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Council Minutes 04/24/18APPROVED BY THE CITY COUNCIL ON JUNE 12, 2018 CITY COUNCIL MEETING MINUTES ORANGE, CALIFORNIA April 24, 2018 The City Council of the City of Orange, California, convened on April 24, 2018, at 4:00 p.m. in an Adjourned Regular Meeting in the Weimer Room, 300 E. Chapman Avenue, Orange, California. 4:00 P.M. 1. 2. 3. ROLL CALL PRESENT - Whitaker, Smith, Murphy, Nichols ABSENT - Alvarez ORAL COMMUNICATIONS None RECESS TO CLOSED SESSION a. Conference with Legal Counsel — Pending Litigation pursuant to Government Code Section 54956.9(a) & (d)(1), Case: Orange County Catholic Worker, et. al. v. County of Orange, et. al. USDC Case No. 8:18 -cv -00155 b. Public Employee Appointment — Pursuant to Government Code Section 54957(b): Title: Public Works Director 4. ADJOURNMENT The City Council adjourned to a Closed Session at 4:05 p.m. An Adjourned Regular City Council Meeting will be held on Tuesday, April 24, 2018, at 5:00 p.m. in the Weimer Room. PAGE CITY COUNCIL MEETING MINUTES 5:00 P.M. 1. OPENING Mayor Smith opened the meeting at 5:13 p.m. 1.1 PLEDGE OF ALLEGIANCE TO THE FLAG Mayor pro tem Mark A. Murphy 1.2 ROLL CALL PRESENT - Alvarez, Whitaker, Smith, Murphy, Nichols ABSENT - None ORANGE, CALIFORNIA April 24, 2018 1.3 PRESENTATIONS/ ANNOUNCEMENTS/ INTRODUCTIONS None 2. PUBLIC COMMENTS None 3. CONSENT CALENDAR None 4. REPORTS FROM MAYOR SMITH Mayor Smith Congratulated the Orange Community Foundation and City staff for the successful 2018 Foundation Games. 5. REPORTS FROM COUNCILMEMBERS None 6. REPORTS FROM BOARDS, COMMITTEES, AND COMMISSIONS None 7. ADMINISTRATIVE REPORTS None PAGE 2 CITY COUNCIL ORANGE, CALIFORNIA MEETING MINUTES April 24, 2018 8. REPORTS FROM CITY MANAGER 8.1 Second Study Session for the Proposed Fiscal Year 2018 -19 Budget. City Manager Rick Otto thanked the City Council for their time and direction at the first Study Session. Staff has made revisions based on the feedback and is presenting new projections. Finance Director Will Kolbow reviewed a series of slides. Revenue was up a small amount from the last Study Session. Sales tax is still trending upward. Property taxes are also trending up. Expenditures are the same from the last Session. Staff has done a good job in keeping the increases in expenditures to a minimum. The proposed budget is balanced. FY 2019 projections were reviewed. Not included in the projections was the continuation of 33 full time vacant positions that saves the budget $3.8 million dollars. The proposed fee study was discussed as another potential budget savings measure. Fees were last reviewed in 2007. For the 2018 Fee Study, staff issued a request for proposals and the City Council chose Matrix Consulting Group to perform the review. If all the proposed changes in fees were made, the City would see approximately $1.7 million in additional annual revenue. In response to questions from Mayor Smith, staff explained that antennas were removed when they become obsolete. Next, the definition of catastrophe was discussed, as that could be a trigger for using reserve funds in an emergency. The City Council would decide what was a catastrophe and when and where any reserve dollars are spent. In response to a question from Mayor pro tem Murphy, it was confirmed that the valuation basis for determining the value of a structure was revenue neutral with a square foot basis. The City would receive more fees using the recommended valuation method. The City would receive 100% cost recovery. Matrix Consulting recommends using the square foot valuation. In response to a question from Councilmember Whitaker, it was clarified that the City will charge an up -front fee of $4000 for development projects. Fees will be drawn down from that initial deposit. Mayor Smith added that the required fees change based on the size and scope of the proposed project. Councilmember Nichols added that getting a bill from the City at the end of a project could hurt. She supports asking for a larger deposit up- front, then leaving a smaller fee at the end only as required. Mayor Smith wondered if the new fee structure might encourage residents to do building projects illegally without permits. Councilmember Whitaker asked about the on -going need for Library cards. Technology is driving Libraries toward E- cards. He inquired how other cities charge for ABC licenses. Most cities use a deposit -based structure while the City of Santa Ana charges a fee. Mayor Smith has no problem with raising fees for ABC licenses. She confirmed that dollars given to the City by groups such as the Friends of the Library and the Community Foundation are PAGE 3 CITY COUNCIL ORANGE, CALIFORNIA MEETING MINUTES April 24, 2018 8. REPORTS FROM CITY MANAGER (Continued) not line items in the budget. They are included in the General Fund but are considered extra revenues. Councilmember Whitaker confirmed that the proposed fee changes would be implemented with the adoption of the budget. The new revenue will help with the funding gaps for budget in the near future. He prefers small changes over time rather that large increases all at once. Councilmember Nichols added that from her Library Foundation experience, using outside donations helps fill funding gaps. Mayor Smith asked staff to look for programs where the City cannot make ends meet, and possibly discontinue those programs. Council asked the City Manager to return at the May 8, 2018, City Council meeting with another version of the fee study that includes Council's direction from tonight's Study Session. City Manager Rick Otto began a discussion on the City's reserve policy. Staff is recommending that the Council adopt a policy where the City has many separate funds holding reserve dollars with a minimum of 40% of General Fund expenditures combined. The City Council would have the flexibility to set the balances and move money across balances. City Council approval would be required to spend any reserve funds. This policy would protect the City against economic downturns and uncertainties. Councilmember Whitaker is against spending any reserve funds to balance any future budget shortfalls. He wonders if future Councils might be hampered in their ability to manage budgets with so many minimum balances that have to be met. City Treasurer, Richard Rohm confirmed that the change in reserve policy did not come from audits, but is a recommendation from GASB -54. Mayor pro tem Murphy added that it looked like the numbers were engineered to fit the situation. City Manager Otto added that if the City had not set -aside money for PERS costs or Workers Comp, the reserves would be much closer the to the current policy goal. Councilmember Nichols added falling short on any minimum balance might send a poor message to the community. Mayor Smith reminded everyone that the City weathered the last recession and we should not abandon the plans and policies that accomplished that goal. ACTION: Received and filed report. PAGE 4 CITY COUNCIL MEETING MINUTES 9. LEGAL AFFAIRS None ORANGE, CALIFORNIA April 24, 2018 10. ADJOURNMENT — The City Council adjourned at 7:00 p.m. The next Regular City Council Meeting will be held on Tuesday May 8, 2018, at 6:00 p.m. in the Board Room at Orange County Transportation Authority with a Closed Session beginning at 5:00 p.m., if necessary. )/, " ROBEIqFZORNADO CHIEF CLERK TERESA E. SMITH MAYOR PAGE 5