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HomeMy WebLinkAboutSPCC Minutes 1991-02-04SRCC MINUTE Special) 2/4/91 Page 1 IN THE COUNCIL CHAMBERS OF THE CITY OF SAN RAFAEL, MONDAY, FEBRUARY 4, 1991, AT 5:00 P.M. Special Meeting: San Rafael City Council Also Present: Pamela J. Nicolai, Gary T. Ragghianti, Jeanne M. Leoncini, SPECIAL WORKSHOP Present: Lawrence E. Mulryan, Mayor Albert J. Boro, Councilmember Dorothy L. Breiner, Councilmember Joan Thayer, Councilmember Absent: Michael A. Shippey, Councilmember City Manager City Attorney City Clerk 1. CITY COUNCIL WORKSHOP TO DISCUSS REVENUE OPTIONS (CM) - File 9-2-42 City Manager Nicolai reported that this workshop is for the purpose of addressing the Revenue Options issue, which has been discussed for the past couple of years. She stated it is a long range look, which began by looking at the Capital Program and has evolved into a long range look into what the City's revenue needs are, including not only capital improvements, but also deferred maintenance. Ms. Nicolai first addressed the subject of the current operating efficiency, since the Council had asked on December 4, 1990 that staff look into it. She noted that there was discussion at that time as to whether the City should bring in an outside consultant to look at the City's efficiency and do an audit. She said it was also suggested that staff contact the League of California Cities to see if there were statistical compilations in any format which would readily make that task feasible. While there are figures available through the State Controller's report which would allow us to see cities of similar populations with broad lump sum amounts for different services, weeks of research would be necessary to assure that we were actually comparing similar service levels, and would perpetuate the fallacy of making population the benchmark for comparisons. Ms. Nicolai then discussed the geographic constraints of the City, with the Highway 101 corridor going down the middle, with only a few points where we can cross from East to West. She stated that for major services such as Police and Fire, when you measure response time you could not analyze it unless you could have data from comparable cities. She noted that while San Rafael has similar problems to Novato, they are primarily residential while the City of San Rafael is the hub (of the County), with Federal buildings and many office buildings. She said that makes a significant difference in daytime and nighttime populations. She noted that a city could have the same population as San Rafael, but with more seniors, or more young children, which would result in a different quality of life and a difference in community culture and expectations. Also, some cities are responsible for public works, and some are not; and some have Parks and Recreation, while some have them as separate. She noted that in San Rafael as far as the infrastructure is concerned, the needs in downtown San Rafael are much greater because of their age, versus Terra Linda which is much newer. For these reasons, using population figures does not work. Ms. Nicolai stated that as far as Public Safety response time is concerned, that is a policy for level of service, and one of the biggest impacts is the geographic areas, and the ratio of personnel versus calls for service. Another concern is whether a City has Paramedics included, and what is their level of service. Ms. Nicolai pointed out that when considering Public Works, the number of employees is dependent upon the number of acres of parks, the number of miles of medians, and number of street trees, as opposed to simply population figures. She noted that the population might be declining, but the City is not losing neighborhoods even if the per capital per household is declining. Ms. Nicolai noted that sewers are not listed in the Public Works analysis because it is a contractual service with the Sanitation District. Also, there are hillsides which require pump stations and lower areas with salt water infiltration which other cities do not have. For Falkirk and the Boyd House, the figures would depend on what kinds of services are being provided. With regard to Planning, one concrete item of evaluation might be the number of projects completed or permit applications in ratio of personnel. In recent years Advance Planning is a major focal point of many neighborhood concerns; the General Plan update has required considerable follow-up and special projects. These issues are not based on population figures, but on priorities within the community. Ms. Nicolai then discussed Recreation, noting that from 1978 to 1991 we have added a third recreation center, and also have major parks, and this would involve extra services. SRCC MINUTES (Special) 2/4/91 Page 1 SRCC MINUTE, ,Special) 2/4/91 Page 2 The City Manager's Office involves the Risk Management Program, and Personnel, with 2.5 employees in each of them. Finance, City Attorney and City Clerk are services support for the other departments. Ms. Nicolai stated that the services and functions mentioned are the kinds of things which should be looked at in measuring efficiency, and there is no readily available statistical information. With regard to the budget Ms. Nicolai stated that the four departments representing the biggest cost are Police, Fire, Public Works and Recreation. She stated that with their costs added to the money allocated for capital improvements, they represent 81.9% of the total budget. She noted the studies which were done on Police, Fire and Public Works, and stated that even if 10% were to be saved in Public Works it would be a drop in the bucket to our total City budget. She noted that the Child Care Program is included in the Recreation Department and 80% of their budget is funded through revenues. With respect to the Fire Department study, Ms. Nicolai stated they had looked at the various alternatives available for a fire station, and when this study was done in 1979 there were seven fire stations. The response time policy is still in effect. She noted that 10% of the Fire Department budget is $600,000, and the only way to cut would be to close a fire station. She stated there has not been enough growth in the City to make this report invalid. She noted a variation in locations for demand for services, and noted that if less personnel responded to a fire they might have to wait for backup. She stated this is a decision for the Council. Ms. Nicolai noted that the Police study was done in 1981 and is very comprehensive. She noted that two Captain positions had been eliminated, and many recommendations in that report have been put into effect, such as freeing up sworn personnel for Police -related work. Also, over this period of time the Police Department has greatly utilized State grants and have tested out and implemented many programs which are now funded in the budget. She noted the two configurations in the charts, for a six - beat structure and a five -beat structure, if that becomes necessary. Ms. Nicolai noted that the Public Works Maintenance Management Study, as well as the Police and Fire were all done by outside consultants. She noted that three operations had been added to Public Works since 1978 - Garage Division, Sanitation District Operations, and Building Maintenance. Ms. Nicolai stated she had checked with one consultant, who came up with a ballpark estimate of $60,000 to $100,000 which included all departments, just as if the studies being discussed had not been done. She stated there is a lot of reason to think that a majority of what has been done is still valid. A lot of what was recommended has been implemented. She stated she does not feel that the basic services were questioned by the Revenue Options Committee, but the question of operating efficiency will come up, no matter what is done. She stated that if the Council is comfortable with the Police and Fire reports, they could probably cut about $50,000 out of the amount the consultant would charge. Ms. Nicolai then discussed the Master List of Capital Improvements for 1990, pointing out what was accomplished, and noted that every option available was put on the list. She pointed out that certain projects were marked to indicate the possibility of obtaining Redevelopment funding. The Revenue Options Committee felt that no recommend- ation would address 100% of the list, and that we should establish an ongoing program for street repair so it could be kept current. Ms. Nicolai then reported on the Revenue Options Committee meeting of January 30th which had been requested by the City Council. She stated that eight of the Committee members were able to attend, and there was much discussion on numerous issues. The Committee reaffirmed their previous recommendation to go to the ballot with a Utility Users Tax, but eliminated their recommendation for a 6% level, feeling that the Council should determine the percentage based on the amount of revenue needed and/or the impact a specific percentage might have on voter approval. They again emphasized that the money should be used for capital projects and deferred maintenance. They also commended the City on the efforts made to fund many of the capital improvements through the various sources such as State grants, gas taxes, general funds and aggressive approach to Redevelopment financing. Ms. Nicolai stated that staff still strongly recommends that new revenue options be sought, that in spite of the success in funding many projects on the list, many projects remain unfunded. She added that not only have several of the projects such as PG&E and Costco disappeared, but the overall economic climate is affecting many of the City's current revenue sources such as sales tax, property tax and interest earnings. She noted the fees which the County is planning, such as booking fees which SRCC MINUTES (Special) 2/4/91 Page 2 SRCC MINUTES pecial) 2/4/91 Page 3 would be about $300,000, as a result of the redistribution of funds by the State. She noted that while the Committee reaffirmed its recommendation of a Utility Users Tax, they did not specifically recommend a 6% level. Gene Dyer, a Committee member, stated that the City cannot say that the money raised by the tax has to be used for a certain purpose, because it has to go into the General Fund. He noted that the biggest increase in the expenditures is salaries for the three departments discussed tonight, and the City should keep this in mind in the next negotiations. He stated that if the tax money is not intended for the General Fund the City will lose taxpayer support. Elissa Giambastiani, of the San Rafael Chamber of Commerce, informed the Council that their Board of Directors discussed the Utility Users Tax yesterday. She stated they appreciate the position the Council is in, having to attempt to find money. However, the Board felt that the Utility Users Tax would be very unfair to the community, noting that the business license fees had just been raised, with no cap on the new tax. She stated that dry cleaners and grocery stores are facing large taxes without regard to their profit margin, and the small businesses are struggling. She stated that an additional 6% tax might send some of the small businesses over the edge. She said they would not dispute a parcel tax, noting it is deductible for homeowners and the utility tax is not. She added that the cost of utilities is continuing to rise. Mayor Mulryan inquired what percentage a parcel tax would be, and Ms. Nicolai pointed out that in the proposed Ordinance for Utility Users Tax it exempts people with low income. She noted there is already a form to fill out for PG&E and Pacific Bell for low income individuals who qualify, and they would also be exempt, for instance, the first $30 of everyone's bill. She noted there are some jurisdictions which have exempted certain amounts, such as the first $30, or perhaps $15 on the telephone and $13 on the gas, so there is some level of exemption. She stated it is difficult to estimate what the revenue would be from some of these exemptions. She said it appears that it would be 65% on commercial and 35% on residential, and Mayor Mulryan indicated it should be 60/40. Ms. Nicolai pointed out that on a parcel tax, if there was an equal charge on each parcel, there could be no charge on a parcel without a dwelling unit on it, so the tax would be similar to the Paramedic tax where you have a dwelling unit charge, and you would have a comparable percentage on square footage. She noted that a Municipal Services Tax would be another direction, and Finance Director Coleman stated that the revenue would be 35% commercial and 65% residential, similar to Mill Valley and Novato. Councilmember Boro asked about actual dollar amounts, and whether the Utility Users Tax of $93.60 per year is for a typical homeowner. Mr. Coleman responded that amount is based on the typical homeowner with an average monthly bill of $30 for Pac Bell and $100 for PG&E. Mr. Boro noted that a commercial charge would then be proportionately higher. Mr. Coleman responded that it would, noting that while the average for a home would be $100 for PG&E it would probably be $250 per month for a business. Mr. Boro then inquired what the parcel tax would equate to, in order to generate $2z million a year, across the board. Mr. Coleman stated it would be $75 per living unit for residential, and 6.6� per square foot for commercial, and that would raise $2,209,000. He stated he does not know what the average commercial structure would pay, but these rates are based on experience with the Paramedic tax. Mayor Mulryan inquired if there was a cap on the Utility Tax, would it alter the collection charge, and Mr. Coleman stated it would not, but the City would have to do it internally, because the utility companies do not have a way of customizing it to make a lower rate if a certain level is reached or to put a cap on it. Laura Gallegioni, an employee of Pardini's of Marin grocery store, explained that their store would suffer a hardship if another tax is imposed, and that if they have to raise their prices, people will shop elsewhere. Mayor Mulryan stated he would like to see the revenue figures from Pardini's, and Ms. Gallegioni stated she will clear it with the owner. Gary Phillips, Revenue Options Committee member, stated that there was concern regarding the Municipal Services Tax because of losses occurring in cities where it was tried. Mr. Coleman responded that two cities in Marin have the tax, Novato and Mill Valley. He stated there has been a suit filed against Mill Valley, and Novato has just imposed the tax. However, Oakland was the subject of a court suit, and it was decided in Oakland's favor. Mr. Phillips stated that the City needs to consider public acceptance of any additional tax, and at the time the Committee had made their recommendation about the Utility SRCC MINUTES (Special) 2/4/91 Page 3 SRCC MINUTE Wpecial) 2/4/91 Page 4 Tax, the climate was different than it is now. He stated it would be much more difficult at this time, and people might reject an additional tax. Mayor Mulryan stated that an economic recession is recognized, but the City would like to take care of its obligations. He said the City would like to maintain its high quality of services, and take care of its capital obligations, and one of the more ominous issues to come down recently is Governor Wilson's proposed plan to deal with the $7 billion shortfall which the State is experiencing and which will go to $9 billion next year,and about $2 billion of that is coming out of local government. He stated it will be very difficult for the City to maintain its high standards. Mr. Phillips stated he feels the reason the schools were successful in their efforts is that, for instance Dixie's parcel tax, because they made it clear what the consequences would be for not passing the parcel tax. They made the language clear and concise. Mayor Mulryan stated that the issue is a complex one, and the City must stay within the law regarding the language which can be used with regard to use of the funds generated. Councilmember Thayer pointed out that there is quite a difference between the City taxing the residents for its purposes, and a School District levying a tax. She noted that the school issue is education for children, whereas the City tax would be for many purposes such as improvement of streets, sewage systems and similar projects. She stated she feels that under the present conditions it would be proper to let the residents know that the tax monies were needed for operating expenses such as Police and Fire protection and deferred maintenance. She stated that the money could then be diverted from the General Fund for a capital improvement as needed. Mr. Phillips stated that the public should be told exactly what is to be funded, and then do it. Ms. Thayer stated she feels it would have been easier to pass a general tax a couple of years ago, but the public wants specifics at this time, about the use of the money. She stated that at this point in time, if the City were to ultimately divert funds to a capital improvement the City cannot announce that intention, because that comes back to the difference between a 2/3rds vote and a majority vote. She stated she feels there is a public suspicion of a general purposes tax. City Attorney Ragghianti pointed out the distinction between a special tax and a general tax. He stated it is possible to adopt an Ordinance imposing a Municipal Services Tax and take it to the electorate and to fund the General Fund with the proceeds of that tax, and still argue prior to the time of the vote that it is the collective wisdom of the Council that some or all of these funds are to be used for specific purposes. He stated that to the extent that those purposes are other than general operating purposes, he does not think that as a matter of law that takes a general tax and then a special tax. He stated that articulating specifics or making a list does not necessarily take what would otherwise be a governmental purpose tax and make it specific. Joe Saccone, former owner of United Markets, stated that by raising the taxes of the businesses in San Rafael they will in turn have to raise their prices and this will affect them and the residents of the City. He stated that a considerable amount of revenue will go to Novato when Costco opens there. Geoffrey Ehlenbach stated he favors the Municipal Services Tax if the cloud can be removed, because it is deductible. He stated that it would cost less than the Parcel Tax. Finance Director Coleman clarified the issue of what can and cannot be deducted. He stated that when staff was originally talking about the Municipal Services Tax a year or so ago they were assuming that it could be collected with the Property Tax. He stated they have since learned, as part of the Oakland case, that the Municipal Services Tax cannot be collected with the Property Tax. It has to be collected separately and, as a result of that, it probably would not be deductible by the homeowners if it is a separate billing, which at this point it would have to be. Mike Smith, a member of the Revenue Options Committee, stated that they had discussed the Parcel Tax and dismissed it because of the pending lawsuit. He stated that in the process the City will need support from the homeowners and the business community, and if they wanted to consider the Parcel Tax, he recommended it go back to the Revenue Options Committee to take another look at that option. Mayor Mulryan stated that if that is done, it would obviously not be on the June ballot. SRCC MINUTES (Special) 2/4/91 Page 4 SRCC MINUTE ,Special) 2/4/91 Page 5 Councilmember Boro stated that the Council, as in running a business, is looking at revenue. He stated it is up to the City to provide the service. He noted that the cuts the State is making, including the ones to be made in the future, will trickle down to the local level. He noted that although San Rafael, as a charter City, could impose the tax, he feels it should be put on the ballot. He stated that he feels comfortable about accepting the Police and Fire studies discussed by Ms. Nicolai, noting that if they were not doing their jobs the Council would have heard about it a long time ago, and he feels the departments are being well handled. He stated that with respect to the other departments, there should be a study, since the Council has a responsibility not only to themselves, but to the voters. He noted that the City would have to be very specific regarding the fee, and the study would have to be done very quickly. He noted that if the tax does not pass the City, at some point, may be faced with cutting services. He stated he fully supports the view that the money should be used for either capital improvements or deferred maintenance. He, stated that while the money has to go into the General Fund, the Council could agree that each year a report would be made to the public regarding the use of the monies, and after four years it could come back for evaluation of the results of the tax. Mr. Boro noted that in December the Council had discussed the Municipal Services Tax and he favors it over the Utility Tax. He noted there is a collection issue and a legality issue. He added he feels that the Chamber of Commerce would support it. Mr. Boro pointed out that they will have to rally people and get the word out, the same as Dixie did with their Parcel Tax. Mayor Mulryan inquired if there is a breakdown of commercial and residential on the Municipal Services Tax, and Ms. Nicolai stated if it was $150 per parcel it could be the same amount for an apartment house as for a single family dwelling. She stated it would have to be dwelling unit related, and handle it the same as the Paramedic Tax. Councilmember Breiner stated she is leaning toward the Municipal Services Tax. She added she wishes there was a way to get the Revenue Options Committee to meet before the Council meets again, and see if there can be an agreement. She noted that the City would have to carry the burden of creating a successful campaign. She said they should reach all parts of the population a little more evenly with a Municipal Services Tax, especially since the Business Taxes were raised recently. Mayor Mulryan suggested that they look at this option. He noted that the $75 would generate $2.2 million for residential. Mr. Boro inquired how the 6.6� per square foot for commercial compares with the Paramedic Tax, and Ms. Nicolai responded that the Paramedic Tax is $25 per living unit, and 2.0 commercial. Councilmember Thayer stated that she agrees with most of what Mr. Boro said, especially with regard to the Municipal Services Tax. She said she has spoken to many individuals and groups, and the Utility Tax would bring an enormous revenue to the City, but would be a hardship on many businesses. However, she does not agree with the Police and Fire studies being accepted, and feels that a new study should include all departments. She noted that since the Police, Fire and Public Works studies were in 1977 and 1978, the public has a right to know how the City is spending the money now, since costs have increased. She said if the City is going to have to make cuts at some point in time there should be a complete job done. She said she feels public improvements is the way to go, and that capital improvements is more of a technical decision. She stated she does not feel that buildings and inanimate objects have as much importance as, for instance, crime prevention. She noted that people have requested more walking patrol and we cannot afford to do that. She stated that more money should be diverted from the General Fund into a fund for Capital Improvements if we can afford it. Mayor Mulryan stated that the Council must decide tonight whether to ask staff to bring back an item for the ballot at the next Council meeting. Councilmember Breiner stated she feels the Council should proceed along those lines, but does not know what can be done about low income residents. Ms. Nicolai responded that depends on what the Council wants to have on the June ballot, and whether the Council has strategy lined up, and if they feel it is appropriate to do the study. She stated she does not know whether the study could be finished if the Council needs it as a component of their campaign. She stated that if it is to go on the June ballot, the wording has to be clear enough to be ready to adopt at the next meeting. Mayor Mulryan asked, if the Council were to ask staff to come back at the next meeting with a $75 per living unit, and 6.6� per square foot Municipal Services Tax, what else would be needed. SRCC MINUTES (Special) 2/4/91 Page 5 SRCC MINUTE Special 2/4/91 Page 6 Ms. Nicolai responded that it would automatically have a four year life, and will have a sunset clause. Ms. Thayer noted that there is not a full Council tonight, since Councilmember Shippey was absent, and this is a consensus type of issue, rather than a vote. Mayor Mulryan stated that hopefully there will be a full Council at the next meeting, and Ms. Breiner stated she will be out of town. Mayor Mulryan responded that if Ms. Breiner makes the motion, everyone will know her opinion on the issue. Ms. Breiner stated, for the record, that one of the justifications we will need to present to the public is that San Rafael, at the time Proposition 13 was voted in, had the lowest Property Tax of any city in Marin, because the Sales Tax was greater. She said the City is now finding we are in a bind, and when the statistics are developed for the campaign, they will probably show that San Rafael has one of the lowest rates. Councilmember Breiner moved and Councilmember Boro seconded, to approve in concept a Municipal Services Tax to be placed on the June, 1991 ballot, with annual reports to be given to the City on what has been accomplished each year, and with a four year sunset clause. Mr. Boro remarked, under question, that he feels that the purpose of this tax will be to fund projects we currently have not been able to do, and as far as the day- to-day running of the City, we will have to live within our means. He stated that to muddy the water and say we would use some for operating expenses would lose his support for it. He noted that the Council took a look a couple of years ago at where we were on Capital Improvements, and for the reasons mentioned by Ms. Breiner, the City never funded Capital Improvements with the exception of Police and Fire vehicles. He stated he would have to stay with that as the purpose of this tax. He noted that, according to the City Attorney, that could be done without being obligated to a 2/3rds vote. Mayor Mulryan stated he is not suggesting that the City should increase the operating expenses. He noted that the voters will want to know such things as the cost of the current level of services. Ms. Thayer noted in January of 1988, shortly after she was elected, she became aware that the City had an operating deficit of $600,000, which represented unfilled positions primarily. She said as time has gone on she sees a situation where the City just makes it. She said that was why she was suggesting a restructuring. She inquired what level of service would be maintained, the one we had four or five years ago, with the unfilled positions, noting that the level of service is slightly less now because of the unfilled positions. Ms. Breiner stated she would like to add to her motion that we should study the other departments which have not been reviewed, and this should be done by a limited audit, not covering Police and Fire. Mr. Boro agreed to the amendment. Ms. Nicolai stated she wanted the Council to be aware that she is totally opposed to the Revenue Options Committee focusing on what the revenue would be used for. She stated she wants to make it clear that what the State is doing is shifting the responsibility for the overall economy. She said if we limit the additional revenue sources to only Capital Improvements, we could be closing a Fire station. She said that even if someone came in and did a study and said that they could find 10% savings in all of the other departments and we had lost revenue in addition to having the service cut down, it could get to the point where the only place we could get that money again would be from the Police and Fire departments. She stated that could happen. Mr. Boro stated that is how he would talk to the public about the purpose of this tax, and each year for the life of this tax staff should report back so the public could be informed. He stated that the intent is to do what the Revenue Options Committee has talked about. He noted that we are all aware of what has happened to the homeless situation, it has gone from the Federal to the State, to the County, and now to the City. He stated he does not think things can keep on being passed down. Ms. Nicolai stated she agrees with the Committee to a certain extent, and that it may be that the City cannot maintain their service levels. Councilmember Breiner moved and Councilmember Boro seconded, to bifurcate the original motion, and move to conceptually approve the Municipal Services Tax, with an annual report on what has been accomplished each year for four years. AYES: COUNCILMEMBERS: Boro, Breiner & Mayor Mulryan NOES: COUNCILMEMBERS: Thayer ABSENT: COUNCILMEMBERS: Shippey SRCC MINUTES (Special) 2/4/91 Page 6 SRCC MINUTE, kSpecial) 2/4/91 Page 7 Councilmember Thayer stated she dissented because of what would be the ultimate thrust of the tax. Councilmember Breiner moved and Councilmember Boro seconded, to have the other department studies performed in the same manner as Police and Fire so that information is available, but that those departments do in-house surveys on ways their departments can find to save money. She noted that hopefully in two weeks the Council will know the cost of the survey. AYES: COUNCILMEMBERS: Boro, Breiner & Mayor Mulryan NOES: COUNCILMEMBERS: Thayer ABSENT: COUNCILMEMBERS: Shippey Councilmember Thayer stated she dissented because Police and Fire should be included in the study. The Council agreed to look at whether senior citizens could be excluded from the Municipal Services Tax. The meeting was adjourned at 7:00 P.M. A- - . JEANNE LEONCINI, Ci y Cler APPROVED THIS DAY OF 1991 MAYOR OF THE CITY OF SAN RAFAEL SRCC MINUTES (Special) 2/4/91 Page 7