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2008-02-19 Joint CC ARRA CIC MinutesMINUTES OF THE SPECIAL JOINT CITY COUNCIL, ALAMEDA REUSE AND REDEVELOPMENT AUTHORITY (ARRA), AND COMMUNITY IMPROVEMENT COMMISSION (CIC) MEETING TUESDAY- -FEBRUARY 19, 2008- -7:25 P.M. Mayor/Chair Johnson convened the Special Meeting at 8:00 p.m. ROLL CALL - Present: Councilmembers/Board Members/Commissioners deHaan, Gilmore, Matarrese, Tam, and Mayor/Chair Johnson – 5. Absent: None. SPECIAL ORDERS OF THE DAY (08-10 CIC) Update on the Alameda Theater, Cineplex, and Parking Structure Project. The Redevelopment Manager gave a brief presentation. Chair Johnson stated the marquee panels look very good and almost like new. The Redevelopment Manager stated differentiating between the new and restored panels is difficult. Commissioner Matarrese inquired whether options would be provided for softening the look of the parking structure’s northern elevation. The Redevelopment Manager responded staff recommends maintaining the contingency until the Theater project is closed out; stated staff is working with an architect on options and pricing. Commissioner Matarrese requested an update on the Central Avenue bike lane and parallel parking. The Redevelopment Manager stated diagonal parking has been converted to parallel parking in front of the Central Avenue School District offices in order to facilitate a bike route, which is part of the General Plan. Commissioner Matarrese congratulated staff for completing the parallel parking. Special Joint Meeting Alameda City Council, Alameda Reuse and Redevelopment Authority, and Community Improvement Commission February 19, 2008 Commissioner deHaan inquired whether monthly parking passes have been successful. The Redevelopment Manager responded flyers were sent to local businesses in the area; stated plans are to advertise in the Park Street Business Association and Chamber of Commerce newsletters; all spaces have not been reserved; more marketing will be done. Commissioner deHaan inquired where are the monthly parking spaces. The Redevelopment Manager responded approximately 40 spaces are restricted to the roof for local business monthly parking; stated expanding the monthly parking spaces to other levels might make sense. Commissioner deHaan stated the public needs to understand that parking is free after 5:00 p.m. Chair Johnson stated parking is also free on Sunday. The Redevelopment Manager stated the increased on-street parking rates would also help. Chair Johnson stated enforcement should help; people are not used to going down Oak Street. The Redevelopment Manager stated better marketing would inform people that the parking garage is open even though half of Oak Street is closed. Commissioner Tam stated that she appreciates that the leak was discovered early; the remaining Theater contingency is $2,777; the remaining garage contingency is $31,000; the original amount of the [parking garage] contingency was $415,000; $604,000 in value engineering was taken out; additional expenditures were covered by interest from loans; inquired whether overages would be covered by interest or contingency. The Redevelopment Manager responded $55,000 is budgeted for the leakage within the current contingency; pending change orders might come back at a higher price; the $31,000 garage contingency should be enough to cover the eastern elevation leakage; the interest from the Housing and Urban Development (HUD) loan has not been committed to anything else; $62,000 was committed from the Cineplex interest income in December; an additional $12,000 available. Commissioner Tam inquired whether there would be an assessment of Special Joint Meeting Alameda City Council, Alameda Reuse and Redevelopment Authority, and Community Improvement Commission February 19, 2008 available funding for such things as the northern elevation and planting at the end of the fiscal year. The Redevelopment Manager responded she would like to wait until the Theater project is closed out and all liabilities have been addressed; stated the money might be needed for outstanding litigation. Commissioner Tam inquired whether redevelopment funds specifically earmarked for projects cannot be used for the General Fund, to which the Redevelopment Manager responded in the affirmative. Commissioner deHaan inquired whether the Theater roofing is in fairly good condition. The Redevelopment Manager responded in the affirmative; stated the leaking is from cracks in the sidewall; water tests have been done on the roof; flashing was added. Chair Johnson inquired whether the western elevation has any leaks. The Redevelopment Manager responded the western elevation has no visible leaks; stated conditions may arise in the future; reserves are being set aside to address issues that may arise in the next three to five years. Chair Johnson stated the matter could be reviewed if contingency is left over. Commissioner Matarrese inquired whether Theater funds and any remaining funds are not General Fund or revenue sources but are restricted by law to use on redevelopment projects. The Development Services Director responded the majority of the Historic Theater funding was all bond money and must go to the project along with interest; Section 108 money was used for most of the garage construction; the land was bought with redevelopment money; Section 108 interest income cannot be used for a non-HUD eligible economic development project. MINUTES (08-11 CIC) Minutes of the Special Community Improvement Commission Meeting of January 15, 2008. Approved. Commissioner deHaan moved approval of the minutes. Special Joint Meeting Alameda City Council, Alameda Reuse and Redevelopment Authority, and Community Improvement Commission February 19, 2008 Commissioner Tam seconded the motion, which carried by unanimous voice vote – 5. AGENDA ITEMS (08-067 CC/08-12 CIC) Recommendation to accept the Quarterly Financial Report for the period ending December 31, 2007. The Finance Director gave a Power Point presentation. Mayor/Chair Johnson inquired whether retiree medical costs are 2% [of the budget]; stated the City is not fully funding the benefit now. The Finance Director responded the 2% represents the current payment for retirees. Mayor/Chair Johnson stated the amount could be much larger once true obligations are addressed. Councilmember/Board Member/Commissioner deHaan inquired whether the overall operational budget is $236 million, to which the Finance Director responded in the affirmative. Councilmember/Board Member/Commissioner Gilmore stated the $4 million [in lost revenue] is for the current fiscal year ending in June; the economic forecast through 2009 continues on the same path; the $4 million gap needs to be closed by the end of June; there will be some type of gap in the next two-year budget cycle. The Finance Director stated the first year is predicted to have some type of gap. Vice Mayor/Board Member/Commissioner Tam commended staff for being ahead of the curve and reviewing ways to reduce expenditures by $3 million in anticipation of the $4 million deficit; $1.4 million was spent on the Beltline litigation; the money was moved from the General Fund to the Risk Management fund; inquired whether the Risk Management fund comes out of the reserves. The Finance Director responded Risk Management is funded by allocations from various funds, including the General Fund, which is the biggest contributor. Vice Mayor/Board Member/Commissioner Tam stated the City cannot Special Joint Meeting Alameda City Council, Alameda Reuse and Redevelopment Authority, and Community Improvement Commission February 19, 2008 anticipate litigation costs; the Beltline litigation ended up costing more than the parcel cost; reserve funding is needed for prospective issues; the City directly controls the Utility Users Tax; inquired whether other revenue sources are controlled by the City. The Finance Director responded the Property Transfer Tax; stated a vote would be required to increase the tax. Vice Mayor/Board Member/Commissioner Tam inquired whether focusing on the Property Tax would result in the biggest bang for the buck. The Finance Director responded an increase in the Property Transfer Tax would require a two-thirds vote; stated currently the City charges $5.40 per $1,000 and is next to the last of the Charter cities. Mayor/Chair Johnson requested clarification on the value of the Beltline property versus cost of litigation. The City Attorney/Legal Counsel stated the result of the litigation is that the City will pay a little under $1 million for the property; the Beltline estimates the property value between $30 and $40 million. Councilmember/Board Member/Commissioner deHaan inquired whether the litigation costs were coming out of the General Fund initially. The Finance Director responded said costs were paid out of the Risk Management fund; the Risk Management fund needed to be backfilled from the General Fund. Councilmember/Board Member/Commission deHaan inquired whether the $1.4 million cost occurred over the last several years, to which the Finance Director responded in the affirmative. Vice Mayor/Board Member/Commissioner Tam stated the third recommendation is to undertake a thoughtful, structural realignment for Fiscal Year 2008-2009; inquired whether the second half of the fiscal year would require dipping into reserves to cover the deficit, to which the Finance Director responded in the affirmative. Councilmember/Board Member/Commissioner Matarrese inquired what would be the risk in deferring the Lincoln Park project. The Public Works Director responded the Recreation and Park Special Joint Meeting Alameda City Council, Alameda Reuse and Redevelopment Authority, and Community Improvement Commission February 19, 2008 Department thought that the risk would be minimal; stated the project would be deferred to July 1,2008. Mayor/Chair Johnson inquired whether deferring the project to next year would create a domino affect. The Public Works Director responded possibly; stated efforts will be made to continue to look for grants. Councilmember/Board Member/Commissioner Matarrese stated that he is always hesitant to defer Capital Improvement Projects because costs increase down the road; he would like to have the Lincoln Park project reviewed very carefully. Councilmember/Board Member/Commissioner deHaan inquired what is the project cost [Lincoln Park], to which the Public Works Director responded $300,000. Councilmember/Board Member/Commissioner Matarrese inquired whether the fund balance is commonly called the reserves, to which the Finance Director responded the fund balance is the City’s reserves. Councilmember/Board Member/Commissioner Matarrese requested information on the Emergency Medical Response (EMS) Tax; inquired whether said tax would be a way to gain revenue. The Finance Director responded possibly; stated that she does not have all the facts; information would be provided; she does not know when the advisory vote was taken; Alameda is the only City in the County that does not assess the tax. Mayor/Chair Johnson inquired how long the Lincoln Park project would take, to which the City Engineer responded design would take approximately six to nine months. Mayor/Chair Johnson responded the length of time is a problem because Alameda High School uses the area as its home baseball field; the field needs to be done by December. The Public Works Director stated one option could be to fund the design now; construction costs could be moved to next year. Mayor/Chair Johnson requested that staff check with the High School regarding the baseball schedule. Councilmember/Board Member/Commissioner Matarrese stated deferment of any capital improvement project should be reviewed very Special Joint Meeting Alameda City Council, Alameda Reuse and Redevelopment Authority, and Community Improvement Commission February 19, 2008 carefully from a policy standpoint because continued deterioration causes costs to increase. Mayor/Chair Johnson stated there is not a real reserve because of the millions of dollars in public safety retirement health benefit obligations, and deferred street, sidewalk, park, and building maintenance; the money could be spent on very critical City needs in a second and is not fun money. Councilmember/Board Member/Commissioner deHaan requested background on the reserves accumulation and the erosion over the last two to three years. The Finance Director stated the reserve levels were adopted and codified in a 1997 document addressing financial policies; in 1989, a motion adopted that reserves be 25% of operating expenditures for economic uncertainties; the fund balance was approximately 27% in 2004-2005; portions have been used to fund: 1) deferred street, sidewalk, and tree maintenance; 2) playing fields; and 3) the Beltline litigation; a small portion of expenditure savings were contributed at the end of last year. Councilmember/Board Member/Commissioner deHaan inquired what is the current reserve level. The Finance Director responded the forecast indicates the reserve will be at 17% at the end of the fiscal year. Councilmember/Board Member/Commissioner deHaan stated the concern is how much of the reserve is liquid. The Finance Director responded $5.9 million of the $15 million is loaned out to the Alameda Public Improvement Corporation, Community Improvement Commission, and Alameda Power and Telecom, and $400,000 has been designated for fire station replacement. Councilmember/Board Member/Commissioner deHaan inquired what is the amount of deferred street maintenance; stated the estimate was approximately $31 million at one time. The Public Works Director responded $12 million is identified for street resurfacing; $100 million is identified for all of the various infrastructures. Councilmember/Board Member/Commissioner deHaan stated costs go up; using reserves for deferred maintenance is important; pension and severance pay is another issue. Special Joint Meeting Alameda City Council, Alameda Reuse and Redevelopment Authority, and Community Improvement Commission February 19, 2008 The Finance Director stated that employees are entitled to accrued vacation payout upon retirement; the amount can be substantial; vacation payout amounted to $200,000 this fiscal year. In response to Councilmember/Board Member/Commissioner deHaan’s inquiry regarding operational savings, the Finance Director stated there is a savings of approximately $1.5 in Capital Improvement Projects and $1.5 in operating expenditures. Councilmember/Board Member/Commissioner deHaan stated that he does not see any upswing or leveling at the end of 2009; the City of Vallejo is considering bankruptcy and is the first city in California to consider such a thing; stated today’s phenomenon is different from 2003. The Finance Director stated the 2003 phenomenon was industry driven, today’s is home sale driven; plans need to be made for a very thoughtful and strategic 2009 budget. Councilmember/Board Member/Commissioner Gilmore thanked staff for the presentation; stated best efforts have been made in forecasting the unknown; the State’s budget has not passed and may not pass until fall; what is known now may change dramatically because the City is dependent on what the State does to balance its budget. The Finance Director stated one more chance to input new information will be available when the Governor presents the May revise; the City could feel a little more home free if a fiscal emergency is not declared. The City Manager/Executive Director stated the City constantly receives feedback from the League of California Cities; information will be received before the May revise. Councilmember/Board Member/Commissioner Matarrese inquired what projects are not being done because funds are being shifted to close the $5 million gap, to which the Finance Director responded different banks are being used; Proposition 1B money would be used for the Pavement Management Plan rather than General Fund money. Councilmember/Board Member/Commissioner Matarrese inquired whether Proposition 1B money was to be used for something else before shift happened, to which the Finance Director responded street paving. Councilmember/Board Member/Commissioner Matarrese stated things are still being deferred; inquired whether Proposition 1B money is Special Joint Meeting Alameda City Council, Alameda Reuse and Redevelopment Authority, and Community Improvement Commission February 19, 2008 being shifted into a project that would reduce the street maintenance deficit. The Public Works Director responded in the affirmative; stated staff is looking for other funding sources; more street improvements could be completed if General Fund money were used in addition to Proposition 1B money. Councilmember/Board Member/Commissioner Matarrese stated that he wants to make sure that the public does not get the impression that everything is all right; no one is talking about the federal deficit; the School District is suffering more than the City. Mayor/Chair Johnson stated a specific list needs to be provided outlining things that are not being done. Councilmember/Board Member/Commissioner deHaan stated the real concern is where the City is going from here; playing with a good estimate of what the cuts will be is important; he does not want to wait until June to receive feedback; he wants to feel comfortable in knowing what initiatives Council needs to take. The Finance Director stated the City Manager/Executive Director will lead a team of Department Heads in reviewing and gathering revenue enhancement ideas to bring to Council in a workshop setting; the expenditure side of the ledger will be reviewed also to determine what level of expenditure can be tolerated; she will have a better idea of property tax revenues on March 19. Mayor/Chair Johnson stated departments have been requested to review cuts through the end of the fiscal year; inquired how much departments are asked to trim. The Finance Director responded 1.5%; stated some departments are able to do more; reductions totaled $1.5 million. Mayor/Chair Johnson inquired how the cuts were made. The Finance Director responded through a strategic hiring freeze and supply and service reductions. Councilmember/Board Member/Commissioner deHaan inquired what is the timeline on the budget. The City Manager/Executive Director responded potential revenue sources will be reviewed and presented at a workshop discussion in March or April; stated each department’s budget is being reviewed; Special Joint Meeting Alameda City Council, Alameda Reuse and Redevelopment Authority, and Community Improvement Commission February 19, 2008 information needs to be gathered on property tax issues; there could be additional impacts. Councilmember/Board Member/Commissioner deHaan stated the City is not at the point of considering a moratorium on spending yet. Vice Mayor/Board Member/Commissioner Tam stated the issue becomes a push pull situation regarding not filling positions; public safety overtime costs are expected to be $350,000; the work still needs to be done and the public needs to be provided with safety comfort; recognizing the obligation to protect the health and safety of residents is important. Councilmember/Board Member/Commissioner deHaan stated that he hopes that the City does not get to that point [moratorium on spending]. Mayor/Chair Johnson stated the public needs to understand the situation; the City cannot run on a deficit budget; the situation is going to be longer term; choices are to increase revenues or determine what services are affordable; she wishes that there were more people here tonight; the budget needs to be balanced by $4 million in the next four months; the community will have serious choices to make. Councilmember/Board Member/Commissioner Matarrese moved approval of the staff recommendation. Councilmember/Board Member/Commissioner Matarrese inquired whether a single-year budget could be done, to which the Finance Director responded a budget and a plan are done; the second year would not be adopted until next June. Councilmember/Board Member/Commissioner deHaan stated the real focus has been the General Fund; two-thirds of the budget is not being discussed tonight; redevelopment and transportation funds could be impacted. The Finance Director stated redevelopment funds could be impacted if assessed values decline due to the County Appeals Board grants appeals, which lead to less tax increment for redevelopment. Vice Mayor/Board Member/Commissioner Tam seconded the motion. Under discussion, Councilmember/Board Member/Commissioner deHaan stated that balancing is being done at the expense of the General Fund reserve. Special Joint Meeting Alameda City Council, Alameda Reuse and Redevelopment Authority, and Community Improvement Commission February 19, 2008 The Finance Director stated revenues were reduced by $4 million; expenditure reductions totaled $3 million; the difference will be funded by the General Fund reserve; money that is not spent at the end of the year would go into the General Fund reserve. On the call for the question, the motion carried by unanimous voice vote – 5. (08-068 CC) Recommendation to accept the Quarterly Sales Tax Report for the period ending September 30, 2007. The Finance Director gave a brief presentation. Mayor Johnson requested that sales tax figures be posted to the website; stated services are hurt by the fact that residents spend money outside of Alameda. The Finance Director stated the per-capita comparison can be posted to the website. Mayor Johnson questioned how much more money would be generated if Alameda had a per-capita similar to the City of Fremont. The Finance Director stated sales tax revenue would double and provide $4 million. Councilmember Gilmore stated $4 million is the amount of the gap. Mayor Johnson stated Development Services has enabled the City to stay even; the City will lose most of the auto sales tax. The Finance Director stated hopefully new businesses will replace the loss. Councilmember deHaan stated the third quarter had $1.3 million in sales tax revenue; the City is on the verge of bringing in more retail; the Alameda Towne Centre is approximately 60% filled; there will not be a lot of change; retail is taking the biggest [economic] hit; looking toward the future is important. The Finance Director stated the fourth quarter may be something entirely different. Councilmember Matarrese moved approval of the staff recommendation. Councilmember Gilmore seconded the motion, which carried by unanimous voice vote – 5. Special Joint Meeting Alameda City Council, Alameda Reuse and Redevelopment Authority, and Community Improvement Commission February 19, 2008 ADJOURNMENT There being no further business, Mayor/Chair Johnson adjourned the Special Joint Meeting at 9:37 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 and Redevelopment Authority, and Community Improvement Commission February 19, 2008