CITY OF HEALDSBURG
CITY COUNCIL/REDEVELOPMENT SUCCESSOR AGENCY
SPECIAL MEETING MINUTES
May 13, 2024
City Hall Council Chamber
401 Grove Street, Healdsburg
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CALL TO ORDER/ROLL CALL
Mayor/Chairperson Hagele called to order the special meeting of the City Council and Redevelopment Successor Agency of the City of Healdsburg at 5:02 p.m. with the following Council Members present:
Present: Council Members/: Edwards, Herrod, Kelley, Mitchell and Mayor Hagele Board Members
Absent: Council Members/: None.
Board Members
APPROVAL OF AGENDA
On a motion by Councilmember Herrod, seconded by Councilmember Edwards, approved the May 13, 2024, City Council and Redevelopment Successor Agency meeting agenda. The motion carried on a unanimous voice vote. (Ayes 5, Noes 0, Absent – None)
PUBLIC COMMENTS ON ITEMS ON NON AGENDA ITEMS
Mark McMullen commented on the Arts and Culture Master Plan, expressed disappointment over the absence of a dedicated full-time staff member to oversee the implementation of the Arts and Culture Master plan and commented on the funds allocated to Arts and Culture.
NEW BUSINESS – FISCAL YEAR 2024-25 BUDGET WORKSHOP
Finance Director Edgar stated the action this evening was to receive a presentation from City staff on the preliminary Fiscal Year 2024-25 and 2025-26 budget and to provide feedback and direction to staff on budget elements. Director Edgar reviewed the agenda for the evening, the timeline to develop the budget for fiscal year 2024-25 and 2025-26, the 2024-2026 budget goals, presented an analysis of the economic outlook, covering factors such as inflation rates, federal funding, and the economic drivers of Healdsburg.
Director Edgar further outlined the operational impacts to the budget including increases in insurance, benefits, cost-of-living adjustments, and the rising costs of materials and services.
Director Edgar highlighted major initiatives and proposed capital improvement projects for the next two fiscal years. Additionally, Director Edgar reviewed the discussion topics for each fund, including revenue estimates, proposed expenditures, fund balance projections, new initiatives incorporated into the budget, and initiatives not included in the budget.
City Council/RSA Special Meeting Minutes
May 13, 2024
General Fund
Finance Director Edgar provided a detailed overview of the various revenue sources for FY 2024-25 and FY 2025-26, noting the total revenue in the general fund is projected to slightly exceed the current fiscal year’s budget, with a proposed budget of $18.6 million for FY 2024-25 and $19.2 million for FY 2025-26. Director Edgar provided an overview of general fund expenditures by department, noting that total expenditures for the current fiscal year are expected to come in slightly under budget. Director Edgar further reviewed the initiatives included and excluded in the budget and provided an overview of the estimated General Fund balance.
In response to Councilmember’s inquiries, Director Edgar provided an overview of how the Type 1 Fire Engine is being funded and Fire Chief Boaz provided details on the Type 1 Engine replacement, noting a build time of 24 to 36 months at the time the order is placed. Additionally, Director Edgar reviewed how the pension stabilization fund operates, how it is funded and noted that property transfer tax transactions have declined, due to the effects of COVID-19 and interest rates.
Public Comment
Cindy Beth commented on Healdsburg Little League’s use of baseball fields and urged the Council to prioritize children's programs.
Special Revenue Funds
Director Edgar provided an overview of Measure S funds, noting a budget change with the inclusion of funding for the L&M Project, reviewed the Measure T revenues and expenditures, noting an estimated ending balance of around $5,000, and no additional revenue is expected to fund unanticipated needs during the budget cycle. Director Edgar further reviewed Measure H, noting revenues are not anticipated until the end of 2024 and staff is proposing to fund the addition of one Fire Inspector position and the completion of a standards of cover survey.
City Manager Kay clarified the addition of the Fire Inspector position.
In response to Councilmember inquiries, Director Edgar provided information on the CARE program, utility discounts.
There were no public comments on this section.
Community Services Revenue
Finance Director Edgar provided information on the revenue sources for the Community Services budget, highlighting the Transient Occupancy Tax (TOT) is anticipated to increase in the first fiscal year and more significantly in the second year, due to new hotel openings.
City Council/RSA Special Meeting Minutes
May 13, 2024
Director Edgar further reviewed the expenditures for FY 2024-25, noting the projected expenditures are $8 million, rising slightly to $8.3 million in FY 2025-26.
Director Edgar further reviewed the initiatives included and excluded in the proposed Community Services budget and the funding for capital improvement projects including $6.8 million for Phase I of the Badger Redevelopment and Saggio Hills Park projects. The budget for FY 2024-25 proposes using $300,000 from the operating reserve.
City Manager Kay commented on the Community Services budget, the decrease in TOT revenue received and the funds invested into current projects. Manager Kay noted the City remains positioned to maintain operations and invest in deferred maintenance and informed Council that the projections for the next couple of years are a conservative estimate.
In response to Councilmember inquiries, City Manager Kay clarified that a significant increase in TOT revenue would be necessary to proceed with the deferred projects. Director Edgar explained that sponsorship revenue has declined due to the reduction of HTID grants and provided the estimated cost for the initiatives not included in the budget.
Public Comment
Mark McMullen commented on $25,000 for support staff for the Arts and Culture Commission.
Street Fund Revenues
Finance Director Edgar outlined the sources of revenue for the Street Fund, noting the proposed expenditures are $1.5 million for FY 2024-25 and $1.6 million for FY 2025-26. Director Edgar provided information on the budget allocations for street capital projects and reviewed the streets fund balance, noting the process of right-sizing the streets and drainage operating fund will be completed by FY 2025-26, with a proposed positive ending fund balance of $2,000.
In response to Councilmember inquiries, Director Zimmer noted that with the addition of SMART, work on Front Street for pedestrian and bike improvements would be duplicative, and the work has stopped. Director Zimmer further clarified that securing funding for addition of roundabouts on Dry Creek can be a lengthy process, but staff is working on it.
Enterprise Funds
Finance Director Edgar reviewed the proposed Water Utility budget for FY 2024-25, noting the proposed budget is $6.9 million, with an increase to $8.3 million in FY 2025-26. Director Edgar provided information on the proposed expenses for the Water Utility over the next two fiscal years and the Water Utility ending fund balance.
City Council/RSA Special Meeting Minutes
May 13, 2024
Director Edgar further reviewed the proposed Wastewater Utility budget for FY 2024-25, noting the proposed budget is $9.1 million, increasing to $10.7 million in FY 2025-26. Director Edgar provided information on the proposed expenses for the Wastewater Utility over the next two fiscal years and the Wastewater Utility ending fund balance. Additionally, Director Edgar provided an update on the deficit in the drainage fund balance noting significant progress has been made but a structural deficit remains.
Director Edgar reviewed the proposed Electric Utility revenues, noting total revenue of $16.4 million for FY 2024-25 and $17.7 million for FY 2025-26. Director Edgar provided information on Electric operating expenses, proposed capital project expenses and the Electric Utility Fund balance. Director Edgar reviewed the key highlights of the Utility fund, including items included in the budget and those not included.
In response to Councilmember inquiries, Director Crowley provided information on the cost structure for the electric utility and on electric smart meter readers, clarifying that the goal is to develop software that will allow customers to access interval data, with plans to integrate this in the FY 2025-2026 budget cycle.
Internal Service Funds
Director Edgar presented the internal service fund budget, reviewed the list of proposed vehicle replacements over the next two fiscal years, proposed building maintenance projects in FY 2024- 25 and FY 2025-26. Additionally, Director Edgar reviewed the Information Services fund, noting the plan to enter into a five-year security contract in FY 2024-25, replacing the annual contract and resulting in savings.
Public Comment
Mark McMullen inquired about the City's Wi-Fi infrastructure and encouraged the Council to consider expanding Wi-Fi access throughout Healdsburg.
City Manager Kay asked for additional feedback or questions of the Council.
Council Comments
Councilmember Herrod thanked staff for their hard work and expressed appreciation for how well-informed the Council has been throughout the process and expressed gratitude about the thoroughness of the presentation.
Councilmember Kelley was supportive of allowing the Arts and Culture Commission to return to Council in the future with a proposal outlining how to spend the $50,000 for grant funding, acknowledged the absence of certain capital projects from the list and emphasized the importance of being cautious with spending decisions.
City Council/RSA Special Meeting Minutes
May 13, 2024
Councilmember Edwards thanked staff for their hard work and is pleased to hear about the grants that are funding various projects.
Vice Mayor Mitchell thanked staff for their hard work and commented on how impressed she was with the numerous capital projects underway and was appreciative of the conservative approach to the budget. Vice Mayor Mitchell expressed concern regarding the community services budget and L&M funding.
Mayor Hagele echoed the sentiments of his fellow Councilmembers and acknowledged the increase in water rates, noting that the public can now clearly see how the funds are being allocated.
ADJOURNMENT
There being no further City Council/Redevelopment Successor Agency business to discuss, the meeting was adjourned at approximately 6:35 p.m.
APPROVED: ATTEST:
_________________________________ __________________________________ David Hagele, Mayor Raina Allan, City Clerk