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HomeMy WebLinkAbout2022/06/02 - Special Budget MeetingCITY OF RANCHO CUCAMONGA SPECIAL MEETING CITY COUNCIL/FIRE PROTECTION DISTRICT AGENDA June 2, 2022 – 4:00 PM Tri­Communities Conference Room 10500 Civic Center Drive Rancho Cucamonga, CA 91730 A. CALL TO ORDER Pledge of Allegiance Roll Call:         Mayor Michael                           Mayor Pro Tem Kennedy                          Council Members Hutchison and Scott  B. PUBLIC COMMUNICATIONS This is the time and place for the general public to address the City Council on any item listed on the agenda. State law prohibits the City Council from addressing any issue not previously included on the Agenda. The City Council may receive testimony and set the matter for a subsequent meeting. Comments are to be limited to five minutes per individual or less, as deemed necessary by the Mayor, depending upon the number of individuals desiring to speak. C. ITEMS OF DISCUSSION C1.Discussion and Consideration of Proposed Budgets for Fiscal Year 2022/23. (Verbal Report) (Document is available for review at City Hall and www.cityofrc.us). (FIRE/CITY COUNCIL) D. ADJOURNMENT CERTIFICATION  I, Linda A. Troyan, MMC, City Clerk Services Director of the City of Rancho Cucamonga, or my designee, hereby certify under penalty of perjury that a true, accurate copy of the foregoing agenda was posted on at least Twenty­Four (24) hours prior to the meeting per Government Code 54954.2 at 10500 Civic Center Drive, Rancho Cucamonga, California and on the City's website.  LINDA A. TROYAN, MMC CITY CLERK SERVICES DIRECTOR If you need special assistance or accommodations to participate in this meeting, please contact the City Clerk's office at (909) 477­2700. Notification of 48 hours prior to the meeting will enable the City to make reasonable arrangements to ensure accessibility.  CITY COUNCIL VISION STATEMENT “Our Vision is to build on our success as a world class community,to create an equitable,sustainable,and vibrant city,rich in opportunity for all to thrive.” Page 1 City of Rancho Cucamonga Fiscal Year 2022/23 Proposed Budgets Budget Study Session June 2, 2022 Remembering a Pillar in Our Community Councilmember Sam Spagnolo FY 2021/22 Budget Message Recap •In 2021, new fiscal year was described as •1/3 COVID + Recovery + 1/3 Brave New World •Theme was Disciplined Innovation •Fiscal Discipline •HR Discipline •Innovation IQ •System IQ FY 2021/22 Budget Message Recap •Emerging trends were different than in the recovery following the Great Recession in FY 2009/10 •Greater interest in development in southern Rancho Cucamonga than other portions of the city •Increased interest in development along West Foothill Boulevard and Vineyard Avenue/Carnelian Street •Substantial private investment in large scale industrial development including millions of square feet of warehouses between Arrow Route and 4th Street and Etiwanda Avenue and the 15 Freeway FY 2022/23 Message Summary •Recovery has brought us back mostly to pre-pandemic levels.V-shaped quick recovery •Storm clouds are present •COVID remains and surges continue •Shortages of key products affecting many sectors •Fragility of supply chain, especially off-shore sources •Environmental fluctuations (wind, fire, drought) •Geo-political instability (war) •Some trends continue •Statewide housing crisis •Unprecedented demand for industrial developments FY 2022/23 Message Summary •Inflation is problematic to continued growth •Federal deficit ballooned during COVID •Efforts to correct •Short term interest rate increases at some point impact consumer debt, leading to reduction in spending •Possible mild to moderate recession •Federal deficit likely to lead to entitlement reduction or increased taxes •2023 into 2024 correction possible •Seize current opportunities for growth and infrastructure but continue Disciplined Innovation Local Economy •Local hospitality sector •Hard hit by the pandemic, but rebounded quicker, and further than expected •Hotel occupancy is now pushing 80% plus on average •Rates are increasing to the $150-$170 range •RevPAR is projected to take local hotels to new heights (grey dots) •Two new hotels to open in RC during FY 2022/23 Local Economy •Local property tax •A lagging economic indicator •A critical revenue source, generally stable •Reflects the health of a local agency •Net taxable value increase of 4.9% for 2021/22 tax roll •Residential property is nearly 70% of all property value in the City •Current median price of SFR increased last calendar year >18% •Growth in number of home sales was virtually flat, though sale prices continue to rise •Market continues to push for more moderate and higher end apartment projects Local Economy •Local property tax (continued) •Victoria Gardens Mall remains the highest taxable value property in the City •Top ten most valuable properties account for just over 6% of total assessed valuation •Total valuation is at $30.3 billion •Rancho Cucamonga is a post-Prop 13 City •Ontario receives 17+ cents for tax dollar assessed •Rancho Cucamonga receives 5 cents Property Tax Dollar Breakdown Local Economy •Local property tax (continued) •Top 40 net taxable secured value changes pattern ties to industrial development trends •Prior year top 10 value changes$9 million to $30 million •Current year top 10 value changes$15 million to $47 million •City Council’s strategic look at how industrial development is managed is proving fruitful: •Ensure residents are protected from adverse environmental impacts •Help improve fiscal performance of these properties as they evolve to higher and better future uses Local Economy •Local sales tax (continued) •Statewide bounce experienced in 2021 appears to be flattening and not expected to continue for FY 2022/23 •Slowing is expected going into 2Q2022 with further slowing expected in 2023 (2.4% growth projected) Local Economy •Local sales tax (continued) •County pools remain a strong driver of sales tax •Growth of 4% expected •As more agencies enter into sales tax deals with online businesses, County pool revenue further separates haves and have nots •What negative impacts will 5 story, 4 Million SF warehouse in local agency have on rest of the pool? •Supporting local sales tax growth is the increase in employment in the Inland Empire Local Economy •Employment and Remote Work •Our City has become associated with corporate headquarters •Remote work is accelerating this trend due to high percentage of knowledge-based workers with advanced degrees •Economic impacts of the downturn were somewhat blunted as a result •Employment in the City dropped a bit more than CA as a whole during the pandemic (reflecting our service sector) •Employment levels, while recovering, are still lagging •Nationwide, a 2 million employee shortage •Recovery is anticipated for firms in Rancho Cucamonga later in 2023 Local Economy •Employment and Remote Work (continued) •Overall, the state of the office market is in flux •COVID accelerated remote work •Companies see remote work as both feasible and potentially a cost savings by reducing office space •Focus may shift from location where employees worked and were supervised to a place where employees network, connect •City’s Economic Development Strategic Plan is addressing these challenges •Renewed focus on the Haven Avenue Corridor •Mixed use developments and office campuses •Growth industries for future office space include health care, technology, creative industries, professional services, government and administrative support Local Economy •Housing Trends and Price Appreciation •The City has always been a desirable community •COVID has not changed that •Despite unemployment, real estate price appreciation in the City seems to be rocketing upward •From March 2019 to March 2020 –below 5% •From April 2020 to November 2020 –15% •From November 2020 to September 2021 –exceeded 15% •Although levels have declined somewhat, price appreciation is still in excess of 10% Local Economy •Housing Trends and Price Appreciation (continued) •Mortgage rates are a secondary driver of housing demand (employment growth being the primary) •Lower rates help with price appreciation •Increasing rates serve to moderate price appreciation •Relationship between housing supply and demand remains a key driver of price appreciation •Recently, inventory in the City is less than pending sales (a measure of demand) •Continues to drive price appreciation •As the City approaches buildout, there is a scarcity of residentially zoned/approved property •Prices will remain high as long as sales remain low Regional/State/Federal Economy •Economy has largely recovered at the macro level •Fiscal and monetary policy reactions were excessive •There is a lot of geopolitical uncertainty •The main concerns short-term are inflation, a potential contraction as monetary easing tightens, and the Federal budget deficit •COVID appears to have largely accelerated pre-existing underlying trends in the areas of housing, land use, and labor markets •Shortages, particularly of employees, are likely to remain for an extended time, but the Inland Empire is well positioned for growth due to lower cost of living Regional/State/Federal Economy •Insurance challenges (not going away) •Key risks •Cyber •Business interruption •Natural catastrophe •Pandemic outbreak •Legislation and regulation •Trends are likely here to stay for the immediate future •Important to prepare for the future by making changes today Infrastructure and Major CIP •Public Safety •Fire Station 178 construction •Fire Station 171 design •Fire Station 173 and 174 ADA improvements •Heritage Park Bridge Replacement •Morgan Ranch Trailhead Improvements •Real Time Information Center •Automated License Plate Reader (ALPR) program –four key intersections being added •Public Safety Video Network –23 additional cameras Infrastructure and Major CIP •Economic and Community Development •Etiwanda Grade Separation •Day Creek Channel Bike Trail •Arbor Substation Redesign •Pavement Rehabilitation Projects •Civic Center HVAC Plant Replacement •Weathertrak Conversion •Citywide Concrete Repair/Sidewalk Replacement Infrastructure and Major CIP •Civic and Cultural Services •Dog park at Central Park •Victoria Gardens Cultural Center Courtyard •Family Resource Center Remodel •Beryl Park Inclusive Playground •Quakes Scoreboard Replacement •Citywide Parks and Recreational Facilities Master Plan •Second Story and Beyond® Capital Project •Records Storage at Station 178 Infrastructure and Major CIP •Administrative Services •Financial Enterprise Application Replacement •Wireless Network Upgrade •City Manager’s Office •8th Street Affordable Housing Personnel Costs and Staffing Levels •Primary interface for providing City services is the talented and dedicated Team RC •Personnel costs are nearly always the single biggest expenditure item for any local government •For Rancho Cucamonga, personnel costs (excluding police and fire) are expected to constitute 24% of our budget •When combined with police and fire (both personnel intensive departments) that percentage increases to 72% •With revenue constraints lifting and the demand for programs and services increasing, the need to ease back staffing closer to pre -pandemic levels has become a priority Personnel Costs and Staffing Levels Full -time staff •FY 2022/23, dept's [continued]to take a cross- functional and wholistic approach to staffing needs •End result •Full-time count increase by 26 positions, year-over-year •Only increase by eight new positions from before the pandemic in FY 2019/20 •18 positions are being refunded / unfrozen and eight are new full-time roles Personnel Costs and Staffing Levels Full -time staff •Demand for additional personnel extends to police and fire as well •Police Department •Two Sergeants •One Sheriff’s Service Specialist •Fire District •Nine positions will be added halfway through the year to prepare to staff the new Station 178 •Three Captains, three Engineers, and three Firefighters Personnel Costs and Staffing Levels Part -time staff •Full-time equivalents (FTE) for part-time staff: •FY 2019/20 (pre-pandemic): 179 FTE •FY 2020/21: 40 FTE •FY 2021/22: 60 FTE •FY 2022/23: 133 FTE (~25% less than pre-pandemic level) •As expressed in dollars: •FY 2021/22 part-time expenditures were about half what was originally budgeted reflecting the continued closure of many Community Services and Library facilities due to COVID Personnel Costs and Staffing Levels Part -time staff •For FY 2022/23, with the purposeful reopening of many facilities and the resumption of programs, the proposed budget •Slightly increases the budget for FY 2020/21 •Doubles the estimated actuals spent in FY 2021/22 •Additional resources restore: •Maintenance Technicians for Facilities and Parks •Library staff for extended hours •Community Services staff for programming Personnel Costs and Staffing Levels Part -time staff •Like many businesses, the City is finding it hard to bring back / hire both full-and part-time staff •As of March 2022, there were 11.5 million job openings and 6.0 million unemployed people in the U.S. •For past two years, hiring was dictated by what services we were offering and what facilities were re-opening in light of the pandemic and associated restrictions •Going into FY 2022/23, programs and services offered and/or how long it takes will be dictated by what staffing the City will be able to not only hire but retain Personnel Costs and Staffing Levels •Closely tied to the staffing level are PERS employer contributions •Charts in blue illustrate the CalPERS rate as a percentage of salary •Multicolored charts convert those rates into dollars Personnel Costs and Staffing Levels City Miscellaneous Plan Personnel Costs and Staffing Levels Fire Miscellaneous Plan $0.27 $0.30 $0.32 $0.35 $0.37 $0.39 $0.19 $0.19 $0.19 $0.19 $0.19 $0.19 $0.01 $0.47 $0.49 $0.51 $0.54 $0.56 $0.58 $- $0.10 $0.20 $0.30 $0.40 $0.50 $0.60 $0.70 FY 2022/23 FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 Rancho Cucamonga Fire Protection District Miscellaneous Plans Estimated CalPERS Employer Costs (In Millions) UAL Employer Normal Cost EPMC Personnel Costs and Staffing Levels Fire Safety Plan $3.6 $3.9 $4.3 $4.6 $4.9 $5.1 $2.8 $3.1 $3.1 $3.1 $3.0 $3.0 $0.3 $6.7 $7.0 $7.4 $7.7 $7.9 $8.1 $- $2.0 $4.0 $6.0 $8.0 FY 2022/23 FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 Rancho Cucamonga Fire Protection District Safety Plans Estimated CalPERS Employer Costs (In Millions) UAL Employer Normal Cost EPMC Personnel Costs and Staffing Levels •As noted in the charts, one of the major drivers for the CalPERS rates is the Unfunded Accrued Liability (UAL) •For both the City Miscellaneous and Fire Safety plans, UAL accounts for roughly 60% of the total PERS rates •City Miscellaneous Plan: Total PERS rate is < 25 cents for every dollar in salary (including UAL payment) •Plan is approximately 76% funded •Fire Safety Plan: Total PERS rate is approaching 50 cents for every dollar in salary (including UAL payment) •Plan is approximately 71% funded Personnel Costs and Staffing Levels •In FY 2020/21, the Fire District adopted a five-year strategy to prefund its UAL for the District’s Fire Safety Plan •Goal is to bring the funded ratio from current 71% to the 85- 95% range by making additional supplemental pension payments over the next several years •FY 2022/23 is the third year of this plan •Budget includes a $3.717 million prefunding payment Agency Work Group Detail Public Safety •Group consists of Police, Fire, and Animal Services Departments, and Community Improvement Division •Police •Crime Prevention Unit will continue to host events educating the public on crime trends and prevention •SOP Team will work with the Fire District to host two large scale Active Shooter training events Agency Work Group Detail Public Safety •Add a total of 23 additional cameras to the City’s Public Safety Video Network (PSVN) at locations for RCMU and Public Works facilities •Replace two aging vehicles –mobile command post and off-road vehicle •Welcomed one new bloodhound named “Keva” •April 2022 Agency Work Group Detail Public Safety •Fire District •Deploy an electric fire engine •Partner with Public Works to address future vehicle maintenance needs and repairs of both the District and City fleet by sharing a new Mechanic position •Partner with Public Works and Planning to create an Urban Forest Management Plan Agency Work Group Detail Public Safety •Animal Services •Department’s focus will be on enhancing the health and welfare of the animals in our community and the people who care for them •Kitten Nursery program will rebrand to “RC aCATemy ” •Strengthen team by funding/refunding positions: •Deputy Director •Animal Caretaker •Customer Care Assistant •Animal Services Officer II •Development of a wellness program Agency Work Group Detail Public Safety •Community Improvement •Cost recovery for enforcement of Municipal Code •Organize two community clean-up in partnership with Public Works and Burrtec Waste Industries •Short-term rental compliance •Develop a noise ordinance •Recruit and hire a Community Improvement Officer I to be shared with Business Licensing for field inspections and compliance work Agency Work Group Detail Economic and Community Development •Group consists of Planning (including Economic Development), Engineering, Building and Safety, and Public Works Departments •Planning •Adoption of new Development Code •Initiate Urban Forestry Master Plan •Continue working on ADA Transition Plan, the citywide Active Transportation Plan, and the Economic Development Strategic Plan update Agency Work Group Detail Economic and Community Development •Expansion of Economic Development Team •Deputy Director of Economic Development •Economic Development Manager •ICMA Fellow / Management Analyst I •Building and Safety •Expand use of the texting system “Quiq” to plan check operations •Enhance community outreach by developing additional media leaning more toward social platforms •Streamline and simplify processes while offering viable options for customers at all levels Agency Work Group Detail Economic and Community Development •Engineering Services •Work on expanding the backbone fiber network and extend new service to existing businesses •New in-house Utility Marker position to better manage utility marking services and provide cost savings over contracting the service out •Reintroduction of previously frozen Executive Assistant Agency Work Group Detail Economic and Community Development •Public Works Services •Civic Center HVAC Plant Replacement •Civic Center Waterproofing •Design and install of new interior and exterior lighting controls and HVAC controls for facilities citywide •Drought tolerant landscape renovations •New Maintenance Coordinator for contract compliance in the Parks Division •One Lead Maintenance Worker and three Maintenance Works positions are being re-funded in Streets Division Agency Work Group Detail Civic and Cultural Services •Group consists of Community Services, Library Services, and City Clerk Services Departments •Community Services •FY 2022/23 marks the implementation of the redesign of CSD to meet current community needs based on 2021 survey data •Feedback expressed the need and desire for more community events, performing arts and entertainment, senior programs, adult activities, health and wellness programs, and improved communication and advertisement •Services are resuming with emphasis in these areas to address community feedback Agency Work Group Detail Civic and Cultural Services •Multiple full-time positions that were frozen at the onset of the COVID-19 Pandemic will, after being redesigned for new duties be funded in the new fiscal year •Entertainment Superintendent •Supervisor over VGCC Operations •Theater Production Coordinator •Three Theatre Technician III positions Agency Work Group Detail Civic and Cultural Services •Library Services •Return of traditional library services •New Career Online High School (COHS) Services •Other new services to begin in FY 2022/23 •Book a Librarian •Library kiosk to be installed outside Fire Station 178 •Library of Things enhancement •Previously frozen Library Technician will be funded •Second Story and Beyond experience will open to the public with a soft launch scheduled for June 2023 Agency Work Group Detail Civic and Cultural Services •City Clerk Services •First full year of electronic signature capability •Contractor to be hired to streamline the City’s Laserfiche files •Will assist with timely response to numerous public records requests •Centralized records repository at Fire Station 178 •Municipal Election in November 2022 •Management Analyst I funded for half the year Agency Work Group Detail Administrative Services •Group consists of Finance, Human Resources, Innovation and Technology Departments, and the Procurement Division •Finance •Implement DebtBook software for GASB 87 compliance •On board a shared Community Improvement Officer I position to assist Community Improvement and Business Licensing with field inspections and compliance work Agency Work Group Detail Administrative Services •Human Resources •Recruiting and filling the many new positions •Restoring the Administrative Assistant position previously unfunded •Upgrading an HR Technician to an HR Business Partner •Ensure focus remains on an employee experience that attracts and retains the best talent Agency Work Group Detail Administrative Services •Information and Technology •Continued improvement of our cybersecurity posture •New Cybersecurity Division with the addition of a Chief Information Security Officer (CISO) •Upgrade wireless network •Team development of many new staff Agency Work Group Detail City Manager’s Office •Support efforts to implement PlanRC •Manage construction of Dog Park and VGCC projects •Present Public Arts Strategic Plan for consideration for adoption •Assess the community’s quality of life •Work to have for-sale affordable housing developed Operating Budgets •Operating budgets for the City are comprised of the following: •Operating Budget (basic municipal operations) •General Fund •Library Operational Fund •Fire District Operational Funds •Special Districts (restricted funding sources for specific operational purposes) •Complete budget includes various other special funds which are restricted from use for general municipal operations •Total Operating Budget increased by $19,334,000, or 13.03% •Fire District’s share increased $5,685,710 or 11.9% primarily due to staffing for Station 178 and a capital project funded by CFD 85-1 •Police budget increased $1,995,990 or 4.25% due to increase in contract cost, along with three new staff •Police and Fire are two largest cost centers •Combined with Animal Care and Services as well as Community Improvement, public safety makes up 63% of the Operating Budget •Fire District is a legally separate subsidiary district General Fund –Major Revenues 88% of total General Fund revenues General Fund –Major Revenues General Fund –Major Revenues *Includes Property Transfer Tax General Fund –Major Revenues General Fund –Major Revenues General Fund Use of Reserves •The last time the City used reserves to balance its Operating Budget was FY 2010/11 •Used $903,130 during the Great Recession •Over the ensuing years, the City cultivated a regular habit of adding to its capital reserves, accumulating a total budgeted contribution to reserves of $7.6 million in eight years •For FY 2022/23, the budgeted contribution to reserves is $1,369,340 •Cumulative total contribution of $8.9 million over nine years Library Fund •For FY 2022/23, Library staff will be focusing on restoring and expanding former services and introducing new services, such as Book a Librarian •Overall, the Library’s operating budget for FY 2022/23 is $6,953,610, an increase of $1,348,830 or 24.1% over the prior fiscal year •The principal funding source for the Library’s operating budget is property tax which makes up approximately 82% of the Library Fund’s revenues. Library Fund Fire District Operating Funds •The Fire District operating budget for FY 2022/23 is $53,330,660, an 11.9% increase over the prior fiscal year •This growth is largely attributable to the midyear hiring of staffing that will be needed for Fire Station 178 as well as ADA improvements to Fire Station 174 funded by CFD 85-1 •Major revenue sources include property tax (72.1%) as well as assessment revenues from CFD 85-1 (11.9%) and CFD 88-1 (0.8%) Fire District Operating Funds Special Districts •There are 34 special districts in the City •Most created prior to Proposition 13 and many have no index to adjust for rising costs •General Fund provides certain minimal levels of funding to some of the Districts to provide fiscal equity •Service and maintenance levels are adjusted to assist with funding shortfalls •Situation has become most acute on the west side of town •No interest in new voter measure to adjust rates •List of deferred and unfunded maintenance items continues to grow Special Districts Deferred and Unfunded Maintenance Items •Shade shelter repairs at Old Town and Golden Oak Parks •Restroom wood repair at Hermosa Park •Concrete repairs at various parks •Playground replacements at Bear Gulch, Church, Hermosa, Golden Oak, and Old Town Parks •Central irrigation system replacements at all LMD 1 parks •Field light fixture and pole replacements at Heritage, Beryl and Red Hill Parks •Amphitheater repair and refurbishment at Red Hill Park •Pathway lighting at Hermosa Park Special Districts Critical Projects Included in FY 2022/23 Budget •Almond Trail Improvement Project ($272,000 in LMD 1) •Water Conservation Landscaping Renovations ($1,586,450 in LMD 2 and $700,000 in LMD 4R) •Paseo Lighting Retrofits ($250,000 in LMD 2) •Park Upgrades for LMD 2 ($250,000) •Heritage Park Bridge Replacements ($1,100,000 -55% funded by the Fire District) •Beryl Park East –Tennis Court LED Light Replacement ($69,000 in LMD 1) •Red Hill Park –Pathway Lighting ($200,000 in PD 85) Special Districts •A new approach will eventually be needed to ensure fiscal stability for the west side parks and landscape districts •Public works will continue to provide the highest level of service given current funding levels •City staff will continue to seek ways for benefitting new development to legally contribute to the appropriate district •In five of the City’s newer districts, rate adjustments are recommended this year •Maintain a structurally balanced budget for those districts •Keep pace with rising utility or contract labor cost increases •Accumulate funding for current or future capital projects Special Districts Maximum Recommended District Recommendation Change (%)Assessment Assessment LMD 2 Increase 3.00%$562.85 $518.88 LMD 4-R Keep Flat 0.00%$499.32 $397.15 LMD 6-R Increase 3.00%$475.93 $475.93 LMD 9 Keep Flat 0.00%$664.01 $311.92 LMD 10 Increase 3.00%$1,021.79 $804.92 CFD 2000-03B Increase 2.00%$1,560.43 $1,560.43 CFD 2018-01 Increase 3.00%$369.00 $369.00 SPECIAL DISTRICTS WITH RATE ADJUSTMENT MECHANISM Fiscal Summary •Following is a summation of all FY 2022/23 City budgets: •General Fund $107,459,870 •Library Services $ 6,953,610 •Fire Protection District*$ 73,572,430 •Special Funds (including CIP)$163,983,260 *Includes Fire Protection Capital Fund budget in the amount of $20,241,770 Conclusion •Headwinds as we face the future – pandemic uncertainties, business closures, federal deficit driven spending, wealth disparities, and sales tax shifts •Also, tailwinds –very strong residential and industrial investment in the city, Brightline highspeed rail from Las Vegas to Cucamonga Station, a new 20-year General Plan, and traditional assets (strong schools, Victoria Gardens Mall, desirable residential living environment) •Success in the future will continue to require Disciplined Innovation •Decision making has to be in clear support of a clear vision: •To build on our success as a world class community, to create an equitable, sustainable, and vibrant city, rich in opportunity for all to thrive Any Questions or Comments?