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1997/01/25CITY OF ANAHEIM, CALIFORNIA - CITY COUNCIL MINUTES ADJOURNED REGULAR MEETING OF JANUARY 14, 1997 (HELD JANUARY 25, 1997) CITY HALL WEST GORDON HOYT CONFERENCE CENTER - 2nd Floor 201 S. ANAHEIM BOULEVARD, ANAHEIM The City Council of the City of Anaheim met in adjourned regular session. PRESENT:Mayor: Tom Daly PRESENT:COUNCIL MEMBERS: Shirley McCracken, Tom Tait, Bob Zemel, Lou Lopez ABSENT:None PRESENT:CITY MANAGER: James Ruth CITY ATTORNEY: Jack White CITY CLERK: Leonora N. Sohl FINANCE DIRECTOR: William Sweeney Mayor Daly called the Adjourned Regular Meeting to order at 8:45 a.m. for the purpose of a Budget Workshop, all Council Members being present. City Manager, James Ruth. The purpose of today’s meeting is to reaffirm the City’s mission and goals, its fiscal position today and prospects for the future, and finally to present a 24-month organizational strategy subsequently seeking Council input and direction to assist staff in executing the proposed plan. (His presentation was supplemented by slides, hard copies of which were submitted to the Council - see - - “24-Month Workplan” - Five Basic Goals - January 25, 1997 - made a part of the record). Mr. Ruth’s presentation briefed the five basic goals which the City has been pursuing as a framework and direction for staff’s ongoing efforts -- (1) to ensure the public’s safety, (2) build the local economy, (3) enhance neighborhoods and build a sense of community, (4) maximize the City’s assets and, (5) maintain Anaheim’s infrastructure. He also briefed the progress and successes in meeting each of the goals. In concluding this part of his presentation, Mr. Ruth introduced Bill Sweeney, the City’s Finance Director, to provide the Council with details on the City’s current and future fiscal situation. Bill Sweeney, Finance Director. In his detailed and extensive presentation which was supplemented by slides (hard copies of which were submitted to the Council and made a part of the record), he covered the following areas: -- revenue historical performance, FY1996/97 General Fund projections, long-range projections, status of the General Fund balance, and budget discussion points. He briefed property tax, sales tax, Transient Occupancy Tax (TOT), and business license historical performance FY/1990-96 (bar graphs presented). He gave the property tax dollar breakdown (FY1995/96) and room sales subject to TOT, 1991-1996. Under General fund and long-range projections, he covered property tax, sales tax, TOT, business license and other operating projections from FY97 through 2005 also giving projected net of revenues over expenditures for those same years. He briefed a graph showing the future status of the General Fund balance showing an unrestricted balance of $10.5 million for 1995/96 escalating to only $11.9 million in 2001/02, but thereafter escalating to a projected $30.1 million in 2004/05 which reflects the effect of the completion of the Disneyland expansion. Budget discussion points were then discussed by Mr. Sweeney: No new taxes proposed-assume retention of existing taxes and fees; Narcotic Forfeiture Fund; Impact of Proposition 218; Establishment of Neighborhood Fund; Stadium; Sportstown; Arena; Fire Station Improvement; Year 2000 conversion. Questions were posed to Mr. Sweeney by Council Members during and after his presentation. Some key points elaborated upon by Mr. Sweeney follow: The large recovery in sales tax in 1995-96 is due in part to the success of the Anaheim Plaza. He sees nothing that indicates sales tax figures will be diminishing in the future. Last year was a phenomenal one for TOT yielding approximately $45 million related to the success of the Disneyland Electric Parade finale and a strong economy. Relative to property tax projections, there is a general consensus it has hit bottom and will now be going back up CITY OF ANAHEIM, CALIFORNIA - COUNCIL MINUTES JANUARY 14, 1997 although slowly with an increase of approximately 1% near term and 2% long term. He also emphasized the magnitude of the positive impact that the Disney expansion will have on the City cautioning, however, that the next few years present the greatest risk and vulnerability relative to revenues because of the uncertainty of what the effect of construction of the Disney program is going to be. There are no new taxes proposed in any of the estimates presented assuming retention of existing taxes and fees. Relative to the impact of Proposition 218, staff is working with that at present to determine its full meaning to the City. He believes the City is in good shape on the “no new taxes” portion of the proposition. The City does not have any taxes that have not been approved by the voters. Where there is vulnerability is on fees and charges. There is a concern by the rating agencies who are saying that the flexibility of the City Council has been diminished. Moody’s Rating Service lowered the City’s rating a notch because of the flexibility issue. He then clarified for the Mayor that all other cities are having to deal with the same issues, that other cities have been downgraded as well, but that in spite of the downgrade, Anaheim still has an outstanding credit rating. Staff will be submitting further information to the Council in the coming months on the issue. A new development relative to the stadium, the agreement with the Disney (California Angels) provided for $100 million for stadium improvements -- $20 million from the City, and $80 million from Disney. One of the options was to ask the City to issue bonds; however, Disney is not going to be asking the City to do so since, as of yesterday, Disney has paid the City their $80 million. He then answered questions posed by Council Member Zemel relative to the City’s $20 million piece and also questions on the Arena. Relative to the Arena and the City’s maximum liability of $7.5 million, payment of $1.5 million/year was due to start next year but since the City financed the land issue, the General Fund will not have any liability in terms of cash next year and possibly enough to get the City through the second year as well. He clarified for the Mayor that the numbers presented assume the $1.5 million payment for the five years and that the money has been set aside. Mayor Daly. He asked Mr. Sweeney to provide a proforma for potential revenues to the City on Sportstown and he asked at what point that might be done; City Manager Ruth stated that staff will be coming to the Council in mid-February with a proposal regarding Sportstown. Bill Sweeney. He explained for Council’s information that money is also set aside for the conversion of the City’s automated system to accommodate the change to the year 2000. There are systems which do not recognize the year 2000 since most are set up for utilizing the last two digits of the year. Staff is aware of the problem. The conversion will cost in the range of $3 million but there is a plan and adequate reserves to cover the conversion. It is a major issue for government as well as a very large problem for corporate America. City Manager Ruth’s closing presentation briefed the City’s core services and key issues. To give an idea of how far reaching the City’s service levels are, he “walked through” City services provided on a typical day in Anaheim. In concluding, Mr. Ruth identified and elaborated upon the following six areas of emphasis that Executive Managers will be focusing on over the next 24 months: (1) Implementing a plan to enhance neighborhoods and neighborhood safety. (2) Complete the vision for downtown Anaheim. (3) Addressing fiscal and operational security. (4) Management of a massive capital program. (5) Continuation of a strong legislative advocacy program. (6) Communicating the “Anaheim Advantage.” He asked for the Council’s comments and reactions to the areas proposed as well as input on additional areas of focus. Comments/concerns/questions by Council Members are summarized as follows. (Mr. Ruth and/or Mr. Sweeney answered questions as they were posed): Council Member Shirley McCracken. Her focus is on neighborhoods and neighborhood safety/security. She would like to see restored some of the things the City had to cut or delay in order to get through the recession period, i.e., resurfacing streets, tree trimming, etc. Council Member Lou Lopez. He is concerned about the citizens and restoration of neighborhoods as expressed by Council Member McCracken. He would like to see the repair and beautification of sidewalks, beautification of streets, tree maintenance, sewers, etc. and dealing with issues such as the 2 CITY OF ANAHEIM, CALIFORNIA - COUNCIL MINUTES JANUARY 14, 1997 impact of abandoned shopping carts, meeting the needs of citizens especially those living in the downtown area, and beautification in general. His emphasis is to find the money to take care of those concerns as well as programs that focus on the young people and that will have a positive impact on crime. Mayor Daly. He completely agrees with focusing on finishing the plan for downtown Anaheim. At the same time, he feels there are obvious opportunities they can capture. Anaheim Plaza is operating at capacity. The Euclid Street corridor is a very busy one. He is interested in being more aggressive about planning for more retail, basically the goal of expanding Anaheim Plaza on the other side of the I-5. He sees no reason why Anaheim Plaza could not straddle the freeway. The Redevelopment Area is much larger than Anaheim Plaza. Lincoln and the area of the I-5 offers an opportunity and it is right in the heart of the City. He believes that Euclid Street has great potential and would like to see steps taken now to set the right tone. Another area is marketing the “Anaheim Advantage” and to add other services already provided by Anaheim that are not provided by surrounding cities. One of the things that has been discussed is adding Sunday library service. Some consideration should be given to opening the libraries on Sunday if sufficient demand is there. Council Member Bob Zemel. He agrees with the six areas presented by staff and has four he would like to add. (1)a. The Arena liability. There is a possibility that the Clippers will come to the Arena and he believes they should be aggressively working on that. He would be happy to assist in the effort. (1)b. A football component to Sportstown. If there is another chance, he would like to be the first to embrace it. (2) Cooperative effort between the Chamber of Commerce and the City. Support the “Anaheim First” concept. Encourage doing business with businesses in Anaheim. He would be glad to assist in that effort as well. (3) Re: Illegal immigration issue. It is important to focus effort on the current INS program which is scheduled to end in April. He wants to make sure there is a cooperative effort to keep the INS Agents currently stationed in the City jail. (4) Re: Brookhurst Redevelopment Area. There should be a cooperative effort in reapplying to have the tax base readjusted (see minutes of the Workshop portion of the Council Meeting of January 14, 1997 where the issue was discussed). An effort should also be made with property owners regarding reuse of their properties. If they are going to have the same tenant with the same use, all they will be doing is remodeling the old use. Mayor Daly. Related to the Brookhurst Street Redevelopment plan, he feels they have to move aggressively on the annexation of the County island in Anaheim which is one reason why Brookhurst is in a deteriorated state south of Broadway. The City does not have control over the zoning for some stretches of Brookhurst. It is a matter of negotiating with the County to come up with acceptable terms and that should be initiated. Council Member McCracken. Beach Boulevard is another area of concern. It is not in a Redevelopment Area but it is an ongoing problem for a variety of reasons. Mayor Daly. He would also like to see included for improvement the West Lincoln area; Council Member Lopez included the block just north of Lincoln (on Brookhurst) and further emphasized the need for ongoing maintenance in the downtown area. He walked the area with Community Development staff and pointed out crooked signs, curbs not painted, trash on Lincoln and Anaheim Boulevard, bus benches not painted, shopping carts, graffiti, etc. He feels that downtown is the showcase for visitors to City Hall. He would like the area checked every Monday and every Friday to make sure any problems are corrected and that the area is well maintained on an ongoing basis. Council Member Tait. The six goals presented are a good synopsis of what the Council wants. Another issue he would like to focus on in the coming year is the Electric Utility of the Public Utilities Department especially relative to the restructuring issue. He feels it is an opportunity to make great gains and maximize the return on the City’s Electric Utility assets; on the other hand, there is also a risk. He would like to see an overall strategy on how to deal with the issue. There is excellent leadership in the Utilities Department and staff has been diligently working on the issue but he would like to refocus the effort. Mayor Daly. He emphasized the importance of preserving the Electric Utility asset to keep it as strong as possible but, facing reality, if outside forces are so strong, perhaps they ought to leverage their risks somehow to make sure the asset does not become devalued overnight. 3 CITY OF ANAHEIM, CALIFORNIA - COUNCIL MINUTES JANUARY 14, 1997 Council Member Tait. He noticed in the figures presented that over the next five years, there will be no excess revenue. There is a net balance increase but revenues will be flat which means if the Council wants anything else, staff will have to do some prioritizing and shifting or maintain the status quo instead of doing more in addition to what is already being done. City Manager Ruth. Staff believes the estimates are conservative. If so, there will be additional revenues for the Council to deal with. Council Member Tait. He also notes that the City will have a reserve of $10.5 million. His guess is that most cities do not have that kind of reserve; City Manager Ruth. For a City the size of Anaheim, it is difficult to predict what is going to happen. Council Member Lopez. Relative to Anaheim being business friendly, he knows a citizen who brought in about $1,000 in business to Anaheim but had to pay an $80 license fee whereas she made $185,000 in Fullerton and only paid $40. He feels they need to look at restructuring license charges for small business people; Council Member McCracken relayed similar incidents related to small home businesses noting that the Budget Commission did come up with another category to handle those businesses. Bill Sweeney. The business license structure has been examined a number of times over the years. He will be happy to look at the situations given and to subsequently present the concerns expressed to the Budget Commission. Council Member Zemel. He agrees it is an excellent idea to take a look at the area of business licenses. It sounds to him that a majority of the Council is leaning towards revisiting the business license fee. Mayor Daly. The concerns expressed were about the exceptional cases (home-based businesses and boutiques). What they need is some perspective from Mr. Sweeney relative to the categories since he believes it is difficult to paint business licenses with a broad brush. He feels they also have to be prepared for the virtual business of the future, i.e., someone operating a multi-million dollar business from their garage. City Manager Ruth. The last time they went through a review, a committee was formed and the Chamber was very involved in the restructuring. There were some disagreements but those were negotiated with the Chamber. If there are inequities, they will take a look at those. Mayor Daly, in concluding the Workshop, stated that he believes any other City would be thrilled to see the numbers five years out. The City is in good shape and it looks like it will be a lot better in four to six years keeping in mind that the figures do not even include some additional revenues they believe can be generated with Sportstown, telecommunications, etc. ADJOURNMENT: By general Council consent, the Adjourned Regular Meeting of January 14, 1997 held January 25, 1997, was adjourned (10:35 a.m.). Leonora N. Sohl City Clerk 4