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MINUTES 2018/11/27 (STUDY SESSION)1 Mayor Curtis W. Morris Mayor Pro Tern John Ebiner Councilmember Emmett Badar Councilmember Denis Bertone Councilmember Ryan A. Vienna S'T'AFF: City Manager Blaine Michaelis Assistant City Manager Ken Duran Assistant City Manager Community Development Larry Stevens Director of Parks and Recreation Hector Kistemann Director of Public Works Krishna Patel City Attorney Mark Steres Mayor Morris convened the Study Session meeting at 5:00 p.m. with all Councilmembers present. 1. Oral Communications There were no public comments. 2. a. Receive a report regarding the 2017 -18 Fiscal Year Audit Mr. Duran reviewed his staff report on the audited financials for the 2017 -18 fiscal year -end. He reviewed the General Fund revenues for the year discussing the actual revenues for the major revenue categories and staff answered questions. Mr. Duran reviewed the General Fund expenditures for the year from his staff report and staff answered questions. Mr. Duran reviewed the Schedule 1 summary of Actual Ending Balances for all Funds from the staff report. He reviewed the General Fund Ending Fund Balance portion of the staff report indicating that the ending fund balance was $18,110,999. 2. b. Receive a report recommending funds to be available for appropriation — then appropriate those funds Study session minutes November 27, 2018 Page 2 Mr. Michaelis presented a summary of the General Fund Ending Fund Balance from the staff report. He recapped that the net available fund balance is $18,110,998. He reviewed that in the past the City has used a policy to hold 78% of General Fund expenditures in reserve. He added that because of the significant General Fund allocations over the past few years staff would suggest using a 75% factor this year. He described that given this approach that would result in approximately $1,320,000 available for distribution to Special Funds. Mr. Michaelis described staff s suggestion on distribution of those funds being $625,000 to the Infrastructure Fund 12 and $495,000 to Park Development Fund 20. He also described that the City has a practice the past few years to pay down the City's pension unfunded liability and suggested using $200,000 this year towards that obligation. Mr. Michaelis described that previously the Council had suggested several specific projects for consideration. He presented cost estimate information for each of those projects. He also mentioned that there have been requests for community contributions which will be discussed later in the meeting. Mr. Michaelis presented a General Fund balance summary for the past 10 years. Mr. Michaelis presented more detailed information for some of the previously discussed park improvement projects including Via Verde Park walking trail improvements and lighting, Via Verde Park playground equipment shade structure and Civic Center Park sidewalks. He suggested allocating the $495,000 to Fund 20 and to discuss specific projects as a part of the FY 2019 -20 budget. He also suggested that there may consideration for alternatives to be considered for the walking trail, play equipment canopy and pursuing outside funding sources. Mr. Michaelis summarized that staff's recommendation is to allocate the additional reserves in the manner as he described in his staff report maintaining an approximate 75% general fund expense reserve level. In response to a question by Mayor Pro Tern Ebiner, Administrative Services Manger O'Brien explained that the City's unfunded pension liability is around $11 million and any additional payments made save on paying additional interest. Mayor Pro Teen Ebiner asked what the projected ending fund balance would be in the Infrastructure Fund without the proposed transfer. Mr. Duran responded that all of the current funds in that Fund are allocated this year for projects so the without the transfer the fund balance would be $0. Mr. Duran also confirmed that all of the funds in the Park Development Funds are committed to projects this year. In response to questions, Mr. Michaelis clarified that staff's recommendation on the transfer of the reserve funds does include allocation to any specific projects, that he provided project cost estimates just for perspective. There was discussion on considering the projects with next year's budget and understanding how they compete with other projects and available revenues. Study session minutes November 27, 2018 Page 3 In response to questions, Mr. Michaelis explained the functions of systems management software. In response to a question regarding the Recreation Center, Mr. Michaelis commmented that in this year's budget are funds to conduct a needs assessment to identify what the future needs of a recreation center might be and based upon the results of that assessment will drive the redesign of the center. Mayor Morris summarized the recommendation of staff on how to allocate the $1,320,000 to the three areas, Fund 12, Fund 20 and pre -pay the unfunded pension obligation. Councilmember Badar made a motion to approve staff s recommendation on the allocation of funds. Councilmember Ebiner made a comment that he will go along with staffs recommendation but would like for us to increase the percentage of reserves over the next few years. Mayor Pro Tern Ebiner commented that maybe in the future Fund 20 should include a change in description to include cultural activities to include community requests. Councilmember Vienna commented that he is partial to seeing an investment back into staff for enhancement software to make them more efficient. The motion was seconded by Councilmember Vienna and approved unanimously. Mr. Michaelis reported that the Festival of Arts has made request to the City to provide funding for their 2019 spring art show. Bob Poff, representing the Festival of Arts, made a presentation on behalf of the Festival requesting financial assistance from the City for the spring 2019 art show. He gave a history of the Festival and the benefits to the City. He gave a history of decline in art sales over recent years and the increasing costs on putting on the show. He added that they have new ideas for marketing and changes to the 2019 show. He asked the Council to consider a contribution for the 2019 show and based upon evaluation of that show possible consideration for the 2020 show. In response to a question, Mr. Poff stated that the Festival is requesting $10,800. Mayor Morris added that since he is considering this like a line of credit the amount should be $15,000. Councilmember Berton stated that he would not vote on this item since he is on the Board of the Festival. There was discussion on the proposal. It was clarified that the request is only for the 2019 show and that depending on the actual expenses and proceeds from that show that it may be reevaluated in 2020. In response to a question Mr. Poff responded that the Festival would present a full budget of expenses prior to the show and a profit and loss statement after the show. Councilmember Badar made a motion to allocate the $15,000 for the 2019 show. There was more discussion on how the show proceeds would be reviewed and applied towards the next year's show. Mayor Pro Tem Ebiner seconded the motion but commented there needs to be an MOU. Councilmember Vienna commented that he is in favor in principal to the allocation but concerned with other non -profit organizations expecting funding from the City. There was further discussion about the details of a contribution and the need for an MOU. Councilmember Badar amended his motion to request staff work with the Festival to draft an MOU for a contribution for the 2019 show and bring it back to the Council for consideration. Study session minutes November 27, 2018 Page 4 The motion was seconded by Councilmember Vienna and pass by a vote of 4 -0 -1 with Councilmember Bertone abstaining. Alline Kranzer, resident, commented that she really feels that there is a need for sidewalks on the perimeter of Civic Center Park and to forget the trees. She added that Civic Center Park should be accessible to seniors since it is adjacent to the Senior Center. � u The meeting was adjourned at 6:45 p.m. s K6n Duran, City Clerk P s9 -�I� Curtis W. Morris, Mayor