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HomeMy WebLinkAboutApproved Minutes - April 13, 2023Finance Committee Meeting Minutes April 13, 2023 Page 1 of 7 CITY OF NEWPORT BEACH FINANCE COMMITTEE APRIL 13, 2023 MEETING MINUTES I. CALL MEETING TO ORDER The meeting was called to order at 3:00 p.m. II. ROLL CALL PRESENT: Noah Blom, Mayor Allen Cashion, Committee Member William Collopy, Committee Member Keith Curry, Committee Member Nancy Scarbrough, Committee Member ABSENT: Will O’Neill, Chair (excused) Joe Stapleton, Council Member (excused) STAFF PRESENT: City Manager Grace K. Leung, Finance Director Jason Al-Imam, Deputy Finance Director Michael Gomez, Administrative Assistant Amy Byrne, Budget Manager Shelby Burguan, Budget Analyst Eric Wilson, Budget Analyst Jessica Nguyen, Contracts and Purchasing Manager Sander Huang, Community Development Director Seimone Jurjis, Public Works Director Dave Webb, Deputy Public Works Director Micah Martin, Deputy Director of Support Services/Police Department Jonathan Stafford, Fire Chief Jeff Boyles, Assistant Fire Chief Justin Carr, EMS Chief Kristin Thomas, Training Battalion Chief Phil Puhek, Battalion Chief Brian McDonough, Fire Marshal James Gillespie, Administrative Manager/Fire Department Raymund Reyes, Harbormaster Paul Blank MEMBERS OF THE PUBLIC: Jim Mosher, Resident; Charles Klobe, Resident OTHER ENTITIES: Terry Madsen, Clear Source III. PUBLIC COMMENTS Mayor Blom opened public comments. Jim Mosher inquired whether staff provided the Commission answers as to whether CalPERS has been impacted by recent bank failures and why residential piers were omitted from the list of top ten revenue sources. He inquired whether the City Council’s recent decision to not declare a state of emergency as related to recent storms will impact the City’s ability to access relief funding. Finance Director Al-Imam responded that CalPERS has approximately 0.02% in exposure due to investment holdings with Silicon Valley Bank and Signature Bank. He also confirmed that the revenue from residential piers is deposited into the Tidelands Fund and split between the operating and capital funds, respectively. City Manager Leung responded the City is able to seek reimbursement for storm-related damages under the County’s emergency declaration. She also confirmed damages to residences may also qualify for reimbursement under the County’s emergency declaration. Seeing no others, Mayor Blom closed public comments. Finance Committee Meeting Minutes April 13, 2023 Page 2 of 7 IV. CONSENT CALENDAR A. MINUTES OF MARCH 16, 2023 Recommended Action: Approve and file. Mayor Blom opened public comments. Resident Jim Mosher and Committee Member Scarbrough requested amendments to the subject minutes. Seeing no other public comments, Mayor Blom closed public comments. MOTION: Curry moved to approve the minutes of March 16, 2023, as amended, seconded by Collopy. The motion carried as follows: AYES: Blom, Cashion, Collopy, Curry, Scarbrough NOES: None ABSENT: O’Neill, Stapleton ABSTAIN: None V. CURRENT BUSINESS A. 2023 FEE STUDY UPDATE Summary: Staff will present the Master Fee Schedule to the Finance Committee prior to presenting it to the City Council Recommended Action: Receive and file. Deputy Finance Director Gomez provided a staff report. The PowerPoint presentation displayed focused on Community Development, Fire Department, and Police Department fees. The majority of fees presented are “cost-recovery” based, as there is a maximum amount to provide the service which the established fee cannot exceed. The City has the authority to charge fees pursuant to its Municipal Code, with some fees designated as a subsidy. The majority of fees are set to achieve 100% cost recovery. The purpose of the fee study is to confirm the costs for providing certain City services. Terry Madsen, City consultant, presented information about the fee study, and noted the proposed changes in fees are small scale incremental adjustments, which are more feasible to manage over time. In response to an inquiry from Committee Member Collopy, Mr. Madsen confirmed the fees charged can only cover the cost of providing the service and can only be adjusted accordingly. Mr. Madsen detailed the two major categories of Community Development fees, building permit-related and planning-related. There are no new fees proposed in the building permit category. The building permit proposed fee adjustments are set to increase by 3% to reflect cost of providing the service. There are two new proposed fees in the planning category, the first of which is a General Plan Maintenance Fee, which is allowed by the California Government Code. The proposed amount is 5% of each building permit fee. Mr. Madsen confirmed that the fee study involved identifying other cities that charge a similar fee and how the City’s proposed fee compares regionally. Committee Member Collopy inquired whether the costs to update the City’s General Plan would meet or exceed the funds that would be collected if the General Plan Maintenance Fee was approved. City Manager Leung confirmed the City currently has $1 million budgeted for the General Plan Update. Community Development Director Jurjis provided additional detail regarding the elements involved in updating the City’s General Plan, including the recent $500,000 expenditure to updating just the Housing Element. An update to each General Plan element has a different cost associated. Finance Committee Meeting Minutes April 13, 2023 Page 3 of 7 Committee Member Collopy inquired whether the proposed fees are covering City staff time, which is already included in the City budget. Community Development Director Jurjis responded that the update to the elements include review of large-scale multi-family developments which impacts taxpayers and staff is identifying measures to offset the resulting costs to incorporate them into the General Plan. The City also utilizes consultant services for General Plan updates. Additionally, City Manager Leung confirmed the City will accrue the General Plan Maintenance Fees in a separate fund and apply them to offset the costs for General Plan-required updates as they are incurred. In response to Committee Member Collopy’s inquiry, Mr. Madsen stated the litigation defense fee is proposed as a method to formally document in the fee schedule, that the City will pass-through the full costs of project-related legal fees to the applicant. He also confirmed staff proactively reached out to the Building Industry Association (BIA), the primary stakeholder association for development-related matters, and walked them through the proposed fee. The BIA had no opposition. Mr. Madsen continued with the presentation on Fire Department fees, categorized under fire prevention and EMS. Under fire prevention, only minor changes were proposed to reflect increased cost of service. Two fee modifications were proposed to enhance correlation between service provided and fee collected. Fee restructuring enables scaling of fees for fire alarm system review and fire sprinkler system review for buildings in excess of two stories. Regarding EMS fees, the emergency transport fees will increase by 2% and the paramedic subscription fees will increase by $2 per month effective January 2024. Committee Member Scarbrough inquired whether the proposed fees take into consideration the salaries and benefits of employees hired at increased rates. Mr. Madsen and City Manager Leung confirmed the proposed fees are based upon hours to perform services, not vacancies. Mr. Madsen continued with the presentation of Police Department fees, noting they are primarily tax funded. There are no new fees proposed. Minor incremental adjustments were proposed for Police administrative fees. Several updates are proposed for animal regulation fees and Mr. Madsen provided details on those items. In response to an inquiry from Committee Member Collopy, Deputy Director/Police Department Stafford confirmed the costs related to police reports are for a copy of an official report, not a cost for taking an incident report. Mr. Stafford provided detail on the City’s policy for cost recovery, particularly as related to lowering fees for copies of incident reports requested by crime victims. In response to an inquiry from Committee Member Cashion, Deputy Finance Director Gomez responded the City is working toward 100% cost recovery on fees for services provided. In response to an inquiry from Committee Member Collopy, Deputy Finance Director Gomez responded the fee study incorporates salaries, benefits, and the direct cost for providing services. Committee Member Scarbrough inquired regarding the rounding of numbers to account for incremental percentage increases in proposed fees. Deputy Finance Director Gomez does have a policy for rounding for small numbers and it will capture the increases over time. Mr. Madsen concluded the report by noting the fee study includes memorialization of pass-through fees for vendor payment processing costs for parking payments made via cell phone applications. There is no net revenue to the City for these fees. Committee discussion ensued regarding the fees and costs for parking tickets and citations. In response to Committee inquiries, Deputy Director/Police Department Stafford responded the State controls moving violation fines and the revenue comes back to the City in an amount and Finance Committee Meeting Minutes April 13, 2023 Page 4 of 7 proportion determined by the State. Parking violations include involvement of the Coastal Commission on certain parking items. The City’s municipal codes sets standards for citations. City Manager Leung noted staff would provide additional information on fines as related to parking. The presentation continued with information provided on the annual subsidies proposed for Community Development, Fire Department, and Police Department fees. In response to an inquiry from Committee Member Scarbrough, City Manager Leung confirmed the City does not differentiate between residents and non-residents as related to Fire Department response fees. Committee discussion ensued on the rationale for the 40% increase in Fire Department fees and whether it will de-incentivize individuals to sign up for the Paramedic subscription program. Administrative Manager/Fire Department Reyes responded noting the City attempts to charge the insurance company regardless of whether the resident is subscribed to the program. The remainder, if not reimbursed by insurance, is charged to the individual who received services. Staff spoke regarding their efforts to market the program. Mayor Blom opened public comments. Jim Mosher commented the City’s charge for copies is three cents per page, noted there is no amount for Police Department cost recovery on page 55 of the agenda report, and inquired as to whether it is the labor charge. He inquired if fees could be waived for nonprofit organizations, such as for pet adoptions. He suggested removing redundancy throughout the proposed fee document. He also requested clarification of the proposed Planning fees listed on pages 54 and 55 of the subject document. In closing, he suggested the appeals fee may be too high and inquired as to how the appeals fee is being justified. It was confirmed the appeals fee was changed to reimburse appeals fees to appellants whose appeals were successful. Seeing no other speakers, Mayor Blom closed public comments. MOTION: Curry moved to receive and file the report, seconded by Collopy. The motion carried as follows: AYES: Blom, Cashion, Collopy, Curry, Scarbrough NOES: None ABSENT: O’Neill, Stapleton ABSTAIN: None B. PROPOSED FY 2023-24 BUDGET OVERVIEW Summary: Staff will present to the Committee an overview of the expenditure budget for FY 2023-24 that will be presented to the City Council in May. Recommended Action: Receive and file. Finance Director Al-Imam and various Finance Department staff provided a staff report and PowerPoint presentation. Mr. Al-Imam highlighted the City’s dedication to providing high quality services and programs throughout the community. The City has an accelerated pension plan, with the goal of paying off pension debt liability by 2032. The budget development timeline and City Council/public review schedule was presented. A snapshot of the current fiscal year financial position was presented, including a recap of the second quarter financials. Budget Manager Burguan presented the proposed budget information for Fiscal Year 2023-24, including display of a chart with a five-year history of the City’s entire budget and a summary of all expenditures and revenues. Finance Committee Meeting Minutes April 13, 2023 Page 5 of 7 In response to an inquiry from Committee Member Collopy, City staff reported that early in the pandemic, the City suspended certain capital improvement projects (CIP) which may explain the ebbs and flows of the CIP fund over the past few years. In response to an inquiry from Committee Member Collopy, City staff responded the adopted budget is what is approved and goes into effect on July 1st (start of each Fiscal Year). Budget Manager Burguan provided detail as to the reasons for the anticipated Fiscal Year 2023-24 budget growth of 6.2% over the previous Fiscal Year. Slide 19 of the PowerPoint presentation provided the costs and percent change for significant factors involved in the increase. City Manager Leung supplied detail on the additional position in Human Resources and overfilling to cover anticipated retirements. Ms. Leung expanded on the City’s recruitment and retention efforts. In response to an inquiry from Committee Member Collopy, it was confirmed the “additional top step” is an added 5% for employees that have been at their top step for at least one year. Budget Manager Burguan provided detail related to general fund expenditures by Department. In response to an inquiry from Committee Member Collopy, Ms. Burguan confirmed the City Manager’s budget is proposed to increase by 11.6% due to anticipated homeless services programs and projects. Budget Manager Burguan provided detail related to general fund transfers for various projects. An additional PowerPoint slide was presented which detailed general fund internal service fund charges for various items. In response to an inquiry from Committee Member Scarbrough, City Manager Leung confirmed the proposed Parks Specific CIP projects has commenced to provide a placeholder for various parks projects, as an assessment of the parks is planned utilizing the services of a consultant. In response to an inquiry from Committee Member Collopy, staff confirmed the plan to place the OPEB 115 trust fund back on the books. General Committee discussion ensued on this item. City Manager Leung reported additional information will be provided to the Committee on valuation. Budget Manager Burguan provided detail related to proposed program enhancements and staffing changes. Committee Member Scarbrough inquired as whether there would be a benefit to documenting Fire Department services provided to residents versus tourists. City Manager Leung responded there are several data points to consider and that it may be quite challenging to raise parking fees in the coastal area. Committee discussion ensued on the various program enhancements and staffing changes that are proposed for the new Fiscal Year. Fire Chief Boyles confirmed the Department will be able to hire six additional staff and will be ready to bring them on in October. Fire Chief Boyles confirmed there are currently approximately 111-112 sworn staff. In response to an inquiry from Committee Member Collopy, City Manager Leung confirmed Human Resources has been working at an exceedingly high pace to handle recruitments and additional staff is proposed to assist with those efforts. Ms. Leung is committed to have a positive workplace culture in the City’s organization and to developing a world-class training program. Finance Committee Meeting Minutes April 13, 2023 Page 6 of 7 Finance Director Al-Imam provided detail on general fund reserves and surplus, including sources and uses, recent changes to the City’s pension liability, historical investment returns and the City’s funded status, turnover of employees into Tiers 2 and 3, and the adjusted unfunded liability paydown strategy. In response to an inquiry from Committee Member Collopy, Finance Director Al-Imam stated the required contribution is about $30 million, which is 10 to 15 times greater than what is required on indebtedness. Additionally, City Manager Leung comment that the City does not have a budget right now for long-term forecasts for significant development agreement revenue. Finance Director Al-Imam concluded the staff report and noted the budget will be presented to the City Council for their review and consideration at upcoming public meetings. Mayor Blom opened public comments. Jim Mosher commented that he and many others were confused by the recent “additional top step” increase of 5% and interpreted it as being an across the board 5% increase in all staff salary ranges. He requested clarification regarding the cost-of-living adjustments that have been actually approved. Staff confirmed the cost-of-living adjustments on slide 19 of the PowerPoint presentation represent 1.7% of the projected 6.2% budget growth anticipated in the upcoming Fiscal Year. Seeing no other speakers, Mayor Blom closed public comments. There was no further action taken on this item. C. BUDGET AMENDMENTS FOR QUARTER ENDING MARCH 31, 2023 Summary: Staff will report on the budget amendments from the prior quarter. Recommended Action: Receive and file. Mayor Blom opened public comments. Jim Mosher requested clarification on the $20,000 for employee luncheon, which he understood was previously paid for by the Chamber of Commerce and not the City. He also requested clarification as to the $7,000 for the City website refresh. City Manager Leung responded the City is responsible for the cost of the employee luncheon and the Chamber of Commerce supplements the program through various in-kind services. She also confirmed the importance of ensuring the City’s website is updated consistently for public transparency and that mobile device users can access and view the website. Seeing no other speakers, Mayor Blom closed public comments. There was no further action taken on this item. D. WORK PLAN REVIEW Summary: Staff will report on the upcoming Finance Committee items. Recommended Action: Receive and file. Mayor Blom opened public comments. Seeing none, Mayor Blom closed public comments. Committee Member Scarbrough requested to have the budget update report in advance. City Manager Leung confirmed the report will be transmitted to the Committee accordingly.