.5 million; water fees generate over $15 million; wastewater fees generate $2.5 million; internal service fund fees for insurance reserve generate $6.4 million; and internal service fund fees for equipment maintenance and replacement generate $3.6 million. Mr. Danner quoted a study by the Policy Institute of California which generally states that cities need to protect the revenue that they have control over. Regarding the City Council budget (Division 0110), City Manager Bludau stated that the proposed budget of $36,300 in Account 8010 (advertising and public relations) includes enough money to put out four newsletters and $9,100 for Michael Media's request to assist with the funding of the Newport Today television program since he says he is providing a public service to residents by interviewing local officials and staff. Regarding Account 8060 (publications and dues), he reported that the $23,622 includes dues for SCAG and the League of California Cities. Regarding Account 8254 (human services), he stated that the $25,000 provides grants to organizations. Mr. Bludau stated that the City Council budget grand total is $235,739. Regarding the Airport Management budget (Division 0120), Mr. Bludau reported that the Deputy City Manager's salary will be covered in the City Manager's budget, but the Deputy City Manager responsibilities will be moved to this division for the next fiscal year, noting that it was included in the City Attorney budget last year. He pointed out that the greatest expenses are in Account 8080 (professional and technical services) at $664,665 and Account 8250 (special departmental expense) at $200,000 which were used for consultant services. He indicated that the total budget of $898,665 was recommended by the Airport Council subcommittee. Volume 52 - Page 482 INDEX 1978 1995 supplied by Federal Government 22.5% 22.3% supplied by State 41.6% 54.9% supplied by County 8.3% 5% supplied by own city 11% 9.2% Mr. Danner stated that there has been a push to make local government revenues dependable (not subject to State take -away) and to reverse all or a portion of the shift. Mr. Danner noted that he previously reviewed the City's major revenue sources (property taxes, sales taxes, and transient occupancy taxes) and reported that the following revenue sources generate over $1 million annually: franchise fees generate $1.3 million; business license fees generate over $2 million; motor vehicle license fees generate $2.8 million; COPS more grant generates about $1.5 million; administrative services /water service fees generate $3.3 million; parking fines generate $1.8 million; interest income generates $1.9 million; parking revenue generates $1.2 million; State gas tax revenue generates $1.3 million; Beacon Bay lease generates almost $1.1 million; tideland permits generate almost $1.2 million; Balboa Yacht basin generates $1.3 million; Balboa Bay Club generates $1.9 million; Balboa parking lot generates $1.1 million; contributions to fund refunds and rebates generate $1.2 million; Measure M funds generate about $1.5 million; water fees generate over $15 million; wastewater fees generate $2.5 million; internal service fund fees for insurance reserve generate $6.4 million; and internal service fund fees for equipment maintenance and replacement generate $3.6 million. Mr. Danner quoted a study by the Policy Institute of California which generally states that cities need to protect the revenue that they have control over. Regarding the City Council budget (Division 0110), City Manager Bludau stated that the proposed budget of $36,300 in Account 8010 (advertising and public relations) includes enough money to put out four newsletters and $9,100 for Michael Media's request to assist with the funding of the Newport Today television program since he says he is providing a public service to residents by interviewing local officials and staff. Regarding Account 8060 (publications and dues), he reported that the $23,622 includes dues for SCAG and the League of California Cities. Regarding Account 8254 (human services), he stated that the $25,000 provides grants to organizations. Mr. Bludau stated that the City Council budget grand total is $235,739. Regarding the Airport Management budget (Division 0120), Mr. Bludau reported that the Deputy City Manager's salary will be covered in the City Manager's budget, but the Deputy City Manager responsibilities will be moved to this division for the next fiscal year, noting that it was included in the City Attorney budget last year. He pointed out that the greatest expenses are in Account 8080 (professional and technical services) at $664,665 and Account 8250 (special departmental expense) at $200,000 which were used for consultant services. He indicated that the total budget of $898,665 was recommended by the Airport Council subcommittee. Volume 52 - Page 482 INDEX City of Newport Beach City Council Minutes May 24, 1999 • Council Member Adams suggested putting a portion of the Deputy City Manager's full-time equivalent into the Airport Management budget. He stated that he would like to have the amount of this category reflect as much of the total airport expenditures, rather than spreading them throughout the budget. Mayor O'Neil noted that this would also involve part of the City Attorney's salary. Council Member Adams stated that this could possibly be done in a separate account. Further, he stated that, on a policy standpoint, the City should know how much is being spent on this issue and that staff time will probably be a significant amount. In response to Council Member Noyes' questions,, Mr. Danner stated that the figures in the budget were first put together in December and that updated numbers for the Airport Management budget were provided to the subcommittee. He reported that the budget is now in the red by $20,000. Regarding the City Clerk budget (Division 0210), Mr. Bludau reported that the budget reflects the same 3 full-time positions, there are no additions or deletions, and there are no significant changes. Noting that he is new to the process, Council Member Adams asked where the burden of the salaries are reflected in the budget. Mr. Danner explained that all the department budgets are broken down and that the burden begins at Account 7210. He stated that the burden is about 30% of direct labor for miscellaneous departments. • Mayor Pro Tem Thomson questioned the inconsistencies in the Airport Management budget but stated that he will discuss them with the City Manager at another time. Regarding the City Manager budget (Division 0310), Mr. Bludau reiterated that a portion of the Deputy City Manager's salary and benefits will go into the Airport Management budget. He pointed out that the amount in Account 8080 (professional and technical services) includes the costs for the legal advocates (Kenneth Emanuels and advocates in Sacramento). Regarding the City Attorney budget (Division 0510), City Attorney Burnham stated that there is no change in staffing. However, there is a significant increase in professional and technical services (Account 8080) due to airport related litigation. Referring to Council Member Adams' previous comments, Mayor O'Neil noted that a clearer total needs to be indicated in the Airport Management budget. Mr. Burnham stated that the increase in Account 8080 totals $150,000 but that he is unsure of how much of his time is spent on airport related issues. Discussion ensued relative to whether or not it is important to keep all airport related issues in the same account. Mr. Bludau indicated that the $150,000 in City Attorney Account 8080 will be transferred to Airport Management Account 8080. • Regarding the Administrative Services budget (Division 0610), Mr. Danner distributed an organizational chart and noted that there are 5 divisions within the Administrative Services Department. He further reported the number of budgeted full-time employees and the full -time equivalent Volume 52 - Page 483 INDEX City of Newport Beach City Council Minutes May 24, 1999 INDEX amounts for each division. He indicated that, they do not have any new positions planned although the number of part -time employees that work nearly 40 hours a week is a significant issue because of the benefits. In response to Council Member Adams' question, Mr. Danner stated that the part -time employees are in the City's retirement system because of the amount of hours they work, but that the primary difference is that part -time employees do not receive health insurance which is about $5,000 a year. In response to Council Member Glover's questions, Mr. Danner explained that, pursuant to Federal law, part -time employees that work under 1,000 hours in a fiscal year receive PARS (Public Agency Retirement System) which is equivalent to a defined contribution plan. He indicated that 3Ya% of their salary is put into a defined benefit plan by the employee and 3'/% by the employer. If the employee works over 1,000 hours, they are enrolled in PERS, pursuant to State regulation. Council Member Glover stated that working part -time is a personal decision. Council Member Ridgeway asked what percentage is paid to PERS vs. PARS. Mr. Danner stated that the employer's rate to PERS is 0% and for PARS is 3%% just for this year. He explained that this is the first time in 9 years that the employer's rate has gone to 0% and that this is a factor of the funding in the account in Sacramento. Mr. Danner stated that they are over - funded for miscellaneous employees this year. Council Member • Ridgeway asked if the City would be better off asking the part -time employees to become full-time employees. Mr. Danner indicated that, in his department, about 100% of the part -time employees are in PERS. Mr. Danner reported that there are no new employees planned in Administrative Services, however, his staff asked him to convert the part - time employees to full-time. He explained that, as Acting City Manager, he received 4 requests but did not feel he was in the position to approve any of them. Mr. Bludau indicated that he will be looking at those requests. Mr. Danner reported that part -time hours are up; health/dental/vision insurance are up $30,000 due to negotiated MOUs; workers compensation charges are up $22,000 due to revised internal. charges; advertising is up $20,000 primarily for recruitment publications; maintenance /repair of equipment is up $97,000 mostly for network and document imaging maintenance; professional and technical services are up $27,000 in Human Resources; Citywide training is up $27,000; tuition reimbursement is up $12,000 due to negotiated changes in the MOUs; office equipment is up $18,000 ($17,000 is in the MIS area for replacement of computers and related equipment); and the total overall department budget increased 2.37 %. He added that the disability insurance charges are down $23,000. Mr. Danner reported that, at the end of the year, the City will have $2.6 million to $2.7 million projected as the cash balance. Pursuant to Council Policy F -2, the City is required to have cash reserves of 50% of the • future costs for liability and workers compensation and 25% for compensated absences. He believed that the goal of $4.7 million will be reached in 2 years. Volume 52 - Page 484 City of Newport Beach City Council Minutes May 24, 1999 INDEX • In response to Council Member Noyes' question regarding the document imaging system, Mr. Danner explained that the $87,000 is for software licensing, as well as maintenance and paymentneasing of the equipment. Regarding the Police Department budget, Chief McDonell stated that the budget is 1% less than the 1998 -99 budget due primarily to the reduction of the PERS rates. He reported that the budget contains one additional Sergeant position that is fully funded by the revenue allocated by the Orange County Auto Theft Task Force; the budget includes 136 sworn and 81 non- sworn full-time employees which reflects 83% of the Police Department budget. He indicated that 3 of the 81 non -sworn employees are the helicopter mechanics that were approved in last years budget and pointed out that 75% of their costs are reimbursed by Costa Mesa and the County of Orange. He stated that they hope to gain approval through PERS to allow ABLE (Air Born Law Enforcement) to be a part of the retirement system. If this happens, the Police Department may recommend to the Joint Powers Authority and the 2 city councils that the City employ them. He indicated that the only other modifications to the Police Department budget include a reallocation of part -time moneys for a part -time crime prevention employee; the increase of maintenance and operating accounts by about 3 %; and the decrease of the capital accounts by about 8% %. In response to Council Member Ridgeway's question, Chief McDonell stated that the Police Department does not anticipate expanding the DARE • Program to the high school level; however, he indicated that he received a report today regarding this and that he hopes to come back to Council with something for consideration. Regarding the Fire and Marine Department budget, Chief Riley stated that the budget is up 1.4% ($228,000). He reported that the increase is due to the addition of the Disaster Preparedness Coordinator; the addition of $32,000 for the increased fire sprinkler and alarm plan checking and inspection services for the Bonita Canyon activities; the $112,000 increase in workers compensation rates; and the increase in the overtime budget for fire suppression and emergency medical services. Chief Riley stated that the department took advantage of the decrease in PERS rates to fully fund the overtime budget which has not been done since 1993. He reported that the department is no longer realizing a $97,000 savings because of the age of the department and the amount of vacation accrued. Additionally, because of the age, the department is recognizing a significant increase in the amount of sick leave and industrial accidents. Chief Riley stated that overtime control is based on the obligations in the MOU and the need to maintain 24 -hour staffing at all the fire stations. In response to Council Member Ridgeway's questions, Chief Riley stated that the turnover due to age is expected to be about 60% in the next 5 years. However, there is legislation pending that would increase PERS' maximum allowable public safety employee from 75% to 90 %. He indicated that he is unsure what impact this would have on the projected future retirements, • how far it will go through the Legislature; or when the City may elect to review this with the safety organizations. He stated that the controls that have been included in the MOU for newly -hired employees will definitely decrease the overtime burden. He reported that, for every new employee Volume 52 - Page 485 i City of Newport Beach City Council Minutes May 24, 1999 hired and every employee that retires, there is about a $12,000 overtime savings for each new employee. Chief Riley stated that there are 121 full- time employees in his department, with a significant number of seasonal and part -time employees. He confirmed that it is reasonable to presume that the budget will decrease on a cyclic basis due to retirements. Mr. Bludau pointed out that the remainder of the budget and the Capital Improvement Projects need to be reviewed prior to the June 14 public hearing but believed that this could be done in less than 3 hours. Mr. Danner indicated that there will be a public hearing for the budget and the appropriations limit at the next meeting; that Council typically prepares the budget checklist at the next meeting; and that the budget is scheduled for adoption on June 28. Mr. Bludau indicated that Council will also be able to conduct a study session on June 28. Following discussion, it was the consensus of Council to schedule the next Study Session at 3 p.m. on June 14, 1999, in order to review the remainder of the budget and the Capital Improvement Projects. PUBLIC COMMENTS Basing her statement on previous comments, Council Member Glover emphasized that she does not know the owner of Land Rover, has never spoken to him/her, has never met with him/her, and has not been lobbied by him/her. Further, that her • meetings with the owner of Sterling BMW were at the request of Ms. Wood, not the owner, and that she has never communicated with the owner on the telephone. • ADJOURNMENT — 6 p.m. to a Study Session at 3 p.m. on June 14, 1999. The agenda for the Study Session was posted on May 19, 1999, at 3:30 pan. on the City Hall Bulletin Board located outside of the City of Newport Beach Administration Building. — �& i &rmn'- Recording Secretary Jam - Mayor Volume 52 - Page 486 INDEX