 It is six o'clock Okay Meeting City Capitola Please give us a roll call Councilmember story finally here Councilmember Peterson here councilmember Brooks here councilmember Bottor here and mayor Bertrand Actually, I should say councilmember and mayor and chair and Do we have additional materials none? Okay, any additions and deletions to the agenda no changes, okay This is a time for public comment anyone in the audience can speak on any item not on the agenda today seeing none Let's go back to city council and city council successor Treasurer and staff comments and city council any comments from the city council. Yes, I Just like to take a minute to acknowledge May 15th as a peace officer's Memorial Day And thank all our police officers for what they do every day Ditto any other comments? Okay staff comments Just a very short update. Well, this is the time of year when we usually close the lagoon That's so Cal Creek in advance of Memorial Day. Unfortunately with the forecast Rain and rain we're getting I think as we speak It's thrown our plans a little bit arrived so we'll be making a call here shortly about whether or not we can proceed with the Operating under our permits because our permits have strict requirements about when we can do the work if there's rain in the forecast Or not about whether or not we're going to begin next week or whether we have to push it back a week So just to let everybody know it's not if you don't see the work starting on Monday I'll let you know on Friday, but we may or may not be able to close the lagoon in advance of Memorial Day this year Okay, no more comments. I'm moving along to a consent calendar. We have one item. Is there a motion? Oh Excuse me anyone in the audience or any comments from City Council on the consent calendar Seeing none back for a motion So moved second. Okay. All those in favor. Hi. Hi. Okay. Let's go on to government hearing presentation of the proposed 2019-2020 fiscal year budget And I think this is going to come up and Our finance director is going to take us on this so you're going to give an introduction. Thank you I'm going to kick this off do first couple slides Before we get started in the budget hearings this year I want to remind everybody this is the first in our series of budget hearings and the intent tonight is really to get Outline the proposed budget to the council in the community in addition Identify areas of questions or concerns or further research that council would like to see us cover in future hearings In addition, I want to thank Jim and Department heads and everybody in finance for all the great work in preparing the budget that you have before you and is available on our Website and it takes a big effort every year. I always appreciate the opportunity to go through and review it I think it provides a great insight into how our city operates. I have been doing this for Not sure if this is the ninth or tenth budget I've done, but nevertheless each time I come up with questions Sometimes the same ones is from previous years, but it's always good to go back and take a look through this stuff So our first slide You know overall our economy remains stable That is we're not seeing significant declines in any major revenue sources However, we are experiencing relatively slow growth particularly in the sales tax and TOT arenas Overall this budget is largely a status quo budget. The primary exception would be in the recreation division Where we're talking about offering new youth programs in this coming fiscal year That includes 1.25 new positions 1.25 full-time equivalents which would be increasing a three-quarter time rec assistant to full-time and adding a recreation assistant to Be devoted to those youth programs and we'll talk more about that later in the presentation tonight And it also includes the additional funding that was Allocated for youth and business groups as part of measure J And we'll be talking about that seeking council guidance on how to expend some of those funds later this evening Overall we have good news with our general fund We have an estimated fund balance that would be ending this fiscal year Which is coming up in June 30th a little more than a month from now at about 1.3 million dollar 1.3 million dollars in Fund balance that is in addition to our emergency and contingency and other reserve funds We will be talking about that later this evening and propose at least starting the conversation about maybe some one-time Allocations of that fund balance for specific council priorities the fund the budget proposes to maintain our reserves that our policy levels of 10% for our emergency reserve and 15% for our contingency reserve Obviously the library is a huge focus for us as we move forward This will be the first year. We hope we anticipate of new cannabis business tax revenue We've projected to operators for half of a year in this budget for about $250,000 we believe that's a Conservative but reasonable estimate of potential revenue, but obviously being the first year of something There's some risk involved in that revenue Big picture is the PERS cost increases continue to be a significant threat and a significant Diversion of funds from other priorities And it will continue to be for several more fiscal years before they stabilize out In addition and you've heard me say this at that budget hearings for time eternal the city's heavy reliance on sales tax remains problematic and challenging And is something we need to think about as we move forward the This is the overall summary at the front end of our budget the budget you see before you today is balanced I think we're about three thousand dollars to the good You can see there also the fund balance that we project of a little bit over $1.3 million in fund balance next year we start to show budget problems and again, this is largely driven by the Project the the known colas for employees coupled with the PERS cost increases that we know are coming So some of the assumptions that went into the generation of this budget We have very good handle on the property tax. It's projected at a four and a half percent growth for next year The sales tax number deserves a little bit of explanation because from where we think it's gonna end this year It's actually down slightly Part of that though is due to the fact that this Fiscal year we got money that wasn't paid last fiscal year because the state implemented this new tax payment system So our figures this year are we think are about two hundred thousand dollars artificially high Which really should be attributed to the prior year So we're showing sales tax is actually a hundred thousand dollar decrease from where we end We think we're gonna end this year. We still have data to come in this year So that actually represents a minor growth in actual economic activity that we're projecting But it is a decrease year over a year sales tax the district taxes. We have not been seeing growth That's measure f and measure o So we're projecting them at flat The difference you'll recall between the sales tax the 1% and the district taxes is that we have a few large Taxpayers who don't pay district taxes because their buyers are predominantly not located within the cities You can think car parts or heavy machine sales that may be selling outside the city The to team are projecting relatively small growth. This is essentially consistent with what we've been seeing about 1% Parking 1% increase in overall parking revenue. We don't have changes in the parking rates And so this would simply do would be due to Increased usage parking citations. We had a small dip this year. We're projecting that that will rebound that was due to some some Injuries and some outage time where we weren't didn't have a full fleet of parking enforcement officers working So I probably covered a couple of these things Already I talked about the sales tax continues to slow and remains heavily relying on auto sales for growth That has been our primary growth engine in our sales tax for the last several years We are heavily reliant on our top 25 sales tax generators which represented about 63% of the total Recall that sales tax is about half of our overall budget. So a Significant punch portion of our budget comes from just 25 sales tax payers As I mentioned before the district tax remains flat property tax And that's really not that that's just just due to prop 13 reassessments The capital mall sale was a significant bump in property tax as well as just the continued turnover in the residential real estate market TOT as I mentioned, you know, it's it's our hotels do very very well. They have very high occupancies There's not new rooms coming on the market The so the growth has been relatively flat because it's really capped out at just room rates and room rates are Considered quite high already. We are hoping in this coming year that with our new partner HDL to do some audits That we hope could yield some additional TOT moving forward But at this point this budget doesn't include any new program TOT revenue associated with that And as I mentioned before it's the first year of the cannabis business tax and we anticipated six months worth of Revenue from two retailers and we're showing the parking revenue growth slowing where we'd seen a bump previously when we went to the Three-hour time limit in the village We're thinking that that that bump is probably over at this point As I mentioned before the unfunded liability the UAL payments are a major cost driver in the budget to get put it in perspective in 1617 a couple years ago. It was eight hundred and thirty five thousand dollars that we had to pay towards CalPERS for the unfunded liability By twenty four twenty five, which is kind of where we hit the peak It'll be two point three million So that that essentially is one and a half district taxes If you will because our district tax or quarter cent taxes are about a million dollars a year So if we were still at that same if we had a fixed rate mortgage, if you will We would have about one point five million dollars more in twenty four twenty five available to spend on other priorities that we won't have Library as I mentioned before It's anticipated for completion about a year from now a little bit less at this point The budget does include some some good news. We've seen some decreases in our liability insurance premium This is due to some heavier claims that we've had in the past moving off of our experience factors that we use with our risk JPA In addition, I want to acknowledge all the work that the staff has done On really driving down our work comp rates We have some of the lowest work comp rates for a city of our size if any I've ever seen and that's really attributable to Great workplace practice habits by our employees and management by by our department heads So one of the things we do is as counsel knows every year is we try to look out ahead to see where the problems are and what The scale of the problem is going to be and so we use a multi-year model where we are assuming certain rates of property tax growth sales tax growth to T growth We will pencil in potentially looking at new hotel revenue if we were to get a new hotel and what our cannabis tax might grow at And you can see that this year's budgets balance moving ahead. We start to have problems pretty quickly into the future To give you a hell an understanding of what's driving those Oh, and so when you look at the multi-year assumptions, you'll see some funky things where we have essentially, you know Ones and zeros in our sales tax and we actually have a 5% decline in 2022. That's Frankly at this point It's just a placeholder and it's really around the mall mall redevelopment that if the mall were to Redevelop we see a potential loss of a chunk decent chunk of sales tax And then essentially flat during the construction phase and then higher growth In the sales tax in the out years To give you a feeling for what's driving the deficits about $250,000 a year Increase comes from essentially cost of living increases for our employees. That's ballpark figure Obviously a subject to year-to-year negotiations, but that's that's a reasonable figure to use in terms of your own thinking in addition It's about $250,000 a year through this cycle for CalPERS. So between those two That's about $500,000 a year of budget growth on the expenditure side that we experience Without changes in our service delivery model. In addition, there are other things that come up year-to-year The larger figure next year is set in some senses by a good piece of good news is that With our formulas for our contingency and emergency reserve They're set at a certain percentage of our expenditures and as expenditures rise We have to put more money into the contingency and emergency reserve There's a pretty healthy chunk that we're gonna have to put in next year Which is also a piece of the increase that you see So this is what graphically our five-year projection I will note that the five-year projection doesn't include allocating any of the measure F funds into the general fund to help To help with these things. I think we've all Know that as we get further into measure F We're gonna have to talk about unless we have new revenues coming online Talk about some of those measure F funds coming into support the police department But at this point this projection doesn't include any of that district tax coming in for other general fund purposes So this budget was built up on the budget principles that this council adopted earlier this winter they're based on three basic fiscal policies about a balanced budget and ensuring that we're balanced using one-time revenues for one-time expenditures and that we Plan for future cost increases and think about where we're going to go into the future Our three public service principles about improving transparency the high priority community places on the public safety And then always looking at service level increases with their long-term costs and then public improvements Really geared towards making sure that we're delivering the high quality public improvements to our community that everyone expects So this is a lot on a slide. It's in your budget in the city manager's message But what we did was we took all the key projects and programs that the council identified and voted on during the budget process Assigned to lead department and then identified specific outcomes for them so we can track them throughout the year Many of these projects are already underway For example, we'll be talking about the call CalPERS costs a lot this evening We have an RFQ out for somebody to help us with an evaluation of our grant program The finance advisory committee. I know is already talking about some future revenue ideas that they want to explore Mall redevelopment is a huge project. I think it's going to be you know for the community development department And the city manager's department one of our key focuses as we move forward into this next year The police department has already done a great evaluation of our parking meter technology and its usability And I think it was a good one that council member Peterson brought up because when we went and did sort of a self-audit It seemed like there was a lot of room for improvement there and we do plan to roll that out in the near future The rec strategic plan the RFQ is out and in do we have some I think we have some middles on that one So we'll begin work on that shortly Coastal Commission zoning certification for Katie's sake. We won't spend too much time talking about this evening but we will be talking about our future meetings and the cannabis retail license process is moving forward and we hope to have two potential on Licensees coming up here in the next couple weeks that then could start working with the planning department planning commission on permits to begin their operation We talked about the children's fund for youth programming. That's in the proposed budget The proposed budget also Reallocated the freed up general fund into the facilities fund and we'll talk about some uses for that to help improve the community center We're continuing to work with central fire on the lifeguard services relationship State of the city report. This is part of that is also included in the budget message at the front of the budget We'll be talking more about the funded CIPs the library of wharf and then the unfunded CIPs more this evening So with that I'm going to turn it over to Jim to talk about the hard numbers a little bit more so this slide up here is just showing our Revenue summary by major category and the takeaway I take from this is 80% of almost 80% of our revenues coming from taxes And about 50% of that is sales tax So sales tax like Jamie was saying earlier we have a slight dip in 1718 where the the state Wasn't paying us timely and and it goes up a little bit this year when they made up for those payments But overall when you look at those columns, it's pretty flat for the last five years Property tax on the other hand continue steady growth as Jamie had mentioned anywhere from about four to six percent over this time frame and Then to T the one bump that you do see in the 1819 year is just with the passage of measure J The 1.25 percent now goes in so without that measure J This would be completely flat across the board as well on the expenditure side The big thing here is we're service Industry so about almost 60% of our expenditures are personnel related Which shows right here. So 66 percent personnel And then 20 percent contract services and then the rest is made up by just the other small categories that are up there By departments again police and public works are two biggest departments So police is just under 48% of the budget and public works is just under 20% and then the other 32 is the rest of the departments So department highlights in the city council department We were able to reduce contract services by using some of the to t restricted revenue that we can give to local business groups So the chamber used to be funded out of the the $30,000 a year He's come out of city council is now coming out of those and then some of the regional homeless needs was funded out of the city Council budget is now coming out of some of the restricted money The other change was we added a couple of memberships and be EP The four C's and the jet noise roundtable total of those is about 13,000 Those were found in other places in the budget. So these aren't new expenditures We just sort of realized that that's probably the better place to put them So then if you see the bump in council memberships, that's what that that's attributable to The city attorney budget really is no change for this year on the city manager Budget the big change was bringing in the information systems Technician we used to contract that out that wasn't working so well for us So we brought that in and have a full-time staff now that you met a few council meetings go Heather And then in the finance department as Jamie mentioned we're getting ready to launch our to T and short-term vacation rental audit enforcement program For the police department there Highlights for this upcoming year is going to be implementation implementation of a new records management system completing the licensing of two retail cannabis locations and also developing the audit and inspection plan Expansion of the neighborhood watch program that was launched last year Successfully complete training for a program for the new officers that are going through the police academy and then as Jamie mentioned also Assessing the parking meter program and equipment and trying to improve the user experience For public works probably the biggest as far as change is converting We had one employee that was half-time mechanic up in the courtyard and half-time maintenance worker Doing some meter maintenance and other maintenance work as well. He's now been converted to a full-time mechanic Big projects are the library and Park Avenue sidewalks library and construction Park Avenue is out to bid right now Continue developing permitting and funding for the war the wristband park project and then we're gonna Talk a little bit more about continuing efforts to complete all the funded CIP projects And then as well as doing a complete full review and evaluation of the CIP program community development They have a couple of big things up there working with the mall ownership group is Huge for us right now the two conditional use permits for the licensed cannabis retail stores and then Jamie already mentioned the zoning code update and submittal to the Coastal Commission for LCP certification And then also working with regional partners towards a regional bike share program For museum their big project for this year is digitizing media for long-term preservation To preserve those historical records and then art and culture Commission is going to be here It's going to be focused on public art on 41st Avenue Corridor and library For the recreation departments, this is probably where most of our changes are happening so The Jamie mentioned we're working on the strategic plan. We've just got the bids back or the proposals back So we'll see what that looks like Piloting a new after-school program for teen and younger youth in partnership with Soquel Union And we have some more information on that later on in the presentation Growing the relationship that we started this year with central fire to provide lifeguard services and training for our junior lifeguard instructors working with public works to Kind of spruce up the community center painting and a couple other Smaller projects, but just make it look a little more appealing and then complete an American camp accreditation process for Camp Capitola So as far as the new programs the teen club is To provide youth opportunity to improve leadership and decision-making For pro-social interests and create social emotional peer interaction and enhance life and Nikki can expand upon that Because that is out of my wheelhouse And also the the program our plan is to have a high staff to participant ratio of one staff for every 10 participants It will be located at New Brighton middle school to enhance school connectivity and try to pick up some of the fifth graders as they come through And then the enrollment by day is to accommodate for the Students that are in social clubs sports, whatever other activities that way they can come on days that they're available They don't have to register for a month at a time when they can't participate the full month on the K through fifth grade. It's intended to provide an enrichment program that exposes youth to diverse recreation activities We're still trying to nail down our transportation Needs on that so that'll that that project or program right there still evolving as we speak right now I want to add on this so you saw the FTE's that were associated with this in the we talked about them earlier in the budget and One of the things that the Nicky and I have worked on a little bit is is that There's a balancing between those staffing positions and actual enrollment in this program. And so Just so council is aware just because we authorize the staff doesn't mean we're going to go out and hire everybody on day one It's going to be an iterative process where we're looking at enrollments and identifying when we had the actual staff needs and figuring out A balancing between the two because so we don't want to dive into the pool before just now figuring out if there's water in it That's our first step so That helps council understand So the other new programs that we have is the youth program funding coming from measure J So for this year, we're estimating about 51 1,500 available 28,000 almost 29,000 of those dollars have already been programmed to existing community grants for youth programs So that leaves about 22,800 available in this year for additional youth programs That will be looking for council direction on that a couple more slides on the capital Improvement project front so the two projects that are that we currently have going on the library Which is under construction Expected to be completed around a year from now and then Park Avenue sidewalks out to bid That was one that was just approved I believe the last council meeting bids are due on June 5th, and we think it Anticipate completion and end of summer early fall this year For measure F. I want to give a little bit of a history on measure F So we're a year and a half into receiving measure F revenue So the column on the left column is the Projects the second column is the budget for this year the majority of the money's Program to the wharf not quite sure how much of that will actually move forward, but that's where it's sitting right now The jetty in the flume as you're aware is kind of on hold as we wait for the outcome of the grant application so in prior years we've To date we've received about 1.6 million and we've programmed or appropriated all 1.6 as listed up there with the wharf At 314 jetty at 650,000 flume at 500. We did wharf repairs the first year We had measure F money at 47,000 and then Measure F also contributed to the purchase of the beach or about 50% of the cost of the beach loader And then the far-right column shows what we've actually spent out of those approved appropriations So this is a kind of a CIP project update so those first four up there 38th Avenue sidewalks the 2018 slurry seal jade street community center and jewel box are all completed and then public works Will be coming back next month to council to review the jewel box traffic calming what the results were of the counts before and after The library is we've in the park Avenue sidewalks. We've talked about already Park Avenue slope repair is in review bike with Keltrans right now with a budget of about 500,000 and we expect to construct in 2019 And that's the the section of Park Avenue that failed with the eucalyptus fell on it and we believe that there is is FEMA money account FHWA money that will pay for that so that's That's improvement that we obviously need because we have the K rail up there now Of the next one up there Brummer Street improvements is in design with the anticipated budget of 770,000 we expect to start constructing next spring Rispin Park is in design $500,000 budget and it's hope to start constructing fall of this year The Monterey Park Avenue trail is currently in review by the RTC with a $250,000 budget that we have not scheduled yet waiting Awaiting their review the jetty and flume as I mentioned total budget of 1.6 is on hold awaiting the grant decision Wharf is in design Right now. We're saying six to nine million and possibly starting construction in 2021 Cap Cap Ave. Avenue roundabout and underground we're working with PG&E and AT&T right now Budget is 45,000 and we'll get that scheduled once we get through Working with people get everything worked out with PG&E and AT&T and then 41st Avenue signal coordination working with Caltrans There's a $400,000 grant out there. I Think it's the Airboard Airboard grant that's out there on the Equipment fund ISF so we're requesting four purchases this year The first is a mini sweeper for public works And also a ditch which for public works The mini street sweeper is going to replace the large one or is in addition to the large one. It's replacing So so the street sweeper is actually represents a little bit of a different strategy that we have an employee in the past and Historically, we've bought a new street sweeper about every five years And we buy the big heavy industrial street sweeper and then the five-year-old street sweeper goes in as our backup and and the five-year replacement cycle is pretty pretty fast a pretty expensive vehicles and It's driven by the amount of usage these things are running a lot and One of the things that Steve and I are proposing here is to get a mini street sweeper Which would be probably more appropriate for a lot of our smaller streets We don't necessarily need the same kind of street sweeper that you'd use up and down 41st Avenue or on bay to try to limit the Runtime on the heavy-duty street sweeper and then use the smaller street sweeper on you know in the neighborhoods more Which hopefully then we end up with a lower sort of overall amortized cost over multiple years So this is a little bit of a new proposal But Steve and I think that it's a good strategy to try to draw more life out of the heavy duty bigger street sweeper And you then use this mini street sweeper to cut down on runtime Configuration-wise is this something similar to like what they'd use in industrial parking lots is it that okay? Yeah, exactly same operator It all guys operate it our guys and gal well our guys at the stage But our crew operates the street sweeper so we don't need a new person no no There's no no new licenses or certifications or a new person Frank I mean we have somebody I think I want to say about 30 hours a week runs the sweeper So what they would hopefully then end up doing is this 15 hours in them the big one and 15 hours in the small one And then we double the life of our our quarter of a million dollar sweeper That's the goal and then the other two pieces of equipment up there for the police department a police sergeant vehicle as well as a replacement police motorcycle on The facilities fund we're actually increasing funding from the general fund by utilizing some of the freed up dollars that were previously spent For on the community grant program if we didn't have those extra measure j. Dollars Funding that we it would have actually been decreasing our contribution to the facilities funds. So that was pretty big help right there So we were able to program 108,000 last year. We had 90,000 going in and we were Balancing back and forth as we were trying to budget the balance the budget between 70 and 80 and then we realized that we had that And then out of that 108 we're programming about 50,000 for the community center improvements that I mentioned earlier And we anticipate an ending fund balance on June 30th of next year of about 439,000 So for the community center improvements right now, we're targeting interior paint 88 the front door so that they there's a you know, but you can hit in the front door will open And probably some interior furniture, you know, we're obviously trying to balance these expenditures with the fact that our lease expires I want to say in 13 12 years With the school district and we've in the past indicated that we didn't want to make sort of heavy long-term 50-year investments in new age Vax roofs sewer lines things like that. So we were trying to target things that were more kind of ongoing so the interior paint the 88 doors really something that should happen and then the furniture is obviously something that You know wouldn't be expected to have a 25 year life cycle in any scenario How about the kitchen? I know it's sort of Unfunctional and so that leads our activities you to rent it out for well You're absolutely right the kitchen is not very functional and that was actually on Nikki's first list of items to address the challenges is Number one is as you start bump bumping up against, you know How much money do you have and number two is is is if we're going to do a major kitchen renovation or do something that allows Us to do more with the kitchen. How does that play with the overall lease? so The paint the front door and the furniture seem to us like the most logical thing But the kitchen certainly on top of everyone's list as well and then so so We're projecting that as Jamie mentioned that we're going to end this year with about 1.3 million dollars of general fund fund balance We would recommend maintaining a minimum of 800,000 which is about half a percent of our general fund And so that leaves 500,000 that could potentially be programmed into other areas and so we put up some potential uses of what those What we could do with that that fund balance and So one of them is obviously leave it intact for future budget shortfalls We could deposit into the purse trust right now. We're sitting at about 845,000 in the purse trust We could pay down principal on the outstanding Pacific Cove debt So that debt that was refinanced in 2012 originally had a five point one four percent interest rate When we refinanced it it dropped a three point two five. It's going to go back to at least five point one four in 2022 so it's set to go to the greater of either the five point one four or the US Treasury Ten year plus three percent which right now would be about five and a half five point four percent So that interest rate is going to go up for sure in the next three years What was that what would the total amount of that loan it is right now the balance is 1.2 million So by way of a little bit more background first off I I think that the 800,000 is about five percent of the general fund not half a percent and secondarily so when we took out the original pack of debt this was to Finance the closure of the part This was to finance the conclusion of the park. I'm sorry We have two pieces of debt on pack of one was to build the parking lot one was to finance the closure So so this was originally a toy. It's a 20 year debt and the first 10 were fixed and then we got went variable 10 years out. It's with Santa Cruz County Bank. And so we received settlement with our insurance brokers After the flood and we used that Settlement money to pay down some of that debt because a lot of the debt was associated with the cost That were incurred because of it. So I want to say that we have about 14 total 16 total years of payments on that and so we have six years where we're into the variable interest rate So there may be an advantage to trying to work towards paying that down So we're not carrying principle into that variable interest rate environment starting in 2022 And then a couple other options would be to increase the deposits into the facilities reserve Or we could fund additional CIP projects or any combination of those and just on the next slide Just as a reminder when we talked about the CIP and the council goals We wanted to list the projects that came up when we were going through the budget principles So we have Claire Street pedestrian improvements Claire Street improvements near Trader Joe's which is a traffic signal Capitola Avenue and sidewalk and retaining wall in the 300 block Fan Mar Street improvements drainage and roadway street improvements from City Hall to fan Mar Relocation of portable toilets at McGregor Park and wharf improvements And then on the kind of public works CIP wish list. We added 41st Avenue rehab Citywide slurry seal and then wrist wristman park. So those were projects that came out of that Goal said the principal budget principles and goal setting as well as just kind of what we have So tonight our next steps identify any questions we can answer as many questions as you have and then Any issues for follow-up that you would like us to bring back? We'd like some direction on uses or at least start the discussion on uses for the 22,000 2800 and youth to T funds and then initial discussions on on uses of the general fund balance We had a fact meeting last night and they asked me to bring back some additional information before they're ready to make a recommendation so part of it was as councilmember Brooks was saying what is Some more information on that loan. When does it but what's the balance wins it pay off and those good things and then We'll be back on May 29th for a special council meeting to go over whatever changes we make between now and then That completes the presentation and we're happy to take questions So Who would like to jump in in questions of Jim? First of all, thank you for their presentation and the state of the city presentation also Okay, Sam, please Thank you Thank you for that overview and that presentation Jim. I guess I want to start off by asking what's a ditch which I Could take a stab at it Which is a trade name for a piece of equipment that is a vacuum It's a portable large trailer mounted vacuum. We use it to clean out our storm brain inlets which we're required to do Every year for the rainy season part of our stormwater program So it's called ditch which because you can also use it for locating utilities in a roadway as part of your projects So we use it for it Good And also, um, I Wonder that the staff was recommending leaving 800,000 of the fund balance. I was just curious Why that number is there some logic or is it just a comfortable number to work with Well, I Mean, I think I think the basic answer is it's a comfortable number to work with I think that what we've experienced is year to year There's obviously in a budget this size with so many things that are beyond the city's control There's variability and we've had years that have closed out a couple hundred thousand dollars or more The wrong direction And so this provides a little bit of cushion also if there's an urgent need that comes up during the year It's a source of funding that can be used. So there's not We don't have a policy about maintaining a five percent fund balance We do have policies about our reserves emergency and contingency reserve levels I think that's just a it's a target figure that I think we would suggest Keep in mind that during the economic downturn. We lost I think it was one point eight million dollars of sales tax over about Six-quarter period as the economy tanked. So that's the scale of variability we can have Particularly with sales tax the other the other revenues trains are a little bit more predictable But that is a little bit of a buffer to help sort of manage into a downturn when it comes up Okay, thank you And on the CIP schedule with that there was a list here and then I was Wonder if we could be given because then it wasn't I didn't notice it in the notebook, but the schedule of the funded portion and And the budget remaining for each of these particular projects As we you know attempt to evaluate them determine whether we want to shift any of that Fund balance into the CIP So correct me if I'm wrong Steve, but this slide here. This is the funded amount. Is that Yeah, now I guess the wharf does not have six to nine million. So that's would be the one The one but so for example the roundabout we've appropriated 45 At this point, which was really just the design cost to get the underground and going there's 250 for the the Monterey Park Avenue Trail and get out of Pat Cove here 500 at this point for risk and park risk, but I think we do think is probably Underfunded at this point Steve. I'll let you chime in. Yeah, and I was just gonna add that budget amount like on the One Jim is just looking at the Monterey Rail Trail or Monterey Park Trail that is 200 of that is actually grant money we have from the RTC So this is a combination of money that's been budgeted over the years and I'd be you know We can certainly come back with more details on each project and what what the money is and what the remaining balance is Yeah, I think before we as we finish up because that was unclear We're using budgeted amount and funded amount and in my mind there there's a distinction I'm not that's correct. Yeah, I'm not clear, you know, some of those seem to be total budget cost And but not necessarily defining how much we've been able to sock away To complete them, so we can come up. We'll clarify that and I think I think this list generally is what's funded with the exception of the war Also in the report and in the pro forma budget the city attorney is Flat funded Is that Pursuant to recent developments, is that still a good Estimation And I'll just leave the question there And maybe you could bring it back to us at a future date in the appropriate setting When when is it anticipated that the cannabis tax? Well, when will the permit when will the stores actually open so that the tax will start will start to be generated? So it's a little bit outside of the city's control to some degree We anticipate issuing our preliminary award, which is basically the top two Top two of the 14 applicants that we got I want to say in the next two weeks So then at that point they have six months to get their land use permits from the planning department and from the planning commission So if they're diligent, I would expect that they and they have leases in place, which I know some of them do They may be able to move relatively quickly And get in front of the planning commission and get their permits and get themselves open Like I said before this budget is anticipating six months of revenue from two So that would mean them opening by January 1st 2020 Which I think is a reasonable timeline to get from A to B But obviously if somebody gets an initial award and then can't get a lease it throws a wrinkle in those in those projections Alternatively the numbers I think I'm hoping are a little bit low And so it's possible that you know either one or even if it was for one was only open for three months That the budget number is attainable Okay, thank you Yeah, and I think that's a realistic assumption. I was just you know curious about what we were assuming for budgeting purposes of the revenue And the other on the on the revenue side once again under property taxes and Vehicle motor in lieu We're projecting like a 6.6 percent increase and I was Yeah, that's part of the property tax. So are we still optimistic that? the property tax Revenues are going to increase themselves four and a half percent I think that the county gave us a little bit of a low estimate last year So the six point four six isn't an increase over last year's budget It's about four and a half percent over what we actually received this year, which is the information I got from the county this year Okay But are we seeing that is that strictly based on? turnover Our activity in the market because it doesn't seem that That prices are increasing in you further No, I would assume it's turnover So you have two drivers of that one is is just the 2% prop 13 and then the other drivers turn over so You know you see about you know 2% is what in theory if nothing sold or was reassessed in the city or was built That's what we would see and then all secondarily is the turnover And that's the 4.5. I think we're pretty confident that 4.5 figure for next year of all of our revenue projections That's probably one that we're the most comfortable That's one of the most stable in terms of you know the parking citations the t.o.t. The sales tax those are the ones that Harder to predict I'll rely on that optimism then Thank you or or worry about the other ones more. How about that? Those are those are my questions. Thank you. Thank you, ma'am Okay, thank you Sam Yeah, I have one some of my questions were already answered in the presentation or Sam beat me to it But one that I have is in regard to our teen club program through recreation I think it's a great idea especially to identify the kinds of youth that would want to be involved in our Boards and commissions that we have seats for youth now One of the things I'm curious about though is that with the enrollment by day model and the idea that we're going to have the Employment based on enrollment my question would be what would our plan be if no one shows up on any given day Is this going to become an on-call position assuming that someone shows up or? If it's enrollment by day and no one enrolls for any given day Are we paying someone to essentially sit in a room by themselves? I think yeah, that's a great question. So Enrollment by day would be that I'm going to sign up for Mondays Oh, I see and then I'm going to sign up for Tuesdays So that way within each month of the program or by session is kind of the model I'm thinking about going with so that the idea is that on Mondays is The days that we're going to do archery for teen club and That's going to have a six week session So for that six week session We will have a group of participants that will sign up for those Mondays and then we know how to staff That based on the enrollment perfect. Thank you. Oh, that was it. Thank you I have a couple of questions Going back to the transient occupancy tax it looks like it flattens out on your bars on page 10 of our packet there is The increase from 10 that we went that was voter approved from 10 to 12 percent reflected here Yeah, that was That's the jump right there. That's the little okay from 1718 to Actual to the 1819 adopted. That's the amended adopted is the 1.25 percent of the general fund portion Okay, thank you and then I just was looking for some clarification on We have a couple three different or four different reserves so we have the emergency reserve contingency reserve per's contingency reserve and then facilities reserve and from your recommendations on how to utilize the fund balance you mention the facilities reserve I What I'm trying to figure out is the differences between and I know there's it explains it here But it they just sound really similar the emergency reserve and the contingency reserve together as a whole and then the facilities reserve And I just wrote down a question like what is considered or considered a major repair Because if we had a major repair like Pat Cove for instance that was pulled out of our contingency reserve our emergency reserve and it just seems that It kind of falls into all the same place so when we're thinking about allocating the allocating those dollars I'm just trying to think of the least restrictive Reserve we have and if there's any reason behind that So Restrictive really Reserves are designated by council. So the council as a group could could Re-designate how those funds are it would take a majority vote Emergency reserve is really kind of just for emergencies where contingency reserve is kind of you're operating Ups and downs so if you're in a downtime you may pull from that contingency and then when it's up you put it back Emergency would be more like the storm drain from 2011 on the facilities reserve and we were talking a little bit about this this afternoon when we did the Evaluation in 2014 the recommendation was two to four percent of our replacement value Which at that time was 17 and a half million so that would be anywhere from 350 to 700,000 budgeted every year into that To cover the major repairs that you're talking about we don't have that kind of funding so we've never funded at that level Right a couple other points. I think One is is that we use the word per trust fund That's the same as this purse contingency reserve. They're the same thing the trust fund Why we call it a trust fund is because it's actually held by a Third-party and it actually we're by putting in the trust home. We're allowed to invest it in Higher risk type investments to get a longer to get with a longer investment portfolio to get a higher rate of return in it So we do talk about putting funding into both of those either the purse contingency or the facilities reserve and the logic behind not putting More to the contingency our emergency reserve is You know primarily driven by the fact that we have a policy funding level on those that you know We say we're gonna have 10 percent and 15 percent in those funds and so There is in a sense whether it's actually more restricted than the purse reserve or the facilities reserve there's more of Restricted in that sense. Maybe it's more politically restricted Yeah, it just okay, so Somewhere in here you mentioned that you are that one of the recommendations is to move 55,000 to the emergency contingency Reserve, is that correct? Was that insight? It was in the budget. So under the policy We have the 10% to emergency and 15% contingency right now based on what the balances are in those reserves and what our Proposed budget is they'll be underfunded if we don't add so I think we need 25 to the emergency and 30 To that contingency if I have that right to get them funded at the problem. So the only the only Only reserve we're not backfilling is The facilities reserve If we don't do anything so it's just the emergency contingency that we're backfilling out of all the reserves And we have an allocation to the facilities we have the 108 proposed to go into the facilities reserve In this budget, right, right The 55,000 that I'm talking about for the two reserves is already out of that 1.3 million, right? and then The Regarding the children's fund just a little note I just want to make sure that we say early ed and youth programs because there's two very different things And that's not reflected in the budget And then in addition to that we you were mentioning the 22,000 for 1920 are we anticipating the same amount For 2021 I couldn't really figure that out from the budget because the decisions we Make today for 1920 You know decisions we make today for 1920, you know when you look at 2021 It comes down to growth in t.o.t You know if we can see growth in t.o.t. Then there will be more in 2021 well, but from what I see it's going to be the same amount of t.o.t. for 2021 and So if we just kept everything as is and funded from the the groups already the 13,000 Would it be safe to say that? 22,000 approximately would be the remainder in the dedicated children's fund. I Think that's a safe estimate. I would you know just When we look at our revenue assumptions particularly for the more volatile revenue sources whether it's t.o.t. Or sales tax The one thing I can tell you is is that we're not going to get it exactly, right? Invariably, you know we can project a 1% growth and we'll see 3% growth or we'll see half a percent So at this point, you know, it's kind of like the finger in the wind It's probably where we think it's going to be but but it'll probably be a little bit different Well, one of council's goals or our intentions were to use one-time funding on one-time things And so when I'm looking at that $22,000, I just want to be mindful that it's on funding. Yeah, that's ongoing, right? Okay, so and just what would what will be available next year will be dependent on what how the community grant program plays out right do we have a Timeline on that. I know the RFP went out. Do we know when the deadline for completion for that is? Larry stepped out. He's like he's in timing is great I Don't know so I think I think we're gonna hoping to get somebody on board here before the end of the fiscal year and then start The process this summer and then going back to the t.o.t. In the budget It separates the BIA capitol of village so it says t.o.t. And then it few lines down it says BIA Chamber on the revenue summary under Under summary information summary information in our budget Under revenue summary So are you I? Guess we need page numbers, huh? Under special special revenue funds. Oh Interesting, so I've noticed that they're separated and I was curious why so that that's I mean, it's actually on every page so if you continue through the revenue summary expenditure, so I mean So keep in mind the BIA capitol village worth BIA that figure that's the BIA revenue 104,000 no, it's we're project. Yes the hundred and four that's exactly that's their total revenue with their assessments of about 75,000 So under the t.o.t. Restricted revenue What's the difference? So what we did was we set up a special revenue fund for restricted t.o.t. Money So all t.o.t. Money will come into that fund and then from there we will either Pay directly to youth programs in the grant programs We will pay directly to the chamber or we transfer down to the BIA Because the BIA already has their own fund special revenue fund for their assessments So it's a little bit funky in that some of it shows as revenue going one area And then it's not really revenue to the BIA. It's more of a transfer that's approved by counsel But they still have another seventy five thousand dollars of assessment revenue that they program as well So the trick is is to think a little bit like a government finance person And if you take money from this pot and you put it here you get money in this pot And then when you move it over here, you also get money over there, so It's hard to get your head around because it looks like it effectively. It's being double-counted If that makes sense, it's not double-counted in the budget in terms of our overall numbers But when you look at the totals When you have money moving from fund to fund looks like revenue When from a logical layperson standpoint, you may not think of it as both numbers are just accurate But it's not they're accurate, but it's it's hard to get your head kind of around If that helps so the BIA BIA capital of village wharf BIA that line that shows up in the special revenue funds That includes both the money that they the thirty thousand from the above line already in there and The BIA And then you mentioned the impact on for the mall redevelop free vitalization. That's a tongue twister And maybe this is just for it's just a comment That maybe that's worth working with the mall on you another on your wish list of CIP projects was the 41st I mean, it's worth the conversation to have who knows maybe they'll pay for it but and and that could be a role of ours as well to To talk to them about that in the future. I Think that's a great point I mean, I do think that it's very typical for large-scale projects like this to include some off-site improvements And those could be some that we would be working through them working with them through the course of the entire my process And in addition, you know, I meant to say it earlier this evening But I think, you know, I spend all this time sort of beating on the dangers of sales tax and over reliance on sales tax I think that the mall project is one that we need to have some real conversations with the developers and as a council about is Is there are the ways to diversify the revenue stream off that project when it's done? You know, does it need to be at this point? You're the ball is essentially other than business licenses is a hundred percent sales tax generator Then when it's done could it be still revenue source for the city? But you know potentially generating other kinds of revenue for us, whether it's to tea or You know some sort of special tax, there's there's a number of different options that we can look at through the process And then my last comment is regarding the after-school Pilot I just want to The original vision that I had I would just stress that it's really important that We consider ensuring that this program is for all students all kids and In the area and so moving forward. I know there's a definition here, but I don't know if that's That's exactly what I was envisioning and I just hope that we can keep that in mind that it's a My idea was that it would be a continuous after-school program for the students to attend and that it would be Partially funded by the dedicated children's fund but also in partnership with with the school district So we can offer low-income Offer it for free to low-income families and so forth. So it's not just completely fee-based. So just something that I wanted to put out there Is that something you mentioned the children's fund is that something we can come back with a scholarship program or something is that You know I from what I understand it's at the early stages since it's a pilot program That there are a lot of community partners such as the school district United Way that could also offer some of these opportunities so You know, I that's probably that could be an option, but I just don't know again. It's the foundationally what it is It sounds like it's it's moving a lot of steps ahead And again, I just want to make sure that it's clear what the model is before we we move forward with approving it So would it be helpful for us to come back at the next budget hearing with more about the model? Would that be I would appreciate that Thank you Sure, I think it's important to recognize, you know by reading through this, you know We are in a lot of transition I you know, especially when I looked at public works, you know We've gone from the full-time superintendent to the field So it's hard to get a figure on how the budget works out on the annual basis and I recognize in a lot of departments I'm finally feeling after a lot of department head replacements and and other things that we were very stable now going into this Year at least with our personnel. So it'll be easier to evaluate all these departments on To Sam's point, you know when we were when we look at this I mean, I appreciate the Accounting and I know that from your perspective this all this is crystal clear to you But for us sometimes for for me, and I'm sitting up here We're right now trying to figure out that we've got this supposed excess money We want to allocate and the helpful thing is I think you're gonna bring back to us is we need to know You know if we're gonna try to allocate some money to something How much is already in there, you know, like our facilities fund for example, you know Because there was talk at one time about you know, how are we going to improve that? But then apparently our least thing is not stable at the school district So it's kind of hard to commit to putting more money in there doing that But on all these things, you know It'd be nice for me to look at it and say because it because my recollection right now is I'm feeling like This time last year We were talking about the wristband and you can maybe go back and look this up for me But I thought we were thinking well the wristbands funded But we think we put I think my memory says we put more money in there last year because we didn't want it to fall short and Then now again, we're here and it's We want more money because we think it's going to be short and I'm thinking I don't know that it's short I think but maybe Steve might be Clueness to it's like Park Avenue and Claire's these projects doubled over time because what we thought was enough to do something Is not enough to do those projects I don't know if that's part of why you hinted that you might like another 250,000 for the wristband because you don't think we're gonna get it done for what we had Because I remember last I think my recollection is that we did put money into the wristband last year just so we wouldn't be short and Apparently that's what I'm what I'm perceiving So like I said when you come back just let us know how much money we actually have in that fund and what your Best guess estimate is next to it You know if you think the wristband is gonna be 800,000 and we only have 500 then that means we're short three and that's what we need to know because You know, we're sitting here trying to figure out we have one point Apparently $559,000 to play with now by my best guess if we if we decide to to allocate that the other area that I had concern on was This our parking incitations, you know, I mean it's a major source of our revenue and I think We we danced around it a little bit, but over the past two years. We had significant Illness injury lack of full people on the street lack of a complete revenue I mean and it's it's between the two of them It's about 1.2 million dollars and they both suffer when we don't have those people out there And I know that's where I'm reading it now is I know there was a 50% Public Works guy that was going to be the 50% repair meter guy and now he's fully into public works So who's repairing the meters is that back on the? Public Works is going to be repairing the meters. Okay, so the the 2.5 I'm gonna call well in the book and the thing it says to went from 3 fta to 2 fta And then we have a 990 hour, which is the part-time person gave for lack of a better term I'm just wondering I'm wondering I guess I want to hear that you feel that of all those people are actually there And we don't have the injuries and that that is adequate to secure our revenue incitations from parking incitations I guess that's what I'm wanting to hear Thank You mr. Mayor members of council. I do believe that you touch on it council member Bautorf that we had during the peak season of the year this current year A shortage of our two parking service officers due to injuries About two and a half months worth and that had the most significant impact on our revenues Absent that and they're healthy now and good luck if we have those two parking service officers and Gabe as our 990 or 900 officer that is the staffing number that makes me comfortable as a police chief that we have the Personnel available and working to manage that part of the program in addition to Steve's employee who helps out on a half-time basis Maintaining the systems and the parking meters and the pay stations. It sounded like a good plan And I'm optimistic that if we have a full year like you say that it would be prosperous I think there is upside on on especially the Yeah, I know that when we went from the two out of three are there was a drop in the citations But I think that the stability of that that probably will go up a little bit when we have people out there on the street So I'm thank you for reinforcing that. I appreciate that and the last one is is you touched on her briefly this city council memberships there was an increase from Come on to say 28,000 or 35,000 is that about right and and you there were three things there that were in the I wrote them down one was BPE CCC and then the the jet sky thing. I think those are the three memberships that we were on I Wrote them down on one. Oh, here we go MBP. Oh, there we are there we go. Can you tell me what those first two are? So m back we joined I want to say about Five years ago. It's Monterey Bay Economic Partnership. It's a You know regional tri-county nonprofit that's trying to sort of grow regionally do economic development But Colligan you may know it was the founder of that The four C's is the central coast cost of that Five five done. Okay, great. The four C's is the central coast climate compact. Is that correct collaborative? Collaborative and we took that to council at some point a couple years back to about joining and then the membership on that is About five as well the jet noise round table. I want to say about three sounds about right Okay, I know that That I weighed in on on suggesting that we joined that but I also weighed in with it saying I'm gonna join We're gonna go for a year and if I don't find it fruitful. We're not gonna continue And so I'd like to get some feedback Whoever is involved about the fruitfulness of our $10,000 and those two I don't know if that would be through you or through somebody else, but the other two Just curious. I think the mayor has been the primary contact at least for the four C's Mbap I You know, I attended a couple of their workforce committees early on and Realize that it probably wasn't a huge value for me to attend their subcommittees. So I haven't been an active participant individually I don't think of the staff level we have so I think it would be a question for council as if council is, you know, Utilizing or participating in any of the Mbap Any more time I'll go ahead and talk to the mayor on that and then get an update from him That's all I got Just to follow up on what he vets that I campaign on youth activities also and I agree I want after-school activities so that like when I was Faced with my daughter coming home from school Where did she go and that was a huge burden on us having a safe place and also having a place where The kid could be doing activities. I thought was fruitful for her at school, etc So I campaigned on this before I saw the the new direction of our park and rec program And I'm very pleased that we have new energy and so I think I probably agree with you I'd like to see what the program is envisioned and How it's moving along and then What I thought before the election is Definitely different than what I think right now So I welcome, you know presentation on the program and see what we're dealing with Okay, so I'd like to support the activity as it is now Some of the few questions I am scared so you'll see some of my questions are gonna deal with this But our economic future That we're tied to we're sort of being driven by what's surrounding us so The the delta percent in the UAL basically how much more we've been Charged for the unfunded liability has gone up over what a hundred and forty percent or something like that. It's huge That's in the last eight years So if we're going to have an economic downturn We're going to have to respond to that because that UAL will go up again So how soon do we know how fast does per's respond to the economic climate? I know they do smoothing and their projections So I'd like to know how much time do we have to respond when we see what's happening and then we know they're going to respond per's issues their Reports each August, so we'll get a report this August and it'll go through June 30th of 2018 So we have about 15 months if we're tracking what the economy is doing and what per's investments are doing We'll know about 15 months 12 to 15 months ahead of time which direction that should go But there's a caveat to that is That's just on the investment side There's probably a hundred different assumptions in there that they can make as far as life Expectancies general hell The makeup of the age of the groups that are in there. So it's hard to know Exactly When it's going to change so when we get ours for August it will be for next year Yeah, probably in reality we get about six months because that's that's a pretty tight city manager excuse me the the other thing about CalPERS is to keep in mind they Probably criticize them to some degree for this, but they're very they like to phase things in And at times that ends up meaning that we end up paying more because for example, there's still this UAL Is phasing in the investment losses from? 2011 2010 so They they try not to change too much based on Year-to-year fluctuations in the market and they try to smooth it out over time so We have this forecast and this forecast has proven relatively accurate for the last four years I would say they've been marching along pretty close to what their forecast has been now the economy has been humming so In fact, some of these numbers have actually gotten a little bit better With some of the returns we've seen I think that 2.3 and fiscal year 24 25 was 2.5 2.5 last year. So There's a smoothing and so even if you know, even if there's an economic shock You know, we have some lead time with our actuarial and then they phase these things in over time So there's time to plan but you know, it's hard to plan for these kinds of increases regardless of how much time You have I see a question from Sam. Yeah on that and One what population do they use to determine our actuarial liability? Is it discrete to? Our staffing it is okay, and could we see or at least I would like to see a copy of last August report Yeah, I can get it on that. Yeah, they're available online, but I'll send you there. Okay, great. Thank you So the actual area report doesn't actually pull out our employees, but it is it's discreet to our place and that's actually a change from How it used to be we used to be pooled it was good with a bunch of other small-sized cities Unfortunately when we got unpooled and they actually did an actuarial for our employees and our retirees The news got significantly worse. We actually benefited from the pooling substantially Um Well, I guess and maybe I'll follow with this But if they don't in the report if they don't discreetly identify our staffing How did they come up with our? Independent unfunded liability So the report is public. It's on the internet and it does break out The probably the closest it comes is to breaking out the accrued unfunded liability associated with retired Employees for the city and active employees for the city so you can see those two numbers and most of it actually is retirees at this point There's relatively Smaller portion of the unfunded liability is attributable to people that are still working for the city at this point but So the actual spreadsheet if you will where they have Employee with how much they're getting and what their life expectancy is and everything else that isn't part of that report stuff We don't we don't frankly see So is the issue though is it longevity? or is it Earnings Or a combination of the two Earnings seems to impact when they have a good year. We will see it come down a little Not as much as you would expect if if their target is seven or seven and a quarter and they're earning 11 or 12 You'd expect a big dip and we don't necessarily they smooth it out over when she meant yeah When I was talking to our new auditors last year the partner there said that he had gone through and done some auditing of CalPERS actual reports and saw a big variance in life expectancy He said he saw some folks that had a life expectancy of like 110 years And when he questioned it and he said well There'll be medical advancements and people will start living that long So they they play a lot of games with a lot of different assumptions Now well we can only hope at the light at the library board the finance director for the library is actually Marcus Pentel for the city of Santa Cruz So we did they do the work on contract for the library board He was presenting the budget this year to the library board and he was Saying that based on his analysis he believed that if CalPERS that actually just got index fund returns since 2011 that they would be a hundred percent funded today and I followed up with him afterwards because that was a pretty Pretty bold statement and he talked to me a little bit, but I didn't see a lot of the backup So that question of what's driving the unfunded liability is it changes in assumptions? Because they changed assumptions that changed what they call their discount ratio Which is their assumed returns over time the lower the discount ratio they used to be at seven and three quarters They're going down to seven here shortly Maybe they should be at five, but every time they bring that number down It grows the unfunded liability every time you assume someone's gonna live longer. It grows the unfunded liability Conversely if you get returns that are better than your discount ratio your unfunded liability should shrink so All of these things factor in and play play a part of the picture, but for sure CalPERS's returns have not worked in our favor in the lessons, you know since 2008 Well, if you could I mean I would like as much information as she could Provide me to you know be able to study that issue and determine whether or not we need to increase our PERS You know trust account, so thank you Just before you move on mayor to finish answering your question They also provide a five-year projection and that CalPERS report in the actual report and their projections For the next year are generally pretty good So like this year I have what is going to cost this year and their projection for next year and that's usually pretty close It's when they get out into years three four and five that it starts moving around Which is this year we saw a $200,000 decrease in the fifth year it could change next year depending on how their investment earnings are So we do have kind of a five-year projection, which we build into our model as well And they actually show it Based on different returns. Yeah, right So you know they'll show with you if they get under perform, you know what what your UAO will look like over that five-year period if they over perform Okay, so I know the UAO is going to go up, but I feel a little bit better that we have some sort of Warning about how the change in the UAO is going to go so that the city could respond and we don't have to abruptly change course We could actually plan for things I know it in your presentation that the workers at Capitola have Been following Good work procedures and workman's comp has gone down because of that I thank you very much and I also know from the budget that Overtime, which I think police department is largely figuring in that has also gone down. So my kudos to everyone on staff Also, I notice in the budget you anticipate a drop in sales tax when the work on the mall starts So I asked you in the hall about this. I'll bring it here in the public I was thinking that we could start slowly setting aside money and a special fund to deal with that What we know is going to happen So Just like in the UAL if we have a sense that it's going to happen then we can plan for it. We already know Depending on work is going to start at the mall that we're probably going to get a drop in sales tax So, you know, maybe that idea can be developed and brought to the board here We could get a sense of if that's something for us to work on So In terms of cannabis We have you made a statement City manager about the approval process and I think it's a two-step approval process So the police is working on that and reviewing it and I appreciate that because we want to get the best choice as possible But also is in California state involved to some extent It's not just us. That's correct So the six-month window from when we give them their preliminary approval is to obtain all their permits necessary to begin Operations and that includes the land use and building permits necessary for us to issue locally But as well, they also have to get their state licenses. Okay Chief is this something that you know about because within your experience at all and like you're going to be choosing the best guys The best companies possible and the vetting is probably going to make it easier for the state to approve But do you have a sense of what we can expect? Thank you for the question mr. Merrick police chief alone is not going to make the selection to cannabis retail I know you but you're part of your driving it. Sorry With regard to the state City manager is Accurate in that they have The requirement is that they get their state license and in conjunction with the local CUP before they can operate The state on that topic the state is One year ago. I would not have suggested to our council that the state is necessarily efficient in that regard There are a whole lot more efficient now because of some of the progress that they've made so I'm comfortable that if the applicant has the proper Filings with the state that it that it should be a relatively efficient turnaround for that permitting In conjunction with our own local permitting With regard to the process As you mentioned, it's a two-part process Captain dally just took the lead internally on Evaluating the 14 applications that was not an in-person evaluation That was a Methodical evaluation of the applications alone with two counterparts one from our partners in HDL and one from a local Santa Cruz County Expert in the industry. So that was the first part of the process The next part of the process is an in-person Interview or we will receive a presentation from the six finalists six finalists of the 14 total That will happen within the next week or so and we hope to be able to make a determination of the To that will go forward to the CUP process At that point and so I'm comfortable with our process I'm comfortable with my role as a chief of police here and understanding that process and that We will hopefully select the two licensees that are Viable Good partners in the community and are able to generate the revenue under the cannabis retail Licensing process that that we would project And I'm happy to answer further questions about the cannabis licensing kind of the state of the industry locally or or or Within the state or questions specific out the process if you'd like No, I wanted to hear from you that you're comfortable with the process and My sense is that there was some uncertainty in the approval process and you've answered my questions. Thank you Thank you very much Steve Before you leave I'm very excited about the Neighborhood watch program and I hope in the future we can get a report on that because I think that's very good for the safety of Capitola and the interaction between the people who live here in our police department. It's only going to make things better We are excited as well. We we just scheduled our fourth Neighborhood watch meeting in a couple of weeks and so the community is becoming interested I think that we're being effective in getting information out to the neighborhoods generating some interest via next door via Walking through the neighborhoods that we've made a good amount of progress over the last year There's more progress to make but I would look forward to the opportunity to come back to council and provide a presentation as to the status of Neighborhood watch. Thank you. Appreciate that Now I have a question for our recreation department directors Excuse me director. You got me on that the first time so I notice you're you're seeking an accreditation and I'm wondering what that all means are we going to be Viewed better. We're going to be more apt to get grants or what did you do this? So the American Camp Association is a national organization that provides a set of professional standards and best practices for camps to Kind of measure themselves by and so the accreditation process is reviewing each aspect of your business as a camp and and Trying to meet those best practices and then through written documentation and On-site visitation while camp is in operation By volunteers who also are in the business and are familiar with the standardized the standard process They come and they view your camp and assure that you are actually achieving all those standards that your camp is Fitting those best practices and in a way turning around and saying to the community that anybody that has an ACA accredited stamp with their camp that that parents and families can trust that that camp is providing a good safe and Progressive program for their camp or for their for their youth and so I'm hoping to bring that process to Camp Capitola in order to Do just that ensure that we have best practices and that we are providing a Safe and progressive program for our youth Okay, because because I remember when my wife and I were trying to figure out if Camp Capitola was a place for our daughter and we were both at work because we're two working family and So we're very concerned about that. So I think this should help people are considering Camp Capitola. I thank this. Yeah, thank you very much. Appreciate it So the roundabout this is for Steve the roundabouts been on forever and How much more are we going to be waiting for PG knee to really give us And I know there's an accumulation of funds that go into the undergrounding, but I've done probably 30% of the design work And at this point we've run into a another delay is trying to get AT&T to participate in So the whole undergrounding thing is yet PG knee will do the design, but they don't necessarily Bring along AT&T with them. We've met had a meeting with AT&T. They are It looks like we're gonna have to readop to a undergrounding resolution for to make them become a participant in this Okay talking to other jurisdictions undergrounding projects are Take about three times longer than you think they ever would and Unfortunately, we're kind of in that holding pattern right now. Okay, so this is basically our service providers are not working well with us Okay, they have their they have separate separate priorities than we do Okay, thanks because often get that question. Thank you I Should have asked you to stay up In terms of the street sweeper Often see the street sweeper go up and down and no one moves their car and everything seems to be still underneath the wheels of the car so Is there any Thought about having some sort of moving of the cars on a regular basis so we could do that it happens in most major cities So the streets are clean and I understand we get the money for the street sweeping because we don't want the residue to Go in the drain during their winter So, I don't know if there's a no, you're right larger cities do it. Don't park on the side of the street every Wednesday and things like that it would be quite a big effort to Institute that I think it would Impact our residents greatly to move cars around. It's something we could certainly look at We'd have to really get in there and redefine Our streets sweeper routes and trying to find you have to have them give them one day on one side one day And the other right now. We're just up and down a street in a day. Yes, we're in and out But we try and vary it so hopefully cars move, but that's certainly something we could look at How do people know when the street sweepers gonna come? They know just by living there. I mean, it's the same day of the week usually around the same Same time. It's every other week for the residential streets And we get a lot of calls that we're the street sweeper today, so I know people know Okay, we'll worry about that one later. Thank you very much in terms of the rail trail Some little surprised. I thought this is an RTC project and well, maybe Steve you're also gonna answer this So why are we putting money into this? I thought this was so this is a connection from the upper beach and village parking lot up to Monterey and then an improvement of that empty Piece of property next to the rail track at Park Avenue in Monterey It's not a it's a very small portion of the rail trail and of the $250,000 or 250 $200,000 of that is from the RTC and 50,000 of it was Kind of a matching fund that we have with it So it was because it's a benefit to us to get people Part of it is on our parking lot and going up to the rail trail itself the very small section of the rail trail That's getting built as part of this Okay, so I stood out You know I think I agree there is a benefit because I've stood out in the parking lot many times and asked residents Why are you walking up the hill and cars are coming in and out and stuff like that and they Prefer to go up the driveway and start down to the village at the top of Monterey So I think in fact you're right that you know, it'll take people off the driveway when cars are coming in and out I think that's how we identified it But but it's being treated at the RT cell and I'm not blaming them for this as a part of a You know full rail trail project. We're right now. We're stuck trying to get agreements to go in there and do some environmental Studies to see what you know how much arsenic there is on there And they're holding us up to see what kind of right-of-way and insurance certificates were required to have so it's just Being treated as a big project even though it's a small project Going on for so many years my way of background this project was actually the first step of it So what this project was really intended to do as a public works director said was get people in and out of back Cove less awkwardly and the first phase of it was what we did here to get out of the upper lot Sidewalk that we put in if you're walking down the left-hand side and that's what we wanted to do going up to Monterey That would have been a much simpler alternative is just get a sidewalk in we would have had it up years ago The problem is there's just not enough width and Steve and I were out there multiple times measuring and squinting and measuring again And trying to figure out some way to do it and We realized the only logical answer was to take people up to the train tracks and then have a lot head on the train tracks Little did we know how challenging it was going to be to get that done Because then it becomes an RTC rail trail project which has a whole host of other issues rather than just being a simple sidewalk So the intent behind it is to find a safe way for people to get out of the upper lot going to the east That's the goal. Okay, and I know there are other issues that are somewhat contentious But I do want to emphasize that it is a safety issue and especially at night. This might be beneficial I don't know if we're gonna provide lights for night, but I agree that it is a safety issue Thank you very much So I notice we're budgeting and anticipated revenue from the cannabis operations Is the Sense of what might happen to the former Osh store Something that we could treat in the same way because so that is part of the reason why you know Even though it looks like we have a sales tax decrease That sales tax estimate was is a we think about a hundred thousand dollars better than We did this year our best guess and that's taking into account the Retinining of the Osh store. It does. Okay. It was a mention. So I just had asked on okay So If there is a downturn you were talking about property taxes fairly stable and goes up 2% because of prop 13 But also if there is a downturn Folks tend to get their property reevaluated. I forget there's a proposition that allows that to happen Yeah, many thoughts on that, you know, I forget the name of the proposition, but When I've seen that happen in the past was during the housing downturn, I think it was more in San Joaquin County I don't know that there was a whole lot of reassessments in Santa Cruz County like there wasn't in the rest of the state but it typically at least last time it took a couple of years of Prices dropping before they started reassessing Okay on an automatic any anyone can go in at any time and appeal their assessment and try to get it reduced When the housing market crashed after the first couple of years, they just wholesale kind of did all of them at least in San Joaquin County okay, so the lag time is is pretty slow and Probably this county doesn't really respond as much like San Joaquin might have a bigger wiggle than we would as I would you'd say So I think the other key thing to keep in mind is is that you're much more susceptible to that if you have large Tracks of housing that are coming up into the market at a particular time because For example, if you've owned your house in Capitola for any period of time beyond two or three years at this point You have 10 20 30 40 percent Your assessed value is going to be below what what the actual market value is so there's a pretty large buffer for most people It would really only be Situations where somebody had bought, you know relatively close to the economic downturn where they haven't built up that that delta between the market value and the assessed value so because We don't have large tracks of houses that come up for sale in any given year. I think we're Relatively insulated from that and that was our experience during the economic downturn. I think We may have had like one year of zero property tax, but don't think it ever went negative like in other communities I'm not sure, but if it did went negative it was You know one percent at most, okay? I just want to understand a little bit more about the basis of your assumption there So I think in general folks here have probably exhausted everyone in terms of questions. Are there any more questions of staff? Sam thank you, ma'am What did they just maybe ask for some additional information on the home program reuse fund They have about a half a million dollars sitting there. What what program I didn't hear that. I'm sorry It's the home program. Oh, right reuse right right on And so just maybe what are some eligible activities? For that fund under the federal guidelines I Can see how it's been used in the past but so that that was just my my one request We don't really have We don't have No, we don't it's under let me double. It's under special revenue funds double check that so we had a couple of account Our new auditors have a different take on how these funds are reported and so we did some they they want us to book the outstanding loans as Available assets, they're not really available assets. I thought I'd cleaned all those up Okay, yeah, maybe give us We can't spend the money that we've already learned to somebody right. Yeah We can't use it twice Yeah, please. Yeah, well I check in on that and follow up with us about maybe how much is actually You know sitting there in that fund balance Thank you And yeah, I I forgot to post it question What's all the all of them up here under the community development block grants? Special revenue funds again It mentions the city has applied for 2.7 million in TDBG funds and anticipates the receiving notification in 1819 That's all language. We didn't Okay And I am comments are we For and just requesting more information regarding the the children's fund But I don't know when you were ready for when you're ready or do you want me to know? So regarding the dedicated children's fund, I know that there's the 22,000 What do you want to serve what's the right terminology? Yeah, unbudgeted and So again, I ideally would love to utilize some of those dollars for the after-school pilot program So again, I just want to be clear that I would hope that the presentation coming forward Talks about the sustainability of the the pilot program that it's a year-round program not just a six week program Or staggered. I would hope that Eventually the model would would be something when I say year-round I'm referring to a school year year-round program So that would be one of the things that I would like to see the dollars being used on The other would to continue to fund the Santa Cruz Children's Museum of Discovery and then the third piece would be to look at The usage fees Possibly creating some sort of grants program for Those who want to come into the city to open up a child care center So if a business wants to open that we would as a city possibly waive those those fees for them I don't know what the number is I don't know if we want to come back with that next time on how much a set aside Annually could look like or would have to look like in order to to do something like that Support yes Thank you, so I think We need more information Also, as Jim said the fact which met I think last night wanted more information Before they could make the recommendation and I have to say the discussion was pretty good and so respecting the fact that They're part of this process. I think is definitely well-founded in terms of how the city works Tomorrow I might mention that we have a volunteer dinner and the facts are gone the fact members are part of that volunteer service I think we need in general besides more information Which I I note that you've been writing down a little bit more information about how the various programs are anticipated developing What are some of the ideas on the table? Just like you bet I campaign on youth activities, too So I'm very concerned about that, but I also want to give Professional courtesy to the person who's working on the program to come up with solutions that work really well I Understand that you're going out to all the organs many of the organizations in this area And I believe you're trying to partner with them where you think feasible and I respect that approach because those Organizations are already operating and they have a footprint in the community Which means that people know about them. They have a track record. So I kind of like that approach When I was campaigning and talking about what I'd like to see for youth I also realized that the city is not in that business and we'd have to partner with someone just to even get Something off the ground. I think we'll we have facilities. We have a community room here with a Wi-Fi We'll have the library presume and J Street Park props could be a facility, too And I know there's issues with scheduling So I look very forward to you know presentation and Jim I look forward to more information so that the fact in this council here can make better decisions And I appreciate both of your presentations the state of the city was good I think anyone listening got a pretty good idea of where we stand and And Jim, I think you wanted to detail that's very important for us And I think everyone had it off ample opportunity to ask questions No more questions Sam you're sure. Oh For now, I'm fine. Uh, well Maybe one but I could resist. Did you guys get what you needed from us from tonight? I noticed it said, you know next steps and tonight It says identify budget issues to follow our direction on uses for the Youth fund. You're all good. We have some ideas for the youth fund that we can bring back some more details We have a bunch of questions and more information we can develop and bring back slides for our next hearing good Okay, thank you. That's it Ed. No, okay. You're in the meeting. Thank you very much