CITY OF LA HABRA HEIGHTS
MINUTES OF A SPECIAL MEETING OF
THE LA HABRA HEIGHTS CITY COUNCIL
MAY 26, 2005
1. CALL MEETING TO ORDER
Mayor Douglas called to order the Special Meeting of the La Habra Heights City Council at 7:38 P.M. on May 26, 2005 in the Multi Purpose Room at 1245 Hacienda Road.
2. ROLL CALL
Members present: Mayor Douglas, Mayor Pro Tem Millsap, Councilmembers Bergman, Carroll and Klein. Also present: Administrative Accountant Vernon and City Manager Hendrickson.
3. FLAG SALUTE
Mayor Douglas led the flag salute.
There were no Public Comments.
4. DISCUSS PRELIMINARY FISCAL YEAR 2005/2006 BUDGET
City Manager Hendrickson thanked the Budget Advisory Committee who went through the Budget. He noted that although they did not agree with us on everything, they agreed that it was ready to present to the Council. He continued that there is a transfer of $1.5 million dollars from the General Fund Reserve to a Capital Improvement Fund.
Mr. Hendrickson explained that he is asking for two full time positions to be added to Staff. One position will be a maintenance individual who will be part of the Public Works Department that we are putting together. There is a part time Public Works Manager and a Public Works Coordinator and now we need a person who will do some of the minor work to be covered by this Department. This person will do anything that can be done which will keep us from having to call out the County Public Works so often. This should save us some money and will also mean a more rapid response to the small repairs around the City. This person will probably be expected to work some times on Friday or even on Saturday. The second position is an entry-level Planner position. This person will be able to handle a lot of the routine and ongoing things that happen in Planning under the tutelage of someone more experienced. As this person becomes more experienced they will be able to handle things independently. We can handle this revenue-wise as the Planning work has increased. Mr. Hendrickson explained that the Budget does show about $1,000,000 expected for road repair from the storms. There will also be money coming in for that from various sources. It should be pretty well covered by FEMA and Federal Highway sources. We have budgeted our portion appropriately in the Budget.
Mr. Hendrickson noted that we show a General Fund balance of about $163,000 estimated. We have figured this in a conservative way. We show Property Tax at 4%, but we received a notice that it would be closer to 9%. We may later have to add charges for septic tank systems, but we are not able to project that right now.
Mr. Hendrickson explained that Special Funds are a little out of balance due to the fact that our total Revenues in the Fire Funds are not covering both the fire and paramedic costs. The Council can balance it by raising the fees or we can wait a full year to see what is needed. The other fund not in balance is for the road repair but we have more money in the fund than is shown in the Budget and more than we will actually spend already in the fund. These expenses will come out of that reserve specifically identified for that work. There is money set aside for the preliminary work on a new Fire Station and City Hall, approximately $150,000. He stated that if we decide how to finance the project we may want to modify or amend the Budget in its full development stage.
Budget and Accounting Officer Vernon presented a preliminary draft of the Fiscal Year (FY) 2005-2006 La Habra Heights Budget.
Accountant Vernon stated that the projected Budget for FY 2005-2006 is as follows:
TOTAL REVENUES: $5,862,927
TOTAL EXPENDITURES: $6.204.877
The details follow:
á General Fund Revenue is expected to be $2,431,000, which is about a 1% decrease.
á We expect to see an increase in the surplus of $163,000 for the next year.
á Property Tax is budgeted at 4% but we were notified it would be 9%.
á We have projected a small decrease in building activity.
á We will receive the full VLF as in the past.
GENERAL FUND EXPENDITURES:
á General Fund Expenditures are projected at $2,268,000, a 9% increase.
á Cost increase in Staff, which will be partly offset by decrease in other costs.
á Transfer of $1,500,000 to Capital Improvement Fund.
GENERAL FUND BALANCE/RESERVES:
á General Fund Balance/Reserves expected to be $1,600,000 after the transfer of the $1,500,000 to the Capital Improvement Fund.
á The Reserves will be about 67% of Annual Expenditures by the end of the year.
FIRE FUND (Including paramedics)
REVENUE:
á Revenues are projected to be $1, 520,000, which is an increase of 15%
The increase is due to higher ratio of developed lots/larger homes.
á We expect an increase in Federal Grant for equipment. If we donÕt get the grant we will not buy the equipment.
á We expect an increase in Wild Fire Contract Revenues.
EXPENDITURES/TRANSFERS
á Total expenditures $1,182,431, which is an increase of 24%.
Mainly due to the fact that this will be our first full year with a fully staffed in-house Paramedic Department, expenses estimated to be about $164,000. This does not cover any revenues we expect to collect.
á We recommend a transfer of $100,000 to the Fire Equipment Replacement Fund that we are starting this year. In about three years we will need a new fire engine.
Mayor Douglas commented that the expenses have gone up more than the cost of the Paramedics.
Accountant Vernon explained that it was mostly the cost of the Paramedics and the transfer for a Fire Equipment Fund.
City Manager Hendrickson noted that not receiving the grant last year which was listed in the estimated revenue made almost $100,000 difference along with inflation of costs of equipment. We also have had an increase in what we pay for PERS retirement this year.
FIRE FUND BALANCE/RESERVES
á We expect the Fire Fund Balance or Reserves to be $739,000.
á The Reserves will be 63% of the Annual Expenditures.
City Manager Hendrickson commented that even though the in-house paramedics have increased our expenses, if we had stayed with La Habra our costs would have been about $60,000 greater.
Mayor Douglas asked if there was any effort to find some area that did not happen each year that could be cut out of the Budget.
City Manager Hendrickson explained that they go over everything every year looking for ways to cut unnecessary items out of the Budget. The Budget Advisory Committee also does this. Mr. Hendrickson stated that it was hard to make a projection until we have a full year of the Paramedic Service. As soon as we are able to we should take a very close look at the expenditures as you have mentioned.
Councilmember Bergman asked why the Retirement was up quite a bit.
Mr. Vernon explained that we have had to pay more into the PERS retirement system. They make the decision on how much we pay in and it has increased by 13%. The good news is that we only have two full-time safety personnel.
RESTRICTED FUNDS
REVENUES/EXPENDITURES
á We expect to receive $139,000 from Gas Tax and spend $132,000. This comes from the State for road maintenance.
á Prop A Funds come from MTA. We expect to receive $92,500 and spend $86,000.
Mayor Douglas asked if the Prop A Funds are also shown in the General Fund Revenue.
The Accountant noted that since we do not have a transit system, we sell these funds at a discount to other cities for General Fund purposes.
Mayor Douglas noted that the amounts between what we receive and what goes into the General Fund do not show much of a discount.
City Manager Hendrickson explained that the amount shown in Miscellaneous Funds on Page 2 of the Budget includes more than Prop A Funds.
á Mr. Vernon continued that we expect to receive from MTA Prop C Funds $83,500 and spend $156,000. He stated that with Prop C Funds we have to spend a certain amount within three years or the money reverts back to MTA. He stated that we are spending more due to using some local funds for our storm damage portion.
City Manager Hendrickson explained that we had not been able to spend that money for some time because we do not have a fixed bus system. Ms. Orchanian and Mr. Vernon have been continuing to talk to MTA and we were able to determine that with the Dial-A-Ride we use certain roads a majority of the time, and are allowed to use the money to help maintain those roads. It will not cover guard-rails.
Mr. Vernon continued with his report.
á For Storm damage we expect to receive and spend $1 million.
á We expect to receive from Supplemental Law $110,000 and spend $110,000.
á For Park Grant Projects we expect to receive $210,000 and spend $219,000. This fluctuates year to year depending on our needs.
CAPITAL PROJECTS – ROADS
EXPENDITURES
á On-going Street/Roads maintenance for District #2, we expect to spend $240,000. We do not expect to receive anything more for District #2, in the new fiscal year.
á On-going Street/Roads maintenance for District #3, we expect to spend $240,000. This is just an estimate. We could spend more or less.
CAPITAL PROJECTS – FACILITIES
EXPENDITURES/TRANSFERS
á We have budgeted $152,800 for Technical and Design work for the new Fire Facilities/City Hall.
á We expect to transfer $1,500,000 from the General Fund to the Capital Improvement Fund where it will probably be needed for whatever option the Council decides to pursue.
á We will transfer $100,000 from the Fire Fund to the new Fire Equipment Replacement Fund.
Accountant Vernon stated that this is the completion of his report.
Mayor Douglas asked where the $1,500,000 transfer is shown.
Accountant Vernon stated that it is shown on page 1 under Transfers.
City Manager Hendrickson stated that another way to show this is on page 11 and 12.
Mayor Douglas asked what page 4 is showing.
Mr. Vernon explained that it is not shown here as it is not an expenditure, and it is shown as a transfer on page 12.
Mayor Douglas asked why there is such a difference in the Parks & Recreation Revenue from last year to this year.
City Manager Hendrickson referred to page 67 and 68 which gives the details of the Grants and projects.
Mayor Douglas asked why there has been so much variance in the amounts over the years for the Resource Extraction License Fees listed on page 5.
Mr. Hendrickson stated that at some time someone missed a payment and it was made up in the next year. It is a little more this year because we expect a little more production, especially in gas. Mr. Hendrickson also noted that this fee is a little higher than a lot of other Cities.
Mayor Douglas asked about Bike and Pedestrian Safety listed as $5,000 Revenue on page 9.
Mr. Hendrickson stated that we get $5,000 every year for that purpose and we have a limited time to use it. We can use that money only for bike and pedestrian. We can utilize the information that we gather for that use as to how it affects or can go along with equestrian use.
Councilmember Bergman stated that he was concerned that we are asking for another Staff member for Planning when we are expecting less activity and revenues in that Department.
Mr. Hendrickson stated that there is still an increase from two years ago. The present Staff really can use more help with the workload.
Councilmember Bergman asked if we have considered using interns.
The City Manager stated that we have and that sometimes interns vary greatly in ability and they are not always available in a continuous manner. He stated that in his opinion we have a workload level that could utilize an Assistant Planner more effectively.
Mayor Pro Tem Millsap stated that on page 84 and 86 the Community Development Director is still listed as Contractual.
City Manager Hendrickson stated that it was easy enough to move over, and it will still be that way until about midway through the Budget year. The cost will be about the same as the Contractual.
Accountant Vernon noted that when they hire a full time employee for that position the money is there.
Mayor Pro Tem Millsap stated that at times they spend quite a bit of money for maintenance so the cost of hiring our own maintenance person would be offset somewhat by what we already pay on special occasions.
Councilmember Bergman stated that he would like to see some saving of money if we are going to hire someone.
Mr. Hendrickson stated that there is not only some tradeoff of cost, but there is also an increased level of service. He stated that when you call out the County it costs $1500.
Mayor Douglas stated that he would like to see more detail on what this person would do and exactly how much this cost would save from what we do now.
Mr. Hendrickson stated that he would have the information by the next Council Meeting.
Councilmember Bergman explained that he knew there still would be services that get farmed out so that is why he wondered what tasks this person would perform that are usually outsourced and what the cost savings would be.
Mr. Hendrickson noted that the reason he was not yet prepared to answer is that he and the Public Works Manager are working that out. We are looking at this person to handle a lot of the small routine items such as signs and small improvements.
Accountant Vernon asked if it was possible to save money from not contracting
out as many hours with certain Transtech members, like Public Works staff.
Mr. Hendrickson answered that there might be some savings possible but he was not expecting a lot initially as there are other programs.
Councilmember Bergman asked if it has been considered as to what it would cost to buy new equipment for the added maintenance person.
City Manager Hendrickson stated that we are not expecting need for much more equipment, but we may be able to get a useable truck from the Water Company for a reasonable price. If we have a need for a larger piece of equipment, we can rent it rather than buy it. Mr. Hendrickson stated that he is not planning a full Public Works Staff. We would use this help here and at The Park for problems needing immediate attention. We get calls all the time regarding some small thing where it would not pay to call out the County work force. He stated that if we had enough volunteers it might eliminate the need for this position, but we would also have to consider the possibility of liability.
Councilmember Bergman stated that it would also be helpful to know the history of work that has been contracted out during the last year that we know this person could do.
Mayor Douglas noted that on page 21 and page 82 it talks about City Attorney. Looking at page 82, he asked what the proposed FY2005/2006 amounts for legal services covers.
City Manager Hendrickson stated that is for attendance at meetings and general items that might come up that we have to deal with, such as land use issues, Planning Commission issues, General Plan issues or Ordinance Review. It really covers all legal service.
Mayor Douglas stated that he sees a total of $40,000 to $45,000 on computer maintenance and cost.
Mr. Hendrickson explained that we need to have the system corrected. It is partly operating cost. He stated that he thought the operating costs would go down if we have the right system in place. Mr. Hendrickson also explained that we have changed our IT individual since we have had problems for some time. He felt that once we get the right system the Consultant time should also go down. We are making some changes now and some will be next year.
Mayor Pro Tem Millsap stated that it never hurts to get a second quote on miscellaneous items.
City Manager Hendrickson agreed and stated that a lot of times we do.
Councilmember Carroll asked what happened to the item that we were going to talk about; more comfortable chairs for the audience.
Mr. Hendrickson noted that it was on page 29, item 9087.
Mr. Vernon stated that he did not think they had added any amount for softer chairs. He suggested they get cushions.
The Council discussed whether money should be added for cushions.
The consensus of the Council was that they would add $2,000 to Item 9087 and discuss the item at a later date.
Councilmember Bergman asked if any of the Revenues are at risk.
Mr. Vernon and Mr. Hendrickson agree that they were all firm.
Mr. Vernon stated that they probably would get more, but he did not want to count on that.
The City Manager stated that the only questionable one is FEMA, but it looks good.
Mr. Vernon mentioned that the Fire Department Grant is a little questionable. It is probably 50/50. If we do not receive the Grant we will not spend the money. The State has actually promised to pay the VLF backfill gap for 2002-2003 and 2003-2004 in March 2006. He stated that he did not enter this $103,000 into the Budget.
Mayor Pro Tem Millsap asked for confirmation that we were denied FEMA funds.
Mr. Hendrickson stated that it was denied only on Hacienda and we found a different source for that which is even better. He confirmed that it is a Federal Highway Fund.
Mayor pro Tem Millsap asked if the match would be the same.
City Manager Hendrickson stated that the match with the Federal Highway source would be better. He stated that we did not allow for that in the Budget.
Mr. Hendrickson noted that it is not in the Budget and he is verifying it now. Until we are sure of all of the facts he noted that he would rather not put the amount in the Budget.
Mayor Pro Tem Millsap noted that since the Hacienda figure from FEMA is in the Budget and is not going to happen, shouldnÕt it be taken out and replace it with the correct figure.
Mr. Hendrickson commented that we could change it, but as Councilmember Carroll stated we do want to be on the conservative side. We could put the new figures in, but if for some reason we donÕt get that figure it would leave us short. There is only the work on Hacienda that may be different from what we determined.
Mayor Douglas asked why they should use an outdated funding mechanism.
Mr. Hendrickson stated that we have had the final talk with FEMA today and we have closed out the dollar amounts. The amount is around $300,000. FEMA will pay 75%, the State will pay 18.75% and we will pay 6.25%.
Mayor Pro Tem Millsap asked Mr. Hendrickson to figure for next time what the Federal Highway amount would be for Hacienda, as it may not be worth changing. We can talk about it next time.
Mr. Hendrickson stated that at best, it would be 5% for us. He stated that he might not have that information by next time.
Mayor Pro Tem Millsap questioned the circumstances for the need of a new Fire Engine in three years. She stated that she did not remember the Fire Chief mentioning such an item.
Mr. Vernon stated that he believed that would be a replacement. He stated that according to his study they would need to replace one in 2008 and retire an older one.
Mr. Hendrickson stated that we should be able to sell the retired one.
They discussed putting that schedule in the next regular Council Meeting.
Mr. Vernon stated that he would talk to the Fire Chief to see if anything has changed and what they will do with the retired Engine.
The City Manager commented that the Engine was 20-25 years old.
Mayor Pro Tem Millsap asked when the next County election will be. There has been the suggestion that anything we do with the Fire Department or facilities should go to a vote from our residents. She wanted to know if we need to put any cost for this in the Budget. She noted that there is also a timing issue as you will not see the money right away.
Mr. Hendrickson stated that he has not looked into it as yet. He also explained that the Fire Fees could be changed at any time it is needed but it has to wait for the next year to be placed on the tax roll. If you are voting on a bond issue you would possibly get a cost savings on a concurrent vote with LA County. You can probably count on a cost of $20,000.
Mayor Pro Tem Millsap stated that she was not concerned about the Fire Service Fee in terms of scheduling.
Mr. Vernon stated that the Council wanted the following items:
1. Cost savings for the new maintenance position.
2. Cost for padded chairs.
3. The most likely scenario for funding for storm damage.
4. Add the Fire Engine replacement schedule with the Budget and talk to the Fire Chief about what he will do with the retired vehicle.
5. Find out date of CountyÕs next election and cost.
Mr. Hendrickson stated that we will put the cost of an election in the Budget. You can decide whether you want it kept in the Budget. That doesnÕt mean it will be spent if there is an election.
Mayor Douglas adjourned the City Council meeting at 9:12 P.M. to the Special City Council Meeting for interviews on June 2, 2005 at 7:30 P.M.
ATTEST:
___________________________________
CITY CLERK, JOHN F. HENDRICKSON