EAST PALO ALTO
CITY COUNCIL
STAFF REPORT
DATE: January 8, 2022
TO: Honorable Mayor and Members of the City Council
VIA: Jaime M. Fontes, City Manager
BY: James Colin, Executive Assistant
Patrick Heisinger, Assistant City Manager
SUBJECT: City Council Priority Setting for Fiscal Year 2022-2023 Recommendation
It is recommended that the City Council:
· Review the attached supporting documents to evaluate the progress made and status of the Fiscal Year 2021-2022 City Council Strategic Priorities; · Define the Fiscal Year 2022-2023 City Council Strategic Priorities; · Solicit input from the community regarding the City Council’s Strategic Priorities; and · Direct the Administration to return to the City Council in March or April 2022 for final adoption of the Fiscal Year 2022-2023 City Council Strategic Priorities.
INTRODUCTION
This staff report provides an overview of the City Council Strategic Priority Setting (Priority Setting) process for Fiscal Year (FY) 2022-2023, as well as a status update related to the most recently adopted FY 2021-2022 City Council Strategic Priorities (Priorities).
The 2022-2023 Priority Setting session has been scheduled for Saturday, January 8, 2022.
BACKGROUND
The City Council conducts an annual Priority Setting process to designate high-priority initiatives, ordinances, and/or projects. The goal of the Priority Setting process is to allow the Administration to focus limited staff and financial resources on initiatives that City Council identifies as the highest priorities. The most recent Priority Setting session was held on January 23, 2021.
Consistent with past Priority Setting sessions, staff recommends the City Council continue with the following guidance:
· Method of Defining a Priority;
· Two (2) Year Approach to Priority Setting; and
· Enhanced Transparency with regard to the Priorities.
Method of Defining a Priority
For the purposes of developing the City Council Strategic Priorities for a given year, a Priority shall be any item that requires:
· Additional city resources to implement (e.g. funding for staffing or new projects/programs);
· Cross-departmental coordination or engagement of partners and entities outside of the City; or
· An increase in level-of-service for any Core Service or previously budgeted activity; and
· Specific goals articulated in terms of defined subtasks/objectives that may lead to achievement of a larger multi-year goal.
Two (2) Year Approach to Priority Setting
Consistent with the two most recent Priority Setting processes, the City Council developed a number of Priorities that would be achieved over a two-year period. Due to the fact that these priority projects are considered major efforts, it is more realistic to expect that completion of many of these goals will require at least two years. Acknowledgement of the two-year approach will provide staff, City Council, and the community with a reasonable understanding of the timelines associated with each goal.
Since this cycle of Priorities has been in place for two years, an ongoing two-year cycle will essentially become a rolling list of Priorities. Substantial progress has been made on several Priorities that were identified in past years, meaning that the City Council may identify new Priorities that may be added through the 2022-2023 Priority Setting process.
Although the City Council has full discretion to divert from this approach, staff recommends that the two-year approach be continued in order to build upon recent momentum in each area of the Priorities described below.
Enhanced Transparency with regard to the Priorities
The following enhanced transparency efforts will be continued in next Priority Setting process:
· Priorities described in detail in a living document on the City’s website. · Mid-year City Council Update each December provided by the Administration regarding progress in achieving the current Priorities.
Adoption of City Council Priorities for FY 2021/2022
On March 16, 2021, the City Council adopted a resolution that established the FY 2021-2022 Priorities, in two categories:
· Specific Priorities for FY 2020-2021; and
· A detailed Priority Workplan (Workplan), articulating the goals and subtasks/objectives within each Priority.
The chart below illustrates the Priorities and the City staff team member identified as lead responsible for implementation:
CITY COUNCIL PRIORITIES for FY 2021/2022
Priority Staff Lead
Effectively Respond to the COVID-19 Pandemic The Administration Enhance Community Services and Parks for Residents Heisinger/McKenzie Advance Housing and Workforce Development Chen/Heisinger Develop/Implement a Comprehensive Facilities Master Plan Fallaha/Heisinger Ensure Health and Public Safety Fallaha/Liu
Develop Comprehensive Strategy to Address the City’s
Structural Deficit
Oku
Establish/Implement a Transportation Mobility Plan Fallaha/Chen Improve the City’s Water Infrastructure Fallaha
Priority Implementation Status
Approximately 72 of the 93 specific actions/objectives from the goals (with subtasks/objectives) described in the adopted Priorities, will be identified as completed or initiated in FY 2021-2022.
To date, 21 goals identified have yet to been started (23%). Staff expects to complete at least 10 additional actions/objectives prior to the end of the current planning period (FY 2021-2022).
In total, at least 88% of the specific actions identified in the adopted Workplan (82 of 93) either have been initiated or will be completed prior to the end of fiscal year. With the continued impacts of the COVID-19 Pandemic, this accomplishment is significant.
Please see Attachment 1 to review the updated status for each Priority.
Staff provided the City Council with progress updates regarding the current Priorities on December 21, 2021. This staff report includes the next formal update and information regarding the process of establishing the Priorities and Workplans for the next Fiscal Year.
ANALYSIS
Core City Services
The City, through our City departments, provides a number of services to our residents which may be understood to be functions of ongoing City operations, actions that are based in legal or regulatory obligations, or activities that were approved through the City’s budget process. (Core Services) The current complement of Core Services is detailed by Department in Table 1 below.
TABLE 1
CITY OF EAST PALO ALTO CORE SERVICES BY DEPARTMENT
Department Director/Lead Core Services
City Manager’s Office Jaime M. Fontes/
Patrick Heisinger
• Lead and Manage the City
Organization. • Parks Capital Planning
• Strategic Initiatives (e.g. Education)
• City Clerk/Public Information
Activities • Human Resources
City Attorney’s Office Rafael Alvarado • Provide legal advice to the City Council and City staff. • Draft
documents that help achieve the City
Council’s Strategic Plan and the City
Manager’s priority action items.
• Defend the City’s interest in court and
administrative hearings and initiate legal
action to protect the City and/or improve
the quality of life of the residents of East
Palo Alto.
Administrative
Services Department
Marie McKenzie • COVID-19 Response. • Community
Programs.
Finance Department Tomo Oku • Financial Management, Reporting, Auditing. • Budget Planning,
Development, Forecasting. • Treasury,
Tax and Fee Administration. • Capital
Financing and Debt Management.
Police Department Acting Chief Liu • Patrol Division: Provide 24/7. • Investigations Division: Provide
Investigative follow-up of serious
crimes. • Administration Division:
Provide Administrative leadership of the
department, Records/Warrant/DOJ
compliance, PRA/staff Public Service
Counter, Evidence and Court liaison.
Community and
Economic
Development
Department
Amy Chen • Citywide Land Use Planning.
• Development Plan Review/Building.
Construction Inspection.
• Administration of the City’s
Affordable Housing Strategy/Rent
Stabilization Program. • Business and
Workforce Development.
Public Works
Department
Kamal Fallaha • Capital Improvement Programs
Implementation. • Public Works
Maintenance. • Environmental
Programs Solid Waste Management,
Stormwater Compliance, Sustainability.
• Oversee the maintenance and operation
of the City Water System. • Issuing
permits for any work to be performed on
City right-of-way (Encroachment
Permits) and Transportation Permits.
• Performs various reviews related to
private development projects.
As previously discussed with City Council, most City resources and staffing are primarily dedicated to the ongoing day-to-day delivery of core services, leaving limited management and other staff capacity available to focus on new initiatives and priorities.
Detailed Departmental Workloads and Constraints
While attending to the current Priorities and implementing our Core Services, staff have also dealt with additional workload activities and constraints, such as the ongoing impacts of the COVID-19 Pandemic and challenges of staffing capacity, with an increasing number of funded vacancies.
Departmental Workloads
Within each Department, there are Divisions that also function to implement ongoing Core Services through activities that are reflected in annual Division and unit workplans. Many of these activities are presented and reviewed by City Council throughout the year, as work is completed or approvals are required.
To assist with the 2022-2023 Priority Setting process, the City Manager seeks to provide a more comprehensive understanding of all activities undertaken by City staff and departments, which include Priorities, Core Services, and additional responsibilities. This added perspective will inform the Priority Setting process, particularly with regards to staff and resource capacities needed to complete assignments.
A detailed inventory of current Departmental Workload activities has been compiled in Attachment 2.
Ongoing Impacts of the COVID-19 Pandemic
The City has spent many hours of staff time and financial resources to help mitigate the ongoing effects of the pandemic. Many hours have been dedicated to media outreach and testing. Daily staff works on creating and coordinating messaging for the pandemic. Messaging goes out on social media outlets, the city website, and newsletter. In addition, financial resources are used to create and publish ads. Additionally, a lot of staff time is devoted to promoting and conducting COVID-19 testing and vaccinations. Testing has increased to almost daily in different parts of the city.
Staffing Capacity and Vacancies
Approaching the FY 2022-2023, it should be noted that the City of East Palo Alto is experiencing an unusual level of vacancies in key funded positions. This gap in capacity creates an added challenge for existing staff to implement the many Priorities, Core Services, and additional Department Workload items that have been identified.
The City’s budget for Fiscal Year 2021-2022 supports 117.75 budgeted positions. Currently, it is estimated that 13 of those positions are vacant and another six (6) positions are not able to support City operations, due to reasons such as long-term leave and workers compensation.
A total gap of 19 full-time positions equates to a 16% vacancy rate. As the City is traditionally leanly staffed, these vacancies require other employees to assume multiple workloads. To avoid staff “burnout” and maintain effective operations, it is imperative that increasing capacity - through recruitment of budgeted positions and other possible means - be a key priority for the remainder of the current and next FY.
City’s Financial Outlook for Fiscal Year (FY) 2022-23
Balancing the General Fund budget in FY 2022-23 will remain a challenge due to continued revenue disruption, service cost pressures, deferred infrastructure challenges and the uncertainty surrounding lingering COVID-19 costs.
Future revenues remain highly uncertain, primarily due to estimating property tax negative Educational Revenue Augmentation Fund (ERAF) cash flow losses and recovery and the uncertain trajectory of COVID-19 economic recovery. However, we anticipate FY 2022-23 revenues will be slightly improved over the current year, as trends indicate recovery in sales tax and transient occupancy tax, as well as a backfill by the State on property tax in-lieu of Vehicle License Fee (VLF) loss in FY19-20. Revenues will remain below trend due to slow COVID-19 economic recovery, underlying, low revenue growth, property tax funding issues, and lack of taxable property development in recent years.
Baseline General Fund expenditures will increase due to personnel and other service cost increases, continued costs of addressing COVID-19 impacts and need to address organizational challenges arising from deferred technology investment in a remote work environment, and implementation of Council priorities in recent years - particularly in housing, grants, and utilities infrastructure. In addition, the City will begin negotiating with all bargaining units in early 2022.
We anticipate a budget process similar to FY 2021-2022 with continued challenges in maintaining current, temporary expenditure reductions, and in absorbing anticipated cost increases. We further note that the City Council adopted the reserve management policy in September 2021 which requires the City to target the contingency reserve amount to be 30% of adopted General Fund expenditures and changes the structure of General Fund balance classification impacting the available unassigned fund balance.
Options for New/Additional Priorities
In preparation for annual Priority Setting, potential options for addition to the next year’s City Council Priorities are identified through four methods, as detailed in Table 2 below:
Table 2
CITY COUNCIL PRIORITY SETTING Identifying Options for New/Additional Priorities
Category How Identified
Priorities for Future Consideration
(Carried-Forward)
Items that were raised during the past Priority
Setting session, but were identified for future
consideration in favor of more urgent Priorities in
the current FY.
Identified by City Council Since
2021-2022 Priorities were
Established
Items that are raised for consideration by City
Councilmembers throughout the FY are recorded
by staff for future discussion during Priority
Setting.
Newly Identified by Two or More
City Councilmembers
Leading up to the City Council’s Priority Setting
session, consultant Greg Larson surveyed each
Councilmember, asking questions about the City’s
accomplishments over the past year, the greatest
challenges facing the City, and the
Councilmembers’ highest priorities given the
ongoing pandemic and limited organizational
capacity to undertake new initiatives until 2022, at
the earliest.
Suggested Options from Staff Key initiatives that have funding deadlines or other pressing timelines.
A review of specific potential priorities for City Council consideration, organized within the categories described above, is provided in Attachment 3. Items that were not mentioned by more than one Councilmember were not included in the attachment. However, Councilmembers may bring up additional items during the retreat for discussion if desired.
The next City Council priority setting session is scheduled for January 8, 2022 beginning at 8:30 a.m. The draft discussion outline is provided as Attachment 4. The session will be facilitated by the City’s consultant, Greg Larson.
For each priority area, staff will highlight significant accomplishments to date and any identified possible changes to that priority area. The City Council will then discuss the priority and seek consensus on the work focus through 2022. Time will also be provided for public comment.
Next Steps
After the FY 2021-2022 Priority Setting session on January 8, 2022, staff will return to the City Council with an updated City Council Priority Workplan in March or April 2022. The updated draft will identify detailed targets, tasks, and timelines for each item, as well as any resources needed and constraints (if applicable). Any items added during the Priority Setting process may be reflected in the new City Council Priorities or in the City Department workplans.
Attachments
1. Status of Detailed Workplan for Each Priority
2. Current Departmental Workloads
3. Potential Priorities for City Council Consideration
4. Draft discussion outline for Saturday, January 8 priority setting session