SO NOS, VERDEST
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CALIFORNIA
MINUTES
OF THE SPECIAL MEETING OF THE JUNE 19, 2023
CITY COUNCIL OF THE CITY OF PALOS VERDES ESTATES
CALL TO ORDER The Special Meeting was called to order at 5:00 pm.
ROLL CALL:
Present: Council Members Kemps, Lozzi, David McGowan, Mayor Pro Tem Murdock, and Mayor Roos
Also Present: City Attorney Rusin, City Manager Ready, Public Works Director Seims, Interim Finance Director Balos, Acting Senior Finance Analyst Smith Community Development Director Brady, and Interim City Clerk Cowley. commemorates the emancipation of Black Americans and originated when Major after the Emancipation Proclamation.
He also commented on the email the City Council received with a link to the result of Preserve PVE's budget survey. The email included a link to Desiree Myers campaign website where the results of her survey were published. He emphasized that this survey was not conducted by the city or the City Council. He added questions on the survey pertain to where tax dollars should be spent and referenced many projects that are not under consideration in this budget and appear to have been selected by her for political purposes. The city cannot confirm the veracity of the results of this survey as published.
The City Attorney, in response to Council Member McGowan's question as to whether there was anything the city could do to counter these types of communications, advised the only recourse is to put out the correct information to the public.
COMMUNICATIONS FROM THE PUBLIC
None
OLD BUSINESS
1. CONTINUED DUSCUSSION OF THE PALOS VERDES ESTATES DRAFT FISCAL YEAR 2023-2024 BUDGET
Recommendation: Discussion and Direction to City Manager.
Interim City Manager Ready gave a presentation and noted that staff is only presenting the General Fund, the revenue, and expenditure funds. The capital improvement budget will be presented later. He reviewed the updated budget calendar with the city council noting the goal was to receive general direction from the city council and adopt the budget at the June 27th meeting. He noted the capital budget which requires a public hearing will be held later in the fiscal year after the new city manager Has had an opportunity to review the budget, organizational structure and make recommendations. He also noted that if the City Council expends ARPA funds the first half of the year that will free up revenue for the general fund for additional services.
He presented the budget summary commenting that the City Council adopted a budget last fiscal year and made some budget adjustments during the year. He noted the City CITY COUNCIL MINUTES 1
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Council did not approve a deficit budget last year. The $962,000 showing as a deficit is part of the budget process as dollars go in and out of other funds and transfer through the general fund.
He explained the next column was the current year estimates that shows what the city will have left at the end of the fiscal year. He noted $2.4 million will go back to the fund balance which is a source of revenue for the new fiscal year. He explained the reason the city has that much money was because several projects that were budgeted did not occur last year. Also, there were some vacancies and since those dollars were not spent, they either go back to fund balance or can be used as revenue for the new fiscal year.
He explained the third column was the estimated budget baseline of what the city will need for the coming year which includes two additional positions that were talked about earlier in April and some of the additional things that staff believes are important.
He showed a slide of the budget summary and recommended the city council approve this fiscal year carry-over Fiscal Year 2022/23 adopted budget expenditures into the new fiscal year. He explained his reason for his recommendation is there is a new city manager starting and the city will be getting a new finance director and since those two positions are critical to assessing the organization in relation to the budget. They can make their assessment and make recommendations to the city council.
He also explained why this is important is to allow the new finance director to assess the current financial processes and procedures. He felt it was important because the staff is currently limited, there are things that need to be corrected, and a new finance director will be able to lead that. He is also recommending the city use the $3 million in ARPA funding to free up $3 million in the general fund that can be used elsewhere. He did not feel it was appropriate for him or the city council to make that decision in such short notice or to decide where to spend that money on services.
Because of these reasons he recommended the City Council carry over the current budget in terms of expenditures.
Mr. Ready then discussed the ARPA funding noting that the city council had previously stated they wanted to use those dollars for public safety. He expressed concern that in the deficit reduction legislation of the federal government, there is discussion of calling back unused portions of ARPA dollars. He spoke to the City Attomey's ARPA expert in Washington DC who deals with these issues for all BBK's clients. She indicated that the money must be appropriated by December 31, 2024, and spent by December 31, 2026. She indicated we should spend the money as soon as possible because it is unclear whether there will be continued attempts for a callback. The attorey confirmed using ARPA funds for the fire contract is a legitimate expense and the city would certainly be able to do that.
Mr. Ready suggested the city transfer in those ARPA funds and get those expended which then leaves an additional $3 million that can be used on other services.
Mayor Pro Tem Murdock indicated it was her understanding that the previous finance director did all the paperwork and everything that needed to be done to account for the expenditure of the ARPA funds. The City Manager noted that the action the council previously took was the first step by committing to receive the funds and spend the funds for a legitimate purpose on public safety. At that point the finance director put the funds in the general fund balance, and they sat there for a year and a half. By obligating the funds, the city appropriates it out of the fund balance and into an actual line item that is more obligated and is harder to call back. The third step is to spend the funds because then they can't be called back.
Council Member McGowan asked If it would make sense to try to negotiate a discount rate with the fire Department by prepaying $3 million of the city's obligation for the next fiscal year. Mr.
Ready advised that Is a good question and staff would make that inquiry. Thereafter a brief discussion ensued regarding the transfer of the funds and where to transfer them. Mr. Ready then continued to explain the general fund expenditure budget and the current year estimate and the adjusted budget amount. After further discussion the City Manager indicated that the $3.7 CITY COUNCIL MINUTES 2
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million is closer to $4.4 million which would be excess for additional services or go back into fund balance.
Interim City Manager Ready presented another slide showing department-by-department summary appropriation explaining each of the columns to the City Council and what the actual costs will be.
Mr. Ready presented a slide showing what the general fund balances would look like at the end of next fiscal year if the City Council adopts the carryover budget. The last slide presented depicted the city's other funds and what Council would be approving in the budget is the current balance at the end of this year, an estimate of revenues, and a combination of those two is what would be available for expenditure as an appropriation in the new fiscal year.
The mayor advised that staff is proposing the city approve a version of the budget based on what the expected fiscal year 2023 budget is and carry it over with the one amendment that the Council appropriate the $3 plus million in ARPA funds for the Fire Department because of the risk of a callback of those funds. He explained the reason is that the finance director left, and the city manager left, and the new city manager will start in a couple of weeks. The premise is to re- authorize the spending from this year to continue to next year.
Council Member McGowan reiterated his concern about moving forward with hiring a public works analyst because of the number of projects the Public Works Department is working on.
He encouraged the city council to include that in the carryover budget. A lengthy discussion regarding going forward with the recruitment of a public works analyst position.
In response to a question posed by Council Member McGowan regarding the CaPERS pension contributions over and above the required estimate, Mr. ready explained that based on the City Council's policy $250,000 would come off the top and go towards the additional PERS and that was included in the estimate. If the City is going to have a carryover, then it would be subject to Council's direction. A lengthy discussion ensued regarding paying the $250,000 up front to CaPERS and the amount that was actually paid in prior years.
Thereafter a lengthy discussion ensued regarding the amount of the general fund balance and the transfer out of the ARPA funds to the designated funds for public safety. The council concurred the amount of the general fund expenditures are $23,104,155 which leaves a net of $4,389,845. Interim City Manager Ready advised that staff will prepare the appropriate documents for the agenda next week based on the Council's direction.
A brief discussion ensued regarding assigned funds and the General Fund Parklands. included the 3% pre-payment discount. He suggested staff investigate that.
Thereafter a discussion took place about special funds that may be expiring, and staff noted there are no funds that were expiring this year. Mayor Pro Tem Murdock discussed pried the mange depart rem york discussed that last year the City Council had asked the finance department to develop an aging schedule for the special funds. Discussion continued the use of special funds, so they don't terminate. The interim City Manager suggested the aging schedule be presented to the City Council as part of the quarterly budget updates.
The City Manager summarized the direction of the City Council indicating staff is going to do a carryover expenditure budget except for the actual cost of the fire contract. Staff were going transfer the ARPA funds into the Fire Department contract line item. Staff will correct some of the figures that were discussed, and the remaining funds are okay as presented
Mayor Roos brought up the LPR cameras in the Police Department. He wanted to make sure what the Council approves will allow the Police Department to proceed with replacement because they are important. Acting Police Chief Hellinga advised that the fund for the LPR was $40,000 next fiscal year and that should be enough to replace the ones we currently have but not enough to add additional cameras. It was noted that the CITY COUNCIL MINUTES 3
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cameras were being purchased out of COPS grant funds. The council concurred that the Police Department could use the COPS funds to purchase the cameras as of July 1, 2023.
A discussion regarding the Parklands Fund of $105,000 ensued and staff explained that those funds were put there a long time ago and never spent. That money is separate from the actual fund balance assigned. The council concurred that the $105,000 be combined with the Parklands Fund Balance. Further discussion continued regarding the tree bank and other funds that need to be cleaned up.
The mayor reiterated the direction that was given to staff.
ADJOURNMENT
There being no further business to come before the City Council, the meeting was adjourned at 6:18 pm.
RESPECTFULLY SUBMITTED,
Carol Cowley, Interim City Clerk
APPROVED
Jim Roos, Mayor
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