CITY COUNCIL
AGENDA
Special Meeting
Thursday, September 1, 2022
2:00 PM
City Council Chambers
68-700 Avenida Lalo Guerrero
Cathedral City, CA 92234
MAYOR
Ernesto Gutierrez
CITY COUNCIL MEMBERS
Mayor Pro Tem
Rita Lamb
Councilmember
Mark Carnevale
Councilmember
Nancy Ross
Councilmember
Raymond Gregory
• CALL TO ORDER
• PLEDGE OF ALLEGIANCE
• INVOCATION (MOMENT OF REFLECTION)
• ROLL CALL
• AGENDA FINALIZATION
At this time the City Council may announce any items being pulled from the agenda or continued to another date.
• STATEMENT OF PARTICIPATION BY THE CITY CLERK
1. AGENDA ITEM
A. FY 2022/2023 Proposed Budget Adjustments
Recommendation: This item is presented for information, discussion and direction only.
ADJOURN
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NOTES TO THE PUBLIC:
The City of Cathedral City complies with the Americans with Disabilities Act of 1990. If you require special assistance to participate in this meeting, please call the City Clerk’s Office at (760) 770-0322 at least 48 hours prior to the meeting.
If you desire to address the City Council during the meeting, please complete a Request to Speak Form available at the entrance and present it to the City Clerk. Speakers will be called upon at the appropriate time.
Any documents provided to a majority of the City Council regarding any item on this agenda will be made available for public inspection in the City Clerk’s office at City Hall located at 68 -700 Avenida Lalo Guerrero during normal business hours. In addition, such documents will be posted on the City’s website at www.cathedralcity.gov.
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Staff Report
City Council
Item No. 1.A
Meeting Date: September 1, 2022
From: Tami Scott, Administrative Services Director
Title: FY 2022/2023 Proposed Budget Adjustments
City Council
RECOMMENDATION:
This item is presented for information, discussion and direction only.
BACKGROUND:
The City of Cathedral City utilizes a biennial budget process – two separate, one-year budgets during the same approval cycle . Doing so has proven to be a good, effective strategy for these reasons:
• Cost and time savings reducing staff preparation time • Allows more time for program review and analysis of expenditures • More conducive to long -term strategic planning, forecasting and analysis/results of decisions
• De-politicize the budget process by adopting biennial budget s in non -election years
There are government agencies utilizing an a nnual budget process, creating more pressure on staff with almost simultaneous actions to:
• Close the previous year’s budget
• Administer the new year’s budget, and
• Plan the following year’s budget
DISCUSSION:
Fiscal Year 2022/2023 is year two of the City’s current biennial budget. With the volatility encountered during the COVID -19 pandemic, we have experienced a varying degree of instability and unknowns impacting our ability to complete our work on a timely basis, including:
• Staff vacancies and shortages related to turnover/retention unsuccessful/delayed and multiple recruitments for the same positions
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• Resulting in delays in work, e.g ., CIP projects using Maintenance of Effort (MOE) and Parks Improvements
• Extraordinary increased costs related to inflation ; insurance – cyber, natural disaster, etc; fuel costs; delays in supply deliveries
Resulting in operating (non-personnel) operating budget adjustments:
o FY 2021/2022 rolling over to FY 2022/2023 (one-time)
o FY 2022/2023 adjustments
In the near term, Staff is forecasting a better/stronger financial position in the FY 2023/2024 and FY 2024/2025 biennial budget, due to:
EXTRAORDINARY TIMES
• It is expected our Sales Tax and Transactions and Use Tax (TUT) Revenue will far exceed projections due to significant changes in buying patterns. Sales Tax is anticipated to reflect $14M and TUT will reach $9.7M. Collectively, this will result in $6.7M in additional revenue than what was projected. This amount of revenue, in these categories, is unheard of for Cathedral City and even with the caveat of a potential 15%-20% softening in the next 12 -24 months, these revenue categories are still expected to be better than any of these revenues historically for the City…truly unprecedented times.
• With more development and growth in our City, e.g., rooftops, we believe there will be continued economic growth and a more stable property tax revenue base as well as increased Utility User’s Tax (UUT) revenue . As an example, f or 14 years, we have consistently budgeted $2.7M for this UUT revenue source…. we expect this revenue source to reach $3.2M, more than $500K over budget. This is directly due to increased rooftops and families in Cathedral City. • Cannabis – although this area has struggled and the revenue generated is approximately $3.0M below budget, we anticipate the Cannabis Cultivation Ramon Road project to finally open in FY 2022/2023 and begin operations with a phased-in approach -- slowing any further re duction in projected cannabis tax revenue.
• One-time revenues totaling $2M will be recognized this fiscal year. • There are other categories with amounts exceeding budgeted projections along with a few not meet our projections. A full presentation of detail s will be presented to City Council in October at the conclusion of the City's audit.
What does this mean – Good news for the City! Where we expected extreme volatility , and had projected more than a $5M deficit, we expect to have an operational surplus for our General Fund of approximately $7.0M for FY 2021/2022.
As a result, and what yo u will see outlined and proposed below, although staff is recommending strategic staffing additions and changes to make a further investment in providing services to our Constituents and Business Community , we expect to have sufficient resources to achieve a small surplus.
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MASTER POSITION CONTROL
Over the last two years, the City has been operating in unprecedented times. The global pandemic, economic shutdowns, and th e local increase in development continue to test the City’s resource allocation. In FY 2021/2022, Council adopted a biennial budget designed to be a conservative forecast for an uncertain future. However, the new normal post-2020 has revealed various resou rces need to be reinstated to improve the City’s service delivery and meet the growing needs of the community.
The City has seen various staffing changes since the Great Recession, with total operational headcount currently below 2010 figures. This has h ad a material impact on the way the organization functions both internally and externally in terms of its ability to respond to current service needs and its ability to keep pace with future growth in demand for services throughout the organization. As the City strategically plans for the future, it is essential the City analyze its human capital resource needs to ensure we have the organizational capability and capacity to provide high quality predictable services to the community. To that end, staff has i dentified several strategic personnel additions necessary to align City resources, City priorities, and the growing demand for services.
In the City Manager’s area, staff is recommending the addition of a P/T Human Resources Assistant to assist the Human Resources (HR) team with a recruitment lead- time in advance of the new fiscal year. Currently, recruitments are taking 60 -90 days to finalize, with some candidates turning over prior to the completion of their probation. In the last eight months, there ha ve been 20 resignations, two (2) retirements with at least two (2) additional retirements by the end of the calendar year, and 31 recruitments – five (5) of which were reposted recruitments.
Over the last several years, Cathedral City has seen a vast in crease in private development activity. The expansion of economic development opportunities in housing, commercial, and retail projects have significantly increased the baseline of the City’s private development workload. In addition to their regular duti es, this has inundated department staff who must support, respond, and efficiently process private development applications. Since staffing levels in Planning and Building Services, as well as Engineering, have not fully recovered from previous budget dri ven staff reductions, backlogs of private development applications have become the norm versus the exception.
As it relates to private development, the goal and purpose of the Planning and Building Services, Engineering & Public Works departments is to f acilitate the investment of private capital in high quality development benefiting the City and its residents. This important goal can only be achieved by having professional staff dedicated to support, respond, and process private development application s. The City currently has approximately 27 projects in the development/planning queue with smaller projects taking approximately 6 -8 months and larger projects 8 -12 months. Notable projects recently approved by the Planning Commission include Cathedral Cov e Center, Denny’s, Dave’s Hot Chicken, Henry Arroyo Auto Repair Facility and Quick Quack
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Carwash. Developer interest in our City remains strong with increasing interest in multi - family residential, self-storage and cannabis projects.
In an effort to impr ove the consistency and predictability of development services for project applicants, staff recently formed a Development Services Strike Team comprised of the Department Directors. However, the work involved in managing these projects across the finish line will require additional resources to reduce the backlog and process private development applications in a reasonable and predictable timeframe.
Accordingly, staff recommends adding a Development Services Engineer in the Engineering and Public Works de partment. This will be a dedicated position for development plan review and streamlining preparation of conditions of approval. In addition, staff recommends the addition of a Deputy Director in the Planning and Building Services Department, proposed to p rimarily manage the Planning Division and help lead the Development Services Strike Team, while also assisting the Director with managing the Department and heading up new initiatives and improve the City’s business friendliness.
The Engineering & Public Works Department is currently utilizing two Assistant Engineers to manage a $ 50 million Capital Improvement Project (CIP) and Parks Improvement Program. Due to time sensitive administrative tasks that must be performed on a regular basis, limited engineer ing resources are diverted to perform numerous non -engineering and administrative/reporting tasks for the Community Development Block Grant (CDBG), National Pollutant Discharge Elimination System (NPDES), Senate Bill (SB) 1, Riverside County Transportation Commission (RCTC), federal, state and county grants, etc. Based on the organizational assessment completed this year and a resource allocation review, it was determined our engineers dedicated to CIP Delivery are currently spending the majority of their t ime (65%) on non-CIP work activities.
The lack of engineering project management resources results in important capital projects being delivered based on availability of professional staff instead of on City Council funding priorities. The resulting pro ject delays have real economic impacts to the City when 90% of our projects are street resurfacing projects and traffic safety projects, such as those funded through the Highway Safety Improvement Program (HSIP) grant program and the Active Transportation Program (ATP) bicycle/pedestrian improvement grant program.
Delaying street resurfacing projects leads to further street degradation resulting in increased costs to repair and maintain. Delaying grant funded projects could result in loss of funding which could also negatively impact the City’s ability to compete for future grant funds. HSIP and ATP grant funds are highly competitive and awarding agencies have strong preferences towards agencies with a good track record of spending money and delivering projects.
Additionally, the Engineering & Public Works Department does not maintain any administrative support staff for assistance in obtaining Requests for Information (RFI), Proposal (RFP), or Quote (RFQ) processing, pricing and tracking of CIP project s and several other clerical needs. To improve these services, staff is recommending three (3)
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positions be added to enhance CIP delivery and to support the various non -engineering and administrative tasks required by the Engineering and Public Works depar tment to include an Analyst I/II, Engineering Technician II and Administrative Assistant.
At the January 2022 City Council Goal Setting Session, in an effort to decrease soft costs associated with manual processes and improve services throughout the organization, staff identified digital transformation as a major Citywide goal. The Tyler Enterprise Resource Planning (ERP) system was the City’s first step in this direction and staff has learned valuable lessons throughout the implementation of this citywid e system over the past four years. One of the major hurdles has been staff capacity. Due to lack of appropriate staffing throughout Operations, the implementation has been slow moving. Over the last three years, staff from Finance have been pulled off thei r regular duties to manage the ERP implementation full -time. This additional position will back -fill for this position’s regular duties.
Additionally, staff is currently reviewing various software upgrades in multiple departments to streamline onerous pr ocesses and increase staff capacity. These software upgrades, if implemented, would potentially improve STVR processing, citywide document management, employee onboarding, personnel management, fleet performance management, and other City services. Staff i s proposing the addition of a dedicated Software/Systems Engineer to assist with the Energov implementation and all other software upgrades being explored.
A summary of the proposed recommended positions outlined above are as follows:
New Positions – 7.5 FTEs Six Month Salary and Benefit Total - $538,462
CITY MANAGEMENT PERSONNEL CHANGES FY 2022/2023
Position Department
Human Resources Assistant (P/T) City Management – HR
DEVELOPMENT SERVICES PERSONNEL CHANGES FY 2022/2023
Position Department
Development Services Engineer Engineering & Public Works Deputy Director Planning & Building Services
ENHANCED CIP DELIVERY PERSONNEL CHANGES FY 2022/2023
Position Department
Analyst I/II Engineering & Public Works
Engineering Technician II Engineering & Public Works
Administrative Assistant I Engineering & Public Works
CITYWIDE TECHNOLOGICAL ENHANCEMENT PERSONNEL CHANGES FY 2022/2023 Position Department
Software Engineer Admin Services – IT
Analyst I/II Admin Services – FIN
In addition, several recl assifications of positions have either occurred or are required to meet the functional of staff duties:
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Reclassified Positions – 5 FTEs Six Month Salary and Benefit Total - $89,916
RECLASSIFIED POSITIONS TO MEET FUNCTIONAL STAFF DUTIES FY 2022/2023 Position Department
Admin Assistant Planning & Building Services
Code Compliance II Planning & Building Services
Assistant Engineer Engineering & Public Works
Fleet Coordinator Engineering & Public Works
Program Administrator Engineering & Public Works
In addition to the proposed staffing outlined, the presentation will summarize the various operational budget amendments to the FY 2022/2023 adopted budget to include rollovers from unspent amounts from the FY 2021/2022 budget such as Council Community As sistance, Desert Recreation District formation activities, Development Impact Fee Study, Maintenance of Effort (MOE) match for SB -1, Parks Improvement and Maintenance Plan and POA Premium Pay for those completing probation for a total of $1,391 M for the Ge neral Fund (100) and $890 K from the Park Improvement Fund (235) and our Recycling Fund (246).
The presentation will also summarize several operational cost increases either previously approved but not yet carried into the FY 2022/2023 budget or not originally contemplated for the original adopted budget such as Ambulance Operators - $172K General Fund (GF) ; Blow Sand $65 K Non-GF; CVAG Homeless - $50K GF; Facilities Services $250K (Facilities Preventive Maintenance, Work Orders, Policies & Procedures, Proj ect Mgt, Bid & RFP Process and overall Facilities Long Range Management Plan) GF ; Fleet Fuel and Maintenance $92 K GF and $1 3K Non-GF; Insurance (Crime / Cyber / Deadly Weapon / Liability/Property / Workers Comp / Medical / Dental / Vision / STD / LTD ) - $1.05M GF/Insurance Fund; National Pollution Discharge - $35K GF ; Parks Turf Revitalization $8 6K GF; Panorama Dog Park Maintenance - $30K GF; Pavement M anagement Software/Maintenance Program - $150K GF; and Flock Camera Maintenance - $8K GF. The total opera tional General Fund adjustments reflect $2,495M and other funds totaling $1.128M.
This is presented for informational and discussion purposes. With Council feedback, staff anticipates incorporating and then bringing forth these proposed budget adjustments in an upcoming City Council meeting.
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