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Home My WebLink About05/12/1992, Agenda cit?Of san Wis bBISPO W all It RCOI`SS A & B • CITY/COUNTY LIBRARY • PALM S OSOS STREETS 7 C o t� **Lead Person - Item to come back to Council #Denotes action by Lead Person No Asterisk - Information Only 6:30-7:30 P.M. CLOSED SESSION TO BE HELD IN THE CITY/COUNTY LIBRARY ROOM A TO DISCUSS LITIGATION. AGENDA C ADJOURNED MEETING OF THE CITY COUNCIL TUESDAY, MAY 12, 1992 - 7:30 P.M. l CITY/COUNTY LIBRARY - ROOMS A & B CALL TO ORDER: Mayor Ron Dunin ROLL CALL: Vice Mayor Penny Rappa, Councilmembers Peg Pinard, Jerry Reiss, Bill Roalman and Mayor Ron Dunin ****************************************************************************** PUBLIC COMMENT PERIOD (Not to exceed 15 minutes) The Council is interested in hearing from the public regarding issues or concerns of the community and welcomes your input. However,as a general rule, action will not be taken on issues not listed on the agenda. Instead, staff will usually be asked to follow-up on such items. Immediately following roll call, members of the public may address the City Council on items that DO NOT appear on the printed agenda. A speaker form (BLUE SLIP-available in the Foyer or from the City Clerk) must be tiled with the City Clerk prior to the beginning of the meeting. Please give your name and address at the podium and limit your remarks to three minutes. You will be able to speak on issues listed elsewhere on the agenda when the item is called, no speaker form is necessary. COUNCIL LIAISON REPORTS (Not to exceed 15 minutes) At this time,any Councilmember may report on meetings,conferences or other City-related activities attended since the last Regular meeting. Reports limited to three minutes per Councilmember. E ****************************************************************************** BUSINESS ITEMS 1. BUDGET STUDY SESSION (STATLER/233 - 2 1/2 hrs.) Consideration of amending the 1991-93 Financial Plan. Page 1 of 3 Council Agenda May 12, 1992 RECOMMENDATION: 1) Approve departmental budget requests amending the 1991-93 Financial Plan for 1992-93; 2) Approve a change in Financial Plan policies authorizing staff to program the use of Economic Stability funds consistent with the City's purchasing policies and procedures; and, 3) Authorize the CAO to negotiate for the purchase of three used buses in an amount not to exceed $180,000 as recommended. FINAL ACTION.• S.tatke,%** 1) Approved departmental budget requests amending the 1991-93 Financial Plan for 1992-93 as recommended; 2)Approved a change in Financial Plan policies authorizing staff to program the use of Economic Stability funds consistent with the City's purchasing policies and procedures with amendment to continue discussion of the Dalidio appropriation to the next Budget session; and, Hampian* 3)Authorized the CAO to negotiate for the purchase of three used buses in an amount not to exceed $180,000 as recommended 2. FIRE ENGINEILADDER TRUCK (NEUMANN/F 92-1 - 15 min.) Consideration of specifications for one 1500 GPM, four-door, custom cab-forward combination Fire Engine/Ladder Truck (continued from 4/7/92). (Specification packet available in Council Office for review.) RECOMMENDATION: By motion, approve specifications (1792-1) for 1500 GPM, four-door, custom cab-forward combination Fire Engine/Ladder Truck, authorize solicitation of bids, and award of contract by the City Administrative Officer if final bid is less than $410,000 as recommended. Nw-mann* FINAL ACTION. By motion, approved specifications (F92-1) for 1500 GPM, four- door,custom cab-forward combination FireEngine/LadderTruck,authorized solicitation of bids, and award of contract by the City Administrative Officer if final bid is less than $410,000 as recommended Staff directed to report back on the operational liability issues. Page 2 of 3 Council Agenda May 12, 1992 ***************************************************************************** COMMUNICATIONS (Not to exceed 15 minutes) During the balance of this meeting, any Councilmember or the City Administrative Officer may informally update the City Council of written or oral communications and ask for comment and/or discussion. State law provides that Council take action only on such matters which have been noticed at least three days in advance of the meeting unless special circumstances are found to exist. Formal action or approval is not preferred and such items should be continued to the next Regular meeting. Rappa** COMM.1. Consideration of agendizing a property maintenance ordinance as requested by Vog e,6** Residents for Quality Neighborhoods. No consensus reached;this item continued to next regular meeting. Duran** Duni'n.** COMM.2. Council Meeting Protocol. Staff directed to prepare and agendize Council Policies Vogea** and Procedures, specifically including methods for conduct of its meetings. Jongenaen* Dunin** COMM.3. Request to appoint a Blue Ribbon Task Force to examine the City's economic Vog u** situation was continued without discussion to next regular meeting. ADJOURNMENT. Page 3 of 3 OtPof San WISOBISPO (n oaa it o U ROOMS A & B + CITY/COUNTY LIBRARY s PALM b OSOS STREETS C — C\ {..ACJ I am lf�lS t� ' " 'alllnQ P 's Agenda Distribution List I Unpaid Subscriptions: 6:30-7:30 P.M. CLOSED SESSION TO BE HELD IN THE (All mtgs.unless o/w noted) ROOM A TO DISCUSS LITIGATION. AIA President ASI President B.I.A. , Lynn Block MUi,e�HVISE r+�vt�a pqe A G E N D A Chamber of Commerce ly��liS On d' L.Laurent, Co.Spvrs.Chair DADJOURNED MEETING OF THE CITY Paul Hood, Co.Administration ?(JOMY M&NOW, MAY 129 1992 - 7:30 P. -'KCBx IFNIZ CITY/COUNTY LIBRARY - ROOMS KCOY KCPR: (2)Gen.Mgr.& News Dir. CALL TO ORDER: Mayor Ron Dunin KDDB KEYT ROLL CALL: Vice Mayor Penny Rappa, Counc' �Y Reiss, Bill Roalman and Mayor KVEC League of Women Voters #**************************************************** Library(reg.mtgs:front desk) PUBLIC COMMENT PERIOD Mustang Daily (Not to exceed 15 minutes) Pacific Gas & Elec.Co. RRM Design Grp./DeAnn Smith The Council is interested in hearing from the public regarding issues on So.Calif.Gas Co./Vic Sterling welcomes your input. However,as a general rule,action will not be taken q SLO Area Coordinating Council instead, staff will usually be asked to follow-up on such items. I Telegram-Tribune Housing; Auth. & Pl.ng.fir,.- . . Immediately following roll call, members of the public may address the Citi Council Candidates appear on the printed agenda. A speaker form (BLUE SLIP -available in 11-- ---- must be filed with the City Clerk prior to the beginning of the meeting. PI 1 e podia and limit your remarks to three minutes. You will beable td Lon Grammer STATE OF CAL119n a en the item is called; no speaker form is necessary. COUKTY OF SAM LU15 Oe John J. Lybarger CITY OF SAN LUIS OBISPO ) Calvin Curtis Massey I dec;arr under peQ31ty of perjury that I am eMIOyW Sa o Giuliano Rizzo by the City of San Luis Obispo in the City Clerk's t� Department: and that 1 poste thi A enda near the L E 6 3 1 n 1992: front door of City Ra11 on 5�9� s. ng All nc C. nd�ers ***#**** * *xx##xx x#x ####*xx####*#x### t Day Co iti IIJ it Ke'rkkl Da lgnature OUNCIL LIAISON REPORTS t Ne /T 3 ry n rerit f (Not to exceed 15 minutes) S /K t pp 6 rQ 1. ig r / .�onnor At this time,any Councilmember may report on meetings,conferences or oth r a C b/ i i e e 1 since the last Regular meeting. Reports limited to three minutes per Counc L ro . e A s ( Et)/ II Subscriptions Paid or Envelopes Provided(all mtgs.) : #####*###*##*x######x#xxx##x#x###**x#x#*###*##*****x** Pac.Bell Right of Way Office BUSINESS ITEMS (reg.mtgs.only) : B1dg.Industry Assoc(exp.8/2/92' 1. BUDGET STUDY SESSION (STATLER/233 - 2 1/2 h . Hawkins/Mark-Tell Image Design Graphics/S.Sudbur. Consideration of amending the 1991-93 Financial Plan. Pacific Subdiv.Consultants Penfield & Smith I Staal,Gardner & Dunne, Inc. Page 1 of 2 Ticor Title Insurance Wallace, John L. & Assocs. Walter Bros. Construction Co. Woodward-Clyde Consultants 1 Council Agenda May 12, 1992 RECOMMENDATION: 1) Approve departmental budget requests amending the 1991-93 Financial Plan for 1992-93; 2) Approve a change in Financial Plan policies authorizing staff to program the use of Economic Stability funds consistent with the City's purchasing policies and procedures; and, 3) Authorize the CAO to negotiate for the purchase of three used buses in an amount not to exceed $180,000 as recommended. 2. FIRE ENGINE/LADDER TRUCK (NEUMANN/F 92-1 - 15 min.) Consideration of specifications for one 1500 GPM, four-door, custom cab-forward combination Fire Engine/Ladder Truck (continued from 4/7/92). (Specification packet available in Council Office for review.) RECOMMENDATION: By motion, approve specifications (F92-1) for 1500 GPM, four-door, custom cab-forward combination Fire Engine/Ladder Truck, authorize solicitation of bids, and award of contract by the City Administrative Officer if final bid is less than $410,000 as recommended. ***************************************************************************** COMMUNICATIONS (Not to exceed 15 minutes) During the balance of this meeting, any Councilmember or the City Administrative Officer may informally update the City Council of written or oral communications and ask for comment and/or discussion. State law provides that Council take action only on such matters which have been noticed at least three days in advance of the meeting unless special circumstances are found to exist. Formal action or approval is not preferred and such items should be continued to the next Regular meeting. ADJOURNMENT. Page 2 of 2 b:avcha1rs.wpr11092san MAILING LIST ADVISORY BODY CHAIRS ` 1/30/92 Michael Underwood, Chair Paul Orton, Chair Architect. Review Comm. Park S Rec. Comm. 487 Chorro 33 Las Praderes San Luis Obispo, CA 93401 San Luis Obispo, CA 93401 Betsey Lyon, President Forrest Watts, Chair Business Improvement Assoc. Parking Management Comm. 982 Monterey 883 Murray San Luis Obispo, CA 93401 San Luis Obispo, CA 93405 Richard Marshall, Chair Robert Sorensen, Chair Bicycle Advisory Comm. Personnel Board 660 Caudill St. 1710 Alta St. San Luis Obispo, Ca 93401 San Luis Obispo, CA 93401 William J. Pyper, Chair R. Gilbert Hoffman, Chair Citizen's Advisory Comm. Planning Commission 1544 Tanglewood 987 Capistrano Ct. San Luis Obispo, CA 93401 San Luis Obispo, CA 93405 Wendy Waldron, Chair , PGlv Cultural Heritage Comm. - Promot ord. 525 Mitchell St. 1115 eaaaire y r able S�r San Luis Obispo, CA 93401 Luis Obispo, CA 9 934rJ Stephen R. Nelson, Chair Howard C. Brown, Chair Housing Authority Tree Committee 1580 Lizzie St. 276 Graves Ave. San Luis Obispo, CA 93401 San Luis Obispo, CA 93401 Marion Wolff, Chair Human Relations Comm. I, 3128 Spring Ct. �� /� � °�l� F.1 w San Luis Obispo, CA 93401 ( 1 I ' �rt�rn Miss Ethel Cooley, Chair Jack House Advisory Comm- 506 Felton Way 1 San Luis Obispo, CA 93405 Barbara Jauregui, Chair Jt. Recreational Use Comm. 2280 Santa Ynez San Luis Obispo, CA 93405 James Forrer, Chair Mass Transportation Comm. 648 Felton Way, #9B San Luis Obispo, CA 93405 Y I}lu^I�III�IIIIIII� 1� tJ f _ MEETING DATE: �i IIII �I= o san lues oBIspo .5--/.? - 9� do COUNCIL AGENDA REPORT ITEM NUMBER: FROM: William C. Statler, Director of Finance t4 SUBJECT: BUDGET STUDY SESSION CAO RECOMMENDATIONS ■ Approve departmental budget requests amending the 1991-93 Financial Plan for 1992-93. ■ Approve a change in Financial Plan policies authorizing staff to program the use of Economic Stability funds consistent with the City's purchasing policies and procedures. ■ Authorize the CAO to negotiate for the purchase of three used buses in an amount not to exceed $180,000. OVERVIEW Appendix A provides comprehensive documentation for expenditure changes recommended in 1992-93. The following is an overview of the three major recommendations contained in this report: Financial Plan Expenditure Changes Consistent with Council policy direction, the proposed operating and capital expenditure changes for 1992-93 reflect a modest change of 2%from the groundwork laid in the 1991-93 Financial Plan as modified during the 1991-92 Mid-Year Budget Review. The vast majority of this change is in enterprise fund areas, and not in the General Fund. The General Fund increase is only 0.3% and is likely to be partially offset by a number of other adjustments which will be made internally prior to adoption of the final budget in June. The following is a summary of the recommended changes which are comprehensively discussed in Appendix A of this agenda report: Operating Programs Public Safety $ 821400 Public Utilities 198,400 Transportation 178,000 Total Operating Programs 458,800 Capital Improvement Plan (CIP) Projects Public Utilities 85,000 Transportation 455.000 Total CIP Projects 540,000 Total Recommended Changes 998 00 As reflected above, the most significant changes are in the Public Utilities and Transportation functions. These changes primarily reflect the financial programming and implementation of policies and projects previously approved by the Council. In the case ��+'��►i��►IIIIII�P1° ��IIU city of san t..Als oBispo COUNCIL AGENDA REPORT of Transportation, $588,000 in operating and capital costs are related to changes in transit operations based on adoption of the Short-Range Transit Plan and approval of a new contract for bus operations and maintenance. In the case of Public Utilities, $137,000 is provided for continued funding of our hardware retrofit program (partially offset by the reduction of$99,100 in water conservation staffing as approved by the Council on April 21, 1992) and $150,000 is provided for the operation and maintenance of the $25 million investment in water quality improvements currently being made to our water reclamation plant. Based on projected revenues and beginning fund balances, adequate resources are available to support the recommended expenditure changes and maintain fund balances at policy levels. Economic Stability Program Under the Economic Stability Program approved by Council as part of the 1991-93 Financial Plan (page D-93), no funds may be expended from this program budget without Council identification and approval of specific projects and activities. This limitation on program implementation was established because program goals were largely undefined at that time. Since adoption of the 1991-93 Financial Plan, several of the projects tentatively identified for funding have been formally approved by Council, and accordingly, the overall direction of this program is clearer at this time. As such, it is recommended that implementation of this program be governed in accordance with adopted financial management standards and purchasing policies rather than the more restrictive approach currently in place. It should be noted that no additional appropriations are recommended in conjunction with this policy change; instead, specific amounts are recommended to be set aside from the existing appropriation to support Council approved projects if necessary (Dalidio, Broad Street Annexation, Auto Center expansion). Provided as Attachment 2 is a memorandum from the Assistant City Administrative Officer detailing the background of this issue and supporting the recommended change in City policy. Authorization to Purchase Three Used Buses As detailed in the budget request to purchase three used buses, inadequate backup currently exists for our bus system; this deficiency will only become more pronounced when buses recommended for rehabilitation are temporarily taken out of service for this purpose. Unfortunately, obtaining used buses which are handicapped-equipped is extremely difficult under current market conditions. In order to purchase these needed backup buses in the most timely and cost-effective manner possible, it is recommended that Council authorize the CAO to negotiate and award contracts for their purchase in an amount not to exceed $180,000. DISCUSSION Background Under the City's two-year financial plan process, the 1991-93 Financial Plan establishes the primary policy, program, and financial guidelines to be used in preparing the 1992-93 Budget. Although budgets are adopted annually under the two-year plan concept, it is ��►��m�Illllilli�" lll►�li city of San LLt1S OBISp0 COUNCIL AGENDA REPORT intended that appropriations in the second year of the plan will be based upon the framework and foundation developed during the two-year planning and budgetary process. At their April 21, 1992 meeting, the Council approved the budget review process and calendar for 1992-93 which reaffirmed our commitment to retaining this straightforward approach in preparing and adopting the 1992-93 Budget. This budget study session was scheduled as part of this review process to consider the following issues: ■ Overview of our financial condition ■ Review of sales tax trends by the City's sales tax advisor (Hinderliter del lamas) ■ Consideration of any departmental budget requests amending the 1992-93 Financial Plan for 1992-93 ■ Consideration of any changes in Financial Plan policies ■ Overview of the status of major City goals ■ Policy direction from the Council Key dates remaining in the budget process after this budget study session include the following: ■ Water and sewer rate review 5/19/92 ■ Distribution of the Preliminary 1992-93 Budget 6/1/92 ■ Public hearing to approve 1991-93 Financial Plan changes 6/16/92 and adopt the 1992-93 Budget Financial Condition Overview The City's revenue and expenditure trends continue to reflect those reported in the mid- year budget review presented to the Council in February of 1992. As reflected at that time, expenditures are on target with budget projections; however, significant downward revisions were made at mid-year in projections for key General Fund revenue sources. Although these revenue shortfalls are largely offset by unanticipated, one-time revenues in 1991-92, the Council approved $1.7 million in expenditure reductions as part of the mid- year budget review in order to ensure our continued financial health today and prudently position us for the future. In summary, the revenue and fund balances projections for 1991-93 presented to Council as part of the mid-year budget review continue to reflect current trends. Based on actions taken by the City Council during mid-year, adequate General Fund fund balances are projected to be available at the end of 1992-93 to meet our strong Financial Plan reserve policies. For reference purposes, the Executive Summary from the mid-year budget review summarizing our financial condition today, our financial condition at the end of 1991-93, and our long-term financial outlook is provided in Attachment 1. 1-3 City of San �IS OBISpo COUNCIL AGENDA REPORT Review of Sales Tax Trends Sales taxes are the City's single largest source of General Fund resources, accounting for almost 30% of total General Fund revenues. During the first seven years of the 1980's, this revenue source grew by about 10% annually, resulting in"real growth" of approximately 3% annually after adjusting for changes in population and inflation. In contrast, we have experienced six consecutive quarters of declining sales tax revenues. Due to its importance in financing City programs and facilities,we have requested that Lloyd de Llamas, our sales tax advisor, provide us with an overview of the following issues: ■ How are different types of businesses and geographic areas in the City doing in this current economic climate? ■ How are we being affected by increased competition in our region? ■ How do our sales tax revenues compare with statewide and regional trends? ■ What factors most affect our sales tax revenues? ■ What is the outlook for our sales tax revenues? Financial Plan Budget Changes Appendix A of this agenda report provides comprehensive documentation for the expenditure changes recommended for 1992-93 organized as follows: Section 1. Summary of operating program and CIP requests for 1992-93 totalling $998,800. This reflects a modest increase of 2% from 1991-93 Financial Plan projections of $453 million. The majority of the requests are for the utilities and transit funds. The General Fund increase is only 0.3%. Section 2. Comprehensive supporting documentation for each of the operating program requests totalling $458,800. Section 3. Comprehensive supporting documentation for each of the CEP project requests totalling $540,000. The following is a brief overview of each of the operating program and CIP project requests: Operating Programs Police Lieutenant Overstaffing. Continues funding in the amount of $82,400 for the Administrative Lieutenant overstaffing approved by the Council in 1989. Hardware Retrofit Rebate. Consistent with Council direction in February of 1992, provides funding in the amount of $137,500 annually for an ongoing retrofit rebate program. The cost for this water conservation program is partially offset by the reduction of water conservation staffing approved by Council on April 2, 1992 in the amount of $99,100. / '��in►►i�lllllfl��► �II�III city Of San LUSS OBISPO COUNCIL AGENDA REPORT Water Reclamation Legal Services. Provides funding in the amount of $10,000 for anticipated legal services arising from the development of the City's water reclamation program and plant improvements. Operations and Maintenance Staffing for Upgraded Plant. Consistent with master plan projections, provides funding in the amount of $150,000 for necessary staff to operate and maintain the $25 million in improvements currently being made to the water reclamation plant. Landfill 'lipping Fee Increases. Provides additional funding in the amount of $45,000 to cover landfill tipping fee increases. Transit Operations and Maintenance. Provides additional funding in the amount of $124,000 to cover the costs associated with the new contract with Mayflower for transit system operations and maintenance as well as the marketing program approved by Council in the Short-Range Transit Plan. Transit Bus Yard Water Separator. Provides funding in the amount of $9,000 in order to meet state water standards by separating bus washing water from any grease and oil that may be contained in the run-off water. Capital Improvement Plmt Projects Reclaimed Water Distribution System. Provides funding in the amount of $85,000 for the drafting and survey portion of design services for the reclaimed water distribution system. Basic design will be performed in-house. Short-Range Transit Plan Improvements. Consistent with the recently adopted Short- Range Transit Plan, provides funding in the amount of $455,000 for the following projects: ■ Preliminary engineering for the multi-model transit transfer center ($40,000 total; $30,000 to be provided by State/regional system) ■ Bus stop improvements ($25,000) ■ Comprehensive bus rehabilitation $210,000) ■ Purchase of three used buses ($180,000) Other Budgetary Issues In addition to the formal changes being submitted for Council consideration at this time, there are several financial issues on the horizon that may require Council review at a later date: ■ County Historical Museum. As the Council is aware, City staff, along with County and museum representatives, have been working cooperatively to develop a revised cost sharing proposal for the long term operation and maintenance of the County Historical Museum It was staffs initial intention to request Council approval of a revised agreement in conjunction with the 1992-93 Financial Plan adoption process. Because the agreement is not yet complete, this will not be possible. However,, a ��N�i�iiilV►Illllillli� ��lll city of san L AIS oBispo do COUNCIL AGENDA REPORT revised agreement is expected to be ready within the next several months and, if approved, will involve a financial contribution from the City during 1992-93. Several cost sharing alternatives have been under consideration by City and County staff. City staff currently support an arrangement whereby the City and County each fund 25% of the museum's annual operating budget (approximately$27,000 each and equally split the cost of all maintenance and rehabilitation to the building (no cost figures are available as yet). The Museum would be responsible for funding the remaining 50% of the ongoing operating budget (approximately $54,000 per year). City staff favors this approach because it would resolve the current confusion over the maintenance responsibilities for the facility, and the County would be committed to assisting with any major building improvements such as seismic retrofit. City staff has advised the County of our preferred approach to the long term operation and maintenance of the Museum. The County has responded with an amendment to an earlier agreement, and the wording of the agreement is currently under discussion. ■ Employee Contract Negotiations. The City will be entering into contract negotiations with our general and mid-management employees that will affect staffing costs during 1992-93. Until these negotiations are completed, it is not possible to calculate their fiscal impact. However, in general terms, each 1% in total compensation will cost the City $31,000 annually for mid-management employees and $60,000 annually for general unit employees. ■ State of California Budget Problems. The State is again facing significant budget deficits. How they resolve their financial difficulties could have significant impacts on the City if they choose to balance their budget by shifting local government revenue sources or expenditure responsibilities similar to SB 2557. Current proposals under consideration include permanently eliminating all cigarette tax subventions and capping growth in motor vehicle in-lieu revenues. ■ Short-Range Transit Plan Implementation. When the Short-Range Transit Plan (SRTP) was adopted by the Council in November of 1991, our ability to fund the recommended improvements was a central concern. As noted in the fiscal impact section of the accompanying agenda report (page 2-3), "it is extremely difficult to predict what the funding environment will be for a transit program over the next several years. Operating and capital costs continue to increase dramatically as a result of several factors, including fuel costs, handicapped accessibility requirements, and clean air requirements". The plan submitted for Council approval was financially balanced; based on the best information available, sufficient resources were projected to be available over the next five years to fund the recommended operating and capital improvements. However, as noted in the report (page 2-4), several major factors could significantly affect the SRTP financial projections: ■ Level of contribution to the regional system ��H��in►►Ilulllll!IIII► ��ll city of san tUIS OBIs130 Wii% COUNCIL AGENDA REPORT ■ Increases in operating and maintenance costs upon expiration of the current contract in July of 1992 ■ Level of growth in TDA revenues and the level of outside assistance available in funding capital improvements Since the SRTP was submitted to Council, several of these key factors have become much clearer: ■ Operations & maintenance contract costs will rise from our current level of $1.90 per mile to $2.46 per mile effective July 1, 1992 compared with the SRT? projection of $1.98. ■ TDA revenues - the primary source of operating funds in the SRT? - were projected to increase by 4% to 5% annually during the five year period of the plan. The County Auditor/Controller (who controls TDA revenue apportionments) is now projecting a 14% decrease in TDA revenues for 1991-92 and a 20% decrease in 1992-93 from 1990-91 levels. This is because TDA revenues, which are derived from a portion of the sales tax, have been affected by the slowdown of the economy. ■ Except for the transit transfer facility,which was projected to be 100% funded from outside sources, 75% of capital improvements were projected to be funded from outside sources in the SRTP. Since this plan was prepared, we now know that we will be funded through UMTA Section 9 allocations due to our recently-designated "urban area" status. This has the major advantage of assuring us of a stable, ongoing revenue source that we do not have to compete for (of which up to 50% may be used for operations). The disadvantage of this change from a discretionary funding status is that funding levels will be static (currently estimated at $400,000 annually) with no significant opportunities for increase over time. ■ Our contribution to the regional system was apportioned at $130,000 in 1990-91, and was projected to remain relatively constant over the five year planning period, growing in proportion to overall TDA revenues. Even with projected decreases in TDA revenues, our contribution level for the regional system for 1991-92 is projected to be $190,000. This is because the regional system's operating contract costs, like ours, have increased substantially. Do these changes warrant a change in our adopted blueprint for the transit? No. The purpose of the SRT? is to provide us with guidance in managing and improving our transit system, and the current SRTP continues to be a valuable policy tool. Further, it would be premature to make revisions to our plans at this time based on the limited information available to use regarding future revenue trends. r `� ofIi117�NIIdIIIIIII��njl��ll City of San Luis OBISPO NiN COUNCIL AGENDA REPORT Even in this difficult financial environment,the budget changes submitted for Council approval for 1992-93 reflect many of the key recommendations of the SRT?. In fact, operating services during 1992-93 will be at the level projected in the SRTP, with operating bus miles at 240,000 for 1992-93 compared with 213,000 in 1990-91. This increase is due to the addition of a fifth bus route. One recommendation of the SRTP not being submitted for financial programming at this time is the purchase of two expansion buses at an estimated cost of$500,000. Given our current financial situation and the uncertainty facing us in the future, Council consideration of this expansion is recommended in the context of the 1993-95 Financial Plan review process. ■ Insurance. During the past several years, the City has been very fortunate in experiencing a relatively stable environment for its liability, workers' compensation, and property insurance needs. This has been due to two key factors: improvements in the overall insurance market combined with aggressive,proactive risk management practices on the part of the City. Information currently available to us indicates that current resources allocated for 1992-93 are adequate to meet our insurance needs. However, our insurance costs will not be known until later in June of 1992, and depending upon premium quotes and loss projection factors that will be finalized at that time, we may need to return to Council with further budget recommendations in this area. ■ Organizational Analysis. As the Council is aware, a comprehensive organizational analysis is currently underway of the Departments of Community Development, Public Works, and Recreation. It is anticipated that results of the analysis will be presented to the Council at their June 2, 1992 meeting. Depending upon the recommendations submitted to the Council at that time, the 1992-93 Budget may need to be further modified to reflect Council action on this item. ■ Tuition Reimbursement Policy and Funding. As a part of the adoption of the City's Affirmative Action Policy, staff was to develop a tuition reimbursement program for Council consideration. The purpose of such a program is to assist employees in acquiring additional education that will enhance their ability to promote and advance in the City organization. After receiving preliminary direction from the Council, staff met with the various employee associations and prepared a draft policy for such a program. In terms of funding, staff was planning to recommend for 1992-93 a first year budget in the range of $5,000 to $7,500. However, given the City's current financial position, it is recommended that consideration of a budget for this program be deferred to the 1993-95 Financial Plan. This deferral should not be viewed as a loss of commitment to this component of the Affirmative Action Policy; rather, staff believes that the City will be in a better position to evaluate our ability to fund the program within the context of the preparation of the next two year funding cycle. Status of Major City Goals On April 15, 1992, the Council received the Quarterly Status Report on Major City Goals for the period ending March 31, 1992. This status report comprehensively sets out the progress to-date in achieving the eleven major goals adopted by Council in the 1991-93 l- S" .1iii l�IUlI city of San WIS OBISPO figagNmaCOUNCIL AGENDA REPORT Financial Plan. Additionally,the report summarizes the status of other high-priority Council objectives for 1991-93. The staff will be available at the meeting to answer any questions that the Council may have on the status of these goals and objectives. Financial Plan Policies As noted in the overview, the only change in Financial Plan Policies recommended at this time concerns the financial administration of the Economic Stability Program. It is recommended that the implementation of this program be governed in accordance with adopted financial management standards and purchasing policies rather than the more restrictive approach currently in place. SUMMARY The purpose of this budget study session is to cover the.topics approved by Council on April 21, 1992 when they approved the budget calendar and review process for 1992-93. Specific recommendations at this time include: ■ Consider departmental budget requests for 1992-93 and provide policy direction for the preparation of the Preliminary 1992-93 Budget. ■ Approve a change in Financial Plan policies authorizing staff to program the use of economic stability funds consistent with the City's purchasing policies and procedures. ■ Authorize the CAO to negotiate for the purchase of three used buses in an amount not to exceed $180,000. Attachments 1. Executive Summary from the 1991-92 Mid-Year Budget Review. 2. Memorandum from the Assistant City Administrative Officer recommending a change in Financial Plan policy regarding Economic Stability Program implementation. 3. Council Agenda Report dated November 5, 1991 regarding Short-Range Transit Plan. Appendix A - Operating and Capital Budget Requests 1. Summary of recommended changes to the 1991-93 Financial Plan for 1992-93. 2. Operating Program Requests 3. Capital Improvement Plan Project Requests 92-938\STUDYS.YP Attachment EXECUTIVE SUMMRY (Excerpt from 2/25/92 Mid-Year Budget Review) The purpose of this mid-year report is to answer three basic questions about the City's financial condition: ■ Where are we today? ■ Where will we be at the end of 1991-93? ■ What is our long-term financial outlook? The following are brief answers to these three questions. How Are We Doing Today? The City's financial condition continues to be strong by state and national standards. This is true even though our most important revenues are coming in at levels significantly below our modest 1991-92 levels. So why are we strong? Because of the things we have already done to help us cope with these tougher times. For example: ■ The City has successfully" abided by its longstanding policy of maintaining reserves which are at least 20% of operating expenditures. These reserves hold the City in good stead during economic downturns. By comparison, the City of Phoenix, recently ranked by City & State Magazine as a top "fiscally strong" community, maintains a reserve of only 4% of expenditures. ■ In terms of staffing levels, this same national survey of "top cities" showed an average of 13 .4 employees per 1, 000 population. In contrast, our City has 9.5 employees per 1,000 (including temporary staffing) . ■ The City uses the private sector to deliver numerous services, including refuse collection, transit, tree trimming, janitorial, and street maintenance services. This means fewer City employees and lower costs. ■ The City has stayed well below standard municipal debt limits, resulting in fewer long-term obligations and a higher credit rating, which was recently upgraded by Moody's Investor Service. ■ In developing the current two year budget, over $1 million was trimmed from submitted departmental "status quo" budgets. A planned Civic Center expansion project was recently deferred indefinitely, returning $440, 000 to the General Fund balance. And a productivity review program has been launched, with three major departments currently being evaluated. Where Will We Be at the End of 1991-93? Below is a brief outline of our projected financial condition for the General Fund. It shows that our most important General Fund revenues will fall significantly short of what were already very modest revenue projections - $3 . 1 million over the next two years. This shortfall is partially offset by unanticipated, one-time sources of $2.4 million. Given these trends, significant expenditures reductions are being recommended at this time in order to ensure our continued financial health today and prudently position us for the future. For the General Fund, these expenditure reductions total $1.7 million over the next two years. Including the recent civic center expansion deferral, over $2 . 1 million will have been cut from the current Financial Plan. There Are Many Uncertainties. The revised 1991-93 financial projections have been based on a number of assumptions using the best information available to us today. But there continue to be a number of uncertainties that cannot be accurately forecasted: ■ The recovery of the State's economy and how it will affect us locally. ■ The State's own budget difficulties and how resolving them will affect local government. . (Remember SB 2557?) ■ Contract negotiations with the General and Mid-Management employees. What About After 1991-93? There are a number of financial challenges facing us in the years ahead. If present revenue trends continue, it will not be possible to fund our current levels of service to the community and achieve our capital facility goals. Major commitments and potential projects ahead of us include building the performing arts center, constructing Fire Station No. 1, implementing downtown plan improvements, acquiring open space, implementing circulation element improvements, acquiring SPRR right-of-way and developing bikeways, and implementing civic center improvements. In Summary. Accomplishing our goals and objectives requires the financial resources to do so. Current trends underscore our need to be concerned about our economic base and what we can do to strengthen it as well as the need for us to continue our commitment to increasing productivity, containing costs, and strengthening our revenue base. 92-93B\EXSUMMY.YP /-lI I ClyoPO Attachment SMlollS OBISy 990 Palm Street/Post Office Box 8100 • San Luis Obispo, CA 93403-8100 April 29, 1992 MEMORANDUM TO: Bill Statler, Finance Director FROM: Ken Hampian, Assistant City Administrative Officer SUBJECT: Amendments to Economic Stability Budget for 1992-93 Fiscal Year When Council approved the Economic Stability Budget as a part of the 1991-93 Financial Plan, all expenditures from that program budget were to require Council approval. This level of restriction, which differs from the approach used relative to the implementation of virtually any other program budget, was established because economic stability goals and projects were largely undefined at that time. Those activities identified in the budget document (page D-93) were basically considered as projects eligible for economic stability funding, though not formally approved. Since that time, the Council has taken formal action on two of the listed activities which I think clearly establishes them as appropriate for Economic Stability funding. These activities are the Broad Street Annexation and the expansion of the Auto Center on Los Osos Valley Road. With regard to the Broad Street Annexation, the Final EIR is near completion and staff is actively negotiating with property owners to support the annexation application. Council has already authorized the use of Economic Stability funds to support a portion of the annexation environmental review costs. The Auto Center expansion concept has been formally incorporated by Council into the Draft Land Use Element. A third activity has also been formally authorized by the Council, although it is not shown as a potentially eligible project in the 1991-93 Financial Plan. This activity is the Dalidio Project, which includes a possible expansion of the Central Coast shopping mall in conjunction with possible open space acquisition. The Council has formally directed staff to pursue the concept, and has authorized staff to receive a proposal for a comprehensive 'land value analysis". A proposal has been submitted, and will be forwarded to the City Council for approval on May 19th. Given the clear establishment of these activities, which are consistent with the intent of the Economic Stability Program, I am requesting that funds be specifically earmarked in the 1992-93 Budget to support them. Funds would be assigned from the existing Economic Stability appropriation; therefore, this would involve no addition apprppriations above what already exists in the 1991-93 Financial Plan. It would, however, eliminate the need for a possible additional step in moving these projects forward -the need to obtain Council approval for all expenditures related to these projects. However, use of these funds would be regulated by the same purchasing procedures which govern the �-l2 expenditures of funds from any other budget program area. Specific budget levels recommended are as follows: Broad Street Annexation: $20,000 (assistance with negotiating pre-annexation agreements and completing annexation package; possible contribution to public improvements) Auto Center Expansion: $20,000 (possible land planning assistance; annexation support for expansion properties; other assistance) Dalidio Property: $25,000 (negotiation support) The above budgeted amounts would leave $90,000 available in undesignated Economic Stability funds. The amounts actually needed may be more or less than the amounts recommended at this time, depending upon the eventual scope of City involvement in these activities. Again, expenditures, including consultant assistance, would be subject to the same purchasing procedure thresholds and requirements which control the implementation of other budget expenditures. C. Dunn Hossli KH:bw STATLER4.mm AttedhmenL3. 111111111111@111a 11u^� I�IIIII��I Ilul�l _ MEETING GATE: u�ll l a o san tuts OBIspo _ 11-5-91 COUNCIL AGENDA REPORT ITEM NUMBER: FROM: Ken Hampian, Assistant City Administrative Officer,�_. '— Prepared by: • Harry Watson, Transit Manager SUBJECT: Five Year Short Range Transit Pla/n� (SRTP) CAO RECOMMENDATIONS: 1. Approve the third and final component of the Short Range Transit Plan, 1991/92 - 1995/96 Operating and Capital Program, including modifications recommended by staff in Attachment 1. 2 . Direct staff to return at a later time with necessary modifications to the transit program budget. REPORT-IN-BRIEF: This entire staff report- is in essence the "Report-In-Brief" for the 90+ page Short Range Transit Plan. DISCUSSION: Background The City Council authorized a grant application for the completion of a Short Range Transit Plan (SRTP) during the Fiscal Year 1990- 91. Council directed that the SRTP include three separate sections: a trolley evaluation; a multi-modal transfer center evaluation; and a five year operating and capital plan. A Federal Urban Mass Transportation Administration (UMTA) grant was obtained and the consulting firm of Nelson/Nygaard was retained to complete the three phases of the SRTP. On March 19 , 1991 the City Council reviewed and approved the trolley evaluation component of the plan. On September 3, 1991 Council reviewed alternatives for a multi-modal transfer center and authorized a grant application for a feasibility study on the block bordered by Santa Rosa, Monterey Street, Toro and South Higuera. This report focuses on the third phase of the SRTP, the 1991/92 - 1995/96 five year operating and capital plan (for simplicity, this third component will be referred to as the "SRTP" throughout this report) . Development and implementation of the SRTP is a Major City Goal included in the 1991-93 Financial Plan. SRTP Purpose and Scope The purpose of the SRTP is to provide general direction for .public transit in the City of San Luis Obispo for the next five years. The Plan is intended to be a "road map" which moves the system toward certain goals, but allows for flexibility in its actual implementation. While the fundamental goals outlined in the plan ��+►��tililAilp� p city of San : _ IS OBISPO Wis COUNCIL AGENDA REPORT Page 2 should be adhered to, flexibility on the more detailed operating and "timing" issues is needed, given the possibility of changes and constraints in the funding environment, priorities, and operating demands. Summary of Current SLO Transit Operation and Performance SLO Transit' s productivity is among the highest in the State for small transit systems. Citywide, productivity is at 55 boardings per hour, much higher than the standard of 30 boardings per hour. Conversely, cost per unit of service is quite low, due to a combination of the high ridership and good management (e.g. , $0. 65 per passenger versus $2 . 69 for the regional system) . over 600, 000 riders are now using SLO Transit annually. This is quite a remarkable number, given that SLO Transit currently operates only four fixed routes using four "all-day" buses, periodically two "tandem" buses, and the trolley. In essence, SLO Transit is transitioning from a "small town" system to a much more sophisticated and complex "urban" system. Routes need adjustment and service must be expanded as a part of this transition. The consultant calls the current route structure "a combination of history and quick fixes" which has resulted in route patterns which resemble "spaghetti" . This can be attributed to the many incremental decisions made over the years as the system has grown. The SRTP provides an opportunity for more comprehensive and rational adjustments to SLO Transit. Aspects of SLO Transit service requiring significant expansion include developing "two way service" and reducing "headways" . Currently, most of the City' s bus routes provide only one way service, which often causes passengers to take circuitous and indirect transit routes in order to reach destinations faster. In addition, individual route service is now provided only on an hourly headway basis. This problem is most immediately evident on routes entering or exiting . the Cal Poly campus. Cal Poly ridership composes 71% of total system ridership, and is a major reason for the system's success. It is also the reason the system is reaching the "break point" at certain times. The buses, which seat 35, commonly arrive and depart the Cal Poly campus with 65 people on board and frequently pass up passengers due to lack of room. Despite this level of demand, which remains constant from 7 : 15 a.m. until 5 : 30 p.m. , the campus continues to be served with hourly routes. The recommendations outlined in the SRTP are intended to not only increase service levels to accommodate existing peak ridership as outlined' above, but to attract new users to the system. In addition to transit dependent persons, SLO Transit wants to attract �'��III11,1111 city of San tins oBIspo COUNCIL AGENDA REPORT Page 3 "choice" riders - persons who choose to "use transit even though they have alternative means of transportation. In particular, the goal is . to encourage people to use the bus as opposed to the automobile. The City Council has expressed its desire to increase the use of its transit system in order to reduce air pollution and traffic congestion. To do so, it is necessary to plan for a system which is convenient and reliable, and which can be aggressively promoted as such. While the "optimum" City system will not be achieved through the 1991/92 - 1995/96 SRTP, the recommendations for improvement and expansion.will represent a major "step forward" for SLO Transit and residents of San Luis Obispo. SRTP Consultant and Staff Recommendations The recommendations of the consultant for the improvement and expansion of SLO Transit is outlined on pages 3 - 5 of the SRTP. Outlined in Attachment 1 is a staff response to each of these recommendations. Council will note that while staff concurs with nearly all recommendations, there is disagreement with some - particularly, the elimination of certain existing route "kinks" recommended by the consultant to improve on-time performance. Council should focus its review heavily on Attachment 1, since the key SRTP recommendations are outlined and discussed in this document. These recommendations will be the focus of the public hearing set for November 5, 1991. . FISCAL IMPACT: This section discusses the overall transit funding environment, as well as the specific financial program outlined in the SRTP. Overall Transit Funding Environment It is extremely difficult to predict what the funding environment will be for a transit program over the next several years. Operating and capital costs continue to increase dramatically as a result of several factors, including fuel costs, handicapped accessibility requirements and clean air requirements. In terms of revenues, transit funding is highly dependent upon Federal budget decisions and the overall economy (TDA funds are based on a percentage of the sales tax) . Transit revenues are also dependent upon local fare box policies, the percent of TDA funds allocated to transit, the amount of TDA allocated to regional transit, and special local revenue sources (e.g. , the contract with Cal Poly) . �i�- J city Of San 'Is OBISPO COUNCIL. ADEN®A REART Page 4 I Major factors that could affect SRTP expenditure and revenue projections in the short term are: ' 1. The cost of operations for the Regional Transit System and the resulting impact on the City of San Luis Obispo ' s contribution. Last year the City' s contribution was $135, 080 . This year' s contribution is unknown at this time, because the County is currently operating the system and is in the process of soliciting bids for vendor operation. When the Regional System's permanent operator is selected, a Fiscal Year 1991- 92 budget will be prepared and the City will be advised as to our required contribution. The initial Regional System staff j proposal had the City' s contribution at $280, 000, which is a 107% increase. This proposal, however, was rejected by the Regional Authority Board. All of the City's operating funds come from two sources: (1) Transportation Development Act (TDA) funds, which is one quarter cent of the sales tax; and (2) a combination farebox and Cal Poly contract. The Regional System contribution comes off the top of our TDA funds before the City receives them, so any substantial increase in our Regional contribution requirement could result in City Transit service reductions. 2 . While staff has negotiated significant increases over the last j two years in the Cal Poly contract, State financial problems create limits on what can be expected from this source. 3.. There may be a substantial contract increase to provide City Transit service. The current contract rate of $1. 90 per mile terminates on June 30, 1992 . The consultant has projected that the new rate increase will be in the 3-5% range. Rates in California are commonly between $2 . 50 to $3 . 50 per mile for fixed route service. Although it is difficult to compare rates due to the many differences between operations, if in this range, it will mean a 32% to 84% increase over the current rate. The current contract dost is $480, 000. A 32% to 84% increase would result in a status quo system costing $153 , 000 to $403 , 200 more per year. 4 . On the "up side" , designation of the City as an "urban" area could mean up to an additional $300, 000 annually for capital and operating purposes. I i SRTP Financial Program Chapter 8 details the specific financial plan for implementation of the SRTP through FY 1995/96 . ►uil�lllll��l��ll city of san Luis oBispo COUNCIL AGENDA REPORT Page 5 To summarize, to implement the SRTP recommendations, operating expenditures will need to increase by an estimated 60% from the current fiscal year to FY 1995-96 (from $677 , 500 to $1, 081, 700 annually) . The total five year capital investment needed is estimated to be over $5. 3 million. Capital funds will be used primarily to acquire additional buses and related equipment, and to develop a new transit transfer center. The total operating and capital investment for the five year period is estimated at nearly $10 million. These cost projections are based on . somewhat optimistic assumptions, as outlined on the "SLO Transit Five Year Financial Plan" summary on the last page of the SRTP (p. 8 - 15) . These assumptions include: that grants will cover 100% of the transfer center and 75% of all other capital costs; that per mile operating cost will increase by only $.08 per mile annually, to $2 .24 in 1995/96; - that the regional system will not severely undermine net available TDA revenues to the City system (which will be almost entirely allocated to transit) ; and that there will be no maior expansion in transit staffing levels. What this financial picture demonstrates is both the uncertainty . of the transit funding environment and the high cost of implementing service enhancement and expansions. It points out that more dramatic changes to the system, while perhaps desireable, would impose substantial costs on the system which would be very difficult to accommodate financially, even with the availability I of Section 9 funds through the urban designation. Such changes, which have been raised through the staff and MTC review process, and periodically by Councilmembers, include: systemwide 15 minute headways; no fares; I abandoning large buses and replacing them with several smaller buses (increases capital costs (e.g. more buses, larger transfer center] and substantially increases operating costs) . 1111111111 11111 city f ' l c� o san ' .:.�s osIspo COUNCIL AGENDA REPORT Page 6 Although .not the "ultimate" system, staff believes that the recommended SRTP represents a substantial step forward for SLO Transit. . It will serve as a "bridge" from SLO Transit' s "small system" roots to a much more convenient and sophisticated system which serves not only transit dependent persons, but those who have the alternative of -an automobile. In terms of budget adjustments, staff will return at a later time to appropriate operating funds needed to implement the "Scenario All , the five bus expansion (capital funds are already available) . Funds for the enhanced marketing program will be requested this fiscal year, consistent with the recommendation outlined in Attachment 1. Funds now available in the TDA Fund Balance should be retained to support these and subsequent phases of SRTP implementation. CONCURRENCES: An earlier draft of the SRTP was presented by the consultant "internally" during a workshop which included staff from the Finance Department, Administration (including Transit) , Community Development, and the Public Works Department. This draft reflects changes recommended by staff during this workshop. The Finance Director has also been heavily involved in the revenue and expenditure projections provided on Figure 8-4B, p. 8 - 15. The SRTP has also been reviewed by the Mass Transportation Committee, San Luis Obispo Area Coordinating Council staff, and Regional Transit Authority staff. All three of these groups support the adoption .of the SRTP. The Mass Transportation Committee particularly agrees with the consultant assessment that.: SLO Transit has been developing deficiencies with on-time performance; SLO Transit has a lack of capacity throughout the day on certain routes; SLO Transit should set a direction for expansion and marketing as presented by the consultant. Actual comments from each group are available in the Council reading file for Council's review. This item has been scheduled as a public hearing on November 5 to provide residents with an enhanced opportunity to comment directly on the plan. ALTERNATIVES: 1. Approve modifications to the staff recommendations outlined in Attachment 1. / -1 ��►�fIIIIIflII�n ��`► city of San Luis 081spo AN COUNCIL AGENDA REPORT Page 7 2. Do not approve the .SRTP. This would result in a status quo transit system. This alternative is not recommended because: (1) the stated need for additional services as recommended in the SRTP, and (2) the direction given in the County's. Clean Air Plan. 3 . Receive the SRTP but delay its implementation to a future date. This alternative is not recommended. There are sufficient funds to begin implementation of the SRTP at this time, and the City has already obtained a Federal grant to purchase one replacement bus and one expansion bus, so the Scenario A expansion can move forward perhaps before the end of the fiscal year. ATTACHMENTS: 1. Response to Consultant Recommendations 2. Short Range Transit Plan (previously distributed) Planrpt.kh