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2007-12-04 Joint CC ARRA CIC MinutesMINUTES OF THE SPECIAL JOINT CITY COUNCIL, ALAMEDA REUSE AND REDEVELOPMENT AUTHORITY (ARRA), AND COMMUNITY IMPROVEMENT COMMISSION (CIC) MEETING TUESDAY- - DECEMBER 4, 2007- -7:31 P.M. Mayor /Chair Johnson convened the Special Joint Meeting at 8:57 p.m. ROLL CALL - Present: Councilmembers /Board Members /Commissioners deHaan, Gilmore, Matarrese, Tam, and Mayor /Chair Johnson - 5. Absent: None. CONSENT Mayor /Chair Johnson announced that the recommendation to authorize the use of up to $50,000 [paragraph no. 07- 051CIC], and the recommendation to approve a $300,000 loan [paragraph no. 07 -052 CIC] were removed for discussion. Councilmember /Board Member /Commissioner deHaan moved approval of the remainder of the Consent Calendar. Councilmember /Board Member /Commissioner Gilmore seconded the motion, which carried by unanimous voice vote - 5. [Items so enacted or adopted are indicated by an asterisk preceding the paragraph number.] ( *07 -050 CIC) Minutes of the Special Community Improvement Commission Meeting of November 20, 2007. Approved. (07 -051 CIC) Recommendation to authorize the use of up to $50,000 in interest earnings to complete the enclosure of the Historic Alameda Theater Balcony Access Corridor and related improvements. Commissioner deHaan stated that the Commission discussed bringing back value engineering items if money became available; inquired whether other worthy items should be considered. The Development Services Director responded the CIC would not be required to make other significant, hard construction improvements to the Historic Theater in the future; stated decorative or restoration items could be considered; the mezzanine balcony rehabilitation and restoration is the last hard construction item left unfinished; the Historic Theater is required to have certain fire and life safety exiting paths as well as American with Disabilities (ADA) access; the proposed platform is part of the Special Joint Meeting Alameda City Council, Alameda Reuse 1 and Redevelopment Authority, and Community Improvement Commission Meeting December 4, 2007 existing path for fire safety as well as ADA access; ADA access would be provided using an elevator system in the new theater; the second floor was always assumed to be part of the second phase; the balance of the second story improvements are the responsibility of the developer. Robb Ratto, Park Street Business Association (PSBR), stated that he supports the staff recommendation; he is concerned with safety issues; PSBR urges Council to accept the staff recommendation. Chair Johnson stated the enclosure should be done now since money is available. Commissioner deHaan inquired whether a canopy would be used or a full enclosure, to which the Development Services Director responded a full enclosure. Commissioner Gilmore stated the enclosure should be done now because the contractors are on site and there would be minimal disruptions. Commissioner Matarrese stated that staff and the developer did an excellent job; he supports the staff recommendation. Commissioner Matarrese moved approval of the staff recommendation. Commissioner Gilmore seconded the motion, which carried by unanimous voice vote - 5. (07 -052 CIC) Recommendation to approve a $300,000 loan to Alameda Entertainment Associates, L.P. for rehabilitation and restoration of the mezzanine balcony in the Historic Alameda Theater and for augmentation of the Cineplex construction contingency budget. The Development Services Manager gave a brief presentation. Commissioner Tam stated that the use of $691,000 Merged Area Bond is fairly restricted. The Development Services Manager stated that the 2003 Merged Area Bond anticipated financing a number of projects; $4 million was unspecified; using the Bond for the Library was not anticipate; $2 million was pledged to the Library to finish construction; State funding for the library is closed out; the unused money was intended to come back to the CIC for other projects. Commissioner Tam stated the remainder of the fund cannot be used Special Joint Meeting Alameda City Council, Alameda Reuse 2 and Redevelopment Authority, and Community Improvement Commission Meeting December 4, 2007 for branch libraries because said libraries are not in redevelopment areas. The Development Services Manager stated typically funds have to be used in redevelopment project areas or benefit redevelopment project areas. Commissioner deHaan stated the West End library would fall well within said criteria because the library is the only library in the area; he is concerned with 738 seats; inquired whether there is a market for 738 seats. The Development Services Director responded she called a number of theaters; stated three or four shows can be sold out in a row on an opening day or the day before. Commissioner deHaan stated that previous discussions addressed utilizing the balcony differently; 254 seats were never anticipated in previous discussions. Kyle Connor, Developer, stated theater strategy is to double track; a lot of auditoriums are needed to double track; capacity is needed to meet demand; 1,300 people attended a silent film festival at the Castro Theater in San Francisco. Commissioner deHaan inquired what is the next largest theater other than the main theater. Mr. Connor responded three theaters have approximately 200 seats. Commissioner deHaan stated that the Castro Theater film festival was a special event. Mr. Connor stated that hopefully Alameda will have film festivals; films pay off in approximately 2.7 weeks; 900 of business is done within the first three weeks; facilitating capacity is important. Commissioner deHaan inquired how the other portion [of the balcony] would be closed, to which Mr. Connor responded drapery would be used. Robb Ratto, PSBR, urged approval of the staff recommendation; stated the community wants the balcony open. Commissioner Matarrese stated the $2 million was not designated for the Library; inquired whether the $2 million was redevelopment money that was held in case Library costs escalated, to which the Special Joint Meeting Alameda City Council, Alameda Reuse 3 and Redevelopment Authority, and Community Improvement Commission Meeting December 4, 2007 Development Services Director responded in the affirmative. Commissioner Matarrese stated there is still Measure 0 money that is supposed to go for branch upgrades; a report is needed on the matter at some point; he would rather open the mezzanine balcony now; people saw the potential for the theater; he thinks the loan should be given to complete the job; twelve public days might demand 800 seats. Commissioner Matarrese moved approval of the staff recommendation. Commissioner Gilmore seconded the motion. Under discussion, Commissioner Gilmore requested a run down on restoration that has been accomplished. The Development Services Director stated the project has gone very well; major, significant repairs and alterations were made to the ceiling; all the trim molding was painted; original light fixtures were installed; fabric workers restored the original curtain; artisans did all of the leaf work; the original art work was put back in place; the detail is phenomenal; some of the original furniture might be recovered. Chair Johnson stated the marquee sign is beautiful. Commissioner deHaan stated that the Historic Alameda Theater is one of the better restorations; separating the upper balconies into theaters would be a shame; inquired how many seats will be gained, to which the Development Services Director responded 150. Commissioner deHaan requested a breakdown of efforts made for the transition into the Cineplex. The Development Services Director stated some of the original carpeting will be put back into the Historic Theater; the Cineplex will have similar carpeting and upholstery; similar icons and images have been carried through the Cineplex. Commissioner Gilmore requested staff to update the website photos. Commissioner Tam stated that the schedule shows a March opening; all contingencies are being used; inquired whether the CIC would be requesting another loan in the next four months. The Development Services Director responded there is approximately $106,000 left in contingency. Special Joint Meeting Alameda City Council, Alameda Reuse 4 and Redevelopment Authority, and Community Improvement Commission Meeting December 4, 2007 Commissioner Tam inquired whether staff is requesting $200,000 on top of the loan, to which the Development Services Director responded in the negative. Commissioner Matarrese inquired whether the $300,000 loan is coming from undesignated bond money, to which the Development Services Director responded in the affirmative. On the call for the question, the motion carried by unanimous voice vote - 5. ( *07 -053 authorize Council. CIC) Recommendation to transmittal to the State Accepted. accept the Annual Report and Controller's Office and the City ( *07 -573 CC / *07 -054 CIC) Recommendation to accept transmittal of the: 1) Comprehensive Annual Financial Report (CAFR) for Fiscal Year ended June 30, 2007; 2) Auditor's Agreed Upon Procedures Report on compliance with Vehicle Code Section 40200.3 Parking Citation Processing; 3) Agreed Upon Procedures Report on compliance with the Proposition 111 21005 -06 Appropriations Limit Increment; 4) Police and Fire Retirement System Pension Plans 1079 and 1092 Audit Report for Fiscal Year ended June 30, 2007; 5) Metropolitan Transportation Commission Grant Programs Financial Statements for Year ended June 30, 2007; 6) Community Improvement Commission Basic Component Unit Financial Statements for the Year ended June 30, 2007; and 7) Alameda Reuse and Redevelopment Authority Basic Component Unit Financial Statements for the Year ended June 30, 2007. Accepted. AGENDA ITEMS (07- 574CC/07- 055CIC) Public Hearing to consider approval of a first addendum to the Alameda Landing Mixed -use Development Project Supplemental Environmental Impact Report, first amendment to the Development Agreement, and first amendment to the Disposition and Development Agreement for the Alameda Landing Mixed Use Project to modify the Public Waterfront Promenade; (07 -574A CC) Resolution No. 14162, "Approving and Authorizing Execution of an Amendment of the Disposition and Development Agreement (Alameda Landing Mixed Use Project) with Palmtree Acquisition Corporation." Adopted; and (07 -055A CIC) Resolution 07 -151, "Approving a First Addendum to the Alameda Landing Mixed Use Development Project Final Supplemental Environmental Impact Report and Authorizing the Executive Director Special Joint Meeting Alameda City Council, Alameda Reuse 5 and Redevelopment Authority, and Community Improvement Commission Meeting December 4, 2007 to Amend the Disposition and Development Agreement (Alameda Landing Mixed Use Project) with Palmtree Acquisition Corporation." Adopted; and (07 -574B CC) Introduction of Ordinance Approving Development Agreement Amendment DA -06 -0003 to the Development Agreement (Alameda Landing Mixed Use Commercial Project) By and Between the City of Alameda and Palmtree Acquisition Corporation, dated January 16, 2007. Introduced. The Base Reuse and Community Development Manager provided a Power Point presentation. Dan Bucko with SMWM provided a brief presentation on wharf redesign. The Base Reuse and Community Development Manager provided a brief summary of the proposed modifications to the Disposition and Development Agreement (DDA). Councilmember /Commissioner Gilmore inquired whether utility lines would be above ground going to Clif Bar and restaurants. The Base Reuse and Community Development Manager responded the existing 115 kV line would be relocated into the Mitchell Avenue right -of -way; stated Catellus would perform the trenching and install the conduit necessary for the ultimate undergrounding; the 115kV line starts at the High Street Bridge, runs the entire length of the City's waterfront, and terminates at Pacific Avenue and Main Street adjacent to Alameda Point. Councilmember /Commissioner deHaan inquired what is the estimated insurance cost. The Base Reuse and Community Development Manager responded the cost has not been calculated; stated the idea is to obtain insurance if available at commercially reasonable rates. Councilmember /Commissioner Matarrese inquired what would be a commercially reasonable rate, to which the Base Reuse and Community Development Manager responded that she would provide the information. Councilmember /Commissioner Gilmore stated the Alameda Landing tax increment would be parceled off; Merged Improvement Areas would be paid back first with tax increment from other areas; requested clarification on the matter and whether Alameda Point would be affected. Special Joint Meeting Alameda City Council, Alameda Reuse 6 and Redevelopment Authority, and Community Improvement Commission Meeting December 4, 2007 The Base Reuse and Community Development Manager stated Alameda Point is in the Alameda Point Improvement Project (APIP) redevelopment area and would not be affected; the Merged Area is the West End Community Improvement Project (WECIP) and Business and Waterfront Improvement Project (BWIP); the Merged Area Bonds were issued in 2003 and were an existing condition when the DDA was approved with Catellus in 2006; the bond was sized and assumed a zero tax increment from Alameda Landing because the property is not on the tax roll; all of the tax increment in the entire project area is pledged to the repayment of the debt; typically underwriters have a debt to loan value ratio when debt is issued; technically, the Alameda Landing tax increment is already pledged to the repayment of the existing obligation; the Bond was sized when there was no tax increment at Alameda Landing; the project area should have no trouble making the bond payment without Alameda Landing tax increment; eventually, property taxes will be on the rolls for Alameda Landing. Vice Mayor /Commissioner Tam stated that some of the proposed Development Agreement (DA) amendments spread the cost and shift some of the liabilities; the staff report notes that the City's financial obligations do not increase but overall project costs increase and references just the acquisition of the property; inquired whether that is the only additional cost. The Base Reuse and Community Development Manager responded there is a one time cost for fencing the wharf and acquisition of the property insurance; stated the 115kV obligation would not be triggered until the DA is amended to remove the project obligation; the process is sequential. Councilmember /Commissioner deHaan requested elaboration on the utility assessment district; inquired whether an assessment for the wharf is required. The Base Reuse and Community Development Manager responded a Municipal Utility District is anticipated which would pay for maintenance and operations of the public open spaces such as the wharf; the undergrounding district would be just like the Rule 20A Undergrounding District where there is an assessment. Councilmember /Commissioner deHaan inquired what the district would cover. The Base Reuse and Community Development Manager responded the district would be comprised of the properties from Alameda Landing Special Joint Meeting Alameda City Council, Alameda Reuse and Redevelopment Authority, and Community Improvement Commission Meeting December 4, 2007 to Alameda Point. Councilmember /Commissioner deHaan inquired whether there would be an assessment fund to maintain the wharf. The Base Reuse and Community Development Manager responded the assessment fund would be from the Municipal Utilities District, covers more than the wharf, and includes other City services. Mayor /Chair Johnson opened the public portion of the hearing. George Phillips, Alameda Boys and Girls Club, urged approval and expedition. Christopher Buckley, Alameda, encouraged the developer to keep both warehouses. Roberta Rockwell, Alameda East Bay Miracle League, stated that she supports the Alameda Landing Project. Richard W. Rutter, Alameda, stated he thought that the May 29 plan was great; he was distressed when the September amendment came before the Planning Board and the western portion of the wharf and a major structure were removed; he thinks that there may be ways of saving and repairing the pier over time. Mario Mariani, Alameda, stated he supports the changes. Don Lindsey, Alameda, encouraged moving forward with the project. There being no further speakers, Mayor /Chair Johnson closed the public portion of the hearing. Councilmember /Commissioner Matarrese inquired whether the buildings would be demolished or deconstructed and reused. The Base Reuse and Community Development Manager responded the buildings would be a combination of deconstruction and potential demolition; stated the existing DDA does not obligate the developer to maintain the warehouses; the Planning Board added a Condition of Approval which states that prior to making a decision about the disposition of the second warehouse, the developer will go back to the Planning Board and make a presentation regarding the feasibility of retaining the warehouse; the May and September plans do not contemplate the retention of the second warehouse; currently, the Plan calls for the retention of the first warehouse for Clif Bar; several other warehouses south of the wharf will be Special Joint Meeting Alameda City Council, Alameda Reuse 8 and Redevelopment Authority, and Community Improvement Commission Meeting December 4, 2007 partially deconstructed and made into parking sheds; the developer is committed to recycle and reuse elements if the second warehouse is not used. Councilmember /Commissioner deHaan inquired what is the office space square footage for Clif Bar, to which the Base Reuse and Community Development Manager responded approximately 100,000 square feet. Councilmember /Commissioner deHaan inquired what would be the remaining square footage of the building, to which the Base Reuse and Community Development Manager responded approximately 300,000 square feet. Councilmember /Commissioner deHaan inquired whether three to five story buildings are still contemplated on the wharf. The Base Reuse and Community Development Manager responded the Master Plan provides for a maximum of five stories; stated the height limit was reduced to 85 feet last year. Councilmember /Commissioner deHaan inquired whether the waterfront would have five -story buildings, to which the Base Reuse and Community Development Manager responded possibly. Councilmember /Commissioner deHaan inquired whether the issue would be contrary to the planning principles of having more open, step down designs to the waterfront. The Base Reuse and Community Development Manager responded the Master Plan provides for a maximum of five stories; stated the new buildings would be set back from the waterfront; there would be waterfront access and open space more than 100 feet from the water; the Bay Conservation and Development Commission (BCDC) requires a minimum 100 foot setback from the water. Councilmember /Commissioner deHaan inquired what would be the cost estimate for retrofitting the wharf. The Base Reuse and Community Development Manager responded between $30 million and $35 million; stated San Francisco waterfront improvements are estimated at $1 billion; the Cruise Terminal did not go forward because of a $144 million bill to retrofit the piers at the Cruise Terminal; San Francisco's challenge is much bigger than Alameda Landing but is similar to the challenges of upgrading the wharf to current seismic conditions and Uniform Building Code as well as geotechnical issues. Special Joint Meeting Alameda City Council, Alameda Reuse 9 and Redevelopment Authority, and Community Improvement Commission Meeting December 4, 2007 Councilmember /Commissioner deHaan inquired what the anticipated cost would be. The Base Reuse and Community Development Manager responded the cost would be approximately $15 million in order to accommodate Clif Bar. Councilmember /Commissioner deHaan inquired whether said cost was new compared to the original estimate, to which the Base Reuse and Community Development Manager responded in the affirmative. Councilmember /Commissioner deHaan inquired what was the original estimate. The Base Reuse and Community Development Manager responded that she would need to check; stated an additional $30 million to $35 was originally budgeted to retrofit the wharf and is cut back to $15 million to preserve the warehouse for Clif Bar; the developer states that it is infeasible to spend an additional $15 million to $20 million to preserve the remainder of the wharf; the developer believes that the redesign maintains a lot of the public amenities and benefits and is a better plan in some ways in that the entire waterfront experience is not seven feet above the water; there is the ability to step down and access the water at the water level. Councilmember /Commissioner Matarrese stated that he appreciates the history; construction costs escalate; costs for preserving the warehouse and rest of the wharf are not worth holding up the project; everything should be done to recycle materials if a couple of buildings are lost; historic significance can be preserved in photos and videos; the buildings are warehouses on a dock; he likes the idea of getting closer to the water's edge and getting millions of dollars in sales tax which helps to have a safe City and good parks; everything should be done to underground the 115kV line, including pursuing Homeland Security money; keeping the project on track is important. Councilmember /Commissioner Tam stated that she concurs with Councilmember /Commissioner Matarrese; there has been a six -month delay in trying to get Clif Bar onto the site; conditions will change; seventy -five percent of the piers are compromised; the recommended amendments accommodate changed conditions in a way that does not expose the City to additional financial obligations. Councilmember /Commissioner Tam moved adoption of the resolutions and introduction of the ordinance. Special Joint Meeting Alameda City Council, Alameda Reuse 10 and Redevelopment Authority, and Community Improvement Commission Meeting December 4, 2007 Councilmember /Commissioner Matarrese seconded the motion. Under discussion, Councilmember /Commissioner Gilmore stated that she assumes that a future feasibility study would take into account the condition of the warehouse and piers and would be part of the question of whether or not the pier can be saved. The Base Reuse and Community Development Manager responded in the affirmative; stated new technology might be available in five years that would make pier replacement more cost effective; stated the feasibility study would address requirements to retain the building as well as the requirement to do what needs to be done to the pier. Mayor /Chair Johnson stated that it is time to move the project forward; the delay was unfortunate; opening up the waterfront and shoreline is great; BCDC would not approve building a pier over the water today; exposing more of the shoreline is good; inquired whether there is a timeframe for Clif Bar, to which the Base Reuse and Community Development Manager responded fall of 2009. Councilmember /Commissioner deHaan stated that the phase is not going to be completely designed out within the next two to three years; his concern is how the waterfront office buildings are treated; he would be discouraged to see a five -story building flush on the shoreline; he hopes that the developer will look at other alternatives in the interim; the waterfront was always questionable and never thought to be something that could be saved; he is concerned with the amount of money that could be deferred from the project; he would like to see the money used in a better way to support the project and community. On the call for the question, the motion carried by unanimous voice vote - 5. (07 -575 CC /07 -056 CIC /ARRA) Recommendation to accept the Fiscal Year 2007 First Quarter Financial Report and budget adjustments. The Finance Director gave a Power Point presentation. Councilmember /Board Member /Commissioner Gilmore stated that Proposition lA did not provide any protection for the City's redevelopment fund; requested clarification on the issue. The Finance Director stated the last Educational Revenue Augmentation funds (ERAF) were $711,000 out of $5 million of property tax in the past years; the construction of a takeaway formula is unknown; redevelopment agencies are the most vulnerable. Special Joint Meeting Alameda City Council, Alameda Reuse 1 1 and Redevelopment Authority, and Community Improvement Commission Meeting December 4, 2007 Councilmember /Board Member /Commissioner Matarrese stated Council did not intend to use reserves for Beltline litigation costs; inquired what will be done in the future to prevent reoccurrence. The Finance Director responded any direction for use of funds needs to come from the City Manager to the Finance Department and needs to have discussions on funding. Mayor /Chair Johnson stated all money needs to be budgeted with approval of Council. The Finance Director stated that she understands that the money was approved for payment from the Risk Management Fund. Councilmember /Board Member /Commissioner Matarrese inquired whether audit practices and protocols are sufficient to catch any in the Finance Director's opinion; stated that authorization happened over a year ago; audits have been performed since that time; the matter is just coming to light now; inquired whether audit practices and protocols are sufficient. The Finance Director stated the only way that an auditor would be aware of the issue was if substantial information was available about the fact that the litigation was directed by Council; the direction would be in the form of information from the City Manager and the City Attorney to Finance. Councilmember /Board Member /Commissioner Matarrese inquired how the issue was discovered. The Finance Director responded by review of the Risk Management Fund when the balance became a deficit. Councilmember /Board Member /Commissioner Matarrese inquired whether the auditors look for deficits. The Finance Director responded the auditors pointed out that it was a deficit this year but the issue was already determined. Councilmember /Board Member /Commissioner Matarrese stated the Power Point presentation should be posted to the website and Council should receive a copy; the national economic environment affects California and will affect the City; thanked the Finance Director for doing a good job on the presentation. Vice Mayor /Board Member /Commissioner Tam echoed Commissioner Special Joint Meeting Alameda City Council, Alameda Reuse 12 and Redevelopment Authority, and Community Improvement Commission Meeting December 4, 2007 Matarrese's appreciation for the presentation; inquired how the City deals with replenishing or drawing down on the reserves from the 20% to 25% range. The Finance Director responded the draw down was purposeful and well thought out by Council in terms of trying to meet unmet infrastructure needs. Vice Mayor /Board Member /Commissioner Tam inquired whether reserves are replenished also. The Finance Director responded reserves are replenished only by having revenues exceed expenditures; stated the expenditure budget is $85.7 million; typically, not all money is spent and will go back into the fund balance; an absolute commitment cannot be made at this time. Councilmember /Board Member /Commissioner deHaan stated there was a draw down on the reserves because of needed infrastructure; the draw down was supposed to be 25% to 23% and is now 210; 18% is left and will leave approximately $12 million; a lot of the $12 million is obligated. The Finance Director stated 180 leaves approximately $15.5 million; the $400,000 reserve designated for Fire Station 3 replacement is excluded; approximately $6 million is loaned to other funds. Councilmember /Board Member /Commissioner deHaan inquired whether the $6 million could be called back. The Finance Director responded the $6 million could be called back, but the disaster would be pushed off to another area. Councilmember /Board Member /Commissioner deHaan inquired what loans are in the $6 million. The Finance Director responded $2.2 million is from Alameda Power & Telecom (AP &T) and is scheduled to be repaid in 2009; the remainder is all redevelopment agency loans. Councilmember /Board Member /Commissioner deHaan stated Public Safety equates to approximately 600 of the budget and 300 of the staffing; the out years obligation is concerning; Public Safety retirement funds are escalating. The Finance Director stated the actuarial evaluation was received in October from the Public Employee Retirement System (PERS); the Special Joint Meeting Alameda City Council, Alameda Reuse 13 and Redevelopment Authority, and Community Improvement Commission Meeting December 4, 2007 City's contribution rate for Public Safety is remaining very close to 30% and is not increasing or decreasing significantly. Mayor /Chair Johnson stated the dollar amount increases because of salary increases. Councilmember /Board Member /Commissioner deHaan inquired whether immediate action is necessary to the extent of hiring freezes, etc. The Finance Director responded department heads have been requested to restrain spending; stated discretionary spending should be postponed. The City Manager /Executive Director stated department heads have been advised that a minimum of 1.5% needs to be saved; the budget is reviewed at weekly meetings; more changes may be necessary mid- year. Councilmember /Board Member /Commissioner deHaan stated that out years are a real concern; different plans will need to be developed; requested elaboration on Proposition 1A. The Finance Director stated the report includes an excellent description of Proposition 1A; the Governor has to declare that there is a severe State fiscal hardship; the State can temporarily suspend Proposition lA basic protection of property tax; the Legislature has to agree by a two- thirds vote; a separate statute must be adopted that requires the State to repay local governments in three years and can be done only twice in ten years. Councilmember /Board Member /Commissioner deHaan stated he has heard about a 25% cut; a loo cut would be disastrous at a State level. Councilmember /Board Member /Commissioner Gilmore stated one way to build up the General Fund reserves is by having revenues exceed expenses; the other way is to not fund infrastructure, as was done in the past; Council decided that the City could no longer do that [not fund infrastructure]; tough choices will need to be made. Councilmember /Board Member /Commissioner Matarrese stated that he is not overly concerned with replenishing the reserves; the reserve was built partially on the PERS bonanza that occurred in the dot.com boom. The Finance Director stated two years had a zero percent contribution; the money was allowed to flow back into the fund balance rather than setting the money aside to be used in the Special Joint Meeting Alameda City Council, Alameda Reuse 14 and Redevelopment Authority, and Community Improvement Commission Meeting December 4, 2007 future for payments. Councilmember /Board Member /Commissioner Matarrese stated that his biggest concern is balancing the budget and delivering essential services; the big difference between 2002 and today is that there was not $10 billion a month of tax dollars flowing out of the economy at the federal level; tonight's discussion sets the stage for what will be a very tough fiscal environment for the foreseeable future; it is important to put on the brakes now. Mayor /Chair Johnson inquired how department heads cut budgets when there are already built in increases. The Finance Department responded salary and benefits are contracted; a position can be left vacant. Mayor /Chair Johnson stated department heads are being asked to cut budgets by 1.50; however, budgets are increasing more than 1.50 because of fixed increases. Councilmember /Board Member /Commissioner Matarrese stated Contracts are tied to salaries; the salaries are paid to people; the blunt end is either not filling the position or lay offs. Councilmember /Board Member /Commissioner deHaan inquired how long the City had the 25% reserve. The Finance Director responded Council was presented with a policy for adoption in late 1997 or early 1998. Councilmember /Board Member /Commissioner Matarrese requested a copy of said policy. Vice Mayor /Board Member /Commissioner Tam stated Alameda is one of the few cities that has a reserve; many cities are being hit hard; the League of California Cities cautioned all cities regarding Proposition 1A; it is easier for the Legislature to raid local government than it is to go up against the educational lobbyists. Mayor /Chair Johnson stated the City of Oakland was audited; $3 million is questionable on payroll; inquired whether an operational review or audit would be beneficial to Alameda. The Finance Director responded an operational review never hurts; there is a great deal of coordination between Human Resources and the Finance Department; a review could be scheduled later in the fiscal year and there has been some practice with the conversion of Special Joint Meeting Alameda City Council, Alameda Reuse 15 and Redevelopment Authority, and Community Improvement Commission Meeting December 4, 2007 the new payroll system. Mayor /Chair Johnson stated operational reviews were performed with significant findings for AP &T and the golf course. Vice Mayor /Board Member /Commissioner Tam stated that the City of Oakland did a performance audit; inquired what would be the cost for such an audit. The Finance Director responded a Request for Proposal (RFP) would need to be done. The City Manager /Executive Director stated AP &T and the golf course are enterprise funds and are different. The Finance Director stated a RFP could be issued in the spring. Mayor /Chair Johnson stated expenditures are 23% to 25% generally; some are lower; inquired whether some categories are over budgeted, such as Police Contract overtime, abandoned vehicle abatement, and advance life support. The Finance Director responded the Police Contract overtime does not follow a straight line and is based upon the need of outside persons to contract with the Police Department for overtime, such as for school dances. Mayor /Chair Johnson inquired whether there is enough in the budget for additional animal shelter staffing and improvements. The City Manager /Executive Director responded a grant fund could be used; stated funding impacts would need to be identified. Mayor /Chair Johnson stated the golf course had more of a shortfall than was anticipated; inquired how much is left in the golf course fund, to which the Finance Director responded $1.9 million. Mayor /Chair Johnson stated the golf course fund is burning through approximately $60,000 per month. Councilmember /Board Member /Commissioner deHaan stated the $15.5 million [reserve] is pretty well obligated; he believes that staff has the skills in getting requirements in order; having an outside review process would be a shame; actions have to be weighed; AP &T and the golf course are other concerns. Mayor /Chair Johnson inquired whether a 1.5% reduction is aggressive Special Joint Meeting Alameda City Council, Alameda Reuse 16 and Redevelopment Authority, and Community Improvement Commission Meeting December 4, 2007 enough for the next six or seven months. The City Manager /Executive Director responded the 1.5% reduction is a beginning; stated the matter will be monitored; she believes that the reduction fits at this point; direction can be changed if necessary. Mayor /Chair Johnson stated Council needs to consider how cuts are made. The City Manager /Executive Director stated the matter would be brought back to Council mid year. Vice Mayor /Board Member /Commissioner Tam moved approval of the first quarter financial report and requested recommended appropriations. Councilmember /Board Member /Commissioner Matarrese seconded the motion, which carried by unanimous voice vote - 5. ADJOURNMENT There being no further business, Mayor /Chair Johnson adjourned the Special Joint Meeting at 11:41 p.m. Respectfully submitted, Lara Weisiger, City Clerk Secretary, Community Improvement Commission The agenda for this meeting was posted in accordance with the Brown Act. Special Joint Meeting Alameda City Council, Alameda Reuse 1 and Redevelopment Authority, and Community Improvement Commission Meeting December 4, 2007