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Study Session 03/22/16CITY COUNCIL MEETING MINUTES ORANGE, CALIFORNIA March 22, 2016 The City Council of the City of Orange, California, convened on March 22, 2016, at 5:00 p.m. in an Adjourned Regular Meeting in the Weimer Room, 300 E. Chapman Avenue, Orange, California. 5:00 P.M. SESSION 1. ROLL CALL PRESENT - Alvarez, Whitaker, Smith, Murphy, Nichols ABSENT - None 2. ORAL COMMUNICATIONS - None 3. RECESS TO CLOSED SESSION a. Public Employee Appointment — Pursuant to Government Code Section 54957(b): Title: Community Services Director 4. ADJOURNMENT — At 5:30 p.m. the City Council adjourned the Closed Session to its Adjourned Regular Meeting on Tuesday, March 22, 2016, in the Weimer Room. PAGE 1 CITY COUNCIL ORANGE, CALIFORNIA MEETING MINUTES March 22, 2016 5:30 P.M. BUDGET STUDY SESSION 1. OPENING This Adjourned Regular Meeting of the Orange City Council was called to order by Mayor Smith at 5:30 p.m. 1.1 INVOCATION Irma Hernandez, Deputy City Manager 1.2 PLEDGE OF ALLEGIANCE TO THE FLAG Councilmember Michael Alvarez 1.3 ROLL CALL PRESENT - Alvarez, Whitaker, Smith, Murphy, Nichols ABSENT - None 1.4 PRESENTATIONS/ ANNOUNCEMENTS/ INTRODUCTIONS Mayor pro tern Murphy invited all City Employees to a soft opening of the Los Playas Restaurant on March 23r from 5:00 p.m. to 7:00 p.m. Mayor Smith thanked Lisa Kim for her 16 years of loyal and dedicated service to the City of Orange. 2. PUBLIC COMMENTS - None 3. CONSENT CALENDAR - None 4. REPORTS FROM MAYOR SMITH - None 5. REPORTS FROM COUNCILMEMBERS - None PAGE 2 CITY COUNCIL ORANGE, CALIFORNIA MEETING MINUTES March 22, 2016 6. REPORTS FROM BOARDS, COMMITTEES, AND COMMISSIONS - None 7. ADMINISTRATIVE REPORTS - None 8. REPORTS FROM CITY MANAGER 8.1 First Study Session for the Proposed Fiscal Year 2016 -17 Budget. City Manager Rick Otto and Finance Director Will Kolbow reviewed a series of slides, outlining the status of the current year budget and the projections for the FY 2016 -17 budget. Also reviewed were the CIP Budget. Departmental work plans have been made available to the City Council and any questions can be answered by the Department Heads who are all in attendance. For the current fiscal year, indicators show that the local economy is strong, permitting is up, and sales tax figures are up. Challenges for the next fiscal year include the cost increases related to PERS, costs related to State and Federal mandates and drop in tax revenues from gasoline sales. Mayor Smith thanked staff for their hard work on the budget process. The Mayor has three priorities she wishes to see addressed: 1) A status on the PERS increases and the unfunded liability related to pensions, 2) A master plan for lighting in the Old Towne district, and 3) Insuring that the Police Department has adequate staffing for public safety. The Council discussed the Orange County Waste Disposal Agreement. After a question from Councilmember Alvarez, staff indicated that the City of Irvine was voting on the agreement this very night. Adjusted revenue for the current fiscal year is at $107.2 million. The adjusted expenditures are at $105.6 million. The City adopted estimated revenue was $102.3 million for the current fiscal year. Sales tax is up, property tax is up, TOT is up, license and permit fees are up, motor vehicle in lieu is up, grants are up and miscellaneous revenues are up, putting updated revenue projections at $107.2 million. Expenditures were adopted at $101.6 million. With the carryover, adjustments, labor costs and grants all up, the adjusted expenditure budget moved to $105.6 million. For the fiscal year 16/17 budget staff is estimating revenue will be $106.3 million and expenditures will be $106.4 million. The City unreserved fund balance is estimated to be $3.9 million, with total transfers out of $2.5 million, the unreserved fund balance will be $1.4 million. Adding that to the General Fund Catastrophic Reserve, the balance will be $20.9 million. PAGE 3 CITY COUNCIL ORANGE, CALIFORNIA MEETING MINUTES March 22, 2016 8. REPORTS FROM CITY MANAGER (Continued) Challenges for the next fiscal year include lower fuel prices. Taxes collected will be lower by approximately one million dollars. Ca1PERS had a poor rate of return last year and the rates the City pays increased more than originally anticipated. Councilmember Alvarez suggested that the City move the $500,000 that is now scheduled for Catastrophic Reserve and use it for a pre - payment to CalPERS. Staff indicated that it would help the unfunded liability slightly. Other challenges include regulatory changes related to the Affordable Care Act and changes to the prevailing wage, and a new Orange County animal control facility with increases to operational costs. For the CIP budget, Public Works Director Joe DeFrancesco gave the staff report. During the seven year planning period, staff has 142 projects valued at $94.2 million planned. Only a small percentage is funded by the General Fund. Staff reviewed many of the projects that were happening now and showed a series of slides with pictures of the projects. Councilmember Alvarez inquired about the Santiago Creek Bike Trail. Staff explained that it is partially private and partially City owned. The City is working on getting permits to complete an annual maintenance project. Councilmember Alvarez asked staff to look into the option of diagonal parking on Chapman Ave. He asked about reconfiguring the parking lots in Old Towne to find more spaces. Parking will be at a premium when the Lemon Street parking lot closes for construction of the new parking structure. City Manager Otto indicated that this issue is on the City Manager's work plan and all options are being studied. Mayor Smith asked staff to review the option of reintroducing metered parking in Old Towne, and explore promoting with businesses that employees park farther from Plaza businesses so customers can park closer to Plaza businesses. Mayor Smith asked staff to consider reinstating the Master Plan for Old Towne Historic District lighting. Councilmember Whitaker noted that the budget is very close to balanced. He is not interested in spending any reserves to balance. He warns that the economy might be slowing and that the City should be proactive in addressing any potential slow -down of economic growth. Councilmember Alvarez wishes to see strategies on what to do with properties that are owned by the former redevelopment agency. PAGE 4 CITY COUNCIL ORANGE, CALIFORNIA MEETING MINUTES March 22, 2016 8. REPORTS FROM CITY MANAGER (Continued) Mayor Smith indicated the next budget study session will be May 10, 2016, at 4:00 p.m in the Weimer Room. ACTION: Received and filed report. 9. LEGAL AFFAIRS - None 10. RECESS TO CLOSED SESSION - None 11. ADJOURNMENT — The Study Session adjourned at 7:30 p.m. The next Regular City Council Meeting will be held on Tuesday April 12, 2016, at 6:00 p.m. in the Council Chamber with a Closed Session beginning at 5:00 p.m., if necessary. Declaration of Chief Clerk, Robert Zornado, declaring posting of the City Council Agenda of an Adjourned Regular Meeting on March 22, 2016, at Orange Civic Center kiosk, Police Facility at 1107 North Batavia, and Orange Public Library at 407 N. Chapman; all of said locations being in the City of Orange and freely accessible to members of the public at least 72 hours before commencement of said Adjourned Regular Meeting. ROB',-kT rE NADO C1ITLF r ai�4 TERESA E. SMITH MAYOR PAGE 5