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HomeMy WebLinkAbout2011-06-06_cityofsanrafael_007740849701a6c0ec79c53d67896099CITY OF no Agenda Item No: 19 Meeting Date: June 6, 2011 SAN RAFAEL CITY COUNCIL AGENDA REPORT Department: CITY MANAGER Prepared by: Nancy Mackie, City Manager City Manager Approval. SUBJECT: UPDATE ON BALANCING THE FISCAL YEAR 20011-2012 BUDGET, THE RECESSION ACTION PLAN AND THE ECONOMIC VITALITY WORKPLAN RECOMMENDATION: Accept Report BACKGROUND: Staff has presented several reports to City Council over the last few months regarding the structural deficit in the General Fund for FY 2011/12. At the City Council meeting on May 16th, the Council approved $2.2 million in primarily "one time" fixes to cut the deficit in half, bringing the current deficit level to $2.2 million. Obviously more work must be done to close this year's deficit, and actions that have multiple year impacts are needed to minimize future fiscal year deficits. Labor negotiations are underway with all bargaining units (except Childcare) and the discussions are revolving around solutions to the deficit. In addition, we still await the final results of the State budget impacts on our budget. Today's report is a chance to provide an update on the Recession Action Plan, Economic Vitality Workplan, and recent actions taken on the budget since the May 16th Council meeting. Final budgetary actions will be presented to the Council on June 20th to close the gap and balance the budget. RECESSION ACTION PLAN. The Council approved a Recession Action Plan in 2009. The plan listed a series of action strategies that have since been used to partially solve the budget situation. Attachment A is an update on all of these strategies. I think it is important to review this list, in its entirety, to see the multiple approaches San Rafael has taken to attempt to solve this issue over the last two years. However, even with a proactive plan, and implementation actions such as furloughs, layoffs, elimination of vacant positions, and reductions in overtime and expenditures, the problem is not yet fully resolved. In short, as has been discussed in prior staff reports, in this harsh economic climate General Fund revenues, having plunged during this recession, are not rebounding to cover expenditures. ECONOMIC VITALITY WORKPLAN. A complementary component to the Recession Action Plan is the Economic Vitality Plan, also approved by the City Council in 2009. Staff has worked to stimulate business growth and retention, expedite approvals, and overall improve our tax base. Attachment B summarizes those activities, ranging from working with large and small businesses, combining short term activities and long term planning for the economy, as well as both seeking new development and re -use opportunities. Again this is an extensive list worth reviewing carefully to see the full range of approaches taken to boost our local economy. FOR CITY CLERK ONLY File No.: Council Meeting: Disposition: SAN RAFAEL CITY COUNCIL AGENDA REPORT / Paue: 2 FY 2011/12 BUDGET UPDATE. Extensive hours have been spent by staff on a variety of difficult budget choices to date, and we continue looking at future options for cuts. It is clear that there are few actions that can be taken without service reductions. I have several additional items to report that can help with this year's budget deficit. These will all be brought back to the Council at the next meeting when more details are worked out, but I wanted to report our progress: We will allocate a portion of Community Development Block Grant (CDBG) funds to engineering design costs. This will reduce funds available for ADA capital improvements and create funds to cover staff time for engineering. These are considered "one time" funds, as CDBG funds cannot be counted on in for future years. 2. We will reassign Fire Department administrative personnel (0.5 FTE) to provide additional support staff for EMS billing services. We will allocate EMS funds to this staff time, and this extra EMS work will also allow us to bring in additional revenues. It will, however, reduce much—needed non -EMS support functions for the Fire Department. 3. Due to a retirement in Community Services, we will eliminate the Assistant Director position and reorganize the department. Administrative work for both Childcare and Recreation will be allocated among staff in a different way, reducing management staff by 1 FTE, and reducing administrative hours available to the public. The above items will save between $150,000- 200,000, so we still have need for significant budget solutions to balance our budget. The City's labor negotiating team is working diligently with all of the City's bargaining units (except Childcare which has a MOU that expires in October) with an eye towards immediate and long term costs savings. Conversations have taken place regarding one time and on going cost reductions, and all involved are continuing to dedicate many hours to this effort. NEXT STEPS. At the June 20th Council meeting, staff will present the budgetary action items listed above and any additional savings identified before that meeting. Our goal is to complete labor negotiations by then and bring you structural budgetary solutions to our ongoing deficit. FISCAL IMPACT: None. This is an informational report. ACTION REQUIRED: Accept Report. ATTACHMENTS: A: Recession Action Plan Update B: Economic Vitality Plan Update W:\City Managers- WorkFile\Council Material\Staff Reports\1 1 \Budget RAP & EVP.doc /_ii•_•AT72-STAil SAN RAFAEL RECESSION ACTION PLAN STATUS REPORT UPDATE - JUNE 2011 Below is the sixth in a series of reports, defining progress on our Recesssion Action Plan since its adoption in May 2009. This updates our December 2010 information. As a reminder, the Principles for Budget Recovery are included, along with a short summary of actions to date. Principles for Budget Recovery To meet our financial challenges, the City is taking steps that will keep our budget balanced and in line with the City Council's goals and priorities. Budget actions will also be guided by a series of long-standing financial management policies. The Council has identified the following guidelines as we respond to the recession: • Collaborate with neighboring governmental agencies to consolidate or regionalize services to leverage resources and improve efficiency • Reduce services, where necessary, after identifying the impacts and weighing the reduction against other options • Reject new services or projects if reduced staffing cannot manage the workload • Continually assess and improve efficiency in the delivery of services •Manage the size and compensation of the workforce to best deliver services given our current and anticipated financial realities • Provide a responsible level of transition assistance to city employees who have lost their jobs . Seek additional revenues from all sources to meet the community's expectations of a high level of service • Implementing an Economic Vitality Plan Commenced implementation of, Economic Vitality focusing on local business retention, Plan (see separate report) expansion and attraction as well as job development • Pursuing Federal Stimulus actions and Secured over $2 million in Federal Stimulus other grants that can provide one time grants for one time resources for street resources for projects and service needs resurfacing, energy efficiency improvements at City Hall, and Police Citizens Academy and other Police activities. Pursuing additional grants where available and stimulus funds if the amounts are large enough to justify the significant staff time involved. For example, State grant funds were received for the Freitas Park playground installation. Recession Action Plan — June 2011 Update Page 2 • Continuing to suspend hiring of positions whenever possible • Offering early retirement packages through incentives Staff continues to suspend hiring whenever possible. Each new vacancy undergoes a process that ultimately requires City Manager approval to fill the position. Staff first looks at other options such as eliminating the position, reducing the hours, reorganizing the division or work group, etc. Program completed. Created "Voluntary Retirement Separation Program" resulting in savings of approximately $900,000 annually through permanent elimination of these positions. • Offering employees the opportunity to This opportunity continues for employees. voluntarily reduce their work hours However, given the on-going furloughs, there is limited interest at this time in additional time off without pay. Reducing the workforce by laying off employees through strategic planning • Working with employees to develop a furlough plan that includes a pay reduction and time off by closing City Hall and other non-public safety facilities on certain days Implemented layoffs in July 2009 and January 2010; provided transition assistance to those who lost their jobs. Layoffs remain an option to reduce the workforce to control costs. Furlough implemented for Fiscal Year 2009-10 and continued in Fiscal Year 2010-11. Furloughs remain under consideration for Fiscal Year 2011- 12. Furloughs equate to a 5% salary reduction for non -safety employees, saving approximately $450,000 per fiscal year. . • Meeting with employee unions to Contract negotiations are currently in -progress control costs by analyzing compensation for all bargaining units, except Childcare as their levels, including possible reductions in MOU expires in October. The goal is to reduce salaries or benefits costs through compensation and other means. • Considering alternative work schedules Staff has investigated alternative work schedules in order to save costs in place in other agencies and the topic is currently under discussion. Will continue to consider. • Maximizing opportunities to recover costs, such as changes in our paramedic transport service City is in the process of updating the master fee schedule which will considerably improve our ability to recover costs. For example, the State has taken an increasingly bigger portion of parking citations making it important to review citation levels so the program does not impact the General Fund. Recession Action Plan -June 2011 Update Page 3 • Continuing to explore collaboration opportunities with other public agencies to maximize efficiency Other Actions to Reduce Expenditures or increase revenues Also, paramedic transports completed by City staff have significantly increased due to program changes, which enhance City revenues. In process of finalizing the agreement with Marinwood CSD to control City costs and provide superior levels of service to both Marinwood and San Rafael. Fire Battalion Chief services agreement with the City of Larkspur (cost sharing) continued as did the contracting out of Fire Dispatching with the County Communications Center. OES services to the City of Larkspur took place throughout the year, bringing in revenue to the City, but will not be continued next year due to Larkspur's budget challenges. City successfully provided Hamilton Pool operations for the City of Novato this past season and will do so again for the 2011 season - providing high quality services and bringing in revenue to the City of San Rafael. Measure C was passed and will increase library service revenues by approximately $875,000 for the next seven years. The City issued bonds to create a "retirement system fund" to go towards retirement cost increases. The City issued "tax revenue anticipation notes" which will steady our cash flow as revenues are received by the City at various points throughout the year while expenditures are weekly. The City continued to make use of special funds (such as Measure A) to meet General Fund obligations where appropriate. The City also continued to defer expenditures where possible (such as to vehicle fleet replacement), reduce contract services, reduce supplies, etc. The City took action on a development proposal (Target) which would significantly increase sales tax revenues and will see other openings (e.g. Honda) that will also enhance revenue (see Economic Vitality Strategy). Attachment B City of San Rafael Economic Vitality Workplan Progress Report March 2009 - June 2011 I. NEW DEVELOPMENT a) West Francisco Boulevard (WFB). . New VW Et Audi facility facade change approved. Anticipate filing for foundation permit this spring with the rest of the building permit requests to follow. • Construction completed on RAB pre -owned vehicle lot. Construction almost complete on main dealership remodel. Final phase of the project will be the facade improvement anticipated in June 2011. b) East Francisco Boulevard (EFB). . GM site at Shoreline Center leased to Honda. Honda remodel approved, construction almost completed with dealership opening in June 2011. • Pre -owned Luxury Car facility opened in former Ford facility, initial sales tax revenue in 4th quarter 2010. • Infiniti dealership facility remodeled and opened. c) Shoreline Center Completion. 137,000 sq. ft. Target approved by City Council on May 16, 2011. First LEED Gold big box building in CA Ft first to commit to meeting CA renewable portfolio standards for power for store operations. d) Marin Square Area Redevelopment. No application received yet from property owner, Sutter Health. Existing businesses continue to operate in the Center. e) Completion of the San Rafael Two new buildings and a parking structure have been Corporate Center. constructed. Leasing activity is underway. Original two office buildings are 80% leased. City Council approved extension of time to build out remaining office building and parking structure; construction of these last structures is not expected to proceed quickly given market conditions. f) Reuse of PG£tE's 999 Third Street PGFtE completed soil and groundwater testing and are developing Site. the property's Remediation Action Plan. It is anticipated this phase will take close to a year to complete. PGEtE provided an update to City staff in May 2011. g) Caltrans Remnant Properties. TAM to coordinate with CalTrans and provide remnant parcels now that 101 Freeway project and 580/101 flyover are completed. CalTrans staff evaluating a sale process for CalTrans Rice Drive parcel. City staff exploring joint marketing Et sale of RDA Et CalTrans Rice Drive parcels. Economic Vitality Workplan Page 2 II. REUSE, RE -TENANTING AND REHABILITATION a) Economic Study. Report presented to City Council: (Completed items italicized.) • Prioritize attracting tenants to large retail sites. (Honda leased former GM site.) • Developed Shop San Rafael Campaign. • Improved Economic Development website. • Consider re -use opportunities of office sites. See Incubator discussion below. • Assist with training businesses on websites. • Surveyed (interviewed) business community on constraints. • Improve perceptions of permit process. (Coordinated with Marin Economic Forum to explain the process to businesses, continued improvement of business section of City website.) • Coordinated with workforce development efforts. • Increase office occupancy, especially with green office users. (CD instituted over the counter approvals of tenant improvements and zoning ordinance changes which will assist applicants.) • Coordinated with Countywide energy efficiency/retrofit efforts. • Consider incentives for green businesses. This item is on hold due to City's financial situation. b) Re -tenanting Vacancies. • Mi Pueblo opened at the former Circuit site. • Working with property owner to re -tenant Border's Books space in the Toys R Us center. • Arizmendi Bakery opened at Rafael Town Center. • Marin Arts Council opened on Fourth Street. • Room Art Gallery opened at former Papyrus. • George's opened in what was referred to as the Kimball's site. • Pizza Orgasmica opened in former Rafters. • Sol Food expanded Lincoln Avenue location into adjacent space Et filled 811 Fourth (former Golden Orb/Pie Shop). • Lotus Chaat Et Spices opened in former Pier 6 space in West End. • 1340 Et 1344 Fourth at D filled with clothing store Et artists' gallery. • Working with West End businesses and WENA on campaign to encourage Home Depot to fill old Yardbirds site. Prepared information handouts for key sites to assist potential tenants. Two of the sites, GM and Ford, have been leased. Continued meetings with Marin Economic Forum, to explore "business incubators" that would create jobs and fill vacant space in the long term as businesses grow. Initial research indicates no City funds will be required and instead City 2 Economic Vitality Workplan Page 3 Re -tenanting Vacancies (Continued). facilitation and collaboration with local partners could result in a b) Climate Change Action Plan San Rafael incubator of some type. Implementation. Participate with Council Member Connolly on Steering Committee of Dominican University's "Venture Greenhouse", a business accelerator effort physically located in East San Rafael. c) Rehabilitation of Northgate Mall. 53 stores opened out of a potential 65. New Rite Aid completed. Promenade completed. Music and entertainment taking place in Oak Plaza. d) "Marin Rocks" Exhibition. Marin History Museum experiencing financial issues including loss of Executive Director. Project appears to be on hold. e) General Plan Update. In process of updating Housing Element. III. SUSTAINABILITY MEASURES a) Green Businesses. Improved Economic Development webpage to include promotion of green business certification and resources. City received $100,000 grant from Marin Community Foundation for collaboration with SR Chamber Et Dominican University for pilot program on small business sustainability circles. b) Climate Change Action Plan Assisted with business outreach on potential requirement for Implementation. "green" food containers at food outlets. CD convened committee, including business representatives, to prepare recommendations for banning single use carryout bags Et reducing takeout food containers. Received grant from Co. Hazardous Et Solid Waste JPA to fund City staff for activities related to single use plastics, construction Et demolition ordinance Et commercial recycling. Created webpage for businesses which includes links for the following • What Green Means to San Rafael • Marin County Green Business Program • San Rafael Climate Change Action Plan • Green Resources c) SMART. Continued participation in Station Area Planning efforts for Downtown and Civic Center stations. Redevelopment CAC is providing oversight to Downtown Station Area Plan. Held a community workshop for Civic Center Station Area Plan with 64 members of the public in attendance. Planning for a second community workshop for the Downtown Station Area Plan to be held in June has commenced. Economic Vitality Workplan Page 4 d) Energy Efficient Decorative Lights. Completed. Installed LED twinkle lights in Downtown street trees to save energy. e) Pedestrian and Bicycle Completed business outreach for Non -motorized pilot programs Improvements and Linkages. (NTPP). City completed $15 Million in NTTP improvements Et grant funding for design of Grand Avenue pedestrian bridge. f) "Greening" of Community Events. Participated in discussions regarding "green" food containers at c) Public Arts Installation Program. events. Making City event recycling containers available to non- profits hosting events in San Rafael. c) Financial Resource Development. Participated in planning and implementation of County's "Way to Go" program to promote non -motorized access to Downtown events. IV. Promotions and Events a) 10 Anniversary of the re -opening of the Smith Rafael Film Center. Completed. Assisted Film Center with a June outdoor movie as well as "A" Street movie in September, 2009. b) West End Village Event. Dropped. July 2009 street festival was successful, held two (BID) Strategy. Farmers' Market fall festivals in October 2009 Et 2010. Extending the Farmers' Market event into October at the West End will not be repeated due to lack of promotional/ advertising funds. c) Public Arts Installation Program. Temporary art exhibits installed in Rafael Town Center vacant retail window space. Notified building owners of Marin Arts c) Financial Resource Development. Council temporary art program for vacant storefronts. Collaboration with Artworks Downtown and Ritter Center provides ongoing temporary public art program in the City Plaza and other civic locations. Added two additional locations in 2011. V. FISCAL STRATEGIES a) Redevelopment Bonds. Interim Bond refunding completed. b) Business Improvement District BID Subcommittee recommended a plan to their Board. Agency/ (BID) Strategy. BID retained consultant Et conducted survey to change from business based to property based BID. Not enough interest from property owners to proceed. BID is proceeding with incorporation effort and with 501(c)6 tax-exempt status. Increased membership from WEV E: two WEV merchants currently serving on BID Board. c) Financial Resource Development. ARRA funds have been secured for street repaving, Police Citizens Academy, and energy efficiency improvements for City Hall. Economic Vitalitv Workplan Pa d) Emergency Preparedness/Business "Get Ready" for Business was held in April 2009. Recovery Plan. with San Rafael Chamber, BID, and Hispanic Chamber of Business Strategy drafted for how to better prepare and recover in the business sector. Task Force with Chamber and BID has been created; working on an implementation plan. Disaster Preparedness Worksheet prepared with phone numbers and websites for businesses £t tips for protecting business from a disaster. Post -Disaster Business Resilience Kit published in English Et Spanish. Both documents posted on City website. e) Real Property Management. Environmental testing of 519 Fourth Street is complete and a final site closure letter for the underground tanks has been received from the Water Quality Control Board. A. COMMUNICATION, EDUCATION Ft OUTREACH a) Communication to the Community Participated in 25 Business Retention and Expansion interviews with San Rafael Chamber, BID, and Hispanic Chamber of Commerce of Marin. On an ongoing basis, attempting to meet with one business per month. Participating in San Rafael Connects. Improved Economic Development website. Includes Business Assistance and links to available properties. Several larger sites in San Rafael are highlighted to assist in business attraction to key retail locations. Participated in Bilingual Entrepreneurs' Fair. b) Managers of Vacant Property. In communication with owners/managers of former Yardbirds £t Dodge sites. Facilitated temporary use by non-profit >:t community groups with Marin Square Manager. c) Re -Leasing Assistance. City "Coffee and Codes" meetings were conducted to assist with information helpful for releasing. Coordinating with Planning staff, held several meetings with commercial brokers to explain land use application processes, City zoning and regulations, etc. Building Department instituted over the counter approvals for tenant improvements, facilitating quicker re-leasing.