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RES-2020-068 RESOLUTION NO. 2020-068 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ANAHEIM, CALIFORNIA, DECLARING A FISCAL EMERGENCY RELATED TO THE INCREASING SPREAD OF NOVEL CORONAVIRUS DISEASE 2019 (COVID-19) WHEREAS, on March 4, 2020, California Governor Newsom issued a Proclamation of a State of Emergency due to the number of confirmed cases of the novel coronavirus disease 2019 ("COVID-19") in the State of California; and WHEREAS, on March 16, 2020, pursuant to Resolution No. 2020-030, the City Manager and Director of Emergency Services declared that a Local Public Health and Safety Emergency existed throughout the City of Anaheim due to the threat presented by the continuing spread of COVID-19 in the community; and WHEREAS, on March 17, 2020, the Orange County Public Health Officer declared a public health emergency in Orange County due to COVID-19, which was updated on March 18, 2020; and WHEREAS, on March 19, 2020, Governor Newsom issued Executive Order N- 33-20 ordering all individuals living in the State of California to stay home or at their place of residence, except as needed to maintain continuity of operations of the federal critical infrastructure sectors, effective that same day and in effect indefinitely until rescinded by the Governor; and WHEREAS, due to the threat posed by the COVID-19 pandemic, and the resulting State of Emergency declared by Governor Newsom, the Local Emergency, and the Stay-at-Home Executive Order issued by Governor Newsom, all Non-Essential Businesses in the City of Anaheim closed on or about March 17, 2020, and remained closed until June 12, 2020; and WHEREAS, Non-Essential Businesses include major league sports franchises that operate within the City, meetings, and conventions within the Anaheim Convention Center and the City's tourism industry stakeholders, including The Disneyland Resort theme parks, shops, stores, restaurants, hotels, and vacation rental properties, which generate Transient Occupancy Tax ("TOT"), and sales and use taxes, which constitute approximately 60% of the City's General Fund revenue that is required to sustain the City's general operations; and WHEREAS, on April 14, 2020, Governor Newsom outlined six indicators that the State of California would consider when modifying the Stay-at-Home Executive Order; and WHEREAS, on April 28, 2020, Governor Newsom announced four "Resilience Roadmap Stages" that the State of California would use to guide its gradual reopening process, including: (1) Stage One, Safety and Preparedness; (2) Stage Two, Lower Risk Workplaces; (3) Stage Three, Higher Risk Workplaces; and (4) Stage Four, End of Stay at Home Order; and WHEREAS, the State of California had been in Stage One since Governor Newsom issued his Stay-at-Home Executive Order on March 19, 2020; and WHEREAS, on May 4, 2020, Governor Newsom issued a State Report Card, announcing that the State of California could move to Stage 2 to gradually reopen some of its lower risk workplaces due to successful and ongoing efforts statewide to combat the COVID-19 pandemic and flatten the curve of positive cases and/or ICU hospitalizations relating to the pandemic; and WHEREAS, on May 7, 2020, the State of California Public Health Officer issued an Order permitting local jurisdictions to move into Stage 2 and containing guidelines to assist local jurisdictions in deciding whether to begin reopening lower risk workplaces and permitting residents to engage with reopened businesses, establishments, or activities within the respective jurisdictions; and WHEREAS, on May 23, 2020, the State of California Public Health Office approved the County of Orange's proposal to move into Stage 2 and begin reopening lower risk workplaces pursuant to the guidelines set forth in the State Public Health Officer's May 7 Order; and WHEREAS, on June 11, 2020, the Orange County Public Health Officer issued an Amended Public Health Order permitting all businesses, industries, and entities identified by the State of California as constituting "lower risk workplaces" to reopen in the County effective June 12, 2020; and WHEREAS, businesses, industries, and entities within the City of Anaheim's jurisdiction, which qualify as "lower risk workplaces" pursuant to the State of California Public Health Officer's May 7 Order, began reopening on or after June 12, 2020; and WHEREAS, Major League sports had suspended operations throughout the United States for each of their respective franchises, including those present and operating within the City, on or about March 17, 2020 due to the threat posed by the COVID-19 pandemic, and remain suspended at present; and WHEREAS, concerts, music festivals, and other large public gatherings fall within Stage Four of the "Resilience Roadmap Stages" announced by Governor Newsom on April 28, 2020, and the Governor has not provided an update or concrete timeframe for when the State of California expects to begin Stage Four and/or when such events or public gatherings may resume within the State; and 2 WHEREAS, due to the impacts of the COVID-19 pandemic, including Governor Newsom's May 19 Stay-at-Home Order and resulting closure of businesses throughout the City's jurisdiction, the City of Anaheim has experienced a 20-27% budget deficit, amounting to $75 - $100 million for the fiscal year 2019-2020; and WHEREAS, Orange County area unemployment continues to remain high, with the unemployment rate within the City of Anaheim estimated as at least 13%; and WHEREAS, City of Anaheim revenues continue to decline precipitously, as the ongoing pandemic continues to impact city revenues from sales taxes and most significantly hotel occupancy taxes, which historically has been the largest General Fund revenue; and WHEREAS, due to the indefinite, ongoing nature of the present pandemic and the lingering economic uncertainty arising from this public health emergency, the City Council anticipates that it will adopt a revised 2020-2021 Budget which would institute various cost reduction and revenue enhancement measures to address the anticipated budget shortfall; and WHEREAS, starting on or about May 27, 2020 and to the present, the City of Anaheim has engaged in negotiations with each of the union representatives for its bargaining units, in an effort to reach mutual agreement on reducing the City's personnel costs to offset the City's fiscal year 2020-2021 deficit; WHEREAS, the City Council hopes to approve agreements with bargaining units represented by the Anaheim Police Association, Anaheim Firefighters Association, International Brotherhood of Electrical Workers and the Anaheim Municipal Employees Association, which delayed wage increases set to be provided to employees in these respective bargaining units over the next 12 calendar months, and is expected to offset the City's general fund deficit by $4.5 million in the 2020-2021 fiscal year; and WHEREAS, the City of Anaheim has embarked on a course to effectuate the $75 million in budget cuts; and WHEREAS, on June 9, 2020, the City Manager's Office presented a Budget Update to the City Council with figures relating to the impact of the COVID-19 pandemic on the City's finances and economic outlook; and WHEREAS, the City Manager's June 9 budgetary update presentation projected that the City of Anaheim will experience a 31% drop in TOT revenue for the current fiscal year (amounting to approximately $53.8 million) relative to the adopted budget, and an additional 30% drop in TOT revenue for the 2020-2021 fiscal year (amounting to approximately $36.7 million); and 3 WHEREAS, the City of Anaheim faced an approximated, net 12% drop in TOT revenue over two years during the Great Recession of 2007-2009, and an approximated, net 4% drop in TOT revenue following the events of September 11, 2001; and WHEREAS, the City Manager's June 9 budgetary update presentation projects that the City of Anaheim will experience a 11% drop in sales and use tax revenue for the current fiscal year (amounting to approximately $9.7 million) relative to the adopted budget, and an additional 5% drop in sales and use tax revenue for the 2020-2021 fiscal year (amounting to approximately $3.6 million); and WHEREAS, the City of Anaheim faced an approximated, net 29% drop in sales and use tax revenue over three years during the Great Recession of 2007-2009; and WHEREAS, between May 2020 and June 2020, the City of Anaheim has notified union representatives of the City's unprecedented fiscal emergency, including the precipitous drop in revenue relating to the COVID-19 pandemic and the City's most current financial documentation of these substantial and sudden economic effects on City finances; WHEREAS, despite the offset that the City hopes to achieve through mutual agreement between the City and several union representatives relating to delayed or rescinded salary increases, the City of Anaheim faces a substantial budgetary deficit for the 2020-2021 fiscal year, and projects that the City's General Fund reserves are insufficient to absorb the anticipated loss in revenue that will occur from the COVID-19 pandemic, and the City still projects a budgetary deficit of 20-27%, amounting to approximately $75 - $100 million; and WHEREAS, this budgetary deficit would require the City of Anaheim to institute substantial reductions in the scope and degree of its services to lower its operational costs, and achieve a balanced budget; and WHEREAS, the City of Anaheim projects that absent further reductions in personnel costs, anticipated reductions in the scope and degree of operational services would result in reduced hours of operation and substantially reduced staff for core City functions, such as Public Works services (for example, road pavement, traffic light maintenance and repair, tree trimming or landscape work), Community Services (for example libraries, family resource centers, recreational programs, parks, community centers, senior programs), and Planning and Building services (for example, processing of zoning and variance permits, building inspections, and business license review and approval); and WHEREAS, the reduction in hours of service and/or City staff assigned to complete this wide array of City operations would result in substantial harm to the welfare, health, and safety of the public; and 4 WHEREAS, the City of Anaheim is unable to generate additional revenue through taxes without voter approval; and WHEREAS, the City of Anaheim is unable to achieve a balanced budget without lowering its expenses, including its personnel costs; and WHEREAS, the present COVID-19 pandemic poses an ongoing public health crisis with no clear end date, with no expected or imminent vaccine or other public health solution; and WHEREAS, the present COVID-19 pandemic has caused substantial economic harm to the City of Anaheim, which has been unprecedented in degree; and WHEREAS, the present COVID-19 pandemic has caused unprecedented economic harm to the City of Anaheim in a relatively short span of time, as the present pandemic resulted in substantial economic harm over the course of several months; and WHEREAS, there is no reasonable way to balance the 2020-2021 budget and preserve essential public services, without additional drastic measures; and WHEREAS, the accelerated and unprecedented deterioration of the City of Anaheim's financial situation since March 2020 now requires additional, immediate cost- saving actions to address the fiscal and cash crisis facing the City; and WHEREAS, immediate and comprehensive action to further reduce spending, including spending on employee payroll costs, must be taken to ensure, to the maximum extent possible, that the essential services of the City of Anaheim are not jeopardized, public health and safety are preserved, the City is able to pay its debts when due, and the City is able to pay its remaining employees for the work they perform. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Anaheim as follows: 1. The City Council, by virtue of the power and authority vested in it by the City Charter and the City Municipal Code, finds that the foregoing recitals are true and correct and hereby incorporates and adopts them as findings and determinations by the City Council as if fully set forth herein. 2. The City Council hereby finds and declares that a Fiscal Emergency exists in the City of Anaheim, pursuant to Government Code section 3504.5 and Anaheim Municipal Code section 6.04.060.010, due to the economic impacts of the COVID-19 pandemic. 3. The City Council hereby directs the City Manager to make recommendations to the City Council for its approval of any actions necessary to address the fiscal emergency, including measures relating to personnel costs, operations, reductions in service levels, 5 or other measures deemed necessary and reasonable to minimize the accelerated and significant reduction to the City's General Fund reserves. 4. The City Council hereby designates the City Manager as the City's authorized representative for the purpose of processing, negotiating, and implementing the layoffs of City employees, should they be deemed necessary. 5. The City Manager and/or his designated representative shall meet with all union representatives of the City of Anaheim's bargaining units regarding the fiscal emergency and possible cost savings measures. Any modifications to labor agreements shall be subsequently ratified by the City Council. 6. Based upon the findings made herein and other substantial information available as part of the public record, and the City Council's declaration of a Fiscal Emergency related to the COVID-19 pandemic, the City Council reserves the right to utilize such measures available to it, pursuant to, and in accordance with, Article XIII.0 of the California Constitution. THE FOREGOING RESOLUTION is approved and adopted by the City Council of the City of Anaheim this 23rd day of June, 2020, by the following roll call vote: AYES: Mayor Sidhu and Council Members Faessel, Kring and O'Neil NOES: Council Members Barnes, Brandman, and Moreno ABSENT: None ABSTAIN: None CITY OF ANAHEIM 4LA . A ' M ' •• ' ' TH r ITY •F ANAHEIM A ITY C E OF THE CITY OF ANAHEIM 6 CLERK'S CERTIFICATE STATE OF CALIFORNIA ) COUNTY OF ORANGE ) ss. CITY OF ANAHEIM I, THERESA BASS, City Clerk of the City of Anaheim, do hereby certify that the foregoing is the original Resolution No. 2020-068 adopted at a regular meeting provided by law, of the Anaheim City Council held on the 23rd day of June, 2020 by the following vote of the members thereof: AYES: Mayor Sidhu and Council Members Faessel, Kring and O'Neil NOES: Council Members Barnes, Brandman and Moreno ABSENT: None ABSTAIN: None IN WITNESS WHEREOF, I have hereunto set my hand this 30th day of June, 2020. CITY CLE OF THE CITY OF ANAHEIM (SEAL)