Study Session 04/28/15APPROVED BY THE CITY COUNCIL ON MAY 12, 2015
CITY COUNCIL, ORANGE, CALIFORNIA
MEETING MINUTES April 28, 2015
The City Council of the City of Orange, California, convened on April 28, 2015, at 5:00 p.m. in
an Adjourned Regular Meeting in the Weimer Room, 300 E. Chapman Avenue, Orange,
California.
5:00 P.M.
1. OPENING
1.1 INVOCATION
Deputy City Manager Irma Hernandez
1.2 PLEDGE OF ALLEGIANCE TO THE FLAG
Mayor pro tem Fred Whitaker
1.3 ROLL CALL
PRESENT — Alvarez, Whitaker, Smith, Murphy, Nichols
ABSENT — None
1.4 PRESENTATIONS/ ANNOUNCEMENTS/ INTRODUCTIONS - None
2. PUBLIC COMMENTS - None
3. CONSENT CALENDAR - None
4. REPORTS FROM MAYOR SMITH
Mayor Smith reported her father celebrated his 90 birthday on Saturday, April 25, 2015.
5. REPORTS FROM COUNCILMEMBERS - None
CITY COUNCIL MINUTES April 28, 2015
6. REPORTS FROM BOARDS, COMMITTEES, AND COMMISSIONS - None
7. ADMINISTRATIVE REPORTS - None
8. REPORTS FROM CITY MANAGER
8.1 Second Study Session for the Proposed Fiscal Year 2015 -16 Budget.
DISCUSSION: Interim City Manager Rick Otto and Finance Director Will Kolbow reviewed a
series of slides, outlining the updated status of the current year budget and the updated
projections for the FY 2015 -16 budget. Mr. Otto thanked staff for their hard work in creating the
budget and thanked the City Council for their input in helping craft the priorities and the policy
direction for the budget.
Finance Director Will Kolbow reviewed the next series of slides. FY 2016 revenue is estimated
to be up 3.3 percent over the FY 2015 budget. The City enjoys a great diversity in the types of
businesses that complete our revenue base.
Mayor pro tem Whitaker asked about any leakage reports that have been produced. Mr. Otto
explained that the City has produced these reports and found only a few small areas where we
can improve. Furniture sales was one example of a retail sector where Orange is weak.
FY 2016 expenditures are estimated to increase by $5.5 million. The City of Orange pie chart for
expenditures looks very similar to other full service cities in the region.
In response to a question from Mayor pro tem Whitaker, Mr. Otto explained that Orange
transfers funds from its General Fund into Capital Funds to pay for capital projects. The funds do
not come out of the General Fund directly. There is $5.4 million available in the unreserved
funds.
Councilmember Alvarez asked what is retained in the catastrophic reserve fund. Mr. Otto
explained that in the past, extra funds would funnel into the catastrophic reserve. Lately the fund
has remained static at $19 million. The City's goal is to increase dollar amounts saved in the
catastrophic reserve.
The Water, Sanitation, Capital Projects, and Internal Service Funds were discussed.
Mayor pro tem Whitaker noted that as water consumption drops, so does revenue, this could put
the entire fund in danger. Public Works Director Joe Defrancesco, in response to a question from
Councilmember Murphy, noted that the City's costs go down as consumption drops because we
won't have to buy as much water from outside or pay as much for the power to move the water,
etc. The City's goal is to have 25% in reserves for the Water Fund and the City is a little under
that goal today.
In response to a question from Councilmember Nichols, Mr. Otto explained that the available
Sanitation Funds are used only to fund ongoing operations. Capital projects would need another
funding source. Mayor pro tern Whitaker noted he does not like when sanitation funds fees are
tied to water usage.
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CITY COUNCIL MINUTES April 28, 2015
8. REPORTS FROM CITY MANAGER (Continued)
Councilmember Alvarez asked how much savings the City realized from contracting out street
sweeping services. Mr. Otto explained that the $500,000 savings goes back to the Sanitation
Fund.
Mayor Smith noted that sewer costs are directly tied to water use.
In response to a question from Councilmember Murphy, Mr. Defrancesco explained that tree
trimming is a fixed cost for all homeowners in the City even when homes have very limited street
frontage.
Next, the City Council discussed PERS funding. Mayor pro tern Whitaker noted that solving the
PERS problem today will save future City Council's time and money. He asked how other
Orange County cities were financing their quicker pay -down plans. Mr. Kolbow explained that
they created their own financing plans with PERS and took on additional risk. If PERS fails to
perform up to standards, their General Funds will have to pick up the difference.
Councilmember Murphy pointed out that the City does not want to be in the business of building
trusts or complex finance. Orange County's bankruptcy was a result of prior poor planning
related to finances. He also noted that the City's reserve funds were created to help cover costs
when funding was tight.
Mayor Smith noted that there are trust experts out in the business community that could help.
She looks forward to hearing more about other options the City can utilize regarding PERS
payments. She asked for the new water consumption rules to be spelled out clearly for the
citizens of Orange. Finally, the Mayor thanked staff and the budget team for their hard work on
this year's budget.
ACTION: Received report and provided policy direction.
9. LEGAL AFFAIRS - None
10. ADJOURNMENT — The City Council adjourned at 6:15 p.m. The next Regular City
Council Meeting will be held on Tuesday, May 12, 2015, at 6:00 p.m. in the Council
Chambers with a Closed Session beginning at 5:00 p.m., if necessary.
k6BEkT ZORNADO ERESA E. SMITH
CHIEF CLERK MAYOR
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