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MINUTES 2019/11/26 (STUDY SESSION)CITY COUNCIL STUDY SESSION MINUTES TUESDAY NOVEMBER 261h, 2019 6:00 P. M. SAN DIMAS COUNCIL CHAMBER SAN CONFERENCE ROOM DIES 245 E. BONITA AVE. CITY COUNCIL: Mayor Curtis W. Morris Mayor Pro Tem. Ryan A. Vienna Councilmember Emmett Badar Councilmember Denis Bertone Councilmember John Ebiner STAFF: City Manager Ken Duran Assistant City Manager Brad McKinney Director of Public Works Krishna Patel Director of Parks and Recreation Hector Kistemann Director of Community Development Henry Noh City Attorney Jeff Malawy City Clerk Debra Black CALL TO ORDER Mayor Morris called the meeting to order at 7:00. ORAL COMMUNICATIONS (For anyone wishing to address the City Council on an item on this agenda. Under the provisions of the Brown Act, the legislative body is prohibited from taking or engaging in discussion on any item not appearing on the posted agenda.) Members of the Audience Resident Gil Gonzalez stated that he had questions regarding revenue in the building department when this subject is discussed. STUDY SESSION Receive a report regarding the 2018-19 Fiscal Year Audit City Manager Ken Duran provided an overview of how the city wrapped up the year starting with the revenue. He shared that the General Fund revenues were about $25.8 million compared to the budgeted amount of $23.6 million, $2 million more than the adopted budget and $3 million more than last year. He stated that there were several one-time revenue sources which accounts for about $1.4 million of the $3 million (property taxes $200,000 and sales tax of $7.1 million). He explained that the sales tax amount was due to a change in the reporting system businesses City Council Study Session Minutes November 26th, 2019 Page 2 use to report their figures and this caused some delays in reporting. Other areas that he touched upon were: • Franchise tax was flat, • TOT d ow n • building permits budget $561,000, brought in $832,000 • street permits $25,000, came in at $162,000 due to the Brandywine Project • Vehicle license fee flat • Business license flat • Parking permits and citations up a little • Local ordinances have declined (moving violations) and have been dropping over several years because of rising court fees • Development fees doubled but still a small number that doesn't cover the zoning or application process • Recreation programs up: swim lessons up 130% due to new marketing implemented last summer • building rentals are flat • Interest received on investments in reserve funds and interest on the golf course loan Administrative Services Manager Michael O'Brien stated that the city has to adjust their investments earnings for fair market value. He provided a detailed description on the method used for doing this along with a breakdown of the reporting of the golf course loan. Mr. Duran reminded the Council of the purpose in establishing the Golf Course Authority. He added San Dimas is the majority participant in the Authority and the City of La Verne has a small interest. He also added that the Golf Course Authority is the entity that the money was loaned to and the Golf Course Authority will be paying the principal and interest. Council and staff continued discussion of the Golf Course loan features and mechanics. Responding to Councilmember Badar, Mr. O'Brien stated the city works with an investment firm as well as Cal Trust and LEIF. He added per our Investment Policy we can't invest more than 30% in CD's or 20% to commercial deposits. Responding to resident Gil Gonzalez, Mr. Duran stated that all revenue funds go into general fund. Responding to Councilmember Ebiner, Mr. Duran stated the budgeted General Fund revenue amount is approximately $24 million. He added in February staff will begin the budget process and present an update to Council then. Mr. Duran moved onto the expenditures, and summarized the $23.4 million expenditures for the year and explained that $130,000 of encumbered money such as projects that were not completed in last year and will be carried over to next year. He summarized the totaled amount of expenditures to be $23.5 million. $24.8 budgeted and we are about $1.3 million below what was City Council Study Session Minutes November 26, 2019 Page 3 anticipated. He stated that there were also some one-time expenses, and a number of carry-over projects that are re -budgeted for next year that accounts for $430,000 of the $1.3 million savings. He also stated there were some expenditure savings due to staff vacancies during recruitment processes that went unfilled. He added collectively all the departments came in under budget and some were over such as contract accounts. Responding to Mr. Gonzalez, Mr. Duran replied that the general plan was placed on hold until a new Community Development Director was hired, the downtown specific plan was held off to determine if the plan would go forward or be revisited, the stormwater replacement plan was placed on hold due to pending litigation. Councilmember Badar asked staff to provide the savings in staffing expenses due to the retirements and vacancies. Receive a report recommending funds to be available for appropriation — then appropriate those funds Mr. Duran explained that in the past staff has looked at the city's position at the end of the fiscal year and what was budgeted for going into the upcoming fiscal year, evaluated if there were excess surplus funds and looked at whether these would be allocated for future special projects or funds. He stated that at the time the budget was proposed the city was looking at $18.9 million in reserves or a 78% threshold of what the City Council adopted several years ago. He stated that during the budget process there were a number of projects staff prioritized and presented to Council and Council selected a number of those to fund. He added the total amount for those projects was $1.4 million that came out of the $18.9 million in reserves and brought the reserves balance down to $17.6 million or 72% of the General Fund and adopted the budget. He added that the new ending fund balance at $20.6 million brings the reserve level back up to 78%, if we didn't do anything with the access funds. Staff s recommendation is to keep that money in reserves, since we don't what projects are going to be funded in next year's budget. Three main areas of special funds that are reliant on the General Funds Reserves: Park Funds (Fund 20) with zero fund balance, Infrastructure (Fund 12) zero fund balance and Equipment Fund Reserve zero fund balance. He stated that today, looking at the next year's budget there would not be any money for those special funds unless we use reserves. He recommended holding off on making any decisions allocating reserve funds until we get into the budget cycle and we know what projects will be coming forward. He added that at that time we should know the results of the sales tax measure and whether that will be a new revenue source. He also added the only exception is that in years past the city has used some of the money to buydown some of its unfunded liability for it's PERS obligation, using a floor of $200,000. The suggestion this year would be to take $200,000 out of the excess reserves and apply that in a lump payment to the PERS unfunded liability obligation. Mr. O'Brien provided an explanation on how unfunded liability works. City Council Study Session Minutes November 26`h, 2019 Page 4 Responding to Councilmember Badar, Mr. O'Brien stated the annual payment for the PERS unfunded liability is approximately $660,000, in the next five years it will go to $1.2 million. He added the normal costs will increase from 9.5% to 10.5 %. Mr. Duran stated that some cities are issuing pension obligation bonds at a lower interest rate paying off in advance but advised that not to be done unless there is no other option. Staff and Council discussed various ways and ideas on how to fund and address some of these obligations. Mr. Duran summarized that it appears the Council would like to allocate some of the funds into some of the other funds and maybe keep the General Fund around 74% or 75%. Mayor Pro Tern Vienna requested to see the project presentation from six months ago. Motion: Moved/seconded by Councilmember Bertone/Mayor Pro Tem Vienna to authorize payment of $200,000 for the unfunded liability PERS contribution. Motion carried. 5-0 YES: Badar, Bertone, Ebiner, Morris, Vienna NOES: None ABSTAIN: None ABSENT: None ADJOURNMENT The meeting was adjourned at 6:54 p.m. A&RAs Debra Black, City Clerk Approved: March 1 Oth, 2020 Curtis W. Morris, Mayor