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HomeMy WebLinkAbout01/10/1995, 1 - BUDGET WORKSHOPMEETING DATE: �u�HO I�IIIII�II�In�uil �l city of San LaiS OBISPO -/ o -qs. j COUNCIL AGENDA REPORT ITEM NUMBER: FROM: John Dunn, City Administrative Office .�0 A� N Prepared By: Bill Statler, Director of Finance SUBJECT: BUDGET WORKSHOP CAO RECOMMENDATION ■ Consider the City's general economic outlook for 1995 -97 ■ Review and consider major work programs that will affect the 1995 -97 Financial Plan process. ■ Approve changes in Financial Plan policies for 1995 -97. ■ Approve goal - setting process for 1995 -97. ■ Review and consider the purpose and organization of the City's Financial Plan document. OVERVIEW The purpose of this workshop is to review background materials in preparation for the Council goal - setting session to be held on January 21, 1995. As previously discussed with the Council, this goal - setting session is one of the most important steps in the Financial Plan process. By identifying the most important things for us to accomplish for our community over the next two years, Council goal - setting enables us to achieve the fundamental purpose of the Financial Plan process: to link what we want to accomplish for the community with the resources require to do so. For it to meaningful shape the Financial Plan process, it is also important that it be one the very first steps in the process. In setting the stage for Council goal- setting and the balance of the Financial Plan process that will follow it, this report discusses the following topics: Key Issues Before Us As We Begin Preparing the 1995 -97 Financial Plan ■ General economic outlook ■ Major work program efforts recently completed or currently underway that will affect the 1995 -97 Financial Plan ■ Recommended changes to selected Financial Plan policies ■ Process for Council goal- setting Background Materials on the Financial Plan Process ■ Purpose of the Financial Plan ■ Preparation and review process ■ Financial Plan organization and appendices DISCUSSION General Economic Outlook Although a detailed five year financial forecast is currently being prepared and will be available for Council review and consideration prior to the goal - setting workshop scheduled for January 21, the /.mp I����i 1ll1�1 1° ��lU city of San t. � OBISpo COUNCIL AGENDA REPORT following summarizes what we believe are the general factors that will affect our overall fiscal outlook for the next two years. Another tough two years The City will continue to be faced with a tough fiscal outlook in 1995 -97. Two major threats confront us as we put together our next two -year financial plan: the performance of our local economy and State budget actions. Per of the local economy Although it appears that the worst of the revenue declines that we consistently experienced from 1990 through 1994 are behind us, there are no indications of a strong recovery on the horizon. This outlook is reinforced by the recent economic projections for San Luis Obispo County prepared by the UCSB Forecasting Project. In addition to the affects of the lingering recession and our slow recovery from it, we will also be faced with increased regional competition from the North and South County areas. This means that even if California and the Central Coast area begin a noticeable economic recovery some time during the next two years, there is no guarantee in the context of this more competitive environment that this will translate into stronger General Fund revenues for our City. And ultimately, the City's fiscal health can not be stronger that the underlying health of our own local economy. State budget impacts The State of California continues to experience significant and real budget problems, which will affect us in at least two key ways as the State addresses its fiscal problems: ■ Direct budget cuts to cities. Over the past four years, State cuts to cities have resulted in annual revenue losses to the City's General Fund of $1.5 million; these reductions will impact us each and every future year.. Given the "conventional wisdom" in the Legislature - that cities have barely been touched in the past relative to counties and school districts - the State budget situation is a continuing threat to our fiscal health for 1995 -97. ■ Impacts on the local economy. If the State makes further budget cuts to its own programs, this could significantly affect major local employers such as Cal Poly, Atascadero State Hospital, Regional Water Quality Board, Caltrans, the Men's Colony and other agencies. Major reductions in staffing by the State at these regional facilities would have a significant, negative impact on our local economic prospects. Dealing with the uncertainty of State budget actions Our recommended approach is to prepare the 1995 -97 Financial Plan based on our present and projected financial picture exclusive of any potential State cuts. Under this strategy, we will not assume any further State cuts to cities, simply because - at this point and probably throughout the Spring - we will not have a sufficient basis for any such assumptions, and we want to avoid am ��� !► ►��III1111�P° �U city of San 'S OBISpo COUNCIL AGENDA REPORT unwarranted speculation (and the needless anxiety that will accompany it) about what the State may or may not do. In assuming no further State cuts to cities in building the budget, it will be our goal to ensure that the Financial Plan retains the City's fiscal strength in the General Fund - as measured by its ending unappropriated fund balance •- to the maximum extent possible so that we can respond to any State cuts in a systematic, responsible way - once they are known definitively - within 3 to 6 months afterwards. At a minimum, this means achieving our Financial Plan policy of maintaining General Fund balances that are at least 20% of operating expenditures (and higher if possible). If more State take -aways do occur, we will not go into the following 3 to 6 month period empty - handed in identifying budget balancing solutions. As part of the 1993 -95 Financial Plan, extensive analysis was performed on possible service reductions, labor cost savings, and revenue options. Although these are not final products, and additional work will undoubtedly need to be done once we know the magnitude of the problem, they lay an important foundation if needed. Although there are obvious down -sides to not assuming further State cuts as we prepare the 1995 -97 Financial Plan, benefits to this approach include: ■ Avoiding needless "wheel- spinning" and anxiety in attempting to craft answers to an unknown, undefined problem. ■ Assuring that our response is proportional to the problem. ■ Recognizing that the process and specific strategy that we will use depends on the size of the problem. It is not reasonable to assume that the budget balancing approach we should use - and the options that we will seriously consider - will be the same regardless of whether we are facing a $15,000 problem or a $1.5 million one. The reality is that our level of analysis - and its impacts on the organization - will be significantly different depending on the scope of the problem ... and we may not know this until after budget adoption. Within the context of this overall approach, the eight point budget balancing strategy previously adopted by the Council as part of 1993 -95 Financial Plan process the remains our best basis for contingency planning in the event of further State cuts in 1995 -97. Once we know the scope of the problem facing us in a defined way - just how much, if at all, the State is going to take away from us and when - then some combination of the following options will continue to be available to us: ■ Reduce services and related regular staffing levels ■ Reduce labor costs ■ Implement other potential cost saving. measures ■ Increase revenues ■ Use fund balance ■ Reduce capital improvements ■ Reduce equipment replacements ■ Work with our State legislators to mitigate the impact of State cuts ����� ►�HI�IIIIIIIIIP °1��llll city Of San t 3 OBISPO COUNCIL AGENDA REPORT In summary, we believe the best strategy available to us in dealing with the uncertainty of State budget actions is to not speculate on what the State might do to us, but to immediately upon learning what their budget actions are and their exact impact on cities, prepare a plan as necessary that deals with the known financial situation, with a balanced City budget as our goal. Major Work Programs Affecting the 1995 -97 Financial Plan As discussed in greater detail below, the Financial Plan's primary purpose is to program the implementation of plans and policy goals already adopted by the Council. A summary of the key policies and plans likely to shape the 1995 -97 Financial Plan is provided on pages I -1 through I-4 of the Financial Plan (Exhibit A); copies of each of these documents in their entirety is available in the Council Office. At this time, however, there are four major work programs underway or recently completed that are especially noteworthy as we begin preparing the 1995 -97 Financial Plan: ■ Recently adopted General Plan elements (land use, circulation, housing and open space) ■ Cost of services study ■ MIS master plan ■ Parks and recreation element of the General Plan The following is an overview of each of these projects. General plat elements The Council recently adopted major revisions to the land use, circulation, housing and open space elements of the General Plan. Contained in each of these elements are a number of programs designed to achieve plan policies and goals. Clearly, starting to implement these programs will have a significant effect on resources, and thus on the 1995 -97 Financial Plan. Accordingly, each of the departments primarily responsible for implementing General Plan programs (Community Development for the land use and housing elements; Public Works for the circulation element; and Parks & Recreation for the open space element) have been directed to prepare candidate work programs for the Council's consideration. Each of these work programs will include the following components: ■ Summary listing of each program contained in the element ■ Initial prioritization of the program on a scale of 1 to 3 (with 1 being the highest priority) ■ Summary of those programs rated as highest priority with an evaluation of the staff resources in "person years" required to accomplish the program over the next two years. Community Development has completed their tentative work program for General Plan implementation for 1995 -97 and it is provided in Exhibit B (similar work programs are currently under preparation in Public Works and Parks & Recreation and will be provided to the Council prior to the goal - setting workshop on January 21). �►� ►►�i�IVIIIIIIIIIP °���lll city of San' s OB)Spo COUNCIL AGENDA REPORT As reflected in this summary, the resources necessary to complete just the "priority 1" programs during 1995 =97 are greater than the current staff resources available. Although no final decisions are required by the Council at this time, any conceptual direction as to how the Council would like to proceed would be helpful to staff as we prepare the Financial Plan, and will be helpful to the Council as you consider priorities for the next two years as part of the goal - setting process. Cost of services study As authorized by the Council on September 6, 1994, the City is currently in the process of completing a comprehensive cost of services study. This study is being prepared with the assistance of the David M. Griffin & Associates (DMG) - a nationally recognized cost accounting firm. There are four major policy questions that this study is designed to answer: ■ what is the total cost of providing various City services? ■ are these fees reasonable given the City's service standards? ■ what are current cost recovery levels? ■ how much do fees and charges have to be changed based on this analysis in order to achieve the City's adopted user fee cost recovery goals (pages B4 through B -8 of the 1993 -95 Financial Plan)? Specific tasks to be performed by DMG as part of this project include: ■ review existing policies, plans and cost of service information, and offer comments and recommendations for improvement as appropriate. ■ identify the total cost of providing various City services (primarily in the General Fund) at the lowest reasonable activity level. ■ compare these costs with existing cost recovery levels; this should include service areas where the City is currently charging fees as well as those where perhaps we should be given our cost recovery policies and the practices of other cities. ■ compare existing and propose fees in key benchmark areas with those charged by comparable cities outside of the County as well as other agencies in the County. ■ recommend appropriate fees based .on this analysis in order to achieve adopted cost recovery goals. ■ form an opinion as to the reasonableness of proposed City fees in light of City costs, service levels and standards, policies and practices of other agencies in California. ■ develop and present findings in a manner that ensures understanding, confidence and credibility by operating staff, interested community members and policy makers. ■ report on other matters that come to their attention in the course of their evaluation that in their professional opinion should be considered by the City. /,wa '���n�i�H►�►IIII�IIP° II�IU city of San t. OBI Spo COUNCIL AGENDA REPORT It is expected that the results of the study will be presented to the Council in March of 1995. Depending on the findings of the study relative to any significant differences between current and adopted cost recovery levels, this study could play a major role in the Financial Plan process. MIS master plan As authorized by the Council on August 16, 1994, the City is currently preparing a comprehensive management information systems (MIS) master plan that will guide the City's acquisition and use of information technology over the next four to five years. This plan is being prepared with the assistance of KPMG Peat Marwick, an internationally recognized consulting firm. Encompassing the City's information and communication systems, key plan objectives include: ■ assessing current systems and resources in their ability to meet the City's current and future information technology needs in a wide variety of areas, including general office automation, geographic information systems, networking, community access, financial management systems, public safety applications, and radio, microwave and telecommunications. ■ analyzing the cost and benefits of information technology alternatives that will best meet the City's organization -wide goals and objectives. ■ evaluating the organization, training and support needed to successfully implement and maintain existing and new systems. ■ developing a phased implementation schedule to meet the City's objectives based on agreed - upon priorities. ■ preparing a disaster prevention and recovery plan for the City's information technology resources that identifies likely disasters, evaluates the cost and benefits of mitigating them, proposes improvements as appropriate, and recommends strategies for recovery where prevention was not warranted. It is expected that the MIS master plan will be presented to the Council in March of 1995, and that it will become the basis for programming MIS improvements in the 1995 -97 Financial Plan. Parks and recreation element Preparation of a major revision to the parks and recreation element of the General Plan began in April of 1994. When completed, this element will serve as the City's blueprint for recreational programming and park improvements through the year 2000. Following several public meetings in May and June of 1994, a draft of this element was presented to the Parks and Recreation Commission in November of 1994, and was approved by them in December. It is currently scheduled to be reviewed by the Planning Commission on January 25, 1995. It is. expected that this document will be presented for Council approval in the Spring of 1995, and that it will become the basis for programming recreation and park improvements in the 1995 -97 Financial Plan. —� ��� ��Hllull1111111p° ����ll city of San ' 's OBI spo COUNCIL AGENDA REPORT Recommended Financial Plan Policy Changes As discussed in greater detail below, the City relies upon clearly stated budget policies in managing its fiscal affairs. In preparing the Financial Plan, several revisions to our existing budget policies are recommended as we begin preparing the 1995 -97 Financial Plan: Equipment replacement for the enterprise funds ■ Background. Our Financial Plan policies establish an equipment replacement fund to provide for the timely replacement of vehicles and equipment (page 1343). Currently, this fund is used to account for equipment replacements for the General Fund as well as our enterprise funds (water, sewer, parking, golf and Whale Rock Commission) with the exception of the Transit Fund (federal and state guidelines preclude this approach for capital replacements funded through their grant programs). In order to ensure that all financial operations of each of the enterprise funds are maintained separately in their entirety from other operations, our auditors have recommended that the enterprise funds no longer participate in the equipment replacement fund, but rather, that resources for the replacement of equipment be developed and maintained separately in each respective fund. ■ Recommended policy. Staff concurs with the auditors recommendation that the equipment replacement fund no longer be used for the enterprise funds; we recommend continuing its use in setting aside resources for the replacement General Fund vehicles and equipment. For the enterprise funds, this will mean carefully planning for equipment replacements as part of the four year time -fiame currently covered in our annual rate evaluations. "Fund balance" for the enterprise funds ■ Background. An important component of the City's Financial Plan is projecting our ending financial position. For the governmental funds (general fund, special revenue funds, capital project funds, and debt service funds), financial position under generally accepted accounting principles is defined as "fund balance ", which represents the cumulative affect of revenues over expenditures since the City began. On the balance sheet side, it represents the difference between asset and liabilities. Under generally accepted accounting principles, enterprise. funds use a different basis of accounting than governmental funds - they are accounted for on the same basis as private sector activities. As such, there is no similar concept as "fund balance" - there is only fund equity, which is determined based on both current and long -term assets and liabilities, with depreciation recorded as an expense. While this is useful in analyzing the overall net worth of an enterprise fund, it is not useful in preparing budgets for the delivery of ongoing services and making facility improvements - the equity in a $30 million water reclamation plant (except perhaps as collateral for a loan) does not help make next week's payroll. /- 7 ��������NUIIIIIII�I ► °�Idlll city of san t, osispo COUNCIL AGENDA REPORT The financial concept in private sector accounting most similar to fund balance is working capital, which is the difference (hopefully positive) between current assets and current liabilities. Accordingly, our long -time practice in preparing budgets and rate reviews has been to use working capital as the primary measure of financial condition for the enterprise funds. While this is generally an "apples to apples" comparison, there is one area of significant difference: the treatment of the current portion of principal and interest payable. For the governmental funds, debt service expenditures are recognized as they are paid; in the enterprise funds, it is recognized based on the current liability due - the amounts immediately coming due in the next fiscal year. On an annual basis, this distinction makes very little difference; however, it can have a significant effect in comparing financial position: relatively speaking, for the same debt obligation, an enterprise fund will show lower working capital balances than it would have if it was accounted for as a governmental fund type. This is because the current portion of principal and interest (next fiscal year's payment) is being accrued as a current liability, thereby reducing working capital. In essence, this results in a higher, more conservative financial position standard for the enterprise funds than for the General Fund when applying the the City's policy that these fiords maintain fund balances/working capital balances that are at least 20% of operating expenditures. ■ Policy recommendation. Even though there are some conceptual difficulties with this approach, we continue to believe that working capital is the best definition available to us in defining financial position for the enterprise funds and in establishing a similar basis for comparison with the governmental funds. Accordingly, no changes in our current practices are recommended; however, it is recommended that the Financial Plan formally recognize the use of working capital for the enterprise funds in defining financial position. Debt management and investments ■ Background. Interest earned on debt issued by local governments - if it's for a "public purpose" - is generally tax exempt at both the federal and state level. This results in lower borrowing costs for public agencies than would otherwise be the case. Traditionally, this tax preference exists in recognition of "State sovereignty" from the federal government. As a practical matter, it only continues in recognition of the public benefits of infrastructure improvements. In recent years, the federal government has passed a number of regulations limiting the ability of cities to use tax exempt financing in response to a number of abuses - both real and perceived - in the use of tax exempt financing. One of the key concerns is the use of tax exempt financing solely for "arbitrage" purposes - issuing debt in order to invest the proceeds in .higher yielding investments. This results in higher net interest earnings with minimal risk (assuming the issuance does not lose its tax exempt status along the way). One form of debt financing that is especially subject to arbitrage is the issuance of tax or revenue anticipation notes (TRANS). These are legitimately issued by many public agencies in order to cover cash flow problems during the year; typically borrowed on July 1, funds must be repaid by June 30 of the same fiscal year. Back when property taxes were the primary revenue source to cities, this was an especially important source of cash flow financing for many cities as property taxes were not received until mid- December, after almost six months /SW v �►��►►►�►►��111111UIU° ��DIII city of San t S OBISPO COUNCIL AGENDA REPORT of operations. Under existing guidelines, it is possible for cities to legally issue TRANS at some level for the sole purpose of investing some or all of the proceeds at higher yields . than the interest cost, rather than for the intended purpose of these types of financings which is to meet cash flow needs. Many cities annually issue TRANS for investment purposes as a routine business practice. ■ Policy recommendation. It has been the City's continuing practice never to issue TRANS solely for investment purposes, and we have no plans to do so in the future. Nonetheless, we recommend formally amending our debt management and investment policies to clearly state that we will not issue TRANS for investment purposes. While this is not intended to be a prohibition on issuing TRANS - there is an important role for them under appropriate circumstances - it does mean that it is unlikely that we would have a need to do so as long as we continue our current policy of maintaining fund balances/working capital balances that are at least 20% of operating expenditures in the General and enterprise funds. De, f=nition of capital outlay ■ Background. The City's current definition of capital outlay has remained the same since 1983: minor capital outlays are items with life in excess of one year and a value ranging from $3,000 to $10,000, and are accounted for in the operating budget; capital improvements or acquisitions with a cost in excess of $10,000 are accounted for in the capital improvement plan. ■ Policy recommendation. In order to account for the passage of time (12 years) since this definition was last revised as well as to achieve consistency with the updated purchasing policies adopted by the Council in October of 1993, it is recommended that the definition of capital outlay be revised as follows: Minor capital $5,000 to $15,000 Capital improvement plan projects more than $15,000 Council Goal- Setting As noted earlier, Council goal - setting is the first and most important step in preparing the 1995 -97 Financial Plan. The recommended format and content of the goal - setting session scheduled for January 21 are detailed in Exhibit C. The following is a brief overview of the proposed process: ■ Discuss shared visions and hopes for the San Luis Obispo community ■ Review the status of existing goals ■ Consider proposed work programs and goals for 1995 -97 presented by Council advisory bodies ■ Consider candidate goals presented by staff and others from the community ■ Review fiscal outlook for 1995 -97 and consider other trends that will affect the community over the next two years ■ Present individual Council member goals ■ Prioritize and set goals �� 1 ��� ►���►►►��►IIfpIIP° llBlll aty of San t. 3 OBISp0 COUNCIL AGENDA REPORT As agreed upon by the Council, we will be using a third -party facilitator to assist us in this process. Don Maruska is a Central Coast resident who specializes in assisting private and public sector organizations group decision - making. Mr. Maruska holds MBA and JD degrees from Stanford University, and he has been the CEO of three Silicon Valley start-up companies as well as an advisor to legislators and multi- national corporations. Background Materials - Purpose, Preparation and Organization of the Financial Plan Purpose of the Financial Plan Although the City's Financial Plan document itself may introduce new plans or policy goals, its primary purpose is to serve as the Council's key tool for programming the implementation of existing plans and policies by allocating the resources necessary to do so. Through a variety of policy documents and plans - such as the General Plan, Urban Water Management Plan, Parking Management Plan, Pavement Management Plan, Short-Range Transit Plan, Facilities Master Plan and Downtown Physical Concept Plan - the Council has set forth a number of long -term goals for the City to accomplish. However, with limited resources, some process must be developed for evaluating priorities and determining which of these goals will be accomplished over a given period of time. This is the fundamental purpose of the City's Financial Plan: to link what we want to accomplish in the near term with the resources required to do so. The Financial Plan process we have used in the past does this by: ■ identifying the most important things for us to accomplish for our community ■ establishing a reasonable time -frame for achieving them ■ allocating the resources necessary to do so In achieving this purpose, the City's Financial Plan has the following distinctive features: ■ Policy- driven. The City's budget is developed under clearly articulated policies that form the fundamental basis and foundation for financial decision - making. These are set forth in the Financial Plan document itself (Section B) and cover a wide range of financial management topics, including financial plan organization, general revenue management, user fee cost recovery goals, enterprise fund fees and rates, revenue distribution, investments, capital financing and debt management, appropriation limitation, fiord balance designations and reserves, capital improvement plan (CIP) management, human resources management, productivity, and contracting for services. ■ Goal- oriented. The Financial Plan sets forth the key goals and objectives to be accomplished during its term. For 1993 -95, these included 16 major goals that the Council unanimously agreed were the most important things for the City to accomplish over its two year time -frame. Additionally, throughout the 70 operating programs under which the City's services are �-rJ � «�H�i►►�Illll�ll�l�ii��lll City O San ' 'S OBISPO COUNCIL AGENDA REPORT organized and delivered, over 200 program objectives were identified. Again, the focus of the City's budget document is not just on how much services cost and how they are financed, but equally importantly, what is accomplished with these resources. As discussed later in this report, Council goal- setting at the beginning of the budget process is an important step in accomplishing this policy outcome. ■ Multi year. One of the most distinguishing features of the City's budget process is the use of a two -year operating budget and four year capital improvement plan. This comes directly from the goal of "establishing reasonable time- frames" for accomplishing City objectives. Few goals fit neatly into one year increments. The two year process allows for setting goals - and allocating the resources necessary to accomplish them - over more than a one year - period. It also helps assure our long -tens fiscal health by focussing not just on our ability to support and sustain objectives and service levels for one year, but on an ongoing basis. Under this multi -year approach, appropriations continue to be made annually; however, the Financial Plan is the foundation for the preparing the budget for the second year. Additionally, unexpended balances from the first year may . be carried -over for specific purposes into the second year with the approval of the CAO. In summary, we believe that the benefits identified when the City's first two -year plan was prepared twelve years ago for 1983 -85 continue to be realized: - Reinforcing the importance of long -range planning in managing the City's fiscal affairs - Concentrating on developing and budgeting for the accomplishment of significant objectives - Establishing realistic time -frames for accomplishing objectives - Creating a pro - active budget that provides for orderly, stable and structured operations and that assures the City's long -term fiscal health - Promoting more orderly spending patterns - Reducing the amount of time and resources allocated to preparing annual budgets Financial Plan Preparation and Review Process Under the City Charter, the CAO is responsible for preparing the budget and submitting it to the Council for approval. Although the specific steps will vary form year to year, the following is an overview of the of the general process used by the City under the two -year budget approach: ■ K st year. The Financial Plan process begins with a Council goal- setting session to determine major objectives to be accomplished over the next two years. As part of this process, Council advisory bodies formally provide their recommendations to the Council. The results of Council goals- setting are incorporated in the budget instructions issued to the operating departments, who are responsible for submitting initial budget proposals. After these proposals are comprehensively reviewed and a detailed financial forecast is prepared, the CAO issues the Preliminary Financial Plan for public comment and Council review. A series of study sessions and public hearings are then held leading to Council adoption of the Financial Plan by July 1. /- /I city of San t, � OBI SPO COUNCIL AGENDA REPORT ■ Second year. Before the beginning of the second year of the two -year cycle, the Council reviews progress during the first year, considers current financial trends, makes adjustments to the Financial Plan as necessary, and approves appropriations for the second fiscal year. ■ Mid-year reviews. The Council formally reviews the City's financial condition and amends appropriations, if necessary, six months after the beginning of each fiscal year. ■ Status reports. On -line access to the "up -to- date" financial information is provided to staff throughout the organization. Additionally, comprehensive financial reports are issued monthly to monitor the City's fiscal condition; more formal reports are issued to the Council on a quarterly basis. The status of major program objectives - including CIP projects - is also formally reported to the Council quarterly. Budget Building Process The principles and values upon which the CAO will base the budget building process are set forth in Exhibit B. As reflected in this memorandum from the CAO to Department Heads, roles and responsibilities in assisting the CAO in the budget building and internal review process include: ■ Department heads. The primary responsibility for producing a fiscally sound budget rests with Department Heads and their staff in preparing initial budget submittals. ■ Budget review team. Consisting of the Director of Finance, Assistant CAO, and Personnel Director who are assisted by Budget Analysts assigned to specific departments (Accounting Manager, Revenue Manager and Assistant to the CAO), the Budget Review Team is responsible for ensuring that budget submissions adhere to consistent and uniform standards, and for providing the CAO with budget advice and recommendations. ■ Special purpose review teams. As appropriate, budget proposals will be reviewed by the MIS Steering Committee, Fleet Management Committee, and CIP Review Committee. Financial Plan Organization In achieving its purpose of identifying the most important things for the City to accomplish over the next two years and allocating the resources necessary to do so, the Financial Plan serves four roles: ■ Policy document. Sets forth goals and objectives to be accomplished and the fundamental fiscal principles upon which the budget is prepared. ■ Fiscal plan. Identifies and appropriates the resources necessary to accomplish objectives and deliver services; ensures that the City's fiscal .health is maintained. ■ Operations 'guide. Describes the basic organization units and activities of the City. ■ Communications tool. Provides the public with a blueprint of how public resources are being used and how these allocations were made. /-JA �► ►N�i►�IfNIIIIIP °��Ulll city Of san s OBISPO COUNC& AGENDA REPORT In meeting these roles, the Financial Plan is organized into the following nine sections: A. Introduction. The most important part of this section is the budget message from the CAO which outlines the key issues facing the City and recommended actions to address them. Other general information about the City (directory of officials and advisory bodies; organization chart) are also included in this section. B. Policies and objectives. Summarizes key budget policies that guide the preparation and management of the budget and sets forth major city goals for the next two years as determined by the Council. C. Budget graphics and summaries. Provides simple pie charts and tables that highlight key financial relationships and summarize the overall budget document. D. Operating programs. The largest section in the Financial Plan, this section presents the City's operating programs which form the City's basic organization units. Narratives are provided for each of the City's 70 operating programs which: ■ establish policies and goals that define the nature and level of services to be provided ■ identify activities performed in delivering services ■ propose objectives for improving the delivery of services ■ identify and appropriate the resources necessary to accomplish objectives The City's operating programs are organized into six major functional groupings. which in many instances cross departmental boundaries and funding sources: ■ Public safety ■ Leisure, cultural and social services ■ Public utilities ■ Community development ■ Transportation ■ General goverment Each program narrative identifies its functional area, departmental responsibility and funding source; summaries its cost for staffing, contract services, supplies, and minor capital outlays; sets forth program purposes and goals; describes program activities; identifies authorized regular staffing by position and temporary staffing levels; highlights any significant staffing and expenditure changes; sets forth program objectives for the next two years; and provides performance and workload indicators. This information is generally provided for four years: last completed fiscal year (1992 -93); current budget year (1993 -94); and the two years covered by the Financial Plan (1995 -96 and 1996 -97). . E. Capital improvement plan. Presents the City's capital improvement plan (CIP) for the next four years. The purpose of the CIP is to systematically plan, schedule and finance projects in a cost - effective manner consistent with adopted policies and plans. It is organized into the same functional groupings used for the operating programs, and funding sources are identified for each project phase (study, design, acquisition, or construction). Project phases scheduled in the first two years (1995 -97) are fully- funded as part of the Financial Plan; projects e- /5 ���n��r�i►�Illllpllp° �lll�ll city of San t, OBIspo COUNCIL AGENDA REPORT scheduled in the second two years (1997 -99) will be funded as part of the next two -year budgetary cycle. F. Debt service requirements. Summarizes the City's debt obligations at the beginning of the Financial Plan period. Descriptions are provided for ,each debt financing including purpose, issue date, original principal amount, current amount outstanding, maturity date, interest rate, and funding source. Annual debt service costs - principal and interest - are also provided for each issuance. G. Changes in fund balance. Provides combined and individual statements of revenues, expenditures and changes in fund balance for each of the City's fifteen operating funds: Governmental Funds General Fund Special Revenue Funds Gasoline Tax Fund TDA Fund CDBG Fund BIA Fund Capital Project Funds Capital Outlay Fund Parkland Development Fund Equipment Replacement Fund Debt Service Fund Enterprise Funds Water Fund Sewer Fund Parking Fund Transit Fund Golf Fund Agency Fund Whale Rock Commission Fund H. Financial and statistical tables. Includes summaries which integrate other Financial Plan section as well as provide supplemental financial or statistical information such as detailed revenue estimates and assumptions, interfund transactions, authorized regular positions by department, appropriations limit history, and general demographic information about the City. I. Budget reference materials. Describes the major policy documents and preparation guidelines used in developing and managing the Financial Plan after its adoption; and provides a budget glossary of terms that may be unique to local government finance or the City's Financial Plan. For reference purposes in understanding the organization of the City's Financial Plan, provided in Exhibit A are selected excerpts from the 1993 -95 Financial Plan which we provide to other agencies when they request information about our two -year budgetary approach. It includes our Financial Plan policies in their entirety as well sample materials from throughout the document. Financial Plan Appendices In addition to the Preliminary Financial Plan, the Council will also receive two accompanying appendices which further explain significant operating program changes and capital improvement plan projects summarized as follows: IIIIIpjllUlll city o� San ' IS OBISPO omm is COUNCIL AGENDA REPORT Appendix A: Significant operating program changes This report compiles supplemental documentation for significant operating program changes recommended by the CAO for Council approval and includes the following information for each request: ■ Operating program affected ■ Request title ■ Request summary ■ Primary objectives ■ Factors driving the change request ■ Alternatives ■ Cost summary ■ Implementation plan Significant operating program changes include major service enhancements or curtailments, increases in regular staffing, major changes in the method of delivering services, significant one -time costs, changes in operations that affect other departments or customer services to the public, and changes that affect current policies. Appendix B. Capital improvement plan This report compiles supplemental documentation for each of the CIP projects recommended by the CAO for Council approval and includes the following information for each requested project: ■ Operating program affected ■ Project title ■ Project objectives ■ Existing situation ■ Goal and policy links SUMMARY M Project work completed to -date ■ Schedule and project costs ■ Project effect on operating budget ■ Public art policy ■ Location map or schematic diagram This background material has been presented for the Council's consideration in preparing for the goal - setting session immediately ahead of us and the balance of the 1995 -97 Financial Plan to follow. By focussing on Council goals and other key issues early in the process, we believe that we can best achieve our overall goal of accomplishing important things for our community in a fiscally responsible way. A. Summary of major City policy documents B. Community Development -tentative work program for implementing General Plan programs (land use and housing elements) C. Tentative agenda, format and process for Council goal- setting D. Budget principles for 1995 -97 E. Excerpts from the 1993 -95 Financial Plan 0 15 Section 105 Exhibit= SUMMARY OF MAJOR POLICY DOCUMENTS Complementing the policies and procedures provided in this manual are the following major policy documents that also guide the management of the City's financial affairs. A brief narrative summary for each of these documents is provided in this section; the department or office responsible for maintaining the document and making it available for distribution is noted at the end of each description: Citywide Policy Documents ■ Municipal Code ■ Council Policies and Procedures Manual ■ City Code of Ethics ■ General Plan ■ Downtown Physical Concept Plan Human Resource Management ■ Personnel Rules and Regulations ■ Employer /Employee Relations Resolution ■ Memorandums of Agreement ■ Affirmative Action Plan /Sexual Harassment Avoidance Policy ■ Facilities Master Plan: 1988 -2010 ■ Drug Free Work Place Policy ■ Financial Plan and Budget Financial Transportation ■ Investment Management Plan ■ Parking Management Plan ■ Pavement Management Plan ■ Flood Management Policy Administrative • Property Management Manual • Public Art Policy and Manual • Goals and Objectives Reporting System • Manual for Preparing Council Agenda Reports • Risk Management Manual ■ Safety /Loss Control Manual 105 -1 ■ Cost Allocation Plan ■ Monthly and Quarterly Financial Reports ■ Comprehensive Annual Financial Report (CAFR) ■ Comprehensive Financial Management Plan: 1989 -2000 Utilities ■ Water Management Plan ■ Wastewater Management Plan /00/w CITYWIDE POLICY DOC ENTS Municipal Code The Municipal code contains all of the regulatory, penal, and administrative ordinances of the City of San Luis Obispo, codified according to the Government Code of the State of California. City Cleric City Council Policies and Procedures Manual This manual establishes guidelines for the conduct of Council meetings. It also sets forth other policies and procedures related to the Council such as appointments to advisory bodies, Council compensation, and Council /staff relationships. City Clerk City Code of Ethics Developed in 1988, the purpose of this code is to establish and communicate City standards for ethical conduct. Containing examples, it addresses conflicts-of- interest (real and perceived), public confidence, acceptance of favors, use of confidential information, use of City facilities, contracts, outside employment, personal investments, and each individual employee's personal responsibility for ethical behavior. Administration General Plan A General Plan is the blueprint of a community's future addressing land use, transportation, housing, open space preservation, conservation of resources, public safety, and noise. In addition to these mandated topics, called elements, San Luis Obispo's General Plan also addresses energy conservation, park and recreational facility development, water, and wastewater treatment facilities. Consequently, the General Plan is constantly being studied and revised. Community Development Dommto,Am Physical Concept Plan The City's downtown business and shopping area is over 100 years old and is rich in historical, cultural, and social significance. This plan guides development and change in the central business district by providing design concepts and policies for this key area of the City. Community Development Financial Plan and Budget The City uses a two -year financial -planning process in preparing its budget. The overall goal of the City's Financial Plan is to establish and maintain effective management of the City's fiscal resources. To accomplish this objective, the City uses a policy- driven, goal- oriented budgeting process. Accordingly, the Financial Plan identifies key financial policies, major goals, program objectives, and appropriates the resources necessary to accomplish them. Finance Facilities Master Plan: 1988 -2010 This report consolidates the findings of previous consultant and staff reports, census and economic data, field investigations, staff interviews and data from city -wide office workspace studies. The Master Plan examines potential solutions to existing and projected facility needs. Administration Comprehensive Financial Management Plan: 1989 -2000 This report assesses the City's ability over the long term to provide existing operating service levels, implement a comprehensive capital improvement program, and maintain adequate fund balances. Finance 105 -2 -0 -� 7 TRANSPORTATION Parking Management Plan The purpose of this plan is to maintain downtown as a healthy retail center by providing easy access to stores and offices. The plan also aims to protect the character of the downtown and surrounding office and residential areas. It consists of several components including a financial plan to improve and maintain parking operations. Public Works Pavement Management Plan The City maintains over 100 miles of streets representing a significant community investment in infrastructure and rights -of -way. The plan's objectives are to establish design and maintenance standards, prioritize maintenance actions, schedule long term maintenance activities to obtain maximum pavement life, and protect the investment made in pavement systems. Public Works Flood Management Policy There are several natural waterways, feeder streams, and catch basins within the City which are critical drainage channels as well as sensitive resource areas. The objectives of this policy document include maintaining creeks in a natural state to the maximum extent feasible and preventing the loss of life and minimizing property damage from flooding. Additionally, the policy establishes design capabilities, development guidelines, flood management standards and priorities, and an action plan. Public Works ADMINISTRATIVE Propert y Management Manual This document aims to maximize the productive use of the City's real property assets by defining property management activities, assigning responsibility for property management to the appropriate City departments, and establishing a process for developing and maintaining a comprehensive inventory and data base of the City's real property assets. Administration Public Art Policy and Manual Adopted in May of 1990, this policy encourages the creation and placement of public art throughout the community. Implementation components include "percent for art" and matching fund programs. Community Development Goals & Objectives Reporting System The Financial Plan identifies major goals to be accomplished over its two year timeframe. Formal reports are provided to the Council on a quarterly basis which report our progress in accomplishing these goals as well as the status of Capital Improvement Plan projects and other key objectives. Administration Manual for Preparing Council Agenda Reports This document outlines the format, content, and procedures to be used in preparing and processing Council Agenda Reports. Administration Risk Management Manual The City's goals, policies, and procedures regarding risk management activities are provided in this document. Personnel 105 -3 148 Safety /Loss Control Manuo The City's policies and procedures designed to prevent injuries to our employees, protect our property from damage, and ensure the safety of the public are provided in this document. Personnel HUMAN RESOURCE MANAGEMENT Personnel Rules and Regulations Chapter 2.36 of the Municipal Code establishes the City's procedures for attracting and retaining qualified employees as well as assuring that appointments and promotions are based on fitness and merit. Personnel Employer /Employee Relations Resolution No. 6620 provides procedures for the administration of employer /employee relations between the City and its employee organizations and for resolving disputes regarding wages, hours, and other terms and conditions of employment. Personnel Memorandums of Agreement. The City has entered into agreements (MOA's) with each of its employee units that govern terms and conditions of employment. Personnel Affirmative Action Plan The City is committed to providing equal opportunity in its hiring practices and ensuring that we have a work environment free from harassment. This document contains the City's policies and procedures designed to achieve these goals. Personnel Drug -Free Workplace Policy It is the City's goal to maintain a safe, healthful, and productive work environment for all of our employees. This document sets forth our commitment to this goal and establishes polices and procedures designed to achieve it. Personnel FINANCIAL 'Investment Management Plan The purpose of this plan is to establish strategies, practices, and procedures to be used in administering the City's investment portfolio in accordance with the City's adopted Investment Policy. Finance Cost Allocation Plan Initially prepared during 1987 -88 in conjunction with the Comprehensive Financial Management Plan, the cost allocation plan identifies the total cost of providing City services by allocating indirect costs such as accounting, personnel, legal, and facility usage to direct program cost areas. Finance 105 -4 !'19 Monthly and Quarterly F. .ncial Reports The Department of Finance publishes interim financial statements on a. monthly and quarterly basis. Monthly reports are distributed to the operating departments at a detailed level for ongoing monitoring and tracking of revenues and expenditures. Formal quarterly reports are prepared for distribution to a broader group of end users that summarize revenues, expenditures, and fund balance, and highlight key trends and issues. The purpose of these reports is to provide meaningful information on an ongoing basis regarding the City's financial position as well as emerging trends. Fwance Comprehensive Annual Financial Report (CAFR) The CAFR includes the City's audited general purpose financial statements as well as a comprehensive review of the City's financial operations and statistical information of general interest about the San Luis Obispo community. The City's commitment to the highest levels of financial reporting is evidenced by its receipt of the Certificate of Achievement for Excellence in Financial Reporting for all of its CAFR's issued since 1983 -84. Finance UTILITIES Water Management Plan This policy document provides a strategic plan for the continued development of the City's water resources and its treatment and delivery systems. UtiMes Wastewater Management Plan Wastewater is another critical resource consideration for the City. Upgrades to the current wastewater . treatment.plant.and other large capital requirements required to modernize the entire infrastructure will significantly influence financial planning for many years to come: Like the Water Management Plan, this document is a policy instrument that defines and analyzes the key wastewater issues facing the City and recommends solutions. Utilities FMM%165.WPF 105-5 Exhibit From: Arnold Jonas, Community Development Director 4 Subject: General Plan Implementation Resource Assessment In addition to the "normal' work program being developed for the Community Development Department, there is a long list of general plan implementation programs that far exceeds the department's resources to complete. The problem we face is that our normal work program includes daily public service and assistance, application processing, advisory body support, department administration and special projects such as ordinance updates, general plan element updates, and CDBG support. The remaining time is available for general plan implementation programs. Attached are two lists of implementation programs contained in various adopted general plan elements. The first is a listing of those programs we felt to be of the highest priority. An estimate of staff resources is included to provide general information as to the scope of the work and time frame required to accomplish each program. The second is a longer list of all general plan implementation programs except Parks and Recreation and Circulation (those will be addressed by the respective departments). We will require Council direction in establishing priorities for general plan implementation programs that may be accomplished within existing staff resources. /-% ;1 Key to Abbreviations Page 1 / — A Project/Resource Prioritization Worksheet Key Division Resources = 2.8 person years I1 person year =1703 hrs.) Abbreviations: LU - Land Use Element H- Housing Element Os- Open Space. Element CO - Conservation Element S- Safety Element Ss- Seismic Safety Element EC - Energy Conservation Element PR - Parks and Recreation Element WW - Water & Wastewater Management Element Cl - Circulation Element N - Noise Element OG - on -going TBD - to be determined CDD - Community Development Department PWD - Public Works Department UTIL - Utilities Department PR D- Parks and Rec. Department ADM/N - Administration FIRE - Fire Department POLICE - Police Department FIN - finance Department Bldg. - COD Building Division Dev Rev - CDD Development Review Division Admin - CDD Administration Division $$$ - I Consultant funding also required Page 1 / — A Community Development Department — Work Program Resource Assessment Item # Priority Budget Category 1 Task Description Resources Required Person Years FY 95196 FY 96197 7 1 Monitor nonresidentlal growth rate: (LU 1.11.4) 0.02 0.02 2 1 Work wl County to make SLO Area Plan Consistent wl City LU (LU 1.16.7) 0.02 0.02 3 1 Pursue means to protect open space (LU 1.17.1)(assist PRD) 0.01 0.01 4 1 Pursue source of open space funding (LU 1.17.2/OS)(assist PRD) 0.01 0.01 5 1 Model air pollution behavior, help educate public (LU 1.18.1) PWD; ADMIN PWD; ADMIN 6 1 Consult with APCD on significant development proposals (LU 1.18.3) Ongoing through Environmental Ongoing through Environmental Review process 7 1 Support formation & continuation of neighborhood groups (LU 2.1.2) TBD TBD 8 1 Review and, if necessary, revise nose standards (LU 2.10.1M update) 0.03 9 1 Adopt prop. maintenance standards (LU 2.10.2) done done 10 1 Affordable housing inctusionary fee req. (LU 2.5, 2.13,H) 0.02 11 1 Undertake focused review, improvement, & enforcement efforts for neighborhoods (LU 2.15.0 TBD TBD 12 1 Provide early neighborhood notice of project reviews (LU 2.15.E) TBD; PWD TBD; PWD 13 1 Provide staff support for neighborhood issues (LU 2.15.F) TBD TBD 14 1 Add warehouse stores to Zoning Regs. (LU 3.5.2.C; 3.7. 1) done done 15 1 Add R&D facilities to Zoning Regulations (LU 3.5.2.C; 3.7.1) done done 16 1 Eliminate PD minimum site area (LU 3.7.2) done done 17 1 Investigate ways to intensify and improve cohesion at existing Madonna Road centers LU 3.7.10 021 18 1 Develop & apply a 'Residential - Office' zone in the downtown (LU 4.2.2) - 0.17 19 1 Survey downtown, rezone office, residential, and mixed use areas (LU 42.2) see #18 see #18 20 1 Encourage public art in all projects (LU 5.8) - 0.02 21 1 Develop resource maps (LU 6.024 $$$ 0.15 0.15 22 1 Adopt creek setback requirements (LU 6.4.6; 6.5.1.8; OS) 0.06 - 23 1 Estabrsh and maintain records of archaeological sites (LU 6.6.4.C) see #24 see # 24 24 1 Staff Support for Cultural Heritage Commission - incl. maintainlaugment Historic Resource Inventory, prepare archaeological resource & historic resource protection guidelines (LU 6.7.1, 6.7.5; OS II.G.1 -2; CO 72) 0.12 0.12 25 1 Assist the CHC in preparing archaeological resource guidelines (LU 6.7.5) done done 26 1 Actively pursue annexation of the Airport Area by 1995 (LU 7.3) 0.05 27 1 Work with Airport Area property owners to complete a specific plan (LU 7.8; 7.11) $$$ 0.16 28 1 Work with property owners to prepare area plans for the Madonna Road Regional Shppong Area U 8.14 see # 17 see # 17 29 1 Work with open space groups to achieve a comprehensive open space vision (OS 11.1. 0 assist PRD - 0.02 30 1 Develop a duster program for the greenbelt and outer planning area (OS 11.1.G; LU) 0.01 0.01 31 1 Assess restoration potential of City owned or controlW creek property (OS 11.8.1 A) wl PRD - 0.02 32 1 Adopt Creek Setback Ordinance (OS II.B.1.B; 11.B.1.E; LU) see # 22 see # 22 12/29/94 page 1 1,2 Community Development Department — Work Program Resource Assessment Item # Priority Budget Category 1 Task Description Resources Required Person Years FY 95196 FY 96197 33 1 Assess impacts of removing water from creeks and wetlands, inform public (OS 11.8.1. w /PRD & UTIL - 0.02 34 1 Prepare & maintain map of grassland communities (OS II.D.1 [within URLD wl CDD dmin 0.03 - 35 1 Maintain current lists from WSFWS, CNPS, and F &G (OS II.E.1.A) 0.01 0.01 36 1 Monitor debate on EMF hazards (OS II.F.1) 0.01 0.01 37 1 Develop Archaeological Resource Guidelines (OS II.G.1; LU) done done 38 1 Work with the County and State to develop archaeological & historic guidelines (OS II.G. done done 39 1 Develop joint City/private sector recreation projects that can generate revenue for open space urcha OS II.K1.D PRO PRO 40 1 Update the Parks and Recreation Element (OS II.K.12)(with PRO) 0.02 41 1 Prioritize lands for open space acquisition (OS IV2) COD; PRO COD; PRO 42 1 Revise affordability standards (H 1.22. 1) 0.01 0.01 43 1 Monitor affordable housing production (H 1.22.4) 0.01 0.01 44 1 Adopt an incluslonary housing ordinance (H 1.22.10) 0.04 0.02 45 1 Adopt permit streamlining procedures for affordable housing (H 1.22.13) w/ Dev Rev 0.04 - 46 1 Amend regulations or fee schedules to provide exemptions for certain affordable housin m cts 1.22.1 0.02 - 47 1 Consider adopting a no net housing loss policy for the downtown (H1.23.8) see #18 see #18 48 1 Revise 0 zone for housing (H 123.9) - 0.04 49 1 Revise and exempt low and very -low income housing from growth management regulations 1.26. 0.02 - 50 1 Amend citywide zoning to require dwellings in new multi-story C-N developments (H 1.26. - 0.04 51 1 Amend regulations to require dwellings in multistory downtown development (H 1.26.9; H.1.26. TBO TBD 52 1 Encourage neighborhood involvement in planning (H 1.27.7) TBD TBD 53 1 dentify neighborhood needs and staff assistance (H 1.27.8) TBD TBD 54 1 Advocate on- campus housing (H 128.9) COD Dir 55 1 Prepare an inventory of historic resources (CO 7.2; LU 6.7. 1) see #24 see # 24 56 1 Determine availability and assign water allocations to development projects (WW 2.8.2) 0.12 0.12 12/29/94 Page 2 GENERAL PLAN IMPLEMENTATION — Work Program Assessment Item # Priority Budget Category ! Task Description 12/29/94 Page 1 Awa S Land use Element Implementatlon 1 1 Monitor nonresidential growth rate: (LU 1. 11.4) 2 4 Monitor County Resource Management Reports (LU 1.16.1) 3 4 Advocate annual meetings among local jurisdictions to discuss regional issues (LU 1.16.2) 4 1 Plans capacity summary (LU 1. 16.3) COG 5 4 Discuss feasibility of countywide planning group (LU 1. 16.4) 6 4 Promote interjurisdictonal review of countywide projects (LU 1. 16.5) 7 3 Advocate regional growth mgmt program (LU 1.16.6) 8 1 Work w/ County to make SLO Area Plan Consistent w/ City LU (LU 1.16.7) 9 3 City- County MOU re: SLO Planning Area (LU 1. 16.8) 10 1 Pursue means to protect open space (LU 1.17.1) 11 1 Pursue source of open space funding (LU 1.17.210S) 12 3 Prepare a refined land use map for the City's planning area outside the URL (LU 1.17.3.A -D /OS) 13 3 Encourage County to adopt duster districts (LU 1. 17.4) 14 1 Model air pollution behavior, help educate public (LU 1.18.1) 15 1 Consult with APCD on sig. dev. proposals (LU 1.18.3) 16 1 Support formation & continuation of neighborhood groups (LU 2.1.2) 17 Promote neighborhood traffic calming (LU 2.1.3.ICE) 18 1 Review and, 'rf necessary, revise noise standards (LU 2.10.1/N update) 19 4 Review, revise parking standards (LU 2.10.1) 20 1 Adopt prop. maintenance standards (LU 2.10.2) 21 4 Periodically review & update prop. maintenance standards (LU 210.2) 22 4 Evaluate student housing needs, revise City standards & zoning as appropriate (LU 2.11. 1) 23 2 Revise apartment standards to include usable open space (LU 2.11.2) 24 Consider adopting special development standards in downtown, including: (LU 2.12A -E) 25 4 A. A new density category between Low - Density and Meduim - Density (LU 2.12.A) 26 2 B. Standards for added dwellings on lots with existing houses (LU 2.123) 27 2 C. Mass & spacing standards (LU 2.12.C) 26 2 D. Parking & coverage standards (LU 2.12.1)) 29 2 E. Usable open space standards (LU 2.12.E) 30 1 Affordable housing indusionary fee req. (LU 2.5, 2.13,H) 31 Consider new regs. for large infill houses (LU 2.14. (1),(2)) 32 Consider new regs. for accessory buildings (LU 2.14.(3)) 33 4 Identity, designate, and plan neighborhoods (LU 2.1.1, 2.15.A) 34 4 Help devise strategies to stabilize existing owner /rental ration and maintain neighborhood character & stability (LU 2.15.6) 35 1 Undertake focused review, improvement, & enforcement efforts for neighborhoods (LU 2.15.C) 36 1 Provide early neighborhood notice of project reviews (LU 2.15.E) 37 1 Provide staff support for neighborhood issues (LU 2.15.F) 38 2 Revise residential density determination method for Med., Med.-High, and High land use districts (LU 2.16) 39 4 Consider Enhancement of Mid- Higuera SL (LU 3.1.4) (see also Special Design Area 8.5) 12/29/94 Page 1 Awa S GENERAL PLAN IMPLEMENTATION — Work Program Assessment Item # Priority Budget Category 1 Task Description 40 1 Add warehouse stores to Zoning Regs. (LU 3.5.2.C; 3.7.1) 41 1 Add R&D facilties to Zoning Regulations (LU 3.5.2.C; 3.7. 1) 42 1 Eliminate PD minimum site area (LU 3.7.2) 43 2 Rezone neighborhood uses in C -S (LU 3.7.3) 44 4 Consider establishing tourist info at City entries (LU 3.7.4) 45 4 Provide zoning incentives for worker dependent care (LU 3.7.5) 46 4 Coordinate development to provide for worker dependent care (LU 3.7.5) 47 4 Revise zoning & architectural standards to protect character of downtown areas (LU 3.7.7) 48 2 Provide incentives to encourage relocation of auto sales (LU 3.7.8) 49 Noise prevention in Zoning Regs, architectural guidelines (LU 3.7.91N update) 50 1 Investigate ways to intensify and improve cohesion at existing Madonna Road centers (LU 3.7.10) 51 Develop aggressive marketing programs for tourism (LU 3.7.11.C) 52 Develop tour concepts (LU 3.7.11.1)) 53 Encourage development of recreation facilities (LU 3.7.11.E) 54 2 Revise zoning regs. to require large new projects downtown to include dwellings, include TDC incentives (LU 4.2.1) 55 2 Develop a transfer of development credit program which includes Commercial Core properties as receiver sites (LU 4.2. 1) 56 1 Develop & apply a'Residential -Office" zone in the downtown (LU 4.2.2) 57 1 Survey downtown, rezone office, residential, and moved use areas (LU 4.2.2) 58 2 Modify allowed building heights in retail areas outside the Commercial Core (LU 4.16.4; 4.18) 59 2 Consider incorporating Downtown Concept Plan features in Zoning Regs., Arch. Guidelines, Engineering Standards, and CIP U 4. 60 3 Work with the County to develop a City-County downtown space needs plan (LU 5.3) 61 Study possible reuse of surplus City facilities (LU 5.7) 62 1 Encourage public art in all projects (LU 5.8) 63 1 Develop resource maps (LU 6.0.2) 64 3 Re- evaluate LU map based upon resource mapping and revise as appropriate (LU 6.03) 65 2 Revise Zoning Regulations to include provisions for transfer of development credits from outside URL to within URL (LU 66 Designate sensitive sites and require ARC review during subdivision process (LU 6.3. 1) 67 3 Revise method for determining building height to minimize visual impacts of hillside development (LU 6.3.4) 68 1 Adopt creek setback requirements (LU 6.4.6; 6.5.1.13; OS) 69 2 Revise engineering standards to provide for porous paving and landscaping (LU 6.4.7) 70 Removal man -made obstructions from creek channels (LU 6.5.1.C; 6.5.4) (PWDD) 71 Coordinate erosion control in watershed wl County & property owners.(LU 6.5.2) 72 Acquire ownership or easements along creeks and wetlands for drainage, maintenance, and appropriate public access (LU 6.5.370% 73 Notify creekside property owners in advance of work along creeks (LU 6.5.8) 74 4 Promote public awareness of creeks and wetlands through activities, incl. tours and clean -up events (LU 6.5.9) 75 4 Prepare an aquatic ecosystem management plan (LU 6.5. 10) 76 Replace non- native creekside plants with native species (LU 6.5.11) 12/29/94 � Page 2 .. l* GENERAL PLAN IMPLEMENTATION — Work Program Assessment Item # Priority Budget Category I Task Description 77 Acquire in fee or partial interest in archaeological sites (LU 6.6.4.A) 78 1 Establish and maintain records of archaeological sites (LU 6.6.4.C) 79 1 Cultural Heritage Committee (LU 6.7. 1) 80 3 Maintain a financial assistance program to encourage preservation and restoration of historic properties (LU 6.7.2) 81 Expand ARC guidelines to address specific guidance for new buildings in historic districts (LU 6.7.3) 82 Sponsor educational programs to foster appreciation of historic resources (LU 6.7.4) 83 1 Assist the CHC in preparing archaeological resource guidelines (LU 6.7.5) 84 Display artifacts which illuminate past cultures (LU 6.7.6) 85 1 Actively pursue annexation of the Airport Area by 1995(LU 7.3) 86 Expanded transit service to development sites in Airport Area concurrent with development (LU 7.7) 87 1 Work with Airport Area property owners to complete a specific plan (LU 7.8; 7.11) 88 Work with County to assure airline service at Airport consistent with Circulation Element (LU 7.12) 89 2 Establish an in -lieu fee for protection of open space south of the Airport Area for use when open space protection not feasible as part of a development plan appmval LU 7.14 90 Work with property owners to prepare area plans for the following areas: (LU 8.1-4) 91 1 Madonna Road Regional Shopping Area 92 3 Foothill Boulevard Area 93 3 Broad Street Area 94 3 Santa Barbara Street Area 95 3 Prepare and adopt a plan for Mid- Higuera area (LU 8.5; 3.1.4) Open Space Demerit hnplemenlatlon 96 4 Form an agreement with the County and State to preserve open space (OS 11.1 A) 97 4 Participate in County Park Rec. and Open Space district of one is formed (OS 11.13) 98 1 Work with open space groups to achieve a comprehensive open space vision (OS 11.1.C) 99 2 Consolidate open space functions in one existing City dept under one person (OS 11. 1.0) 100 3 Provide education materials on resource protection (OS 11.1.E) 101 2 Develop & adopt a transfer of development credit program (OS 11.1.F; LU ) 102 1 Develop a cluster program for the greenbelt and outer planning area (OS 11.1.G; LU) 103 3 Develop open space banking program (OS II.1.H) 104 3 Document & map open space easements and dedications (OS 11.1.1; II.B.1.D) 105 3 1 Develop open space acqusition funding sources (OS 11. U; LU) 108 3 Coordinate hillside standards w/ County& Cal Poly (OS II.A.1) 107 1 Assess restoration potential of City owned or controled creek property (OS ll.B.1.A) 108 1 Adopt Creek Setback Ordinance (OS II.B.1.B; II.B.1.E; LU) 109 2 Designate undeveloped flood prone areas adjacent to creeks as open space (OS II.B.1.C) 110 1 Assess impacts of removing water from creeks and wetlands, inform public (OS ll.B.1.F) 111 3 Develop Mitigation Banking Program (OS II.B.2) 112 3 Work w/ Cal Poly & County to fund creek restoration (OS II.B.3.A) 12/29/94 Page 3 �-a7 GENERAL PLAN IMPLEMENTATION — Work Program Assessment Item # Priority Budget Category / Task Description 113 4 Work w/ Cal Poly & County to develop & distribute educational brochures discussing care of creeks, wetlands, and sensitive h OS II.B.3.6 114 4 Encourage the County & Cal Poly to adopt creek setback ordinances (OS 11.4A) 115 4 Encourage the County & Cal Poly to adopt penalties for removing riparian vegetation (OS II.B.4.A) 116 4 Encourage the County & Cal Poly to protect creek corridors (OS II.B.4.B) 117 4 Protect creeks and wetlands from mining operations (OS 11.BAC) 118 3 Protect creeks & wetlands from ag operations (OS 11.B.4.D ) 119 1 Prepare & maintain map of grassland communities (OS II.D.1 [within URLD 120 3 Work with other agencies to plan for wildlife corridors (OS II.0.1; II.E.1.B ) 121 1 Maintain current lists from WSFWS, CNPS, and F &G (OS II.E.1.A) 122 1 Monitor debate on EMF hazards (OS II.F.1) 123 2 Develop standards for EMFs if proven hazardous (OS II.F.1) 124 1 Develop Archaeological Resource Guidelines (OS II.G.1; LU) 125 1 Work with the County and State to develop archaeological & historic guidelines (OS II.G.2) 126 4 Revise the Municipal Code to prohibit commercial mining in City limits (OS II.H.1.A) 127 4 Encourage the County to prohibit commercial mining in URL (OS II.H.1.B) 128 4 Work with the County & State to identify sites for future reclamation (OS II.H.1.C) 129 3 Encourage the County maintain a mapped inventory of important mineral resources (OS II.H.1.A [outside URLD 130 3 Encourage County to designate important mineral resources as Energy or Resource Extraction (OS II.H.1.B [outside URLD 131 3 Encourage State and County to work with Farm Bureau and other organizations to study supply and demand for farm worker A 132 3 Encourage State and County to work with Farm Bureau and other organizations to study supply and demand for farm-related services 0 133 3 Encourage State and County to work with Farm Bureau and other organizations to study how demands •for farm worker housing and fram related services can be better met OS II.I.1.A. 3 134 3 Examine alternative farm taxing procedures to support continued farm operations (OS 11.1.1.B) 135 3 1 Examine low- interest loans to stabilize farm operations (OS 11.1.1.C) 136 2 Identify important ag lands in the greenbelt and outer planning area threatened by urbanization (OS 137 2 Work with County to prepare ag impact mitigation fee (OS 11.1.2) 138 2 Encourage County & State to protect City gateways (OS II.J.1.A) 139 2 Encourage County to revise regs. to protect gateways (OS II.J.1.B) 140 2 Work with State & County to designate gateways as Designated Scenic Highways or provide other protection (OS II.J.1.C) 141 3 Work w/ County to eliminate billboard in City s planning area (OS II.J.1.D) 142 Develop precise boundaries along scenic roads (OS II.J2.A) 143 2 Develop setbacks & other regulations to ensure views from scenic roadways are maintained (OS II.J.2.B) 144 3 Establish a program forpublic assistance in trail security, development, maintenance, and restoration (OS II.K.1.A) 145 Work with the County to establish consistent trail guidelines (OS II.K.1.B) 146 Adopt an urban trails plan (Pedestrian Circulation Plan) (OS II.K1.C; CE) 12/29/94 � � Page 4 8 GENERAL PLAN IMPLEMENTATION — Work Program Assessment Fem:4Priority Budget Category / Task Description 147 1 Develop joint City /private sector recreation projects that can generate revenue for open space purchase (OS II. K.1.D) 148 1 Update the Parks and Recreation Element (OS II.K.1.E)(with PRD) 149 3 Work with the State. and County to develop a program for preservation of watershed areas (OS II1.1) 150 Establish a program to purchase and lease back agricultural lands near urban areas (OS III.1.A) 151 Pursue implementation of long-term financing mechanisms (OS IV.1 A) 152 Revise the City s current parcel transfer tax fees (OS IV. 1.13) 153 Devise programs to recover maintenance costs of open space lands by fees for use of these lands (OS IV. 1.C) 154 Develop an open space impact fee & encourage the County to implement such an impact fee (OS IV. 1.D) 155 1 Prioritize lands for open space acquisition (OS IV.2) Housing Element Implementation 156 3 Expand code enforcement (H 1.21.4) 157 1 Revise affordability standards (H 1.22.1) 158 1 Monitor affordable housing production (H 1.22.4) 159 1 Adopt an inclusionary housing ordinance (H 1.22.10) 160 2 Establish a housing trust fund (H 1.22.11) 161 Review development regulations (H 1.22.12) 162 1 Adopt permit streamlining procedures for affordable housing (H 1.22.13) 163 3 Amend housing regulations to allow unconventional but improved housing designs (H 12214) 164 1 Amend regulations or fee schedules to provide exemptions for certain affordable housing projects (H 1.22.15) 165 2 Amend condominium regulations (H 1.22.16) 166 4 Coordinate public and private sector actions to promote affordable housing (H 1.22.17) 167 3 Enable issuance of mortgage revenue bonds for homebuyer assistance programs (H 1.22.18) 168 3 Develop affordable housing conservation standards (H 1.22. 19) 169 3 Establish a housing rehabilitation loan program (H 1.23.7) 170 1 Consider adopting a no net housing loss policy for the downtown (H1.23.8) 171 1 Revise 0 zone for housing (H 1.23.9; LU 4.2.2) 172 2 1 Revise housing conservation permit process for downtown C-C zone (H 1.23. 10) 173 2 Remove regulatory obstacles (H 1.23.11) 174 2 Encourage housing rehabilitation (H 1.23.12) 175 3 Seismic safety education (H 1.23.13) 176 3 Create a residential seismic retrofit assistance program (H 1.23.14) 177, 2 Amend non-conforming use regulations (H 1.23.15) 178 2 Evaluate and revise codes to encourage housing (H 1.23.16) 179 2 Revise regulations to encourage mixed -income housing (H 1.24.4) 180 2 Revise regulations to encourage mixed housing variety and tenure (H 1.25.6) 181 1 Revise and exempt low and very4ow income housing from growth management regulations (H 1.26.7) 12/29/94 Page 5 1 -a 9 GENERAL PLAN IMPLEMENTATION — Work Program Assessment Item # Priority Budget Category I Task Description 182 1 Amend citywide zoning to require dwellings in new multi -story C-I developments (H 1.26.8) 183 1 Amend regulations to require dwellings in multi-story downtown development (H 1.26.9) 184 Amend Edna -Islay Specific Plan to add R -3 zoning (H 1.26.11) 185 1 Encourage neighborhood involvement in planning (H 1.27.7) 186 1 Identify neighborhood needs and staff assistance (H 1.27.8) 187 Revise standards for public street visibility (H 1.27.10) 188 4 Review regulations to implement neighborhood quality (H 1.27.11) 189 Support needs of homeless persons (H 1.28.6.) 190. 4 Identify alternative housing sites in expansion areas (H 1.28.8) 191 1 Advocate on- campus housing (H 1.28.9) 192 Revise zoning standards for Fraternities and sororities (H 1.28. 10) 193 4 Educate staff and review bodies in energy conservation (H 1.29.3) 194 3 Expand solar energy requirements (H 1.29.4) 195 4 Assemble energy committee (H 1.29.5) 196 3 Update solar regulations (H 1.29.6) 197 3 Expand plumbing retrofit program (H 1.29.7) 198 4 Expand water conservation education (H 1.29.8) 199 4 Analyze housing impacts of new development (H 1.30.5) 200 2 Discourage significant employment growth in airport area until annexation (H 1.30.6) 201 2 Encourage developers to limit housing promotions to local area (H 1.30.7) 202 Refine City promotion practices (H 1.30.8) 203 2 Advocate linkage of enrollment growth to on-campus housing ( H 1.30.9) 204 2 Discourage institutional expansion unless additional housing provided (H 1.30.10) 205 3 Adopt standards to prevent housing on unsuitable or hazardous sites (H 1.31.5) Conaervatlon Element Implement3don 206. Participate in regional planning (CO 2.4; WW) 207 Revise water rates (CO 2.8) 208 Use recycled water (CO 2.9) 209 Limit public money for promotion to discourage growth (CO 3.3.a)(H) 210 Maintain zoning consistent with General Plan (CO 3.3.b) 211 Establish a system to monitor energy use (CO 3.4) 212 Use fuels which minimize pollution in City vehicles (CO 3.6) (PWD) 213 4 Seek formation of a multicounty APCD (CO 3.7) 214 done as part of LUE EIR Investigate industrial zoning reductions where topographic or meteorological conditions would adversely concentrate air pollutants (CO 3.9) 215 done Revise general plan for compact development, alternative transportation (CO 3.10) 216 Promote transit (CO 3.11) 217 3 Apply an Agricultural zoning to preserve "worthy lands" (CO 4.2) 218 implement a erosion control zone in areas not yet urbanized (CO 4.8) 12/29/94 Page 6 GENERAL PLAN IMPLEMENTATION — Work Program Assessment Item # Priority Budget Category I Task Description 219 Assume a leadership role in reducing energy consumption (CO 6.2) 220 4 Adopt ordinances and regulations to provide incentives for and require reduced energy consumption (CO 6.2) 221 1 Prepare an inventory of historic resources (CO 7.2) 222 4 Set up advisory body with County to evaluate and maintain the historic resources inventory (CO 7.3) 223 3 Provide incentives to encourage productive use of historic buildings (CO 7.6; CHC) 224 3 Provide public information on proper methods and techniques of restoration (CO 7.7) 225 3 Create a list of historic resource experts and require that experts be consulted when restoring historic bldgs. or sites (CO 78 226 2 Regulate odor- causing agricultural operations (CO 8.2) 227 2 Regulate odor impacts of industrial operations (CO 8.3) 228 Cooperate with the State and County to remove billboards (CO 8.1) 229 Establish restrictive standards for signs (CO 8.2) 130 Develop stronger measures to minimize litter & emphasize recycling(CO. 8.5) 231 2 Incorporate provisions for upgrading historic buildings in the City Building Code (CO 8.6; COD) 232 3 Revise zoning regulations & provide tax incentives to encourage renovation of historic buildings (CO 8.6) Energy Conservation Implementation 233 Provide Bicycle Paths (EC #6) 134 Retrofit City facilities where savings are possible (EC #12) 235 Encourage private materials recycling programs (EC #20) 236 4 Train development review staff & commissioners in energy - saving design (EC #22) (H 1.29.3) 237 Educate City property managers in energy efficient practices (EC #23) 238 Streamline ARC review for solar heating systems (EC #24� 139 Expand ARC Guidelines to provide design criteria for solar water heating systems (EC #25) 240 Expand ARC role in energy - saving design (EC #26) (H 1.29.1 & 2) 241 3 Advise developers on energy - saving design information (EC #27 & #30) (H 1.29.5) 242 3 Advise businesses on energy saving measures (CE #29) 243 Modify subdivision rules to protect solar exposure (CE #32) 244 Revise ARC Guidelines to address heat gain in commercial structures (EC #38) 245 Advocate changes to State law for energy savings (EC #47) 246 3 Minimize design/permit cost for solar fixtures (EC #48) Safety EWmt Implementation 247 Inspect public buildings for safety (S 1.1) 248 Revise Circ. Elem. as necessary after SPRR evaluation of potential impact of earthquakes on railroad facilities (S 1.3) 249 Review PG &E reports of potential impacts of earthquakes on their facilities (S 1.4) 250 3 Encourage inspection of seismic hazards at Righetti Reservoir (S 1.5) 251 Reduce risk for structures not meeting safety standards (S 1.6) 12/29/94 Page 7 IM3/ Item # GENERAL PLAN IMPLEMENTATION - Work Program Assessment Budget Category / Task Description 12/29/94 Page 8 Jcw3a 252 Planning Commission recommend to City Council criteria for determining significant hazards (S1.7(a)) 253 Begin condemnation of structures that are earthquake or fire hazards (S1.7(b)) 254 Advocate state, federal help for those displaced from hazardous buildings IS 1.8) 255 Revise building regulations to incorporate minimum standards for seismic resistance, floodproofing and fireproofing, and to dress pglice & fire e gLely concerns 156 Review zoning, subdivision standards for police, fire concerns (S 2.3) 257 Control off -road vehicle use (S 3.3) 258 Review emergency response, esp. mutual aid responsibilities and capabilities with regard to information in Safety & Seismic Safely elements IS 4.1 259 Improve mutual aid for rural fire protection ( S 4.2) 260 Revise emergency response plans to include radiological accidents IS 4.3) 261 3 Evaluate Righetti Reservoir wave potential (S 5.1) 262 3 Reevaluate liquefaction potential (S 5.3) 263 4 Develop a program to familarize residents & developers with Safety Element information, conclusions, recommendations (S. 6.1 264 Establish program to train volunteers to assist civil defense personnel after major disaster (S 6.2) 265 Establish education programs for lower grades to teach fire hazards (S 6.3) 266 Support and sponsor secondary schools programs on more involved aspects of fire IS 6.4) 267 Monitor implementation progress, keep City Council posted IS 7.1) Seismic Safely dement hnptementadon 168 Inspect buildings within City for conformance with Uniform Building Code earthquake regulations (SS 2.1) 269 Encourage Caltrans to evaluate highways for susceptibility to earthquake damage; revise evacuation routes in Circulation Element as n 2.2 270 Encourage Southern Pacific Railroad to evaluate its facilities for susceptibility to earthquake damage; revise Circulation Element as necessa SS 2.3 271 Encourage P.G. & E. to evaluate their facilities for susceptibility to earthquake (SS 2.4) 272 3 Encourage inspection of Righetti Reservoir for resistance to earthquakes (SS 2.5) 273 Seismically strengthen structures not in compliance with current earthquake standards (SS 3.1) 274 Establish review committee to consider condemnation proceedings on unsafe structures (SS 3.2) 275 Advocate State and Federal programs to assist persons and businesses displaced from hazardous buildings (SS 3.3) 276 4 Provide detailed field study of liquefaction potential in hazard areas (SS 4.1; S 5.3) 277 Institute a strong -motion instrumentation program for buildings over 4 stories (SS 4.5 ) 278 3 Initiate geologic study of Righeth Reservoir for resistance to earthquakes and slope stability (SS 4.6) 279 4 Develop a public information program on the Seismic Safety Element (SS 6.1) 280 Develop program to train emergency volunteers to assist with a major earthquake (SS 6.2) 281 Establish a staff committee to implement the Seismic Safety Element (SS 8.1) 282 2 Revise Seismic Safety Element every 5 years or sooner when needed (SS 8.2) Water & Wastewater Management dement Implementation Utilities Department - Long Range Planning Division responsibilities below: 12/29/94 Page 8 Jcw3a GENERAL PLAN IMPLEMENTATION — Work Program Assessment Item # Priority Budget Category / Task Description 183 1 Determine availability and assign water allocations to development projects (WW 2.8.2) 284 1 Administer water off- set(retroft program (WW 2.9.1.A) 285 Update service area, population, & development capacity for new LU (WW Programs 1.1 & 2) Parks and Recmation Element Implementadon Parks and Recreation Department Circulation Element knplementadon Public Works Department Downtown Plan Implemerrfatlon 286 Establish a CIP fund to acquire 975 Broad SL and easements along creek west of Nipomo 287 2 Add or amend policy statements in GP documents and zoning standards to reflect downtown plan standards & guidelines Cl: PR 288 Develop a program to stimulate private development and attract targeted business to the downtown 289 Coordinate formation of a non -profit foundation to support downtown and contribute to physical improvements 190 Develop a transit center in cooperation with the County (Cl) 291 Add a landscape median on Santa Rosa between Mill and Higuera 292 Redesign Garden St. for one -way traffic and install bulbouts at Higuera and Garden (Cl; OS) 293 Repave pedestrian crossing and provide suggested bulbouts starting in the core area at a rate of 2 -3 projects per year (Cl) 294 Redesign Monterey between Osos and Santa Rosa for temporary closure and civic functions (CI) 2915 Construct surface parking area to serve Jack House and Heritage Park (this will involve property acquisition near Jack Ho 296 Review and revise city standards for paving, street furniture, lighting, benches, planters, signing, bulbouts (LU) 297 3 Identify places suitable for public art in downtown, especially at major downtown gateways 298 3 Extend pedestrian path along San Luis Creek, west of Nipomo 299 4 Restore Dana SL Adobe; Construct bridge over creek to allow walking tour connection to Jack House (LU, CO) 300 2 Review and revise UBC standards to eliminate obstacles to construction/rehab of downtown housing (LU; H) 12/29/94 Page 9 / +33 Exhibit MEMORANDUM January 3, 1995 TO: City Council FROM: John Dunn, City Administrative Of SUBJECT: GOAL- SETTING PROCESS Attached for your information and review are the following materials which outline the proposed Council goal - setting process: 1. Overview of the proposed process 2. Draft workshop agenda 3. Description of the proposed process 4. Council member preparation for the workshop a. Overview of advance preparation requested of Council members in considering your vision, hopes and goals for San Luis Obispo. b. Vision worksheet C. Hopes worksheet d. Overview of hopes - what are they and why are shared hopes of practical value? e. Goals worksheet f. Proposed criteria for major City goals We will be reviewing this process at the January 10 workshop. In the interim, if you have any questions regarding the proposed process, please do not hesitate to contact me. /'WaAl Exhibit -� Overview of the Goal- Setting Process Visions of San Luis Obispo in 5 -10 Years "overall direction" Hopes for Each Category of Civic Interest "purpose — why" Specific Possibilities and Projects "options to consider" "Candidate" Goals "Council- supported options" Major City Goals "what is most important to accomplish together" Financial Plan and Budget for 1995 -1997 "how and when we will accomplish the goals" /t-3s Exhibit? y .. Draft Agenda Goal- Setting Workshop for the City of San Luis Obispo Financial Plan 1995 -1997 Saturday, January 21, 1995 Community Room, SLO Main Library (Note: As the workshop proceeds, this agenda is subject to review and modification by the Council to fulfill the workshop's purpose. For the convenience of the public, however, the scheduled time for public input will not be changed.] 8:30 - 8:45 a.m. Convene — greetings, coffee, juice, and rolls 8:45 - 9:00 a.m. Purpose, Process, and Guidelines Mayor,CAO 9:00 - 10:45 am Visions and Hopes for San Luis Obispo City Council 10:45 - 11:00 a.m. Break 11:00 - 12:00 p.m. Input from City Advisory Boards and Interested Public (Since time is limited, written input prior to the meeting is encouraged.) 12:00 - 12:15 p.m. Review Financial Outlook for 1995 -1997 12:15 - 1:00 p.m. 1:00 - 3:00 p.m. 3:00 - 3:15 p.m. 3:15 - 4:00 p.m. 4:00 - 4:30 p.m. 4:30 - '4:45 p.m. Lunch Break Specific Goals Break Goals Wrap -Up Priority Ratings Review and Summary City Staff City Council City Council City Council Mayor, CAO /rV Process Suggestions for the January 21 Workshop 8:45 - 9:00 anc Purpose, Process, and Guidelines Exhibit 3 Mayor, CAO The purpose of the workshop is to develop "Major City Goals" for 1995 -1997. These goals will guide preparation of San Luis Obispo's financial plan and budget. The proposed process for this year's workshop is to begin with statements of what the Council Members' visions are for the City of San Luis Obispo. Since the goals and budget we develop for 1995 -1997 will have a significant impact upon our city five to ten years from now, each Council Member will have an opportunity to express her or his vision of the City for that time frame. Then, we will proceed to discuss what our hopes are for the City and look for areas of agreement we can build upon to develop specific goals. After input from the City Advisory Boards, interested public, and City staff, the Council Members will proceed to discuss and choose specific goals. At the end of the afternoon, each Council Member will assign priorities to the selected goals and we will summarize the results. Final action on the Major City Goals will take place at the January 24th City Council meeting. Following action on the Major City Goals, the City staff will develop a budget for Council review, revision, and action. In the course of reviewing the budget and other actions to implement the Major City Goals, there will be opportunities for further discussion. [Introduction of facilitator and reporter. Each describes his role.] 9:00 -10: 45 ant Visions and Hopes for San Luis Obispo City Council [30 mimrtes] Each Council Member takes 2 to 3 minutes to describe her or his overall vision for the City five to ten years from now —what things they would like to be different, what they would like to remain the same, etc. Brief summaries will be posted on the wall boards. Without debating the visions, Council Members will look for areas of common interest. [60 minutes] Next, Council Members will review the hopes they submitted in each of the categories of civic interest. Summaries of the hopes will be posted by category on wall boards. Beginning with the categories of highest interest, Council Members will discuss and then vote for those hopes they share. /°- 37 Those hopes which receive support from all Council Members are core hopes which will receive particular attention-in developing specific Major City Goals. All other hopes which gain support from 3 or 4 Council Members are also noted and included in the summary. 10: 45 -11: 00 d m. Break [Staff arranges the core hopes and other Council- supported hopes on the wall boards.] 11:00 -12: 00 p. m. Input from City Advisory Boards and Interested Public Each speaker summarizes her or his recommendations in 1 or 2 minutes. Council Members may wish to ask brief questions to clarify any recommendations which appear unclear. Staff will post a brief summary of each recommendation on the appropriate wall board for the category addressed. If the speaker has not submitted a summary, the recorder will write a summary and post it. Since there are likely to be many recommendations and requests and only limited resources to support them, we will encourage speakers to include any suggestions about supportive efforts citizen groups can take to implement them or "win -win" opportunities to collaborate with other groups. 12.00- 12.15 p.m. Review Financial Outlook for 1995 -1997 City Staff The City Administrative Officer and Finance Director review the City's fiscal situation and projected resources for 1995 -1997. This summary will provide a context for the discussion of the City's financial capacity to fiilfill its hopes. 12.-00- .1: 00 p. m Lunch Break [Staff organizes input for specific goals on the appropriate wallboards.] 1:00 - 3:00 p.m. Speck Goals Ctty Council Returning to each category of civic interest, the Council Members reflect upon their shared hopes and review the possibilities for pursuing them. Sources of potential goals include: submissions from Council Members, recommendations from the City Advisory Boards, and comments from interested members of the public. I-Q036 If there is a desire to discuss a particular option, then Council Members briefly state in round -robin order the negatives about the option and then the positives. In light of the limited time available and the likely large number of options for discussion, this is intended to be a quick information exchange, not a debate. If Council Members feel that there is insufficient information to make a preliminary determination about the merits of a particular option, they can specify what information they would like and have the City staff answer the question on the spot (if possible) or request that the item be held over until the January 24th follow -up meeting. After reviewing all of the options in a particular category, Council Members are invited to reflect upon how the options impact their shared hopes for the City. Then they vote by ballot for the options they support. After the ballots are counted, staff posts the results and the Council Members move on to the next category. . All options which receive 3 or more votes are "candidates" for Major City Goals. 3:00 - 3:15 p. m Break [Staff summarizes the "candidates" for Major City Goals on wall boards. for the.completed categories and sets up the next set of categories and options for discussion.] 3:15 - 4.00 p.m Goals Wrap -Up pity Council (Follow process outlined above.) 4.00 - 4 :30 p.m Priority Ratings City Council After all of the "candidates" for Major City Goals have been selected, Council Members express the strength of their support for them on a ballot using a scale of 0 (not important) to 5 (one of the most important goals for the City). Staff counts and posts the results. All "candidates" which receive 25 points (5 five's) automatically become Major City Goals. (If there happen to be too many 2Ys, then Council Members may wish to rank order their preferences.) If there are sufficient resources to pursue additional goals, the Council may wish to establish a lower threshold, for example, 20 points or maybe even 15 points since three very enthusiastic Council Members (3 x 5 =15) could enact a measure. 1�39 4:30 - 4:45p.m. Review and Summary Mayor, C40 There is a brief review of the results and discussion of any pending items and how they will be resolved. The meeting concludes with final Council review and action to occur on January 24th. /M1�0 Exhibit Council Member's Preparation for the Goal - Setting Process The objective for the goal- setting process is to help Council Members reach agreement on the Major City Goals for preparation of the 1995 -1997 budget. The proposed process is intended to cover a lot of ground in a relatively short period of time. Therefore, it is important that the planned process has the Council's input and support (and willingness to modify it, if desirable, as we see how it unfolds). The attached preliminary plan for the goal- setting process and the agenda for the January 21 workshop describe the proposed approach. Please review them and provide informal input on them as soon as possible. The Council is scheduled to review them formally at its January 10 meeting which will introduce the budget preparation and goal- setting process. The process anticipates that Council Members will submit certain information in writing by January 19 so that the information can be organized in advance of the January 21 workshop. The requested information is as follows: your vision of San Luis Obispo in 5 -10 years (see "Vision" worksheet), your hopes for the various categories of civic interest (see "Hopes" worksheet), your suggestions of potential specific goals you would like the Council to consider (see "Suggested Goals" worksheet). This advance preparation will enhance your participation in the workshop and enable the efficient use of time at the meeting. Please submit your written input to the City Administrative Officer's office by 5:00 p.m., Thursday, January 19. Yhankyou. /19 All Exhibit -110 _ . Vision Worksheet What is your vision of San Luis Obispo in 5 -10 years? What would you like to see (that presently does not exist)? What would you like to be different? What would you like to remain the same? What are your concerns about the City's ability to realize this -vision? What obstacles do you see? Where does the City need to focus its attention? Kindly summarize your vision so that staff can put it on a transparency for the workshop. The proposed agenda provides 2 to 3 minutes for each Council Member to express her or his vision. /+ �� Exhibit��G� Hopes Worksheet Please write down your hopes in any of the categories of civic interest. Especially include hopes for categories which you believe are of particular importance to the City and/or need special attention. The attached "Power of Hopes" describes what is meant by hopes and how they can be of practical value. Please summarize each hope so that the staff can transcribe it in bold letters on a separate, standard -size sheet of paper. The summaries of each of the hopes from all Council Members will be gathered by category for review. The Council will then look for areas of common interest. (The agenda does not provide time for debating them.) Community /Governmental Relationships 1. 2 Cultural RecreadonA and Social Services 1. 2. Economic Development/Jobs 1. 2. Environment 1. I Financial Resources 1. 2. Public Safety 1. 2. Public FaciUdes/Infrasbucture 1. 2. Other? / -q3 Exhibit ¢�d> The Power of Hopes Hopes express "why" we value something. Unlike goals or expectations, hopes address the deep underlying issues which motivate us. Whereas, goals or expectations represent particular way of achieving something, hopes describe why we are doing it. Hopes reflect a deep spirit of community within us Hopes bring out our best selves. They represent heart felt desires for which we are willing to tradeoff our narrow self interests. Hopes are aspirations The most powerful hopes are those which reach beyond our current limits. In this way, hopes attract multiple approaches and resources to fulfill them. We can look at each situation or decision we confront as an opportunity to choose options which help us pursue our hopes. Hopes unleash energy. When people are in touch with their hopes, they are empowered for constructive action. Identifying shared hopes helps us f rid common ground While individuals may differ on how to realize a particular objective, they often can agree on the same underlying hope. This encourages a constructive "win -win" perspective. Hopes invite creative and effective courses of action. From the broader perspective of hopes, parties which may have squared off in an "A versus B" dynamic can explore and develop new options (C, D, E, etc.) which enhance the results for all concerned. Hopes provide a framework for developing and evaluating alternatives With shared hopes there is a value -based framework for discussing and choosing among options. ExhibiLC 460 Suggested Goals Worksheet Please write out the specific goals you would like the Council to consider in setting Major City Goals. Although there is no limit on the number of goals you may wish to suggest, prior goal- setting processes have found that 5 to 7 from each Council Member in addition to recommendations from others have helped to yield a focused list of Major City Goals. Since you will want to consider input from City Advisory Boards and interested members of the public at the workshop, you need not feel bound by the goals you submit in advance of the meeting. Submitting those which are of serious interest to you, however, will help preparations for a productive meeting. In the 1991 -1993 and the 1993 -1995 budget planning processes, the Councils adopted criteria for Major City Goals. The proposed process suggests that the Council Members use those criteria with the modification that a Major City Goal needs the support of a majority of Council Members. The modification recognizes that goals which are strongly supported by a majority need to be assessed in the budget process even though all Council Members may not favor them Efforts to improve upon specific goals in order to achieve full Council consensus are desirable. The proposed criteria are attached. � iJ Exhibit C g ��J Proposed Criteria for Major City Goals o Be legitimate to our beliefs (real, supported) o Agreed upon by a Council majority o Reduced in number for comprehension, communication, and focus o Set forth in one document: Financial Plan and Budget o Be clear, understandable o Established as a high priority and a real commitment o Translated into the objectives of employees at all levels in the organization o Created within a supportive atmosphere where participants aren't afraid to state their suggestions for improving goals or objections o Accepted to the point where resistance to them is reduced or eliminated. /-�/6 Exhibit MEMORANDUM December 14, 1994 TO: Department Heads FROM: John Dunn, City Administrative Officer to SUBJECT: BUDGET PRINCIPLES AND VALUES FOR 995 -97 The purpose of this memorandum is to set forth budget principles and values as we begin preparing the 1995 -97 Financial Plan. It establishes key goals I would like the budget process to accomplish. These budget principles and values are intended to emphasize substance over process, and to ensure that we - as the leadership of the organization - speak unambiguously, with a single, clear voice. BACKGROUND - OUR FISCAL ENVIRONMENT The City will continue to be faced with a tough fiscal outlook in 1995- 97. Two major threats confront us as we put together our next two -year financial plan: the performance of our local economy and State budget actions. Performance of the local economy Although it appears that the worst of the revenue declines that we consistently experienced from 1990 through. 1994 are behind us, there are no indications of a strong recovery on the horizon. This outlook is reinforced by the recent economic projections for San Luis Obispo County prepared by the UCSB Forecasting Project. In addition to the affects of the lingering recession and our slow recovery from it, we will also be faced with increased regional competition from the North and South County areas. This means that even if California and the Central Coast area begin a noticeable economic recovery some time during the next two years, there is no guarantee in the context of this more competitive environment that this will translate into stronger General Fund revenues for our City. And ultimately, the City's fiscal health can not be stronger that the underlying health of our own local economy. State budget impacts The State of California continues to experience significant and real budget problems, which will affect us in at least two key ways as the State addresses its fiscal problems: ■ Direct budget cuts to cities. Over the past four years, State cuts to cities have resulted in annual revenue losses to the City's General Fund of $1.5 million; these reductions will impact us each and every future year. Given the "conventional wisdom" in the Legislature - that cities have barely been touched in the past relative to counties and school districts - the State budget situation is a continuing threat to our fiscal health for 1995 -97. /, J/1 ■ Impacts on the local economy. If .the State makes further budget cuts to its own programs, this could significantly affect major local employers such as Cal Poly, Atascadero State Hospital, Regional Water Quality Board, Caltrans, the Men's Colony and other agencies. Major reductions in staffing by the State at these regional facilities would significantly worsen our local economic prospects. These two factors mean that we have to take a very fiscally conservative approach to the budget process, and ensure that the integrity of our budgeting practices is a top priority. FISCAL CONSERVATISM The message of the Orange County investment situation is a simple one: those who violate conservative and prudent fiscal practices expose their agencies to unacceptable risks and perils. We must do our job of producing a responsible budget proposal through a genuine team effort, recognizing that we each have different "positions" to play on the team. The primary responsibility for preparing a fiscally conservative budget - one that ensures that existing service levels are delivered at the lowest possible cost - ultimately rests with the Department Head. I want Departments to take responsibility for submitting budgets that are well- researched, accurate, fully documented, and supported by the facts; budgets that request funding levels necessary to deliver current service levels, not more and not less. Although the Budget Review Team and Analysts will play an important role in this process, I want the use of detailed analysis and a sharp pencil to be the principal domain of the operating departments, not the central budget staff. However, we do need to ensure that department submissions adhere to consistent and uniform standards, which is the principal role that the Budget Review Team (consisting of Ann, Bill, Ken and the three Budget Analysts - Carolyn, Deb and Linda) will play in this process. In summary, I want to achieve a fiscally conservative budget, and I will hold the operating departments principally accountable for achieving this goal. KEY ELEMENTS OF THE BUDGET PROCESS It is my goal to develop and implement a clear -cut budget process. While recognizing that our operations are relatively complex, the process should be straightforward. There will be no "targets" this time for departmental budgets. Line item program budgets will be developed based on straightforward and honest assessments of what is required to deliver current service levels and our need to develop a fiscally conservative financial plan. The six basic tasks involved in the budget process are: ,1My8 ■ Finance prepares a fiscal forecast for the next five years ■ Council sets goals for the next two years ■ Departments build budget submissions ■ Budget Review Team analyzes departmental budget submissions ■ CAO makes budget decisions and issues preliminary Financial Plan ■ Council adopts the budget after public review Let's focus on the departmental budget building, review, and CAO decision - making aspects of this process. ■ Detail Review. As noted above, the operating departments have the primary responsibility for preparing the budget, and for doing so in a manner consistent with the goals and values discussed earlier. Department budget submissions will first be reviewed by assigned Analysts. If there are any unresolved issues - disagreements on the need or justification for certain line items, or requests by the Analysts for additional supporting information or corrections to those already submitted - this will be resolved on an as- needed basis by the Director of Finance and the assigned Analyst meeting face -to -face with the Department Head and relevant staff. I expect these occasions to be rare, and best addressed on a timely, informal basis. At this stage, if issues are not resolved by the Director of Finance to the satisfaction of the Department Head, the issue should be brought directly to me by the Department Head. ■ Policy Review. We will continue to have formal reviews of significant operating program changes and. CIP project requests as we have in the past. This will involve special purpose reviews by the CIP Coordinating Committee, MIS Steering Committee, Fleet Management Committee and any other special purpose internal review groups as well as by the Budget Review Team. ■ Budget Review Team Recommendations. After this process, I will sit down with the Budget Review Team and receive their advice and preliminary recommendations on the budget. Although I want Department Heads to take responsibility for their budgets in particular and for the City's fiscal health in general, the Finance Director, Personnel Director and Assistant CAO have unique and distinct responsibilities to view the organization, its financial resources, and its human resources in a broad, Citywide fashion. They have been assigned roles in this process that reflect these responsibilities. The Budget Review Team is not self- appointed; they are filling necessary roles and tasks that have been assigned to them. ■ Department Head Review. The input and perspectives of Department Heads as a group and individually needs to be an integral part of the budget process before I make my final recommendations to the Council. I envision two opportunities for making this happen as part of the 1995 -97 Financial Plan process: 1. After the Budget Review Team has made their preliminary recommendations to me, the Department Heads will meet as a group to review and discuss them, and offer their recommendations to me regarding priorities, etc. 1.49 2. After this group review, Department Heads are welcome to meet with me individually to further discuss any significant concerns that they may have regarding recommendations made to me by either the Department Heads as a group or by the Budget Review Team. ■ CAO Preliminary, Budget. As clearly set forth in the City Charter, it is the CAO's responsibility to prepare and submit the preliminary budget for the Council's consideration. I take this singular responsibility seriously. After considering the thoughts and advice of Department Heads and Budget Review Team, and after carefully choosing what I believe to be in the best overall interest of the organization and community, I will make the final decisions about what is to be included in the preliminary Financial Plan. At that point, r will expect the full support of the Department Heads in the budget submitted to the Council. DEPARTMENTAL PARTICIPATION Just as 'I want a process that relies on the participation of a broad range of players - Department Heads, .Budget Review Team, special staff policy committees - in assisting me in making my final budget recommendations, I encourage you to also use as broad - based, inclusive process as possible in preparing your final recommendations to me. While you will be personally responsible and accountable for the ..quality and credibility of the budget recommendations that come from your department, the process can and should involve appropriate members of your staff. DEALING WITH THE UNCERTAINTY OF STATE BUDGET ACTIONS As we discussed at a previous Department Head meeting, our approach will be to build our budget based on our present and projected City financial picture. We will not assume any further State cuts to cities, simply because - at this point and probably throughout the Spring - we will not have a sufficient basis for any such assumptions, and I want to avoid unwarranted speculation (and the needless anxiety that will accompany it) about what the State may or may not do. When we know definitely what cuts, if any, the State implements for 1995 -97, we will respond at that time based on the extensive expenditure and revenue options we have already prepared as part of the 1993 -95 Financial Plan. Our goal then, as always, will be to deliver a balanced budget - to live within our means. BUDGET BALANCING CHALLENGES In 1993 -95, our task was fundamentally different from previous financial plans: to identify the services we would no longer be providing after budget adoption. This year I believe our task at the staff level will be to prepare a budget that maintains our current service levels but does not augment or enhance them, except as directed by the Council as part of the goal - setting process, or as you and I both agree are necessary to bring an A&S D existing service level up to an acceptable community standard. In short, our goal will be to prepare a budget that respects our true revenue base without reducing services. This means that we have to be extremely cautious about any service expansions or enhancements. Translated into practical terms, this means that no requests for regular staffing increases should be submitted unless absolutely necessary - consistent with our Human Resources Management Policy (see attached) - to do the following: ■ Maintain existing service levels ■ Bring an existing service level up to an acceptable standard ■ Implement Council goals as developed by them at the beginning of the budget process In considering new initiatives or goals, it important for us to keep in mind our fiscal circumstances, and to realize that responding to new priorities will require reallocating existing resources rather than adding them if new resources are not available. X40 V IZY'Kk1�I My desire, based on the City's current situation, is to produce a balanced budget that is fiscally conservative in its fundamental assumptions. I want to achieve this primarily through the efforts of operating department staff and Department Heads. However, I have also asked the Budget Review Team to be as rigorous as necessary in order to assure accurate and well thought -out budget submissions. This process is intended to acknowledge and respect the appropriate roles and responsibilities of all parties involved, and through a genuine team effort, produce the best possible budget document for Council consideration. ATTACE24ENTS ■ Tentative budget schedule ■ Human resource management policy ( age B -15 of the 1993 -95 Financial Plan) C4-6 ind&eL&JL i01 �'S -ejtcevrt) BI=PROC ® -51 Tentative 1995 -97 Financial Plan Calendar WIiEN j WHAT October 13, 1994 0 Council advisor}, bod}'chairs review budget process at Mayor /Adi-isory Body Chairs Quarterly Meeting November, 1994 0 Council advisory bodies begin preparing work program andgoals for consideration by the Council as part of 1995-97 Financial Plan process • Finance be gins preparing five year f1scol forecast December 13, 1994 Council reviet;s and approves tentative Financial Plan Regular Council Meeting calendarfor 1995 -97 Mid — December, 1994 Finance begins drafting budget instructions and developing budget preparation materials.: CAO approves administrative policies and p: ocedures for internal budget preparation January 10, 1995 Council revie:vs and considers purpose, goals and organization of the Council Study Session Financial Plan document: etisting policies and possible revisions.-programs, related work efforts recently completed or currently underway (such ns General Plan programs, cost ofsertices stuciv, .4115 master plan) January 21, 1995 Council setsgoals for 1995 -97.• provides other directions to staff in Council Budget Workshop preparing the Financial Plan Januaryld, 1995 Continued budget worksbop to be held only if necessary to Council Budget Workshop complete Council goal— setting Late January, 1995 Finance issues budget instructions reflecting Councilgoals and CAO's administrative policies and procedures • Depariments bqc n preparing budget submittals February 28, 1995 Council considers trod —year budget review: approves Mid —Year Review budget cbangesasappropriate Early March, 1995 Departments subv t budget requests • Budget Review Team and otherspectal internal reviewgroups (such as the CIP Coordinating Committee, MIS Steering Committee and Fleet Management Committee) begin evaluating budget submittals Mid— March, 1995 Special budget workshop to be held only ifnecessary to Council Budget Workshop prov7de staff with supplemental budget direction Early May, 1995 0 CAO finalizes budget recommendations • Finance completes and distributes Preliminary FinanualPlan Middle May through Council holds budget workshops and hearings as necessary to consider the June, 1995 Prebatinary Financial Plan (three to sir sessions) By June 30, 1995 Counciladopts 1995- 971--inanclal Plan and 199.5 -96 Budget FPCAL97 /�-sA CITY OF SAN LUIS OBISPO Excerpts from the 1993 -95 FINANCIAL PLAN Why did we prepare this summary? The City receives many requests throughout the year for copies of our two —year budget and financial plan. %lost of these requests are from other cities who want to see how our budget document looks, what it includes, and how it is prepared, rather than to actually review our financial condition, spending trends, revenue forecasts, or major goals and objectives. To respond to these requests in a less expensive way, we have prepared this summary of key excerpts from our Financial Plan which we believe provides the kind of general informatidn that is of the most interest to them. If you determine that you need the entire budget document, there is a $15.00 charge to cover the costs of printing and mailing. What did we include? Prc ra cc Bricfly describes why we use a two —vicar budget, what it includes, and how it is organized. Section A — Introduction Since this section includes the Budget Message and other City — specific information such as a directory of officials and organization chart, we have only included our "fission Statement" and GFOA ,1w:ird for Distinguished Budget Presentation. Section 11 — Politics and Objectives Because this section includes many of the things that make our budget unique, we have included its entire contents. Section C — Budget Graphics Provides a summary of section contents and includes one sample chart. Section D — Operating Programs Descnibes the purpose and organization of this section, and includes two samples of the information that is prepared for each of the City's 70 operating programs. Section !s — Capital rmprovcmcni Plan Dcscribcs the purpose and organiTttion of the CIP and includes key excerpts from it. Section F — Debt Service Requirements Summarizes the City's debt service obligations at the beginning of the fiscal year by purpose and funding source. Section G — Changes in Fund Balance Summarizes section contents, overviews the organization of the City's funds, includes combining schedules of fund balances by fund type, and provides examples for two individual funds (General and Water) of the schedules included in the financial plan for each of the City's fifteen operating funds. Section 11— Financial & Statistical Tables Summarizes section contents and includes three samples: revenue projections, revenue assumptions, and combined expenditures. Section I — Budgct Reference Materials Summarizes section contents and provides major preparation guidelines and calendar. If you have any questions concerning these excerpts from our Financial Plan, please do not hesitate to contact us at the following address or phone number. 990 Palm Street RO Box 8100 San Luis Obispo, CA 93403 / -53 PREFACE HOW TO USE THE FINANCIAL PLAIN DOCUMENT This document reflects the City's continued use of a two -year financial plan which emphasizes long - range planning and effective program management. The benefits identified when the City's first two -year plan was prepared for 1983 -85 continue to be realized: • Reinforcement of long -range planning. • Concentration on developing and budgeting for significant objectives. ■ Establishment of realistic schedules for completing program objectives • A pro - active budget providing for orderly and structured operations. • Promotion of more orderly spending patterns. • Savings in time and resources allocated to preparing annual budgets. Appropriations continue to be made annually; however, the Financial Plan is the foundation for preparing the budget for the second year. Additionally, unexpended operating appropriations from the first year may be carried over for specific purposes into the second year with the approval of the City Administrative Officer. The City's Financial Plan serves four primary roles: s Policy Document Financial Plan • Operations Guide • Communication Tool To meet these roles, the Financial Plan is organized into the following nine sections. Each of these sections is introduced by an overview which comprehensively describes its purpose, format, and content. Section A Introduction Includes the Budget Message from the City Administrati -ve Officer, a Directory of Officials and Advisory Bodies, Organization Chart, and Award for Distinguished Budget Presentation. Section B Policies and Objectives Summarizes general budget policies and new significant program policies that guide the preparation and management of the budget. This section also includes major city -wide goals. Section C Budget Graphics and Summaries Provides simple pie charts and tables which highlight key financial relationships and summarize the overall budget document. i 14=10 PREFACE HOW TO USE THE FINANCIAL PLAN DOCUMENT (continued) Section D Operating Programs Presents the City's operating programs which form the City's basic organizational units, allow for the provision of essential services to citizens, and enable the City to accomplish the following tasks: • Establish policies and goals which define the nature and level of services to be provided. • Identify activities performed in delivering program services. • Propose objectives for improving the delivery of service. • Identify and appropriate the resources required to perform activities and accomplish objectives. The City's operating programs are organized into six major functional areas which in many instances cross departmental boundaries and funding sources: • Public Safety • Public Utilities • Transportation • Leisure, Cultural, and Social Services • Community Development • General Government Section E Capital Improvement Plan Presents the City's Capital Improvement Plan (CIP) which includes all of the City's construction projects and capital purchases (other than replacement items to be purchased through the Equipment Replacement Fund) which cost more than $10,000. Section F Debt Service Requirements Summarizes the City's debt obligations at the beginning of the Financial Plan period. Section G Changes in Fund Balance Provides combined and individual statements of revenues, expenditures, and changes in fund balance for each of the City's fourteen operating funds. Section H Financial and Statistical Tables Includes summaries which integrate the other Financial Plan sections as well as provide supplemental financial and statistical information such as detailed revenue estimates, interfund transactions, authorized regular positions, summary of significant operating program changes, appropriations limit history, and general demographic information about the City. Section I Budget Reference Materials Describes the major policy documents and preparation guidelines used in developing and executing the Financial Plan; and provides a Budget Glossary of terms that may be unique to local government finance or the City's Financial Plan. ii /wSS GOVERNMENT FINANCE OFFICERS ASSOCIATION Distinguished Budget Presentation Award PRESENTED TO City of San Luis Obispo, California For the Fiscal Year Beginning July 1; 1992 President Executive Director The Government Finance Officers. Association of the United States and Canada (GFOA) presented a Distinguished Budget Presentation Award to the City of San Luis Obispo, California for its annual budget for the fiscal year beginning July 1, 1992. In order to receive this award, a governmental unit must publish a budget document that meets program criteria as a policy document, as an operations guide, as a financial plan and as a communications device. The award is valid for a period of one year only. We believe our current budget continues to conform to program requirements, and we are submitting it to GFOA to determine its eligibility for another award. A -12 ,1-5b MISSION STATEMENT SAN LUIS OBISPO STYLE Quality With Vision WHO ARE WE? People Serving People ■ A team that puts high value on each citizen it serves. ■ Providers of programs that meet basic service needs of each citizen. ■ Enhancers of the quality of life for the community as a whole. WHAT DO WE STAND FOR? Quality in all Endeavors -- Pride in Results ■ Service to the community -- the best -- at all times ■ Respect -- for each other -and for those we serve. ■ Value -- ensuring delivery of service with value for cost. ■ Community involvement -- the opportunity to participate in attaining the goals of the City. 7 WHERE ARE WE GOING? Into the Future with a Design ■ PIanning and managing for levels of service consistent Aith-the needs of the citizens. ■ Offering skills development and organizational direction for employees in order to improve the delivery of municipal services. ■ Developing sources of funding and establishing a sound financial management program which will result in fiscal independence and flexibility in the delivery of City services. ■ Providing the residents of the City with accurate and timely information on issues which affect them, and encouraging the full utilization of City services. ■ Promoting the City as a regional trade, recreational and tourist center and improving the quality of life for residents and visitors. A -13 n POLICIES AND OBJECTIVES OVERVIEW The overall goal of the City's Financial Plan is to establish and maintain effective management of the City's financial resources. Formal statements of budgetary policies and major objectives provide the foundation for achieving this goal. Accordingly, this section outlines the policies used in guiding the preparation and management of the City's overall budget and the major objectives to be accomplished. This section is composed of two major parts: • General Budget Policies • Major City Goals GENERAL BUDGET POLICIES The following policies guide the preparation and execution of the 1991 -93 Financial Plan: • Financial Plan Organization • General Revenue 1%•fanagement • ,User Fee Cost Recovery Goals Recovery Goals • Enterprise Funds Fees and Rates • Revenue Distribution ■ - Investments • Capital Financing and Debt Management • Appropriation Limitation • Fund Balance Designations and Reserves • Capital Improvement Mangement • Human Resources Management • Productivity • Contracting for Services The enterprise fund, user fee cost recovery, revenue distribution, capital improvement management, and fund balance polices reflect the following changes for 1993 -95 based on direction provided by the Council in November of 1992 as part of the "Action Plan for Fiscal Health ", as well as the "Strategic Budget Direction" workshop in March of 1993: Enterprise Fund Rates and Fees ■ The golf course will be accounted for as an enterprise operation effective with the 1993- 95 Financial Plan. ■ As approved by Council as part of the Short -Range Transit Plan, the cost recovery goal for fare box revenues has been increased from 10% to 30%. User Fee Cost Recovery Goals ■ The overall cost recovery goal for recreation programs has been increased from 40% to 50°10. Revenue Distribution ■ Formal allocations of property tax revenues have been discontinued effective with 1992- 93. B -t t ��/ O POLICIES AND OBJECTIVES OVERVIEW (continued) Capital Improvement Management ■ Use of the Capital Improvement Plan (CIP) control account, under which all CIP appropriations were previously pooled by fund and held there pending release for specific appropriation on a project -by- project basis, has been discontinued. Funding is now tied to specific projects, although project appropriations will generally continue to be made at the time of bid award. Fund Balance Designations and Reserves ■ Minimum fund balance requirements in the Equipment Replacement Fund have been reduced from 309o' to 20c7o of the original purchase cost of equipment accounted for in this fund. Other Financial Plan Policy Issues The revenue distribution policies call for allocating 20% of Transient Occupancy Tax revenues to community promotion, cultural activity, and economic stability activities; and the City's public art policy calls for allocating 110 of the cost of eligible construction projects for public art. Although no formal changes to these policies are recommended, these guidelines are not reflected in the. 1993 -95 Financial Plan based on the City's fiscal situation. AWOR CITY GOALS Under the City Charter, the Mayor is responsible for presenting an annual work program in Nlay of each year to the Council for its consideration and adoption. Beginning with 1988 -89, the Council Work Program has been developed and reviewed as an integral component of the City's financial planning and budgetary process. Building on our experiences in preparing the 1989 -91 and 1991 -93 Financial Plans in attempting to meaningfully integrate the budgetary process and development of the Council Work Program, early Council involvement in setting major City goals and priorities has become the first major step in preparing the Financial Plan. This approach allows the City to better focus our organization- wide efforts and resources in ensuring that the most important, highest - priority objectives are accomplished, and that these high - priority objectives are communicated to the public. Using a process similar to the one developed in preparing the 1991 -93 Financial plan, the Council held two all -day budget workshops in January and February to review and discuss the City's fiscal situation, approach to preparing the Financial Plan, strategies for balancing the budget, service levels provided by the City, and to identify goals for the 1993 -95 Financial Plan. The outcome of these goal - setting workshops, which sets major City goals and prioritizes them, is provided in this part of Section B. B -2 � +� POLICIES AND OBJECTIVES GENERAL BUDGET POLICIES FINANCIAL PLAN ORGA:\'IZATION A. Through its financial plan, the City will: 1. Identify community needs for essential services. 2. Organize the programs required to provide these essential services. 3. Establish program policies and goals which define the nature and level of program services required. 4. Identify activities performed in delivering program services. 5. Propose objectives for improving the delivery of program services. 6. Identify and appropriate the resources required to perform program activities and accomplish program objectives. 7. Set standards to measure and evaluate the: a. output of program activities b. accomplishment of program objectives C. expenditure of program appropriations B. Following the City's favorable experience over the past ten years, the City will continue using a two -year financial plan, emphasizing long =range planning and effective program management. The benefits identified when the City's first two -year plan was prepared for 1983 -85 continue to be realized: 1. Reinforcement of long -range planning. 2. Concentration on developing and budgeting for significant objectives. 3. Establishment of realistic schedules for completing program objectives. 4. A pro- active budget providing for orderly and structured operations. 5. Promotion of more orderly spending patterns. 6. Savings in time and resources allocated to preparing annual budgets. C. The two -year financial plan will establish measurable program objectives and allow reasonable time to accomplish those objectives., D. Before the beginning of the second year of the two -year cycle, the Council «ill review progress during the first year and approve appropriations for the second fiscal year. E. Operating program appropriations not spent during the first fiscal year may be carried over for specific purposes into the second fiscal year with the approval of the City Administrative Officer. F. The status of major program objectives will be formally reported to the Council on an ongoing, periodic basis. G. The Council will review and amend appropriations, if necessary, six months after the beginning of each fiscal year. B -3 /= D POLICIES AND OBJECTIVES GENERAL BUDGET POLICIES (continued) GENERAL REVEIN'UE MANAGEMENT A. The City will seek to maintain a diversified and stable revenue base to protect it from short - term fluctuations in any one revenue source. B. To emphasize and facilitate long -range financial planning, the City will maintain current projections of revenues for the succeeding five years. C. The City will make all current expenditures with current revenues, avoiding procedures that balance current budgets by postponing needed expenditures, accruing future revenues, or rolling over short -term debt. USER FEE COST RECOVERY GOALS A. Ongoing Review Fees will be reviewed and updated on an ongoing basis to ensure that they keep pace with changes in the cost- of- lidrig as well as changes in methods or levels of service delivery. B.... User_ Fee Cost Recovery Levels In setting user fees and cost recovery levels, the following factors will be considered: 1. Community-Wide vs Special Benefit The level of user fee cost recovery should consider the community-wide versus special service nature of the program or activity. The use of general purpose (tax) revenues is appropriate for community-wide services, while user fees are appropriate for services which are of special benefit to easily identified individuals or groups. 2. Service Recipient vs Service Driver After considering community-wide versus special benefit of the service, the concept of service recipient versus service driver should also be considered. For example, it could be argued that the applicant is not the beneficiary of the City's development review efforts: the community is the primary beneficiary. However, the applicant is the driver of development review costs, and as such, cost recovery from the applicant is appropriate. 3. Effect of Pricing on the Demand for Services The level of cost recovery and related pricing of services can significantly affect the demand and subsequent level of services provided. At full cost recovery, this has the specific advantage of ensuring that the City is providing services for which there is genuinely a market that is not overly - stimulated by artificially low prices. Conversely, high levels of cost recovery will negatively impact on the delivery of services to lower income groups. This negative feature is especially pronounced, and works against public /_ H -4 / V POLICIES AND OBJECTIVES GENERAL BUDGET POLICIES (continued) policy, if the services are specifically targeted to low income groups. 4. Feasibility of Collection and Recovery Although it may be determined that a high level of cost recovery may be appropriate for specific services, it may be impractical or too costly to establish a system to identify and charge the user. Accordingly, the feasibility of assessing and collecting charges should also be considered in developing user fees, especially if significant program costs are intended to be financed from that source. C. Factors Which Favor Low Cost Recovery Levels Very low cost recovery levels are appropriate under the following circumstances: 1. There is no intended relationship between the amount paid and the benefit received. Almost all "social service" programs fall into this category as it is expected that one group will subsidize another. 2. Collecting fees is not cost - effective or will significantly impact the efficient delivery of the service. 3. There is no intent to limit the use of (or entitlement to) the service. Again, most "social service" programs fit into this category, as well as many public safety (police and fire) emergency response services. Historically, access to neighborhood and community parks would also fit into this category. 4. The service is non - recurring, generally delivered on a "peak demand" or emergency basis, cannot reasonably be planned for on an individual basis, and is not readily available from a private sector source. Many public safety services also fall into this category. 5. Collecting fees would discourage compliance with regulatory requirements and adherence is primarily self - identified, and as such, failure to comply would not be readily detected by the City. Many small -scale licenses and permits might fall into this category. D. Factors Which Favor High Cost Recovery Levels The use of service charges as a major source of funding service levels is especially appropriate under the following circumstances: 1. The service is similar to services provided through the private sector 2. Other private or public sector alternatives could or do exist for the delivery of the service. 3. For equity or demand management purposes, it is intended that there be a direct relationship between the amount paid and the level and cost of the service received. B -5 �-6a POLICIES AND OBJECTIVES GENERAL BUDGET POLICIES (continued) 4. The use of the service is specifically discouraged. Police responses to disturbances or false alarms might fall into this category. 5. The service is regulatory in nature and voluntary compliance is not expected to be the primary method of detecting failure to meet regulatory requirements. Building permit, plan checks, and subdivision review fees for large projects would fall into this category. E. General Concepts Regarding the Use of Service Charges The following general concepts will be used in developing and implementing service charges:. 1. Revenues should riot exceed the reasonable cost of providing the service. 2. Cost recovery goals should be based on the total cost of delivering the service, including direct costs, departmental administration costs, and organization -vide support costs such as accounting, personnel, data processing, vehicle maintenance, and insurance. 3. The method of assessing and collecting fees should be as simple as possible in order to reduce the administrative cost of collection. 4. Rate structures should be sensitive to the "market" for similar services as well as to smaller, infrequent users of the service. 5. A unified approach should be used in determining cost recovery levels for various programs based on the factors discussed above. F. Low Cost - Recovery Services Based on the criteria discussed above, the following types of services should have very low cost recovery goals. In selected circumstances, there may be specific activities within the broad scope of services provided that should have user charges associated with them. However, the primary source of funding for the operation as a whole should be general purpose revenues, not user fees. 1. Delivery of public safety emergency response services such as police patrol services and fire suppression. 2. Maintaining and developing public facilities that are provided on a uniform, community - wide basis such as streets, parks, and general purpose buildings. 3. Delivery of social service programs and economic development activities. G. Recreation Programs The following cost recovery policies apply to the City's recreation programs: B -6 e-43 POLICIES AND OBJLILTIVES GENERAL BUDGET POLICIES (continued) C. The City will review and adjust enterprise fees and. rate structures as required to ensure that they remain appropriate and equitable. REVENUE DISTRIBUTION The Council recognizes that generally accepted accounting principles for local government discourage the "earmarking" of General Fund revenues, and accordingly, the practice of earmarking general fund revenues for specific programs should be minimized in the City's administration and management of its fiscal affairs. Approval of the following Revenue Distribution policies does not prevent the Council from directing General Fund resources to other functions and programs as necessary. A. Property Tax Allocations 1. Section 807 of the City Charter establishes property tax rate authorizations for general municipal purposes as well as for debt service, retirement obligations, public improvements and betterments, library purposes, and parks and recreation. The passage of Proposition 13 on June 6, 1978, drastically changed the method of establishing and allocating property tax revenues for all local agencies in California, superseding the City's own charter provisions in this area. In addition to limiting annual increases in market value, placing a ceiling on voter - approved indebtedness, and redefining assessed valuations, Proposition 13 established a maximum County-wide levy for general revenue purposes of 1% of market value. Under subsequent state legislation which adopted formulas for the distribution of this County-wide levy, the City now receives a percentage of total property tax revenues collected County-wide as determined by the County Auditor - Controller. 2. Since the City no longer controls setting and distributing property tax revenues, formal allocations of property tax revenues have been discontinued effective with fiscal year 1992 -93: these are general purpose revenues, and formally distributing them between funds needlessly complicates accounting for them. Instead, operating transfers will be made from the General Fund as needed to support expenditures in the Capital Outlay and Debt Service Funds, and library related costs will be directly accounted for in the General Fund. B. All Gasoline Tax revenues (which are restricted by the State for street - related purposes) will be used for maintenance activities. Since the City's total expenditures for gas tax eligible programs and projects are much greater than this revenue source, this approach significantly reduces the accounting efforts required in meeting State reporting requirements. C. All Transportation Development Act (TDA) revenues will be allocated to alternative transportation programs, including regional and municipal transit systems, bikeway improvements, and other programs or projects designed to reduce automobile usage. Because TDA revenues will not be allocated for street purposes, it is expected that alternative transportation programs - in conjunction with other state or federal grants for this purpose - will be self - supporting from TDA revenues. B -9 r POLICIES AND OBJEG i IVES GENERAL BUDGET POLICIES (continued) D. Twenty percent (20 %) of transient occupancy tax (T.O.T.) revenues should be allocated for cultural activities, community promotion, and economic stability activities; remaining TOT revenues (80 %) should be unrestricted within the General Fund and used in funding programs or projects that benefit our residents as well as visitors. Based on the City's fiscal situation, this guideline is not being used for 1993 -95. E. All parking fine revenues will be allocated to the Parking Fund. F. A minimum of $50,000 annually shall be designated in the Capital Outlay Fund for Mission Plaza improvements and expansions. INVESTN'IEN7S A. Investments and cash management will be the responsibility of the City Treasurer or designee. B. The City's primary investment objective is to achieve a reasonable rate of return while minimizing the potential for capital losses arising from market changes or issuer default. Accordingly, the following factors will be considered in priority order in determining individual investment placements: 1. Safety 2. Liquidity 3. Yield. C. The City will strive to keep all idle cash balances fully invested through daily projections of cash flow requirements. To avoid forced liquidations and losses of investment earnings, cash flow and future requirements will be the primary consideration when selecting maturities. D. As the market and the City's investment portfolio change, care will be taken to maintain a healthy balance of investment types and maturities. E. The City will invest only in those instruments authorized by the California Government Code Section 53601. The City will not invest in stock, will not speculate, and will not deal in futures or options. The investment market is highly volatile and continually offers new and creative opportunities for enhancing interest earnings. Accordingly, the City will thoroughly investigate any new investment vehicles prior to committing City funds to them. F. Current financial statements will be maintained for each institution in which cash is invested. Investments will be limited to 20 percent of the total net worth of any institution and may be reduced further or refused altogether if an institution's financial situation becomes unhealthy. G. In order to maximize yields from its overall portfolio, the City will consolidate cash balances from all funds for investment purposes, and will allocate investment earnings to each fund in accordance with generally accepted accounting principles. B -10 /— (0 so POLICIES AND OBJE%, FIVES GENERAL BUDGET POLICIES (continued) H. Ownership of the City's investment securities will be protected through third -parry custodial safekeeping. I. The City Treasurer will develop and maintain a comprehensive, well documented investment reporting system which will comply with Government Code Section 53607. This system will provide the Management Team and City Council with appropriate investment performance information. J. The City Treasurer will develop and maintain an Investment Management Plan which addresses the City's administration of its portfolio, including investment strategies, practices, and procedures. CAPITAL FINANCING AND DEBT MANAGEMENT Capital Financing A. The Citv will consider the use of debt financing only for one -time capital improvement projects and only under the following circumstances: 1:..... When_ the project's useful life will exceed the term of the financing. 2. When project revenues or specific resources will be sufficient to service the long -term debt. B. Debt financing will not be considered appropriate for any recurring purpose such as current operating and maintenance expenditures. The issuance of short -term instruments such as revenue, tax, or bond anticipation notes is excluded from this limitation. C. Capital improvements will be financed primarily through user fees, service charges, assessments, special taxes, or developer agreements when benefits can be specifically attributed to users of the facility. Accordingly, development impact fees should be created and implemented at levels sufficient to ensure that new development pays its fair share of the cost of constructing necessary communities facilities. D. The City will use the following criteria to evaluate pay -as- you -go versus long -term financing in funding capital improvements: Factors Which Favor Pay As- You -Go 1. Current revenues and adequate fund balances are available or project phasing can be accomplished. 2. Existing debt levels adversely affect the City's credit rating. 3. Market conditions are unstable or present difficulties in marketing. Factors Which Favor Long Term Financing 4. Revenues available for debt service are deemed to be sufficient and reliable so that long- B -11 POLICIES AND OBJECTIVES GENERAL BUDGET POLICIES (continued) term financings can be marketed with investment grade credit ratings. 5. The project securing the financing is of the type which will support an investment grade credit rating. 6. Market conditions present favorable interest rates and demand for City financings. 7. A project is mandated by state or federal requirements and current revenues and available fund balances are insufficient. 8. The project is immediately required to meet or relieve capacity needs, current resources are unavailable, but a long -term revenue source has been identified. 9. The life of the project or asset to be financed is 10 years or longer. Debt Management E. The City will not obligate the General Fund to secure long -term financings except when marketability can be significantly enhanced. F. No more than 60% of capital improvement outlays will be funded from long term financings; and direct debt will not exceed 2% of assessed valuation. G. An internal feasibility analysis will be prepared for each long -term financing which analyzes the impact on current and future budgets for debt service and operations. This analysis will also addreis the reliability of revenues to support debt service. H. The City will generally conduct financings on a competitive basis. However, negotiated financings may be used due to market volatility or the use of an unusual or complex financing or security structure. 1. The City will seek an investment grade rating (Baa /BBB or greater) on any direct debt and will seek credit enhancements such as letters of credit or insurance when necessary for marketing purposes, availability, and cost - effectiveness. J. The City will monitor all forms of debt annually coincident with the City's Financial Plan preparation and review process and report concerns and remedies, if needed, to the Council. K. The City will diligently monitor its compliance with bond covenants and ensure its adherence to federal arbitrage regulations. L. The City will maintain good communications with bond rating agencies about its financial condition. The City will follow a policy of full disclosure on every financial report and bond prospectus (Official Statement). APPROPRIATIONS LIMITATION A. The Council will annually adopt a resolution establishing its appropriations limit calculated according to Article XIIIB of the Constitution of the State of California, Section 7900 of the State of California Government Code, and any other voter approved amendments or state B -12 ���� POLICIES AND OBJET (IVES GENERAL BUDGET POLICIES (continued) legislation that affect the City's appropriations limit.. B. Although there is no legal requirement for a public hearing, at least 15 days notice will be required before the Council considers a resolution to establish an appropriations limit. The City will generally consider this resolution in connection with final approval of the budget. C. The City will strive to develop revenue, sources, both new and existing, which are considered non -tax proceeds in calculating its appropriations subject to limitation. D. The City wit annually review user fees and charges and report to the Council the amount of program subsidy, if any, that is being provided by the General or Enterprise Funds. E. The City will actively support legislation or initiatives sponsored or approved by League of California Cities which would modify Article XIIIB of the Constitution in a manner which would allow the City to retain projected tax revenues resulting from growth in the local economy for use as determined by the Council. F. The City shall seek a vote of the public to amend its appropriation limit at such time that tax proceeds are in excess of allowable limits. FUND BALANCE DESIGNATIONS AND RESERVES A. The City will maintain fund balances of at least 20% of operating expenditures in the General Fund as well as the Water, Sewer, Parking, and Golf Enterprise Funds. This is considered the minimum level necessary to maintain the City's credit worthiness and to adequately provide for: 1. Economic uncertainties, local disasters, and other financial hardships or downturns in the local or national economy. 2. Contingencies for unseen operating or capital needs. 3. Cash flow requirements. B. The City will establish and maintain an Equipment Replacement Fund to provide for the timely replacement of vehicles and capital equipment. Under the City's current definition of capital outlay, this includes items with an individual replacement cost of 53,000 or more. The City will maintain a minimum fund balance in the Equipment Replacement Fund of at least 20% of the original purchase cost of the items accounted for in this fund. The annual contribution to the Fund will generally be based on the annual use allowance which is determined based on the estimated life of the vehicle or equipment and its original purchase cost. Interest earnings and sales of surplus equipment as well as any related damage and insurance recoveries will be credited to the Equipment Replacement Fund. C. The Council may designate specific fund balance levels for future development of capital projects which it has determined to be in the best long -term interests of the City. D. In addition to the designations noted above, fund balance levels will be sufficient to meet funding requirements for projects approved in prior years which are carried forward into the B -13 ��4a POLICIES AND OBJEU i IVES - GENERAL BUDGET POLICIES (continued) new year; debt service reserve requirements; reserves for encumbrances; and other reserves or designations required by contractual obligations, state law, or generally accepted accounting principles. CAPITAL IAIPROVEMENT MANAGEMENT A. Construction projects and capital purchases (other than vehicles or equipment to be acquired through the Equipment Replacement Fund) which cost more than $10,000 will be included in the Capital Improvement Plan (CIP); minor capital outlays of $10,000 or less will be included with the operating program budgets. B. • The purpose of the CIP is to systematically plan, schedule, and finance capital projects to ensure cost - effectiveness as well as conformance with established policies. The CIP is a four year plan organized into the same functional groupings used for the operating programs. The CIP will reflect a balance between capital replacement projects which repair, replace, or enhance existing facilities, equipment or infrastructure; and capital facility projects which significantly expand or add to the City's existing fixed assets. C. Every CIP project will have a project manager who will prepare the project proposal, ensure that required phases are completed on schedule, authorize all project expenditures, ensure that all regulations and laws are observed, and periodically report project status. D. A CIP Coordinating Committee, headed by the City Administrative Officer or designee, will review project proposals, determine project phasing, recommend project managers, review and evaluate the draft CIP budget document, and report CIP project progress on an ongoing basis. E. The CIP will emphasize project planning, with projects progressing through at least two and up to six of the following phases: 1. Designate. Appropriates funds based on projects designated for funding by the Council through adoption of the Financial Plan. 2. Study. Includes concept design, site selection, feasibility analysis, schematic design, environmental determination, property appraisals, scheduling, grant application, grant approval, and specification preparation for equipment purchases. 3. Acquisition Includes equipment purchases and property acquisition for projects, if necessary. 4. Design Includes final design, plan and specification preparation, and construction cost estimation. 5. Constr utiom Includes bid administration, construction, project inspection and management, and closeout. 6. Debt Service. Includes installment payments of principal and interest for completed B -14 / -� POLICIES AND OBJECTIVES GENERAL BUDGET P011CIES (continued) projects funded through debt financings. Expenditures for this project phase are included in the Debt Service section of the Financial Plan. Generally, it will become more difficult for a project to move from one phase to the next. As such, more projects will be studied than will be designed, and more projects will be designed than will be constructed or purchased during the term of the CIP. F. The City's annual CIP appropriation for study, design, acquisition, and /or construction is based on the projects designated by the Council through adoption of the Financial Plan. Adoption of the Financial Plan CIP appropriation does not automatically authorize funding for specific project phases. This authorization generally occurs only after the preceding project phase has been completed and approved by the Council and costs for the succeeding phases have been fully developed. Accordingly, project appropriations are generally made when contracts are awarded. If project costs at the time of bid award are less than the budgeted amount, the balance will be unappropriated and returned to fund balance. If project costs at the time of bid award are greater than budget amounts, five basic options are available to the Council: 1. Eliminate the project. 2 Defer the project for consideration to the next Financial Plan period. 3. Rescope or change the phasing of the project to meet the existing budget. 4. Transfer funding from another specified, lower priority project. 5. Appropriate additional resources as necessary from fund balance. G. CIP appropriations lapse three years after budget adoption. Projects which lapse from lack of project account appropriations may be resubmitted for inclusion in a subsequent CIP. Project accounts which have been appropriated will not lapse until completion of the project phase. H. Project phases will be listed as objectives in the program narratives of the programs which manage the projects. I. CIP projects will be evaluated during the budget process and prior to each phase for conformance with the City's Public Art Policy, which generally requires that 1% of eligible project construction costs be set aside for public art. Due to the City's fiscal situation, no funding has been allocated for this purpose in the 1993 -95 Financial Plan. HUMAN RESOURCE MANAGEMENT A. The budget will fully appropriate the resources needed for authorized regular staffing and will limit programs to the regular staffing authorized. B. Staffing and contract service cost ceilings will limit total expenditures for regular employees, temporary employees, and independent contractors hired to provide operating and maintenance services. B -15 -7a POLICIES AND OBJECTIVES GENERAL BUDGET POLICIES (continued) C. Regular employees will be the core work force and the preferred means of staffing ongoing, year -round program activities that should be performed by full -time City employees rather than independent contractors. The City will strive to provide competitive compensation and benefit schedules for its authorized regular work force. Each regular employee will: 1. Fill an authorized regular position. 2. Be assigned to an appropriate bargaining unit. 3. Receive salary and benefits consistent with labor agreements or other compensation plans. D. To manage the growth of the regular work force and overall staffing costs, the City will follow these procedures: 1. The Council will authorize all regular positions. 2. The Personnel Department will coordinate and approve the hiring of all regular and temporary employees. 3. All requests for additional regular positions will include evaluations of: a... The necessity, term, and expected results of the proposed activity. b. Staffing and materials costs including salary, benefits, equipment, uniforms, clerical support, and facilities. C. The ability of private industry to provide the proposed service. d. Additional revenues or cost savings which may be realized. 4. Periodically, and prior to any request for additional regular positions, programs will be evaluated to determine if they can be accomplished with fewer regular employees. (See: Productivity Review Policy) E. The hiring of temporary employees will not be used as an incremental method for expanding the City's regular work force. 1. Temporary employees will include all employees other than regular employees, elected officials, and volunteers. Temporary employees will generally augment regular City sting as extra -help employees, seasonal employees, contract employees, interns, and work -study assistants. The City Administrative Officer and Management Team will encourage the use of temporary rather than regular employees to meet peak workload requirements, fill interim vacancies, and accomplish tasks where less than full -time, year - round staffing is required. Under this guideline, temporary employee hours will generally not exceed 50% of a regular, full -time position (1,000 hours annually). There may be limited circumstances where the use of temporary employees on an ongoing basis in excess of this target may be appropriate due to unique programming or staffing requirements. However, any such exceptions must be approved by the CAO based on the review and recommendation of the Personnel Director. 2. Contract employees will be defined as temporary employees with written contracts B -16 / 7/ POLICIES AND OBJEUTIVES GENERAL BUDGET POLICIES (continued) approved by the CAO who may receive approved benefits depending on hourly requirements and the length of their contract. Contract employees will generally be used for medium -term (generally between six months and two years) projects, programs, or activities requiring specialized or augmented levels of staffing for a specific period of time. The services of contract employees will be discontinued upon completion of the assigned project, program, or activity. Accordingly, contract employees will not be used for services that are anticipated to be delivered on an ongoing basis. H. Independent contractors will not be considered City employees. Independent contractors may be used in two situations: Short-term, peak work load assignments to be accomplished through the use of personnel contracted through an outside temporary employment agency (OEA). In this situation, it is anticipated that the work of OEA employees will be closely monitored by City staff and minimal training will be required. However, they will always be considered the employees of the OEA and not the City. All placements through an OEA will be coordinated through the Personnel Department and subject to the approval of the Personnel Director. 2.:- Construction of public works projects and the provision of operating, maintenance, or specialized professional services not routinely performed by City employees. Such services will be provided without close supervision by City staff, and the required methods, skills, and equipment will generally be determined and provided by the contractor. Contract awards will be guided by the City's purchasing policies and procedures. (See Contracting for Services Policy) PRODUCTIVITY Ensuring the "delivery of service with value for cost" is one of the key concepts embodied in the City's Mission Statement (San Luis Obispo Style - Quality With Vision). To this end, the City will constantly monitor and review its methods of operation to ensure that services continue to be delivered in the most cost - effective manner possible. This review process encompasses a wide range of productivity issues, including: A. Analyzing systems and procedures to identify and remove unnecessary review requirements. B. Evaluating the ability of new technologies and related capital investments to improve productivity. C. Investing in the organization's most valuable asset - its human capital - by developing the skills and abilities of all City employees, with special emphasis on first -line supervisors. D. Developing and implementing appropriate methods of recognizing and rewarding exceptional employee performance. E. Evaluating the ability of the private sector to perform the same level of service at a lower cost B -17 / +7C POLICIES AND OBJEUMES GENERAL BUDGET POLICIES (continued) F. Periodic formal review of operations on a systematic, ongoing basis. G. Maintaining a decentralized approach in managing the City's support service functions. Although some level of centralization is necessary for review and control purposes, decentralization supports productivity by: 1. Encouraging accountability by delegating responsibility to the lowest possible level. 2. Stimulating creativity, innovation, and individual initiative. 3. Reducing the administrative costs of operation by eliminating unnecessary review procedures. 4. Improving the organization's ability to respond to changing needs and identify and implement cost - saving programs. 5. Assigning -responsibility for effective operations and citizen responsiveness to the department. CONTRACTING FOR. SERVICES A. General Policy Guidelines 1. Contracting with the private sector for the delivery of services provides the City with a significant opportunity for cost containment and productivity enhancements. As such, the City is committed to using private sector resources in delivering municipal services as a key element in our continuing efforts to provide cost - effective programs. 2. Private sector contracting approaches under this policy include construction projects, professional services, outside employment agencies, and ongoing operating and maintenance services. 3. In evaluating the costs of private sector contracts compared with in -house performance of the service, indirect, direct, and contract administration costs of the City will be identified and considered. 4. Whenever private sector providers are available and can meet established service levels, they will be seriously considered as viable service delivery alternatives using the evaluation criteria outlined below. 5. For programs and activities currently provided by City employees, conversions to contract services will generally be made through attrition, reassignment, or absorption by the contractor. B -18 POLICIES AND OBJET iIVES GENERAL BUDGET POLICIES (continued) B. Evaluation Criteria Within the general policy guidelines stated above, the cost - effectiveness of contract services in meeting established service levels will be determined on a case -by -case basis using the following criteria: 1. Is a sufficient private sector market available to competitively deliver this service and assure a reasonable range of alternative service providers? 2.- Can the contract be effectively and efficiently administered? 3. What are the consequences if the contractor fails to perform, and can the contract reasonably be written to compensate the City for any such damages? 4. Can a private sector contractor better respond to expansions, contractions, or special requirements of the service? 5. Can the work scope be sufficiently defined to ensure that competing proposals can be fairly and fully evaluated, as well as the contractor's performance after bid award? 6. Does the use of contract services provide us with an opportunity to redefine service levels? 7. Will the contract limit our ability to deliver emergency or other high priority services? 8. Overall, can the City successfully delegate the performance of the service but still retain accountability and responsibility for its delivery? B -19 POLICIES AND MaCTIVES STATEMENT OF MAJOR CITY GOALS PUBLIC SAFETY ■ Evaluate pre - hospital emergency medical care and transport services to eliminate duplication of service, and develop an equitable formula for paramedic service cost recovery and /or consider a City operated patient transport system. PUBLIC UTILITIES ■ Continue to aggressively pursue the development of a long range water supply, including the Nacimiento project, Salinas Reservoir expansion, use of reclaimed water, and the evaluation of a pipeline between the Salinas and Whale Rock Reservoirs. ■ Implement programs to achieve solid waste reduction goals established under AB939. TRA&\'SPORTATION ■ Enhance the use of alternative transportation through the implementation of projects identified in the Circulation Element, Short Range Transit Plan, and Bicycle Plan, and pursue grant funding in support of specific projects, including rail. LEISURE, CULTURAL, & SOCIAL SERVICES ■ Construct the Performing Arts Center in conjunction with Cal Poly and the Foundation for the Performing Arts. ■ Work with the community and pursue grant funding to promote installing more trees and landscaping in various areas of the community. COM111U\ * ITY DEVELOPMENT ■ Complete the update of General Plan Elements: Land Use, Circulation, Housing (including student housing), Open Space, and Noise. ■ Adopt master calendar for completing the updating of General Plan Elements. Following completion of the update, develop a program to assure that General Plan elements are routinely reviewed and kept current. ■ After adoption of the updated General Plan Elements, prepare options for the implementation of an enhanced neighborhood.protection program, based on citizen input. ■ Develop non - general fund options to support the implementation of Open Space Programs. B -zo POLICIES AND OBJECTIVES STATEMENT OF MAJOR CITY GOALS (continued) COMMUNITY DEVELOPMENT (continued) ■ Adopt a Downtown Physical Concept Plan which promotes appropriate mixed uses in the downtown. ■ Adopt a creek setback ordinance. ■ Adopt an agricultural zone for the City. ■ Streamline the development review process, while assuring high standards and quality projects. ■ Implement a more defined /proactive economic stability program. GENERAL GOVERW\'IIENT ■ Maintain City fiscal health and a balanced budget. B -21 BUDGET GRAPHICS AND SUMMARIES OVERVIEW This section provides simple charts and tables which highlight key financial relationships and summarize the overall budget document. Graphics for the following areas are included: Combined Expenditures and Revenuer - All Funds • Total Operating, Capital, and Debt Service Expenditures • Total Funding Sources • Operating Program Expenditures by Function • Operating Program Expenditures by Type • Capital Outlay Expenditures by Function • Capital Outlay Expenditures by Funding Source • Debt Service Expenditures by Function Expenditures and Revenues by Fund Type • Total Expenditures by Fund • General Fund Expenditures • General Fund Revenues and Sources • General Fund Operating Program Expenditures by Function n... General Fund Operating Program Expenditures by Type ■ General Fund Tax Revenues Authorized Regulff Positions ■ Authorized Regular Positions by Function ■ Authorized Positions by Function - General Fund C -1 p. 17? BUDGET GRAPHICS AND SUMMARIES TOTAL OPERATING, CAPITAL AND DEBT SERVICE EXPENDITURES E CAPITAL OUTLAY 1993 -94 BUDGET - $46.9 Million PROGRAMS (63.0%) 1991 -92 ACTUAL 1992 -93 BUDGET 1993 -94 APPROVED 1994 -95 APPROVED Operating Programs S28,448,600 531,625,500 529,548,800 529,868,300 Capital Outlay 22,107,300 46,717,100 11,973,700 5,120,800 Debt Senice 2,554,500 2,813,700 5,396,500 5,602,800 TOTAL $53; 110, 400 $81,1562300 $46,869,000 $40,591,900 BUDGET GRAPHICS AND SUMMARIES TOTAL FUNDING SOURCES - ALL FUNDS COMBINED 1993 -94 FUNDING SOURCES - $46.9 Million DEBT FINANCING - CAPITAL PROJECTS (2.6%) OTHER SOURCES (19.2%) SERVICE CHARGES (].] %) TAXES (M4%) ENTERPRISE FUNDS (29.0 %) T� INVESTMENTS (2.9%) SUBVEN -nONS i GRANTS (12.60) Taxes Investments Subventions and Grants Enterprise Fund Service Charges Other Service Charges Other Revenues Total Current Sources Proceeds from Debt Financings Fund Balance/Other Sources (Uses) TOTAL 1991 -92 1992.93 1993 -94 1994 -95 ACTUAL BUDGET APPROVED APPROVED 516,049,800 516,390,700 517,056,800 517,764,400 2,018,700 1,642,600 1,308,800 1,173,900 3,606,500 4,785,500 5,900,200 3,918,300 10,021,400 11,545,200 13,125,000 14,748,200 1,701,100 1,930,000 1,543,800 1,770,400 3,608,100 1,915,100 1,733,200 1,586,900 37,005,600 38,219,100 40,667,800 40,912,100 19,483,500 25,656,800 1,700,000 (3,378,600) 17,280,400 4,478,900 (322,400) 553,1101500 5819156,300 $46,8461700 $40,5899700 C -3 _ BUDGET GRAPHICS AND SUMMARIES OPERATING PROGRAM EXPENDITURES BY FUNCTION 1993 -94 OPERATING BUDGET - $29.5 Million GENERALGOVERNME TRANSPORTATION (10.9 -A) PUSUC UTILITIES (2 AL a SoC SVCS (10 -3x) EVELOPMENT (8.8%) SAFETY (32.4x) 1991 -92 ACTUAL 1992 -93 BUDGET 1993.94 APPROVED 1994 -95 APPROVED Public Safety S9,342,100 S9,996,800 S9,588,000 59,737,600 Public Utilities 5,089,800 6,975,000 6,439,500 6,700,600 Transportation 2,794,500 3,136,000 3,233,500 3,183,800 Leisure, Cultural and Social Services 3,327,500 3,304,500 3,043,200 2,972,700 Community Development 3,074,600 3,296,100 2,595,400 2,530,600 General Government 4,820,100 4,917,100 4,649,200 4,743,000 TOTAL S281448,600 $31,6252500 $29,548,800 $29,868,300 C -4 /0-610 OPERATING PROGRAmS OVERVIEW - PURPOSE AND ORGANIZATION The operating programs described in this section of the Financial Plan form the City's basic organizational units, provide for the delivery of essential services, and allow the City to accomplish the following tasks: • Establish policies and goals which define the nature and level of services to be provided. • Identify activities performed in delivering program services. • Propose objectives for improving the delivery of services. • Appropriate the resources required to perform activities and accomplish objectives. The City's operating expenditures are organized into the following hierarchical categories: Function The highest level of summarization used in the City's Financial Plan, the "function" classification represents a grouping of related operations and programs which may cross organizational (departmental) boundaries aimed at accomplishing a broad goal or delivering a major service. The six functions in the Financial Plan are: • Public Safety • Public Utilities Transportation • Leisure, Cultural, and Social Services • Community Development • General Government Operation Grouping of related programs within a functional area such as police protection within Public Safety or water service within Public Utilities. Program Basic organizational unit of the Financial Plan which establishes policies, goals, and objectives that define the nature and level of services to be provided. Activity Specific service performed within a program. in the pursuit of its objectives and goals. The following is an example of the relationship between functions, operations, programs, and activities: FUNCTION Public Utilities OPERATION Water Service PROGRAM Water Treatment ACTIVITY Laboratory Analysis D -1 �-�/ OPERATING PROGR 'S OVERVIEW - OPERATING PROGRAM NARRATIVES Each operating program narrative provides the following information: Program Title The function, program name, operation, department responsible for program administration, and the primary funding source are shown at the top of the page. Program Costs Four years of historical and projected expenditure information (1991 -92 through 1994 -95) is provided in this part divided into four categories: K Staffing All costs associated with City personnel, including salaries for all regular, temporary, and contract employees as well as related costs for benefits and overtime. o Contract Services. All expenditures related to contract services. ■ Other Operating Expenditures. Purchases of supplies, tools, utilities, insurance, and similar operating expenditures. ■ Minor CapitaL New capital acquisitions or projects with a life in excess of one year and costs between S3,000 and 510,000. New capital acquisitions or projects Nrith a cost in excess of $10,000 are included in the Capital Improvement Plan. (CIP).section; and replacement capital equipment items are included in the Equipment Replacement Fund. Program Description Program purpose, goals, and activities are described in this part. Staffing Summary This part provides a four year summary of authorized regular positions allocated to this program along with full -time equivalents (FTE's) for temporary staffing. Generally, whole regular positions are assigned to programs based on where employees spend at least 50% of their time. Significant Expenditure and Staffing Changes Significant operating program changes from the prior Financial Plan are summarized in this part, which include: major service curtailments or expansions; any increases or decreases in regular positions; significant one -time costs; major changes in the method of delivering services; changes in operation that will significantly affect other departments or customer services; and changes that affect current policies. 1993 -95 Program Objectives This part provides a listing of major 1993 -95 program objectives to improve service delivery. Performance and workload Indicators Four years of historical and projected performance and workload indicators (1991 -92 through 1994- 95) are provided in this part in order to provide the Council and public with an overview of the program's workscope and effectiveness. D -3 lo-83 OPERATING PROGR, S EXPENDITURES BY PROGRAM - PUBLIC UTILITIES WATER SERVICE Water Source of Supply Groundwater Supply Water Conservation Water Treatment Water Distribution Water Customer Service Water Administration & Engineering Total Water Service WASTEWATER SERVICE Wastewater Collection Wastewater Pretreatment Wastewater Treatment & Disposal Wastewater Administration & Engineering Total Wastewater Service 1991 -92 1992 -93 1993-94 1994 -95 ACTUAL BUDGET APPROVED APPROVED 852,300 1,028,500 934,700 959,600 223,900 246,900 248,100 249,400 305,400 372,900 270 „300 267,300 565,600 666,700 648,500 908,400 426,100 525,100 528,000 536,300 196,400 216,000 217,600 22100 614,500 693,100 598,700 486,700 3,184,200 3,749,200 3,445,900 3,629,200 380,000 407,000 436,000 451,900 95r ;00 117,000 123,800 131,400 726,800 1,652,100 1,619,000 1,723,200 274,900 290,200 194,000 198,600 1,477,000 2,466,300 2,377,800 2,505,100 WHALE ROCK RESERVOIR, Reservoir Operations 355,400 665,500 540,500 538,700 Fishing Program 15,200 21,400 2,700 2,700 Total Whale Rock Reservoir 370,600 686,900 543,200 541,400 SOLID WASTE MANAGEMENT Solid Waste Management 58,000 72,600 72,600 24,900 TOTAL PUBLIC UTILITIES 25,089,800 $6,975,000 56,439,500 56,700,600 D -9 PUBLIC UTILITIES PROGRAM: Water Treatment OPERATION: Water Service DEPARTMENT: Utilities FUND: Water Fund 1991.92 1992 -93 1993 -94 1994 -95 PROGRAM COSTS ACTUAL BUDGETED APPROVED APPROVED Staffing 5 303,800 5 337,200 5 346,200 5 356,100 Contract services 31,400 35,700 43,100 43,100 Other operating expenditures 214,600 288,800 259,200 509,200 Minor capital 15.800 5.000 0 _0 TOTAL S 565,600 5 666,700 5 648,500 S 908,400 PROGRAM DESCRIPTION The water treatment program receives raw water from reservoirs and wells, treats it to meet potable water standards and delivers it into the water distribution system. The program goal is an adequate water supply, treated to required standards, for domestic consumption and firefighting. This program has four major activities: • Reservoir water &eatrnent. Receiving and analyzing raw water from reservoirs, chemically treating and filtering the raw water to federal and state standards, adding fluorides to treated water, pumping treated water to storage reservoirs, preparing reports for local, state and federal agencies (55% of program costs) Laboratory analysis Analyzing raw and treated water to determine physical, chemical and bacteriological characteristics (.Aec of program costs) Equipment rnafntenmice. Calibrating treatment mechanisms, performing periodic preventive maintenance, repairing broken parts, replacing worn and obsolete parts (10:'c of program costs) • JanilorLd and grounds ma&a=wice. Cleaning and tending buildings, removing trash, performing minor repairs, controlling weeds, preventing soil erosion, planting low'maintenance landscaping materials (5% of program costs) STAFFING SUMMARY Regular positions: Water Treatment Plant Supervisor 1.0 1.0 1.0 1.0 Laboratory Technician 1.0 1.0 1.0 1.0 Water Treatment Plant Operator M is a M TOTAL 7.0 7.0 7.0 7.0 SIGNIFICANT EXPENDITURE AND STAFFING CHANGES • 1993 -95. Reducing line items for materials and chemicals will save $15,000 annually. • 1994 -95: Funding electrical costs to support ozonation as primary method of disinfection upon completion of the water treatment plant upgrade will cost 5250,000 annually. • 1993 -95: Funding "large water system" fees as required under AB 2158 will cost an additional 56,000 annually. 1993 -95 PROGRAM OBJECTIVES 1993 -95: Complete the water treatment plant upgrade project currently under construction PERFORMANCE AND WORKLOAD INDICATORS Ace -feet of water treated Ace -feet of peak day watcr production 1991 -92 1992 -93 ACTUAL PROJECTED 4,965 5,500 22 25 D -40 1993 -94 ESTIMATED 6,000 27 1994 -95 ESTIMATED 6,500 30 k85 GENERAL GOVERNML-.4T PROGRAM: Finance Administration OPERATION: Organizational Support Services DEPARTMENT: Finance FUND: General Fund 1991 -92 1992 -93 1993 -94 1994 -95 PROGRAM COSTS ACTUAL BUDGETED APPROVED APPROVED Staffing S 714,500 S 684,300 S 132,700 S 136,300 Contract services 137,300 102,800 2,500 47,500 Other operating expenditures 82,200 100,300 27,300 27,200 Minor capital 4.600 0 _ 9 — 0 TOTAL S 938,600 S 887,500 S 162,500 S 211,000 " New program effective with the 1993 -95 Financial Plan; prior years include costs for the administration, accounting, and revenue management programs as well as a portion of the information systems program. PROGRAM DESCRIPTION The financial administration program plans, organizes, leads, and monitors the activities of the three Finance Department Divisions: accounting, revenue management, and information systems. It is responsible for managing the City's financial operations in accordance with established fiscal policies and for coordinating the use of the City's decentralized information systems. Program goals are: 1) developing and implementing efficient and effective financial policies, plans and reporting systems that help the operating departments achieve their objectives and assure the City's long -term fiscal health 2) protecting the City's assets from unauthorized use 3) effectively using the City's information management resources 4) and providing quality service to all of the department's customers - both external and internal to the organization. This program has three major activities: Fiscal policy advice and g,franc• Developing innovative and cost - effective ways of financing City services and facilities; preparing and implementing policies and plans for effective management of the City's financial resources and preservation of its long -term financial health; advising the Council and City Administrative Officer on fiscal matters; coordinating the preparation of the City's two -year financial plan and budget; and reviewing Council agenda reports and other policy documents for fiscal effects (30% of program costs) Depamnzw leadership. Developing an organization that effectively builds and uses the skills and talents of each Finance team member in achieving departmental goals and objectives; communicating City values, missions, and goals to all Finance team members and assuring that they guide actions and behaviors; developing departmental and employee work programs and monitoring performance; coordinating activities that cross program lines, maintaining a positive employee relations environment and achieving a high level of employee morale; and representing department programs before the public, community groups, Council, staff, and other public agencies (30% of program costs) Depmrment adminisstrarion. Coordinating department training activities; preparing and administering department budgets; administering department personnel, payroll, and purchasing activities; maintaining department records; providing clerical support for department program areas (40;'0 of program costs) STAFFING SUMNLARY Regular positions Director of Finance/City Treasurer 1.0 1.0 1.0 1.0 Administrative Secretary U .Q 1_Q I4 TOTAL 2.0 2.0 2.0 2.0 SIGNIFICANT EXPENDITURE AND STAFFING CHANGES 199495: Preparing a comprehensive cost of services study (similar to the one prepared by Vertex Cost. Systems in 1988) by an independent cost' accounting firm will cost $45,00 in 199495. D -123 GENERAL GOVERNN6 J PROGRAM: Finance Administration (continued) DEPARTA4ENT- Finance 1993 -95 PROGRAN1 OBJECTIVES • 1993 -95: Coordinate implementation of citywide fiscal health strategies and programs adopted by Council as part of the 1993 -95 Financial Plan process • 1993 -94: Perform an analysis of the fiscal benefits of debt financing construction of the performing arts center and fire station headquarters rather than using pay -as- you -go resources in light of the City's ability to borrow at lower rates than it can earn on its investments • 1993 -94: Expand use of joint purchasing efforts with other agencies • 1993 -95: Continue to identify opportunities for increased cost recovery for "non - essential• services • 1994 -95: Prepare cost of services study and present findings and recommendations to the Council • 1993 -95: Implement departmental budget and service reductions in a way that minimizes adverse impacts on the community and organization to the maximum extent possible • 1993 -95: Develop and implement departmental productivity and morale /team building strategies in the context of the organization's downsizing activities • 1993 -95: Achieve accounting, revenue management, and information systems program objectives PERFORMANCE AND 1991 -92 1992 -93 1993 -94 1994 -95 WORKLOAD INDICATORS ACTUAL PROJECTED ESTIMATED ESTIMATED Council agenda /CAO reports prepared 60 65 65 65 Council agenda /CAO reports reviewed 220 224 225 225 D -124 / -87 CAPITAL IMPROVEML PLAN OVERVIEW All of the City's construction projects and capital purchases (other than vehicles or equipment acquired through the Equipment Replacement Fund) which cost more than $10,000 are included in the Capital Improvement Plan. (Minor capital outlays of $10,000 or less are included with the operating program budgets.) Through the Capital Improvement Plan (CIP), the City systematically plans, schedules, and finances capital projects to ensure cost - effectiveness and conformance with established policies. The CIP is a four year plan organized into the same functional groupings used for the operating programs: • Public Safety ■ Leisure, Cultural, and Social Services • Public Utilities ■ Community Development • Transportation ■ General Government Comprehensive policies governing the development and management of the CIP are set forth in the Policies and Objectives Section of the Financial Plan (Capital Improvement Management). ORGANIZATION The CIP is composed of six parts: 1. Overview introducing the CIP and describing project types, phases, and financing. 2. Summary of CIP expenditures by function and operation. 3. Summary of CIP expenditures by funding source. 4. Listing of all CIF projects by function providing the project title, phase (study, design, acquisition, or construction), project cost, and phasing over four years. 5. Listing of all CIP project by funding source. 6. Description of each project, including prior year funding levels if applicable. Each project included within the CIP was originally developed based on a standardized format for requesting individual projects. The supporting documentation for the recommended CIP projects has been prepared as a separately bound document and is available upon request. E -1 /_s& CAPITAL IMPROVEN' IT PLAN SUMMARY OF CIP EXPENDITURES BY FUNCTION 1993-94 1994 -95 1995 -96 1996 -97 APPROVED APPROVED PROPOSED PROPOSED PUBLIC SAFETY Fire and EnNironmental Safety 56,000 11,000 165,000 Total Public Safety 56,000 11,000 165,000 PUBLIC UTILITIES 90,000 90,000 92,000 20,000 183,000 118,000 Water Service 2,475,000 1,450,000 9,575,600 1,630,000 Wastewater Service 526,500 474,400 491,000 900,000 Total Public Utilities 3,001,500 1,924,400 10,066,600 2,530,000 TRANSPORTATION Streets and Flood Control 1,460,000 1,160,000 1,945,000 5,410,000 Transportation Planning 1,242,000 50,000 690,000 490,000 Transit 993 „300 351,800 2,420,000 765,000 Total Transportation 3,695 „300 1,561,800 5,055,000 6,665,000 LEISURE, CULTURAL AND SOCIAL SERVICES Parks and Recreation Cultural Facilities Total Leisure, Cultural & Social Services GENERAL GOVERNMENT City Clerk Services Buildings Information Systems Total General Government TOTAL 423,200 1,256 „300 200,000 4,001,000. 50,000 50,000 50,000 4,424,200 1,306,300 250,000 50,000 35,000 90,000 90,000 92,000 20,000 183,000 118,000 40,000 245,000 20,000 313,000 90,000 $11,422,000 $4,823,500 $15,849,600 $9,335,000 E -2 . / -89 CAPITAL IMPROVEM, T PLAN SUMMARY OF CIP EXPENDITURES BY FUNDING SOURCE CAPITAL OUTLAY FUND General Fund Donations Transportation Impact Fees Zone 9 Reimbursements Debt Financing Federal and State Grants Other Sources Total Capital Outlay Fund PARKLAND DEVELOPMENT FUND Park —in Lieu Fees Total Parkland Development Fund ENTERPRISE AND AGENCY FUNDS 1993-94 1994-95 1995-96 1996-97 APPROVED APPROVED PROPOSED PROPOSED 3,318,200 1,549,300 1,527,000 1,103,000 21,000 3,000 3,000 400,000 4,400,000 30,000 190,000 1,700,000 1,142,000 280,000 1,433,000 534,000 200,000 6,411,200 2,019,.300 3,363,000 6,040,000 1,016,000 528,000 1,016,000 528,000 Water Fund 2,475,000 1,450,000 9,575,600 1,630,000 Sewer Fund 526,500 474,400 491,000 900,000 Transit Fund 90„300 351,800 2,420,000 765,000 Total Enterprise Funds 3,994,800 2,276,200 12,456,600 3,295,000 TOTAL S11,422,000 4 823 500 S4,823,500' 515,849,600 59,335,000_ E -3 /- 10 CAPITAL IMPROVEN, JT PLAN PROJECT DETAIL AND PHASING - PUBLIC UTILITIES WATER SERVICES Source of Supply Salinas Reservoir Expansion Design . Construction Hansen- Gularte Water Line Acquisition Groundwater Development Water Distribution Telemetry Upgrade and Expansion Water Valve Replacements Water Storage Tank Repair Dowvtown Sprinkler Reimbursement Transmission Main Replacement System Improvements Total Water Services WASTEWATER SERVICES Wastewater Collection System Improvements Portable Sewage Pump Highway 101 Landscape Underground Tank Upgrade Major Equipment Replacement WaterReclamalion Facility Major Equipment Maintenance Total Wastewater Services TOTAL PUBLIC UTILITIES 1993-94 1994 -95 1995 -96 1996 -97 APPROVED APPROVED PROPOSED PROPOSED 1,300,000 100,000 250,000 500,000 30,000 20,000 20,000 20,000 50,000 50,000 10,000 10,000 95,000 130,000 50,000 50,000 50,000 100,000 995,600 600,000 700,000. 500,000 1400,000 2,475,000 1,450,000 9,575,600 1,630,000 176,000 305,500 341,000 750,000 30,000 51,500 28,900 10,000 64,000 195,000 - 140,000 150,000 150,000 526,500 474,400 491,000 900,000 53,001,500 51,924,400 $10,066,600 52,530,000 Phasing - All amounts are for construction only unless otherwise indicated E -5 /_ �/ CAPITAL IMPROVEM`AT PLAN PROJECT DESCRIPTIONS - PUBLIC UTILITIES WATER SERVICES Salinas Reservoir Expansion (1993 -96) Enlarge the capacity of the Salinas Reservoir by installing spillway gates and mitigating the impact on the recreation and other facilities around the lake by relocating these facilities. The City has previously approved $341,300 for study and design for this project. Hansen - Gularte Water Line Abandonment (1993 -94) Install wells and any necessary treatment units to free the City from any obligation to provide water to certain properties along the Hansen - Gularte creek. Water quality from the current pipeline is questionable. Water Distribution System Improvements (1993 -97) Replace valves and pipelines to eliminate bottlenecks, leaking, and substandard mains due to age and corrosion to assure adequate water flow. This is an ongoing program which will replace 2% of the distribution system each year based on an estimated 50 year useful life of pipelines. Water Storage Tank Repairs (1993 -95) Repair several reservoirs serving the water distribution system. Downtown Fire Sprinkler Reimbursements (1993 -97) Provide reimbursement for fire sprinkler lateral connections to buildings in the downtown core as directed by Council with adoption of the City's sprinkler retrofit ordinance. By the year 2000 all building in the downtown core are required to retrofit fire sprinkler systems. Water System Telemetry Upgrade and Expansion (1993 -97) Upgrade obsolete control equipment and provide a Distributed Control and Data Acquisition System for monitoring water distribution operations. Groundwater Development (1993 -95) Develop and treat of groundwater resources to ensure the continuation of a well program of at least 500 acre feet per year. Treatment alternatives are being investigated for wells lost due to groundwater quality degradation. The City has previously approved $250,000 for study and design of this project. WASTEWATER SERVICES Wastewater Collection System Improvements (1993 -97) Replace sewer mains to eliminate inflow and infiltration and substandard mains that are beginning to fail due to broken pipe, sags, tree roots, and age. This is an ongoing program which will replace sewer mains each year based on an estimated 50 year useful life of sewer main pipes. E -15 �— �� DEBT SERVICE REM =MENTS OVERVIEW This section summarizes the debt service obligations of the City as of the beginning of the 1993 -95 Financial Plan period (July 1, 1993). These obligations represent the City's annual installment payments of principal and interest for previous capital improvement plan projects or acquisitions funded through debt financings. The City's debt management policies are comprehensively discussed in Section B (Capital Financing and Debt Management) of the Financial Plan. The following is a description of each lease or bond obligation existing at July 1, 1993: 1959 Whale Rock Reservoir General Obligation Bonds - Series A and B • Purpose: Constructing the City's share of the Whale Rock Reservoir. • Maturity Date: 1999 8 Interest Rate: 3.75% to 4.00% • Original Principal Amount: $3,900,000 8 Funding Source: Water Fund • July 1, 1993 Principal Outstanding: 51,140,000 1986 Lease Revenue Bonds . • Purpose: Constructing parking structures (55,758,400) as well as road improvements and facility acquisitions ($4,450,000). • Maturity Date: 2006 Interest Rate: 4.25% to 8.25% • Original Principal Amount: 513,970,000 Funding Source: Debt Service and Parking Funds • July 1, 1993 Principal Outstanding: $11,555,000 1988 Water Certificates of Participation ■ Purpose: Constructing various water system improvements. Maturity Date: 2008 interest Rate: 6.70% to 7.25% • Original Principal Amount: $5,000,000 Funding Source: Water Fund • July 1, 1993 Principal Outstanding: 54,310,000 1990 Certificates of Participation • Purpose: Acquiring land for open space, rehabilitating the City's Recreation Center, and acquiring land for a fire station site. • Maturity Date: 2010 Interest Rate: 6.00% to 6.70% • Original Principal Amount: 54,500,000 Funding Source: Debt Service Fund • July 1, 1993 Principal Outstanding: $4,310,000 1992 State Revolving Fund Loan • Purpose: Upgrading the City's water reclamation plant and collection system to meet discharge standards • Maturity Date: 2012 Interest Rate: 3.00% to 3.20% • Original Principal Amount: $31,227,400 Funding Source: Sewer Fund • July 1, 1993 Principal Outstanding: $31,084,100 1993 Water Revenue Bonds • Purpose: Upgrading the City's water treatment plant to meet water quality standards. • Maturity Date: 7023 Interest Rate: 5.00% to 550% • Original Principal Amount: (10,890,000 Funding Source: Water Fund • July 1, 1993 Principal Outstanding. 510,890,000 F -1 x_03 DEBT SERVICE REOL..IEMENTS ANNUAL PAYMENTS BY FUNCTION PUBLIC SAFETY Fire & Environmental Safety TotaI Public Safety PUBLIC UTILITIES Wastewater Service Water Service Total Public Utilities TRANSPORTATION Streets and Flood Control Parking Total Transportation 1991-92 1992-93 1993-94 1994-95 ACTUAL BUDGET APPROVED APPROVED 214,100 217,000 215,700 216,700 214,100 217,000 215,700 216,700 249,800 2,127,800 2,127,800 678,100 678,200 1 „387,000 1,435,400 678,100 928,000 3,514,800 3,563,200 473,900 474,800 474,800 476,700 927,700 930,.300 929,100 932,900 1,401,600 1,405,100 1,403,900 1,409,600 LEISURE, CULTURAL & SOCIAL SERVICES Cultural Services 150,000 Parks and Recreation 260,700 263,600' 262,100 263,300 Total Leisure, Cultural & Social Services 260,700 263,600 262,100 413,300 TOTAL DEBT SERVICE REQUIREMENTS $2,554,500 $2,813,700 $5,396,500 55,602,800 • Projected debt service for partial funding of the City's share of the Performing Arts Center. (Based on $1.7 million in proceeds from debt financing of the Ciry's $4.2 million share of project costs). F -2 /. 0 DEBT SERVICE RE(. .REMENTS ANNUAL PAYMENTS BY SOURCE TOTAL DEBT SERVICE REQUIREMENTS $2,554,500 $2,813,700 $5,396,500 $5,602,800 F -3 /� g✓ 1991 -92 1992 -93 1993-94 1994 -95 ACTUAL BUDGET APPROVED APPROVED DEBT SERVICE FUND 1986 Lease Revenue Bonds Principal 172,000 185,000 198,000 214,600 Interest 370,100 360,800 347,700 333,300 1990 Certificates of Participation Principal 65,000 125,000 130,000 140,000 Interest 339,000 284,600 276,900 268,800 1993 Debt Issue Interest 150,000 Total Debt Service Fund 946,100 955,400 952,600 1,106,700 WATER FUND 1959 Water Bonds - Series A Principal 115,000 120,000 125,000 130,000 Interest 41,300 36,900 32,000 27,000 1959 Water Bonds - Series B Principal .. ,. 35,000 _ 35,000 35,000. 35,000 Interest 13,400 12,700 11,400 10,000 1988 Certificates of Participation Principal 145,000 155,000 165,000 180,000 Interest 328 ,300 318,600 308,200 297,200 1993 Water Revenue Bonds Principal . 25,000 170,000 Interest 685,400 586,200 Total Water Fund 678,100 678,200 1,387,000 1,435,400 WASTEWATER FUND Principal 143,300 1,070,200 1,190,900 Interest 106,500 1,057,600 936,900 Total Waste va ter Fund 249,800 2,127,800 2,127,800 PARKING FUND 1986 Lease Revenue Bonds Principal 293,000 315,000 337,000 365,400 Interest 637,300 615,300 592,100 567,500 Total Parking Fund 930,300 930,300 929,100 932,900 TOTAL DEBT SERVICE REQUIREMENTS $2,554,500 $2,813,700 $5,396,500 $5,602,800 F -3 /� g✓ CHANGES IN FUND B' 'kNCE OVERVIEW This section summarizes revenues, expenditures, and changes in fund balance for each of the City's operating funds. Changes in fund balance are provided for the last completed fiscal year (1991 -92); the current fiscal year in progress (1992 -93); and the two years covered by the 1993 -95 Financial Plan (1993 -94 and 1994 -95). The following schedules are included in this section: Combining Fund Balance Statements All Funds Combined All Governmental Funds Combined All Enterprise and Agency Funds Combined Individual Fund Balance Statements General Fund Special Revenue Funds Library Fund Business Improvement Area (BLk) Fund Gas Tax Fund Transportation Development Act (TDA) Fund Capital Project Funds Capital Outlay Fund Parkland Development Fund Equipment Replacement Fund Debt Service Fund Enterprise Funds Water Fund Sewer Fund Parking Fund Transit Fund Golf Fund Agency Fund - Whale Rock Commission The organization of the City's funds is further described on the following page. G -1 19(0 CHANGES IN FUND F ANCE ORGANIZATION OF THE CITY'S FUNDS In accordance with generally accepted accounting principles, the City's financial reporting system is organized on a fund basis consisting of three major fund types - Governmental, Proprietary, and Fiduciary - and two self - balancing Account Groups: General Fixed Assets and General Long -Term. The City's various funds have been established in order to segregate and identify those financial transactions and resources associated with providing specific activities or programs in conformance with special regulations, restrictions, or limitations. Budgets are prepared for each fund in accordance with its respective basis of accounting. All governmental funds have legally adopted budgets except capital project funds. While budgets are prepared for the City's capital project funds, the capital projects generally span more than one year and are effectively controlled at the project level. The following funds are included in the Financial Plan; additional descriptions of each of the fund types are provided in the Budget Glossary (Section I): Governmental Funds Most of the City's programs and functions are provided and financed through the following Governmental Funds, which are distinguished by their measurement focus on determining financial position and changes in financial position, rather than upon determining net income: ■ General Fund a . Special Revenue Funds Business Improvement Area Gas Tax Transportation Development Act • Debt Senice Fund • Capital Project Funds Capital Outlay Parkland Development - Equipment Replacement Enterprise Funds Enterprise funds are distinguished from Governmental funds by their similarity to private sector enterprises, as it is intended that the cost of providing services will be financed or recovered primarily through user charges. The following four Enterprise Funds are used by the City: • Water • Sewer • Parking • Transit • Golf Trust and Agency Funds Also known as Fiduciary Funds, Trust and Agency. funds are used to account for assets held by the City in a trustee capacity for private individuals, organizations, or other governmental agencies. Agency funds are custodial in nature (assets equal liabilities) and do not measure the results of operations (revenues, expenditures, and changes in fund balance). Accordingly, Agency Funds are not typically included in budgetary documents. However, due to its significance to the City's operations and organizational structure, budget information for the Whale Rock Commission (which is accounted for as an Agency Fund of the City) is provided in the City's Financial Plan. G -2 147 CHANGES IN FUND. .LANCE ALL FUNDS COMBINED Revenues Tax Revenues Licenses and Permits Fines and Forfeitures Investment and Property Revenues Subventions and Grants Service Charges Governmental Funds Enterprise Funds Trust and Agency Revenues Other Revenues Total Revenues Expenditures Operating Programs Public Safety Public Utilities Transportation Leisure, Cultural, and Social Services Community Development General Government . Total Operating Programs Capital Projects Debt Service Total Expenditures Other Sources (Uses) Operating Transfers In Operating Transfers Out Proceeds from Debt Financings Estimated State Revenue Losses Downsizing Conversion Costs Expenditure Savings Total Other Sources (Uses) Revenues and Other Sources Over (Under) Expenditures and Other Uses Fund Balance, Beginning of Year Fund Balance, End of Year Reserved for Debt Service Unreserved Total Fund Balance 1991 -92 1992 -93 1993 -94 1994 -95 ACTUAL BUDGET APPROVED APPROVED 16,049,600 16,390,700 17,056,800 17,764,400 124,300 144,500 173,000 218,500 686,600 725,000 625,100 631,200 2,018,700 1,642,600 1,308,800 1,173,900 3,606,500 4,785,500 5,900,200 3,918,300 1,701,100 1,930,000 1,543,800 1,720,400 10,021,400 11,5 45,200 13,125,000 14,748,200 526,500 800,800 614,100 625,400 2,270 600 254,800 321,000 111,800 537,005,300 $38,219,100 540,667,800 540,912,100 9,342,100 9,996,800 9,588,000 9,737,600 5,089,800 6,975,000 6,439,500 6,700,600 2,794 „500 3,136,000 3,233,500 3,183,800 3:327,500 3,304,500 3,043,200 2,972,700 3,074,600 3,296,100 2,595,400 2,530,600 - 4 820 100 4,917,100 4,649,200 < 4,743,000 28,448,600 31,625,500 29,548,800 29,868,300 22,107,300 46,717,100 11,923,700 5,120,800 2,554,500 2,813,700 5,396,500 5,602,800 $53,110,400 $81,156,300 $46,869,000 $40,591,900 3,883,000 2,781 M0 4,742,500 3,809,000 (3,883,000) (2,781,300) (4,742,500) (3,809,000) 19,483,500 25,656,800 1,700,000 (500,000) (500,000) (150,000) 57.5,000 9,500 32,300 $19,483,500 526,231,800 $1,059,500 (S467,700) 3,378,400 (16,705,400) (5,141,700) (147,500) 31,168,100 34,546,600 17,841,200 12,699,500 1,384,000 33 162 800 1,516,500 16,324,700 1,516,500 11,183,000 1,516,500 11,035,500 S34,546,500 $17,841,200 S12,699500 S12,552,000 G -3 /-915 CHANGES IN FUND ,LANCE ALL GOVERNMENTAL FUNDS COMBINED Revenues Tax Revenues Licenses and Permits Fines and Forfeitures Investment and Property Revenues Subventions and Grants Service Charges Other Revenues Total Revenues Expenditures Operating Programs Public Safety Public Utilities Transportation Leisure, Cultural, and Social Services Community Development General Government Reimbursed Expenditures Total Operating Programs Capital Projects Debt Service Total Expenditures Other Sources (Uses) Operating Transfers In Operating Transfers Out Proceeds from Debt Financings Estimated State Revenue Losses Downsizing Conversion Costs Expenditure Savings Total Otbcr Sources (Uses) Revenues and Other Sources Over (Under) Expenditures and Other Uses Fund Balance, Beginning of Year Fund Balance, End of Year Reserved for Debt Service Unreserved Total Fund Balance 1991 -92 1992 -93 1993-94 1994 -95 ACTUAL BUDGET APPROVED APPROVED $16,049,600 $16,390,700 $17,0561800 $17,764,400 $124,300 $144,500 $173,000 5218,500 $133,500 $170,000 $175,100 $181,200 $1 „342,500 $1,137,600 5730 „300 $655 „300 $2,921,600 53,206,900 $3,699,500 $2,910,500 $1,701,100 $1,930,000 51543,800 $1,720,400 $2,270,600 5254,800 $321,000 $111,800 524543,200 $23,234500 $23,699500 523562,100 59,342,100 $9,996,800 59,588,000 59,737,600 558,000 572,600 572,600 $24,900 $1592500 $1,678,400 $1,580 „300 $1,582,600 $3,327500 S3 „304500 $2,765,600 $2,691,200 53,074,600 53,296,100 $2,595,400 S2,530,600 54,820,100 54,917,100 $4,649,200 54,743,000 (1580,000) (1,676,800) (2,046,000) (2,124,700) 20,634,800 21588,700. 19,205,100 19,185 200 3,764,600 12,258,400 7,928,900 2,844,600 946,100 955,400 952,600 1,106,700 $25,.345500 534,802500 $28,086,600 $23,136500 $3,883,000 $2,781,.300 $4,666,100 $3,809,000 ($3,772,200) ($2,713,700) ($4,673,100) ($3,739,600) 1,700,000 (500,000) (500,000) (150,000) 275,000 110,800 342,600 1,043,000 (430,600) (691500) (11,225,400) (3,344,100) (5,000) 22,009 „300 21,317,900 10,092500 6,748,400 21,317,800 10,092 500 6,748,400 6,743,400 $21,317,800 $10,092,500 $6,748,400 $6,743,400 G -4 /� 7 7 CHANGES IN FUND L .LANCE ALL ENTERPRISE AND AGENCY FUNDS COMBINED Revenues Fines and Forfeitures Investment and Property Revenues Subventions and Grants Service Charges Trust and Agency Revenues Total Revenues Expenditures Operating Programs Public Utilities Transportation Leisure, Cultural & Social Services General Government Total Operating Programs Capital Projects Debt Service Total Expenditures Other Sources (Uses) Operating Transfers In Operating Transfers Out Proceeds from Debt Financings Expenditure Savings/Project Deferrals Total Other Sources (Uses) Revenues and Other Sources Over (Under) Expenditures and Other Uses Fund Balance, Beginning of Year Fund Balance, End of Year Reserved for Debt Service Unreserved Total Fund Balance 1991 -92 1992 -93 1993-94 1994 -95 ACTUAL BUDGET APPROVED APPROVED 553,100 555,000 450,000 450,000 676,200 505,000 578,500 518,600 684,900 1,578,600 2,200,700 1,007,500 10,021,400 11,545,200 13,125,000 14,748,200 526 „500 800,800 614,100 625,400 $12,462,100 $14,984,600 S16,968,300 S17,350,000 5,031,800 6,902,400 6,.366,900 6,675, 700 1,202,000 1,457,600 1,653,200 1,601,200 277,600 281,500 I „580,000 1,676,800 2,046,000 2,124,700 7,813,800 10,036,500 10,343,700 10,653,100 18 „342,700 34,458,700 3,994,800 2,276,200 1,608,400 1,558 „300 4,443,900 4,496,100 527,764,900 546,35300 $18,782,400 $17,455,400 76,400 (110,800) (67,600) (69,400) (69,400) 19,483,500 .25,656,800 1 300,000 9,500 32,300 $19,372,700 $25,889,200 516,500 ($37,100) 4,069,900 (5,480,000) (1,797,600) (142,500) 9,158,800 13,228,700 7,748,700 5,951,100 1,384,000 11,844,700 1,516,500 6,232,200 1,516,500 4,434,600 1,516,500 4,292,100 $13,228,700 $7,748,700 S5,951,100 S5,808,600 G -5 /10/0 0 CHANGES IN FUND __,LANCE GENERALFUND Revenues Tax Revenues Licenses and Permits Fines and Forfeitures Investment and Property Revenues Subventions and Grants Service Charges Other Revenues Total Revenues Expenditures Public Safety Public Utilities Transportation Leisure, Cultural, and Social Services Community Development General Government Total Program Expenditures Reimbursed Expenditures. . Total Expenditures Other Sources (Uses) Operating Transfers In Operating Transfers Out Estimated State Revenue Losses Downsizing Conversion Costs Expenditure Savings Total Other Sources (Uses) Revenues and Other Sources Over (Under) Expenditures and Other Uses Fund Balance, Beginning of Year Fund Balance, End of Year 1991-92 1992-93 1993-94 1994-95 ACTUAL BUDGET APPROVED APPROVED $14,607,300 $16,390,700 $17,056,800 $17,764,400 124,300 144,500 173,000 218,500 133,500 170,000 175,100 181,200 ' 427,300 447,600 488 ,300 413,300 1,802,200 1,974,600 1,778,100 1,849,800 1,492,400 1,496,600 1,142,000 1,.377,600 1,824,300 134,500 101,000 91,800 $20,411,300 $20,758,800 $21,114,300 $21,896,600 59,342,100 $9,996,800 $9,588,000 59,737,600 58,000 72,600 72,600 24,900 1,592,500 1,678,400 1,S80'10 0 1,582,600 3,312,100 3,304,500 2,765,600 2,691,200 2,879,900 3,138,600 2,462,600 2,395,800 4,820,100 4,917,100 4,649,200 4,743,000 22,004,900 23,108,000 21,118,300 21,175,100 (1580,000} (1,676,800) - (2,046,000) (2,124,700) $20,424,900 $21,431,200 $19,072,300 519,050,400 $868,100 $772,300 5776,100 $780,700 (1,923,500) (186,000) (3,897,000) (2,958,900) (500,000) (500,000) (150,000) 275,000 (51,055,200) $861,300 ($3,770,900) ($2,678,200) (1,068,800) 188,900 (1,728,900) 168,000 6,397,200 5,328,300 5,517,300 3,788,400 55,328,400 55,517,300 53,788,400 $3,956,400 G -6 /aw/ID / CHANGES IN FUND BALANCE WATER FUND Revenues Service Charges Water Sales Water Service Charges' Sales to Cal Poly Sales to Cuesta Capital Improvement Charges Connection Charges and Meter Sales Hydroplant Revenues Other Service Charges Total Service Charges Investment and Property Revenues Total Revenues Expenditures Operating Programs Public Utilities General Government Total Operating Programs Capital Projects Debt Service Total Expenditures Other Sources (Uses) Operating Transfers Out Other Sources (Uses) Proceeds from Debt Financing Expenditure Savings Total Other Sources (Uses) Revenues and Other Sources Over (Under) Expenditures and Other Uses Fund Balance, Beginning of Year Fund Balance, End of Year Reserved for Debt Service Unreserved Total Fund Balance 1991 -92 1992 -93 1993-94 1994 -95 ACTUAL BUDGET APPROVED APPROVED $5,072,600 $5,638,200 $6,023,700 $6,896,400 36,200 60,000 130,500 186,800 17,300 23,000 35,000 46,700 49,200 40,000 27,700 47,700 40,600 30,000 50,200 50,500 76,300 250,000 75,000 75,000 18,000 60,000 20,000 20,000 5,310,200 6,101,200 6,362,100 7,32 3,100 264,200 250,000 300,000 250,000 55,574,400 $6,351,200 $6;662,100 $7,573,100 53,184,200 $3,749,200 $3,445,900 53,629,200 726,600 773,900 883,000 914,300 _ 3,910,800 4,523,100 4,328,900 4,543,500 686,100 18,817,400 2,475,000 1,450,000 678,100 678,200 1.387,000 1,435,400 S5,275,000 524,018,700 $8,190,900 S7,428,900 ($23,800) ($24,500) (514,600) ($14,600) 15,855,700 ($23,800) $15,831,200 ($14,600) ($14,600) 275,600 (1,836,300) (1,543,400) 129,600 4,609,500 4,885,100 3,048,800 1,505,400 488,800 488,800 488,800 488,800 4,196,;00 2,560,000 1,016,600 1,146,200 $4,885,100 53,048,800 . $1,505,400 $1,635,000 Assumes 6% rate increase in 1993 -94 and again in 1994 -95; Council approval pending. G -15 /low /1001- FINANCIAL AND STA1`0TICAL TABLES OVERVIEW This section provides summaries which integrate the other Financial Plan sections as well as provide supplemental financial and statistical information. Generally, each schedule provides information for four fiscal years: last completed fiscal year (1991 -92); the current fiscal year in progress (1992 -93); and the two fiscal years covered by the 1993 -95 Financial Plan (1993 -94 and 1994 -95). The following schedules are included in this section: Revenue Summaries ■ . Revenues by Major Category and Source (all funds combined) ■ Summary of Key Revenue Assumptions Fzpenditure Summaries • Total Expenditures by Function and Type • Total Operating Program Expenditures by Function • Capital Outlay Expenditures by Function • Schedule of Equipment Replacements for 1993 -95 Interfund Transactions ■ . Operating Transfers ■ Reimbursement Transfers Staffing Summaries • Regular Positions by Department • Regular Positions by Function • Temporary Full -Time Equivalents (FTE's) by Function Other Statistkal and Financial Summaries • Summary of Significant Operating Program Changes • Appropriations Limit History • Demographic and Statistical Summary H-1 /! 103 FINANCIAL AND STS' 3TICAL TABLES REVENUES BY MAJOR CATEGORY AND SOURCE TAX REVENUES Sales & Use Tax Property Tax Transit Lodging Tax Franchise Tax Business Tax Receipts Utility Users Tax Real Property Transfer Tax Total Tax Revenues LICENSES AND PERMITS Bicycle Licenses Construction Permits Street & Curb Permits Other Licenses & Permits Total Licenses and Permits FINES AND FORFEITURES Vehicle Code Fines Parking Fines Other Fines and Forfeitures Total Fines and Forfeitures INVESTMENT AND PROPERTY REVENUES Investment Earnings Rents & Concessions Total Investment and Property Revenues SUBVENTIONS AND GRANTS Motor Vehicle In -Lieu Homeowners & Other Property Tax In -Lieu Trailer Coach In -Lieu Cigarette Taxes Other In -Lieu Taxes SB 90 Reimbursements Police Training Gasoline Tax Subventions Transportation Development Act Transit Section 9 Grants Other Transit Grants Parks and Recreation Grants Nipomo Street Bridge State Transportation Partnership Program Community Development Block Grant Other Grants Total Subventions and Grants 1991-92 1992-93 1993-94 1994-95 ACTUAL BUDGET APPROVED APPROVED 5,850,900 5,900,000 5,959,000 6,108,000 $4,314,800 $3,950,000 $4,080,700 $4,244,600 1,940,400 2,350,000 2,606,000 2,780,000 66300 700,000' 778,600 826,100 606,000 715,700 754,200 800,200 2,605,600 2,700,000 2,803,300 2,9301500 68,400 75,000 75,000 75,000 $16,049,600 $16,390,700 $17,056,800 $17,764,400 $1,700 51,500 $10,000 $1,500 111,100 130,000 150,000 204,000 10,900 12,000 12,000 12,000 600 1,000 1,000 1,000 $124,300 $144,500 $173,000 $218,500 $68,700 $70,000 $ 75,100 $81,200 553,100- 555,000 450,600 450,000 64,800 100,000 100,000 100,000 $686,600 $725,000 $625,100 $631,200 $2,001,100 $1,625,100 $1,293,800 $1,158,900 17,600 17,500 15,000 15,000 $2,018,700 $1,642,600 $1,308,800 $1,173,900 $1,465,900 $1,520,000 51,551,300 51,594,200 79,100 69,300 50,000 50,000 8,400 16,000 15,000 15,000 46,200 4,500 10,000 103,700 20,000 20,000 20,000 42,400 52,500 26,800 26,800 747,900 757,300 759,600 763,400 657,000 558,600 526,200 550,100 1,161,000 400,000 42,100 1,035,000 530,000 75,000 333,300 89,600 3,300 400,000 240,300 200,000 200,000 24,000 2,400 46,500 20,000 1,057,000 223,800 $3,606,500 H -2 54,785,500 $5,900,200 53,918,300 /.� / FINANCIAL AND STkiI STICAL TABLES REVENUES BY MAJOR CATEGORY AND SOURCE 1991 -92 1992 -93 1993-94 1994 -95 ACTUAL BUDGET APPROVED APPROVED SERVICE CHARGES - GOVERNMENTAL FUNDS 55,310,300 $6,101,200 S6,362,100 Planning & Zoning Fees $106,600 $110,000 $110,000 $110,000 Sales of Publications 11,600 13,500 5,000 5,000 Police Department Services 91,800 52,500 104,300 109,000 Fire Department Services 89,600 62,500 103,000 107,700 Engineering Fees 116,900 190,000 121,500 133,200 Streets, Sidewalks & Curbs 22,300 2.5,000 25,000 25,000 Maintenance of State Highwa %s 3. 29,500 22,000 30,000 30,000 Weed & Lot Cleaning 2,600 2,100 2,000 2,000 Zone 9 Reimbursements 52,200 190,300 51,000 190,000 Swimming Pool Revenues 106,700 104,700 144,500 144,500 Golf Course Revenues 321,900 339,100 " Park in -lieu Fees 33,900 35,000 20,000 20,000 Other Parks & Recreation Fees 487,900 593,800 637,800 649,600 BIA Surcharge Assessments 68,800 75,000 73,000 75,000 BIA Service Charges 83,600 58,100 57,800 57,800 CCCJPA Reimbursements 34,300 36,400 38,900 41,600 Other Service Charges 40,600 20,000 20,000 20,000 Total Service Chargcs - Governmental $1,701,100 $1,930,000 $1,543,800 $1,720,400 SERVICE CIiARGES - ENTERPRISE FUNDS Water Operating Revenues 55,310,300 $6,101,200 S6,362,100 $7,323,100 Sewer Operating Revenues 3,346,200 3,992,500 4,982,900 5,495,100 Parking Operating Revenues 1,155,200 1,251,500 1,200,000 1,350,000 Golf Course Revenues 171,200 10,000 350,000 350,000 Transit Operating Revenues 210,000 200,000 230,000 230,000 Total Service Charges - Enterprise $10,021,700 $11,545,209 513,125,000 $14,748,200 -TRUST AND AGENCY REVENUES Whale Rock Operating Revenues Total Trust and Agency Revenues OTHER REVENUES Sales of Property & Equipment Non - Governmental Contributions Assigned FAU Funds PERS Refunds Insurance Refunds Other Revenues Total Other Revenues TOTAL REVENUES • Golf Course became Enterprise Fund July 1, 1993. 5526,500 $800,800 $614,100 $625,400 $526,500 $800,800 $614,100 $625,400 $97,100. $77,000 $20,000 $20,000 46,500 40,000 20,000 20,000 171,200 10,000 20,000 20,000 1,490,000 71,300 212,600 28,500 20,000 21,800 213,200 28,000 241,000 30,000 $2,270,600. 5254,800 S321,000 5111,800 537,005,600. $38,219,100 $40,667,800 $40,912,100 H -3 /./()67 FINANCIAL AND STA..STICAL TABLES SUMMARY OF KEY REVENUE ASSUMPTIONS One of the key analytical tools developed during the 1993 -95 Financial Plan process Was a comprehensive five year General Fund financial forecast which was presented to the Council as part of the "Action Plan for Fiscal Health" in November of 1992. Consisting of eight different forecast scenarios depending on various revenue and expenditure assumptions, the forecast was updated as part of the "Strategic Budget Direction" workshop held in March of 1993. The "midrange" forecast scenario presented in this document became the basis for the the budget balancing actions reflected in the 1993 -95 Financial Plan. This forecast document, which includes a ten year history of key revenue sources, operating expenditures, capital outlays, and demographic trends such as changes in population and inflation along with a full discussion of key forecast assumptions, is available upon request The revenue projections included in the 1993 -95 Financial Plan are primarily based on the "midrange" revenue assumptions included in this forecast Sources used in developing these revenue projections include economic trends as reported in the national media, forecast data for California as developed by the UCLA forecasting project, forecast data for San Luis Obispo County as developed by the UCSB forecasting project (of which the City is a sponsor), and materials prepared by the League of California Cities and State Controllers Office. Ultimately, however, the 1993 -95 revenue projections reflect the staffs besf judgement about the performance of the local economy over the next two years and how it will affect City revenues. Includes all Governmental Fund rapes The following provides a brief description of the City's top eight General Fund revenue sources — which account for over 80% of total revenues - along with the assumptions used in preparing projections for 1993 -95. General Assumptions The 1993 -95 revenue projections generally assume that there will be an improvement in the local economy over the next two years, but recovery will take place at a very slow rate. Three key factors that will affect the level of recovery include: how fast the State recovers from the recession; the effect of increased economic competition from the North and South County areas on the City's traditional market position as the commercial center of the County; and the impact of State budget cuts on major local employers such as Cal Poly, the County, and the Men's Colony. Demographic Factors Although there are a number of external factors that will affect General Fund revenues, two key demographic items were closely considered in analyzing revenue trends: inflation (increases in the consumer price index — cpi) and population. The 1993 -95 revenue projections assume the following growth rates for these two factors: Inflation Population O Sales tax Grows by 155 is 1993 -94 and tS% in 1994 -93 1993 -94 revenue $5,959,000 f5 of total revenue 25% © Property tax Grows by355; in 1993 -94 and 4.0% is 1994 -95 1 1993-194 revenue 54,080,700 %oftotalrevenue 17% 1993 -94 1994 -95 3.0% 03% 3.5% 0.5% The City receives 1% from all taxable retail sales occurring in its limits. This is collected for the City by the State of Califorina along with their component of the sales tax (525% for the State General Fund and 1% for local transportation purposes, for a total sales tax rate in San Luis Obispo County of 7.25%). Based on recent trends, this revenue source is projected to grow at levels significantly less than population and inflation. Under Proposition 13 adopted in June of 1978, property tax levies for general municipal purposes'may not exceed 1% of market value. Property tax assessment, collection, and apportionment is performed by the County. The City receives approximately 16% of this levy within its limits. For 1993 -95, this revenue source is projected to grow at rates equal to population and inflation. This estimate excludes any reductions resulting from State budget cuts. H -4 � �� FINANCIAL AND S1. ISTICAL TABLES SUMMARY OF KEY REVENUE ASSUMPTIONS (Continued) © Utility users tax The City levies a 5% tax on all residences and businesses using the following Grows by3.8%in 1993 -94 utilities: telephone, electricity, natural gas, water, and cable television. Although and 4.55'5 in 1994 -95 the tax is collected for the City by the utility companies, it is a tax on the user, 1993 -94 revrnue $2,803,300 not the utility itself. For 1993 -95, utility user taxes are projected to grow at 4E ofrotalrevenue 12% rates equal to population and cpi plus 03% based on trends for the past 5 years. O Transient occupancy tax Tar base Bows by 10% in 1993 -94 and 31°55 in 1994 -9.5; tar rate increases from 99 to 10q,. of active October 1. 1993 1993 -94 revenue $2,606,000 9Eof total revenue 11% Transient occupancy taxes (TOT) are levied on all individuals occupying their dwelling for 30 days or less. This generally applies to room rentals at motels and hotels. Although the tax is collected for the City by the dwelling operators, it is a tax on the occupant, not the hotel or motel. The increase in the TOT rate from 9% to 10% effective October 1, 1993 is the most significant revenue increase approved by the Council in balancing the budget, generating an additional 5180,000 in 1993 =94 and 5260,000 in 1994 -95. This revenue source is projected to, ow by the cpi annually over the next two years. © Vehicle in —lieu subvention Vehicle license fees (VLF) in the amount of 2% of the market value of the Grows by2.155 in 1993 -94 motor vehicle are imposed by the State annually in lieu of local property taxes. and.0 c- in 1994 -95 ' The State allocates 81.25% of theses revenues equally betwen cities and 1993 -94 revenue $1,551.3001 counties, apportioned based on population. For 1993 -95, VLF revenues are 4E oflotal revrnue 7 %' projected to grow by rates equal to population and cpi less 1.2% based on O Franchise fees Tar base goes b }'5.4% in 1993 -94 and 6.1 Fe in 1994 -95,• rate for cable television increases from 455 to 5 o e11'ective July 1. 1993 1993 -94 revenue $778,600 96 of total revenue 3 %' O Gasoline tax subvention` Grows by 0 .3 5S in 1993 -94 and 014E in 1994 -9S 1993 -94 rexnue 3759,600 53 of total revenue 3% average trends over the past five and ten years. Franchise fees are levied by the City on a variety of utilities at various rates. The State sets franchise fees for utilities regulated by them (most notably gas and electricity): 1% of gross sales or 2% of revenues attributable to their investment in infrastructure, whichever is greater. The City sets rates on a gross receipts basis for the following utilities: water (2 %); solid waste collection (6 %); and cable television (currently 4% proposed to go to 5% under contract renewal negotiations currently underway). For 1993 -95, revenues from this source are projected to increase by population and cpi plus 2% based on avenge trends over the past five and ten years. An additional $40,000 annually is projected from the proposed increase in the cable television rate from 4% to 5 %. The State allo®tes a portion of gas tax revenues to cities under four distinct funding categories on a population basis totalling about 517.69 per capita: Section 2105 (113% of gas tax funds in excess of 9 cents per gallon); Section 2106 ($4,800 per year plus the balance remaining after counties receive their portion); Section 2107 (5.0825 per gallon); and Section 2107.5 ($6,000 per.year). Gas tax revenues are restricted by the State for street purposes only, and are projected to grow by increases in population over the next two years. O Business tax receipts Anyone conducting business in the City is subject to a municipal business tax. Grows by s.4 %6,1993 -94 The basis and rate is the same for all businesses: $50 per 5100,000 of gross and 6.1%in 1994 -95 receipts (or one —half of one —half a percent). The tax is not regulatory, and is 1993 -94 revenue $754,200 only imposed for the purpose of raising general purpose revenues. For 4b oflotal revenue 3% 1993 -95, this revenue source is projected to grow at rates equal to population and cpi plus 2% based on trends for the past five and ten years. As noted above, the foregoing eight revenues account for over 80% of total General Fund revenues. A wide variety of service charges account for another 7% of rcven ues summarized as follows: Recreation fees Development review fees Other fees and charges 1993 -94 Revenues % of Total Revenues $782,300 3% 393,500 2% 368,0001 2% • See Section B (Policies and Objectives — Revenue Disin'bution) for the City's policy regarding the use of gas tax revenues H -5 /,,/07 FINANCIAL AND STA :TICAL TABLES TOTAL EXPENDITURES BY TYPE AND FUNCTION OPERATING PROGRAM EXPENDITURES Public Safety Public Utilities Transportation Leisure, Cultural & Social Services Community Development General Government Total Operating Programs CAPITAL OUTLAY EXPENDITURES Public Safety Public Utilities Transportation Leisure, Cultural & Social Services Community Development General Government Total Capital Outlay_ DEBT SERVICE EXPENDITURES Public Safety Public Utilities Transportation Leisure, Cultural & Social Services Community Development General Government Total Debt Service TOTAL EXPENDITURES Public Safety Public Utilities Transportation Leisure, Cultural & Social Services Community Development General Government Total Expenditures 1991 -92 1992 -93 1993-94 1994-95 ACTUAL BUDGET APPROVED APPROVED 9,342,100 9,996,800 9,588,000 9,737,600 5,089,800 6,975,000 6,439,500 6,700,600 2,794,500 3,136,000 3,233,500 3,183,800 3,327,500 3,304,500 3,043,200 2,972,700 3,074,600 3,296,100 2,595,400 2,530,600 4,820,100 4,917,100 4,649,200 4,743,000 28,448,600 31,625,500 29,548,800 29,868,300 593,400 5,857,200 89,500 724,100 18,044,100 33543,200 3,182,500 1,924,400 1,494,600 906,500 3,717,300 1,561,800 1,181,600 2,338,700 4,464,200 1,306,300 793,600 4,071,500 470,200 104,200 22,107,300 46,717,100 11,923,700 5,120,800 214,100 217,000 215,700 216,700 678,100 928,000 3,514,800 3563,200 1,401,600 1,405,100 1,403,900 1,409,600 260,700 263,600 262,100 413,300 2,554,500 2,813,700 5,396,500 57602,800 10,149,600 16,071,000 9,893,200 10,178,400 23,812,000 41,446,200 13,136,800 12,188,200 5,690,700 5,447,600 8,354,700 6,155,200 4,769,800 - 5,906,800 7,769500 4,692,300 3,074,600 3,296,100 2,595,400 2530,600 5,613,700 8,988,600 5,119,400 4,847,200 553,110,400 $81,156,300 546,869,000 540,591,900 H -6 /-106 BUDGET REFERENC OVERVIEW AATERIALS Complementing the general budget policies .provided in Section B are a number of major policy documents that also guide the preparation and execution of the City' financial plan. A brief narrative summary for each of the following documents is provided in this section of the 1993 -95 Financial Plan: Citywide Policy Documenis Adminrrtrative ■ City Charter ■ MIS Policies ■ Municipal Code ■ Property Management Manual ■ City Council Policies ■ Public Art Policy and Procedures Manual ■ Fleet Management Program ■ General Plan ■ Goals and Objectives ■ Comprehensive Financial Reporting System Management Plan: 1989 -2000 ■ - Facilities Master Plan: 1988 -2010 Utilities ■ . Water Management Plan ■ Wastewater Management Plan Transportation ■ Parking Management Plan ■ Pavement Management Plan ■ Flood Management Policy Financial ■ Financial Management Manual ■ Cost Allocation Plan ■ ■ Monthly and Quarterly Financial Reports Comprehensive Report (CAFR) Annual Financial The following materials are also included in this section to facilitate the reader's understanding of the Financial Plan document and preparation process: Budget Glossary Defines terms that may be used in a manner unique to public finance or the City's budgetary process in order to provide a common terminology in discussing the City's financial operations. Major Preparation Guidelines and Budget Calendar Describes the steps, procedures, and calendar used in developing and documenting the 1993 -95 Financial .Plan. I -1 /,0/09 BUDGET REFERENCE ,ATERIALS MAJOR PREPARATION GUIDELINES In preparing the 1993 -95 Financial Plan, several key documents were produced which significantly affected its development. The following is a description of each of these along with a calendar of key dates in the preparation process. ACTION PL4N FOR FISCAL HEALTH In recognition of the fiscal difficulties facing the City, an immediate plan for fiscal health was prepared in November of 1992 which included the following components: • Five year forecast of General Fund revenues, expenditures, and fund balance • Identification of operating expenditure cut options and their service impacts at 5% and 10% levels • Immediate implementation of Si-5 million in operating expenditure reductions • Employee Working Group ideas regarding lay -off prevention strategies • Financial Plan policy changes regarding property tax distribution, accounting for the golf course as an enterprise fund, and capital appropriations BUDGET INSTRUCTIONS Comprehensive guidelines were issued to the staff in January of 1993 describing the City's fiscal situation, overall budget strategy, procedures for preparing operating and capital budget submittals, and budget redew calendar. COUNCIL GOAL SETTING (Budget Workshops No. 1 and 2) Consistent with the objective of meaningfully integrating Council goal setting into the budget process, 1993 -95 Fmancial Plan preparation formally began with a series of workshops leading to the development and approval of major City goals. Materials prepared for the first two workshops included: January 26 Workshop • Overview of the purpose of the goal setting workshops • Proposed approach and calendar for preparing the 1993 -95 Fmancial Plan • Update on the City's fiscal situation • Recommended eight point budget strategy • Mission driven service levels - comprehensive inventory of the services the City provides and why February 6 Workshop • Overview of the goal setting process • Status of current goals • Candidate goals proposed by staff • Advisory body goals and recommendations STRATEGIC BUDGET DIRECTION (Budget Workshop No. 3) The third budget workshop was held on March 13, 1993, at which time strategic direction was provided by Council to staff in preparing the Preliminary Financial Plan. Materials prepared for the workshop included: • Specific expenditure, revenue, and fund balance recommendations in closing a projected S33 million General Fund revenue /expenditure gap • Outcomes from Council goal setting Updated five year forecast I -10 , • /,� BUDGET REFERENG. .AATERIALS MAJOR PREPARATION GUIDELI \TES (continued) • 'Total Cut Solution• - expenditure and service reduction options available to Council in balancing the budget solely through expenditure and staffing cuts Task Force reports on tax override for public safety, grants, prevailing wage, employee working group, and revenue options FINANCIAL PLAN APPENDICES A & B The purpose of these two documents is to summarize and compile the supporting materials that were used in developing the significant operating program changes and capital improvement plan projects recommended by the City Administrative Officer (CAO) for inclusion in the 1993 -95 Financial Plan. Appendix A - Proposed Significant Operating Program Changes Summaries and narratives for each recommended significant operating program change request are included in this document providing the following information for each one: • Operating program affected a Factors driving the request for change • Request title a Alternatives • Request summary a Cost summary • Primary objectives a Implementation Significant operating program changes include major service expansions, increases in regular staffing, major changes is the method of delivering services, significant one -time costs, changes is operation that affect other departments or customer service, and changes that affect current policies. Appendix B - Draft Capital Improvement Plan Summaries and narrative for each recommended capital improvement plan (CIP) project are included in this document providing the following information for each project: • Operating program affected a Project work completed • Project title a Schedule and project costs • Project objectives a Project effect on the operating budget • Existing situation a Public art policy • Goals and policy links a Location map or schematic diagram To assist the CAO in developing the recommended operating program changes and CIP projects included in these documents, a Budget Review Team was created with the responsibility for evaluating each request and submitting their recommendations to the CAO. The team was composed of the following staff members who were divided into two review groups for operating program changes and CIP project requests: Ken Hampian, Assistant CAO Bill Statler, Director of Finance Ann Slate, Personnel Director Arnold Jonas, Director of Community Development Mike McCluskey, Director of Public Works Wayne Peterson, City Engineer Debra Hossli Administrative Analyst Carolyn Dominguez, Accounting Manager Linda Asprion, Revenue Manager Operating & CIP Operating & CIP Operating CIP CIP CIP Operating & CIP Operating & CIP Operating & CIP I -11 /!, // BUDGET REFERENCt- .,MATERIALS MAJOR PREPARATION GUIDELINES CALENDAR OF KEY BUDGET DATES Special Council Meeting "Action Plan for Fiscal Health" NO- Five year forecast of General Fund revenues and expenditures 0- Identifcation of operating expenditure cut options at 59a and 109 levels and their service impacts 0- Immmediate fmplementadon ofSlSmillion in operating expenditure cuts xi- Employee A4ori-ing Group ideas regardfag lay— offprevendon strategies 0- Financial Plan policy changes regarding property lax distribution, accounting for the golfcourse as an enterprise fund, and capital appropriations Council advisory bodies prepare work programs and goals for consideration by the Council at the goal setting workshop Finance issues mid —year budget review instructions Task Forces created and assigned the following projects: w Afission Driven Sertdce Levels 0- Revenues m6- Prevailing Rage 0- Tax Override for Public Safety mi- Federal andState Grants Finance issues 1993 -95 budget instructions to the operating departments MIS Steering Committee reviews computer — related requests Council Budget Workshops No. 1 and 2 'Goal Setting" 0- Approach and calendar for preparfng the 1993- 95Financial Plan aF Update on the City's fiscal status 0- Retideu•ofreaommended eight point budget strategy Mission driven service levels — comprehensive fnvenrory of what the City does and uby NF Overview of the recommendedgoalsettfagprocess *- Stans ofcurrentgoals 0- Candfdategoals "brairsstormed "bystaff 0- Advisory bodygoals and recommendations 0- Councilgoal setting and prioritLm on Departments submit mid —year budget requests Finance completes mid —year budget review Council review /action dates I -12 November 10, 1993 November 1992 to January 1993 December 24, 1992 January 7, 1993 January 19, 1993 January 20, 1993 Jannary 26, 1993 February 6, 1993 'February 9, 1993 "carryover from 316 workshop January 26, 1993 February 11, 1993 /- /)9 BUDGET REFERENT MATERIALS MAJOR PREPARATION GUIDELINES CALENDAR OF KEY BUDGET DATES (Continued) Departments submit their 1993 -95 budget drafts Budget Review Team evaluates departmental submittals; assigned Analysts perform detailed line item reviews; departments make presentations Regular Council Meeting "Mid —Year Budget Review" LL) Summaryoffiscal condition andyear— endprojections Retilewofmid —year budget requests Budget Workshop No. 3 ' "Strategic Budget Direction" Updatedflti eiear financial forecast ml-- Outcomes from Council goal setting 0- 'Total Cut Solution " — eApenditure and sern -ice reduction options ai ailable to the Council in balancing the budget solely through expenditure and staffing cuts 0- Task Force reports on Laxotierride forpublic safe ty, grants, prevailing wage, and revenues 0- Specifl-ceApenditure, revenue, and fund balance recommenda lions for closing the projected V3 million budgetgap 0- Direction from Council forpreparing the Preliminary 1993 -95 Financial Plan CAO reviews departmental requests, Budget Review Team recommendations, and finalizes administrative budget review process Fleet Management Committee finalizes vehicle replacement recommendations Finance completes and distributes,Prelimnary Financial PIan Council Study Session 'Review of Prelimina Financial Plan* 0- Ovan*wofFinancal Plan organization 0- Highlights of key budget issues 0- Consideration ofproposed Capitallmprovement Plan projects Special and Regular Council Meetings 'Public Hearings' rt Continued Council consideration of the 199.4 -9S Financial Plan andreceipt ofpublic comments *- Final Council consideration of the Financial Plan and budget adoption February 26, 1993 March 1, 1993 to April 27, 1993 March 2, 1993 March 13, 1993 May 5, 1993 May 19, 1993 May 27, 1993 June 2, 1993 June 8, 1993 June 9, 1993 June 15, 1993 I -13 SENT BY :Xerox Te l ecopier 7021 : 1.-23-95 ; 8 :07PM �11NG �' oua X41 zOU211s`'z' AGENDA DOW LOHNES & ALBERT'SON E 1 -Z -ITEM # _ 1 WJMKXMF . mOMILAm JOIa11o„0.MYT r,MWA oleo" -M Numma a aftsw e,a. 14"a ,, DOOLMMMAW "k IL IONUM aaabm.x ANDw" & NU AvowoB "Mm �-OI.MY OW J. mom MM WMII..a® aLNa,vn m "aretwne. CUM&E 1 mTaeuWUS'1L JMwaJaer m093ML ¢ew MOM6J."Na ThOINI4 alp N*Vaaamoma .L IN D.ILOM 9IL44a4'R =,'L t[A 0-=KDY461 JNDL4 o WB e..utLzw $%W & &G4M �" ft"06THM or o Rgo�a OWN IL D" & R. now Ngn.sASaa �t�"'"aftiL J"'m L Trt44Oa>• MChLPM 19OLMA y"a, JONa)M10 IW.41W 3 & M4"i10 Lm xYmmD LODi mn a DMOa.%a JDaO1TMma OYOL =ftz 6NWmtOY.OaQL N0"Ne,Iya v . u"u1410 aw Dan 9W0AWrMNMW OF OOI/IW ft pa W.Iwle"a ' "r D,I.aaAN."Mg �Ok&4ER 4286 TWENTY•THIRO STREET WASHINGTON. D.C. 10037.IISa TELEPMO"IC (20R) 687 -we00 FACeIMILC QO1t1 6a7•l000 ONE RAV1N14 D"nE. OVITC IOOD 4T64NT4. DEOae1A m>14a.l IOa TZLEF."ONe 1� aOl�app ,^calm" 14041 901J4i. RECEIVED JAN 2 '995 czA. ' Cop NCIU ca0. ra Mr. John Dunn City Administrative Officer City of San Luis Obispo 990 Palm Street San Luis Obispo, CA 93406 NFFER'a DIRECT 014L NO. (202) 857 -2776 January 23, 1995 B f30UNCIL D ODD DIR O 0 FIN DIR 1a N)Mpigm ❑ FIRE CHIEF �CAO EY Q PW DIR CLMWJ CLERIGORIO D POLICE CHI ❑ MG rTEAM ❑ REC DIR ❑ q— FA ILE ❑ DIR 11831t0R11M9 Oda LL PER O PERS DIR D. F}oss l Re: Sonic Cable Lea inn omoration San Luis Obispo, California FCC CUM No. CA0040 nV1 a 411A01'1 *akma" "141a a Olds NNIeWrI Y+RI w wa woo . 1a N)Mpigm mama &a m La"aamw aD' ai LIWI MAW mom Ild.., r a)at D eras Na wwm JOWL OOIRD4 - tiOO'la wW bamoew. Pow T�iJ. "we W 11831t0R11M9 Oda LL {/W R RD1A Dtl"q mm M.®4"1a 4L 11L. MOM6J."Na gun &N6W roue a ia� "Mtn Nqi RRD AMWK j%UW uwko AI.A DI'M OnIaOtLli"S�• TOL"O,a OQUM mimmunw OWN IL J W D M a OW, N"1"L uD1a. �" owe Own A aa+MK• jujawI ft-W a GWMI "NoDr -KW% t L LW4- Daree.awa,®b ar pp WX n' ay+uwwk a1pY� w)NLa4,Ly aJr aEM L I.ar4rr N.o"a L MUM W LIIV •• LnMWOBO4I, MWDNT N0"Ne,Iya v . u"u1410 aw Dan anJ 2J �® 1995 RESPONSE TO AGENDA REPORT AND DRAFT RESOLUTION Dear Mr. Dunn: As communications counsel to Sonic Cable Leasing Corporation ("Sonic") and because of our extensive experience representing cable television operators before federal, state and local governmental agencies, we have been asked to review lice City of San Luis Obispo's (the "City") January 10, 1995 letter to Sonic, the Council Agenda Report (the "Report"), and the draft City resolution concerning Sonic's basic service der rate charged in the City.. As described m more detail below, the Report contains several material factual _ errors and several erroneous legal conclusions concerning Sonic's basic cable service and equipment rates. To the extent the City incorporates the. legal and factual errors outlined below in its final decision, Sonic intends to appeal the City's rate decision to the Federal Communications Commission (the "Commission ") lI 1/ On behalf of Sonic, we respectfully request that this letter, and the January 13, 1995 letter from Thomas Green, ]sq. to the City be included in the administrative record in this Proceeding. SENT BY:Xerox Telecopier 7021 ; 1 -23 -95 ; 8:07PM Mr. John Dunn January 23, 1995 Page 2 �y UU7 541 zM;;; s Although we do not intend to address in detail every aspect of the Report, this letter will address various sections of the Report in the order in which they appear. FCC RATE REGULATION PROCESS In summarizing the status of the local proceeding in the City, the City makes several factual errors. Sonic opposes the Report and the Draft Order to the extent that these errors implicate Sonic's rights.21 The chart of rates on page 2 -2 of the Report is incorrect. The correct rates are noted below. Basic Service (12 channels) $20.81 Expanded Basic Service (17 channels) " Total Cable Service (29 channels) $22.41 Rates in Effect on Initial Date of Regulation (10/27/93) Basic Service (35 channels) $24.46 The Report also erroneously indicates that there 38 channels before and after regulation, although the rate filings submitted by Sonic clearly indicate the appropriate channel counts and rates. The City also asserts that Sonic's restructuring of services from two tiers to one tier "fell short of the 'spirit'" of the 1992 Cable A601 Although we address this issue in more detail below, the restructuring of Sonic's services had no impact whatsoever on the rates that Sonic could charge for all regulated services. Moreover, the restructuring was completely consistent with the Commission's regulations and policies, as recognized by the City when it determined that Sonic's initial basic service rates were reasonable and complied 2/ The Report also contains factual errors with regardito the adoption of the Commission's orders and rules. For example, the Report states that the initial regulations were released in June, 1993. In fact, the initial rules were adopted April 1, 1993 and released May 3, 1993. at Cable Television Consumer Protection and Competition Act of 1992, Pub. L. No. 102- 385, 106 Stat. 1460 (1992) (the °1992 Cable Act "). SENT BY:Xerox Telecopier 7021 ; 1 -23 -35 ; 8 :08PM ; 3y 8U5 541 2802;;; 4 Mr. John Dunn January 23, 1995 Page 3 with the Commission's regulations. To the extent that any subscribers. were affected by the restructuring, only about 136 customers, or less than one percent of the subscriber base in the City, subscribed to basic -only service prior to restructuring. FIRST ROUND OF FCC RATE REGULATION In the section of the Report concerning the fast round of rate regulation, the City again makes several factual misstatements, despite the fact that Sonic provided complete and accurate information concerning rates and services in its rate filings with the City. In fact, as the City notes in its Report, its consultant found that Sonic's rates were reasonable under the rate regulations in effect prior to May 15, 1994. SECOND ROUND OF FCC RATE REGULATION' In this section of the Report, the City makes additional factual errors concerning the Commission's adoption and implementation of the rate regulations that became effective May 15, 1994, the services and rates offered by Sonic, and the difference in rates under the Commission's initial regulations and the new regulations. Sonic initially indicated that its new permitted rate was $24.21 and reduced its rates accordingly on July 14, 199411 Subsequently, on October 27, 1994, Sonic amended its Form 1200 for end of year adjustments to program icing costs to reflect a rate of $23.63?' The City indicated in its staff Report that the rates were $24.46 for 38 channels.. a difference of $0.83. However, the rate actually was $0.58'10 wer ($24.21 - $23.63) and the total channels were 36, not 38. From this information, appears that the City completely failed to recognize the rate reduction instituted in July, and it misrepreseated to the public Sonic's good faith effort to comply with the Commission's regulations. 4/ Pursuant to the Commission's rules, Sonic deferredrefund liability and deferred filing of its rate information until July 14, 1994. 47 C.F.R. § 76.922(b)(6)(B). Therefore, as discussed below, Sonic should not be subject to refunds ' for the period May 15, 1994 through July 14, 1994.. _ 11 At the time the amended Form 1200 was submitted, Sonic also forwarded to the City an FCC Form 1210 which reflects a maximum permitted rate of $24.23, as discussed below. SENT BY :Xerox Telecopier 7021 ; 1 -23-95 : 8 :09PM ; 4-0 our 741 zouZ 91 Z Mr. John Dunn January 23, 1995 Page 4 REFUND LIABELITY In its Report, the City requests that Sonic issue refunds and roll rates back to $23.63 until such time that the City can review Sonic's Form 1210 rates. By requiring refunds for the period from July 15, 1994 through the date refunds are issued, Sonic may be required to issue refunds in excess of that which would be permitted based on Sonic's Form 1210 rate justification. Moreover, the City failed to acknowledge that, if refunds are required, the City would be required to refund to Sonic the franchise fees collected on the rates allegedly charged in excess of the permitted rate. The City's Order Should Hold In Abeyance Refunds For the Period Subsequent to November 26, 1994. . On October 27, 1994, along with its amended Form 1200, Sonic submitted a Form 1210 that justified a rate of $24.23 based on standard external cost adjustments, pursuant to the Commission's rules. This filing justifies Sonic's current rate of $24.21. The City has not reviewed this filing as yet, however, though it has agreed that Sonic's rate of $23.63 as justified on the Form 1200 is proper. If the City subsequently finds that the FCC Form 1210 maximum permitted rate of $24.23 is in accordance with FCC regulations and Sonic is forced to issue refunds back to July 15, 1994 and reduce its rate to $23.63, Sonic would suffer irreparable harm because it could not recover the lost revenue from subscribers that represents the difference between the rate permitted under the Form 1210 and the rate permitted under the Form 1200 for the period subsequent to November 26, 1994. Sonic does not dispute that, to the extent refunds are owed, they should accrue for the period from July, 15, 1994 to November 26, 1994 (30 days after the date the Form 1210 was submitted) for the difference between the rate charged ($24.21) and the rate justified ($23.63), offset by any undercharges in equipment rates. However, Sonic does believe that the City should permit Sonic to maintain an accounting of revenues received from the period November 27, 1994 forward, pending review of the Form 1210. If the City ultimately finds that the Form 1210 rate is justified, Sonic will be permitted to charge that rate going forward. However, because the City deferred consideration of the Form 1210, and likely will not issue.a decision for the full 90-day tolling period (a total period of 120 days), the refunds due wilt accrue despite the fact that Sonic's rate is justified by the Form 1210. Generally, the Commission expects local franchising authorities to issue decisions on rate increase filings within the permitted level within 30 days. In its May 3, 1993 order, the Commission stated: SENT BY:Xerox Telecopier 7021 1 -23 -95 ; 8 :09PM ; 4-0 ou> >ai couZ.s o Mr. John Dunn January 23, 1995 Page 5 We are concerned that operators' proposed rate increases be reviewed as thoroughly, but as quickly, as possible, in order to ensure that a cable system's basic service rates are reasonable.... Thus, we expect that unopposed rates and rate increases which are beneath the permitted level generally can become effective in 30 days.... Implementation of Sections of the Cable Television Consumer Protection and Competition Act of 1992: Rate Regulation, Report and Order and Further Notice of Proposed Rulemaking, 8 FCC Red. 5630, 5704 (1993) ( "Initial Rate Order ") (emphasis added). The Commission also noted in its Initial Rare Order that, "[b]ecause ... exogenous costs are presumed reasonable, review of these adjustments should not create an undue delay for the operator, and the franchising authority must pass on them within 30 days." Initial Rate Order, 8 FCC Red at 5720 (citations omitted). Though the period of review may be tolled for 90 days in cases where the franchising authority is unable to make a determination on the price cap increase, 47 C.F.R § 76.933(b)(1), the two step approach adopted by the Commission "promotes the goal of expedition to the fullest extent possible by requiring franchise authorities to evaluate a cable operator's [increase filing] within 30 days. V In Sonic's case, the Form 1200 and Form 1210 rate review processes overlap by several months because the City extended the Form 1200 review process by an additional 90 days. Though the Form 1200 filing by Sonic may. have been sufficiently complex to justify tolling the review period, the Form 1210 justification is not as complex. Therefore, the City should have been able to review that filing within 30 days. In any case, now that the City has determined that Sonic's initial rate filing was accurate, the City can use its discretion to require Sonic to maintain an accounting of amounts received in excess of the permitted rate ($23.63), and hold in abeyance a decision concerning refunds for the period after November 26, 1994 pending review of Sonic's Form 1210. This would minimize the harm to Sonic, while not in any way affecting the interests ¢/ Id. at 5710. Even,if some portion of a total rate increase is difficult to analyze, the . Commission has stated that, "-where the questionable portion is clearly severable. a franchising authority may ... permit the implementation of portions of a rate increase it finds reasonable while it reviews the reasonableness of,other portions. Implementation of Sections of the Cable Television Consumer Protection. and Competition Act of 1992: Rate Regulation and Buy - Through Prohibition, Third Order on Reconsideration, 9 FCC Rcd 4316, 434243 (1994) ( "Third Recon. Order "). SENT BY :Xerox Telecopier 'luzl o•iurm s- nu> 041 Love'" Mr. John Dunn January 23, 1995 Page 6 of subscribers.'' -' This approach would be consistent with the Commission's policies, orders, and rules while not adversely affecting subscriber interests. The Commission's decision in a recent letter ruling supports this position. The Commission's regulations restrict cable operators from increasing cable pro,Mamt,,;ng service ( "CPS ") tier rates without Commission approval when CPS rates have been deemed unreasonable within the past 12 months. Cox Cable Hampton Roads, Inc. ( "Cox "), a cable operators serving Virginia Beach, Virginia, wished to file a Form 1210 to increase rates for exogenous costs and channel additions. However, the Commission recently had deemed Cox's CPS rates unreasonable. Cox requested that the Commission permit it to increase rates subject to refunds should the Commission ultimately deem Cox's 1200 rates unreasonable. The Commission approved Cox's request on an interim basis subject to refunds, recognising the possible irreparable harm to Cox if the rate adjustment were delayed. Letter From Meredith J. Jones, Esq., Chief, Cable Services Bureau to Peter H. Feinberg, Esq., Counsel for Cox (Jan. 13, 1995). Compared to the Cox case, the situation in Sonic's case weighs even more in favor of reducing potential irreparable harm. The City already has ruled on Sonic's Form 1200 rate. All the City' would have to do is modify its refund order to hold refunds for the period after November. 26, 1994 in abeyance pending review of Sonic's Form 1210. If in the unlikely event Sonic's Form 1210 is improper, Sonic could issue refunds to subscribers for any amounts Sonic charged over the permitted increased rate. The City's Order Must provide that The City Must Refund to Sonic Franchise Fees on Any Amounts Refunded to Subscribers ,, I. The staff also failed to point out to the Council that any refunds made to subscribers would also require the franchising authority, the City of San Luis Obispo, to refund franchise fees and user taxes to Sonic. The Commission's regulations require that franchising authorities refund to cable operators any franchise fees collected on amounts refunded to subscribers: Under Section 76.942(f) of the Commission's rules, a local franchising authority must "return to the cable operator. an amount equal to that portion of the franchise fee that was paid on the total amount of the refund to subscribers." 47 C.F.R. § 76.942(f). 1 If the City ultimately determines that Sonic's rate increase was in excess of permitted levels, Sonic could issue refunds to its subscribers for the excess. SENT BY:Xerox Telecopier 7021 1 -23 -95 ; 8 :10PM �� ou> >ai couc.a o Mr. John Dunn January 23, 1995 Page 7 ADVERTISING OF SERVICE RATES In its Report, the City stated that Sonic would have to correct the manner in which it advertises rates for cable service. Report at 2-4. However, the Commission's rules permit "[c]able systems that cover multiple franchise areas having differing franchise fees or other franchise costs, different channel line -ups, or different rate structures [to] advertise a complete range of fees without specific identification. of the rate for each individual area." 47 C.F.R. § 76.946. Because Sonic's system that serves the City covers franchise area with differing franchise fees and users tax, Sonic may advertise a complete range of fees, "without identification of the rate for each individual area." Id. Though Sonic notified the City of this, the City's Report fails to recognize the applicable regulations. "BUNDLING" OF RATES The City`s Report states that Sonic must establish separate charges for remotes and addressable converters pursuant to the Commission's regulations. Report at 2-4. However, Sonic does not bundle remote control units and addressable converters in package prices. FCC Form 1205 indicates Sonic can charge $0.03 for remote controls and $0.30 for converters. Sonic has opted not to charge for this type' of equipment at this time, and the Commission's rules do'not require Sonic to do so. Th'e equipment rates computed under Form 393 and Form 1205 generate maximum permitted rates for equipment, but operators are free to charge lower rates if they choose to do so, so long as rates are uniform. 47 C.F.R. f 76.984(a). The Commission confirmed this interpretation in a recent order. In TCI Cablevision of Central Indiana, Inc., Order, DA 94 -1604 (rel. Dec. 280 1994) ("TCI Order "), the FCC Cable Services Bureau (the "Bureau ") stated that local franchising authorities "should not require the operator to set a particular rate for programming, equipment or installations at any rate less than its maximum permitted rate, even if its current or actual rate is below its maximum permitted ',rate. TCI Order at 16. The Bureau also noted that "[a]n operator is not required, however, to raise its rates to the maximum permitted level. An operator may voltatrarily choose to charge Iess than the maximum permitted rate." Id at 3 n.11. The operator may therefore voluntarily choose to charge less than the maximum permitted rates. In any case, Sonic'does not understand why the City would require Sonic to charge subscribers a fee for equipment that currently is provided at no charge. Moreover, to the extent that Sonic could have charged a fee for such equipment, it is permitted to offset any refund liability for regulated basic tier service by deducting the amount that could have; been charged for equipment. The City's Report should therefore be amended accordingly. SENT BY:Xerox Telecopier 7021 1 -23 -95 ; 8:11PM 3y UU5 541 ZeoZ;u s Mr. John Dum January 23, 1995 Page 8 OTHER MATTERS Collapsing of Service Tiers The City: alleged in its Report that Sonic may have evaded rate regulation by collapsing service tiers, and stated that it intends to file a letter with the Commission requesting what action is appropriate with regard to the alleged rate evasion that resulted from Sonic's restructuring of services. Report at 2 -5. The City also implies that the Commission recently issued orders that appear to clarify that collapsing of service tiers constitutes rate evasion in all cases. As previously stated, Sono established one level of service that affected only 136 subscribers in the City of San Luis Obispo. By offering all services on the basic tier, the local franchising a_ uthority now has full jurisdiction over the regulation of basic service and equipment rates. Moreover, because no services were moved from regulated to unregulated tiers, all channels that were regulated prior to September 1, 1993 are still subject to rate regulation. Under the Commission's benchmark formula, Sonic can charge no more now for regulated services than it would have been able to charge under the two- tiered service approach. ` The Commission's orders and policies support Sonic's position. The Commission stated in its initial rate order that rate evasion is "any practice or action which avoids the rate regulation provisions of the [1992 Cable] Act or the [Commission's rules]. "I This policy was reiterated in recent orders issued by the Bureau.a In addition, the Bureau recently released an order resolving a letter of inquiry regarding a cable operator that eliminated its cable programming service tier and offeted instead only a basic service tier and three d la carte channels. Cable TV of Greater San Juan, Letter of Inquiry, Memorandum Opinion and Order, DA 94 -1425 (rel. Dec. 12, 1994) ("San Juan Order "). In the San Juan Order, the Bureau found that Cable TV San Juan restructured its services so that three regulated tiers of service, two `of which contained 19 channels and one of which contained 9 channels, were collapsed into one 44 channel basic service tier,. and one unregulated 3 channel d la carte package. San Juan Order at 117 -10. The Bureau $l_ Initial Rate Order, 8 FCC Rcd at 5915 (emphasis added). Q/ See, e.g., C -TEC Cable Systems, Letter of Inquiry, Memorandum Opinion and Order, DA 94 -1622 (rel. Dec. i309 1994) J 6. f SENT BY :Xerox Telecopier 7021 : 1 -23 -95 ; 8:12PM ou> >ai [auc.4tu Mr. John Dunn January 23, 1995 Page 9 ruled that it could not determine that the new service offerings constituted rate evasion. Sonic's restructuring actually is less suspect than Cable TV San Juan's restructuring, because Sonic did not move any formerly regulated services to unregulated packages. Because so few subscribers were affected by Sonic's restructuring (less than one percent of the subscriber base) and all services formerly subject to regulation were not moved to unregulated packages, Sonic's actions clearly do not constitute rate evasion under the Commission's rules and orders. In any case, the City did not dispute Sonic's service offerings, which were effective as of September 1, 1993, when it approved Sonic's Form 393 rate justification for all service offerings. The City had ample opportunity to do so. Sonic therefore believes that the City explicitly, or at least impliedly, approved Sonic's rate restructuring. r City's Draft Resolution The City's draft resolution is defective, and in conflict with the Commission's regulations, in several respects. First, the City in its draft resolution incorrectly asserts that Sonic's rate justifications were facially incomplete. Report at 2 -6. In paragraph five of the resolution, the City states that, puimant to Section 76.937(e), Soriic's Forms 1200, 1205, and 1215 were facially incomplete. Sonic has continued to disagree with the City regarding the interpretation of the Commission's rules. In order for a franchising authority to assert that a filing is facially incomplete and thereby toll the date by which rate filings must be reviewed. an operator must fail to complete the relevant rate forms or fail to include all required attachments to the form. This is not the case in Sonic's filing. The City declared the filing facially incomplete because they needed supplemental information to complete their review; nothing was omitted that was a requirement of the filing. The Commission has distinguished facially incomplete filings with filings submitted in good faith: We distinguish an incomplete filing (for'example, a form filed without a required 'explanation) from one which is complete and submitted in good faith, but about which the regulating authority has certain questions or reasonably feels it requires clarifying or substantiating information.... [''jhe regulatory authority `in such as situation has the right to request and receive clarifying or substantiating information. However, we will not automatically toll the deadlines for franchising authorities to act in these circumstances, as we do for incomplete filings. SENT BY :Xerox Telecopier 7021 ; 1 -23 -95 ; 8 :1z1'M ; a" OUO X41 couc VF I Mr. John Dunn January 23, 1995 Page 10 Third Recon, Order, 9 FCC Rcd at 4348 (emphasis added). In this case, the City cannot toll the review deadline merely because more clarifying information is required. This aspect of the rate order therefore is invalid. Second, paragraph eight of the resolution states that Sonic advised the City, via correspondence dated December 14, 1994, that Sonic had reviewed the report prepared by the City's consultant, TMC, implying that Sonic made no comments regarding the contents of the report. However, by letter dated December 14, 1994, Sonic stated it was not appropriate to comment on whether TMC's report contained errors as that is the responsibility of the City. Sonic stated that there were concerns about the report prepared for the City and that Sonic was unclear as to what the City was requesting or recommending. It is our understanding that the City did not respond to Sonic's request for clarification. Third, as noted previously, item number one of the resolution on page 2 -7, imposes refunds in excess of the amount necessary to make subscribers whole, and therefore would cause Sonic irreparable harm, if the City ultimately approves Sonic's Form 1210. CONCLUSION The City's Report and draft resolution ate replete with factual errors and misinterpretations and misapplications of the Commission's regulations and policies. The City bas suggested that Sonic violated the Commission's regulations, but has failed to support its legal determinations. Although Sonic would appreciate the opportunity to work with the City to resolve these matters. Sonic must oppose the Report and draft resolution to the extent that they are inconsistent with the applicable regulations, orders and policies as promulgated by the Commisswi m Sincerely, Christopher Redding Counsel for Sonic Cable Leasing Corporation 12/ The City also informed Sonic that it would toll the deadline for reviewing Sonic's Form 1210 on the same erroneous basis. WARREN A. 51N5HEIMER III ROBERT IL SCHIEBELHUT K. ROBIN BACCETT MARTIN J. TANGEMAN THOMAS M. DUGGAN MARTIN P. MOROSKI DAVID A. JUHNKE STEVEN J. ADAMSKI THOMAS D. GREEN M. SUZANNE FRYER ROY E. OGDEN CYNTHIA CALDEIRA SUSAN S. WAAC THOMAS J. MADDEN III STEVEN M. CHANLEY MARIA L HUTKIN - � Iti� # �...._ SINSHEIMER, SCHIEBELHUT £s BAGGETT A 4 lid A PROFESSIONAL CORPORATION STREET ADDRESS ATTORNEYS AT LAW 1010 PEACH STREET P05T OFFICE BOX 31 WSAl7 CLERKIORIG S OBI PO. CALIFORNIA 9340G•0031 805- 411-2802 805-541 -2800 O C READ FILE A tj 2 1495 CITY CLERK SAN LUIS OBISPO, CA January 24, 1995 Diane Gladwell San Luis Obispo City Clerk City of San Luis Obispo City Hall 990 Palm Street San Luis Obispo, California 93401 Re: Public Records Request Dear Ms. Gladwell: CLIENT 0133222 HAND- DELIVERED Pursuant to the California Public Records Act Government Code section 6250 et. seq., please make available for inspection the below requested documents within the custody, possession and control of the City of San Luis Obispo ( "City") within the minimum statutory period allowed, i.e., ten days from this letter. This request covers documents created, dated, received or sent from January 1, 1981 to the present. Also, please arrange to make copies of such documents at my expense. The requested documents are: 1. All proposals from Telecommunications Management Corp. ( "TMC ") to perform services for the City; 2. 3. 4. 5. 6. T s. 9. All proposals from Carl Pilnick to perform services for the City; I All bills or invoices from TMC; All bills or invoices from Carl Pilnick; All bills paid by the City to TMC; All bills paid by the City to Carl Pilnick; All bills from Rutan & Tucker; All bills paid to Rutan & Tucker; COUNCIL ❑ CDD DIR CAO 0 R DIM ACAO ❑ FIRE CHLEF ATTORNEY O PW DIR CLERKIORIG O POLICE CHI O MGMTTEAM O REC DIR O C READ FILE O UTIL D(Ri it it VILE O PERS DIR All memoranda from Rutan & Tucker (any of its attorneys) to the City; J� f -WSL. Diane Gladwell San Luis Obispo City Clerk January 24, 1995 Page 2 10. All memoranda from the San Luis Obispo City Attorney relating or referring to the San Luis Obispo County Superior Court action entitled City of San Luis Obispo v. Sonic Cable Television case no. 55408 (the "Lawsuit "); 11. All City files relating to the Lawsuit; 12. All City files relating to Rutan & Tucker; 13. All City files relating to TMC; 14. All City files relating to Carl Pilnick; 15. All agreements between TMC and the City; 16. All agreements between Rutan & Tucker and the City; 17. All agreements between Carl Pilnick and the City; 18. All correspondence to and from TMC; 19. All correspondence to and from Carl Pilnick; 20. All correspondence to and from Rutan & Tucker; and 21. All documents including correspondence and/or memoranda to or from any City, County, State, FCC or any other government agency, concerning Sonic Communications, Sonic Cable Leasing Corporation, Sonic Cable T.V. Inc., Sonic Cable Television, Sonic Cable Television of San Luis Obispo, and/or Christopher Cohan. RKS:mab g:ltdSonic\CitySL0\18clerk.124 cc: Christopher Cohan Very truly yours, MEEr DATE: II I j�l city o f san Dais o��spo � 1/10/95 COUNCIL AGENDA REPORT `M"' NUMBER: n FROM: Ken Hampian, Assistant City Administrative Officer SUBJECT: 1993 -95 ECONOMIC STABILPTY PROGRAM UPDATE CAO RECONEMIENDATION: 1. Receive a status report on the implementation of the City's 1993 -95 Economic Stability Program- 2. Provide staff with direction regarding future activities, as recommended in this report. REPORT -IN-BRIEF Since Council adoption of some Economic Stability Task Force (ESTF) recommendations last March, a number of activities have been underway, particularly in support of the retention and expansion of existing local businesses. Several steps have been taken to improve perceptions of the City, strengthen communication between the City and various employers and businesses, and improve customer service. In addition, the City has invested financially in support of specific services or projects which benefit the local economy. Last March, the Council also deferred action on some of the ESTF's recommendations to a later time. This report offers recommendations relative to those deferred activities, which include: A Shop San Luis Obispo Program, a Tourism Network, a conference facility, a downtown study regarding co- existence with the Mall, the redevelopment of the Madonna Road shopping area, formal business incentives, Court Street, a daily Farmer's Market, and further Auto Center expansion. Direction is also sought relative to the implementation of a formal Business Visitation Program, New Business Attraction, a Facade Enhancement Program, a Countywide Tourism Development Plan, and the County's Economic Advisory Committee. The recommendations contained in the report require no significant cost to the City beyond the current level of investment (both financial and in terms of staff support). Goals or programs above and beyond those identified in this report should be considered within the context of other community priorities per the Council's goal setting process for the 1995 -97 Financial Plan. Even if no new goals are added through that process, with the approval of recommendations contained in this report, staff believes that the City will be providing a solid level of support for the community's economic development and stability. . DISCUSSION Back round The implementation of "a more defined, proactive Economic Stability Program" was established by the City Council as a major goal for 1993/95. To help develop this program, in March 1993 a - I city Of San tuts OBISPO COUNCIL AGENDA REPORT the Council appointed the Economic Strategy Task Force (ESTF). On October 1, 1993, the ESTF issued its report, which outlined 59 recommendations for a more proactive City role in promoting the economic stability of the community. The report was considered by Council on November 9th, and subsequently referred to staff for evaluation with respect to implementation. On March 8, 1994 staff returned to Council with a plan for implementing the recommendations of the ESTF. Ultimately, the Council adopted some, but not all of the recommendations. In general, the Council endorsed the activities outlined under the first page of Attachment 1. Those items listed on page two, with a recommended implementation "start up" beyond six months, were deferred for reconsideration at a later time. As a part of the March 8th action, the Council also assigned the Assistant CAO to implement the program on approximately a one -half time basis. Current Status of Implementation In general, to one degree or another, staff has addressed all of the goals outlined on page one of Attachment 1, with the exception of the "Business Roundtable" (which was not endorsed by the Council). In addition, other parties have taken the initiative on some of the goals outlined on page two. For example, the Chamber of Commerce has led the formation of a "Tourism Council ", which includes representatives of all parties involved in the .local tourism industry (restaurants, hotels/motels,. the BIA, Cal Poly, the Chamber, the City, etc.). The conference facility concept is at least being given informal consideration by certain parties, and with respect to the Veteran's Memorial Hall, active discussions are underway between the County and the Holiday Express Hotel. While a daily Farmers' Market has not been considered, a third "Farmers' Market" is now being offered every Tuesday in the parking lot of the Market Place. . With regard to the initiatives directly undertaken by the City, they have leaned most heavily in the direction of the retention and expansion of existing local businesses and related activities. This is consistent with the direction provided by Council last March. However, there have been other activities underway as well. The remainder of this "Current Status" section of the report will address these efforts under the two broad categories of "Business Retention" and "Other Activities" . Business Retention. In terms of implementing business retention activities, an early emphasis of staffs efforts has been to change previously held negative perceptions about the City. It is no secret that in certain quarters the City has been considered a "business unfriendly place ". This reputation has tended to feed on itself, persisting as "fact" despite past and more recent efforts by the City Council and staff to support local business and the local economy. Whether fair or not, this perception must be changed if city government and the business community are to achieve a shared goal of having a more positive business environment. Said another way, as long as "old horror stories" continue to be told, our "new, improved stories" won't make a difference. Therefore, a focus of staffs' start-up efforts has been to better communicate the City's ongoing economic stability activities, as well as those new activities initiated as a result 2 ^ Oc 11111111110 1111 city of San -LaIs oBispo i COUNCIL AGENDA REPORT of the Council's adopted Economic Stability Goals.. These activities can be expressed under four main categories which, taken together, form the basis of a strong commitment to local business retention and expansion. These categories are: • Changing Perceptions • Strengthening the Local Communication Network • Improving Customer Service • Providing City Financial Assistance (direct and indirect) Outlined in Attachment 2 under each of these four categories are economic stability activities undertaken during the current financial planning period (1993 -95) which directly support local business retention and expansion efforts. Although some of the activities were already underway at the time of Council adoption of the 1994 program, many were initiated following adoption of the ESTF recommendations. Other Activities. Since last March, other major economic stability activities undertaken by staff have been the Airport Annexation; the Dalidio Development Agreement Proposal; responses to business relocation inquiries; and a very limited amount of business attraction. Of these activities, the Airport Area Annexation was initially a fairly heavy workload item. However, since the breakdown of the property owner -City discussions, this activity has involved little or no time (although it is recognized that the Council may wish to consider a different approach to the Airport area, at a later time). The Dalidio Development Agreement continues to be a significant work assignment, and given the amount of analysis and negotiation ahead, will continue to demand staff time over the next several months. With regard to business relocation and attraction, staff has primarily been responding to inquiries. Because of the enhanced profile of economic stability in the City (including the designation of a specific staff person as responsible for implementation), these inquiries have increased somewhat, but continue to be a fairly minor work activity. There have been only two proactive efforts to attract new businesses to the community (beyond the interest in Costco as part of the overall Dalidio proposal): First, we have repeatedly expressed the City's interest in locating a Trader Joe's in San Luis Obispo. This interest has been expressed to Trader Joe's executives as well as to local real estate owners and brokers. Second, staff tried to persuade Orchard Supply Hardware to remain with the Marigold Center project, but apparently to no avail. Clarification of the City's role and goals relative to business attraction is a matter that needs to be addressed by the City Council, as discussed in the next section of this report. 3 a -3 �����► �Illllp��i ���l� city of San lU1S OBISpo COUNCIL AGENDA REPORT Direction Regarding Future Activities As mentioned earlier, formal Council direction provided last March related to those activities either "Underway" or to be initiated within "Six Months Or Less ". Although, specific direction was not provided for those activities suggested to begin after six months, for various reasons, some things have occurred relative to some of the goals. These "beyond six months" items are listed below, along with a brief statement of status and a recommendation relative to further direction. Direction is also sought regarding the initiation of a Business Visitation Program, business attraction, a Facade Enhancement Program, a Tourism Development Plan, and the "Sports Mecca" concept. ■ With Chamber assistance rekindle the "Shop San Luis Obispo program. Status: This program was initially intended to combine City and private sector funds to create an advertising program targeted only within the region to promote San Luis Obispo as a shopping destination. The program was originally proposed by the Chamber of Commerce, but later withdrawn due to a lack of adequate citywide participation from local retailers. Recommendation: Staff feels that there is nothing conceptually wrong with such a program; however, staff does not feel that this activity should be further pursued until the private sector offers widespread and coordinated support and financial commitment. This is because the private sector is in the best position to judge whether or not such a program would be effective, and therefore the City should not commit funds until such a sentiment exists. ■ Serve as a catalyst for the formation of a "Tourism Network ". Status: The Chamber of Commerce has taken the lead in forming such a network through the creation of the Tourism Council. The Council includes a membership of 26 persons representing numerous sectors that share an interest in a healthy local tourism market (hotels/motels, restaurants, local industry, the arts, the VCB, the Chamber of Commerce, Cuesta College, Cal Poly, and City government). In addition to representatives from the PCC and BIA, the Assistant CAO and Parks and Recreation Director represent the City on the Council. Early efforts of the Tourism Council include overall improved communication and coordination, improved tourism linkage to Cal Poly activities, input on Decemberfest, and efforts to attract or restore conferences to the City (e.g. return of the Future Farmers of America). Recommendation: The Tourism Council is working effectively, and continued City participation is recommended. 4 1111n%JJJJ1w11JpJ city of San Lais OBlspo ni;% COUNCIL AGENDA REPORT ■ Evaluate conference facility concept. Status: Last summer, the Cal Poly- County- City- Cuesta- Chamber of Commerce group (now informally known as the Five C's Committee, and previously called the "Business Research Park Committee ") established a work program which includes seven main parts: Improved Communication; pursuit of the Electronic Village; exploration of a conference center; development of a small business incubator program; connecting schools- students- businesses in training opportunities; sharing resources and collaborating on technical endeavors (e.g. GIS systems); and sub - regional economic development issues (e.g. "Sports Mecca "; programs at Vandenberg). At a recent meeting of this committee, Supervisor Blakely announced that the Holiday Express Motel is engaged in discussions with County General Services with respect to the creation of a conference facility at the Veteran's Memorial Hall. This would be established through the negotiation of a long term lease between the motel and the County. In addition to the Holiday Express, the facility could be sub - leased to other parties in need of conference rooms. While such an outcome would not establish the "ultimate conference facility", it would represent a significant improvement over the status quo. Recommendation: The Mayor, CAO, and Assistant CAO represent the City on the Five C's Committee, and Council will be kept apprised of any further conference center developments. ■ Consider downtown study regarding co- existence with the Mall. Status: The underlying intent of this suggested study is to determine ways that the downtown can best co -exist and promote itself, should the Dalidio project be developed. Questions that the study could answer include: What is the special role of the Downtown in San Luis Obispo? What is the Downtown's most appropriate "niche" in the regional marketplace? How can the Downtown most effectively compete, both within the City and within the region? However, the study is not intended to answer the question: Should the Dalidio property be developed ?. Recommendation: Staff recommends no action on the initiation of such a study until the timing and scope of development on the Dalidio property is clarified, since this development has been the major reason behind the perceived need for this study. ■ Encourage re- development of the Madonna Road shopping center. Status: The redevelopment of the Madonna Road shopping center in coordination with the Central Coast Mall was extensively discussed during the update of the Land Use Element, and there appears to be widespread community consensus that an improved use of the existing developed centers would be very desirable. However, in separate discussions with the owners of each mall, staff has been told that such a joint endeavor 5 ����n��t�►�IIIIIfI�P II city of San tins OBE spo Mij% COUNCIL AGENDA REPORT is not presently feasible and will not be pursued. However, the new owners of the Central Coast Mall are actively engaged in efforts to improve that center, including at least improving the transition between the two shopping centers. Recommendation: The City should continue to conceptually support improvements at either of the centers, and assist as appropriate if improvement projects are initiated. ■ Evaluate more formal brininess incentive programs. Status: In surveys completed by staff and others, not. many California cities provide direct financial subsidies to either attract or retain businesses for both financial and policy reasons. Most, however, do provide important non - financial incentives. Non - financial incentives include such things as site location assistance (considered "most important" by a 1993 National. Council for Urban Economic Development survey), streamlined permitting, R & D support, job training /labor pool, availability of economic data and information, City attitude and communication, and quality of life (it is important to note that some of these "non - financial" incentives can offer important direct financial benefits, such as reduced carrying -costs resulting from timely permit processing). While the City does offer a couple of direct financial incentives — Auto Center fee credit incentive and the League of Cities Bonds for Industry Program -= our evolving practices are more consistent with the non - financial approaches taken by these other cities (e.g. site location assistance, timely processing, responsive communication, making data and other information available, resolving problems, etc.). Staff recommends that the City concentrate on these non - financial incentives, and avoid any "across - the - board" policies for subsidies or incentives. Further direct financial incentives should be considered only on a very targeted basis, and only after cost - benefit analysis that considers the long term. We are a relatively small community with limited resources, and realistically we can not compete with major metropolitan areas or cities and state governments outside of California, some of which are willing to virtually give away acres of land, or millions of dollars in infrastructure (often through a Redevelopment Agency).. In addition, perhaps the major obstacle to companies considering relocating to San Luis Obispo is the cost of housing, which the usual financial incentives can not address. However, our perceived "weakness" could be our strength in that most businesses cite "quality of life ", and not the availability of special financial advantages, when asked why they are presently located here, or hoping to relocate here. Therefore, the City needs to protect its quality of life, and at the same time promote it as appropriate. In combination with aggressive non - financial incentives, staff believes that there are compelling reasons for employers and other businesses to be in San Luis Obispo, and with proper effort we can be successful in targeted business recruitment. N city of San AS OBISp0 Mi;% COUNCIL AGENDA REPORT Recommendation: Staff recommends that we focus on the non - financial incentives that we can offer businesses to expand or locate here. This recommendation is made with the recognition that there could always be the exception to the rule, if circumstances are appropriate and unique. One added way that staff can gather, and respond to better information on "how we are doing" relative to non - financial incentives is to institute periodic "exit interviews" with persons just completing the permit process. Staff also requests Council concurrence with this concept. ■ Reconsider Coun Street options /project. Status: No activities have been undertaken on this project since the litigation pending against the City expired. One factor to consider in determining the timing of restarting a Court Street endeavor is the status of the " Higuera Street bridge ", which is currently being studied relative to future replacement (the bridge partially crosses through the Court Street property). In addition, the Downtown physical concept plan shows a design concept quite different from the previous proposal. Additionally, the current parking lot is a high desire parking area, and frequently fills to capacity, and an acceptable parking replacement plan would have to be developed prior to eliminating the parking area. Recommendation: Council may wish to consider this project as a part of the establishment of goals and objective for the 1995/97 Financial Plan. However, in addition to the factors noted above, Council should take into account other competing priorities, since another Court Street effort (even if simplified) is likely to be time - consuming. ■ Consider viability of daily Farmers' Market. Status: As megtioned earlier, City staff has not pursued this recommendation. However, a third "Farmers' Market" (in addition to "Thursday Night" and Saturdays at the Mall) has been initiated on tuesdays at the Market Place on South Higuera Street, and Cal Poly is also now holding periodic Farmers' Markets. Recommendation: Private sector judgement and initiative should determine whether added market days are appropriate. ■ Consider more formal efforts to encourage Auto Center expansion, if necessary. Status: Spring Toyota has relocated to the Auto Center area on Los Osos Valley Road. Actions taken through the update of the Land Use Element encourage further expansion in that area. The City currently offers a $15,000 contribution toward fees for dealerships which relocate to the area from other locations in the community. 7 ��►►��II�IIII�II��N�I���� MY Of san lU1 S OBI SPO Mi;% COUNCIL AGENDA REPORT Recommendation: Council may wish to consider the priority of a more aggressive effort within the context of 1995/97 goal setting. ■ Enhance communication between the City and the business community, starting with the implementation of a regular Business Visitation Program by high level City Officials. Status: The purpose of this ESTF recommendation was to enhance communication with local industry and other businesses by institutionalizing formal on -site "visits" by a delegation of City and private sector officials. Such programs are commonly active in other cities, typically as a component of a business retention program. One Ventura County city, for instance, schedules "Local Industry Familiarization Tours" (or, "LIFT' tours ") in partnership with their Chamber of Commerce. Experience elsewhere has shown that such programs offer one of the easiest and most cost effective ways available to improve perceptions relative to the interest of City Government in the health of local businesses. In addition, such programs can serve as "an early warning system" to bring important matters to the attention of City officials (e.g. business expansion needs, potential relocation out of the City). Staff has consulted with our Chamber of Commerce officials, and has drafted a proposed program concept (Attachment 3). The concept includes formats for both large tours and small business visits. It also establishes the Chamber as "the lead" in organizing and sponsoring the actual visits, in to avoid complicating the visits with numerous open meeting law procedures (although the visits will be open and publicized). Recommendation: That the City work with the Chamber of Commerce to begin the recommended Business Visitation Program at the earliest possible time. ■ Establish a team of City Qfflcials and business representatives that can be called upon in efforts to assist existing industries in expanding their operations locally, or to attract select companies on a limited basis. Status: As mentioned in Attachment 2, staff has been quite active in assisting businesses in expanding locally. This has been done through on -site visits to encourage local expansion, improved internal procedures, efforts to overcome previous negative perceptions, and an overall heightened sensitivity to the need for timely, efficient, and flexible permit processing. In addition, the City joined the Bonds for Industry Joint Powers Authority, which makes low interest State loans available for industrial expansions. As discussed previously, no significant action has been taken relative to business attraction, and staff is not recommending an aggressive, "high - profile" business recruitment program. Our community's needs and character are such that it would not be appropriate to copy or try to compete with those communities (or states) that 8 49_ 8 �►��H�i�HI�IIII��P ��U city of San JIS OBISPO COUNCIL AGENDA REPORT aggressively recruit business by offering low cost land and other substantial incentives and subsidies often by using a redevelopment agency. In addition, as a practical matter, the City has only a limited amount of industrially zoned land where relatively larger employers could be located (approximately 45 acres, divided evenly between manufacturing and service - commercial zoning designations). Therefore, our efforts should be strategic, as opportunities arise, as opposed to "shotgun" and constant. There are things that we should do, however, to improve our "readiness" to pursue opportunities when they surface, and staff is recommending three actions as outlined below. Recommendation: (1) That improved information be made available to companies which make inquiries at City Hall; (2) that the Council endorse the concept of "Red Team" responses to unique recruitment or retention opportunities; (3) that the Council further clarify the kinds of businesses that would be appropriate for more assertive recruitment efforts. With regard to improved information, the intent is to prepare an inexpensive, but professional appearing information packet for companies that make inquiries about SLO. The packet will be designed so that already existing demographic and other information can be inserted, "mixed and matched" to the interests of the business. The City gets fairly regular requests for such information, but our current ad hoc way of responding is time consuming, and the presentation of the material we send is less than professional in appearance. An outline of the intended contents of the packet is provided as Attachment 4, and sample packets recently obtained form the City of Monterey and Davis are available for review in the Council Reading File. With regard to "Red Teams ", this is a concept borrowed from the State of California whereby an ad hoc committee is formed to work on special business retention or recruitment efforts. The intent of such teams is to bring together all the appropriate "players" (public and private) that share an interest in the endeavor, thus improving the overall coordination and unity of the effort. It is suggested that the Mayor, a Councilmember, the CAO, Assistant CAO, and Community Development Director represent the City in such efforts, on an as needed basis. Recent examples of when a "Red Team" might be appropriate include the recruitment of a grocery store to the Payless Center, and the local retention of the Telegram- Tribune and San Luis Sourdough. The City Council will be advised when such future efforts are anticipated, and at such time the council can designate its representatives. . However, the goal should be that the Council and staff share a common understanding as to which endeavors would be appropriate and consistent with City policies and goals. The sentiment regarding local business retention and expansion seems clear: We should 9 a- ����n���►►�IIIIII�I�� ►�� ���U111 city of San Luis OBI spo ni;% COUNCIL AGENDA REPORT help facilitate these efforts, within City land use and permit processing policies. The picture is less clear with regard to business attraction. While it is assumed that any attraction efforts would have to be consistent with existing City land use, growth, and other appropriate policies, it would be helpful if the Council would provide some added direction relative to business recruitment as a matter of emphasis and priority. Outlined below are examples of the kind of direction that would be useful, ranging from fairly general to fairly specific. Council may choose to focus on one of the examples, but modify it to more accurately reflect the Council's interests. More pro-active business attraction efforts are appropriate for: 1. Environmentally - conscious, cutting edge companies which offer enhanced employment opportunities ( "higher end " jobs) for local residents. (ESTF Report, October 1993). 2. Those "new" businesses or employers that are exempted from the LUE's non- residential growth limits, per the following categories: (A) Additional non- residential floor area within the downtown core; (B) Public agencies; (C) Manufacturing, light industrial, or research businesses. (City of SLO LUE, August 1994). 3. Technology intensive enterprises, including start up companies, incubators, research and development entities, computer software, and health care services. (City of Davis, 1992) 4. Future oriented businesses which would have natural ties to Cal Poly in such areas as computers, biomedicine, robotics, micro- electronics, new materials research and communications. Also, regional medical facilities to strengthen the City's role as a regional medical center. (Chamber "Vision of SLO's Economic Future', 1993). ■ Facade Enhancement Program Status: As outlined in previous correspondence to the Council, several months ago Mid - State Bank proposed a Facade Enhancement Program to City staff whereby they would make low- interest loans available for storefront improvements, in cooperation with the City. After an initial discussion, through word of mouth several other local banks expressed an interest in' offering a similar program. On October 18th, a meeting with representatives from our local banks was held to discuss the development of a consistent program which all banks could offer, and which the City could support. The City's proposed program is outlined in Attachment 5. To date, staff has received verbal assurances that several of the local banks will be participating in the program. 10 49-/0 City Of San LdIS OBISPO COUNCIL AGENDA REPORT Recommendation: When a more formal response is received, staff requests Council direction to bring the program forward to Council for action. ■ Countywide Tourism Development Plan Status: Last March, the Visitors and Conference Bureau (VCB) submitted a request to the City for funding under the Community Development Block Grant program to support the completion of a countywide tourism development plan. Although the City Council chose not to support this request, the Council agreed to consider support for such a plan at a later time, possible utilizing Economic Stability Program funding. The VCB's goal was to fund the plan from contributions from other agencies within the County. Thus far, Paso Robles, Grover Beach, and Atascadero have agreed to contribute; however, the County of San Luis Obispo, Morro Bay, Pismo Beach, and Arroyo Grande have declined to participate. Therefore, over the last few months, the VCB has worked with the County Rideshare and Ride -On programs in an effort to secure a grant from Caltrans to provide the remaining funds. If the grant application were successful, an alternative transportation dimension, as it relates to tourism, would have been added to the study. However, the effort was unsuccessful. Further efforts are underway to secure the necessary funding from Caltrans next fiscal year (July 1995), and from currently non - participating agencies. Recommendation: Conceptually, staff strongly encourages the development of a coordinated tourism plan, which has never existed in San Luis Obispo County. This is a rather conspicuous void, given the role tourism plays in the County and in cities such as our own. Consequently, programs and strategies have evolved over the years in a Largely ad hoc and independent way, based on past experience and "gut feeling ". This approach does not maximize the use of the limited public and private resources available to promote tourism. Therefore, staff recommends that Council endorse continued efforts to secure countywide participation and funding for the completion of a Tourism Development Plan. The Planning Commission also apparently supports such a plan and has included it as one of their recommendations to Council for goal- setting. ■ Countywide Economic Advisory Committee Status: In 1993, the San Luis Obispo Board of Supervisors appointed a 15 person Economic Advisory Committee (EAC) to advise them on economic development. The committee's mission statement calls for the committee to: "balance the economic, social, and environmental needs of the community, using methods such as appropriate regulations, encouraging diverse strategies, recognizing local autonomy while encouraging regional cooperation, and educating and advocating for balanced policies ". Thus far, the committees membership has been from the private- sector only. The committee has worked to develop goals and objectives, sponsored a forum in 1993, and obtained CDBG grant funding for the development of a "business retention, expansion 11 th —' I city of san Luis oBispo nia-; COUNCIL AGENDA REPORT and attraction" study. In addition, the EAC has attempted to coordinate its efforts with the County's "Designing the Future Committee", and most recently both committees have embarked upon a closer integration of their efforts through the formation of a "Foundation for Community Design" (Attachment 6). Recommendation: Beyond the above brief description, staff is not very familiar with the activities of the EAC, or these other related efforts. However, because this is a County supported activity aimed at preparing countywide strategies, it is important that the City become more familiar with these efforts. Therefore, Council should direct staff to stay abreast of the EAC and the newly forming Foundation for Community Design, and to keep Council apprised as appropriate. In addition, if more formal City involvement appears warranted, staff should obtain more specific direction from the City Council prior to proceeding. FISCAL E%IPACT Receipt of this report, and the further direction requested by staff, will involve no significant added cost to the City. Funding for the relatively modest cost of the information packets is available in the Economic Stability Budget, which has a balance of just under $35,000. The staff time involved in carrying out economic stability efforts will be provided within the roughly one -half time allocation of the Assistant CAO, .and from other staff members as appropriate. Continued funding of the Economic Stability Program in the next two year Financial Plan, or any goals or programs not identified in this report, should be addressed as a part of the Council's establishment of Major City Goals for the 1995 -97 Financial Plan and Budget. PUBLIC INPUT As mentioned in Attachment 2, staff has made presentations to several organizations and business persons regarding the City's economic stability activities. In addition, staff recently held an informal meeting with some of the non - business representatives of the former ESTF, and with some members of RQN and the EQTF (Ray Norquist, Dominic Perello, Pat Veesart, Carla Saunders, and Richard Schmidt). During this meeting, staff outlined the information contained in this status report and answered questions. CONCLUSION As outlined in this report and the attachments, the City has been involved in a number of different ways in supporting our local economy. Our efforts increased further with the adoption of added economic stability goals and objectives, as recommended by the Economic Strategy Task Force. The "one -half' allocation of the Assistant CAO time is being fully utilized in support of these efforts. In addition, other staff members are also contributing significantly to the effort since most of the programs cross departmental lines and require team work and mutual support for success. With the added Council direction sought through this report, staff believes 12 a- is ►��n� ►�I�I��pn�u�l 11 city of San LUIS OBISpo ,w COUNCIL AGENDA REPORT that the City will be providing a solid level of support for economic development and stability. Future efforts, if desired, should be addressed through the Council goal setting and Financial Plan preparation processes. ATTACHMENTS 1. Work Program for Implementation of ESTF Goals 2. 1993 -95 Economic Stability Activities 3. Business Visitation Program Concept Paper 4. Proposed SLO City Information Packet 5. Proposed Facade Enhancement Program 6. Foundation for Community Design COUNCEL READING FILE 1. Information Packets: Monterey and Davis 2. Complete list of ESTF recommendations and related staff recommendations for implementation UPD 13 a -13 ACAO ECONOMIC STABILTI'Y WORK PROGRAM AND REASSIGNMENTS .. ............E................... UNDRWAY ■ Serve as project manager for Airport Area Annexation ( #34, 49). ■ Serve as project manager for Mall Expansion /Costco /Dalidio proposal ( #13. A., B.). ■ Serve on Development Review Committee and lead staff efforts to expedite processing for high priority local business expansion /retention efforts ( #36). ■ Serve on County Space Needs Task Force, and pursue other efforts to retain County presence in the downtown ( #12.E.). ■ Continue current efforts to encourage Auto Center Expansion on LOVR ( #17). ■ Oversee Promotional Coordinating Committee referrals from the ESTF, which are to enhance promotional efforts, including emphasizing natural assets, increasing special events and attractions, and attracting more group tours ( #'s 24, 26, and 27). ■ Serve on "Cal Poly" Research Park Committee ( #32). ■ Assume some current related CAO duties, such as serving on Visitors and Conference Bureau Tourist Development Plan Committee, attending Downtown BIA Board meetings, etc. ■ Oversee implementation of all other Council- adopted ESTF recommendations to be carried out by other departments. in Help establish and serve on "Business Roundtable" ( #2, 37, 38, 40). ■ Get a business visitation program going, and follow -up on problems identified (even prior to the more formal "Business Retention Program" listed below) ( #5, 31). ■ Establish a formal local Business Retention /Expansion Program, to include: business visitation; streamline processing for priority efforts; possible training support (e.g., Cuesta assistance); and strategic attraction on a "case -by -case" basis ( #'s 4, 5, 18, 21, 31, 35, 36, and 39). An early focus of this program could also be a seismic retrofit assistance program. ■ Lead stronger and more formal internal effort to enhance City's Customer Relations efforts (all "customers ", not just business related). ( #6) ATTACHMENT 1 . 4Q—/q Page 2 Economic Stability Duties ■ With Chamber assistance rekindle the "Shop San Luis Obispo" program ( #19). ■ Serve as a catalyst for formation of a 7burism Network" (#25). ■ Evaluate conference facility concept (7029). ■ Consider downtown study regarding coexistence with the mall ( #12.K). 'Tii°ELtE >:110;\tTHS OR ?�40}2E ■ Encourage redevelopment of 'Madonna. Plaza Shopping Center ( #13.C.). ■ Evaluate more formal business incentive program (7`9). ■ Reconsider Court Street options /project (#72.G.). ■ Consider viability of daily Farmer's 'Market (7t12.I.). ■ Consider more formal efforts to encourage Auto Center Expansion, if necessary (# 1 i). The numbers shown in parentheses tie to specific ESTF Report recommendations that support the goal shown. The complete list of 59 ESTF recommendations is available for review in the Council Reading File. This list includes the staff recommendations relative to implementation, as set forth in the March -1994 Agenda Report. a -is 1993 -95 ECONOMIC STABILITY ACTIVITIES CHANGING PERCEPTIONS ► The Council's adoption of several economic stability goals, as recommended by the ESTF, has clarified and better communicated the City's interest in the local economy and the health of local business. ► Fixing responsibility for overall program implementation with a specific staff person - the Assistant CAO - has demonstrated a higher level of program commitment, and it has also made "help" easier to find for local business persons (an identified "ombudsman"). ► Language was included in the updated Land Use Element that requires that "the City maintain and bi- annually review goals and objectives that promote the economic well being of the community". Review will occur concurrent with the budget process. This facilitates integration of such goals among the activities of the City on an ongoing basis. ► In order to address the City's "image ", presentations have been made to several organizations to create a more balanced perception of the range of activities the City Council has initiated in the area of economic stability. Presentations have been made at "Good Morning San Luis Obispo ", and to the Business Improvement Association, the Manufacturers and Processors Association, the Promotional Coordinating Committee, the Executive Association and the Kiwanis. ► A "Want to Expand Your Business" flyer has been prepared for distribution at City public counters, which includes "testimonials" by several notable local businesspersons concerning the excellent service and support they received from the City in pursuing business expansions through the development review process. ► A City booth was established and staffed at the Chamber of Commerce "Mixer Showcase 1994 ", which promoted the City's improved customer service and streamlined procedures for business expansions. STRENGTHENING THE COMMUNICATION NETWORK ► By. identifying a point of contact in City Hall, assistance is easier to find. This has resulted in arranging more "up front" meetings between staff and companies with expansion or remodeling plans (before they invest heavily in design and permit costs). Such meetings allow staff and -the companies to share their respective goals and requirements, which ultimately leads to smoother permit processing. ► Improved communication has resulted in earlier "tips" to City staff egarding existing business problems or potential new businesses. The ff retention of San Luis Sourdough was largely a result of early communication, followed up by assistance. New business prospects 1 ATTACHMENT 2 �� have been referred to staff from different sources, including from hotel operators with "high tech" guests in town to research SLO as a possible place to relocate. ► At staffs initiative, the City Administrative Officer, Assistant City Administrative Officer, and Development Review Manager met with the new owner and manager of the Central Coast Mall to learn about their short and longer term strategies for revitalizing the Mall. Further meetings will be held as remodeling plans take shape. ► A collaborative group has evolved out of a feasibility study of a research park in San Luis Obispo. This group includes high level officials of Cal Poly, the County, the City (Mayor, CAO, ACAO), the Chamber of Commerce, and Cuesta College (now called the "5 C's Committee "). At a meeting last summer the group identified its work program, which includes: (1) creating a small business incubator program; (2) better connecting the schools and training resources with the needs of businesses; (3) studying the feasibility of a conference facility, either on or off campus; and (4) further pursuing the electronic village. The group has also expressed its interest in the expansion of Cal Poly sports facilities as they may support tourism and the "Sports Mecca" concept. ► Representatives from the PCC and BIA, the Assistant CAO and Parks and Recreation Director represent the City on the newly formed Tourism Council. The Tourism Council consists of several players in the local tourist industry, including the Chamber of Commerce, VCB, hotel owners, restaurateurs, art and cultural groups, and travel agencies. ► Staff and Council Members have served on the County Space Needs Task Force, which is composed of government and business representatives for the purpose of retaining a strong County office presence in the downtown. At the request of County staff, the Assistant CAO spoke in front of the Board of Supervisors in favor of the County's acquisition of the Kimball Mitsubishi site. The site was acquired, and several County functions have been relocated there on a long -term basis. TOMER SERVICE /STREAMLINING PROCEDURES ► For the 1993 -95 Financial Plan period, the Council adopted a Major City Goal to streamline the development review process, and recently the Council adopted the second phase of a three phase development streamlining effort. The thrust of the changes is to push down decision making for certain types of permits to lower levels of review and action. ► The Council has made it easier to get through Architectural Review by allowing greater staff level approvals and the ARC is working to update their guidelines to make them more clear and easy to use. ► The public counter in Community Development has been remodeled to create a one -stop permit processing center, and customer service has been enhanced, in part because of input received from an ongoing over - the - counter customer survey. 0 01" 17 ► With the assistance of staff from the City of Sunnyvale, a training session for City employees was held in June 1994. The focus of the session was to impress upon employees the role all employees play in creating and maintaining a positive business environment through excellent customer service. ► As a follow -up to the training, an intradepartmental working group, the Development Processing Group, has formed to evaluate ways to improve internal permit processing. An early undertaking with the preparation of a standardized survey that can be used to gather information from those who have recently gone through the permit process (especially the building permit process). ► Staff has assisted several businesses in the City with their expansion plans including San Luis Sourdough, The Spice Hunter, Copeland's Sports, JBL Scientific and Blake Printery. ► Staff continues to work with the downtown in the coordination of capital improvement projects in order to minimize disruption to their business activities (we are currently working with the downtown on the Marsh Street sewer line/South Higuera water line project). ► Staff is working on a concept for a business visitation program (which will include Council members) with the goal of implementing such a program in early 1995. ► Staff is working on an information packet (which will include financial, demographic, and community information) which can be made available to companies interested in relocating to San Luis Obispo. Currently, information is compiled on an ad hoc basis, which is time consuming and results in a less than professional packet in terms of appearance. CITY FINANCIAL ASSISTANCE ► Annually, the City invests nearly $300,000 in tourism promotion and advertising. In addition, over $75,000 is allocated in grants to arts and cultural non - profit groups, which provide programs that add to the ambiance and attractiveness of the community to residents and visitors alike. ► Starting in 1993 -94, an added $100,000 ($50,000 each fiscal year) has been made available to the PCC to spark new, creative promotional ideas. This added funding resulted in the first Film Festival, a new Gold Card Program, Decemberfest, and other creative projects recommended by the PCC. ► The City has provided nearly $5 million in support for the construction of the Performing Arts Center, a project which will have an enormous economic impact on the community. ► The City entered into an agreement allowing the Little Theatre to use rent free our Old Library building adjacent to City Hall - this helps them, and it helps business by bringing more nighttime activity into the downtown. 3 a -Is ► The Council appropriated $15,000 to the Downtown BIA to support a business retention program. This supported a market and main street survey, which helped motivate business to expand store hours to 9 pm. The grant also funded a new Downtown brochure and small business training programs. ► The Council established a $15,000 incentive program to reduce fees for auto dealerships willing to relocate to the Auto Center area. ► The City Council approved the $120,000 Seismic Safety Deferred Loan Program, funded with Community Development Block Grant monies. Work with the Chamber of Commerce's Seismic Subcommittee continues, with efforts focussing on identifying additional financing options for seismic retrofit projects. For example, a meeting with all local bankers to discuss the concept of a "Bankers Pool for Seismic Financing" was held in mid- October. Future solutions are pending completion of an analysis of the engineering studies of existing buildings. When this analysis. is completed, the scope and cost of the problem will be better defined. ► During the above mentioned bankers meeting, staff presented the concept of a citywide Facade Enhancement Program to be funded through local banks (for Community Reinvestment Act credits). This concept was originally proposed by Mid -State Bank, but because interest from other banks has been expressed, staff is attempting to encourage a consistent citywide program. ► The City uses Economic Stability funds to support the services of the sales tax consultant, who makes important data available to both the City and private sector (Hinderliter, de Llamas and Associates). Economic Stability funds are also used to fund the City's sponsorship of the UCSB Economic Forecast Project. ► The City joined the California Communities Development Authority, which is the Joint Powers Agency that manages the Bonds for Industry Program. Staff has provided a substantial amount of information to our local industries regarding this program, which makes low interest loans available for certain types of industrial expansion. ► Staff may be recommending a $5,000 contribution from the Economic Stability Program toward the development of a regional tourism and transportation plan being promoted by the Visitor's and Conference Bureau, in conjunction with the Rideshare Program, Ride -On Transportation and Caltrans District 5. (This recommendation is contingent on the increased participation of other local governmental agencies). 4 r1_ 1 PROPOSED BUSINESS VISITATION PROGRAM GOAL: To improve communication between local business and government through an ongoing formal "Business Visitation Program ", jointly organized and carried out by the Chamber of Commerce and the City. CONCEPT: Communication between business and City government typically occurs on an ad hoc basis, usually as a result of some specific public policy issue or administrative action which impacts the private sector. Such interactions are typically narrowly focused, and in the past, sometimes contentious. A formal Business Visitation Program will create a proactive opportunity. for positive communication and interaction among business and community leaders. In addition to improving communication and developing a greater understanding of our respective challenges and opportunities, a regular visitation program can serve as an "early warning system" to local government, should a given business be experiencing major problems or considering relocation to another community. The Chamber of Commerce shares the City's interest in enhancing City- business and business- business relationships, and wishes to participate in carrying out this program. Specifically, the Chamber has agreed to be the "tour organizer ", which offers the added advantage of avoiding Brown Act complications. The tours will be open and publicized, and Councilmember participation will be limited to touring and asking questions (without discussion among attending Councilmembers on matters of business within the subject matter jurisdiction of the City). WHICH BUSINESSES?: The priority should be major employers and sales tax generators, since these businesses have greater community-wide impact than others. However, the program should also be sensitive to smaller businesses, and to all geographic area of the community, so that both the City and private- sector representative demonstrate an interest in the health and success of all businesses in the community. In fact, it may even be appropriate to visit governmental agencies (e.g. the City of SLO) so that business can better understand the "business of government ", too. Example businesses include: - Blake Printery - Wallace Computer Services - Ziatech Corporation - EG & G Power Systems. - Sierra Vista Medical Center - French Hospital - Pacific Bell - San Luis Sourdough - Taco Works - Cattaneo Brothers - Gottschalks - Mervyns - Central Coast Mall - Auto Dealerships ATTACHMENT 3 A -�O TOUR FREQUENCY RECOMMENDATION: 1. One major tour /visit per month (approximately two hours per visit) 2. One small business visit per month (smaller delegation would be appropriate) FORMAT /ATTENDEES: ■ Major Tours For the major tours, the recommended City delegation includes Councilmembers, the CAO, the Assistant CAO, department heads (1 -2), other select staff (1 -2). The Chamber delegation will include approximately the same number of persons as the City. The visit will be divided into two parts: (1) the tour; and (2) post tour meeting. During the tour segment, there would be no limit on the number of Councilmembers who wish to attend; the Chamber will be the official organizer of the tour, the tour will be publicized and open, and Councilmember participation will be identical to all other tour participants (without discussion among attending Councilmembers on matters of business within the subject matter jurisdiction of the City). The purpose of the meeting which follows the tour is to provide the business owners/managers an opportunity to communicate with a smaller group of City and business officials in order to share more discrete concerns, comments, problems, etc. This would likely be the forum where the "early warning system" would come into play. The City representatives at this meeting would include a Councilmember (on a rotating basis), the CAO, and the Assistant CAO. Limiting Councilmember attendance at the meetings which follow the tours is recommended to avoid Brown Act issues (business owners/managers would be reluctant to candidly discuss company concerns or plans at a larger, publicly noticed meeting). ■ Small Business Visits The format for these visits should be similar to the meetings which follow the major tour, except that the number of representatives (both public and private) could be smaller, depending upon logistics. Brown Act requirements will be strictly observed. For ease in scheduling, the goal will be to schedule small business visits on the same day as major tours. a-ai SLO CITY INFO PACKET GOAL: To develop an information packet that is attractively and professionally prepared, and which can be used to distribute important information to companies considering relocation to San Luis Obispo. CKi�`►L�7t�9 Because business recruitment will be a relatively infrequent City activity, the package should be inexpensive to initially prepare, and to maintain over time. Therefore, develop a folder that contains pockets on the inside so that material can be assembled and enclosed to meet the specific information needs of the recipient (as opposed to preparing a lengthy printed and bound booklet). PACKET CONTENTS: Doing Business In SLO ■ Introductory letter from Mayor • Community Economic Profile • Commonly asked questions about the development review process: • Residential and non - residential growth limits • Development impact fees • Toilet retrofit program • City water supply • Role of ARC ■ Permit streamlining information (testimony of "happy customers ") • Availability of Communication Infrastructure/Electronic Village (fiber optics, underwater trans - pacific cables, advanced switch) • Cal Poly as a local resource • City Budget Fact Sheet (Major City Goals; Financial Data) ■ School District information /test scores ■ Various brochures (Downtown, VCB, Historic Tours, Plaza, Decemberfest, etc.) • Newspaper article highlighting community safety • Parks and Recreation information ATTACHMENT 4 —0071:07,� CITY OF SAN LUIS OBISPO PARTICIPATION IN THE FAC4DE ENHANCEMENT FROGRAM October 18, 1994 Background Several months ago, Adid -State Bank proposed a low- interest facade enhancement loan program to the City. As proposed originally, the bank would make the loans and the City would guarantee each loan. The City would also define "facade enhancement" and could designate certain areas of the city as appropriate for the program, if desired. (The City loan guarantee condition was later dropped by Mid -State in a subsequent correspondence). Following receipt of the Mid -State proposal, City staff also received expressions of interest from First Bank and Commerce Bank under similar, but not the same, terms. Because the City would like to avoid being "caught in the middle" of competing local institutions, we have invited all local banks to meet with staff on October 18th to discuss the possibility of creating a.citywide program that everyone can participate in, if desired. What the City Wants ■No requirement for City to guarantee loans ■Participation of as many local banks as possible ■Program standardization: name (Facade Enhancement? Storefront Improvement ?); loan minimums & maximums; repayment periods; eligible improvements, etc. ■Clearly attractive interest rates ■Minimal administrative burden on City staff What the City Will Do First, the City will offer a definition of "facade enhancement" that is as inclusive and as flexible as possible. This is borrowed from the concept used by the BIA in making a similar program available, which paraphrased was: "As long as it makes the building look better than it does today, lets try to support it ". Therefore, we propose that the following improvements be considered as appropriate for funding under the program: ■Exterior clean -up, repairs, and repainting; ■Replacement /restoration of original building materials; ■Installation of lighting; ■Installation or replacement of signs; ■InsWlation of storefront awnings; ■Landscape and irrigation improvements; ■Minor building additions; ■Changes to windows or doors consistent; .anerior siding changes; ■New storefronts to accommodate seismic strengthening. ATTACHMENT 5 1-4; 5 As noted above, we have included new storefronts to accommodate seismic strengthening as an eligible activity. This N%ill offer one more form of assistance to those property owners Mih unreinforced masonry buildings. In addition to providing a program definition, the City will also: ■Obtain formal City Council approval (needed for CRA credits) ■Help to promote the program (including a contribution to the preparation of a program brochure) ■Verily the proposed improvements as eligible under. the Facade Enhancement Program. ■Offer "Express Processing" for permit applications being processed under the Facade Enhancement Program. The Community Development Department M11 provide 'Express Processing" for approvals of Facade Enhancement improvements; extensive or radical changes in the building's appearance may still require a hearing before the Architectural Review Committee, which could require additional review time. Use of a streamlined architectural review process will be utilized whenever possible, and should be a key feature of all material developed and distributed to promote the program. Depending on the scope of the Facade Enhancement project, processing fees may be required. However, projects involving the strerigthenin; of an unreinforced masonry building are eligible for fee credits and therefore not likely to pay any fees. ,1 -,94 Foundation for Community Design of the County of San Luis Obispo Mission Statement The.Foundation for Community Design seeks to define, through education and community consensus, the appropriate relationship among economic, environmental, and social needs in our county. The endeavors of the Foundation are guided by three key principles: insight, involvement, and impact. ► Insight means that the Foundation will provide an objective educational base for decision - making. This educational base will be developed and expanded by approaching the community with an open mind, listening to County residents' desires for a better future, and learning from them. ► Involvement means that the Foundation will strive to be inclusive of all community members and to establish an environment that is conducive to civic participation and mutual respect. ► Impact means that the results of the Foundation's activities will affect public policy and private action. The Foundation will seek the endorsement of its work by public officials and other stakeholders. With a spirit of commitment and an intent of collaboration, the Foundation invites all residents to participate in this unique partnership for a better tomorrow. 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U N cc a a -3`f Foundation for Community Design Officers and Board Members 1994 -95 Don Parham, Chair 1261 Pasadena Dr. Los Osos, CA 93402 -1123 Phone & FAX 528 -2291 Rob Cruttenden, Treasurer 555 Chorro Street San Luis Obispo, CA 9340 Phone: 781 -3636, FAX: 781 -3638 Antonia Hampton Mariposa Center 1106 Grand Ave., Suite A Arroyo Grande, CA 93420 Phone: 473 -7082, FAX 481 -8168 Bud Laurent County Supervisor County Government Center, Room 370 San Luis Obispo, CA 03408 -2040 Phone: 781 -5450, FAX 781 -5023 Dr. Grace Mitchell Cuesta College PO Box 8106 San Luis Obispo, CA 93403 Phone: 546 -3118, FAX: 546 -3907 Mike Mowrey, EAC IBEW PO Box 881 San Luis Obispo, CA 93406 -0881 Phone: 543 -5693, FAX 544 -3762 Maria Singleton, Vice -Chair PG &E PO Box 592 San Luis Obispo, CA 93406 Phone: 546 -5290, FAX: 546 -5297 Chris Pillsbury, Secretary Pillsbury Communications PO Box 6323 Los Osos, CA 93412 Phone & FAX: 528 -1657 Dominic Perello 1591 Slack Street San Luis Obispo, CA 93405 -1963 Phone: 543 -9085 Rob Rossi Rossi Enterprises 412 Higuera, Suite A San Luis Obispo, CA 93401 Phone. 595 -7777, FAX: 595 -7927 Tom Sullivan 2186 Augusta Court San Luis Obispo, CA 93401 -4500 Phone: 543 -5987 6�- -3 w MEEI...0 AGENDA DATE ' -4 4 ITEM # RICHARD SCHMIDT 112 Broad Street, San Luis Obispo, CA January 10, 1995 Re: Agenda Item 2, January 10 Council Meeting To the city Council: WM (805) 5490ftlh Jff ACAO O FIRE CHIEF I "ATTORNEY O PW DIR m' CLEW 4=0 ❑ POLICE CHI D MQWr TEAM O REC DIR O C FILE O UTIL OIR 2r. O PERS DIR I was astonished to learn that according to Mr. Hampian's report (page. 12) 1 provided "public input" on this item. I wish to inform you that I most certainly did NOTprovide input, that to date no opportunity has been afforded to me to provide input, and, furthermore, that the program does not have my support. I urge ycu to discontinue the program as it is now conducted by the CAO's office. Late last year I was invited by another participant to attend a coffeehouse get - together 'Niih Mr. Hampian to discuss the economic development program. At the outset of that get- together, Mr. Hampian said he was not prepared to engage in philosophical ciscussion or to justify the program, but only to tell us how it works. He said, iurthermore, that he only carries out the Council's economic development agenda, and ;hat entertaining debate about the agenda's merits was properly the Council's ;_prerogative and not his. The agenda of the get- together was thereby set by Mr. H mpian as bureaucratic output and not as public input. For Mr. Hampian to turn ;:round and claim in his report to you that we provided input is therefore not only untrue, "ut is an attempt at rank manipulation of the Council with untruths. ':,'hat unfolded at that get- together was a snowjob. I was impressed with its slickness, but unmoved by its thin substance. After an hour of being rather bored, I departed to tend to more pressing matters. So much for my involvement in this sordid affair. I wish the Council would stimulate some real and intelligent debate on the merits of this program. I'd like to see issues like the following debated intelligently: 1. , /fiat is the justification for spending nearly $200,000 per year of scarce city funds on !his public sector interference in the private sector's affairs? Isn't this yet another exannple of government's meddling where it has no business meddling? Why is the di.. 's current expenditure policy so tilted towards the desires of the "business Lommunity" (many of whose members aren't even city residents) when business provides a minority of the job opportunities in our city's people -shed? Why doesn't the *business community" fund and operate its own economic development program if this is truly such a needed function? Where are corresponding city monetary commitments to preserving open space (no funds allocated since 1990), to enhancing neighborhoods . %Here citizens live (too little positive action, too many actions and inactions that lower neighborhood quality of life), to providing affordable housing opportunities (too little RECEIVED JAN 1 B 1945 CITY CLERK t action -- profits seem to be more important), to providing assistance (instead of hassling) to the homeless? The list could go on. 2. If, as claimed, increasing amounts of Mr. Hampian's time are now being devoted to "economic development," who is now doing what he used to do? A. If the answer is that somebody else is doing his previous work, then maybe we never needed an assistant administrator (high pay scale) to do what somebody else (lower pay scale) now does. B. If nobody else is doing his previous work, then could it be that the CAO's "economic development" program is simply a make -work project to justify keeping an otherwise unneeded and expensive assistant administrator on the city payroll? (It is significant that the "pain" of city job cuts has to date been exclusively experienced by lower level employees, while the number of those employed at administrative levels continues to expand -- the city's own contribution to the national phenomenon of the widening gap between the rich and the working class.) 3. Many of the "economic development" projects listed involve the CAO's office conducting planning functions. What are the merits of having planning amateurs in the CAO's office usurping planning functions from the city's professional planning staff? Shouldn't like functions be consolidated where they can best be dealt with, i.e., with the most professional and proficient practitioners of the skills involved? The CAO's program smacks of political interference with the established city "process" -- i.e., bypassing the established process for political reasons. Or, put another way, it represents creation of an "alternative" process available to some parties but not to all -- which is also political interference in established process, and is blatantly unfair. a. Why is the city spending nearly $200,000 per year on the CAD's economic development program, which the people of this city have never voted to be a priority, and is setting aside not one single cent for acquiring open space, which the citizens -- by large percentages' -- have repeatedly voted to be a top priority? Why, in other words, are citizens' priorities given less support by this Council than the CAD's priorities? Is this not illustrative of the institutionalization of a narrow undemocratic bias in our city government's structure? 1 -hese are the sorts of fundamental issues that have never been part of an intelligent discussion of the merits of what is rapidly becoming the CAD's sacred cash cow. isn't it time we took stock of what we are doing with the city's funds in a broader, ;rore inclusive context rather than saying, as issues like this one arise individually -- well, this might be nice, and it doesn't cost that much, so let's see hour it works? Sincerely,. Richard Schmidt ''FETING AGENDA usa // -1 ITEM # - MEMORANDUM January 6, 1995 To: City Council Via: John Dunn, City Administrative Officer From: Ken Hampian, Assistant City Administrative Officer Subject: JANUARY 10 MEETING, AGENDA ITEM #2: Sports Mecca Information The January 10th staff report concerning the status of the City's Economic Stability program states that staff will be requesting direction conerning the "sports mecca" concept. However, a paragraph on this topic was inadvertently not included in the staff report, and is thus supplemented in this memorandum. Recently, Pierre Rademaker and Steve Wathen provided the Parks and Recreation Commission with information concerning the "sports mecca" idea. This information is attached. In essence, the "mecca" is at a very conceptual stage, and staff is only requesting that Council support a City role in developing a better understanding and "fleshing -out" of the idea. Initially, this can involve staff only. If, however, the Council would like to designate a member to attend meetings at this early stage, that would certainly be appropriate, too. WyMWIL ❑ CDD DIR O FIN OIR O FIRE CHIEF ,TKWNEY Loom ERKIOFSG 13 P O O E CHF O MOMT TEAM WIFIEC DIR O C FILE O UTIL DIR O PERS DIR RECEIVED JAN U 6 1995 CITY COUNCIL SAN LI IIQ OBISPO. CA The Vision • Environmentally friendly economic development • County -wide network of venues • Public /private partnership • For amateur, professional and recreational athletes of all ages • Sports programs with local, state -wide, national and international appeal • Individual and team training programs /facilities • Competitive Events (meets, tournaments, playoffs, finals) • Interdisciplinary Involvement • Long Term Goal:. provide additional recreation facilities and activities for the community and visitors Sports Suggested for Evaluation • Archery • Beach Volleyball • Bowling, • Boxing • Crew • Cross Country • Cycling • Diving • Equestrian Events • Golf • Hang Gliding • Kayaking • Marshal Arts • Men's Gymnastics • Polo • Rodeo Training • Amateur • Professional Competition • Tournaments & Trials - State - Divisional - Regional • Finals - National - International • Sailing • Shooting • Softball • Swimming • Tennis • Track & Field • Volleyball • Water Polo • Water Skiing • Weight Lifting • Windsurfing • Women's Gymnastics • Wrestling • Youth Football • Youth Soccer • Youth Softball The Economic Benefits e Environmentally friendly, destination tourism e. Increases average length of stay for visitors • Imports money into the county v recirculating dollars • Financial benefits to the city /county - Generates more TOT tax - Improves sales tax revenues -User fees generate funds for maintenance and expansion of recreational facilities • Joint use /leveraged funds maximize utilization and spreads the cost of facilities / maintenance • Public transit will benefit from increased ridership (fee income) • Ensure best available medical care and facilities • Provides vehicle to attract grants, corporate sponsors, etc. to support current and future facilities that will benefit the entire community • Promotes a healthy lifestyle: reduces medical/ social costs • Concept is dependent upon open space, clean air, public transit, etc.. Will attract more political and financial support from the business community for environmentally friendly projects