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HomeMy WebLinkAboutApproved Minutes - June 11, 2015Finance Committee Meeting Minutes June 11, 2015 Page 1 of 6 CITY OF NEWPORT BEACH FINANCE COMMITTEE JUNE 11, 2015 MEETING MINUTES I. CALL MEETING TO ORDER The meeting was called to order at 4:00 p.m. in the Newport Coast Conference Room, Bay 2E, 100 Civic Center Drive, Newport Beach, California 92660. II. ROLL CALL PRESENT: Council Member Keith Curry (Chair); Mayor Pro Tem Diane Dixon; Committee Member Bill McCullough; Committee Member Larry Tucker; Committee Member John Warner (arrived at 4:06 p.m.); and Committee Member Jack Wu ABSENT: Council Member Tony Petros (Excused) STAFF PRESENT: City Manager, Dave Kiff; Finance Director, Dan Matusiewicz; Deputy Finance Director, Steve Montano; Administrative Specialist to the Finance Director, Marlene Burns; Senior Accountant, Theresa Schweitzer; Public Works Administrative Manager, Jamie Hook; Fire Administrative Manager, Angela Crespi; Deputy City Manager/HR Director, Terri Cassidy; Fire Chief, Scott Poster; Systems and Administrative Manager, Dan Campagnolo; Community Development Director, Kimberly Brandt; Revenue Manager, Evelyn Tseng; Accounting Manager, Rukshana Virany; Police Support Services Administrator; Jonathan Stafford; Budget Manager, Susan Giangrande; Senior Civil Engineer, David Keely; Harbor Resources Supervisor, Shannon Levin; Building Manager/Chief Building Official, Seimone Jurjis; License Supervisor, Monique Navarrete; and IT Manager, Rob Houston MEMBER OF THE PUBLIC: Carl Cassidy III. PUBLIC COMMENTS - None IV. APPROVAL OF MINUTES A. Summary: Approval of the March 10, 2015, Joint City Council/Finance Committee Minutes and the May 11, 2015, Finance Committee Minutes. Recommended Action: Approve and file. Mayor Pro Tem Dixon moved, and Committee Member Tucker seconded, to approve the March 10, 2015, Joint City Council/Finance Committee Minutes and the May 11, 2015, Finance Committee Minutes. The motion carried with 6 ayes and 1 absent (Council Member Petros). V. CURRENT BUSINESS A. MUNICIPAL FEE SCHEDULE Summary: Chapter 3.36 of the Newport Beach Municipal Code (“Municipal Code”) requires that user fees for municipal services be recovered at one hundred percent (100%), unless otherwise Finance Committee Meeting Minutes June 11, 2015 Page 2 of 6 provided for in Municipal Code Section 3.36.030. After careful analysis and review by MGT of America, Inc. (“MGT”), staff developed and proposes updates to the fees for the Police, Fire, Public Works, and Community Development Departments. Recommended Action: Staff recommends that the Finance Committee direct staff to bring the attached changes for City Council approval. Finance Director Dan Matusiewicz thanked Finance staff and participating Departments, introduced the item and deferred to staff for a report. Deputy Finance Director Steve Montano provided a PowerPoint presentation. He acknowledged attendance of staff from various Departments as well as the consultant retained to help with this project. He addressed an overview of the presentation including a high-level summary of the proposed fee changes, the purpose of the fees and the authority for administering and updating the fees, the methodology on how the fees were calculated and each Department's proposed fees. He noted that thirty-four percent (34%) (100) of the fees are being decreased or eliminated. He addressed the phased approach, cost of services, and the reasons why some fees are being increased/decreased/eliminated, including recovering of costs for services. Brief discussion followed regarding total revenue by Department related to fees. Deputy Finance Director Montano addressed Police Department fees, variances in fees, Public Works fees and Transport fees. Fire Chief Scott Poster addressed emergency medical transport fees. Discussion followed regarding County fees and services, potential revenue from the changes in fees, efforts to recover costs as much as possible, Medicare coverage, rate of recovery, situations where patients are treated but not transported and uncollectable charges. City Manager Kiff responded to an inquiry from Mayor Pro Tem Dixon noting that staff would like input from the Committee regarding, policies, and uncollectable debt and on first responder non-transport fees. Mayor Pro Tem Dixon noted that taxpayers pay for the uncollectable debt. Discussion followed regarding repetitive calls and it was noted that the Fire Department cannot discriminate and must respond to each call, without regard to the likelihood of collection. Discussion followed regarding best practices by other cities, private ambulance services, issues with borrowing ambulances, and advanced life support services. Fire Chief Poster stated that the City of Costa Mesa is looking to implement the Newport Beach model and reported that many Fire Departments are getting into the transport business and suggested looking at neighboring cities. He addressed a jurisdictional comparison of fees and reported that Newport Beach calculated actual costs where other cities have not. Discussion followed regarding efforts to collect and Chief Poster reported that the City contracts with outside agencies for billing and collection services. Fire Administrative Manager Angela Crespi reported the bad debt average from 2014 is $578,000. Finance Committee Meeting Minutes June 11, 2015 Page 3 of 6 Fire Chief Poster added that about thirty-four percent (34%) of the calls for service in the City are for non-residents. Each jurisdiction decides how they want to set up their fee structure and what they want to bill. Chair Curry noted that initially, when this was reviewed in the past, there was a differential charge for non-residents. Fire Administrative Manager Crespi reported that the Department does not collect data on people that are not billed. She added fourteen percent (14%) of transports are "private pay". Finance Director Matusiewicz added that some of the fees offset the cost of the Fire Department's readiness to serve. Fire Chief Poster noted there is some redundancy in terms of fire fighter paramedics and ALS calls and addressed the need to evaluate transport, financially. In response to Mayor Pro Tem Dixon's question, Chief Poster commented that bad debt was not currently factored in. Discussion followed regarding the expected revenue once the fee changes have been implemented and the percent of salaries and benefits derived from fees. In reply to Committee Member Wu's question, Chief Poster noted that just a little less than eighty percent (80%) of all calls are EMS. Discussion followed regarding the need for fire engines for certain calls. Chief Poster stated that when a call is received, the goal is to provide the closest resource to be able to respond as soon as possible. Chair Curry redirected the discussion to the proposed fee changes. Committee Member Tucker commented on increases in plan-check fees. Chief Building Official Seimone Jurjis reported that plan-check fees are not charged on an hourly basis. He added that fees are based on the assessed value of the project, based on square footage. He indicated that staff is proposing a twenty-one percent (21%) increase in plan-check fees. Deputy Finance Director Montano added that fees have not been updated since 2008. Chair Curry commented on the cumulative impact of delayed action. Discussion followed regarding appeals to City Council and the Planning Commission. Community Development Director Kimberly Brandt reported that a provision in the Municipal Code states that appeals are to be subsidized by fifty percent (50%). She addressed the previous and current appeals process. Chair Curry opened public comments. Chair Curry closed public comments. Mayor Pro Tem Dixon moved, and Committee Member Tucker seconded, to approve recommend approval of the proposed changes in fees to City Council. The motion carried with 6 ayes and 1 absent (Council Member Petros). Discussion followed regarding exploring how to recover "uncollectible costs", establishing a fee differential for residents and non-residents, considering a process to recover for high-volume users and incentivizing not to call and consider a policy change to recover non-resident non- transport services and bad debt. Chair Curry summarized direction to staff to return to the Finance Committee with recommendations on how to advance fee/cost recovery in the Fire Department. Finance Committee Meeting Minutes June 11, 2015 Page 4 of 6 B. BUSINESS LICENSE Summary: Pursuant to recent Council direction, staff will present an overview of the City’s Business License Tax to the Finance Committee. Recommended Action: Receive and file. Business License Supervisor Monique Navarrete provided an overview of the Business Tax Program. She addressed background, tax versus assessment fee, authority, raising revenue for public services, examples of services provided, business categories, and total current revenues. She added that the City receives very few complaints related to the Business Tax Program. She addressed the number of businesses licenses issued per year and costs to administer the program and noted that revenues go into the City's General Fund. She added that the program is not intended for regulation. Business License Supervisor Navarrete addressed practices of surrounding cities. Discussion followed regarding the Huntington Beach program, the number of businesses in Huntington Beach compared to Newport Beach, cities that base on a flat tax, charges per employee based on whether they collect sales tax or not, percentage of non-compliance, the tax collection process, enforcement and attempts at discovering non-compliant businesses. Additionally, Business License Supervisor Navarrete reported on the number of California cities that require business licenses and those that do not. She presented changes that went into effect in 2014, and addressed what happens if the tax becomes a fee. Finance Director Matusiewicz addressed the financial impact to the City by eliminating the program. Discussion followed regarding practices in the City of Irvine. It was noted the Irvine has no marine services, no library and no lifeguards. Ensuing discussion pertained to the criteria for requiring a business license and the process for taxing contractors. Chair Curry opened public comments. Carl Cassidy opined that the City does a good job in terms of business license taxes. He noted that using a P.O. Box for filing taxes is prohibited. Chair Curry closed public comments. Committee Member Wu stated he would like to see what percentage of businesses in Huntington Beach, do not pay business license taxes. Chair Curry suggested that staff research the matter and communicate the findings to the members of the Finance Committee. Discussion followed regarding the possibility of getting a higher percentage of businesses participating if the tax is reduced. Business License Supervisor Navarrete stated that most complaints received are not about the amount of the tax, but rather not knowing that a business license was needed or wanting to stay "under the radar" as long as possible. Discussion followed regarding the number, categories, and sizes of businesses in the City and proprietors who do not have employees. Finance Committee Meeting Minutes June 11, 2015 Page 5 of 6 C. QUESTION/ANSWERS PERTAINING TO FY 2015-16 ADOPTED BUDGET Summary: As a follow up to the last Finance Committee, the Committee is welcome to continue its questions and comments about the FY 2015-16 Adopted Budget. All questions and comments are still relevant even following Council adoption of the FY 2015-16 Budget, as the input will help frame both budget adjustments and planning for the FY 2016-17 Budget, which begins relatively soon. Recommended Action: The Committee may ask questions specific to the Adopted FY 2015-16 Budget or any topics pertaining to City finance practices, policies, and procedure. Chair Curry commented on the previous budget discussion and noted this item has been placed on the agenda to allow for further discussion if the Finance Committee desires it. Discussion followed regarding providing an explanation of variances in budget presentations, going forward, changes in the budget, the performance plan and identifying what things the Finance Committee wants to review in order to make recommendations to the City Manager prior to starting the budget. Committee Member Tucker commented on the importance of determining if the City has the right number of employees. He added that savings will result from more efficient use of employees. Mayor Pro Tem Dixon noted that the number of employees are driven by the number and types of services provided. Chair Curry commented on efforts made by the City to address costs associated with full-time employment, including outsourcing, the waste and street-sweeping contract, and other operational efficiencies. He added that the low-hanging fruit has been done and that the big labor costs are in Police and Fire services. Committee Member Tucker commented on the possibility of additional efficiencies. Mayor Pro Tem Dixon noted that the community is accustomed to a certain level of service and suggested that going forward, the Finance Committee should scrutinize principles to inform staff how to build their respective department budgets. She added that the budget includes $40 million of forced savings for future needs. Finance Director Matusiewicz addressed items that would go into the long-term need category, including the FFP, vehicle replacement plans, and transitions in the communications system, as well as others. Committee Member Warner departed at 5:48 p.m. Discussion followed regarding conducting efficiency studies, outsourcing park maintenance, and construction projects, the approval threshold for City contracts and the possibility of implementing a flat budget and its impact. Finance Director Matusiewicz stated that many programs are near and dear to the community so that care must be taken before deciding to change or eliminate them. Chair Curry suggested finding a function that would be a candidate for additional efficiencies and having the Finance Committee work with staff to identify a strategy and an estimate of the savings and develop recommendations for Council. Mayor Pro Tem Dixon suggested reviewing the vehicle replacement policy in a future meeting.