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1974/04/1774-379 City }~aL~, Anahgtm, California - COUNCIL MINUTES - April 17, 1974a 9;00 The City Council of the City of Anaheim met in Adjourned Regular Session called for the purpose of Combined City C~uncil-Depart~nent Head Budget Review. ABSENT: PRESENT: COUNCIL E/HB~RS: . Kay~ood, Seymour (Arrived 9:28 a.m.), Pebley, Sneegas, and Thom COUNCIL MEMBERS: None CITY ~ANA~ER: Keith A. Murdoch ASSISTANT .CITY MANAGER: Robert M. Davis CITY ATTORNEY.. Alan R. Watts CITY CLERK: Aloha H. Fattens FINANCE DIRECTOR: Mike R. Ringer UTILITIES DIRECTOR: Gordon W. Hoyt PERSONNEL DIRECTOR: Garry O. McRae DEVELOPMENT SERVICES DIRECTOR: Alan G. Orsborn FIRE CHIEF: James Riley POLICE CHIEF: David B. Michel Mayor Thom called the meeting to order at 9:25 A.M. City Manager Keith Murdoch outlined the purpose of the meeting as follmes: 1. To define the financial situation regarding the 1973-74 Budget with some indications as to what the picture will be by the end of the current fiscal year. 2. To suggest some modifications in the way major it_~,s are financed. 3. To outline anticipated revenue in 1974-75 together with the budget requests made. 4. To outline a series of alternativemethods of balancing the budget. 5. To receive input from Council as to specific areas of interest. REVISIONS 1973-74 BUDGE~: Finance Director Mike Ringer reviewed the revisions to the budget for fiscal year 1973-74 raising this from $58,771,520 to the current adopted budget of $64,416,386. This increase has been largely necessary due to increases in the cost of electrical power and subsequent retail rate increases effective September ? and November 6, 1973. In regard to unappropriated funds, of $1,583,555, Hr. Ringer explained that it is recc~nended that $400,000 of these funds be allocated to pay Architect's fees for the Civic Center Project; that unbudgeted salary increases and benefits (dental plan) will amount to $721,500 and $90,000 respectively. With the remaining appropriations reco-w-ended to be taken from unappropriated balance (See Page No. 3 of Novmher 6, 19?3memo to the City Manager "Subject: Request Revision 1973-74 Budget" on file in the office of the City Clerk) deducted, the funds in un- appropriated reserve balance amount to $237,276. With the approval of these it~-~, the revised total budget for 1973-74 will amount to $65,990,941. Hr. Rinser further reported that the revenue forecast for 1973-74 is an anticipated $3,031,127 over the corrected budget of $64,416,386. He indicated that a refund of $840,000 may be expected from the Stadi,~ Possessory Tax and that $1,750,000 in Convention Center Bond funds is still available which may be designated to provide additional parking at this facility. ~C UTILITY - 2.20KV CONSTR~CTION BUDGET; (Page No. 4 of November 6Memo from Finance Director to City Manager) Mr. Ringer reported on the current Electric Utility 220KV Construction Budget which shows amounts of $1,450,000 for fiscal year 1973-74 and $1,600,000 for 1974-75; Court settlement from Southern California Edison adds $2,150,000 to Chis construction budget. Hr. Ringer advised that the $1,600,000 shown as an allocation from the 1974-75 budget reflects an over-collection of an estimated $1,650,000 from Electrical Sales. Current reco~endation for this over-collection is to reco~nd to the City Manager and Council that this surplus be retained in the Electrical Utility to be carried forward to complete financing of the 220KV Substation. 74-380 ~ity l~all,.Anaheim, California - COUNCILMINlrfES - April 17, 1974~ 9:00 A,M, Mr. Murdoch commented that the wisdom of following the Finance Director's recommendation by applying the over-collection to a specific item, for which the City has a contract in the Electrical Utility, is that, although this amount goes directly to the Electrical Fund, it has the effect of allowing a flow of the equivalent amount of money from Electrical Fund to the General Fund, which could be used for whatever pur- poses Council deems appropriate. The other major area of over-collection reported by Mr. Ringer is in the field of investment of idle funds. These investments are yielding far greater proceeds than anticipated since the City is receiving interest rates of 94 to 10%. The City has collected $660,000 in excess of the estimate and it is anticipated that' this will prove to be an over-collection of $1,200,000 for the year. SUMMARY OF THE BUDGET AS SUBMITTED BY DEPARTMENTS OF THE CITY OF ANAHEIM FOR 1974-75: Mr. Ringer next reviewed the fiscal year 1974-75 estimated revenue and expenditure comparison as of April 17, 1974 (Page No. 1 of City of Anaheim 1974-75 Departmental Budget requests, on file in the office of the City Clerk). He indicated that this 1974-75 preliminary budget is up $30,000,000 over the Council approved and amended budget in 1973-74. The primary reason for this large increase is the huge increase in the cost of purchasing power from Southern California Edison, which is up 18.7 million dollars . Mr. Ringer advised that these departmental requests have not been reviewed by the City Manager, after which review there are usually cuts in the neighborhood of 4 to 5 million dollars. Mr. Ringer related that the first col,,mn on Page No. 1 (estimated revenue)was calculated using existing rates adopted by the Council and based on past history over the last two years in growth of revenues. This col-mn totals $85,680,560 for preliminary estimate of revenue in 1974-75. The second column of this page s,,mmarizes the estimations for inter-fund revenue transfers and Mr. Ringer indicated the following potential transfers: TRANSFER TO GENERAL FUND TRANSFER FROM GENERAL FUND General Gas Tax 2107 Recreation Water Utility Electric Utilities ~nicipal Golf Course Anaheim Hills Golf Course Anaheim Stadium 447,000 334,000 1,500,000 3,000,000 100,000 $ 4,481,000 300,000 600,000 The Convention Center shows no inter-fund transfer, and Mr. Ringer explained he would estimate that they could place $500,000 of the room tax this year in the General Fund but he has not been able to show this because the second bond payment is due which amounts to $720,000. The Convention Center, from a cash standpoint, will be level - room taxes plus operating revenues will pay for its operation, the bond payment and the V & C Bureau. The Stadium figures provide an estimate for World Football and reflects a degree of optimism regarding attendance at Angel games and therefore is estimated $400,000 over what is anticipated~in revenue this Fiscal Year. The fourth col%,mn on Page No. 1 is thes%,m,mry.by fund of departmental requests for Fiscal Year 1974-75 and totals $94,483,218. The final column (using brackets to indicate those departmental areas which are estimated to have sufficient funds; un- bracketed figures representing an estimated deficiency in that particular fund) represents a comparison of the figures in the two final columns showing a deficiency of $8,802,615 between the departmental requests and estimated revenues to the various funds. Mr. M~rdoch pointed out that the deficit is actually greater than this figure since the various amounts shown in brackets (being in excess of the particular department's request) are really not available to offset other expenditures; i.e., sewer construc- tion and maintenance funds are restricted to use for sewer construction and maintenance. 74-381 City Fall, Anaheim, California - COUNCIL MIFOTES - April 17, 1974, 9;00 A,M, When the restricted funds are not considered as an off-setting factor, the gap which exists amounts to $9,600,000. Mr. Ringer indicated that Page Nos. 2 and 3 of the Su~uary of Budget Requests 1974- 75 are a comparison of the 1973;74 Budget as currently approved and the departmen- tal requests for appropriations in 1974-75. AL~hNATIVES FOR CLOSING THE ~9,500,000 GAP; 1. Allocate funds from unappropriated reserve (which is higher than expected) to reduce the deficit by that amount. 2. Parks and Recreation: a. Recon~endation that the $400,000 requested in 1974-75 budget for a con~amity building in ModJeska Park be deleted. b. Reduction of allocation for development of juarez Park, since the City does not have the manpower to utilize all of this location and could utilize the total amount only by contracting labor. ($150,000) c. State bond issue, 1974 - if passed by the voters, would provide: $100,000 - Rio Vista Park $200,000 - Juarez Park $200,000 - Riverdale Park (If State bond issue does not pass, it would be recommended that $50,000 be allocated in the Budget for development of Juarez Park site.) d. Possible joint obligation under Land and Waters Act - Newkirk Dump Site. 3. Utilization of this year's unappropriated reserve to finance the remainder of the funds required for the 220 KV Substation ($1,600,000). 4. Maintenance of current rate structure relationship with Southern California Edison Company rates would provide an additional $3,500,000 in revenue. 5. Adjustment of water rates upwards of 20% - an additional $1,000,000. 6. Increase in sanitation charges of 15% would net $300,000 on an annual basis. CONCLUSION: THE OBVIOUS AREAS OF OBTAINING ADDITIONAL REVENUE (WITH TN~ EXCEPTION OF ~mCTRICALRATES) WILL NOT PROVIDE SUBSTANT?ALA~S TO ~DUCE THE BUDGET DEFICITt TWO OPTIONS TO BALANCE THE BUDGET; 1. Aggressively go into long-term financing of major capital expenditures. 2. Drastically reduce the levels of service to the citizens of the co~.,~nity. REC0J~TION OF CITY MANAGER - CONCENTRATE ON LONG TERM FINANCING. LONG-T~RMFINANCING MEIHODS WITH SIGNIFICANT IMPACT: Electrical & Water Bonds -- These are revenue bonds and require a simple majority of the electorate for approval. Theyare paid from revenue received by these utilities. They would have a strong impact on the General Fund since they would release heavy financial obligations carried by the General Fund for utility purposes and by spreading the cost of such capital it-,t,, the amount which would have been necessary to pay for same in the short term is then released for other purposes. Hence, the City could hypothetically finance park development wlthout a bond issue for same by using the amount of additional funds made available in the General Fund by an approved electrical revenue bond. ADDI~IONALARFAS OF DISCUSSION BY TOPICS~ 1. Anaheim Hills Golf Course: Mayor Thom brought attention to the following: Estimated revenue - AnaheimMunicipal Golf Course --- $353,000. Departmental budgetary requests --- 441,000. Estimated revenue - Anaheim Hills Golf Course --- 265,000. Departmental budgetary requests --- 673,000. The inter-fund revenue transfers call for transferring $100,000 from AnaheimMunicipal towards the Anaheim Hills Golf Course. He suggested 74-382 City Hal!, Anaheim, California - COUNCIL MINUTES - April 17, 1974, 9:00 A.M, the sale of the Anaheim Hills Golf Course to a private owner for use as a country club in an attempt to regain funds used for acquisition and development of same. Pertinent points of discussion: a. Basic philosophy of whether or not the Anaheim Hills Golf Course serves a special interest group as compared with other recreational facilities which are subsidized by the City. b. That an analysis should be made as to the cost to the City of maintaining this golf course in relationship to the Percentage of population served. c. That the amortization currently being paid at the Anaheim Hills Golf Course is for substantially more than the existing 18-hole $olf course and includes additional land for a potential 27-hole golf course; land for park purposes and riding trails, as Well as a possible fire station site. Increased assessed valuation on private property due to its location adjacent to the golf course and the impact on City tax revenue. The cost of the Anaheim Hills Golf Course in terms of the reduction of the amount of funds available for use in expanding or modifying the AuaheimNunicipal Golf Course. Consensus of Council opinion: That they would be willin~ to consider sale of the Anaheim Hills Golf Course facility if it could be assured in some manner that it would be continued to be maintained as a golf course and not subdivided for other purposes, an4 if it were kept open to the public. (Not a private country club.) Additional action neededt The Council requested an analysis of the situation as to what the flexibility might be in seekin~ & potential b~er. Said report to include their abilities to sale; the impact of revenue to the City immediate and future. lupact on budSetz Use o£ bondin~ procedure for two capital ltem~ $1,680,$00 ~ - First phase Civic Center Construction 1,000,000 - Final palflnent, Bank of America perkins lot (shown under General Revenue Sharin~ Funds, Pa~e No, 3) The use of a bondlns procedure for these item would renove these oblilations frou the General Fund, l~roJect £1nancinS alternatives (euphasis - scope of the project not yet teterained and therefore cost fisure..hmm afl not a Oenoral obXIaa~on bo~. c, ~on-profit corporation d, Fhase construction a. Magnitude of annual obllsatiouwith all bonding methods - approximately $1,000,000, b. Increased buildLns cost factor (inflationa~y) estimated at 11% per anntus ingress o. c. Flnanoinj optionsj 1). Phase constructiout There are no provisions for handling additional phases of construction in the budget. 2). Redevelopment &8ency - In lllht oft he fact that the entire Civic Center concept comprises more than Just the City Hall structure, it would be lo$ical to tie the City's interests tosether with those of the Redevelopment ASency and forms Joint powers asency which would have the authority to issue revenue bonds which are autou~tically subject to referendum. 3). The Council could voluntarily place the financin$ issue of the project on the ballot which would require majority approval. (Sample of the opinion o£ the electorate.) 74-383 City Hall, Anaheim, California - COUNCIL MIFUTES - April 17, 1974, 9;00 A,M, 4). Under a Joint powers agreement, obligation of such bonds could be proportionately shared by water and electric utilities as tenants or users of the building; the Redevelopment Agency would also pay its proportionate share out of tax increments. ® The costs of inefficiency and the proportionate gain received from consolidating services and providing an efficient structure - estimated at 15%. 4. Outline of City Hall construction budget - $15,000,000 including City Hall, one parking structure, plaza, two City blocks acquisition. Civic Center Task Force reco,~endation: Pay as you go out of the General Fund for the first phase and use bond financing method for remainder of the building. Charter provisions, State Election Code regarding bond election - restricted to March, June and November in even number years; restricted to November and March in odd numbered years. MAJOR AREAS AVAIIABLE FOR BONDING WHICH COULD d~zF~CT THE 1974-75 BUDGET: 1. Stom drains - three in the proposed budget; could include the Broadway storm drain which is now in revenue sharing. Bonds require 2/3 majority vote. 2. Libraries - architect's fee of $25,000. 3. Electrical utility - line construction; acquisition of betterments for those areas acquired through Southern California Edison; modification of meter shop; studies for generation participation; street lighting improve- ments; labor and equipment for all of the above: This could amount to $3,250,000, however most of this would be required as an on-going opera- tional expense. This would be revenue bond issue and is considered excellent as a part of a long-term financing program. Requires simple majority rather than 2/3 of the vote. However there would be no option as to whether or not to proceed with this bond issue since these items would be necessary whether or not the bond issue passed. Would provide relief to the General Fund. , 4. Water Bonds: These could relieve the current budget in the amount of approximately $1,000,000, however the necessity to meet the requirements of the expanding area would continue. 5. Park bonds: The amount of these would depend on the success or failure of the State bond issue election in June, 1974, and the amount of park development financed with Federal Revenue Sharing Funds. 6. Alternative, long-term capital financing method - 7 to 8 year lease arrangement. AREAs RECO~IENDED FOR INCREASED LEVELS OF SERVICE; 1. Recreation program - the Parks and Recreation program has been reco~nended by Parks and Recreation Ccm~nission and participating school districts for additional enhancement relative to extending the program to additional people; additional swimming activities. School districts are willing to increase their proportionate share. Recommendation to increase user charges where these are appropriate. 2. Police activity: Approach in the budget has been to add civilian personnel to release sworn personnel for other duties. 3. Park development: Budgeted at a level of development of two parks per year; increase or acceleration in this field wilI have additional impact on the budget. REQUEST FOR ADDITIONAL INFORMATION MAD~ BY COUNCIL - AREAS OF CONCt~-N; Councilwoman Eaywood: A listing of all park sites owned by the City with the dates of acquisition. Councilman Pebley: Requested figures of what amount of money in bonds the City would need to complete all of the libraries, to complete development of all park sites and all storm drains - similar to the analysis made by the Capital Improvements Committee in 1968. 74-384 City H~L1. /~-~h~im, California - COUNCIL MINtrfES - April 17, 1974, .9;00 A,M, Councilman Seymour: 1. An inventory of the total lands owned by the City of Anaheim, not projected for future use, from whtch properties may be designated for sale. 2. The financial data on the bicycle paths programs and alternatives to these - including cost per mile for development with particular emphasis on using rights- of way, greenbelts, etc. 3. Consideration of extension of the management efficiency data concept (as used in Utilities Depart- ment) to other departments of the City - possible inclusion in the 1974-75 budget. ?aramedics program - interested in seeing cost analysis and alternatives in relationship with re- viewing budget priorities. 5. Maxim~zing utility of Federal funds and the negative to use of same, &It was determined the next budgetary review session would be held y, April 24, 1974 at 9:30 A.M. Councilman Pehley moved to adjourn. Councilman Seymour seconded the motion. MOTION CARRIED. Adjourned= 12=10 P.M.