SPECIAL REPORT - Laguna Hills City Council Budget Workshop - May 7, 2013 - Looking at Operating Budget and Capital Improvement Plan (CIP) Study Session for years 2012/13 and 2014/15


This Budget Session was recorded and can be heard in it's entirety in the audio on the city's web site for this May 7, 2013 meeting. Because this was a 5 hour meeting we are printing the highlights here.


City Manger Channing mentioned that some of the council has expressed concern re. the staff's proposal to alter the financial policy for the Operating Budget and Reserve ratios. A 10% gap between revenues and expenditures has long been held to allow for the setting aside money for Capital Projects. The city also held to a conservative 40% operating reserve but has never had to use the reserve funds so is now suggesting a reduced reserve.  Although the city has not been able to stay at the General Fund Operating Revenues for Operating Expenditures ratio of 1.1 to 1 the reserve balance has been kept high but perhaps this has been too conservative. Adjustments would now be necessary to maintain more conservative ratios.

Assistant City Manager Don White began with effects of recession on City's major revenue sources have lingered into this fiscal year. Revenues are estimated to come in at $1.1 million below budget. Sales tax particularly has lagged. Moulton/La Paz and Oakbrook Village projects were delayed by about a year. Operating expenditures projected to come in at about 5% under with an operating surplus of $521,000 for the fiscal year. Don said the Laguna Hills mall doesn't really have an impact on the next 2 years. Their could be some construction activity there in the next 2 years but the space has already been systematically de-leased.
**Editor's Note - It was announced in the OC Register Newspaper on May 9, 2013 that the Laguna Hills Mall was recently sold to a developer Merlone Geier - a private real estate investment company focusing on mixed use centers and community and neighborhood shopping centers on the West Coast.

Don White clarified that - Proposed changes to financial policies are presented tonight for discussion and will be brought back to the June 25 Public Hearing for final adoption. These include changes in the Operating and Reserve Ratios. Per Don White, 1 to 1 is a balanced budget and the recommendation is to go from 1.1 to 1 (which means 10% revenues over expenditures) to 1.07 to 1 (which means 7% revenues over expenditures) which is more than a balanced budget. He explained that when the city incorporated it was saving money to spend on a lot of Capital Projects - such as the $34 million spent for the Community Ctr. and Sports Complex and the $16 million spent for the City Hall project plus 2 new parks and a lot spent on existing parks, etc. He added that we still have a lot of capital projects but they're largely trails, open space and street scapes, not essential and not as high dollar as in the past so the need to have the 1.1 to 1 is not the same as it was previously. The new ratio will free up funds for new programs and services or capital projects to re-invest in the community in future years. Don also recommend a change in the reserve policy from 40% to 35% for the unencumbered general fund balance and 25% for the unassigned general fund balance. He explained that unencumbered funds are the unassigned funds plus all of the assigned fund balance which is our capital reserve fund, our reserve fund is for insurance, liability and for the Family Justice Center. Unassigned money is the money in the bank that can be used immediately for anything.

Don stated that the proposed changes to the financial polices free up about a million dollars over the next 6 years for capital projects. Don added that if the council wants to stay with the 40% reserve policy they will need to delay some capital projects for a few years and probably $1.5 million of projects in years 4, 5 and 6 of the 8 year Capital improvement plan are off the table. If the council wants to keep the operating ratio at 1.1 to 1, that is a target we can shoot for, but probably not reach for about 4 or 5 years.

Council Member Gilbert asked about these proposed ratios being temporary and Don White responded that they are and we should be back to them in about year 3 of the 8 year plan.  Regarding financial situation improvements, Don White said The Village at Nellie Gail Ranch should be completed in about a year from now and the Oakbrook Village plan should be starting in this next fiscal year. He added that the Laguna Hills Mall should be undergoing major redevelopment in 2014-16.
Mayor Pro-Tem Blount asked about the basis for Don's assumptions of growth in property and sales taxes. Don responded it's based on talking to a lot of different people, consultants, etc. but is more art than science.
Council Member Bressette referred to Don White's chart re. sales tax increases he said in FY 2014-15 sales tax is projected to increase by 6% over the previous year but with the Mall in recession and Oakbrook under development, etc. why do we expect this? Don responded even if things go wrong it would be about a half percent so if not 6% it's 4.5 to 5%. Sales tax is 28 or 29% of gross revenues. He added later that Assessed Value is our dominant source of revenue. Mayor Pro-Tem Blount added that an extra 6% in sales tax translates to an assumption that about an extra $35 million would be spent in Laguna Hills and our city receives 1% of the dollars that are spent, Don agreed.


PERSONNEL COSTS and SHERIFF'S CONTRACT -

PERSONNEL COSTS

Don White continued that the combination of Personnel Costs and the Sheriff's contract amount to more than 2/3 of the City's budget. Don said we want personnel costs to be no more than 27% of the city's operating budget and predicted that it will come down from 27.6% in 2014/15 it slowing decreases to 25.9%.
Council Member Gilbert mentioned that this is all subject to future contract negotiations and does it allow for inflation. Don responded this assumes that the city continues the same cautionary measures that were agreed to before and added that a little bit of inflation is actually good for our numbers, because the raises remain under the rate of inflation.
Medical Ins. Premium Costs - Don said he assumes a 6% increase over the next 3 years then 4% increases over the following 5 years. He added the increases will be split 50/50 with non-management and it is assumed they will be split with management staff and the City Council as well.

PENSION COSTS

Don White continued that the city has projected their PERS rate (Public Employee Retirement System) based upon assumptions of things that might happen. There is a cumulative effect of 7.95% on the city's rate but the city's share of the employer rate is declining from 7% to 0% in FY 2021 coupled with a recommended side fund payoff before the end of this fiscal year of $616,192. The side fund is described as a fund created to account for the difference between the funded status of the pool and the funded status of the City's plan in addition to the City's unfunded liability. Total city PERS rate is expected to stabilize at 18% by FY 2017/18. Don noted that 37% of the 27 full time employees are projected to retire over the next 6 years and replacements will start at the bottom end of the salary range.
** Editor's Note the City always mentions only their PERS Retirement Plan of 2% at 60, but never acknowledges the additional Retirement Plan they provide for employees, the Public Agency Retirement System (PARS) so we requested City Records on 5/8/13 to obtain some updated information about this plan and its impact on the city.


SHERIFF'S CONTRACT

Don White stated the current Sheriff's contract is 39% of the City's budget. Unfortunately, the Sheriff’s Department is unable to provide a five-year projection of OCERS rates or contract costs until later this summer. As a result, staff is estimating an annual growth rate of 4% starting in 2014-15. Given the volatility associated with enriched defined benefit plans and the new assumptions being implemented by OCERS, this issue continues to be the greatest threat to the City’s long-term budget outlook. As stated above, the Sheriff’s contract is projected to grow to 42% of the City’s budget by 2020-21. This can be largely explained by the County’s decision to enhance their defined benefit retirement plans. Sworn personnel are provided a 3% at 50 formula and non-sworn are provided a 2.7% at 55 formula. If the contract increases more than 4% annually, the City will need to seriously consider the elimination of positions from the contract. We have a year to year contract with the Sheriff.

City Manager Channing added that he believed the cost of our deputies fully loaded would be no worse than equal and probably less than the same positions in cities that have their own police force. Council Member Carruth offered that she doesn't believe there is any connection between high staffing levels and safer streets.
Council Member Bressette asked if there were options for reducing costs here other than eliminating another position.
** Editor's Note there were some hints but no serious consideration of combining Sheriff's deputy forces with another or more than one other cities.
Council Member Carruth did mention the possibility of sharing Administrative Services with other cities. Mayor Pro-Tem Blount noted that the average cost for a deputy is about $1000 a day. Don White acknowledged sharing management as a possibility.

Don White concluded that staff has identified a list of Capital Projects that total $120 million. $18.3 million of that has been programmed for the next 6 years. Mr. Ken Rosenfield will present this. the Oakbrook Village project will eventually be paying about $7,300 per unit for parks and recreation facilities that adds to about $2.5 million. He add we have to spend that money within 5 years of receiving it and should start receiving some of it next year.

Mayor Kogerman asked where we account for the spending for the new County Animal Shelter and Don responded, "We don't". He explained that it's a $20 to $30 million project so when we begin paying we will pay approx. $25,000 a year in addition to our County Animal Service fees.

Don White projected that the city would have an operating surplus in every year of the plan. Mayor Pro-Tem Blount said we broached the subject of having someone analyze what other cities costs are. Mayor Kogerman mentioned that there was also a discussion of eliminating the motorcycle deputies.


CITY DEPARTMENT BUDGETS MAJOR PLANS and WORK PROGRAMS

Council Member Bressette recalled Mayor Kogerman's Major Plan issue - Hiring one person to serve as liaison for a Planning Commission, Business Development, Senior Services and Community Interactivity. Council Member Bressette said Mayor Kogerman had modified that to a position he agreed with but in the voting he held up the wrong number and his number should have been 2 as opposed to 1 so he asked to have that corrected now. City Manager Channing responded that was a dilemma because now there is no money budgeted for that position so we can change the rating number for that item now or vote again but need to make a decision to put money in the budget if you want to approve adding this position. Channing suggested giving all members a chance to change their votes. Carruth made a motion to take a new vote and that was seconded by Gilbert. Mayor Pro-Tem Blount reminded the council and staff that his vote on this item at the last meeting was to get a cost not vote on hiring the position and that's what he'd still like to have so asked how to get that? Channing, restated his previous position from the last session, that the cost would be about $100,000. Bressette accurately recalled that at the last session the council determined this position would be part time, so what we voted on that night was to include an estimated cost which should have come up this time but that is not included here. He suggested revoting and asking staff, again, to come back with the estimated cost for a part time position. All agreed there would be some cost for the position and voted again. Council Member Gilbert changed his vote so this time the votes were two 2s and three 0s, so it still didn't pass. Mayor Pro-Tem Bount asked for clarification and stated that what he just heard was that the cost was $100,000 and our discussion at the last meeting was that we were looking at a cost of around $30,000. Blount noted he was not in favor of $100,000.  Mayor Kogerman noted that we're not convinced that a part time position would be $100,000. Council Member Gilbert explained that he changed his vote because even if the cost is $30,000 he is still voting no. He continued that he originally thought it was going to be a volunteer position.
** Editor's Note - This entire discussion made little sense to us and according to our recording of the last Budget Session on April 16, 2013 the repeat vote at this session was taken based upon incorrect information.  The council apparently voted this time on a full time position for a predicted salary and benefits package in the amount of $100,000 but the final vote taken at the last Budget Session on April 16, 2013, according to our recording, was as follows - Mayor Kogerman offered that possibly this position could be a paid volunteer part time - under 29 hours a week and she offered to strike # 1 about a Planning Commission that Bressette and Carruth don't want. Vote was for coming back with a report at the next study session on cost.City Council VOTE Total = 6 for this item - Carruth voted 0, Gilbert voted 1, Kogerman voted 2, Blount voted 2 and Bressette voted 1.


CITY MANAGER DEPT.

1. City Manager Channing spoke of working with the Simon Company owners of the Laguna Hills Mall and noted that $20,000 was budgeted for consultants to work with the owners to ensure we get the kind of development we'd like to see happen there.
** Editor's Note - On Thursday, May 9, just 2 days after this meeting, it was just announced in the OC Register Newspaper that the Laguna Hills Mall had been sold by the Simon Company to a real estate development company Geier Partners.
Mayor Kogerman said she thought we were told that the LH Mall had moved back on the mixed use (Residential Rental Units in addition to Shops) plan for the mall. Channing responded the Simon Company had pulled back from that plan for awhile but they may have some future mixed use.

2. Research and ID strategies to reduce water rates for Laguna Hills Residents - $25,000 was budgeted for consultants for this.

3. Develop a Plan for establishing a South Orange County Family Justice Center in Laguna Hills for the Council's Consideration - Assigned a portion of the fund balance in the amount of $100,000 for the Family Justice Center.


Work Programs -

Channing stressed that they will meet with all of the owners of the City's commercial centers to assist them and will promote their shopping centers at the ICSC Conference later this month.
** Editor's Note - It is encouraging to see that the City is working with businesses. It appears that taking advice from a previous study and having more business friendly council members now may be helping. In 2010 the City of Laguna Hills paid $12,500 for a study and report from the Urban Land Institute's Technical Assistance Panel (TAP). TAP consisted of a panel of professionals with significant experience in the private sector planning and development-related industry who offer expert advice relative to the needs of the community and the best practices of their respective industries. The findings of this report included advice to the City regarding - The "HANDS OFF" approach of the City related to Collaboration in advancing their role in the development of the Urban Village with other stake holders. It said "The City's hands off approach to development may, in part, be responsible for the limited investment in the Urban Village." The Study's Report continued: Stakeholder interviews indicated that individual landowners within the downtown area rarely moved forward with a holistic planning approach that would support the overall downtown core vision. It said existing properties in the area have difficulty connecting with decision makers of other existing properties and property owners are communicating with the City but the synergy to create a cohesive downtown is lost as each moves forward with their own individual projects. The report said of the City that "Governing with a hands-off approach misses the opportunity for collaboration among the various land owners."

** Mayor Kogerman asked about any expense for a new car for the  City Manager (whose last $65,000) new car was purchased in 2009 and previously replaced about every 5 years, so might be and item coming up again in 2014. Channing responded if it was to be replaced it would be listed here as a capital outlay item. She also asked if (PARS) Public Agency Retirement System, the city's additional retirement benefit for City Employees was included in the budget and Channing responded, Yes. She asked if management will actually have the same sharing for health care costs, etc. that the non-management employee association has adopted. She asked if that needs to codified somehow. Channing responded, Yes. this will be brought to the council a salary and benefits resolution that would apply to all management employees, before the end of the fiscal year.


CITY CLERK  - City Clerk, Peggy Johns

City Clerk, Peggy John's said she has no Major Plans and 2 work programs
1. Conduct the General Municipal Election in November 2014 was a repetition of a completed work program.
2. Conduct a comprehensive review of the Citywide Records Program and Retention Schedule.
$21,000 budgeted for the next election in 2014.


ADMINISTRATIVE SERVICES - Assistant City Manager Don White

1. Overhaul and update the City’s web site to improve its efficiency and effectiveness from the public’s perspective- $25,000 budgeted for this.

2. Preserve the history of the City of Laguna Hills and the past twenty (20) years of accomplishments and actions by creating an oral recording and video production presenting significant events in chronological order. Assist. City Manager Don White Announceed that $5,000 has been budgeted for this.
** Editor's Note - From our recording of the April 16, 2013 Major Plans Study Session the Cost Estimate for this item was - Minimum Cost of $5,000 for a 20 to 25 min. piece with a lot of still photographs, music and voice overs, and video clip interviews per Don White. There was discussion about this needing to continue to be updated, etc. Council Member Carruth wanted this and Council Member Bressette wanted to go back a little more than 20 years but maybe not a film. Council Member Gilbert reminded the council once again that, "We are not 'that' important" and reminded us all of the historic heritage of the area in which we live that reaches beyond the last 20 years. Others thought it was probably not that important related to enough interest out there for this project re. the past 20 years and suggested that maybe this could be an opportunity for a volunteer person or group to undertake. Tom Epperson, Laguna Hills Resident in the audience suggested that the city challenge Chapman College's Masters or Doctorate movie program to take this on. He added that he thinks Doti is very political and would love to do something like that. City Council  VOTE Total = 10 for this item. Each Council member voted 2 for this to be done as a volunteer project.

3. Regarding City Views and the ad hoc committee of Council Members, Don White reported the ad hoc committee did meet and has agreement on how to go forward which will probably be brought back as an item in the Consent Calendar for council's approval. Don continued that they decided to go with a smaller version without advertising and as a result the budget has reportedly been reduced from $105,00 per year to $65,000 per year. ** Editor's Note - At the April 23, 2013 City Council meeting it was part of the motion taken for this item that this ad hoc commission was to include an option for public input outside the council chamber as the ad hoc committee desired throughout the process, but no public input was mentioned here and there was also no mention of any changes to the content of City Views, only to the size.

4. $10,000 was Budgeted for a Reserve Study of funds in the Capital Reserves for infrastructure. Per Don White no study has been done on this for a long time so a study needs to be done.

5. Don White is receiving a vehicle replacement for his current car that was purchased 8 years ago and is provided to Assist. City Manager Don White under his contract. Budget item for Rent/Lease Vehicle $6,065 in the 1st year, $5,220 in the 2nd year. He said this is $435 a month lease and $845 Drive off for a Mazda CX9. He added that if staff proposes purchasing this vehicle they would have to come back to the council so these numbers are for budgeting purposes based on a Mazda CX9. He added they may be able to do better than these numbers if this is bought from the Mazda dealer in Laguna Hills but no purchase price was mentioned.

Don White noted the budget for his dept. is going up $30,000 for next year.


INFORMATION TECHNOLOGY - David Reynolds, Community Services Director and Deputy City Manager.

Mr. Reynolds noted one Major Plan to upgrade the city's phone system infrastructure at the Civic Center and Community Center with new technology. $25,000 has been budgeted in the 1st year for this.

PERSONNEL 

Proposal for the next budget cycle to recruit one full time employee for an IT position which would begin in the next fiscal year in October, after recruitment. $91,000 is budgeted for this.

Council Member Carruth asked for Mr. Reynolds to persuade her that it would be a good idea add another employee to the city staff rather than contract out. **Editor's Note for those of us who have used the City's (currently contracted out) computer system over time, encountered the problems and discussed them with City Staff, and for those of us who have worked at companies that use computers this question of why the need for not only in house IT support but consistent and good quality IT support is clear.

Mr. Reynolds responded that he has considered this for many budget cycles and they have been running a bare bones IT for several years. They have been contracting out for $55,000 a year to a contractor who does not charge as much as others in the area, but this service is only 2 days a week. With 2 days a week service a project gets started and progresses a little then has to wait another week to be addressed again. In IT there are always fires so with the contract out system we can put out the fires but not stay ahead of them. A full time IT person could complete projects and support our existing network. Mr. Reynolds noted that before he came to the city he did work in the IT field. Typical costs for outsourcing such as our 2 days a week is $100,000 a year with the City of Brea. Laguna Woods spends about $50,000 but they have 2 days on call support with no one physically on site unless they call and wait. Dana Point spends about $100,000 for 2 days of support, etc. Carruth suggested we could look for another vendor besides Mr. Oros. Mr. Reynolds responded this is an open recruitment for a full time IT position and Mr. Oros could apply.

Carruth asked if there are other cities of 31,000 population that have a full time IT. Mr. Reynolds repeated that Dana Point is spending about $100,000 for 2 days a week and looking at spending more to grow that support. In answer to questions from Council Member Gilbert the difference to the City would be about $20,000 to $35,000 a year for full time IT support. Mayor Kogerman noted that many times on Friday afternoons the fully agendized packet for the following Tuesday's City Council Meeting is ready to go and something breaks down and this information cannot be accessed by the public. In response to another question from Mayor Kogerman, Mr. Reynolds stated, The Computer Library at the Community Center is funded by the County that has it's own IT support. Mayor Pro-Tem Blount remarked that loss of productivity within the organization is a great way to quantify value. If one of our folks can't work for a day that's a very high cost so support cost is relatively inexpensive compared to the value of a day lost. Blount added that $91,000, if you can get someone for that, is cheap.


COMMUNITY DEVELOPMENT - David Chantarangsu Community Development Director

MAJOR PLANS

1. Evaluate the Community Development Department’s zoning and building permit processes and regulations to identify and recommend changes to the City Council to streamline development review requirements, and provide information that enhances and promotes the City’s “business friendly” environment.

2. Continue work efforts that facilitate the redevelopment of the Laguna Hills Mall through site plan reviews and evaluation of environmental studies as needed.

3. Evaluate the use of Administrative Citations as a way of expediting the City’s Code Enforcement process and potentially reducing costs in pursuing code enforcement abatement through City Attorney’s office.

Mr. Chantarangsu said there is a need for increased professional services in the next 2 years related to the additional building inspections that we are anticipating because of redevelopment. Those increases in cost are offset by additional building fee revenue. He noted that related to the economy and not having full access to the city attorney's office, they are having problems with code enforcement related to compliance. City Manager Channing added that this department is down by one full time code enforcement officer. Mr. Chantarangsu added this is why his department is looking at the use of Administrative Citations as a way of expediting the code enforcement process for chronic violators. He noted that code enforcement officers do collect signs posted in the city's right of ways as does the County.

Mayor Kogerman asked if the County's weekend sign confiscators still take signs to the City of Santa Ana for realtors and others to retrieve. City Manager Channing answered that the County still takes signs, with the exception of political campaign signs, to the county yard in Santa Ana and they have to be retrieved there as part of a deterrent process. Political Campaign signs are supposed to be taken to city hall.

Carruth and Bressette were concerned with a signage blight and asked about a part time person that could be hired to deal with those issue. Super Cuts was noted as a problem. Mr. Chantarangsu said a temporary sign permit was issued to Super Cuts that was a new business that opened in March or April, and they do have a 45 day period, that is not consecutive, to display and then remove the signs.


PUBLIC SERVICES - Ken Rosenfield, Public Services Director and City Engineer

Ken explained we have Engineering, Public Works and Parks in Public Services in this department. No anticipated changes in staffing over the next 2 year period. 

9 Major Plans included in the budget under Public Services.

1. Evaluate alternative service delivery for Public Works maintenance and for Traffic Signal Maintenance to consider utilization of private contractors in place of the County of Orange for these functions. There is a $10,000 budget item for a consultant to assist staff with scope of work and expected results.

2. Evaluate the return of Holiday Banners during the winter “Season’s Greetings” holiday period and the spring “Patriotic” holiday period. No new cost established in the budget for this.

3. Evaluate the City wide speed limits in accordance with the California Manual of Uniform Traffic Control Devices and California Vehicle Code. Have to do this on a 5, 7 or 10 year cycle and this is about 7.5 years. $20,000 is budgeted for this.

4. Establish new five-year Professional Services Agreements for Civil Engineering support services and for Landscape Architecture support services. No additional cost for this beyond staff time.

5. Exercise the Irrevocable Offer of Dedication for Sheep Hills Park. From the online report -Implementation of this project is subject to a future acceptance of an Irrevocable Offer of Dedication to convert this 11 acre private park to public use. The project would include rehabilitation of the entire park with new picnic tables, trash receptacles, and BBQs as well as reconfiguration of the soccer field and baseball field. The proposed project also includes the conversion of the parcel at the southeast corner of Moulton Parkway/Laguna Hills Drive to a 93 space parking lot with a pedestrian bridge crossing Aliso Creek.  - Purpose / Justification: Improve active park facilities and inventory for various public recreation uses.
Operating Budget Impact: Annual landscape maintenance cost estimate of $94,000 and utility costs of $15,000. The acquisition of Sheep Hills Park is included in the budget, but the operating fiscal impact of the annual Landscape Maintenance Budget does not come into play until the third year in the 8-Year Plan. The total cost budgeted for "Future" is estimated to be $1,750,000.00. Staff is recommending that the City undertake a two year process that will provide ample notice to current organized users of the park and give them the opportunity to find fields elsewhere.

6. Install shade structures at the Little League field bleacher areas at Cabot Park

7. Modify the lower Cabot Park Little League field to allow for a new Little League 50/70 Intermediate Division play for 11 to 13 year olds.

8. Install "LH" letters on the hill behind the Ralph's Shopping Center across from the Laguna Hills Community Center so that the letters are visible to everyone sitting at the Laguna Hills High School stadium. Ken said he thinks on call Landscape Architect Services can be tapped to get this done. No specific amount identified yet.

9. Improve the storage area at the Community Center's Little League field for AYSO/LHLL joint use, and provide a portable storage bin at upper Cabot Park field for AYSO/LHLL joint use.

** Ken Rosenfield said Items 6, 7 and 9 above are minor park modifications requested by Parks and Rec. and supported by the Council reallocated $175,000 set aside for General Park Renovations to use for this.


Work Programs are:

1. Update the Traffic Signal Master Plan.

2. Expand the use of Geographic Information System to add layers of data for work efficiency.

3. Seek grant funds for a “Safe Routes to School” program around Valencia Elementary School.

4. Seek grant funds through Measure M-2 for street improvements.

Council Member Bressette inquired about installation of rain gauging sprinklers, updated landscape irrigation equipment and painting of the Moulton Niguel Water District tank . Ken responded that some systems now tap into satellite signals of rain gauge conditions, etc. and said the city updates the rain gauge controllers as they fail or need replacing and he will ask Moulton Niguel about painting their water tank.

Mayor Kogerman asked about new street lighting that uses much less electricity.
** Editor's Note - Inside Camp Pendleton we have noticed there is often one solar panel for each street light.
Ken Rosenfield answered that we have 2 kinds of street lights in the City, those we own (in the parks and on the median island of El Toro Rd.) and those we don't own but pay for that are owned by SDG&E or So. CA. Edison. We cannot change the ones we don't own to LED lighting and both power companies do not have an incentive to convert their lights because we pay both energy and a maintenance fees for those lights.

Mayor Pro-Tem Blount the computer consulting services goes up by $30,000 a year, is that in addition to our IT professional ? Ken answered- That is related to our geographic information system that has a fixed cost of about $20,000 per year to maintain and feed data the additional $20,000 in the budget is to expand the use of Geographic Information System to add layers of data for work efficiency.

Council Member Gilbert asked about the Patriotic Banners being hung at the Community Center honoring the fallen of the 3/5 with pictures and names of the fallen. Ken answered that the city current owns about 300 general patriotic banners and 300 holiday banners with a significant labor cost to hang them and take them down. City Manager Channing added during the previous budget Major Plans meeting it was discussed that we could replace some of the patriotic banners we have now with ones that honor the fallen heroes as the old banners wear out.
Council Member Carruth said she'd like to see banners in the center of the city around the Community Center from Memorial Day thorough July featuring the fallen from the 3/5 and may have to work with the 3/5 committee and Camp Pendleton to do that.

Council Member Carruth asked Ken if we should be concerned that we will be sheltering the cost from the mismanagement of the San Onofre Power plant. Ken answered they have included about a 3% general rate increase but it's too early to estimate real numbers and could be spread over many years if it gets approved at all so may need to revisit that issue.
** Mayor Kogerman asked about any budget for replacement of the City Manager's 2009 Car in 2014?  Ken said there is no budget for the City Manager's car in the Public Services budget.


COMMUNITY SERVICES - David Reynolds Community Services Director, and Dan Meehan, Community Services Supervisor

MAJOR PLANS

1. Determine the recycling requirements and the terms and conditions of the next Solid Waste and Recycling services agreement term which will begin July 2016, and conduct a procurement process for the next Solid Waste and Recycling services agreement term. David Reynolds said he is looking at State mandated recycling requirements to be sure we adhere to those in our next franchise term draft.

2. Enforce park use rules at the Skate Park with the establishment of a new skate park use section in the City’s municipal code, and install a fence around the Skate Park facility to regulate use if necessary. David Reynolds said we are working in conjunction with the City Attorney's Office to update our municipal code related to park use and regulations related to the skate park. A follow up may be a fence around the skate park.

Dan Meehan announced no proposed staffing level changes for the next 2 years. There is a budget item for the purchase of a new $29,500 van to replace the older 1997 vehicle currently used by the Community Services Dept. It's a 15 passenger van to transport children and adults.

** Mayor Kogerman asked if there was a City Manager's vehicle in this budget? City Manager Channing said if there was a new car to be purchased for him it would be in Capital Outlay. Channing finally added we aren't buying a new City Manager vehicle anywhere in this budget. 
** Editor's Note - Good for the Mayor for sleuthing out this information! We would not want to see this kind of expense overlooked for a second time by the city council and the budget hunt for the elusive city manager car was a welcome bit of fun in this 5 hour budget session.

Mayor Pro-Tem Blount inquired about the $145,000 cost for the marathon and asked have we consider allowing businesses to purchase booths in the expo? Dan responded we currently have between 40 and 50 expo booths that vendors pay for. Blount added that last year he tried buy an election booth there so if someone is running for office why can't they buy a booth. Council Member Gilbert joked - "He was running!" City Manager Channing explained the expo is focused exclusively on personal health and hygiene not politics.


WORK PROGRAMS FOR FY 2013/14 – FY 2014/15:

1. Leverage Facebook to promote the City’s special events and recreation activity.
Examine and possibly implement the use of paid advertisements to reduce costs
of producing the City’s recreation brochure and consider the use of paid
advertisements through Facebook to offset some of the costs to provide
recreation programming.
2. Host and promote multiple Community-wide events.
3. Increase community awareness and availability of senior programs.
4. Continue to work with the Laguna Hills High School through existing joint use
agreements and partnership to secure fields for youth sport activities and to
mutual benefit the recreation facility needs of both parties.
5. Expand recreational activity services (i.e. “Lunch-time Activities”) to local
elementary schools to promote the importance of physical activity and our “Get
Fit Campaign.”


PUBLIC SAFETY/Police Services Report from Laguna Hills Police Chief LT. Tom Behrens

Animal Control Services are provided under contract with the County of Orange. The purpose of this division is to provide pet care, pet recovery, and pet education/training for residents. (Pet Adoption and Related Owner Services, Animal Care, Pet Recovery, Response to Calls for Service, Animal Population Control, Disease Prevention, Mobile Pet Adoption Services, and Local Vaccination Clinics)


The Emergency Management function is responsible for preparing and maintaining an emergency operations plan.

FUNCTIONAL AREAS INCLUDE:

GENERAL LAW ENFORCEMENT (Respond to Calls for Service, Preventive Patrol, Follow-up General and Specialized Investigation, Apprehension of Criminal Offenders, and Directed Enforcement Team)
TRAFFIC SAFETY (Traffic Enforcement, Traffic Safety, DUI Suppression, and Collision Investigation)
PARKING SERVICES (Parking Enforcement, Citation Processing, Citation Adjudication, and Abandoned
Vehicle Abatement)
YOUTH SERVICES (Drug Education, Teen Safety Programs, Bicycle and Pedestrian Safety Programs)
SPECIAL SERVICES (Airborne Law Enforcement, Gang Suppression, Mounted Patrol, and Reserve Bureau)

MAJOR PLANS FOR FY 2013/14 – FY 2014/15:

1. Review current Police Services contract, including recommendations regarding any possible modifications or reallocation of resources. Include a study of the possible elimination or reallocation of motor positions and the impact on traffic safety. Lt. Behrens said his one Major Plan is a this staffing survey to be done through ECHO (sp?) Solutions for $25,000.

Lt Behrens also noted his 4 WORK PROGRAMS FOR FY 2013/14 – FY 2014/15:

1. Provide to the City Council monthly statistical report with current crime activity with the City.

2. Present one Citizens Emergency Preparedness Academy (CEPA) per year.

3. Coordinate a “National Night Out” event that educates citizens on public safety resources available with the City.

4. Participate in “National Take-Back Day” where City residents are encouraged to bring unused prescription drugs for proper disposal. Lt. Behrens said they collected about 25 lbs. of unused prescription meds. at their Take Back Day for this year which was about 2 weeks ago.

Council Member Bressette noted the $30,000 for a new motorcycle in FY 13/14
Mayor Pro-Tem Blount mentioned the staffing study and asked about the previous discussion of a study to see how we could better collaborate with other cities in OC and what they are actually spending on their law enforcement costs. City Manager Channing interrupted and said we think we can do that with our own staff. Lt. Behrens said that's all information that he could gather from other contract cities. Blount said that he is looking here for information that is not gathered by the Sheriff's Dept. but by a 3rd party as to how the other cities are doing, how effective they believe the Sheriff's Dept. is for them an d if they've looked at any alternatives to the Sheriff's Dept. to reduce costs, so explained that this study needs to come from an independent party. Channing interupted again that all the contract cities get a detailed breakdown of contract costs so it's not difficult for us to get that from each of those cities and to make that comparative analysis, but everybody's getting essentially the same services from the County for the same cost so the deployment study undertaken by the Chief will help us to compare how we deploy against some of these other cities but it would be an excessively larger study to make that analysis so we need to see what he gets back and look at it in a comparison cost to each of the other cities so some preliminary analysis of that first. Channing added, there is no other contract service provider available and all of the cities providing services in house are spending more that we do for contract services. Blount asked have any other cities had any thoughts, research or discussions of a better way of doing this for their number 1 budget item. Channing said regarding forming a JPA, "I haven't sensed that there is an interest in that among the other cities, but things are changing fast so that may be." *** Editor's note - So apparently no one in our city is working pro-actively on sharing police services but continues to wait for another city to bring up the subject of city's sharing police services to keep costs down.

Mayor Kogerman brought up the issue of the city having to pay for motorcycles as opposed to police cars and asked about the issue of motorcycles vs police cars for traffic patrol. Council Member Carruth contributed that the number one issue in the city with residents is speeding so police cars not as effective with this problem as motorcycles. Lt. Behrens added that because of the size of a motorcycle a deputy can put himself in much better positions to see those kinds of violations including distracted driving violations. Mayor Kogerman mentioned the issue of resident complaints that Motorcycle officers are sitting in hidden places to catch traffic law violators.

Lt. Behrens responded that it's difficult to change public opinion but the idea is that when you see one you slow down, and whether he gives a ticket or a warning it impacts traffic in that area, so what we need to consider the service to the city. Deputies being in places where they can't be easily seen can be changed and there have been complaints about motorcycles being in residential areas but the only times they are in those areas is if they were called there to address problems in that area. Council Member Gilbert and Mayor Pro-Tem Blount agreed with Motor Deputies not being predatory on residential streets. Council Member Bressette added he loves our motorcycle cops and so do mothers and they are first responders where a patrol car can't get through. City Manager Channing contributed we can get a report on the use of motors for traffic control and added they don't make enough revenue to pay for themselves. There are 3 motorcycles in our fleet in Laguna Hills.


6 YEAR CAPITAL IMPROVEMENT PROGRAM (CIP) with Ken Rosenfield, Public Services Director - Addressing the CIPs in the next 2 years 1st then the others in the 6 year cycle, per City Manager Channing.

Ken Rosenfield went over CIP programs from previous years on slides shown during the meeting. $120 million spent in the 1st 20 years in Laguna Hills on Capital Improvement projects.

Some Current Projects -

Annual Street Maintenance $2 million budgeted for 2014-15
Traffic Signal Improvement Coordination - $100,000 budgeted for 2013-14
Ridge Route Dr. pavement Rehab - $1,280,000 budgeted for 2013-14
*** All projects and costs are posted in a chart online on the city's web site under this May 7, 2013 meeting in staff reports

Mayor Kogerman asked if there were any projects in these budget pages that are in cooperation with the Saddleback Valley School District. City Manager Channing stated there was not anything in the 2 year cycle. He continued that the School district wants the city and the school district to share in a new 50 meter swimming pool at the high school (this cost about $4.2 million at Foothill high school) and artificial turf installed on the upper playground field. Council Member Gilbert said for the fields they are looking at Astro Turf that is supposed to be better now and the school can put it down at 2/3 of the cost of other turf. Mayor Kogerman asked about the Paseo de Valencia Widening budget item and Ken responded that the expectation is that Grant funding for that budget project would not be available for 2 years, so it's not in the 2 year budget but is in year 3 and has not yet been approved by the council.

Ken announced there are also requests from the community:

1. From the Moulton Ranch HOA, Moulton Ranch 1 requested a median in Nottingham Dr. South of Oso Pkwy. Years ago the city and Moulton Ranch 3 went into a partnership in which the city constructed 2 median islands which the HOA contracted to landscape and maintain in perpetuity. Moulton Ranch 1 has requested the same thing on Nottingham Dr. with the same commitment. $70,000 is the estimated staff cost for the median island and this item is in the "Future" category, not in the 6 year budget.

2. Per Ken Rosenfield there are 3 requests for additional street lighting as follows:

A) One street light is requested on Chelsea Lane off of Nottingham in Moulton Ranch 1 related to people hanging out at night where additional lighting would be helpful. This request came from the Moulton Ranch 1 Homeowner's Assoc.

B) One street light is requested on Mandeville Dr. near the end of the cul de sac with a similar complaint that this is a dark area of the street system. This request came from an individual.

C) One street light is requested on Highwood Circle where 2 lights are spaced very far apart on a long cul de sac with dark areas. This request came through Nellie Gail Ranch Homeowner's Assoc. after contact from Mr. Barry.

Ken mentioned that historically staff has not brought street lighting issues to the city council, because the perspective has been that these street lights were installed in accordance with County Standards and accepted by the community as they moved in so a condition that the city should not necessarily be burdened with enhancing. Counter argument is that over time community standards change and people feel their safety would be enhanced with more street lighting. Questions are how far apart should street lights be placed and what type of street lights to use. In Chelsea and Mandeville they are Cobra Street lights that stand about 25 to 30 feet tall. On Highwood they are about 18 feet tall with a lantern type of light, so the lighting distribution is less here. Cost would be about $50,000 for all 3 street lights.


PUBLIC COMMENTS

Mr. Patrick Barry, Laguna Hills Resident from Highwood Circle spoke and stated a request for a new street light as a matter of safety because this is a very dark area in need of additional light. He said this is to correct an original mistake. There was supposed to be another light on Rocking Horse to shine on Highwood Circle but because of driveway locations, etc. it was not installed there. So there is a very dark area so the HOA has requested one additional light. He said the community has reported nefarious activity and found condom wrappers and an occasional condom discarded there on the ground and on cars. Police Patrols have been tried but has not worked as a permanent solution. Lights now are more than 300 feet apart there now and no homes would be adversely affected by the additional lighting. Also, when cars turn into Highwood Circle they can't see people walking in the street and there are no sidewalks.

City Staff responded they would do a report on location and cost.

Council Member Comments on the street lights issue:

Council Member Carruth: asked if and neighbors would be negatively affected by additional lighting and said she was not interested in getting into some street light program and that's where she's afraid we're going to go but if we look at one we should look at all 3.  
Council Member Bressette: said the only one that sounds feasible is Highwood because they have a unique circumstance he said he knows Mandeville and wasn't particularly interested in adding a light there. 


Ken Rosenfield noted that the staff report given by Don White said there could be $1.5 Million available for City Council Programing in year 5, which has been corrected to year 4 to 8 and the following are 4 projects put forward for council's consideration for this funding:

1. Pavement Maintenance on Moulton Pkwy. from Via Lomas to the South City Limits ($1,200,000.00), and due to the importance of the infrastructure investment in the street system, Ken said he would rate this as the highest priority.  He later noted that $1 spent on pavement today saves you up to $10 spent later.

2. The last one the list is the La Paz trail extension ($1,675,000.00), an extension of the multiuse trail without extensive landscaping between Alameda and Paseo de Valencia.

3.  Alicia median island rehab. ($985,000.00) and La Paz median island (from Cabot to Paseo de Valencia) rehab. ($525,000.00) These rehabs would update the irrigation system and drainage as well as the landscape. Ken proposed that refurbishing old median islands should take precedence over going on to new median islands.

Council Member Comments and Questions on these spending priorities:

Mayor Kogerman - La Paz Median island landscape is a gateway into the city so would like to see that one happen. Agreed about maintenance being a priority and asked if any trails would fit under funding for the the Safe Routes to School program.  Ken responded the La Paz sidewalk will be submitted for that program and grant applications are due in July for CALTRANS and we will try to get funding for that sidewalk. the Safe Routes to School has been wrapped into a larger program, the Highway Safety Improvement Program. The reality is there is no new federal money for roadways or trails and what funding there is is expected to decrease not increase.   There was Prop. 1B passed by the State of CA. voters in 2006 and last funding from it is expected to be in 2014, but all the trail funding from that has already been allocated. Bottom line is that money is more limited today than it has ever been.

Council Member Carruth - Asked and was told by Assist. City Manager Don White and by City Manager Channing that the $1.5 million being discussed here is not the La Paz Moulton money it is General Fund money. Carruth asked if any other monies avail. for the Moulton repaving and was told those sources has already been investigated.

Council Member Gilbert asked again about the importance of the Moulton Pkwy. paving and asked if General Fund Money is expected to be available for the La Paz Trail extension in the next 4 to 8 years, to which the answer from Ken Rosenfield was No. He noted that every council has to wrestle with the fact that you have to have a very long term, 20 to 30 year view and a lot of patience to accomplish all these projects and realize that some of them may never be accomplished and then you have to cycle back to maintain them.  He said the staff goes through this every year related to rating potential projects and brings them to your attention for this purpose.

Mayor Pro-Tem Blount asked about the enhanced lighting for equestrians in the Nellie Gail Area. Ken explained that back in October the City Council directed staff to add 2 flashing beacons a 2 crossing locations and directed discussion of various trail issues between staff and the ad hoc committee.  This is going to the Traffic Commission next week for a final report and then will come back to the city council. The report lists $26,000 of improvements so if that's the final number it will fit within existing budget items.  Much of this includes signs and pavement markings.

City Manager Channing instructed that the council needed to see if it wanted to change any of the 2 year projects and needs to identify their priority for the $1.5 million for the later years and square that with their earlier conversation about financial policy related to adhering to the 40% vs 35% reserve.

Kogerman asked, so if we wanted to increase the $1.5 million for later years we need to remove some of the items that are currently listed for funding or change our ratios?   Channing said this budget assumes changed ratios and also gives you a list of funded projects. We're talking now about funding what projects in future years beyond the next 2 years.

Carruth asked asked what would we have to do tonight to approve this list to stay within the old 40% formula?  Channing answered eliminate capital projects. 

Assist. City Manager Don White noted that he had said 4 hours ago that some Capital Projects would have to be eliminated.  He added if 40% is the target you can go with 35% and 38% in the first 2 years and then you will be back to 40% in the 3rd year.  If you want to stay strictly with 40% you have to cut a million dollars of General Fund money from the 2 year budget and move those projects to years 4 or 5, etc.

Kogerman made a motion to approve the staff's recommendation for the 35% and 38% for the first 2 years then reach the 40% ratio at year 3 to free up some money for Maintenance.  Gilbert seconded the motion. 
Council Member Bresette objected to changing the ratios and said by making this permanent change you will allow staff to simply spend the money. He said he rejects the suggested ratio changes because these polices keep Laguna Hills financially strong.

Council Member Gilbert said he understands that this ratio change is only temporary and the city does need to continue maintenance. He said he has confidence in staff that they will scale back proposed projects as needed to keep city financially strong.

Mayor-Pro-Tem Blount - asked about our financial position related to neighboring cities.
2013 newspaper entCity Manager Channing referred to the recent OC Register Report in the Sunday May 5, enitled, "The older the city the slimmer the cash cushion." He noted there was wide disparity and Laguna Hills was about in the middle. He added there needs to be a balance between keeping too much of taxpayer money vs. spending it for things on which the public should reasonably expect it to be spent. He added there is no State requirement for this cushion for cities just suggested ranges.
** Editor's Note - The OC Register Newpaper's story "Troubled OC cities get fiscal reprieve", May 3, 2013  http://www.ocregister.com/articles/city-506992-percent-million.html
examined the latest audited statements for the county's 34 cities and described Cash Cushions as how much quick cash each city could put their hands on in an emergency. Out of the 34 cities in Orange County Laguna Hills was rated 21 from the top. 20 cities had more substantial cash cushions than Laguna Hills and 13 had less substantial cash cushions. La Palma topped the chart with the highest cash cushion at 121.97% with Laguna Woods coming in 2nd at 117.54%. Laguna Hills cash cushion was 26.21%. Placentia was at the bottom with no cash cushion at -1.29% and Anaheim was 2nd lowest cushion at 2.02%. Neighboring cities, Aliso Viejo's cash cushion was 114.19%, Lake Forest's cash cushion was 93.42% and Mission Viejo's cash cushion was 34.05%.

Asst. City Manager Don White added that in other states they could have lower amounts in their cushions because they can set their property tax rates annually as needed.
Council Member Carruth clarified that the staff doesn't make the spending choices, the council members do and expressed her concern about altering ratios that have worked.

PUBLIC COMMENTS - Tom Epperson, Laguna Hills Resident said he thought the conservative policies of the city over the years are very important. He said he supported Bressette and Carruth in their lack of change. He added some of you are new on the council and some of you when you campaigned for this seat on the council, which you now have, campaigned on very conservative grounds. Tom said he thought those should be maintained and it really isn't staff that spends the money it's you folks right here that spend the money. He said in terms of where Laguna Hills stands with reserves we are right about in the middle, that doesn't put us at one of the most conservative cities in the county and we have a long way to go before we get that conservative. He concluded by saying he urged them think twice before changing the ratios.

Council Member Bressette added what if we are wrong about the predicted 6% bump in sales tax next year, having strong ratios gives us the opportunity to get through that bump. He also admitted that it is the council's final decision to spend the money but added when we allow staff to spend more money that's how they will present the budget to us. He noted the mistake that was made in 1992 with investing in County Treasurer Citron's fund that went bankrupt.

What followed this discussion of ratios was Council Member Carruth attempting to pull items from the budget to shave $1 million only to be stopped at every choice related to the selected items not being General Fund Items, which they must be to reduce the budget expenditures enough to get back to the desired ratios.


Ken Rosenfield Public Services Director, explained that if some General Fund smaller amounts are not spent in this fiscal year that would prevent much larger amounts in Grant Funds from being paired with the smaller amounts and some items are mandated by law to be spent, such as water quality items.

Mayor-Pro-Tem Blount suggested that rather than change the ratios we just make and exception for this particular budget.  City Manager Channing agreed that could be the solution.

City Atty. Simonian reminded everyone that the intent of the proceeds from the property sale of the city to the Moulton/La Paz developer was to use to enhance and restore the remaining 9 acres of open space between Alameda and Moulton for the benefit of the city.

City Manager Channing explained to Council Member Carruth - If you want to stay with the 40% policy and you are comfortable that you are going to get back there in year 3 of the cycle you don't need to worry about cutting out a project in the next 2 years. He added staff was suggesting they thought that level was unduly high but the council's concern can be address at a separate discussion in adopting the revisions of the financial policies when we bring those back to you. He added they would prepare this for final consideration to run by the city council at the June 25 public hearing. **The last Biennial Budget meeting and ONLY PUBLIC HEARING will be on June 25, 2013 for final adoption of the Budget.

Mayor Kogerman adjourned the meeting with a moment of silence and prayer for our Community Services Director David Reynolds and his family at this difficult time.