BRAD HALPERN RAY PEARL NED E DAVIS KELLY HONIG SUSAN MOSWEENEY Mayor Mayor Pro Tem Councilmember Councilmember Councilmember
MINUTES
Study Session of the City Council
May 11, 2022
CALL TO ORDER:
This Study Session meeting of the Westlake Village City Council was called to order by Mayor Halpern on Wednesday, May 11, 2022, at 4:34 p.m., at 31200 Oak Crest Drive, Westlake Village.
PLEDGE OF ALLEGIANCE:
Mayor Halpern led the Pledge of Allegiance.
ROLL CALL:
PRESENT: Councilmembers McSweeney, Honig, Davis, Mayor Pro Tem Pearl, and Mayor Halpern.
ABSENT: None.
Also Present: City Manager de Geus, City Attorney Boga, Deputy City Manager Eskandar, Administrative Services Director Wilson, Planning Director Forbes, Deputy City Clerk Kramer, Public Works Manager Iverson, and Accountant Hanson.
APPROVAL OF AGENDA:
Councilmember McSweeney moved to approve the Agenda as presented.
Councilmember Davis seconded the motion.
YES: Councilmembers McSweeney, Honig, Davis, Mayor Pro Tem Pearl, and Mayor Halpern.
NO: None.
ABSENT: None.
ABSTAIN: None.
Mayor Halpern declared the motion passed 5-0.
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PUBLIC COMMENTS: None
STUDY SESSION:
CONSIDERATION OF PROPOSED OPERATIONS BUDGET FOR FISCAL
YEAR 2022-23
City Manager de Geus introduced the item stating the purpose of the Study Session was to review the draft operating budget for Fiscal Year 2022-23. Mr. de the community, meeting service demands, customer service, and commitment to excellence and innovation. Mr. de Geus noted the Fiscal Year 2022-23 Budget will fund several new or reinstated programs and projects that are aligned with fulfilling City Council and goals. He stated that the budget remains very conservative and although we do not anticipate a deficit again this year, the projected surplus remains a very thin margin.
Administrative Services Director Wilson reported that the goal-setting study session was held on January 26, 2022 which established budget parameters and priorities for the budget development process. She noted that staff has had several meetings internally and also with City Council committees since that time. She introduced consultant Laura Burnett, Avenu Insights/MuniServices, who was available for questions following the presentation. Ms. Wilson stated the budget adoption is scheduled for June 8, 2022.
Ms. Wilson stated Council identified eight major goals with several objectives in each at its goal-setting study session in January. This Operations Budget addresses four of the eight Council goals with the other four included in the Capital Improvement Plan as discussed at the last meeting on April 27, 2022.
Ms. Wilson presented the Citywide budget proposed at $20.2 million in 8x39 mitun in Ries ticked Funds She praleted overie of expenditures broker down by division and noted that the City's largest budget expense remains Public Safety and Capital Improvement Plan (CIP) at 18% and 19% respectively.
Ms. Wilson reviewed citywide revenues projected at $18.1 million with the largest three revenue sources remaining as sales tax, property tax, and transient occupancy tax (TOT) which comprises 63% of all projected revenue. She noted restricted revenue will total 16% of anticipated revenues.
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Ms. Wilson provided an overview of the proposed budget on a programmatic level on a citywide basis, including a comparison with last fiscal year, stated there is an increase in Personnel costs of approximately $387,000 and an increase in Materials and Operations of approximately $808,000, $627,000 of which is in the General Fund. Ms. Wilson reported that overall, the proposed budget is $1.1 million more than last year's budget, $1 million of which is attributed to the General Fund and expenditures mentioned above. Ms. Wilson reviewed and discussed budget- related categories which included: 1. Staffing Plan, 2. General Fund Expenditures, Revenue, History, Expenditures vs. Revenue 2022-23, 3. Highlights for FY 2022- 23, 4. Fund Balances, and 5. Professional Services Agreement List.
Staffing Plan
Ms. Wilson stated that the proposed budget assumes 14.5 positions including an addition of one full-time position to support the increasing workload in the Public Works division. She explained that in 2021, Council approved a new classification of Public Works Manager, and that staff is recommending the City retain the position of a Lead Public Works Inspector to support the Public Works Manager position for continuity of reliable service delivery. Ms. Wilson stated that the increase in cost of $387,720 when compared to last year was due to the salary and benefit allocations for the new Public Works Manager, budgeting for the Public Works Inspector position, employment contract alignment costs, a three percent annual adjustment to allow for movement in employee ranges, and salary adjustments for certain positions as approved in the Classification and Compensation Study completed this fiscal year. She noted adjustments have also been made to accommodate increases in Public Employee Retirement System (PERS) costs, medical insurance plan, workers compensation, Medicare and deferred compensation costs.
Ms. Wilson provided context on the relationship between the proposed salaries and benefits to the General Fund over time. She explained that the proposed increase in salary costs this fiscal year, as a percentage of the General Fund budget remain lower than the level in previous years with the exception of the pandemic driven reductions in FYs 2019-20 to FY 2020-21, and the expansion of rehiring in FY 2021-22. She noted the staffing structure in the proposed budget includes the new Public Works Manager position, two Community Services Specialist positions, retention of the Lead Public Works Inspector position, and Senior Planner designation from a recent promotion.
City Manager de Geus commented on the staffing plan changes with the need for a Public Works Inspector to assist the Public Works Manager with the significant increasing workload and need for increased capacity and support for Public Works.
Administrative Services Director Wilson responded to Councilmember Davis stating that cities that provide in-house services have a staffing cost of approximately 80-84% of their total budget as opposed to our 21% as a contract city. She noted the balance was made up with contracts, though some of the City Council Minutes - Study Session
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recently added positions are more cost efficient and stated that consideration is given to weighing benefits compared to costs. Ms. Wilson responded to further Council questions regarding Unfunded Accrued Liability payments, flexibility ano utility of an in-house staff member vs. consultant, and service levels and program categories provided by contractors.
General Fund
Expenditures
Ms. Wilson stated the General Fund expenditures are proposed at $14.2 million and continue to underscore the Council goals and City's commitment to public safety for our residents. Public Safety is the City's largest expenditure at 26% of the entire General Fund. Ms. Wilson stated that overall, the Materials and Operations budget reflects an increase of $627,440 compared to the current budget. She noted that the major drivers behind this increase include adjustment of the law enforcement and crossing guard services contract, reinstatement of the Public Art and Trolley Programs, increase in landscape and maintenance costs to meet the City's new zero-emission standards, election services for 2022, Earthquake Insurance program, contract adjustments for community events plus an additional event in the Spring, maintenance costs, software acquisitions and upgrades, internship program costs, and employee training. Ms. Wilson provided a breakdown of operating budget adjustments by department. She stated that the $1.1 million increase in costs is offset by $488,000 in deletions for a net total increase of $627,000.
Revenues
Ms. Wilson stated that revenues are projected at $14.3 million and presented the revenue projections for the major categories included in the proposed budget. She provided an overview of the City's three main revenue sources which combine for 80% of all General Fund revenues and include the following:
1. Sales Tax - Revenue projection of $5.1 million presents the highest Sales Tax receipt in the history of the City, approximately $500,000 above the pre- pandemic level of $4.7 million in 2019.
2. Property Tax - The real estate market continues to remain active, with relatively low-interest rates available. A conservative approach, the revenue estimate assumes that underlying assessments will increase by 2%.
3. Transient Occupancy Tax (TOT) - Revenue projections anticipate $3.5 million in the upcoming fiscal year, 10% under the pre-pandemic highest level. Ms.
Wilson stated it is assumed hotels will be open for all twelve months, and occupancy rates and events will be restored. Staff will monitor this revenue source and provide Council with updates or revenue adjustments if needed.
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History
Ms. Wilson provided a historical perspective on the trend for the three major revenue sources and provided a detailed look into the TOT revenue which peaked in 2018 at $3.9 million and is projected at $3.5 million in the upcoming fiscal year.
Ms. Wilson reiterated that Sales Tax and Property Tax revenues are forecasted at She stated that consultants, Muni-Services and Regional Government Services informed the revenue projections for the major categories included in the proposed budget and that they continue to guide the City in its Revenue vs. Expenditures
Ms. Wilson compared expenditures and revenues and anticipated that next year's projected General Fund expenditures of $14.2 million will be under the projected General Fund revenue of $14.3 million by $45,000. She noted that although the inclusion of this funding in the General Fund, the City will have a surplus of $1 million for the upcoming fiscal year.
Highlights in FY 2022-23
City Manager de Geus discussed five fundamental benchmarks to consider and how best to evaluate the proposed budget. Administrative Services Director Wilson presented each benchmark:
1. How does the budget meet Council Goals?
Administrative Services Director Wilson reviewed the eight 2022 City Council goals and associated funding allocated in the budget towards achieving each of the goals with just under $2.4 million.
Ms. Wilson mentioned that the additional Rotary event support would be approximately $15,000.
2. What adjustments were added or any new programs?
Ms. Wilson discussed the most significant funding adjustments included in the budget which included additional costs for zero emissions compliance, reinstatement of the trolley and public art programs, public safety contract adjustments, cultural programming, document imaging system, election services and the earthquake insurance program.
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With regard to the earthquake insurance program, Ms. Wilson reported that Staff requested direction from the Administrative Committee regarding the procurement of insurance coverage for flood and earthquake damages. She stated it has been the City's tradition not to have this category of insurance coverage. With the addition of new infrastructure and the escalation in estimated replacement cost for City infrastructure, staff revisited this direction and sought Council guidance. Ms.
Wilson said the proposed coverage from the California Joint Powers Insurance Authority (JPIA) is a replacement cost of up to $200 million per occurrence for earthquake and flood event damage, with a $100,000 deductible for the City per occurrence. The initial proposal presented to the Administrative Committee included coverage of all facilities on the JPIA property program at a cost of $56,000. She noted the Committee's recommendation was to proceed with an estimate of coverage for the City Hall/Library complex. The cost is $42,000 which has been included in the proposed budget. Responding to Councilmember Davis, Ms. Wilson stated the Civic Center was appraised at approximately $16,000,000.
She explained that the JPIA insurance is a group policy with multiple layers of coverage by highly rated companies spreading the risk, and that with this policy, the City would be fully covered at every level.
City Manager de Geus discussed the reasons for Earthquake Insurance Coverage and prompted the Council for feedback on the list of proposed added programs.
Following City Council discussion, it was the consensus of the Council to suspend the Trolley and Public Art Programs, and to remain conservative due to financial uncertainty. Councilmembers were in favor of the Earthquake Insurance Coverage. Councilmember Honig commented on the upcoming community services payment from the Cedar Valley Senior Center.
3. What line items are continuing from last year's additions? Ms. Wilson reported that as part of this fiscal year, Council approved several budget amendments that have been maintained as part of the proposed budget including the Communications and Legislative Consultants, and the North Business Park Specific Plan Legal Consultant, each at $100,000.
4. What line items were removed?
Ms. Wilson stated some one-time line items approved by Council in this fiscal year that have not been carried forward in the proposed budget include:
1) School Bus Program
) City Survey
) Class and Compensation Stud
4) Reserve Study
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5. Is the proposed budget in compliance with the City Council's reserve policy? In keeping with past practice, Ms. Wilson reported the City maintains its reserve level between 50-75% of the City's General Fund operating expenditures. She provided a snapshot of the General Fund reserve levels over the last nine years, noting that with the proposed $14.2 million expenditures, (although the General Fund Reserve level will be at its highest at the end of FY 2022-23 with $7.2 million), it will also be trending towards the lowest reserve trend level of 50.7% (subject to change). Ms. Wilson stated the City has grown its General Fund Reserve from $5.8 to $7.2 million however the expenditures are outpacing the reserve level. The General Fund budget during the same time period has increased from $8.2 million to $14.2 million. She noted that the City's reserve level continues to represent sound, conservative, and fiscally prudent oversight and the proposed budget is in compliance with the City's reserve policy.
Administrative Services Director Wilson provided a summary of the action steps the City Manager is already taking towards improving the City's financial forecast including:
a. Increased investment with an additional $3 million in Local Agency Investment Fund (LAIF) deposits,
b. Refunding the City's 2015 Certificates of Participation to achieve savings on debt repayment obligation without extending the debt term,
c. Exploring other California Public Employees' Retirement System (CalPERS) options of pre-funding Employer Pension Contributions and Other Post- Employment Benefits, and
d. Revenue enhancement options for review by Council via the appropriate Council Committees.
Fund Balances
Ms. Wilson provided a summary of the projected fund balances at the end of FY 2022- 23 after expenditures for the upcoming fiscal year:
$7.2 million in General Fund Reserves
$1.8 million in the Restricted CIP Reserves
$9.3 million in the Unrestricted CIP Reserves
Professional Services Agreement List
For Council consideration, Ms. Wilson presented a list of Professional Services Agreement vendors and stated that staff is seeking approval of several agreements that are routine in nature and recurring each fiscal year. She noted that approving these agreements as part of the budget process will streamline the approval process by authorizing the City Manager to execute the agreements. She explained that by utilizing the same vendors each year, the total amount cumulatively spent on each contract over the years typically exceeds the City Manager's spending limit of $25,000 without City City Council Minutes - Study Session
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Council approval. Ms. Wilson said the list will be brought forward each year for Council approval as part of the budget process and includes vendors for summer programs such as the 4th of July event. She noted that any agreements with significant changes in cos or scope of services would be brought to Council for approval.
Responding to City Council questions, Staff discussed the Right of Entry Agreement fee with Westlake Golf Course, White Oak Crossing Guards, Tegan Cohen - Daisy the Clown, and Shumbar LLC - Jolly Jumps.
ADJOURNMENT
The meeting adjourned at 5:41 p.m.to the Regular Session scheduled for 6:30 p.m.
Brad Halpern, Mayor
Attest:
Antoirette Intrave
Antoinette Mann, City Clerk