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Study Session Consider Report on Town Fiscal Situation and Financial Alternatives and Discuss Ways to Involve the Community in Addressing the Funding Short FallCOUNCIL AGENDA DATE: 11/8/93 STUDY SESSION TOWN OF LOS GATOS COUNCIL AGENDA REPORT DATE: November 4, 1993 TO: MAYOR AND TOWN COUNCI FROM: TOWN MANAGER SUBJECT: CONSIDER REPORT ON TOWN FISCAL SITUATION AND FINANCIAL ALTERNATIVES AND DISCUSS WAYS TO INVOLVE THE COMMUNITY IN ADDRESSING THE FUNDING SHORT FALL RECOMMENDATION: Accept report on Town fiscal situation and financial alternatives and discuss ways to involve the community in addressing the funding short fall. BACKGROUND: On October 11, Council conducted a study session on the Town's fiscal future. Staff presented revenue and expenditure projections and alternative actions. Report highlights included: A growing gap between revenues and expenditures reaching over $2,000,000 per year by 2000-2001 • $7.4 million in reserves would be required to continue existing service levels through 2001. This would deplete Town reserves • A special study prepared by student intern, Amy Brown indicating that Town revenues per capita were low and presenting various revenue alternatives • Presented revenue action alternatives of economic development and new taxes ■ Presented the alternative of debt financing major capital projects PREPARED BY: MARK LINDER, Assistant Town Manager ML:pm 11/5/93 1:11 pm MGR065 A:\CNCLRPTS\11-8-1 Attachments: 1. 1993-94 Estimated Revenues 2. 1993-94 Estimated Service Expenses 3. October 11, 1993 Report 4. Community Forum Schedule 5. City of Claremont Information Distribution: Reviewed by: Attorney Clerk COUNCIL ACTION/ACTION DIRECTED TO: ance Treasurer PAGE 2 MAYOR AND TOWN COUNCIL SUBJECT: CONSIDER REPORT ON TOWN FISCAL SITUATION AND FINANCIAL SITUATION November 4, 1993 Following discussion of the report, Council requested a follow-up study session on November 8. Staff was asked to narrow the revenue options and present expenditure reductions. Council expressed a need for organized community input and asked staff to return with a community forum program including timetable. DISCUSSION: Attached are two additions to the October 11 study session report. The first is a new revenue comparison chart that reflects current information. The second chart is a program expenditure comparison between Campbell, Saratoga and Los Gatos. This chart compares the per capita expenditures in key program areas. The comparison shows that not every service is provided by each community and the service level is also different. For example, Los Gatos provides library services and Campbell and Saratoga do not. The October 11 th Study Session staff report is also attached for information. Assumptions used for revenue projections have been added. Revenue Alternatives Council requested fewer revenue options focusing on the most realistic. Staff recommends narrowing the options to: • Economic development • Utility users tax • Parking Meters on Municipal Tots • Town -wide sidewalk assessment district • Town -wide landscape and lighting district • San Jose Water franchise fee • General Obligation Bond for capital improvements Economic development addresses land use at 85/17 as well as improving the existing economic climate. Economic development activities for the downtown, Los Gatos Boulevard, and local hotels and conference facilities will produce new sales tax, property tax and transient occupancy tax revenues. Commercial use at 85/17 plus active economic development programs in the existing commercial districts will produce new revenues in excess of $1,000,000 per year. An economic development staff person may be required, but staff believes working with the private sector is preferable and more cost effective. These issues will be discussed further at the December 6 Council meeting. A 3.5% utility users tax on electric, gas, telephone is estimated to produce $720,000 per year. Parking meters on municipal lots are projected to produce $594,000 per year. A $30 per parcel landscape and lighting district would yield $360,000 per year. A $50 per parcel sidewalk assessment district would produce $600,000 per year. A 2% franchise fee for the San Jose Water Company is estimated to yield $60,000 per year. A $20 million general obligation bond would increase property taxes by $60 per $100,000 of assessed value per year for 20 years. PAGE 3 MAYOR AND TOWN COUNCIL SUBJECT: CONSIDER REPORT ON TOWN FISCAL SITUATION AND FINANCIAL SITUATION November 4, 1993 Expenditure Reductions The 1993-94 Budget message suggested additional expenditure reductions if further cuts were required. These cuts produce $354,000 per year. The cuts include: • Park Ranger Program $128,000 • Maintenance Worker II position 45,000 • Accounting Technician Cashier 50,000 • Narcotics Control Officer 80,000 • Close the Library one day a week 30,000 • Eliminate Museum funding 21,000 Community Forums Community support for any of the financial alternatives is important. An organized community forum process is recommended. The elements of this process and timetable are attached. A well organized process requires approximately six months and includes a survey of registered voters, at least three community forums to determine recommended alternatives, and a final report to the Council. City of Claremont coordinated a similar process. Councilmember Linda Lubeck received the attached information. Depending upon the final recommendations, local elections may be required. Council needs to act by February 1995 to be on the June 1995 ballot and by July 1995 to be on the November 1995 ballot. or 1M ESTIMATED REVENUES 1993-94 O 0 Los Gatos Santa Cruz co I— O P in CO M co 1— (O CO V' N 0 Ct. C) CO N N- N 00 cM 0)cp C7N a- co O ti t0 co- 0) c.' .4 o co -CO Nr co CI O (OA f` 00 o CO N Mt e-- N O C") N et (O�) O co(O N 00)) COOo M In r N. N. C)) O CO (A M iA O rn CO N V CO COD e- r' V N 2,647,630 Csi CO N CD r' CNI gr gar CO) M M N} 0% N r' 1-1 N 0 CO .-1 r1 . (r1 0 CA 1-1 C►% N .♦ b CO 4,119,] 12,929,380 O M 0 CO�i # 0 0) 0 (+) . V' 0 0 .1-- N O O a- 0 N 0 O 0 CO_ CT CD- 00 0 O O 0 N co_ 0 0) r, (O r T r O T CO00 0 0)) 0 � o (0 N (Or) N 0 t() N O N 00 a- Mn HMO- O O C) N N N a- CV - co ifF O OM) O Oa) • O co C \ cp 0 O 0 0 CD CD O CO O O O 0 N (ND C .- ° CO -CO O N co In an a0 M 0) N th N O O 0 0 00 00 N- t O N O N. O O O O If1 O CO- 0 01 J CO ' - N �OM N V} CD CD ff f ff 1 0 et O N F i O u') i 0 0 r CO 000 0. co' N O CI) CNI O of M M (p CO (NO O 000 N CO N L 00 00 N M0. 0 O O0) co" a0 O N cO e4 CO co:47 N c) L co" xco as as 1- (gyp Q. >, 0 o U 4.3 n 0. as a) as a 0 a` a U) 0 Assessments ATS per Capita Franchise Fees as w CJ X fa a) U cis 0 � 1— L 0. w Cl F- � D 0 O Fees for Services M Total General Fund 0 3 0. 0 a_ O co Total per Capita ESTIMATED SERVICE EXPENSES 1993-94 ✓ M N R 0) N 4- Los Gatos 4,975,490 (i 00 O 0 O aco) co co (h O • '� a co O co co_ao O co CJ r 01 o Vr o • O it (SI 1'V! e-i N ri N. CO CO N n. In 01 is I- 0) O O r O 'szf ti to 1,011,340 1D o th O 1D O l�1 Ir1 O er1 %D 1D ri N (O O O N 1-1 b N Cs r1 (h O c- co � N N 0 4- N Ps - CO 0) (0 O c N O ` - N M CO ti CO-4. 0 M 'it O O_ 0 LC) CO 00 (0 Co) (II cp• CU • ca (0 • N (Q o 4U`) a (a - L U a. a J a a a ii Q Street Maint. Community Grps cts (u U • c U c a ii a .-. fTACHMENT 6 COUNCIL AGENDA DATE: 10/11/93 STUDY SESSION TOWN OF LOS GATOS COUNCIL AGENDA REPORT DATE: October 8, 1993 TO: MAYOR AND TOViGAI-COUNCIL FROM: TOWN MANAGER SUBJECT: ACCEPT REPORT ON TOWN FISCAL SITUATION AND FINANCIAL ALTERNATIVES RECOMMENDATION: Accept report on Town Fiscal Situation and Financial Altematives. BACKGROUND: The Town's 1993-94 Operating and Capital Improvement budgets reflect decline in revenues and expenditures. Most of the revenue decline results from the State's taking more and more of our local revenues. This year's transfer of property tax revenues from the Town to the schools is a continuation of State actions that began in the early 1980's. With this year's estimated property tax transfer of $657,000, the annual revenue Toss due to State actions Is $1,787,500. The Town's response to this crisis has been to reduce expenditures, Implement efficiency Improvements and maintain a policy of full cost recovery for specific fees. The 1993-94 Operating Budget projects expenditures at 1.8% below 1992-93. Nine employees were laid off. Since 1989-90, the Town has experienced a reduction of 31 full-time staff or 16.7%. The 1993-94 Capital Improvement Program spends 30% less than 1992-1993 and continues to decline each year until only $500,000 will be spent in 1997-98. On the other hand, the last tax increase was in 1991 when the business license tax for businesses outside the Business Improvement District was increased. Council Members expressed concem about the high fees during the 1993-94 Operating Budget process and requested a study session to review the Town's fiscal future, the strategy of full cost recovery for fees, and revenue and financing alternatives. The following report will include: Revenue and expenditure projections through FY 1999-2000 If current practices continue A review of expenditure reductions and efficiencies adopted since 1990-91 Expenditure and efficiency alternatives Revenue alternatives Financing alternatives This report is for discussion pur PREPARED BY: MARK UNDER, bssistant Town Manager ML:pm 10/8/93 2:01 pm MGA065 A:\CNCLRPTS\10-11-1 Aevlewed by: Attomey Clerk mance Treasurer COUNCIL ACTION/ACTION DIRECTED TO PAGE 2 MAYOR AND TOWN COUNCIL SUBJECT: ACCEPT REPORT ON TOWN FISCAL SITUATION AND FINANCIAL ALTERNATIVES October 8, 1993 DISCUSSION: The Town is at an important crossroad in its history. The State fiscal problems are not over. Even with the severe 1993-94 budget cuts adopted by the State, early projections indicate a large deficit by the end of the fiscal year. The half -cent sales tax on the November ballot faces a dubious future, even with the Governor's endorsement. These fiscal uncertainties combined with a stagnate economy are like a tree in the middle of the road. We can see this tree ahead of us, do nothing and hit it. Or, we can tum the wheel and avoid it. If we continue as we are today, we will need $7.4 millon in one-time money to supplement the operating budget between 1994-95 and 1999-2000. This would deplete the Building maintenance, PERS, Economic Uncertainty, COPS Debt Service, Parking Lot #4 Mitigation, and Equipment Replacement reserves. This leaves the Town with no reserves and a growing annual deficit in excess of $2 million as we go into 2000- 2001. In addition, the Town's capital program will be non-existent. Streets and sidewalks will be minimally maintained and not improved. So far, we have been anticipating these problems and are taking action. We have improved productivity, reduced expenditures. decreased staff, and maintained reserves. We have decreased the use of one-time money for ongoing expenses from over $900,000 in 1989-90 to only $130,150 in 1993-94. We have increased staff efficiency through departmental restructuring, automation, and management. Since 1990 we have fully automated finance and administration, and are in the process of automating permit tracking and GIS, the Library and the Police Department. There are 31 fewer employees than in 1989-90. Every department has fewer employees today than in 1989-90. The Engineering Department functions have been merged Into either Planning or Building. Custodial services are provided by an outside contractor. Many engineering functions are provided by an outside contractor. Yet, thanks to increased efficiency, excellent employees and a renewed customer service emphasis, the service levels remain high. Other efficiency improvements are in progress. These include one stop shopping' in Planning and Building/Engineering, converting to low pressure sodium lights, development review streamlining, and regional services for library, police, animal control and cable television regulation. Another important action taken was the development of a One Year and Five Year Strategic Plan. This plan began in 1991-92_ The plan anticipates the fiscal problems discussed above and outlines specific actions. These actions include adopting a General Plan amendment for the 85/17 area, developing a five year revenue plan, and active exploration of cooperative regional efforts such as police services. The reality is that despite reduced expenditures, fiscal prudence, and increased efficiency the Town's fiscal future is bleak. The Town's revenues per capita are among the lowest in the County. Attached are the most recent revenue and expenditure projections. These projections incorporate current expenditure reductions and a continued conservative approach. The revenue projections do not include retail development at 85/17. The projections indicate a deficit of $354,747 in 1994-95 and a continuing annual deficit up to $2,104,600 In 1999-2000. Infrastructure improvements will be limited to the redevelopment area. These projections do not Include any additional State raids on Town revenues. The Strategic Plan provides a direction, but decisions should be made beginning with the 1994-95 Capital Improvement and Operating Budgets. The financial alternatives include economic development, new revenues and capital project financing. The Town must now decide either to let services decline or increase revenues. Economic Development One way to improve the Town's financial health is to encourage economic development. The two most immediate opportunities are the 85/17 General Plan amendment and the development of a conference center. PAGE 3 MAYOR AND TOWN COUNCIL SUBJECT: ACCEPT REPORT ON TOWN FISCAL SITUATION AND FINANCIAL ALTERNATIVES October 8, 1993 Retail development at 85/17 will provide a service to Los Gatos residents and raise revenues for the Town. Based on the Campbell experience with Fry's and Home Depot, this area has an $800.000 annual revenue potential. Box retail is not the only solution, but some type of retail development is needed to generate this revenue. If the 85/17 area is not developed the Town will not only lose the $800,000 in new revenue, but risks losing an additional $800,000 in current revenue when people shop at the new retail centers across the street in Campbell and San Jose. Some have suggested retaining this area as open space. The Town would need to purchase, develop and maintain the area if it is to be open space. Based on the $1 million per acre paid for Highway 85, the cost of purchasing the land would be close to S40 million. Another option is housing but with the State take away, housing costs more In services than It produces in revenue. A conference facility is the second opportunity for economic development. A conference facility would bring additional revenue to local businesses and Transient Occupancy Tax (TOT) to the Town. Potential sites for a facility include Los Gatos Lodge and the Toll House/Post Office area, The Lodge appears to be the most Immediate candidate. The Town could possibly assist In this effort through redevelopment bonds. The Chamber of Commerce is also developing a proposal to establish a Conference and Visitors Bureau to promote Los Gatos as a destination for the 150-300 person conference. A proposal seeking a portion of the Town's Transient Occupancy Tax to fund this Bureau will be presented to Council in January 1994. A successful Conference and Visitors Bureau and improved conference facility could produce $200,000 in new revenue annually. This figure is based on the Gilroy Conference and Visitors Bureau experience. TOT in Gilroy Increased 70% in the first year following the creation of the Bureau. The Town's TOT in 1992-93 was $427,500. A 70% increase would yield an additional $299,250. Even if $100,000 was required to operate the Bureau, the net to the Town is close to $200,000. Continuing the Downtown and Los Gatos Boulevard organizing activities will also Improve the economic climate. Town staff will continue to work with the Chamber of Commerce and the Business Improvement District in these endeavors. Revenue Alternatives There are several new revenue altematives. Attached is a report prepared by UCSC student intern, Amy Brown. Amy volunteered to compile and analyze this Information. Her report focuses on revenue alternatives used by cities similar in size. She met with the Clty Manager or Finance Manager in Campbell, Saratoga, Cupertino, Los Altos, Morgan Hill, Gilroy, Santa Cruz and Capitola. Her report compares the Town's revenues per capita with these other cities. Town revenues per capita are below average and lower than most of the comparison cities. She also analyzes a utility tax, landscape and lighting district, a franchise fee for San Jose Water, and an admissions tax. Her report also compares the business license tax in each community. Her analysis includes a description, potential yield, equity Issues, administration, and legal concerns. The report Includes a review of debt financing alternatives. She concludes with recommendations from the other communities and her recommendations. The Town should consider a franchise fee with San Jose Water Company or a utility user tax. A 2% franchise fee on San Jose Water Company would yield approximately $60,000 per year. A 2.4% utility user's tax on electric, gas, water, and garbage would yield $719,000 annually. The Town could also establish a Town -wide landscape and lighting district. While Campbell experienced some administrative problems, such a district charging $35 per parcel would yield $420,000. PAGE 4 MAYOR AND TOWN COUNCIL SUBJECT: ACCEPT REPORT ON TOWN FISCAL SITUATION AND FINANCIAL ALTERNATIVES October 8, 1993 There are other revenue alternatives not included in her report. A sidewalk assessment district and parking lot meters are two. San Jose's sidewalk assessment program notifies the property owner of a needed sidewalk repair, the property owner can repair the sidewalk or the City will invoice the property owner. Currently, the Town's Capital Improvement Program budgets $250,000 every other year for sidewalk maintenance. This $250,000 funds a minimal program. Parking meters are found in Capitola and Santa Cruz, but not in any of the other comparison cities. If meters were used only on the Town parking Tots and 25% of the spaces were reserved for unlimited long term parking, the Town would realize $594,257 in annual revenues based on a 50 cent per hour rate and 60% use. A table prepared by Building and Engineering is attached. Financing Alternatives The Town may want to consider financing capital improvements. Ms. Brown's report discusses various debt financing altematives and the legal considerations. The Town's Redevelopment Plan calls for $6 million in redevelopment bonds for infrastructure improvements within the project area. The Town could have an accelerated streets and sidewalk repair program using General Obligation Bonds. The Town's financial advisor, Emily Wagner of Miller and Schroeder, reports that recent research on successful bond issue elections in California indicate that voters will approve a bond Issues up to a maximum tax increase of $60 per $100,000 of assessed value. Using that figure, Los Gatos voters could approve a $20 million bond issue for various capital programs including streets and sidewalks. If the Town decided to use General Obligation Bonds to finance the purchase of open space at 85/17 the anticipated $40 million purchase price equates to a $120 per $100,000 of assessed value. This means an additional $600 tax on a $500,000 home. The $40 million does not include property development and maintenance costs. General Obligation and Revenue Bonds could be used to finance additional downtown parking. Additional parking is an economic development activity. Another alternative for parking lot construction is to give development and revenue rights to a private contractor. One example is the contractor builds the parking lot, receives revenues produced by the lot and retums it to the Town after 20 years. Assessment Districts provide another financing strategy. State law allows the establishment of community service assessment districts, parking assessment districts, police assessment district, library assessment districts, etc. For capital projects, assessment districts are created to borrow money for a specific project with the beneficiaries repaying the bonds. The Town's Parking Assessment District is an example. One problem with assessment districts is that the cost is transferred from the user of the facility to property owners adjacent to the facility. Charter City Converting the Town from a general law city to a charter city should also be considered. Charter cities have greater latitude in raising revenues and operate under their own charters whereas general law cities are guided by State law. For example, a charter city can solely increase the real property transfer tax and a general law city cannot. Charter cities also have greater land use control authority. General law cities are bound by State land use regulations. Charter cities have greater flexibility in determining their own land use regulations. Charter cities do not have to pay prevailing wages on contracts and can establish their own contract bidding procedures. Establishment of a charter city involves the creation of a charter commission, the development of a Town charter, and voter approval of the charter. Charter amendments also require voter approval. Local charter cities include Palo Alto, San Jose, Santa Cruz and Mountain View. PAGE 5 MAYOR AND TOWN COUNCIL SUBJECT: ACCEPT REPORT ON TOWN FISCAL SITUATION AND FINANCIAL ALTERNATIVES October 8, 1993 Note of Caution The economic impact of additional taxes should be analyzed when considering revenue and debt financing alternatives. Recent research conducted by the W.F. Upjohn Institute for Employment Research in Kalamazoo, Michigan found that at the local level a 10% increase in one community's tax will slash its growth in business activity by a much larger 10% to 30% in the long run. CONCLUSION: Los Gatos is at a critical decision point. The continuing State budget crisis has eroded Town revenues. Every indication is the State's crisis will continue for the next few years. The economic climate remains relatively stagnate. The Town has reduced expenditures, Implemented efficiencies and streamlined the organization. While additional efficiencies may be implemented, future expenditure cuts will be limited. To provide basic municipal services at current levels over the next 6 years and make important capital improvements requires additional revenue. This report outlines three general areas for generating revenue. These are economic development, new revenues and financing capital improvement projects. If the Town does not act, it faces potential fiscal insolvency and a deteriorating infrastructure. Study session comments will be considered in the Town Manager's 1994-95 Capital and Operating Budget recommendations. Attachments: 1. Projected Revenues and Projected Expenditures and Shortages -1993-94 through 1999-2000 without 85/17 Retail Development 2. Projected Revenues and Projected Expenditures and Shortages - with 85/17 Retail Development 3. Revenue and Expenditure Forecast without 85/17 Retail Development 4. Revenue Sources for Town of Los Gatos 5. Annual Revenue for Town Parking Lots 6. Preliminary Implementation Budget for Redevelopment Infrastructure Improvements Distribution: Susan M. Strehlow, Executive Manager - Chamber of Commerce, PO Box 949, Los Gatos CA 95031 Eric Morley, Legislative Advocate - Los Gatos -Saratoga Board of Realtors, 20454 Blauer Drive, Saratoga CA 95070 Carol Ann Weber, Chairperson - Trails & Bikeways Committee, 189 Ivy Hill Way, Los Gatos CA 95030 Barbra Toren, Executive Director - Business Improvement District, PO Box 291, Los Gatos CA 95031 1i s i § - s 8 cu N v M <') ae N q N N N ae 0 N 1 f' E O �j v 9. s op cow 8 8 �Op Epp Epp spy Q N 2 § N § Y N fh § to �E 2 A 7) C E! ? 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M1'ACHMEN14 II COMMUNITY FORUM PROCESS AND SCHEDULE The Community Forum Process has several steps. The steps and anticipated time required are: Survey A survey will be sent to all registered voters. The survey will provide registered voter an opportunity to express opinions on the financial options. This information along with the staff financial analysis will be presented at the community forums. Projected time to develop, approve, distribute, collect and analyze the survey is eight weeks. Community Forums The community forums are public working sessions. Participants will receive Town financial information, alternative actions and survey data. Using a combination of small and large group discussions, the forums will produce feedback on expenditure priorities and revenue recommendations. To do both small and large group working sessions will require extensive use of volunteer facilitators. One volunteer will be needed for every 5-7 participants. A forum with 50 participants would use 10 volunteer facilitators. The facilitators would be trained prior to the forums. Projected time to identify and train 10 or more volunteers, and publicize and conduct three to five community forums is eight weeks. Public Hearing Data from the forums and surveys will be analyzed and organized into a final report. The report and recommended actions will be presented to the Town Council for public hearing and action. Projected time to prepare report and conduct public hearing is five weeks. The entire community forum process including an additional three weeks for unanticipated issues is 24 weeks. MGRO60;A:\COMFORUM ' "1"t.,1'..S3 i'..t.;•--; ::).A1:' i ik C 4REMONT CHOICES: 'e/n Funding the Future ATTACHMENT 5 A November 11, 1992 Dear Fellow Citizens: We, your elected representatives, seek to bring together the citizens of Claremont as a committee of the whole to obtain your advice on an issue that will affect our community for the next decade. Our normal sources of money are not growing. Costs for the same services continue to go up. A combination of State rain on City funds and the effects of a lingering recession have resulted in continuing shortfalls in our budget. Over the last three years we have made many cost reductions, including consolidation of jobs, layoffs and increased privari7anon. We have deferred expenses, such as vehicle replacements and maintenance of roads and parks, but these are only one-time savings that could end up costing us more in the future. Our choices are to continue to reduce service levels or to find more money to maintain what we have. Examples of servic level are police response times, ongoing resurfacing of streets, park maintenance and readiness to respond to disasters The magnitude of the problem in the City's General Fund is projected to be about $1,500,000 per year for the foreseeable future. We will never be able to grow out of the problem through commercial development, even in the best of economic times. Furthermore, we know the State will continue to raid city funds to pay for its programs. We need to come together as a community to discuss our present and our future. To this end, the council has scheduled seven neighborhood meetings and one town meeting, a listing of which is at the bottom of this page. In addition, we will I pleased to attend club or neighborhood meetings. If you have any questions about the process, or would like more inform Lion, you can call the City's Community Information Coardinarar, Mike Maxfield, at 399-5497. After all the ideas and suggestions are considered, the council will make the tough decisions you elected us to do. We will provide directions to the city manager to prepare the 1993-95 budgets consistent with the expectations of our community. We look forward to hearing from you at one of the meetings. We all have a stake in this citizen process, since we will define what kind of city we will leave to our children and what kind of city we will enjoy in the future. Sincerely, Diann Ring Algird Leiga Mayor Maya Pro Ten Nick Presecan Cotmcilmember Suzan Smith Judy Wright Causcilmember Camcilmember r-� ftCLAREMONT CHOICES: I.. Funding the Future Monday, November 30 Tesday, December 1 Wednesday, December 2 Monday, December 7 Tuesday, December 8 Wednesday, December 9 Thursday, December 10 Town Meeting Saturday, December 12 7:00 p.m. 7:00 p.m. 7:00 p.m 7:00 p.m. 7:00 p.m. 7:00 p.m. 7:00 p.m. 10:00 a.m. Meeting Schedule cr more unformat:cn, call 399-5497 Western Christian School, 3105 Padua Avenue Vista School, 550 Vista Drive Youth Activity Center, 1717 N Indian Hill Boulevard Oakmont School, 120 West Green Street Sumner School, 1770 North Surma' Avenue Claremont Presbyterian Fellowship Hall, 1111 N. Mountain Ave. Chaparral School, 451 Chaparral Drive Bridges Auditorium, 400 North College Way O'•.r the last several years, the city council has •eloped a long range vision for the city, a sum- mary Nhich is included below, We invite you to L:._. a Iook at it and see how it compares to your ex- pectations for the community. Does it include all the things you want Claremont to be? Or perhaps it goe: too far. Cse the space on the next page to write down your thoughts. Because financial resources have always been limited in Claremont. and will be especially so in the coming years. priorities have to be set and choices made about how we use those resources to acheive the community vision. Making those choices will evoke discussion and debate because what one person con- siders expendable, another will not be able to do without. What parts of the community vision do you think are most important? How should they be paid for? Write down your thoughts on these issues, too. The discussion at the neighborhood meetings will focus on Claremont's community vision. the financial resources available to the city, and ways for balancing the two. Your input as a Claremont citi- zen is important to this process, so we hope you choose to participate in the meetings. If you attend, brink the thoughts you write down on the next page as a reference for the discussions. If you can't attend, you can still contribute to the process by sending us your comments. We look forward to hearing from you. COUNCIL VISION Quality of Life To maintain Claremont's desirable college town living environment for all citizens by preserving its historic and social fabric, residential character, and small hometown atmosphere, while ensuring that new development reinforces both the quality and economic strength of the community. Community Safety and Protection To safeguard the health. safety, well-being, and physical protection of local residents and property. To provide places and activities for our youth to grow up in a healthy environment. Infrastructure To provide and maintain adequate streets, sidewalks, public transportation, sewers, parks, and public buildings. Economic Development To provide a climate that encourages healthy commercial areas that capture more of the purchasing power of the community and creates more destination commercial activities to capture regional money. Environmental Quality To encourage development projects which reflect the city's commitment to quality design, preserva- tion of existing neighborhoods, parks, historic structures, open space, trees, and resource renewal. Financial Stability To become a self-reliant community with a sound economic base. To prudently manage the city's financial resources and provide for adequate reserves. Responsiveness of City Government To provide the best possible level of service to residents through the joint effort of all departments working with other governmental agencies, local businesses, community groups, and the colleges. To maintain a well -trained, responsive, and courteous workforce, sensitive to community concerns. Citizen Particiration To actively recruit and involve residents in the local government decision -making process, and to Maintain advisory commissions and committees for that purpose. Regional Cooperation To work with neighboring communities and other governmental agencies and the school district in areas of mutual concern and efficiency. This spac provided for you to write down your thou regarding Claremont community vision, including your expectations and priorities for the community, as well as any ideas for how t city might balance the cost of achieving this vision with existing and/or new sources of income. You are encouraged to bring these written comments with you to any of the neighborhood meet ings you attend. If you can't attend any of the meetings, please send your comments to: Citizen Vision Response City of Claremont P.O. Box 880 Claremont CA 91711-0880 Thank you for your interest. Please include the following information so we can respond to your comments. Thank you. Name: Address: Printsd on Recycled Paper uogedi3IUd Uazwo Jot lsanbaa a cn;ng ay; Nuzpun, j :S3310H31NOW31:1Y13 I I L I6 VD INO1N32IY10 IN3aiS32I SES 'ON .LI$13d VD 'INOWE 11r D mVd 3OVJ.SOd 'Sf1 L11OS S11 11VD 3J.Y1! X1111I 0880-I.I.L16 e0 WawaJef0 098 xog 'ad aflueAy PJEAJEH L0Z 1NOV(HV13 AO A1l3 r- For more information, you can call the City at 399-5497 The choices you hetp make r- — — —today will determine the kind of Claremont you'll have tomorrow The City of Claremont has some difficult choices to make about its financial future. With our normal sources of income not keeping pace with our costs, we need to take a close look at the quality of life we want in our community -and how we go about paying for it. The citizens of Claremont are invited to participate in this process by coming to one of a series of neighborhood meetings. By providing the Ct y Council with your input and ideas, you'll help make the choices that will define what kind of community Claremont will be for years to come. Mon, November 30 Tues, December 1 Wed, December 2 Mon, December 7 Tues, December 8 Wed, December 9 Thurs, December 10 Town Meeting Sat, December 12 Meeting Schedule 7:00 p.m. 7:00 p.m. 7:00 p.m. 7:00 p.m. 7:00 p.m. 7:00 p.m. 7:00 p.m. Western Christian School, 3105 Padua Avenue Vista School, 550 Vista Drive Youth Activity Center, 1717 N. Indian Hill Boulevard Oakmont School, 120 West Green Street Sumner School, 1770 North Sumner Avenue Presbyterian Fellowship Hall, 1111 N. Mountain Ave. Chaparral School, 451 Chaparral Drive 10:00 a.m. Bridges Auditorium, 400 North College Way CLAREMONT CHOICES: Funding the Future 430 CLAREMONT CHOICES: Funding the Future BUDGET PRESENTATION OUTLINE Prepared by: Glenn Southard City Manager How is city government Organized to provide local services? Refer to Chart #1 - Organizational Structure II How are city services are funded? 1. City operations are financed 48% by taxes (property, sales, and motor vehicle registration), 38% by fees (user charges and assessment district fees), and 14% by other sources (grants and other funds). Refer to Chart #2 "How Services are Funded" 2. City operations are accounted for in 26 separate funds or "account groups". 3. Expenses for general tax supported services are accounted for in the General Fund, which represents 52% of the city's total operating budget. Refer to Chart #3 "General Fund Expenditures vs. Total Operating Budget" 4. Problems have only been identified in the General Fund portion of the budget which must be addressed. III Where do General Fund revenues come from? 1. In 1993-94 General Fund revenues are expected to be $8.5 million, and 72% of this amount will be received from five sources: a) Property Tax* - $2,050,000 b) Sales Tax - $2,300,000 c) Motor Vehicle Registration Fees - $1,100,000 d) Hotel/Motel Tax - $350,000 e) Tax on Local Businesses - $375,000 *Note: 15% of property in Claremont is exempted from paying property taxes. 2. $1.3 million in fees from the citywide Landscaping and Lighting District are accounted for in a separate fund. Refer to Chart #4 "General Fund Revenue Sources" -1- IV Where do General Fund revenues go? 1. 80% of expenditures are salary related. 2. 55% of expenditures are related to Police services. 3. Human services programs for which a fee cannot be charged represent 3%. 4. Planning and Engineering services, which are not development related, represents 14%. 5. Maintenance related to streets, public buildings, and landscaping not covered by Landscaping and Lighting District fees represents 9%. 6. General Administration and General Government expenses such as legal fees, insurance, and support services for the operating departments represent 14%. Refer to Chart #5 "General Fund Expenses - By Category" "General Fund Expenses (5-yr change) - By Department" V What is the problem? 1. Operating Shortfall A $1.5 million shortfall between General Fund operating revenues and expenditures is projected for next fiscal year, and a similar amount each year thereafter. This amount is 15% of the expenditure budget, and it will increase if the Legislature continues its practice of taking local revenues to balance the State budget. Refer to Chart #6 - "General Fund Revenues vs. Expenditures" (5-yr projection) A. Revenues Stagnant or Decking Basic General Fund tax revenues are flat, growing an average of less than 2% over the last five years while the average increase in CPI over this same period is 4.5%. Contributing factors: a recessionary economy resulting in decreased retail/auto sales, real estate transfers, and development related activities; increased hotel competition from the Ontario area; little vacant land remaining for new development. Example: A survey of sales tax revenues for ten surrounding cities showed a per capita average of $102 compared to $65 per capita for Claremont. Refer to Chart #7 "Change in "Big Five" Revenues vs. CPI" -2- B. State Take Aways Over the last five years, the Legislature has taken $1.1 million from Claremont's revenue budget for State programs. During this time, the Legislature has continued to place new requirements on local government and mandate new programs without additional funding. Indications are that the State will take additional local monies in 1993-94. Refer to Chart #8 "Cumulative State Government Take-Aways from General Fund" C. Utilization of One -Time Funds and One -Time Delays To offset revenue losses, the city has utilized on the average of $640,000 per year in non -reoccurring (one- time) revenues which equal 7% of the budget. These one- time funding sources have declined and are no longer available. To balance the operating budget and retain current service levels, projects have been delayed, positions left vacant, and supply budgets frozen. These created a one-time savings which are no longer available. Refer to Chart #9 "One -Time Revenues as a Percent" D. Increases in Cost of Providing Services Although the average five-year growth in expenditures, including salaries, has been in line with the increase in CPI, the cost of providing General Fund services did exceed the 1.8% average growth in General Fund revenues causing a funding gap. Some expenses, such as legal fees and insurance, did exceed the 4.5% average CPI increase. Refer to Chart #10 "Increase in General Fund Expenditures" 2. Infrastructure Backlog A backlog of deferred infrastructure maintenance, totalling $6 million, currently exists. A ten-year "catch up" plan has been developed requiring a financial commitment of $735,000 each year. Although a top budget priority, sufficient funding has not been available to make this commitment. This is in addition to $629,000 in routine maintenance required annually to keep the backlog from growing. -3- A. Maintenance Deferred To offset revenue losses, maintenance projects have been deferred creating the $6 million backlog. Gas tax revenues have been diverted to operations rather than street resurfacing projects. The city's annual commitment to infrastructure maintenance should be $1,485,000: $735,000 to eliminate the backlog over a ten year period, and $629,000 to keep the backlog from growing. Only 70% of this amount, or $964,000, is included in the 1993-94 maintenance budget. Refer to Chart #11 "Infrastructure Needs - Deferred Maintenance" 3. Insufficient Reserves Reserves set aside for unexpected costs (such as might result from a natural disaster) are $786,000, representing less than 10% of the General Fund operating budget which is insufficient. A goal of 15% has been established. On a $10 million budget, the operating reserve should be $1.5 million. A. Reserves Deferred The city has historically used reserves to balance the General Fund operating budget. As a result, the "rainy day fund" is low. Replenishing the reserves to reach a goal of 15% should continue to be a high priority. Refer hart #12 "Reserves" 4. No Fun or New Facilities Approximately $10 million in new city facilities have been identified. A financial commitment of from $600,000 to $1.2 million per year for 10 years would be necessary depending on the projects selected. Due to lack of funding, no reserves have been established to pay for new facilities the community may need in the future. v What have we done to address problem? The following examples are taken from a list of fifty measures taken by the operating departments which resulted in more efficient delivery of services, cost cutting, or cost capping. -4- 1. Reductions made in work force. Over the last three years, the city's work force has been reduced by 42 positions, affecting all departments. The number of city employees per 100 population is now .5 which compares favorably to an average of .5 for ten surrounding cities. Refer to Chart #13 - "Staffing Reductions" 2. Operational efficiencies continue to be implemented wherever possible. Examples: Established a minimum staffing plan based on calls for service thus reducing overtime by 25%; converted Police cars from gasoline to propane; maximum usage of Asset Forfeiture Funds to purchase crime related equipment and fund the Narcotics Enforcement Team officer. Acquired sewer video equipment to more readily determine location and severity of repair problems; implemented new work schedules in sanitation which reduce overtime and holiday make-up staffing; implemented direct dial telephone system thus eliminating the need for a central telephone operator. 3. All departments have been reorganized including several consolidations for cost savings and increased efficiency. Examples: Human Services Department consolidated with the Community Services Department; Economic Development Department consolidated with the Community Development Department; Warehouse operation reorganized and moved from the Community Services Department to the Financial Services Department. 4. Philosophically the city supports the use of the private sector to provide city services whenever contracting can produce the same or an increased level of service at a lower cost. Examples: Custodial, mowing, street striping, and minor street repairs are services now performed by private contract rather than city employees. 5. Work plan items have been reviewed and put "On Hold" where staffing or funding shortages exist. Examples: City Hall accessibility project; Youth Master Plan; Historic Preservation Ordinance; computerization of vehicle maintenance system. -5- 6. All fees for services are reviewed annually and increased where appropriate to cover increased costs of providing the service. Examples of recent fee increases: Business License Permits; all development related fees; sanitation fees; sewer fees; cemetery fees; recreation program fees; assessment district fees. 7. We are attempting to rebuild the general operating reserve by trying to commit $100,000 each year in the budget to this purpose. 8. Capital projects have been deferred or delayed as revenues have decreased. Examples: Infrastructure maintenance and new facilities such as sports fields, Human Services Building, and traffic signals. VII Financial Summary of Problem 1. Operation Shortfall 2. Deferred Maintenance Shortfall $1,500,000 400,000 Total Operating Budget Problem $1,900,000 3. No reserves for new facilities established. An annual set -aside of from $600,000 to $1,200,000 is a realistic goal for the age and size of this community. Refer to Chart #14 "Summary of Problem" VIII What are the alternatives? 1. Increase revenues to maintain current service level with adequate funding for infrastructure and reserves. Options include expanding or sunsetting existing Landscaping and Lighting District and/or implementing new taxes. 2. Reduce expenditures and reduce service levels. Options also include close buildings; reduce hours of operating; defer infrastructure maintenance; undertake no new projects; reduce commitment to rebuild reserves; sell assets. -6- 3. Change method of service delivery. Options include contracting with Los Angeles County for services such as Sheriff, building permits, etc., joint provision of services with school district or other agencies. 4. Make service fees cover all costs. User fee based government is where users are charged the full cost of all services including general government services. This approach would have the most impact on police and community development services. 5. Combination of approaches. Pick and choose to cover operational and infrastructure gaps. Refer to Chart #15 "Alternatives" IX Conclusions 11/92 1. General Fund revenues are stagnant, and not keeping up with inflation (based on Consumer Price Index). 2. State cuts in local revenue have significant impacts on the city's budget; there is potential for more cuts. 3. Expenditure growth has been contained and is below CPI. 4. Deferred infrastructure maintenance backlog is serious and growing. 5. No money available for new facilities or programs. 6. Reserves are insufficient and in need of rebuilding. 7. The majority of General Fund expenditures are directed toward providing law enforcement services. Refer to Chart #16 "Conclusions" -7- LIST OF CHARTS 1 Organizational Chart 2 How Services are Funded (all funds) - Column Chart 3 General Fund Expenses vs. Total Operating Budget - Pie Chart 4 General Fund Revenue Sources - Pie Chart 5 General Fund Expenses by Object - Pie Chart General Fund Expenses by Department (5-yr change) - Bar Chart 6 General Fund Revenues vs. Expenditures (5-yr projection) - Bar Chart 7 Change in "Big Five" Revenues vs. CPI - Bar Chart 8 Cumulative State Government Take-Aways from General Fund - Bar Chart 9 One -Time Revenue as a % of Total General Fund Revenues - Line Graph 10 5-year Increase in General Fund Expenditures vs. CPI - Bar Chart 11 Infrastructure Maintenance: Money Needed vs. Money Available - Stack Bar Chart 12 General Fund Reserves - Line Graph 13 Staffing Reductions - Chartperson 14 Summary of Problem 15 Alternatives 16 Conclusions -8- C 0 CU N t 0) 0 I , 0 E V 0 c op 3 a°'o O j) 4'r .g U cis 8� c E55 0 Q v z 0 2 c up r 0 Jp .-1 cv ca La U L L O 5 o t h W 6 z Z tl1 C) C) LL -J J N C) C) LL N 0, C7 CA CV Cr) O) cn c O to 0 0 Units of Government C7 • T LA T e e O O 0 N Ar AT T 1 1 0 0 0 om) O O r Q 0 O O 0 0 0 0 0 0 T O N CO CO O In N N Q) O 0 0 0 0) O 0 CO T T T oo 0 0 C) O o- O O O Oo 0)) Lf) CO N CO N N O CO Op O O pO O O O OO O O O p O O 00888 �p Q� CO r fz CV f� N - LLI N Cr) - CO U) Oa) T N r Lt) C'r) Cr) N O O O O O O O O O O O O O O O op O pco Cr) cTTO Oa' cc') C) CO 11) 0 CO V' In T in V. V' N C7 T O Cr) IN t O 0) C) n. c CM C 'u) as (/) o 6lc • _ may •E o Z c < o o 'a c ▪ a) v) o 3 E 0 Q a .c o� ro (j U' Z, o _. L m p) ! m m L m F- C) O ✓ c E c •� m ccd c 3 E CD o 'o � c '3 cC c Q) 0 m 0 C) C) a _ a w m U ii Q( CC cn 0 a. CC w TOTAL ALL FUNDS c chart +•; I• iCLAREMONTC7i0ICES: I ,/: Funding the Future City services supported by other funds General Fund Expenses vs. Total Operating Budget General Fund supported services Total City Operating Budget (FY 1992-93) $16.6 million chart 4 CLAREMONTCHOICES: '►1..t Funding the Future General Fund Revenue Sources "Big Five" sources sales tax secured property tax motor vehicle in -lieu transient occupancy tax business tax all other sources Total General Fund Revenues (FY 1993-94 projected) $8.53 million chart I*r: CLAREMONTCHOICES: NW I: Funding the Future 100 80 60 40 20 0 General Fund Expenses By Category (percent of total expenses) salaries & benefit all other services & contracts 9% supplies & training 5% By department (5-year change) FY 1988-89 (actual) 6% FY 1993-94 (projected) Human Services - 3% Maintenance - 9% Community Development -14% Finance/Warehouse - 5% Administration/Gen. Gov't - 14% Police /04F (4i CIAFtEUONT CHO4CES: �i�lFunding the Future 12000000 11000000 N L co 10000000 0 0 . 9000000 8000000 chart 6 General Fund Revenues vs. Expenditures (5-year projection) rn tn rn c) Fiscal Year co t� rn rn 0) v) ❑ Revenues II Expenditures chart ' '.sIr CLAREMONT CHO4CES: !kilt Funding the Future Change in "Big Five" Revenues vs. Consumer Price Index ,0 5 y -10 , ,,, , , , , ,,,,,I, 1 1 1 r r 89-90 90-91 91-92 92-93 93-94 (projected) Fiscal Year 0 "Big Five" —�— CPI ,2 F/�� CLAP EUONT CHOICES: Zr al Funding the Future Cumulative State Government "Take Aways" from General Fund 4000000 3000000 N 2000000 1000000 0 88-89 89-90 90-91 91-92 92-93 93-94 94-95 95-96 96-97 Fiscal Year Total "Take Away" by 1996-97 $3,587,000 cart 8 1%10,, it �.;; a/411E11ONT CHOICES: Ak ,l .Funding the Future One Time Revenues as a % of Total General Fund Revenues 14 12 10 a a 6 4 2 0 y 88-89 89-90 90-91 91-92 92-93 93-94 Fiscal Year chart 9 /•' (+r CLARQAONT c HO CES: Funding the Future 5-Year Increase in General Fund Expenditures vs. CPI 10500000 -" 10000000 9500000 i 9000000 -" p 8500000 8000000 -f 7500000 �^ 7000000 r- 1988-89 Fiscal Year 1993-94 (projected) char 10 ❑ Expenditures Expenditure • Growth Equal to CPI . i1r cu►R�+ONres+acE3: I� 11:I Funding the Future Infrastructure Maintenance: Dollars Needed vs. Dollars Available 1500000 1250000 1000000 as 750000 O 500000 250000 0 Amount Needed Amount Budgeted Fiscal Year 1993-94 chart 1 hart 12 CLAREIIONTCHO10ES: !k,1: Funding the Future L 0 General Fund Reserves (projected as of June 30, 1993) 1750000 1 1500000 1250000 1000000 750000 500000 250000 0 Actual Goal Reserves Amount �o�Lf� , `1; CL ARE ONT CHOICES: ft ' Funding the Future 200 150 # of Authorized 100 Full Time Positions 50 0 Staffing Reductions June 1989 Present chart 1; Alt�' ' C.ARE': iT CHOICES: gigPin the Future Summary of Problem Chart 14 • Operation Shortfall $1.5 million • Deferred Maintenance Shortfall .4 million • Total Operating Budget Problem $1.9 million • Set -aside $.6 million to $1.2 million per year for new facilities chart1 CLARE IONT CHOICES: Funding the Future Alternatives • Increase Revenues • Reduce Expenditures and Service Levels • Change Method of Service Delivery • Service Fees to Cover All Costs • Combination /e,;";,\ chart 6 tt' CLAREMONT CHOICES: 1'�p ll: Funding the Future Conclusions • General Fund Revenues Stagnant, Not Keeping Up with C P I • State Cuts Have Significant Impact; Potential for More Cuts • Expenditure Growth Contained, Below CPI • Deferred Maintenance Backlog Growing • No Money for New Facilities • Insufficient Reserves • The Majority of General Fund Expenditures are directed toward providing law enforcement services >, J C - CL v ` ^ ." a0 "0y .G y L.., C cL)) a) O' ai g °° . y E .Q 6.� 0., a.) E?,y°o,0x, o•om 0m c c+ °"43 0 •m Tvy ' 3s y m G-C �wm m> .a g O L co 2 >, a)63 01 V -a •i-• E x.� V m •> x 0 >, a) I.m 00 O -6.0 w m c0 i. ., >-, C +, _C m y� O 4.' y O 'Q -c i0' m rWj t O amG ° •, . o > 6, a y .� — 1 .a .a a ,.0 0 o m^00 0 y aE o C d'� o m_ y O aA�P.,>,�.4 Z3Ew53m grit) .a 0O! �.y -N Cs- :1 Q 'd .ON 4.' a a ,.__m CD 0 .a o o a) oo^a Alb > - m m - .. 0) y ai CO :b �a qs •C 0 .a •;a)°Cc ° E•�mm y agi° maE��y E�•o� 3 �M occ ai0yCu aym >, m> m 0 " m o•y off' Z ,3° tb.22 y m y= y o,Exy. oy. ° 0 c c +, cam_ 0_O4 5s Fes, y .Zfa).m oyy^c5�G' 0°' 3 a4 0 y y' a) O s O 0 a) 10 o .ar �m�m� aa.. 44 _0 00 ab d O O aco a)) ° 1. 'A ^7, 0 u o as d p 3 as .•. 'VS m m 0 0 '�,'� ... s; '.• m OZ 3 w 5 O _ O ,�"' y '.�. F. Q• Lb A .0 i. .�: ' O � y y 0 � �' to S c) *m�,=to rm5' +gy•sad G�p'O,_,,mw O ♦a y U }; eqm O� +a 4: 0 A 1:1oo A m 21 .3•... Cbe ^y •'O L4y 00+i o OO50Cays 4yP. - O ga „,�2'S1�' m'> oal m u m ++a O. m aS 4a +a t a3 bmo E ) m '_ O ° 'C „0 i Ccj y� C .2=2w /( 43 y y • O O Wi g t g3• 0 n0.,0- ,p. y ^_.�.,& 04 yy o m o +� �� °� C 0 y � ra 1 m 'fill m - 0o=0 U o m 6J y .0 i 'G L:.r 1 m V 4 ]L C O m �•� o o� C o G.0 Cm Wt>,o'� do ' m v g O Qc.O.U41.3. ei ea y o0... Y C y y.5 .3 y yr� sy., — W') UuC --CSo ayiyae.: y;'m.4ay , CC m0 0 3 m.2 Ex.J'• .§b ,2 E E 1 Depot Transit Center Open for Sen ice The Claremont Depot Transit Center is now open following a Grand Opening ceremony held in Decem- ber. The Depot offers access to a variety of local and commuter transit services, including Foothill Transit bus lines, PVTA's Valley Connection and Get About dial -a -ride shuttles, and Metrolink commuter rail. Five of Foothill's lines now serve the Depot along First Street, including the 690 commuter bus to Pasad- ena, the 480 into downtown L.A., and three local lines — 192, 194, and 185 with service to the Montclair Transit Center. Metrolink provides weekday service between the Depot and L.A.'s Union Station. There are currently three trains from Claremont each morning with three return trips in the evening. With the opening of the Montclair station on February 22, service will increase seven trains in each direction, including reverse ection and mid-morning/early afternoon trips. Still to come at the Depot are the paving of the P.S. Hundreds turned out to celebrate the Grand Opening of the Claremont Depot Transit Center. 379-space parking lot at College Avenue and First Street, an annex of the Transit Store providing trip planning information, public art pieces, and a small cafe. For more information about service from the Depot, call the original Transit Store at 622-8686. Household Hazardous Waste Roundup Budget constraints may be keeping the City from having its own waste collection day this year, but residents can still dispose of their household hazardous waste at a county -sponsored collection on Saturday, February 20. Materials can be taken to Mt. San Antonio College, Parking Lot F, at the corner of Temple Avenue and Bonita Drive in Walnut. Hours of operation will be from 9 a.m. until 3 p.m. It is illegal to dispose of any hazardous items, including used motor oil, in regular trash collections or by leaving it at the Lion's Claremont recycling center. For more information on this and other roundups, please contact the County at (800) 552-4286. Senior Apartments Set to Open This Spring The recently re -named Claremont Village Senior Apartments project at the corner of Indian Hill Boulevard and Santa Fe Street is set to open this spring. Nearly half of the 154 units in the project are reserved for low- and very -low income residents, thanks to the participation of the Claremont Redevelopment Agency. Information about renting one of the apartments is available by calling (800) 624-0236. Claremont City Council Diann Ring Mayor Algird Leiga Mayor Pro-Tempore Nicholas Presecan....Councilmember Suzan Smith Councilmember Judy Wright Councilmember Glenn Southard City Manager The newsletter of the City of Claremont is published and distributed as a public service to city residents. Send any questions or comments to: City Manager's Office, CITY LETTER, City Hall, P.O. Box 880, Claremont, CA 91711-0880. itw Printed on Recycled Paper CLAREMONT CITY LETTER City Hall P.O. Box 880 Claremont, California 91711-0880 CARRIER ROUTE SORT BULK MAIL U.S. Postage PAID Permit No. 535 Claremont, CA 91711 RESIDENTIAL CUSTOMER Claremont, CA 91711 "meetings" con't from page 1 City will pursue for the future. These are all related to the key themes that emerged from the public's discus- sions including continuing to create more efficiencies in how City programs are run, developing additional cooperative efforts with other agencies, increasing the use of volunteers, strengthening the community's business base, and insuring "fair share" participation in any new taxes or revenues. Cost Savings Not Enough; Additional Revenues Needed The general conclusion among the citizens was that the only realistic way to close the budget gap that will exist as of July 1, without cutting City services, would be to implement a significant source of new revenue. Many thought that a utility tax would be an appropriate way to do that. The City Council agreed, and so it directed staff members to begin the process for considering the implementation of such a tax. In addition to discussing financial issues, citizens were asked to comment on the Council's "vision" for the community. This served two purposes: First, it allowed the Council to see if what it envisions for the community is in line with the public's expectations; and secondly, it helped the participants' focus on what they wanted for the City so they would be better prepared to talk about how to achieve it financially. Goal Was to Get Public Input, Ideas The format of the neighborhood meetings was designed to allow and encourage as much public input The bottom line, then, is that current sources of as possible. In all, seven of these meetings, totaling General Fund revenue are expected to fall at least $2 nearly 21 hours of discussion, were held. Participants million short each year of what is needed to operate the were randomly assigned to small groups, provided with City at its current level of services, add more youth various written and oral information about City fi- programs, build a prudent level of reserves, and ade- nances, and then guided through the brainstorming/ quately address the physical requirements of our discussion sessions by citizens who had volunteered to streets. Another $2 million could be used to hedge be facilitators. All ideas were written down and became against the likelihood of additional state take aways, part of the official record. City Council's and staff's make City building's more accessible, and eliminate the role was simply to observe, listen to what was being Landscaping and Lighting District. Assistance to the said, and answer an occasional question. A special school district would be on top of these amounts. thanks to the facilitators who generously volunteered Deciding what and how much to fund is the difficult their time and skills to help develop and conduct this choice now before the City Council.a process. The final Town Meeting was more like a typical public hearing. After each Council member spoke on a different theme, providing a recap of what occurred at the neighborhood meetings, members of the public ad- dressed the City Council. Finally, the Council discussed the direction the City should follow in developing future budgets. A copy of the minutes of all eight meetings are available for review in the Claremont branch library. Process Gets Good Marks The process has been deemed a success by the City and the public alike. In fact, citizen response has been so positive that these type of meetings will most likely become a regular event in Claremont. Thank you to everyone who took the time and made the effort to participate and help make Claremont the best it can be.; "budget crunch' con't from page 2 Budget Shortfall Isn't Only Problem The shortfall in the general operating budget is just one of the financial hurdles that the City currently faces. Another is the insufficient level of reserves to cover unexpected costs such as might result from a natural disaster. Our goal is to have an amount equal to 15% of General Fund budget in reserves. We currently have $786,000, less than 10%. We would also like to set aside $100,000 per year until the 15% mark is achieved but the proposed 1993-94 budget does not include that item. A backlog of sidewalk and street maintenance projects totaling $6 million is another liability for the City. A ten-year plan developed to eliminate that backlog requires a financial commitment of $735,000 per year. In addition to that amount, another $629,000 in routine maintenance is required each year to keep the backlog from growing. Unfortunately, the City is approximately $400,000 short of being able to com- pletely fund these efforts. Finally, improvements to city facilities are needed to make them accessible to citizens with disabilities as required by the Americans with Disabilites Act. These changes, as well as those needed to insure city build- ings can meet the current and future needs of the community, will require a commitment of $600,000 to $1.2 million per year for the next 10 years. 7 Bottom Line — $2 million to $4 million "utility tax" con't from page 1 issues such as dealing with future state take aways of City revenues, eliminating the Landscape and Lighting District assessment, additional human services programs, and reducing the backlog of street maintenance projects. The tax would be levied as a percentage of the utility fees paid by residents, businesses, and all other organiza- tions in the city, in essence, a "sales tax" on utilities. The tax could be assessed against usage fees charged by providers of telephone, electrical, natural gas, water, and cable television service. A rate of between 4% and 9% is being considered which would generate from two to five million dollars for the General Fund each year. Amount Not Yet Determined Hearings on the proposed utility tax will be held on February 9 and 23 beginning at 7:00 p.m. in the City Council Chambers. The exact rate of the utility tax will depend on what the City Council wants to accomplish in terms of service levels and other projects. Approximately $2 million per year would be needed to close the currently projected budget gap (maintaining the current level of police services), provide more human service/youth programs, reduce the maintenance backlog, and keep up with current maintenance projects. On top of this is the likelihood of the state taking away another $500,000. If the Council wants to eliminate the Landscape and Lighting assessment, another $1.3 million would be needed to replace the lost revenue. Making City facilities accessible to citizens with disabilities and otherwise keeping buildings in good condition requires from $600,000 to $1.2 million per year. Paying for programs to assist the school district might also be considered. Other issues that will be discussed include whether or not the utility tax should continue indefinitely or have a time limit, and if there should be any exemptions from paying the tax, particularly for low-income residents. Hearing Dates Set New state law requires that two public hearings be held before a city adopts any new or increased general tax. The hearings for Claremont's utility tax will be held on Tuesday, February 9 and 23 at 7:00 p.m. in the City Council Chambers, 225 West Second Street. Written comments will be accepted until February 23. Comments should be addressed to the City of Claremont, attention City Clerk, P.O. Box 880, Claremont CA 91711-0880. Anyone with questions about the proposed utility tax or that would like to review a copy of the proposed tax ordinance can contact the Assistant to the City Manager, Betty Sheldon, at (909) 399-5462.; "actions" con't from page 5 Increase Revenues Raising additional revenue was generally viewed as the only realistic way to avoid cuts in the level of City services. It was made very clear, though, that any methods used to raise this money should be as equi- table as possible, insuring that everyone in the commu- nity would pay their "fair share." There was also support for adding or adjusting fees for City services so that the cost of providing services is paid directly by those who benefit. The passage of Proposition 13 drastically changed the way cities are funded, especially in terms of taxes. In response, Claremont began to look at new ways to pay for the services that citizens wanted. That included a much more business -like approach to developing and charging fees for service. More and more, the true cost of providing services, including overhead and adminis- tration, is paid directly by those who are using the service. That leaves more General Fund revenues available to pay for general services that benefit the entire community. In setting fees, however, care is taken not to set them so high that it discourages people and businesses from using the service. The best way to do that is to operate the services as cost effectively as possible. All departments in the City will continue to review their current fee structures and look for opportu- nities to add new fees. But new fees, plus all the other cost-cutting and revenue -raising efforts outlined above, simply won't be enough to fund existing service levels and plan for future needs.. Implementing a new tax appears to be the only remaining option. Because the public wanted a tax that was as equitable as possible, it was felt that a utility tax would be the best alternative. Everyone that uses utility services would pay the tax, the percentage rate would be the same for everyone, and because it's based on usage, consumers would have some control over how much tax they pay. That would also help encourage conservation. The process to consider implementing the tax is already underway. A draft ordinance has been written and is available for review, and two public hearings have been scheduled for February 9 and 23., i 6 • a positive impact on the upcoming i._.iget or future budgets, and work to implement those that make sense. Change Methods of Service Delivery Very often, changing the way a service is deliv- ered results in cost efficiencies. Over 100 different suggestions for changing City service delivery methods were made by the public, including using volunteers (more on this in the next section), contracting with the county for services such as police protection, combin- ing efforts with other cities and agencies to provide certain services, and using private contractors. The idea of using county sheriffs met with mixed reaction, however, with just about as many people opposing the idea as supporting it. The City supports the concept of using private companies to provide City services. Nearly all of the landscape and building maintenance work in the City has been recently contracted out to private firms. The key is to make sure that when we contract for a service, the public receives the same or higher level of service at a lower cost. Claremont has provided transit and mental health services in conjunction with neighboring cities for a number of years, and often participates with other cities in studying regional issues such as solid waste disposal and transportation. Here in town, the City and the School District work together in several areas to provide programs. Staff will be exploring the development of even more joint programs with other cities and agencies. The City Council and School Board will be having joint meetings to discuss cooperative ventures that would help solve immediate and long-term revenue problems; maintenance efforts are a good candidate. Use of Volunteers The idea of developing a corps of volunteer workers to perform certain City functions was men- tioned quite often. Suggested tasks for the workers included landscape maintenance, fixing sidewalks and potholes, teaching DARE, and staffing the Youth Activity Center. The City makes extensive use of volunteers right now, about 40,000 hours worth each year. Volunteers assist the police department through its reserve and Retired Senior Volunteers Program, provide a good deal of support for Human Services programs, and include every city commissioner. Their combined efforts are equivalent to $1 million worth of labor for the City annually. To help increase the use of volunteers in the City, a committee will be formed to look into the feasibility of the idea and then prepare a plan for implementing it. They will tackle such questions as what kinds of tasks volunteers could do, the amount of staff time needed to 5 supervise the work, waat are the potential cost benefits. can we expect the same level of commitment from volunteers as from paid employees, the possibility of sharing the services of a volunteer coordinator with the school district, and how we would address the liability concerns. Economic Development Most of the participants recognized the impact that economic development has on the financial health of the City and supported the idea of continuing these types of efforts. Communities need a strong business base to generate the sales tax and other development - related revenues necessary to pay for quality local services. Supporting existing businesses was mentioned as an important aspect of the overall effort and there was strong support for working to attract major retail- ers to Claremont. That led to several questions about why these retailers hadn't already located in Claremont. It's certainly not because the City hasn't been trying to get them. The fact is that every city is trying to get these businesses, and the competition is stiff. Claremont has long been an active player in economic development efforts. Our successes include seeing the Auto Center through its bankruptcy by lining up a new owner, and bringing a new dealer there. Peppertree Square, not long ago a vacant and deteriorating site, is now an attractive and successful neighborhood shop- ping center. The Claremont Village Senior Apartments are scheduled to open later this spring. Preliminary work has been done on several other projects, too. A strategy is in place for the development of the Griswold's site and the Foothill East area at Foothill and Claremont Boulevards, and we've met with several major companies and developers to discuss possible projects throughout town. It should be noted, however, that economic development alone can not solve Claremont's financial troubles. To generate $2 million in new revenue, we would need another $200 million in taxable sales, basically doubling our current retail base. Given the small amount of available land in Claremont, that can't be done. We will, however, work to increase our retail base as much as we can, though it will take time. And as we've seen, this source of revenue is always suscep- tible to the effects of a recession. The City has recommited itself to taking an aggressive stance on economic development. A number of opportunities will be pursued. We intend to review the City's business -related codes and re -write any that are unclear or ambiguous. By keeping several "irons in the fire," we will be ready to strike when the opportu- nity is right. see "actions," page 6 Process viewed as a success by citizens and City Council Ready to Act on Public Input he Funding the Future process has Taccomplished exactly what the City hoped it would. Over 500 citizens shared their thoughts about how to deal with Claremont's financial future, providing the City Council with a wealth of ideas and information to consider as it begins the process of developing budgets for 1993-94 and beyond. Prior to the final Town Meeting, Council members sifted through all of the public input, condensing and categorizing it into general themes. Then they compared the public's suggestions to what the City has already done, and developed recom- mendations on how the City should pro- ceed. The results were presented during the Town Meeting, and are summarized below. Cut Spending, Waste There was considerable discussion about the need to cut "waste" in city government. The suggestions included cutting the number of employees, cutting employee wages and benefits, and cutting unnecessary programs. The thing that very few people wanted to cut, however, was the level of service that the City provides. A lot has already been done to streamline the City's operations and make it a "lean" organization. Over the last three years, 42 positions have been eliminated from all departments and levels of manage- ment. Certain work projects have been postponed, i.e. preparation of the Historic Preservation Ordinance, the City Hall accessibility project, and computerization of the vehicle maintenance system. At the same time, City services to the public have been maintained at virtually the same level. Freezing employee salaries and lowering benefits are alternativesthat will be explored. The Council thinks that cutting employee wages is counter produc- tive. Asking employees to provide the same (and often a higher) level of service for less money may create poor job performance and encourage some staff members to find jobs elsewhere. Replacing people is also an expensive proposition; recruiting, testing, and training costs nearly $4,000 for a typical employee and $35,000 for a new police officer. Recruiting high - quality applicants is also difficult if wages are low. What we've done instead is to keep good employees by paying fair wages, and then stretched their abilities by Dealing with the Budget Actions to be Taken • hold public hearings to consider implementing a utility tax • assess budget impact of freezing employee wages and cutting benefits • explore contracting with county sheriff • pursue development of joint arrangements with other agencies to provide services more cost effectively • develop an aggreement with school district to reduce costs by combining work efforts • market our services on a contract basis to other agencies • utilize contracted services when same or higher level of service can be obtained at a lower total cost • continue to look for and implement operating efficiencies • study the feasibility of using more volunteers and, if appropriate, prepare a plan for doing so • increase revenues by implementing and adjusting user fees to reflect true cost of providing service • continue economic development efforts to support local busi- nesses and attract new retailers 4 asking them to perform a wider variety of tasks. Improved Efficiency Improving efficiency was a major topic for nearly all of the participants. Comments included "Be more efficient. Be cost effective. Do better planning. Tighten your belt." Most people said they were sure that the City was inefficient but were unsure of what those inefficiencies were. Some suggestions for improving efficiency included basing employees' salaries on performance, using lower -skilled workers in some jobs, and closing City Hall one day a week. The City has taken a number of actions over the last few years to increase its efficiency. Examples include the re -organization and consolidation of several departments and divisions, the development of a staffing plan for the Police Department that reduced overtime costs by 25%, converting the police cars to run on propane for a net annual savings of $30,000, and the installation of a direct dial phone system that eliminated the need for a central operator. Several performance -based pay incentives are also in place to encourage employees to perform at their highest potential. Staff will evaluate all of the specific efficiencies suggested at the meetings, see if they would have a `Vision" Important to Seeing the Future or the last several years, the City Council has developed a long range vision for Claremont, a general statement of what it thinks the City lould work to achieve. Having a clear community [sion is important because it is the basis upon which ,ttailed budget decisions about the City's work efforts id expenditures are made. It could be said that the sion spells out where we want to go as a community Id the budget tells us how we plan to get there. itizens Comment on the Vision Because of this link between the vision and idget decisions, a significant portion of the Funding e Future process was committed to discussing and fining the vision. Citizens were asked to review the sion statements and compare them to their own ;pectations for the community, suggesting any odifications they thought were needed. Overall, the rticipants were supportive of the vision. This exercise served two very important purposes. rst, it allowed the City Council to see if what it [visioned for the community was in line with what the iblic expected. Secondly, it helped focus the partici- tnts' attention on what they wanted for the City so ey could better discuss what it would take to achieve it financially. The vision statement touches on nine different topics, namely, overall quality of life, community safety and protection, infrastructure, economic devel- opment, environmental quality, financial stability, responsiveness of City government, citizen participa- tion, and regional cooperation. Vision Reviewed Regularly The Council reviews the vision every year, working together to make any necessary refinements to this statement of community goals and values. The priorities for achieving the vision are then set through the annual budget process. How the City decides to spend its money is a direct reflection of what parts of the vision will be emphasized and worked towards during any particular year. Because the budget process is a public process, everyone has the opportunity to comment on how our vision is being implemented. Anyone who thinks that the City should pay more attention to a particular aspect of the vision is encouraged to share that during the budget hearings. The utility tax hearings will be one opportunity to do that. Discussions on the entire 93-94 budget will begin within the next few months. Claremont's 1992 Community Vision Quality of Life To maintain Claremont's desirable college town living environment for all citizens by preserving its historic and social fabric, residential character, and small hometown atmosphere, while ensuring that new development reinforces both the quality and economic strength of the community. Community Safety and Protection To safeguard the health, safety, well-being, and physical protection of local residents and property. To provide places and activities for our youth to grow up in a healthy environment. Regional Cooperation To work with neighboring communities, othergovernmental agencies, and the school district in areas of mutual concern and efficiency. Responsiveness of City Government To provide the best possible level of service to residents through the joint effort of all departments working with other governmental agencies, local businesses, community groups, and the colleges. To maintain a well -trained, responsive, and courteous workforce, sensitive to community concerns. Environmental Quality To encourage development projects which reflect the city's commitment to quality design, preservation of existing neighborhoods, parks, historic structures, open space, trees, and resource renewal. Financial Stability To become a self-reliant community with a sound economic base. To prudently manage the city's financial resources and provide for adequate reserves. Economic Development To provide a climate that encourages healthy commercial areas that capture more of the purchasing power of the community and creates more destination commercial activities to capture regional money. Infrastructure To provide and maintain adequate streets, sidewalks, public transportation, sewers, parks, and public buildings. Citizen Participation To actively recruit and involve residents in the local government decision -making process, and to maintain advisory commissions and committees for that purpose. 3 The Budget Crunch - Why? he budget crisis currently confronting the City is the result of several different factors, most of which have been compounding for the last three to four years and which are expected to continue for some time. Understanding what these factors are is vital to understanding the choices that the City Council will have to make to deal with the situation. The City's finances are accounted for in 26 different "funds" but only one, the General Fund, is experienc- ing any serious problems. It is the General Fund, however, that pays for most of the City's operations, including police services which make up 55% of total General Fund expenses. Beginning on July 1, 1993, and continuing every year for the foreseeable future, the General Fund is expected to have at least a $1.5 million gap between income and what it costs to provide the current level of City services. Because state law requires the City's budget to be balanced every year, something has to be done to close that gap. Revenues Not Keeping Pace The first of the factors responsible for the gap is the fact that General Fund revenues have increased an average of less than 2% a year over the last five years compared to an average annual inflation rate of 4.5% over the same period. The recession's impact on retail sales (especially auto sales), increased hotel competi- tion from surrounding cities, and the lack of available land for new development have combined to keep the City's five main sources of revenue literally flat since 1989. These five sources (sales tax, property tax, vehicle registration fees, "hotel" tax, and business tax) provide 72% of the General Fund's total revenue. Revenues Taken by State; Governor Proposes Taking More Also contributing to the situation is the state's repeated decisions to take moneyaway from cities to balance its own budget, a situation that is expected to get worse based on Governor Pete Wilson's latest budget proposal to take even more property tax revenues away from cities. Over the last five years, state take-aways have totaled $1.1 million for The Governor's proposed 1993-94 budget calls for taking $2.6 billion in property taxes away from cities, counties, and special districts. Claremont. On top of this, the state Legislature has continued to place new requirements on local govern- ments and mandate new programs without providing a source of additional funding to cover the costs of these efforts. Costs Grow Despite Controls In response to lagging revenues, the City success- fully kept cost increases below the rate of inflation by delaying several work projects, leaving several posi- tions vacant, eliminating 42 positions all together, re -structuring several departments for increased efficiency, and freezing supply budgets. Unfortu nately, revenues were still not able to keep pace. Further cost cutting can only be accomplished by cutting service levels. No "One -Time" Revenues Left In the past, the City was able to offset the weak performance of traditional revenues sources and close the funding gap by taking advantage of several "one-time" revenues, including credits from the state retirement program, insurance refunds, and the sale of city assets. Since 1988, these revenues have averaged $640,000 per year, nearly 7% of the budget. However, there are simply no more of these revenues available. Share of General Fund Expenses by Department/Division Police Human Services — 3% Finance — 5% Park & Street Maintenance — 9% Community Development — 14% Administration/General Government — 14% 2 see "budget crunch . " page 7 t•c cft (Oro' ^ 1in 1 •1887- Claremont CLAREMONT CHOI S: Funding the Futul''e CITY LETTER Volume IX, Issue 4 Winter 1992/93 Claremont citizens discuss the City's financial future during one of eight special public meetings on the matter. INSIDE How Bad is the Budget Problem 2 Checking Our "Vision" City Set to Act on Input 3 4 Public says no service cuts, improve efficiency, increased revenues OK Citizen Meetings Help Chart Course for City's Financial Future ontinuing a 100-year-old Clare- mont tradition of having Town Hall -style meetings to collect citizen input on important community issues, a series of special public meetings was held in November and December to discuss the City's financial future. The consensus of the over 500 citizens who participated in the "Funding the Future" process was that the City should continue providing the same level of services, paying for them by continuing to increase the efficiency of all City operations and by generating additional revenue through more user fees and a new utility tax. Meetings Held to Address Budget Crisis Several years of a weak economy, along with repeated decisions by the state to take revenues away from cities to balance its own budget, have resulted in a projected budget gap in Claremont's General Fund of at least $1.5 million annually beginning this July 1 and continu- ing into the foreseeable future. That gap could be as much as $2 million a year, approximately 20% of the current General Fund budget, if the state follows through on Governor Pete Wilson's recent propos- als for balancing the state's 1993-94 budget. Dealing with that large of a shortfall means significant changes have to be made in the way the City does business. The Funding the Future process invited every household in Claremont to share their ideas with the City Council before it made any choices about what actions to take to deal with the situation. At a final Town Meeting, the City Council outlined several methods that the see "meetings, " page 7 Utility Tax Seen As Best Option; Council to Consider Most of the citizens who took part in the recent "Funding the Future" meetings thought that raising additional revenue was the only realistic way for the City to balance its future operating budgets without cutting essential city services. A utility tax was viewed as being the fairest and most equi- table way to raise the necessary amount of money in time for the upcoming fiscal year which begins July 1, 1993. Hearings Scheduled In response, the City of Claremont will consider implementing a city-wide utility tax at two public hearings on February 9 and 23. The revenue from the tax would be used to close the gap in the General Fund budget and perhaps address several other see "utility tax," page 6