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HomeMy WebLinkAboutApproved Minutes - May 24, 2018Finance Committee Meeting Minutes May 24, 2018 Page 1 of 8 CITY OF NEWPORT BEACH FINANCE COMMITTEE MAY 24, 2018 MEETING MINUTES I. CALL MEETING TO ORDER The meeting was called to order at 3:00 p.m. in the Crystal Cove Conference Room, Bay 2D, 100 Civic Center Drive, Newport Beach, California 92660. II. ROLL CALL PRESENT: Council Member Diane Dixon - via teleconference (Chair), Mayor Pro Tem Will O'Neill (Chair), Council Member Kevin Muldoon (arrived 3:08 p.m.) Committee Member William Collopy, Committee Member Patti Gorczyca, Committee Member Joe Stapleton, and Committee Member Larry Tucker ABSENT: None STAFF PRESENT: City Manager Dave Kiff, Assistant City Manager Carol Jacobs, Finance Director/Treasurer Dan Matusiewicz, Deputy Finance Director Steve Montano, Accounting Manager Rukshana Virany, Budget Analyst Amy Mayfield, Budget Manager Susan Giangrande, Deputy City Attorney Armeen Komeili, Budget and Payroll Supervisor Shannon Espinoza, and Administrative Specialist to the Finance Director Marlene Burns. MEMBER OF THE PUBLIC: Jim Mosher III. PUBLIC COMMENTS Chair Dixon opened public comments. Jim Mosher noted a proposal from a previous meeting which would reconstitute the Finance Committee membership to exclude sitting City Council Members. He expressed support for this change in the interest of keeping the Finance Committee’s review and recommendations independent, as well as to ensure all City Council Members are receiving and reviewing information from the Finance Committee in an equal fashion. City Manager Kiff noted this item does not appear on today’s agenda and discussion at this time would not be appropriate for the Finance Committee. Chair Dixon noted this item can be added to a future agenda by the Finance Committee during agenda item five. Noting there were no other members of the public who elected to speak on this item, Chair Dixon closed public comments. Chair Dixon deferred Chairmanship for this meeting to Mayor Pro Tem O’Neill. Chair O’Neill proceeded to Chair the meeting from this point forward. IV. CURRENT BUSINESS B. UPTOWN NEWPORT COMMUNITY FACILITIES DISTRICT (CFD) UPDATE Summary: Finance Committee Meeting Minutes May 24, 2018 Page 2 of 8 The Uptown Newport development agreement stated that staff would work cooperatively to form a CFD to finance the undergrounding of overhead electrical power transmission lines. Staff will brief the Finance Committee on the topic as the project appears to be moving forward for Council consideration soon. The proposed financing is secured by the real property currently owned by the developer(s). The is “No-Commitment Debt” meaning neither the faith nor credit of the City of the Newport Beach will be pledged as collateral or as a further backstop for the proposed financing. Recommended Action: Receive and file. Council Member Muldoon recused himself from participation in this item and left the room for the duration of the item. Finance Director Matusiewicz noted previous Finance Committee’s have not addressed Community Facilities Districts (CFD) or assessment districts historically. There is a CFD contemplated to underground high-powered transmission lines in front of the subject development. The project scope has grown, and by handing this matter off to another agency, the City may lose control over pricing terms. Once the City Council forms the CFD it is recommended the authorizing resolution contains specific language to establish parameters for price setting. Committee Member Tucker inquired as to the level of risk that would be assumed by the City in the development of a CFD. Finance Director Matusiewicz noted a certain number of property owners would be assessed a “Mello-Roos” tax to fund the CFD. There is no City money at stake. Committee Member Tucker requested clarification related to the Finance Committee’s role in this matter. Finance Director Matusiewicz stated this item is a general “receive and file” informational update and there is no action required by the Finance Committee. Committee Member Gorczyca inquired as to financing and administration of the the proposed CFD. Finance Director Matusiewicz stated the funding has grown to approximately $8 million to include both the undergrounding and a community park and the the financing and administration would be carried out by the California Statewide Communities Development Authority (CSCDA) Chair O’Neill opened public comments. Jim Mosher expressed support to broaden the Finance Committee’s ability to review policy decisions and make recommendations as to the overall financial impacts of program and projects to the City of Newport Beach. Noting there were no further members of the public who elected to speak on this item, Chair O’Neill closed public comments. MOTION: The Finance Committee unanimously (Council Member Muldoon recused) accepted this report with a “receive and file” action. A. FINANCE COMMITTEE BUDGET RECOMMENDATION(S) TO COUNCIL Summary: The Finance Committee has had the opportunity to review the City Manager’s Fiscal Year 2018-2019 proposed budget documents since April 10, 2018. City staff has presented brief power point presentations to Finance Committee summarizing the budget, addressing committee questions and provided a variance analysis of the budget. Staff will be available to answer any further questions the Committee may have pertaining to the Fiscal Year 2018-2019 proposed budget. Recommended Action: Finance Committee Meeting Minutes May 24, 2018 Page 3 of 8 Make written recommendation(s) to the Council concerning the City Manager’s Fiscal Year 2018-2019 proposed budget. Committee Member Tucker requested the City Manager to provide brief updates on budget checklist items, excluding any items, which are proposed as part of the Capital Improvement Program (CIP). City Manager Kiff spoke regarding the proposed formation of a Harbor Department, which is currently a Division. Some Council Members have expressed support for an increased role for the Division including larger-scale maintenance projects. There will be an increase in cost associated with the formation of a Harbor Department, including making the positions permanent, such as Director (tied to Library Director salary level). There is potential for revenue offset by pulling in contracted management of Marina Park and having the program managed in-house. The total net cost of the change is approximately $150,000. Currently, the program is moving toward approximately $1 million in costs. Discussion ensued regarding costs going forward for in-house management of the proposed Department. City Manager Kiff spoke regarding the past establishment of the Library Department as a comparison and noted the future City Council and City Manager will have the ability to adjust the proposed Department, as necessary. Committee Member Collopy inquired as to how the City Council can ensure the next City Manager will manage the growth of the program, ideally with net-zero growth. City Manager Kiff stated the choice of the next City Manager’s financial management style is determined by the City Council who selects the individual and the direction they provide regarding the budget. Committee Member Gorczyca inquired as to the benefit changes that will result when the positions move to permanent status. City Manager Kiff stated the costs include their PEPRA benefits, as the employees will not fall under the Tier II or Tier I, “Classic,” pension programs. City Manager Kiff discussed the proposed addition of officers to school programs, an option that was determined based upon discussions with Dr. Navarro. There is a deletion of the two (2) additional sworn officers and the proposed addition of three (3) community services officers. He also discussed the potential addition of matrons related to female custody transfers. He spoke regarding the cite and release impacts of intoxicated individuals, and would prefer to keep them in custody in Newport Beach as opposed to the County Jail for longer periods of time. Committee Member Gorczyca inquired whether there was a cooperative agreement with the schools for officers. City Manager Kiff stated there was a potential for cost-sharing as long as Dr. Navarro’s school board was agreeable to the terms. As a follow-up, Committee Member Collopy inquired as to the hours the officers would be available at the schools. City Manager Kiff stated there may be circumstances where officers may be pulled away due to other city-wide safety matters; however, it is anticipated they would be available during school hours. Committee Member Gorczyca inquired how many officers are currently at the schools. Chair O’Neill stated that on principle, in deference to school safety concerns, the City does not discuss the information related to officer’s schedules at the school. Council Member Muldoon is not in support of the addition of three (3) community service officers and he does have serious concerns related to the formation of a Harbor Services Department. He confirmed the two (2) new officers have been removed from the proposed budget. He supports the concept of an additional officer to be shared with the schools. He supports the concept of perhaps one (1) community service officer who could be blended with sworn staff. He expressed his concerns regarding bifurcating the vote on the recommended budget so as to affirm his support for the budget, overall. Finance Committee Meeting Minutes May 24, 2018 Page 4 of 8 Committee Member Tucker stated that the day-to-day operational issues and policy direction are the jurisdiction of the City Council. The Finance Committee does not have jurisdiction over those matters, especially given that the Committee is constituted partially of non-elected members. He will be supporting a motion to recommend approval to the City Council of the City Manger’s proposed budget, but would exclude any comment from the Finance Committee on the budget checklist. Committee Member Gorczyca stated that the budget checklist is not the purview of the Finance Committee. Chair O’Neill mentioned that although he believes the Finance Committee does have purview over many of the issues presented in the budget checklist, he is in support of the Finance Committee voting strictly on the proposed budget and not comment on the budget checklist. He also spoke regarding the potential for adding matrons in the jail in order to potentially avoid future litigation. There are also impacts to hiring the three (3) additional community services officers; however, there are also impacts to the potential permanent closure of the jail. Council Member Dixon inquired as to the other services that may be performed by the matrons. City Manager Kiff stated there must be continuous coverage in the jail for females when in custody, although the matrons may also be assigned to records-type duties when their services are not required for jail custody purposes. The female matrons are non-sworn employees. Council Member Muldoon stated there are automation opportunities where law clerks or interns could response to law enforcement records requests and there may be other ways the need for additional matrons may be addressed. He does not want to vote “no” on the City Manager’s proposed budget. Committee Member Tucker stated his preference that the Finance Committee not take a position on the budget checklist. Chair O’Neill inquired as to the “fund transfer” listed on the top of a distributed document. Finance Director Matusiewicz assured there was no double counting in the proposed budget for the transfer of cash from the Internal Service Fund (ISF). Committee Member Collopy inquired as to the creation of the Harbor Department. Chair O’Neill stated the proposed Harbor Department has not yet been approved. He further commented that at the last City Council meeting, approval was given for a stand-alone Utilities Department and to move Municipal Operations under the Public Works Department at an estimated cost savings. Discussion of a stand-alone Harbor Department was continued to the next City Council meeting. It was confirmed there will be an additional cost to create the proposed Department. The staff report on the item was comprehensive and is publically available. City Manager Kiff spoke regarding service delivery model changes in the Fire Department, including increasing service capability for Emergency Medical Services (EMS). The change would entail the ability for additional stations to provide Advanced Life Support (ALS) services, through the addition of a certified Paramedic at the station. There will be more staff who are Firefighter/Paramedics, rather than Firefighter/EMT’s. Chair O’Neill noted that there are few Firefighters who have elected to become Paramedic certified, even though the City does pay for the Paramedic training. Most Firefighters would prefer to remain just Firefighters. Committee Member Collopy inquired if the Fire Chief places priority for hiring on those candidates who apply already Paramedic certified. City Manager Kiff did not recollect if this was the current policy for the Fire Department. Finance Committee Meeting Minutes May 24, 2018 Page 5 of 8 Committee Member Gorczyca stated that one of her previous clients, a Fire Authority, reported approximately 90% of their calls for service were calls requiring Paramedic service. City Manager Kiff confirmed the City of Newport Beach Fire Department reports approximately 89% of their calls as requiring Paramedic service. City Manager Kiff noted additional dollars were placed in the proposed budget for facility cleaning, including bathrooms, plexiglass, and to address various contract costs for maintenance. There were also proposed reductions in capital expenses, as reflected in distributed documentation. Chair O’Neill stated he would prefer to redirect the presentation back to the Finance Committee for their discussion on the proposed budget. The Committee Members had no further questions or discussion at this time. Chair O’Neill opened public comments. Jim Mosher expressed his support for the Finance Committee to ensure the public has the appropriate documentation and details to understand the proposed budget, and suggested this be part of their recommendation to the City Council. He requested additional detail in the budget document, including projects that are presumed approved by staff once the budget has been approved by the City Council, details as to the specified changes in the budget from year-to- year, specific highlighting of budget checklist items which are added to the proposed budget, and notice as to where the City’s airport issues allocation is located in the document. He expressed concern with the amount of discretion the City Manager has over line items in the budget, and suggested lowering the budget and purchasing authority for the new City Manager to ensure fiscal accountability. Noting there were no further members of the public who elected to speak on this item, Chair O’Neill closed public comments. Chair O’Neill, in deference to previous comments made by Council Member Muldoon and Committee Member Tucker, suggested the recommendations explicitly exclude any items from the budget checklist. Council Member Muldoon confirmed he specifically wanted to exclude any recommendation related to the three (3) proposed community service officers. Committee Member Tucker responded to comments made by Mr. Mosher, in that the public speaker would like appointed officials serving on the various Commissions and Committees to have more discretion as related to policy recommendations and decision-making. Committee Member Tucker believes the resolutions creating most City Council-appointed Commissions and Committees provide for a narrower scope of discretion than Mr. Mosher would prefer. MOTION: Committee Member Tucker moved, and Committee Member Stapleton seconded, to recommend approval to the City Council of the Fiscal Year 2018-2019 budget as proposed by the City Manager, while taking no position or making any specific recommendation on either the Capital Improvement Program or budget checklist items. Committee Member Gorczyca preferred to review the budget checklist prior to the vote, particularly the pension information. Discussion ensued as to items, which are on the list and where they can be located in the distributed documents and on-line. City Manager Kiff confirmed the budget checklist is actually a supplement to the original proposed budget. Staff noted the proposed Unfunded Accrued Liability (UAL) payment is approximately $34.5 million across all funds, and the amount that is discretionary is $8.8 million. The information was available via the PowerPoint Presentation that was provided at a recent City Council meeting. Committee Member Collopy admitted to struggling with the motion on taking no position on Capital Improvement Program. He does believe it is the Committee’s responsibility to take a Finance Committee Meeting Minutes May 24, 2018 Page 6 of 8 position on total amounts and to recommend the proposed budget is balanced. He agreed the Committee should not take positions on individual line items. Committee Member Tucker stated the Committee is taking a position on pension liabilities, as they are already built into the proposed operational budget. In regard to the Capital Improvement Program, there are various sources which supplement the operational budget funding for projects and the Capital Improvement Program is essentially a summation of a large number of proposed projects. It is not necessarily the purview of the Finance Committee to approve the projects, as the City Council is the appropriate authority to review and approve specific projects. Chair O’Neill noted that although the Finance Committee does not approve specific capital projects, it does recommend whether the total dollar amount proposed to be spent is fiscally responsible. Discussion ensued regarding the role of the Finance Committee in recommending overall budgets to the City Council, and to what level of detail should they be reviewing items. It was agreed upon by consensus to continue the discussion of the role of the Finance Committee, including the constitution of its membership to a future meeting. Committee Member Gorczyca expressed concern with recommending approval of the proposed budget without reviewing additional detail, including the results of the reserve study and any impacts of upcoming bargaining unit negotiations. In addition, she does not have enough information to recommend the $8.8 million for the pension pay down, nor the status of having a new City Manager on-board. She is tending toward abstaining on the item. Further discussion ensued further as to the level of information the Finance Committee should review or have access to prior to making a recommendation of approval of the proposed budget to the City Council. Chair O’Neill affirmed the original motion, as amended, to recommend approval to the City Council of the Fiscal Year 2018-2019 budget as proposed by the City Manager, while taking no position or making any specific recommendation on either the Capital Improvement Program or budget “checklist” items. Council Member Muldoon reported a potential conflict of interest on the budget “checklist” related to the 800 megahertz matter however, since the current motion before the Finance Committee explicitly excludes any position or recommendation on that item, he does feel it is appropriate for him to vote. MOTION: Committee Member Tucker moved, and Committee Member Stapleton seconded, to recommend approval to the City Council of the Fiscal Year 2018-2019 budget as proposed by the City Manager, while taking no position or making any specific recommendation on either the Capital Improvement Program or budget “checklist” items. AYES: Dixon, O'Neill, Collopy, Stapleton, Tucker NOES: None. ABSENT: None. ABSTAIN: Gorczyca There was no further action taken on this item. C. WORK PLAN REVIEW Summary: Finance Committee Meeting Minutes May 24, 2018 Page 7 of 8 Staff will review with the Committee the agenda topics scheduled for the remainder of the calendar year. Recommended Action: Receive and file. Finance Director Matusiewicz reported there are currently two (2) meetings of the Finance Committee scheduled for June (June 14 and 28). Deputy Finance Director Montano stated proposed June 14 agenda items include a discussion of parametric insurance with the City’s GFOA consultants and a presentation regarding the Advanced Metering Infrastructure (AMI). Discussion ensued regarding the need for a meeting on June 28, 2018. The City Council will be discussing items related to a proposed Charter amendment and the membership and responsibilities of the Finance Committee at their June 12, 2018, meeting. By Finance Committee consensus, it was decided to include the following items on the June 14, 2018, Finance Committee agenda: proposed Charter amendment, membership and responsibilities of the Finance Committee, reserve policy report/discussion, and master fee schedule. The June 14, 2018, is forecasted to be a longer meeting due to the aforementioned subject matter, and discussion of the need for a June 28, 2018, meeting will be made at that time. Council Member Muldoon stated the membership qualifications and responsibilities of the Finance Committee are determined by the City Council via resolution. Committee Member Gorczyca inquired as to the ability for the Finance Committee to schedule meetings in July and August. Discussion ensued as to the City Council appointment schedule for Commission and Committee members whose terms end on June 30, 2018. The City Council has traditionally made appointments/reappointments to the various Commissions/Committees at the end of June. City Manager Kiff will confer with the City Clerk’s Office as to the exact schedule. Committee Member Gorczyca expressed her interest in having enough time to properly vet the results of the reserve study, especially as it relates to debt. She referenced an initiative to place a ballot measure related to indebtedness before the voters. Discussion ensued regarding the length of time required to properly review the items which are forecasted for the upcoming June meetings, particularly the results of the reserve study and any proposed increases/decreases to city-wide fees. There was Committee consensus to direct Administrative Specialist to the Finance Director Marlene Burns to send out a meeting notice for the June 28, 2018, meeting. Chair O’Neill on opened public comments. Jim Mosher expressed his support for an expanded role for the Finance Committee, including review of policy and budget decisions related to fiscal matters. He does not believe any action by the Finance Committee to recommend items to the City Council overrides the City Council’s ability to take action. He also supports a change in the membership of the Finance Committee to include only non-elected officials, and was interested in the viewpoints of the current Committee as related to this matter. Noting there were no further members of the public who elected to speak on this item, Chair O’Neill closed public comments. There was no further action taken on this item.