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Addendum BMEETING DATE: 05/19/15 ITEM NO: 10 COUNCIL AGENDA REPORT ADDENDUM B DATE: MAY 18, 2015 TO: MAYOR AND TOWN COUNCIL FROM: LES WHITE, INTERIM TOWN MA SUBJECT: OPERATING AND CAPITAL BUDGETS A. CONSIDER THE TOWN OF LOS GATOS PROPOSED OPERATING AND CAPITAL BUGDET FOR FISCAL YEAR 2015/16 B. CONSIDER THE TOWN OF LOS GATOS PROPOSED CAPITAL IMPROVEMENT PROGRAM FOR FISCAL YEAR 2015-2020 C. PROVIDE DIRECTION REGARDING ANY OF THE FOLLOWING CHANGES TO THE FISCAL YEAR 2015/16 OPEARTING AND CAPITAL BUDGET OR THE 2016-2020 CAPITAL IMPROVEMENT PROGRAM BUDGET: 1. TRANSFER OF $100,000 IN YEAR-END GENERAL FUND SURPLUS TO THE NPDES FUND 2. TRANSFER OF $500,000 FROM THE TOWN'S VEHICLE MAINTENANCE FUND TO THE TOWN'S GENERAL LIABILITY ABAG FUND 3. INCREASE VEHICLE IMPACT FEE REVENUE IN THE GENERAL FUND APPROPRIATED RESERVE (GFAR) BY $136,000 4. ALLOCATION OF ONE-TIME ADDITIONAL FY 2014/15 YEAR END GENERAL FUND SURPLUS TO OFFSET HUMAN SERVICES GRANTS FUNDING GAP OF $31,294 5. ALLOCATION OF ADDITIONAL ONE-TIME FUNDING OF $1,000 FROM FY 2014/15 YEAR END GENERAL FUND SURPLUS TO FUND THE ART DOCENTS OF LOS GATOS 6. ALLOCATION OF ADDITIONAL ONE-TIME FUNDING OF $2,000 FROM FY 2014/15 YEAR END GENERAL FUND SURPLUS TO FUND THE NEW MUSEUMS OF LOS GATOS 7. ALLOCATION OF ADDITIONAL ONE-TIME FUNDING OF $5,600 FROM FY 2014/15 YEAR END GENERAL FUND SURPLUS TO FUND THE ARTS AND CULTURE COMMISSION 8. AUTHORIZATION TO ASSIST THE ARTS AND CULTURE COMMISSION IN DEVELOPING AN UPDATED ARTS PLAN FOR COUNCIL REVIEW AND CONSIDERATION AND FOR STAFF TO Reviewed by: k% Assistant Town Manager Town Attorney mance N:\MGR\AdminWorkFiles\2015 Council Reports\May 19\Town Council Budget Staff Report Addendum B.docx PAGE 2 MAYOR AND TOWN COUNCIL SUBJECT: OPERATING AND CAPITAL BUDGETS DATE: MAY 18, 2015 EXPLORE ALTERNATIVE OPTIONS FOR ONGOING REVENUE SOURCES FOR PUBLIC ART FUNDING 9. AUTHORIZATION TO ADJUST GENERAL FUND EXPENDITURES AND REVENUES BY $164,000 TO FUND AN ENTRY LEVEL OFFICER 10. ALLOCATION OF $300,000 IN FY 2014/15 YEAR END GENERAL FUND SURPLUS TO FUND RESTORATION OF SERVICES AND/OR FUTURE SALARY AND BENEFIT AUGMENTATIONS REMARKS: Provided below are responses to Council inquiries for this agenda item. 1. Excluding major sales tax contributors (i.e., car dealers and Netflix DVDs), how has Los Gatos sales tax revenue been trending? When analyzing the most recent fourth quarter year-end sales tax data (Oct -Dec 2014) when compared to the fourth quarter year-end sales tax data from the prior year (Oct -Dec 2013), there is a decrease in sales tax of less than 1 %. With the available data, staff removed Netflix and car dealership figures for both comparison years and found, exclusive of these major contributors, sales tax grew by 2.6% from the fourth quarter in 2013 to the fourth quarter in 2014. 2. Tait repaving is scheduled for next fiscal year. What are the projected cost and source of funding? The project cost estimate for the Tait Avenue project is $1.9 million. The estimate will be further refined once bids for the Broadway and Bachman portion of the project are received as that will provide more accurate unit costs. Tait Avenue will be funded with the balance of the Almond Grove project funds of $835,212 (and up to $1.2 million, depending on the bids for Broadway and Bachman). Additional funds will be required to complete the Tait Avenue project, up to $1.2 million. Staff will provide options or recommendations on funding for Tait Avenue, including additional GFAR funds, other reserve funds, and potential property sale revenue, as funding needs become clear in the late fall of this year. 3. The "purchase" of the parking lot on Main is scheduled for this fiscal year at a cost of $1,196, 000. Please explain why we would have to repay funds? If we built BMR housing? Can we wait until 2017? The funds to purchase the parking lot on Main have been held in reserve for several years with anticipation that repayment may need to occur, depending on the use of the property. If Below Market Rate (BMR) housing is built on site, the repayment will not have to occur at all. PAGE 3 MAYOR AND TOWN COUNCIL SUBJECT: OPERATING AND CAPITAL BUDGETS DATE: MAY 18, 2015 4. What is the residual balance from the Vasona Land Sale? The residual balance left in reserve from the Vasona Land Sale is $411,245. This assigned fund balance may be used for acquisition and development of new Town properties. 5. What has been the school district's participation in the special traffic study? Over the past year, the school districts have not shown interest in participating in the traffic study. Most recently, with the increased focus on Safe Routes to Schools, the Los Gatos Union School District Superintendent has expressed some interest. Staff will re-engage with the High School to see if there is interest there and bring a proposed project to Council in the fall. 6. Confirm: Revenue approximately $7 million less than last year? Total Town revenues decreased by $4.7 million from FY 2014/15 budgeted amount and $7.3 million from FY 2014/15 estimated year-end balance. The primary reason for this is the $7.2 million dollar capital transfer in FY 2014/15 to help fund the Almond Grove project and other capital projects. Exclusive of these "Transfers In," Proposed FY 2015/16 Total Town Revenues increased by $1.8 million from the FY 2014/15 budgeted amounts. Likewise, exclusive of "Transfers In," Proposed FY 2015/16 General Fund revenues increased by $1.5 million from the FY 2014/15 budgeted amounts. 7. What was PPW's "significant staff turnover"? PPW has experienced significant turnover, including the Town Engineer, and two engineers, one each in capital projects and land development. In addition, the Departments Administrative Analyst and a Parks Services Officer separated from the Town. Within the Engineering program, the Department retained one land development engineer and one traffic engineer. With the significant turnover, especially within the Engineering program, capital projects suffered with little support to advance projects. The Engineering program is now fully staffed with work emphasis on the capital projects backlog. 8. What is the "litigation settlement money"? The Town entered into a settlement agreement on March 3, 2014 between the Los Gatos Citizens for Responsible Development (LGCRD) and other named parties. As part of this settlement agreement, the Town will receive $350,000 in "community benefit" monies which will be established in a separate fund to specifically track the use of these monies and compliance with the restrictions outlined in the Settlement Agreement, including expended in proximity to the project, and related to the projects implementation, with high priority to traffic congestion. In addition to the "community benefit" money, the settlement agreement and initiative incorporates a $1 per square foot payment which staff is describing as "litigation settlement money." This $1 per square foot payment is part of the project approvals and payable to the Town upon issuance of the certificates of occupancy for each of the buildings. This payment is expected to total $489,000 in PAGE 4 MAYOR AND TOWN COUNCIL SUBJECT: OPERATING AND CAPITAL BUDGETS DATE: MAY 18, 2015 one-time monies over several years. Given the restricted use of the community benefit money described above, staff wanted to clearly differentiate between the two different settlement amounts in order to properly track use and compliance with the terms of the agreement. The FY 2015/16 General Fund Operating Budget proposed to use the litigation settlement money ($1 per square foot), to help fund 40% of the proposed addition of a project manager position in the Parks and Public Works Department. 9. Please explain who does our "downtown trash removal"? Currently trash removal downtown is done by West Valley Collection and Recycling on a Monday through Saturday schedule. Recycling is collected twice a week by Town staff. Staff expects to change to a different model to provide improved weekend service where garbage cans will be emptied on both Saturday and Sunday by a different company beginning this summer. West Valley Collection and Recycling cannot provide Sunday service due to their union agreement. 10. Will the town equipment which creates significant noise at Pageant Park be removed? (A compressor?) The Town equipment creating the noise in Pageant Park is HVAC equipment necessary for the Civic Center. Staff is working on a project to provide mitigating noise insulation. Staff has obtained one quote for the work and is looking for additional contractors who are interested and can provide the service. The work is expected to be complete this calendar year. 11. Who, currently, are our "two town librarians"? Currently, the two Town Librarians are Heidi Murphy and Henry Bankhead. The two Town Librarians have been co -managing the Library since June 2012. 12. Isn't Hwy 9/University completed? The Highway 9/University project construction is complete. Staff anticipates the paperwork associated with Caltrans funding to take several months to complete. Once the paperwork is complete the project will close out completely.