HomeMy WebLinkAbout2017-05-15 ECONOMIC DEVELOPMENT, INFRASTRUCTURE , BUDGET & TECHNOLOGY CITY OF SANTA ANA
CITY COUNCIL COMMITTEE ON
ECONOMIC DEVELOPMENT, INFRASTRUCTURE, BUDGET AND TECHNOLOGY
SPECIAL MEETING MINUTES
May 15, 2017
CALL TO ORDER: City Hall
20 Civic Center Plaza, Room 1600
Santa Ana, CA
5:03 p.m.
ATTENDANCE: Council Committee members:
Vincent Sarmiento
Michele Martinez
P. David Benavides (5:32pm)
MEMBERS ABSENT: None
STAFF PRESENT: Robert Cortez, CMO/CDA James Schnabl, PD
Teresa Ramirez, FMSA Robert Carroll, PD
Francisco Gutierrez, FMSA Christina Holland, PD
Sergio Vidal, FMSA Fred Mousavipour, PWA
Waldo Barela, FMSA Mike Fetner, ITD
Katrina Nguyen, FMSA Sarah Ro, FMSA
Sandra Simon, FMSA Alvaro Castellon, FMSA
Melanie Torres, ITD
GUESTS PRESENT: Peter Katz, Com-Link; Ryan Smolar, Downtown Inc.; Hector
Bustos, Job Shadow Student; J. Manriquez; Mark Alvarado,
Kelly Associates; Mike Lopez, SEIU 721; Claudia Andrade-
Villa, PD; Ana Urzlia, SABHC; Carlos Melendez, Communidad;
Adrian Munoz, Cooperativa Producciones S.A.; Reyna
Mendoza, Cooperativa Manos Unidas Creando Arte; Apolonio
Cortes, Cooperativa Tierra y Dignidan; Victor Acevedo,
Resident.
PUBLIC COMMENTS
• Ryan Molar, member of City's Joint Committee with Chamber of Commerce, known
as City's Economic Development Council. Provided his top ten list of economic
development priorities: 1) Smart Community; 2) Reorganize Downtown; 3) Finish
Branding Study; 4) Redirect Bed Tax; 5) Investment on Process Improvement; 6)
May 15, 2017 lEconomic Development, Infrastructure, Budget & Technology Minutes 1
Staff-up on more Inspectors; 7) Organize Retail; 8) Corridor facade improvements;
9) Placemaking; 10) More BIDs and Council of Business Area.
• Peter Katz, Corn-Link. Disappointed that council rejected Harbor Blvd hotel project
that is an underutilized area. Neighboring cities like Garden Grove have a 34% bed
tax versus Santa Ana's 7%. Revenue opportunities: golf course if upgraded to PGA
status; mini-convention center on Harbor Blvd with streetcar to bring people;
medical marijuana tax increase; Courtyard Plaza Downtown for tourist; hotel bed tax
needs to add branding tax to pay for advertising. And help PD on 4th of July with off
duty officers, by adding $5 fee to non-profits to help offset costs.
• Adrian Munoz, Producciones Santa Ana, (Spanish Speaker). Twenty year Santa
Ana resident participating in cooperative called Producciones Santa Ana. Spoke in
support of agenda item #9 (Cooperative Business Ordinance).
AGENDA DISCUSSION ITEMS
1. Receive and File Minutes from Regular Finance, Economic Development, &
Technology Committee Meeting of January 11, 2016.
MOTION: Sarmiento SECOND: Martinez
VOTE: AYES: Martinez, Sarmiento (2)
NOES: None (0)
ABSENT: Benavides (1)
2. Approval of Minutes from Regular Economic Development, Infrastructure,
Budget and Technology Committee Meeting of March 13, 2017.
MOTION: Sarmiento SECOND: Martinez
VOTE: AYES: Martinez, Sarmiento (2)
NOES: None (0)
ABSENT: Benavides (1)
3. Selection of Chair and Vice-Chair
MOTION: Sarmiento SECOND: Benavides
VOTE: AYES: Martinez, Sarmiento, Benavides (3)
NOES: None (0)
ABSENT: None (0)
Chair— Mayor Pro Tern Martinez
Vice-Chair— Councilmember Benavides
May 15, 2017 !Economic Development, Infrastructure, Budget &Technology Minutes 2
4. Review of By-Laws
MOTION to Approve: Sarmiento SECOND: Benavides
VOTE: AYES: Martinez, Benavides, Sarmiento (3)
NOES: None (0)
ABSENT: None (0)
5. FY 2017-18 & FY 2018-19 Budget Plan {Strategic Plan No. 4, 1} - (FMSA)
Francisco Gutierrez, Executive Director, introduced Mark Alvarado, Principal, with
Kelly Associates Management Group, hired to perform audit and look over City
financial and budget documents. Firm has extensive background with auditing and
government management.
Presented overview of fiscal year 2017-18 budget and proposed budget plan. Staff
seeking committee direction to finalize draft for tomorrow night's council meeting.
Overview will be of general fund revenue & expenditure assumptions of the plan
currently in place. If committee would like to make any recommendations or
changes, those can be included in final budget. Assumptions includes loss of ICE
contract; reduction of Water Transfer Revenue; increase of top six revenue sources;
recognizes the operations of additional Medical Marijuana Dispensaries; and
completion of Citywide Fee Study in 4th Quarter of FY 17-18.
Expenditure assumptions: Assumes no labor negotiated increases; reflects PERS
increase; includes increase to Health Insurance; increase of OCFA & Ambulatory
cost; incorporates Graffiti Abatement Program funding in General Fund; includes
allocation for 3rd COPS Grant $1.OM; includes funding for City's annual share of
Animal Shelter construction costs; includes increase to Worker Compensation rates;
recognizes financing of 800 MHz final phase; and continues current attrition value
that was started last year.
From a percentage basis; Police department continues to be highly funded at
49.7%, followed by Fire contract at 21.0%, then Recreation & Library at 8.3%, and
so on. Technology infrastructure is included in 'Other'. Councilmember Martinez
would like to have IT related funding highlighted for council viewing.
Budget debt of $14.M identified for current year with a budget gap of $19.5M for
next year. Trying to establish two year vision plan in order to address the City's
various issues.
Current plan, in order to balance next year's budget - one item identified is mid-year
moving of jail from Type II to a Holding facility with a cost savings of $4M. Strategic
plan funded year after year, currently has enough funds to sustain itself next year
therefore not warranting a new budget of $2.5M. It currently has close to $2.5M
May 15, 2017 !Economic Development, Infrastructure, Budget & Technology Minutes 3
remaining in its balance. Also identified $1.0M from the opening of dispensaries for
the medical marijuana tax, for FY 18-19 it will include change in ordinance to
broaden operation hours and such, and will be reflected in outer year.
Robert Cortez, Deputy City Manager, added this is a conservative number that will
be brought to the City Council at first meeting in June; which will include Bowers,
signage. Anticipate numbers will be increasing, conservative ballpark number to be
used at this time. Change in operation hours will provide operators about 40%
more opportunity to be open and sale their medical marijuana, anticipating
generated increases.
In moving from a Type II to holding facility, intent would then be to close the Bureau
of Prisons and Marshals contract. Would technically use $2.5M from moving to a
holding facility, so that would have to be included. City attorney has expressed
including some type of ordinance that would recover legal fees in terms of
development, so placeholder for $100,000 placed, which would mean that our
budget gap would narrow to $9.3M and if you use one-time monies of $9.3M then
you would have a balanced budget. This is a placeholder for now as priories have
and will be discussed, so those can be included as additions to FY17/18.
Looking at Budget Gap for FY 18/19 the plan shows: full value of jail recognizing
close of Type II jail and there would be no Strategic Plan funds, Medical marijuana
tax changes will be recognized, sale of land on Main Street related to hotels,
Citywide Fee Study approved by council, recognize full value of jail revenue,
identified revenue sources of two new hotels [Holiday Inn Express and Hampton
Inn], expanding parking enforcement, potential economic development and jail
reuse revenue, and legal expense reimbursement. The adjusted budget gap for
year 2 would be $8.9M; use of remaining one-time monies and if economic
uncertainty funds tapped; budget gap then would be $0.7M.
If the Economic Uncertainty of $3.M is used, funds would be exhausted. Intent is to
not use operating reserves as per fiscal policy; balance out any variations as they
may occur to revenues (Prop 6). Use of operating reserves would require 2/3
council approval. Uncertainty funds allows you to use those monies for a two-year
period and develop a plan to recover those monies and build up reserves.
Mayor Pro Tem Martinez: Use of one-time funds to balance budget is not good
practice. Not in favor of amending fiscal policy. Willing to support a resolution for
one-time monies. Need ongoing sources of revenues to fulfill budget expenses,
unless we make serious cuts.
Mr. Gutierrez added: Policy not required to be changed as it relates to operating
reserves. The one-time element specifically indicates you can only use for term
specific or as one-time expenditure. No trigger that allows council to split or change
that. However council has to take action, as policy does not currently allow monies
May 15, 2017 I Economic Development, Infrastructure, Budget & Technology Minutes 4
to be used for labor costs. Hence resolution needed with council 5 votes, for two-
year use, giving staff direction to make changes.
FY 2017-18 Identified Priorities: Items listed intended to provide information as
discussed and available for council consideration; but not currently part of the
budget. Budget gap would increase if included. Generating additional revenue or
major cost reduction would need to be discussed for FY 18/19. Seeking committee
direction on whether you want to go with base budget or put in any of the other
items.
Mayor Pro Tern Martinez stated Smart Cities concept: "Smart cities" solutions use
advanced information and communication technologies to collect, communicate,
and analyze data to improve the design and operations of a city's core systems and
programs, as well as citizen engagement, for greater efficiency and effectiveness,
thus improving the city's sustainability, resilience, bottom line and quality of life.
How we transition with park ranger program has been asked for by community and
should be put down on list. More plan checkers and inspectors in planning working
with developers by hiring staff to help capture and recover costs and generate
monies. Email will be sent with list of items for consideration.
6. Discuss Revisions to Budget and Fiscal Policy {Strategic Plan No. 4, ld} -
(FMSA)
Francisco Gutierrez provided presentation on Budget & Financial Policy. Current
policy adopted in 2012 was developed for dealing with recession of 2008 and City
shortfalls. Timeline of 2006 to 2012 reviewed. Current reserve level goals and
value were also reviewed. Reserve levels are based on year-end operating
expenditures. As the budget grows, you're chasing the 20%. Operating reserve
cannot be used to cover budgetary shortfalls unless approved by 2/3 vote of the
City Council.
Robert Cortez added: Two year plan to insure sustainability. If council choses by
2/3 vote to use operating reserve, the fiscal policy would then require the council to
develop a two year plan. This would then replenish and achieve 20% reserve goal
over a two year period. Committing to be fiscally prudent to raise enough funding or
savings to get reserves back to 20%.
Councilmember Sarmiento inquiring if declaration of fiscal crisis required, but not
stated in policy. Would like staff to check with City Attorney's office if language for
declaration of crisis included. Mayor Pro Tem Martinez would only support one time
use of funds for resolution; not for ongoing costs.
Economic Uncertainty minimum reserve level ranges from 1% to 10% of general
fund revenues; current balance is $3.8M, a little over 1.5%. Economic Uncertainty
can be used to balance the budget upon determination of a structural deficit by a
May 15, 2017 'Economic Development, Infrastructure, Budget & Technology Minutes 5
2/3 vote of the City Council. Authorization to utilize Economic Uncertainty reserve
beyond two consecutive years is strictly prohibited.
Current policy states general fund year-end operation balance can be considered
for term specific operational or capital needs for one-time items. Policy does not
include fund balance categories or definitions or calculation of operation balance.
Would like to have policy expanded to include these and any other committee
suggestions.
Reserve level options: 1) Status Quo — Maintain 20% operating reserve level, to
maintain rating; 2) Adjust the current reserve level to 2 months of operations
(16.67% - GFOA Recommendation); 3) Establish reserve level at 15% (in
compliance with policy); 4) City Council establishes new reserve level. Robert
Cortez added: other alternative is to give direction to revise policy to state between
2 months of operation but up to 20%, that way when you do budget at a minimum
we'll have 2 months' worth of reserve. If below the 20%; you're still within the policy
and would solve rating issue. Intent is to protect reserves. Language can be
modified to show up to 20%.
Use of One-time monies options: 1) Status Quo — can only be used to match one-
time non-recurring expenditures, term specific projects and programs, as well as
capital expenditures; 2) to offset structural deficits for a two-year period only
(Economic Uncertainty remains the same); 3) City Council exercises 100% full
discretion and includes the use of one-time monies to balance structural deficits,
requires 2/3 vote by the City Council (Economic Uncertainty remains the same).
Councilmember Sarmiento suggests separating policies (budget vs. reserves) for
clarity for council and public. For operating reserves, language for declaration of
fiscal crisis if not already existing, might be considered to include in policy.
Draft budget will be presented at May 16th City Council Meeting. Actual budget will
be on June 6th City Council Meeting. Options will be listed for council to select.
7. Jail Cost Review and Structure {Strategic Plan No. 1, 3} - (PD)
Christina Holland, Jail Administrator, provided overview of Type I and Type II jail
models. City currently operates a Type II jail facility, primarily for pre-trial and
sentenced inmates, Santa Ana Jail contract partners provide inmates, no local
arrests remain in our custody. Type II requires comprehensive medical services,
food services, law library, education and religious programs. Type I Jail Facility is
intended for pre-arraignment felony/misdemeanor offenders held for 48-72 hours
and are provided meals, uniforms, bedding and hygiene supplies as they do stay
overnight.
Temporary holding facility is more for our local arrests who are being released to
county on same day of arrival. Held for 4-6 hours for booking or until they are sober
May 15, 2017 I Economic Development, Infrastructure, Budget & Technology Minutes 6
enough to care for themselves. Minimal contract and supply requirements.
Currently most other cities have holding facilities. Once county dropped booking
fees, most changed to temporary holding and transferred on same day to county.
Ms. Holland reviewed presentation on Type II with Contract Housing current model
as of July 1, 2017: Fiscal overview, housing contracts, staffing, and services
provided. No other cities utilize this model. For Type I: no housing agreements,
offenders provided uniforms, hygiene items, meals, phone services and visitation
allowance. Court lists prepared for staff daily for arraignments scheduled and
transport to court by jail staff. Currently LAPD, Huntington Beach PD and
Pasadena PD utilize the Type I model. Robert Carroll, Police Administrative
Manager, added that for Type 1, because of our proximity to Orange County facility,
cost would be $0.5M to $1.0M more than temporary holding facility.
Temporary Holding facility model fiscal overview, staffing and services provided as
part of presentation. Anaheim PD, Costa Mesa PD and Garden Grove PD utilize
the temporary holding facility model.
Pending items: Awaiting jail re-use report and City Council direction to revise the
FY 2017-18 budget to reflect transition to selected jail model.
Deputy City Manager, Robert Cortez, added that floors three and four are available
for re-use. There are different holding facilities models, dependent on city council
direction on model; this one assumes keeping all job titles and pay of current staff.
There are other models that outsource or change the structure of holding facility
which could generate additional savings.
Jail has 512 beds available but only one-half used for ICE and marshals combined.
Changing from Type II to holding facility would also change staff levels requiring
different job requirements. Preliminary estimated savings would be 30% if
adjustments made to staff. Floors could change to asset versus liability, if re-used
and could generate additional revenue. Jail business is not a core business of City
to generate revenue. Looking forward to review reuse study with options.
Suggestion to include slide, if City to opt out of jail service. Look at hybrid model for
the two floors that may become available. Christina Holland added that reuse study
should be completed in August.
8. Revenue Enhancement Options {Strategic Plan No. 4, 2} (FMSA)
Francisco Gutierrez, presented Revenue Enhancement Options. Shown are option
items undertaken or proposed to be undertaken in terms of trying to generate
additional revenue. New revenue consideration items and information on sales tax
and hotel visitor's tax were provided. Citywide fee study could provide numbers for
sustainability and would be dependent on type of service level to be given. Working
with current staffing or change with upgraded service/staff.
May 15, 2017 l Economic Development, Infrastructure, Budget & Technology Minutes 7
Development impact fee study contract just provided to consultant, will take six to
nine months to complete as it requires information from departments, per Fred
Mousavipour, Executive Director of Public Works. For sale of City-owned
properties, next steps would be recommendation to purchase technology to install
and run asset management and will take four months to convert data into system to
be ready to use in about a year from now. There are a number of initiatives for
approval: Smart Santa Ana, fiber optics with partner to merge with utilities and LED
programs, affordable internet, light conversion, review franchise fees with utility
companies, and SARTC deferred maintenance to attract tenants.
9. Cooperative Business Ordinance (Strategic Plan No. 3, 1}
Mayor Pro Tem Martinez: "Cooperative business ordinance primarily supports idea
of worker cooperatives — businesses that are owned and democratically controlled
by workers — as a key part of the City's economic development strategy moving
forward. The worker cooperative model has proven to be an effective tool for
creating and maintaining sustainable, dignified jobs; generating wealth; improving
the quality of life of workers; and promoting community and local economic
development, particularly for people who lack access to conventional means of
business ownership."
"Direction would be to: direct City Manager to develop recommendations to support
local worker cooperatives, particularly ones that target areas of need in Santa Ana
such as food deserts. It also directs the city manager to review the City's small
business program loan applications and other materials to ensure worker
cooperative can access those on the same basis as comparable conventional
businesses. Direct city manager to develop recommendations on how to reach out
to existing business owners and present worker cooperative conversion as a
retirement or succession plan for older business owners. Direct the city manager to
review City procurement and contracting procedures for any possible barriers to
worker cooperative to bid on City contracts." Can look at Oakland and Berkeley
models. Will forward email from Ana at Santa Ana Building Healthier Communities
for staff to review.
ITEMS MOVED TO NEXT COMMITTEE MEETING
• Cooperative Business Ordinance — bring back to committee for next steps.
PUBLIC COMMENTS:
• Apolonio Cortes — co-op member and spoke in favor of ordinance.
• Adian Munoz — spoke in support of cooperative business ordinance.
• Ana Urzua — spoke in support of cooperative business ordinance.
May 15, 2017 I Economic Development, Infrastructure, Budget & Technology Minutes 8
• Reyna Mendoza — spoke in support of cooperative business ordinance.
• Carlos Melendez — spoke in support of cooperative business ordinance.
STAFF MEMBER COMMENTS:
Robert Cortez, Deputy City Manager, thanked committee for opportunity to have
discussion. Budget is extremely important and decisions made were critical to help
produced balanced budget.
COMMITTEE MEMBER COMMENTS:
Mayor Pro Tem Martinez has emailed notes and information to Robert Cortez, as well as
forwarded email from Ana Urzlia @ SABHC.
Adjournment — 8:01 p.m.
a7--
)
Teres- 'amirez, CAP M
Rece ding Secreta , FMS
May 15, 2017 I Economic Development, Infrastructure, Budget & Technology Minutes 9