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Minutes 2006-03-20 105 MINUTES OF AN ADJOURNED REGULAR MEETING OF THE CYPRESS CITY COUNCIL HELD March 20, 2006 The adjourned regular meeting of the Cypress City Council was called to order at 5:30 p.m. by Mayor Sondhi in the Executive Board Room, 5275 Orange Avenue, Cypress, California. Members present: Mayor/Agency Chair Lydia Sondhi Mayor Pro Tem/Agency Vice Chair Phil Luebben Council/Agency Board Member Todd Seymore Members absent: Council/Agency Board Member Frank McCoy Council/Agency Board Member Mike McGill Others present: City Manager David Norman Assistant City Manager David Belmer Director of Finance and Administrative Services Richard Storey Chief of Police Rick Hicks Public Works Director Doug Dancs Recreation and Community Services Director Laura Detweiler Assistant City Engineer Kamran Dadbeh Finance Manager Matt Burton Recreation Superintendent Dena Diggins Recreation Supervisor Mark Nix Contracts/Environmental Affairs Manager Gonzalo Vazquez Associate Engineer/Traffic Keith Carter City Clerk Jill Ingram ORAL COMMUNICATIONS: Rob Johnson, Recreation and Community Services Commission, presented the City with the "Award of Excellence" that the Cypress Recreation and Community Services Department received for Youth Development at the 58th Annual California Park and Recreation Society Awards and Installation Banquet. WORKSHOP SESSION: Review of Fiscal Year 2006-2007 Non-Profit Contribution Grant Requests: The Recreation and Community Services Director stated that the non-profit grant request process gives Cypress-based groups an opportunity to receive direct and indirect funding support from the City and Recreation and Park District. Staff is seeking direction for the level of funding for each organization. She stated that total requests are just over $370,000 with $35,000 being direct funding requests. A total of 27 groups applied with one being a new applicant. The VFW and Boys and Girls Club are not included in the charts because they are part of long-term lease agreements that will come due next year for further negotiation. She stated that the lease market value of the Boys and Girls Club is approximately $45,000 per year. The VFW building is located on City-owned land with the VFW owning the building. The Recreation and Community Services Director stated that staff continues to be concerned about the ability to accommodate all of the facility requests with the pending renovation of the Community Center. She stated that a relocation plan is being worked 106 CITY COUNCIL MINUTES MARCH 20, 2006 on and based upon approval of facility uses by the Council, staff will notify the groups that it is in their best interest to reserve their facilities immediately. Mayor Sondhi asked about the applications that were received late and if these groups were apprised in a timely manner of the application deadline. The Recreation and Community Services Director stated that they were notified via mail at the beginning of November with telephone calls th<ereafter. After the deadline had passed, staff again contacted the groups and is continuing to work on getting the applications completed. Council Member Seymore requested clarification on the residency requirement of 50 percent. The Recreation Supervisor briefly discussed the information provided on the grant request chart. Mayor Sondhi asked if the groups that are identified at less than 50 percent residency have been consistently less than 50 percent. The Recreation and Community Services Director stated that residency rates in the past have been closer to the 50 percent requirement. Staff continues to work with the groups to meet the residency requirement because they have not provided all of the information. Mayor Sondhi expressed her concerns about the organizations that request large sums of money, either direct or indirect, and submit either late or incomplete applications. She asked if information could be sent out to the organizations earlier than November. Mayor Pro Tem Luebben stated that he is not in favor of increasing any requests for FY 2006-07. He asked for information about the Cypress Civic Theatre Guild. The Recreation and Community Services Director stated that they have a series of plays that are performed throughout the year. She stated that to enable the use of the facility, part of the lease agreement requires the City to maintain Oxford's athletic field. The lease agreement expires in 2008. Mayor Sondhi stated that she is concerned with a perception of entitlement from organizations that receive funding each year and may be part of the reason why applications are submitted late or incomplete. She would approve these organizations on condition that the groups submit the necessary documents. She stated that she would approve the funding at the current level with the condition that organizations not receive any funding until the applications are completed. Mayor Pro Tem Luebben stated his concerns regarding using taxpayer dollars for direct funding that does not benefit the entire community. Mayor Sondhi discussed the possibility of partnering with neighboring cities to support activities that their residents participate in. Council Member Seymore stated that the organizations provide a much needed benefit and promote the city. Mayor Pro Tem Luebben asked for information on the Cypress Art League. The Recreation Supervisor stated that the funding for the Cypress Art League is for two open art shows in addition to gallery purchases. Mayor Sondhi asked about the purchase of the spotlight that would be used by FOCCA. The Recreation and Community Services Director stated that the spotlight would benefit the City as well. 2 107 CITY COUNCIL MINUTES MARCH 20, 2006 Mayor Sondhi asked if the volunteer hours from Cypress Council PTA could replace staffing hours. The Recreation and Community Services Director stated that the volunteers could be used instead of City staff. It was the consensus of the City Council to not increase funding for Acacia, A YSO, Community Festival, Cypress Art League for the program brochure, Cypress Girls Softball, Cypress High School Athletic Boosters, and St. Irenaeus Church. It was the consensus of the City Council to approve the additional requests of Children's Advocacy Council, Civic Theater Guild, Cypress Pops Orchestra, FOCCA for facility use, and Cypress Council PT A. Mayor Pro Tem Luebben stated that the spotlight request from FOCCA, that would be purchased and kept by the City, should be removed from the grant request and placed in the budget. The Recreation and Community Services Director stated that each group will receive a letter indicating what has been approved by the City Council and in that letter, it will state that grants will not be approved until applications are complete. They will be given 30 days to complete the information. The meeting was recessed at 6:35 p.m. The meeting was reconvened at 6:40 p.m. Review of Preliminary 2006/2007 - 2012/2013 Capital Improvement Proqram: The Contracts/Environmental Affairs Manager stated that the seven year Capital Improvement Program is a document that provides a guideline for infrastructure improvements that are intended to address the health, safety, and welfare of the community. He stated that projects are presented for possible inclusion in the CIP, are reviewed by a CIP Committee, and are then presented to the City Council for review and consideration. The Public Works Director stated that per City Council policy, $1.7 million is allocated in the General Fund. He stated that $800,000 of that goes toward residential paving, $250,000 to concrete improvements, $250,000 to facility improvements, and $400,000 to Warland Drive payments. He stated that the overall CIP for 2006-07 is approximately $7.8 million. The Public Works Director stated that funding for the CIP comes from a variety of sources including Measure M, Gas Tax, CDBG, and Parks and Recreation grants. He stated that the majority of funding for 2006-07 will be from the Redevelopment Agency and General Fund. The Redevelopment Agency funding will be used toward the Community Center improvements. The Assistant City Engineer provided a status report on the current projects and the projects identified in the facility condition assessment, which are proposed over a three year period. The Assistant City Engineer provided information by category on the proposed projects. Mayor Pro Tem Luebben asked if the City had involvement with the O.C. Sanitation District for the videoing of the sewer system. The Public Works Director stated that the videoing is done through a Request for Proposal process. 3 108 CITY COUNCIL MINUTES MARCH 20, 2006 The Public Works Director stated that the City is going to request Measure M funds for Holder Street Bridge be moved and designated for 2010-2011. Mayor Sondhi asked about addressing the system deficiencies at City Hall, especially after the loss of power. The Public Works Director stated that staff is negotiating with the current HVAC contractor on generator replacement for specific areas at City Hall and the entire facility. Mayor Pro Tem Luebben asked for clarification on the park improvement projects. The Contracts/Environmental Affairs Manager stated that the Capital Improvement Program will be presented for formal adoption with the budget in June. Mayor Pro Tem Luebben asked about the doubling of the projected funding for Art in Public Places. The City Manager stated that it was a proposal to match FOCCA so that more quality bronze pieces can be placed in the Civic Center. Mayor Pro Tem Luebben stated that he was happy about the directional signs and asked that staff explore different options if there are better alternatives. Mayor Sondhi asked for clarification on the annual funding amounts for the Capital Improvement Program. She stated that the City needs to make sure that the infrastructure of the community is maintained. Mayor Pro Tem Luebben commented on possible options for monument signs and asked about the pedestrian signal in the Denni Street area. The Associate Engineer/Traffic stated that based on the traffic studies that have been done, pedestrian signals will be placed in the general area where there are existing flashing beacons. This is being done due to the increase in speed and volume of traffic on Denni as well as an increase in pedestrians. Council Member Seymore stated that traffic will more than likely increase with the Lexington extension also. Review of General Fund Desiqnations: The City Manager stated that since the 1990's with the recession, the State began taking away City funding. This was also the beginning of ERAF and since 1992, approximately $24.2 million has been taken from the City of Cypress. He stated that beginning in the early 2000's, the State began striving for stability and the City began receiving some specialized give backs that were primarily public safety related. He stated that in response, the City started a 25 percent contingency fund that accrues 25 percent of the growth in General Fund revenues. This is a Council policy that was adopted by Resolution, which started in 1991 at 15 percent. In 1998, it was raised to 20 percent and 25 percent in 2000. He stated that the current balance of this fund is over $5.3 million, which equates to 21 percent of total General Fund revenue and is an on-going accumulation with no cap. The City Manager stated that a 30 percent Capital Improvement Contingency Fund was created that accrues 30 percent of the growth in General Fund revenues. It was started in 1991 as an emergency contingency in case of a major disaster. The current balance of that fund is approximately $6.4 million and equates to 26 percent of the total General Fund revenue and is an on-going accumulation with no cap. He stated that an Investment Earnings Stabilization account was added after the Orange County bankruptcy in 1995. It is currently capped at $500,000 and has never been drawn upon. He stated that there is a Business Relocation Stabilization set aside 4 109 CITY COUNCIL MINUTES MARCH 20, 2006 that was started in the 1990's to guard against the risk of losing either of the two largest sales tax producers and is to be used as a buffer while the City figures out how to plug the gap by either cuts or new revenues. It is capped at $2,500,000, which is approximately one quarter of the City's sales tax and has never been drawn upon. The City Manager stated that the City has 55 percent of the growth in the General Fund taken out of operations each year and set aside in a Contingency Designation. He stated that the right balance needs to be found between present needs and future unknowns. These needs include building maintenance, infrastructure maintenance, staff training and development, competitive compensation, NPDES implementation, technology-related services, and the marketing program. Future unknowns include natural disasters, economic uncertainty, loss of major sales tax producers, terrorism, and more new mandates. The City Manager proposed that a new Contingency Fund be made in the budget that will equal 25 percent of General Fund revenues each fiscal year. As General Fund revenues increase, so does the Contingency Fund. However, if General Fund revenues decrease, the Contingency Fund stays at the previous level. This would equal approximately $7 million in Fiscal Year 2006-07 if implemented compared to the $5.5 million under the current policy. He stated that to get to 25 percent, he proposes using approximately $1.6 million of the CIP Contingency Designation. He also proposes using $617,000 from the CIP Contingency Designation to bring all Facility Condition Assessment needs into good condition, which would leave a balance of $4.1 million and stopping the contribution to the 30 percent Designation. This captures 30 percent of the growth in the General Fund revenue for operations, which means a gain of approximately $300,000 in Fiscal Year 2006. The City Manager stated that there would be $7 million in the new fund, $4.1 million in CIP Contingency, $2.5 in Business Relocation Stabilization, and $500,000 in Investment Earnings Stabilization for a total of $14.1 million available cash. The City Manager stated that there are new sales tax generators in Costco, Siemens Medical, Office Depot, MWB Business Systems, Sarnafil, Trans-Box Systems, and Pro Sound and Stage Lighting, and future sales tax in Red Robin, Baja Fresh, Panda Express, and Beverages & More. The Governor has proposed the elimination of ERAF and reimbursement of State mandates. He stated that if all revenue suddenly stopped, the City could provide all services for four and a half months. Police, crossing guard, and basic street maintenance services could be provided for 12 months, and police and crossing guard services could be provided for 14.5 months. If Council agrees with the plan, staff will return with a new Resolution that establishes a new Contingency Fund policy and will budget $617,000 in 2006-07 for Facility Condition Assessment needs. Mayor Pro Tem Luebben stated that he feels the past conservative approach is still worthwhile and does not see a need to change anything. Mayor Sondhi asked about the downsides to not changing. The City Manager stated that negotiations with employee bargaining units will be a factor. He stated that the City will be able to weather many different storms in its current financial situation. Mayor Sondhi stated that she is open to future discussion on this issue. Council Member Seymore stated that the City Manager made good points, and he likes that the City is solvent and has the contingency funds. He asked about the annual funding increases. 5 110 CITY COUNCIL MINUTES MARCH 20, 2006 The City Manager discussed the funding recommendations of the Governmental Finance Officers Association and that the City funds ten percent higher than those recommendations. Mayor Pro Tem Luebben stated that there will always be labor changes and that they are not monumental insurmountable numbers. They are still manageable numbers within the operating budget. He expressed his conCE3rn about shifting conservative reserve policies to strictly one fund. ADJOURNMENT: Mayor Sondhi adjourned the meeting at 7:50 p.m., to Monday, March 27, 2006, beginning at 5:30 p.m. in the Executive Board Room, 5275 Orange Avenue, Cypress, California. ATTEST: ~,~~ MAYOR Of T E CITY OF CYPRESS ( "'-.-../ 6