CITY COUNCIL MINUTES

May 19, 2014

________________________________________________________________ REGULAR MEETING

BUDGET WORKSHOP

1. PLEDGE OF ALLEGIANCE/ROLL CALL - The meeting of the City Council was called to order by Mayor John Marchand at 7:03 pm, in the City Council Chambers, 3575 Pacific Avenue, Livermore, California.

1.01 ROLL CALL - Present: Mayor John Marchand, Vice Mayor Bob Woerner, and Councilmembers Stewart Gary and Doug Horner. Councilmember Laureen Turner was absent/excused.

1.02 PLEDGE OF ALLEGIANCE

2. CITIZENS FORUM

Don Meeker, Livermore, spoke regarding minutes from the Board of Trustees meeting July 2, 1877.

3. BUDGET WORKSHOP

3.01 Preliminary Fiscal Year 2014-2015 Financial Plan and 2014-2017 Capital Improvement Plan Update.

Recommendation: Staff recommended the City Council provide direction.

Administrative Services Director Douglas Alessio presented the preliminary Fiscal Year 2014-2015 Financial Plan.

Assistant City Engineer Mike Cavalieri presented the Capital Improvement Program for Fiscal Years 2014-2017.

Assistant City Manager Troy Brown said the next steps were as follows: the Capital Improvement Plan would be presented to the Planning Commission on June 3, 2014 for determination of consistency with the General Plan; Livermore-Pleasanton Fire Department budget would be presented to the Joint Powers Authority on June 3, 2014 for approval; the Financial Plan and Capital Improvement Plan would be presented to the City Council for approval at the June 9, 2014 City Council meeting.

In response to questions by CM Horner, Administrative Services Director Doug Alessio said the 22% of the Annual Required Contribution (ARC) contributed to the Other Post Employment Benefits (OPEB) was a cumulative figure. He said it was projected to take thirty years to fully fund the future liability.

In response to questions by Mayor Marchand, Mr. Cavalieri said the $133.4 million for upgrades to the storm drains were for the storm drains that had been placed during the last 50-60 years that would ultimately need to be replaced as they reached the end of their useful life. He said these were not upgrades required by the Water Quality Control Board Municipal Regional Plan. He said the CIP included future expansion of the facilities funded by a separate funding source. He said the City did not currently have a fund to replace the existing storm drains. He said Flood & Safety included cleaning stream beds only and not the storm drains.

CM Gary suggested the section Budget Overview of the Financial Plan be moved to immediately follow the City Managers transmittal letter; he also suggested including more graphs to address revenue to expense growth over time. He said the recession damaged the City and it would take at least a decade to return to incremental budgeting. He said each future budget book should clearly state the City would fund reserves, fund liabilities, and share with current employees before adding more employees and programs, and annually match revenues to available needs. He said the CIP should include the Annual Maintenance Shortfalls and Backlog with the annual funding to clearly demonstrate the true figure. He requested staff create a financial strategy for a multi-year strategic borrowing plan such as a COP or bond to address the unfunded infrastructure. He suggested adoption of a three-year budget based on the conservatism currently built into the budget.

City Manager Marc Roberts said over the next several years staff would be conducting a detailed analysis of assets, identifying alternative maintenance programs, timing alternatives and the appropriateness of asking the voters to fund at a different level. He said another question would be what level of service the community wished to have.

VM Woerner spoke regarding funding choices and options, and the long-term funding for the $290 million backlog. He suggested there needed to be a true assessment of the backlog to establish a plan on how to solve the problem and to identify possible funding sources and possible tradeoffs. He said the OPEB liability was being practically addressed through contract negotiations with the unions.

CM Horner said the OPEB liability was for labor already consumed. He said amortizing the liability over 30 years was the best way to proceed and asked staff for strategies on how to shrink the liability sooner.

In response to questions by CM Horner, Mr. Roberts said the $100 million included the projected earnings that would come from future retirees. He said during the next 25-27 years, the last employees under that system would complete their work with the City of Livermore. He said the payment of OPEB was aligned with the last group of employees; the big bulk of employees included in the OPEB were still working for the City and providing service. He explained that fully funding the ARC actually was for the projected ARC which was 62-63% of the $100 million. He said negations with the employees would help contribute to the liability in addition to fully funding the ARC.

Mayor Marchand said the number one reason for local government to exist was to provide services. He said revenues fell during the worst recession in modern times while services continued to be provided. He said there was a long term plan in place. He supported committing to a multi-year plan and establishing a long-term strategy.

In response to questions by Mayor Marchand regarding $2.6 million for decorative walls, Community & Economic Development Director Stephan Kiefer said staff was exploring various options for the funding of the walls. He said some property owners were using the walls as retaining walls and staff was exploring sharing the cost with those property owners.

Mayor Marchand said the number one priority of the City Council was to increase revenue and business in Livermore. He said a good strategic plan, along with leveraging the large amount of grants received, and a plan for the funding of long-term obligations of OPEB and infrastructure would help solve the problem.

VM Woerner said was a serious problem; he reiterated having a discussion regarding policy and strategy in the fall. He said with regards to OPEB, he encouraged the continued partnership with the employees. He said it was not feasible to inject more from the City to cover OPEB. He said the City was in austerity for the foreseeable future.

CM Horner said he wanted an examination of whether paying more now would free up money later on for other things. He did not want to investigate individual items; he wanted a complete evaluation. He said getting out of debt quicker was always good.

CM Gary said at the beginning of every budget document and conversation, the question would be are we funding incrementally the entire fabric of existing obligations. He said the strategic and long-term obligations were adequately sliced every year before there were new, unfunded mandates.

THE CITY COUNCIL DIRECTED STAFF TO PROCEED WITH THE 2014-2015 FINANCIAL PLAN AND 2014-2017 CAPITAL IMPROVEMENT PLAN WITH DIRECTION TO PREPARE AN ASSESSMENT AND STRATEGIES PERTAINING TO THE UNFUNDED LIABILITIES ASSOCIATED WITH OTHER POST EMPLOYMENT BENEFITS (OPEB) AND INFRASTRUCTURE REHABILITATION.

4. ADJOURNMENT - at 8:32 pm to a regular City Council meeting on Monday, June 9, 2014 at 7:00 pm, Council Chambers, 3575 Pacific Avenue, Livermore.