BURBANK REDEVELOPMENT AGENCY
Tuesday, June 8, 2004
AGENDA
CITY COUNCIL CHAMBER - 275 EAST OLIVE AVENUE
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5:00 P.M. CLOSED SESSION IN CITY HALL BASEMENT LUNCH ROOM/CONFERENCE ROOM:
Conference with Real Property Negotiator:
Pursuant to Govt. Code �54956.8
Agency Negotiator: Assistant Executive Director/Susan M. Georgino.
Properties: 111-245 East Magnolia Boulevard, 401-761 North First Street, 200 East Cypress, 601-800, 801, 805, 851, 875, 877, 891 South San Fernando Boulevard, 228 East Burbank Boulevard. The 41 acre site (excluding IKEA) generally bounded by Magnolia Boulevard, Third Street, Burbank, Boulevard, and Interstate 5 (Media City Center Mall). Parcels 2460-023-045 through and including 2460-023-062.
Parties With Whom Agency is Negotiating: Crown Realty and Development Inc.
Name of Contact Person: Jack Lynch, Senior Redevelopment Project Manager.
Terms Under Negotiation: Negotiation for the sale of the fee title in regards to the improvements on the above mentioned parcels.
When the Agency reconvenes in open session, the Agency may make any required disclosures regarding actions taken in Closed Session or adopt any appropriate resolutions concerning this matter.
6:30 P.M.
INVOCATION:
The Courts have concluded that sectarian prayer as part of City Council meetings is not permitted under the Constitution.
FLAG SALUTE:
ROLL CALL:
JOINT PUBLIC HEARING WITH THE CITY COUNCIL, HOUSING AUTHORITY, PARKING AUTHORITY AND YOUTH ENDOWMENT SERVICES FUND BOARD:
1. PROPOSED FISCAL YEAR 2004-05 ANNUAL BUDGET, CITYWIDE FEE SCHEDULE, INCLUDING AN INCREASE IN THE TRANSIENT PARKING TAX AND APPROPRIATIONS LIMIT PUBLIC HEARING:
The purpose of this report is to present the proposed Fiscal Year (FY) 2004-05 Annual Budget, Citywide Fee Schedule, including an increase in the Transient Parking Tax and Appropriations Limit to the Council, Redevelopment Agency Board, Housing Authority, Parking Authority and Youth Endowment Services Fund Board for a public hearing. The adoption of the FY 2004-05 Budget will be considered on June 22, 2004.
Staff has worked diligently over the past months to develop a balanced approach to address the long-term structural problem that the City is still facing. Although Burbank was fortunate to have the budget balancing resources available for FY 2004-05, staff anticipates recurring deficits to continue over the next five years, from $2.9 million in FY 2005-06, $1.4 million in FY 2006-07, and escalating to $1.8 million in FY 2008-09. The Executive Team continued its diligent work from last year in trying to resolve the recurring deficit. Through teamwork and creative thoughts, several budget balancing ideas were devised, and a comprehensive five-year plan was provided at the initial Budget Study Session held on April 13, 2004. As part of the long range budget balancing plan, staff will continue to look at business practices in an effort to identify efficiencies while also looking at regional synergy and collaborations to reduce ongoing costs.
It was determined that each department would attempt to identify reductions and reasonable increases in fees that would not necessarily achieve any quantifiable target, but instead, be intuitive in nature. However, in order to have some benchmark for discussion, departments were requested to provide two percent and/or four percent reduction scenarios. For the most part, each General Fund department achieved or came close to achieving at least the two percent reduction through actual reductions in personnel, Materials, Supplies and Services Accounts (MS&S), and programs, as well as fee increases. The total proposed General Fund reduction was $2,731,926, or an average of 2.97 percent of each department�s discretionary budget. The breakdown was: $1,463,448 from salaries/benefits/overtime; $696,535 from MS&S; and, $571,943 from an increase in fees/revenue. Making these reductions was challenging, considering last year�s 10 percent reduction.
The continuing strategy is to make reductions in areas that will have the least impact, such as freezing or eliminating vacant positions, offering retirement incentives to employees close to retirement, and reducing programs and services or increasing fees for existing programs and services that will not materially affect the quality of life that the residents and businesses of Burbank have come to enjoy.
FY 2004-2005 BUDGET PLANNING AND DEVELOPMENT
Even before the City considered the potential State budget impacts to the upcoming Fiscal Year budget, the City was already progressing into a deficit position over the next several years due to the underperformance of several revenue categories and the significant increase in recurring costs, especially the Public Employee Retirement System (PERS) rates. As previously noted, the General Fund budget parameters for this year were once again strict, requesting two percent and four percent reduction scenarios based on FY 2003-04�s discretionary budget amounts.
New Positions/Upgrades:
Similar to last year, no new positions or upgrades were accepted unless revenue offset, or recommended by the Executive Team for operational needs. A new position title, Executive Assistant, was added to more accurately reflect the responsibilities of certain individuals. This new title has a minimal budgetary impact.
Frozen Positions:
Most of the positions frozen in FY 2003-04 carried over into FY 2004-05 with savings of $1,710,345. Additionally, newly frozen positions in FY 2004-05 resulted in savings of $314,714. Total FY 2004-05 frozen position savings amount to $2 million.
MS&S Accounts:
There was no allowable increase in MS&S accounts provided to any General Fund department. Any exceptions were to be beyond the department�s control. A total of $416,918 (of which $47,428 is non-recurring) in MS&S exceptions is being requested.
Capital Outlay:
No new requests for capital outlay were to be allowed unless funded by a revenue source. Any exceptions were to be beyond the department�s control. No new requests for capital outlay were allowed with the following exceptions: Fire shelters and new pickup truck (Fire Department), and an aerial truck (Public Works Department).
The first Council Budget Study Session was held on April 13, 2004 and included staff recommended reductions and fee increases. The Council then received the Proposed Budget prior to the May 8, 2004 annual Goal Setting Workshop. Other Budget Study Sessions were held on May 11, May 25 and May 27, 2004. At the first Study Session, the Financial Services Director provided a brief overview of the Proposed Budget, projected available recurring and non-recurring fund balances, and significant changes to all departmental budgets including increases in Internal Service Funds and PERS rates. Each Department Manager then reviewed their respective proposed budgets and any capital outlay requests.
With the budget parameters, costs and revenues in mind, the following chart is the proposed source of funds and appropriations for each fund or fund type for the FY 2004-05 Budget:
*Resources represent the total sources available to each fund, such as taxes, fees, charges, sales, interest, use of fund balance (from bond proceeds, depreciation, and available retained earnings) and includes changes disclosed in the addendums to the Proposed Budget. The recurring portion of revenue for the General Fund is $113,350,848, and the recurring General Fund appropriation is $113,350,848.
** The General Fund variance between proposed sources and appropriations is a result of the following: the inclusion of the 1) use of reserves (Utilities Users Taxes, BWP In-Lieu and related interest earnings) previously designated for BWP competitiveness and set-aside in the General Fund; and, 2) yet to be settled contracts with several bargaining groups.
STATE BUDGET � IMPACT ON BURBANK
The Governor released his FY 2004-05 Proposed State Budget on January 10, 2004, and his May Revision on May 13, 2004. If adopted, a balanced budget for FY 2004-05 will be achieved and the State will have enough Proposition 57 bond proceeds left to cover much of the structural budget gap for FY 2005-06.
Following is a brief overview of the potential impacts that the Governor�s May Revision to the Proposed FY 2004-05 State Budget will have on the City.
Redevelopment Agency:
Educational Revenue Augmentation Fund (ERAF): In FY 2003-04, the State required a one-time shift of Burbank redevelopment revenue of $1,343,093 which, as it turns out, was not a one-time shift after all, as the Governor�s January 2004 Budget again requires redevelopment agencies to shift $135 million to the ERAF in FY 2004-05. The Governor�s May Revision added another $1,134,010 to this amount, bringing the total ERAF shift from the Redevelopment Agency to $2,477,103. To put this ERAF shift into perspective, with the Proposed FY 2004-05 shift, the total amount shifted from the Redevelopment Agency since the ERAF�s inception is over $8.3 million.
General Fund Impacts:
Public Library Foundation: The May Revision cut 10 percent from the previous year�s levels, equating to an additional loss of $4,694 for the FY 2004-05 Budget.
Booking Fee Reimbursement: This item was eliminated by the Governor, but is a small revenue loss of $12,772 to Burbank. This reduction is already included in the City�s Proposed FY 2004-05 Budget.
Proposition 42 Transportation Funding: Although there is no improvement for local cities, counties and road rehabilitation in the May Revision, the State indicated that if any additional one-time money from the Indian Gaming Negotiations became available, funding would be directed towards local road improvements. The current estimate is a $180 million loss for FY 2004-05, in addition to the $188 million loss in FY 2003-04 to cities and counties. It is difficult to quantify the precise dollar impact to Burbank at this time.
State Mandates: The City has not budgeted State reimbursement payments for FY 2004-05 due to the State suspending payments to local agencies for State-mandated programs. However, this continued suspension of payments remains a real loss of revenues that the City had counted on for many years. Further, the Governor�s proposal suggests an array of changes, including: accelerating the timing of test claims; the ability of local governments to terminate the mandate within 90 days if the State cannot reimburse in the current or future State budgets; disallowing the Governor to veto a mandate appropriation; and, broadening the definition of mandate to include situations when the State transfers partial funding responsibility for a joint State-county program.
A significant development which staff has been monitoring closely in the last few weeks has been the Ballot Initiative proposed by the League of California Cities entitled the �Local Taxpayers and Public Safety Protection Act,� also known as LOCAL (Leave our Community Assets Local). This Ballot Initiative has qualified for the November 2004 Presidential Election, and will require voter approval before the State can divert local revenues. The Governor quickly responded to this act by proposing his own budget agreement which permanently eliminates the State�s Vehicle License Fee (VLF) backfill (i.e., the two percent rate becomes .65 percent rate) and replaces it with Property Tax revenues. Local governments will contribute $350 million for two years (FY 2004-05 and FY 2005-06) after which the State will be prohibited from diverting Property Tax, Sales Tax and the remaining VLF revenues from local governments through a constitutional amendment. In addition, the State will repay the VLF revenue lost in FY 2003-04. For Burbank, the General Fund is expected to lose $1.794 million annually for the next two years, but will receive $1.863 million in FY 2006-07, for a net loss of $1.726 million over the three-year period. In light of numerous other proposals and compromises that were far less palatable, Burbank supports the Governor�s proposal, but also continues to support the LOCAL Initiative.
Staff will continue to monitor the State Budget and its potential impacts on the City and keep the Council advised as developments arise.
PROPOSED CITYWIDE FEE SCHEDULE
The primary purpose of the Citywide Fee Schedule is to provide a one-stop listing of all City fees, charges and rates. The Fee Schedule is reviewed and updated annually as part of the budget process in an effort to document all fees that have been revised or changed during the fiscal year. The Council has already approved fee changes during FY 2003-04 that have been incorporated into the Fee Schedule.
As was previously discussed, there was a conscious effort made to review all City fees, charges and rates due to the significant budget challenges facing the City. It was agreed upon that making reductions in costs alone would not be the most prudent course of action, as many more services, programs and employees would have been affected. Thus, each department that has fees, charges and rates, spent a great deal of time researching the current rates, identifying areas of concern, and conducting surveys of other cities to ascertain a fair and reasonable charge. In addition, some departments were able to identify new fees that were being charged by surrounding communities that made sense for Burbank to consider.
The following are the significant fee changes being proposed.
Transient Parking Tax (TPT):
Following a lengthy analysis of the TPT, including a survey of the rates charged by other cities, the Council approved placing a Ballot Measure on the April 8, 2003 General Election for the electors to consider increasing the TPT. Burbank voters approved the Ballot Measure which allows the Council to increase the City�s existing TPT from the current rate of 10 percent up to a maximum of 12 percent, after a public hearing on the matter.
The City held its first public hearing on June 10, 2003 to receive public input on its FY 2003-04 Proposed Budget and Citywide Fee Schedule, which included a proposal to increase the TPT to 12 percent. The Council voted 4-1 against raising the TPT at that time.
On December 16, 2003, by majority vote, the Council agreed to consider holding another public hearing on raising the TPT from 10 percent to 12 percent. The second public hearing was held on January 27, 2004, and the Council again voted 4-1 against raising the TPT at that time.
In light of the City�s current financial condition, and the fact that there are very few opportunities for the City to effectuate a positive change in a revenue source, staff is recommending that the Council take public comment on the matter at a third public hearing, as required by the Ballot Measure and ultimately take action to approve an increase in the TPT from 10 to 12 percent. It is estimated that this increase will provide an additional $330,000 in TPT revenue.
Water Rate:
This is the third year of a five-year smooth ramp-up of a water rate increase, which averages 4.8 percent a year.
Sewer Fee:
This is the second year of a five-year rate plan with annual seven percent rate increases for FY 2004-05 through FY 2007-08 (monthly fee will increase from $13.99 to $14.97 for FY 2004-05).
Film Permit Fees and Associated Costs � Facility Usage Fee:
It is recommended that new fees be established to cover the staffing cost of various Park, Recreation and Community Service facilities used for filming purposes.
City Attorney Restitution Fee:
This new fee will reimburse the City for the costs of administering the criminal restitution program. The Fee will be paid by the defendants and is expected to generate $5,000 in revenue.
Safety Personnel Rates:
Both the Police and Fire personnel rates in a number of categories have been increased to be in line with recent Memorandum of Understanding increases. The average rate increase over FY 2003-04 is 6.85 percent.
Emergency Medical Services (EMS) Membership Fee:
This fee will be increased by 33 percent, to $48 per household annually. Both the current and new fee are lower than other local cities, and had not been increased since 1998. Estimated incremental revenue is expected to be $39,845.
Traffic Plan Check and Study Fees:
These new fees cover the cost of staff�s time in inspecting, researching, and reviewing many facets of the developing and building process. Examples of review include site plans, building permits, conditional use and administrative use permits, subdivision map review, variance review, lot line adjustment, zone map and text amendment review, excavation/street use permit review, traffic study review, traffic control plan review, sign/signing plan review, among others. In total, the estimated additional revenue is $79,570.
Planning Permits:
A new fee of $30 is proposed to compensate staff�s time involved in performing plan checks for non-development projects. This fee along with proposed increases to other planning applications is estimated to account for $72,690 in additional revenue.
License and Code Services Fees:
Various fees were raised on average 10 percent, including Property Maintenance Inspection fees, regulatory license fees to cover 90 percent of cost and Business Tax Amnesty Program to encourage business registration. In total, the increase in revenue is expected to be $115,000 for this fee category.
Building Permits:
Building, grading, mechanical, electrical and plumbing fees were increased four percent. Other fees that fall in this category that have a smaller impact are the surcharge fees which have been revised as follows: Community Facility Fee (five percent); Fire Permit ($20); and, Grading Bond ($50 administrative fee per permit). Altogether, the building permit category is expected to yield an additional $135,429 in revenue.
Monthly Parking Permit Fee:
This is year two of a three-year ramp-up for the public lot monthly parking permit fee. The rate increases from $24 to $28 in FY 2004-05 and another increase of $4 will be implemented in FY 2005-06. Based on surveys performed, staff has found that the $32 rate is still lower than fees charged by other cities.
Due to the FY 2003-04 budget deficit and projected deficits in future years, staff performed a comprehensive overhaul of the Fee Schedule which resulted in a number of fee increases as well as new fees. For FY 2004-05, the trend continued to ensure that the fees are in line with surrounding cities, remain affordable and have minimal impact on the users. Moreover, it is important to keep in mind that the City is not out to make money, and as such, very few of the non-enterprise funded programs have total cost recovery, instead the City General Fund heavily subsidizes many City services.
GANN INITIATIVE APPROPRIATION LIMIT
The City is required by State law to establish an appropriation limit each fiscal year. Only those revenues received from proceeds of taxes are subject to this limit. This means that only certain revenues from funds such as the General Fund and Propositions A and C Transportation Funds are subject to the appropriation limit. All other funds that fall under the Council�s control (i.e., Redevelopment Agency and Enterprise Funds) are exempt from this limitation. The Redevelopment Agency is statutorily exempt and Enterprise Funds receive their funds through service charges, not general taxes.
The City�s FY 2004-05 appropriation limit is estimated to be $121,877,315. The actual amount of the appropriations contained in the budget that is subject to the limit is $89,250,018. The difference between the City�s appropriation limit and the amount subject to it is $32,627,297. As a result, the City has a significant gap between its legal limit and the actual appropriations subject to the limit. The exact figures will be calculated and made available after the budget is adopted on June 22, 2004.
FISCAL IMPACT
At the Mid-Year review in February 2004, staff had projected that the year-end deficit for FY 2004-05 would be a staggering $4.5 million. This deficit, in addition to the State�s budget deficit of $14 billion, provided a significant challenge for the City.
Per the Council�s direction at the May 27, 2004 Budget Study Session, staff was directed to utilize the Burbank Water and Power (BWP) Utility Users Tax (UUT) In-Lieu Set-Aside Account in the amount of $274,457 to close the City�s FY 2004-05 budget gap. The Council was also in favor of combining the BWP In-Lieu Set-Aside and Budget Stabilization Reserve Funds. In addition, staff was directed to: defer the funding of reserves to the close of FY 2003-04; consider increasing the TPT rate from 10 percent to 12 percent which generates an additional $330,000 annually, plus recognizing an additional $1,104,000 in UUT and In-Lieu tax reserves; and, fund additional positions within the Police Department. However, as has been disclosed to the Council in the Five-Year Financial Forecast, the City is still in a precarious position for the outgoing years and continued prudent fiscal planning is required.
The adoption of the Budget sets the initial appropriations for the new fiscal year. Appropriations have been balanced against estimated revenue and other sources of funding, such as reserves or bond proceeds.
Recommendation:
Staff recommends that the Council, Redevelopment Agency Board, Housing Authority, Parking Authority and Youth Endowment Services Fund Board conduct the public hearing on the Proposed Fiscal Year 2004-05 Annual Budget, Citywide Fee Schedule, Transient Parking Tax increase and Appropriations Limit. Staff will incorporate any direction into the budget resolutions that will be presented on June 22, 2004 for final adoption.
RECESS to conclude the City Council meeting.
ADJOURNMENT.