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FC061218FINANCE COMMITTEE MEETING June 12, 2018 Elected Officials Present Councilmember Dave Teitzel (Chair) Councilmember Diane Buckshnis Mayor Dave Earling Staff Present Scott James, Finance Director Dave Turley, Assistant Finance Director Leif Bjorback, Building Official Rob Chave, Planning Manager Scott Passey, City Clerk Jeff Taraday, City Attorney The meeting was called to order at 7:20 p.m. in the Jury Meeting Room. 2. Development Services Fee Adjustments Mr. Bjorback reviewed adjustments to the Development Services Fee Schedule, advising the costs would be passed through to the customer: • Increase in fees to reflect the increase in the state's surcharged effective July 1 • Minor adjustments proposed by the Fire Marshal to standardize permit fees for fire alarms and fire sprinklers • New fees added to the Engineering Fee section o Cost recovery for fabrication of private development -related fire and aid signage and private drive signs performed by City's sign shop o Fee for staff completion of water and sewer availability letters Discussion followed regarding who pays for private drive signs and engineering fees based on costs. Action: Schedule on Consent Salaries & Benefits Budget Amendment - City Clerk's Office Mr. Passey explained this proposed amendment would allow Deputy City Clerk Linda Hynd to train her successor for two weeks; the cost is approximately $3,500. Ms. Hynd has been with City for 18 years; she is the fifth employee in five years to retire from the City Clerk's office, resulting in a complete turnover of the department during that time. Hynd's. If approved, the additional amount will be included with the second quarter budget amendments next month. Staff is interviewing for the position now. Action: Include in second quarter budget amendments 3. Budget Amendment for LicenseTrak Permit System Implementation Mr. Chave explained the City is in the midst of implementing a new electronic permitting system; the cost to implement the entire system is $340,000. The licensing portion of the system was scheduled to be implemented in 2019 and intended to be included in the 2019 budget. It would be advantageous to push the licensing implementation into 2018 so that all permit integration and training on the new system can be done at the same time. A $10,200 discount has also been quoted if the City acquires the licensing module this year. The licensing was separated into 2019 due to the state's implementation of the web portal in 2019. The intent is to include the cost of licensing in the second quarter budget amendments. 06/12/18 Finance Committee Minutes, Page 2 Action: Include in second quarter budget amendments 4. April 2018 Monthly Financial Report Mr. Turley reviewed: • 33% through year • Many expenses lag behind revenue • Technology Rental Fund (512) o $300,000 in Small Equipment being moved to Machinery/Equipment for telephone system • Annual interest income is up • REET is up (includes sale of three apartment buildings) Mr. James reported on the Senior Accountant position, explaining due to differences in job duties in the departments, a decision was made to split it into two positions, one for Finance and one for Public Works. This was presented to the PSPP Committee tonight; amending the Senior Accountant -Finance position will be on the Consent Agenda as it was approved in the 2018 budget and the Senior Public Works Accountant will have to go through full Council. He commented on the job duties for each position. Discussion followed regarding Footnote 1 related to grant billings, hiring of a Senior Accountant, justification for another 1.0 FTE Senior Accountant for Public Works, job responsibilities for Finance Senior Accountant and the Senior Public Works Accountant, why no funds are budgeted for the BID, BID expenditures in 2017 and 2018, the cost of WCIA driven by claims, water fund construction project carryover, moving the CIP/CFP process earlier in year, carryforwards in first quarter budget amendments, timing of Police Department holiday buyback, Police Department overtime and unfilled positions, and overtime in Development Services & Planning. Mr. James suggested project decision packages state whether it is a multiyear project so Council is aware there may be carryover. Suggestions: • Add footnote regarding BID Fund 140 regarding why no funds are budgeted • Add footnote to Other Misc Revenue/Expense regarding bridge loan to PFD Action: Schedule on Consent Agenda 5. Review of City Travel Policy Mr. James explained finance policies are adopted by resolution; travel policies are in the code. He preferred travel policies remain in the code as that carries more weight. He also recommended travel policies in the personnel policy refer to the code. He recommended other minor amendments to the code to reference Uber, Lyft, etc., to omit telephone expenses, etc. Discussion followed regarding the requirement for travel and training requests for Council and boards and commission to be approved by the Council President, guidelines for the Council President to approve travel and training requests, and non -allowable expenses. Minor amendments were suggested to the language in the policy. Action: Make minor amendments to the code language and amend the personnel policy to refer to the code. Present to PSPP Committee (revisions do not need to come back to Finance Committee). 6. Long-range Financial Planning Committee Presentation of Draft Update to Reserve Policy Mr. James explained the reserve policy was developed in 2012; things have changed since then including fund balance definitions and how rating agencies review financials. The City of Fresno's policy 06/12/18 Finance Committee Minutes, Page 3 was used as a basis for the proposed draft policy. The City's current reserve policy is 8-16%. During discussion, Mr. James and Mr. Turley distributed and reviewed: • Bainbridge, Everett, Lynnwood, Shoreline's reserve fund amounts • Graph of sales tax revenues 2007-2014 • Recession Revenue Loss & Expenditure Reduction Summary • Budget and expenditures from Risk Management Fund 2015-2017 Mr. James described the goal to increase the City's bond rating from AA to AAA. The proposed policy is comprehensive; it describes the policy, objectives, definitions, and criteria for establishing appropriate fund balance reserve levels. He reviewed the proposed policy and recommended the committee consider: • Incorporating the Contingency Reserve into the General Fund — committee agreed • Eliminating Risk Management Reserve — committee agreed • Establishing a capital fund for utilities — vet with Public Works Director first • Establishing a policy related to the Pavement Condition Index and fund to that level instead of a Street Construction reserve fund Discussion included the purpose for revising the reserve policy, other local cities' reserve policies, the City's experience during the recession, GFOA recommendation regarding reserve policy, concern the draft policy is too complicated, projects the City may need to bond for such as construction of Civic Park, a suggestion to bring a decision regarding bonding for Civic to Council, savings to the City via a good bond rating, how bond ratings are established, effect reserve amounts have on bond ratings, cost of bonding with AAA versus AA rating, Equipment Rental fund (Fund 511) balance, purpose of the Risk Management Fund, staff's research of the way cities insure against risk, General Fund Operating Reserve versus General Fund Stabilization Reserve, increasing reserves during good economic times, ensuring the policy is as clear and streamlined as possible, policy for use of funds in the Stabilization Reserve, researching how other cities have achieved a AAA rating, Council approval for use of reserve funds, basing reserve fund percentage on revenue or expense, establishing a policy regarding LEOFF 1 expenditures, lack of financial reporting in 2010, and the purpose of reserve amounts. Action: Staff make revisions to the draft policy and schedule for study session at City Council in July Mr. Williams explained a Senior Accountant position that would be shared by Finance and Public Works was approved in the 2018 budget. Issues have arisen regarding the capacity of one person, their skill set and focus and who they would report to. Public Works and Utilities has a $40 million budget and needs a staff person to assist with daily financial work, budgeting, CIP, rate studies, grant management, capital asset management, etc. He referred to the job description for the Senior Public Works Accountant and the Senior Accountant -Finance. The meeting was adjourned at 9:22 p.m.