Piedmont Budget Advisory & Financial Planning Committee

Thursday, May 23, 2019

6:00 p.m.  

Emergency Operations Center, Police Department, 403 Highland Avenue

The meeting is open to the public. The meeting will not be broadcast or recorded.

Regular Agenda

1. Update on FY 18-19 General Fund Revenue and Expenditures: Projected Actual vs Budget
2. Overview of FY 19-20 Budget
3. Review of Ten Year Projections and Long Term Pension and General Fund Projections
4. Review of Facilities Maintenance Fund Projections
5. Discuss FY 18-19 Year End General Fund Transfers
6. Discuss the Process for Reviewing Parcel Tax Renewal

Meeting back up materials have not been publicly distributed. 

The City Council on May 20, 2019 held the first of the two Public Hearings on the FY 2019-20 Budget.  There were no comments from the public at that Hearing.

Presentation by Finance Director Michael Szczech at the May 20, 2019 Council Public Hearing.  >Budget_Council_MTG_May 20_2019_PP

Contacts and Members of the Piedmont Budget Advisory and Financial Planning Committee

Roster *

Council Liaison: Mayor Robert McBain – rmcbain@piedmont.ca.gov – (VM) 420-3048
Staff Liaison: Finance Director Michael Szczech – mszczech@piedmont.ca.gov – (W) 420-3045

Committee Members:

05/20/19 – Consideration of the Acceptance of a State of California Tobacco Grant to Fund a Juvenile Officer in the Police Department for Three Years in Cooperation with the Piedmont Unified School District

For questions, contact Jeremy Bowers, Chief of Police Piedmont Police Department 403 Highland Avenue Piedmont, CA 94611 (510)420-3010 jbowers@piedmont.ca.gov. 

READ the entire agenda by clicking below:

http://www.ci.piedmont.ca.us/html/govern/agendas/2019-05-20.pdf

General Fund and Sewer Taxes along with fees proposed to move upward.

The City Charter requires that a public hearing be held prior to adoption of the budget, the levy of the Municipal Services Special Tax, and the proposed levy for the Special Municipal Sewer Tax. This is the first of two scheduled public hearings, with the second hearing to be held on June 3, 2019. Following the June 3, 2019 public hearing, staff is recommending that the City Council consider adoption of the budget and levying the taxes.

READ the entire budget proposal for the May 20, 2019 FY 2019-20 and view proposed taxes and fees by clicking below:

05/20/19 – PUBLIC HEARING Regarding the Proposed Budget and Fee Proposals for FY 19-20 and the Levy of the Municipal Services Tax and Sewer Tax

READ the agenda for the May 20, 2019 Council meeting by clicking below:

http://www.ci.piedmont.ca.us/html/govern/agendas/2019-05-20.pdf

READ the staff report to view the plans and funding by clicking below:

05/20/19 – Consideration of a Resolution Dedicating SB-1 Funding for FY 19-20 to the Oakland Avenue Pavement Project

READ the May 20, 2019 Council agenda by clicking below:

http://www.ci.piedmont.ca.us/html/govern/agendas/2019-05-20.pdf

For these reasons, we very purposely:

•  focus on the delivery of basic services and core programs;
•  budget carefully and conservatively; and
•  work diligently to safeguard our financial position by mitigating, to the extent possible, the impact of rising expenses which the City has little control over – particularly CalPERS related benefit costs which constitute an unfunded liability of just over $25 million.

On this latter point, the Council has proactively established a program of pension cost-sharing with employees and has curtailed retiree medical benefits for new hires.  These two initiatives, taken together, slowed the growth rate of our Underfunded Liabilities and will save the City millions of dollars in benefit-related expenses over the years to come.

Another significant action to buffer the effects of rising pension costs was the establishment of a Pension Rate Stabilization Fund, also known as a Section 115 Irrevocable Trust Fund, with the Public Agency Retirement Services – or PARS.

To date, the City Council has approved a total transfer of $2.75 million to PARS from the General Fund. One key benefit of this initiative is that funds deposited with PARS may achieve higher earnings due to less restrictive investment policies than apply to City funds invested in Local Agency Investment Fund.

As a result of the CalPERS decision to reduce the planned rate of return (Discount Rate), the City’s annual pension contributions are projected to increase from the current $2.2 million (7.5% of City revenue) to $5.5 million (13.3 % of City revenue) by 2029. This equates to a cost increase of approximately 132%, while City revenue over this same 10 year period is estimated to increase by only 35%.

As soon as 2023, and potentially continuing through 2031, the increase in mandatory pension contributions is projected to result in General Fund expenses exceeding revenue. When we face these net-negative revenue years, the City will be in a position to stabilize the General Fund by drawing down on its PARS account to pay pension costs.

Overall, prior City Councils and the current Council, working together with staff, have applied wisdom in managing the City’s limited financial resources. Piedmont now has a modest Reserve of just under $5 million, which represents 17% of our operating budget. Absent a catastrophic event, that amount should be of significant help in responding to an emergency or addressing unforeseen circumstances.

While there are no established policies to guide what constitutes “reasonable”, the reserve for the City of Piedmont is restricted by the City Charter to no more than 25% of the Operating Budget.

To put our City’s reserve in perspective, at the end of last fiscal year Emeryville, with a population similar to Piedmont’s, maintained a reserve of $30.3 million, which equates to approximately 76% of their General Fund; Albany’s was $8.8 million, which is 45% of their General Fund; Berkeley had a reserve of $84 million or 55% of their General Fund; and Oakland’s was approximately $150 million or 24% of their General Fund.

In addition to maintaining a modest reserve, the City has been making consistent, long-needed transfers to the Facilities Maintenance and Equipment Replacement Funds, and has also made much needed investments in our IT Systems, with a goal of bringing our use of technology into the modern era.

At the start of this Fiscal Year the Equipment Replacement Fund is projected to have a balance of $2.75 million – which, assuming we continue to make the planned annual transfers from the General Fund, should be sufficient to address the schedule for equipment replacement into the future.

The Facilities Maintenance Fund is projected to have a balance at the start of the year of only $4.8 million. This amount is far short of what is required to address accessibility, life-safety, life- cycle, and efficiency issues of our city’s facilities and property.

Piedmont’s facilities, like so many of the homes in Piedmont, are old and expensive to maintain. While aesthetically pleasing, most of our facilities are in need of significant repair and renovation.

On the whole, our community facilities and infrastructure have been kept largely functional, but it is time to devote the attention and investment necessary to meet community needs, let alone current safety or accessibility standards.

•  Miles of sidewalks and pathways are in poor condition, and our City Engineer has estimated that we could spend on the order of $11 million on sidewalk and trail repair alone.
•  To keep the Pavement Condition Index of our streets from deteriorating will require an estimated annual paving expenditure of approximately $1.5 million – up from the current $1 million – and this is assuming a competitive bid environment. As you know, the Engineer’s estimate for the repaving of Magnolia Avenue was $1.3 million. The sole bid submitted was for $1.7 million. So, the estimated $1.5 million required to maintain the condition of our streets could actually have increased to $2 million or more.
•  The Veterans Hall and Recreation Building are virtually in the same condition and configuration as when they were originally built 50 to 100 years ago. Bringing them to where they should be would require an estimated investment of $6 to 7 million.
•  The Community Pool cannot remain open much longer without substantial investment. While short-term fixes may postpone the eventual closing, safety issues are significant and the pool is losing an estimated 1 million gallons of water per year via unidentified leaks. Based on the recently completed Aquatics Master Plan, the cost of a modern and safe facility that meets community needs is estimated at between $12 million and $15 million.

Our beloved City Hall has significant needs rarely seen by the public. Low, open ceilings with exposed wires, water intrusion during storms, fire safety and accessibility issues are just a few of the problems.

At times, I hear comments asserting that the City does not have the space needed to support our programs. The fact is we have the “space”. We just need to make the investment needed to address the efficiency, functionality and accessibility issues that limit program opportunities as well as use by staff, the very young, and seniors.

The bottom line fact is that many of our facilities and amenities are inefficient, have significant condition issues limiting usage, and are not where they should be relative to life, safety, and accessibility standards – let alone to where they should be for a community like Piedmont.

Like the School District’s initiatives to invest in modernizing the Elementary Schools and High School to meet 21st Century needs, it is time to apply a similar focus to improving our City facilities and infrastructure.

In recent years, under the leadership of the City Council and with the support of city staff, there has been the political and organizational will to take a fresh and realistic look at our facilities and systems and to make the initial investment needed to develop a clear understanding of the issues and the opportunities for improvement.

While we have been doing the work necessary to develop that understanding—- the reality is that the City’s financial position, in the best of times, will only support an incremental approach to completing the work that needs to be done.

Unfortunately, for many facilities, an incremental approach will not get us to where we need to be.

To summarize:

Maintaining the current condition of our street paving, addressing unsafe sidewalks and pathways, and implementing priority pedestrian and bicycle safety projects will cost an estimated $23 million.

Factoring in the Recreation Building and the basement of City Hall adds up to $7 million. To address the pool and Veterans Hall, add another $17 million. Linda Beach Park improvements are estimated to cost $7 million. Improving Coaches Field could cost up to $4 million. All together these projects total $58 million.

Looking to the future, barring a natural disaster, bringing our facilities and civic infrastructure into the 21st century will be the City’s biggest challenge and greatest opportunity for the betterment of the Piedmont community.

The Piedmont School District contracted Dr. Timothy McClarney of True North Research for a Tax Survey and the results were presented April 24. Plainly taxpayers are more receptive to a square foot tax of building than the current flat rate levy. Dr. McLarney’s survey report states on p.18: “More tax rate sensitivity for flat rate / less tax rate sensitivity for square foot version.” Dr. McLarney confirmed this verbally.

READ the agenda below for the Council Budget Work Session when the Council will consider all CIP proposals and department budgets:

http://www.ci.piedmont.ca.us/html/govern/agendas/2019-05-11_special.pdf

READ the full CIP Review Report for 2019 below:

CIPreviewreport 2019

Minutes, broadcasts, and recordings were not made of any of the CIP Review meetings.  Staff reports were not publicized. 

Recordings and broadcast will not be made of the Saturday, May 11, 2019 Council Budget Workshop held at 403 Highland Avenue in the Emergency Operations Center of the Piedmont Police Department.  The public is welcome to attend and participate.

 

READ the full staff 2019-20 Budget recommendations including fees, permits, salaries, benefits, use of City property, tax rates, personnel, etc. – http://www.ci.piedmont.ca.us/finance/budget/19-20/19-20_budget.shtml

Piedmont Proposed FY 19-20 Budget Presentation and Workshop Saturday, May 11,  9 am Piedmont Police Department Emergency Operations Center (EOC)

Those interested in participating in City of Piedmont expenditures, taxation, and priorities should find the less formal Budget Workshop meeting informative and an opportunity.  The Workshop is where the work is largely done.  Public participation is allowed.  The Workshop will not be broadcast or recorded making physical presence a necessity to hear first hand the discussions. 

Proposed budget and the levy of the Municipal Services Tax and the Sewer Tax. 

The Saturday Work Session will be held in the Police Department EOC – 403 Highland Avenue on May 11, 2019 beginning at 9 am.

At the workshop, the City Administrator and Department Heads will present their proposed budgets for the coming fiscal year starting on July 1, 2019. The public and Council can ask questions and present ideas regarding proposals.

The Piedmont City Council will consider the proposed annual budget for fiscal year 2019-2020 at three separate meetings.  The first is the Budget Workshop on May 11 when most questions and issues are resolved prior to formal budget consideration at the two following Public Hearings regarding the proposed budget and the levy of the Municipal Services Tax and the Sewer Tax.

Two Public Hearings will be held during regularly scheduled City Council meetings on May 20 and June 3, 2019.  Many times there is little discussion on the budget at the Public Hearings. The regular Council meetings will be broadcast and recorded.

The public is invited to attend these meetings and speak to the City Council about spending priorities for the city in the coming year.  Click to visit the 2019-2020 Proposed Budget page, where all sections of the budget are available for download.

For questions on contents of the budget, please contact Finance Director Michael Szczech via email at mszczech@piedmont.ca.gov or by phone at (510) 420-3045.

If you wish to write to the Council regarding the budget, please send an e-mail to the City Council at citycouncil@piedmont.ca.gov or send a letter via U.S. Mail to Piedmont City Council, c/o City Clerk’s Office, 120 Vista Avenue, Piedmont, 94611.

Recommendation:

Two parcel tax measures: one for each separate parcel and a second measure, an additional add on tax based on square footage of each Piedmont building including single family residences. See full report linked below.

The School Board will discuss potential School District parcel tax measures at their Wednesday, May 8, 2019 Board Meeting in City Hall, 120 Vista Avenue.  The meeting will be broadcast live on cable Channel 27 and the Piedmont website under videos/school board. The tax measure agenda item is set for 8:40 p.m.

READ the staff reports below:

VI_A_BackgroundSchoolSupportTaxPollingResults_

VI_A_PollingResultsPresentation_